EXECUTION COPY
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STOCK AND ASSET PURCHASE AGREEMENT
BETWEEN
XXXXXXX-XXXXX SQUIBB COMPANY
and
CONMED CORPORATION
Dated as of November 26, 1997
SALE OF LINVATEC CORPORATION
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TABLE OF CONTENTS
Page
ARTICLE I
PURCHASE AND SALE OF THE SHARES AND THE OTHER ASSETS
Section 1.1 Purchase and Sale of the Shares and the Other
Assets.........................................................1
ARTICLE II
CLOSING; PURCHASE PRICE ADJUSTMENT
Section 2.1 Closing ..........................................................3
Section 2.2 Working Capital Cash Purchase Price Adjustment....................4
Section 2.3 Other Assets Cash Purchase Price Adjustment.......................7
ARTICLE III
CONDITIONS TO CLOSING
Section 3.1 Buyer's Obligation................................................9
Section 3.2 Seller's Obligation..............................................10
Section 3.3 Waiver of Closing Conditions.....................................11
Section 3.4 Frustration of Closing Conditions................................12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 4.1 Authority .......................................................12
Section 4.2 No Conflicts; Consents...........................................13
Section 4.3 The Shares and the Other Assets..................................14
Section 4.4 Organization and Standing; Books and Records.....................14
Section 4.5 Capital Stock of the Company and the Subsidiary .................15
Section 4.6 Equity Interests.................................................16
Section 4.7 Financial Statements.............................................16
Section 4.8 Taxes............................................................17
Section 4.9 Assets Other than Real Property Interests........................18
Section 4.10 Title to Real Property..........................................19
Section 4.11 Intellectual Property...........................................19
Section 4.12 Contracts ......................................................20
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Section 4.13 Litigation .....................................................24
Section 4.14 Benefit Plans .................................................24
Section 4.15 Absence of Changes or Events....................................27
Section 4.16 Compliance with Applicable Laws.................................28
Section 4.17 Employee and Labor Matters......................................29
Section 4.18 Material Services Provided by Seller, Zimmer
or their Respective Affiliates to the
Company.......................................................30
Section 4.19. Plant and Equipment............................................30
Section 4.20. No Severance Payments..........................................30
ARTICLE V
COVENANTS OF SELLER
Section 5.1 Access...........................................................31
Section 5.2 Ordinary Conduct.................................................31
Section 5.3 Insurance........................................................34
Section 5.4 Xxxxxx U.S. Receivables..........................................35
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 6.1 Authority........................................................37
Section 6.2 No Conflicts; Consents...........................................37
Section 6.3 Securities Act...................................................38
Section 6.4 Actions and Proceedings, etc.....................................38
Section 6.5 Availability of Funds............................................38
ARTICLE VII
COVENANTS OF BUYER AND SELLER
Section 7.1 Confidentiality .................................................38
Section 7.2 No Additional Representations....................................39
Section 7.3 No Use of Certain Names..........................................40
ARTICLE VIII
MUTUAL COVENANTS
Section 8.1 Consents.........................................................41
Section 8.2 Cooperation......................................................41
Section 8.3 Publicity........................................................42
Section 8.4 Best Efforts.....................................................42
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Section 8.5 Antitrust Notification and Other Regulatory
Filings.......................................................42
Section 8.6 Records..........................................................43
Section 8.7 Distribution Arrangements and Additional
Support Services..............................................44
Section 8.8 Manufacturing Agreement..........................................44
Section 8.9 Convatec Agreement...............................................45
Section 8.10 Certain Liabilities.............................................45
ARTICLE IX
EMPLOYEE AND RELATED MATTERS
Section 9.1 Employee Matters.................................................45
Section 9.2 Continuation of Comparable Benefit Plans.........................45
Section 9.3 Pension Plan.....................................................46
Section 9.4 401(k) Plan......................................................47
Section 9.5 Non-Qualified Plans..............................................47
Section 9.6 Medical/Dental Plans.............................................48
Section 9.7 Short and Long-Term Disability...................................50
Section 9.8 Life Insurance...................................................50
Section 9.9 Severance........................................................50
Section 9.10 Performance Bonuses.............................................50
Section 9.11 Outplacement Services...........................................51
Section 9.12 Relocation Benefits.............................................51
Section 9.13 Vacation Benefits...............................................51
Section 9.14 Non-U.S. Employees..............................................51
ARTICLE X
FURTHER ASSURANCES
Section 10.1 Further Assurances..............................................52
ARTICLE XI
INDEMNIFICATION
Section 11.1 Tax Indemnification.............................................52
Section 11.2 Other Indemnification by Seller.................................54
Section 11.3 Other Indemnification by Buyer..................................55
Section 11.4 Cooperation.....................................................56
Section 11.5 Losses Net of Insurance, etc....................................57
Section 11.6 Termination of Indemnification..................................57
Section 11.7 Procedures Relating to Indemnification for
Third Party Claims...........................................57
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Section 11.8 Procedures Relating to Indemnification for
Other Claims (Other than Tax Claims under
Section 11.1)................................................59
Section 11.9 Procedures Relating to Indemnification of Tax
Claims.......................................................59
ARTICLE XII
TAX MATTERS
Section 12.1 Responsibility for Preparation and Filing of
Tax Returns and Amendments...................................60
Section 12.2 Cooperation.....................................................61
Section 12.3 Refunds and Credits.............................................62
Section 12.4 Transfer Taxes .................................................63
Section 12.5 FIRPTA Certificate..............................................63
Section 12.6 Buyer Activity on Closing Date..................................63
Section 12.7 Buyer Activity Post-Closing.....................................63
Section 12.8 338 Elections...................................................64
ARTICLE XIII
TERMINATION
Section 13.1 Termination.....................................................64
Section 13.2 Return of Confidential Information..............................65
Section 13.3 Consequences of Termination.....................................65
ARTICLE XIV
SURVIVAL OF REPRESENTATIONS
Section 14.1 Survival of Representations.....................................66
ARTICLE XV
MISCELLANEOUS
Section 15.1 Assignment......................................................66
Section 15.2 No Third-Party Beneficiaries....................................66
Section 15.3 Expenses........................................................67
Section 15.4 Amendments......................................................67
Section 15.5 Notices.........................................................67
Section 15.6 Interpretation; Exhibits and Schedules;
Definitions..................................................68
Section 15.7 Counterparts....................................................71
Section 15.8 Entire Agreement................................................71
Section 15.9 Fees............................................................72
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Section 15.10 Severability .................................................72
Section 15.11 Consent to Jurisdiction........................................72
Section 15.12 Waiver of Jury Trial...........................................73
Section 15.13 GOVERNING LAW .................................................74
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Exhibits
Exhibit A [Intentionally Omitted]
Exhibit B Opinion of Cravath, Swaine & Xxxxx
Exhibit C Opinion of Xxxx X. XxXxxxxxxx
Exhibit D Opinion of Xxxxxxxx & Xxxxxxxx
Exhibit E Opinion of Xxxxxx X. Xxxxxxxxx
Exhibit F Form of Warrant
Exhibit G Transition and Distribution Services
Agreement
Exhibit H Distribution Agreement
Exhibit I Manufacturing Agreement
Exhibit J Cross-Licensing Agreement
Exhibit K Convatec Term Sheet
STOCK AND ASSET PURCHASE AGREEMENT
STOCK AND ASSET PURCHASE AGREEMENT dated as
of November 26, 1997, between XXXXXXX-XXXXX SQUIBB
COMPANY, a Delaware corporation ("Seller"), and
CONMED CORPORATION, a New York corporation ("Buyer").
Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, all the issued and outstanding shares of Common Stock, par value $.00001
per share (the "Shares"), of Linvatec Corporation, a Florida corporation and
wholly owned subsidiary of Seller (the "Company"). In addition, Buyer desires to
purchase from Seller's Affiliates that are set forth on Schedule 1(a) (the
"Seller Entities"), and Seller desires to cause such Affiliates to sell to
Buyer, certain assets relating to the Company's International Business and
Domestic Hall Surgical Business. The term "International Business" means the
business conducted by the Company, Envision Medical Corporation, a California
corporation and wholly owned subsidiary of the Company (the "Subsidiary"), and
certain other subsidiaries of Seller, including the Seller Entities, relating to
the sale outside of the United States of all the Company's products. The term
"Domestic Hall Surgical Business" means the business conducted by the Company,
the Subsidiary and Xxxxxx, Inc., a wholly owned subsidiary of Seller ("Zimmer"),
relating to the sale of the Company's Hall(R) Surgical branded products
throughout the United States and the sale of the Company's arthroscopy products
to the accounts in the United States listed on Schedule 1(b).
Accordingly, Seller and Buyer hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES AND THE OTHER ASSETS
Section 1.1 Purchase and Sale of the Shares and the Other Assets. (a)
On the terms and subject to the conditions of this Agreement, (i) Seller will
sell, transfer and deliver (or cause to be sold, transferred and delivered) to
Buyer, and Buyer will purchase from Seller, free and clear of all Liens (Section
15.7(c) identifies the sections of this Agreement in which this term and the
other
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capitalized terms used herein are defined) the Shares and (ii) Seller will sell,
convey, transfer and assign or cause the Seller Entities to sell, convey,
transfer and assign to Buyer or its designee, and Buyer or its designee will
purchase from Seller or such Seller Entities, as applicable, the Other Assets,
for an aggregate purchase price equal to (A) $370,000,000 (the "Cash Purchase
Price") plus (B) the Warrant Consideration (the Warrant Consideration, together
with the Cash Purchase Price, the "Purchase Price"), payable and subject to
adjustment as set forth in Article II. The "Warrant Consideration" means the
Warrant, in the form of Exhibit F, to purchase common stock, par value $1.00 per
share, of Buyer with an exercise price per share equal to 130% of the average of
the closing sale prices of a share of such common stock on the NASDAQ National
Market System for the 15 consecutive trading days immediately preceding the
Closing Date (the "Warrant"), on the terms of and subject to the conditions of
the Warrant.
(b) The "Non-U.S. Inventory Purchase Price" means the aggregate
standard cost for the Non-U.S. Inventory, which standard cost means the standard
cost used to prepare the Balance Sheet. The term "Other Assets" means (i)
products which are both (A) manufactured by the Company or the Subsidiary and
sold to a Seller Entity prior to the Closing Date in connection with the
International Business and (B) owned by such Seller Entity as of the Closing
Date (the "Non-U.S. Inventory") and (ii) accounts receivable reflected in
Closing Working Capital which were owned by Zimmer as of the Closing Date and
arise out of the sale in the United States of the Company's Hall(R) Surgical
branded products by Xxxxxx'x U.S. distributors (the "Xxxxxx U.S. Receivables").
If any amount necessary to compute the Non-U.S. Inventory Purchase Price is in a
currency other than U.S. dollars, such amount shall be converted into U.S.
dollars at the prevailing commercial rate of exchange for purchasing U.S.
dollars with the applicable foreign currency, as quoted by Citibank, N.A. in New
York City two business days prior to the Closing Date. On or prior to December
15, 1997, Seller shall cause Zimmer to provide (i) a good faith estimate of the
amount of Xxxxxx U.S. Receivables and (ii) a good faith estimate of the amount
of Non-U.S. Inventory with a breakdown by Seller Entity, in each case as of
November 30, 1997.
(c) Buyer and Seller shall negotiate in good faith to allocate the
Purchase Price among the Shares and the Other Assets prior to the Closing Date.
If Buyer and Seller agree on an allocation of the Purchase Price prior to the
Closing Date, Buyer and Seller shall set forth such
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allocation in Schedule 1.1(c). To the extent the Purchase Price is adjusted
pursuant to Section 2.2 or 2.4 after the Closing Date, and if Buyer and Seller
have been able to agree on a Purchase Price allocation pursuant to the preceding
sentence, Buyer and Seller shall negotiate in good faith to allocate such
adjustment among the Shares and the Other Assets in a manner consistent with the
original Purchase Price allocation, and Schedule 1.1(c) shall be amended
accordingly. In such case, neither Buyer nor Seller, nor any of their respective
Affiliates (including the Company and the Subsidiary), shall take any position
on any return, declaration, report, or information return or statement relating
to Taxes inconsistent with any allocation set forth in Schedule 1.1(c), unless
required to do so by applicable law.
ARTICLE II
CLOSING; PURCHASE PRICE ADJUSTMENT
Section 2.1 Closing. The closing (the "Closing") of the purchase and
sale of the Shares and the Other Assets shall be held at the offices of Cravath,
Swaine & Xxxxx, Worldwide Plaza, 825 Eighth Avenue, New York, New York, at 10:00
a.m. on December 31, 1997, or, if the conditions to the Closing set forth in
Article 3 shall not have been satisfied by such date, as soon as practicable
after such conditions shall have been satisfied. The date on which the Closing
shall occur is hereinafter referred to as the "Closing Date". At the Closing,
(a) Buyer shall deliver to Seller, by wire transfer to a bank account designated
in writing by Seller at least two business days prior to the Closing Date,
immediately available funds in an amount equal to the sum of (i) the Cash
Purchase Price and (ii) the Closing Tax Adjustment Amount plus or minus (iii) an
estimate, prepared by Seller, containing sufficient detail to describe the basis
therefore and the calculation thereof and delivered to Buyer at least three
business days prior to the Closing Date, of any adjustment to the Cash Purchase
Price under Section 2.2 (the Cash Purchase Price plus or minus such estimate of
any adjustment under Section 2.2 being hereinafter called the "Closing Date
Amount"); (b) Buyer shall execute and deliver to Seller the Warrant; (c) Seller
shall deliver or cause to be delivered to Buyer certificates representing the
Shares, duly endorsed in blank or accompanied by stock powers duly endorsed in
blank in proper form for transfer, with appropriate transfer stamps, if any,
affixed; and (d) Seller (acting as agent for the Seller Entities) shall deliver
or cause to be delivered to
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Buyer such appropriately executed instruments of sale, assignment, transfer and
conveyance in form and substance reasonably satisfactory to Buyer and its
counsel evidencing and effecting the sale, assignment, and transfer to Buyer of
the Other Assets (it being understood that such instruments shall not require
the Seller Entities to make any additional representations, warranties or
covenants, expressed or implied, not contained in this Agreement). With respect
to Intellectual Property, Seller hereby agrees to execute (or cause the
appropriate Seller Entities to execute) after the Closing such additional
documents (provided that such documents are reasonably satisfactory in form and
substance to Seller) in form appropriate for recordation (with governmental
agencies or authorities responsible for intellectual property) in all countries
where such Intellectual Property is registered as Buyer may prepare and request
from time to time for the purpose of perfecting Buyer's rights in, maintaining
the enforceability of, or obtaining proper recordation of the assignment to
Buyer of, such Intellectual Property, including but not limited to, executing
powers of attorney, deeds of assignment, proofs of use, registered user
agreements, original certificates of registration (to the extent available) or
letters patent, affidavits or declarations, it being understood that the cost of
preparing and recording any such documents shall be borne by Buyer.
Section 2.2 Working Capital Cash Purchase Price Adjustment. (a)(i)
Within 60 calendar days after the Closing Date, Buyer shall prepare and deliver
to Seller a statement (the "Statement"), certified by an officer of Buyer,
setting forth Working Capital as of the close of business on the Closing Date
("Closing Working Capital") and a certificate of Buyer stating that the
Statement has been prepared in compliance with the requirements of this Section
2.2.
(ii) During the 30 calendar day period following Seller's receipt of
the Statement, Seller shall be permitted to review the working papers of Buyer
relating to the Statement. The Statement shall become final and binding upon the
parties on the thirtieth day following delivery thereof, unless Seller gives
written notice of its disagreement with the Statement ("Notice of Disagreement")
to Buyer prior to such date. Any Notice of Disagreement shall (A) specify in
reasonable detail the nature of any disagreement so asserted and (B) only
include disagreements based on mathematical errors or based on Closing Working
Capital not being calculated in accordance with this Section 2.2. If a Notice of
Disagreement is received by
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Buyer in a timely manner, then the Statement (as revised in accordance with
clause (1) or (2) below) shall become final and binding upon Seller and Buyer on
the earlier of (1) the date Seller and Buyer resolve in writing any differences
they have with respect to the matters specified in the Notice of Disagreement or
(2) the date any disputed matters are finally resolved in writing by the
Accounting Firm.
(iii) During the 30 calendar day period following the delivery of a
Notice of Disagreement, Seller and Buyer shall seek in good faith to resolve in
writing any differences which they may have with respect to the matters
specified in the Notice of Disagreement. At the end of such 30 calendar day
period, Seller and Buyer shall submit to a nationally recognized independent
accounting firm mutually agreed upon by Seller and Buyer (the "Accounting Firm")
for review and resolution any and all matters which remain in dispute and which
were properly included in the Notice of Disagreement. The scope of the
Accounting Firm's review shall be limited to only those matters which remain in
dispute and which were properly included in the Notice of Disagreement. Seller
and Buyer shall use reasonable efforts to cause the Accounting Firm to render a
decision resolving the matters submitted to the Accounting Firm within 30
calendar days of the receipt of such submission. Seller and Buyer agree that
judgment may be entered upon the determination of the Accounting Firm in any
court having jurisdiction over the party against which such determination is to
be enforced. The Accounting Firm's determination shall be accompanied by a
certificate of the Accounting Firm that it reached its decision in accordance
with the provisions of this Section 2.2(a). The cost of any arbitration
(including the fees and expenses of the Accounting Firm) pursuant to this
Section 2.2(a) shall be borne by the party that, on a relative basis, prevails
less on matters resolved by the Accounting Firm, which determination also shall
be determined by the Accounting Firm at the time the determination of the
Accounting Firm is rendered on the merits of the matter submitted.
(b) Subject to Section 2.2(f),the Cash Purchase Price shall be
increased by the amount by which Closing Working Capital exceeds $38,571,000
(the "WC Amount"), and the Cash Purchase Price shall be decreased by the amount
by which Closing Working Capital is less than the WC Amount (the Cash Purchase
Price as so increased or decreased shall hereinafter be referred to as the
"Adjusted Cash Purchase Price"). If the Closing Date Amount is less than the
Adjusted Cash Purchase Price, Buyer shall, and if the Closing Date Amount is
more than the Adjusted Cash Purchase
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Price, Seller shall, within 10 business days after the Statement becomes final
and binding on the parties, make payment by wire transfer in immediately
available funds of the amount of such difference, together with interest thereon
from and including the Closing Date to but excluding the actual date of payment
at the Prime Rate.
(c) The term "Working Capital" shall mean Current Assets minus Current
Liabilities. The WC Amount equals Working Capital on the date of the Domestic
Balance Sheet, and shall not be subject to change regardless of whether the
items included therein were in accordance with United States generally accepted
accounting principles ("GAAP"). The terms "Current Assets" and "Current
Liabilities" shall mean the U.S. current assets and current liabilities of the
Company and the Subsidiary, calculated in accordance with the Bristol Xxxxx
Squibb Company Accounting Procedures previously delivered to Buyer and certified
to be in effect as of June 30, 1997 (the "Seller Accounting Policies"), which
Seller hereby represents to Buyer are in accordance with GAAP (it being
understood that current assets and current liabilities should be classified as
"U.S. current assets and liabilities" consistent with the classifications used
in preparing the Domestic Balance Sheet). Current assets and current liabilities
relating to Taxes shall not be taken into account in determining Working
Capital. The parties agree that the adjustment contemplated by this Section
2.2(c) is intended to show the change in Working Capital from the date of the
Domestic Balance Sheet to the Closing Date, and that such change can only be
measured if the calculation is done in the same way and uses Seller Accounting
Policies at both dates. The scope of the disputes to be resolved by the
Accounting Firm is limited to whether such calculation was done in accordance
with this Section 2.2(c), including whether Seller Accounting Policies were used
and whether there were mathematical errors in the Statement, and the Accounting
Firm is not to make any other determination, including any determination as to
whether GAAP was followed for the Domestic Balance Sheet or the Statement. Any
items on or omissions from the Domestic Balance Sheet that are based upon errors
of fact or mathematical errors or that are not in accordance with the Seller
Accounting Policies shall be retained for purposes of calculating Closing
Working Capital.
(d) Buyer agrees that following the Closing any actions with respect to
the accounting books and records of the Company on which the Statement is to be
based that are not consistent with the Seller Accounting Policies shall not
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be taken into consideration for purposes of calculating the Closing Working
Capital.
(e) During the period of time from and after the Closing Date through
the resolution of any adjustment to the Cash Purchase Price contemplated by this
Section 2.2, Buyer shall cause the Company to afford to Seller and any accoun-
tants, counsel or financial advisers retained by Seller in connection with any
adjustment to the Cash Purchase Price contemplated by this Section 2.2
reasonable access during normal business hours to all the Company's properties,
books, contracts, personnel and records relevant to the adjustment contemplated
by this Section 2.2 (including the working papers relating to the Statement of
Buyer and any working papers relating to the Statement prepared by any
accountants retained by Buyer).
Section 2.3 Other Assets Cash Purchase Price Adjustment. (a) The
Non-U.S. Inventory will be in the possession of the Seller Entities on the
Closing Date. At the Effective Time, title to such Non-U.S. Inventory shall pass
to Buyer. As promptly as practicable after the Closing Date, Seller shall
prepare and deliver to Buyer a statement setting forth the actual amount of the
Non-U.S. Inventory Purchase Price (the "Non-U.S. Inventory Statement") on the
Closing Date.
(b) During the 60-calendar day period following Buyer's receipt of the
Non-U.S. Inventory Statement, Buyer shall be permitted to review Seller's
calculations and working papers related thereto. The Non-U.S. Inventory
Statement shall become final and binding upon the parties on the thirtieth day
following delivery thereof, unless Seller gives written notice of its
disagreement with the Statement ("Notice of Inventory Disagreement") to Buyer
prior to such date. Any Notice of Inventory Disagreement shall (i) specify in
reasonable detail the nature of any disagreement so asserted and (ii) only
include disagreements based on mathematical errors or based on the Non-U.S.
Inventory Purchase Price not being calculated based on the actual inventory
delivered or standard cost. If a Notice of Inventory Disagreement is received by
Seller in a timely manner, then the Non-U.S. Inventory Statement (as revised in
accordance with clause (1) or (2) below) shall become final and binding upon
Seller and Buyer on the earlier of (1) the date Seller and Buyer resolve in
writing any differences they have with respect to the matters specified in the
Notice of Disagreement or (2) the date any disputed matters are finally resolved
in writing by the Accounting Firm.
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(c) During the 30-calendar day period following the delivery of a
Notice of Inventory Disagreement, Seller and Buyer shall seek in good faith to
resolve in writing any differences which they may have with respect to the
matters specified in the Notice of Inventory Disagreement. At the end of such
30-calendar day period, Seller and Buyer shall submit to the Accounting Firm for
review and resolution any and all matters which remain in dispute and which were
properly included in the Notice of Inventory Disagreement. The scope of the
Accounting Firm's review shall be limited to only those matters which remain in
dispute and which were properly included in the Notice of Inventory
Disagreement. Seller and Buyer shall use reasonable efforts to cause the
Accounting Firm to render a decision resolving the matters submitted to the
Accounting Firm within 30 calendar days of the receipt of such submission.
Seller and Buyer agree that judgment may be entered upon the determination of
the Accounting Firm in any court having jurisdiction over the party against
which such determination is to be enforced. The Accounting Firm's determination
shall be accompanied by a certificate of the Accounting Firm that it reached its
decision in accordance with the provisions of this Section 2.4(c). The cost of
any arbitration (including the fees and expenses of the Accounting Firm)
pursuant to this Section 2.4(c) shall be fully borne by the party that, on a
relative basis, prevails less, which determination also shall be determined by
the Accounting Firm at the time the determination of the Accounting Firm is
rendered on the merits of the matter submitted.
(d) In the event that the Non-U.S. Inventory Purchase Price is greater
than $11,027,000, Buyer shall pay to Seller, within five calendar days after the
Non-U.S. Inventory Statement becomes final and binding, the amount of the
deficiency. In the event that $11,027,000 is greater than the actual amount of
the Non-U.S. Inventory Purchase Price, Seller shall pay to Buyer, within five
calendar days of the date the Non-U.S. Inventory Statement has become final and
binding, the amount of the excess. Any such payment shall be made by wire
transfer to a bank account designated by the receiving party of immediately
available funds in the amount of such deficiency or excess, as the case may be,
together with interest thereon from and including the Closing Date to but
excluding the actual date of payment at the Prime Rate.
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ARTICLE III
CONDITIONS TO CLOSING
Section 3.1 Buyer's Obligation. The obligation of Buyer to purchase and
pay for the Shares and the Other Assets is subject to the satisfaction (or
waiver by Buyer) as of the Closing of the following conditions:
(a) The representations and warranties of Seller made in this
Agreement that are qualified as to materiality shall be true and
correct, and those representations and warranties not so qualified
shall be true and correct in all material respects, as of the date
hereof and as of the time of the Closing as though made as of such
time, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations
and warranties that are qualified as to materiality shall be true and
correct, and those representations and warranties not so qualified
shall be true and correct in all material respects, on and as of such
earlier date). Seller shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement
to be performed or complied with by Seller by the time of the Closing.
Seller shall have delivered to Buyer a certificate dated the Closing
Date and signed by an authorized officer of Seller confirming the
foregoing.
(b) Buyer shall have received an opinion dated the Closing
Date of Cravath, Swaine & Xxxxx, counsel to Seller, substantially in
the form of Exhibit B, and an opinion dated the Closing Date of Xxxx X.
XxXxxxxxxx, General Counsel of Seller, substantially in the form of
Exhibit C.
(c) No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or
other order enacted, entered, promulgated, enforced or issued by any
Federal, state, local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental
Entity") or other legal restraint or prohibition shall be in effect
preventing the consummation of the transactions contemplated to occur
at the Closing. The parties shall have received all authorizations,
consents, orders and approvals of Governmental Entities
10
required in order to consummate the sale of the Shares and the Other
Assets and the execution and delivery of the Transaction Agreements,
except the consents listed on Schedule 4.2(iii)(B).
(d) The waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx"), if applicable to the purchase
and sale of the Shares and the other Assets, shall have expired or been
terminated.
(e) The Transition Distribution Services Agreement, the
Distribution Agreement, the Cross-Licensing Agreement and the
Manufacturing Agreement shall have been executed and delivered by the
parties thereto.
(f) Buyer and Seller shall have executed a xxxx of sale for
each relevant country with respect to the Other Assets in forms to be
mutually agreed upon.
(g) Buyer shall not have been informed in writing by any of
The Chase Manhattan Bank ("Chase"), Xxxxx Xxxxxx Funding Group ("SB")
and Chase Securities Inc. ("CSI") that the financing contemplated by
the Commitment Letter, dated as of the date hereof (the "Commitment
Letter), among Buyer, Chase, CSI and SB, is not being provided to Buyer
solely as a result of there having occurred a material adverse change
in banking conditions that materially impairs the syndication of such
financing as contemplated by clause (c) of the last paragraph on page
three of the Commitment Letter.
Section 3.2 Seller's Obligation. The obligation of Seller to sell and
deliver the Shares and the Other Assets to Buyer is subject to the satisfaction
(or waiver by Seller) as of the Closing of the following conditions:
(a) The representations and warranties of Buyer made in this
Agreement qualified as to materiality shall be true and correct, and
those representations not so qualified shall be true and correct in all
material respects, as of the date hereof and as of the time of the
Closing as though made as of such time, except to the extent such
representations and warranties expressly relate to an earlier date (in
which case such representations and warranties that are qualified as to
materiality shall be true and correct, and those representations and
warranties not so qualified shall be true and correct in all material
11
respects, on and as of such earlier date). Buyer shall have performed
or complied in all material respects with all obligations and covenants
required by this Agreement to be performed or complied with by Buyer by
the time of the Closing. Buyer shall have delivered to Seller a
certificate dated the Closing Date and signed by an authorized officer
of Buyer confirming the foregoing.
(b) Seller shall have received an opinion dated the Closing
Date of Xxxxxxxx & Xxxxxxxx, counsel to Buyer, substantially in the
form of Exhibit D, and Xxxxxx X. Xxxxxxxxx, Vice-President-Legal
Affairs and General Counsel of Buyer, substantially in the form of
Exhibit E.
(c) No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or
other order enacted, entered, promulgated, enforced or issued by any
Governmental Entity or other legal restraint or prohibition shall be in
effect preventing the consummation of the transactions contemplated to
occur at the Closing. The parties shall have received all
authorizations, consents, orders and approvals of Governmental Entities
required in order to consummate the sale of the Shares and the Other
Assets and the execution and delivery of the Transaction Agreements,
except the consents listed on Schedule 4.2.
(d) The waiting period under the HSR Act, if applicable to the
purchase and sale of the Shares and the Other Assets, shall have
expired or been terminated.
(e) The Transition Distribution Services Agreement, the
Distribution Agreement, the Cross-Licensing Agreement and the
Manufacturing Agreement shall have been executed and delivered by the
parties thereto.
(f) Buyer and Seller shall have executed a xxxx of sale for
each relevant country with respect to the Other Assets in forms to be
mutually agreed upon.
Section 3.3 Waiver of Closing Conditions. The parties acknowledge and
agree that if Buyer or Seller has actual knowledge of a failure of any condition
set forth in Section 3.1 or 3.2, respectively, or of any breach by the other
party of any representation, warranty or covenant
12
contained in this Agreement, and such party proceeds with the Closing despite
such actual knowledge, such party shall be deemed to have waived such condition
or breach and such party and its successors, assigns and Affiliates shall not be
entitled to be indemnified pursuant to Section 11, to xxx for damages or to
assert any other right on remedy for any losses arising from any matters
relating to such condition or breach, notwithstanding anything to the contrary
contained herein. For purposes of this Section 3.3 only, "actual knowledge" (a)
with respect to Buyer, means the actual (as opposed to constructive) knowledge
of Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxxxxx and Xxxxxx X.
Xxxxxxxx, Xx. and (b) with respect to Seller, means the actual (as opposed to
constructive) knowledge of Xxxxxx X. Xxxxx, Xx., Xxxxxx X. Xxxxxxxx and Xxxxxx
X. Xxxxxx.
Section 3.4 Frustration of Closing Conditions. Neither Buyer nor Seller
may rely on the failure of any condition set forth in Section 3.1 or 3.2,
respectively, to be satisfied if such failure was caused by such party's failure
to act in good faith or to use its best efforts to cause the Closing to occur,
as required by Section 8.4.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
Section 4.1 Authority. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Seller
has all requisite corporate power and authority to enter into this Agreement and
to perform its obligations hereunder. Each of the Seller Entities is a direct or
indirect wholly owned Subsidiary of Seller (except for director qualifying
shares). Seller and the Seller Entities have all requisite corporate power to
consummate the transactions contemplated hereby. Subject to approval by the
Board of Directors of Seller, all corporate acts and other corporate proceedings
required to be taken by Seller and Xxxxxx to authorize the execution, delivery
and performance of this Agreement, the Manufacturing Agreement, the Convatec
Agreement, the Transition Distribution Services Agreement, the Distribution
Agreement and the Cross-Licensing Agreement (together with the Warrant, the
"Transaction Documents"), to the extent such persons are parties to such
agreements, and the
13
consummation of the transactions contemplated hereby have been duly and properly
taken. Subject to approval by the Board of Directors of Seller, this Agreement
has been duly executed and delivered by Seller and constitutes a legal, valid
and binding obligation of Seller, enforceable against Seller in accordance with
its terms.
Section 4.2 No Conflicts; Consents. (a) The execution and delivery of
this Agreement by Seller do not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancelation or
acceleration of any obligation or to loss of a benefit under, or result in the
creation of any liens, claims, encumbrances, security interests, options,
charges or restrictions of any kind ("Liens") upon any of the properties or
assets of the Company or the Subsidiary under, any provision of (i) the
Certificate of Incorporation or By-laws (or the comparable governing
instruments) of Seller, the Company, the Subsidiary or any Seller Entity, (ii)
except as set forth in Schedule 4.2(a), any note, bond, mortgage, indenture,
deed of trust, license, lease, contract, commitment, agreement or arrangement to
which Seller, the Company, the Subsidiary or any Seller Entity is a party or by
which any of their respective properties or assets are bound or (iii) any
judgment, order or decree, or, subject to the matters referred to in clauses
(i), (ii) and (iii) of paragraph (b) below, statute, law, ordinance, rule or
regulation applicable to Seller, the Company, the Subsidiary or any Seller
Entity or their respective properties or assets, other than, in the case of
clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, would not have a Material Adverse Effect.
(b) No consent, approval, license, permit, order or authorization of,
or registration, declaration or filing with, any Governmental Entity or
nongovernmental third party is required to be obtained or made by or with
respect to Seller, the Company, the Subsidiary or any Seller Entity in
connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby other than (i) compliance
with and filings under the HSR Act, if applicable, (ii) those that may be
required solely by reason of Buyer's (as opposed to any other third party's)
participation in the transactions contemplated hereby, (iii) those set forth on
Schedules 4.2(b)(iii)(A) and (b)(iii)(B) and (iv) with respect to
nongovernmental third parties, such consents,
14
approvals, licenses, permits, orders, authorizations, registrations,
declarations and filings the absence of which, or the failure to make which,
individually or in the aggregate, would not have a Material Adverse Effect.
(c) As of the date hereof, there are no (i) outstanding judgments,
orders, injunctions or decrees of any Governmental Entity or arbitration
tribunal against Seller or any of its Affiliates, (ii) lawsuits, actions or
proceedings pending or, to the knowledge of Seller, threatened against Seller or
any of its Affiliates or (iii) investigations by any Governmental Entity which
are, to the knowledge of Seller, pending or threatened against Seller or any of
its Affiliates, which, in the case of each of clauses (i), (ii) and (iii), have
or could have a material adverse effect on the ability of Seller to consummate
the transactions contemplated hereby.
Section 4.3 The Shares and the Other Assets. (a) Seller has good and
valid title to the Shares, free and clear of any Liens. Assuming Buyer has the
requisite power and authority to be the lawful owner of the Shares, upon
delivery to Buyer at the Closing of certificates representing the Shares, duly
endorsed by Seller for transfer to Buyer, and upon Seller's receipt of the
Closing Date Amount, good and valid title to the Shares will pass to Buyer, free
and clear of any Liens, other than those arising from acts of Buyer or its
Affiliates. Other than this Agreement, the Shares are not subject to any voting
trust agreement or other contract, agreement, arrangement, commitment or
understanding, including any such agreement, arrangement, commitment or
understanding restricting or otherwise relat ing to the voting, dividend rights
or disposition of the Shares.
(b) Each Seller Entity has good and valid title to the Other Assets
being transferred by it pursuant to Section 1.1.
Section 4.4 Organization and Standing; Books and Records. Each of the
Company and the Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation. Each of
the Company and the Subsidiary has full corporate power and authority and
possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to own, lease or otherwise hold its properties
and assets and to carry on its business as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals the lack of which,
15
individually or in the aggregate, would not have a Material Adverse Effect. Each
of the Company and the Subsidiary is duly qualified and in good standing to do
business as a foreign corporation in each jurisdiction in which the conduct or
nature of its business or the ownership, leasing or holding of its properties
makes such qualification necessary, except such jurisdictions where the failure
to be so qualified or in good standing, individually or in the aggregate, would
not have a Material Adverse Effect. Seller has prior to the execution of this
Agreement made available to Buyer true and complete copies of (a) the
Certificate of Incorporation and By-laws, each as amended to the date hereof, of
the Company and (b) the Articles of Incorporation and By-laws, each as amended
to the date hereof, of the Subsidiary.
Section 4.5 Capital Stock of the Company and the Subsidiary. The
authorized capital stock of the Company consists of 100,000,000 shares of common
stock, par value $.00001 per share, of which 9,675,220 shares, constituting the
Shares, are duly authorized and validly issued and outstanding, fully paid and
nonassessable. Seller is the record and beneficial owner of the Shares. Except
for the Shares, there are no shares of capital stock or other equity securities
or interests of the Company outstanding. The authorized capital stock of the
Subsidiary consists of 1,000 shares of common stock, par value $1.00 per share
(the "Subsidiary Shares"), all of which are duly authorized and validly issued
and outstanding, fully paid and nonassessable. The Company is the record and
beneficial owner of the Subsidiary Shares. Except for the Subsidiary Shares,
there are no shares of capital stock or other equity securities of the
Subsidiary outstanding. Neither the Shares nor the Subsidiary Shares have been
issued in violation of, and none of the Shares or the Subsidiary Shares are
subject to, any preemptive, subscription or similar rights under any provision
of applicable law, the Certificate of Incorporation or By-laws of the Company or
the Articles of Incorporation or By-laws of the Subsidiary, any contract,
agreement or instrument to which the Company or the Subsidiary is subject, bound
or a party or otherwise. There are no outstanding warrants, options, rights,
"phantom" stock rights, agreements, convertible or exchangeable securities or
other commitments (other than this Agreement) (a) pursuant to which Seller, the
Company or the Subsidiary is or may become obligated to issue, sell, purchase,
return or redeem any shares of capital stock or other securities of the Company
or the Subsidiary or (b) that give any person the right to receive any benefits
or rights similar to any rights enjoyed by or accruing to the holders of shares
of
16
capital stock of the Company or the Subsidiary. There are no equity securities
of the Company or the Subsidiary reserved for issuance for any purpose. The
Company has good and valid title, directly, to all the Subsidiary Shares, free
and clear of any Liens. There are no outstanding bonds, debentures, notes or
other indebtedness having the right to vote on any matters on which stockholders
of the Company or the Subsidiary may vote.
Section 4.6 Equity Interests. Except as set forth on Schedule 4.6 and
for the Subsidiary, the Company does not directly or indirectly own any capital
stock of or other equity interests in any corporation, partnership or other
person and neither the Company nor the Subsidiary is a member of or participant
or investor in any partnership, joint venture or similar Person.
Section 4.7 Financial Statements. (a) Schedule 4.7 sets forth (i) the
audited consolidated statement of assets to be acquired and liabilities to be
assumed of the Company and the Subsidiary as of June 30, 1997 (together with the
notes thereto, the "Balance Sheet"), and the audited consolidated statement of
net sales and direct operating expenses of the Company and the Subsidiary for
the period ended June 30, 1997, in each case together with the notes to such
financial statements, (ii) the audited consolidated statement of U.S. assets to
be acquired and liabilities to be assumed of the Company and the Subsidiary as
of June 30, 1997 (together with the notes thereto, the "Domestic Balance
Sheet"), and an audited consolidated statement of U.S. net sales and direct
operating expenses for the period ended June 30, 1997, in each case together
with the notes to such financial statements, and (iii) the audited consolidated
statement of assets to be acquired and liabilities to be assumed of the Company
and the Subsidiary as of December 31, 1996 and 1995, and the audited
consolidated statements of net sales and direct operating expenses of the
Company and the Subsidiary for the years ended December 31, 1996 and 1995, in
each case together with the notes to such financial statements (the financial
statements described in clauses (i), (ii) and (iii) above, together with the
notes to such financial statements, collectively, the "Financial Statements").
The Financial Statements have been prepared in conformity with GAAP consistently
applied (except in each case as described in the notes thereto) and on that
basis fairly present in all material respects the consolidated financial
condition and results of operations of the Company and the Subsidiary as of the
respective dates thereof and for the respective periods indicated.
17
(b) The Company does not have any material liabilities or obligations
of any nature (whether accrued, absolute, contingent, unasserted or otherwise)
of a nature required by GAAP to be reflected on a consolidated balance sheet of
the Company and the Subsidiary or in the notes thereto, except (i) as disclosed,
reflected or reserved against in the Balance Sheet, (ii) for liabilities and
obligations incurred in the ordinary course of business and consistent with past
practice since the date of the Balance Sheet and not in violation of this
Agreement and (iii) for Taxes.
Section 4.8 Taxes. (a) For purposes of this Agreement, (i) "Tax" or
"Taxes" shall mean all Federal, state, local and foreign taxes and similar
assessments, including all interest, penalties and additions imposed with
respect to such amounts; (ii) "Pre-Closing Tax Period" shall mean all taxable
periods ending on or before the Closing Date and the portion ending on the
Closing Date of any taxable period that includes (but does not end on) the
Closing Date; and (iii) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(b) Except as set forth in Schedule 4.8, (i) the Company and the
Subsidiary, and any affiliated group, within the meaning of Section 1504 of the
Code, and any unitary, combined or consolidated group of which the Company or
the Subsidiary is or has been a member, has filed or caused to be filed in a
timely manner (within any applicable extension periods) all Tax returns, reports
and forms required to be filed by the Code or by applicable state, local or
foreign Tax laws, (ii) all Taxes shown to be due on such returns, reports and
forms have been timely paid in full or will be timely paid in full by the due
date thereof, and (iii) no Tax liens have been filed and no material claims are
being asserted with respect to any Taxes.
The Tax returns referred to in the prior paragraph have been examined
by the Internal Revenue Service or the appropriate taxing authority for all
taxable years through the year ended December 31, 1991. All deficiencies
resulting from such examinations have either been paid or adequately provided
for.
(c) Except as set forth in Schedule 4.8, (i) neither Seller, the
Company nor the Subsidiary has given with respect to the Company or the
Subsidiary, or any property held by the Company or the Subsidiary, any consent
under Section 341 of the Code, (ii) no property of the Company or the Subsidiary
is "tax exempt use property"
18
within the meaning of Section 168(h) of the Code, and (iii) neither the Company
nor the Subsidiary is a party to any lease made pursuant to Section 168(f)(8) of
the Internal Revenue Code of 1954.
(d) Except as set forth in Schedule 4.8, there are no outstanding
agreements or waivers extending the statutory period of limitation applicable to
any Tax returns required to be filed with respect to the Company or the
Subsidiary and no extension of time within which to file any Tax return, which
return has not yet been filed, has been requested.
(e) Neither the Company nor the Subsidiary is a United States real
property holding company within the meaning of Section 897 of the Code.
(f) Seller is not a "foreign person" within the meaning of Section 1445
of the Code.
Section 4.9 Assets Other than Real Property Interests. The Company or
the Subsidiary has, or as of the Closing Date will have, good and valid title to
all material assets reflected on the Balance Sheet or thereafter acquired,
except those sold or otherwise disposed of since the date of the Balance Sheet
in the ordinary course of business consistent with past practice and not in
violation of this Agreement, in each case free and clear of all Liens, except
(a) the Other Assets, (b) Non-U.S. accounts receivable reflected therein, (c)
such as are set forth in Schedule 4.9, (d) mechanics', carriers', workmen's,
repairmen's or other like liens arising or incurred in the ordinary course of
business, liens arising under original purchase price conditional sales
contracts and equipment leases with third parties entered into in the ordinary
course of business and liens for Taxes and other governmental charges which are
not due and payable or which may thereafter be paid without penalty, (e)
mortgages and Liens which secure debt that is reflected as a liability on the
Balance Sheet and the existence of which are indicated in the notes thereto, and
(f) other imperfections of title or encumbrances, if any, which do not,
individually or in the aggregate, materially impair the continued use and
operation of the assets to which they relate in the business of the Company and
the Subsidiary, taken as a whole, as presently conducted (the mortgages and
Liens described in clauses (c), (d) and (e) above are hereinafter referred to
collectively as "Permitted Liens").
19
This Section 4.9 does not relate to real property or interests in real
property, Intellectual Property or Contracts, such items being the subjects of
Section 4.10, 4.11 and 4.12, respectively.
Section 4.10 Title to Real Property. Schedule 4.10 sets forth a
complete list of all real property and interests in real property leased by the
Company and the Subsidiary (individually, a "Leased Property"). The Company or
the Subsidiary has good and valid title to the leasehold estates in all Leased
Property free and clear of all mortgages, Liens, leases, assignments, subleases,
easements, covenants, rights-of-way and other similar restrictions of any nature
whatsoever, except (a) such as are set forth in Schedule 4.10, (b) leases,
subleases and similar agreements set forth in Schedule 4.12, (c) Permitted
Liens, (d) easements, covenants, rights-of-way and other similar restrictions of
record that do not, individually or in the aggregate, materially impair the use
and operation of the Leased Property to which they relate in the business of the
Company and the Subsidiary, taken as a whole, as presently conducted, and (e)
(i) zoning, building and other similar restrictions, (ii) mortgages, Liens,
easements, covenants, rights-of-way and other similar restrictions that have
been placed by any developer, landlord or other third party on property over
which the Company or the Subsidiary has easement rights or on any Leased
Property and subordination or similar agreements relating thereto, and (iii)
unrecorded easements, covenants, rights-of-way and other similar restrictions,
none of which items set forth in clause (e), individually or in the aggregate,
materially impair the continued use and operation of the Leased Property to
which they relate in the business of the Company and the Subsidiary, taken as a
whole, as presently conducted. Neither the Company nor the Subsidiary has a fee
title interest in any real property.
Section 4.11 Intellectual Property. Schedule 4.11 sets forth a true and
complete list of all material patents, trademarks (registered or unregistered),
trade names, service marks, applications therefor and the Subsidiary's
registered copyright (collectively, "Intellectual Property"), owned, used, filed
by or licensed to the Company or the Subsidiary. With respect to registered
trademarks, Schedule 4.11 sets forth a list of all jurisdictions in which such
trademarks are registered or applied for and all registration and application
numbers. Except as set forth in Schedule 4.11, the Company or the Subsidiary
owns (or will own as of the Closing Date), and the Company and the Subsidiary
have the right (or will have
20
the right as of the Closing Date) to use without payment to any other person
(except to the extent the Intellectual Property may be licensed from third
parties, as specified on Schedule 4.11), all Intellectual Property listed in
Schedule 4.11 and the consummation of the transactions contemplated hereby will
not conflict with, alter or impair any such rights.
The Intellectual Property contains all patents, trademarks (registered
or unregistered), trade names, service marks and applications therefor necessary
for the conduct of the business of the Company and the Subsidiary as presently
conducted.
Except as set forth in Schedule 4.11, neither the Company nor the
Subsidiary has granted any options, licenses or agreements of any kind relating
to Intellectual Property listed in Schedule 4.11 or the marketing or
distribution thereof, except non-exclusive implied licenses to end-users in the
ordinary course of business. Neither the Company nor the Subsidiary is bound by
or a party to any options, licenses or agreements of any kind relating to the
Intellectual Property of any other person, except as set forth in Schedule 4.11
and except for agreements relating to computer software licensed to the Company
or the Subsidiary in the ordinary course of business consistent with past
practice. Subject to the rights of third parties set forth in Schedule 4.11, all
Intellectual Property listed in Schedule 4.11 is free and clear of the claims of
others asserted in writing to Seller, the Company, the Subsidiary or Xxxxxx and
of all Liens. Except as set forth in Schedule 4.11, no claims are pending or, to
the knowledge of Seller, the Company, the Subsidiary or Xxxxxx, threatened, as
of the date of this Agreement, against the Company, the Subsidiary or, in the
case of Intellectual Property to be transferred to the Company prior to the
Closing Date (as indicated on Schedule 4.11), the party that owns such
Intellectual Property, by any person with respect to the ownership, validity,
enforceability, effectiveness or use of any Intellectual Property.
Section 4.12 Contracts. Except as set forth in Schedule 4.12, neither
the Company nor the Subsidiary is a party to any:
(a) employment agreement or employment contract that has an
aggregate future liability in excess of $50,000, is not terminable by
the Company or the Subsidiary by notice of not more than 60 calendar
days
21
and provides for severance or other termination payments other than
pursuant to the Benefit Plans;
(b) employee collective bargaining agreement or other contract
with any labor union;
(c) covenant not to compete that restricts the operation of
the business of the Company and the Subsidiary as presently conducted;
(d) agreement, contract or other arrangement with (i) Seller
or any Affiliate of Seller (other than the Company or the Subsidiary)
or (ii) any officer, director or employee of the Company, the
Subsidiary, Seller or any Affiliate of Seller (other than (A)
employment agreements that are the subject of paragraph (a) above and
(B) agreements and contracts with Xxxxxx and its subsidiaries
(including the Seller Entities) (1) entered into in the ordinary course
of the International Business and the Domestic Hall Surgical Business),
(2) for services being continued under the Transition Distribution
Services Agreement, (3) by their terms not in effect after the Closing
Date, (4) that individually do not have future liability in excess of
$50,000 except for accounts payable, accounts receivable, purchase
orders and customer contracts arising, in each case, in connection with
the manufacturing, marketing, sale and distribution of the Company's
and the Subsidiary's products in the ordinary course of business
consistent with past practice or (5) in connection with other services
or relationships continuing under the Manufacturing Agreement, the
agreement with Convatec contemplated by Section 8.9, the Transition
Distribution Services Agreement and the Distribution Agreement);
(e) lease, sublease or similar agreement with any person
(other than the Company or the Subsidiary) under which the Company or
the Subsidiary is a lessor or sublessor of, or makes available for use,
to any person (other than the Company or the Subsidiary), (i) any
Leased Property or (ii) any portion of any premises otherwise occupied
by the Company or the Subsidiary;
(f) lease or similar agreement with any person (other than the
Company or the Subsidiary) under which (i) the Company or the
Subsidiary is lessee of, or holds or uses, any machinery, equipment,
vehicle or other tangible personal property owned by any person or
22
(ii) the Company or the Subsidiary is a lessor or sublessor of, or
makes available for use by any person, any tangible personal property
owned or leased by the Company or the Subsidiary, in any such case
which has an aggregate future liability or receivable, as the case may
be, in excess of $100,000, is not terminable by the Company or the
Subsidiary by notice of not more than 60 calendar days for a cost of
less than $50,000 and, together with all other such agreements, in the
aggregate has termination payments in excess of $250,000;
(g) (i) continuing contract for the future purchase of
materials, supplies or equipment (other than purchase contracts and
orders for inventory in the ordinary course of business consistent with
past practice); (ii) management, service, consulting or other similar
type of contract (other than contracts for services in the ordinary
course of business consistent with past practices) or (iii) advertising
agreement or arrangement, in any such case which has an aggregate
future liability to any person (other than the Company or the
Subsidiary) in excess of $100,000, is not terminable by the Company or
the Subsidiary by notice of not more than 60 calendar days for a cost
of less than $50,000 and which, together with all other such leases and
agreements, has termination payments in the aggregate in excess of
$250,000;
(h) agreement, contract or other instrument under which the
Company or the Subsidiary has borrowed any money from, or issued any
note, bond, debenture or other evidence of indebtedness to, any person
or any other note, bond, debenture or other evidence of indebtedness
issued to any person except for cash management and funding practices
among or between any of the Company, the Subsidiary, Seller or Seller's
Affiliates that will terminate as of the Closing Date, or accounts
payable, accounts receivable or purchase orders entered into, in each
case, in the ordinary course of business consistent with past practice;
(i) agreement, contract or other instrument (including
so-called take-or-pay or keepwell agreements) under which (i) any
person (including the Company or the Subsidiary) has directly or
indirectly guaranteed indebtedness, liabilities or obligations of the
Company or the Subsidiary or (ii) the Company or the Subsidiary has
directly or indirectly guaranteed indebtedness, liabilities or
obligations of any person
23
(in each case other than endorsements for the purpose
of collection in the ordinary course of business);
(j) agreement, contract or other instrument under which the
Company or the Subsidiary has, directly or indirectly, made any
advance, loan, extension of credit or capital contribution to, or other
investment in, any person except for accounts receivable arising in the
ordinary course of business consistent with past practice;
(k) mortgage, pledge, security agreement, deed of trust or
other instrument granting a Lien upon any Leased Property, which Lien
is set forth in Schedule 4.10 except for Permitted Liens and Liens
described in Section 4.9(f);
(l) agreement or instrument providing for indemnification of
any person with respect to material liabilities relating to any current
or former business of the Company, the Subsidiary or any predecessor
person; or
(m) other agreement, contract, lease, license, commitment or
instrument to which the Company or the Subsidiary is a party or by or
to which it or any of its assets or business is bound or subject which
has an aggregate future liability to any person (other than the Company
or the Subsidiary) in excess of $50,000, is not terminable by the
Company or the Subsidiary by notice of not more than 60 calendar days
for a cost of less than $50,000 and which, together with all such other
instruments, in the aggregate has termination payments in excess of
$250,000.
Except as set forth in Schedule 4.12, each agreement, contract, lease, license,
commitment or instrument of the Company or the Subsidiary listed in the
Schedules hereto (collectively, the "Contracts") is valid, binding and in full
force and effect and, to the knowledge of Seller, the Company, the Subsidiary
and Xxxxxx, is enforceable by the Company or the Subsidiary in accordance with
its terms subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws affecting creditors' rights generally,
general principles of equity and the discretion of courts in granting equitable
remedies. Except as set forth in Schedule 4.12, the Company and the Subsidiary
have performed all material obligations required to be performed by them to date
under the Contracts and they are not (with or without the lapse of time or the
24
giving of notice, or both) in breach or default in any material respect
thereunder and, to the knowledge of Seller, the Company, the Subsidiary and
Xxxxxx, no other party to any of the Contracts is (with or without the lapse of
time or the giving of notice, or both) in breach or default in any material
respect thereunder. Except as set forth on Schedule 4.12, neither the Company
nor the Subsidiary has received any written notice that any party to any
Contract intends to cancel or exercise its option, if any, under such Contracts
to terminate. Neither the Company nor, the Subsidiary is a party to any
agreement which prohibits such entity from engaging in the business that it
currently conducts, or solely by reason of consummation of the transactions
contemplated hereby, will prohibit such entity from engaging in the business
that it currently conducts.
Section 4.13 Litigation. (a) Schedule 4.13 sets forth a list, as of the
date of this Agreement, of all pending or, to the knowledge of Seller, the
Company or the Subsidiary, threatened, suits, actions, arbitrations or legal or
administrative proceedings or governmental investigations (including with
respect to product liability or by the FDA) against the Company or the
Subsidiary or any of their respective properties, assets, operations or
businesses and which (i) involve an uninsured claim against the Company or the
Subsidiary of, or which involve an uninsured unspecified amount which would
reasonably be expected to result in a liability of, more than $100,000, (ii)
seek any injunctive relief or (iii) seek any legal restraint on or prohibition
against the transactions contemplated by this Agreement. Except as set forth in
Schedule 4.13, neither the Company nor the Subsidiary is a party or subject to
or in default in any material respect under any judgment, order, injunction or
decree of any Governmental Entity or arbitration tribunal applicable to it or
any of its respective properties, assets, operations or business. The matters
set forth on Schedule 4.13, except as otherwise specifically indicated thereon,
are not reasonably expected to have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.13(a), since January 1, 1997,
there has not been any product liability suit, action, arbitration or legal or
administrative proceedings against Seller, any Affiliate of Seller, the Company
or the Subsidiary with respect to any product manufactured, marketed or
distributed by the Company or the Subsidiary.
Section 4.14 Benefit Plans. (a) Schedule 4.14 contains a list of all
benefit and compensation plans,
25
contracts, policies or arrangements covering current or former employees of the
Company or the Subsidiary, including but not limited to "employee pension
benefit plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (sometimes referred to herein as
"Pension Plans"), "employee welfare benefit plans" (as defined in Section 3(1)
of ERISA), bonus, stock option, stock purchase, deferred compensation plans or
arrangements and other employee fringe benefit plans (all the foregoing being
herein called "Benefit Plans") maintained, or contributed to, by Seller, the
Company or the Subsidiary for the benefit of any current or former employees of
the Company or the Subsidiary. Seller has made available to Buyer true, complete
and correct copies of (i) each Benefit Plan and all amendments thereto (or, in
the case of any unwritten Benefit Plans, descriptions thereof), (ii) the most
recent annual report on Form 5500 filed with the Internal Revenue Service with
respect to each Benefit Plan (if any such report was required) and (iii) the
most recent summary plan description for each Benefit Plan for which such a
summary plan description is required.
(b) Each Benefit Plan has been administered in all material respects in
accordance with its terms. The Company and all the Benefit Plans are in
compliance in all material respects with the applicable provisions of ERISA and
the Code. Except as set forth in Schedule 4.14, there are no lawsuits, actions,
termination proceedings or other proceedings pending, or, to the knowledge of
Seller, threatened against or involving any Benefit Plan and, to the knowledge
of Seller, there are no investigations by any Governmental Entity or other
claims (except claims for benefits payable in the normal operation of the
Benefit Plans) pending or threatened against or involving any Benefit Plan or
asserting any rights to benefits under any Benefit Plan.
(c) Except as set forth in Schedule 4.14, (i) all contributions to, and
payments from, the Benefit Plans that may have been required to be made in
accordance with the Benefit Plans and, when applicable, Section 302 of ERISA or
Section 412 of the Code, have been timely made, (ii) there has been no
application for or waiver of the minimum funding standards imposed by Section
412 of the Code with respect to any Pension Plan and (iii) no Pension Plan has
an "accumulated funding deficiency" within the meaning of Section 412(a) of the
Code as of the most recent plan year; and (iv) neither the Company nor the
Subsidiary has provided, or is required to provide, pursuant to Section
401(a)(29) of the Code, security to any single-
26
employer plan of any entity which is considered one employer with the Company
under Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate").
(d) Except as set forth in Schedule 4.14, all Pension Plans intended to
qualify under Section 401(a) of the Code have been the subject of determination
letters from the Internal Revenue Service to the effect that such Pension Plans
are qualified and exempt from Federal income taxes under Sections 401(a) and
501(a), respectively, of the Code, and no such determination letter has been
revoked nor, to the knowledge of Seller, has revocation been threatened, nor has
any such Pension Plan been amended since the date of its most recent
determination letter or application therefor in any respect that would adversely
affect its qualification or materially increase its cost.
(e) To Seller's knowledge, no "prohibited transaction" (as defined in
Section 4975 of the Code or Section 406 of ERISA) has occurred that involves the
assets of any Benefit Plan and that could subject the Company or the Subsidiary
or any of their employees, or, to the knowledge of Seller, a trustee,
administrator or other fiduciary of any trusts created under any Benefit Plan to
the tax or penalty on prohibited transactions imposed by Section 4975 of the
Code, Section 502(i) of ERISA or the sanctions imposed under Title I of ERISA.
Except as set forth in Schedule 4.14, none of the Pension Plans has been
terminated nor have there been any "reportable events" (as defined in Section
4043 of ERISA and the regulations there under) with respect thereto. Neither
Seller nor any trustee, administrator or other fiduciary of any Benefit Plan
nor any agent of any of the foregoing has engaged in any transaction or acted or
failed to act in a manner that could subject the Company or the Subsidiary to
any material liability for breach of fiduciary duty under ERISA or any other
applicable law.
(f) With respect to any Pension Plan subject to Title IV of ERISA
(including for the purposes of this Section 4.14(f) and Section 4.14(g) any
Pension Plan maintained or contributed to by Seller or an ERISA Affiliate,
Seller has not incurred any material liability to such Pension Plan or to the
Pension Benefit Guaranty Corporation, other than for the payment of
contributions or premiums, all of which have been paid when due. Seller has
delivered or made available to Buyer most recent actuarial report or valuation
with respect to each Pension Plan that is a "defined benefit pension plan" (as
defined in Section 3(35) of ERISA).
27
(g) Except as set forth in Schedule 4.14, as of the most recent
valuation date for each Pension Plan that is a defined benefit pension plan,
there was not any amount of "unfunded benefit liabilities" (as defined in Sec-
tion 4001(a)(18) of ERISA) under such Pension Plan and, to the knowledge of
Seller, there are no facts or circumstances that would materially change the
funded status of any such Pension Plan.
(h) At no time within the five years preceding the Closing Date has
Seller, the Company or the Subsidiary been required to contribute to any
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA, including for
the purposes of this Section 4.14(h) any multiemployer plan maintained or
contributed to by Seller or an ERISA Affiliate for the benefit of any current or
former employees of the Company and the Subsidiary or incurred any withdrawal
liability, within the meaning of Section 4201 of ERISA, with respect to any such
multiemployer plan, which liability has not been fully paid as of the date
hereof, or announced an intention to withdraw, but not yet completed such
withdrawal, from any such multiemployer plan.
(i) With respect to any Benefit Plan that is an employee welfare
benefit plan, except as disclosed in Schedule 4.14, (i) no such Benefit Plan is
funded through a welfare benefits fund, as such term is defined in Section
419(e) of the Code and (ii) each such Benefit Plan that is a group health plan,
as such term is defined in Section 5000(b)(1) of the Code, complies in all
material respects with the applicable requirements of Sec tion 4980B(f) of the
Code.
(j) Except as set forth on Schedule 4.14, neither the Company nor the
Subsidiary has any obligations for retiree health and life benefits under any
Benefit Plan.
Section 4.15 Absence of Changes or Events. (a) Except as set forth in
Schedule 4.15, since the date of the Balance Sheet, there has not been any
material adverse change in the business, assets, results of operations or
financial condition of the Company and the Subsidiary, taken as a whole
(including the International Business and the Domestic Hall Surgical Business).
(b) Except as set forth in Schedule 4.15 or as contemplated by this
Agreement, since the date of the Balance Sheet, Seller has caused the business
of the Company and the Subsidiary to be conducted in the ordinary course
consistent with past practice and neither the Company nor
28
the Subsidiary has taken any action that, if taken after the date of this
Agreement, would constitute a breach of any of the covenants set forth in
Section 5.2.
Section 4.16 Compliance with Applicable Laws. (a) Except as previously
disclosed by Seller to Buyer on Schedule 4.16 or in writing referring to this
Section 4.16, the Company and the Subsidiary have complied at all times with all
applicable statutes, laws, ordinances, rules, orders and regulations of any
Governmental Entity ("Applicable Laws"), including those relating to
occupational health and safety and the statutes, rules and regulations of the
United States Food and Drug Administration ("FDA"), except for instances of
noncompliance that, individually or in the aggregate, would not have a Material
Adverse Effect. Except as set forth in Schedule 4.16, none of Seller, the
Company or the Subsidiary has received any written communication during the past
two years from a Governmental Entity that alleges that the Company or the
Subsidiary is not in compliance in any material respect with any Applicable
Laws. This Section 4.16(a) does not relate to matters with respect to Taxes,
which are the subject of Section 4.8, to employee benefit or ERISA matters which
are the subject of Section 4.14 or to environmental matters, which are the
subject of Section 4.16(b).
(b) Except as disclosed in Schedule 4.16: (i) the Company and the
Subsidiary have complied at all times in all material respects with all
applicable Environmental Laws; (ii) there have been no material releases or
threatened releases on any property currently owned or operated by the Company
or the Subsidiary or, during the period of the Company's or the Subsidiary's
ownership or operation, on any property formerly owned or operated by the
Company or the Subsidiary; (iii) neither the Company nor the Subsidiary is
subject to any material liability for Hazardous Substance disposal or
contamination on any third party property; (iv) neither the Company nor the
Subsidiary is subject to any material liability for any release or threat of
release of any Hazardous Substance; (v) neither the Company nor the Subsidiary
has received any material notice or communication from a Governmental Entity or
third party indicating that it may be in violation of or subject to liability
under any Environmental Law; (vi) neither the Company nor the Subsidiary is
subject to any material order, decree, injunction or other binding written
agreement with any Governmental Entity or any material indemnity or other
binding written agreement with any third party relating to liability under any
29
Environmental Law; (vii) there are no other circumstances or conditions
involving the Company or the Subsidiary that could reasonably be expected to
result in any material claims, liability, investigations, costs or restrictions
on the ownership, use, or transfer of any property in connection with any
Environmental Law; and (viii) except as would not individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, the Company
has delivered to Purchaser copies of all environmental reports, studies,
assessments, sampling data and other environmental information in its possession
prepared within the last five years relating to the Company or the Subsidiary or
any of their current or former properties or operations.
As used herein, the term "Environmental Law" means any federal, state
or local law, regulation, order, decree, permit, authorization, common law or
enforceable agency requirement in effect as of the Closing Date relating to: (i)
the protection, investigation or restoration of the environment, occupational
health and safety or natural resources, (ii) the handling, use, presence,
disposal, release or threatened release of any Hazardous Substance or (iii)
noise, odor, indoor air, employee exposure, wetlands, pollution, contamination
or any injury or threat of injury to persons or property relating to any
Hazardous Substance and the term "Hazardous Substance" means any substance that
is: (i) listed, classified or regulated pursuant to any Environmental Law, (ii)
any petroleum product or by-product, asbestos-containing material in a friable
condition, or radioactive materials; or (iii) any other substance which is
regulated under any Environmental Law.
Section 4.17 Employee and Labor Matters. Except as set forth in
Schedule 4.17, (a) there is not, and since June 30, 1995, there has not been,
any labor strike, dispute, work stoppage or lockout pending, or, to the
knowledge of Seller, the Company or the Subsidiary threatened, against the
Company or the Subsidiary; (b) to the knowledge of Seller, the Company and the
Subsidiary no union organizational campaign is in progress with respect to the
employees of the Company or the Subsidiary, and no question concerning
representation exists respecting such employees; (c) neither the Company nor the
Subsidiary is engaged in any unfair labor practice; (d) there is no unfair labor
practice charge or complaint against the Company or the Subsidiary pending, or,
to the knowledge of Seller, the Company or the Subsidiary, threatened, before
the National Labor Relations Board; (e) there are no pending, or, to the
knowledge of Seller, the Company or the Subsidiary, threatened, union grievances
against the Company or the
30
Subsidiary as to which there is a reasonable possibility of adverse
determination and that, if so determined, individually or in the aggregate,
would have a Material Adverse Effect; (f) there are no pending, or, to the
knowledge of Seller, the Company or the Subsidiary threatened, charges against
the Company, the Subsidiary or any current or former employee of the Company or
the Subsidiary before the Equal Employment Opportunity Commission or any state
or local agency responsible for the prevention of unlawful employment practices;
and (g) since June 30, 1995, none of Seller, the Company or the Subsidiary has
received written notice of the intent of any Governmental Entity responsible for
the enforcement of labor or employment laws to conduct an investigation of the
Company or the Subsidiary and, to the knowledge of Seller, the Company or the
Subsidiary no such investigation is in progress.
Section 4.18 Material Services Provided by Seller, Xxxxxx or their
Respective Affiliates to the Company. Except as set forth on Schedule 4.18(a),
Seller, Xxxxxx and their respective Affiliates provide no material services to
the Company. The Seller Entities do not own any material assets (including fixed
assets, inventories and intellectual property) that are necessary for the
conduct of the business of the Company (including the International Business and
the Domestic Hall Surgical Business) as presently conducted, except as set forth
on Schedule 4.18(a) and the Other Assets.
Section 4.19. Plant and Equipment. The material machinery, equipment
and other tangible property used by the Company and the Subsidiary are in good
operating condition and repair, normal wear and tear excepted.
Section 4.20. No Severance Payments. None of the Company or the
Subsidiary will owe a severance payment or similar obligation to any of their
respective current or former employees, officers or directors as a result of the
transactions contemplated by this Agreement, nor will any of such persons be
entitled to an increase in severance payments or other benefits payable by the
Company or the Subsidiary as a result of the transactions contemplated by this
Agreement in the event of the subsequent termination of their employment.
31
ARTICLE V
COVENANTS OF SELLER
Seller covenants and agrees as follows:
Section 5.1 Access. From the date hereof to the Closing, Seller shall,
and shall cause the Company, the Subsidiary and the Seller Entities to, give
Buyer and its representatives, employees, counsel, financial advisors, lenders
and accountants (a) reasonable access, during normal business hours and upon
reasonable notice, to the personnel, properties, books and records of the
Company and the Subsidiary and, to the extent relating to the International
Business, the Domestic Hall Surgical Business and the sales, distribution,
marketing, purchasing, manufacturing and repair and customer services provided
to the Company or the Subsidiary by the Seller Entities, the Seller Entities,
(b) such financial and operating data and other information as Buyer shall from
time to time reasonably request with respect to the business and properties of
each of the Company and the Subsidiary; provided, however, that such access and
the furnishing of such data and other information does not unreasonably disrupt
the normal operations of Seller, the Company, the Subsidiary or the Seller
Entities.
Section 5.2 Ordinary Conduct. (a) Except as set forth in Schedule 5.2
or otherwise expressly permitted by the terms of this Agreement, from the date
hereof to the Closing, Seller shall cause the business of the Company and the
Subsidiary to be conducted in the ordinary course in substantially the same
manner as presently conducted and shall make all reasonable efforts consistent
with past practices to (i) preserve their relationships with customers,
suppliers, distributors and others with whom the Company or the Subsidiary has a
material business relationship, (ii) preserve intact the business organization
of the Company and the Subsidiary and keep available the services of the present
officers and employees of the Company and the Subsidiary and (iii) provide
funding and other cash management services to the Company and the Subsidiary in
the ordinary course of business consistent with past practices; provided that
Seller shall not be required to make any payment or grant any accommodation
(financial or otherwise) with respect to its obligations under clause (i) or
(ii).
32
(b) Except as set forth in Schedule 5.2 or otherwise contemplated by
the terms of this Agreement, Seller shall not permit the Company or the
Subsidiary to do any of the following without the prior written consent of
Buyer:
(i) amend its Certificate of Incorporation or By-
laws;
(ii) declare, set aside or pay any dividend or make any other
distribution to its stockholders whether or not upon or in respect of
any shares of its capital stock or other ownership interests, if any;
provided, however, that (A) Buyer acknowledges that the Company and the
Subsidiary do not maintain cash balances and, at the time of the
Closing, Seller will withdraw any cash balances of the Company and the
Subsidiary (and such cash balances shall not be included in the
calculation of Closing Working Capital), (B) dividends and
distributions may continue to be made by the Subsidiary to the Company
and (C) dividends and distributions of cash may continue to be made by
the Company to Seller or its Affiliates;
(iii) directly or indirectly redeem, purchase or otherwise
acquire any shares of its capital stock or other ownership interests,
if any, or issue any capital stock or any option, warrant or right
relating thereto or any securities convertible into or exchangeable for
any shares of capital stock or other ownership interests;
(iv) adopt or amend any Benefit Plan or collective bargaining
agreement, except as required by law or as part of a general amendment
by Seller to its benefit plans generally (notice of which shall be
furnished to Buyer);
(v) enter into any employment, consulting or distribution
agreement, contract or commitment with any Person, modify or cancel any
such agreement that is a Contract containing, in each case, an
obligation to pay or accrue any sum of money upon termination or grant
to any executive officer or employee any increase in compensation or
benefits, except in the ordinary course of business consistent with
past practice or as may be required under existing agreements and
except for any increases for which Seller shall be solely obligated;
33
(vi) enter into, modify or cancel, any agreement, contract,
indenture or other instrument relating to or incur or assume any
liabilities, obligations or indebtedness for borrowed money or
guarantee any such liabilities, obligations or indebtedness, other than
in the ordinary course of business consistent with past practice;
provided that in no event shall the Company or the Subsidiary incur,
assume or guarantee any long-term indebtedness for borrowed money;
(vii) permit, allow or suffer any of its assets to become
subjected to any mortgage, lien, security interest, encumbrance,
easement, covenant, right-of-way or other similar restriction of any
nature whatsoever except Liens permitted pursuant to Section 4.9(d) and
(f) and Section 4.10(c), (d) and (e);
(viii) cancel any indebtedness of third parties other than in
the ordinary course of business consistent with past practice
(individually or in the aggregate) or waive any claims or rights of
substantial value;
(ix) except for (a) dividends and distributions permitted
under clause (ii) above, (b) the conduct of the International Business
and the Domestic Hall Surgical Business, (c) transactions between the
Company and the Subsidiary, on the one hand, and Seller or Seller's
Affiliates, on the other hand, in the ordinary course of business
consistent with past practices, (d) pay, loan or advance any amount to,
or sell, transfer or lease any of its assets to, or enter into any
agreement or arrangement with, Seller or any of its Affiliates (other
than the Company and the Subsidiary);
(x) make any change in any method of accounting or accounting
practice or policy other than those required by United States generally
accepted accounting principles;
(xi) acquire by merging or consolidating with, or by
purchasing the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof;
(xii) acquire any assets (other than inventory) which are
material, individually or in the aggregate, to the Company and the
Subsidiary, taken as a whole;
34
(xiii) make or incur any capital expenditure that is not
currently budgeted which, individually, is in excess of $50,000 or make
or incur any such expenditures which, in the aggregate, are in excess
of $100,000;
(xiv) sell, lease or otherwise dispose of any of its assets
with an individual value in excess of $50,000, except in the ordinary
course of business consistent with past practice or enter into any
lease of any personal property except leases entered into in the
ordinary course of business with aggregate lease payments not in excess
of $100,000;
(xv) enter into, modify or cancel any lease of real property
or lease of personal property that is a Contract, except any renewals,
modifications or cancellations of existing leases in the ordinary
course of business consistent with past practice;
(xvi) modify, amend, terminate or permit the lapse of any
lease of, or reciprocal easement agreement, operating agreement or
other material agreement relating to, real property (except
modifications or amend ments associated with renewals of existing
leases in the ordinary course of business);
(xvii) amend or terminate any Contract;
(xviii) enter into any license agreement for Intellectual
Property other than the Cross Licensing Agreement or any research and
development agreements;
(xix) settle any litigation involving the Company or
the Subsidiary; or
(xx) commit or agree, whether in writing or otherwise, to do
any of the foregoing.
Section 5.3 Insurance. Seller shall keep, or cause to be kept, all
insurance policies presently maintained with respect to the Company and the
Subsidiary and their respective assets and properties, (except to the extent
that Seller is making changes generally to the insurance coverage for itself and
its Subsidiaries) in full force and effect through the close of business on the
Closing Date. Any and all insurance policies maintained with respect to the
Company and the Subsidiary and their respective assets and properties are owned
and maintained by Seller and its Affiliates (other than the Company and the
35
Subsidiary). None of Buyer, the Company or the Subsidiary will have any rights
under any such insurance policies from and after the Closing Date except that
Seller shall continue to administer and prosecute, on behalf of the Company and
the Subsidiary (notice of which shall be given to Buyer), claims made prior to
the Closing Date.
Section 5.4 Xxxxxx U.S. Receivables. Seller shall cause Zimmer to
forward to Buyer, on a weekly basis, any and all proceeds from Xxxxxx U.S.
Receivables that were transferred pursuant to this Agreement and that are
received by Zimmer after the Closing Date.
Section 5.5 Covenant Not To Compete. (a) Seller, for and on behalf of
itself and its subsidiaries, agrees that, for a period of three years after the
Closing Date (or, with respect to the Company's and the Subsidiary's Hall(r)
Surgical large bone products being distributed under the Distribution Agreement,
the longer of (i) three years after the Closing Date and (ii) two years after
any termination of the Distribution Agreement by either party thereto, but in no
event longer than five years after the Closing Date), they shall not own,
manage, operate, control or otherwise engage in any Competitive Business;
provided, however, that nothing herein shall be construed to prevent Seller or
any of its Affiliates from any of the following: (A) acquiring any Person
engaged in any Competitive Business (other than any Person primarily engaged in
a Competitive Business) or any interest in any such Person and thereafter
owning, managing, operating or controlling such Person or otherwise engaging in
any business engaged in by such Person, (B) owning, managing, operating or
controlling Xxxxxx or any of its subsidiaries or otherwise engaging in any
business currently engaged in by Xxxxxx or any of its subsidiaries, other than
the International Business and the Domestic Hall Surgical Business, (C) engaging
in transactions pursuant to the Manufacturing Agreement, the Transition
Distribution and Services Agreement or the Distribution Agreement, (D) owning up
to five percent (5%) of the voting equity securities or any non-voting equity or
debt securities of any Person whose securities are publicly traded on a national
securities exchange or in the over-the-counter market (it being understood,
however, that this Agreement shall not prohibit or in any way be deemed to be
inconsistent with the ownership or exercise by Seller of the Warrant or the
Warrant Shares (as defined in the Warrant)) or (E) manufacturing or selling the
current MicroMill(r) branded products (capital equipment and related
disposables) and upgrades and improvements of MicroMill(r) branded products.
Notwithstanding anything to the contrary
36
contained herein, to the extent that the Company discontinues manufacturing and
selling any product being distributed under the Distribution Agreement that
otherwise would be restricted hereunder, Seller and its subsidiaries shall no
longer be restricted in any manner under this Agreement with respect to such
product.
(b) Seller, on behalf of itself and its subsidiaries, agrees that, for
a period of two years after the Closing Date, it will not solicit any individual
that, as of the date hereof, is a member of management or a sales representative
or an area sales director of the Company or the Subsidiary, in each case except
for any such individual no longer employed by the Company or the Subsidiary at
the time of any solicitation. Buyer covenants and agrees that, for a period of
two years after the Closing Date, it will not, and it will cause its
subsidiaries not to, solicit any individual that, as of the date hereof, is a
member of management or a sales representative or an area sales director of
Xxxxxx, except for any such individual no longer employed by Xxxxxx at the time
of any such solicitation. It is understood and agreed that general solicitations
in periodicals of broad distribution by either Seller or Buyer (or any of their
respective subsidiaries) shall not constitute a breach of this Section 5.5(b).
(c) Buyer covenants and agrees that, for a period of three years after
the Closing Date, it will not, and it will cause its subsidiaries, including the
Company and the Subsidiary, not to, solicit or induce any of Xxxxxx'x
distributors who are located within the United States to sell any products
manufactured by Buyer or any of its subsidiaries, including the Company and the
Subsidiary.
(d) "Competitive Business" shall mean (i) the manufacturing or selling
of any arthroscopy product of a type currently manufactured or sold by the
Company or the Subsidiary or a similar type used primarily for arthroscopy,
other than, in each case, any product for spinal arthroscopy procedures, and
(ii) the manufacturing or selling of any powered surgical instrument (capital
equipment and disposables) of a type currently manufactured or sold by the
Company or the Subsidiary or any similar pneumatic, electric or battery powered
surgical instrument that mechanically cuts, xxxxx or drills bone and, in the
case of clause (i) and (ii), upgrades and improvements thereof.
37
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
Section 6.1 Authority. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York. Buyer has
all requisite corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. All corporate acts and other corporate proceedings required
to be taken by Buyer to authorize the execution, delivery and performance of
this Agreement and any other Transaction Documents to which it is a party and
the consummation of the transactions contem plated hereby have been duly and
properly taken. This Agreement has been duly executed and delivered by Buyer and
constitutes a legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms.
Section 6.2 No Conflicts; Consents. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
and compliance with the terms hereof shall not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancelation or acceleration of
any obligation or to loss of a benefit under, or result in the creation of any
Lien upon any of the properties or assets of Buyer or the Subsidiary of Buyer
under, any provision of (a) the Certificate of Incorporation or By-laws of Buyer
or the comparable governing instruments of the Subsidiary of Buyer, (b) any
material note, bond, mortgage, indenture, deed of trust, license, lease,
contract, commitment, agree ment or arrangement to which Buyer or the Subsidiary
of Buyer is a party or by which any of their respective proper ties or assets
are bound, or (c) any judgment, order, or decree, or material statute, law,
ordinance, rule or regulation applicable to Buyer or the Subsidiary of Buyer or
their respective properties or assets, other than, in the case of clauses (b)
and (c) above, any such items that, individually or in the aggregate, would not
have a material adverse effect on the ability of Buyer to consummate the
transactions contemplated hereby. No material consent, approval, license,
permit, order or authorization of, or registration, declaration or filing with,
any Governmental Entity or any nongovernmental third party is required to be
obtained or made by or with respect to Buyer or any of its
38
subsidiaries or their respective Affiliates in connection with the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, other than (i) a consent under Buyer's
principal existing bank facility, under which Buyer on the date hereof does not
have any outstanding indebtedness, (ii) compliance with and filings under the
HSR Act, if applicable, and (iii) those that may be required solely by reason of
Seller's and its Affiliates (as opposed to any other third party's)
participation in the transactions contemplated hereby.
Section 6.3 Securities Act. The Shares purchased by Buyer pursuant to
this Agreement are being acquired for investment only and not with a view to any
public distribution thereof, and Buyer shall not offer to sell or otherwise
dispose of the Shares so acquired by it in violation of any of the registration
requirements of the Securities Act of 1933, as amended.
Section 6.4 Actions and Proceedings, etc. As of the date hereof, there
are no (a) outstanding judgments, orders, injunctions or decrees of any
Governmental Entity or arbitration tribunal against Buyer or any of its
Affiliates, (b) lawsuits, actions or proceedings pending or, to the knowledge of
Buyer, threatened against Buyer or any of its Affiliates, or (c) investigations
by any Governmental Entity which are, to the knowledge of Buyer, pending or
threatened against Buyer or any of its Affiliates, which, in the case of each of
clauses (a), (b) and (c), have or could have a material adverse effect on the
ability of Buyer to consummate the transactions contemplated hereby.
Section 6.5 Availability of Funds. Buyer has cash available or has
binding written financing commitments which together are sufficient to enable it
to finance the transactions contemplated by this Agreement. True and correct
copies of any such commitments have been provided to Seller.
ARTICLE VII
COVENANTS OF BUYER AND SELLER
Section 7.1 Confidentiality. The parties acknowledge that the
information being provided to Buyer and its representatives, employees, agents,
counsel, financial advisors, lenders and accountants in connection with the
purchase and sale of the Shares and the consummation of the
39
other transactions contemplated hereby is subject to the terms of a
confidentiality agreement between Buyer and Seller (the "Confidentiality
Agreement"). Effective upon, and only upon, the Closing, the Confidentiality
Agreement shall terminate with respect to information to the extent relating to
the Company and the Subsidiary (including the International Business and the
Domestic Hall Surgical Business); provided that Buyer acknowledges that any and
all other information provided to it by Seller or Seller's representatives
concerning Seller (including, with respect to information to the extent not
related to the International Business and the Domestic Hall Surgical Business,
Xxxxxx or one of its Affiliates) shall remain subject to the terms and
conditions of the Confidentiality Agreement after the Closing Date.
Section 7.2 No Additional Representations. (a) Buyer acknowledges that
it and its representatives have received or been afforded the opportunity to
review prior to the date hereof all written materials which Seller was required
to deliver or make available, as the case may be, to Buyer pursuant to this
Agreement on or prior to the date hereof. Buyer acknowledges that it and its
representatives have been permitted access to the books and records, facilities,
equipment, tax returns, contracts, insurance policies (or summaries thereof) and
other properties and assets of the Company and the Subsidiary that it and its
representatives have requested to see and/or review, and that it and its
representatives have had an opportunity to meet with the officers and employees
of Seller, Xxxxxx, the Company and the Subsidiary to discuss the businesses and
assets of the Company and the Subsidiary. Buyer acknowledges that none of
Seller, Xxxxxx, the Company, the Subsidiary, any Seller Entity or any other
person has made any representation or warranty, expressed or implied, as to the
accuracy or completeness of any information regarding the Company, the
Subsidiary, the International Business or the Domestic Hall Surgical Business
furnished or made available to Buyer and its representatives, except as
expressly set forth in this Agreement or the Schedules hereto, and none of
Seller, the Company, the Subsidiary, any Seller Entity or any other person shall
have or be subject to any liability to Buyer or any other person resulting from
the distribution to Buyer, or Buyer's use of, any such information, including
the Confidential Offering Memorandum prepared by Xxxxxx Xxxxxxx & Co.
Incorporated, dated September 1997, and any information, documents or material
made available to Buyer in certain "data rooms", management presentations or in
any other form in expectation of the transactions contemplated hereby.
40
(b) Seller acknowledges that none of Buyer or any other person has made
any representation or warranty, expressed or implied, as to the accuracy or
completeness of any information regarding Buyer furnished or made available to
Seller and its representatives, except as expressly set forth in this Agreement.
Section 7.3 No Use of Certain Names. Except as provided in the
Transition and Distribution Services Agreement and the Distribution Agreement,
Buyer shall cause the Company and the Subsidiary promptly, and in any event (a)
within 180 calendar days after Closing, to revise product literature and
labeling to delete all references to the Names and (b) within 90 calendar days
after Closing, to change signing and stationery and otherwise discontinue use of
the Names; provided, however, that for a period of 365 calendar days from the
Closing Date each party may continue to distribute product literature that uses
any Names and distribute products with labeling that uses any Names to the
extent that such product literature and labeling exists on the Closing Date; and
provided, further, until no later than the second anniversary of the Closing
Date, outside the United States each party may continue to distribute product
literature that uses any Names and distribute products with labeling that uses
any Names (in each case, consistent with past practices) to the extent that, in
spite of the reasonable efforts of such party to obtain registration that
permits such party to distribute products that do not use such Names, such party
has not obtained such registration and such continued distribution does not
violate any Applicable Law.
In no event shall either party hereto or its Affiliates use any Names
after the Closing in any manner or for any purpose different from the use of
such Names during the 90-day period preceding the Closing. With respect to
product inventory manufactured by the Company and the Subsidiary prior to the
Closing, Buyer, the Company and the Subsidiary may continue to sell such
inventory, notwithstanding that it bears one or more of the Names, for a
reasonable time after the Closing (not to exceed 365 calendar days). "Names"
means, with respect to Buyer and its Affiliates, "Xxxxxxx-Xxxxx Squibb",
"Xxxxxxx-Xxxxx Squibb Company", "Zimmer"; "MicroMill", "Z-Serter", "Z- Wire",
"Ultra-Cut", variations and derivatives thereof and any other logos, service
marks or trademarks of Seller or its Affiliates not included in Schedule 4.11
and means, with respect to Seller and its Affiliates, "Linvatec", "Hall
Surgical", variations and derivatives thereof and any other logos or trademarks
of the Company and the Subsidiary,
41
except to the extent permitted under the Transition and Distribution Services
Agreement and the Distribution Agreement.
ARTICLE VIII
MUTUAL COVENANTS
Each of Seller and Buyer covenants and agrees as follows:
Section 8.1 Consents. The parties acknowledge that certain consents and
waivers with respect to the transactions contemplated by this Agreement may be
required from lenders under Buyer's existing bank facility and parties to the
Contracts listed on the Schedules hereto and that such consents and waivers have
not been obtained. To the extent required at Closing, Buyer shall obtain the
consent of each of its lenders required under the terms of its existing bank
facility. Buyer agrees that Seller shall not have any liability whatsoever to
Buyer arising out of or relating to the failure to obtain any consents or
waivers that are not set forth on Schedule 8.1 or because of the termination of
any Contract as a result thereof. Prior to the Closing, Seller shall, and shall
cause the Company, the Subsidiary and the Seller Entities to, cooperate with
Buyer, upon the request of Buyer, in any reasonable manner in connection with
Buyer obtaining any such consents and waivers; provided, however, that such
cooperation shall not include any requirement of Seller or any of its Affiliates
to expend money (other than the Company, the Subsidiary and the Seller Entities
to the extent that Buyer funds any cash expenditures in advance) commence,
defend or participate in any litigation or offer or grant any accommodation
(financial or otherwise) to any third party. Prior to and after the Closing
Date, Buyer shall cooperate with Seller to terminate or otherwise release Seller
and its Affiliates from any guarantees, obligations and liabilities under the
contracts and agreements set forth on Schedule 11.3.
Section 8.2 Cooperation. Buyer and Seller shall cooperate with each
other, and shall cause their officers, employees, agents, auditors and
representatives to cooperate with each other, for a period of 180 calendar days
after the Closing to ensure the orderly transition of the Company and the
Subsidiary from Seller to Buyer and to minimize any disruption to the respective
businesses of Seller, Seller Entities, Buyer, the Company and the Subsidiary
that might result from the transactions contemplated hereby. After the
42
Closing, upon reasonable written notice, Buyer and Seller shall furnish or cause
to be furnished to each other and their employees, counsel, auditors and
representatives access, during normal business hours, to such information and
assistance relating to the Company, the Subsidiary, the International Business
and the Domestic Hall Surgical Business as is reasonably necessary for financial
reporting and accounting matters, the preparation and filing of any Tax returns,
reports or forms or the defense of any Tax claim or assessment. Each party shall
reimburse the other for reasonable out-of-pocket costs and expenses incurred in
assisting the other pursuant to this Section 8.2. Neither party shall be
required by this Section 8.2 to take any action that would unreasonably
interfere with the conduct of its business or unreasonably disrupt its normal
operations (or, in the case of Buyer, the business or operations of the Company
or the Subsidiary).
Section 8.3 Publicity. Seller and Buyer agree that, from the date
hereof through the Closing Date, no public release or announcement concerning
the transactions contemplated hereby shall be issued by either party without the
prior consent of the other party (which consent shall not be unreasonably
withheld), except as such release or announcement may be required by law or the
rules or regulations of any United States or foreign securities exchange, in
which case the party required to make the release or announcement shall allow
the other party reasonable time (to the extent allowable) to comment on such
release or announcement in advance of such issuance.
Section 8.4 Best Efforts. Subject to the terms and conditions of this
Agreement (including the provisions set forth in Sections 8.1 and 8.5), each
party shall use its best efforts to cause the Closing to occur. Without limiting
the foregoing or the provisions set forth in Section 8.5, Buyer and Seller shall
use their respective best efforts to cause the Closing to occur on or prior to
December 31, 1997 or as soon as practicable thereafter. Each of Seller and Buyer
shall not, and shall not permit any of their respective Affiliates to, take any
action that would, or that could reasonably be expected to, result in any of the
conditions to the purchase and sale of the Shares set forth in Article 3 not
being satisfied.
Section 8.5 Antitrust Notification and Other Regulatory Filings. Each
of Seller and Buyer shall as promptly as practicable, but in no event later than
the close of business on November 28, 1997, file with the United States Federal
Trade Commission (the "FTC") and the
43
United States Department of Justice (the "DOJ") the notification and report
form, if any, required for the transactions contemplated hereby. Any such
notification and report form and supplemental information shall be in
substantial compliance with the requirements of the HSR Act. Each of Buyer and
Seller shall furnish to the other such necessary information and reasonable
assistance as the other may request in connection with its preparation of any
filing or submission which is necessary under the HSR Act. Seller and Buyer
shall keep each other apprised of the status of any communications with, and any
inquiries or requests for additional information from, the FTC and the DOJ and
shall comply with any such inquiry or request as promptly as practicable. Each
of Seller and Buyer shall use its best efforts to obtain any clearance required
under the HSR Act for the purchase and sale of the Shares and the Other Assets.
Seller and Buyer shall also cooperate to make any required regulatory filings
with any state or outside the United States as promptly as practicable after the
execution and delivery of this Agreement.
Section 8.6 Records. (a) As soon as practicable on or after the Closing
Date, Seller shall deliver or cause to be delivered to Buyer all material
original agreements, documents, books, records and files, including records and
files stored on computer disks or tapes or any other storage medium
(collectively, "Records"), if any, in the possession of Seller and its
subsidiaries (other than the Company and the Subsidiary) relating to the
business and operations of the Company and the Subsidiary to the extent not then
in the possession of the Company and the Subsidiary, subject to the following
exceptions:
(i) Buyer recognizes that certain Records may contain
incidental information relating to the Company, the Subsidiary, the
International Business or the Domestic Hall Surgical Business or may
relate primarily to Subsidiary or divisions of Seller other than the
Company and the Subsidiary, and that Seller may retain such Records and
shall provide copies of the relevant portions thereof to Buyer;
(ii) Seller may retain all Records prepared solely in
connection with the sale of the Shares, including bids received from
other parties and analyses relating to the Company and the Subsidiary;
(iii) Seller may retain any Tax returns, reports or forms, and
Buyer shall be provided with copies of such returns, reports or forms
only to the extent that they
44
relate to the Company's and the Subsidiary's separate
returns or separate Tax liability; and
(iv) Seller may retain (but shall provide copies to Buyer of)
all distribution agreements related to the International Business and
the Domestic Hall Surgical
Business.
(b) After the Closing, upon reasonable written notice, Buyer and Seller
agree to furnish or cause to be furnished to each other and their
representatives, employees, counsel and accountants access, during normal
business hours, to such information (including Records pertinent to the Company
and the Subsidiary) and assistance relating to the Company and the Subsidiary as
is reasonably necessary for financial reporting and accounting matters, the
preparation and filing of any Tax returns, returns or forms or the defense of
any Tax claim or assessment; provided, however, that such access does not
unreasonably disrupt the normal operations of Seller, Buyer, the Company or the
Subsidiary.
Section 8.7 Distribution Arrangements and Additional Support Services.
(a) On the Closing Date, the Company and Xxxxxx shall enter into the Transition
Distribution Services Agreement substantially in the form of Exhibit G (the
"Transition Distribution Services Agreement" and the Distribution Agreement
substantially in the form of Exhibit H (the "Distribution Agreement").
(b) In addition to the distribution services provided by Xxxxxx and its
subsidiaries for the International Business and the Domestic Hall Surgical
Business, Seller and its Affiliates (including Xxxxxx) provide the Company and
the Subsidiary with certain support services ("Additional Support Services").
The Additional Support Services include cash management, credit and accounts
receivable, payroll and human resources, legal, tax and benefit plan
administration. Buyer acknowledges that all Additional Support Services not
continued pursuant to the Transition Distribution Services Agreement or the
Distribution Agreement will be terminated as of the Closing Date.
Section 8.8 Manufacturing Agreement. Seller and Buyer agree that Xxxxxx
and the Company, on the Closing Date, shall execute and deliver a manufacturing
agreement substantially in the form of Exhibit I (the "Manufacturing Agreement")
and a Cross-Licensing Agreement substantially in the form of Exhibit J (the
"Cross Licensing Agreement").
45
Section 8.9 Convatec Agreement. Seller and Buyer agree to negotiate in
good faith, prior to the Closing, and to execute and deliver an agreement with
respect to X.X. Xxxxxx & Sons, Inc. (d/b/a Convatec) containing the terms and
conditions set forth on Exhibit K, and otherwise in form and substance
reasonably satisfactory to Seller and Buyer.
Section 8.10 Certain Liabilities. Effective as of the Closing, Buyer
hereby assumes and agrees to pay, perform and discharge when due any obligations
of Xxxxxx or its Affiliates under the distribution agreements set forth on
Schedule 8.10 to repurchase inventory or otherwise make a payment in connection
with the International Business or the Domestic Hall Surgical Business. The
obligations set forth on Schedule 8.10 shall not be included in the calculation
of Closing Working Capital.
ARTICLE IX
EMPLOYEE AND RELATED MATTERS
Section 9.1 Employee Matters. The Company and the Subsidiary shall be
responsible for all employee benefits-related claims of each of the following
groups of current or former employees of the Company, or the Subsidiary: active
employees, employees on leave of absence and all current or former employees on
short or long-term disability (collectively, the "Continued Employees"), except
as otherwise provided in this Article.
Section 9.2 Continuation of Comparable Benefit Plans. For not less than
two years following the Closing Date (the "Continuation Period"), Buyer shall
maintain, or shall cause the Company and the Subsidiary to maintain, (to the
extent permitted by law) compensation and employee benefit plans and
arrangements (other than any plans and arrangements based on equity securities
or any equivalent thereof) and perquisites for the Continued Employees that, in
the aggregate, are substantially comparable to those provided pursuant to the
compensation and employee benefit plans and arrangements and perquisites in
effect on the date hereof as set forth in Schedule 4.14. Following the
Continuation Period, Buyer shall maintain, or cause the Company and the
Subsidiary to maintain, compensation and employee benefit plans and arrangements
and perquisites for employees of the Company and the Subsidiary that, in the
aggregate, are substantially similar to those provided to similarly situated
employees of Buyer. Continued Employees' service with Seller and its Affiliates
shall be credited for
46
all purposes under the plans established after the Closing Date.
Section 9.3 Pension Plan. (a) Effective as of the Closing, Buyer shall
have in effect a defined benefit plan ("Buyer's Plan") intended to be qualified
pursuant to Section 401(a) of the Code providing benefits to Continued Employees
substantially identical in all material respects (except for such changes as may
be required by law) to those provided under the Xxxxxxx-Xxxxx Squibb Company
Retirement Income Plan ("Seller's Plan") as of the date hereof. Each Continued
Employee participating in Seller's Plan as of the Closing shall become a
participant in Buyer's Plan as of the Closing. Continued Employees shall receive
credit for all service with Seller and its Affiliates for purposes of
eligibility, vesting and benefit accrual under Buyer's Plan.
(b) At such time as Seller is reasonably satisfied that Buyer's Plan
meets the requirements for qualification under Section 401(a) of the Code,
Seller shall cause to be transferred to Buyer's Plan cash or property acceptable
to Buyer equal to the actuarial present values of the accrued benefit
liabilities as of the Closing for Continued Employees (the "Accrued Liability"),
calculated by using the actuarial assumptions used by the actuaries for Seller's
Plan and specified in the most recent actuarial valuation for funding purposes
furnished to Seller by the actuaries, plus interest from the Closing to the day
before such transfer at the rate equal to that credited by The Northern Trust
Company on its Government STIF fund, calculated on the basis of the actual
number of calendar days elapsed over 365. The Accrued Liability shall be
adjusted to reflect payments made to Continued Employees from Seller's Plan
during the period beginning on the Closing Date and ending on the date the
assets are transferred to the trust maintained under Buyer's Plan ("Pension
Transition Period"). Such calculation shall be made initially by the actuarial
firm employed by Seller and shall be reviewed by the actuarial firm employed by
Buyer. If there is a dispute between the two actuaries, they shall jointly
select an actuarial firm of national repute, whose determination shall be final
and binding on all parties. In no event shall amounts be transferred from
Seller's Plan to Buyer's Plan until Buyer has provided written notice to Seller
that it has verified the amount to be transferred. Each party shall pay the cost
of its own actuary and the cost of the third firm of actuaries shall be shared
equally by Buyer and Seller. Following such transfer of assets, Buyer shall
assume all Seller's and its Affiliates' liabilities under Seller's Plan with
respect to Continued
47
Employees, and Seller and its Affiliates shall have no further liability to
Buyer or any Continued Employee with respect thereto. Following such transfer of
assets, Buyer shall indemnify and hold harmless Seller and its Affiliates from
all costs, expenses or other damages that may result to Seller and its
Affiliates from any claim by any Continued Employee for any benefit alleged to
be payable under Seller's Plan. Within 60 calendar days after the Closing Date
or as soon as practicable thereafter, Seller and Buyer shall make any required
governmental filings necessary to effect the asset transfer described herein,
including the filing of IRS Form 5310-A.
Section 9.4 401(k) Plan. (a) Effective as of the Closing, Buyer shall
have in effect a profit-sharing plan that includes a qualified cash or deferred
arrangement within the meaning of Section 401(k) of the Code ("Buyer's 401(k)
Plan") that will provide benefits to Continued Employees substantially identical
in all material respects (except for such changes as may be required by law) to
those provided by the Xxxxxxx-Xxxxx Squibb Company Savings and Investment
Program ("Seller's 401(k) Plan") as of the date hereof. Each Continued Employee
participating in Seller's 401(k) Plan as of the Closing shall become a
participant in Buyer's 401(k) Plan as of the Closing. Continued Employees shall
receive credit for all service with Seller and its Affiliates for purposes of
eligibility and vesting under Buyer's 401(k) Plan.
(b) At such time as Seller is reasonably satisfied that Buyer's 401(k)
Plan meets the requirements for qualification under Section 401(a) of the Code,
Seller shall cause cash or property acceptable to Buyer to be transferred to
Buyer's 401(k) Plan in an amount equal to the account balances of the Continued
Employees (including any outstanding loan balances in Seller's 401(k) Plan) as
of the valuation date next preceding such transfer. Following such transfer of
assets, Buyer shall assume all Seller's and its Affiliates' liabilities under
Seller's 401(k) Plan with respect to Continued Employees and Seller and its
Affiliates shall have no further liability to Buyer or any Continued Employee
with respect thereto. Following such transfer of assets, Buyer shall indemnify
and hold harmless Seller and its Affiliates from all costs, expenses or other
damages that may result to Seller and its Affiliates from any claim by a
Continued Employee for any benefit alleged to be payable under Seller's 401(k)
Plan.
Section 9.5 Non-Qualified Plans. (a) Effective as of the Closing Date,
Buyer shall have in effect a non-
48
qualified defined benefit plan ("Buyer's Non-Qualified DB Plan") and a
non-qualified defined contribution plan ("Buyer's Non-Qualified DC Plan")
providing benefits to Continued Employees substantially identical in all
material respects to those provided under the Benefit Equalization Plan of
Xxxxxxx-Xxxxx Squibb Company and its Subsidiary or Affiliated Corporations
Participating in the Xxxxxxx-Xxxxx Squibb Company Retirement Income Plan or the
Xxxxxxx-Xxxxx Squibb Company Puerto Rico, Inc. Retirement Income Plan ("Sellers
Non-Qualified DB Plan") and the Benefit Equaliza tion Plan of Xxxxxxx-Xxxxx
Squibb Company and its Subsidiary or Affiliated Corporations Participating in
the Xxxxxxx- Xxxxx Squibb Company Savings and Investment Program ("Seller's
Non-Qualified DC Plan"), respectively. Each Continued Employee participating in
Sellers' Non-Qualified DB Plan or Seller's Non-Qualified DC Plan shall become a
participant in Buyer's Non-Qualified DB Plan and Buyer's Non-Qualified DC Plan,
respectively, as of the Closing. Continued Employees shall receive credit for
all service with Seller and its Affiliates for purposes of eligibility, vesting
and, as applicable, benefit accrual under Buyer's Non-Qualified DB Plan and
Buyer's Non-Qualified DC Plan.
(b) As soon as reasonably feasible after the Closing, Seller shall
cause cash or property acceptable to Buyer to be transferred to (i) Buyer's
Non-Qualified DB Plan in an amount equal to the actuarial present values of the
accrued benefit liabilities for Continued Employees under Seller's Non-Qualified
DB Plan as of the Closing, which shall be calculated in the same manner and
using the same assumptions as set forth in Section 9.3(b) and (ii) Buyer's
Non-Qualified DC Plan in an amount equal to the account balances of the
Continued Employees as of the valuation date next preceding such transfer.
Following such transfers, Buyer shall assume all Seller's and its Affiliates
liabilities under Seller's Non-Qualified DB Plan and Seller's Non-Qualified DC
Plan and Seller and its Affiliates shall have no further liability to Buyer or
any Continued Employee with respect thereto. Buyer shall indemnify and hold
harmless Seller and its Affiliates from all costs, expenses or other damages
that may result to Seller and its Affiliates from any claim by a Continued
Employee for any benefit alleged to be payable under Seller's Non-Qualified DB
Plan or Seller's Non-Qualified DC Plan.
Section 9.6 Medical/Dental Plans. (a) Buyer agrees that Continued
Employees and their dependents eligible to participate in Seller's current
medical program shall be eligible to participate in the medical and dental plans
maintained or established by Buyer or its designee
49
("Buyer's Health Plans"), effective as of the Closing Date, the terms of which
are substantially identical to those set forth on in pages HC-1 through HC-38 of
the Your Benefits Booklet provided to Buyer. Any and all waiting periods and
pre-existing condition clauses shall be waived under Buyer's Health Plans with
respect to Continued Employees and their eligible dependents. In addition, Buyer
shall cause Buyer's Health Plans to recognize any out-of-pocket medical and
dental expenses incurred by Continued Employees and their eligible dependents
prior to the Closing Date and during the calendar year in which such Closing
Date occurs for purposes of determining their deductibles and out-of-pocket
maximums under Buyer's Health Plans. During the Continuation Period, the cost to
a Continued Employee under Buyer's Health Plans shall be not more than the cost
to such Employee under Seller's Standard Comprehensive Medical Plan and under
Seller's Comprehensive Dental Plan.
(b) Buyer agrees to provide or cause to be provided under Buyer's
Health Plans to Continued Employees (other than Continued Employees who are, as
of the Closing Date, eligible to retire from the Company) who retire after the
Closing Date and their dependents, the health care benefits and coverage that
are substantially identical to those set forth in the Comprehensive Medical Plan
Flex Summary Plan Description for Retirees of Xxxxxxx-Xxxxx Squibb Company
provided to Buyer.
(c) Seller agrees to retain responsibility under Seller's health plans
for medical and dental claims incurred by Continued Employees and their
dependents prior to the Closing Date and for retiree medical benefits for
Continued Employees who have retired prior to the Closing Date.
(d) Effective as of the Closing Date, Buyer shall cause the Company to
have in effect a health care reimburse ment account plan, the terms of which are
substantially identical to the Health Care Reimbursement Account Plan of Seller
as in effect on the Closing Date and which gives full effect to, and continues
in effect, salary reduction elections made under such Seller's Plan. Prior to
the Closing Date, Seller shall cause the accounts of Continued Employees under
Seller's Plan to be segregated into a separate Health Care Reimbursement Account
Plan to be maintained by the Company, and such Company Plan shall be assumed by
Buyer or its designee on the Closing Date. It is agreed that, subject to the
Closing Date occurring on or prior to December 31, 1997, Buyer shall reimburse
Seller on a dollar-for-dollar basis for forfeitures of Company
50
Employee Accounts under such Company Plan relating to the 1997 plan year.
Section 9.7 Short and Long-Term Disability. Buyer agrees to cause the
Company to provide coverage effective as of the Closing Date to Continued
Employees under Buyer's or its designee's short- and long-term disability plans,
the terms of which are substantially identical to those set forth on pages D-1
through D-11 of the Your Benefits Booklet provided to Buyer, at the same cost
Continued Employees are paying under Seller's plans as of the Closing Date. Any
and all waiting periods and pre-existing condition clauses shall be waived under
Buyer's short and long-term disability plans with respect to Continued
Employees.
Section 9.8 Life Insurance. (a) Buyer agrees to provide to each
Continued Employee life insurance coverage, effective as of the Closing Date,
equal to two times such employee's annual eligible compensation (as determined
in accordance with Seller's current life insurance plan) and at the same cost
Continued Employees are paying under Seller's plans as of the Closing Date. In
addition, Buyer agrees to make available to each Continued Employee effective as
of the Closing Date, optional life insurance coverage, the terms of which are
substantially identical to those set forth on pages S-1 through S-19 of the Your
Benefits Booklet provided to Buyer. Any and all waiting periods and proof of
insurability clauses shall be waived with respect to Continued Employees under
Buyer's life insurance plans or any other life insurance plans made available to
Continued Employees.
(b) Seller agrees to retain responsibility for life insurance claims
incurred with respect to employees of the Company or the Subsidiary prior to the
Closing Date.
Section 9.9 Severance. Buyer or its designee agrees to adopt, effective
as of the Closing Date, and maintain during the Continuation Period, a severance
policy covering Continued Employees, which policy shall contain the terms that
are substantially identical to those summarized on pages SP-1 through SP-11 of
the Your Benefits Booklet provided to Buyer. The Continued Employees shall
receive credit for all service with Seller and its Affiliates for the purpose of
determining benefits under Buyer's severance plan established pursuant to this
Section 9.9.
Section 9.10 Performance Bonuses. Buyer or its designee agrees to make
or cause to be made any and all
51
payments to Continued Employees pursuant to the performance and incentive plans
and related administrative guidelines and procedures (the "Incentive Plans")
listed or described on Schedule 4.14, which relate to the fiscal year ending
December 31, 1997, and which shall not have been paid to the Continued Employees
prior to the Closing Date and which are fully reflected in the Closing Working
Capital amount or are otherwise properly accrued. Buyer agrees to calculate and
make such payments pursuant to the terms and conditions of the Incentive Plans
and in a manner consistent with the Company's past practices and procedures;
provided, however, that, notwithstanding any provisions of the Incentive Plans
to the contrary, all Continued Employees who are employed by the Company or the
Subsidiary on the Closing Date shall be entitled to receive payments pursuant to
this Section 9.10, regardless of whether any such Continued Employee's
employment shall be terminated for any reason within two years after the Closing
Date.
Section 9.11 Outplacement Services. During the Continuation Period,
Buyer agrees to provide to each Continued Employee outplacement services
consistent with the terms of the Xxxxxx policy listed or described on Schedule
4.14.
Section 9.12 Relocation Benefits. During the Continuation Period, Buyer
agrees to provide to each Continued Employee who is considered an exempt
employee for purposes of the Fair Labor Standards Act (a) relocation benefits
consistent with those listed or described on Schedule 4.14 and (b) move back
benefits listed on Schedule 4.14 for any Continued Employee terminated within 24
months of his or her relocation by Seller.
Section 9.13 Vacation Benefits. Buyer agrees to recognize all accrued
and unused vacation as of the Closing Date of the Continued Employees.
Section 9.14 Non-U.S. Employees. Exhibit 9.14-A to Schedule 9.14 lists
certain employees of Seller, Xxxxxx or Xxxxxx'x Affiliates who provide services
outside the United States to the Company or the Subsidiary ("Non-U.S.
Employees"). Buyer shall have the right to offer, or to have the Company and the
Subsidiary offer, employment to some or all of the Non-U.S. Employees. To the
extent reasonably practicable, any such offer shall be made contemporaneously
with termination of the Transition and Distribution Services Agreement for the
jurisdiction in which such Non-U.S. Employee is employed. Each such Non- U.S.
Employee who accepts such offer of employment shall be
52
referred to as an "International Employee". Subject to applicable law, the
principles applicable to Continued Employees in this Article IX shall be applied
on a good faith basis to each such International Employee. Notwithstanding
anything to the contrary contained herein, Buyer shall be responsible for all
benefits-related claims of the International Employees incurred on or after the
date of their employment by Buyer, the Company, the Subsidiary or any of their
Affiliates on the same basis as set forth in Section 9.1. In addition, Buyer
agrees to reimburse Seller, Xxxxxx or a Xxxxxx Affiliate for fifty percent of
any severance benefits paid by Seller, Xxxxxx or a Xxxxxx Affiliate attributable
to the actual or constructive termination on or after the Closing Date by
Seller, Xxxxxx or a Xxxxxx Affiliate of any or all of the Non-U.S.
Employees.
ARTICLE X
FURTHER ASSURANCES
Section 10.1 Further Assurances. From time to time, as and when
requested by either party hereto, the other party shall execute and deliver, or
cause to be executed and delivered, all such documents and instruments and shall
take, or cause to be taken, all such further or other actions (subject to the
provisions of Sections 8.1, 8.4 and 8.5), as such other party may reasonably
deem necessary or desirable to consummate the transactions contemplated by this
Agreement.
ARTICLE XI
INDEMNIFICATION
Section 11.1 Tax Indemnification. (a) Seller shall indemnify Buyer and
its Affiliates (including the Company and the Subsidiary) and each of their
respective officers, directors, employees, stockholders, agents and
representatives and hold them harmless from (i) all liability for Taxes of the
Company and the Subsidiary for the Pre-Closing Tax Period (other than any such
Tax for which Buyer is required to indemnify Seller pursuant to Section
11.1(b)(ii)), (ii) any Taxes resulting from the election under Section
338(h)(10) of the Code provided for in Section 12.8 and (iii) all liability as a
result of Treasury Regulation ss. 1.1502-6(a) or similar provision of
53
state, local or foreign law for Taxes of Seller or any other corporation which
is or has been affiliated with Seller (other than the Company or the
Subsidiary).
(b) Buyer shall, and shall cause the Company and the Subsidiary to,
indemnify Seller and its Affiliates and each of their respective officers,
directors, employees, stockholders, agents and representatives and hold them
harmless from (i) all liability for Taxes of the Company and the Subsidiary for
any taxable period ending after the Closing Date (except to the extent such
taxable period began before the Closing Date, in which case Buyer's indemnity
will cover only that portion of any such Taxes that are not for the Pre-Closing
Tax Period) and (ii) any Tax resulting from any action (except for the election
under Section 338(h)(10) of the Code provided for in Section 12.8) taken by the
Company, Buyer or any Affiliates of Buyer after the Closing on the Closing Date
other than in the ordinary course of business.
(c) In the case of any taxable period that includes (but does not end
on) the Closing Date (a "Straddle Period"):
(i) real, personal and intangible property Taxes ("Property
Taxes") of the Company and the Subsidiary allocable to the Pre-Closing
Tax Period shall be equal to the amount of such Property Taxes for the
entire Straddle Period multiplied by a fraction, the numerator of which
is the number of calendar days during the Straddle Period that are in
the Pre-Closing Tax Period and the denominator of which is the number
of calendar days in the Straddle Period; and
(ii) the Taxes of the Company and the Subsidiary (other than
Property Taxes) allocable to the Pre- Closing Tax Period shall be
computed as if such taxable period ended as of the close of business on
the Closing Date.
Seller's indemnity obligation in respect of Taxes for a Straddle Period shall
initially be effected by its payment to Buyer of the excess of (i) such Taxes
for the Pre-Closing Tax Period over (ii) the amount of such Taxes paid by Seller
or any of its Affiliates (other than the Company or the Subsidiary) at any time
plus the amount of such Taxes paid by the Company or the Subsidiary on or prior
to the Closing Date. Seller shall initially pay such excess to Buyer within
fifteen business days after receipt of written notice from Buyer that payment of
such amounts to the appropriate
54
taxing authority is due, but in no case earlier than two business days before
such payment is due to the appropriate taxing authority. If the amount of such
Taxes paid by Seller or any of its Affiliates (other than the Company or the
Subsidiary) at any time plus the amount of such Taxes paid by the Company or the
Subsidiary on or prior to the Closing Date exceeds the amount payable by Seller
pursuant to the preceding sentence, Buyer shall pay to Seller the amount of such
excess (i) in the case of Property Taxes, at the Closing (the "Closing Tax
Adjustment Amount") and (ii) in all other cases, no later than two business days
before payment for such Tax is due to the appropriate taxing authority. The
payments to be made pursuant to this paragraph by Seller or Buyer with respect
to a Straddle Period shall be appropriately adjusted to reflect any final
determination (which shall include the execution of Form 870-AD or successor
form) with respect to Straddle Period Taxes.
Section 11.2 Other Indemnification by Seller. (a) Except as relates to
Taxes, for which the sole indemnification is provided in Section 11.1, Seller
shall indemnify Buyer, its Affiliates (including the Company and the Subsidiary)
and each of their respective officers, directors, employees, stockholders,
agents and representa tives against and hold them harmless from any loss,
liability, claim, damage or expense (including reasonable legal fees and
expenses) suffered or incurred by any such indemnified party to the extent
arising from (i) any breach of any representation or warranty of Seller which
survives the Closing contained in this Agreement or in any certificate delivered
pursuant hereto and (ii) any breach of any covenant of Seller contained in this
Agreement; provided, however, that Seller shall not have any liability under
clauses (i) and (ii) above unless the aggregate of all losses, liabilities,
costs and expenses relating thereto (except those related to a breach of the
representations or warranties contained in Section 4.1, the first sentence of
Section 4.3(a) and Section 4.5, for which there shall be no minimum) for which
Seller would, but for this proviso, be liable exceeds on a cumulative basis an
amount equal to $3,000,000, and then only to the extent of any such excess;
provided further, however, that Seller shall not have any liability under
clauses (i) and (ii) above for any individual items where the loss, liability,
cost or expense relating thereto (except those related to a breach of the
representations or warranties contained in Section 4.1, the first sentence of
Section 4.3 and Section 4.5, for which there shall be no minimum) is less than
$25,000 and such items shall not be aggregated for purposes of the first
55
proviso to this Section 11.2; and provided further, however, that Seller's
liability under clauses (i) and (ii) above shall in no event exceed
$185,000,000(except in the case of a breach of the representations and
warranties contained in Section 4.1, the first sentence of Section 4.3(a) and
Section 4.5, for which Seller's liability under clause (i) above in respect of
such breach together with Seller's liability under clauses (i) and (ii) above in
the aggregate shall in no event exceed the Cash Purchase Price); and provided
further, however, that Seller shall not have any liability under this Section
11.2 to the extent the liability or obligation arises as a result of any action
taken or omitted to be taken by Buyer or any of its Affiliates. In no event
shall Seller be obligated to indemnify Buyer or any other person with respect to
any matter to the extent that such matter was reflected in the calculation of
the adjustment to the Cash Purchase Price, if any, pursuant to Section 2.2 or
the calculation of the adjustment to the Non-U.S. Inventory Purchase Price, if
any, pursuant to Section 2.3.
(b) Buyer further acknowledges and agrees that, should the Closing
occur, its sole and exclusive remedy with respect to any and all claims relating
to this Agreement, the transactions contemplated hereby, the Company and the
Subsidiary and their respective assets, liabilities and business (other than
claims of, or causes of action arising from, fraud or willful and knowing
breach) shall be pursuant to the indemnification provisions set forth in this
Section 11 or pursuant to the indemnification provisions stated in the other
Transaction Agreements, as applicable. In furtherance of the foregoing, Buyer
hereby waives, from and after the Closing, to the fullest extent permitted under
applicable law, any and all rights, claims and causes of action (other than
claims of, or causes of action arising from, fraud or willful and knowing
breach) it, the Company or the Subsidiary may have against Seller and its
Affiliates arising under or based upon any Federal, state, local or foreign
statute, law, ordinance, rule or regulation or otherwise (except pursuant to the
indemnification provisions set forth in this Section 11).
Section 11.3 Other Indemnification by Buyer. (a) Except as relates to
Taxes, for which the sole indemnification is provided in Section 11.1, Buyer
shall, and shall cause the Company and the Subsidiary to, indemnify Seller, its
Affiliates and each of their respective officers, directors, employees,
stockholders, agents and representatives against and hold them harmless from any
loss, liability, claim, damage or expense (including reason-
56
able legal fees and expenses) suffered or incurred by any such indemnified
party to the extent arising from (i) any breach of any representation or
warranty of Buyer which survives the Closing contained in this Agreement or in
any certificate delivered pursuant hereto, (ii) any breach of any covenant of
Buyer contained in this Agreement, (iii) any guarantee, obligation or liability
under the contracts or agreements set forth on Schedule 11.3, (iv) all
obligations and liabilities of whatever kind and nature, primary or secondary,
direct or indirect, absolute or contingent, known or unknown, whether or not
accrued, whether arising before on or after the Closing Date, of the Company or
the Subsidiary, including any such obligations or liabilities contained in the
Contracts or any agreement, lease, license, permit, plan or commitment that,
because it fails to meet the relevant threshold amount or term, is not included
within the definition of Contracts, or the Benefit Plans set forth in Schedule
4.14 or any plan, fund, program, policy, contract or arrangement described in
Section 4.14 but not required to be set forth in Schedule 4.14 (collectively,
the "Plans") (in each case other than items for which indemnification is
provided under Section 11.2) and (v) any discontinuance, suspension or
modification on or after the Closing Date of any Plan.
(b) Seller further acknowledges and agrees that, should the Closing
occur, its sole and exclusive remedy with respect to any and all claims relating
to this Agreement and the transactions contemplated hereby (other than claims
of, or causes of action arising from, fraud or willful and knowing breach) shall
be pursuant to the indemnification provisions set forth in this Section 11 or
pursuant to the indemnification provisions stated in the other Transaction
Agreements, as applicable. In furtherance of the foregoing, Seller hereby
waives, from and after the Closing, to the fullest extent permitted under
applicable law, any and all rights, claims and causes of action (other than
claims of, or causes of action arising from, fraud or willful and knowing
breach) it, may have against Buyer and its Affiliates arising under or based
upon any Federal, state, local or foreign statute, law, ordinance, rule or
regulation or otherwise (except pursuant to the indemnification provisions set
forth in this Section 11).
Section 11.4 Cooperation. Buyer and Seller shall cooperate with each
other with respect to resolving any claim or liability with respect to which one
party is obligated to indemnify the other party hereunder including by making
commercially reasonable efforts to mitigate or resolve any such claim or
liability.
57
Section 11.5 Losses Net of Insurance, etc. The amount of any loss,
liability, claim, damage, expense or Tax for which indemnification is provided
under this Section 11 shall be net of any amounts recovered or recoverable by
the indemnified party under insurance policies with respect to such loss,
liability, claim, damage, expense or Tax (collec tively, a "Loss") and shall be
(a) increased to take account of any net Tax cost actually realized by the
indemnified party arising from the receipt of indemnity payments hereunder
(grossed up for such increase) and (b) reduced to take account of any net Tax
benefit (excluding as a result of any basis adjustment) actually realized by the
indemnified party arising from the incurrence or payment of any such Loss. In
computing the amount of any such Tax cost or Tax benefit, the indemnified party
shall be deemed to recognize all other items of income, gain, loss, deduction or
credit before recognizing any item arising from the receipt of any indemnity
payment hereunder or the incurrence or payment of any indemnified Loss. Any
indemnity payment under this Agreement shall be treated as an adjustment to the
Purchase Price for Tax purposes, unless a final determination (which shall
include the execution of a Form 870-AD or successor form) with respect to the
indemnified party or any of its Affiliates causes any such payment not to be
treated as an adjustment to the Purchase Price for United States Federal income
Tax purposes.
Section 11.6 Termination of Indemnification. The obligations to
indemnify and hold harmless a party hereto (a) pursuant to Section 11.1, shall
terminate at the time the applicable statutes of limitations with respect to the
Tax liabilities in question expire (giving effect to any extension thereof), (b)
pursuant to Sections 11.2(a)(i) and 11.3(a), shall terminate when the applicable
representation or warranty terminates pursuant to Article XIV and (c) pursuant
to the other clauses of Sections 11.2 and 11.3 shall not terminate; provided,
however, that as to clauses (a) and (b) above such obligations to indemnify and
hold harmless shall not terminate with respect to any item as to which the
person to be indemnified or the related party thereto shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice of such claim (stating in reasonable detail the basis of such claim) to
the indemnifying party.
Section 11.7 Procedures Relating to Indemnification for Third Party
Claims. In order for a party (the "indemnified party") to be entitled to any
indemnification provided for under this Agreement (other than indemnification
for a Tax Claim under Section 11.1
58
which shall be governed by Section 11.9) in respect of, arising out of or
involving a claim or demand made by any person against the indemnified party (a
"Third Party Claim"), such indemnified party must notify the indemnifying party
in writing, and in reasonable detail, of the Third Party Claim within 10
business days after receipt by such indemnified party of written notice of the
Third Party Claim; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure (except that the indemnifying party shall not be liable for any expenses
incurred during the period in which the indem nified party failed to give such
notice). Thereafter, the indemnified party shall deliver to the indemnifying
party, promptly after the indemnified party's receipt thereof, copies of all
notices and documents (including court papers) received by the indemnified party
relating to the Third Party Claim.
If a Third Party Claim is made against an indemnified party, the
indemnifying party shall be entitled to participate in the defense thereof and,
if it so chooses and acknowledges its obligation to indemnify the indemnified
party therefor, to assume the defense thereof with counsel selected by the
indemnifying party; provided that such counsel is not reasonably objected to by
the indemnified party. Should the indemnifying party so elect to assume the
defense of a Third Party Claim, the indemnifying party shall not be liable to
the indemnified party for legal expenses subsequently incurred by the
indemnified party in connection with the defense thereof. If the indemnifying
party assumes such defense, the indemnified party shall have the right to
participate in the defense thereof and to employ counsel (not reasonably
objected to by the indemnifying party), at its own expense, separate from the
counsel employed by the indemnifying party, it being understood that the
indemnify ing party shall control such defense. The indemnifying party shall be
liable for the fees and expenses of counsel employed by the indemnified party
for any period during which the indemnifying party has failed to assume the
defense thereof (other than during the period prior to the time the indemnified
party shall have given notice of the Third Party Claim as provided above).
If the indemnifying party so elects to assume the defense of any Third
Party Claim, all of the indemnified parties shall cooperate with the
indemnifying party in the defense or prosecution thereof. Such cooperation shall
include the retention and (upon the indemnifying party's
59
request) the provision to the indemnifying party of records and information
which are reasonably relevant to such Third Party Claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Whether or not the indemnifying
party shall have assumed the defense of a Third Party Claim, neither the
indemnified party nor the indemnifying party shall admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the other party's prior written consent (which consent shall not be unreasonably
withheld).
Section 11.8 Procedures Relating to Indemnification for Other Claims
(Other than Tax Claims under Section 11.1). In the event any indemnified party
should have a claim against any indemnifying party under Section 11.2 or 11.3
that does not involve a Third Party Claim being asserted against or sought to be
collected from such indemnified party, the indemnified party shall deliver
notice of such claim with reasonable promptness to the indemnifying party. The
failure by any indemnified party so to notify the indemnifying party shall not
relieve the indemnifying party from any liability which it may have to such
indemnified party under Section 11.2 or 11.3, except to the extent that the
indemnifying party demonstrates that it has been materially prejudiced by such
failure.
Section 11.9 Procedures Relating to Indemnification of Tax Claims. (a)
If a claim shall be made by any taxing authority, which, if successful, might
result in an indemnity payment to Buyer, one of its Affiliates or any of their
respective officers, directors, employees, stockholders, agents or
representatives pursuant to Section 11.1 (a "Tax Claim"), Buyer shall promptly
notify Seller in writing of such Tax Claim. If notice of a Tax Claim is not
given to Seller within a sufficient period of time to allow Seller to
effectively contest such Tax Claim, or in reasonable detail to apprise Seller of
the nature of the Tax Claim, in each case taking into account the facts and
circumstances with respect to such Tax Claim, Seller shall not be liable to
Buyer, any of its Affiliates or any of their respective officers, directors,
employees, stock holders, agents or representatives to the extent that Seller's
position is actually prejudiced as a result thereof.
(b) With respect to any Tax Claim (other than a Tax Claim relating
solely to Taxes of the Company or the Subsidiary for a Straddle Period), Seller
shall control all proceedings taken in connection with such Tax Claim (includ-
60
ing selection of counsel) and, without limiting the fore going, may in its sole
discretion pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with any taxing authority with respect thereto, and
may, in its sole discretion, either pay the Tax claimed and xxx for a refund
where applicable law permits such refund suits or contest the Tax Claim in any
permissible manner; provided, however, that, unless the Tax Claim is one with
respect to federal income Taxes, to the extent a Tax Claim is reasonably
expected to adversely affect the liability of Buyer, the Company or the
Subsidiary for Taxes for a post-Closing Tax period, Buyer shall be entitled to
participate in the defense of such Tax Claim at its own expense. Seller and
Buyer shall jointly control all proceedings taken in connection with any Tax
Claim relating solely to Taxes of the Company or the Subsidiary for a Straddle
Period.
(c) Buyer, the Company, the Subsidiary and each of their respective
Affiliates shall cooperate with Seller in contesting any Tax Claim, which
cooperation shall include, without limitation, the retention and (upon Seller's
request) the provision to Seller of records and information which are reasonably
relevant to such Tax Claim, and making employees available on a mutually
convenient basis to provide additional information or explanation of any
material provided hereunder or to testify at proceedings relating to such Tax
Claim; provided, however, that Seller shall reimburse Buyer for the reasonable
expense of making such employees available to testify.
(d) In no case shall Buyer, the Company, the Subsidiary or any of their
respective officers, directors, employees, stockholders, agents or
representatives settle or otherwise compromise any Tax Claim without Seller's
prior written consent. Neither party shall settle a Tax Claim relating solely to
Taxes of the Company or the Subsidiary for a Straddle Period without the other
party's prior written consent.
ARTICLE XII
TAX MATTERS
Section 12.1 Responsibility for Preparation and Filing of Tax Returns
and Amendments. (a) For any taxable period of the Company or the Subsidiary that
includes (but does not end on) the Closing Date, Buyer shall timely prepare and
file with the appropriate authorities all Tax
61
returns, reports and forms required to be filed and shall pay all Taxes due with
respect to such returns, reports and forms; provided that Seller shall reimburse
Buyer (in accordance with the procedures set forth in Section 11.1) for any
amount owed by Seller pursuant to Section 11.1 with respect to the taxable
periods covered by such returns, reports or forms. To the extent such Returns
relate to the Company or the Subsidiary, Buyer shall furnish such Returns to
Seller for its approval (which approval shall not be unreasonably delayed or
withheld) at least 10 calendar days prior to the due date for filing such
returns.
(b) For any taxable period of the Company or the Subsidiary that ends
on or before the Closing Date, Seller shall timely prepare and file with the
appropriate authorities all Tax returns, reports and forms required to be filed,
and shall pay all Taxes due with respect to such returns, reports and forms. To
the extent that they relate to the Company and the Subsidiary, all such returns
shall be prepared on a basis consistent with the past practice of the Company
(or the Subsidiary, as the case may be) and in a manner that does not distort
taxable income (e.g., by deferring income or accelerating deductions). Buyer and
Seller agree to cause the Company and the Subsidiary to file all Tax returns,
reports and forms for the period including the Closing Date on the basis that
the relevant taxable period ended as of the close of business on the Closing
Date, unless the relevant taxing authority will not accept a return, report or
form filed on that basis.
(c) Seller shall be responsible for filing any amended consolidated,
combined or unitary Tax returns for taxable years ending on or prior to the
Closing Date. For those jurisdictions in which separate Tax returns are filed by
the Company or the Subsidiary, any required amended returns shall be prepared by
Seller and furnished to the Company or the Subsidiary, as the case may be, for
signature and filing at least 30 calendar days prior to the due date for filing
such returns. To the extent that they relate to the Company and the Subsidiary,
and subject to applicable Tax law, all such amended returns shall be prepared on
a basis consistent with the past practice of the Company (or the Subsidiary, as
the case may be) and in a manner that is not reasonably expected to adversely
affect the liability of Buyer, the Company or the Subsidiary for Taxes for a
post- Closing Tax period.
Section 12.2 Cooperation. Each of Seller, the Company, the Subsidiary
and Buyer shall reasonably cooperate, and shall cause their respective
Affiliates,
62
officers, employees, agents, auditors and representatives reasonably to
cooperate, in preparing and filing all returns, reports and forms relating to
Taxes, including maintaining and making available to each other all records
necessary in connection with Taxes and in resolving all disputes and audits with
respect to all taxable periods relating to Taxes. Buyer and Seller recognize
that Seller and its Affiliates will need access, from time to time, after the
Closing Date, to certain accounting and Tax records and information held by the
Company and the Subsidiary to the extent such records and information pertain to
events occurring prior to the Closing Date; therefore, Buyer agrees, and agrees
to cause the Company and the Subsidiary, (a) to use its best efforts to properly
retain and maintain such records until such time as Seller agrees that such
retention and maintenance is no longer necessary, and (b) to allow Seller and
its agents and representatives (and agents or representatives of any of its
Affiliates), at times and dates mutually acceptable to the parties, to inspect,
review and make copies of such records as Seller may deem necessary or
appropriate from time to time, such activities to be conducted during normal
business hours and at Seller's expense.
Section 12.3 Refunds and Credits. Any refunds or credits of Taxes of
the Company or the Subsidiary for any taxable period ending on or before the
Closing Date shall be for the account of Seller. Any refunds or credits of Taxes
of the Company or the Subsidiary for any taxable period beginning after the
Closing Date shall be for the account of Buyer. Any refunds or credits of Taxes
of the Company or the Subsidiary for any Straddle Period shall be equitably
apportioned between Seller and Buyer. Buyer shall, if Seller so requests and at
Seller's expense, cause the Company or the Subsidiary to file for and obtain any
refunds or credits to which Seller is entitled under this Section 12.3. Buyer
shall permit Seller to control the prosecution of any such refund claim and,
where deemed appropriate by Seller, shall cause the Company and the Subsidiary
to authorize by appropriate powers of attorney such persons as Seller shall
designate to represent the Company or the Subsidiary with respect to such refund
claim. Buyer shall cause the Company and the Subsidiary to forward to Seller any
such refund within 10 calendar days after the refund is received (or reimburse
Seller for any such credit within 10 calendar days after the credit is allowed
or applied against other Tax liability); provided, however, that any such
amounts payable to Seller shall be net of any Tax cost (such Tax cost to be
reduced by the amount of any Tax benefit related or attributable to the refund
payment)
63
to Buyer, the Company or the Subsidiary, as the case may be, attributable to the
receipt of such refund and/or the payment of such amounts to Seller. Seller and
Buyer shall treat any payments under the preceding sentence that Seller shall
receive pursuant to this Section 12.3 as an adjustment to the Purchase Price for
United States Federal income tax purposes, unless a final determination (which
shall include the execution of a Form 870-AD or successor form) with respect to
Buyer or any of its Affiliates causes any such payment not to be treated as an
adjustment to the Purchase Price. Notwithstanding the foregoing, the control of
the prosecution of a claim for refund of Taxes paid pursuant to a deficiency
assessed subsequent to the Closing Date as a result of an audit shall be
governed by the provisions of Section 11.9.
Section 12.4 Transfer Taxes. All transfer, documentary, sales, use,
value added, registration and other such Taxes (including all applicable real
estate transfer or gains Taxes) and related fees (including any penalties,
interest and additions to Tax) incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid 50% by Buyer and 50% by
Seller, and Seller and Buyer shall cooperate in issuing all applicable
government uniform invoices and timely making all filings, returns, reports and
forms as may be required to comply with the provisions of such Tax laws.
Section 12.5 FIRPTA Certificate. Seller shall deliver to Buyer at the
Closing a certificate in form and substance satisfactory to Buyer, duly executed
and acknowledged, certifying any facts that would exempt the transactions
contemplated hereby from withholding pursuant to the provisions of the Foreign
Investment in Real Property Tax Act.
Section 12.6 Buyer Activity on Closing Date. On the Closing Date, Buyer
shall cause the Company and the Subsidiary to conduct its business in the
ordinary course in substantially the same manner as presently conducted and on
the Closing Date shall not permit the Company or the Subsidiary to effect any
extraordinary transactions (other than any such transactions expressly required
by applicable law or by this Agreement) that could result in Tax liability to
the Company or the Subsidiary in excess of Tax liability associated with the
conduct of its business in the ordinary course.
Section 12.7 Buyer Activity Post-Closing. Buyer shall not, with respect
to any Pre-Closing Tax Period,
64
(a) file any amended tax return with respect to the Company or the Subsidiary;
(b) carry back any loss or other Tax attribute of the Company or the Subsidiary;
or (c) take any position with respect to Taxes of the Company or the Subsidiary
that would have the effect of shifting income to a Pre-Closing Tax Period
unless, in each case, Seller shall have consented in writing to such action by
Buyer.
Section 12.8 338 Elections. (i) Buyer shall timely make an election
under Section 338(g) of the Code (and any comparable election under state or
local Tax law), (ii) Buyer and Seller shall join in making an election under
Section 338(h)(10) of the Code and any comparable election under state or local
Tax law with respect thereto and (iii) Buyer and Seller shall in good faith
cooperate in the completion and timely filing of any such elections in
accordance with the provisions of Treasury Regulation ss. 1.338(h)(10)-1 (or any
comparable provisions of state or local Tax law) or any successor provision. For
purposes of executing any such elections, Buyer and Seller (and any of their
Affiliates as necessary) shall jointly execute (i) IRS Form 8023-A and all
attachments required to be filed therewith pursuant to applicable Treasury
Regulations and (ii) any other forms required to be filed under state or local
Tax law with respect to such elections, as soon as practical, but in no event
later than 30 days before the date each such form is required to be filed. In
connection with such elections, Seller and Buyer shall in good faith agree upon
a valuation of the assets of the Company and the Subsidiary, and neither Seller
nor Buyer (nor any of their respective Affiliates) shall take any position on
any Tax Return or with any taxing authority that is inconsistent with the agreed
valuation.
ARTICLE XIII
TERMINATION
Section 13.1 Termination. Anything contained herein to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby aban doned at any time prior to the Closing Date:
(a) by mutual written consent of Seller and Buyer;
(b) by Seller if any of the conditions set forth in Section 3.2
shall have become incapable of fulfill ment, and shall not have been
waived by Seller;
65
(c) by Buyer if any of the conditions set forth in Section 3.1
shall have become incapable of fulfillment, and shall not have been
waived by Buyer;
(d) by either party hereto, if the Closing does not occur on
or prior to March 31, 1998; or
(e) by either party hereto, if the Board of Directors of
Seller does not approve or ratify the execution and delivery of this
Agreement at its meeting on December 2, 1997.
provided, however, that the party seeking termination pursuant to clause (b),
(c) or (d) is not in breach in any material respect of any of its
representations, warranties, covenants or agreements contained in this
Agreement.
Section 13.2 Return of Confidential Information. If the transactions
contemplated by this Agreement are terminated as provided herein:
(a) Buyer shall return all documents and other material
received from Seller, the Company, the Subsidiary or any other
Affiliate of Seller relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to Seller;
and
(b) all confidential information received by Buyer with
respect to the businesses of Seller and its Affiliates (including the
Company and the Subsidiary) shall be treated in accordance with the
Confidentiality Agreement, which shall remain in full force and effect
notwithstanding the termination of this Agreement.
Section 13.3 Consequences of Termination. In the event of termination
by Seller or Buyer pursuant to Article XIII, written notice thereof shall
forthwith be given to the other party and the transactions contemplated by this
Agreement shall be terminated, without further action by either party. If this
Agreement is terminated and the transactions contemplated hereby are abandoned
as described in this Article XIII, this Agreement shall become void and of no
further force or effect, except for the provisions of (a) Section 7.1 relating
to the obligation of Buyer and Seller to keep confidential certain information
and data obtained by it, (b) Section 15.3 relating to certain expenses, (c)
Section 8.3 relating to publicity, (d) Section 15.9 relating to finder's fees
and broker's fees and (e) this Article XIII. Nothing in this Article XIII
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shall be deemed to release either party from any liability for any breach by
such party of the terms and provisions of this Agreement or to impair the right
of either party to compel specific performance by the other party of its
obligations under this Agreement.
ARTICLE XIV
SURVIVAL OF REPRESENTATIONS
Section 14.1 Survival of Representations. The representations and
warranties in this Agreement and in any certificate delivered pursuant hereto
(in each case other than the representations and warranties relating to Taxes)
shall survive the Closing solely for purposes of Sec tions 11.2 and 11.3 and
shall terminate at the close of business on December 31, 1999, except that (a)
the representations and warranties contained in Section 4.1, the first sentence
of Section 4.3(a) and Section 4.5 shall remain in full force and effect
indefinitely, (b) the representations and warranties contained in Section 4.13
shall remain in full force and effect until the third anniversary of the Closing
Date and (c) the representations and warranties contained in Section 4.16(b)
shall remain in full force and effect until the fifth anniversary of the Closing
Date. Representations and warranties relating to Taxes shall not survive the
Closing.
ARTICLE XV
MISCELLANEOUS
Section 15.1 Assignment. This Agreement and the rights and obligations
hereunder shall not be assignable or transferable by Buyer or Seller (including
by operation of law in connection with a merger, or sale of substantially all
the assets, of Buyer or Seller) without the prior written consent of the other
party hereto; provided, however, that Buyer may assign its right to purchase the
Shares and the Other Assets hereunder to a wholly owned subsidiary of Buyer
without the prior written consent of Seller; provided further, however, that no
assignment shall limit or affect the assignor's obligations hereunder. Any
attempted assignment in violation of this Section 15.1 shall be void.
Section 15.2 No Third-Party Beneficiaries. Except as provided in
Section 9.2, 9.6, 9.7, 9.8, 9.9, 9.10,
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9.11, 9.12, 9.13 and 9.14 and Article XI, this Agreement is for the sole benefit
of the parties hereto and their permit xxx assigns and nothing herein expressed
or implied shall give or be construed to give to any person, other than the
parties hereto and such assigns, any legal or equitable rights hereunder.
Section 15.3 Expenses. Whether or not the transactions contemplated
hereby are consummated, and except as otherwise specifically provided in this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs or expenses.
Section 15.4 Amendments. No amendment, modification or waiver in
respect of this Agreement shall be effective unless it shall be in writing and
signed by both parties hereto.
Section 15.5 Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand, sent by telecopy or sent, postage prepaid, by registered, certified or
express mail or reputable overnight courier service and shall be deemed given
when so delivered by hand or telecopied, or if mailed, three calendar days after
mailing (one business day in the case of express mail or overnight courier
service), as follows:
(a) if to Buyer,
CONMED Corporation
000 Xxxxx Xxxxxx
Xxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx; and
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(b) if to Seller,
Xxxxxxx-Xxxxx Squibb Company
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: General Counsel
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx, Esq.
Section 15.6 Interpretation; Exhibits and Schedules; Definitions. (a)
The headings contained in this Agreement, in any Exhibit or Schedule hereto and
in the table of contents to this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. Any
matter set forth in any provision, subprovision, section or subsection of the
Schedules hereto shall be deemed set forth for all purposes of the Schedules to
the extent relevant. 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 Schedule or Exhibit but
not otherwise defined therein, shall have the meaning as defined in this
Agreement.
(b) For all purposes hereof:
"Affiliate" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified person; and for
the purposes of this definition, "control" when used with respect to
any specified person means the power to direct the management and
policies of such person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
"including" means including, without limitation.
"Material Adverse Effect" means, with respect the
Company, a material adverse effect on the business,
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assets, results of operations or financial condition of the Company and
the Subsidiary, taken as a whole (including the International Business
and the Domestic Hall Surgical Business).
"person" means any individual, firm, corporation, partnership, limited
liability company, trust, joint venture, Governmental Entity or other
entity.
"Prime Rate" means the rate of interest from time to time publicly
announced by Citibank, N.A. in its New York office as its prime or base
rate, calculated on the basis of the actual number of calendar days
elapsed over 365.
(c) The following terms have the meanings given such terms in the
Sections set forth below:
Term Section
Accounting Firm 2.2(a)
Accrued Liability 9.3(b)
Accumulated Funding Deficiency 4.14(c)
Additional Support Services 8.7(b)
Adjusted Cash Purchase Price 2.2(b)
Affiliate 15.7(b)
Applicable Laws 4.16(a)
Balance Sheet 4.7(a)
Benefit Plans 4.14(a)
Buyer Preamble
Buyer Freight Charges 2.3
Buyer's 401(k) Plan 9.4(a)
Buyer's Plan 9.3(a)
Buyer's Health Plans 9.6(a)
Buyer's Non-Qualified DB Plan 9.5(a)
Buyer's Non-Qualified DC Plan 9.5(a)
Cash Purchase Price 1.1(a)
Closing 2.1
Closing Date 2.1
Closing Date Amount 2.1
Closing Tax Adjustment Amount 11.1(c)
Closing Working Capital 2.2(a)
Code 4.8(a)
Commitment Letter 3.1(g)
Company Preamble
Competitive Business 5.5(d)
Confidentiality Agreement 7.1
Continuation Period 9.2
Continued Employees 9.1
Contracts 4.12
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control 15.7(b)
controlled 15.7(b)
controlling 15.7(b)
Convatec Agreement 8.9
Cross Licensing Agreement 8.8
Current Liabilities 2.2(c)
Current Assets 2.2(c)
Defined Benefit Pension Plan 4.14(f)
Distribution Agreement 8.7
DOJ 8.5
Domestic Balance Sheet 4.7(a)
Domestic Hall Surgical Business Preamble
Employee Pension Benefit Plans 4.14(a)
Employee Welfare Benefit Plans 4.14(a)
Environmental Law 4.16(b)
ERISA 4.14(a)
Estimated Non-U.S. Inventory
Purchase Price 2.1
FDA 4.16(A)
Financial Statements 4.7(a)
Financing 6.5
FTC 8.5
GAAP 2.2(c)
Governmental Entity 3.1(c)
Hazardous Substance 4.16(b)
HSR Act 3.1(d)
Incentive Plans 9.10
including 15.7(b)
indemnified party 11.7
Intellectual Property 4.11
International Business Preamble
International Employees 9.14
Leased Property 4.10
Liens 4.2(a)
Loss 11.5
Manufacturing Agreement 8.8
Material Adverse Effect 15.7(b)
Multiemployer Plan 4.14(h)
Names 7.3
Non-U.S. Employees 9.14
Non-U.S. Inventory 1.1(b)
Non-U.S. Inventory Purchase Price 1.1(b)
Non-U.S. Inventory Statement 2.4(a)
Notice of Disagreement 2.2(a)
Notice of Inventory Disagreement 2.4(b)
Pension Plans 4.14(a)
Pension Transition Period 9.3(b)
Permitted Liens 4.9
person 15.7(b)
Plans 11.3(a)
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Pre-Closing Tax Period 4.8(a)
Prime Rate 15.7(b)
Prohibited Transaction 4.14(e)
Property Taxes 11.1(c)
Purchase Price 1.1(a)
Records 8.6(a)
Reportable Events 4.14(e)
Seller Preamble
Seller Accounting Policies 2.2(c)
Seller Entities Preamble
Seller's 401(k) Plan 9.4(a)
Seller's Non-Qualified DB Plan 9.5(a)
Seller's Non-Qualified DC Plan 9.5(a)
Seller's Plan 9.3(a)
Shares Preamble
Statement 2.2(a)
Straddle Period 11.1(c)
Subsidiary Shares 4.5
Subsidiary Preamble
Tax 4.8(a)
Tax Claim 11.9(a)
Taxes 4.8(a)
Third Party Claim 11.7
Transaction Documents 4.1
Transition Distribution and
Services Agreement 8.7
Unfunded Benefit Liabilities 4.14(a)
Warrant 1.1(a)
Warrant Agreement 2.1
WC Amount 2.2(b)
Working Capital 2.2(c)
Xxxxxx U.S. Receivables 1.1(b)
Zimmer Preamble
Section 15.7 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other party.
Section 15.8 Entire Agreement. This Agreement, the other Transaction
Documents and the Confidentiality Agreement contain the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to such
subject matter. Neither party shall be liable or bound to any other party in any
manner by any representations, warranties or covenants relating to such subject
matter except as specifically set
72
forth herein, in the other Transaction Documents or in the Confidentiality
Agreement.
Section 15.9 Fees. Each party hereto hereby represents and warrants
that (a) the only brokers or finders that have acted for such party in
connection with this Agreement or the transactions contemplated hereby or that
may be entitled to any brokerage fee, finder's fee or commission in respect
thereof are Xxxxxx Xxxxxxx & Co. Incorporated with respect to Seller and Xxxxx
Xxxxxx Inc. with respect to Buyer and (b) each party shall pay all fees or
commissions which may be payable to the firm so named with respect to such
party.
Section 15.10 Severability. If any provision of this Agreement (or any
portion thereof) or the application of any such provision (or any portion
thereof) to any person or circumstance shall be held invalid, illegal or
unenforce able in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other persons or circumstances.
Section 15.11 Consent to Jurisdiction. Each of Buyer and Seller
irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of
the State of New York, New York County, and (b) the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement, the other Transaction Documents
or any transaction contemplated hereby. Each of Buyer and Seller agrees to
commence any action, suit or proceeding relating hereto either in the United
States District Court for the Southern District of New York or if such suit,
action or other proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York, New York County. Each of
Buyer and Seller further agrees that service of any process, summons, notice or
document by U.S. registered mail to such party's respective address set forth
above shall be effective service of process for any action, suit or proceeding
in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 15.11. Each of Buyer and Seller irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court for the Southern District of New York, and
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hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
Section 15.12 Waiver of Jury Trial. Each party hereto hereby waives to
the fullest extent permitted by applicable law, any right it may have to a trial
by jury in respect of any litigation directly or indirectly arising out of,
under or in connection with this Agreement or any of the other Transaction
Documents. Each party hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce that
foregoing waiver and (b) acknowledges that it and the other parties hereto have
been induced to enter into this Agreement and the other Transaction Documents,
as applicable, by, among other things, the mutual waivers and certifications in
this Section 15.12.
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SECTION 15.13 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
XXXXXXX-XXXXX SQUIBB COMPANY,
by
----------------------------
Name:
Title:
CONMED CORPORATION,
by
----------------------------
Name:
Title:
