EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
dated as of
May 9, 2006
between
XXXXXX INTERNATIONAL INC.
and
XXXXXXX RIVER LABORATORIES INTERNATIONAL, INC.
relating to the purchase and sale
of
The Companies Comprising
the Phase II-IV Clinical Services Business
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions.....................................................1
Section 1.02. Other Definitional and Interpretative Provisions................7
ARTICLE 2
PURCHASE AND SALE
Section 2.01. Purchase and Sale...............................................7
Section 2.02. Closing.........................................................8
Section 2.03. Estimated Working Capital.......................................8
Section 2.04. Closing Statement...............................................8
Section 2.05. Adjustment of Purchase Price....................................9
Section 2.06. Allocation of Purchase Price...................................10
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.01. Corporate Existence and Power..................................10
Section 3.02. Corporate Authorization........................................11
Section 3.03. Governmental Authorization.....................................11
Section 3.04. Noncontravention...............................................11
Section 3.05. Capitalization.................................................11
Section 3.06. Ownership of Shares............................................12
Section 3.07. Subsidiaries...................................................12
Section 3.08. Financial Statements...........................................13
Section 3.09. Absence of Certain Changes.....................................13
Section 3.10. No Undisclosed Material Liabilities............................14
Section 3.11. Material Contracts.............................................15
Section 3.12. Litigation.....................................................16
Section 3.13. Compliance with Laws...........................................16
Section 3.14. Government Contracts...........................................17
Section 3.15. Properties.....................................................17
Section 3.16. Intellectual Property..........................................18
Section 3.17. Finders' Fees..................................................18
Section 3.18. Employee Benefit Plans.........................................18
Section 3.19. Environmental Matters..........................................21
Section 3.20. Significant Customers; Backlog.................................21
Section 3.21. Employees And Labor Controversies..............................22
Section 3.22. Tupe Transferring Employees....................................25
Section 3.23. Euro...........................................................25
Section 3.24. Disclosure.....................................................26
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.01. Corporate Existence and Power..................................26
Section 4.02. Corporate Authorization........................................26
Section 4.03. Governmental Authorization.....................................26
Section 4.04. Noncontravention...............................................26
Section 4.05. Financing......................................................27
Section 4.06. Solvency of the Companies......................................27
Section 4.07. Purchase for Investment........................................28
Section 4.08. Litigation.....................................................28
Section 4.09. Finders' Fees..................................................28
Section 4.10. Inspections; No Other Representations..........................28
ARTICLE 5
COVENANTS OF SELLER
Section 5.01. Conduct of the Business........................................28
Section 5.02. Access to Information..........................................30
Section 5.03. Notices of Certain Events......................................31
Section 5.04. Resignations...................................................31
Section 5.05. Financial Statements...........................................31
Section 5.06. Exclusivity....................................................32
Section 5.07. Software Matters...............................................32
Section 5.08. Registration...................................................32
Section 5.09. Assignment Of Confidentiality Agreements.......................32
ARTICLE 6
COVENANTS OF BUYER
Section 6.01. Confidentiality................................................32
Section 6.02. Access.........................................................33
Section 6.03. Trademarks; Tradenames.........................................33
Section 6.04. Financing Matters..............................................34
ARTICLE 7
COVENANTS OF BUYER AND SELLER
Section 7.01. Reasonable Best Efforts; Further Assurances....................34
Section 7.02. Certain Filings................................................35
Section 7.03. Public Announcements...........................................36
Section 7.04. Intercompany Accounts..........................................36
Section 7.05. Preparation Of Financial Statements............................36
ARTICLE 8
TAX MATTERS
Section 8.01. Definitions....................................................36
Section 8.02. Tax Representations............................................37
Section 8.03. Tax Covenants..................................................38
Section 8.04. Tax Sharing....................................................40
Section 8.05. Cooperation on Tax Matters.....................................40
Section 8.06. Indemnification by Seller......................................41
Section 8.07. Purchase Price Adjustment and Interest.........................43
Section 8.08. Exclusivity; Survival..........................................43
ARTICLE 9
EMPLOYEE BENEFITS
Section 9.01. Transfer of Certain Employees..................................44
Section 9.02. Application Of TUPE And Related Matters........................44
Section 9.03. Comparability of Benefits......................................45
Section 9.04. Service........................................................45
Section 9.05. Preexisting Conditions and Deductibles.........................46
Section 9.06. US Defined Contribution Plan...................................46
Section 9.07. UK Retirement Plans............................................47
Section 9.08. FUTA; FICA.....................................................48
Section 9.09. Vacation.......................................................48
Section 9.10. Flexible Spending Reimbursement Accounts.......................48
Section 9.11. Allocation Of Employment Related Liabilities...................49
Section 9.12. Foreign Law Obligations........................................49
Section 9.13. Employees On Leave.............................................49
ARTICLE 10
CONDITIONS TO CLOSING
Section 10.01. Conditions to Obligations of Buyer and Seller.................50
Section 10.02. Conditions to Obligation of Buyer.............................50
Section 10.03. Conditions to Obligation of Seller............................51
ARTICLE 11
SURVIVAL; INDEMNIFICATION
Section 11.01. Survival......................................................52
Section 11.02. Indemnification...............................................52
Section 11.03. Procedures....................................................53
Section 11.04. Calculation of Damages........................................54
Section 11.05. Assignment of Claims..........................................55
Section 11.06. Exclusivity...................................................55
ARTICLE 12
TERMINATION
Section 12.01. Grounds for Termination.......................................55
Section 12.02. Effect of Termination.........................................56
ARTICLE 13
MISCELLANEOUS
Section 13.01. Notices.......................................................56
Section 13.02. Amendments and Waivers........................................57
Section 13.03. Expenses......................................................57
Section 13.04. Successors and Assigns........................................57
Section 13.05. Governing Law.................................................57
Section 13.06. Jurisdiction..................................................57
Section 13.07. Waiver of Jury Trial..........................................58
Section 13.08. Counterparts; Effectiveness; Third Party Beneficiaries........58
Section 13.09. Entire Agreement..............................................58
Section 13.10. Severability..................................................58
Section 13.11. Disclosure Schedules..........................................59
Disclosure Schedules
Exhibit A - Form of Transition Services Agreement
STOCK PURCHASE AGREEMENT
AGREEMENT (this "Agreement") dated as of May 9, 2006 between Xxxxxx
International Inc., an Ohio corporation ("Buyer"), and Xxxxxxx River
Laboratories International, Inc., a Delaware corporation ("Seller").
W I T N E S S E T H :
WHEREAS, Seller owns, directly or indirectly, the Shares; and
WHEREAS, Seller desires to sell the Shares to Buyer, and Buyer desires to
purchase the Shares from Seller, upon the terms and subject to the conditions
hereinafter set forth.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions. (a) As used herein, the following terms have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person;
provided that neither the Companies nor any Subsidiaries shall be considered an
Affiliate of Seller.
"Antitrust Law" means the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other applicable federal, state and foreign statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines and other laws that are
designed or intended to prohibit, restrict, regulate or control actions having
the purpose or effect of monopolization or restraint of trade or lessening of
competition through merger or acquisition.
"Applicable Law" means, with respect to any Person, any federal, state,
local or foreign law (statutory, common or otherwise), constitution, treaty,
convention, ordinance, code, rule, regulation, order, injunction, judgment,
decree, ruling or other similar requirement enacted, adopted, promulgated or
applied by a Governmental Authority that is binding upon or applicable to such
Person or its assets, as amended unless expressly specified otherwise.
"Balance Sheet" means the unaudited interim consolidated balance sheet of
the Business as of April 1, 2006.
"Balance Sheet Date" means April 1, 2006.
"Base Working Capital" means $2,000,000.
"Business" means the business of providing Phase II-IV clinical trials
monitoring and management services to the pharmaceuticals and biotechnology
industries as currently conducted by the Companies and Subsidiaries.
"Business Day" means a day, other than Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by
Applicable Law to close.
"Business Intellectual Property Rights" means all Intellectual Property
Rights owned by the Companies or any Subsidiaries.
"Closing Date" means the date of the Closing.
"Closing Working Capital" means the difference between Current Assets and
Current Liabilities as of the Closing Date and determined in accordance with
GAAP using the accounting policies, principles, practices and methodologies used
in the preparation of the Balance Sheet, as adjusted in accordance with Schedule
2.04 and excluding the effect of any act, event or transaction after the
Closing.
"Code" means the United States Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
"Company" means each of Inveresk Research Inc., a Delaware corporation and
Xxxxxxx River Laboratories Clinical Services GmbH, a German limited liability
company, and "Companies" means both such entities.
"Company Employees" means (i) as of the date of this Agreement those
persons employed by Seller, any Affiliate, any Company or any Subsidiary who
work on a full-time or part-time basis for the Business; and (ii) as of the
Closing Date, (A) those persons employed by any Company or any Subsidiary, (B)
TUPE Transferring Employees and (C) those persons listed on Part I of Schedule
9.01(b) to be transferred into the Companies or the Subsidiaries by Seller or
any of its Affiliates on or prior to the Closing Date; provided that "Company
Employees" excludes those persons listed on Part II of Schedule 9.01(b) to be
transferred out of the Companies or the Subsidiaries to Seller or its Affiliates
prior to the Closing Date.
"Current Assets" means on a consolidated basis for the Business, the sum of
(A) book cash (unrestricted), (B) book restricted cash held in escrow relating
to specific customer studies, (C) trade accounts receivable both billed and
unbilled (excluding intercompany balances and net of allowance for doubtful
accounts) and (D) prepaid expenses, in each case as determined with respect to
the Business in accordance with Schedule 2.04.
"Current Liabilities" means on a consolidated basis for the Business, the
sum of (A) trade accounts payable (excluding intercompany balances), (B) current
accrued expenses, including accrued compensation for Company Employees, and (C)
current liabilities for customer advances and deferred revenue (including
amounts to be paid to investigators), in each case as determined with respect to
the Business in accordance with Schedule 2.04.
"Disclosure Schedules" means the Disclosure Schedules to this Agreement
dated the date hereof prepared by Seller and appended to, and forming part of,
this Agreement.
"Environmental Laws" means any Applicable Law that has as its principal
purpose the protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and the rules and regulations promulgated thereunder.
"ERISA Affiliate" of any entity means any other entity which, together with
such entity, would be treated as a single employer under Section 414 of the
Code.
"FDA" means the United States Food and Drug Administration.
"GAAP" means generally accepted accounting principles in the United States.
"Governmental Authority" means any transnational, domestic or foreign
federal, state or local, governmental authority, department, court, agency or
official, including any political subdivision thereof.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Intellectual Property Right" means any trademark, service xxxx, trade
name, patent, trade secret, copyright, know-how (including any registrations or
applications for registration of any of the foregoing) or any other similar type
of proprietary intellectual property right.
"Knowledge of Seller", "Seller's knowledge" or any other similar knowledge
qualification in this Agreement means to the actual knowledge, after reasonable
inquiry, of the individuals named on Schedule 1.01.
"Lien" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest or encumbrance in respect of such property or
asset.
"Material Adverse Effect" means a material adverse effect on the financial
condition, business operations or results of operations of the Business, except
any such effect resulting from or arising in connection with (i) this Agreement
or the transactions contemplated hereby, including the taking of any action
contemplated by this Agreement, compliance by Seller with its covenants
hereunder, or the announcement or consummation of this Agreement or such
transactions, (ii) changes or conditions affecting the industry in which the
Business operates generally not disproportionately affecting the Business, (iii)
changes in economic, regulatory or political conditions generally, (iv) the
announcement, declaration, commencement, occurrence, continuation or threat of
any war or armed hostilities, any act or acts of terrorism or any public health
or other public emergency or crisis, (v) changes in Applicable Law or GAAP
generally not disproportionately affecting the Business or (vi) actions or
omissions of Buyer or any of its Affiliates.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"Permitted Liens" means, with respect to any property:
(i) Liens disclosed on the Balance Sheet or notes thereto or securing
liabilities reflected on the Balance Sheet or notes thereto;
(ii) Liens for taxes, assessments and similar charges that are not yet
due or are being contested in good faith;
(iii) Liens incurred in the ordinary, usual and regular course of
business since the Balance Sheet Date; or
(iv) other Liens which, individually or in the aggregate, do not
materially impair the value or materially interfere with the current use of
such property in the Business.
"Person" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
Governmental Authority.
"Shares" means (i) all of the outstanding shares of capital stock or other
equity securities or ownership interests of the Companies and (ii) shares of
capital stock or other equity securities or ownership interests of certain
Subsidiaries of the Companies held by Seller or its Affiliates as set forth on
Schedule 3.06.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by any Company.
"Transaction Documents" means this Agreement and the Transition Services
Agreement.
"Transition Services Agreement" means a Transition Services Agreement
substantially in the form of Exhibit A hereto.
"TUPE" means the Transfer of Undertaking (Protection of Employment)
Regulations 2006.
"TUPE Transferring Employees" means those UK Company Employees who are
wholly or mainly employed in the Business in the UK, whose details are set out
in Schedule 9.01(c) pursuant to TUPE and the terms of this Agreement, which
Schedule 9.01(c) shall be updated at the Closing.
"UK Company Employees" means those Company Employees in respect of whom the
employment laws of England and Wales, or Scotland apply to govern the terms of
their employment.
"US Company Employees" means Company Employees who are located in the
United States.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
Agreement Preamble
Audited Financial Statements 3.08(b)
Authorization 3.13(b)(ii)
Business Registered Intellectual Property Rights 3.16(a)
Buyer Preamble
Buyer's FSA 9.10
Buyer's Plan 9.06(c)
Claim 11.03
Closing 2.02
Closing Purchase Price 2.01
Closing Statement 2.04
Commitment Letters 4.05
Company Securities 3.05
Confidentiality Agreement 6.01
CRL Clinical 3.22
CRL Pre-Clinical 3.22
Term Section
Current Representation 6.03
Damages 11.02
Debt Financing 4.05
Designated Employees 9.01
Estimated Closing Working Capital 2.03
Estimated Closing Certificate 2.03
Euro 3.23
FFDCA 3.13(b)(i)
FICA 9.08
Final Working Capital 2.05
Financing 4.05
FUTA 9.08
Health Care Laws 3.13(b)(i)
Indemnified Party 11.03
Indemnifying Party 11.03
International Employees 3.18(c)
International Plan 3.18(d)
Loss 8.06(a)(iii)
Material Contract 3.11(a)
On Leave Employee 9.13
Post-Closing Representation 6.03
Post-Closing Tax Period 8.01
Potential Contributor 11.05
Pre-Closing Tax Period 8.01
Purchase Price 2.01
Quarterly Financial Statements 5.05(a)(ii)
Returns 8.02
Seller Preamble
Seller Group 8.01
Seller's FSA 9.10
Seller's 401(k) Plan 9.06(a)
Seller Trademarks and Tradenames 6.03
Separate Returns 8.01
Subjects of Disagreement 2.04(b)
Subsidiary Securities 3.07
Tax 8.01
Tax Asset 8.01
Tax Benefit 8.06(c)
Tax Claim 8.06(e)
Taxing Authority 8.01
Third Party Claim 11.03
Third Party Payor Program 3.13(b)(iii)
382 Allocation Amount 8.03(f)
Transferred Accounts 9.06(c)
Term Section
TUPE Employers 3.22
UK Pension Plans 9.07(b)
UK Plan 3.18(a)(ii)
US Plans 3.18(a)(i)
Warranty Breach 11.02
Section 1.02. Other Definitional and Interpretative Provisions. The words
"hereof", "herein" and "hereunder" and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. References to Articles, Sections, Exhibits and Schedules are to
Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise
specified. All Exhibits and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise
defined therein, shall have the meaning as defined in this Agreement. Any
singular term in this Agreement shall be deemed to include the plural, and any
plural term the singular. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation", whether or not they are in fact followed by
those words or words of like import. "Writing", "written" and comparable terms
refer to printing, typing and other means of reproducing words (including
electronic media) in a visible form. References from or through any date mean,
unless otherwise specified, from and including or through and including,
respectively. References to "law", "laws" or to a particular statute or law
shall be deemed also to include any and all Applicable Law. Except for amounts
set forth in any financial statements described in, or provided pursuant to,
this Agreement, foreign currencies shall be converted into US Dollars by
reference to the "Exchange Rates" published in the Eastern Edition of the Wall
Street Journal on the date of this Agreement.
ARTICLE 2
PURCHASE AND SALE
Section 2.01. Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, Seller agrees to sell, or cause its Affiliates to
sell, to Buyer or to Buyer's designee (which designee shall be a direct or
indirect wholly owned subsidiary of Buyer), and Buyer agrees to purchase, either
itself or through such designee, from Seller and its Affiliates, the Shares at
the Closing. The aggregate purchase price for the Shares (the "Purchase Price")
is $215,000,000 in cash, subject to adjustment as provided in Section 2.05. The
amount payable in cash to Seller at Closing (the "Closing Purchase Price") is
equal to the Purchase Price, plus (i) if Estimated Working Capital exceeds Base
Working Capital, the amount of such excess, or minus (ii) if Base Working
Capital exceeds Estimated Working Capital, the amount of such excess. The
Closing Purchase Price shall be paid as provided in Section 2.02.
Section 2.02. Closing. The closing (the "Closing") of the purchase and sale
of the Shares hereunder shall take place at the offices of Xxxxx Xxxx &
Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, as soon as possible, but in
no event later than five Business Days, after satisfaction of the conditions set
forth in Article 10, or at such other time or place as Buyer and Seller may
agree. At the Closing:
(a) Buyer shall deliver to Seller the Closing Purchase Price in
immediately available funds by wire transfer to an account of Seller
designated by Seller, by notice to Buyer, which notice shall be delivered
not later than two Business Days prior to the Closing Date (or if not so
designated, then by certified or official bank check payable in immediately
available funds to the order of Seller in such amount).
(b) Seller shall deliver, or cause to be delivered, to Buyer
certificates for the Shares duly endorsed or accompanied by stock powers
duly endorsed in blank, with any required transfer stamps affixed thereto.
(c) Buyer and Seller shall execute and deliver the Transition Services
Agreement.
Section 2.03. Estimated Working Capital. Not less than five Business Days
prior to the Closing Date, Seller shall deliver to Buyer a certificate of an
authorized officer of Seller (the "Estimated Closing Certificate") setting forth
Seller's good faith estimate of Closing Working Capital as of the Closing Date
(the "Estimated Closing Working Capital"). The Estimated Closing Certificate
shall be accompanied by appropriate information and documentation in reasonable
detail supporting Seller's estimate. The amounts set forth on the Estimated
Closing Certificate shall be conclusive for the purposes of calculating the
Closing Purchase Price, but the actual Closing Working Capital and any resulting
adjustment to the Purchase Price shall be determined in accordance with the
provisions of Section 2.04.
Section 2.04. Closing Statement. (a) As promptly as practicable, but no
later than 60 days, after the Closing Date, Seller will cause to be prepared and
delivered to Buyer a closing statement (the "Closing Statement") setting forth
Seller's calculation of Closing Working Capital as of the Closing Date. The
Closing Statement shall be accompanied by appropriate information and
documentation in reasonable detail in support of Seller's calculation.
(b) If Buyer disagrees with Seller's calculation of Closing Working Capital
delivered pursuant to Section 2.04(a), Buyer may, within 30 days after
delivery of the documents referred to in Section 2.04(a), deliver a notice to
Seller disagreeing with such calculation and setting forth Buyer's calculation
of such amount. Any such notice of disagreement shall specify those items or
amounts as to which Buyer disagrees (the "Subjects of Disagreement"), and Buyer
shall be deemed to have agreed for purposes of this Section 2.04 with all items
and amounts contained in the Closing Statement and the calculation of Closing
Working Capital delivered pursuant to Section 2.04(a) other than the Subjects of
Disagreement.
(c) If a notice of disagreement shall be delivered pursuant to Section
2.04(b), Buyer and Seller shall, during the 20 days following such delivery, use
their best efforts to reach agreement on the Subjects of Disagreement in order
to determine, as may be required, the amount of Closing Working Capital. If,
during such period, Buyer and Seller are unable to reach such agreement on the
Subjects of Disagreement, they shall promptly thereafter cause a firm of
independent accountants of nationally recognized standing reasonably
satisfactory to Buyer and Seller (who shall not have any material relationship
with Buyer or Seller), promptly to review the Closing Statement, Buyer's notice
of disagreement and the Subjects of Disagreement for the purpose of calculating
Closing Working Capital. In making such calculation, such independent
accountants shall consider only the Subjects of Disagreement and the
determination of such independent accountants with respect to each such Subject
of Disagreement shall be an amount within the range established with respect to
such item by Seller's calculation delivered pursuant to Section 2.04(a) and
Buyer's calculation delivered pursuant to Section 2.04(b). Such independent
accountants shall deliver to Buyer and Seller, as promptly as practicable, a
report setting forth such calculation. Such report shall be final and binding
upon Buyer and Seller. The cost of such review and report shall be borne by
Buyer and Seller pro rata based upon the proportion by which their respective
determinations of Closing Working Capital differs from Final Closing Working
Capital.
(d) Buyer and Seller agree that they will, and agree to cause the
independent accountants and each Company and each Subsidiary to, cooperate and
assist in the preparation of the Closing Statement and the calculation of
Closing Working Capital and in the conduct of the reviews referred to in this
Section, including the making available to the extent necessary of books,
records, work papers and personnel.
Section 2.05. Adjustment of Purchase Price. (a) If Estimated Closing
Working Capital exceeds Final Working Capital, Seller shall pay to Buyer, as an
adjustment to the Purchase Price, in the manner and with interest as provided in
Section 2.05(b), the amount of such excess. If Final Working Capital exceeds
Estimated Closing Working Capital, Buyer shall pay to Seller, as an adjustment
to the Purchase Price, in the manner and with interest as provided in Section
2.05(b), the amount of such excess. "Final Working Capital" means Closing
Working Capital as shown in Seller's calculation delivered pursuant to Section
2.04(a), if no notice of disagreement with respect thereto is duly delivered
pursuant to Section 2.04(b); or if such a notice of disagreement is delivered,
as agreed by Buyer and Seller pursuant to Section 2.04(c) or in the absence of
such agreement, as shown in the independent accountant's calculation delivered
pursuant to Section 2.04(c); provided that, in no event shall Final Working
Capital be more than Seller's calculation of Closing Working Capital delivered
pursuant to Section 2.04(a) or less than Buyer's calculation of Closing Working
Capital delivered pursuant to Section 2.04(b).
(b) Any payment pursuant to Section 2.05(a) shall be made at a mutually
convenient time and place within ten days after the Final Working Capital has
been determined by causing such payments to be credited to such account of such
other party as may be designated by such other party. The amount of any payment
to be made pursuant to this Section shall bear interest from and including the
Closing Date to but excluding the date of payment at a rate per annum equal to
the Prime Rate as published in the Wall Street Journal, Eastern Edition in
effect from time to time during the period from the Closing Date to the date of
payment. Such interest shall be payable at the same time as the payment to which
it relates and shall be calculated daily on the basis of a year of 365 days and
the actual number of days elapsed.
Section 2.06. Allocation of Purchase Price. Buyer and Seller agree that the
Purchase Price shall be allocated for Tax purposes as set forth on Schedule
2.06. Buyer, the Companies and the Subsidiaries and Seller shall file all Tax
Returns (including amended returns and claims for refund) and information
reports in a manner consistent with such allocation. Buyer and Seller agree
that, in the event of any payment that is treated as an adjustment to the
Purchase Price is made pursuant to Section 2.05, the allocation set forth on
Schedule 2.06 shall be adjusted accordingly to take account of such adjustment,
based on the extent to which the adjustment relates to each Company.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Disclosure Schedules, Seller represents and
warrants to Buyer as of the date hereof and, unless otherwise indicated, as of
the Closing Date that:
Section 3.01. Corporate Existence and Power. Seller and each Company is a
corporation or limited liability company, as applicable, duly incorporated or
organized, validly existing and in good standing (or the local law equivalent)
under the laws of its jurisdiction of incorporation or organization and has all
corporate powers and all material governmental licenses, authorizations,
permits, consents and approvals required to carry on its business as now
conducted. Each Company is duly qualified to do business as a foreign or alien
corporation and is in good standing (or the local law equivalent) in each
jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect.
Section 3.02. Corporate Authorization. The execution, delivery and
performance by Seller of the Transaction Documents and the consummation of the
transactions contemplated hereby are within Seller's corporate powers and have
been duly authorized by all necessary corporate action on the part of Seller.
This Agreement constitutes a valid and binding agreement of Seller, enforceable
against Seller in accordance with its terms, and each other Transaction
Document, when executed and delivered by Seller will constitute the valid and
binding agreement of Seller, enforceable against Seller in accordance with its
terms.
Section 3.03. Governmental Authorization. The execution, delivery and
performance by Seller of this Agreement and the consummation of the transactions
contemplated hereby require no action by or in respect of, or filing with, any
Governmental Authority other than (i) compliance with any applicable
requirements of the HSR Act and the 1934 Act; (ii) compliance with any
applicable requirements of non-United States Antitrust Laws; and (iii) any such
action or filing as to which the failure to make or obtain would not have a
Material Adverse Effect.
Section 3.04. Noncontravention. The execution, delivery and performance by
Seller of the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby do not and will not (i) violate the certificate
of incorporation or bylaws of Seller or either of the Companies, (ii) assuming
compliance with the matters referred to in Section 3.03, violate in any material
respect any Applicable Law, (iii) except as disclosed in Schedule 3.04, require
any consent or other action by any Person under, constitute a material default
under, or give rise to any right of termination, cancellation or acceleration of
any right or obligation of Seller, any Company or any Subsidiary under any
provision of any Material Contract or (iv) result in the creation or imposition
of any Lien on any material asset of any Company or any Subsidiary, except for
any Permitted Liens.
Section 3.05. Capitalization. (a) Schedule 3.05(a) sets forth the
authorized capital stock and, as of the date hereof, the outstanding capital
stock of each Company.
(b) All outstanding shares of capital stock of each Company have been duly
authorized and validly issued and are fully paid and non-assessable. Except as
set forth in this Section 3.05, there are no outstanding shares of capital stock
or voting securities of any Company, securities of any Company convertible into
or exchangeable for shares of capital stock or voting securities of such Company
or options or other rights to acquire from any Company, or other obligation of
any Company to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of any
such Company (the items in clauses 3.05(b)(i), 3.05(b)(ii) and 3.05(b)(iii)
being referred to collectively as the "Company Securities"). There are no
outstanding obligations of any such Company or any Subsidiary to repurchase,
redeem or otherwise acquire any Company Securities. There are no "phantom" stock
or equity rights outstanding pursuant to which either Company or any of the
Subsidiaries could be required to issue Company Securities or make payments
measured by or with respect to Company Securities.
Section 3.06. Ownership of Shares. Each of Seller or its Affiliate named on
Schedule 3.06 is the record and beneficial owner of the Shares set forth
opposite the name of Seller or any such named Affiliate on Schedule 3.06, free
and clear of any Lien, and Seller will transfer and deliver, or cause to be
transferred and delivered, to Buyer at the Closing valid title to the Shares
free and clear of any Lien.
Section 3.07. Subsidiaries. (a) Each Subsidiary is a corporation or limited
liability entity duly incorporated or organized, validly existing and in good
standing (or the local law equivalent) under the laws of its jurisdiction or
organization of incorporation and has all material corporate or limited
liability entity powers and all material governmental licenses, authorizations,
permits, consents and approvals required to carry on its business as now
conducted. All Subsidiaries and their respective jurisdictions of incorporation
or organization are identified on Schedule 3.07.
(b) All of the outstanding capital stock or other voting securities or
ownership interests of each Subsidiary is owned by one of the Companies or an
Affiliate of Seller as set forth on Schedule 3.06, directly or indirectly, free
and clear of any Lien. After giving effect to the transactions contemplated by
this Agreement, all of the outstanding capital stock or other voting securities
or ownership interests of each Subsidiary shall be owned by Buyer or its
designee. There are no outstanding securities or ownership interests of any
Company or any Subsidiary convertible into or exchangeable for shares of capital
stock or voting securities of any Subsidiary or options or other rights to
acquire from any Company or any Subsidiary, or other obligation of any Company
or any Subsidiary to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of any
Subsidiary (the items in clauses 3.07(b)(i) and 3.07(b)(ii) being referred to
collectively as the "Subsidiary Securities"). There are no outstanding
obligations of any Company or any Subsidiary to repurchase, redeem or otherwise
acquire any outstanding Subsidiary Securities. There are no "phantom" stock or
equity rights outstanding pursuant to which either Company or any Subsidiary
could be required to issue Subsidiary Securities or make payments measured by or
with respect to Subsidiary Securities.
Section 3.08. Financial Statements. (a) The unaudited consolidated balance
sheet as of December 31, 2005 and the related unaudited consolidated statements
of income and cash flows for the year ended December 31, 2005 and the Balance
Sheet and the related unaudited interim consolidated statements of income and
cash flows for the quarter ended April 1, 2006 of the Business, true and
complete copies of which are set forth in Schedule 3.08, fairly present, in
conformity with GAAP, consistently applied (except as otherwise indicated in
such statements), the financial position of the Business as of the dates thereof
and its consolidated results of operations and cash flows for the periods then
ended (subject to normal year-end adjustments in the case of any interim
financial statements and the absence of notes).
(b) The audited consolidated balance sheet as of December 31, 2005 and the
related consolidated statements of income and cash flows for the year ended
December 31, 2005 of the Business (together, the "Audited Financial Statements")
when delivered to the Buyer shall fairly present, in conformity with GAAP,
consistently applied (except as otherwise indicated in the notes thereto), the
combined financial position of the Business as of the dates thereof and its
consolidated results of operations and cash flows for the period then ended.
Section 3.09. Absence of Certain Changes. Except as set forth on Schedule
3.09, since the Balance Sheet Date, the Business has been conducted in the
ordinary course consistent with past practices and there has not been:
(a) any event, occurrence or development which has had, individually
or in the aggregate, a Material Adverse Effect;
(b) any amendment of any term of the constituent documents or any
outstanding security of any Company or any Subsidiary;
(c) any incurrence, assumption or guarantee by any Company or any
Subsidiary of any indebtedness for borrowed money other than in the
ordinary course of business consistent with past practices, but not in any
event (other than accounts payable in the ordinary course of business)
exceeding $250,000 in the aggregate outstanding at any time;
(d) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital
contributions to or investments made in a Subsidiary and loans and advances
to employees in the ordinary course of business consistent with past
practices (including with respect to quantity and frequency);
(e) any transaction or commitment made, or any contract or agreement
entered into, by any Company or any Subsidiary relating to its assets or
business, in either case, material to the Companies and the Subsidiaries,
taken as a whole, other than transactions and commitments in the ordinary
course of business consistent with past practices and those contemplated by
this Agreement (including with respect to quantity and frequency);
(f) any acquisition of property other than (i) inventory, capital
expenditures and accounts receivable in the ordinary course of business
consistent with past practice or (ii) in an aggregate amount not exceeding
$250,000;
(g) any disposition of property other than (i) merchandise or
inventory, each in the ordinary course of business consistent with past
practice, (ii) obsolete, inoperative or replaced equipment or (iii) in an
aggregate amount not exceeding $250,000;
(h) any material change in any method of accounting or accounting
practice by any Company or any Subsidiary except for any such change
required by reason of a concurrent change in GAAP; or
(i) any (i) employment, deferred compensation, severance, retirement
or other similar agreement entered into with any senior manager of any
Company or any Subsidiary (or any amendment to any such existing
agreement), (ii) grant of any severance or termination pay to any senior
manager of any Company or any Subsidiary, or (iii) defined. change in
compensation or other benefits payable to any senior manager of any Company
or any Subsidiary pursuant to any severance or retirement plans or policies
thereof, in each case other than in the ordinary course of business
consistent with past practices.
Section 3.10. No Undisclosed Material Liabilities. There are no liabilities
of any Company or any Subsidiary of any kind, other than:
(a) liabilities provided for in the Balance Sheet or disclosed in the
notes thereto;
(b) liabilities not required under GAAP to be shown on the Balance
Sheet for reasons other than the contingent nature thereof or the
difficulty of determining the amount thereof;
(c) liabilities disclosed in the Disclosure Schedules;
(d) liabilities arising under this Agreement or any other agreement or
instrument between the parties hereto;
(e) liabilities incurred in the ordinary course of business since the
Balance Sheet Date; or
(f) other undisclosed liabilities which, individually or in the
aggregate, do not have a Material Adverse Effect.
Section 3.11. Material Contracts. (a) Except as set forth on Schedule 3.11
(each listed item, a "Material Contract"), none of the Companies or any
Subsidiaries is a party to or bound by:
(i) any lease (whether of real or personal property) providing for
annual rentals of $250,000 or more that cannot be terminated on not more
than 60 days' notice without payment by any Company or any Subsidiary of a
penalty or termination fee;
(ii) any agreement for the purchase of materials, supplies, goods,
services or equipment providing for annual payments by any Company or any
Subsidiary of $250,000 or more or that cannot be terminated on not more
than 60 days' notice without payment by any such Company or any Subsidiary
of a penalty or termination fee;
(iii) any agreement for the provision of clinical trials monitoring
and management services by any Company or any Subsidiary that provides for
payments in the aggregate to any such Company or Subsidiary of $2,500,000
or more, except for any such agreement having a term of 180 days or less or
that can be terminated by the other party thereto on not more than 180
days' notice;
(iv) any partnership, joint venture or other similar agreement or
arrangement pursuant to which any of the Companies or any Subsidiary has
unlimited liability or any other material partnership, joint venture or
other similar agreement or arrangement;
(v) any agreement relating to the acquisition or disposition of any
business (whether by merger, sale of stock, sale of assets or otherwise);
(vi) any agreement relating to indebtedness for borrowed money or the
deferred purchase price of property (in either case, whether incurred,
assumed, guaranteed or secured by any asset), except any such agreement (A)
with an aggregate outstanding principal amount not exceeding $250,000 or
(B) entered into subsequent to the date of this Agreement as permitted by
Section 3.09(c);
(vii) any agreement that limits in any material respect the freedom of
any Company or any Subsidiary to compete in any line of business or with
any Person or in any area; or
(viii) any agreement with Seller or any of its Affiliates or any
director or officer of Seller or any of its Affiliates.
(b) Each agreement, contract, plan, lease, arrangement or commitment
required to be disclosed pursuant to this Section is a valid and binding
agreement of a Company or Subsidiary, as the case may be, and is in full force
and effect, and none of the Companies, any Subsidiaries or, to the knowledge of
Seller, any other party thereto is in default or breach in any material respect
under the terms of any such agreement, contract, plan, lease, arrangement or
commitment.
Section 3.12. Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Seller, threatened against or
affecting, any Company or any Subsidiary or any of their respective properties
or involving any TUPE Transferring Employee before any arbitrator or any
Governmental Authority which is reasonably likely to result in damages, fines or
penalties exceeding $250,000 or otherwise have a Material Adverse Effect.
Section 3.13. Compliance with Laws. (a) None of any Companies or any
Subsidiaries is in violation in any material respect of any Applicable Law.
(b) Without limiting the generality of clause (a):
(i) The Companies and the Subsidiaries are, and at all times have
been, in material compliance with all relevant federal, state or foreign
civil or criminal health care laws applicable to the Company, any of the
Subsidiaries or their respective businesses, including, to the extent
applicable, the federal Food, Drug and Cosmetic Act (21 U.S.C.ss.301 et
seq.) ("FFDCA") and the Controlled Substances Act (21 U.S.C.ss.801 et seq.)
and the regulations promulgated pursuant to such laws, and comparable state
laws, accreditation standards and all other state, federal and foreign
federal laws and regulations relating to the regulation of the business of
the Company or any of its Subsidiaries (collectively, "Health Care Laws").
(ii) The Companies and the Subsidiaries have (i) all material
licenses, consents, certificates, permits, authorizations, approvals,
registrations and qualifications from, and has made all declarations and
filings with, all applicable Governmental Authorities (each, an
"Authorization") necessary to engage in the business conducted by it, and
(ii) not received notice and has no knowledge that any Governmental
Authority is considering suspending, adversely amending or revoking any
such Authorization. All such Authorizations are valid and in full force and
effect and each Company and its Subsidiaries is in material compliance with
the terms and conditions of all such Authorizations and with the rules and
regulations of the regulatory authorities having jurisdiction with respect
to such Authorizations.
(iii) None of the Companies or the Subsidiaries bills, receives
payment from or otherwise participates as a healthcare provider or supplier
in any Third Party Payor Program. For purposes of this Agreement, "Third
Party Payor Program" means any private, state or federal government program
that pays or reimburses healthcare providers and suppliers for health care
services rendered to individuals, including, without limitation, Medicare,
Medicaid, commercial health insurance, a health maintenance organization,
an employer-sponsored health benefits plan and a similar healthcare
reimbursement or payment program.
(iv) The Companies and the Subsidiaries have received and maintain
accreditation in good standing and without limitation or impairment by all
applicable accrediting organizations, to the extent required by Law
(including any foreign law or equivalent regulation).
(v) All analyses, studies, tests and clinical trials conducted by each
of the Companies and the Subsidiaries are being and were, if completed,
conducted in material compliance with experimental protocols, procedures
and controls pursuant to accepted professional scientific standards and
applicable local, state, provincial and federal laws, rules, regulations,
policies, directives and guidance (such as Good Clinical Practice),
including, but not limited to, the FFDCA and its implementing regulations
at 21 C.F.R. Parts 11, 50, 54, 56, 312 and 314 and the CSA and its
implementing regulations, to the extent applicable to the Companies and
Subsidiaries based on the obligations assumed by each of them pursuant to
their contracts or subcontracts with the sponsors of such analyses,
studies, tests and clinical trials. None of the Companies or the
Subsidiaries have received any notices, correspondence or other
communication from the FDA or other Governmental Authority requiring the
termination, suspension or material modification of any study, test or
clinical trial currently being conducted by the Companies and the
Subsidiaries.
Section 3.14. Government Contracts. Except as set forth on Schedule 3.14,
none of the Companies or any Subsidiaries are party to any contract or agreement
with the United States federal government.
Section 3.15. Properties. (a) The Companies and the Subsidiaries have good
title to, or in the case of leased property and assets have valid leasehold
interests in, all material personal property and assets (whether tangible or
intangible) reflected on the Balance Sheet or acquired after the Balance Sheet
Date, free of any Liens other than Permitted Liens, except for property and
assets sold since the Balance Sheet Date in the ordinary course of business
consistent with past practices.
(b) The Companies and the Subsidiaries do not own any real property.
Section 3.16. Intellectual Property. Schedule 3.16(a) contains a list of
all registrations and applications for registration included in the Business
Intellectual Property Rights (the "Business Registered Intellectual Property
Rights").
(b) Schedule 3.16(b) sets forth a list of all material agreements
(excluding licenses for commercial off-the-shelf computer software that are
generally available on non-discriminatory pricing terms) to which any Company or
any Subsidiary is a party and pursuant to which (i) any Person is authorized to
use any Business Intellectual Property Right or (ii) any Company or any
Subsidiary is licensed to use any Intellectual Property Right of any other
Person.
(c) No Business Intellectual Property Right is subject to any outstanding
judgment, injunction, order, decree or agreement restricting in any material
respect the use thereof by the Companies or any Subsidiaries or restricting in
any material respect the licensing thereof by the Companies or any Subsidiaries
to any Person.
(d) The Companies and Subsidiaries own and possess or have the right to use
pursuant to a valid and enforceable written license, sublicense, agreement, or
permission all the Business Intellectual Property Rights necessary for the
operation of the Business as presently conducted. Except as set forth on
Schedule 3.16(d), each Business Intellectual Property Right currently used by
the Company or any of the Subsidiaries immediately prior to the Closing will be
owned or available for use by the Companies or the Subsidiaries immediately
subsequent to the Closing.
(e) To the knowledge of Seller, neither the Companies nor any of the
Subsidiaries has infringed upon or misappropriated any Intellectual Property
Rights of any other Person, and Seller has not received any written claim,
demand or notice alleging any such infringement or misappropriation from using
any Intellectual Property Rights of any other Person. To the knowledge of
Seller, no third party has infringed upon or misappropriated any Business
Intellectual Property Rights of the Companies or any of the Subsidiaries.
Section 3.17. Finders' Fees. Except for Credit Suisse Securities (USA) LLC
whose fees will be paid by Seller, there is no investment banker, broker, finder
or other intermediary which has been retained by or is authorized to act on
behalf of Seller or any Company or any Subsidiary who might be entitled to any
fee or commission in connection with the transactions contemplated by this
Agreement.
Section 3.18. Employee Benefit Plans. (a) In relation to the US Company
Employees:
(i) Schedule 3.18(a)(i) sets forth a list of each "employee benefit
plan", as defined in Section 3(3) of ERISA, each employment, severance or
similar material contract, plan arrangement or policy and each other
material plan or arrangement (written or oral) providing for compensation,
bonuses, profit-sharing, stock option or other stock related rights or
other forms of incentive or deferred compensation, vacation benefits,
insurance (including any self-insured arrangements), health or medical
benefits, employee assistance program, disability or sick leave benefits,
workers' compensation, supplemental unemployment benefits, severance
benefits and post-employment or retirement benefits (including
compensation, pension, health, medical or life insurance benefits) which is
maintained, administered or contributed to by any Company or any Affiliate
and covers any US Company Employee or former US Company Employee of the
plans (and, if applicable, related trust or funding agreements or insurance
policies) and all amendments thereto and written interpretations thereof
have been furnished to Buyer together with the most recent annual report
(Form 5500 including, if applicable, Schedule B thereto) and Form 990, if
applicable, prepared in connection with any such plan or trust. Such plans
are referred to collectively herein as the "US Plans".
(ii) None of the Companies who employ US Company Employees nor any
ERISA Affiliate of any such Company has (i) engaged in, or is a successor
or parent corporation to an entity that has engaged in, a transaction
described in Sections 4069 or 4212(c) of ERISA or (ii) incurred, or
reasonably expects to incur prior to the Closing Date, any liability under
Title IV of ERISA arising in connection with the termination of, or a
complete or partial withdrawal from, any plan covered or previously covered
by Title IV of ERISA.
(iii) None of the Companies who employ US Company Employees, any ERISA
Affiliate of such Companies and any predecessor thereof contributes to, or
has in the past contributed to, any multiemployer plan, as defined in
Section 3(37) of ERISA.
(iv) Each US Plan which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter,
or has pending or has time remaining in which to file, an application for
such determination from the Internal Revenue Service, and Seller is not
aware of any reason why any such determination letter should be revoked or
not be reissued. The Seller has made available to Buyer copies of the most
recent Internal Revenue Service determination letters with respect to each
such US Plan. Each US Plan has been maintained in material compliance with
its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations, including ERISA and the Code, which are
applicable to such US Plan. Full payment has been made of all amounts that
are required under the terms of Seller's 401(k) Plan to be paid as
contributions or premiums with respect to all periods prior to and
including the last day of the most recent fiscal year of such plan on or
before the date of this agreement, and all periods thereafter prior to the
Closing Date. All material filings required by ERISA and the Code as to
each US Plan have been timely filed, and all material notices and
disclosures to participants required by either ERISA or the Code have been
timely provided. Other than routine individual material claims for benefits
submitted by participants or beneficiaries, no material claim against or
legal proceeding involving any US Plan is pending or to the knowledge of
the Seller, is threatened. No corrections have been made under any
voluntary compliance program or self-correction program with the Internal
Revenue Service or the Department of Labor. No material events have
occurred with respect to any US Plan that could result in payment or
assessment by or against the Company of any material excise taxes under
Sections 4972, 4975, 4976, 4977, 4979, 4980B, 4980D, 4980E or 5000 of the
Code.
(v) Neither the Companies nor any Subsidiaries has any current or
projected liability in respect of post-employment or post-retirement health
or medical or life insurance benefits for retired, former or current
employees of the Companies or any Subsidiaries, except as required to avoid
excise tax under Section 4980B of the Code.
(b) In relation to UK Company Employees, Seller has made available to the
Buyer particulars of the terms of employment (including all emoluments) together
with copies of the standard terms and conditions of employment, staff handbooks
and other applicable policies, any collective agreements, agreements with trade
unions, staff associations and other representative bodies and elected
representatives of UK Company Employees, details of any profit sharing, bonus
arrangements, share schemes or other incentive arrangements and details of any
benefits that are payable on retirement (including participation in the UK
Pension Plans), on death or in the event of disability, accident or sickness
(including any medical expenses scheme or loss of earnings indemnity) (each, a
"UK Plan") and Seller has at all relevant times been in material compliance with
all of its obligations arising out of or in connection with a UK Plan.
(c) In relation to Company Employees who are not US Company Employees or UK
Company Employees ("International Employees"), Seller has made available to
Buyer summaries of material employment and benefit arrangements (each such
arrangement, an "International Plan") for such International Employees who are
located in countries with more than 25 International Employees. Each
International Plan has been maintained in substantial compliance with its terms
and with the requirements prescribed by any and all applicable statutes, orders,
rules and regulations (including any special provisions relating to qualified
plans where such International Plan was intended to so qualify) and has been
maintained in good standing with applicable regulatory authorities.
(d) Except as set forth in Schedule 3.18(d), no Company Employee will
become entitled as a result of a contract with Seller to any bonus, severance,
or similar benefit, or any acceleration or vesting of any such benefit as a
result of the transactions contemplated hereby.
Section 3.19. Environmental Matters. (a) Except as to matters that would
not reasonably be expected to have a Material Adverse Effect:
(i) (x) no written notice, order, request for information, complaint
or penalty has been received by Seller, any Company or any Subsidiary, and
(y) there are no judicial, administrative or other actions, suits or
proceedings pending or, to the knowledge of Seller, threatened, in the case
of each of (x) and (y), which allege a violation of any Environmental Law
and relate to the Business;
(ii) each Company and each Subsidiary have all environmental permits
necessary for their operations to comply with all applicable Environmental
Laws and are in compliance with the terms of such permits and with all
other applicable Environmental Laws;
(iii) (x) no real property currently and no real property formerly
owned or operated by any Company or Subsidiary is listed or, to the
knowledge of Seller, proposed for listing on the National Priority List
established by CERCLA, or any other similar state hazardous site list and
(y) no Company or Subsidiary nor any Person on behalf of any Company or
Subsidiary has transported, disposed of, or arranged for disposal of any
Hazardous Substance to or at any such site; and
(iv) to the knowledge of Seller, there is no obligation of any Company
or Subsidiary under Environmental Laws to investigate, remove, remediate or
cleanup any Hazardous Substance from the soil, groundwater or surface water
at, on or under any real property currently or formerly owned or operated
by any Company or Subsidiary.
(b) Except as set forth in this Section 3.19, no representations or
warranties are being made with respect to environmental matters.
Section 3.20. Significant Customers; Backlog. (a) Except as set forth on
Schedule 3.20, none of the customers listed on Schedule 3.20 of either Company
or of any of the Subsidiaries has delivered any written notice to either Company
or any of the Subsidiaries that any such customer has terminated or intends to
terminate any contract or agreement with either Company or any of the
Subsidiaries.
(b) Schedule 3.20(b) sets forth the backlog of the Companies and the
Subsidiaries as of April 1, 2006, as determined by Seller in good faith based,
with respect only to studies and projects included in the backlog that are in
process but that have not been completed, on Seller's revenue recognition
policies (which comply with GAAP) and, with respect to all studies and projects
included in the backlog, based on assumptions that Seller believes to be
reasonable and using the methodologies, practices and principles consistent with
those used by Seller in its determination of its backlog as disclosed in its
filings pursuant to the 1934 Act.
(c) Except as set forth in Schedule 3.20(c), to the knowledge of Seller, as
of April 1, 2006 there were no material ongoing customer projects with respect
to the Business for which the projected completion costs would reasonably be
expected to exceed the budgeted costs for such projects by amounts that,
individually or in the aggregate, would have a material effect on the backlog
amount set forth on Schedule 3.20(b), as determined by Seller in the exercise of
its reasonable judgment applying the principles, practices and methodologies
referred to above and taking into account expected changes in scope of such
projects in the ordinary course of business.
Section 3.21. Employees And Labor Controversies. (a) In relation to the UK
Company Employees:
(i) Other than (A) PAYE and National Insurance contributions in
respect of the current payroll period, (B) accrued but untaken holiday
leave, (C) benefits, commission or fees accrued but not yet payable and (D)
the reimbursement of expenses, no material amount due to any present or
former UK Company Employees or director is in arrears or is owing and there
are no outstanding loans or advances from any Company or Subsidiary to any
present or former UK Company Employee or director (whether of money or any
other asset). None of the Companies, Subsidiaries or TUPE Employers are
under any obligation to increase the rates of remuneration or increase
bonuses with respect to UK Company Employees other than in the ordinary
course consistent with past practice.
(ii) All the UK Company Employees employed under contracts of service
can be terminated on six months' notice or less without payment of
compensation or damages (other than UK statutory rights to payments of
compensation), and there is no policy, arrangement or agreement (whether
legally binding or not) in relation to which any of the UK Company
Employees is or may be entitled to any payment or benefit in addition to
his or her statutory entitlements to redundancy pay on termination of
employment by reason of redundancy or redeployment.
(iii) Schedule 9.01(c) includes the following details for each TUPE
Transferring Employee: name, job title or description, age, date of
commencement of continuous employment, employing company, location,
full time or part time status, notice entitlement, salaries/rates of
remuneration, and benefits (whether financial or otherwise) actually
provided or which the applicable employer has agreed to provide whether now
or in the future.
(iv) Seller has provided particulars of the terms of the contracts of
service for all directors, including name, position, date appointed, fees,
remuneration, benefits (whether financial or otherwise) which the Companies
or Subsidiaries are obliged to pay or provide, amount of time devoted to
the relevant Companies or Subsidiaries and notice entitlement (of the
Companies or Subsidiaries and the director) and/or expiry date of the
appointment. No person is a shadow director of the Company. There have been
no changes to these terms in the 6 months preceding this Agreement and
there are no obligations on the Companies or Subsidiaries to make any
changes.
(v) During the three years preceding the date of this Agreement, there
has been no trade dispute (as defined in section 218 of TULR(C)A 1992) or
industrial action involving any UK Company Employee, former UK Company
Employee trade union (whether recognized or not), staff association, worker
representatives or any other body representing employees, and the Companies
and Subsidiaries are not involved in any such dispute and there are no
present circumstances or facts to Seller's knowledge which are likely to
give rise to any such dispute and no industrial action involving the UK
Company Employees (official or unofficial and including but not limited to
strike, slowdown, work stoppage or lockout) is now occurring or threatened
nor has any industrial relations or employment matter been referred by the
Companies or Subsidiaries, any of the UK Company Employee or by any trade
union, staff association or any other body representing employees to ACAS
for advice, conciliation or arbitration.
(vi) The Company and Subsidiaries have not received and do not
anticipate receiving any request for statutory recognition under the Trade
Union and Labour Relations (Consolidation) Xxx 0000 or any request to
negotiate an agreement in respect of information and consultation under the
Information and Consultation of Employees Regulations 2004.
(vii) The only bonus, incentive and commission arrangements covering
UK Company Employees are those set forth in Schedule 3.21(a)(vii).
(viii) As of the date of this Agreement, (A) no more than 20
outstanding offers of employment or consultancy have been made to work in
the Business in the United Kingdom which have not been accepted, and
(B) there are no more than 20 UK Company Employees working out their notice
or who are receiving or are entitled to receive pay in lieu of notice or on
garden leave (in both cases where the basic annual salary or fees payable
to such person by any Company or any Subsidiary exceeds(pound)25,000).
(ix) As of the date of this Agreement, no UK Company Employee is
subject to a current disciplinary final written warning and there is no
pending, anticipated or ongoing action under any of the grievance
procedures of any Company or any Subsidiary.
(x) Neither the Companies nor any Subsidiary is subject to any
existing, threatened or pending claims by present or former UK Company
Employees, directors, consultants or third parties, nor any outstanding
orders, awards or rulings in relation to present, former or prospective UK
Company Employees, directors or consultants, and there are no circumstances
which can be reasonably foreseen, to Seller's knowledge, as likely to give
rise to any such claims or disputes.
(b) Except as set forth on Schedule 3.21(b), (i) without limiting the
generality of Section 3.13, the Companies and each of the Subsidiaries have
complied in all material respects with all Applicable Laws respecting employment
and employment practices, terms and conditions of employment, wages and hours,
and neither the Companies nor any Subsidiary is liable for any arrears of wages
or any taxes or penalties for failure to comply with any such laws, rules or
regulations; (ii) there are no material controversies pending or, to the
knowledge of Seller, threatened between the Companies or any of the Subsidiaries
and any of their respective employees; (iii) neither the Companies nor any
Subsidiary is a party to any collective bargaining agreement or other labor
union contract applicable to US Company Employees or UK Company Employees, nor
are there any activities or proceedings of any labor union to organize any such
employees, except in the case of either of the foregoing as would not result in
a material liability to either Company; (iv) there are no unfair labor practice
complaints pending or, to the knowledge of Seller, threatened against the
Companies or any Subsidiary before the National Labor Relations Board or similar
body in the UK or any current union representation questions involving US
Company Employees or UK Company Employees; (v) there is no strike slowdown, work
stoppage or lockout existing, or, to the knowledge of Seller, threatened, by or
with respect to any employees of the Companies or any Subsidiary; (vi) no
charges are pending or, to the knowledge of Seller, threatened before the Equal
Employment Opportunity Commission or any state, local or foreign agency
responsible for the prevention of unlawful employment practices with respect to
the Companies or any Subsidiary; (vii) there are no material claims pending
against the Companies or any Subsidiary before any workers' compensation board
in the US; (viii) neither the Companies nor any Subsidiary has received notice
that any federal, state, local or foreign agency responsible for the enforcement
of labor or employment laws in the US or UK intends to conduct an investigation
of or relating to the Companies or any Subsidiary and no such investigation is
in progress; and (ix) neither the Companies nor any Subsidiary has received
notice that any foreign agency responsible for the enforcement of labor or
employment laws in jurisdictions other than the US or UK intends to conduct an
investigation of or relating to the Companies or any Subsidiary and no such
investigation is in progress, except in the case of either of the foregoing as
would not result in a material liability to any Company or any Subsidiary.
(c) Neither the Companies nor any Subsidiary have any obligation to provide
those Persons who have been treated as consultants or contractors or have
otherwise performed services for the Companies or any Subsidiary other than in
an employment capacity with benefits under any Plan, nor do the Companies or any
Subsidiary have any obligation to provide such Persons with any life insurance
or medical benefits except as required under applicable law, or any additional
compensation, whether pursuant to a Plan or otherwise.
(d) The Companies and each Subsidiary have properly classified for all
purposes (including, without limitation, for all Tax purposes and for purposes
of determining eligibility to participate in any employee benefit plan) all
employees, leased employees, consultants and independent contractors, and has
withheld and paid all applicable Taxes and made all appropriate filings in
connection with services provided by such persons to the Companies and each
Subsidiary.
Section 3.22. Tupe Transferring Employees. Seller warrants that each of
Xxxxxxx River Laboratories Pre-Clinical Services Edinburgh Limited ("CRL
Pre-Clinical") and Xxxxxxx River Laboratories Clinical Services Limited ("CRL
Clinical" and together with CRL Pre-Clinical, the "TUPE Employers") is in
material compliance with all applicable legal requirements and terms of
employment, including pursuant to contracts of employment, with respect to the
TUPE Transferring Employees. Prior to and until the Closing Date, each of the
TUPE Employers will comply with the obligations set forth in the preceding
sentence and its obligations under TUPE. Specifically, each of the TUPE
Employers will comply in all material respects with the Information and
Consultation requirements under Regulations 13-16 of TUPE in connection with the
transfer and/or assignment to and/or employment of the TUPE Transferring
Employees by Xxxxxxx River Laboratories Clinical Services International Limited
and any transfer of such employees to Buyer, as applicable.
Section 3.23. Euro. The computer financial systems that are used or relied
on by the Companies or the Subsidiaries (i) are capable of performing all
appropriate functions necessary to process more than one currency and any common
currency adopted by one or more of the European Union (the "Euro"), (ii) comply
with all legal requirements applicable to the Euro in any jurisdiction,
including the rules on conversion and rounding set out in applicable European
Community regulations, and (iii) are capable of displaying and printing, and
incorporate in all relevant screen layouts, all symbols and codes adopted by any
government or any other European Union body in relation to the Euro.
Section 3.24. Disclosure. To the knowledge of Seller, as of the date of
this Agreement, the documents made available to Buyer in the electronic data
site relating to the transactions contemplated hereby do not contain any
misstatement of fact that is material to the Business taken as a whole, taking
into account any supplementary, modifying or otherwise reasonably related
information made available to Buyer in connection with the transactions
contemplated hereby; provided that the foregoing representation shall not apply
to (i) any forward-looking information such as forecasts or projections or (ii)
any item the subject matter of which is addressed by the Disclosure Schedules or
any other provisions of this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof and as of the
Closing Date that:
Section 4.01. Corporate Existence and Power. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of Ohio and
has all corporate powers and all material governmental licenses, authorizations,
permits, consents and approvals required to carry on its business as now
conducted.
Section 4.02. Corporate Authorization. The execution, delivery and
performance by Buyer of the Transaction Documents and the consummation of the
transactions contemplated hereby are within the corporate powers of Buyer and
have been duly authorized by all necessary corporate action on the part of
Buyer. This Agreement constitutes a valid and binding agreement of Buyer, and
the other Transaction Documents when executed and delivered by Buyer will
constitute, valid and binding agreements of Buyer.
Section 4.03. Governmental Authorization. The execution, delivery and
performance by Buyer of this Agreement and the consummation of the transactions
contemplated hereby require no material action by or in respect of, or material
filing with, any Governmental Authority other than compliance with any
applicable requirements of the HSR Act and compliance with any applicable
requirements of non-United States Antitrust Laws.
Section 4.04. Noncontravention. Except as set forth on Schedule 4.04, the
execution, delivery and performance by Buyer of this Agreement and the
consummation of the transactions contemplated hereby do not and will not (i)
violate the articles of incorporation or regulations of Buyer, (ii) assuming
compliance with the matters referred to in Section 4.03, violate any Applicable
Law, (iii) require any consent or other action by any Person under, constitute a
default under, or give rise to any right of termination, cancellation or
acceleration of any right or obligation of Buyer or to a loss of any benefit to
which Buyer is entitled under any provision of any agreement or other instrument
binding upon Buyer or (iv) result in the creation or imposition of any material
Lien on any asset of Buyer.
Section 4.05. Financing. True and correct copies of commitment letters from
UBS Loan Finance LLC and UBS Securities LLC and the related term sheets and
conditions precedent are attached hereto as Schedule 4.05 (all such documents,
the "Commitment Letters") (such financing, the "Debt Financing"). The Commitment
Letters have been duly executed by all parties thereto, and are in full force
and effect. As of the date hereof, the Commitment Letters have not been amended
or terminated, and there is no breach existing thereunder. Buyer, as of the date
hereof, does not have knowledge of any existing fact, occurrence or condition
that would cause the commitments provided in such Commitment Letters to be
terminated or ineffective, any of the conditions contained therein not to be met
or the financing contemplated by the Commitment Letters not to be consummated.
Except for the conditions described in the Commitment Letters, there are no
other conditions precedent to the Debt Financing. Buyer has fully paid any and
all commitment or other fees required by the Commitment Letters to be paid on or
before the date hereof. The Debt Financing, when funded in accordance with, and
subject to the terms and conditions of, the Commitment Letters will provide
Buyer with funds which, together with Buyer's cash on hand, will be sufficient
to pay the Purchase Price and any other amounts to be paid by it in connection
with the transactions contemplated hereby.
Section 4.06. Solvency of the Companies. Immediately after giving effect to
the transactions contemplated by this Agreement (including the financings to be
undertaken in connection therewith), assuming the truth and accuracy of the
representations and warranties set forth in Sections 3.08, 3.09 and 3.10 of this
Agreement, (i) no Company or Subsidiary will have incurred debts beyond its
ability to pay such debts as they mature or become due, (ii) the then present
fair salable value of the assets of each Company and Subsidiary will exceed the
amount that will be required to pay its probable liabilities (including the
probable amount of all contingent liabilities) and its debts as they become
absolute and matured, (iii) the assets of each Company and Subsidiary, in each
case at a fair valuation, will exceed its respective debts (including the
probable amount of all contingent liabilities) and (iv) none of the Companies or
Subsidiaries will have unreasonably small capital to carry on its business as
presently conducted or as proposed to be conducted. No transfer of property is
being made and no obligation is being incurred in connection with the
transactions contemplated by this Agreement with the intent to hinder, delay or
defraud either present or future creditors of any Company or Subsidiary.
Section 4.07. Purchase for Investment. Buyer is purchasing the Shares for
investment for its own account and not with a view to, or for sale in connection
with, any distribution thereof. Buyer (either alone or together with its
advisors) has sufficient knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks of its investment
in the Shares and is capable of bearing the economic risks of such investment.
Section 4.08. Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Buyer threatened against or
affecting, Buyer before any arbitrator or any Governmental Authority which in
any manner challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.
Section 4.09. Finders' Fees. Except for UBS Securities LLC whose fees and
expenses will be paid by Buyer, there is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Buyer who might be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.
Section 4.10. Inspections; No Other Representations. Buyer has undertaken
such investigation and has been provided with and has evaluated such documents
and information as it has deemed necessary to enable it to make an informed
decision with respect to the execution, delivery and performance of this
Agreement. Buyer acknowledges that Seller has given Buyer access to key
employees and documents of the Companies and the Subsidiaries. Buyer will
undertake prior to Closing such further investigation and request such
additional documents and information as it deems necessary. Buyer acknowledges
that Seller makes no representation or warranty with respect to any information
or documents made available to Buyer or its counsel, accountants or advisors
with respect to the Companies, the Subsidiaries or the Business, except as
expressly set forth in this Agreement.
ARTICLE 5
COVENANTS OF SELLER
Seller agrees that:
Section 5.01. Conduct of the Business. From the date hereof until the
Closing Date, except as set forth on Schedule 5.01, Seller shall cause the
Companies and the Subsidiaries to conduct the Business in the ordinary course
consistent with past practice and to use its reasonable efforts to preserve
intact its business organizations and relationships with third parties and to
keep available the services of its present officers and employees. Without
limiting the generality of the foregoing, from the date hereof until the Closing
Date, except as disclosed on Schedule 5.01 or as contemplated by any of the
Transaction Documents, Seller will not permit the Companies or any Subsidiaries
to:
(a) adopt or propose any change in its certificate of incorporation or
bylaws or other organizational documents;
(b) merge or consolidate with any other Person or acquire a material
amount of assets from any other Person;
(c) sell, lease, license or otherwise dispose of any material assets
or property except (i) pursuant to existing contracts or commitments or
(ii) otherwise in the ordinary course consistent with past practice;
(d) take any action that would make any representation or warranty of
Seller in Sections 3.06, 3.07 and 3.09 inaccurate in any material respect
at the Closing Date;
(e) amend, modify, extend, renew or terminate any existing lease in
any material respect for the use or occupancy of any real property, or
enter into any new lease, sublease, license or other agreement for the use
or occupancy of any real property;
(f) take any action that would result in a knowing and material
violation of Applicable Law;
(g) knowingly enter into any customer contract that, if in existence
at the date hereof, would be required to be disclosed pursuant to Section
3.20(c);
(h) with respect to any Tax with respect to which a Company or
Subsidiary files a Separate Return, make or change any election, change an
annual accounting period, adopt or change any accounting method, file any
amended Tax return, enter into any closing agreement, settle any Tax claim
or assessment relating to the Companies or any of the Subsidiaries,
surrender any right to claim a refund of Taxes, consent to any extension or
waiver of the limitation period applicable to any Tax claim or assessment
relating to the Companies or any of the Subsidiaries, or take any other
similar action relating to the filing of any Tax return or the payment of
any Tax, if such election, adoption, change, amendment, agreement,
settlement, surrender, consent or other action would have the effect of
increasing the Tax liability of the Companies or any of the Subsidiaries
for any period ending after the Closing Date; or
(i) agree or commit to do any of the foregoing.
Section 5.02. Access to Information. (a) From the date hereof until the
Closing Date, Seller will (i) give, and will cause each Company and each
Subsidiary to give, Buyer, its counsel, financial advisors, auditors and other
authorized representatives reasonable access to the offices, properties, books
and records of Seller, each Company and each Subsidiary relating to the
Business, (ii) furnish, and will cause each Company and each Subsidiary to
furnish, to Buyer, its counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and other
information relating to the Business as such Persons may reasonably request and
(iii) instruct the employees, counsel and financial advisors of Seller or any
Company or any Subsidiary to cooperate with Buyer in its investigation of the
Business, including (without limitation) any Phase I environmental
investigations relating to properties used in the Business. Any investigation
pursuant to this Section shall be conducted in such manner as not to interfere
unreasonably with the conduct of the business of Seller or the Business.
Notwithstanding the foregoing, unless required by TUPE, Buyer shall not have
access prior to the Closing Date to personnel records of any Company or any
Subsidiary relating to individual performance or evaluation records, medical
histories or other information which in Seller's good faith opinion is sensitive
or the disclosure of which could subject any Company or any Subsidiary to risk
of liability.
(b) On and after the Closing Date, Seller will afford promptly to Buyer and
its agents reasonable access to its books of account, financial and other
records (including accountant's work papers), information, employees and
auditors to the extent necessary or useful for Buyer in connection with any
audit, investigation, dispute or litigation or any other reasonable business
purpose relating to the Business; provided that any such access by Buyer shall
not unreasonably interfere with the conduct of the business of Seller. Buyer
shall bear all of the out-of-pocket costs and expenses (including attorneys'
fees, but excluding reimbursement for general overhead, salaries and employee
benefits) actually and reasonably incurred in connection with the foregoing.
(c) Sellers and the Companies agree to provide such cooperation as may be
reasonably requested by Buyer in timely obtaining the Debt Financings
contemplated by the Commitment Letters, including, without limitation, (A)
assisting in the preparation of offering circulars, confidential information
memoranda and rating agency presentations with respect to the Debt Financings,
(B) using reasonable efforts to prepare and deliver such financial and
statistical information relating to the Business as may be reasonably requested
in connection with the Debt Financings, (C) making appropriate employees,
accountants and advisors of the Companies available for due diligence meetings
and for participation in meetings with rating agencies and prospective lenders
and investors, (D) providing timely access to diligence materials and
appropriate personnel to allow lenders and their representatives to complete all
reasonably required diligence and (E) providing reasonable assistance with
respect to the review and granting of security interests in collateral for the
Debt Financings. All reasonable out-of-pocket expenses incurred by Seller, the
Companies or any Subsidiaries in connection with the foregoing shall be paid or
reimbursed promptly following demand therefor, by Buyer.
Section 5.03. Notices of Certain Events. Seller shall promptly notify Buyer
of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental Authority
in connection with the transactions contemplated by this Agreement;
(c) any actions, suits, claims, investigations or proceedings
commenced relating to Seller or any Company or any Subsidiary that, if
pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Section 3.12 or Section 3.19; and
(d) any notice from any customer listed on Schedule 3.20 that, if
pending on the date of this Agreement, would have been required to be
disclosed pursuant to Section 3.20.
Section 5.04. Resignations. Seller will deliver to Buyer the resignations
of all officers and directors of each Company and each Subsidiary who will be
officers, directors or employees of Seller or any of its Affiliates (other than
the Companies and Subsidiaries) after the Closing Date from their positions with
each such Company or Subsidiary at or prior to the Closing Date.
Section 5.05. Financial Statements. (a) Seller will use its reasonable
efforts to prepare, or cause to be prepared, and to deliver to Buyer: (i) as
promptly as practicable, but in no event later than June 15, 2006, the Audited
Financial Statements; and promptly upon completion, but in any event no later
than 40 days after the end of the applicable fiscal quarter, financial
statements of the Business for each fiscal quarter ending on or after June 30,
2006, consisting of a consolidated balance sheet and related statements of
income and cash flows (the "Quarterly Financial Statements").
(b) Seller shall also use its reasonable efforts to prepare, or assist
Buyer in causing to be prepared, as promptly as practicable and at Buyer's
expense, and in any event no later than 65 days following the Closing Date, any
financial statements that Buyer is required to file pursuant to Rule 3-05 or
Article 11 of Regulation S-X under the 1934 Act.
Section 5.06. Exclusivity. Seller will not (and will not cause or permit
the Companies or any of the Subsidiaries to) (i) solicit, initiate, or encourage
the submission of any proposal or offer from any Person relating to the
acquisition of any capital stock or other voting securities, or any substantial
portion of the assets, of the Companies or any of the Subsidiaries (including
any acquisition structured as a merger, consolidation, or share exchange) or
(ii) participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing.
Section 5.07. Software Matters. Prior to the Closing, Seller shall use
reasonable efforts to assist Buyer, at Buyer's expense, in obtaining any
computer software or information systems, including entering into new or
supplemental license agreements to be effective as of the Closing, as Buyer may
reasonably request and in form and substance reasonably satisfactory to Buyer,
to ensure that, after the Closing, the Companies and the Subsidiaries have full
use of all computer software and information systems used by the Companies and
the Subsidiaries prior to the Closing.
Section 5.08. Registration. To the extent that Seller is unable to cause
all of the ownership interests held by Xxxxxxx River Laboratories, Inc. in each
of Xxxxxxx River Laboratories Servicos Clinicos Ltda. and Xxxxxxx River
Laboratories Clinical Services Argentina SRL to be transferred at or prior to
Closing to a designee identified by Buyer, Seller shall take such actions to
effectuate such transfers as soon as practicable after the Closing.
Section 5.09. Assignment Of Confidentiality Agreements. At Closing, Seller
shall assign to Buyer all of Seller's right, title and interest in and to the
confidentiality and non-disclosure agreements entered into by Seller and
Seller's representatives with the several parties that expressed interest in
acquiring the Business.
ARTICLE 6
COVENANTS OF BUYER
Buyer agrees that:
Section 6.01. Confidentiality. Prior to the Closing Date and after any
termination of this Agreement, Buyer and its Affiliates will hold, and will use
their best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence,
pursuant and to the terms of the Confidentiality Agreement dated as of March 31,
2006, between Buyer and Seller (the "Confidentiality Agreement"), all
confidential documents and information concerning the Companies, any Subsidiary
or the Business furnished to Buyer or its Affiliates in connection with the
transactions contemplated by this Agreement. If this Agreement is terminated,
Buyer and its Affiliates will, and will use their best efforts to cause their
respective officers, directors, employees, accountants, counsel, consultants,
advisors and agents to, destroy or deliver to Seller, upon request, all
documents and other materials, and all copies thereof, obtained by Buyer or its
Affiliates or on their behalf from Seller or the Companies or any Subsidiary in
connection with this Agreement that are subject to such confidence to the extent
required by the Confidentiality Agreement. For a period of three years following
the Closing Date, Buyer will cause the Company Employees to keep confidential
and not use or disclose to any third party or to any other employee of Buyer or
any Affiliate of Buyer all non-public or proprietary information of Seller or
its Affiliates that is unrelated to the Business and is known by such
individuals at the Closing Date, including any financial, operational or
strategic information and any information regarding potential acquisitions or
dispositions outside the scope of the Business.
Section 6.02. Access. Buyer will cause each Company and Subsidiary, on and
after the Closing Date, to afford promptly to Seller and its agents reasonable
access to their properties, books, records, employees and auditors to the extent
necessary to permit Seller to determine any matter relating to their rights and
obligations hereunder or to any period ending on or before the Closing Date;
provided that any such access by Seller shall not unreasonably interfere with
the conduct of the business of Buyer. Seller will hold, and will use its best
efforts to cause its officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in confidence, unless compelled to
disclose by judicial or administrative process or by other requirements of
Applicable Law, all confidential documents and information concerning the
Companies or any Subsidiaries provided to it pursuant to this Section.
Section 6.03. Trademarks; Tradenames. Buyer shall be permitted to use
existing stocks of supplies, advertising and marketing materials, technical data
sheets and any similar materials of the Business bearing any of the trademarks
and tradenames set forth on Schedule 6.03 (the "Seller Trademarks and
Tradenames") until the earlier of three months after the Closing Date and the
date existing stocks are exhausted; provided that Buyer complies with all
Applicable Laws in any use of all supplies, advertising and marketing materials,
technical data sheets or any other materials of the Business containing any of
the Seller Trademarks and Tradenames. From and after such date, Buyer shall not
use any such materials for any purpose and shall destroy such supplies,
advertising materials, technical data sheets and other materials of the Business
upon Seller's request. Buyer shall use its reasonable efforts to cease using the
Seller Trademarks and Tradenames on buildings, cars, trucks and other fixed
assets as soon as possible, and in any event, within a period not to exceed
three months after the Closing Date. Except as set forth in this Section 6.03,
after the Closing, Buyer shall not use any of the Seller Trademarks and
Tradenames. As soon as reasonably practicable following the Closing, Buyer shall
change the name of each Company and Subsidiary so that it does not include any
of the Seller Trademarks and Tradenames.
Section 6.04. Financing Matters. Buyer shall comply with its obligations
under the Commitment Letters and shall use its reasonable efforts to consummate
the Debt Financing on the terms and conditions described in the Commitment
Letters, including using its reasonable efforts to (i) negotiate definitive
agreements with respect to the Debt Financing on the terms and conditions
contained in the Commitment Letters and (ii) satisfy all conditions to the Debt
Financing to the extent the satisfaction of such conditions is within the
control of Buyer. If any portion of the Debt Financing becomes unavailable on
the terms and conditions contemplated in the Commitment Letters, Buyer will seek
in good faith to arrange to obtain such portion from alternative sources on
terms and conditions that are equivalent or more favorable to Buyer as promptly
as practicable. Buyer will give Seller prompt notice of any material breach by
any party of the Commitment Letters or any termination of the Commitment
Letters. To the extent reasonably requested by Seller, Buyer will keep Seller
informed on a current basis in reasonable detail of the status of its efforts to
consummate the Debt Financing. Buyer will not agree to any material amendment or
modification to, or grant or seek any waiver under, the Commitment Letters
without first consulting with Seller and, if such amendment, modification or
waiver would or would reasonably be expected to adversely affect or delay in any
material respect Buyer's ability to consummate the Debt Financing or the
Closing, receiving Seller's prior written consent.
ARTICLE 7
COVENANTS OF BUYER AND SELLER
Buyer and Seller agree that:
Section 7.01. Reasonable Best Efforts; Further Assurances. (a) Subject to
the terms and conditions of this Agreement, Buyer and Seller will use their
respective reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary or desirable under
Applicable Law to consummate the transactions contemplated by this Agreement.
Seller and Buyer agree, and Seller, prior to the Closing, and Buyer, after the
Closing, agree to cause each Company and Subsidiary, to execute and deliver such
other documents, certificates, agreements and other writings and to take such
other actions as may be necessary or desirable in order to consummate or
implement expeditiously the transactions contemplated by this Agreement.
(b) In furtherance and not in limitation of the foregoing, each of Buyer
and Seller shall make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act with respect to the transactions contemplated hereby as
promptly as practicable and, in the case of such Notification and Report Form
pursuant to the HSR Act, in any event within ten Business Days of the date
hereof. Each of Buyer and Seller shall supply as promptly as practicable any
additional information and documentary material that may be requested pursuant
to the HSR Act and any other Applicable Law, including any non-United States
Antitrust Law, to take all other actions necessary to cause the expiration or
termination of the applicable waiting periods under the HSR Act and any other
Applicable Law, including any non-United States Antitrust Law, as soon as
practicable.
(c) If any objections are asserted with respect to the transactions
contemplated hereby under any Antitrust Law or if any action, suit or other
proceeding is instituted or threatened by any Governmental Authority or any
private party challenging any of the transactions contemplated hereby as
violative of any Antitrust Law, Buyer and Seller shall use their respective
reasonable best efforts promptly to resolve such objections. Without limiting
the generality of the foregoing, Buyer shall agree to hold separate or to divest
any of the businesses or properties or assets of Buyer or any of its Affiliates
(including, following the Closing, any of the Companies and/or Subsidiaries), as
may be required (i) by the applicable Governmental Authority in order to resolve
such objections as such Governmental Authority may have to such transactions
under any Antitrust Law, or (ii) by any domestic or foreign court or other
tribunal, in any action, suit or other proceeding brought by a private party or
Governmental Authority challenging such transactions as violative of any
Antitrust Law, in order to avoid the entry of, or to effect the dissolution,
vacating, lifting, altering or reversal of, any order that has the effect of
restricting, preventing or prohibiting the consummation of the transactions
contemplated by this Agreement; provided that Buyer shall not be required to
take any action in respect of the foregoing if such action would have a Material
Adverse Effect in the aggregate on the Buyer or the Business.
(d) Buyer and Seller shall use their respective reasonable best efforts to
keep the other parties informed in all material respects with respect to any
communication given or received in connection with any filing, submission,
investigation or proceeding relating to the transactions contemplated hereby.
Section 7.02. Certain Filings. Seller and Buyer shall cooperate with one
another (i) in determining whether any action by or in respect of, or filing
with, any Governmental Authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
contracts, in connection with the consummation of the transactions contemplated
by this Agreement and (ii) in taking such actions or making any such filings,
furnishing information required in connection therewith and seeking timely to
obtain any such actions, consents, approvals or waivers.
Section 7.03. Public Announcements. The content and timing of any initial
press release with respect to this Agreement or the transactions contemplated
hereby (whether issued as a joint press release or as individual press releases
by each of Seller and Buyer) shall be agreed to by each of Seller and Buyer and
thereafter Seller and Buyer agree to consult with each other before issuing any
press release or making any public statement with respect to this Agreement or
the transactions contemplated hereby and, except for any press releases and
public announcements the making of which may be required by Applicable Law or
any listing agreement with any national securities exchange, will not issue any
such press release or make any such public statement prior to such consultation.
Section 7.04. Intercompany Accounts. All intercompany accounts between
Seller or its Affiliates, on the one hand, and any Company or any Subsidiary, on
the other hand, as of the Closing shall be settled (irrespective of the terms of
payment of such intercompany accounts) in the manner provided in this Section.
At least five Business Days prior to the Closing, Seller shall prepare and
deliver to Buyer a statement setting out in reasonable detail the calculation of
all such intercompany account balances based upon the latest available financial
information as of such date and, to the extent requested by Buyer, provide Buyer
with supporting documentation to verify the underlying intercompany charges and
transactions. All such intercompany account balances shall be settled in full on
or prior to the Closing.
Section 7.05. Preparation Of Financial Statements. The parties shall
cooperate fully and use reasonable efforts to cause the condition in Section
10.02(f) to be satisfied, including providing the auditors selected by Seller to
prepare the financial statements described in Section 5.05(b) all reasonably
necessary resources, including appropriate personnel, to complete such financial
statements in a timely manner.
ARTICLE 8
TAX MATTERS
Section 8.01. Definitions. The following terms, as used herein, have the
following meanings:
"Post-Closing Tax Period" means any Tax period beginning after the Closing
Date; and, with respect to a Tax period that begins on or before the Closing
Date and ends thereafter, the portion of such Tax period beginning after the
Closing Date.
"Pre-Closing Tax Period" means any Tax period ending on or before the
Closing Date; and, with respect to a Tax period that begins on or before the
Closing Date and ends thereafter, the portion of such Tax period ending on the
Closing Date.
"Seller Group" means, with respect to federal income Taxes, the affiliated
group of corporations (as defined in Section 1504(a) of the Code) of which
Seller is a member and, with respect to state, local or foreign income or
franchise Taxes, the consolidated, combined, unitary or other group of which
Seller or any of its Affiliates is a member.
"Tax" means (i) any tax, governmental fee or other like assessment or
charge of any kind whatsoever (including, but not limited to, withholding on
amounts paid to or by any Person), together with any interest, penalty, addition
to tax or additional amount imposed by any governmental authority (domestic or
foreign) responsible for the imposition of any such tax (a "Taxing Authority")
and (ii) any liability for the payment of any amount of the type described in
the immediately preceding clause (i) as a result of any Company being a member
of an affiliated, consolidated, combined or other group with any other
corporation at any time on or prior to the Closing Date.
"Tax Asset" means any net operating loss, net capital loss, investment tax
credit, research and development tax credit, foreign tax credit, charitable
deduction or any other loss, relief, credit, right to repayment of Tax or Tax
attribute that could be used (including being carried forward or back) to reduce
Taxes (including, without limitation, deductions and credits related to
alternative minimum Taxes) and losses or deductions deferred by the Code or
other applicable law.
"Separate Returns" means, separate Returns required to be filed by any
Company or any Subsidiary, or by any combined, consolidated, affiliated, unitary
or other group the members of which include only the Companies and the
Subsidiaries.
Section 8.02. Tax Representations. Seller represents and warrants to Buyer
as of the date hereof and as of the Closing Date that, except as set forth in
the Balance Sheet (including the notes thereto) or on Schedule 8.02, (i) all Tax
returns, statements, reports and forms that are material and required to be
filed with any Taxing Authority on or before the Closing Date with respect to
any Pre-Closing Tax Period by, or with respect to, any Company or any Subsidiary
(collectively, the "Returns") have been, or will be, timely filed on or before
the Closing Date; (ii) the Companies and the Subsidiaries have timely paid, or
will timely pay, all Taxes shown as due and payable on the Returns that have
been or will be filed on or before the Closing Date; (iii) the Returns that have
been or will be filed on or before the Closing Date are true, correct and
complete in all material respects, (iv) the charges, accruals and reserves for
Taxes with respect to the Companies and Subsidiaries reflected on the books of
the Companies and its Subsidiaries (including, but not limited to, the Quarterly
Financial Statements) are adequate to cover material Tax liabilities accruing
through the end of the last period for which the Companies and the Subsidiaries
ordinarily record items on their respective books; (v) there is no action, suit,
proceeding, investigation, audit or claim now proposed or pending against or
with respect to any Company or any Subsidiary in respect of any material Tax;
(vi) neither the Companies nor any of the Subsidiaries is a party to any
agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in the payment of any "excess parachute payment"
within the meaning of Codess.280G (or any corresponding provision of state,
local or foreign Tax law); and (vii) to Seller's knowledge, neither the
Companies nor any of the Subsidiaries have any liability for the Taxes of any
Person other than the Seller Group or any other Company or Subsidiary under
Treasury Regulations Section 1.1502-6 (or any similar provision of state, local
or foreign Tax law), as a transferee or successor, by contract, or otherwise..
Section 8.03. Tax Covenants. For all Pre-Closing Tax Periods, Seller shall
include the income of the Companies and the Subsidiaries (including any deferred
items triggered into income by Treasury Regulations Section 1.1502-13 and any
excess loss account taken into income under Treasury Regulations Section
1.1502-19) in Seller's income Tax returns for Pre-Closing Tax Periods filed on a
consolidated, combined or unitary group basis to the extent eligible under
Applicable Law and file such returns and pay any Taxes attributable to such
income in a timely manner (taking into account any extensions of a required
filing date). For all Pre-Closing Tax Periods, Buyer shall cause the Companies
and the Subsidiaries to join in Seller's income Tax returns filed on a
consolidated, combined or unitary group basis to the extent eligible to do so
under Applicable Law and, in jurisdictions requiring separate reporting from any
Company or Subsidiary, to file Separate Returns in a timely manner (taking into
account any extensions of a required filing date). All such Tax returns shall be
prepared and filed in a manner consistent with prior practice, except as
required by changes in Applicable Law. Buyer shall cause the Companies and the
Subsidiaries to furnish information to Seller as reasonably requested by Seller
to satisfy its obligations under this Section and shall submit to Seller each
Separate Return with respect to a Pre-Closing Tax Period of any Company or
Subsidiary (together with schedules, statements and, to the extent requested by
Seller, supporting documentation) at least 30 days prior to the due date
(including extensions) of any such Separate Return. Seller shall have the right
to review all work papers and procedures used to prepare any such Separate
Return. Buyer shall reflect on such Separate Return all reasonable comments made
by any Seller, to the extent such comments relate to or affect the Pre-Closing
Tax Period. To the extent Seller's comments are reflected on such Separate
Returns, Seller's obligation to indemnify Buyer under Section 8.06 shall be
determined without regard to the last provisio of Section 8.06(a). Buyer shall
include the Companies and the Subsidiaries in its consolidated federal income
Tax returns for all Post-Closing Tax Periods to the extent eligible to do so for
federal income tax purposes.
(b) Buyer covenants that, except as otherwise expressly provided herein or
as agreed by Seller in writing, it will not cause or permit any Affiliate of
Buyer, or, effective upon the Closing, any Company or any Subsidiary (i) to take
any action on or after the Closing Date other than in the ordinary course of
business, including but not limited to the distribution of any dividend or the
effectuation of any redemption, that could give rise to any Tax liability or
reduce any Tax Asset of the Seller Group or give rise to any loss of the Seller
or the Seller Group under this Agreement, (ii) to make any election or deemed
election under Section 338 of the Code or any comparable provision under
applicable law, or (iii) to make or change any Tax election, amend any Return or
take any Tax position on any Return, take any action, omit to take any action or
enter into any transaction, merger or restructuring that results in any
increased Tax liability or reduction of any Tax Asset of any Seller or the
Seller Group.
(c) Buyer shall promptly pay or cause to be paid to Seller all refunds of
Taxes and interest thereon received by Buyer, any Affiliate of Buyer, any
Company, or any Subsidiary attributable to Taxes paid by Seller, any Company or
any Subsidiary (or any predecessor or Affiliate of Seller) with respect to any
Pre-Closing Tax Period, except to the extent that such refund is reflected in
the Closing Statement and taken into account in the determination of Final
Working Capital. If, in lieu of receiving any such refund, any Company or any
Subsidiary reduces a Tax liability with respect to a Post-Closing Tax Period or
increases a Tax Asset that can be carried forward to a Post-Closing Tax Period,
Buyer shall promptly pay or cause to be paid to Seller the amount of such
reduction in Tax liability or the amount of any benefit resulting from such
increase in Tax Assets, as the case may be. The benefit resulting from an
increase in a Tax Asset shall be calculated on the same basis as applicable to
Tax Benefits pursuant to Section 8.06.
(d) All transfer, documentary, sales, use, stamp, registration and other
such Taxes and fees (including any penalties and interest) incurred in
connection with transactions contemplated by this Agreement (including any real
property transfer Tax and any similar Tax but excluding any income Tax and any
similar Tax) shall be borne and paid one half (1/2) by Seller and one half (1/2)
by Buyer, and Buyer will, at its own expense, file all necessary Returns and
other documentation with respect to all such Taxes and fees, and, if required by
applicable law, Seller will, and will cause its Affiliates to, join in the
execution of any such Returns and other documentation.
(e) Notwithstanding Section 8.06(a), Buyer agrees that Seller is to have no
liability for any Tax resulting from any action, referred to in Section 8.03(b),
of any Company or Buyer or any of its subsidiaries or any Affiliate of Buyer,
and agrees to indemnify and hold harmless Seller and its Affiliates against any
such Tax (together with any interest, penalty, addition to Tax or additional
amount), any Tax or Damages incurred or suffered by Seller or any of its
Affiliates, arising out of a breach of any other covenant or agreement contained
in this Article 8, any Tax imposed on the Company or any Subsidiary that is not
subject to Seller's indemnification obligation under Section 8.06(a) and (iv)
any liabilities, costs, expenses (including, without limitation, reasonable
expenses of investigation and attorney's fees and expenses), losses, damages,
assessments, settlements or judgments arising out of or incident to the
imposition, assessment or assertion of any Tax described in clause (i), (ii) or
(iii) above. Seller agrees to give prompt notice to Buyer of the assertion of
any claim, or the commencement of any action or proceeding, in respect of which
indemnity may be sought under this Section 8.03(e). Buyer may participate in any
such suit, action or proceeding at its own expense and the parties hereto shall
cooperate in the defense or prosecution thereof.
(f) Seller shall file a timely election under Treasury Regulations Section
1.1502-95(c) and 1.1502-95(f) to allocate a portion of the Seller Group's Code
Section 382 limitation from prior ownership changes to the Companies and the
Subsidiaries ("382 Allocation Amount"). Prior to the Closing, Seller and Buyer
shall cooperate in the determination of the 382 Allocation Amount, which shall
be a fair and equitable allocation from the Seller Group to the Companies and
Subsidiaries. At Seller's request, Buyer shall cause any of the Companies or
Subsidiaries to join with Seller in making any election required under Treasury
Regulations Section 1.1502-95(f).
(g) Buyer shall elect to waive carry-back to any Pre-Closing Tax Period of
a Tax Asset of any Company or Subsidiary arising in a Post-Closing Tax Period.
Notwithstanding the preceding sentence, with respect to any Tax Asset of any
Company or Subsidiary arising in a Post-Closing Tax Period that is required to
be carried back to a Pre-Closing Tax Period or with respect to which no election
to waive carry-back is possible, Seller shall promptly pay to Buyer the amount
of any tax refund (or reduction in tax liability) resulting from carry-back of
such Tax Asset into the Seller Group consolidated tax return for a Pre-Closing
Tax Period, net of any tax incurred as a result of such refund, when such refund
(or reduction) is received or realized, as the case may be, by the Seller Group.
Section 8.04. Tax Sharing. Seller represents and warrants to Buyer that
neither Company nor any Subsidiary is a party to any Tax sharing agreements or
Tax groupings between any Company or any Subsidiary and any member of the Seller
Group. This Agreement shall be the sole Tax sharing agreement relating to any
Company or any Subsidiary for all Pre-Closing Tax Periods.
Section 8.05. Cooperation on Tax Matters. Buyer and Seller agree to furnish
or cause to be furnished to each other, upon request, as promptly as
practicable, such information (including access to books and records) and
assistance relating to each Company as is reasonably necessary for the filing of
any return, for the preparation for any audit, and for the prosecution or
defense of any claim, suit or proceeding relating to any proposed adjustment.
Buyer and Seller agree (i) to retain or cause to be retained all books and
records pertinent to each Company and Subsidiary until the applicable period for
assessment under applicable law (giving effect to any and all extensions or
waivers) has expired, and to abide by or cause the abidance with all record
retention agreements entered into with any Taxing Authority and (ii) to give the
other party reasonable notice prior to transferring, discarding or destroying
any such books and records relating to Tax matters and, if the other party so
requests, Buyer and Company, or Seller, as the case may be, shall allow the
other party to take possession of such books and records. Buyer and Seller shall
cooperate with each other in the conduct of any audit or other proceedings
involving any Company for any Tax purposes and each shall execute and deliver
such powers of attorney and other documents as are necessary to carry out the
intent of this subsection.
Section 8.06. Indemnification by Seller. Seller hereby indemnifies Buyer,
its Affiliates and, effective upon the Closing, any Company or any Subsidiary,
against and agrees to hold them harmless from any Tax of Seller (or any
predecessors), any of its Affiliates (or any predecessors), or any Company or
any Subsidiary relating to a Pre-Closing Tax Period, any loss or damage actually
incurred or suffered by Buyer or any of its Affiliates and, effective upon the
Closing, any Company or any Subsidiary, arising out of a breach of any covenant
or agreement made or to be performed by Seller pursuant to this Article 8 and
liabilities, costs, expenses (including, without limitation, reasonable expenses
of investigation and attorneys' fees and expenses), arising out of or incident
to the imposition, assessment or assertion of any such Tax loss or damage
described in clause (i) and (ii) above, including those incurred in the contest
in good faith in appropriate proceedings relating to the imposition, assessment
or assertion of any such Tax described in clause (i) above, in each case
incurred or suffered by Buyer, any of its Affiliates or, effective upon the
Closing, any Company, or any Subsidiary (the sum of (i), (ii) and (iii) being
referred to as a "Loss"); provided, however, that Seller shall have no liability
for the payment of any Loss attributable to or resulting from any action
described in Section 8.03(b) hereof, including, but not limited to, an election
made or deemed made by Buyer under Section 338 of the Code or any comparable
provision of applicable law; provided, further, that Seller shall have no
obligation to make any payment pursuant to this Section 8.06 if at the time the
Loss is incurred or suffered by any Company or any Subsidiary, as the case may
be, Buyer no longer owns, directly or indirectly, such Company or such
Subsidiary, as the case may be; and provided, further, that Seller shall be
obligated to make payments to Buyer pursuant to this Section 8.06 only to the
extent that the cumulative amount that would otherwise be payable by Seller
pursuant to this Section 8.06(a) (notwithstanding this proviso and the
succeeding proviso) exceeds the aggregate amount of the provisions for Tax
liabilities reflected in the Closing Statement and taken into account in the
determination of Final Working Capital; and provided, further, that the amount
of any Loss determined for purposes of this Section 8.06(a) shall be determined
without regard to any Tax Asset of the Buyer or any of its Affiliates other than
any Company or any Subsidiary attributable to a Pre-Closing Tax Period; and
provided, further, that Seller shall not be obligated to make any payment to
Buyer pursuant to this Section 8.06(a) in respect of a Loss arising from any
adjustment to Taxes if the amount of such individual adjustment is less than or
equal to $50,000.
(b) For purposes of this Section 8.06, in the case of any Taxes that are
imposed on a periodic basis and are payable for a Taxable period that includes
(but does not end on) the Closing Date, the portion of such Tax related to the
portion of such Taxable period ending on the Closing Date shall (x) in the case
of any Taxes other than Taxes based upon or related to income, be deemed to be
the amount of such Tax for the entire Taxable period multiplied by a fraction
the numerator of which is the number of days in the Taxable period ending on the
Closing Date and the denominator of which is the number of days in the entire
Taxable period, and (y) in the case of any Tax based upon or related to income,
be deemed equal to the amount which would be payable if the relevant Taxable
period ended on the Closing Date. Any credits, reliefs and rights to repayment
of Tax relating to a Taxable period that begins before and ends after the
Closing Date shall be taken into account as though the relevant Taxable period
ended on the Closing Date. All determinations necessary to give effect to the
foregoing allocations shall be made in a manner consistent with prior practice
of the Companies and the Subsidiaries.
(c) If Seller's indemnification obligation under this Section 8.06 arises
in respect of an adjustment which makes allowable to Buyer, any of its
Affiliates or, effective upon the Closing, any Company or any Subsidiary any
deduction, amortization, exclusion from income or other allowance (a "Tax
Benefit") which would not, but for such adjustment, be allowable, then any
payment by Seller to Buyer shall be an amount equal to (x) the amount otherwise
due but for this subsection (c), minus (y) the present value of the Tax Benefit
multiplied by the maximum federal, state or other as the case may be, corporate
Tax rate in effect at the time the relevant adjustment is made or, in the case
of a credit, by 100 percent. The present value referred to in the preceding
sentence shall be determined using a discount rate equal to the mid-term
applicable federal rate in effect at the time the relevant adjustment is made
and assuming that the Tax Benefit will be used at the earliest date or dates
allowable by applicable law.
(d) Any payment by Seller pursuant to this Section 8.06 shall be made not
later than 30 days after receipt by Seller of written notice from Buyer stating
that any Loss has been paid by Buyer, any of its Affiliates or, effective upon
the Closing, any Company or any Subsidiary and the amount thereof and of the
indemnity payment requested.
(e) If any audit, claim, action, demand, litigation or proceeding
(including any Tax audit) with respect of Taxes (a "Tax Claim") in respect of
which indemnity may be sought pursuant to this Section 8.06 is commenced or
asserted in writing against Buyer, any of its Affiliates or, effective upon the
Closing, any Company or any Subsidiary, Buyer shall notify Seller of such Tax
Claim promptly, and shall give Seller such information with respect thereto as
Seller may reasonably request. Seller may discharge, at any time, its
indemnification obligation under this Section 8.06 by paying to Buyer the amount
payable pursuant to this Section 8.06, calculated on the date of such payment.
Whether or not any party hereto chooses to defend or prosecute any Tax Claim
pursuant to this Section 8.06(e), all of the parties hereto shall cooperate in
the defense or prosecution thereof. With respect to any Tax Claim relating to a
Pre-Closing Tax Period, Seller may, at its own expense, participate in and, upon
notice to Buyer, assume the defense of such Tax Claim; provided, however, Seller
shall not, without Buyer's consent (which shall not be unreasonably withheld,
delayed or conditioned), agree to any settlement with respect to any Tax Claim
if such settlement could adversely affect the Tax liability of Buyer, any of its
Affiliates or, upon the Closing, the Company or any Subsidiary. If Seller
assumes such defense, Seller shall have the sole discretion as to the conduct of
such defense and Buyer shall have the right (but not the duty) to participate in
the defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by Seller. With respect to any Tax Claim relating to a tax
period beginning prior to the Closing Date and ending after the Closing Date,
Seller may, at its own expense, participate in and, upon notice to Buyer, assume
joint control with the Buyer of the defense of such Tax Claim.
(f) Seller shall not be liable under this Section 8.06 for (i) any Tax the
payment of which was made without Seller's prior written consent, which consent
shall not be unreasonably withheld, or delayed or conditioned, or (ii) any
settlements effected without the consent of Seller, which consent shall not be
unreasonably withheld, or delayed or conditioned, or resulting from any claim,
suit, action, litigation or proceeding with respect to which Seller was not
notified pursuant to Section 8.06(e).
Section 8.07. Purchase Price Adjustment and Interest. Any amount paid by
Seller or Buyer under Article 8 or Article 11 will be treated as an adjustment
to the Purchase Price.
Section 8.08. Exclusivity; Survival. The provisions of this Article 8 shall
be the exclusive provisions of this Agreement with respect to indemnification
involving Taxes and none of the provisions of Article 11 shall apply to a claim
for indemnification involving Taxes. Notwithstanding anything in this Agreement
to the contrary, the covenants and agreements contained in Article 8 shall
survive for the full period of all statutes of limitations (giving effect to any
waiver, mitigation or extension thereof).
ARTICLE 9
EMPLOYEE BENEFITS
Section 9.01. Transfer of Certain Employees. (a) All Company Employees will
become employees of Buyer or one of its Affiliates as of the Closing Date, as a
result of the transactions contemplated hereby or pursuant to an offer of
employment by Buyer, as applicable.
(b) Schedule 9.01(b) sets forth the list of employees who shall be
transferred in or out of the Companies and the Subsidiaries prior to the Closing
Date (the "Designated Employees"). The list set forth in Schedule 9.01(b) may be
modified upon the mutual agreement of Buyer and Seller between the date hereof
and the Closing Date.
(c) Seller agrees to use commercially reasonable efforts to give effect to
the recruitment and hiring efforts listed in Schedule 5.01, consistent with the
current budget for such efforts.
Section 9.02. Application Of TUPE And Related Matters. (a) It is the
parties intention that the TUPE Transferring Employees will be assigned to the
Business and become employees of Xxxxxxx Xxxxxx Laboratories Clinical Services
International Limited on or before Closing, and Seller undertakes to use its
reasonable efforts to effect such assignment and employment; provided that
reasonable efforts shall not require Seller to make payments to such employees
to effect the transfer. In the event that such employment is not effected, the
parties acknowledge and agree that the sale of the Business will constitute a
transfer for the purposes of TUPE and accordingly any of the contracts of
employment of the TUPE Transferring Employees shall be transferred to the Buyer
pursuant to TUPE with effect from the Closing Date which shall be the time of
transfer under TUPE.
(b) From the date hereof until the Closing Date, Seller shall cause each of
the TUPE Employers to use its reasonable efforts to keep available the services
of the TUPE Transferring Employees. Specifically, Seller shall cause each of the
TUPE Employers to refrain from, without Buyer's consent which consent shall not
be unreasonably withheld, (i) making any material changes to the terms of
employment of the TUPE Transferring Employees, other than in ordinary course or
as set forth in Section 9.02(a) or (ii) terminating, transferring or redeploying
any of the TUPE Transferring Employees, other than for cause or for reasonable
business purposes or as set forth in Section 9.02(a).
(c) Seller shall indemnify Buyer, on the terms set forth in Article 11, for
any action, proceeding, costs, claim, expenses, demands and liabilities becoming
payable or arising with respect to any of the following:
(i) the breach of its obligations under this Section 9.02 or its
representation in Section 3.22,
(ii) any claim by or on behalf of a TUPE Transferring Employee arising
from his or her employment or termination of employment prior to the
Closing Date, and
(iii) the employment or termination of employment of any employee
other than a TUPE Transferring Employee whose employment is transferred to
Buyer pursuant to TUPE.
(d) Buyer shall assume responsibility for the performance of all
employment-related obligations, including obligations under TUPE, with respect
to the TUPE Transferring Employees with effect from the Closing Date. Buyer
shall indemnify Seller, on the terms set forth in Article 11, with respect to
any and all actions, proceedings, costs, claims, expenses, demands and
liabilities becoming payable or arising with respect to (i) the employment and
termination of employment of any TUPE Transferring Employee following the
Closing Date and (ii) any breach by Buyer of its obligations under TUPE,
following the Closing Date or arising out of Buyer's failure to comply with its
obligations under Regulation 13(4) of TUPE.
Section 9.03. Comparability of Benefits. (a) For a period of at least one
year following the Closing Date or as otherwise required by Applicable Law or
contract, Buyer shall, or shall cause the applicable Company to, provide Company
Employees:
(i) salary or wage and benefits (specifically excluding bonuses and
other incentive compensation) that are substantially comparable in the
aggregate to those they received immediately prior to the Closing Date; and
(ii) severance benefits to Company Employees no less favorable than
those provided by Seller, any of its Affiliates, any Company or any
Subsidiary, as applicable to any such Company Employee, immediately prior
to the Closing Date.
(b) Buyer shall provide bonus opportunities to Company Employees for the
year ending December 31, 2006 that are comparable to the bonus opportunities
provided to such Company Employees immediately prior to the Closing Date.
Section 9.04. Service. Each Company Employee will receive service credit
for all periods of employment with Seller, any of its Affiliates, any Company or
any Subsidiary or any predecessor thereof prior to the Closing for purposes of
vesting, eligibility and benefit levels with respect to vacation, paid time-off
and severance (including accrual of benefits) with respect to any employee
benefits which such Company Employee receives after the Closing, to the extent
that such service was recognized for purposes of any analogous employee benefits
offered by Seller, any of its Affiliates, any Company or any Subsidiary in
effect immediately prior to the Closing; provided that no such service credit
shall be given if it would result in a duplication of benefits.
Section 9.05. Preexisting Conditions and Deductibles. Buyer shall cause all
pre-existing condition exclusions under any medical and dental plans made
available to Company Employees to be waived in respect of such employees. Buyer
will use its reasonable efforts to take into account expenses incurred by
Company Employees under Seller's medical and dental plans during the year that
includes the Closing Date for purposes of satisfying deductible provisions of
Buyer's medical and dental plans, to the extent applicable, in which Company
Employees participate for such year.
Section 9.06. US Defined Contribution Plan. (a) Effective as of the Closing
Date, Seller shall cause the active participation of US Company Employees in the
defined contribution plan in which such employees participate (the "Seller's
401(k) Plan") to cease as of the Closing Date.
(b) On the Closing Date or as soon as practicable after the Closing Date,
Seller shall (A) cause the trustee of Seller's 401(k) Plan to segregate the
assets of the plan representing the full account balances of US Company
Employees as of the Closing Date, (B) make any and all filings and submissions
to the appropriate governmental agencies arising in connection with such
segregation of assets and (C) make all necessary amendments to Seller's 401(k)
Plan and related trust agreement to provide for such segregation of assets and
the transfer of assets as described below. The manner in which the account
balances of US Company Employees under the Seller's 401(k) Plan are invested
shall not be affected by such segregation of assets.
(c) As soon as practicable after the Closing Date, Buyer shall establish or
designate an individual account plan for the benefit of US Company Employees
(the "Buyer's Plan"), shall take all necessary action, if any, to qualify such
plan under the applicable provisions of the Code including without limitation,
Sections 401(a) and 401(k) of the Code, and shall make any and all filings and
submissions to the appropriate governmental agencies required to be made in
connection with the transfer of assets described below. As soon as practicable
following the delivery to Buyer of a favorable determination letter from the
Internal Revenue Service regarding the qualified status of the Buyer's Plan,
Seller shall cause the trustee of Seller's 401(k) Plan to transfer in the form
of cash (or such other form as may be agreed between Buyer and Seller) the
aggregate fair market value (as of the transfer date) of the account balances of
US Company Employees under the Seller's 401(k) Plan as appropriate (the
"Transferred Accounts"), to the appropriate trustee as designated by Buyer under
the trust agreement forming a part of the Buyer's Plan. Moreover, with respect
to such Transferred Accounts, where appropriate, Buyer shall cause its plan to
preserve all optional forms of benefit protected under Section 411(d)(6) of the
Code and all benefits, rights and features to the extent required by Treasury
Regulation 1.401(a)(4)-4(d)(1).
(d) In consideration for the transfer of assets described herein, the
Buyer's Plan shall, effective as of the transfer date, assume and be solely
liable for all of the payment obligations of the Seller's 401(k) Plan related to
the Transferred Accounts, subject to Seller's compliance with paragraph (c) of
this Section 9.06. Neither Buyer nor any of its Affiliates shall assume any
other obligations or liabilities arising under or attributable to the Seller's
401(k) Plan.
Section 9.07. UK Retirement Plans. (a) Buyer shall comply with the
requirements of the Pensions Xxx 0000 and the Transfer of Employment (Pension
Protection) Regulations 2005 in relation to the provision of retirement benefits
for UK Company Employees on and after the Closing Date.
(b) With respect to each defined contribution plan and defined benefit plan
in which certain UK Company Employees participate (the "UK Pension Plans"), as
soon as practicable after the Closing Date, and in any event within 3 months
from the Closing Date, subject to the election of the relevant UK Company
Employee, either,
(i) transfer values will be calculated in respect of the applicable UK
Company Employee in accordance with the current rules of the applicable UK
Pension Plan and transferred in accordance with such rules into an
alternative retirement benefits scheme or arrangement;
(ii) Seller shall cause accrued benefits to be paid in respect of the
applicable UK Company Employee and such employee will become a deferred
member of such UK Pension Plan; or
(iii) in the case of UK Company Employees who have less than 2 years
pensionable service in the applicable UK Pension Plan, Seller shall cause
such employee's contributions will be refunded by Seller to such employee,
after deduction of appropriate tax, as provided for in accordance with the
current rules of such defined contribution plan.
(c) Seller will take all necessary steps to comply with the election of the
UK Company Employees in so far its controls and directs the "UK Pension Plans".
Seller will indemnify Buyer for all claims, costs, expenses, damages and
liabilities arising or becoming payable in respect of the UK Pension Plans in
respect of the UK Company Employees with respect to their accrued benefits up to
the Closing Date and underfunding associated with the UK Pension Plans
consistent with the terms of Article 11, other than Section 11.01 and clause
(ii) of Section 11.02(a).
(d) Buyer undertakes to Seller that Buyer shall establish, at its election
a defined contribution scheme or arrangement for the benefit of UK Company
Employees, or shall admit such employees into preexisting plans of Buyer, so
that each UK Company Employee can participate in a defined contribution plan.
Section 9.08. FUTA; FICA. Subject to Buyer determining in good faith that
it is legally permitted to do so, Seller and Buyer shall treat Buyer as a
"successor employer" and each Seller as a "predecessor" within the meaning of
Sections 3121(a)(1) and 3306(b)(1) of the Code with respect to US Company
Employees for purposes of Taxes imposed under the United States Federal
Unemployment Tax Act ("FUTA") or the United States Federal Insurance
Contributions Act ("FICA").
Section 9.09. Vacation. Buyer shall, or shall cause the applicable Company
to, assume vacation and other paid time off liabilities accrued but unpaid as of
the Closing Date with respect to Company Employees, and shall, with respect to
accrued vacation, honor the terms of Seller's vacation policy with respect to
such accrued vacation. For the year ending December 31, 2006, Buyer shall honor
the terms of Seller's vacation policy for future accrual of benefits. Buyer will
permit Company Employees to carry over accrued vacation consistent with the
terms of Buyer's plans.
Section 9.10. Flexible Spending Reimbursement Accounts. Buyer shall, or
shall cause its subsidiaries to, assume flexible spending reimbursement account
balances on behalf of US Company Employees (with any associated assets). As of
the Closing, Buyer shall, or shall cause its subsidiaries to, establish flexible
spending reimbursement accounts for medical and dependent care expenses under a
new or existing plan ("Buyer's FSA") for each US Company Employee who, on or
prior to the Closing Date, is a participant in a flexible spending reimbursement
account for medical and dependent care expenses under a US Plan ("Seller's FSA")
and who elects to participate in Buyer's FSA. Subject to Buyer being provided
all information reasonably necessary to permit the administrator of Buyer's FSA
to accommodate the inclusion of the Company Employees in Buyer's FSA on the
basis described herein, Buyer shall, or cause each Company to, credit or debit,
as applicable, effective as of the Closing Date, the applicable account of each
US Company Employee under Buyer's FSA with an amount equal to the balance of
each such Company Employee's account under Seller's FSA as of immediately prior
to the Closing Date. As soon as practicable after the Closing Date, each Seller
shall pay to Buyer or the Company the net aggregate amount of the account
balances credited under Seller's FSA, if such amount is positive, and Buyer
shall pay to any such Seller the net aggregate amount of the account balances
credited under Buyer's FSA, if such amount is negative.
Section 9.11. Allocation Of Employment Related Liabilities. (a) Buyer
agrees that all liabilities and obligations that arise out of or relate to the
Company Employees to the extent attributable to the Company Employees'
employment after the Closing Date shall be the liability of the Buyer, and not
the Seller. Buyer shall be responsible for all workers' compensation claims
related to employment after the Closing Date by Company Employees under the
terms of the workers' compensation program of Buyer and its Affiliates, and
Seller shall be responsible for all workers' compensation claims relating to
employment on or prior to the Closing Date by Company Employees that are payable
under the terms of the workers' compensation program of Seller and its
Affiliates. For purposes of the preceding sentence, a claim shall be deemed to
be incurred on the date the event giving rise to the claim occurs, provided that
in the case of a claim where the event giving rise to the claim occurs over a
period both prior to and following the Closing, the claim shall be allocated in
accordance with applicable law; provided, however, that to the extent that
applicable law does not specify a methodology to allocate any such claim, such
claim shall be the joint responsibility and liability of Seller and Buyer and
shall be equitably apportioned between Seller and Buyer based upon the relevant
periods of time that such event transpired prior to and following the Closing.
(b) Notwithstanding any other provision of this Agreement to the contrary,
Buyer shall be solely responsible for paying any liabilities that arise under
(i) the Retention Letters referred to on Schedule 3.18(d) and (ii) the Stay
Bonus Programs referred to on Schedule 5.01; provided, however, the maximum
amount of all obligations and liabilities for which Buyer is responsible under
clauses (i) and (ii) above, including all related costs and expenses, shall not
exceed $2,300,000.
Section 9.12. Foreign Law Obligations. Buyer agrees that it will abide by
any Applicable Law regarding the assumption of liabilities or the maintenance or
transfer of employee benefits as it pertains to any Company Employees who are
not located in the US.
Section 9.13. Employees On Leave. Schedule 9.13 contains a list of each
Company Employee who is on short-term disability leave, long-term disability
leave, authorized leave of absence or military service and has been on such
leave for a period of less than two (2) years ("On Leave Employee") as of the
date hereof. Seller shall update Schedule 9.13 five (5) Business Days prior to
the Closing Date. Each On Leave Employee as of the Closing Date shall remain
eligible to participate in US Plans, UK Plans or International Plans, to the
extent such On Leave Employee was so eligible prior to the Closing Date and as
permitted by Applicable Law and the terms of the plan, until such authorized
leave terminates; provided, however, that Buyer shall reimburse Seller for any
costs it incurs in this regard after the Closing Date with respect to such On
Leave Employee, as such Company Employees shall become employees of Buyer or one
of its Affiliates as of the Closing Date as provided in Section 9.01(a);
provided, further, no On Leave Employee shall have the right to continue
employment if such On Leave Employee fails to return from such leave of absence
or military service within two (2) years of the Closing Date except if otherwise
required by Applicable Law.
ARTICLE 10
CONDITIONS TO CLOSING
Section 10.01. Conditions to Obligations of Buyer and Seller. The
obligations of Buyer and Seller to consummate the Closing are subject to the
satisfaction of the following conditions:
(a) Any applicable waiting period under the HSR Act or any non-United
States Antitrust Law relating to the transactions contemplated hereby shall
have expired or been terminated.
(b) No provision of any Applicable Law shall prohibit the consummation
of the Closing.
(c) The consents, waivers and notices with respect to the agreements
set forth on Schedule 10.01(c) shall have been, in the case of consents and
waivers, obtained from, and in the case of notices, given to the
counterparties to such agreements, in each case in form and substance
reasonably satisfactory to Buyer and Seller.
Section 10.02. Conditions to Obligation of Buyer. The obligation of Buyer
to consummate the Closing is subject to the satisfaction of the following
further conditions:
(a) (i) Seller shall have performed in all material respects all of
its obligations hereunder required to be performed by it on or prior to the
Closing Date, (ii) the representations and warranties of Seller contained
in this Agreement and in any certificate or other writing delivered by
Seller pursuant hereto (disregarding all materiality and Material Adverse
Effect qualifications therein) shall be true at and as of the Closing Date,
as if made at and as of such date (except for any representation or
warranty made as of a specific date, which representation and warranty
shall be true at and as of such specific date), with only such exceptions
as would not in the aggregate reasonably be expected to have a Material
Adverse Effect and (iii) Buyer shall have received a certificate signed by
an appropriate officer of Seller to the foregoing effect.
(b) Buyer shall have received all documents it may reasonably request
relating to the existence of Seller and the authority of Seller for this
Agreement, all in form and substance satisfactory to Buyer.
(c) Buyer shall have received the resignations, effective as of the
Closing, of each director of the Companies and the Subsidiaries who will
remain an employee of the Seller or its Affiliates after the Closing.
(d) Immediately prior to the Closing, Seller shall have caused Xxxxxxx
River Laboratories Clinical Services International Ltd. to have become a
direct wholly owned subsidiary of CRL Clinical Services Inc.
(e) The parties shall have entered into a mutually acceptable
agreement providing that for a period of up to five years following the
Closing Date, Buyer will be the preferred outsource provider to Seller's
Edinburgh, Scotland operations of MDS and other data management services,
provided in each case that (A) such services will be provided only to the
extent required based on the demands therefor by customers of Seller in
relation to specific customer projects, (B) the provider of services, which
shall be in the Edinburgh region, shall provide the requisite level of
service and expertise for the project in question in accordance with good
industry practices, (C) the prices offered by the service provider for such
services are consistent with commercially reasonable rates, and (D) such
agreement shall be terminable based on customary breaches and failure to
perform, provided such agreement shall provide for a reasonable cure period
for such breaches and failure.
(f) The financial statements described in Section 5.05(b) are
reasonably likely in Buyer's reasonable judgment to be delivered within 60
days following the Closing Date, based upon the information provided by the
auditors preparing such financial statements as to the status thereof.
Section 10.03. Conditions to Obligation of Seller. The obligation of Seller
to consummate the Closing is subject to the satisfaction of the following
further conditions:
(a) (i) Buyer shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Closing Date, (ii) not defined. the representations and warranties of Buyer
contained in this Agreement and in any certificate or other writing
delivered by Buyer pursuant hereto shall be true in all material respects
at and as of the Closing Date, as if made at and as of such date (except
for any representation or warranty made as of a specific date, which
representation and warranty shall be true at and as of such specific date)
and (iii) Seller shall have received a certificate signed by an appropriate
officer of Buyer to the foregoing effect.
(b) Seller shall have received all documents they may reasonably
request relating to the existence of Buyer and the authority of Buyer for
this Agreement, all in form and substance reasonably satisfactory to
Seller.
ARTICLE 11
SURVIVAL; INDEMNIFICATION
Section 11.01. Survival. The representations and warranties of the parties
hereto contained in this Agreement or in any certificate or other writing
delivered pursuant hereto or in connection herewith shall survive the Closing
until the date that is eighteen months after the Closing Date; provided that (i)
the representations and warranties contained in Sections 3.02 (Corporate
Authorization), 3.05 (Capitalization), 3.06 (Ownership of Shares), 3.17 (Finders
Fees), 4.02 (Corporate Authorization) and 4.09 (Finders Fees) shall survive
indefinitely or until the latest date permitted by law and (ii) the
representations and warranties set forth in Article 8 (Tax Matters) shall not
survive the Closing. The covenants and agreements of the parties hereto
contained in this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall survive the Closing indefinitely
or for the shorter period explicitly specified therein, except that for such
covenants and agreements that survive for such shorter period, breaches thereof
shall survive indefinitely or until the latest date permitted by law.
Notwithstanding the preceding sentences, any inaccuracy or breach of
representation, warranty, covenant or agreement in respect of which indemnity
may be sought under this Agreement shall survive the time at which it would
otherwise terminate pursuant to the preceding sentences, if notice of the
inaccuracy or breach thereof giving rise to such right of indemnity shall have
been given to the party against whom such indemnity may be sought prior to such
time.
Section 11.02. Indemnification. Effective at and after the Closing, Seller
hereby indemnifies Buyer and its Affiliates against and agrees to hold each of
them harmless from any and all damage, loss and expense (including reasonable
expenses of investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding whether involving a third party
claim or a claim solely between the parties hereto) ("Damages") actually
suffered by Buyer or any of its Affiliates arising out of any misrepresentation,
inaccuracy or breach of warranty (except representations and warranties
contained in Article 8 of this Agreement) (each such misrepresentation and
breach of warranty a "Warranty Breach") or breach of covenant or agreement made
or to be performed by Seller pursuant to this Agreement (except covenants or
agreements contained in Article 8 of this Agreement as to which the provisions
of Article 8 shall govern); provided that with respect to indemnification by
Seller for Warranty Breaches pursuant to this Section 11.02(a), Seller shall not
be liable unless the aggregate amount of Damages with respect to such Warranty
Breaches exceeds 1% of Purchase Price and then only to the extent of such excess
and Seller's maximum liability for all such Warranty Breaches shall not exceed
20% of Purchase Price; and (iii) no individual Warranty Breach (considering
separate Warranty Breaches arising out of the same facts as one individual
Warranty Breach for purposes of this clause (iii)) shall be deemed to have
occurred if the actual Damages incurred as a result thereof are less than
$50,000 and no such Warranty Breach shall be taken into account for purposes of
determining whether the threshold set forth in clause (i) above has been reached
.. Any such maximum liability of Seller (as specified in clause (ii) above) shall
not apply to the Seller's indemnification of Buyer in respect of Section 9.07 of
this Agreement.
(b) Effective at and after the Closing, Buyer hereby indemnifies Seller and
its Affiliates against and agrees to hold each of them harmless from any and all
Damages actually suffered by Seller or any of its Affiliates arising out of any
Warranty Breach or breach of covenant or agreement made or to be performed by
Buyer pursuant to this Agreement; provided that with respect to indemnification
by Buyer for Warranty Breaches pursuant to this Section 11.02(b), (i) Buyer
shall not be liable unless the aggregate amount of Damages with respect to such
Warranty Breaches exceeds 1% of Purchase Price and then only to the extent of
such excess and (ii) Buyer's maximum liability for all such Warranty Breaches
shall not exceed 20% of Purchase Price; and (iii) no individual Warranty Breach
shall be deemed to have occurred if the actual Damages incurred as a result
thereof are less than $50,000 and no such Warranty Breach shall be taken into
account for purposes of determining whether the threshold set forth in clause
(i) above has been reached.
Section 11.03. Procedures. (a) The party seeking indemnification under
Section 11.02 (the "Indemnified Party") agrees to give prompt notice to the
party against whom indemnity is sought (the "Indemnifying Party") of the
assertion of any claim, or the commencement of any suit, action or proceeding
("Claim") in respect of which indemnity may be sought under such Section and
will provide the Indemnifying Party such information with respect thereto that
the Indemnifying Party may reasonably request. The failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party of its obligations
hereunder, except to the extent such failure shall have materially prejudiced
the Indemnifying Party.
(b) The Indemnifying Party shall be entitled to participate in the defense
of any Claim asserted by any third party ("Third Party Claim") and, subject to
the limitations set forth in this Section, shall be entitled to control and
appoint lead counsel for such defense, in each case at its expense.
(c) If the Indemnifying Party shall assume the control of the defense of
any Third Party Claim in accordance with the provisions of this Section 11.03,
(i) the Indemnifying Party shall obtain the prior written consent of the
Indemnified Party (which shall not be unreasonably withheld) before entering
into any settlement of such Third Party Claim, if the settlement does not
release the Indemnified Party from all liabilities and obligations with respect
to such Third Party Claim or the settlement imposes
injunctive or other equitable relief against the Indemnified Party and (ii) the
Indemnified Party shall be entitled to participate in the defense of such Third
Party Claim and to employ separate counsel of its choice for such purpose. The
fees and expenses of such separate counsel shall be paid by the Indemnified
Party.
(d) Each party shall cooperate, and cause their respective Affiliates to
cooperate, in the defense or prosecution of any Third Party Claim and shall
furnish or cause to be furnished such records, information and testimony, and
attend such conferences, discovery proceedings, hearings, trials or appeals, as
may be reasonably requested in connection therewith.
(e) Each Indemnified Party shall mitigate in accordance with Applicable Law
any loss for which such Indemnified Party seeks indemnification under this
Agreement. If such Indemnified Party mitigates its loss after the Indemnifying
Party has paid the Indemnified Party under any indemnification provision of this
Agreement in respect of that loss, the Indemnified Party must notify the
Indemnifying Party and pay to the Indemnifying Party the extent of the value of
the benefit to the Indemnified Party of that mitigation (less the Indemnified
Party's reasonable costs of mitigation) within two Business Days after the
benefit is received.
(f) Each Indemnified Party shall use reasonable efforts to collect any
amounts available under insurance coverage, or from any other Person alleged to
be responsible, for any Damages payable under Section 11.02.
Section 11.04. Calculation of Damages. (9a) The amount of any Damages
payable under Section 11.02 by the Indemnifying Party shall be net of any (i)
amounts recovered or recoverable by the Indemnified Party under applicable
insurance policies or from any other Person alleged to be responsible therefor,
and (ii) Tax benefit realized by the Indemnified Party arising from the
incurrence or payment of any such Damages. In computing the amount of any such
Tax benefit, the Indemnified Party shall be deemed to fully utilize, at the
highest marginal tax rate then in effect, all Tax items arising from the
incurrence or payment of any indemnified Damages. If the Indemnified Party
receives any amounts under applicable insurance policies, or from any other
Person alleged to be responsible for any Damages, subsequent to an
indemnification payment by the Indemnifying Party, then such Indemnified Party
shall promptly reimburse the Indemnifying Party for any payment made or expense
incurred by such Indemnifying Party in connection with providing such
indemnification payment up to the amount received by the Indemnified Party, net
of any expenses incurred by such Indemnified Party in collecting such amount.
(b) The Indemnifying Party shall not be liable under Section 11.02 for any
(i) Damages relating to any matter to the extent that (A) there is reflected in
the Closing Statement a liability or reserve relating to such matter or (B) the
Indemnified Party is otherwise compensated for such matter pursuant to the
Purchase Price adjustment under Section 2.05, (ii) indirect, consequential,
special or punitive Damages or (iii) Damages for lost profits.
Section 11.05. Assignment of Claims. If the Indemnified Party receives any
payment from an Indemnifying Party in respect of any Damages pursuant to Section
11.02 and the Indemnified Party could have recovered all or a part of such
Damages from a third party (a "Potential Contributor") based on the underlying
Claim asserted against the Indemnifying Party, the Indemnified Party shall
assign such of its rights to proceed against the Potential Contributor as are
necessary to permit the Indemnifying Party to recover from the Potential
Contributor the amount of such payment.
Section 11.06. Exclusivity. Except as specifically set forth in this
Agreement, effective as of the Closing Buyer waives any rights and claims Buyer
may have against Seller whether in law or in equity, relating to any Company or
any Subsidiary or the Shares or the transactions contemplated hereby. The rights
and claims waived by Buyer include claims for contribution or other rights of
recovery arising out of or relating to any Environmental Law (whether now or
hereinafter in effect), claims for breach of contract, breach of representation
or warranty, negligent misrepresentation and all other claims for breach of
duty. After the Closing, Article 8 and Section 11.02 will provide the exclusive
remedy for any misrepresentation, breach of warranty, covenant or other
agreement (other than those contained in Section 2.05) or other claim arising
out of this Agreement or the transactions contemplated hereby; provided that
this Section shall not apply to claims of fraud.
ARTICLE 12
TERMINATION
Section 12.01. Grounds for Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by mutual written agreement of Seller and Buyer;
(b) by either Seller or Buyer if the Closing shall not have been
consummated on or before August 31, 2006; or
(c) by either Seller or Buyer if consummation of the transactions
contemplated hereby would violate any nonappealable final order, decree or
judgment of any Governmental Authority having competent jurisdiction.
The party desiring to terminate this Agreement pursuant to clauses 12.01(b)
or 12.01(c) shall give notice of such termination to the other party.
Section 12.02. Effect of Termination. If this Agreement is terminated as
permitted by Section 12.01, such termination shall be without liability of
either party (or any stockholder, director, officer, employee, agent, consultant
or representative of such party) to the other party to this Agreement; provided
that if such termination shall result from the willful (i) failure of either
party to fulfill a condition to the performance of the obligations of the other
party, (ii) failure to perform a covenant of this Agreement or (iii) breach by
either party hereto of any representation or warranty or agreement contained
herein, such party shall be fully liable for any and all Damages incurred or
suffered by the other party as a result of such failure or breach. The
provisions of Sections 6.01, 13.03, 13.05, 13.06 and 13.07 shall survive any
termination hereof pursuant to Section 12.01.
ARTICLE 13
MISCELLANEOUS
Section 13.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given,
if to Buyer, to:
Xxxxxx International Inc.
000 Xxxxx Xxxxx
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx
Vice President, Strategic Development
& Treasurer
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx Muething & Xxxxxxx PLL
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
if to Seller, to:
Xxxxxxx River Laboratories International, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx, General Counsel
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
or such other address or facsimile number as such party may hereafter specify for the purpose by notice to the
other parties hereto. All such notices, requests and other communications shall be deemed received on the
date of receipt by the recipient thereof if received prior to 5 p.m. in the place of receipt and such day is a
Business Day in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed
not to have been received until the next succeeding Business Day in the place of receipt.
Section 13.02. Amendments and Waivers. (a) Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed, in the case of an amendment, by each party to this Agreement, or
in the case of a waiver, by the party against whom the waiver is to be
effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 13.03. Expenses. Except as otherwise expressly provided herein, all
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense.
Section 13.04. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto; provided, however, that
notwithstanding the foregoing, Buyer and Company may pledge or assign this
Agreement and the benefits hereunder to the lenders in connection with the
Financings.
Section 13.05. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, without regard to
the conflicts of law rules of such state.
Section 13.06. Jurisdiction. The parties hereto agree that any suit, action
or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought in the United States District Court for the
District of Delaware or any Delaware State court, so long as one of such courts
shall have subject matter jurisdiction over such suit, action or proceeding, and
that any cause of action arising out of this Agreement shall be deemed to have
arisen from a transaction of business in the State of Delaware, and each of the
parties hereby irrevocably consents to the jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum. Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 13.01 shall be deemed effective service of
process on such party.
Section 13.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 13.08. Counterparts; Effectiveness; Third Party Beneficiaries.
This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement shall become effective when each
party hereto shall have received a counterpart hereof signed by the other party
hereto. Until and unless each party has received a counterpart hereof signed by
the other party hereto, this Agreement shall have no effect and no party shall
have any right or obligation hereunder (whether by virtue of any other oral or
written agreement or other communication). No provision of this Agreement is
intended to confer any rights, benefits, remedies, obligations, or liabilities
hereunder upon any Person other than the parties hereto and their respective
successors and assigns.
Section 13.09. Entire Agreement. This Agreement and the other Transaction
Documents constitute the entire agreement between the parties with respect to
the subject matter of hereof and thereof and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter hereof and thereof.
Section 13.10. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other Governmental Authority to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such a determination, the parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
Section 13.11. Disclosure Schedules. Seller has set forth information on
the Disclosure Schedule in a section thereof that corresponds to the section of
this Agreement to which it relates. A matter set forth in one section of a
Schedule need not be set forth in any other section so long as its relevance to
such other section of the Schedule or section of the Agreement is reasonably
apparent on the face of the information disclosed therein to the Person to which
such disclosure is being made. The parties acknowledge and agree that (a)
the Schedules to this Agreement may include certain items
and information solely for informational purposes for the convenience of Buyer
and (b) the disclosure by any Seller of any matter in
the Schedules shall not be deemed to constitute an acknowledgment by such Seller
that the matter is required to be disclosed by the terms of this Agreement or
that the matter is material.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
XXXXXX INTERNATIONAL INC.
By:
-----------------------------------------
Name: Xxxx Xxxxxxxx III
Title: Senior Vice President - Chief
Financial Officer and Secretary
XXXXXXX RIVER LABORATORIES INTERNATIONAL, INC.
By:
-----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman, President and
Chief Executive Officer
