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EXHIBIT 2.2
ENGLISH TRANSLATION
ANNEX 1.3
OF THE OPTION AGREEMENT
PURCHASE AND ASSIGNMENT AGREEMENT
BETWEEN
Xxxxxxxxx Xxxxxx xxx Xxxxxxxxxxx
Xxxxxxx
00000 Xxxxxxxxxxxxxxx
Xxxxxxx
(the "Hofkammer")
A N D
My Asset Management GmbH
c/o Shearman & Sterling
Xxxxxxxxx. 0
00000 Xxxxxxxxxx
Xxxxxxx
("NewCo")
(The Hofkammer and NewCo are hereinafter collectively referred to as the
"Parties".)
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INTRODUCTION
Applied Analytical Industries, Inc. ("AAI"), being the sole shareholder of
NewCo, the Hofkammer and Baden-Wurttembergische Bank AG have entered into an
escrow agreement (the "Escrow Agreement") in July 1996 as stipulated in the
Exclusive Option Agreement (notarial deed Allg. Prot. No. 133 of the notary
public Xx. Xxxxxxx Wamister, Bale) which was entered into by AAI and the
Hofkammer.
AAI has deposited under the Escrow Agreement at Baden-Wurttembergische Bank AG
an amount of DM 1,575,000 (the "Escrow Fund") to be applied to any purchase of
L.A.B. by AAI or a subsidiary.
In consideration hereof, the Parties agree as follows:
1. FACTS AS OF THE EFFECTIVE DATE
1.1 The Hofkammer is a limited partner (Kommanditistin) of L.A.B.
Gesellschaft fur pharmakologische Untersuchungen mbH & Co. (
"L.A.B."). The Hofkammer's limited partnership interest (the
"Limited Partnership Interest") with a registered liability
amount of DM 1,500,000 has been fully paid in cash. L.A.B. is
registered at the commercial register of Amtsgericht Memmingen
under HR A 6951.
1.2 The Hofkammer is also the sole shareholder of L.A.B.
Verwaltungsgesellschaft mbH ( Partner GmbH ) and is holding
three shares, one share with a nominal value of DM 25,000 and
two shares each with a nominal value of DM 12,500 representing
100% of the stated capital (Stammkapital) in the amount of DM
50,000 of Partner GmbH (hereinafter the GmbH Shares ). The
Partner GmbH is registered at the commercial register of
Memmingen under HR B 6885.
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1.3 The Partner GmbH is the sole general partner (Komplementarin)
of L.A.B.
2. SALE AND ASSIGNMENT
2.1 The Hofkammer hereby sells to NewCo and NewCo hereby purchases
from the Hofkammer the GmbH Shares. The transfer of the GmbH
Shares shall have economic effect as of the Effective Date, as
defined hereinafter. NewCo shall be entitled to all dividend
rights and all other secondary rights of the Shares.
The Hofkammer hereby assigns to NewCo the GmbH Shares with
effect in rem as of the Effective Date, as defined hereinafter
and NewCo accepts such assignment.
2.2 The Hofkammer hereby sells to NewCo and NewCo hereby purchases
from the Hofkammer the L.A.B. partnership interest including
all capital accounts and any other rights the Hofkammer may
have in L.A.B. The transfer of the Limited Partnership
Interest shall have economic effect as of the Effective Date.
The Hofkammer hereby assigns to NewCo the Limited Partnership
Interest with effect in rem as of registration of NewCo in the
commercial register as successor in law
(Sonderrechtsnachfolgerin) of the Hofkammer.
3. EFFECTIVE DATE
The Effective Date of this Agreement is January 1, 1997, 0:00 o'clock
or December 31, 1996, 23:59 o'clock, at the choice of NewCo.
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4. PURCHASE PRICE
4.1 The purchase price owed by NewCo for the GmbH Share and the
L.A.B. Limited Partnership Interest amounts to DM 6,553,000
(in words: Deutsche Xxxx six million five hundred and
fifty-three thousand) (the "Purchase Price").
4.2 The Purchase Price is due and payable as follows:
(i) DM 4,503,000 15 banking days in Baden-Wurttemberg
after the Effective Date from a distribution of the
Escrow Fund plus additional cash;
(ii) DM 600,000 on January 2, 1998;
(iii) DM 700,000 on January 2, 1999;
(iv) DM 750,000 on January 2, 2000.
4.3 AAI may offset counterclaims against Hofkammer, whatever their
cause in law, only insofar as such counterclaims are finally
and absolutly judicially determined or are acknowledged by
Hofkammer. This also applies to counterclaims for warranty or
damages claims asserted on the basis of this Agreement.
5. HOFKAMMER'S REPRESENTATION AND WARRANTIES
5.1 The Hofkammer represents and warrants in form of an
independent guarantee (selbstandiges Garantieversprechen) as
of the Effective Date that:
5.1.1 it is the sole owner of the fully paid in GmbH Shares
and of the fully paid in Limited Partnership Interest
(hereinafter
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collectively the "L.A.B. Interests") and is entitled
to sell and transfer to NewCo the full legal and
beneficial ownership of the L.A.B. Interests, and
NewCo hereby will own such interests free and clear
from any encumbrances and will thereby become the
sole owner of the L.A.B. Interests;
5.1.2 no third party has any interest in the Partner GmbH
and in L.A.B., provided, however, that this
representation shall not apply to Xx. Xxxxxx'x and
Xx. Xxxxxx'x interests in L.A.B. with a registered
liability amount of DM 125,000 and DM 375,000,
respectively;
5.1.3 the Partner GmbH has a net equity (Eigenkapital in
the meaning of sect. 266 III A HGB) in the amount of
at least DM 50,000 notwithstanding any liabilities
connected with its position as a general partner of
L.A.B.;
5.1.4 the L.A.B. Interests are not subject to any
restrictions on disposition, any preemptive rights,
option rights, rights of first refusal or similar
rights of third parties;
5.1.5 the facts stated in clause 1 are true and correct;
5.1.6 the capital represented by the L.A.B. Interests have
not been paid back at any time after May 10, 1995,
and no additional contribution obligations in cash or
in kind (NachschuBpflichten) exist with respect to
the L.A.B. Interests;
5.1.7 there are no voting trusts, stockholder agreements,
proxies or other agreements or understandings in
effect with respect to the voting or transfer of the
L.A.B. Interests except as provided for in the
articles of incorporation of the Partner GmbH and the
partnership agreement of L.A.B.; for the avoidance of
doubt: the purchase price in the amount of
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DM 5,000 paid by the Hofkammer to Xx. Xxxxxx for the
GmbH shares is not deemed to be a repayment as such;
5.1.8 the L.A.B. Interests do not constitute the entire
property of the Hofkammer within the meaning of sect.
419 of the Civil Code (BGB);
5.1.9 APPENDIX 5.1.9 contains a true and correct copy of
the articles of incorporation (Gesellschaftsvertrag)
of the Partner GmbH;
5.1.10 APPENDIX 5.1.10 contains a true and correct copy of
the partnership agreement of L.A.B.; this, however,
shall not be a guarantee that the changes to the
Partnership Agreement dated March 27, 1996, and
September 9, 1996, are effective and binding;
5.1.11 APPENDIX 5.1.11 contains a true and correct list of
all of the subsidiaries of L.A.B. and the Partner
GmbH including the amount of shareholding (the
"Subsidiaries");
5.1.12 except for the bonus entitlements
(Erfolgsbeteiligung) of Xx. Xxxxxxxx and Xx. Xxxxxxx
and certain employees, all as further described in
Appendix 5.1.12, neither the Partner GmbH nor L.A.B.
is bound by any control, profit transfer or other
agreements of the type referred to in sect. 291, 292
et seq. of the Stock Corporation Act (Aktiengesetz),
and no silent participations (stille Beteiligungen),
profit participating loans (partiarische Darlehen),
profit participations of management or employees or
other similar obligations exist with respect to the
profits of L.A.B. and/or the Partner GmbH;
5.1.13 between the date of this notarial deed and the
Effective Date, the business will be conducted in the
ordinary course
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and consistent with past practice, and the Hofkammer
shall cause the Partner GmbH, L.A.B. and the
Subsidiaries not to enter into any transaction
outside the ordinary course of business without the
prior consent of NewCo. As amplification and not
limitation of the foregoing, the Partner GmbH, L.A.B.
and/or the Subsidiaries will not:
(i) make any loan to, guarantee any indebtedness
of or otherwise incur any indebtedness on
behalf of the Hofkammer or any third party or
assume any other unusual obligations;
(ii) redeem any of the capital or declare, make or
pay any profit distributions (whether in
cash, securities or other property);
(iii) enter into any arrangement under or similar
to the Transformation Law
(Umwandlungsgesetz);
(iv) purchase any assets or make any investments
in excess of DM 50,000 (in words: Deutsche
Xxxx fifty thousand), without the prior
written consent of NewCo;
(v) hire new employees;
clause 6.2, second half sentence, shall remain
unaffected.
5.1.14 neither L.A.B. nor any of its Subsidiaries has, or
will have, any liability (whether actual, contingent
or disputed and whether having arisen before or
arising after September 30, 1996) effectively
attributable to the period on or before September 30,
1996 (the "Unrecorded Liabilities"), except to the
extent reflected in the interim financial statements
as of
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September 30, 1996, contained in Appendix 5.2.3,
provided that Unrecorded Liabilities up to an amount
of DM 3,200,000 shall not constitute a breach of this
clause 5.1.14. Unrecorded Liabilities as used herein
do not include
(i) liabilities of L.A.B. connected with the law
suit filed by Apotex, Inc. against various
companies including L.A.B. and the Partner
GmbH, at the Ontario Court (General
Division), Canada, in an amount of
US$188,306.80 and Canadian $40,000,000 (Court
File No. 94-CQ-50477), and
(ii) tax liabilities of IPA-Internationale
Pharmaagentur GmbH and Inpharmco GmbH
Gesellschaft zur Vermarktung von
Arzneimitteln up to an amount of DM 1,300,000
in the aggregate for the business years up to
1992, regardless to which extent reflected in
the Reference Balance Sheet, and
(iii) any kind of liabilities other than tax
liabilities which AAI or any of the persons
who acted in the interest of AAI during the
negotiations and the due diligence have
knowledge of.
The Hofkammer shall not be liable for any of the
liabilities stated under (i) through (iii).
5.2 The Hofkammer herewith warrants and represents to its best
knowledge, whereby only the knowledge of Hofkammerprasident
Xx. Xxxx-Xxxxxxx Xxx and of Xx. Xxxxxx Schockenhoff is
attributable to the Hofkammer, and provided that neither the
Hofkammer nor its officers, advisors or agents have any duty
to make affirmative inquiry into any facts or circumstances
except after due inquiry with Xx. Xxxxx Xxxxxxxx and Xx.
Xxxxxxx Xxxxxxx, both managing direc-
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tors of the Partner GmbH as of the date hereof and having
confirmed in writing that as of the date hereof
5.2.1 sufficient insurance policies have been concluded and
maintained to secure against risk arising in
connection with the business of L.A.B. and the
Subsidiaries until the Effective Date;
5.2.2 neither the execution, delivery and performance of
this Agreement by the Hofkammer nor the consummation
of the transactions contemplated hereby and thereby,
will
(i) violate or conflict with, result in a breach
of, or result in or permit the acceleration
or termination of or constitute a default
under (whether with notice or lapse of time
or both) any agreement, instrument,
indenture, mortgage, lien, lease or other
contract to which L.A.B. or the Partner GmbH
or a Subsidiary is a party or by which any of
them or their property or assets is bound,
provided such violation, conflict,
acceleration, termination of default
individually or in the aggregate would have a
material adverse effect on their business;
(ii) result in the creation of any lien, charge,
or encumbrance on any of the property or
assets of said companies which individually
or in the aggregate would have an adverse
effect on their business;
5.2.3 the financial statements contained in APPENDIX 5.2.3
fairly present the financial position and results of
operation of L.A.B. at the respective dates and for
the respective periods to which they apply;
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5.2.4 APPENDIX 5.2.4 completely and correctly identifies
all contracts with licensors, contracts with
licensees, leases and other contracts relating to
L.A.B., the Partner GmbH or the Subsidiaries (other
(i) than contracts with employeees of L.A.B. listed
in APPENDIX 5.2.14 (a), including the service
agreements with Xx. Xxxxxxx and Xx. Xxxxxxxx, (ii)
the two lease agreements with the Hofkammer referred
to in clause 4.1 of the Option Agreement, and (iii)
contracts with a monthly payment obligation of no
more than DM 10,000 and a term of less than one
year). Except as disclosed in such Appendix, neither
the Partner GmbH nor L.A.B. nor any Subsidiary is a
party or otherwise subject to
(i) any contract, agreement or instrument
evidencing or relating to any material amount
of indebtedness for borrowed money or the
deferred purchase price of property, or any
direct or indirect guarantee of any such
indebtedness or deferred purchase price, or
(ii) any secrecy or other agreement or any
injunction, judgment, order or award that (x)
restricts the right of the Partner GmbH or
L.A.B. or any Subsidiary to engage in any
place in any line of business or (y) would
restrict the right of the Partner GmbH or
L.A.B. or any Subsidiary to engage in any
place in any line of business after the
Effective Date;
5.2.5 L.A.B. is the owner of the know-how incorporated in
the dossiers, listed in APPENDIX 5.2.5, all such
know-how is free and clear of any liens, pledges,
usufruct, and other encumbrances and L.A.B. can
freely dispose of such knowhow;
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5.2.6 the Partner GmbH, L.A.B. and the Subsidiaries are
each in compliance in all material respects with all
laws, regulations, orders, judgments and decrees of
any court or governmental or administrative authority
applicable to their business so that there will be no
material detrimental impact for said companies in the
future;
5.2.7 either L.A.B. or the Partner GmbH, as the case may
be, owns, leases or has the legal right to use all
the properties and assets, including, without
limitation, the intellectual property and the real
property, used or intended to be used in the conduct
of its business or otherwise owned, leased or used by
said companies and, with respect to contract rights,
is a party to and enjoys the right to the benefits of
all contracts, agreements and other arrangements used
or intended to be used by said companies (all such
properties, assets and contract rights being the
"Assets"). Either L.A.B. or the Partner GmbH, as the
case may be, has good and marketable title to, or, in
the case of leased or subleased Assets, valid and
subsisting leasehold interests in, all the Assets,
free and clear of all encumbrances;
L.A.B. has caused the Assets to be maintained in
accordance with good business practice, and all
the Assets are in good operating condition and repair
and are suitable for the purposes for which they are
used and intended;
5.2.8 neither L.A.B. nor the Partner GmbH nor any
Subsidiary has entered into any agreement with the
Hofkammer, Xx. Xxxxxx and/or Xx. Xxxxxx or with any
company, trust or other entity controlled by the
aforesaid persons, with the exception of a
transaction with L.A.B. Canada in the amount of
approximately DM 1,000,000 in 1996, from which
transaction, however, there are no open claims;
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5.2.9 neither L.A.B. nor the Partner GmbH nor any of its
Subsidiaries is a party to any contract in violation
of Section 1 of the Act Against Restraints on
Competition (Gesetz gegen Wettbewerbsbeschrankungen)
or respective foreign laws or requiring approval of
the Federal Cartel Office (Bundeskartellamt) or other
respective national authorities or the European
Commission without having duly filed a respective
application to receive such approval;
5.2.10 neither L.A.B. nor the Partner GmbH nor any of its
Subsidiaries has entered into any speculative
transactions including foreign exchange, options,
futures, or other derivative financial instruments;
5.2.11 other than normal salary there are no outstanding
amounts due to Xx. Xxxxxxxx and Xx. Xxxxxxx except
for possible claims of Xx. Xxxxxxx for bonus payments
in the amount of approximately DM 220,000, for the
business years 1994, 1995, 1996, and for which an
accrual has been created in the interim balance sheet
of L.A.B.;
5.2.12 neither L.A.B. nor the Partner GmbH nor any of their
Subsidiaries is party to any proceeding pending or
threatened (including notification of customers for
malperformance) before any courts, government
agencies or arbitration courts; said companies are
not subject to, in violation of or in default with
respect to any judgment, order writ or injunction and
such companies have no knowledge of to potentially
becoming subject to any official investigation, claim
or action which might be detrimental to the business
(e.g., conditions (Auflagen) to or revocation of
permits), all except the Apotex claims
(US $ 188,306.80 and Can $ 40,000,000) and
any claims of the tax authorities;
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5.2.13 L.A.B. has paid all social contributions, V.A.T. and
trade tax when due except for health insurance
payments for November 1996 (amounting to
approximately DM 650,000) and possible tax
liabilities referred to in clause 5.1.14 (ii);
5.2.14 Appendix 5.2.14 (a) contains a true and complete list
of all employees of L.A.B., the Partner GmbH and
their Subsidiaries; none of the key employees listed
in Appendix 5.2.14 (b) have communicated that they
intend to leave;
5.2.15 neither L.A.B. nor the Partner GmbH nor any of their
Subsidiaries has sold since January 1, 1996, any
assets outside the ordinary course of business; for
the avoidance of doubt: L.A.B. KK (Japan) has been
shut down for tax purposes and all assets (book value
DM 1 in the balance sheet 1994) have been transferred
to the Japanese tax authorities;
5.2.16 the Hofkammer has disclosed all facts and
circumstances which can reasonably be expected to be
material to NewCo.
5.3 In case of a breach of any of the representations and
warranties under clause 5.1 and/or 5.2 the following applies:
5.3.1 In the event of an incorrect representation, the
Hofkammer is entitled to put NewCo in such position
as if the representation had been correct. If the
Hofkammer fails to cure the breach within a period of
three months after notification by NewCo, or if
immediate action is necessary (Gefahr im Verzug), the
Hofkammer shall refund to NewCo the damage in order
to establish the represented status. However, the
liability in case of a breach of a representation
shall be limited to DM 3,650,000, provided, that a
breach of the representation under clause 5.1.14
shall be limited to an amount of DM 1,575,000 with
prejudice to liabilities pursuant to the
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other representations. It is understood that the
Hofkammer is entitled to offset any remedies owed
hereunder against any installments of the Purchase
Price not yet due for payment.
5.3.2 Claims of NewCo pursuant to this clause 5 shall
become time-barred 15 months after the Effective
Date, except for breach of warranties in connection
with clause 5.1.14, which remedies become time-barred
6 months after final tax assessments for L.A.B., the
Partner GmbH and their Subsidiaries have been
rendered after a tax audit with respect to the tax
periods until and including 1996. The limitation
period stops running if claims are asserted in
writing by NewCo against the Hofkammer and if the
reasons on which such claim is based are reasonably
identified. On request by the Hofkammer NewCo shall
lodge an appeal against tax assessments. The Parties
shall mutually consent to the splitting of costs.
6. COVENANTS
6.1 Hofkammer agrees that neither it nor any of its associated
undertakings shall do business for a period of three years
after the Effective Date in the product or geographical
markets in which L.A.B. or any of its Subsidiaries operates at
the time of entry into this Agreement.
6.2 Between the date of this notarial deed and the Effective Date
the Hofkammer shall instruct Xx. Xxxxxxxx and Xx. Xxxxxxx not
to file for bankruptcy, provided, that the Hofkammer shall
have no liability if such bankruptcy will be filed.
6.3 NewCo shall give the Hofkammer the opportunity to accompany
and have representatives at and participating in any tax
audits.
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7. MISCELLANEOUS
7.1 Each Party shall bear its own costs and expenses in connection
with the negotiation, preparation and implementation of this
Agreement with the exception of notarial and court costs and
similar charges which shall be shared equally between the
Parties. Transfer taxes will be borne by NewCo.
7.2 If any of the provisions contained in this Agreement are or
become invalid or impracticable for any reason, including by
virtue of the omission of any other provision, the validity of
the remaining provisions shall remain unaffected. The invalid
or impracticable provision shall be substituted or
supplemented by provisions that ensure the economic purpose of
the invalid or impracticable provision as far as possible.
7.3 Unless otherwise specified in this Agreement, all notices and
other communications hereunder shall be in writing and in
English.
IF TO THE HOFKAMMER:
Hofkammer des Hauses Wurttemberg
- Direktion -
SchloB
88045 Friedrichshafen
Fax (+49-7541) 307-126
IF TO NEWCO:
Applied Analytical Industries Deutschland GmbH
c/o Shearman & Sterling
XxxxxxxxxxXx 0
00000 Xxxxxxxxxx
Fax (x00-000) 0 00 00-00
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IF TO AAI:
Applied Analytical Industries, Inc.
attn. General Counsel
0000 Xxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
X.X.X.
Fax: (x0-000) 000-0000
7.4 All Annexes in this Agreement are considered a part hereof.
7.5 Each of the Parties shall execute and deliver all such further
documents and agreements and do such further acts as are
reasonably required hereby and are not inconsistent with any
other provisions of this Agreement.
7.6 The Parties agree to keep confidential all information
obtained in connection with this Agreement and its performance
as long as and to the extent that it has not been made known
to the public without fault of any of the Parties. If this
Agreement is terminated for any reason, this confidentiality
obligation shall remain in effect indefinitely.
7.7 Neither this Agreement nor any right hereunder may be assigned
without the prior written consent of the other Parties unless
specifically stated otherwise. Any attempt to assign any right
hereunder without such approval will be void unless it is an
assignment or transfer by operation of law. Subject to the
preceding sentence, this Agreement is binding upon, inures to
the benefit of, and is enforceable by the Parties and their
respective successors and assignees.
7.8 Each Party shall execute any further legal acts which are
required to achieve the goal of this agreement. This also
includes that the Hofkammer, upon request, will render all
necessary statements so that for the Buyer no undesirable
consequences will result from the exclusion of the Xxxxxxx
agreed on by the shareholders' meeting. This clause 7.8
contains no financial commitments for either Party.
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7.9 This Agreement shall be governed by the laws of the Federal
Republic of Germany. The exclusive place of jurisdiction is
Frankfurt am Main.
IN WITNESS THEREOF, this public deed and the Annexes have been read out in
their entirety in the presence of the appeared persons and in my presence.
After reading, this public deed and the Annexes have been found to be correct
and approved. After that the appeared persons have signed the public deed in my
presence, thereupon I, the notary public, have also signed this public deed and
affixed my official seal.
BALE, this 23rd (twenty-third) day of December 1996 (nineteen hundred and
ninety-six)
[Signatures and seal of notary public]
