EXHIBIT 10.17
OPTION AGREEMENT
Dated As Of
March 31, 2000
RELATING TO
JAPANESE XXXXXXX BUSINESS
Table of Contents
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(continued)
Page
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ARTICLE I DEFINITIONS...................................................... 1
1.1. Definitions......................................................... 1
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ARTICLE II GRANT OF OPTION................................................. 6
2.1. Grant of Option..................................................... 6
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2.2. Exercise Period..................................................... 6
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2.3. Manner of Exercise.................................................. 6
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2.4. Transfer of Purchased Business...................................... 6
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ARTICLE III DETERMINATION OF STRIKE PRICE.................................. 6
3.1. Strike Price........................................................ 6
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3.2. Opening Net Worth................................................... 6
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3.3. Closing Date Net Worth ............................................. 7
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3.4. Access to Information............................................... 8
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ARTICLE IV PURCHASE AND SALE............................................... 8
4.1. Purchased Business.................................................. 8
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4.2. Excluded Assets..................................................... 10
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4.3. Assumed Liabilities................................................. 11
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4.4. Excluded Liabilities................................................ 12
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ARTICLE V CLOSING; POST-CLOSING ADJUSTMENT................................. 12
5.1. Conditions to Closing............................................... 12
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5.2. Closing Date........................................................ 13
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5.3. Xxxxxxx Optionholder's Deliveries at Closing....................... 13
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5.4. Xxxxxx Japan's Deliveries at Closing................................ 13
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5.5. Post Closing Adjustment............................................. 13
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5.6. Non-Assignable Contracts............................................ 13
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5.7. Further Assurances.................................................. 14
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5.8. Novation of Assumed Liabilities..................................... 15
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ARTICLE VI REPRESENTATIONS AND WARRANTIES.................................. 16
6.1. Organization, Good Standing and Authority of Xxxxxx Japan........... 16
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6.2. Organization, Good Standing and Authority of Xxxxxxx Optionholder... 16
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6.3. No Other Representations or Warranties.............................. 16
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ARTICLE VII PRE-CLOSING COVENANTS.......................................... 17
7.1. Operation of Japanese Xxxxxxx Business.............................. 17
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7.2. Consents of Third Parties; Governmental Approvals................... 18
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7.3. Services............................................................ 18
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7.4. Financial Statements................................................ 19
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Table of Contents
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(continued)
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ARTICLE VIII POST-CLOSING COVENANTS........................................ 19
8.1. Collection of Accounts Receivable................................... 19
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8.2. Agreements Relating to Xxxxxxx Optionholder and Xxxxxx Japan........ 20
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8.3. Informal, Nondocumented Real Estate Leases.......................... 20
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ARTICLE IX [INTENTIONALLY OMITTED]......................................... 21
ARTICLE X EMPLOYEES AND EMPLOYEE BENEFIT MATTERS........................... 21
10.1. Employment of Xxxxxxx Employees..................................... 21
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10.2. Terminations/Layoff/Severance....................................... 21
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10.3. Employee Benefit Plans.............................................. 21
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10.4. Transfer of Account Balances and Accrued Benefits................... 22
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10.5. Welfare Benefits.................................................... 22
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10.6. Stock Purchase Plans................................................ 23
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10.7. Workers' Compensation............................................... 23
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10.8. Vacation Pay Policy................................................. 23
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10.9. Information to be Provided to Baxter................................ 23
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10.10. Transfer of Employee Files.......................................... 23
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10.11. Employment Solicitation............................................. 23
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ARTICLE XI INSURANCE MATTERS............................................... 24
ARTICLE XII INDEMNIFICATION................................................ 27
12.1. Indemnification by Xxxxxxx Optionholder............................. 27
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12.2. Indemnification by Xxxxxx Japan..................................... 27
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12.3. Applicability of and Limitation on Indemnification.................. 28
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12.4. Adjustment of Indemnifiable Losses.................................. 28
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12.5. Procedures for Indemnification of Third Party Claims................ 29
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12.6. Procedures for Indemnification of Direct Claims..................... 31
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12.7. Remedies Cumulative................................................. 31
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ARTICLE XIII DISPUTE RESOLUTION............................................ 31
13.1. General............................................................. 31
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13.2. Escalation. ....................................................... 32
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13.3. Arbitration. ...................................................... 32
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13.4. Procedures.......................................................... 32
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13.5. Injunctive Relief................................................... 33
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ARTICLE XIV GENERAL PROVISIONS............................................. 33
14.1. Notices............................................................. 33
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14.2. Successors and Assigns.............................................. 34
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14.3. Access to Records after Closing..................................... 34
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14.4. Entire Agreement; Amendments........................................ 35
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Table of Contents
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(continued)
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14.5. Interpretation...................................................... 35
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14.6. Waivers............................................................. 35
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14.7. Expenses............................................................ 35
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14.8. Partial Invalidity.................................................. 35
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14.9. Execution in Counterparts........................................... 35
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14.10. Governing Law....................................................... 35
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14.11. Submission to Jurisdiction.......................................... 36
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14.12. Termination......................................................... 36
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14.13. Survival of Obligations............................................. 36
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14.14. Currency............................................................ 36
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EXHIBITS
A Description of Japanese Xxxxxxx Business
B Form of Instrument of Assignment
C Form of Instrument of Assumption
D Valuation Date Balance Sheet
E Form of TK Agreement
SCHEDULES
1.1 Agreed Accounting Principles
4.1(iv) Governmental Permits
4.1(v) Real Estate Leases
4.1(vi) Personal Property
4.1(vii) Contracts
4.1(ix) Product Registrations and Import Licenses
7.3 Services/Facilities
[10.4 Allocation of Pension Plan Assets]
OPTION AGREEMENT
OPTION AGREEMENT, dated as of March 31, 2000 (this "Agreement"),
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between Xxxxxx Limited, a Japanese corporation ("Baxter Japan"), and Xxxxxxx
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Lifesciences Limited, a Japanese corporation ("Xxxxxxx Optionholder").
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WHEREAS, Baxter Japan currently conducts all of the business of the
Cardiovascular Group of Xxxxxx International Inc. in Japan, all as more
specifically described in Exhibit A hereto (the "Japanese Xxxxxxx Business");
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and
WHEREAS, Xxxxxx Japan desires to grant to Xxxxxxx Optionholder, and
Xxxxxxx Optionholder desires to acquire from Xxxxxx Japan, an irrevocable option
to purchase, on a going concern basis, the Japanese Xxxxxxx Business, all on the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed between Xxxxxx Japan and
Xxxxxxx Optionholder as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. In this Agreement, the following terms have the meanings
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specified or referred to in this Section 1.1 and shall be equally applicable to
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both the singular and plural forms. Any agreement referred to below shall mean
such agreement as amended, supplemented and modified from time to time to the
extent permitted by the applicable provisions thereof and by this Agreement.
"Action" means any action, claim, suit, arbitration, inquiry,
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subpoena, discovery request, proceeding or investigation by or before any court
or grand jury, any governmental or other regulatory or administrative entity,
agency or commission or any arbitration tribunal.
"Affiliate" means, with respect to any Person, any other Person which
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directly or indirectly controls, is controlled by or is under common control
with such Person.
"Agreed Accounting Principles" means Japanese generally accepted
----------------------------
accounting principles consistently applied, provided that, with respect to any
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matter as to which there is more than one Japanese generally accepted accounting
principle, Agreed Accounting Principles means the generally accepted accounting
principles applied in the preparation of the Valuation Date Balance Sheet;
provided further that, notwithstanding the foregoing, Agreed Accounting
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Principles shall include the accounting policies and be subject to the
allocation methodology and direct accounts described in Schedule 1.1; and
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provided further that, for purposes of the Agreed Accounting Principles, no
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known adjustments for items or matters, regardless of the amount thereof, shall
be deemed to be immaterial.
"Assumed Liabilities" has the meaning specified in Section 4.3.
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"Baxter" means Xxxxxx International Inc., a Delaware corporation.
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"Xxxxxx Japan" has the meaning specified in the first paragraph of
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this Agreement.
"Baxter Japan Change in Control" shall mean (i) the acquisition,
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directly or indirectly, by any Person or Persons of more than 30% of the voting
stock of Xxxxxx Japan or any Person that controls Xxxxxx Japan, other than an
acquisition by Baxter of, or a Person or Persons that are controlled by Baxter
of, Xxxxxx Japan, (ii) any merger or consolidation involving Baxter or any
Affiliate of Baxter that requires a vote of the stockholders of Baxter, or (iii)
the sale, assignment, transfer or other disposition (including any disposition
through a merger) of all or substantially all of the business and assets of any
Person that controls Xxxxxx Japan.
"Xxxxxx Japan Group Member" means Xxxxxx Japan and its Affiliates and
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their respective successors and assigns.
"Xxxxxx Japan Pension Plan" has the meaning specified in Section 10.4.
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"Closing" has the meaning specified in Section 5.2.
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"Closing Date" has the meaning specified in Section 5.2.
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"Closing Date Balance Sheet" means the balance sheet established
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pursuant to the provisions of Section 3.3.
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"Contracts" means all contracts, agreements, arrangements, leases
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(other than Real Estate Leases), manufacturers' warranties, memoranda,
understandings and offers open for acceptance of any nature, whether written or
oral.
"Divested Business" means any portion of the Japanese Xxxxxxx Business
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that is divested by Baxter Japan between the date hereof and the Closing Date.
"Xxxxxxx" means Xxxxxxx Lifesciences Corporation, a Delaware
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corporation.
"Xxxxxxx Division President" means any person appointed as President
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of the Xxxxxxx division of Baxter Japan and approved by Xxxxxxx.
"Xxxxxxx Employees" means the employees of Xxxxxx Japan who are
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assigned to the Xxxxxxx division of Xxxxxx Japan.
"Xxxxxxx Optionholder" has the meaning specified in the first
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paragraph of this Agreement.
"Xxxxxxx Optionholder Change in Control" shall mean (i) the
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acquisition, directly or indirectly, by any Person or Persons of more than 30%
of the voting stock of Xxxxxxx Optionholder or any Person that controls Xxxxxxx
Optionholder, other than an acquisition by Xxxxxxx of, or a Person or Persons
that are controlled by
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Xxxxxxx of, Xxxxxxx Optionholder, (ii) any merger or consolidation involving
Xxxxxxx or any Affiliate of Xxxxxxx that requires a vote of the stockholders of
Xxxxxxx, or (iii) the sale, assignment, transfer or other disposition (including
any disposition through a merger) of all or substantially all of the business
and assets of any Person that controls Xxxxxxx Optionholder.
"Xxxxxxx Optionholder Group Member" means Xxxxxxx Optionholder and its
---------------------------------
Affiliates and their respective successors and assigns.
"Xxxxxxx Products" means the products referred to in Exhibit A,
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together with any additional products manufactured, imported or distributed by
the Japanese Xxxxxxx Business after the date hereof.
"Encumbrance" means any lien, claim, charge, security interest,
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mortgage, pledge, easement, conditional sale or other title retention agreement,
defect in title, covenant or other restriction of any kind.
"Estimated Strike Price" shall mean an amount equal to (Yen) [23.2
----------------------
billion plus the (Yen) equivalent of $30MM].
"Excluded Assets" has the meaning specified in Section 4.2.
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"Excluded Liabilities" has the meaning specified in Section 4.4.
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"Exercise Period" shall mean the period during which the Option is
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exercisable, as specified in Section 2.2.
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"Expense" means any and all expenses incurred in connection with
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investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including, without
limitation, court filing fees, court costs, arbitration fees or costs, witness
fees, and reasonable fees and disbursements of legal counsel, investigators,
expert witnesses, consultants, accountants and other professionals).
"Final TK Balance Sheet" shall mean the balance sheet delivered by
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Xxxxxx Japan as part of its full accounting as of the date of expiration or
termination of the TK Agreement.
"Governmental Body" means any foreign, federal, state, local or other
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governmental authority or regulatory body.
"Governmental Permits" means all licenses, franchises, permits,
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privileges, immunities, approvals and other authorizations from a Governmental
Body.
"Indemnified Party" shall have the meaning specified in Section 12.4.
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"Indemnifying Party" shall have the meaning specified in Section 12.4.
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"Indemnity Payment" shall have the meaning specified in Section 12.5.
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"Instrument of Assignment" means an Instrument of Assignment in the
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form of Exhibit B.
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"Instrument of Assumption" means an Instrument of Assumption in the
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form of Exhibit C.
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"Insurance Amount" has the meaning specified in Section 11.4.
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"Insurance Charges" has the meaning specified in Section 11.7.
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"IV Business" means the business of importing and distributing
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Infusors, TDR solutions and sets, EIS infusion pumps, Interlink products,
Epidural trays [and Sabratek pumps].
"Japan Distribution Agreement" means the Japan Distribution Agreement
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dated as of [March 31, 2000] between Baxter Japan and Xxxxxxx Lifesciences LLC.
"Japanese Xxxxxxx Business" has the meaning specified in the first
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recital.
"Liability" means any and all debts, liabilities and obligations,
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absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising (unless otherwise
specified in this Agreement), including all costs and expenses relating thereto,
and including, without limitation, those debts, liabilities and obligations
arising under any law, rule, regulation, Action, threatened Action, order or
consent decree of any Governmental Body or any award of any arbitrator of any
kind, and those arising under any contract, commitment or undertaking.
"Loss" means any and all losses, costs, obligations, liabilities,
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settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.
"Net Worth Adjustment" means (i) the Closing Net Worth (as defined in
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Section 3.3) minus (ii) the Opening Net Worth (as defined in Section 3.2).
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"New Subsidiary" has the meaning specified in Section 2.4.
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"Notice of Exercise" has the meaning specified in Section 2.3.
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"Opening Balance Sheet" means the balance sheet established pursuant
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to the provisions of Section 3.2.
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"Operating Agreements" shall mean the agreements referred to in
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Section 7.3.
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"Option" has the meaning specified in Section 2.1.
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"Owned Real Property" means each parcel of real property owned by
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Xxxxxx Japan and used in or relating to the Japanese Xxxxxxx Business.
"Permitted Encumbrances" means (a) liens for taxes and other
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governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary
4
course of business for sums not yet due and payable and (c) other liens or
imperfections on property which are not material in amount or do not materially
detract from the value or materially impair the existing use of the property
affected by such lien or imperfection.
"Person" means any individual, corporation, partnership, joint
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venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or Governmental Body.
"Pre-Closing Claims Administration" has the meaning specified in
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Section 11.6.
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"Purchased Business" has the meaning specified in Section 4.1.
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"Real Estate Leases" has the meaning specified in Section 4.1(d).
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"Retained Business" means all businesses of Xxxxxx Japan other than
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the Japanese Xxxxxxx Business.
"Shared Agreements" has the meaning specified in Section 8.2(a).
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"Software" means computer software programs and software systems,
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including, without limitation, all databases, compilations, tool sets,
compilers, higher level or "proprietary" languages, related documentation and
materials, whether in source code, object code or human readable form.
"Strike Price" has the meaning specified in Section 3.1.
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"Subsidiary" means, when used with reference to any Person, any
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corporation or other organization whether incorporated or unincorporated of
which at least a majority of the securities or interests having by the terms
thereof ordinary voting power to elect at least a majority of the board of
directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such Person or by any one or more of its Subsidiaries, or by such Person and
one or more of its Subsidiaries; provided, however, that no Person that is not
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directly or indirectly wholly-owned by any other Person shall be a Subsidiary of
such other Person unless such other Person controls, or has the right, power or
ability to control, that Person.
"Tax" means any net income, alternative or add-on minimum, gross
---
income, gross receipts, consumption, property, sales, use, transfer, gains,
license, excise, employment, payroll, withholding or minimum tax, or any other
tax custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or any penalty, addition to tax or
additional amount imposed by any Governmental Body.
"TK Agreement" means a Tokumei Kumiai Agreement between Baxter Japan
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and Xxxxxxx Lifesciences Finance Limited, in substantially the form attached as
Exhibit E hereto.
"Transferred Employee" has the meaning specified in Section 10.1.
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"Valuation Date Balance Sheet" means the December 31, 1999 balance
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sheet of the Japanese Xxxxxxx Business attached as Exhibit D hereto.
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ARTICLE II
GRANT OF OPTION
2.1. Grant of Option. In consideration of the payment by Xxxxxxx Optionholder
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of (Yen) [equivalent of $12.34 MM] and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Xxxxxx Japan hereby grants and issues to Xxxxxxx Optionholder, upon the terms
and conditions set forth herein, an irrevocable option (the "Option") to
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purchase all, but not less than all, of the Purchased Business in exchange for
(i) cash in an amount equal to the Strike Price, and (ii) the assumption by
Xxxxxxx Optionholder of the Assumed Liabilities.
2.2. Exercise Period. The Option may be exercised at any time (i) from and
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including August 1, 2002 through and including the earlier of (x) March 31,
2005 and (y) 180 days after the occurrence of an Xxxxxxx Optionholder Change in
Control, (ii) in the event of a Xxxxxx Japan Change in Control, during a period
of 180 days thereafter, and (iii) in the event Xxxxxx Japan provides a notice of
termination under Article 12(4) of the TK Agreement, during a period of 180 days
after such notice is given; provided, however, that if Xxxxxxx provides a notice
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of termination under Article 12(1) of the TK Agreement, the Option may be
exercised only during a period of 180 days after such notice is given, and
clauses (i), (ii) and (iii) above shall no longer apply.
2.3. Manner of Exercise. Xxxxxxx Optionholder may exercise the Option at any
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time during the Exercise Period by delivering a written notice of exercise (the
"Notice of Exercise") to Xxxxxx Japan.
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2.4. Transfer of Purchased Business. Xxxxxxx Optionholder agrees that Xxxxxx
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Japan may, at its option, at any time prior to the [exercise of the Option]
[Closing Date], transfer all of the Purchased Business and Assumed Liabilities,
determined as of the date of transfer, to a subsidiary of Xxxxxx Japan (the "New
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Subsidiary"). If so, the parties will amend this Agreement to provide for
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Xxxxxxx Optionholder to have the option to purchase all of the capital stock of
the New Subsidiary in exchange for cash in an amount equal to the Strike Price,
and the remainder of this Agreement shall be amended to the extent necessary or
advisable as a result of such change in structure.
ARTICLE III
DETERMINATION OF STRIKE PRICE
3.1. Strike Price. (a) The "Strike Price" shall be an amount equal to (i)
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(Yen) [23.2 billion plus the (Yen) equivalent of $30MM] plus (ii) the Net Worth
Adjustment.
3.2. Opening Net Worth.
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(a) The term "Opening Net Worth" shall mean (i) the sum of all assets reflected
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in the Opening Balance Sheet minus (ii) the sum of all liabilities
reflected in the Opening Balance Sheet.
(b) As promptly as practicable following the date hereof, Xxxxxx Japan shall
prepare, in accordance with the Agreed Accounting Principles, a balance
sheet as of the date hereof with respect to the Purchased Business and the
Assumed Liabilities, as if the Closing Date were March 31, 2000 (the
"Preliminary Opening Balance Sheet"), and shall deliver same to Xxxxxxx
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Optionholder.
(c) Promptly following receipt of the Preliminary Opening Balance Sheet,
Xxxxxxx Optionholder may review the same and, within 30 days after the date
of such receipt, may deliver to Xxxxxx Japan a certificate (signed by its
chief financial officer or its chief accounting officer) setting forth its
objections to the Preliminary Opening Balance Sheet, together with a
summary of the reasons therefor and calculations which, in its view, are
necessary to eliminate such objections. In the event Xxxxxxx Optionholder
does not so object within such 30-day period, the Preliminary Opening
Balance Sheet shall be final and binding as the Opening Balance Sheet for
purposes of this Agreement.
(d) In the event Xxxxxxx Optionholder so objects within such 30-day period,
Xxxxxxx Optionholder and Xxxxxx Japan shall use their reasonable efforts to
resolve by written agreement (the "Opening Agreed Adjustments") any
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differences as to the Opening Balance Sheet and, in the event Xxxxxx Japan
and Xxxxxxx Optionholder so resolve all such differences, the Preliminary
Opening Balance Sheet, as adjusted by the Opening Agreed Adjustments, shall
be final and binding as the Opening Balance Sheet for purposes of this
Agreement.
(e) If all such differences are not resolved by Opening Agreed Adjustments
within the 30-day period next following such 30-day objection period, then
Xxxxxxx Optionholder and Xxxxxx Japan shall submit the objections that are
then unresolved to an international accounting firm acceptable to both
Xxxxxx Japan and Xxxxxxx Optionholder and such firm (the "Accounting Firm")
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shall be directed by Xxxxxxx Optionholder and Xxxxxx Japan to resolve the
unresolved objections (based solely on the presentations by Xxxxxxx
Optionholder and by Xxxxxx Japan as to whether any disputed matter had been
determined in a manner consistent with the Agreed Accounting Principles) as
promptly as reasonable practicable and to deliver written notice to each of
Xxxxxxx Optionholder and Xxxxxx Japan setting forth its resolution of the
disputed matters. The Preliminary Opening Balance Sheet, after giving
effect to any Opening Agreed Adjustments and to the resolution of disputed
matters by the Accounting Firm, shall be final and binding as the Opening
Balance Sheet for purposes of this Agreement.
3.3. Closing Date Net Worth .
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(a) The term "Closing Date Net Worth" shall mean (i) the sum of all assets
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reflected in the Closing Date Balance Sheet minus (ii) the sum of all
liabilities reflected in the Closing Date Balance Sheet.
(b) As promptly as practicable following the Closing Date (but not later than
30 days after the Closing Date), Xxxxxx Japan shall prepare, in accordance
with the Agreed
7
Accounting Principles, a balance sheet as of the Closing Date with respect
to the Purchased Business and the Assumed Liabilities (the "Preliminary
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Closing Date Balance Sheet") and shall deliver same to
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Xxxxxxx Optionholder.
(c) Promptly following receipt of the Preliminary Closing Date Balance Sheet,
Xxxxxxx Optionholder may review the same and, within 30 days after the date
of such receipt, may deliver to Xxxxxx Japan a certificate (signed by its
chief financial officer or its chief accounting officer) setting forth its
objections to the Preliminary Closing Date Balance Sheet, together with a
summary of the reasons therefor and calculations which, in its view, are
necessary to eliminate such objections. In the event Xxxxxxx Optionholder
does not so object within such 30-day period, the Preliminary Closing Date
Balance Sheet shall be final and binding as the Closing Date Balance Sheet
for purposes of this Agreement.
(d) In the event Xxxxxxx Optionholder so objects within such 30-day objection
period, Xxxxxxx Optionholder and Xxxxxx Japan shall use their reasonable
efforts to resolve by written agreement (the "Closing Agreed Adjustments")
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any differences as to the Preliminary Closing Date Balance Sheet and, in
the event Xxxxxx Japan and Xxxxxxx Optionholder so resolve all such
differences, the Preliminary Closing Date Balance Sheet as adjusted by the
Closing Agreed Adjustments shall be final and binding as the Closing Date
Balance Sheet for purposes of this Agreement.
(e) If all such differences are not resolved by the Closing Agreed Adjustments
within the 30-day period next following such 30-day period, then Xxxxxxx
Optionholder and Xxxxxx Japan shall submit the objections that are then
unresolved to the Accounting Firm and such firm shall be directed by
Xxxxxxx Optionholder and Xxxxxx Japan to resolve the unresolved objections
(based solely on the presentations by Xxxxxxx Optionholder and by Xxxxxx
Japan as to whether any disputed matter had been determined in a manner
consistent with the Agreed Accounting Principles) as promptly as reasonably
practicable and to deliver written notice to each of Xxxxxxx Optionholder
and Xxxxxx Japan setting forth its resolution of the disputed matters. The
Preliminary Closing Date Balance Sheet, after giving effect to any Closing
Agreed Adjustments and to the resolution of disputed matters by the
Accounting Firm, shall be final and binding as the Closing Date Balance
Sheet for purposes of this Agreement.
3.4. Access to Information. The parties hereto shall make available to each
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other and, if applicable, the Accounting Firm, such books, records and other
information (including work papers) as any of the foregoing may reasonably
request to prepare or review the Preliminary Opening Balance Sheet, the
Preliminary Closing Date Balance Sheet or any matters submitted to the
Accounting Firm pursuant to the terms hereof. The fees and expenses of the
Accounting Firm hereunder shall be paid 50% by Xxxxxxx Optionholder and 50% by
Xxxxxx Japan.
ARTICLE IV
PURCHASE AND SALE
4.1. Purchased Business. In the event that Xxxxxxx Optionholder exercises the
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Option, upon the terms and subject to the conditions of this Agreement, on the
Closing Date,
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Xxxxxx Japan shall sell, transfer, assign, convey and deliver to Xxxxxxx
Optionholder, and Xxxxxxx Optionholder shall purchase from Xxxxxx Japan, on a
going concern basis, all of Xxxxxx Japan's right, title and interest in and
under the Japanese Xxxxxxx Business and all of the assets and properties of
Xxxxxx Japan of every kind and description, wherever located, real, personal or
mixed, tangible or intangible, relating exclusively to the Japanese Xxxxxxx
Business as the same shall exist on the Closing Date (herein collectively called
the "Purchased Business"), including, without limitation, all right, title and
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interest of Xxxxxx Japan in, to and under:
(i) all notes, accounts and other receivables generated by the Japanese Xxxxxxx
Business;
(ii) all prepayments relating exclusively to the Japanese Xxxxxxx Business;
(iii) all raw materials, supplies, work-in-process, spare parts and other
materials relating exclusively to the Japanese Xxxxxxx Business, other than
items of inventory relating to products to be supplied by Xxxxxx Japan to
Xxxxxxx Optionholder after the Closing under Operating Agreements entered into
pursuant to Section 7.3;
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(iv) all Governmental Permits that relate exclusively to the Japanese Xxxxxxx
Business including those listed or described in Schedule 4.1(iv);
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(v) the real estate leases and leasehold improvements that relate exclusively
to the Japanese Xxxxxxx Business including those listed or described in
Schedule 4.1(v) (the "Real Estate Leases");
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(vi) all machinery, equipment, vehicles, furniture and other personal property
that relate exclusively to the Japanese Xxxxxxx Business including those
listed or described in Schedule 4.1(vi);
----------------
(vii) all Contracts that relate exclusively to the Japanese Xxxxxxx Business,
including the Japan Distribution Agreement and the Contracts listed or described
in Schedule 4.1(vii);
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(viii) all trade secrets and other proprietary or confidential information used
exclusively in connection with the Japanese Xxxxxxx Business;
(ix) all product registrations and import licenses that relate exclusively to
the Japanese Xxxxxxx Business including those listed or described in
Schedule 4.1(ix);
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(x) all (x) Software that relates exclusively to the Japanese Xxxxxxx Business,
(y) PC-based Software located on hardware included in the assets of the
Purchased Business and (z) any Contracts related to the aforementioned
Software;
(xi) all of Xxxxxx Japan's rights, claims or causes of action against third
parties relating exclusively to the Japanese Xxxxxxx Business;
9
(xii) all books and records (including all data and other information stored on
discs, tapes or other media) of Xxxxxx Japan relating exclusively to the
Japanese Xxxxxxx Business;
(xiii) all office supplies, production supplies, purchase orders, forms,
labels, shipping material, art work, catalogues, sales brochures, operating
manuals and advertising and promotional material and all other printed or
written material that relate exclusively to the Japanese Xxxxxxx Business;
(xiv) Xxxxxx Japan's interest in and to all telephone, telex and telephone
facsimile numbers, domain names and other directory listings utilized
exclusively in connection with the Japanese Xxxxxxx Business; and
(xv) all other assets, tangible or intangible, including all goodwill and all
deposits or other security from customers of the Japanese Xxxxxxx Business,
that are exclusive to the operations of, or otherwise relate exclusively
to, the Japanese Xxxxxxx Business.
4.2. Excluded Assets. Notwithstanding the provisions of Section 4.1, the
--------------- -----------
Purchased Business shall not include the following (herein referred to as the
"Excluded Assets"):
----------------
(i) all cash, bank deposits and cash equivalents, except for (i) all
deposits or other security from customers of the Japanese Xxxxxxx Business,
(ii) deposits securing bonds, letters of credit, leases and all other
obligations related to the Japanese Xxxxxxx Business and (iii) xxxxx cash
and impressed funds related to the Japanese Xxxxxxx Business;
(ii) the name "Xxxxxx" or any related or similar trade names, trademarks,
service marks or logos to the extent the same incorporate the name "Xxxxxx"
or any variation thereof;
(iii) Xxxxxx Japan's rights, claims or causes of action against third parties
relating to the Japanese Xxxxxxx Business which may arise in connection with the
discharge by Xxxxxx Japan of the Excluded Liabilities;
(iv) [all contracts of insurance;]
(v) all corporate minute books, stock transfer books, the corporate seal and
all xxxxx of Xxxxxx Japan;
-----
(vi) any right, title or interest of Xxxxxx Japan in any tax refund, credit or
benefit (including any income with respect thereto) relating to the
operations of the Japanese Xxxxxxx Business prior to the Closing Date;
(vii) all assets relating to all employee benefit plans of Xxxxxx Japan, other
than as provided in Article X;
---------
10
(viii) all real estate owned or leased by Xxxxxx Japan at its Miyazaki plant
and all leasehold improvements thereon except for those leasehold improvements
specifically listed or described in Schedule 4.1(v);
---------------
(ix) the IV Business; and
(x) All other assets, properties and rights of Xxxxxx Japan not used
exclusively in the conduct of the Japanese Xxxxxxx Business and not
specifically included in the Purchased Business.
4.3. Assumed Liabilities. On the Closing Date, Xxxxxxx Optionholder shall
-------------------
assume and agree to discharge, in accordance with their respective terms and
subject to the respective conditions thereof, all contractual and other
Liabilities of Xxxxxx Japan arising out of or related to the Japanese Xxxxxxx
Business, any Divested Business and/or any of the past or present facilities of
Xxxxxx Japan used primarily in connection with the Japanese Xxxxxxx Business or
any Divested Business, including, without limitation:
(i) All Liabilities in respect of Taxes except income Taxes;
(ii) All Liabilities of Xxxxxx Japan under the Contracts and Real Estate Leases
included in the Purchased Business;
(iii) All Liabilities of Xxxxxx Japan under the TK Agreement, other than
payment obligations under Articles 11 and 12 of the TK Agreement;
(iv) All warranty, performance and similar obligations entered into or made
prior to the Closing Date with respect to the products or services of the
Japanese Xxxxxxx Business;
(v) All Liabilities related to any and all Actions asserting a violation of any
law, rule or regulation related to or arising out of the operations of the
Japanese Xxxxxxx Business, whether before or after the Closing Date;
(vi) All Liabilities arising under any laws regarding the management, control
and clean-up of hazardous materials (including off-site waste disposal
liabilities) relating to or arising out of the operations of the Japanese
Xxxxxxx Business, whether before or after the Closing Date;
(vii) All Liabilities in connection with workers' compensation claims of past,
current or prospective employees of the Japanese Xxxxxxx Business, whether
incurred prior to, on or after the Closing Date;
(viii) All Liabilities relating to severance or termination of any Xxxxxxx
Employees whether before or after the Closing Date, and including any Xxxxxxx
Employees who do not accept employment by Xxxxxxx Optionholder at the Closing
Date;
11
(ix) All Liabilities associated with the transfer of assets from the Xxxxxx
Japan Pension Plan to the Xxxxxxx Japan Pension Plan; and
(x) All other Liabilities relating to the Japanese Xxxxxxx Business, whether
existing on the Closing Date or arising at any time or from time to time
after the Closing Date, and whether based on circumstances, events or
actions arising before or after the Closing Date, whether or not such
Liabilities shall have been disclosed herein, and whether or not reflected
on the books and records of Xxxxxx Japan.
All of the foregoing liabilities and obligations to be assumed by Xxxxxxx
Optionholder hereunder (excluding any Excluded Liabilities) are referred to
herein as the "Assumed Liabilities."
-------------------
4.4. Excluded Liabilities. Xxxxxxx Optionholder shall not assume or be
--------------------
obligated to pay, perform or otherwise discharge any Liability of Xxxxxx Japan
not expressly assumed by Xxxxxxx Optionholder pursuant to Section 4.3 (all such
-----------
liabilities and obligations not being assumed being herein called the "Excluded
--------
Liabilities") and, notwithstanding anything to the contrary in Section 4.3, none
----------- -----------
of the following shall be Assumed Liabilities for purposes of this Agreement:
(i) any Liabilities in respect of income Taxes; and
(ii) any Liabilities or obligations in respect of any Excluded Assets.
ARTICLE V
CLOSING; POST-CLOSING ADJUSTMENT
5.1. Conditions to Closing. (a) Following exercise of the Option, the
---------------------
obligation of Xxxxxx Japan to close the transactions contemplated hereby is
subject to the satisfaction or the waiver by Xxxxxx Japan of each of the
following conditions:
(i) The absence of any material statutory, regulatory or judicial prohibition
to the consummation of the transactions contemplated hereby; and
(ii) The completion of the transfer from Xxxxxx Japan to Xxxxxxx Optionholder of
all material Japanese import approvals and product registrations for the
Xxxxxxx Products or the receipt by Xxxxxx Japan of an agreement by Xxxxxxx,
in form and substance satisfactory to Xxxxxx Japan in its sole discretion,
to indemnify Xxxxxx Japan and its Affiliates for any failure to complete
such transfer.
(b) Following exercise of the Option, the obligation of Xxxxxxx Optionholder to
close the transactions contemplated hereby is subject to the satisfaction
or the waiver by Xxxxxxx Optionholder of each of the following conditions:
(i) The absence of any material statutory, regulatory or judicial prohibition
to the consummation of the transactions contemplated hereby; and
12
(ii) The completion of the transfer of all material Japanese import approvals
and product registrations for the Xxxxxxx Products from Xxxxxx Japan to
Xxxxxxx Optionholder.
5.2. Closing Date. The closing of the transactions contemplated by this
------------
Agreement (the "Closing") shall be consummated at __:00 A.M., local time, as
-------
soon as practicable after satisfaction or waiver of the conditions set forth in
Section 5.1(a) (ii) and 5.1(b)(ii), or at such other date and time as may be
------------------- ----------
agreed upon by Xxxxxxx Optionholder and Xxxxxx Japan, at the offices of
_________________, or at such other place or at such other time as shall be
agreed upon by Xxxxxxx Optionholder and Xxxxxx Japan. The time and date on
which the Closing is actually held are sometimes referred to herein as the
"Closing Date".
-------------
5.3. Xxxxxxx Optionholder's Deliveries at Closing. Subject to fulfillment or
---------------------------------------------
waiver by Xxxxxxx Optionholder of the conditions set forth in Section 5.1(b), at
--------------
Closing Xxxxxxx Optionholder shall (i) pay Xxxxxx Japan an amount equal to the
Estimated Strike Price by wire transfer of immediately available funds to the
account designated in writing by Xxxxxx Japan and (ii) deliver to Xxxxxx Japan a
duly executed Instrument of Assumption and duly executed counterparts of the
Operating Agreements.
5.4. Xxxxxx Japan's Deliveries at Closing. Subject to fulfillment or waiver by
------------------------------------
Xxxxxx Japan of the conditions set forth in Section 5.1(a), at Closing Xxxxxx
--------------
Japan shall deliver to Xxxxxxx Optionholder (i) a duly executed Instrument of
Assignment and duly executed counterparts of the Operating Agreements and (ii)
such other certificates and documents of title, assignment, transfer and
conveyance as the parties shall reasonably deem necessary to transfer title in
and to the Purchased Business.
5.5. Post Closing Adjustment. Promptly (but not later than five days) after
-----------------------
the Closing Date Balance Sheet becomes final and binding pursuant to Section
-------
3.3:
---
(a) if the Strike Price exceeds the Estimated Strike Price, Xxxxxxx
Optionholder shall pay to Xxxxxx Japan, by wire transfer of immediately
available funds to such bank account of Xxxxxx Japan as Xxxxxx Japan shall
designate in writing to Xxxxxxx Optionholder, the amount of such excess,
plus interest on such amount from the Closing Date to the date of payment
thereof at [interest rate to come from Xxxx Xxxxxxx]; or
(b) if the Estimated Strike Price exceeds the Strike Price, Xxxxxx Japan shall
pay to Xxxxxxx Optionholder, by wire transfer of immediately available
funds to such bank account of Xxxxxxx Optionholder as Xxxxxxx Optionholder
shall designate in writing to Xxxxxx Japan, the amount of such excess, plus
interest on such excess from the Closing Date to the date of payment
thereof at [interest rate to come from Xxxx Xxxxxxx].
5.6. Non-Assignable Contracts. In the event and to the extent that the parties
------------------------
are unable to obtain any consent, approval or amendment to any Contract, lease,
license or other rights relating to the Japanese Xxxxxxx Business that otherwise
would be transferred or assigned to Xxxxxxx Optionholder or one of its
Subsidiaries as contemplated by this Agreement or any
13
other agreement or document contemplated hereby, (i) Xxxxxx Japan shall continue
to be bound thereby and the purported transfer or assignment to Xxxxxxx
Optionholder shall automatically be deemed deferred until such time as all legal
impediments are removed and/or all necessary consents have been obtained, and
(ii) unless not permitted by the terms thereof or by law, Xxxxxxx Optionholder
shall pay, perform and discharge fully all the obligations of Xxxxxx Japan
thereunder from and after the Closing Date, or such earlier date as such
transfer or assignment otherwise would have taken place, and indemnify Xxxxxx
Japan and its Affiliates for all indemnifiable Losses arising out of such
performance by Xxxxxxx Optionholder. Xxxxxx Japan shall, without further
consideration therefor, pay and remit to Xxxxxxx Optionholder promptly all
monies, rights and other considerations received in respect of such performance.
Xxxxxx Japan shall exercise or exploit its rights and options under all such
Contracts, leases, licenses and other rights and commitments referred to in this
Section 5.6 only as reasonably directed by Xxxxxxx Optionholder and at Xxxxxxx
-----------
Optionholder's expense. If and when any such consent shall be obtained or such
Contract, lease, license or other right shall otherwise become assignable or be
able to be novated, Xxxxxx Japan shall promptly assign and novate (to the extent
permissible) all of its rights and obligations thereunder to Xxxxxxx
Optionholder without payment of further consideration, and Xxxxxxx Optionholder
shall, without the payment of any further consideration therefor, assume such
rights and obligations. To the extent that the assignment of any Contract,
lease, license or other right (or the proceeds thereof) pursuant to this Section
-------
5.6 is prohibited by law, the assignment provisions of this Section 5.6 shall
--- -----------
operate to create a subcontract with Xxxxxxx Optionholder to perform each
relevant unassignable Contract, lease or license of Xxxxxx Japan at a
subcontract price equal to the monies, rights and other considerations received
by Xxxxxx Japan with respect to the performance by Xxxxxxx Optionholder under
such subcontract.
5.7. Further Assurances. (a) In addition to the actions specifically provided
------------------
for elsewhere in this Agreement, each of the parties shall use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable laws, regulations and agreements to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement and the other agreements and documents contemplated hereby. Without
limiting the generality of the foregoing, each party shall cooperate with the
other party to execute and deliver, or use commercially reasonable efforts to
cause to be executed and delivered, all instruments, including instruments of
conveyance, assignment and transfer, and to make all filings with, and to obtain
all consents, approvals or authorizations of, any Governmental Body or any other
Person under any permit, license, Contract or other instrument, and to take all
such other actions as such party may reasonably be requested to take by the
other party from time to time, consistent with the terms of this Agreement, in
order to confirm the title of Xxxxxxx Optionholder to all of the Japanese
Xxxxxxx Business, to put Xxxxxxx Optionholder in actual possession and operating
control of the Purchased Business and to permit Xxxxxxx Optionholder to exercise
all rights with respect thereto and to effectuate the provisions and purposes of
this Agreement, and the other agreements and documents contemplated hereby;
provided, however, that Xxxxxxx Optionholder shall be solely liable for the
-------- -------
payment of any costs associated with transferring any import approvals and
product registrations for the Xxxxxxx Products; and provided further, that
-------- -------
except as stated in the previous proviso, neither party shall be obligated to
pay any consideration to any third party in connection with any of the
foregoing. In addition, Xxxxxx Japan shall use reasonable efforts to remove or
cause to be removed any liens for borrowed money existing on the Purchased
Business immediately prior to the Closing Date other
14
than liens securing Assumed Liabilities or liens incurred in connection with the
transactions contemplated by this Agreement.
(b) If, as a result of mistake, oversight or otherwise, any asset reasonably
necessary to the conduct of the Japanese Xxxxxxx Business is not
transferred to Xxxxxxx Optionholder, or any asset reasonably necessary to
the conduct of the Retained Business is transferred to Xxxxxxx
Optionholder, Xxxxxxx Optionholder and Xxxxxx Japan shall negotiate in good
faith after the Closing Date to determine whether such asset should be
transferred to Xxxxxxx Optionholder or Xxxxxx Japan, as the case may be,
and/or the terms and conditions upon which such asset shall be made
available to Xxxxxxx Optionholder or Xxxxxx Japan, as the case may be.
Unless expressly provided to the contrary in this Agreement and the other
agreements and documents contemplated hereby, if as a result of mistake,
oversight or otherwise, any Liability arising out of or relating to the
Japanese Xxxxxxx Business is retained by Xxxxxx Japan, or any Liability
arising out of or relating to the Retained Business is assumed by Xxxxxxx
Optionholder, Xxxxxxx Optionholder and Xxxxxx Japan shall negotiate in good
faith after the Closing Date to determine whether such Liability should be
transferred to Xxxxxxx Optionholder or Xxxxxx Japan, as the case may be,
and/or the terms and conditions upon which any such Liability shall be
transferred.
(c) If either party identifies any commercial or other service that is needed
to assure a smooth and orderly transition of the Japanese Xxxxxxx Business
in connection with the consummation of the transactions contemplated
hereby, and that is not otherwise governed by the provisions of this
Agreement or the Operating Agreements, the parties will cooperate in
determining whether there is a mutually acceptable arm's-length basis on
which one party will provide such service to the other party.
5.8. Novation of Assumed Liabilities. (a) It is expressly understood and
-------------------------------
agreed to by the parties that upon the assumption by Xxxxxxx Optionholder of the
Assumed Liabilities, Xxxxxx Japan and its officers, directors, and employees
shall be released unconditionally by Xxxxxxx Optionholder from any and all
Liability, whether joint, several or joint and several, for the discharge,
performance or observance of any of the Assumed Liabilities, so that Xxxxxxx
Optionholder will be solely responsible for such Assumed Liabilities.
(b) Xxxxxxx Optionholder shall, at the request of Xxxxxx Japan, use
commercially reasonable efforts to obtain, or cause to be obtained, any
consent, approval, release, substitution or amendment required to novate
(including with respect to any government contract) or assume all
obligations under the Assumed Liabilities, or to obtain in writing the
unconditional release of all parties to such arrangements other than
Xxxxxxx Optionholder and its Affiliates; provided, however, that Xxxxxxx
-------- -------
Optionholder shall not be obligated to pay any consideration therefor to
any third party from whom such consents, approvals, releases, substitutions
or amendments are requested.
(c) In the event that the Parties are unable to obtain a novation or assignment
and release with respect to a particular Contract included in the Purchased
Business, at the expiration of the base term of such Contract, Xxxxxxx
Optionholder agrees that it will not exercise any option to renew such
Contract or, to the extent such Contract provides for automatic renewal,
Xxxxxxx Optionholder agrees that it will not allow such Contract to enter
an auto-
15
renewal period unless Xxxxxxx Optionholder obtains the prior written
consent of Xxxxxx Japan to such extension or auto-renewal.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Organization, Good Standing and Authority of Xxxxxx Japan. Xxxxxx Japan
---------------------------------------------------------
hereby represents and warrants to Xxxxxxx Optionholder as follows: Xxxxxx Japan
is a corporation duly organized and validly existing and in good standing under
the laws of Japan. Xxxxxx Japan has full power and authority to execute, deliver
and perform this Agreement. The execution, delivery and performance of this
Agreement by Xxxxxx Japan have been duly authorized and approved by Xxxxxx
Japan's board of directors and stockholders. This Agreement has been duly
authorized, executed and delivered by Xxxxxx Japan.
6.2. Organization, Good Standing and Authority of Xxxxxxx Optionholder.
-----------------------------------------------------------------
Xxxxxxx Optionholder represents and warrants to Xxxxxx Japan as follows: Xxxxxxx
Optionholder is a corporation duly organized and validly existing under the laws
of Japan. Xxxxxxx Optionholder has full power and authority to execute, deliver
and perform this Agreement. The execution, delivery and performance of this
Agreement by Xxxxxxx Optionholder has been duly authorized and approved by
Xxxxxxx Optionholder's board of directors and do not require the further
authorization or consent of Xxxxxxx Optionholder or its stockholder. This
Agreement has been duly authorized, executed and delivered by Xxxxxxx
Optionholder.
6.3. No Other Representations or Warranties. Xxxxxx Japan does not represent
--------------------------------------
or warrant in any way (i) as to the value or freedom from encumbrance of, or any
other matter concerning, any of the Purchased Business or (ii) as to the legal
sufficiency to convey title to any part of the Purchased Business on the
execution, delivery and filing of the Instrument of Assignment. ALL ASSETS
INCLUDED IN THE PURCHASED BUSINESS ARE BEING TRANSFERRED ON AN "AS IS, WHERE IS"
BASIS WITHOUT ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR ANY
OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, and Xxxxxxx Optionholder
shall bear the economic and legal risks that any conveyances of such assets
shall prove to be insufficient or that Xxxxxxx Optionholder's title to any such
assets shall be other than good and marketable and free of encumbrances. Xxxxxx
Japan does not make any representation or warranty with respect to whether the
consents, approvals, or filings and applications obtained or made prior to
consummation of the transactions contemplated by this Agreement shall satisfy
the provisions of all applicable agreements or the requirements of all
applicable laws or judgments, and, subject to Section 5.6, Xxxxxxx Optionholder
-----------
shall bear the economic and legal risk that any necessary consents or approvals
are not obtained or that any requirements of law or judgments are not complied
with.
16
ARTICLE VII
PRE-CLOSING COVENANTS
7.1. Operation of Japanese Xxxxxxx Business. (a) Until either (i) the Closing
---------------------------------------
Date (if the Option is exercised) or (ii) the end of the Exercise Period (if the
Option is not exercised), Xxxxxx Japan shall operate and carry on the Japanese
Xxxxxxx Business (pursuant to the terms of the TK Agreement (if applicable))
only in the ordinary course and substantially as presently operated and shall
not, without the express written approval of Xxxxxxx Optionholder:
(i) change the primary line of business of the Japanese Xxxxxxx Business; or
(ii) sell, lease (as lessor), transfer or otherwise dispose of, or mortgage or
pledge, any of the assets of the Japanese Xxxxxxx Business that, upon
exercise of the Option, would constitute part of the Purchased Business
(including, without limitation, Xxxxxx Japan's rights under the
Distribution Agreement), other than accounts receivable, inventory and
other property sold or otherwise disposed of for fair value in the ordinary
course of the Japanese Xxxxxxx Business consistent with past practice;
provided, however, that this clause (ii) shall not apply to any transfer of
all of the assets of the Japanese Xxxxxxx Business to an Affiliate of
Xxxxxx Japan in which case all of such transferred assets shall remain
subject to the Option.
(b) If the Option is exercised, then from and after the date it receives the
Notice of Exercise through and including the Closing Date, Xxxxxx Japan
shall not, without the approval of the Xxxxxxx Division President:
(i) make any change in the Japanese Xxxxxxx Business or its operations or make
any capital expenditure in respect of the Japanese Xxxxxxx Business which
shall exceed the amount budgeted therefor;
(ii) enter into any contract for the purchase or sale of real property that
would be included in the Purchased Business or exercise any option to
extend a Real Estate Lease;
(iii) sell, lease (as lessor), transfer or otherwise dispose of (other than to
an Affiliate of Xxxxxx Japan), or mortgage or pledge, or impose or suffer to be
imposed any lien, charge, security interest, mortgage, pledge or other defect in
title on, any part of the Purchased Business, other than accounts receivable,
inventory and minor amounts of personal property sold or otherwise disposed of
for fair value in the ordinary course of the Japanese Xxxxxxx Business
consistent with past practice and other than Permitted Encumbrances;
(iv) cancel any debts owed to or claims held by Japanese Xxxxxxx Business
(including the settlement of any claims or litigation) other than in the
ordinary course of the Japanese Xxxxxxx Business consistent with past
practice;
(v) create, incur or assume, or agree to create, incur or assume, any
indebtedness for borrowed money in respect of the Japanese Xxxxxxx Business
or enter into, as lessee, any capitalized lease obligations (as defined in
Statement of Financial
17
Accounting Standards No. 13);
(vi) accelerate or delay collection of any notes or accounts receivable
generated by the Japanese Xxxxxxx Business in advance of or beyond their
regular due dates or the dates when the same would have been collected in
the ordinary course of the Japanese Xxxxxxx Business consistent with past
practice;
(vii) delay or accelerate payment of any account payable or other liability of
the Japanese Xxxxxxx Business beyond or in advance of its due date or the date
when such liability would have been paid in the ordinary course of the Japanese
Xxxxxxx Business consistent with past practice;
(viii) allow the levels of raw materials, supplies, work-in-process or other
materials included in the inventory of the Japanese Xxxxxxx Business to vary in
any material respect from the levels customarily maintained;
(ix) institute any increase in any profit-sharing, bonus, incentive, deferred
compensation, insurance, pension, retirement, medical, hospital,
disability, welfare or other employee benefit plan with respect to
employees of the Japanese Xxxxxxx Business; or
(x) make any change in the compensation of the employees of the Japanese
Xxxxxxx Business other than changes made in accordance with normal
compensation practices and consistent with past compensation practices.
7.2. Consents of Third Parties; Governmental Approvals. (a) If the Option is
-------------------------------------------------
exercised, Xxxxxx Japan and Xxxxxxx Optionholder will act diligently and
reasonably to secure the consent, approval or waiver of any third party that is
reasonably required for the consummation of transactions contemplated by this
Agreement; provided, however, that Xxxxxxx Optionholder shall be solely liable
-------- -------
for the payment of any costs associated with transferring any import approvals
and product registrations for the Xxxxxxx Products; and provided further, that
-------- -------
except as stated in the previous proviso, neither party shall have any
obligation to offer or pay any consideration in order to obtain any such
consents or approvals; and provided further, that Xxxxxx Japan shall not make
-------- -------
any agreement or understanding affecting the Purchased Business or the Japanese
Xxxxxxx Business as a condition for obtaining any such consents or waivers
except with the prior written consent of Xxxxxxx Optionholder.
(b) If the Option is exercised, Xxxxxx Japan and Xxxxxxx Optionholder shall act
diligently and reasonably, and shall cooperate with each other, to secure
any consents and approvals of any Governmental Body required to be obtained
by them in order to assign or transfer any Governmental Permits to Xxxxxxx
Optionholder or to permit the consummation of the transactions contemplated
by this Agreement; provided that Xxxxxx Japan shall not make any agreement
--------
or understanding affecting the Purchased Business or the Japanese Xxxxxxx
Business as a condition for obtaining any such consents or approvals except
with the prior written consent of Xxxxxxx Optionholder.
7.3. Services. If the Option is exercised, Xxxxxxx Optionholder and Xxxxxx
--------
Japan will work together to identify any services (including those relating to
occupation and use
18
of facilities) that are needed to assure a smooth and orderly transition of the
Japanese Xxxxxxx Business and, to the extent practicable, negotiate and prepare
mutually acceptable agreements to govern the provision of such services after
the Closing Date (the "Operating Agreements"). Schedule 7.3 sets forth a
-------------------- ------------
non-exclusive list of services and facilities for which Operating Agreements may
be required.
7.4. Financial Statements. Until either (i) the Closing Date (if the Option is
--------------------
exercised) or (ii) the end of the Exercise Period (if the Option is not
exercised), Xxxxxx Japan will deliver to Xxxxxxx Optionholder, within 25 days
after the end of each fiscal quarter, an unaudited balance sheet, income
statement with respect to the Japanese Xxxxxxx Business, all prepared in
accordance with the Agreed Accounting Principles.
ARTICLE VIII
POST-CLOSING COVENANTS
The following covenants shall apply from and after the Closing Date:
8.1. Collection of Accounts Receivable.
---------------------------------
(a) Xxxxxx Japan shall be entitled to control all collection actions related to
the Retained Business, including the determination of what actions are
necessary or appropriate and when and how to take any such action.
(b) CVG and its Subsidiaries shall be entitled to control all collection
actions related to the Purchased Business, including the determination of
what actions are necessary or appropriate and when and how to take any such
action.
(c) If, after the Closing Date, Xxxxxxx Optionholder or any of its Affiliates
shall receive any remittance from any account debtors with respect to the
accounts receivable arising out of the Retained Business or other amounts
due Xxxxxx Japan in respect of services rendered or products sold by Xxxxxx
Japan after the Closing Date, or Xxxxxx Japan or any of its Affiliates
shall receive any remittance from any account debtors with respect to the
accounts receivable arising out of the Purchased Business or other amounts
due Xxxxxxx Optionholder or its Affiliates in respect of services rendered
or products sold by Xxxxxxx Optionholder or its Affiliates after the
Closing Date, such party shall receive and deposit such remittance and
deliver cash in an amount equal thereto to the other party as soon as
practicable. In the absence of any designation of the specific invoice
being paid by a customer thereby, payments from account debtors shall be
applied to the earliest invoice outstanding with respect to indebtedness of
such account debtor owing to either Xxxxxxx Optionholder or Xxxxxx Japan.
(d) Each party shall deliver to the other such schedules and other information
with respect to the accounts receivable included in the Purchased Business
and those not included therein as each shall reasonably request from time
to time in order to permit such parties to reconcile their respective
records and to monitor the collection of all accounts receivable (whether
or not included in the Purchased Business). Each party shall afford the
other reasonable access to its books and records relating to any accounts
receivable.
19
8.2. Agreements Relating to Xxxxxxx Optionholder and Xxxxxx Japan. (a) Each
------------------------------------------------------------
of Xxxxxxx Optionholder and Xxxxxx Japan shall use commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things, reasonably necessary, proper or advisable under applicable
laws, regulations and agreements to consummate, make effective and perform its
or its Subsidiaries' allocable portion of all purchase, distribution and other
obligations under all Contracts with customers, suppliers, vendors or other
third parties relating to both the Japanese Xxxxxxx Business and the Retained
Business (the "Shared Agreements"). Each of Xxxxxx Japan and Xxxxxxx
-----------------
Optionholder shall be entitled to the rights and privileges of its allocable
portion of the Shared Agreements.
(b) Each of Xxxxxxx Optionholder and Xxxxxx Japan shall use commercially
reasonable efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws, regulations and agreements to afford the rights and
privileges of the allocable portion of the Shared Agreements to the other.
(c) Liabilities pursuant to, arising under or relating to a Shared Agreements
shall be allocated between Xxxxxx Japan, on the one hand, and Xxxxxxx
Optionholder on the other hand, as follows:
(i) First, if a Liability is incurred exclusively in respect of a benefit
received by one party, the party receiving such benefit shall be
responsible for such Liability; and
(ii) Second, if a Liability cannot be so allocated under clause (i), such
Liability shall be allocated between the parties based on the relative
proportions of total benefit received (based upon the performance under
such Shared Agreement during the twelve-month period immediately prior to
the Closing Date) under the relevant Shared Agreement. Notwithstanding the
foregoing, each party shall be responsible for any and all Liabilities
arising out of or resulting from its breach of the relevant Shared
Agreement.
(d) If either Xxxxxx Japan, on the one hand, or Xxxxxxx Optionholder, on the
other hand, improperly receives any benefit or payment under any Shared
Agreement that was intended for the other, the party receiving such benefit
or payment will use commercially reasonable efforts to deliver, transfer or
otherwise afford such benefit or payment to the other party.
8.3. Informal, Nondocumented Real Estate Leases. Each party may continue to
------------------------------------------
occupy, from and after the Closing Date, such space in the facilities of the
other party as is occupied immediately prior to the Closing Date, or such other
space therein as may be mutually agreed to from time to time by Xxxxxxx
Optionholder and Xxxxxx Japan, and which occupancy is otherwise not documented
by any written leasing agreement or otherwise provided for in the Operating
Agreements, on the following terms and conditions:
(a) The occupying party shall pay to the other party rent with respect to such
occupied space for the period from and after the Closing Date during which
such space is so
20
occupied, which rent shall be determined by the other party on the same
basis on which the other party allocates rent with respect to the occupancy
of space by business units of the other party or as the occupying party
presently is paying, whichever is lower. Such rent shall be payable from
time to time by the occupying party (but not more frequently than monthly)
promptly following delivery by the other party to the occupying party of a
statement therefor.
(b) The occupying party may, at any time, upon not less than 15 days' prior
written notice to Xxxxxx'x Director of Corporate Real Estate, with a copy
to Xxxxxxx, terminate its occupancy of any or all of such space.
(c) The other party may, at any time, upon not less than 30 days' prior written
notice to the occupying party, require the occupying party to cease
occupancy of any or all of such space as designated in a notice sent to the
occupying party.
ARTICLE IX
[INTENTIONALLY OMITTED]
ARTICLE X
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
10.1. Employment of Xxxxxxx Employees. On the Closing Date, Xxxxxxx
--------------------------------
Optionholder shall make an offer to employ each Xxxxxxx Employee at the same
salary and wage rate levels (including bonus programs) paid by Xxxxxx Japan as
in effect on the Closing Date; provided, however, that Xxxxxxx Optionholder and
-------- -------
its Affiliates retain the right to determine the compensation of all such
Xxxxxxx Employees after the Closing Date. Xxxxxxx Optionholder and Xxxxxx Japan
shall use commercially reasonable efforts to accomplish any transfers of
employment required by this Section 10.1 in a timely manner. Each Xxxxxxx
------------
Employee who accepts this offer of employment is referred to as a "Transferred
-----------
Employee".
--------
10.2. Terminations/Layoff/Severance. Xxxxxxx Employees shall not be eligible
-----------------------------
for any severance benefits from Xxxxxx Japan as a result of either their
employment by Xxxxxxx Optionholder or its Affiliates or any subsequent
termination of employment with Xxxxxxx Optionholder or its Affiliates.
10.3. Employee Benefit Plans. (a) Except as otherwise specifically provided
----------------------
in this Article X, all Transferred Employees shall cease to participate in the
---------
Xxxxxx Japan employee benefit plans and programs (the "Xxxxxx Plans") as of the
------------
Closing Date.
(b) No later than the Closing Date, Xxxxxxx Optionholder and/or its Affiliates
shall establish its own employee benefit plans and programs for the benefit
of eligible Transferred Employees including, but not limited to, a pension
plan (the "Xxxxxxx Japan Pension Plan"), [a savings plan (the "Xxxxxxx
Japan Savings Plan"),] a medical plan (including dental and vision), a
long-term disability plan, a group life insurance plan, an overseas travel
insurance plan, and a housing loan subsidy program (collectively, the
"Xxxxxxx Welfare Plans"). Additionally, Xxxxxxx Optionholder shall
----------------------
continue to contribute to the ["Kosei Nenkin" Old Age Employees' Pension
Plan] on behalf of Transferred Employees.
21
Notwithstanding the foregoing, Xxxxxxx Optionholder shall not contribute on
behalf of the Transferred Employees to the multiemployer fund entitled the
[Employee Pension Fund].
10.4. Transfer of Account Balances and Accrued Benefits. Subject to applicable
-------------------------------------------------
law and the provisions of the [Xxxxxx Tax Qualified Pension Plan] (the "Xxxxxx
------
Japan Pension Plan"), as soon as administratively practicable following the
------------------
Closing Date, or effective as of any other date as agreed to in writing by the
plan administrator for the Xxxxxx Japan Pension Plan and the plan administrator
for the Xxxxxxx Japan Pension Plan, the accrued benefits (the "Transferred
-----------
Accrued Benefits") of all Xxxxxx Japan Pension Plan participants who are
----------------
Transferred Employees shall be transferred from the Xxxxxx Japan Pension Plan to
[the Xxxxxxx Japan Pension Plan] (the "Xxxxxxx Japan Pension Plan"). The amount
--------------------------
of Transferred Accrued Benefits shall be determined by the actuaries for the
respective plans by the Closing Date in accordance with the methodology
described in Schedule 10.4. Each Transferred Employee shall receive credit for
-------------
all purposes under the Xxxxxxx Japan Pension Plan for the periods of service
with Xxxxxx Japan or any of its Subsidiaries or Affiliates. The plan
administrator for the Xxxxxxx Japan Pension Plan shall take any other action
reasonably requested by the plan administrator for the Xxxxxx Japan Pension Plan
that is necessary or advisable, in the opinion of the plan administrator for the
Xxxxxx Pension Plan, to maintain the tax-qualified status of the Xxxxxx Japan
Pension Plan or to avoid the imposition of any penalties with respect to such
plan.
10.5. Welfare Benefits.
----------------
(a) Each Transferred Employee who becomes eligible to participate in the
Xxxxxxx Welfare Plans shall be credited under such plans with periods of
service with any Xxxxxx Japan Group Member for all purposes under such
plans.
(b) Xxxxxx Japan shall pay all costs associated with the provision of
disability benefits to any Xxxxxxx Employee or former Xxxxxxx Employee who
as of the Closing Date is totally and permanently disabled. Xxxxxxx
Optionholder shall pay all costs associated with the provision of
disability benefits to any Xxxxxxx Employee or former Xxxxxxx Employee
other than the persons described in the first sentence of this Section
10.5(b) in an amount equal to the benefits such persons would have received
if they had remained covered under the Xxxxxx Plans during the period of
such disability leave. Notwithstanding the foregoing, any Transferred
Employee receiving benefits under the [Xxxxxx Japan Long-Term Disability
Plan] on the Closing Date shall continue to receive benefits under the
terms of such plan and the insurance contract used to fund such plan, and
Xxxxxxx Optionholder shall not be charged for the payment of such benefits.
[As of the Closing Date, Xxxxxxx Optionholder shall assume all Liabilities
determined under FAS 112 relating to all Xxxxxxx Employees.]
(c) Xxxxxx Japan shall pay all claims under the [Xxxxxx Japan Medical Plan]
(including dental and vision benefits) relating to Transferred Employees
that as of the Closing Date have been incurred but not paid, but only if
claims for such costs are submitted in written form to the authorized
agents of Xxxxxx Japan during the six-month period beginning on the Closing
Date.
22
10.6. Stock Purchase Plans. Except as otherwise provided in the Xxxxxx Stock
--------------------
Purchase Plan, on the Closing Date, all Transferred Employees shall cease to be
eligible to purchase Xxxxxx Common Stock under the terms of the Xxxxxx
International Inc. Employees Stock Purchase Plan for International Employees
(the "Xxxxxx Stock Purchase Plan").
--------------------------
10.7. Workers' Compensation. As soon as administratively practicable following
---------------------
the Closing Date, a risk management representative for each of the parties shall
agree upon the allocation between the parties of responsibility and liability
for workers' compensation claims and expenses relating to current and former
Xxxxxxx Employees.
10.8. Vacation Pay Policy. After the Closing Date, it is expected that Xxxxxxx
-------------------
Optionholder shall maintain for its employees a vacation pay policy, and Xxxxxxx
Optionholder shall be responsible for costs incurred to provide vacation pay to
Transferred Employees following such date. Xxxxxxx Optionholder shall assume
any and all Xxxxxx Japan Liabilities to provide to Transferred Employees
vacation that such persons accrued under the Xxxxxx Japan vacation pay policy as
of the Closing Date, and no payment of such accrued vacation pay shall be made
by Xxxxxx Japan on the Closing Date.
10.9. Information to be Provided to Xxxxxx Japan. Xxxxxxx Optionholder (or its
------------------------------------------
applicable Affiliate) shall provide any information that Xxxxxx Japan may
reasonably request, including information relating to dates of termination of
employment, in order to provide benefits to any eligible Transferred Employee
under the terms and conditions described herein or under the applicable Xxxxxx
Plans. Any information relating to an employee's termination of employment
shall be provided by Xxxxxxx Optionholder to Xxxxxx Japan as soon as available
to Xxxxxxx Optionholder or any of its Affiliates, but in any event no later than
30 days after such information is made available to Xxxxxxx Optionholder or any
such Affiliates.
10.10. Transfer of Employee Files. By a specified date as agreed upon by
--------------------------
Xxxxxxx Optionholder and Xxxxxx Japan following the Closing Date, Xxxxxx Japan
shall transfer to Xxxxxxx Optionholder complete copies of the personnel files
relating to all Transferred Employees.
10.11. Employment Solicitation. During the period beginning on the Closing
-----------------------
Date and ending one year after the Closing Date, neither Xxxxxx Japan nor
Xxxxxxx Optionholder shall, nor shall they permit any of their respective
Subsidiaries, Affiliates or agents to, directly or indirectly, except as
provided in the following sentence, actively solicit or recruit for employment
any then current employee of the other or of any of the other's Subsidiaries.
Nothing contained in this Section 10.11 shall (i) prohibit the hiring of any
-------------
employee who in good faith is believed to be actively seeking employment on his
or her own initiative without prior contact initiated by any employee or agent
of the company where employment is sought, or any of such company's Affiliates;
provided, however, that such employee or the hiring company has obtained
authorization from the Department Manager of Human Resources of his or her
current employer; or (ii) prohibit Xxxxxx Japan or Xxxxxxx Optionholder or any
of their respective Subsidiaries from hiring any person who has terminated
employment with the other company. The foregoing restriction shall cease to
apply one year after the Closing Date.
23
ARTICLE XI
INSURANCE MATTERS
11.1. Insurance Prior to the Closing Date. Xxxxxxx Optionholder does hereby
-----------------------------------
agree that Xxxxxx Japan shall not have any Liability whatsoever as a result of
the insurance policies and practices of Xxxxxx Japan in effect at any time prior
to the Closing Date, including any assistance rendered to Xxxxxxx Optionholder
by Xxxxxx Japan in the placement of its insurance program, including as a result
of the level or scope of any such insurance, the creditworthiness of any
insurance carrier, the terms and conditions of any policy and the adequacy or
timeliness of any notice to any insurance carrier with respect to any claim or
potential claim or otherwise.
11.2. Ownership of Existing Policies and Programs. Xxxxxx Japan shall continue
-------------------------------------------
to own all property, casualty and liability insurance policies and programs,
including primary and excess general liability, errors and omissions,
automobile, workers' compensation, property, fire, crime, surety and other
similar insurance policies, in effect on or before the Closing Date
(collectively, the "Xxxxxx Japan Policies" and individually, a "Xxxxxx Japan
---------------------- -------------
Policy"). [Xxxxxx Japan shall use commercially reasonable efforts to maintain
------
commercially reasonable insurance coverage in full force and effect up to and
including the Closing Date, and, subject to the provisions of this Agreement,
Xxxxxx Japan shall retain all of its rights, benefits and privileges, if any,
under the Xxxxxx Japan Policies.] Nothing contained herein shall be construed
to be an attempt to assign or to change the ownership of the Xxxxxx Japan
Policies.
11.3. Procurement of Insurance for Xxxxxxx Optionholder. To the extent not
-------------------------------------------------
already provided for by the terms of the Xxxxxx Japan Policies, Xxxxxx Japan
shall use commercially reasonable efforts to cause Xxxxxxx Optionholder [and its
Affiliates] to be named as additional insureds under Xxxxxx Japan Policies whose
effective policy periods include the Closing Date, in respect of claims for
which coverage is available under the terms and conditions of Xxxxxx'x policies,
arising out of or relating to periods prior to the Closing Date; provided,
--------
however, that nothing contained herein shall be construed to require Xxxxxx
-------
Japan to pay any additional premium or other charges in respect to, or waive or
otherwise limit any of its rights, benefits or privileges under, any Xxxxxx
Japan Policy in order to effect the naming of Xxxxxxx Optionholder [or its
Affiliates] as such additional insureds.
11.4. Acquisition and Maintenance of Post-Closing Xxxxxxx Optionholder's
------------------------------------------------------------------
Insurance Policies and Programs. Commencing on and as of the Closing Date,
--------------------------------
Xxxxxxx Optionholder shall be responsible for establishing and maintaining
separate property, casualty and liability insurance policies and programs
(including primary and excess general liability, errors and omissions,
automobile, workers' compensation, property, fire, crime, surety and other
similar insurance policies) for activities and claims involving Xxxxxxx
Optionholder and the Japanese Xxxxxxx Business. Xxxxxxx Optionholder will
exercise commercially reasonable efforts to secure liability insurance to avoid
potential gaps in coverage for claims arising from events prior to the Closing
Date, which gap would not exist had the Japanese Xxxxxxx Business continued to
be covered with the same retroactive dates existing in the Xxxxxx Japan Policies
in effect on the Closing Date. Xxxxxxx Optionholder shall be responsible for
all administrative and financial matters relating to insurance policies
established and maintained by Xxxxxxx Optionholder for claims relating to any
period on or after the Closing Date involving Xxxxxxx
24
Optionholder. Notwithstanding any other agreement or understanding to the
contrary, except as set forth in this Section 11.7 with respect to claims
------------
administration and financial administration of the Xxxxxx Japan Policies, Xxxxxx
Japan shall not have any responsibility for or obligation to Xxxxxxx or any of
its Affiliates relating to property and casualty insurance matters for any
period, whether prior to, on or after the Closing Date.
11.5. Xxxxxxx Optionholder Directors' and Officers' Insurance. Xxxxxx [Japan]
--------------------------------------------------------
shall use commercially reasonable efforts to cause the persons currently serving
as officers and/or directors of Xxxxxx Japan to be covered for a period of [six
(6)] years from the Closing Date by the directors' and officers' liability
insurance policy maintained by Xxxxxx as of the Closing Date (including
corporate reimbursement) (provided that Xxxxxx Japan may substitute therefor
--------
policies of at least the same coverage and amounts containing terms and
conditions that are not less advantageous than such policy) with respect to
matters covered under the existing policy occurring prior to the Closing Date
that were committed by such officers and/or directors in their capacity as such;
provided, however, that in no event shall Xxxxxx be required to expend with
-------- -------
respect to any year more than 200% of the current annual premium expended by
Xxxxxx (the "Insurance Amount" to maintain or procure insurance coverage
-----------------
pursuant hereto; and provided, further, that if Xxxxxx is unable to maintain or
-------- -------
obtain the insurance called for by this Section 11.5, Xxxxxx shall use
------------
commercially reasonable efforts to obtain as much comparable insurance as
available for the Insurance Amount. In the event Xxxxxx [Japan] or any of its
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any Person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Xxxxxx [Japan] assume the obligations set forth in this Section 11.5.
------------
The provisions of this Section 11.5 are intended to be for the benefit of, and
------------
shall be enforceable by, each such officer and director and his or her heirs and
representatives.] As provided in Section 12.4, any amount Xxxxxxx Optionholder
------------
is required to pay to Xxxxxx Japan as an indemnity under this Agreement is
reduced to the extent Xxxxxx Japan receives insurance proceeds from the above
coverage, but only to the extent such proceeds are actually received by Xxxxxx
Japan.
11.6. Pre-Distribution Insurance Claims Administration. Xxxxxxx Optionholder
------------------------------------------------
acknowledges that Xxxxxx Japan has and will continue to experience losses and
receive claims that are, or might be, covered by one or more Xxxxxx Japan
Policies, and prior to the Closing Date will make decisions and commitments
regarding administration of such claims, including reaching agreements and
stipulations regarding such claims (collectively, "Pre-Closing Claims
-------------------
Administration"). Xxxxxxx Optionholder covenants not to contest or challenge in
----------------
any manner any action taken by Xxxxxx Japan prior to the Closing Date in
connection with or relating to Pre-Closing Claims Administration, or to
interfere with the performance of any agreement, commitment or stipulation so
made by Xxxxxx Japan in connection with or relating to Pre-Closing Claims
Administration.
11.7. Post-Distribution Insurance Claims Administration. Xxxxxx Japan shall
--------------------------------------------------
have the primary right, responsibility and authority for claims administration
and financial administration of claims that relate to or affect the Xxxxxx Japan
Policies. Upon notification by Xxxxxxx Optionholder of a claim relating to
Xxxxxxx Optionholder [or an Affiliate thereof] under one or more of the Xxxxxx
Japan Policies, Xxxxxx Japan shall cooperate with Xxxxxxx
25
Optionholder in asserting and pursuing coverage and payment for such claim by
the appropriate insurance carrier(s). In asserting and pursuing such coverage
and payment, Xxxxxx Japan shall have sole power and authority to make binding
decisions, determinations, commitments and stipulations on its own behalf and on
behalf of Xxxxxxx Optionholder, which decisions, determinations, commitments and
stipulations shall be final and conclusive if made to maximize the overall
economic benefit of the Xxxxxx Japan Policies. Xxxxxxx Optionholder assumes
responsibility for, and shall pay to the appropriate insurance carriers or
otherwise, any premiums, retrospectively-rated premiums, defense costs,
indemnity payments, deductibles, retentions or other charges (collectively,
"Insurance Charges") whenever arising, which shall become due and payable under
------------------
the terms and conditions of any applicable Xxxxxx Japan Policy in respect of any
liabilities, losses, claims, actions or occurrences, whenever arising or
becoming known, involving or relating to any of the assets, businesses,
operations or liabilities of the Japanese Xxxxxxx Business, whether the same
relate to the period prior to, on or after the Closing Date. To the extent that
the terms of any applicable Xxxxxx Japan Policy provide that Xxxxxx Japan shall
have an obligation to pay or guarantee the payment of any Insurance Charges
relating to Xxxxxxx Optionholder, Xxxxxx Japan shall be entitled to demand that
Xxxxxxx Optionholder make such payment directly to the Person [or any of its
Affiliates] entitled thereto. In connection with any such demand, Xxxxxx Japan
shall submit to Xxxxxxx Optionholder a copy of any invoice received by Xxxxxx
Japan pertaining to such Insurance Charges together with appropriate supporting
documentation, to the extent available. In the event that Xxxxxxx Optionholder
fails to pay any such Insurance Charges when due and payable, whether at the
request of the party entitled to payment or upon demand by Xxxxxx Japan, Xxxxxx
Japan may (but shall not be required to) pay such insurance charges for and on
behalf of Xxxxxxx Optionholder and, thereafter, Xxxxxxx Optionholder shall
forthwith reimburse Xxxxxx Japan for such payment. Subject to the other
provisions of this Article XI, the retention by Xxxxxx Japan of the Xxxxxx Japan
----------
Policies and the responsibility for claims administration and financial
administration of such policies are in no way intended to limit, inhibit or
preclude any right of Xxxxxxx Optionholder, Xxxxxx Japan or any other insured to
insurance coverage for any Insured Claims under the Xxxxxx Japan Policies.
11.8. Non-Waiver of Rights to Coverage. An insurance carrier that otherwise
--------------------------------
would be obligated to pay any claim shall not be relieved of the responsibility
with respect thereto, or, solely by virtue of the provisions of this Article XI,
----------
have any subrogation rights with respect thereto, it being expressly understood
and agreed that no insurance carrier or any third-party shall be entitled to a
windfall (i.e., a benefit they would not be entitled to receive had the Closing
----
not occurred or in the absence of the provisions of this Article XI) by virtue
----------
of the provisions hereof.
11.9. Scope of Affected Policies of Insurance. The provisions of this Article
---------------------------------------- -------
XI relate solely to matters involving liability, casualty and workers'
--
compensation insurance, and shall not be construed to affect any obligation of
or impose any obligation on the parties with respect to any life, health and
accident, dental or medical insurance policies applicable to any of the
officers, directors, employees or other representatives of the parties or their
Affiliates.
26
ARTICLE XII
INDEMNIFICATION
12.1. Indemnification by Xxxxxxx Optionholder. From and after the Closing
---------------------------------------
Date, Xxxxxxx Optionholder shall indemnify and hold harmless each Xxxxxx Japan
Group Member from and against any and all Loss and Expense incurred or suffered
by such Xxxxxx Japan Group Member in connection with, relating to, arising our
of or due to, directly or indirectly, any of the following items:
(a) the Japanese Xxxxxxx Business as conducted on or at any time prior to the
Closing Date (other than Excluded Liabilities);
(b) the Purchased Business;
(c) the Assumed Liabilities;
(d) the breach by Xxxxxxx Optionholder of any covenant or agreement set forth
in this Agreement or the Instrument of Assumption, regardless of when or
where the loss, claim, accident, occurrence, event or happening giving rise
to the Expense or Loss took place, or whether any such loss, claim,
accident, occurrence, event or happening is known or unknown, or reported
or unreported;
(e) the employee benefits provided or the actions taken or omitted to be taken
with respect thereto in connection with this Agreement or otherwise
relating to the provision of employee benefits to Xxxxxxx Employees, their
beneficiaries, alternate payees or any other person claiming benefits
through them (except to the extent such Expenses or Losses are specifically
allocated to Xxxxxx Japan pursuant to Section 12.2(e), including Expenses
---------------
or Losses arising in connection with (i) Xxxxxxx Optionholders' reduction,
elimination or failure to provide any benefit accrued by its employees
(including benefits accrued prior to the Closing Date) and (ii) the
transfer of account balances and accrued benefits as described in Section
-------
10.4 where such Expenses or Losses are incurred as a result of any act or
----
omission by Xxxxxxx Optionholder (or a representative of Xxxxxxx
Optionholder);
(f) the indemnifiable matters set forth in Section 5.6 and Article X; and
----------- ---------
(g) Xxxxxx Japan's inability to terminate the employment of any Xxxxxxx
Employees following the termination or expiration of this Agreement.
12.2. Indemnification by Xxxxxx Japan. From and after the Closing Date, Xxxxxx
-------------------------------
Japan shall indemnify and hold harmless each Xxxxxxx Optionholder Group Member
from and against any and all Loss and Expense incurred or suffered by such
Xxxxxxx Optionholder Group Member in connection with, relating to, arising out
of or due to, directly or indirectly, any of the following items:
(a) the business (other than the Japanese Xxxxxxx Business) conducted by Xxxxxx
Japan on or at any time prior to the Closing Date;
27
(b) the assets owned by Xxxxxx Japan other than assets included in the
Purchased Business and the Shared Agreements;
(c) the Liabilities (including the Excluded Liabilities) of Xxxxxx Japan other
than the Assumed Liabilities;
(d) the breach by Xxxxxx Japan of any covenant or agreement set forth in this
Agreement or the Instrument of Assignment, regardless of when or where the
loss, claim, accident, occurrence, event or happening giving rise to the
Expense or Loss took place, or whether any such loss, claim, accident,
occurrence, event or happening is known or unknown, or reported or
unreported; and
(e) Xxxxxx Japan's reduction, elimination or failure to provide any benefit
previously provided to its employees, other than a benefit assumed by
Xxxxxxx Optionholder pursuant to Article X, or any act or omission by
---------
Xxxxxx Japan in connection with the transfer of assets and liabilities as
described in Section 10.4.
------------
12.3. Applicability of and Limitation on Indemnification.
--------------------------------------------------
(a) EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE INDEMNITY OBLIGATIONS UNDER THIS
ARTICLE XII SHALL APPLY NOTWITHSTANDING ANY INVESTIGATION MADE BY OR ON
BEHALF OF ANY INDEMNIFIED PARTY AND SHALL APPLY WITHOUT REGARD TO WHETHER
THE LOSS, LIABILITY, CLAIM, DAMAGE, COST OR EXPENSE FOR WHICH INDEMNITY IS
CLAIMED HEREUNDER IS BASED ON STRICT LIABILITY, ABSOLUTE LIABILITY OR
ARISES AS AN OBLIGATION FOR CONTRIBUTION.
(b) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL XXXXXX JAPAN BE LIABLE TO ANY XXXXXXX OPTIONHOLDER GROUP MEMBER, OR
XXXXXXX OPTIONHOLDER BE LIABLE TO ANY XXXXXX JAPAN GROUP MEMBER, UNDER THIS
AGREEMENT FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
DAMAGES, INCLUDING LOSS OF ANTICIPATED PROFITS OR LOSS OR DIMINUTION OF
REVENUES, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT OR
OTHERWISE, EXCEPT TO THE EXTENT THAT SUCH LIABILITY HAS BEEN ASSERTED BY A
THIRD PARTY AGAINST A PARTY ENTITLED TO INDEMNIFICATION HEREUNDER.
12.4. Adjustment of Indemnifiable Losses.
----------------------------------
(a) The amount that either party (an "Indemnifying Party") is required to pay
------------------
to any Person entitled to indemnification hereunder (an "Indemnified
-----------
Party") shall be reduced (including retroactively) by any Insurance
Proceeds and other amounts actually recovered by or on behalf of such
Indemnified Party in reduction of the related Expense or Loss. If an
Indemnified Party receives a payment (an "Indemnity Payment") required by
-----------------
this Agreement from an Indemnifying Party in respect of any Expense or Loss
and subsequently actually receives Insurance Proceeds or other amounts in
respect of such Expense or Loss, then such Indemnified Party shall pay to
the Indemnifying Party a sum equal to the lesser of (i) the amount
28
of such Insurance Proceeds or other amounts actually received or (ii) the
net amount of Indemnity Payments actually received previously. The
Indemnified Party agrees that the Indemnifying Party shall be subrogated to
such Indemnified Party under any insurance policy.
(b) An insurer who otherwise would be obligated to pay any claim shall not be
relieved of the responsibility with respect thereto, or, solely by virtue
of the indemnification provisions hereof, have any subrogation rights with
respect thereto, it being expressly understood and agreed that no insurer
or any other third-party shall be entitled to a "windfall" (i.e., a benefit
he or she would not be entitled to receive in the absence of the
indemnification provisions) by virtue of the indemnification provisions
hereof.
(c) If any Indemnified Party realizes a Tax benefit or detriment in one or more
Tax periods by reason of having incurred an Expense or a Loss for which
such Indemnified Party receives an Indemnity Payment from an Indemnifying
Party (or by reason of the receipt of any Indemnity Payment), then such
Indemnified Party shall pay to such Indemnifying Party an amount equal to
the Tax benefit or such Indemnifying Party shall pay to such Indemnified
Party an additional amount equal to the Tax detriment (taking into account,
without limitation, any Tax detriment resulting from the receipt of such
additional amounts), as the case may be. The amount of any Tax benefit or
any Tax detriment for a Tax period realized by an Indemnified Party by
reason of having incurred an Expense or a Loss (or by reason of the receipt
of any Indemnity Payment) shall be deemed to equal the product obtained by
multiplying (i) the amount of any deduction or loss or inclusion in income
for such period resulting from such Expense or Loss (or the receipt of any
Indemnity Payment or additional amount), as the case may be (without regard
to whether such deduction or loss or such inclusion in income results in
any actual decrease or increase in Tax liability for such period), by (ii)
the highest applicable marginal Tax rate for such period (provided,
however, that the amount of any Tax benefit attributable to an amount that
is creditable shall be deemed to equal the amount of such creditable item).
Any payment due under this Section 12.4(c) with respect to a Tax benefit or
---------------
Tax detriment realized by an Indemnified Party in a Tax period shall be due
and payable within 30 days from the time the return for such Tax period is
due, without taking into account any extension of time granted to the party
filing such return.
12.5. Procedures for Indemnification of Third Party Claims.
----------------------------------------------------
(a) If any third-party shall make any claim or commence any arbitration
proceeding or suit (collectively, a "Third Party Claim") against any one or
-----------------
more of the Indemnified Parties with respect to which an Indemnified Party
intends to make any claim for indemnification against Xxxxxxx Optionholder
under Section 12.1 or against Xxxxxx Japan under Section 12.2, such
------------ ------------
Indemnified Party shall promptly give written notice to the Indemnifying
Party describing such Third Party Claim in reasonable detail, and the
following provisions shall apply. Notwithstanding the foregoing, the
failure of any Indemnified Party to provide notice in accordance with this
Section 12.5(a) shall not relieve the related Indemnifying Party of its
---------------
obligations under this Article XII, except to the extent that such
-----------
Indemnifying Party is actually prejudiced by such failure to provide
notice.
(b) The Indemnifying Party shall have the right to assume the defense of any
such Third Party Claim. If the Indemnifying Party elects not to conduct
and control the defense
29
of such Third Party Claim, the Indemnified Party shall have the right to
defend, contest, settle or compromise such Third Party Claim in the
exercise of its exclusive discretion subject to the provisions of
Section 12.5(c), and the Indemnifying Party shall, upon
---------------
request from any of the Indemnified Parties, promptly pay to such
Indemnified Parties in accordance with the other terms of this Section
-------
12.5(b) the amount of any Expense or Loss resulting from their liability to
-------
the third-party claimant. If the Indemnifying Party assumes the defense of
the Third Party Claim, the Indemnifying Party shall have the right to
undertake, conduct and control, through counsel reasonably acceptable to
the Indemnified Party, and at its sole expense, the conduct and settlement
of such Third Party Claim, and the Indemnified Party shall cooperate with
the Indemnifying Party in connection therewith, provided that (i) the
Indemnifying Party shall not thereby permit any lien, encumbrance or other
adverse charge to thereafter attach to any asset of any Indemnified Party;
(ii) the Indemnifying Party shall not thereby permit any injunction against
any Indemnified Party; (iii) the Indemnifying Party shall permit the
Indemnified Party and counsel chosen by the Indemnified Party and
reasonably acceptable to the Indemnifying Party to monitor such conduct or
settlement and shall provide the Indemnified Party and such counsel with
such information regarding such Third Party Claim as either of them may
reasonably request (which request may be general or specific), but the fees
and expenses of such counsel (including allocated costs of in-house counsel
and other personnel) shall be borne by the Indemnified Party unless (A) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to
the retention of such counsel or (B) the named parties to any such Third
Party Claim include the Indemnified Party and the Indemnifying Party and in
the reasonable opinion of counsel to the Indemnified Party representation
of both parties by the same counsel would be inappropriate due to actual or
likely conflicts of interest between them, in either of which cases the
reasonable fees and disbursements of counsel for such Indemnified Party
(including allocated costs of in-house counsel and other personnel) shall
be reimbursed by the Indemnifying Party to the Indemnified Party; and (iv)
the Indemnifying Party shall agree promptly to reimburse to the extent
required under this Article XII the Indemnified Party for the full amount
-----------
of any Expense or Loss resulting from such Third Party Claim and all
related expenses incurred by the Indemnified Party. In no event shall the
Indemnifying Party, without the prior written consent of the Indemnified
Party, settle or compromise any claim or consent to the entry of any
judgment that does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the Indemnified Party a release from
all Liability in respect of such claim.
If the Indemnifying Party shall not have undertaken the conduct and control of
the defense of the Third Party Claim as provided above, the Indemnifying Party
shall nevertheless be entitled through counsel chosen by the Indemnifying Party
and reasonably acceptable to the Indemnified Party to monitor the conduct or
settlement of such claim by the Indemnified Party, and the Indemnified Party
shall provide the Indemnifying Party and such counsel with such information
regarding such Third Party Claim as either of them may reasonably request (which
request may be general or specific), but all costs and expenses incurred in
connection with such monitoring shall be borne by the Indemnifying Party.
(c) So long as the Indemnifying Party is contesting any such Third Party Claim
in good faith, the Indemnified Party shall not pay or settle any such Third
Party Claim. Notwithstanding the foregoing, the Indemnified Party shall
have the right to pay or settle any such Third Party Claim, provided that
in such event the Indemnified Party shall waive any right
30
to indemnity therefor by the Indemnifying Party, and no amount in respect
thereof shall be claimed as an Expense or a Loss under this Section
-------
12.5(c).
--------
If the Indemnifying Party shall have undertaken the conduct and control of the
defense of any Third Party Claim as provided above, the Indemnified Party, on
not less than 30 days prior written notice to the Indemnifying Party, may make
settlement (including payment in full) of such Third Party Claim, and such
settlement shall be binding upon the parties for the purposes hereof, unless
within said 30-day period the Indemnifying Party shall have requested the
Indemnified Party to contest such Third Party Claim at the expense of the
Indemnifying Party. In such event, the Indemnified Party shall promptly comply
with such request and the Indemnifying Party shall have the right to direct the
defense of such claim or any litigation based thereon subject to all the
conditions of Section 12.5(b). Notwithstanding anything in this Section 12.5(c)
--------------- ---------------
to the contrary, if the Indemnified Party, in the belief that a claim may
materially and adversely affect it other than as a result of money damages or
other money payments, advises the Indemnifying Party that it has determined to
settle a claim, the Indemnified Party shall have the right to do so at its own
cost and expense, without any requirement to contest such claim at the request
of the Indemnifying Party, but without any right under the provisions of this
Section 12.5(c) for indemnification by the Indemnifying Party.
---------------
(d) The provisions of this Section 12.5 and Section 12.6 shall not apply to
------------ ------------
income Taxes (which are covered by the Tax Sharing Agreement).
12.6. Procedures for Indemnification of Direct Claims. Any claim for
-----------------------------------------------
indemnification on account of an Expense or a Loss made directly by the
Indemnified Party against the Indemnifying Party and that does not result from a
Third Party Claim shall be asserted by written notice from the Indemnified Party
to the Indemnifying Party specifically claiming indemnification hereunder. Such
Indemnifying Party shall have a period of 30 business days after the receipt of
such notice within which to respond thereto. If such Indemnifying Party does
not respond within such 30 business day period, such Indemnifying Party shall be
deemed to have accepted responsibility to make payment and shall have no further
right to contest the validity of such claim. If such Indemnifying Party does
respond within such 30 business-day period and rejects such claim in whole or in
part, such Indemnified Party shall be free to pursue resolution as provided in
Article XIII.
------------
12.7. Remedies Cumulative. The remedies provided in this Article XII shall be
------------------- -----------
cumulative and, subject to the provisions of Article XIII below, shall not
------------
preclude assertion by an Indemnified Party of any other rights or the seeking of
any and all other remedies against any Indemnifying Party.
ARTICLE XIII
DISPUTE RESOLUTION
13.1. General. Any dispute arising out of or relating to this Agreement, the
-------
Instrument of Assignment or the Instrument of Assumption shall be solved in
accordance with the procedures specified in this Article XIII which shall be the
------------
sole and exclusive procedures for the resolution of any such disputes.
31
13.2. Escalation. The parties will attempt in good faith to resolve
----------
expeditiously any dispute, claim or controversy arising out of or relating to
the execution, interpretation and performance of this Agreement (including the
validity, scope and enforceability of this arbitration provision) promptly by
negotiations between executives who have authority to settle the controversy and
who are at a higher level of management than the persons with direct
responsibility for the administration of this Agreement. Either party may give
the other party written notice (an "Escalation Notice") of any dispute not
-----------------
resolved in the normal course of business. Within fifteen days after delivery of
the Escalation Notice, the receiving party shall submit to the other a written
response. The Escalation Notice and the response thereto shall include (a) a
statement of each party's position and a summary of arguments supporting that
position, and (b) the name and title of the executive who will represent that
party and of any other person who will accompany the executive. Within 30 days
after delivery of the Escalation Notice, the executives of both parties shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the dispute. All reasonable
requests for information made by one party to the other will be honored. All
negotiations pursuant to this clause are confidential and shall be treated as
compromise and settlement negotiations for purposes of applicable rules of
evidence.
13.3. Arbitration. Any dispute, claim or controversy arising out of or
-----------
relating to this Agreement or its breach, termination or validity which has not
been resolved by the specified non-binding procedure set forth in Section 13.2
------------
within 90 days of the date of delivery of the Escalation Notice shall be settled
by binding arbitration in accordance with the CPR Non-Administered Arbitration
Rules in effect on the date of this Agreement, by three independent and
impartial arbitrators, none of whom shall be appointed by either party. The
arbitration shall be governed by the United States Arbitration Act, 9 U. S. C.
(S) (S) 1- 16, as the same may be amended from time to time, and judgment upon
the award rendered by the arbitrators may be entered by any court having
jurisdiction thereof. The place of the arbitration shall be Lake County,
Illinois or Orange County, California, and shall be determined by the party that
initiated the dispute resolution process. The arbitrators may award attorneys'
fees in their discretion. Otherwise, the arbitrators are not empowered to award
damages in excess of compensatory damages, and each party hereby irrevocably
waives any right to recover such damages.
13.4. Procedures. The parties may request limited discovery in accordance with
----------
the Federal Rules of Civil Procedure of the United States (the "F.R.C.P.") for a
--------
period of 120 days after the initiation of the arbitration process. All issues
regarding compliance with discovery requests shall be decided by the arbitrators
pursuant to the F.R.C.P. The parties agree that the recipient of a discovery
request shall have 10 business days after the receipt of such request to object
to any or all portions of such request and shall respond to any portions of such
request not so objected within 30 business days of the receipt of such request.
All objections shall be in writing and shall indicate the reasons for such
objections. The objecting party shall ensure that all objections and responses
are received by the other party within the above time periods; failure to comply
with the specified time period shall be addressed as set forth in F.R.C.P. 37.
Any party seeking to compel discovery following receipt of an objection shall
file with the other party and the arbitrators a motion to compel, including a
copy of the initial request and the objection. The arbitrators shall allow 10
business days for the responses to the motion to compel before ruling. Claims of
privilege and other objections shall be determined as they would be in United
States federal court in a case applying Illinois law. The arbitrators may grant
or deny the motion to
32
compel, in whole or in part, concluding that the discovery request is or is not
appropriate under the circumstances, taking into account the needs of the
parties and the desirability of making discovery expeditious and cost-effective.
The statute of limitations of the State of Illinois applicable to the
commencement of a lawsuit shall apply to the date of initial written
notification of a dispute and shall be extended until commencement of
arbitration if all interim deadlines have been complied with by the notifying
party.
13.5. Injunctive Relief. Nothing contained in this Article XIII shall prevent
----------------- ------------
either party from resorting to judicial process if injunctive or other equitable
relief from a court is necessary to prevent serious and irreparable injury to
one party or to others. The use of arbitration procedures will not be construed
under the doctrine of laches, waiver or estoppel to affect adversely either
party's right to assert any claim or defense.
ARTICLE XIV
GENERAL PROVISIONS
14.1. Notices. All notices or other communications required or permitted
-------
hereunder shall be in writing and shall be deemed given or delivered when
delivered personally, or when sent by registered or certified mail or by private
courier or facsimile transmission (provided that in the case of facsimile
transmission, a confirmation copy of the notice shall be delivered by hand or
sent by courier within two days of transmission) addressed as follows:
If to Xxxxxxx Optionholder, to:
Xxxxxxx Lifesciences Limited
Xxxxxxxxxx 0-0, Xxxxxxx-xx
Xxxxx 000-0000 Xxxxx
Attention: __________
Facsimile: 00-0-0000-0000
with a copy to:
______________________
______________________
______________________
______________________
Attention: __________
If to Xxxxxx Japan, to:
Xxxxxx Limited
0, Xxxxxxxxxx, Xxxxxxx-xx
Xxxxx 000-0000 Xxxxx
Attention: __________
Facsimile: 00-0-0000-0000
with a copy to:
33
______________________
______________________
______________________
______________________
Attention: __________
or to such other address as such party may indicate by a notice delivered to the
other party hereto.
14.2. Successors and Assigns. (a) Either party may assign any of its rights
----------------------
under this Agreement, but no such assignment shall relieve such party of its
obligations hereunder.
(b) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and permitted assigns. The successors
and permitted assigns hereunder shall include without limitation, in the
case of Xxxxxxx Optionholder, any permitted assignee as well as the
successors in interest to such permitted assignee (whether by merger,
liquidation (including successive mergers or liquidations) or otherwise).
Except to the extent otherwise provided in Section 11.5 or Article XII,
------------ -----------
nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any Person other than the parties and successors
and assigns permitted by this Section 14.2 any right, remedy or claim under
------------
or by reason of this Agreement.
14.3. Access to Records after Closing. (a) For a period of ten years after
-------------------------------
the Closing Date, Xxxxxx Japan and its representatives shall have reasonable
access to all of the books and records of the Japanese Xxxxxxx Business
transferred to Xxxxxxx Optionholder hereunder to the extent that such access may
reasonably be required by Xxxxxx Japan in connection with matters relating to or
affected by the operations of the Japanese Xxxxxxx Business prior to the Closing
Date. Such access shall be afforded by Xxxxxxx Optionholder upon receipt of
reasonable advance notice and during normal business hours. Xxxxxx Japan shall
be solely responsible for any costs or expenses incurred by it pursuant to this
Section 14.3(a). If Xxxxxxx Optionholder shall desire to dispose of any of such
---------------
books and records prior to the expiration of such ten-year period, Xxxxxxx
Optionholder shall, prior to such disposition, give Xxxxxx Japan a reasonable
opportunity, at Xxxxxx Japan's expense, to segregate and remove such books and
records as Xxxxxx Japan may select.
(b) For a period of ten years after the Closing Date, Xxxxxxx Optionholder and
its representatives shall have reasonable access to all of the books and
records relating to the Japanese Xxxxxxx Business which Xxxxxx Japan or any
of its Affiliates may retain after the Closing Date. Such access shall be
afforded by Xxxxxx Japan and its Affiliates upon receipt of reasonable
advance notice and during normal business hours. Xxxxxxx Optionholder
shall be solely responsible for any costs and expenses incurred by it
pursuant to this Section 14.3(b). If Xxxxxx Japan or any of its Affiliates
---------------
shall desire to dispose of any of such books and records prior to the
expiration of such ten-year period, Xxxxxx Japan shall, prior to such
disposition, give Xxxxxxx Optionholder a reasonable opportunity, at Xxxxxxx
Optionholder's expense, to segregate and remove such books and records as
Xxxxxxx Optionholder may select.
34
14.4. Entire Agreement; Amendments. This Agreement and the Exhibits and
----------------------------
Schedules referred to herein and the documents delivered pursuant hereto contain
the entire understanding of the parties hereto with regard to the subject matter
contained herein or therein, and supersede all prior agreements, understandings
or letters of intent between or among any of the parties hereto. This Agreement
shall not be amended, modified or supplemented except by a written instrument
signed by an authorized representative of Xxxxxxx Optionholder and by the
President of Xxxxxx Japan.
14.5. Interpretation. Article titles and headings to sections herein are
--------------
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement. The Schedules and
Exhibits referred to herein shall be construed with and as an integral part of
this Agreement to the same extent as if they were set forth verbatim herein.
14.6. Waivers. Any term or provision of this Agreement may be waived, or the
-------
time for its performance may be extended, by the party or parties entitled to
the benefit thereof. Any such waiver shall be validly and sufficiently
authorized for the purposes of this Agreement if, as to any party, it is
authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
14.7. Expenses. All costs and expenses incident to its negotiation and
--------
preparation of this Agreement will be paid by Xxxxxx Japan. Each party will pay
all costs and expenses incident to its performance and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with.
14.8. Partial Invalidity. Wherever possible, each provision hereof shall be
------------------
interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
14.9. Execution in Counterparts. This Agreement may be executed in one or more
-------------------------
counterparts, each of which shall be considered an original instrument, but all
of which shall be considered one and the same agreement, and shall become
binding when one or more counterparts have been signed by each of the parties
hereto and delivered to each of Xxxxxx Japan and Xxxxxxx Optionholder.
14.10. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws (as opposed to the conflicts of law
provisions) of the State of Illinois.
35
14.11. Submission to Jurisdiction. Xxxxxx Japan and Xxxxxxx Optionholder
--------------------------
hereby irrevocably submit in any suit, action or proceeding arising out of or
related to this Agreement or any of the transactions contemplated hereby or
thereby to the jurisdiction of the United States District Court for the Northern
District of Illinois and the jurisdiction of any court of the State of Illinois
located in Chicago and waive any and all objections to jurisdiction that they
may have under the laws of the State of Illinois or the United States.
14.12. Termination. (a) Anything contained in this Agreement to the contrary
-----------
notwithstanding, this Agreement may be terminated at any time by mutual written
consent of Xxxxxxx Optionholder and Xxxxxx Japan. This Agreement shall
terminate automatically if the Exercise Period expires prior to exercise of the
Option.
(b) If this Agreement is terminated pursuant to this Section 14.12, all further
-------------
obligations of the parties under this Agreement shall be terminated without
further liability of any party to the other, provided that nothing herein
shall relieve any party from liability for its willful breach of this
Agreement.
14.13. Survival of Obligations. All representations, warranties, covenants and
-----------------------
obligations contained in this Agreement shall survive the consummation of the
transactions contemplated by this Agreement.
14.14. Currency. All payments under this Agreement shall be denominated in
--------
Yen.
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed the day and year first above written.
XXXXXX LIMITED
By:___________________________
Name: Xxxxxx Xxxxxx
Title: President and
Representative Director
XXXXXXX LIFESCIENCES LIMITED
By:___________________________
Name: Takashi Tsumori
Title: Chairman and
Representative Director
37
Exhibit A
---------
Japanese Xxxxxxx Business
The Cardiovascular Group sells or is engaged in the development of following
product categories in Japan through its three business units (Cardiovascular
Surgery, or CVS, Anesthesia and Medication Delivery, or AMD, and Vascular and
Interventional Cardiology, or VIC):
. Tissue and mechanical heart valves and rings, pericardial patches,
oxygenators, and cardiopulmonary bypass circuits including reservoirs and
arterial filters, cardioplegia devices, heart-lung machines, centrifugal pumps,
arterial and venous cannulae, CDI oxygen monitor cells, Novacor left ventricular
assist devices
. Thermo-dilution (Xxxx-Xxxx) catheters, pacing catheters, central venous
catheters, venous introducers, Invos cerebral tissue oxygen monitor devices, VIA
continuous arterial blood gas monitor devices
. Direct blood pressure monitor kit, disposable pressure transducers,
Embolectomy (Xxxxxxx) catheters, Lifepath abdominal aortic aneurysm endovascular
graft system, Datascope intra-aortic balloon pumps and catheters, VasoSeal
collagen hemostasis devices, UniCath percutaneous transluminal coronary
angioplasty balloon catheters and stents, Medtronic pacemakers
The Cardiovascular Group in Japan also manufacturers Custom Pac cardiopulmonary
circuits and direct blood pressure monitor kits at the Miyazaki plant.
38
Exhibit B
---------
XXXX OF SALE AND ASSIGNMENT
Pursuant to that certain Option Agreement dated as of March 31, 2000
(the "Option Agreement") by and between Xxxxxx Limited, a Japanese corporation
("Xxxxxx Japan"), and Xxxxxxx Lifesciences Limited, a Japanese corporation
("Xxxxxxx Optionholder"), for good and valuable consideration paid to Xxxxxx
Japan by or on behalf of Xxxxxxx Optionholder, the receipt of which is hereby
acknowledged by Xxxxxx Japan, Xxxxxx Japan does hereby sell, transfer, assign,
convey and deliver to Xxxxxxx Optionholder the Purchased Business (all
capitalized terms not defined herein shall have the meanings specified in the
Option Agreement); provided, however, as to any lease, contract, agreement,
-------- -------
permit or other authorization or rights included in the Purchased Business that
cannot be conveyed, assigned, transferred, contributed, set over or delivered
effectively without the consent of a third party, which consent has not been
obtained, this Xxxx of Sale and Assignment shall be of no force or effect until
such requisite consent is obtained, whereupon this Xxxx of Sale and Assignment
shall become of full force and effect with respect thereto.
EXCEPT FOR THE REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS
SPECIFICALLY PROVIDED FOR IN THE OPTION AGREEMENT, ALL OF THE ASSETS SOLD
HEREUNDER ARE SOLD TO XXXXXXX OPTIONHOLDER "AS IS" WITHOUT ANY IMPLIED WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, MARKETABILITY, TITLE,
VALUE, FREEDOM FROM ENCUMBRANCE OR ANY REPRESENTATION OR WARRANTY, EXPRESSED OR
IMPLIED.
This Xxxx of Sale and Assignment shall be binding upon Xxxxxx Japan,
its successors and assigns, and shall inure to the benefit of Xxxxxxx
Optionholder, its successors and assigns.
IN WITNESS WHEREOF, Xxxxxx Japan has caused this instrument to be duly
executed and delivered as of ____________________.
XXXXXX LIMITED
By: _____________________________
Name:
Title:
Exhibit C
---------
INSTRUMENT OF ASSUMPTION
------------------------
Pursuant to that certain Option Agreement dated as of March 31, 2000
(the "Option Agreement") by and between Xxxxxx Limited, a Japanese corporation
("Xxxxxx Japan"), and Xxxxxxx Lifesciences Limited, a Japanese corporation
("Xxxxxxx Optionholder"), for good and valuable consideration paid to Xxxxxxx
Optionholder by or on behalf of Xxxxxx Japan, the receipt of which is hereby
acknowledged by Xxxxxxx Optionholder, Xxxxxxx Optionholder does hereby assume
and agree to pay, perform or otherwise discharge, in accordance with their terms
and subject to the respective conditions thereof, the Purchased Business (all
capitalized terms not defined herein shall have the meanings specified in the
Option Agreement).
This Instrument of Assumption shall be binding upon the successors and
assigns of Xxxxxxx Optionholder and shall inure to the benefit of the successors
and assigns of Xxxxxx Japan.
IN WITNESS WHEREOF, Xxxxxxx Optionholder has caused this instrument to
be duly executed and delivered as of ____________.
XXXXXXX LIFESCIENCES LIMITED
By:__________________________
Name:
Title:
