ASSET PURCHASE AGREEMENT
by and between
Chiron Diagnostics Corporation
as "Seller,"
Chiron Corporation
and
Bio-Rad Laboratories, Inc.
as "Buyer"
Dated: December 5, 1997
Legend:
[ ** ] This material has been omitted pursuant to a request
for confidential treatment. The material has been filed
separately with the Commission.
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
1.1 Defined Terms 1
1.2 Other Defined Terms 9
ARTICLE II PURCHASE AND SALE OF ASSETS 9
2.1 Transfer of Assets 9
2.2 Assumption of Liabilities 9
2.3 Excluded Liabilities 10
2.4 Purchase Price 11
2.5 Post-Closing Adjustment 12
2.6 Prorations 13
2.7 Closing Costs; Transfer Taxes and Fees 13
ARTICLE III CLOSING 14
3.1 Closing 14
3.2 Conveyances at Closing 14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER 15
4.1 Organization of Seller 15
4.2 Subsidiaries 15
4.3 Authorization 15
4.4 No Adverse Change 16
4.5 Assets 16
4.6 Facilities 16
4.7 Contracts and Commitments 17
4.8 Permits 19
4.9 No Conflict or Violation 19
4.10 Financial Statements 19
4.11 Books and Records. 20
4.12 Litigation 20
4.13 Labor Matters 20
4.14 Liabilities 20
4.15 Compliance with Law 20
4.16 No Brokers 21
4.17 No Other Agreements to Sell the Assets 21
4.18 Proprietary Rights 21
4.19 INTENTIONALLY OMITTED 22
4.20 INTENTIONALLY OMITTED 22
4.21 Tax Matters 22
4.22 INTENTIONALLY OMITTED 23
4.23 INTENTIONALLY OMITTED 23
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4.24 Inventory 23
4.25 Purchase Commitments 23
4.26 Payments 23
4.27 Customers, Distributors and Suppliers 24
4.28 Compliance With Environmental Laws 24
4.29 INTENTIONALLY OMITTED. 26
4.30 Projections 26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER 26
5.1 Organization of Buyer 26
5.2 Authorization 26
5.3 No Conflict or Violation 27
5.4 Consents and Approvals 27
5.5 No Brokers 27
5.6 Lawsuits, Claims 27
5.7 Financial Capability 27
5.8 Intentionally Omitted 27
5.9 Projections 28
ARTICLE VI COVENANTS OF SELLER AND BUYER 28
6.1 Further Assurances 28
6.2 No Solicitation 29
6.3 Notification of Certain Matters 29
6.4 Investigation by Buyer 30
6.5 Conduct of Business 31
6.6 Employee Matters 32
6.7 INTENTIONALLY OMITTED 33
6.8 INTENTIONALLY OMITTED 34
ARTICLE VII CONDITIONS TO SELLER'S OBLIGATIONS 34
7.1 Representations, Warranties and Covenants 34
7.2 Consents; Regulatory Compliance and Approval 34
7.3 No Actions or Court Orders 34
7.4 Opinion of Counsel 34
7.5 Certificates 35
7.6 Corporate Documents 35
7.7 Assumption Document 35
7.8 Ancillary Agreements 35
ARTICLE VIII CONDITIONS TO BUYER'S OBLIGATIONS 35
8.1 Representations, Warranties and Covenants 36
8.2 Consents; Regulatory Compliance and Approval 36
8.3 No Actions or Court Orders. 36
8.4 Opinion of Counsel 36
8.5 Certificates. 38
ii
8.6 Material Changes 38
8.7 Corporate Documents 38
8.8 Due Diligence Review 38
8.9 INTENTIONALLY OMITTED 38
8.10 Conveyancing Documents; Release of Encumbrances 38
8.11 INTENTIONALLY OMITTED 38
8.12 Permits 38
8.13 Other Agreements 38
8.14 INTENTIONALLY OMITTED 38
8.15 Tax Clearance Certificate 39
ARTICLE IX RISK OF LOSS; CONSENTS TO ASSIGNMENT 39
9.1 Risk of Loss 39
9.2 Consents to Assignment 39
ARTICLE X ACTIONS BY SELLER AND BUYER AFTER THE CLOSING 40
10.1 INTENTIONALLY OMITTED 40
10.2 Books and Records; Tax Matters 40
10.3 Survival of Representations, Etc 40
10.4 Indemnifications 41
10.5 INTENTIONALLY OMITTED 43
10.6 Holdback Amount 43
10.7 Bulk Sales 43
10.8 Taxes. 44
10.9 Insurance. 44
10.10 Name. 44
10.11 Collection of Receivables. 44
10.12 Supply of Products. 44
ARTICLE XI - MISCELLANEOUS 44
11.1 Termination 44
11.2 Assignment 46
11.3 Notices; Transfer of Funds 46
11.4 Choice of Law 47
11.5 Entire Agreement; Amendments and Waivers 47
11.6 INTENTIONALLY OMITTED 47
11.7 Multiple Counterparts 47
11.8 Expenses 47
11.9 Invalidity 47
11.10 Titles; Gender 47
11.11 Publicity 48
11.12 INTENTIONALLY OMITTED 48
11.13 Cumulative Remedies 48
11.14 Service of Process, Consent to Jurisdiction 48
11.15 Specific Performance. 48
iii
EXHIBITS
Exhibit
A Facilities A-1
B Allocation of Purchase Price ▇-▇
▇ ▇▇▇▇ ▇-▇
▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇-▇
E Assignment of Leases E-1
F Assignment of Contract Rights F-1
G Patent and Trademark Assignment Agreement G-1
H Assumption of Certain Liabilities H-1
I Required Consents or Approvals of Buyer I-1
J Agreement Regarding Employee Benefit Plans J-1
K Indemnification Escrow Agreement K-1
L Agreement Not to Compete L-1
M Promissory Note M-1
N Administrative Services Agreement N-1
O License Agreement O-1
P Master Supply Agreement P-1
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SCHEDULES
Schedule 1.1A Immunoassay Controls Sale or Distribution Contracts
Schedule 1.1B Contracts Requiring Best Efforts
Schedule 1.1C Contracts Requiring Commercially Reasonable Efforts
Schedule 1.1D Excluded Assets
Schedule 1.1E Permitted Encumbrances
Schedule 2.4(d) Inventory Located in Foreign Jurisdictions
Schedule 4.2 Assets Owned By Subsidiaries
Schedule 4.5 Tangible Assets (Value Exceeding $1,000)
Schedule 4.7 Contracts
Schedule 4.7(c) Product Warranty
Schedule 4.8 Permits
Schedule 4.9 Conflicts and Defaults
Schedule 4.12 Litigation
Schedule 4.13 Labor Matters
Schedule 4.18 Proprietary Rights
Schedule 4.27 Customers, Distributors and Suppliers
Schedule 4.28 Environmental Matters
Schedule 5.6 Lawsuits, Claims
Schedule 6.6 Rehired Employees
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of December 5, 1997, is by
and among Bio-Rad Laboratories, Inc., a Delaware corporation ("Buyer"),
Chiron Diagnostics Corporation, a Delaware corporation ("Seller"),
and Chiron Corporation, a Delaware corporation ("Parent").
RECITALS
A. Seller owns certain assets which it uses in the
conduct of the Business (as defined below). Seller is a wholly owned
subsidiary of Parent.
B. Buyer desires to purchase from Seller, and
Seller desires to sell to Buyer, such assets upon the terms and subject
to the conditions of this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the respective
covenants and promises contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used herein, the terms below shall
have the following meanings. Any of such terms, unless the context
otherwise requires, may be used in the singular or plural, depending
upon the reference.
"Action" shall mean any action, inquiry, claim, suit,
litigation, proceeding, labor dispute, arbitral action, governmental
audit, criminal prosecution or unfair labor practice charge or
complaint.
"affiliate" shall have the meaning set forth in the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.
"Ancillary Agreements" shall mean the Agreement Not
to Compete, Administrative Services Agreement and Master Supply
Agreement substantially in the forms attached hereto as Exhibits L, N
and P, respectively.
"Assets" shall mean all of the right, title and
interest in and to the business, properties, assets and rights of any
kind, whether tangible or intangible, real or personal and reflected in
the Financial Statements or used in the operation of the Business owned
by Seller, including without limitation all of Seller's right, title and
interest in the following:
(a) INTENTIONALLY OMITTED;
(b) all Contract Rights;
(c) all Leases;
(d) all Leasehold Estates;
(e) all Leasehold Improvements;
(f) all Fixtures and Equipment;
(g) all Inventory;
(h) all Books and Records;
(i) all Proprietary Rights;
(j) to the extent transferable, all Permits;
(k) all computers and, to the extent transferable,
software;
(l) INTENTIONALLY OMITTED;
(m) available supplies, sales literature, promotional
literature, customer, supplier and distributor lists, art
work, display units, telephone and fax numbers and purchasing
records related to the Business;
(n) all rights under or pursuant to all warranties, representations
and guarantees made by suppliers in connection with the Assets
or services furnished to Seller pertaining to the Business or
affecting the Assets, to the extent such warranties, representations
and guarantees are assignable;
(o) all deposits and prepaid expenses of Seller;
but excluding therefrom the Excluded Assets.
"Balance Sheet" shall mean the balance sheet of the
Business at the date indicated thereon, together with the notes thereon.
"Benefit Arrangements" shall mean each employment or
severance contract or arrangement providing for insurance coverage,
severance, termination, vacation pay or similar coverage, Employee
investment or retirement plans, and all written compensation policies
2
and practices maintained by the Seller covering any Employee or former
Employee of the Business.
"Books and Records" shall mean (a) all records and
lists of Seller pertaining to the Assets, (b) all records and lists
pertaining to customers, suppliers or personnel of the Business, (c) all
product, business and marketing plans of Seller related exclusively or
primarily to the Business and (d) all books, ledgers, files, reports,
plans, drawings and operating records of every kind related exclusively
or primarily to the Business maintained by Seller, but excluding the
originals of Seller's minute books, stock books and tax returns, any
financial or tax information prepared or used in connection with the
preparation of financial statements or tax returns of Seller or any
Subsidiary, records relating to intercompany agreements or exclusively
to Excluded Assets, and any other records Seller is required by law to
retain in its possession.
"Business" shall mean the Seller's business of
manufacturing diagnostic controls, as presently conducted by Seller, and
the marketing and sale of such diagnostic control products by Seller and
its Subsidiaries. "Business" shall not include the manufacture or sale
of diagnostic control products for use with blood gas or blood
electrolyte diagnostic systems.
"Closing Date" shall mean December 5, 1997, or such
other date as Buyer and Seller shall mutually agree upon.
"Closing Inventory Report" shall mean a report
prepared by Seller setting forth the value of the worldwide Inventory at
standard cost as of the Closing Date determined in accordance with
Seller's written standard accounting practices as consistently applied on
an historical basis including reserves determined in accordance with
generally accepted accounting principles.
"Code" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations thereunder.
"Confidentiality Agreement" shall mean that certain Confidentiality
Agreement dated September 5, 1997, by and among Seller and Buyer.
"Contract" shall mean any agreement, contract, note,
loan, evidence of indebtedness, purchase, order, letter of credit,
indenture, security or pledge agreement, franchise agreement,
undertaking, practice, covenant not to compete, employment agreement,
license, instrument, obligation or commitment to which Seller is a party
or is bound and which relates to the Business or the Assets, whether
oral or written, but excluding (i) all Leases and (ii) all contracts,
agreements and commitments which will expire or be terminated in the
ordinary course of business prior to the Closing.
"Contract Rights" shall mean all of Seller's rights
and obligations under the Contracts, excluding any such rights and
obligations as to any Contract that is not listed on Schedule 4.7 and
contains terms and conditions other than standard business terms and
conditions or as to which the failure to make such listing is a breach
3
of a representation by Seller hereunder, unless Buyer elects to assume
such Contract within 30 days of receipt following the Closing Date.
"Copyrights" shall mean registered copyrights,
copyright applications and unregistered copyrights.
"Court Order" shall mean any judgment, decision,
consent decree, injunction, ruling or order of any federal, state or
local court or governmental agency, department or authority that is
binding on any person or its property under applicable law.
"Default" shall mean (a) a breach of or default under
any Contract or Lease, (b) the occurrence of an event that with the
passage of time or the giving of notice or both would constitute a
breach of or default under any Contract or Lease, or (c) the occurrence
of an event that with or without the passage of time or the giving of
notice or both would give rise to a right of termination, renegotiation
or acceleration under any Contract or Lease.
"Disclosure Schedule" shall mean a schedule executed
and delivered by Seller to Buyer as of the date hereof which sets forth
the exceptions to the representations and warranties contained in
Article IV hereof and certain other information called for by this
Agreement. Unless otherwise specified, each reference in this Agreement
to any numbered schedule is a reference to that numbered schedule which
is included in the Disclosure Schedule.
"Employees" shall mean the employees listed on Schedule 4.13 hereto.
"Encumbrance" shall mean any claim, lien, pledge,
option, charge, easement, security interest, deed of trust, mortgage,
right-of-way, encroachment, building or use restriction, conditional
sales agreement, encumbrance or other right of third parties, whether
voluntarily incurred or arising by operation of law, and includes,
without limitation, any agreement to give any of the foregoing in the
future, and any contingent sale or other title retention agreement or
lease in the nature thereof.
"Excluded Assets," notwithstanding any other provision
of this Agreement, shall mean the following assets of Seller which are
not to be acquired by Buyer hereunder:
(a) all Assets of Seller or any Subsidiary used in
the marketing and sale of products of the Business or in connection with
the provision of legal, human resource or financial services in
connection with the Business, except for Assets located at the
Facilities, Inventory, Contracts and assets described in clause (m) of
the definition of "Assets" in this Section 1.1.;
(b) all of Seller's Inventory of finished
Immunoassay Controls, anemia controls and anti-depressant controls and
of products held by Seller for internal use at locations other than the
Facilities;
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(c) all Contracts for the sale or distribution of
Immunoassay Controls as described on Schedule 1.1A;
(d) items reflected in the Financial Statements
which have been or will be disposed of or consumed in the ordinary
course of business by Seller between the date of the Interim Financial
Statements and the Closing;
(e) claims of Seller or any Subsidiary for U.S.
federal, state or foreign tax refunds, tax loss carry forward benefits
or other benefits claims and rights relating to Taxes for any period or
partial period prior to the Closing;
(f) contracts between Seller and any of Seller's Subsidiaries;
(g) any Patent, Trademark or Copyright (or
application for any of the foregoing) which is either not utilized in
the Business or indicated on Schedule 4.18 as not being transferred to
Buyer or any Permit which is either not utilized in the Business or
listed on Schedule 4.8;
(h) software and programs that (i) are not
assignable by Seller to Buyer or (ii) interface between the Facilities
and other Seller facilities and are used primarily for internal use and
management;
(i) contracts not required for the operation of the
Business as conducted by Seller;
(j) the distribution and sales Contracts listed on
Schedules 1.1B and Schedule 1.1C and for which the consent of the other
party for assignment to Buyer has not been obtained by the Closing Date;
(k) books and records not included in the definition
of Books and Records;
(l) insurance policies;
(m) all cash and cash equivalents held by Seller;
(n) all Permits and software, to the extent not transferable;
(o) all claims, causes of action, chooses in action,
rights of recovery and rights of set-off of any kind against any person
or entity arising out of or relating to the Assets to the extent related
to the Excluded Liabilities;
(p) INTENTIONALLY OMITTED;
(q) all accounts receivable;
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(r) the Contract, dated as of March 19, 1996,
between Seller and Hematronix, Inc.;
(s) the Contract, dated October 20, 1997, between
Seller and ISLA Lab Products Corporation;
(t) the telecommunications and data operations
equipment listed on Schedule 1.1D; and
(u) the Contract with the United States Department
of Veterans Affairs No. V797P-511N, dated January 1, 1992 as amended
through May 15, 1997.
"Facilities" shall mean all real property and related
facilities which are identified or listed on Exhibit "A" attached
hereto.
"Facility Leases" shall mean all of the leases of
Facilities listed on Schedule 4.7.
"Financial Statements" shall mean the Year-End
Financial Statements and the Interim Financial Statements.
"Fixtures and Equipment" shall mean all of the
furniture, fixtures, furnishings, machinery, automobiles, trucks, spare
parts, supplies, equipment, tooling, molds, freeze dryers, patterns,
dies and other tangible personal property owned by Seller and used in
connection with the Business, wherever located and including any such
Fixtures and Equipment in the possession of any of Seller's suppliers,
including all warranty rights with respect thereto.
"Former Facility" shall mean each plant, office,
manufacturing facility, store, warehouse, improvement, administrative
building and all real property and related facilities which was owned,
leased or operated by Seller at any time prior to the date hereof, but
excluding any Facilities.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder.
"Immunoassay Controls" shall mean the immunoassay
control products to be supplied to Seller by Buyer pursuant to the
Master Supply Agreement.
"Interim Balance Sheet" shall mean the unaudited
Balance Sheet dated the Interim Balance Sheet Date.
"Interim Balance Sheet Date" shall mean July 14, 1997.
6
"Interim Financial Statements" shall mean the Interim
Balance Sheet and the unaudited statement of operations for the period
ended on the Interim Balance Sheet Date.
"Inventory" shall mean all of Seller's worldwide
inventory at standard cost held for resale and all of Seller's raw
materials, work in process, finished products, wrapping, supply and
packaging items and similar items with respect to the Business, in each
case wherever the same may be located.
"Knowledge" or "knowledge" when used in this
Agreement with respect to the knowledge of Seller, shall mean the actual
personal knowledge of a management employee of Seller having
responsibility for the area of operation of the Business or the financial
or legal matters to which the issue of knowledge relates under the terms
of this Agreement after diligent inquiry including consultation with
appropriate experts and the failure of any such management employee of
Seller to undertake such diligent inquiry in connection with any
representation or warranty qualified by the knowledge of Seller shall be
a breach of such representation or warranty.
"Leased Real Property" shall mean all leased property
described in the Facility Leases.
"Leasehold Estates" shall mean all of Seller's rights
and obligations as lessee under the Leases.
"Leasehold Improvements" shall mean all leasehold
improvements situated in or on the Leased Real Property and owned by
Seller.
"Leases" shall mean all of the existing leases with respect to
the personal or real property of Seller listed on Schedule 4.7.
"Liabilities" shall mean any direct or indirect
liability, indebtedness, obligation, commitment, expense, claim,
deficiency, guaranty or endorsement of or by any person of any type,
whether accrued, absolute, contingent, matured, unmatured or other.
"material adverse effect" or "material adverse change"
shall mean with respect to the Business or the Assets any significant
and substantial adverse effect or change in the condition (financial or
other), business, results of operations, assets, Liabilities or
operations of the Business and/or the Assets or on the ability of Seller
to consummate the transactions contemplated hereby, or any event or
condition which would, with the passage of time, constitute a "material
adverse effect" or "material adverse change."
"ordinary course of business" or "ordinary course" or
any similar phrase shall mean the ordinary course of the Business and
consistent with Seller's past practice.
"Optional Consents" shall mean the consents of other
parties to the assignment to Buyer of any Contract listed on Schedule
1.1B and Schedule 1.1C.
7
"Patents" shall mean all patents and patent
applications and registered design and registered design applications.
"Permits" shall mean all licenses, permits,
franchises, approvals, authorizations, consents or orders of, or filings
with, any governmental authority, whether foreign, federal, state or
local, or any other person, necessary or desirable for the past, present
or anticipated conduct of, or relating to the operation of the Business.
"Permitted Encumbrances" shall mean (a) the
Encumbrances set forth on Schedule 1.1E; (b) liens for Taxes and
assessments not yet due and payable; and (c) Encumbrances which do not
materially interfere with the use or transfer or detract from the value
of the Assets subject thereto or result in the imposition upon Buyer of a
liability not assumed hereunder.
"Proprietary Rights" shall mean all of Seller's
Copyrights, Patents, Trademarks, technology rights and licenses,
computer software (including without limitation any source or object
codes therefor or documentation relating thereto), trade secrets,
franchises, know-how, inventions, designs, specifications, marketing and
product plans, drawings and intellectual property rights used in or
necessary for the Business, except as otherwise set forth on Schedule
4.18 and except for the name "Chiron".
"Regulations" shall mean any existing laws, statutes,
ordinances, regulations, rules, notice requirements, court decisions,
agency guidelines, principles of law and orders of any foreign, federal,
state or local government and any other governmental department or
agency, including without limitation FDA Laws, Environmental Laws,
energy, motor vehicle safety, public utility, zoning, building and
health codes, occupational safety and health and laws respecting
employment practices, employee documentation, terms and conditions of
employment and wages and hours.
"Representative" shall mean any officer, director,
principal, attorney, agent, employee or other representative.
"Subsidiary" shall mean (a) any corporation in an
unbroken chain of corporations beginning with Seller if each of the
corporations other than the last corporation in the unbroken chain then
owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain,
(b) any partnership in which Seller is a general partner, or (c) any
partnership in which Seller possesses a greater than or greater interest
in the total capital or total income of such partnership.
"Tax" shall mean any federal, state, local, foreign or
other tax, levy, impost, fee, assessment or other government charge,
including without limitation income, estimated income, business,
occupation, franchise, property, payroll, personal property, sales,
transfer, use, employment, commercial rent, occupancy, franchise or
withholding taxes, and any premium, including without limitation
interest, penalties and additions in connection therewith.
8
"Trademarks" shall mean registered trademarks,
registered service marks, trademark and service ▇▇▇▇ applications and
unregistered trademarks and service marks.
"Year-End Financial Statements" shall mean the Balance
Sheets for the Business dated December 31, 1996 and October 31, 1997,
and the related statements of operations for the fiscal year ended
December 31, 1996 and the nine months ended October 31, 1997.
1.2 Other Defined Terms. The following terms shall have
the meanings defined for such terms in the Sections set forth below:
Term
Adjustment Amount 2.5(b)
Assumed Liabilities 2.2
Assumption Documents 3.2(b)
Bulk Sales Act 10.7
Claim 10.4(d)
Claim Notice 10.4(d)
Closing 3.1
Damages 10.4
Environmental Laws 4.28(a)
Excluded Liabilities 2.3
Hazardous Substance 4.28(a)
Holdback Amount 2.4(a)
Holdback Note 2.4(a)
Proposed Acquisition Transaction 6.2(a)
Purchase Price 2.4
Release 4.28(a)
Rehired Employee 6.6
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Transfer of Assets. Upon the terms and subject to the
conditions contained herein, at the Closing, Seller will sell, convey,
transfer, assign and deliver to Buyer, and Buyer will acquire from
Seller, the Assets, free and clear of all Encumbrances other than
Permitted Encumbrances.
2.2 Assumption of Liabilities. Upon the terms and subject to
the conditions contained herein, at the Closing, Buyer shall assume the
following, and only the following, Liabilities of Seller (the "Assumed
Liabilities"):
9
(a) All Liabilities accruing, arising out of, or relating
to events or occurrences happening after the Closing Date under the
Contracts included in the Assets and Leases (excluding any such
Liabilities as to any Contract that is not listed on Schedule 4.7 and
that contains terms and conditions other than standard business terms
and conditions or as to which the failure to make such listing is a
breach of a representation by Seller hereunder, unless Buyer elects to
assume such Contract) including any Contract assigned to Buyer after the
Closing Date in accordance with Section 6.1, but not including any
Liability for any Default under any such Contract occurring on or prior
to the Closing Date or the assignment date if after the Closing Date.
2.3 Excluded Liabilities. Notwithstanding any other provision
of this Agreement, except for the Assumed Liabilities expressly
specified in Section 2.2, Buyer shall not assume, or otherwise be
responsible for, any Liabilities, including but not limited to any
accounts payable of Seller, whether liquidated or unliquidated, or known
or unknown, whether arising out of occurrences prior to, at or after the
date hereof ("Excluded Liabilities"), which Excluded Liabilities
include, without limitation:
(a) Except as otherwise provided in Section 2.2 or 6.6,
any Liability to or in respect of any employees or former employees of
Seller including without limitation (i) any employment agreement,
whether or not written, between Seller and any person, (ii) any
Liability under any Benefit Arrangements at any time maintained,
contributed to or required to be contributed to by or with respect to
Seller or Parent or under which Seller or Parent may incur Liability, or
any contributions, benefits or Liabilities therefor, or any Liability
with respect to Seller's withdrawal or partial withdrawal from or
termination of any Employee Plan and (iii) any claim of an unfair labor
practice, or any claim under any state unemployment compensation or
worker's compensation law or regulation or under any federal or state
employment discrimination law or regulation, which shall have been
asserted on or prior to the Closing Date or is based on acts or
omissions which occurred on or prior to the Closing Date;
(b) Any Liability of Parent or Seller in respect of any Tax;
(c) Any Liability arising from any injury to or death of
any person or damage to or destruction of any property, whether based on
negligence, breach of warranty, strict liability, enterprise liability
or any other legal or equitable theory arising from defects in products
manufactured or from services performed by or on behalf of Seller or any
other person or entity on or prior to the Closing Date;
(d) Any Liability of Seller arising out of or related to
any Action against Seller or any Action which adversely affects the
Assets and which shall have been asserted on or prior to the Closing
Date or to the extent the basis of which shall have arisen on or prior
to the Closing Date;
(e) Any Liability of Parent or Seller resulting from
entering into, performing its obligations pursuant to or consummating
the transactions contemplated by, this Agreement (including without
limitation any Liability of Parent or Seller pursuant to Article X
hereof);
10
(f) Any Liability related to any Former Facility.
2.4 Purchase Price.
(a) Purchase Price. At the Closing, upon the terms and
subject to the conditions set forth herein, Buyer shall pay to
Seller for the sale, transfer, assignment, conveyance and delivery of
the Assets, the aggregate amount of [ ** ]
(the "Purchase Price"), subject,
however, to the adjustment as set forth in Section 2.5 by (i) wire
transfer of immediately available funds in the amount of [ ** ] to
an account designated by Seller and (ii) delivery to Seller of a
promissory note in the form attached hereto as Exhibit M (the "Holdback
Note") in the principal amount of $1,000,000 (the "Holdback Amount") and
Buyer shall assume the Assumed Liabilities pursuant to this Agreement.
The Purchase Price shall be allocated among the Purchased Assets in the
manner required by Section 1060 of the Code and regulations thereunder.
Within fifteen (15) days of the date of the Closing Inventory Report,
Seller shall deliver to Buyer a statement (the "Allocation Statement")
setting forth the amount of the Purchase Price allocable to the various
Purchased Assets. Buyer and Seller agree to each prepare and file on a
timely basis with the Internal Revenue Service substantially identical
initial and supplemental Internal Revenue Service Forms 8594 "Asset
Acquisition Statements Under Section 1060" consistent with the
Allocation Statement and which gives effect to any Adjustment Amount
determined in accordance with Section 2.5 hereof.
(b) Agreement Not to Compete. At the Closing, Buyer shall
pay Parent and Seller pursuant to the Agreement Not to Compete attached
hereto as Exhibit L, an aggregate of Ten Thousand Dollars ($10,000)
which is included in the Purchase Price.
(c) Right of Set-Off Against Holdback Note. In accordance
with the terms of the Holdback Note, Buyer shall have a right of set-off
against amounts due and payable under the Holdback Note to satisfy
Seller's indemnification obligations, if any, pursuant to Section 10.4
hereof.
(d) Purchase of Foreign Inventory. Promptly following the
Closing and in no event later than two weeks following the Closing,
Seller shall cause its subsidiaries to sell, and Buyer shall cause its
subsidiaries to purchase, the Inventory located in the foreign
jurisdictions listed on Schedule 2.4(d) directly from Seller's
subsidiary located in each such foreign jurisdiction at a purchase price
to be determined by Seller's subsidiary. The aggregate amount of the
payments made by Buyer's subsidiaries pursuant to this Section 2.4 is
referred to herein as the "Aggregate Foreign Inventory Amount." Except
as set forth in this Section 2.4(d), all sales of Inventory pursuant to
this Section 2.4(d) shall be on the same terms and conditions as the
sale of Inventory located in the United States.
(i) If the Aggregate Foreign Inventory Amount
exceeds [ ** ] , then within two weeks of the Closing Seller shall
pay to Buyer an amount equal to the Aggregate Foreign Inventory Amount
less [ ** ] .
[ ** ] This material has been omitted pursuant to a request
for confidential treatment. The material has been filed
separately with the Commission.
11
(ii) If the Aggregate Foreign Inventory Amount is
less than [ ** ] , then within two weeks of the Closing Buyer shall
pay to Seller an amount equal to [ ** ] less the Aggregate Foreign
Inventory Amount.
(iii) All payments made by Buyer's subsidiaries, Buyer
or Seller pursuant to this Section 2.4(d) shall be paid in United States
dollars net fifteen days.
2.5 Post-Closing Adjustment.
(a) Closing Inventory. The quantities of Inventory to be
purchased and sold hereunder shall be determined by an itemized inventory
to be taken at such time as Buyer and Seller mutually agree and shall be
adjusted to book as of the Closing Date based upon a physical inventory
pursuant to which all Inventory will be counted as to quantity by
personnel of Seller and Buyer using the same procedures normally used by
Seller to take inventories of the type of Inventory being counted;
provided, that if Buyer and Seller shall mutually agree, an outside
inventory service or services (the "Inventory Service") mutually
selected by Seller and Buyer may be selected to take such inventory.
Both Buyer and Seller will have the right to Representatives present to
observe the physical inventories.
(b) Adjustment Amount. The "Adjustment Amount" shall be
the amount equal to the Closing Inventory as set forth on the Closing
Inventory Report less [ ** ] .
(i) If the Adjustment Amount is a positive number,
then Buyer shall pay to Seller the Adjustment Amount.
(ii) If the Adjustment Amount is a negative number
then Seller shall pay to Buyer the Adjustment Amount.
(c) Disputed Adjustment Amount. If Buyer shall disagree
with the Adjustment Amount, it shall notify Seller of such disagreement
in writing specifying in detail the particulars of such disagreement
within fifteen (15) business days after Buyer's receipt of the Closing
Balance Sheet. To the extent that any portion of the Adjustment Amount
is not in dispute, within fifteen (15) business days after Buyer's
receipt of the Closing Balance Sheet, Buyer shall pay Seller or Seller
shall pay Buyer, as the case may be, that portion of the Adjustment
Amount which is not in dispute in the manner set forth in Section 2.5(b).
(d) Resolution of Disputed Adjustment Amount. Buyer and
Seller shall use their best efforts for a period of thirty (30) calendar
days after Buyer's delivery of such notice (or such longer period as
Buyer and Seller shall mutually agree upon) to resolve any disagreements
raised by Buyer with respect to the calculation of the Adjustment
Amount. If, at the end of such period, Buyer and Seller are unable to
resolve such disagreements, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Co., and KPMG Peat
Marwick LLP, independent auditors of Buyer and Seller, respectively,
shall jointly select a third independent auditor of recognized national
standing to resolve any remaining disagreements. The determination by
[ ** ] This material has been omitted pursuant to a request
for confidential treatment. The material has been filed
separately with the Commission.
12
such third independent auditor shall be final, binding and conclusive on
the parties. Buyer and Seller shall use their best efforts to cause
such third independent auditor to make its determination within thirty
(30) calendar days of accepting its selection. Within ten (10) calendar
days after the date of determination of such third independent auditor,
Buyer shall pay Seller, or Seller shall pay Buyer, as the case may be,
the Adjustment Amount in the manner set forth in Section 2.5(b). The
fees and expenses of such third independent auditor shall be borne by
Buyer and Seller equally.
(e) Payment of Adjustment Amount. All payments made by
Buyer or Seller as part of the Adjustment Amount, shall be made by
wire transfer of immediately available funds to an account designated by
the payee.
2.6 Prorations.
(a) INTENTIONALLY OMITTED.
(b) Utilities; Taxes. On the Closing Date, or as promptly
as practicable following the Closing Date, but in no event later than
sixty (60) calendar days thereafter, the real and personal property
taxes, water, gas, electricity and other utilities, common area
maintenance reimbursements to lessors, local business or other license
fees or taxes, merchants' association dues and other similar periodic
charges payable with respect to the Assets or the Business shall be
prorated between Buyer and Seller effective as of the Closing Date. To
the extent practicable, utility meter readings for the Facilities shall
be determined as of the Closing Date. If the real property tax rate for
the current tax year is not established by the Closing Date, the
prorations shall be made on the basis of the rate in effect for the
preceding tax year and shall be adjusted when the exact amounts are
determined. All such prorations shall be based upon the most recent
available assessed value of any Facility prior to the Closing Date.
(c) Rents. Seller shall pay all rent under the Leases
through the end of the calendar month in which the Closing Date occurs,
and Buyer shall reimburse Seller for such rent accrued from the Closing
Date through the end of such month as part of the post-Closing proration.
2.7 Closing Costs; Transfer Taxes and Fees. Seller shall be
responsible for any documentary and transfer taxes imposed by reason of
the transfers of the Assets provided hereunder and any deficiency,
interest or penalty asserted with respect thereto. Seller shall pay the
fees and costs of recording or filing all applicable conveyancing
instruments described in Section 3.2(a). Buyer shall pay all costs of
applying for new Permits and obtaining the transfer of existing Permits
which may be lawfully transferred. Buyer shall be responsible for any
sales, use or other taxes imposed by reason of the transfers of Assets
provided hereunder. Buyer shall provide to Seller a properly executed
"California Resale Certificate" with respect to the Inventory.
13
ARTICLE III
CLOSING
3.1 Closing. The Closing of the transactions contemplated
herein (the "Closing") shall be held at 11:00 a.m. local time on the
Closing Date at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C., unless the parties hereto otherwise agree.
3.2 Conveyances at Closing.
(a) Instruments and Possession. To effect the sale and
transfer referred to in Section 2.1 hereof, Seller will, at the Closing,
execute and deliver to Buyer:
(i) INTENTIONALLY OMITTED;
(ii) one or more bills of sale, in the form attached
hereto as Exhibit D, conveying in the aggregate all of Seller's or
Seller's Subsidiaries' owned personal property included in the Assets;
(iii) subject to Section 9.2, Assignments of Lease in
the form attached hereto as Exhibit E with respect to the Leases;
(iv) subject to Section 9.2, Assignments of Contract
Rights, each in the form of Exhibit F attached hereto, with respect to
the Contract Rights included in the Assets;
(v) Assignments of Patents and Trademarks and other
Proprietary Rights each in the form attached hereto as Exhibit G, in
recordable form to the extent necessary to assign such rights;
(vi) INTENTIONALLY OMITTED;
(vii) such other instruments as shall be reasonably
requested by Buyer to vest in Buyer title in and to the Assets in
accordance with the provisions hereof.
(b) Assumption Document. Upon the terms and subject to
the conditions contained herein, at the Closing Buyer shall deliver to
Seller an instrument of assumption substantially in the form attached
hereto as Exhibit H, evidencing Buyer's assumption, pursuant to Section
2.2, of the Assumed Liabilities (the "Assumption Document").
(c) Form of Instruments. To the extent that a form of any
document to be delivered hereunder is not attached as an Exhibit hereto,
such documents shall be in form and substance, and shall be executed and
delivered in a manner, reasonably satisfactory to Buyer and Seller.
14
(d) Certificates; Opinions. Buyer and Seller shall
deliver the certificates, opinions of counsel and other matters
described in Articles VII and VIII.
(e) Consents. Subject to Section 9.2, Seller shall
deliver all Permits and any other third party consents required for the
valid transfer of the Assets as contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Parent and Seller, jointly and severally, hereby represent
and warrant to Buyer as follows, except as otherwise set forth on the
Disclosure Schedule, which representations and warranties are, as of the
date hereof, and will be, as of the Closing Date, true and correct:
4.1 Organization of Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware with full corporate power and authority to conduct the
Business as it is presently being conducted and to own and lease its
properties and assets. Seller is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where
the character of its properties owned or leased or the nature of its
activities make such qualification necessary, except where the failure
to be so qualified or in good standing would not have a material adverse
effect on the Assets or the Business. Copies of the Certificate of
Incorporation and Bylaws of Seller, and all amendments thereto,
heretofore delivered to Buyer are accurate and complete as of the date
hereof.
4.2 Subsidiaries. Except as set forth in Schedule 4.2, Seller
does not have any Subsidiaries which own any of the Assets. No
corporate proceedings on the part of any Subsidiary are necessary to
authorize this Agreement and the transactions contemplated hereby.
4.3 Authorization. Seller has all requisite corporate power and
authority, and has taken all corporate action necessary, to execute and
deliver this Agreement and the Ancillary Agreements, to consummate the
transactions contemplated hereby and thereby and to perform its
obligations hereunder and thereunder. The execution and delivery of
this Agreement and the Ancillary Agreements by Parent and Seller and the
consummation by Parent and Seller of the transactions contemplated
hereby and thereby have been duly approved by the boards of directors of
Parent and Seller. No other corporate proceedings on the part of Parent
or Seller are necessary to authorize this Agreement and the Ancillary
Agreements and the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by Parent and Seller and
is, and upon execution and delivery each of the Ancillary Agreements
will be, legal, valid and binding obligations of Parent and Seller
enforceable against them in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws of
general applicability relating to or affecting creditors' rights and to
general principles of equity which may limit the availability of
equitable remedies.
15
4.4 No Adverse Change. Since the Interim Balance Sheet Date:
(a) to the knowledge of Seller there has been no actual or
threatened material adverse change in the financial condition or results
of operation, the Business or the Assets or any event, condition or
state of facts, in either case that is reasonably expected to result in
a material adverse change in the Assets or the Business;
(b) there has not been any sale or other disposition,
except in the ordinary course of business of any of the Assets, or any
Encumbrance other than a Permitted Encumbrance placed on the Assets; and
(c) Seller has operated the Business in the ordinary
course so as to use reasonable efforts to preserve the Business intact,
to keep available to the Business the services of Seller's employees,
and to preserve the Business and the goodwill of Seller's suppliers,
customers, distributors and others having business relations with it.
4.5 Assets. Excluding the Leased Real Property, Seller has and
will transfer good and marketable title to the Assets and upon the
consummation of the transactions contemplated hereby, Buyer will acquire
good and marketable title to all of the Assets, free and clear of any
Encumbrances except for Permitted Encumbrances. The Assets include
without limitation all assets necessary for the conduct of the Business
as presently conducted. Schedule 4.5 contains accurate lists and
summary descriptions of all tangible Assets where the value of an
individual item exceeds $1,000.00 or where an aggregate of similar items
exceeds $1,000.00. All tangible assets and properties which are part of
the Assets are in good operating condition consistent with their age,
have been maintained in accordance with industry standards, and are
usable in the ordinary course of business and conform in all material
respects to all applicable Regulations (including Environmental Laws)
relating to their construction, use and operation.
4.6 Facilities.
(a) INTENTIONALLY OMITTED
(b) Actions. There are no pending or, to the best
knowledge of Seller, threatened condemnation proceedings or other
Actions relating to any Facility.
(c) Leases or Other Agreements. Except for Facility
Leases listed on Schedule 4.7, there are no leases, subleases, licenses,
occupancy agreements, options, rights, concessions or other agreements
or arrangements to which Seller is a party, written or oral, granting to
any person the right to purchase, use or occupy any Facility or interest
in any Facility.
(d) Facility Leases and Leased Real Property. With
respect to each Facility Lease, Seller has an unencumbered interest in
the Leasehold Estate. Seller enjoys peaceful and undisturbed possession
of all the Leased Real Property.
16
(e) Certificate of Occupancy. All Facilities have
received all required approvals of governmental authorities (including
without limitation Permits and a certificate of occupancy or other
similar certificate permitting lawful occupancy of the Facilities)
required in connection with the operation thereof and have been operated
and maintained in accordance with applicable Regulations in all material
respects.
(f) Utilities. All Facilities are supplied with utilities
(including without limitation water, sewage, disposal, electricity, gas
and telephone) and other services necessary for the operation of such
Facilities as currently operated, and there is no condition which would
reasonably be expected to result in the termination of the present
access from any Facility to such utility services.
(g) Improvements, Fixtures and Equipment. The
improvements constructed on the Facilities, including without limitation
all Leasehold Improvements, and all Fixtures and Equipment and other
tangible assets owned, leased or used by Seller at the Facilities are
(i) insured to the extent and in a manner customary in the industry,
(ii) structurally sound with no known material defects, (iii) in good
operating condition and repair, subject to ordinary wear and tear, (iv)
not in need of maintenance, repair or correction except for maintenance
and repair consistent with industry standards, the cost of which would
not be material and except for obligations with respect to repairing
damage caused by removal of fixtures upon termination of the Facility
Leases as expressly set forth in the Leases, (v) sufficient for the
operation of the Business as presently conducted and (vi) in conformity
in all material respects with all applicable Regulations.
(h) No Special Assessment. Seller has not received notice
of any special assessment relating to any Facility or any portion
thereof and to the knowledge of Seller there is no pending or threatened
special assessment.
(i) Normal wear and tear excepted, Buyer shall not be
required to undertake any remedial work at the Facilities to return the
Facilities to the conditions in which they existed at the commencement
of the Lease related thereto other than painting of the premises,
removal of equipment and fixtures and the repair of any damage to the
Facilities caused by the removal of such equipment and fixtures.
4.7 Contracts and Commitments.
(a) Contracts. Schedule 4.7 sets forth a complete and
accurate list of all Contracts of the following categories:
(i) Contracts not made in the ordinary course of business;
(ii) INTENTIONALLY OMITTED;
(iii) Labor or union contracts;
17
(iv) Franchise, license, consulting or technical
assistance contracts related to the Assets or the Business;
(v) Options with respect to any property, real or
personal, whether Seller shall be the grantor or grantee thereunder;
(vi) Contracts involving future expenditures or
Liabilities, actual or potential, in excess of $15,000.00 or otherwise
material to the Business or the Assets;
(vii) Contracts or commitments relating to commission
arrangements with others;
(viii) Distribution or sales contracts under
which annual revenue of the Business exceed $50,000;
(ix) Contracts limiting the freedom of Seller to
engage in the Business or compete with any person with respect to the
Business;
(x) Any Contract with the United States or any
Contract with any state or local government or any agency or department
thereof involving expenditures or Liabilities in excess of $15,000.00;
(xi) Leases of real property;
(xii) Leases of personal property not cancelable
(without Liability) within 30 calendar days; and
(xiii) notes, loans, indentures or other evidences of
indebtedness.
Seller has delivered to Buyer true, correct and complete copies of all
of the Contracts listed on Schedule 4.7, including all amendments and
supplements thereto.
(b) Absence of Defaults. To the extent material to the
Business, (i) all of the Contracts and Leases included in the Assets are
valid and binding, (ii) Seller has fulfilled, or taken all action
necessary to enable it to fulfill when due, all of its material
obligations under each of such Contracts and Leases, (iii) Seller, and
to Seller's Knowledge, all parties to such Contracts, have complied in
all material respects with the provisions thereof, to Seller's Knowledge
no party is in Default thereunder and no notice of any claim of Default
thereunder has been given to Seller, (iv) Seller and all parties to such
Leases, have complied in all material respects with the provisions
thereof, no party is in Default thereunder and no notice of any claim of
Default thereunder has been given to Seller, (v) Seller has no reason to
believe that the products and services called for by any unfinished
Contract cannot be supplied in accordance with the terms of such
Contract, including time specifications, and (vi) with respect to any
Leases, Seller has not received any notice of cancellation or
termination under any option or right reserved to the lessor, or any
notice of Default thereunder.
18
(c) Product Warranty. Except as set forth on Schedule
4.7(c), to the knowledge of Seller, Seller has committed no act, and
there has been no omission, which may result in, and there has been no
occurrence which could reasonably be expected to give rise to, product
liability or Liability for breach of warranty (whether covered by
insurance or not) on the part of Seller, with respect to products
designed, manufactured, assembled, repaired, maintained, delivered or
installed or services rendered prior to or on the Closing Date.
(d) Leases. INTENTIONALLY OMITTED.
4.8 Permits. (a) Schedule 4.8 sets forth a complete list of all
Permits held by Seller and used in the operation of the Business.
Seller has all Permits required under any Regulation (including
Environmental Laws) in the operation of its Business or in the ownership
of the Assets, and owns or possesses such Permits free and clear of all
Encumbrances other than Permitted Encumbrances. Seller is not in
Default, nor has it received any notice of any claim of Default, with
respect to any such Permit. Except as otherwise governed by law, all
such Permits are renewable by their terms or in the ordinary course of
business without the need to comply with any special qualification
procedures or to pay any amounts other than routine filing fees and will
not be adversely affected by the completion of the transactions
contemplated by this Agreement. No present or former shareholder,
director, officer or employee of Seller or any affiliate thereof, or any
other person, firm, corporation or other entity, owns or has any
proprietary, financial or other interest (direct or indirect) in any
Permit which Seller owns, possesses or uses.
(b) Other than in connection with or in compliance with
the provisions of the HSR Act, and except as disclosed on Schedule 4.8
hereto, no notice to, declaration, filing or registration with, or
Permit from, any domestic or foreign governmental or regulatory body or
authority, or any other person or entity, is required to be made or
obtained by Parent or Seller in connection with the execution, delivery
or performance of this Agreement and the consummation of the
transactions contemplated hereby.
4.9 No Conflict or Violation. Neither the execution, delivery
or performance of this Agreement nor the consummation of the
transactions contemplated hereby, nor compliance by Parent or Seller
with any of the provisions hereof, will (a) violate or conflict with any
provision of the Certificate of Incorporation or Bylaws of Parent or
Seller, (b) except as set forth on Schedule 4.9 hereto, violate,
conflict with, or result in or constitute a Default under, or result in
the termination of, or accelerate the performance required by, or result
in a right of termination or acceleration under, or result in the
creation of any Encumbrance upon any of the Assets under, any of the
terms, conditions or provisions of any Contract, Lease or Permit, (i) to
which Seller is a party or (ii) by which the Assets are bound,
(c) violate any Regulation or Court Order, (d) impose any Encumbrance on
the Assets or the Business.
4.10 Financial Statements. Seller has heretofore delivered to
Buyer the Financial Statements. The Financial Statements (a) are in
accordance with the books and records of Seller, (b) have been prepared
in accordance with Seller's customary accounting principles (a copy of
which has been provided to Buyer) consistently applied throughout the
19
periods covered thereby and (c) fairly present the Assets of the
Business as of the respective dates thereof and the results of
operations for the periods then ended (subject, to the qualifications
and assumptions set forth in such Financial Statements and the notes
thereto).
4.11 Books and Records. Seller has made and kept (and given
Buyer access to) Books and Records and accounts, which, in reasonable
detail, fairly and materially accurately reflect the activities of
Seller related to the Business and the Assets.
4.12 Litigation. Except as set forth on Schedule 4.12, there is
no Action pending, or to the knowledge of Seller, threatened or
anticipated (a) against, related to or affecting Seller, the Business or
the Assets (including with respect to Environmental Laws), or
(b) seeking to delay, limit or enjoin the transactions contemplated by
this Agreement. To the knowledge of Seller there are no Court Orders or
agreements with, or liens by, any governmental authority or quasi-
governmental entity relating to any Environmental Law which regulate,
obligate, bind or in any way affect any Facility.
4.13 Labor Matters. Seller is not a party to any labor agreement
with respect to its employees at the Facilities with any labor
organization, union, group or association. In the past two years,
Seller has not experienced any attempt by organized labor or its
representatives to make Seller conform to demands of organized labor
relating to its employees at the Facilities or to enter into a binding
agreement with organized labor that would cover the employees at the
Facilities. There is no labor strike or labor disturbance pending or,
to the knowledge of Seller, threatened against Seller at the Facilities
nor is any grievance currently being asserted, and in the past two years
Seller has not experienced a work stoppage at the Facilities. Without
limiting the foregoing, Seller is in compliance with the Immigration
Reform and Control Act of 1986 and maintains a current Form I-9, as
required by such Act, in the personnel file of each Employee. Schedule
4.13 sets forth the names and current annual salary rates or current
hourly wages of all present Employees of Seller at the Facilities and
also sets forth the earnings for each of such employees as reflected on
Form W-2 for the 1996 calendar year.
4.14 Liabilities. Other than Excluded Liabilities, Seller has no
Liabilities due or to become due, except (a) Liabilities which are set
forth or reserved for on the Interim Balance Sheet, which have not been
paid or discharged since the Interim Balance Sheet Date, (b) Liabilities
arising in the ordinary course of business under Contracts, Leases,
Permits and other business arrangements described in the Disclosure
Schedule (and under those Contracts, Leases and Permits which are not
required to be disclosed on the Disclosure Schedule) and (c) Liabilities
incurred since the Interim Balance Sheet Date in the ordinary course of
business and in accordance with this Agreement (none of which relates to
any Default under any Contract or Lease, breach of warranty, tort,
infringement or violation of any Regulation or Court Order or arose out
of any Action) and none of which, individually or in the aggregate, has
or would have a material adverse effect on the Business or the Assets.
4.15 Compliance with Law. The conduct of the Business has not
violated and is in compliance with all Regulations and Court Orders
relating to the Assets or the Business except to the extent that any
violation or noncompliance is not material to the Business. Seller has
20
not received any notice to the effect that, or otherwise been advised
that, it is not in compliance with any such Regulations or Court Orders,
except to the extent that any violation or noncompliance is not material
to the Business.
4.16 No Brokers. Neither Parent, Seller nor any of their
respective officers, directors, employees, shareholders or affiliates
has employed or made any agreement with any broker, finder or similar
agent or any person or firm which will result in the obligation of Buyer
or any of its affiliates to pay any finder's fee, brokerage fees or
commission or similar payment in connection with the transactions
contemplated hereby.
4.17 No Other Agreements to Sell the Assets. Neither Parent nor
Seller nor any of their respective officers, directors, shareholders or
affiliates have any commitment or legal obligation, absolute or
contingent, to any other person or firm other than the Buyer to sell,
assign, transfer or effect a sale of any of the Assets (other than
inventory in the ordinary course of business), or to enter into any
agreement or cause the entering into of an agreement with respect to any
of the foregoing.
4.18 Proprietary Rights.
(a) Proprietary Rights. Schedule 4.18 lists all of
Seller's Proprietary Rights. Schedule 4.18 also sets forth: (i) for
each Patent, the number and date of issuance, for each country in which
such Patent has been issued, or, if applicable, the application number
and date of filing for each country, (ii) for each Trademark, the
application serial number or registration number and the class of goods
covered for each country in which a Trademark has been registered and
(iii) for each Copyright, the number and date of filing for each country
in which a Copyright has been filed. Except as otherwise noted on the
Disclosure Schedule, the Proprietary Rights listed in the Disclosure
Schedule excluding the Trademarks are all those used by Seller in
connection with the Business. Except as otherwise noted on the
Disclosure Schedule, the Trademarks listed in the Disclosure Schedule
are all those used by Seller exclusively or primarily in connection with
the Business. True and correct copies of all Patents (including all
pending applications) owned, controlled, created or used by or on behalf
of Seller or in which Seller has any interest whatsoever have been
provided to Buyer.
(b) Royalties and Licenses. Except as set forth in
Schedule 4.18, Seller does not have any obligation to compensate any
person for the use of any such Proprietary Rights nor has Seller granted
to any person any license, option or other rights to use in any manner
any of the Proprietary Rights, whether requiring the payment of
royalties or not.
(c) Ownership and Protection of Proprietary Rights.
Seller owns each of the Proprietary Rights and the Proprietary Rights
will not cease to be valid rights of Seller by reason of the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby. All of the pending Patent
applications have been duly filed. Except as set forth in Schedule 4.18,
no other person (i) has been granted by Seller the right to use any of
Seller's Trademarks included in the Assets on the goods on which they
are now being used either in identical form or in such near resemblance
thereto as to be likely, when applied to the goods of any such person,
21
to cause confusion with such Trademarks or to cause a mistake or to
deceive, (ii) has notified Seller that it is claiming any ownership of
or right to use such Proprietary Rights, or (iii) to the knowledge of
Seller, is infringing upon any such Proprietary Rights in any way. No
Action has been instituted against or notices received by Seller that
are presently outstanding alleging that Seller's use of the Proprietary
Rights infringes upon or otherwise violates any rights of a third party
in or to such Proprietary Rights. There are not, and it is reasonably
expected that after the Closing there will not be, any restrictions on
Seller's or Buyer's, as the case may be, right to sell products
manufactured by Seller or Buyer, as the case may be, in connection with
the Business.
4.19 INTENTIONALLY OMITTED
4.20 INTENTIONALLY OMITTED
4.21 Tax Matters
(a) INTENTIONALLY OMITTED.
(b) Payment of Taxes. All Taxes, in respect of periods
beginning before the Closing Date, have been timely paid, or will be
timely paid, or an adequate reserve has been established therefor, as
set forth in the Disclosure Schedule or the Financial Statements, and
Seller does not have any material Liability for Taxes in excess of
amounts so paid or reserves so established.
(c) Audits, Investigations or Claims. Except as set forth
in the Disclosure Schedule, the consolidated federal income tax returns
of Seller have been examined by the Internal Revenue Service for all
periods to and including those set forth in the Disclosure Schedule, and
except to the extent shown therein, no material deficiencies for Taxes,
have been claimed, proposed or assessed by any taxing or other
governmental authority against Seller. Except as set forth in the
Disclosure Schedule, there are no pending or threatened audits,
investigations or claims for or relating to any material additional
Liability in respect of Taxes, and there are no matters under discussion
with any governmental authorities with respect to Taxes that in the
reasonable judgment of Seller, or its counsel, is likely to result in a
material additional Liability for Taxes. Audits of federal, state and
local returns for Taxes by the relevant taxing authorities have been
completed for each period and set forth in the Disclosure Schedule and,
except as set forth in the Disclosure Schedule, Seller has not been
notified that any taxing authority intends to audit a return for any
period. Except as set forth in the Disclosure Schedule, no extension of
a statute of limitations relating to Taxes is in effect with respect to
Seller.
(d) Lien. There are no liens for Taxes (other than for
current Taxes not yet due and payable) on the Assets.
(e) Safe Harbor Lease Property. None of the Assets is
property that is required to be treated as being owned by any other
person pursuant to the so-called safe harbor lease provisions of former
Section 168(f)(8) of the Code.
22
(f) Security for Tax-Exempt Obligations. None of the
Assets directly or indirectly secures any debt the interest on which is
tax-exempt under Section 103(a) of the Code.
(g) Tax-Exempt Use Property. None of the Assets is "tax-
exempt use property" within the meaning of Section 168(h) of the Code.
(h) Foreign Person. Seller is not a person other than a
United States person within the meaning of the Code.
(i) No Withholding. The transaction contemplated herein
is not subject to the tax withholding provisions of Section 3406 of the
Code, or of Subchapter A of Chapter 3 of the Code or of any other
provision of law.
4.22 INTENTIONALLY OMITTED.
4.23 INTENTIONALLY OMITTED.
4.24 Inventory. The Disclosure Schedule contains a complete and
accurate list of all Inventory as of the date shown thereon. The
Inventory as set forth on the Disclosure Schedule or arising since the
date of the Disclosure Schedule was acquired and has been maintained in
accordance with the regular business practices of Seller, consists of
new and unused items of a quality and quantity usable or saleable in the
ordinary course of business within the past six months, and is valued at
reasonable amounts based on the normal valuation policy of Seller at
prices equal to standard cost. None of such Inventory is obsolete,
unusable, slow moving, damaged or unsaleable in the ordinary course of
business, except for such items of Inventory (which in the case of
finished goods Inventory shall be in an amount not in excess of [ ** ]
in any one fiscal year) which have been written down to realizable
market value, or for which adequate reserves have been provided, in the
Interim Balance Sheet.
4.25 Purchase Commitments. As of the date of this Agreement, the
aggregate of all orders or commitments for the purchase of supplies by
Seller does not exceed [ ** ] , all of which orders and
commitments were made in the ordinary course of business. As of the
date of this Agreement, there are no material claims against Seller to
return products by reason of alleged overshipments, defective
merchandise or otherwise, or of products in the hands of customers under
an understanding that such products would be returnable. No outstanding
purchase or outstanding lease commitment of Seller presently is in
excess of the normal, ordinary and usual requirements of the Business or
was made at any price in excess of the now current market price or
contains terms or conditions more onerous than those usual and customary
in the Business. There is no outstanding bid, proposal, Contract or
unfilled order which relates to the Assets which will or would, if
accepted, have a material adverse effect, individually or in the
aggregate, on the Business or the Assets.
4.26 Payments. Seller has not, directly or indirectly, paid or
delivered any fee, commission or other sum of money or item or property,
however characterized, to any finder, agent, client, customer, supplier,
[ ** ] This material has been omitted pursuant to a request
for confidential treatment. The material has been filed
separately with the Commission.
23
government official or other party, in the United States or any other
country, which is in any manner related to the Business, which is, or
may be with the passage of time or discovery, illegal under any federal,
state or local laws of the United States (including without limitation
the U.S. Foreign Corrupt Practices' Act) or any other country having
jurisdiction.
4.27 Customers, Distributors and Suppliers. Schedule 4.27 sets
forth a complete and accurate list of the names and addresses of
Seller's (i) twenty largest current customers, distributors and other
agents and representatives showing the approximate total sales in
dollars by Seller to each such customer during the current fiscal year;
and (ii) twenty largest current suppliers showing the approximate total
purchases in dollars by Seller from each such supplier during such
fiscal year. Since the Interim Balance Sheet Date, there has been no
material adverse change in the business relationship of Seller with any
customer, distributor or supplier named on Schedule 4.27. Seller
has not received any communication from any customer, distributor or
supplier named on Schedule 4.27 of any intention to terminate or
materially reduce purchases from or supplies to Seller.
4.28 Compliance With Environmental Laws.
(a) Definitions. The following terms, when used in this
Section 4.28, shall have the following meanings. Any of these terms
may, unless the context otherwise requires, used in the singular or the
plural depending on the reference.
(i) "Seller" For purposes of this Section, the term
"Seller" shall include (i) all affiliates of Seller,
(ii) all partnerships, joint ventures and other entities
or organizations in which Seller was at any time or is a partner, joint
venturer, member or participant and (iii) all predecessor or former
corporations, partnerships, joint ventures, organizations, businesses or
other entities, whether in existence as of the date hereof or at any
time prior to the date hereof, the assets or obligations of which have
been acquired or assumed by Seller or to which Seller has succeeded.
(ii) "Release" shall mean and include any spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the environment or the
workplace of any Hazardous Substance, and otherwise as defined in any
Environmental Law.
(iii) "Hazardous Substance" shall mean any pollutants,
contaminants, chemicals, waste and any toxic, infectious, carcinogenic,
reactive, corrosive, ignitable or flammable chemical or chemical
compound or hazardous substance, material or waste, whether solid,
liquid or gas, including without limitation any quantity of asbestos in
any form, urea formaldehyde, PCB's, radon gas, crude oil or any fraction
thereof, all forms of natural gas, petroleum products or by-products or
derivatives, radioactive substance, waste waters, sludges, slag and any
other substance, material or waste that is subject to regulation,
control or remediation under any Environmental Laws.
24
(iv) "Environmental Laws" shall mean all Regulations
which regulate or relate to the protection or clean-up of the
environment, the use, treatment, storage, transportation, generation,
manufacture, processing, distribution, handling or disposal of, or
emission, discharge or other release or threatened release of, Hazardous
Substances or otherwise dangerous substances, wastes, pollution or
materials (whether, gas, liquid or solid), the preservation or
protection of waterways, groundwater, drinking water, air, wildlife,
plants or other natural resources, or the health and safety of persons
or property, including without limitation protection of the health and
safety of employees. Environmental Laws shall include without
limitation the Federal Water Pollution Control Act, Resource
Conservation & Recovery Act ("RCRA"), Clean Water Act, Safe Drinking
Water Act, Atomic Energy Act, Occupational Safety and Health Act, Toxic
Substances Control Act, Clean Air Act, Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), Hazardous Materials
Transportation Act and all analogous or related federal, state or local
law, each as amended.
(b) Facilities. The Facilities are, and at all times
since first occupancy by Seller have been, leased and operated by Seller
in compliance in all material respects with all Environmental Laws and
in a manner that will not give rise to any material Liability under any
Environmental Laws. Without limiting the foregoing, (i) to Seller's
knowledge, there is not and has not been any Hazardous Substance used,
generated, treated, stored, transported, disposed of or handled under,
about or from any Facility since first occupancy by Seller, except for
quantities of any such Hazardous Substances stored or otherwise held on,
under or about any such Facility in compliance in all material respects
with all Environmental Laws, (ii) Seller has at all times used,
generated, treated, stored, transported, disposed of or otherwise
handled its Hazardous Substances at the Facilities in compliance in all
material respects with all Environmental Laws and in a manner that will
not result in any material Liability of Seller under any Environmental
Law, (iii) there is not now and to the knowledge of Seller has not been
at any time in the past any underground or above-ground storage tank or
pipeline at any Facility where the installation, use, maintenance,
repair, testing, closure or removal of such tank or pipeline was not in
compliance with all Environmental Laws and there has been no Release
from or rupture of any such tank or pipeline, including without
limitation any Release from or in connection with the filling or
emptying of such tank which would trigger a reportable event under any
Environmental Law, (iii) except as set forth in Schedule 4.28, Seller
does not manufacture any product at the Facilities which requires the
warning mandated by the California Safe Drinking Water and Toxic
Enforcement Act of 1986 ("Proposition 65").
(c) Notice of Violation. Except as set forth in Schedule
4.28, Seller has not received any notice of alleged, actual or potential
responsibility for, or any inquiry or investigation regarding, (i) any
Release or threatened Release of any Hazardous Substance at the
Facilities or (ii) an alleged violation of or non-compliance with the
conditions of any Permit required under any Environmental Law or the
provisions of any Environmental Law. Except as set forth in Schedule
4.28, Seller has not received any notice of any other claim, demand or
Action by any individual or entity alleging any actual or threatened
injury or damage to any person, property, natural resource or the
environment arising from or relating to any Release or threatened
Release of any Hazardous Substances at, on, under, in, to or from any
Facilities, or in connection with any operations or activities thereat.
25
(d) INTENTIONALLY OMITTED.
(e) Environmental Audits or Assessments. True, complete
and correct copies of the written reports, and all parts thereof, of all
environmental audits or assessments which have been conducted at any
Facility within the past year, either by Seller or any attorney,
environmental consultant or engineer engaged by Seller for such purpose,
have been delivered to Buyer and a list of all such reports, audits and
assessments of which Seller has knowledge is included on the Disclosure
Schedule.
(f) Indemnification Agreements. Seller is not a party,
whether as a direct signatory or as successor, assign or third party
beneficiary, or otherwise bound, to any Lease or other Contract
(excluding insurance policies disclosed on the Disclosure Schedule)
under which Seller is obligated by or entitled to the benefits of,
directly or indirectly, any representation, warranty, indemnification,
covenant, restriction or other undertaking concerning environmental
conditions.
(g) Notices, Warnings and Records. To Seller's knowledge,
Seller has given all notices and warnings, made all reports, and has
kept and maintained all records required by and in compliance in all
material respects with all Environmental Laws.
4.29 INTENTIONALLY OMITTED.
4.30 Projections. The written estimates, projections and other
forecasts for the Business made available to Buyer in connection with
Buyer's investigation of the Business and the Assets were prepared in
good faith by Seller or Parent, as the case may be.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Parent and Seller as
follows, which representations and warranties are, as of the date
hereof, and will be, as of the Closing Date, true and correct:
5.1 Organization of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and is qualified to do business and in good standing
as a foreign corporation in the State of California.
5.2 Authorization. Buyer has all requisite corporate power and
authority, and has taken all corporate action necessary, to execute and
deliver this Agreement and the Ancillary Agreements, to consummate the
transactions contemplated hereby and thereby and to perform its
obligations hereunder and thereunder. The execution and delivery of
this Agreement and the Ancillary Agreements by Buyer and the
consummation by Buyer of the transactions contemplated hereby and
26
thereby have been duly approved by the board of directors of Buyer. No
other corporate proceedings on the part of Buyer are necessary to
authorize this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby. This Agreement has been
duly executed and delivered by Buyer and is, and upon execution and
delivery the Ancillary Agreements will be, legal, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their
terms, subject to bankruptcy, insolvency, reorganization, moratorium or
similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity which may limit
the availability of equitable remedies.
5.3 No Conflict or Violation. Neither the execution, delivery
or performance of this Agreement nor the consummation of the
transactions contemplated hereby, nor compliance by Buyer with any of
the provisions hereof, will (a) violate or conflict with any provision
of the Certificate of Incorporation or Bylaws of Buyer, (b) violate,
conflict with, or result in or constitute a Default under, or result in
the termination of, or accelerate the performance required by, or result
in a right of termination or acceleration under, or result in the
creation of any Encumbrance upon any of Buyer's assets under, any of the
terms, conditions or provisions of any contract, indebtedness, note,
bond, indenture, security or pledge agreement, commitment, license,
lease, franchise, permit, agreement, authorization, concession, or other
instrument or obligation to which Buyer is a party, (c) violate any
Regulation or Court Order.
5.4 Consents and Approvals. Except as set forth on Exhibit I
hereto and other than in connection with or in compliance with the
provisions of the HSR Act, no notice to, declaration, filing or
registration with, or authorization, consent or approval of, or permit
from, any domestic or foreign governmental or regulatory body or
authority, or any other person or entity, is required to be made or
obtained by Buyer in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
5.5 No Brokers. Neither Buyer nor any of its officers,
directors, employees, shareholders or affiliates has employed or made
any agreement with any broker, finder or similar agent or any person or
firm which will result in the obligation of Seller or Parent or any of
their respective affiliates to pay any finder's fee, brokerage fees or
commission or similar payment in connection with the transactions
contemplated hereby.
5.6 Lawsuits, Claims. Except as set forth in Schedule 5.6
hereto, there is no Action pending or, to the knowledge of Buyer,
threatened against Buyer which would materially impair or delay the
ability of Buyer to effect the Closing. Buyer is not subject to any
order, writ, judgment, award, regulatory authority of competent
jurisdiction or any arbitrator or arbitrators which would materially
impair or delay the ability of Buyer to effect the Closing.
5.7 Financial Capability. On the Closing Date, Buyer will have
sufficient funds to effect the Closing and all other transactions set
forth in this Agreement.
5.8 INTENTIONALLY OMITTED.
27
5.9 Projections. In connection with Buyer's investigation of the
Business and the Assets, Buyer has received from Seller and its
Representatives certain estimates, projections and other forecasts for
the Business. Buyer acknowledges that there are uncertainties inherent
in attempting to make such estimates, projections, forecasts, plans and
budgets, that Buyer is familiar with such uncertainties, that Buyer is
taking full responsibility for making its own evaluation of the adequacy
and accuracy of all estimates, projections, forecasts, plans and budgets
so furnished to it, and that Buyer will not assert any claim against
Seller or any of its Representatives or hold any of them liable, in
connection with such estimates, projections and forecasts.
ARTICLE VI
COVENANTS OF SELLER AND BUYER
Parent, Seller and Buyer each covenant with the other as follows:
6.1 Further Assurances. (a) Upon the terms and subject to the
conditions contained herein, the parties agree, both before and after
the Closing, (i) to use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement, (ii) to execute any documents,
instruments or conveyances of any kind which may be reasonably necessary
or advisable to carry out any of the transactions contemplated
hereunder, and (iii) to cooperate with each other in connection with the
foregoing. Without limiting the foregoing, the parties agree to use
their (i) respective best efforts to obtain all necessary waivers,
consents and approvals from other parties to the Leases to be assumed by
Buyer; provided, however, that Buyer shall not be required to make any
payments, commence litigation or agree to modifications of the terms
thereof in order to obtain any such waivers, consents or approvals, and
(ii) commercially reasonable efforts (A) to obtain all necessary Permits
as are required to be obtained under any Regulations, (B) to defend all
Actions challenging this Agreement or the consummation of the
transactions contemplated hereby, (C) to lift or rescind any injunction
or restraining order or other Court Order adversely affecting the
ability of the parties to consummate the transactions contemplated
hereby, (D) to give all notices to, and make all registrations and
filings with third parties, including without limitation submissions of
information requested by governmental authorities, and (E) to fulfill
all conditions to this Agreement. Within five (5) calendar days after
the execution and delivery of this Agreement, Buyer and Seller shall
make all filings required under the HSR Act, to the extent not
previously made.
(b) Notwithstanding anything herein to the contrary, the
parties agree to use their (i) best efforts to obtain all necessary
waivers, consents and approvals from other parties to the Contracts
listed on Schedule 1.1B; provided, however, that no party shall be
required to make any expenditures in the aggregate in excess of 5% of
the revenue generated under any such Contract nor shall any party be
required to commence litigation to obtain any such waivers, consents or
approvals and (ii) commercially reasonable efforts to obtain all
necessary waivers, consents and approvals from other parties to the
Contracts listed on Schedule 1.1C; provided, however, that no party
28
shall be required to make any payments, commence litigation or agree to
modifications of the terms thereof in order to obtain any such waivers,
consents or approvals. To the extent that any such waiver, consent or
approval to any Contract listed on Schedule 1.1C is not obtained, Seller
and Parent agree to use their commercially reasonable efforts to assist
Buyer in negotiating new contractual relationships with the other
parties to such Contracts, provided that none of Buyer, Seller or Parent
shall be required to make any payment or incur any Liability in
connection with such negotiations of new contracts or termination of any
prior contracts. Notwithstanding anything herein to the contrary, Buyer
shall have the right to reject the assignment of any distribution or
agency Contract of Seller within four months of the Closing Date.
6.2 No Solicitation.
(a) No Solicitation. From the date hereof through the
Closing or the earlier termination of this Agreement, each of Parent,
Seller and their Representatives shall not, and shall cause each of
their respective shareholders or Representatives (including without
limitation investment bankers, attorneys and accountants), not to,
directly or indirectly, enter into, solicit, initiate or continue any
discussions or negotiations with, or encourage or respond to any
inquiries or proposals by, or participate in any negotiations with, or
provide any information to, or otherwise cooperate in any other way
with, any corporation, partnership, person or other entity or group,
other than Buyer and its Representatives, concerning any sale of all or
a portion of the Assets or the Business, (each such transaction being
referred to herein as a "Proposed Acquisition Transaction"). Seller and
its subsidiaries shall not, directly or indirectly, through any officer,
director, employee, representative, agent or otherwise, solicit,
initiate or encourage the submission of any proposal or offer from any
person (including, without limitation, a "person" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) or entity
relating to any Proposed Acquisition Transaction. Seller hereby
represents that it is not now engaged in discussions or negotiations
with any party other than Buyer with respect to any of the foregoing.
Seller agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement related to the
Business to which Seller is a party.
6.3 Notification of Certain Matters. From the date hereof
through the Closing, each party shall give prompt notice to the other of
(a) the occurrence, or failure to occur, of any event which occurrence
or failure would be likely to cause any representation or warranty
contained in this Agreement or in any exhibit or schedule hereto to be
untrue or inaccurate in any material respect and (b) any failure of such
party, or any of its respective affiliates, or of any of their
respective shareholders or Representatives, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement or any exhibit or schedule hereto; provided,
however, that such disclosure shall not be deemed to cure any breach of
a representation, warranty, covenant or agreement or to satisfy any
condition.
Seller shall promptly notify Buyer of any Default, the threat or
commencement of any Action, or any development that occurs before the
Closing, in each case to the extent such event is reasonably expected to
have a material adverse effect on the Assets or the Business.
29
6.4 Investigation by Buyer.
Subject to the Confidentiality Agreement, from the date
hereof through the Closing Date:
(a) Seller shall, and shall cause its officers, directors,
employees and agents to, afford the Representatives of Buyer and its
affiliates complete access at all reasonable times to the Assets for the
purpose of inspecting the same, and to the officers, employees, agents,
attorneys, accountants, properties, Books and Records and Contracts of
Seller, and shall furnish Buyer and its Representatives all financial,
operating and other data and information as Buyer or its affiliates,
through their respective Representatives, may reasonably request.
(b)(i) Buyer shall have the right, at its sole cost and
expense to (A) conduct tests of the soil surface or subsurface waters
and air quality at, in, on, beneath or about the Leased Real Property,
and such other procedures as may be recommended by a designated employee
or an independent environmental consultant selected by Buyer (the
"Consultant") based on its reasonable professional judgment, in a manner
consistent with good engineering practice, (B) inspect records, reports,
permits, applications, monitoring results, studies, correspondence, data
and any other information or documents relevant to environmental
conditions or environmental noncompliance, and (C) inspect all buildings
and equipment at the Leased Real Property, including without limitation
the visual inspection of the Facilities for asbestos-containing
construction materials; provided, in each case, such tests and
inspections shall be conducted only (1) during regular business hours;
and (2) in a manner which will not unduly interfere with the operation
of the Business and/or the use of, access to or egress from the Leased
Property.
(ii) Buyer's right to conduct tests, inspect records
and other documents, and visually inspect all buildings and equipment at
the Leased Real Property shall also be subject to the following terms
and conditions:
(A) All testing performed on Buyer's behalf
shall be conducted by the Consultant or a designated employee;
(B) Seller shall have the right to accompany
the Consultant or designated employee as it performs testing;
(C) Except as otherwise required by law, any
information concerning the Leased Real Property gathered by Buyer or the
Consultant as the result of, or in connection with, the testing shall be
kept confidential in accordance with subsection (D) below and shall not
be revealed to, or discussed with, anyone other than Representatives of
Buyer or Representatives of Seller or Parent who agree to comply with
the provisions of subsection (D) below; and
(D) In the event that any party to this
Agreement or any party set forth in subsection (C) above is requested or
required to disclose information described in subparagraph (b)(i), Buyer
shall provide Seller or Seller shall provide Buyer, as the case may be,
30
with prompt notice of such request so that Seller or Buyer, as the case
may be, may seek an appropriate protective order or waiver of the other
party's compliance with this Agreement. If, in the absence of a
protective order or the receipt of a waiver hereunder, such party is
nonetheless, in the opinion of its counsel, compelled to disclose such
information to any tribunal or else stand liable for contempt or suffer
other censure or penalty, such party will furnish only that portion of
the information which is legally required and will exercise its
reasonable efforts to obtain reliable assurance that confidential
treatment will be afforded to the disclosed information. The
requirements of this subparagraph shall not apply to information in the
public domain or lawfully acquired on a nonconfidential basis from
others.
(E) Buyer shall promptly deliver to Seller
copies of all test and laboratory results and all reports by
environmental consultants regarding the environmental conditions at the
Leased Real Property.
(F) Buyer shall repair any damage to the
Leased Real Property resulting from Buyer's testing of the property, and
shall indemnify and hold harmless Seller from all costs and liabilities
arising out of such testing, which obligation and indemnity shall
survive the Closing Date or termination of this Agreement.
Provided, however, that unless such investigations reveal a
material breach of a representation or warranty of Seller, no information
obtained by Buyer as a result of such investigation shall relieve Buyer
of its obligations to complete the transactions contemplated by this
Agreement.
6.5 Conduct of Business. From the date hereof through the
Closing, Seller shall, except as contemplated by this Agreement, or as
consented to by Buyer in writing, operate the Business in the ordinary
course of business and in accordance with past practice and will not
take any action inconsistent with this Agreement or with the
consummation of the Closing. Without limiting the generality of the
foregoing, Seller shall not except as specifically contemplated by this
Agreement or as consented to by Buyer in writing:
(a) INTENTIONALLY OMITTED;
(b) enter into, extend, materially modify, terminate or
renew any Contract or Lease, except in the ordinary course of business;
(c) sell, assign, transfer, convey, lease, mortgage,
pledge or otherwise dispose of or encumber any of the Assets, or any
interests therein, except in the ordinary course of business and,
without limiting the generality of the foregoing, Seller and its
subsidiaries will produce, maintain and sell inventory consistent with
its past practices;
(d) INTENTIONALLY OMITTED;
(e) adopt, enter into or amend any collective bargaining
or employment agreement with any Employees;
31
(f) INTENTIONALLY OMITTED;
(g) INTENTIONALLY OMITTED;
(h) fail to expend funds for budgeted capital expenditures
or commitments;
(i) INTENTIONALLY OMITTED;
(j) INTENTIONALLY OMITTED;
(k) INTENTIONALLY OMITTED;
(l) fail to maintain the Assets in substantially their
current state of repair in accordance with industry practice, excepting
normal wear and tear or fail to replace consistent with Seller's past
practice inoperable, worn-out or obsolete Assets;
(m) INTENTIONALLY OMITTED;
(n) INTENTIONALLY OMITTED;
(o) fail to comply with all Regulations applicable to it,
to the extent that such failure has a material adverse effect on the
Assets or the Business;
(p) intentionally do any other act which would cause any
representation or warranty of Parent or Seller in this Agreement to be
or become untrue in any material respect;
(q) INTENTIONALLY OMITTED;
(r) fail to use its reasonable efforts to (i) retain the
Seller's employees and (ii) maintain the Business so that such employees
will remain available to Seller on and after the Closing Date,
(iii) maintain existing relationships with suppliers, customers and
others having business dealings with Seller and (iv) otherwise to
preserve the goodwill of the Business so that such relationships and
goodwill will be preserved on and after the Closing Date;
(s) INTENTIONALLY OMITTED; and
(t) enter into any agreement, or otherwise become
obligated, to do any action prohibited hereunder.
6.6 Employee Matters.
(a) Buyer shall extend offers of employment to Seller's
Employees listed on Schedule 6.6 (such Employees are hereinafter
referred to as the "Rehired Employees"), which offers shall be at
salaries at least equal to the current salaries of such Employees.
32
Schedule 6.6 sets forth the name of each Rehired Employee, the current
annual salary of each Rehired Employee and the number of years each
Rehired Employee has been employed by the Seller and predecessors in
business of Seller. The benefit plans provided to Rehired Employees
shall be substantially equivalent to those in effect for Buyer's
existing employees except for severance benefits and to the extent
permitted by such plans the Rehired Employees shall be credited for
purposes of determining benefits except severance benefits under all
such plans with all service with Seller or any predecessor in business
of Seller. As to any plan that does not currently permit recognition of
service with Seller for purposes of the plan, Buyer shall use its
reasonable efforts to effect any necessary plan amendments to permit
such recognition. Seller shall terminate the employment of all Rehired
Employees immediately prior to the Closing and shall cooperate with and
use its reasonable efforts to assist Buyer in its efforts to secure
satisfactory employment arrangements with those Employees of Seller to
whom Buyer makes offers of employment.
(b) Seller shall be solely responsible for all of the
Benefit Arrangements and all obligations and liabilities thereunder.
Buyer shall not assume any of the Benefit Arrangements or any obligation
or liability thereunder.
(c) Nothing contained in this Agreement shall confer upon
any Rehired Employee any right with respect to continuance of employment
by Buyer, nor shall anything herein interfere with the right of Buyer to
terminate the employment of any of the Rehired Employees at any time,
with or without cause, or restrict Buyer in the exercise of its
independent business judgment in modifying any of the terms and
conditions of the employment of the Rehired Employees. Notwithstanding
the foregoing, Buyer shall indemnify and hold harmless Parent, Seller
and their respective affiliates and subsidiaries from any salary related
severance benefits owed under any Benefit Arrangement to any Rehired
Employee discharged by Buyer for reasons other than cause in accordance
with Buyer's personnel policies within six months following the Closing.
Furthermore, in the event of a plant closing or mass layoff as defined
under the Worker Adjustment and Retraining Notification Act (or similar
applicable law ("WARN")), which arises solely as a result of Buyer not
making offers of employment to the employees listed on Schedule 6.6.
(d) No provision of this Agreement shall create any third
party beneficiary rights in any Rehired Employee, any beneficiary or
dependents thereof, or any collective bargaining representative thereof,
with respect to the compensation, terms and conditions of employment and
benefits that may be provided to any Rehired Employee by Buyer or under
any benefit plan which Buyer may maintain.
(e) Neither Parent nor Seller shall, directly or
indirectly, hire or offer employment to any Rehired Employee of Seller,
unless Buyer first terminates the employment of such Rehired Employee or
gives its written consent to such employment or offer of employment or
unless at least one year has elapsed from the date such Rehired Employee
resigned from employment by Buyer.
6.7 INTENTIONALLY OMITTED.
33
6.8 Parent Transfers. Parent shall, and shall cause all of its
subsidiaries to, transfer all right, title and interest in the Assets to
be transferred to Seller prior to the Closing.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions
provided for hereby are subject, in the discretion of Seller, to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by Seller:
7.1 Representations, Warranties and Covenants. All
representations and warranties of Buyer contained in this Agreement
shall be true and correct in all material respects at and as of the date
of this Agreement and at and as of the Closing Date, except as and to
the extent that the facts and conditions upon which such representations
and warranties are based are expressly required or permitted to be
changed by the terms hereof, and Buyer shall have performed and
satisfied in all material respects all agreements and covenants required
hereby to be performed by it prior to or on the Closing Date.
7.2 Consents; Regulatory Compliance and Approval. All consents,
approvals and waivers from governmental authorities and other parties
necessary to permit Seller to transfer the Assets to Buyer as
contemplated hereby shall have been obtained, unless the failure to
obtain any such consent, approval or waiver would not have a material
adverse effect upon Seller. The applicable waiting period, including
any extension thereof, under the HSR Act shall have expired.
7.3 No Actions or Court Orders. No Action by any governmental
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated
hereby and which could reasonably be expected to damage Seller
materially if the transactions contemplated hereby are consummated.
There shall not be any Regulation or Court Order that makes the purchase
and sale of the Business or the Assets contemplated hereby illegal or
otherwise prohibited.
7.4 Opinion of Counsel. Buyer shall have delivered to Seller an
opinion of counsel to Buyer, dated as of the Closing Date, in form and
substance reasonably satisfactory to Seller, to the effect that:
(a) Incorporation. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of
the State of Delaware;
(b) Corporate Power and Authority. Buyer has the
necessary corporate power and authority to enter into this Agreement and
the Ancillary Agreements and to consummate the transactions contemplated
hereby and thereby;
34
(c) Corporate Action and Enforceability. The execution,
delivery and performance of this Agreement and the Ancillary Agreements
by Buyer have been duly authorized by all necessary corporate action of
Buyer, and this Agreement and the Ancillary Agreements have been duly
executed and delivered by Buyer, and constitute legally valid and
binding obligations of Buyer, enforceable against Buyer in accordance
with their terms, except as limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors'
rights generally or by equitable principles (whether considered in an
action at law or in equity), (ii) limitations imposed by federal or
state law or equitable principles upon the availability of specific
performance, injunctive relief or other equitable remedies, or
(iii) other customary limitations reasonably satisfactory to Seller's
counsel;
(d) No Breach of Contracts. Neither the execution and
delivery of this Agreement or the Ancillary Agreements by Buyer nor the
consummation of the transactions contemplated hereby or thereby will (i)
violate the Certificate of Incorporation or Bylaws of Buyer, (ii) cause
a Default under any term or provision of any material contract known to
such counsel to which Buyer is a party, or (iii) to the best knowledge
of such counsel, violate any Court Order applicable to Buyer; and
(e) No Violation of Law. Neither the execution and
performance of this Agreement or the Ancillary Agreements by Buyer nor
the consummation of the transactions contemplated hereby or thereby will
violate or result in a failure to comply with any Regulation or Court
Order, applicable to Buyer; and, to the best knowledge of such counsel,
no Permit of, or filing with, any governmental authority is required for
the execution and delivery of this Agreement or the Ancillary Agreements
by Buyer or the consummation by Buyer of the transactions contemplated
hereby and thereby, except as set forth in this Agreement, the
Disclosure Schedule, the exhibits hereto or the Ancillary Agreements.
7.5 Certificates. Buyer shall furnish Seller with
such certificates of its officers and others to evidence compliance with
the conditions set forth in this Article VII as may be reasonably
requested by Seller.
7.6 Corporate Documents. Seller shall have received from Buyer
resolutions adopted by the board of directors of Buyer approving this
Agreement, the Ancillary Agreements and the transactions contemplated
hereby or thereby, certified by Buyer's corporate secretary.
7.7 Assumption Document. Buyer shall have executed the
Assumption Document.
7.8 Ancillary Agreements. Buyer shall have executed and
delivered the Ancillary Agreements to which Buyer is a party.
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATIONS
35
The obligations of Buyer to consummate the transactions
provided for hereby are subject, in the discretion of Buyer, to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by Buyer:
8.1 Representations, Warranties and Covenants. All
representations and warranties of Seller contained in this Agreement
shall be true and correct in all material respects at and as of the date
of this Agreement and at and as of the Closing Date, except as and to
the extent that the facts and conditions upon which such representations
and warranties are based are expressly required or permitted to be
changed by the terms hereof, and Seller shall have performed and
satisfied in all material respects all agreements and covenants required
hereby to be performed by it prior to or on the Closing Date.
8.2 Consents; Regulatory Compliance and Approval. All Permits,
consents, approvals and waivers from governmental authorities and other
parties necessary to the consummation of the transactions contemplated
hereby and for the operation of the Business by Buyer (including,
without limitation, all required third party consents to the assignment
of the Leases and Contracts to be assumed by Buyer but excluding the
Optional Consents) shall have been obtained. All approvals required
under any Regulations to carry out the transactions contemplated by this
Agreement shall have been obtained. The applicable waiting period,
including any extension thereof, under the HSR Act shall have expired.
8.3 No Actions or Court Orders. No Action by any governmental
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated
hereby and which could reasonably be expected to damage Buyer, the
Assets or the Business materially if the transactions contemplated
hereby are consummated, including without limitation any material
adverse effect on the right or ability of Buyer to own, operate, possess
or transfer the Assets after the Closing. There shall not be any
Regulation or Court Order that makes the purchase and sale of the
Business or the Assets contemplated hereby illegal or otherwise
prohibited.
8.4 Opinion of Counsel. Parent and Seller shall have delivered
to Buyer an opinion of counsel to Parent and Seller, dated as of the
Closing Date, in form and substance reasonably satisfactory to Buyer, to
the effect that:
(a) Incorporation. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of
the State of Delaware; Seller is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where
the ownership or leasing of its property or nature of the Business
requires such qualification, except where the failure to be so qualified
would not have a material adverse effect on the Business or the Assets;
(b) Corporate Power and Authority. Parent and Seller have
the necessary corporate power and authority to enter into this Agreement
and the Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby; and Seller has the necessary corporate
36
power and authority to own, lease and operate the Assets and its other
properties and to conduct the Business as presently conducted;
(c) Corporate Action and Enforceability. The execution,
delivery and performance of this Agreement and the Ancillary Agreements
by Seller have been duly authorized by all necessary corporate action of
Parent and Seller, and this Agreement and the Ancillary Agreements have
been duly executed and delivered by Parent and Seller, and no approval
of the stockholders of Parent or Seller is required in connection
therewith or, if required, such approval has been duly obtained in
accordance with the provisions of Parent or Seller's Certificate of
Incorporation and Bylaws and applicable law, and this Agreement and each
Ancillary Agreement constitute legally valid and binding obligations of
Parent and Seller, enforceable against Parent and Seller in accordance
with their terms, except as limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors'
rights generally or by equitable principles (whether considered in an
action at law or in equity), (ii) limitations imposed by federal or
state law or equitable principles upon the availability of specific
performance, injunctive relief or other equitable remedies, or (iii)
other customary limitations reasonably satisfactory to Buyer's counsel;
(d) No Breach of Contracts. Neither the execution and
delivery of this Agreement or the Ancillary Agreements by Seller nor the
consummation of the transactions contemplated hereby or thereby will (i)
violate the Certificate of Incorporation or Bylaws of Parent or Seller,
(ii) to the best knowledge of such counsel cause a Default under any
term or provision of any material Contract or Lease to which Seller is a
party or by which the Assets are bound, or (iii) to the best knowledge
of such counsel, violate any Court Order applicable to Parent or Seller;
(e) No Violation of Law. Neither the execution and
performance of this Agreement or the Ancillary Agreements by Parent or
Seller nor the consummation of the transactions contemplated hereby or
thereby will violate or result in a failure to comply with any
Regulation or Court Order applicable to the Business or operations of
Seller; and, to the best knowledge of such counsel, no Permit of, or
filing with, any governmental authority is required for the execution
and delivery of this Agreement or the Ancillary Agreements by Parent or
Seller or the consummation by either Parent or Seller of the
transactions contemplated hereby and thereby, except as set forth in
this Agreement, the Disclosure Schedule, the exhibits hereto or the
Ancillary Agreements;
(f) Transfer and Assignment. The documents to be
delivered by Seller at the Closing to effect the transfer and assignment
to Buyer of all right, title and interest in and to the Assets are
effective to do so, subject to (i) the effects of bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally and equitable principles (whether considered
in an action at law or in equity), (ii) limitations imposed by federal
or state law or equitable principles upon the availability of specific
performance, injunctive relief or other equitable remedies, or
(iii) other customary limitations reasonably satisfactory to Buyer's
counsel;
37
(g) No Breach of Contract. To the knowledge of such
counsel, Seller is not in Default under any term or provision of any
material Contract or Lease to be assumed by Buyer or other material
Contract to which Seller is a party or by which the Assets are bound,
except for such Defaults which will not have a material adverse effect
upon the Business or the Assets.
8.5 Certificates. Parent and Seller shall furnish Buyer with
such certificates of its officers and others to evidence compliance with
the conditions set forth in this Article VIII as may be reasonably
requested by Buyer.
8.6 Material Changes. Since the Interim Balance Sheet Date,
there shall not have been any material adverse change with respect to
the Business or the Assets.
8.7 Corporate Documents. Buyer shall have received from Seller
resolutions adopted by the boards of directors of Parent and Seller and
resolutions of Parent, for itself and as the shareholder of Seller,
approving this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby, certified by Parent's and
Seller's corporate secretary, as applicable.
8.8 Due Diligence Review. Buyer and its Representatives shall
have been permitted to conduct a due diligence review of Seller's Books
and Records, Financial Statements, and other records and accounts of the
Business. Such review shall have no effect whatsoever on the Liability
of Parent or Seller to Buyer under this Agreement or otherwise for
breach of any representations, warranties or covenants of Parent or
Seller or hereunder.
8.9 INTENTIONALLY OMITTED.
8.10 Conveyancing Documents; Release of Encumbrances. Seller
shall have executed and delivered each of documents described in Section
3.2 hereof so as to effect the transfer and assignment to Buyer of all
right, title and interest in and to the Assets and Seller shall have
filed (where necessary) and delivered to Buyer all documents necessary
to release the Assets from all Encumbrances other than Permitted
Encumbrances, which documents shall be in a form reasonably satisfactory
to Buyer's counsel.
8.11 INTENTIONALLY OMITTED.
8.12 Permits. Buyer shall have obtained or been granted the
right to use all Permits necessary to its operation of the Business.
8.13 Other Agreements. Parent and Seller shall have executed and
delivered the Ancillary Agreements in the forms attached as exhibits
hereto.
8.14 INTENTIONALLY OMITTED.
38
8.15 Tax Clearance Certificate. Seller shall provide Buyer with
a clearance certificate or similar document(s) that may be required by
any state taxing authority in order to relieve Buyer of any obligation
to withhold any portion of the Purchase Price.
ARTICLE IX
RISK OF LOSS; CONSENTS TO ASSIGNMENT
9.1 Risk of Loss. From the date hereof through the Closing
Date, all risk of loss or damage to the property included in the Assets
shall be borne by Seller, and thereafter shall be borne by Buyer. If
any portion of the Assets is destroyed or damaged by fire or any other
cause on or prior to the Closing Date, other than use, wear or loss in
the ordinary course of business, Seller shall give written notice to
Buyer as soon as practicable after, but in any event within five (5)
calendar days of, discovery of such damage or destruction, specifying
the amount of insurance, if any, covering such Assets and the amount, if
any, which Seller is otherwise entitled to receive as a consequence.
Prior to the Closing, Buyer shall have the option, which shall be
exercised by written notice to Seller within ten (10) calendar days
after receipt of Seller's notice or if there is not ten (10) calendar
days prior to the Closing Date, as soon as practicable prior to the
Closing Date, of (a) accepting such Assets in their destroyed or damaged
condition in which event Buyer shall be entitled to the proceeds of any
insurance or other proceeds payable with respect to such loss and the
full Purchase Price shall be paid for such Assets, (b) excluding such
Assets from this Agreement, in which event the Purchase Price shall be
reduced by the amount allocated to such Assets, as mutually agreed
between the parties or (c) terminating this Agreement in accordance with
Section 11.1. If Buyer accepts such Assets, then after the Closing, any
insurance or other proceeds shall belong, and shall be assigned to,
Buyer without any reduction in the Purchase Price; otherwise, such
insurance proceeds shall belong to Seller.
9.2 Consents to Assignment. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an
agreement to assign any Contract, Lease or Permit included in the Assets
or any claim or right or any benefit arising thereunder or resulting
therefrom if an attempted assignment thereof, without the consent of a
third party thereto, would constitute a Default thereof or in any way
adversely affect the rights of Buyer thereunder. If such consent is not
obtained, or if an attempted assignment thereof would be ineffective or
would affect the rights thereunder so that Buyer would not receive all
such rights, Seller will cooperate with Buyer, in accordance with
Sections 6.1(a) and (b) to provide to Buyer the benefits under any such
Contract, Lease, Permit or any claim or right, including without
limitation enforcement for the benefit of Buyer of any and all rights
of Seller against a third party thereto arising out of the Default or
cancellation by such third party or otherwise. Nothing in this Section
9.2 shall affect Buyer's right to terminate this Agreement under
Sections 8.2 and 11.1 in the event that any consent or approval to the
transfer of any Asset is not obtained.
ARTICLE X
39
ACTIONS BY SELLER AND BUYER
AFTER THE CLOSING
10.1 INTENTIONALLY OMITTED.
10.2 Books and Records; Tax Matters.
(a) Books and Records. Each party agrees that it will
cooperate with and make available to the other party, during normal
business hours, all Books and Records, information and employees
(without substantial disruption of employment) retained and remaining in
existence after the Closing which are necessary or useful in connection
with any tax inquiry, audit, investigation or dispute, any litigation or
investigation or any other matter requiring any such Books and Records,
information or employees for any reasonable business purpose. The party
requesting any such Books and Records, information or employees shall
bear all of the out-of-pocket costs and expenses (including without
limitation attorneys' fees) reasonably incurred in connection with
providing such Books and Records, information or employees. All
information received pursuant to this Section 10.2(a) shall be subject
to the terms of the Confidentiality Agreement.
(b) Cooperation and Records Retention. Seller and Buyer
shall (i) each provide the other with such assistance as may reasonably
be requested by any of them in connection with the preparation of any
return, audit, or other examination by any taxing authority or judicial
or administrative proceedings relating to Liability for Taxes, (ii) each
retain and provide the other with any records or other information that
may be relevant to such return, audit or examination, proceeding or
determination, and (iii) each provide the other with any final
determination of any such audit or examination, proceeding, or
determination that affects any amount required to be shown on any tax
return of the other for any period. Without limiting the generality of
the foregoing, Buyer and Seller shall each retain, until the applicable
statutes of limitations (including any extensions) have expired, copies
of all tax returns, supporting work schedules, and other records or
information that may be relevant to such returns for all tax periods or
portions thereof ending on or before the Closing Date.
(c) Payment of Liabilities. Following the Closing Date,
Seller shall pay promptly when due all of the debts and Liabilities of
Seller, including any Liability for Taxes, other than Assumed
Liabilities; provided, however, this covenant shall not apply to that
portion (or all) of any debt that Seller is contesting in good faith.
10.3 Survival of Representations, Etc. All of the
representations, warranties, covenants and agreements made by each party
in this Agreement or in any attachment, Exhibit, the Disclosure
Schedule, certificate, document or list delivered by any such party
pursuant hereto shall survive the Closing for a period of (and claims
based upon or arising out of such representations, warranties, covenants
and agreements may be asserted at any time before the date which shall
be) three years following the Closing except for the tax and
environmental representations which shall survive until the expiration
of the applicable statute of limitations (with extensions) with respect
to the matters addressed in such sections. Each party hereto shall be
40
entitled to rely upon the representations and warranties of the other
party set forth in this Agreement. The termination of the
representations and warranties provided herein shall not affect the
rights of a party in respect of any Claim made by such party in a
writing received by the other party prior to the expiration of the
applicable survival period provided herein.
10.4 Indemnifications.
(a) By Parent and Seller. Parent and Seller, jointly and
severally, shall indemnify, save and hold harmless Buyer, its affiliates
and subsidiaries, and its and their respective Representatives, from and
against any and all costs, losses (including without limitation
diminution in value), Taxes, Liabilities, obligations, damages,
lawsuits, deficiencies, claims, demands, and expenses (whether or not
arising out of third-party claims), including without limitation
interest, penalties, costs of mitigation, losses in connection with any
Environmental Law (including without limitation any clean-up or remedial
action), damages to the environment, attorneys' fees and all amounts
paid in investigation, defense or settlement of any of the foregoing
(herein, "Damages"), incurred in connection with, arising out of,
resulting from or incident to (i) any breach of any representation or
warranty or the inaccuracy of any representation, made by Parent or
Seller in or pursuant to this Agreement; (ii) any breach of any covenant
or agreement made by Seller in or pursuant to this Agreement; (iii) any
Excluded Liability or (iv) any Liability imposed upon Buyer by reason of
Buyer's status as transferee of the Business or the Assets.
The term "Damages" as used in this Section 10.4 is not
limited to matters asserted by third parties against Seller or Buyer,
but includes Damages incurred or sustained by Seller or Buyer in the
absence of third party claims. Payments by Buyer of amounts for which
Buyer is indemnified hereunder, and payments by Seller of amounts for
which Seller is indemnified, shall not be a condition precedent to
recovery. Except for the rights to specific performance set forth in
Section 11.15, Seller's obligation to indemnify Buyer, and Buyer's
obligation to indemnify Seller, shall be the exclusive remedy of the
parties for any claim arising under or related to the execution,
delivery and performance of this Agreement. The amount of any Damages
for which indemnification is provided to Buyer hereunder shall be
computed net of the (i) proceeds of any insurance received by the
Indemnified Party to the extent that such insurance was funded by Seller
or any of its affiliates and (ii) amount of any tax benefit actually
realized by the Indemnified Party with respect to the matter which was
the basis for the Damages for which indemnification is sought.
(b) By Buyer. Buyer shall indemnify and save and hold
harmless Parent, Seller, their respective affiliates and subsidiaries,
and their respective Representatives from and against any and all
Damages incurred (i) in connection with, arising out of, resulting from
or incident to (x) any breach of any representation or warranty or the
inaccuracy of any representation, made by Buyer in or pursuant to this
Agreement; (y) any breach of any covenant or agreement made by Buyer in
or pursuant to this Agreement; or (z) from and after the Closing, any
Assumed Liability; (ii) solely as a result of the operation of the
Business or use of the Assets by Buyer after the Closing and not related
to any breach of warranty or representation by Seller under this
Agreement; or (iii) in connection with, arising out of, resulting from
41
or incident to the Lease relating to the property located at ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇, provided that such claim does not arise out
of, result from or is not incident to, any breach of any representation
or warranty made by Seller pursuant to this Agreement.
(c) Cooperation. The indemnified party shall cooperate in
all reasonable respects with the indemnifying party and such
indemnifying party's attorneys in the investigation, trial and defense
of such lawsuit or action and any appeal arising therefrom; provided,
however, that the indemnified party may, at its own cost, participate in
the investigation, trial and defense of such lawsuit or action and any
appeal arising therefrom. The parties shall cooperate with each other
in any notifications to insurers.
(d) Defense of Claims. If a claim for Damages (a "Claim")
is to be made by a party entitled to indemnification hereunder against
the indemnifying party, the party claiming such indemnification shall
give written notice (a "Claim Notice") to the indemnifying party as soon
as practicable after the party entitled to indemnification becomes aware
of any fact, condition or event which may give rise to Damages for which
indemnification may be sought under this Section 10.4. If any lawsuit
or enforcement action is filed against any party entitled to the benefit
of indemnity hereunder, written notice thereof shall be given to the
indemnifying party as promptly as practicable (and in any event within
fifteen (15) calendar days after the service of the citation or
summons). The failure of any indemnified party to give timely notice
hereunder shall not affect rights to indemnification hereunder, except
to the extent that the indemnifying party demonstrates actual damage
caused by such failure. After such notice, if the indemnifying party
shall acknowledge in writing to the indemnified party that the
indemnifying party shall be obligated under the terms of its indemnity
hereunder in connection with such lawsuit or action, then the
indemnifying party shall be entitled, if it so elects at its own cost,
risk and expense, (i) to take control of the defense and investigation
of such lawsuit or action, (ii) to employ and engage attorneys of its
own choice to handle and defend the same, and (iii) to compromise or
settle such claim, provided that any compromise or settlement which
results in the indemnified party becoming subject to injunctive relief
or that otherwise adversely affects the business of the indemnified
party shall be made only with the written consent of the indemnified
party, such consent not to be unreasonably withheld. If the
indemnifying party fails to assume the defense of such claim within
fifteen (15) calendar days after receipt of the Claim Notice, the
indemnified party against which such claim has been asserted will (upon
delivering notice to such effect to the indemnifying party and the
indemnifying party not assuming such defense within 15 days of such
notice) have the right to undertake, at the indemnifying party's cost
and expense, the defense, compromise or settlement of such claim on
behalf of and for the account and risk of the indemnifying party. In
the event the indemnified party assumes the defense of the claim, the
indemnified party will keep the indemnifying party reasonably informed
of the progress of any such defense, compromise or settlement. The
indemnifying party shall be liable for any settlement of any action
effected pursuant to and in accordance with this Section 10.4 and for
any final judgment (subject to any right of appeal), and the
indemnifying party agrees to indemnify and hold harmless an indemnified
party from and against any Damages by reason of such settlement or
judgment.
42
(e) Right of Offset. Anything in this Agreement to the
contrary notwithstanding, Buyer may withhold and set off against any
other amounts otherwise due Seller, including without limitation amounts
owing pursuant to the Holdback Note, any amount as to which Seller is
obligated to indemnify Buyer pursuant to any provision of this Section
10.4 and Seller may withhold and set off against any other amounts
otherwise due Buyer any amount as to which Buyer is obligated to
indemnify Seller pursuant to Section 10.4(b)(iii).
(f) Product and Warranty Liability. The provisions of
this Section 10.4 shall cover, without limitation, all Liabilities of
whatsoever kind, nature or description relating, directly or indirectly,
to product liability, litigation or claims against Buyer or Seller in
connection with, arising out of, or relating to products sold or shipped
from the Facilities by Buyer or Seller, respectively.
(g) Brokers and Finders. Pursuant to the provisions of
this Section 10.4, each of Buyer and Seller shall indemnify, hold
harmless and defend the other party from the payment of any and all
broker's and finder's expenses, commissions, fees or other forms of
compensation which may be due or payable from or by the indemnifying
party, or may have been earned by any third party acting on behalf of
the indemnifying party in connection with the negotiation and execution
hereof and the consummation of the transactions contemplated hereby.
(h) Limitations. Neither Buyer nor Seller shall be liable
to the other under this Section 10.4 for any Damages until any
individual amount otherwise due the party being indemnified exceeds
[ ** ] and the aggregate amount
otherwise due the party being indemnified exceeds an accumulated total
of [ ** ] , and then only to
the extent of such excess; provided, however, that neither Buyer nor
Seller shall, in any event, have any obligation to indemnify and hold
harmless the other under this Section 10.4 for any amount in excess of
[ ** ] except for claims based upon
violations of the representations of Seller and Parent contained in
Section 4.13, Section 4.21 and Section 4.28.
(i) Representatives. No individual Representative of any
party shall be personally liable for any Damages under the provisions
contained in this Section 10.4. Nothing herein shall relieve either
party of any Liability to make any payment expressly required to be made
by such party pursuant to this Agreement.
10.5 INTENTIONALLY OMITTED.
10.6 Holdback Amount. Buyer and Seller agree and acknowledge
that offset against the Holdback Amount shall not be Buyer's exclusive
method of receiving indemnification from Seller pursuant to Section 10.4.
10.7 Bulk Sales. It may not be practicable to comply or attempt
to comply with the procedures of the "Bulk Sales Act" or similar law of
any or all of the states in which the Assets are situated or of any
other state which may be asserted to be applicable to the transactions
[ ** ] This material has been omitted pursuant to a request
for confidential treatment. The material has been filed
separately with the Commission.
43
contemplated hereby. Accordingly, to induce Buyer to waive any
requirements for compliance with any or all of such laws, Seller hereby
agrees that the indemnity provisions of Section 10.4 hereof shall apply
to any Damages of Buyer arising out of or resulting from the failure of
Seller or Buyer to comply with any such laws.
10.8 Taxes. Subject to Section 2.6, Parent and Seller shall pay,
or cause to be paid, when due all Taxes for which Seller is or may be
liable or that are or may become payable with respect to all taxable
periods ending on or prior to the Closing Date.
10.9 Insurance. For six (6) years after the Closing Date, Seller
or Parent shall continue to maintain products liability insurance with
respect to products insured as of the Closing Date providing
substantially the same coverage as in effect on the date hereof and
Seller shall cause Buyer to be named as an additional insured on each
such policy.
10.10 Name. Parent hereby grants to Buyer, effective as of the
Closing Date, the right to use the name "Chiron" on existing packaging,
stationery, purchase order forms, advertising, literature and the like
until the supply of such material is exhausted.
10.11 Collection of Receivables. Buyer shall cooperate with
Seller at Seller's expense in the collection of accounts receivable of
customers of the Business that are not transferred to Seller and shall
promptly remit to Seller any payments received by Buyer on account of
any invoice for goods shipped on or prior to the Closing Date. Seller
shall promptly remit to Buyer any payments received by Seller on account
of any invoice for goods shipped after the Closing Date.
10.12 Supply of Products. Schedules 1.1B and 1.1C list certain
commitments of Seller and its subsidiaries to provide products
manufactured at the Facilities ("Products") to third parties (the
"Commitments"). A true, correct and complete copy of each document or
agreement reflecting such Commitments has been provided to Buyer. If
notwithstanding the provisions of Section 6.1(b) any party does not
consent to assignment or cancellation of the Contracts set forth on
Schedules 1.1B and 1.1C, from and after the Closing Buyer shall supply
to Seller the Products required to be supplied to such party for the
required period under any such Contract, at the price at which Seller is
required to supply such product to such party less 8% provided, however,
that in no event shall Buyer be required to supply Products to Seller at
a price below Seller's standard cost.
ARTICLE XI
MISCELLANEOUS
11.1 Termination.
(a) Termination. This Agreement may be terminated at any
time prior to Closing:
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(i) By mutual written consent of Buyer and Seller;
(ii) By Buyer or Seller if the Closing shall not have
occurred on or before December 19, 1997; provided however, that this
provision shall not be available to Buyer if Seller has the right to
terminate this Agreement under clause (iv) of this Section 11.1, and
this provision shall not be available to Seller if Buyer has the right
to terminate this Agreement under clause (iii) of this Section 11.1;
(iii) By Buyer if there is a material breach of any
representation or warranty set forth in Article IV hereof or any
covenant or agreement to be complied with or performed by Parent or
Seller pursuant to the terms of this Agreement or the failure of a
condition set forth in Article VIII to be satisfied (and such condition
is not waived in writing by Buyer) on or prior to the Closing Date, or
the occurrence of any event which results or would result in the failure
of a condition set forth in Article VIII to be satisfied on or prior to
the Closing Date, provided that, Buyer may not terminate this Agreement
prior to the Closing if Seller has not had an adequate opportunity to
cure such failure; or
(iv) By Seller if there is a material breach of any
representation or warranty set forth in Article V hereof or of any
covenant or agreement to be complied with or performed by Buyer pursuant
to the terms of this Agreement or the failure of a condition set forth
in Article VII to be satisfied (and such condition is not waived in
writing by Seller) on or prior to the Closing Date, or the occurrence of
any event which results or would result in the failure of a condition
set forth in Article VII to be satisfied on or prior to the Closing
Date; provided that, Seller may not terminate this Agreement prior to
the Closing Date if Buyer has not had an adequate opportunity to cure
such failure.
(b) In the Event of Termination. In the event of
termination of this Agreement:
(i) Each party will redeliver all documents, work
papers and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before or after
the execution hereof, to the party furnishing the same;
(ii) The provisions of the Confidentiality Agreement
shall continue in full force and effect; and
(iii) No party hereto shall have any Liability to any
other party to this Agreement, except as stated in subsections (i), (ii)
and (iii) of this Section 11.1(b), except for any willful breach of this
Agreement occurring prior to the proper termination of this Agreement.
The foregoing provisions shall not limit or restrict the availability of
specific performance or other injunctive relief to the extent that
specific performance or such other relief would otherwise be available
to a party hereunder.
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11.2 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by any party without the prior
written consent of the other parties; except that (i) Buyer may, without
such consent, assign all such rights to any lender as collateral
security and assign all such rights and obligations to a wholly owned
subsidiary (or a partnership controlled by Buyer) or subsidiaries of
Buyer which shall assume all obligations and Liabilities of Buyer under
this Agreement (provided that Buyer shall remain responsible for the due
performance of such obligations), (ii) Seller may assign its rights and
obligations hereunder insofar as such rights and obligations relate to
Assets held by a Subsidiary of Seller to such Subsidiary (provided that
Seller and Parent shall remain responsible for the due performance of
such obligations by such Subsidiary), and (iii) either party may assign
all rights and obligations hereunder to a purchaser of all or
substantially all of the assets of such party or to a successor in
interest to such party which shall assume all obligations and
Liabilities of such party under this Agreement. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted
assigns, and no other person shall have any right, benefit or obligation
under this Agreement as a third party beneficiary or otherwise.
11.3 Notices; Transfer of Funds. All notices, requests, demands
and other communications which are required or may be given under this
Agreement shall be in writing and shall be deemed to have been duly
given when received. In each case notice shall be sent to:
If to Parent or Seller, addressed to:
Chiron Diagnostics Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
with a copy to: Chiron Diagnostics Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Legal Department
If to Buyer, addressed to:
Bio-Rad Laboratories, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
or to such other place and with such other copies as either party may
designate as to itself by written notice to the others.
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Payments to be made to Seller hereunder shall be made by
wire transferred funds to be delivered to Seller's account number
12335223422 at Bank of America San Francisco, ABA Number ▇▇▇▇▇▇▇▇▇ or to
such other account or place as Seller may designate by written notice as
provided herein. Payments to be made to Buyer hereunder shall be made
by wire transferred funds to be delivered to Buyer's account number
▇▇▇▇▇▇▇ at First Chicago, Chicago, Illinois; ABA Number ▇▇▇▇▇▇▇▇▇ or to
such other account or place as Buyer may designate by written notice as
provided herein.
11.4 Choice of Law. This Agreement shall be construed,
interpreted and the rights of the parties determined in accordance with
the laws of the State of California, without reference to the choice of
law provisions of any other state.
11.5 Entire Agreement; Amendments and Waivers. This Agreement,
the Ancillary Agreements, together with all exhibits and schedules
hereto and thereto (including the Disclosure Schedule), and the
Confidentiality Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral
or written, of the parties. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
No amendment, supplement, modification or waiver of this Agreement shall
be binding unless executed in writing by the party to be bound thereby.
No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
11.6 INTENTIONALLY OMITTED.
11.7 Multiple Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
11.8 Expenses. Except as otherwise specified in this Agreement,
each party hereto shall pay its own legal, accounting, out-of-pocket and
other expenses incident to this Agreement and to any action taken by
such party in preparation for carrying this Agreement into effect.
11.9 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument
referred to herein, shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, then to the maximum extent
permitted by law, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement or any other such
instrument.
11.10 Titles; Gender. The titles, captions or headings of the
Articles and Sections herein, and the use of a particular gender, are
for convenience of reference only and are not intended to be a part of
or to affect or restrict the meaning or interpretation of this Agreement.
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11.11 Publicity. The parties hereto covenant and agree that,
except as provided for hereinbelow, each will not from and after the
date hereof make, issue or release any public announcement, press
release, statement or acknowledgment of the existence of, or reveal
publicly the terms, conditions and status of, the transactions provided
for herein, without the prior written consent of the other party as to
the content and time of release of and the media in which such statement
or announcement is to be made; provided, however, that in the case of
announcements, statements, acknowledgments or revelations which either
party is required by law to make, issue or release, the making, issuing
or releasing of any such announcement, statement, acknowledgment or
revelation by the party so required to do so by law shall not constitute
a breach of this Agreement if such party shall have given, to the extent
reasonably possible, not less than two (2) calendar days prior notice to
the other party, and shall have attempted, to the extent reasonably
possible, to clear such announcement, statement, acknowledgment or
revelation with the other party. Each party hereto agrees that it will
not unreasonably withhold any such consent or clearance.
11.12 INTENTIONALLY OMITTED.
11.13 Cumulative Remedies. Except as otherwise expressly provided
herein, all rights and remedies of either party hereto are cumulative of
each other and of every other right or remedy such party may otherwise
have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent
exercise of other rights or remedies.
11.14 Service of Process, Consent to Jurisdiction.
(a) Service of Process. Each party hereto irrevocably
consents to the service of any process, pleading, notices or other
papers by the mailing of copies thereof by registered or certified,
postage prepaid, to such party at such party's address set forth herein,
or by any other method provided or permitted under California or
Massachusetts law.
(b) Consent and Jurisdiction. Each party hereto
irrevocably and unconditionally (1) agrees that any suit, action or
other legal proceeding arising out of this Agreement may be brought in
the United States District Court for the Northern District of California
or, if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in California;
(2) consents to the jurisdiction or any such court in any such suit,
action or proceeding; and (3) waives any objection which such
Shareholder may have to the laying of venue of any such suit, action or
proceeding in any such court.
11.15 Specific Performance. The parties acknowledge that the
subject matter of this Agreement (i.e., the Assets of Seller) is unique
and that no adequate remedy at law would be available for breach of this
Agreement. Accordingly, each party agrees that the other parties will
be entitled to an appropriate decree of specific performance or other
equitable remedies to enforce this Agreement (without any bond or other
security being required) and each party waives the defense in any action
or proceeding brought to enforce this Agreement that there exists an
adequate remedy at law.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on their respective behalf, by their
respective officers thereunto duly authorized, all as of the day and
year first above written.
Chiron Corporation Bio-Rad Laboratories, Inc.
By /s/ ▇.▇. ▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Senior Vice President Its Vice President and Secretary
Chiron Diagnostics Corporation
By /s/ ▇.▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its President