PURCHASE AGREEMENT
between
BASF AKTIENGESELLSCHAFT
67056 LUDWIGSHAFEN
("Seller")
on the one hand
and
ABBOTT LABORATORIES
("Purchaser")
on the other hand
DEFINITIONS
"ACCRUED TAXES" shall mean currently payable Tax liabilities and provisions for
deferred Tax liabilities;
"ACTIVE INGREDIENTS" shall mean active chemical substances intended for use in
Pharmaceutical Products and any intermediates of such active chemical
substances;
"ACTUAL KNOWLEDGE OF SELLER" shall have the meaning described in Section 14.3;
"AFFILIATES" shall mean any company or other entity which is an affiliated
company within the meaning of Sections 15 ET SEQ. Aktiengesetz (German Stock
Corporation Act);
"AGGREGATE PURCHASE PRICE" shall have the meaning as described in Section 8.1;
"ASSIGNMENTS" shall have the meaning as described in Section 12.1;
"BASF PHARMACEUTICAL BUSINESS" shall mean the business activities conducted by
Seller and its Affiliates within the BASF Pharmaceutical Field;
"BASF PHARMACEUTICAL FIELD" shall mean the research, development, importation,
use, registration, manufacture, distribution or sale of (a) BASF Pharmaceutical
Products and (b) Exclusive Active Ingredients and Mutual Active Ingredients but
excluding the BASF Pharmachemical Field;
"BASF PHARMACEUTICAL PRODUCTS" shall mean Pharmaceutical Products being
researched, developed, imported, used, registered, manufactured, distributed or
sold by Seller or any of its Affiliates, including the Companies, as of the date
of this Agreement or the Closing, including without limitation (a) the products
listed in Exhibit 13.27(a) and clinical compounds listed in Exhibit 13.27(b) and
(b) all line extensions and generic versions of the foregoing provided, however,
that BASF Pharmaceutical Products shall not include the finished pharmaceutical
products that are manufactured as of the date hereof at Knoll AG's production
facility in Uetersen, Germany;
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"BASF PHARMACHEMICAL BUSINESS" shall mean the business activities conducted by
Seller and its Affiliates within the BASF Pharmachemical Field;
"BASF PHARMACHEMICAL FIELD" shall mean the Pharmachemical Field but excluding
any Exclusive Active Ingredients;
"BEST KNOWLEDGE OF SELLER" shall have the meaning as described in Section 14.3;
"BPC" shall have the meaning as described in Section 1.1;
"BPC SUBSIDIARIES" shall have the meaning as described in Section 1.2;
"CASH" shall mean liquid funds and non-trade receivables from Affiliates;
"CLOSING CONDITIONS" shall have the meaning as described in Section 11.1.1;
"CLOSING NET ASSET VALUE" shall have the meaning as described in Section 9.1(b);
"CLOSING NET ASSET VALUE STATEMENT" shall have the meaning as described in
Section 10.1;
"COMPANIES" shall have the meaning as described in Section 13.1;
"CONVERSION EXCHANGE RATES" shall mean the local currency exchange rates in
effect on the second day prior to Closing, as reported on the Reuters screen at
approximately 9:00AM CST.;
"D2E7" shall mean the compound known as D2E7, and any Pharmaceutical Product
that includes D2E7 as an Active Ingredient;
"DAMAGES" shall have the meaning given to it in Sections 249 et seq. of the
German Civil Code;
"DISCONTINUED/EXCLUDED BUSINESSES" shall mean any or all of the businesses,
operations, personnel and assets of the Seller or any Affiliate of Seller,
including Knoll AG and the Companies (or any predecessor thereof), that prior to
the Closing Date were or are in the process of being (i) closed, wound-up or
otherwise terminated, (ii) ceased to be used in connection with such business or
operations, or (iii) sold or otherwise disposed of to any third person or
entity. Such Discontinued/Excluded Businesses shall include, without limitation,
(a) the Uetersen Business as well as any other businesses of Knoll AG other than
the Knoll Business, (b) the site, operations and businesses conducted at the
site in Nottingham, U.K., (c) the Generics Business as described in Exhibit A
hereto and (d) BASF Pharmachemikalien GmbH & Co. KG.
"DISCONTINUED/EXCLUDED BUSINESSES LIABILITIES" means, except as otherwise
expressly provided for in this Agreement, any and all obligations, liabilities
and expenses arising out of or associated with, or alleged to arise out of or be
associated with, the Discontinued/Excluded Businesses, including, without
limitation, any of the foregoing arising under any applicable environmental
laws, with respect to the employment or termination of employment of any
individual, or under or with respect to any employee benefit plan or program,
including pension, disability, post-retirement medical or severance or income
continuation plan;
"DISPUTED ITEM" shall have the meaning as described in Section 10.4;
"EMPLOYEES" shall mean all individuals who are employed by the Companies on the
Closing Date;
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"EXCLUSIVE ACTIVE INGREDIENTS" shall mean all Active Ingredients used in any
BASF Pharmaceutical Product other than the Mutual Active Ingredients. The
material Exclusive Active Ingredients are described on Exhibit 13.27(c);
"FINANCIAL DEBT" shall mean financial indebtedness and non-trade liabilities to
Affiliates;
"GROUP PENSION ARRANGEMENT" shall mean a pension plan or vehicle for the
financing and administration of pension promises which is used by the Seller and
its Affiliates in a particular country for providing pension benefits and in
which the Companies participate in connection with providing pension benefits to
their respective employees, except for the Seller U.S. Defined Benefit Plans;
"GROUP PENSION TRANSFER AMOUNT" shall have the meaning as described in Section
23.3;
"HOKURIKU SHARES" shall mean the shares in Hokuriku Seiyaku K. K., a stock
corporation organised under Japanese law, held by Transpharm GmbH and Lupharma
GmbH in the amounts and as described on Exhibit 2;
"INDIA SHARES" shall mean the shares in Knoll Pharmaceuticals LTD India, a stock
corporation organised under Indian law;
"INTERCOMPANY AGREEMENTS" shall mean the agreements listed in Exhibit 13.10
hereto;
"KNOLL AG" shall have the meaning as described in Section 3.1.1;
"KNOLL BUSINESS" shall have the meaning as described in Section 3.2;
"KNOLL BUSINESS EMPLOYEES" shall have the meaning as described in Section 29.3;
"MATERIAL ADVERSE EFFECT" shall mean any event, change, circumstance or effect
that, individually or in the aggregate, is, or could reasonably be expected to
be (a) materially adverse to the BASF Pharmaceutical Business, or the assets,
operations , results of operations, financial condition of the BASF
Pharmaceutical Business, taken as a whole, other than any event, change,
circumstance or effect relating (x) to the economy in general, or (y) in general
to the pharmaceutical industry and not specifically relating to the BASF
Pharmaceutical Business, or the transactions contemplated by this Agreement;
"MUTUAL ACTIVE INGREDIENTS" shall mean the Active Ingredients manufactured by
Seller or its Affiliates as of the date of this Agreement which are used in both
BASF Pharmaceutical Products and other Pharmaceutical Products of third parties
as described in Exhibit 13.27(c);
"OTHER FOREIGN SUBSIDIARIES" shall have the meaning as described in Section 2;
"PAKISTAN SHARES" shall mean the shares in Knoll Pharmaceuticals LTD Pakistan, a
stock corporation organised under Pakistan law;
"PARTNERSHIP" shall have the meaning as described in Section 4.1;
"PENSION ARRANGEMENT" shall mean a defined benefit pension promise which has
been made by any of the Companies on an individual, collective or local labor
law basis to one or more of their employees prior to Closing, including
pension-type indemnities provided upon retirement on a mandatory basis as, for
example in Austria, Italy and France, supplemental executive retirement
programs, defined benefit cash balance plans, seniority awards, disability
pension benefits, survivor
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pension benefits, early or accelerated retirement arrangements and
post-employment medical benefits, but excluding purely defined contribution
promises such as, for example, 401(k) plans;
"PENSION LIABILITIES" shall mean the liabilities under Pension Arrangements
pertaining to the BASF Pharmaceutical Business whether organized under either
internally or externally financed arrangements, which are transferred to and
assumed by Purchaser, but excluding the pension liabilities which are financed
via the BASF Pensionskasse VVaG. Such obligations shall be determined as of the
Closing valued as the Projected Benefit Obligation on an FAS 87, 106 or 112
basis, as applicable (or, if FAS 87, 106 or 112 is not applicable, using
accounting principles consistent with FAS 87, 106, or 112, as appropriate) using
the Projected Unit Credit Method (PUC) based on plan provisions as in effect at
Closing and applying the following economic assumptions for Pension Arrangements
in Germany, the USA and Japan:
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*** *** *** ***
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Germany *** *** *** ***
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U.S.A. *** *** *** ***
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Japan Hokuriku *** *** *** ***
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All other assumptions for Pension Arrangements in such countries and all
assumptions for Pension Arrangements in other countries shall be mutually agreed
upon by Purchaser and Seller within 45 days after the date of this Agreement. If
Purchaser and Seller have not agreed within said 45 day period on such
assumptions to be applied, then within an additional five days they shall
appoint a mutually acceptable actuary who shall establish those assumptions
prior to Closing; provided, however, that in establishing those assumptions the
actuary shall be limited to selecting on a plan by plan basis either the
assumptions proposed by Purchaser or the assumptions proposed by Seller. The
costs of the actuary shall be borne jointly by Seller and Purchaser.
"PHARMACEUTICAL FIELD" shall mean the research, development, importation, use,
registration, manufacture, distribution or sale of Pharmaceutical Products;
"PHARMACEUTICAL PRODUCTS" shall mean drug products in finished form for human or
animal use;
"PHARMACHEMICAL FIELD" shall mean (a) the research, development, importation,
use, registration, manufacture, distribution, physical or galenic processing or
sale of Active Ingredients and (b) custom manufacturing for third parties of
Pharmaceutical Products other than BASF Pharmaceutical Products not based upon
Mutual Active Ingredients;
"REFERENCE NET ASSET VALUE" shall have the meaning as described in Section
9.1(a);
"REMAINING PATENTS" shall have the meaning as described in Section 5.2;
"SEPARATE SALE AND TRANSFER CONTRACTS" shall have the meaning as described in
Section 7.1;
"SHARED SUBSTANCES" shall have the meaning as described in Section 5.3;
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*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
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"SHARED SUBSTANCE RELATED PATENTS" shall have the meaning as described in
Section 5.4;
"SHARES" shall have the meaning as described in Section 6.2;
"SHARES/INTERESTS VERWALTUNGS-GMBH/PARTNERSHIP" shall have the meaning as
described in Section 6.1;
"STRADDLE PERIOD" shall mean any taxable period beginning on or before and
ending after the Closing Date;
"STRUCTURE OPTION" shall have the meaning as described in Section 7 (A) 1;
"TAX" OR "TAXES" shall mean all taxes of any kind imposed by a federal, state,
local or foreign governmental authority, and any payments made to another party
pursuant to a tax sharing arrangement, indemnity or other similar arrangement,
including but not limited to those on, or measured by or referred to as income,
gross receipts, financial operation, sales, use, AD VALOREM, value added,
franchise, profits, license, withholding, payroll (including all contributions
or premiums pursuant to industry or governmental social security laws or
pursuant to other tax laws and regulations), employment, excise, severance,
stamp, occupation, premium, property, transfer or windfall profit taxes,
customs, duties or similar fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by such governmental authority with respect to such amounts;
"TAX ASSETS" shall mean all deferred tax assets valued according to U.S. GAAP
including, but not limited to, those resulting from loss carry forwards or
credit carry forwards, as far as they relate to the BASF Pharmaceutical Business
and are not used up by Seller prior to Closing;
"TRANSACTIONS" or "TRANSACTIONS" contemplated by this Agreement shall include
without limitation, the Demerger and the transactions contemplated by the
Demerger, the Merger, the transfer of the Shares and the transfer of the
Transferred Patents;
"TRANSFERRED PATENTS" shall have the meaning as described in Section 5.1;
"UETERSEN BUSINESS" shall mean the business activities conducted as of the date
hereof by Knoll AG at its production facility in Uetersen, Germany;
"U.S. EMPLOYEES" shall mean all individuals who are employed by the Companies on
the Closing Date in the United States;
"VERWALTUNGS-GMBH" shall have the meaning as described in Section 4.1.
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I.
DESCRIPTION OF SHARES AND ASSETS
SECTION 1
US SUBSIDIARIES
1.1 BASF Pharma Corporation is a corporation validly existing under
the laws of the State of Delaware with 1,000 issued shares with no
par value (hereinafter referred to as "BPC"). All such issued
shares are directly or indirectly owned by Seller as described in
Exhibit 1.1.
1.2 BPC has direct or indirect legal ownership of the participations
in the companies which are set forth in Exhibit 1.2 (hereinafter
referred to as "BPC Subsidiaries").
SECTION 2
OTHER FOREIGN SUBSIDIARIES
Seller has direct or indirect legal ownership of the participations in the
companies and other entities which are set forth in Exhibit 2 (hereinafter
referred to as "Other Foreign Subsidiaries").
SECTION 3
KNOLL AG AND KNOLL DEUTSCHLAND GMBH
3.1
3.1.1 Knoll AG is a stock corporation under the laws of the Federal
Republic of Germany registered in the Commercial Register of the
local court Ludwigshafen under docket number HR B 4300 with a
registered share capital of EUR 50,000,000.00 (hereinafter referred
to as "Knoll AG") which is directly and indirectly held by Seller.
3.1.2 Knoll Deutschland GmbH is a limited liability company (Gesellschaft
mit beschraenkter Haftung) under the laws of the Federal Republic
of Germany registered in the Commercial Register of the local court
Ludwigshafen under docket number HR 3767 with a registered share
capital of DM 4,000,000.00 (hereinafter referred to as "Knoll
GmbH") which is indirectly held by Seller.
3.2 Knoll AG and Knoll GmbH operate the BASF Pharmaceutical Business
in Germany (such Business being the "Knoll Business").
3.3 Knoll AG also operates a business of manufacturing pharmaceutical
substances in Uetersen.
SECTION 4
KNOLL BUSINESS
4.1 Knoll AG will form a limited partnership in the legal form of a
GmbH & Co KG (hereinafter referred to as the "Partnership"). The
sole general partner will be a GmbH with a fully paid up registered
share capital of EUR 25,000.- (hereinafter referred to as
"Ver-
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waltungs-GmbH"). All capital interest in the Partnership and
shares in the Verwaltungs GmbH will be held by Knoll AG.
4.2 Seller shall cause Knoll Deutschland GmbH to be merged into Knoll
AG with economic effect as of January 1, 2001 (the "Merger").
Subject to the Merger becoming effective, Knoll AG will transfer
the Knoll Business to the Partnership by way of a demerger
(Ausgliederung) in the meaning of Section 123 para 3 no. 1
Conversion Act (Umwandlungsgesetz) with economic effect as of
January 2, 2001 (the "Demerger"). Copies of the Merger agreement
and the Demerger agreement, including the exhibits and attachments
thereto, will be provided to Purchaser for its review and comment a
reasonable period of time prior to the execution thereof
(collectively, the "Merger/Demerger Agreements"). Neither this
Agreement nor the transactions contemplated hereby shall release
Seller from its liability under the Business Sale and Purchase
Agreement dated April 27, 2000 by and among Kanoldt Arzneimittel
GmbH, Knoll AG and Abbott GmbH.
4.3 At the Closing, the Partnership will own as a result of the
Demerger:
a) the shares in the companies set forth in Exhibit 4.2 (b); and
b) the other assets and liabilities including contracts of the
Knoll Business.
4.4 If the Structure Option has been exercised by Seller pursuant to
Section 7 (A), Seller shall not complete the transactions referred
to in items 4.1 and 4.2 unless such transactions have already been
commenced at the time of the exercise of the Structure Option and
Purchaser requires Seller by notice in writing to complete those
actions.
SECTION 5
PATENTS, SHARED SUBSTANCES
5.1 Seller owns, or owns in part as described on Exhibit 5.1 patents
and patent applications exclusively relating to the Pharmaceutical
Field and/or the BASF Pharmaceutical Business (hereinafter referred
to as "Transferred Patents") as listed in Exhibit 5.1, including,
without limitation, all patents and patent applications relating to
compounds and substances being researched or developed, or that
have been researched or developed, at the Nottingham site which
compounds and substances are described in Exhibit 5.1(a).
5.2 Seller owns certain other patents and patent applications as
listed in Exhibit 5.2 which also relate but not exclusively
relate to the Pharmaceutical Field and/or the BASF Pharmaceutical
Business which are hereinafter referred to as "Remaining
Patents".
5.3 The substances (Substanzen) collected in the "Compound Library" of
Seller are physically available on the premises of both the
Partnership or, if the Structure Option has been exercised by
Seller pursuant to Section 7 (A), Knoll AG, and Seller in
Ludwigshafen, Germany (and will hereinafter be referred to as
"Shared Substances").
5.4 Patents and patent applications, whether owned by Seller or
by Seller's Affiliates, which relate to any of the Shared
Substances will hereinafter be referred to as "Shared Substance
Related Patents".
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SECTION 6
SHARES
6.1 The shares in Knoll AG are hereinafter referred to as the
"Knoll AG Shares", the shares in the Verwaltungs-GmbH and the
interests in the Partnership are hereinafter jointly referred to
as "Shares/Interests Verwaltungs-GmbH/Partnership".
6.2 "The Shares" shall mean (a) the shares or other equity interests or
equity in BPC, in the Other Foreign Subsidiaries, in the
Verwaltungs-GmbH and in the Partnership, or (b) in the event of the
exercise of the Structure Option the shares or other equity in BPC,
in the Other Foreign Subsidiaries and the Knoll AG Shares.
II.
SALE, STRUCTURE OPTION, PURCHASE PRICE
SECTION 7
SALE
7.1 Seller hereby sells, or shall cause its Affiliates to sell, the
Shares and the Transferred Patents to Purchaser or to entities
designated by Purchaser, subject to the occurrence and fulfillment or
waiver of all of the Closing Conditions and with commercial effect as
amongst the parties as of the Closing except as otherwise provided in
Section 7.4 and Seller hereby agrees to transfer, or to cause its
Affiliates to transfer, the Shares and the Transferred Patents by
separate sale and transfer contracts (hereinafter referred to as
"Separate Sale and Transfer Contracts") to Purchaser or to entities
designated by Purchaser at and effective as of the Closing.
7.2 The Separate Sale and Transfer Contracts shall be entered into and
completed at the Closing in accordance with Section 12.1, except for
the sale of the Hokuriku Shares which shall be completed pursuant to
Section 7.4 below.
7.3 Seller shall cause the businesses described in clauses (a) through
(d) in the definition of "Discontinued/Excluded Businesses" to be
transferred to Seller prior to the Closing and Purchaser shall upon
Seller's request and at Seller's expense cause such transfer to be
made or completed after the Closing as far as not made or completed
prior thereto and shall hold such Discontinued/Excluded Businesses
until completion of their transfer for the account of Seller.
7.4 As far as the Hokuriku Shares are concerned, Purchaser agrees to
commence within 5 business days after the completion of the
procedures set forth in Exhibit 7.4 a tender offer procedure as
required under Japanese law for the acquisition of all outstanding
shares in Hokuriku Seiyaku K. K. with the commitment that Purchaser
shall be required to purchase all of the tendered shares in Hokuriku
Seiyaku K. K. including the Hokuriku Shares tendered by Seller
directly or indirectly and to complete such tender offer procedure
within 21 to 60 days after the commencement of such tender offer
procedure (the "Hokuriku Tender Offer"). Seller agrees to (a) tender
the Hokuriku Shares at the price per share offered by Purchaser in
the course of such tender offer (the "Per Share Tender Price") and
(b) provide such information and take such actions as may be
necessary to enable Purchaser to comply
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with applicable Japanese law. The Per Share Tender Price
multiplied by the number of Hokuriku Shares tendered by Seller in
the Hokuriku Tender Offer (such amount, converted from Yen to USD
using the Conversion Exchange Rates, being the "Final BASF Tender
Amount") together with Seller's pro rata portion of the Excess
Hokuriku Payment, if any, shall determine the amount of the
Aggregate Purchase Price that shall be allocated to the Hokuriku
Shares.
SECTION 7 (A)
STRUCTURE OPTION
7 (A).1 Up to and through 10 working days prior to Closing, Seller shall have
the option ("Structure Option") to choose to sell the shares in
Knoll AG ("Knoll AG Shares") rather than the shares in the
Verwaltungs-GmbH and the interests in the Partnership
("Shares/Interests Verwaltungs-GmbH/Partnership").
7 (A).2 The Structure Option can be exercised whether or not the Demerger
within the meaning of Section 4.2 has been commenced but may not be
exercised if the Demerger has been completed.
7 (A).3 In order to exercise the Structure Option, Seller shall communicate
in writing to Purchaser that it has decided to make use of the
Structure Option.
7 (A).4 If the Structure Option is exercised, provisions in this Agreement
intended to address issues associated with the termination and
maintenance of the Partnership, including Sections 29 and 30,
shall be of no further force and effect.
SECTION 8
PURCHASE PRICE
8.1 The aggregate purchase price for the Shares and Transferred Patents
and the license granted in Section 25.1 below shall be USD
6,900,000,000.00 (six billion nine hundred million United States
Dollar) (hereinafter referred to as the "Aggregate Purchase Price"),
and shall be allocated as set forth in Exhibit 8.1. To the extent
permitted by law such allocation of the Aggregate Purchase Price
shall be binding for Seller and Purchaser for all aspects including
but not limited to tax filings. At the Closing, the Aggregate
Purchase Price less (i) the Provisional Hokuriku Tender Amount (the
"Provisional Non-Hokuriku Purchase Price") and (ii) any sums heldback
pursuant to Section 12.5, shall be paid by transfer of immediately
available funds and free of wire transfer charges and transfer taxes
to such bank as Seller may specify in writing within 5 business days
prior to the Closing.
8.2 The Aggregate Purchase Price shall be adjusted as provided for in
Sections 9 and 10 below or as a result of a claim for indemnification
pursuant to Sections 15, 18 and 21 below.
8.3 The "Provisional Hokuriku Tender Amount" shall mean an amount,
denominated in USD using the Conversion Exchange Rate for Yen to USD,
equal to (a) the number of Hokuriku Shares held by Seller, times (b)
the average of the closing prices of the Hokuriku Shares on
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the Tokyo Stock Exchange for the five trading days immediately prior
to the fifth day prior to the Closing Date. If the Final BASF Tender
Amount exceeds the Provisional Hokuriku Tender Amount (the "Hokuriku
Overpayment"), an amount of the Provisional Non-Hokuriku Purchase
Price equal to the Hokuriku Overpayment shall be refunded by Seller
to Purchaser and the allocation to such other Shares (other than the
Hokuriku Shares) or assets shall be reduced by the Hokuriku
Overpayment in such manner as Purchaser and Seller shall mutually
agree in good faith. If the Provisional Hokuriku Tender Amount
exceeds the Final BASF Tender Amount (the "Hokuriku Underpayment") an
amount equal to the Hokuriku Underpayment shall be refunded by
Purchaser to Seller and allocated to such other Shares (other than
the Hokuriku Shares) or assets of the Companies upon which Purchaser
and Seller shall mutually agree in good faith. "Non Hokuriku Purchase
Price" shall be equal to the Aggregate Purchase Price less the Final
BASF Tender Amount, including any Excess Hokuriku Payments.
SECTION 9
NON-HOKURIKU PURCHASE PRICE ADJUSTMENT
9.1 The Non-Hokuriku Purchase Price shall be adjusted as follows:
a) As of September 30, 2000, the net asset value of the BASF
Pharmaceutical Business amounts to *** (such amount, net of the
Hokuriku Reference Net Asset Value, being hereinafter referred to as
"Reference Net Asset Value"). The Reference Net Asset Value has been
determined on the basis of the unaudited proforma balance sheet
contained in the attached Exhibit 9.1 (a) in item 3.2 thereof taking
into account adjustments, as shown in Exhibit 9.1 (b) by the
elimination of (i) Cash, Financial Debt, deferred Taxes and Accrued
Taxes as shown in Exhibit 9.1 (a), (ii) deferrals shown in
Exhibit 9.1 (a) as miscellaneous liabilities related to expenses of
Seller allocated to the BASF Pharmaceutical Business; and (iii) other
current assets as shown in Exhibit 9.1 (a) related to one-time
payments of American Home Products to Seller with regard to a certain
patent ("Enbrel"). Notwithstanding anything to the contrary set forth
in this Section 9.1, Exhibit 9.1 (a) or Exhibit 9.1 (b), Section 21.4
shall govern to the exclusion of this Section 9.1 with respect to the
calculations described therein.
b) If the net asset value of the BASF Pharmaceutical Business
as of the Closing (net of the Hokuriku Closing Net Asset
Value) as determined in accordance with the principles set
forth in Section 10 below and as shown on the Final
Closing Net Asset Value Statement (hereinafter referred to
as the ("Closing Net Asset Value") is less than the
Reference Net Asset Value, Seller shall pay to Purchaser
the amount by which the Closing Net Asset Value is less
than the Reference Net Asset Value.
c) If the Closing Net Asset Value exceeds the Reference Net
Asset Value, Purchaser shall pay to Seller in addition to
the Aggregate Purchase Price the amount by which the
Closing Net Asset Value exceeds the Reference Net Asset
Value.
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*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
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9.2 The amount determined in accordance with Section 9.1 above shall be
paid by Seller or Purchaser, as the case may be in USD, together
with any accrued interest at a rate of six percent per annum as of
the Closing within 5 working days after the Closing Net Asset Value
Statement has become final in accordance with Section 10.5 hereof
in immediately available funds free of wire transfer charges and
transfer taxes to the bank account set forth in Section 8.1 above,
if payment is to be made to Seller, and to Citibank, N.A., New
York, New York (ABA #021000089) for credit to Abbott Laboratories
*** if payment is to be made to Purchaser. Any credit to Purchaser
shall be made in USD at the spot exchange rate in effect at two
business days prior to the date of payment.
SECTION 10
FINAL CLOSING NET ASSET VALUE STATEMENT
10.1 For the purpose of determining the amount of the purchase price
adjustment, if any, pursuant to Section 9 above, Seller shall
deliver to Purchaser as promptly as practicable (but in any event
no more than 45 days) after the Closing an audited consolidated
balance sheet and statement of changes in shareholder's equity of
the Companies as of the Closing (the "Closing Balance Sheet") and
the Closing Net Asset Value Statement, each prepared by Seller and
audited by Deloitte & Touche GmbH ("Seller's Auditors")
(hereinafter referred to as "Closing Net Asset Value Statement")
reflecting the Closing Net Asset Value, together with the report of
Seller's Auditors thereon ("Auditor's Report"). The Closing Balance
Sheet and the statement of changes in shareholder's equity included
in the Auditor's Report shall be prepared in accordance with the
Report Principles (as defined in Section 13.20) as of the Closing
Date, and prepared and consolidated in a manner consistent with
Exhibit 9.1(a). The Closing Net Asset Value Statement included in
the Auditor's Report shall be prepared on the basis of, and derived
from, the balance sheet contained in the Closing Balance Sheet, and
adjusted in a manner consistent with Exhibit 9.1(b), and further
adjusted in accordance with the principles set forth in Exhibit
10.1 hereto. The audit of the Closing Balance Sheet shall include a
physical count and valuation of the Companies' inventory. The
Auditor's Report shall provide at least as much detail by financial
statement line item as is included in Exhibit 9.1(a). Intercompany
Obligations shall be dealt with as provided in Section 19.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS SECTION
10.1, EXHIBIT 7.4 SHALL GOVERN THE CALCULATION OF THE HOKURIKU NET
ASSET VALUE DESCRIBED THEREIN.
10.2 To the extent to which the Closing Net Asset Value Statement
arrives at a Closing Net Asset Value resulting in an adjustment of
the Non-Hokuriku Purchase Price pursuant to Section 9, the Closing
Net Asset Value Statement must also state how the amount by which
the Non-Hokuriku Purchase Price, as so adjusted, should be
allocated.
10.3 For the purpose of preparing and auditing the Closing Balance Sheet
and Closing Net Asset Value Statement, Purchaser shall grant, or
cause Companies to grant, Seller and Seller's auditors access to
all relevant information and shall cause Purchaser's employees and
the employees of the Companies to give Seller and its auditors all
support and assistance reasonably requested by Seller free of
charge. Purchaser and Purchaser's outside
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*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
Page 12
accountants, Arthur Andersen, shall be permitted to observe all
procedures with respect to the counting and valuation of inventories.
10.4 Purchaser shall have 30 days after receipt of the Closing Net Asset
Value Statement during which it may review the Closing Net Asset
Value Statement, and raise in writing and in reasonable detail any
objections against specified items of the Closing Net Asset Value
Statement, indicating precisely the higher or lower value which in
Purchaser's opinion should be allocated to each item in dispute.
During this period of time, Purchaser and its auditors shall be
granted access to all relevant information produced by Seller or
Seller's Auditors; provided, however, that the work papers of
Seller's Auditors shall be made available only to Purchaser's
Auditors. The objections raised by Purchaser pursuant to the
preceding sentence must also specify how the amounts in dispute
should be allocated in Purchaser's opinion. Any item in the Closing
Net Asset Value Statement objected to by Purchaser shall
hereinafter be referred to as "Disputed Item".
10.5 If and insofar as Purchaser does not raise objections to the Closing
Net Asset Value Statement in accordance with Section 10.4 above, the
Closing Net Asset Value arrived at in the Closing Net Asset Value
Statement shall be final and binding upon the parties. To the extent
to which the Net Asset Value arrived at in the Closing Net Asset
Value Statement is final and binding upon the parties, the adjustment
payment to be made by Purchaser or Seller according to Section 9.1
shall be made forthwith.
10.6 The parties shall use their best efforts to resolve the Disputed
Items within 15 working days following the receipt by Seller of
Purchaser's objections pursuant to Section 10.4 above.
10.7 Any Disputed Items not resolved pursuant to Section 10.6 above
shall be submitted by the parties to Ernst & Young for review.
Should Ernst & Young become unavailable, the parties shall agree on
another accounting firm of international standing. If they cannot
reach agreement within 15 working days, such accounting firm shall
be determined at the request of either party by the Institut der
Wirtschaftsprufer e.V. Dusseldorf.
10.8 In rendering its decision, the accounting firm shall consider only
the Disputed Items and, with respect to each such Disputed Item,
shall stay within the range of the values allocated to it by the
parties. The accounting firm shall deliver in writing to Seller and
Purchaser as promptly as practicable its determination of the
Disputed Items stating the reasons of its decision. The reasons
shall specifically address the arguments brought forward by the
parties with respect to each Disputed Item. Such determination
shall be final and binding upon the parties absent manifest
mathematical errors. The accounting firm shall allocate its fees to
the parties in accordance with Sections 91 et seq. of the German
Civil Procedure (ZPO).
10.9 No later than 45 days after the Closing, as part of, and
concurrently with, its preparation of the financial statements
described in Section 10.1, Seller shall prepare and Seller's
Auditors shall audit and report on, in accordance with U.S. GAAP
and the Securities Exchange Act of 1934 and the rules and
regulations of the U.S. Securities and Exchange Commission
thereunder (including Regulation S-X) (the "U.S. Securities Laws"),
such financial statements of the BASF Pharmaceutical Business and
the Companies as may be
Page 13
required to be filed by Purchaser under Item 7 of Form 8-K under
the U.S. Securities Laws (the "U.S. Financial Statements").
Seller and Seller's Auditors shall permit Purchaser and
Purchaser's Auditors to have access to all information, including
Seller's Auditor's work papers, as Purchaser may reasonably
request in connection therewith; provided, however, that the work
papers of Seller's Auditors shall be made available only to
Purchaser's Auditors. The engagement of Seller's Auditors will be
governed by a separate agreement between Purchaser and Seller's
Auditors and be based on the General Conditions of Assignment for
Wirtschaftsprufer and Wirtschaftsprufungsgesellschaften as of
July 1, 2000 including a limitation of liabilities for all
damages arising from or in connection with the engagement. All
fees and expenses of Seller's Auditors incurred in connection
with the preparation of the U.S. Financial Statements shall be
paid by Purchaser. After the Closing, Seller shall permit
Seller's Auditors, Purchaser and its representatives to have
access, upon reasonable advance notice, to the assets, employees,
books and records of Seller and its Affiliates and shall furnish,
or cause to be furnished, to Seller's Auditors and Purchaser,
such financial, tax and operating data and other available
information with respect to the BASF Pharmaceutical Business as
Seller's Auditors and Purchaser may from time to time request or
otherwise require to prepare the U.S. Financial Statements.
Seller shall provide such certifications, support and
attestations, including certifications and attestations as to the
accuracy of the financial information that forms the basis of the
U.S. Financial Statements or that is otherwise provided to
Seller's Auditors. Purchaser and Purchaser's outside accountants
shall be entitled to observe and participate in Seller's and
Seller's Auditors preparation and audit of the US Financial
Statements.
III.
CLOSING
SECTION 11
CLOSING
11.1 The transactions set forth in this Agreement shall be consummated
at the time, place and manner provided below (the "Closing"). The
date of the Closing (the "Closing Date") shall be, unless otherwise
agreed between the parties or terminated pursuant to Section 33, on
the fifth working day after the Closing Conditions have been
fulfilled, but not earlier than on March 2, 2001.
11.1.1 The obligation of Purchaser and Seller to effect the Closing shall
be subject to the satisfaction of the following conditions
(hereinafter referred to as the "General Closing Conditions" and,
together with the Purchaser Conditions (as defined in Section
11.1.2), the "Closing Conditions"):
a) The transactions contemplated by this Agreement have been, or
are treated as being, approved
aa) under the EU merger control rules;
bb) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 ("HSR Act") as amended,
including, without limitation, the expiration or
early termination of any waiting period applicable
to the consummation of the purchase under the HSR
Act; and
Page 14
cc) under the Industrial Site Recovery Act implemented
by the New Jersey Department of Environmental
Protection; and
b) Except if the Structure Option has been exercised by
Seller pursuant to Section 7 (A), the Merger shall have
been registered in the Commercial Register of Knoll GmbH
and Knoll AG, and the Demerger shall have been registered
in the Commercial Register of both Knoll AG and the
Partnership;
c) No preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent
jurisdiction or by a governmental authority shall be in
effect that would prevent the consummation of the
transactions contemplated by this Agreement in the United
States of America or the European Union.
11.1.2. The obligation of Purchaser to effect the Closing shall be
subject to satisfaction of the following conditions
("Purchaser Conditions"):
a) The Representations of Seller made in Section 13 of this
Agreement (other than the representation in the last
sentence of Section 13.2) shall be true and correct on and
as of the Closing Date as so made anew on and as of such
date, unless such failure to be so true and correct would
not have, or would not reasonably be expected to have, a
Material Adverse Effect. Purchaser shall have received a
certificate, dated the Closing Date, to such effect by an
officer of Seller.
b) Seller shall have performed and complied in all material
respects with all covenants, terms and agreements to be
performed and complied with by it on or before the Closing
Date, unless any failure to so perform or comply would not
have, or would not reasonably be expected to have, a
Material Adverse Effect. Purchaser shall have received a
certificate, dated the Closing Date, to such effect by an
officer of Seller.
c) Seller shall have obtained, or shall have caused the
Companies to have obtained, all Material Agreement
Consents (as defined in Section 13.21).
11.2 Each of the parties will inform the other promptly of the
fulfillment of the Closing Conditions.
11.3 The Closing shall take place at the offices of Hengeler Mueller
Weitzel Wirtz, Frankfurt am Main, Germany, or such other place as
agreed upon by the parties.
SECTION 12
ACTIONS TO BE TAKEN AT THE CLOSING
12.1 At the Closing, Seller and Purchaser shall deliver:
a. except if the Structure Option has been exercised by Seller
pursuant to Section 7 (A) a notarial deed between Knoll AG and
Purchaser or its designee on the transfer of title to the
shares in Verwaltungs-GmbH;
Page 15
b. except if the Structure Option has been exercised by Seller
pursuant to Section 7 (A) a duly executed agreement between
Knoll AG and Purchaser or its designee on the transfer of the
limitedccccc partnership interests in the Partnership;
c. except if the Structure Option has been exercised by
Seller pursuant to Section 7 (A) an application for
registration of the change of the limited partner of the
Partnership in the commercial register duly executed by
Knoll AG, Verwaltungs-GmbH and Purchaser or its designee;
d. duly executed assignments, in recordable form, of each of the
Transferred Patents entered into by Seller and Purchaser or
its designees (the "Assignments");
e. duly executed Separate Sales and Transfer Contracts
f. a duly executed license agreement relating to the Remaining
Patents to be negotiated in good faith by Purchaser and
Seller.
12.2 At the Closing, Seller shall deliver or cause to be delivered to
Purchaser:
a. certificates representing the Shares sold pursuant to
Section 12.1 (e) above and, if the Structure Option is
exercised by Seller pursuant to Section 7 (A), the Knoll
AG Shares duly endorsed for transfer to Purchaser or its
designees or such evidence of the transfer of such Shares
as required by the applicable law of the jurisdictions of
incorporation of the companies to which the shares relate;
b. except if the Structure Option has been exercised by
Seller pursuant to Section 7 (A), executed copies of all
Merger/Demerger documents, including, without limitation,
all executed instruments of assignment and assumption and
filings made in connection therewith; and
c. a duly executed assignment of (i) all Intellectual
Property owned or licensed by Seller or any of its
Affiliates that relates exclusively to the Pharmaceutical
Field or the BASF Pharmaceutical Business, and (ii) all
Intellectual Property relating to the compounds and
substances described in Exhibit 5.1(a).
12.3 At the Closing, Purchaser shall pay to Seller such portion of the
Aggregate Purchase Price as is payable at Closing in accordance
with Section 8.
12.4 The deliveries of the agreements and other documents set forth in
Section 12.1, deliveries to be made by Seller pursuant to Section
12.2, and the payment of the purchase price by Purchaser pursuant
to Section 12.3 above shall all be made concurrently (Zug um Zug).
12.5 If and insofar as the transfer of any of the Shares and/or the
Transferred Patents is prohibited due to a missing approval from
antitrust authorities or governmental authorities other than those
mentioned in Section 11.1.1(a), this shall not delay or prevent the
Closing pursuant to Sections 12.1, 12.2 and 12.3 provided, however,
that the portion of the Aggregate Purchase Price attributable to
such Shares and/or Transferred Patents shall not be delivered and
paid at Closing, but shall be held by Purchaser until such
approval(s) have been obtained and such Shares and/or Transferred
Patents shall have been transferred. The parties shall use their
best efforts to obtain such approvals. All earnings from the
relevant Companies shall be held for the account of Purchaser.The
respective Shares or Transferred Patents shall be transferred
without undue delay after the approval has
Page 16
been obtained with commercial effect as amongst the parties as of
the Closing and the respective portion of the Aggregate Purchase
Price attributable to such Shares and/or Transferred Patents
shall be paid simultaneously together with interest thereon for
the period from the Closing Date to the receipt of payment at an
interest rate of six percent per annum.
IV.
REPRESENTATIONS OF SELLER
SECTION 13
REPRESENTATIONS OF SELLER
Seller hereby absolutely and unconditionally represents and warrants in the form
of an independent guarantee to Purchaser that the following statements (the
"Representations") are true and accurate as of the date of this Agreement and as
of the Closing Date except as otherwise provided herein:
13.1 (a) BPC, BPC Subsidiaries, Other Foreign Subsidiaries, the
Partnership and Verwaltungs GmbH or, in the event of an exercise of
the Structure Option pursuant to Section 7 (A), BPC, BPC
Subsidiaries, Other Foreign Subsidiaries, Knoll Deutschland GmbH
and Knoll AG, (together in either case, hereinafter referred to as
the "Companies") are duly organized, validly existing and (where
such concept applies) in good standing under the laws of the
jurisdiction of their respective incorporation and each of them has
the requisite corporate power and authority to own, operate or
lease the properties that it purports to own, operate or lease and
to carry on its businesses as they are now being conducted. Each of
the Companies is duly qualified and in good standing to do business
in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification
necessary. Seller and each of its Affiliates (as applicable)
including the Companies has all requisite corporate power and
authority to enter into this Agreement and to consummate the
Transactions contemplated hereby.
(b) The execution and delivery of this Agreement and the
consummation of the Transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the
part of Seller and each of its Affiliates (as applicable),
including the Companies, shareholder approval not being required by
any of them. This Agreement and transaction documents provided for
herein have been, or upon execution, shall have been, duly executed
and delivered by Seller, its Affiliates (as applicable), including
the Companies and constitutes a valid and binding agreement of each
of them, enforceable against them in accordance with their terms.
13.2 Except for the manufacture of the Mutual Active Ingredients and
certain of the Exclusive Active Ingredients pursuant to certain
Intercompany Agreements (the "Intercompany Manufacturing
Agreements"), Seller conducts the BASF Pharmaceutical Business only
through the Companies, and neither Seller nor any of Seller's
Affiliates (including the entities and operations listed in clauses
(a)-(d) of the definition of Discontinued Excluded Businesses)
other than the Companies owns, leases or uses, or has any interest
in, any assets or properties, real or personal, tangible or
intangible, including Intellectual Property, related to the BASF
Pharmaceutical Business, other than (i) the manufacturing
facilities operated in connection with the Intercompany
Manufacturing Agreements, and (ii) the Transferred Patents and the
Remaining Patents. Except as disclosed on Exhibits 1.1, 1.2, 2 and
4.2(b), Seller has no direct or indirect subsidiary corporations,
and owns no interest, direct or indirect, in any other business
enterprise, firm or corporation that, in each
Page 17
case, is engaged in the BASF Pharmaceutical Business. Seller
holds, as set forth in Exhibits 1.1, 1.2, 2 and 4.2(b), good and
marketable title to the Shares (including all the issued and
outstanding shares of the BPC Subsidiaries) and the Shares are
free and clear of all liens, encumbrances, pledges, options,
claims, charges and restrictions of any nature and, except as
disclosed in Exhibit 13.2(d), are free of other third party
rights and can be freely disposed of by the respective
assignors. Each respective assignor has the full right and power
to transfer to Purchaser the Shares (including all the issued
and outstanding shares of the BPC Subsidiaries) pursuant to this
Agreement, without obtaining the consent of any third party
except as set forth on Exhibit 13.2(d). No consent, approval,
order or authorization of, or registration, declaration or
filing with, any governmental entity is required by or with
respect to Seller or the Companies in connection with the
execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby, except the necessary
consents and approvals described in Section 11.1.1 (a)
("Consents").
13.3 The authorized and issued share capital of each of the Companies is
described, and is held by the persons and in the amounts as set
forth in Sections 1 through 4 and the appertaining Exhibits and all
shares of such share capital are duly authorized, validly issued,
outstanding, fully paid and non-assessable. There are no
outstanding contractual obligations of any of the Companies to
repurchase, redeem or otherwise acquire or to issue, sell or
otherwise dispose of any outstanding shares or capital of, or
otherwise ownership interests in or any warrant, option or other
security exercisable, for exchange for, or convertible into any
shares of, any of the Companies, or to make any investment (in the
form of a loan, capital contribution or otherwise) in any other
entity. No bonds, debentures, notes or other indebtedness of any of
the Companies having the right to vote on any matters on which
stockholders may vote are issued or outstanding.
13.4 Except if the Structure Option has been exercised by Seller
pursuant to Section 7 (A), as of the Closing, the Demerger set
forth in Section 4 above will have been duly authorized and
implemented in accordance with governing law and will have resulted
in the transfer to the Partnership of all assets and liabilities as
described in Section 4.3 above.
13.5 Except as set forth in Exhibit 13.5, the execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby, will not (i) conflict with or violate the
articles of incorporation or bylaws or equivalent organizational
documents of Seller, any of its Affiliates, or any of the
Companies, (ii) subject to making the filings and obtaining the
approvals identified in Section 11.1.1(a) and Exhibit 13.2(e) or
such other filings and approvals the absence of which would not
reasonably be expected to have a Material Adverse Effect and are
necessary under other applicable merger, investment, drug or
environmental control statutes, conflict with or violate any
statute, rule, regulation or other legal requirement or temporary,
preliminary or permanent order, judgment or decree or any
memorandum of understanding with any governmental entity applicable
to Seller, any of its Affiliates, as applicable, or any of the
Companies or by which any property or asset of Seller, any of its
Affiliates, as applicable, or any of the Companies is bound or
affected, or (iii) result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would
become a default) under, result in the loss of a benefit under, or
give to others any right of purchase or sale, or any right of
termination, amendment, acceleration, increased payments or
cancellation of, or result in the creation of a lien on any
property or asset of Seller, any of its Affiliates, as applicable,
or any of the Companies pursuant to, any note, bond, mortgage,
indenture, con-
Page 18
tract, agreement, lease, license, permit, franchise, authorization
or other instrument or obligation to which Seller, any of its
Affiliates, as applicable, or any of the Companies is a party or
by which Seller, any of its Affiliates, as applicable, or any of
the Companies or any property or asset of Seller, any of its
Affiliates, as applicable, or any of the Companies is bound or
affected, except, in the case of clauses (ii) and (iii) for any
such conflicts, violations, breaches, defaults, events, losses,
rights, payments, cancellations, encumbrances or other
occurrences that could not either (x) result in a default or
event of default or accelerate or require that Seller, any of its
Affiliates, as applicable, or any of the Companies pay prior to
the scheduled maturity date or repurchase or offer to repurchase
indebtedness owed to any person that is in excess of EUR
10,000,000 or indebtedness in excess of EUR 30,000,000 in the
aggregate, or (y) with respect to any other obligation, document
or instrument, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect.
13.6 As of the Closing, there exist no obligations of the Companies
under any tax sharing agreements between the Companies and the
Seller which will survive with effect after Closing , agreements of
domination or profit and loss pooling agreements or agreements of a
similar kind or effect between any of the Companies and Seller or
any of Seller's Affiliates.
13.7.1 All Tax returns required to have been filed by or with respect to
any of the Companies have been duly and timely filed, and all Taxes
shown to be due on such Tax returns for which any of the Companies
is liable have been timely paid. To the Best Knowledge of Seller,
the Tax Assets represent valid reductions of Tax that will be
available to the Purchaser or the Companies after the Closing.
13.7.2 All Tax assessments relating to any of the Companies with respect
to Tax periods ending on or before the date of this Agreement have
been timely paid or are being contested in good faith
13.7.3 Except for the ongoing audits listed in Exhibit 13.7.3, there is no
action, suit or investigation, claim or assessment pending or to
the Best Knowledge of Seller threatened with respect to Taxes of
the Companies.
13.8 Except as disclosed in Exhibit 13.8, none of the Companies has
received any written Tax ruling or entered into any written and
legally binding agreement or is currently under negotiations to
enter into any such agreements with any Tax authority which would
affect the Tax situation of any of the Companies in any time period
ending after the Closing.
13.9 a) Except for (i) the manufacturing facilities operated in
connection with the Intercompany Manufacturing Agreements, and (ii)
the Transferred Patents and the Remaining Patents, the assets,
properties, rights and interests owned by the Companies, or which
the Companies have valid, subsisting and enforceable rights to use
constitute all of the assets, properties, rights and interests
necessary to conduct the BASF Pharmaceutical Business in
substantially the same manner as conducted by Seller and its
Affiliates, including the Companies, prior to the date of this
Agreement. The Companies have good and marketable title, or are
otherwise legally entitled to use, all assets whether tangible or
intangible, (except for (i) the manufacturing facilities operated
in connection with the Intercompany Manufacturing Agreements, and
(ii) the intellectual property rights as otherwise
Page 19
addressed in Sections 13.15 through 13.17) which are used in, or
are necessary for, the conduct of the BASF Pharmaceutical
Business as currently conducted free and clear of material
restrictions on, or conditions to, transfer or assignment, and of
liens, pledges, charges, encumbrances, security interest,
equities, claim, covenants, conditions and restrictions, except
as set forth in Exhibit 13.9(a).
13.10 The Intercompany Agreements listed in Exhibit 13.10 are validly
existing and binding on the parties thereto.
13.11.1 For purposes of this Section 13.11, the following terms have the
definitions set forth below:
a) "ERISA Affiliate" means, with respect to any entity, trade
or business, any other entity, trade or business that is a
member of a group described in Section 414(b), (c), (m) or
(o) of the Internal Revenue Code of 1986, as amended
(hereinafter referred to as "Code"), or Section 4001(b)(1)
of the Employee Retirement Income Security Act of 1974, as
amended (hereinafter referred to as "ERISA"), that
includes the first entity, trade or business, or that is a
member of the same "controlled group" as the first entity,
trade or business pursuant to Section 4001(a)(14) of
ERISA.
b) An "Employee Benefit Plan" means any employee benefit
plan, program, policy, practice, or other arrangement
providing benefits to any current or former employee,
officer or director of any of the Companies or any
beneficiary or dependent thereof that is sponsored or
maintained by the Seller, any of the Companies or any
Affiliate of the Seller or any of the Companies or to
which the Seller, any of the Companies or any Affiliate of
Seller or any of the Companies contributes or is obligated
to contribute, whether or not written or funded or
unfunded, including without limitation any Pension
Arrangement, disability, death benefit, hospitalization,
medical or other employee welfare benefit plan or employee
pension benefit plan (including any employee welfare
benefit plan within the meaning of Section 3(1) of ERISA
or any employee pension benefit plan within the meaning of
Section 3(2) of ERISA whether or not such employee welfare
benefit or employee pension benefit plan is subject to
ERISA), and any bonus, incentive, deferred compensation,
vacation, stock purchase, stock option, stock
appreciation, severance, early retirement, seniority,
employment, change of control or fringe benefit plan,
program or agreement.
13.11.2 As of the Closing, Exhibit 13.11.2 includes a complete
list of all Employee Benefit Plans which (i) represent
Pension Arrangements, (ii) cover 100 or more Employees or
former employees, (iii) represent an annual operating
expense of USD 250,000 or more, or (iv) represent post-
retirement obligations of which the market value or
present value is USD 250,000 or more, none of which is a
multiemployer plan subject to Title IV of ERISA. True and
complete copies of all such Employee Benefit Plans,
including, but not limited to, any trust instrument or
insurance contract forming a part of any such Employee
Benefit Plan, and all amendments thereto, have been
provided or made available to Purchaser.
13.11.3 Each Employee Benefit Plan complies with all applicable
local laws, including but not limited to the Code and
ERISA, and any contract or labor, works council or
collective bargaining agreement, and has been administered
in accordance with its terms. All contributions, premiums
and other payments due from Seller, the Companies or any of
their
Page 20
Affiliates to (or under) any Employee Benefit Plan
through the date of this Agreement and as of the Closing
have been fully paid or, to the extent not required to be
paid on or before such date, have been provided for in
accordance with Exhibit 13.20 (a) (the Report Principles).
There are no liabilities arising out of or under any
Employee Benefit Plan or other employee benefit plan
sponsored, maintained or contributed to by Seller or any of
its Affiliates or ERISA Affiliates, whether absolute,
accrued, contingent or otherwise, that could become a
liability of Purchaser and its Affiliates, including the
Companies, upon or after the consummation of the
transactions contemplated by this Agreement other than those
liabilities (i) specifically assumed by Purchaser under
Sections 22 and 23 or accrued on the Closing Net Asset Value
Statement, or (ii) which arise out of an event occurring
after the Closing under an Employee Benefit Plan then
maintained by any of the Companies.
13.11.4 Except as disclosed by Jeffrey Rosen of Wasserstein
Perella & Co. Inc. to Steve Fussell, William Dempsey and
Jeffrey Leiden of Purchaser on December 12, 2000 at the
offices of Hengeler Mueller, Bockenheimer Landstrasse 51,
60325 Frankfurt am Main, neither the execution and delivery
of this Agreement nor the consummation of the transactions
contemplated hereby will, either alone or in conjunction
with any other event, (i) result in any payment becoming
due, or increase the amount or value of compensation or
benefits due, any current or former Employee, including,
without limitation, any severance payment or benefit; (ii)
increase any benefits otherwise payable under any Employee
Benefit Plan or (iii) result in the acceleration of the
time of payment, funding or vesting of any such benefits.
13.12 Except as disclosed in Exhibit 13.12(a), there is no court,
administrative or arbitration proceeding, litigation, action, suit,
investigation or claim (including, but not limited to, product
liability cases) that (a) would reasonably be expected to have a
Material Adverse Effect, or (b) involves an amount in dispute,
individually or in the aggregate, in excess of EUR 5,000,000
pending or, to the Best Knowledge of Seller, threatened in writing
against any of the Companies or Seller with respect to the BASF
Pharmaceutical Business. Neither any of the Companies nor Seller or
any of its Affiliates (with respect to the BASF Pharmaceutical
Business) is subject to, or bound by, any judgment, order,
injunction or decree of any court, agency or instrumentality.
Neither BASF (with respect to the BASF Pharmaceutical Business),
nor any of the Companies have received any notice, citations or
order from any government authority or from any professional or
consumer body (a) asserting that any product is or may be defective
or dangerous, or fails to meet any applicable standards promulgated
by any governmental or regulatory authority or agency, (b)
constituting any warning or similar notice, or (c) requesting that
any of them recall any of its products or to inform the public or
its customers of an adverse effect, or a defect or danger in any of
their products or linked to their use and, to the Best Knowledge of
Seller, no facts or conditions exist which could reasonably be
expected to result in any of the foregoing.
13.13 By January 31, 2001 Seller shall deliver to Purchaser a complete
and accurate list of all real property and leaseholds belonging to
the Companies and material to the BASF Pharmaceutical Business, as
well as all other facilities used or occupied by the Companies in
connection with the BASF Pharmaceutical Business and shared with
Seller, or any Affiliate of Seller other than one of the Companies
(collectively, the "Real Property"). The Companies own, or have a
valid leasehold or other valid interest in the Real
Page 21
Property. None of the owned Real Property is subject to any lien
against such Real Property or to any encumbrance other than minor
imperfections of title, if any, none of which is substantial in
amount, detracts from the value or impairs the use of the
property subject thereto or which would reasonably be expected to
have a Material Adverse Effect. All of the leased Real Property
is subject to valid lease agreements that are in full force and
effect in accordance with their terms, the Companies have the
right to quiet enjoyment with respect to such leased Real
Property, and there exists no material breach or default
thereunder on part of any of the Companies or, to the Actual
Knowledge of Seller, any other party thereto. The Companies are
in sole possession of each parcel of Real Property and no portion
of the leased Real Property has been sublet nor has any portion
of the document creating such leasehold interest been assigned.
13.14 As of the date of this Agreement, Exhibit 13.14(a) lists all
patents owned, and applications made for registration of such
rights, by Seller or its Affiliates, including any of the Companies
(excluding the Transferred Patents and the Remaining Patents listed
in Exhibit 5.1 and Exhibit 5.2) which relate to or are used in the
BASF Pharmaceutical Business. Within 30 days of the date of this
Agreement Seller shall furnish to Purchaser a list of all
trademarks owned, and applications made for registration of such
rights, by Seller or its Affiliates, including any of the Companies
which relate to or are used in the BASF Pharmaceutical Business,
which list shall be deemed part of Exhibit 13.14(a). Exhibit
13.14(b) lists all contracts, all of which are valid, binding and
enforceable, under which Seller or its Affiliates, including any of
the Companies is licensed or otherwise permitted to use any
Intellectual Property right which is material to the BASF
Pharmaceutical Business. Exhibit 13.14(a), Exhibit 13.14(b),
Exhibit 5.1 and Exhibit 5.2 list all the patents and, upon delivery
of the list referred to in the second sentence of this Section
13.14, trademarks, owned, and applications made for registration of
such rights which are used in, or are necessary for, the conduct of
the BASF Pharmaceutical Business as currently conducted. Exhibit
5.1 list all patents owned by Seller and its Affiliates relating to
D2E7.
13.15.1 To the Best Knowledge of Seller, none of the Intellectual Property
listed in Exhibit 13.14(a), Exhibit 13.14(b), Exhibit 5.1 and
Exhibit 5.2 has lapsed, has been abandoned or is subject to any
pending opposition or cancellation proceeding before any
registration authority in any jurisdiction, and no party thereto is
in breach of any of the license agreements listed in Exhibit
13.14(b).
13.15.2 To the Best Knowledge of Seller no person is infringing on any of
the intellectual property rights listed in any Exhibit to this
Agreement or on any of the Transferred Patents.
13.15.3 (a) The Companies own, or, giving effect to the license of the
patents contemplated by Section 13.14 will be licensed to use
(in each case, free and clear of any liens or encumbrances
whatsoever), all Intellectual Property used in or necessary for
the conduct of the BASF Pharmaceutical Business as currently
conducted; (b) to the Best Knowledge of Seller, no person is
challenging, infringing on or otherwise violating any right of
the Companies or Seller with respect to the BASF Pharmaceutical
Business with respect to any Intellectual Property owned by or,
to Seller's Actual Knowledge licensed to, the Companies or Seller
with respect to the BASF Pharmaceutical Business and (c) neither
the Companies nor Seller has received any written notice of any
pending claim with respect to any Intellectual Property used by
Seller or its Affiliates in connection with the BASF
Pharmaceutical Business or the Companies and to the Best
Knowledge of Seller no Intellectual Property owned or, to Seller's
Actual Knowledge licensed by, Seller or its Affiliates in
connection with the BASF Pharmaceutical Business or the
Companies is
Page 22
being used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of such Intellectual
Property.
For purposes of this Agreement, "Intellectual Property" shall mean
trademarks, service marks, brand names, certification marks, trade
dress and other indications of origin, the goodwill associated with
the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing,
including any extension, modification or renewal of any such
registration or application; inventions, discoveries and ideas,
whether patentable or not, in any jurisdiction; patents,
applications for patents (including, without limitation, divisions,
continuations, continued prosecution applications, continuations in
part and renewal applications), and any renewals, extensions or
reissues thereof, in any jurisdiction; know-how, trade secrets and
confidential information and rights in any jurisdiction to limit
the use or disclosure thereof by any person; writings and other
works, whether copyrightable or not, in any jurisdiction;
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; and any
similar intellectual property or proprietary rights.
13.15.4 Except for the Remaining Patents, all Intellectual Property used
in the BASF Pharmaceutical Business and developed, owned or held,
directly or indirectly, by any officer, director, employee or
contractor of any of the Companies or, with respect to the BASF
Pharmaceutical Business, Seller or any of its Affiliates, has
been or prior to or as of the Closing will have been, duly and
effectively transferred to the Companies or Purchaser. Except to
the extent accrued on the balance sheet included as Exhibit
9.1(a) or as will be accrued on the Closing Net Asset Value
Statement, neither the Companies nor, with respect to the BASF
Pharmaceutical Business, Seller or any of its Affiliates, has any
liabilities or obligations outstanding at the Closing Date under
any invention or similar agreement or otherwise to any officer,
director, employee or contractor with respect to Intellectual
Property.
13.16.1 With respect to products manufactured or distributed by the BASF
Pharmaceutical Business which are already in the market as of the
date of this Agreement, to the Best Knowledge of Seller, none of
such products infringes on and, to the Best Knowledge of Seller,
except as disclosed in Exhibit 13.16.1, no third party has asserted
that any such products infringe on, any intellectual property
rights of any other person .
13.16.2 With respect to the products listed in Exhibit 13.16.2 which are in
development as of the date of this Agreement, to the Best Knowledge
of Seller, no third party has asserted in writing that such
products infringe on any intellectual property rights of such third
party. Except for the opinions of counsel to Seller and/or its
Affiliates (which shall be delivered to Purchaser prior to
Closing), Seller has provided to Purchaser or its representatives
all material information available to Seller relating to D2E7.
13.16.3 Except as expressly set forth in Sections 13.16.1, 13.16.2, 15.1
(II) and 15.1 (III), Seller (a) does not make any representation
with respect to infringement of third party rights, and (b) does
not assume any responsibility and liability with respect to
infringement of third party rights, with respect to any products or
product ideas or product proposals which, in each case, are under
consideration for the BASF Pharmaceutical Business.
13.17 As of the Closing Date, all renewal fees shall have been paid and
all other "administrative steps" shall have been taken which are
required for the registration or maintenance of the intellectual
property rights listed in Exhibit 13.14(a) and 13.14(b) to the
extent they
Page 23
are registered or eligible for registration and of the Transferred
Patents and the Remaining Patents.
13.18.1 As of the Closing Date, and to Seller's Actual Knowledge as of the
date of this Agreement, the Companies have obtained and hold all
permits, licenses or approvals required by environmental laws and
necessary to the conduct of the BASF Pharmaceutical Business in the
manner in which it has routinely been conducted. The Companies are
in compliance with such permits and other requirements of
applicable environmental laws.
13.18.2 None of the Companies has received any written request for
information, demand letter, administrative inquiry, or formal or
informal complaint notices from any governmental authority or
otherwise of violation of any environmental laws which has not been
complied with or any condition that might require remediation.
13.18.3 To the Actual Knowledge of Seller, the Real Property referred to in
Section 13.13 above does not contain any underground storage tanks,
surface impoundments containing any hazardous substances,
PCB-containing materials, or any exposed, friable
asbestos-containing materials.
13.18.4 Except as disclosed in Exhibit 13.18.4, none of the Companies has
received any written notice, claim, or request for information
relating to any third-party waste disposal site alleging that any
of them is or may be liable to any person or governmental authority
as a result of a release or threatened release or any other form of
disposal of hazardous materials generated by any of the Companies
or any third party on behalf of any of the Companies.
13.18.5 The Companies and to Seller's Best Knowledge, any entity for
which any of them may be responsible, are not subject to any
Environmental Liabilities and, to the Best Knowledge of Seller,
no facts, circumstances or conditions relating to, arising from,
associated with or attributable to any real property currently
or, to the Best Knowledge of Seller, formerly, owned, operated or
leased by the Companies or any entity for which any of them may
be responsible, or operations thereon would reasonably be
expected to result in Environmental Liabilities. Seller has
provided to Purchaser all Environmental Reports prepared or dated
since January 1, 1995 and available to Seller and any of its
Affiliates.
13.18.6 As used in this Agreement, "Environmental Liabilities" with
respect to any person means any and all liabilities of or
relating to such person or any of its subsidiaries (including any
entity which is, in whole or in part, a predecessor of such
person or any of such subsidiaries), whether vested or unvested,
contingent or fixed, actual or potential, known or unknown, which
arise under or relate to matters covered by environmental laws or
with respect to hazardous materials. As used in this Agreement,
"Environmental Report" means any report, study, assessment,
audit, or other similar document that addresses any issue of
noncompliance with, or liability under, any environmental law
that may affect any of the Companies.
13.19 Except as set forth in Exhibit 13.19: (a) the Companies have
obtained, and are in compliance with, all licenses, permits and
other authorizations required by applicable law or government
regulations in connection with their business as now conducted, (b)
none of the Companies has received any written notice from any
governmental authority of violation of any laws which has not been
complied with, and (c) the BASF Pharmaceutical Business has been
conducted and each of the Companies is currently in compliance with
Page 24
all applicable laws (including without limitation, all laws
relating to drug and pharmaceutical regulation, reporting,
pharmacovigilance, sales and marketing, civil rights, occupational
health and safety, antitrust, consumer protection, currency
exchange, equal opportunity, and the Worker Adjustment Retraining
Notification Act and similar state, local and foreign "plant
closing" or reduction in force laws).
13.20 (a) Seller has delivered to Purchaser prior to the execution of
this Agreement the WEDIT Deloitte & Touche "Report on the
draft Pro forma Financial Statements for the Pharmaceutical
Business for the Periods ending December 31, 1999, June 30,
2000, and September 30, 2000" attached to this Agreement as
Exhibit 9.1(a) and hereinafter referred to as the "Report".
The Report has been prepared in accordance with the
provisions of the German Commercial Code taking into account
as far as permissible under the German Commercial Code, U.S.
GAAP as described in more detail in Exhibit 13.20(a) (the
"Report Principles").
(b) Each of the financial statements included in the Report
(including the related notes and schedules) presents fairly,
in all material respects, the consolidated financial
position of the BASF Pharmaceutical Business and the
Companies as of their respective dates or, as applicable,
the consolidated results of operations, retained earnings or
cash flows, as the case may be, of the BASF Pharmaceutical
Business and the Companies for the periods set forth
therein, in each case in accordance with the Report
Principles consistently applied during the periods involved,
except as may be noted therein. Except for inventories for
which a reserve has been taken in preparation of the balance
sheet included in Exhibit 9.1(a) or on the Closing Net Asset
Value Statement, the inventories of the BASF Pharmaceutical
Business and the Companies do not consist of, in any
material amount, items that are obsolete or damaged, or of
below standard quality. Such inventories are not (as of the
date hereof) and will not be (as of the Closing Date)
excessive, in any material respect, in kind or amount in
light of the ordinary and normal course of business and
reasonably anticipated needs of the BASF Pharmaceutical
Business.
(c) To Seller's Actual Knowledge, the companies have no
liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to
be reflected on, or reserved against in, a consolidated
balance sheet of the Companies or described or referred to
in the notes thereto, prepared in accordance with the Report
Principles consistently applied, except for (i) liabilities
or obligations accrued on the September 30, 2000 balance
sheet contained in the Report, and (ii) liabilities or
obligations arising in the ordinary course of business
(including trade indebtedness) since September 30, 2000. To
Seller's Actual Knowledge, any liabilities for government or
customer paybacks or rebate programs, customs liability or
similar arrangements have either been paid or are accrued on
the September 30, 2000 balance sheet contained in the
Report.
(d) Prior to January 31, 2001 Seller shall deliver to Purchaser
Exhibit 13.20 (d), which shall be a listing of all of the
Companies' third party indebtedness for borrowed money
outstanding, setting forth in each case the principal amount
thereof. No payment defaults have occurred and are
continuing under the agreements and instruments governing
the terms of such indebtedness.
Page 25
(e) Since September 30, 2000 (i) except for the sale or transfer
of the businesses described in clauses (a) through (d) in
the definition "Discontinued/Excluded Businesses" (as
defined above) the Companies have conducted their respective
businesses, and Seller has conducted the BASF Pharmaceutical
Business, only in, and have not engaged in any transaction
other than in accordance with, the ordinary and usual course
of such businesses, and (ii) there has not been any Material
Adverse Effect.
13.21 Exhibit 13.21 and Exhibit 13.10, taken together, set forth a true
and complete list of
(i) each contract pursuant to which any of the Companies is
obligated to expend more than EUR 5,000,000 per annum and which is
not terminable pursuant to its terms by the respective Company on
not more than sixty (60) days' notice (without liability, premium
or penalty), other than purchase orders in the ordinary course of
business;
(ii) each contract between any of the Companies and Seller or any
of Seller's Affiliates, including the Intercompany Manufacturing
Agreements;
(iii) each loan or credit agreement, security agreement, guaranty,
indenture, mortgage, pledge or other agreement or instrument
evidencing indebtedness of any of the Companies in excess of EUR
5,000,000 and that will continue in effect or with respect to which
any of the Companies will have any liabilities following the
Closing;
(iv) any non-competition, restrictive covenant or other agreement
that restricts any of the Companies from operating its business,
including the BASF Pharmaceutical Business, or that would, after
the Closing, to the Best Knowledge of Seller, limit or restrict
Purchaser or any of its Affiliates (including the Companies) or any
successor thereto, from engaging or competing in any line of
business or in any geographic area anywhere in the world;
(v) any material research and development agreement, sales and
marketing agreement, or co-promotion agreement relating to the BASF
Pharmaceutical Business not otherwise listed on Exhibit 13.14 (b);
(vi) joint venture agreement,
(vii) agreement for the sale, disposition, transfer or closure of
any facilities, businesses or operation of Seller relating to the
BASF Pharmaceutical Business or of the Companies, and
(viii) any other contract, agreement, commitment or undertaking
which is otherwise material to the BASF Pharmaceutical Business
taken as a whole (clauses (i) through (viii) collectively, the
"Material Agreements"). Exhibit 13.21 sets forth a correct and
complete list of Material Agreements pursuant to which consents or
waivers are or may be required prior to consummation of the
transactions contemplated by this Agreement (the consents and
waivers disclosed on Exhibit 13.21 being the "Material Agreement
Consents"). The Intercompany Agreements are adequate and sufficient
to permit the Companies to conduct the BASF Pharmaceutical Business
as previously conducted, without any interruption of supply of
materials or services thereunder, and have been negotiated on terms
comparable to or better than those that could be obtained from
third parties under similar circumstances. None of the Companies
are a party to, or otherwise bound by, any con-
Page 26
tracts or agreements imposing off balance sheet commitments,
including any foreign exchange or derivative contract.
13.22 Except as otherwise set forth in Exhibit 13.10, to the Best
Knowledge of Seller, each of the Companies has performed all the
obligations required to be performed by them under, and none of the
Companies is in breach or default under, any Material Agreements.
True and complete copies of all contracts listed in Exhibits 13.10,
13.14(b) and 13.21 have been delivered to Purchaser, and there are
no amendments to, modifications of or significant agreements of the
parties relating to any thereof, which have not been disclosed to
Purchaser. Neither Seller nor any of the Companies has received any
written notice from any other party to any of the Material
Agreements threatening the cancellation or termination thereof.
13.23 As of the date of this Agreement there is no labor strike or other
work stoppage of employees of any of the Companies currently in
effect, and to the Best Knowledge of Seller, none is threatened.
None of the Companies is a party to any collective bargaining,
works council, union contracts, or other agreements which create
any obligation or restriction on the Companies or Purchaser in the
USA with respect to the termination of any employee or employees,
and, to the Best Knowledge of the Seller, there is no activity or
proceeding by any union, works council or other labor organization
to organize or seek to represent any Employees in the USA.
13.24 The Companies maintain insurance coverage with reputable insurers
in such amounts and covering such risks as are in accordance with
normal industry practice for companies engaged in businesses
similar to that of the Companies (taking into account the cost and
availability of such insurance).
13.25 No broker, investment banker, financial advisor or other person
other than Wasserstein Perella & Co., Inc., the fees and expenses
of which will be paid by Seller, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this
Agreement.
13.26 To the Best Knowledge of Seller neither any of the Companies, nor
any of their respective Affiliates, officer, director, employee or
agent (or any Person acting on behalf of any of the foregoing) has
given or agreed to give (i) any gift or similar benefit of more
than nominal value to any customer, supplier, governmental
authority (including any governmental employee or official) or any
other person who is or may be in a position to help, hinder or
assist any of the Companies, the BASF Pharmaceutical Business or
the person giving such gift or benefit in connection with any
actual or proposed transaction relating to the BASF Pharmaceutical
Business, which gifts or similar benefits would individually or in
the aggregate subject the Companies, any of their respective
Affiliates, officer, director, employee or agent to any fine,
penalty, cost or expense or to any criminal sanctions, (ii)
receipts from or payments to any governmental officials or
employees, (iii) commercial bribes or kick-backs, (iv) political
contributions, or (v) any receipts or disbursements in connection
with any unlawful boycott and no such gift or benefit is required
in connection with the operation of the Companies or the BASF
Pharmaceutical Business to avoid any fine, penalty, cost, expense
or Material Adverse Effect.
13.27 (a) Seller shall deliver no later than 30 days after the
date of this Agreement Exhibit 13.27 (a) that shall list
all major Pharmaceutical Products currently marketed by
Seller and its Affiliates and the Active Ingredients used
therein.
Page 27
(b) Exhibit 13.27(b) lists all compounds of Seller and any of
its Affiliates that are in clinical development;
(c) Exhibit 13.27(c) contains a true, accurate and correct
list, separated by type, of all material Exclusive Active
Ingredients and all Mutual Active Ingredients manufactured
by Seller.
(d) Exhibit 13.27 (d) lists all BASF Pharmaceutical Products
that are custom manufactured by Seller or any of its
Affiliates (except the Companies) for third parties.
(e) As of the date hereof, to the Best Knowledge of Seller,
there are no circumstances or facts concerning suppliers
(including Seller, and its Affiliates as suppliers) of
active ingredient, bulk product and finished product to
the Companies that would reasonably be expected to have a
Material Adverse Effect on the continued supply of such
materials.
13.28 To the Actual Knowledge of the Seller, none of the data room files
and records or the writings referred to in Section 14.2 contain an
untrue statement of a material fact or omit to state a material fact
necessary to make the statements and facts contained herein and
therein, in the light of the circumstances in which they were or are
made, false and materially misleading or materially misleading.
Purchaser acknowledges that the opinions of counsel referred to in
Section 13.16.2 have not been delivered to it or provided in the
writings referred to in Section 14.2.
SECTION 14
LIMITATIONS OF REPRESENTATIONS
14.1 Except as expressly set forth in Section 13 above, Seller does not
make any express or implied representations under this Agreement. Any
statutory warranties are hereby excluded to the extent permissible
under mandatory law.
14.2 Any inaccuracy in any Representation made by Seller shall not
trigger any rights of Purchaser under this Agreement to seek
indemnity under Section 15.1(a) to the extent that such inaccuracy
was disclosed prior to the date of this Agreement in a clear and
comprehensible manner in any Exhibits to Section 13 of this
Agreement, in the data room files and records made available to
Purchaser on November 8, 9, 10 and 13, 2000 (a full and complete
copy of which has been provided to Purchaser prior to the date of
this Agreement), or in a writing (provided such writing was
delivered prior to the date, and in the context of this Agreement),
in each case to one or more of the following individuals: Brian
Smith, Honey Lynn Goldberg, Jeffrey Leiden, Steven Weger, James L.
Tyree, Steve Lichter, Terrence Kearney, John Poulos, John Leonard,
Daniel Norbeck, Arthur Higgins and William Dempsey; provided,
however, that no Environmental Reports delivered to Purchaser after
December 13, 2000, or information contained therein, shall be
deemed delivered, disclosed or made available prior to the date of
this Agreement.
14.3 Wherever referred to in Section 13 above, "Actual Knowledge of
Seller" means actual knowledge of any of Thorlef Spickschen, Ulrich
Grau, Robert Kamen, Chris Schroder, Carter Eckert, Jurg Ambuhl,
Markus Kramer, Fried-Walter Munstermann, Robert Anderson, John
Conway, Andreas Biberbach, Joachim Scholz and the individuals
listed on Ex-
Page 28
hibit 24.3(d), and "Best Knowledge of Seller" means actual
knowledge of the aforementioned individuals and such additional
knowledge which any such person could reasonably have obtained
upon due inquiry into the matter concerned.
SECTION 15
INDEMNIFICATION
15.1 (I) Seller shall indemnify and hold harmless the Purchaser and each
of its Affiliates, (including the Companies) (each a member of the
"Purchaser Group") from and against any and all Damages (including,
without limitation, costs and expenses of litigation and reasonable
attorneys' fees) arising out of or related to:
a) (i) The inaccuracy or breach of any of the
Representations; or (ii) any inaccuracy or breach of any
Representation that relates to any of the Companies in
which the Seller currently has less than a 100 % direct or
indirect ownership interest (each, a "Non-Wholly Owned
Company"); provided, however, that Seller's obligation to
indemnify the Purchaser pursuant to this subsection
(a)(ii) for each inaccuracy or breach shall be limited to
(x) the liability associated with such inaccuracy or
breach multiplied by (y) the percentage of the Seller's
ownership interest in the Non-Wholly Owned Company to
which the inaccuracy or breach relates.
b) The failure to perform or the breach of any of the
covenants, obligations or other agreements of Seller
contained in this Agreement; or
c) Any Discontinued/Excluded Businesses or any Discontinued/
Excluded Businesses Liabilities.
(II) Seller shall reimburse each member of the Purchaser Group for
*** of all Excess D2E7 Royalties ("Seller D2E7 Payments"). "Excess
D2E7 Royalties" shall mean the aggregate of all royalties paid on a
worldwide basis under D2E7 License Agreements and that are in
excess of *** of the Annual Net Sales of D2E7. "Annual Net Sales
of D2E7" shall mean the aggregate worldwide annual net sales of
D2E7 up to a maximum of ***. "D2E7 License Agreements" shall mean
license and sublicense agreements executed prior to or after the
date of this Agreement covering patents or patent applications
published on the date of this Agreement, including, without
limitation, ***. Seller shall pay Seller D2E7 Payments to
Purchaser within 30 days after the receipt by Seller of a statement
from Purchaser that sets forth the amount of the Seller D2E7
Payments and the basis upon which the Excess D2E7 Royalties were
calculated, which statements shall be issued by Purchaser on a
quarterly basis.
(III) Seller shall reimburse each member of the Purchaser Group for
*** of any and all expenses, including attorneys fees, incurred in
connection with the defense of any claim, action, complaint, cause
of action or proceeding commenced or threatened, based upon,
arising out of, or related to the allegation that the manufacture,
use or sale of D2E7 by any member of the Purchaser Group infringes
patents or patent applications published on the date of this
Agreement, including, without limitation, *** ("D2E7 Proceeding").
Purchaser shall have the right to control the defense and
settlement of any D2E7 Proceeding. Purchaser shall keep Seller
reasonably informed of all material developments and events
relating to such D2E7 Proceeding, and Seller shall be entitled,
- ------------------------
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
Page 29
at its expense, to employ its own counsel and to participate in,
but not control, any D2E7 Proceeding. Expenses payable pursuant
to this Section 15.1 (III) shall be paid within 30 days of
Seller's receipt of Purchaser's quarterly invoice therefor.
Seller shall be entitled to audit annually, at Seller's expense,
the calculation of amounts payable pursuant to Section 15.1 (II)
and (III).
15.2 Unless expressly provided for otherwise in this Section 15 or in
Section 16.2, Purchaser and the other members of the Purchaser
Group shall be entitled to indemnification pursuant to Section 15.1
(a) above only if:
a) a claim for indemnification based on an individual breach or
inaccuracy of a Representation exceeds the amount of ***
(each, an "Individual Claim"); and
b) the total amount of all Individual Claims exceeds the amount
of ***.
For purposes of calculating amounts pursuant to this Section 15,
all acts, occurrences, conduct or sets of facts that relate to the
same subject matter (or, in the case of a breach of the
Representation made in Section 13.11.2, all acts, occurences,
conduct or sets of facts that relate to all breaches of such
Representation) shall be considered aggregated as a single
Individual Claim.
15.3 If the aforementioned threshold of *** is exceeded, Seller shall
be liable for the entire claim amount that exceeds *** up to a
maximum amount equal to *** of the Aggregate Purchase Price as
adjusted pursuant to this Agreement.
15.4 The limitation of the liability of Seller set forth in Sections
15.2 and 15.3 above shall not apply in case of a violation of any
Representation made in Sections 13.1 through 13.4, Section 13.9 and
Section 13.15.3(a). In this case, the liability of the Seller shall
be limited to the amount of the Aggregate Purchase Price as
adjusted pursuant to Section 9.
15.5 Any amounts owing or paid by Seller to Purchaser pursuant to
Section 15.1 shall be reduced or refunded if and to the extent
Purchaser or any other member of the Purchaser Group has received
or receives insurance proceeds under any policy of insurance.
15.6 If and to the extent to which specific provisions have been made
in the Closing Net Asset Value Statement with respect to a matter
which is the subject of a claim for indemnification pursuant to
Section 15.1 above, such claim for indemnification shall be
reduced by the amount of such provision.
15.7 Any payment made by Seller to Purchaser or any other member of the
Purchaser Group with respect to a claim of Purchaser pursuant to
Section 15.1 above or Section 19 below is an adjustment of the
Aggregate Purchase Price as allocated pursuant to this agreement.
- ------------------------
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
Page 30
15.8 Except as set forth in Section 16.2, any claims of Purchaser or any
other member of the Purchaser Group pursuant to Section 15.1(a)
above are subject to the following survival periods
(Verjahrungsfristen), unless Purchaser has notified Seller of a
specific claim in writing before the expiration of the applicable
survival period and has initiated arbitration proceedings in the
subject matter within six months of such notification in which case
the survival period for such claim shall be interrupted
(unterbrochen):
a) claims pursuant to Sections 13.1 through 13.4, 13.9 and
13.15.3(a) above, and claims pursuant to Sections 13.13
and 13.14 which are based on a defect of title, shall be
subject to a survival period of ***;
b) claims related to environmental issues pursuant to
Section 13.18.1 through 13.18.5 shall be subject to a
survival period of ***; and
c) claims not based on a defect in title and related to
intellectual property pursuant to Sections 13.14 through
13.17 shall be subject to a survival period of ***;
and
d) all other claims shall be subject to a survival period of
***.
All survival periods shall commence at the Closing.
15.9 The provisions of this Section 15 shall not apply to any indemnity
under any provision of this Agreement other than pursuant to
Section 15.1, including indemnification with respect to Taxes set
forth in Section 18, which shall be governed solely by Section 18.
SECTION 16
EXCLUSION OF OTHER CLAIMS
16.1 Following the Closing, except for (a) Purchaser's right to adjust
the Aggregate Purchase Price pursuant to Section 9 above, (b)
claims for indemnification pursuant to Section 15 above, (c) claims
pursuant to Section 16.2, (d) claims under the Tax indemnity in
Section 18, (e) claims under Sections 19, 21, 22, 23 and 26 below,
and (f) claims for specific performance of covenants and
obligations of Seller under this Agreement, Purchaser and the other
members of the Purchaser Group shall not be entitled to bring any
claims against the Seller under this Agreement in connection with
the condition of the BASF Pharmaceutical Business whether for
reduction of the purchase price, rescission, damages or any other
legal remedies regardless of their legal basis including breach of
duty prior to contract (culpa in contrahendo) and tort. For the
avoidance of doubt, this Section 16 shall not limit a party's
ability to bring other claims under any other agreement, including
any Intercompany Agreement, executed by Seller or any Affiliate of
Seller.
16.2 Claims based on fraud or intentional acts of Seller are not
excluded from the immediately preceding paragraph, nor are any such
claims subject to the limitations on indemnification contained in
Section 15.
- ------------------------
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
Page 31
V.
COOPERATION, INDEMNITIES, CONTESTS
SECTION 17
COOPERATION
17.1 Each party hereto shall, and shall cause the Companies to, provide
to the respective other party hereto such cooperation and
information as any of them reasonably may request in filing any Tax
return, mandatory Tax return or claim for refund or for the
preparation of any audit and the Party requesting such cooperation
shall reimburse the other Party for any reasonable out of pocket
expenses incurred by such cooperating Party in complying with the
request for cooperation. Such cooperation and information shall
include providing copies of all relevant portions of relevant Tax
returns and relevant records. Each party will retain and Purchaser
will cause the Companies to retain all Tax returns and all material
records and other documents relating to Tax matters of the
Companies for any taxable period or a portion thereof ending on or
before the Closing Date until the later of the expiration of the
statute of limitations for the taxable periods to which the Tax
returns and other documents relate or eight years following the due
date for such Tax returns. Thereafter, the party holding such Tax
returns or other documents may dispose of them, provided that such
party shall give to the other party written notice and an
opportunity to take custody thereof prior to disposing of them.
17.2 Seller or Purchaser, respectively, shall be responsible for the
preparation and filing of all Tax returns related to the Companies
for fiscal years, or other periods for which Tax returns are due,
ending on or prior to the Closing Date, consistent with the past
practice of Seller and its Affiliates in the normal course of
business prior to Closing, as follows: Seller shall be responsible
for those Companies for which Seller or any Seller Companies
prepared and filed Tax returns prior to Closing, and Purchaser
shall be responsible for those Companies for which such Company or
any other Company prepared and filed Tax returns prior to Closing.
Seller and Purchaser shall provide each other, for review and
approval, with a copy of each such Tax return at least 3 weeks
prior to the due date (including any extension thereof) for the
filing of such return. Each party's approval may not be
unreasonably withheld, and in no event shall this Section operate
to cause any such return to be filed after the due date (including
any extension thereof) for filing such return.
17.3 The Seller and its Affiliates, and the Purchaser and the Companies
shall each have the duty to reasonably cooperate in the prosecution
or defense of all lawsuits and claims involving the BASF
Pharmaceutical Business for events occurring prior to Closing, and
the party requesting such cooperation shall reimburse the other
party for any reasonable expenses incurred by such cooperating
party in complying with the request for cooperation.
Notwithstanding the foregoing, neither party shall be obligated to
take or omit to take any action in connection with a lawsuit or
claim which the party, acting reasonably and in good faith does not
believe to be in its best interest.
SECTION 18
TAX INDEMNITY
18.1 Seller shall indemnify Purchaser on an After-Tax Basis against any
liability for Taxes including any reduction of any tax loss carry
forward or tax credit carry forward included in the Closing Net
Asset Value, relating to the Companies for any taxable period
ending
Page 32
on or before the Closing Date and any Pre-Closing Straddle
Period if and to the extent such liability exceeds the liabilities
or accruals taken into account by the Closing Net Asset Value
Statement in accordance with Section 10.1 for Taxes relating to
said period provided, however, that such obligation to indemnify
shall be limited to the percentage of such liability which
corresponds to the percentage of the direct or indirect ownership
interest of Seller in the Companies sold hereunder. The foregoing
obligation of Seller shall not apply if and to the extent to which
the liability results from an adjustment for depreciation or
accruals or from a write-up after previous depreciation or any
other reallocation of deductible expenses made as regards a taxable
period ending on or prior to the Closing Date or any Pre-Closing
Straddle Period into a taxable period beginning after the Closing
Date or in a Post-Closing Straddle Period and is compensated for by
a Tax reduction in a taxable period beginning after the Closing
Date or a Post-Closing Straddle Period that arises solely as a
result of such adjustment; provided, however, that the net present
value of such future Tax reduction shall be discounted at an
interest rate of 6 percent p.a. "After-Tax Basis" shall mean
grossing up of an indemnification payment under this Agreement for
a Tax cost, if any, to the person receiving such payment arising
from the receipt or accrual thereof, and in the case of
indemnification payments under this agreement, reduced by the Tax
benefit, if any, to the person receiving such payment resulting
from its or a Company's incurring the Damages, loss, liability,
damage or expense giving rise to such payment or the payment of any
Taxes indemnified under Section 18. "Straddle Period" shall mean
any taxable period beginning on or before and ending after the
Closing Date. "Post-Closing Straddle Period" shall mean the portion
of the Straddle Period beginning after the Closing Date.
"Pre-Closing Straddle Period" shall mean the portion of the
Straddle Period ending on the Closing Date.
18.2 Provided there are no amounts due from Seller to Purchaser under
Section 18.1 hereof, Purchaser shall pay to Seller any Tax refund
or credit received which relates to the Companies and is
attributable to any taxable period that ends on or before the
Closing Date or any Pre-Closing Straddle Period provided that such
refund or credit has not been booked in the Closing Net Asset Value
Statementor is not attributable to the use in such period of a
loss, credit or other Tax item attributable to a taxable period
beginning after the Closing Date or a Post-Closing Straddle Period.
18.3 For the purpose of Section 18.1 and 18.2, Taxes relating to the
BASF Pharmaceuticals Business for any Pre-Closing Straddle Period
shall be computed as if this period were a separate business year
and will not be affected by developments in the Post-Closing
Straddle Period. Depreciations and similar items will be allocated
to the Pre-Closing Straddle Period on the one hand and the rest of
the Post-Closing Straddle Period on the other hand on a PRO RATA
TEMPORIS basis. All other items of income, gain, loss, expense,
deduction or credit of the Pre-Closing Straddle Period and the
Post-Closing Straddle Period shall be determined based on an
interim closing of the books as of the close of business on the
Closing Date. In case of a loss incurred in the Pre-Closing
Straddle Period, the Tax loss carry forward shall be treated as a
Tax Asset.
18.4 Any claim under this Section 18 shall be subject to a survival
period expiring *** after the Tax assessment for the relevant Tax
and the relevant period has become final.
18.5 Any payment made by Seller or by Purchaser pursuant to this
Section 18 is an adjustment of the Aggregate Purchase Price.
- ------------------------
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
Page 33
SECTION 19
SETTLEMENT AND ELIMINATION OF INTERCOMPANY OBLIGATIONS
19.1 For purposes of this Agreement, the term (i) "BASF Intercompany
Obligations" means all intercompany notes, cash advances,
receivables and payables between any Seller Company, on the one
hand, and any of the Companies, on the other hand, except for
Intercompany Trade Accounts, (ii) "Intercompany Trade Accounts"
shall mean trade payables and trade receivables arising from
transactions between any of the Companies, on the one hand, and any
of the Seller Companies, on the other hand, (iii) "Intracompany
Trade Accounts" shall mean trade payables and trade receivables
arising from transactions between any of the Companies, as shown on
the books and records of the relevant Companies as of the Closing
Date, and (iv) "Seller Company" means Seller or any of its
Affiliates , other than any Companies.
19.2 Prior to the Closing, Seller shall cause all Intercompany Trade
Accounts and Intracompany Trade Accounts, which are outstanding as
of the month ending no more than 30 days prior to Closing to be
settled and paid.
19.3 Effective as of the Closing, all BASF Intercompany Obligations due
and payable as of the Closing Date or attributable to any period
ending on or prior to the Closing Date shall, for all purposes of
this Agreement, be netted as between the appropriate obligors and
obligees and the resulting balances shall be settled as of the
Closing in a manner reasonably satisfactory to Purchaser, with the
result that as of and following the Closing, there shall be no
further obligation or liability with respect to any BASF
Intercompany Obligations as of the Closing Date.
19.4 Within 60 days following Closing, Purchaser and Seller shall
determine and reconcile all remaining Intercompany Trade Accounts
outstanding as of the Closing.
19.5 Effective as of the Closing, Seller shall not assert and hereby
waives or agrees to cause to be waived, claims by Seller or any of
its Affiliates against the Companies (a) relating to transfer
pricing of supplies and/or services including but not limited to
research and development activities provided prior to Closing or
(b) arising out of German tax sharing agreements (Korperschaft- and
Gewerbesteuerumlage) between the Seller and any of its Affiliates,
on the one hand, and any of the Companies, on the other hand, in
effect during the time prior to the Closing (clauses (a) and (b)
collectively, "Non-Asserted Claims"). Purchaser shall cause the
Companies to not assert, and to waive any Non-Asserted Claims of
such Companies against the Seller or Affiliates of the Seller
(other than the Companies) insofar as such claims relate to the
time prior to the Closing. Nothing set forth in this Section 19.5
shall affect, derogate, limit or otherwise prejudice Purchaser's
rights under this Agreement, including, without limitation, Section
18, or any other agreement entered into in connection with this
Agreement, or any written agreement between Seller or its
Affiliates, and any of the Companies, that survives the Closing
with respect to periods after the Closing.
Page 34
SECTION 20
CERTAIN CONTEST PROVISIONS
20.1 After acquiring knowledge of any claim of a third party which may
trigger a claim by Purchaser or any other member of the Purchaser's
Group against Seller for indemnification pursuant to Section 15
above or of any notice of administrative or judicial proceeding or
proposed audit or Tax assessments relating to or affecting any of
the Companies and with respect to which Purchaser or any other
member of the Purchaser's Group intends to seek indemnification
against Seller, Purchaser shall promptly give written notice
thereof to Seller., provided, however, that any failure of
Purchaser to so notify the Seller shall not relieve the Seller from
any obligations hereunder to provide indemnification to the extent
Seller is not materially prejudiced by such failure and in any
event shall not relieve it from any liability which it may have
otherwise than on account of Section 15. Such notice shall specify
in reasonable detail the issue for such claim and shall include a
copy of any relevant correspondence so far exchanged in this
matter, if any. Within thirty (30) days of its receipt of such
notice, Seller may elect to assume control over such administrative
or judicial proceeding, audit or assessment or the defense of such
claim, so long as Seller acknowledges in writing its obligation to
indemnify Purchaser and/or any other member of the Purchaser's
Group, as the case may be, in full with respect to such claims. If
Seller so elects, Seller may so assume control and may employ
counsel reasonably acceptable to the Purchaser, at the Seller's
sole costs, expense and risk. As long as Seller is defending a
claim in accordance with this Section 20.1, Purchaser shall provide
or cause to be provided to Seller, any information reasonably
requested by Seller relating to such claim, and Purchaser shall
otherwise cooperate with and support Seller and its representatives
in good faith in order to facilitate the effective contest of such
claim, any reasonable out of pocket expenses expenses incurred by
Purchaser in this regard to be paid by the Seller. Seller shall
inform Purchaser of all developments and events relating to such
claim and Purchaser shall be entitled, at its expense, to employ
its own counsel and to attend and participate in , but not control,
all conferences, meetings and proceedings relating to such claim.
If Seller elects not to control such proceeding, audit or
assessment or the defense of such claim, Seller shall be entitled,
at its expense, to employ its own counsels, and to attend and
participate in but not control all conferences, meetings and
proceedings relating to such claim. After having given written
notice to Purchaser of Seller's election to assume control of
defense of any such claim, Seller shall, however, not be liable to
Purchaser for any legal expenses subsequently incurred by Purchaser
in connection with the defense as long as Seller assumes and
conducts such defense in a timely and diligent manner.
Notwithstanding the foregoing, this Section 20 shall not apply to
Individual Claims unless and until all such claims exceed the
amounts contained in Section 15.2. With respect to any third party
claim for which indemnification is available ("Indemnified Claim")
that is combined or joined with one or more claims which are not
Indemnified Claims or with respect to an Indemnified Claim under
which both the indemnified party and the indemnifying party may be
liable, which either party desires to contest, control of such
claim shall rest with the party having the larger amount in
dispute, and the party in control may not settle or compromise any
such claim without the prior written consent of the other party.
20.2 If Seller does not assume control of a defense of a specific claim
in accordance with the provisions in Section 20.1, Purchaser shall
have full control of such defense and such proceedings, including
the right to settle, and Seller shall have no right to object to
the results obtained by the Purchaser with respect to such claim.
If requested by Purchaser,
Page 35
Seller shall cooperate in good faith with Purchaser in order to
contest effectively such claim. Seller shall be entitled, at its
expense, to employ its own counsel and to attend and participate
in, but not control, all conferences, meetings and proceedings
relating to such claim.
20.3 If Seller does assume control of a defense of a claim in
accordance with the provisions in Section 20.1, it may, without
the prior consent of Purchaser, settle or compromise or consent
to the entry of any judgment with respect to any litigation, or
any investigation or proceeding by any governmental agency or
body, commenced or threatened, on any claim whatsoever in respect
of which indemnification could be sought: (i) under Sections 15
and 18, but only if such settlement, compromise or consent
satisfies the conditions described in clauses (i), (ii) and (iii)
of Section 26.4; or (ii) under Section 18, but only if such
settlement, compromise or consent does not materially affect
Taxes, (including by way establishing a precedent for Tax
treatment of a Tax item of the Purchaser or any of the Companies
in a taxable period beginning after the Closing Date or in a
Post-Closing Straddle Period. If the Seller does not receive the
written consent of the Purchaser which may not be unreasonably
withheld Purchaser is deemed to have assumed control of the
defense and the liability of Seller to indemnify the Purchaser is
limited to the amount payable under the proposed settlement,
compromise or consent. If any such proposed settlement compromise
or consent does not satisfy all of the conditions in clause (i)
of the preceding sentence or the condition in clause (ii) of the
preceding sentence as applicable, the Seller must receive the
written consent of the Purchaser prior to entering into same.
20.4 The provisions of this Section 20 shall not apply to
Section 15.1(II) or 15.1(III).
VI.
EMPLOYEE MATTERS
SECTION 21
GENERAL EMPLOYEE MATTERS
21.1 Seller and its Affiliates shall be responsible for any and all
payments, withholding and reporting obligations that arise on or
after the Closing Date under terms of the Seller's stock option
programs including payments, if any, which may be made by the
Seller in its sole discretion, to settle option rights under the
programs.
21.2 No employee or any other person (except the parties to this
Agreement) shall be entitled to assert any claim against the
Purchaser, its Affiliates or any of the Companies relating to the
employment, compensation, employee benefits or benefit plans or
programs based on or arising from any provisions of this Agreement.
21.3 Seller shall terminate, or cause to be terminated, prior to the
Closing the participation of Employees in any stock purchase plan
maintained by Seller or its Affiliates, and Seller and its
Affiliates shall be responsible for any and all payments,
withholding and reporting obligations that arise under the terms of
any such stock purchase plan.
21.4 If the Pension Liabilities exceed the sum of (x) any cash, and the
fair market value of the other assets as determined by mutual
agreement of Purchaser and Seller, transferred to
Page 36
pension arrangements of Purchaser pursuant to Section 23.3 as
part of the Group Pension Transfer Amount, (y) any cash, and the
fair market value of other assets as determined by mutual
agreement of Purchaser and Seller transferred to the Purchaser
U.S. Defined Benefit Plan as part of the U.S. Pension Transfer
Amount (excluding any accruals or interest credited after the
Closing Date), and (z) the pension obligations as reflected in
the Closing Net Asset Value Statement (the sum of (x), (y) and
(z) hereinafter referred to as the "Transferred Amounts"), Seller
agrees to indemnify Purchaser for such excess amount (such excess
hereinafter referred to as "Purchaser Pension Indemnification
Amount"). Seller agrees to pay Purchaser in cash the Purchaser
Pension Indemnification Amount as soon as practicable but not
later than 30 days after the date of the actuarial determination
which fixes the Pension Liabilities. If the Transferred Amounts
exceed the Pension Liabilities, Purchaser agrees to indemnify
Seller for such excess amount (such excess amount hereinafter
referred to as "Seller Pension Indemnification Amount").
Purchaser agrees to pay Seller in cash the Seller Pension
Indemnification Amount as soon as practicable but not later than
30 days after the date of the actuarial determination which fixes
the Pension Liabilities. Interest from the Closing Date to the
date of payment, at a rate of 6% compounded annually, shall be
paid along with the Purchaser Pension Indemnification Amount or
Seller Pension Indemnification Amount, as applicable. Seller and
Purchaser jointly shall provide Seller's and Purchaser's
actuaries with all relevant plans and employee census information
needed to calculate the Pension Liabilities within 45 days after
Closing. The Pension Liabilities shall be determined by mutual
agreement between Seller and Purchaser within 180 days after
their actuaries' receipt of said information. If Seller and
Purchaser cannot agree on the amount of the Pension Liabilities
within said 180 period, the Seller and Purchaser shall appoint
within five days a mutually acceptable actuary who shall review
their calculations and within 45 days after appointment, render a
final and binding decision on the amount of the Pension
Liabilities and who shall, in making such decision, be limited on
a plan by plan basis to either the position of Seller or
Purchaser. The cost of the actuary shall be borne jointly by
Seller and Purchaser. In connection with the procedures referred
to herein, Seller and Purchaser shall provide each other and the
actuaries referred to herein access to the relevant business
records and other relevant documents, and shall permit the other
party to consult with its employees and the employees of its
Affiliates.
21.5 The indemnifications provided for in Section 21.4 above are
separate and apart from any other indemnification provision of this
Agreement. Any payment made by Seller or by Purchaser pursuant to
Section 21.4 shall be treated as an adjustment of the Aggregate
Purchase Price.
SECTION 22
US EMPLOYEE BENEFIT MATTERS
22.1 Seller and Purchaser agree that the transactions contemplated by
this Agreement shall not constitute a severance of employment of
any of the U.S. Employees. Purchaser agrees to continue, without
interruption, the employment of the U.S. Employees. The Purchaser
may, however, terminate any U.S. Employee at any time for any
reason provided, however, Purchaser shall be responsible for any
severance obligations incurred with respect to the termination of
any U.S. Employee after the Closing.
22.2 Subject to the provisions of this Section 22, U.S. Employees shall
be eligible to participate in and be subject to the provisions of
all employee benefit plans, programs and policies of Purchaser and
its Affiliates, other than Purchaser's defined benefit plans,
qualified
Page 37
or unqualified, on the same basis as similarly situated employees
of the Purchaser and its Affiliates including any applicable
severance pay plan or policy.
22.3 To the extent that service is relevant for purposes of determining
participation, vesting or eligibility for benefits under any
health, welfare, post-employment medical or life insurance plan, or
any vacation or severance plan, program or policy established,
maintained or contributed to by the Purchaser or any of its
Affiliates, U.S. Employees shall receive credit under the terms of
such employee benefit plan, program or arrangement for service with
the Seller and its Affiliates prior to the Closing.
22.4 Effective as of the Closing, each U.S. Employee and their eligible
dependents who was participating in the health and welfare benefit
plans and programs of the Seller and its Affiliates shall become
entitled to participate in the medical, dental, life insurance and
other welfare benefit plans provided by Purchaser or its Affiliates
to similarly situated employees. To the extent that any welfare
benefit plan in which any U.S. Employee participates after the
Closing Date (i) imposes any pre-existing condition limitation,
such condition shall be waived, or (ii) has a deductible or
requires a co-payment that is subject to maximum out-of-pocket
limitation, each U.S. Employee will receive credit toward any such
co-payments and deductibles under such welfare benefit plan of
Purchaser or its Affiliates for any costs paid by the U.S. Employee
under the applicable Seller welfare benefit plan or program during
the portion of the relevant plan year or other period preceding the
Closing under such welfare plan of Purchaser or its Affiliates.
22.5.1 Effective as of the Closing, U.S. Employees shall cease active
participation in all qualified and non-qualified defined benefit
pension arrangements maintained by the Sellers' BASF Corporation
Affiliate (the "Seller U.S. Defined Benefit Plans"), and Seller
shall take, or cause to be taken, all such action as may be
necessary to effect such cessation of their participation under
Seller U.S. Defined Benefit Plans as of the Closing. Purchaser
will take, or cause to be taken, all action as may be necessary
to cause such U.S. Employees who are participants in the BASF
Corporation Salaried Employees' Pension Plan (the "Seller U.S.
Qualified Defined Benefit Plan") to become participants in a
defined benefit pension plan which meets the requirements for
qualification under Section 401 (a) of the Code to be established
by Purchaser or one of its Affiliates (the "Purchaser U.S.
Defined Benefit Plan") as of the Closing and which provides each
such U.S. Employee benefits which are substantially similar to
those provided under the Seller U.S. Qualified Defined Benefit
Plan as of the Closing. Each U.S. Employee who was a participant
in the Seller U.S. Qualified Defined Benefit Plan on the Closing
shall be granted credit for service with Seller and its
Affiliates which was recognized under the terms of the Seller
U.S. Qualified Defined Benefit Plan as of the Closing for
purposes of participation, eligibility, vesting, retirement
eligibility and, subject to the transfer of assets and
liabilities contemplated by Section 22.5.2 below, benefit accrual
under the Purchaser U.S. Defined Benefit Plan.
Purchaser will take, or cause to be taken, all action necessary to
cause (i) U.S. Employees and (ii) retirees who were employees of
the Companies immediately prior to retirement (the "Retirees"),
participating in the BASF Corporation Supplemental Executive
Retirement Plan, the BASF Corporation Policy No. BCR 008 Retirement
Supplement Plan, the Excess Retirement Plan of BASF Corporation or
the Boots Company Supplemental Executive Retirement Plan
(collectively, the "Seller U.S. Non-Qualified Defined Benefit
Plan") to become participants in a non-qualified defined benefit
plan to be established by Purchaser or one of its Affiliates
(the "Purchaser U.S. Non-Qualified Defined Benefit
Page 38
Plans") which shall (i) accept the Pension Liabilities with
respect to such U.S. Employees or Retirees and (ii) provide such
U.S. Employees and Retirees benefits which are substantially
similar to the Pension Liabilities associated with such U.S.
Employees and Retirees under the Seller U.S. Non-Qualified
Defined Benefit Plans as of the Closing. Each U.S. Employee or
Retiree who was a participant in the Seller U.S. Non-Qualified
Defined Benefit Plans on the Closing shall be granted credit for
service with Seller and its Affiliates which was recognized under
the terms of the Seller U.S. Non-Qualified Defined Benefit Plans
as of the Closing for purposes of participation, eligibility,
vesting, retirement eligibility and, to the extent included in
the Pension Liabilities, benefit accrual under the Purchaser U.S.
Non-Qualified Defined Benefit Plan.
22.5.2 As soon as practicable after Closing, Seller shall cause the
Seller U.S. Qualified Defined Benefit Plan to transfer to the
Purchaser U.S. Defined Benefit Plan an amount (hereinafter
referred to as the "U.S. Pension Transfer Amount") in cash, or in
securities to be mutually agreed on by Seller and Purchaser, in
respect of the Pension Liabilities determined with respect to the
Seller U.S. Qualified Defined Benefit Plan. The U.S. Pension
Transfer Amount will be a total amount of assets equal to the
amount required to make the transfer compliant in all respects
with requirements under Section 414(l) of the Code. Interest on
the U.S. Pension Transfer Amount from the date the U.S. Pension
Transfer Amount is determined to the date of transfer at a rate
of 6% compounded annually shall be transferred along with the
U.S. Pension Transfer Amount. The amount necessary to comply with
Section 414(l) of the Code shall be determined using the
actuarial assumptions provided in the attached Exhibit 22.5.2.
22.5.3 Prior to any transfer of assets and liabilities, Seller shall
present an opinion of counsel reasonably satisfactory to Purchaser
to the effect that the terms of the Seller U.S. Qualified Defined
Benefit Plan meet in all material respects the requirements of
Section 401(a) of the Code (or can be timely amended to meet such
requirements) and other applicable laws, and Purchaser shall
present an opinion of counsel reasonably satisfactory to Seller to
the effect that the terms of Purchaser U.S. Defined Benefit Plan
meets in all material respects the requirements of Section 401(a)
of the Code (or can be timely amended to meet such requirements).
22.5.4 Seller and Purchaser jointly shall provide Seller's and
Purchaser's actuaries all relevant documents and employee census
information needed to calculate the U.S. Pension Transfer Amount
within 45 days after Closing. The U.S. Pension Transfer Amount
shall be determined by mutual agreement between Seller and
Purchaser within 60 days after receipt of said information. If
Seller and Purchaser cannot agree on the amount of the U.S.
Pension Transfer Amount within said 60 day period, the Seller and
Purchaser shall appoint within five days a mutually acceptable
actuary who shall review their determinations and within 45 days
after appointment, render a final binding decision on the amount
of the U.S. Pension Transfer Amount and who shall, in making such
decision, be limited to either the position of Seller or
Purchaser. The cost of the actuary shall be borne by Seller and
Purchaser. In connection with the procedures referred to herein,
Seller and Purchaser shall provide each other and the actuaries
referred to herein access to the relevant business records and
other relevant documents and shall permit the other party to
consult with its employees and the employees of its Affiliates.
22.5.5 In transferring the assets and liabilities from the Seller U.S.
Qualified Defined Benefit Plan to Purchaser U.S. Defined Benefit
Plan, Purchaser and its Affiliates and Seller and its Affiliates
shall comply with all applicable requirements of Sections 411(d)
(6), 414(l)
Page 39
and 401(a)(12) of the Code. Purchaser and its Affiliates shall,
in the administration of Purchaser U.S. Defined Benefit Plan,
comply with Sections 411(d)(6), 414(l) and 401(a)(12) of the Code
and regulations thereunder with regard to accrued benefits
transferred from the Seller U.S. Qualified Defined Benefit Plan.
Further, the Purchaser U.S. Defined Benefit Plan shall honor the
provisions of the domestic relations orders that are contained in
the personnel and pension files of the U.S. Employees which are
delivered to Purchaser and which previously have been determined
qualified by Seller pursuant to Section 206(d)(3) of ERISA and
Section 414(p) of the Code, and shall administer such orders in
accordance with the terms thereof. Notwithstanding anything to
the contrary in this Section 22.5, Purchaser reserves the right
to amend, modify or suspend the Purchaser U.S. Defined Benefit
Plan at any time or from time to time or terminate such plan at
any time.
22.5.6 In connection with the implementation of this Section 22.5,
Purchaser and its Affiliates and Seller and its Affiliates shall
cooperate in the exchange of information, the notification of
affected employees and in the preparation of any documentation
required to be filed with the IRS, DOL (U.S. Department of Labor),
PBGC (U.S. Pension Benefit Guaranty Corporation) or any other
applicable governmental agency.
22.5.7 Except with respect to the liabilities that have been actually
transferred to the Purchaser pursuant to Section 22.5, on and after
the date of this Agreement, Seller shall retain all liability for
the administration, management and funding of Seller's U.S. Defined
Benefit Plans, qualified and non-qualified, and Purchaser shall
have no such liability with respect to those Plans.
22.6 As of the Closing Date, the U.S. Employees shall cease active
participation in the Seller Employee Savings Plan (the "Seller U.S.
Defined Contribution Plan") and Purchaser will take, or cause to be
taken, all action as may be necessary to cause such U.S. Employees
to become eligible to participate in a U.S. Qualified Defined
Contribution Plan of Purchaser or one of its Affiliates (the
"Purchaser U.S. Defined Contribution Plan") as of such Date, or as
soon thereafter as is administratively practical, on the same basis
as similarly situated employees of the Purchaser. Service of each
U.S. Employee recognized under terms of the Seller's U.S. Defined
Contribution Plan for periods prior to the Closing Date shall be
credited to the U.S. Employee for all purposes (including
eligibility and vesting) under the Purchaser U.S. Defined
Contribution Plan.
Seller shall advise participants in the Seller U.S. Defined
Contribution Plan who are U.S. Employees of their right to elect to
receive a rollover distribution of their individual nonforfeitable
account balances and nonforfeitable accrued benefits, respectively,
in accordance with the terms of such plan by reason of the
transactions contemplated by this Agreement. Any U.S. Employees who
are participants in the Seller U.S. Defined Contribution Plan shall
be 100% vested in their accrued benefits and individual account
balances under such Seller U.S. Defined Contribution Plan as of the
Closing Date. Purchaser and Seller may agree to allow U.S.
Employees who are participants in the Seller U.S. Defined
Contribution Plan to elect direct rollover distributions from such
Seller U.S. Defined Contribution Plan to the Purchaser U.S. Defined
Contribution Plan in a directed rollover. Effective as of the
Closing Date, Purchaser shall amend the Purchaser U.S. Defined
Contribution Plan to the extent necessary to enable U.S. Employees
who were participants in the Seller U.S. Defined Contribution Plan
to elect rollover distributions, which may include any outstanding
loan notes from such Seller U.S. Defined Contribution Plan in
accordance with Section 402 of the Code. In order to rollover an
out-
Page 40
standing loan note, a U.S. Employee shall be required to execute
(i) an acknowledgement that the Purchaser U.S. Defined Contribution
Plan will be substituted for the applicable Seller U.S. Defined
Contribution Plan as the obligee of the loan note, (ii) a payroll
authorization form and (iii) any other forms deemed necessary by
the plan administrator for the Purchaser U.S. Defined Contribution
Plan. No other assets shall be transferred from any Seller U.S.
Defined Contribution Plan to the Purchaser U.S. Defined
Contribution Plan other than as specified herein. All directed
rollovers between any Seller U.S. Defined Contribution Plan and any
Purchaser U.S. Defined Contribution Plan will be in the form of
cash and loan notes, as described herein.
SECTION 23
NON-US EMPLOYEE PENSION BENEFIT MATTERS
23.1 Seller and Purchaser agree that the transaction contemplated by
this Agreement shall not constitute a severance of employment of
any of the Employees participating in a Group Pension Arrangement
regardless of whether or not a transfer of Pension Liabilities will
be made from a Group Pension Arrangement to a pension arrangement
of the Purchaser.
23.2 To the extent that service is relevant for purposes of determining
participation, vesting or eligibility for benefits under a
Purchaser's pension arrangement in which an Employee may
participate, the Employees shall receive credit under the terms of
such pension arrangement for pensionable service they had under the
Group Pension Arrangement. Seller shall use its best endeavours to
allow Purchaser to continue the membership of the Employees in the
Group Pension Arrangement for one year after Closing or, if
shorter, such period which is admissible under the respective local
law or plan rules. During the temporary period of participation the
Purchaser shall make contributions or premiums to the Group Pension
Arrangement at an equivalent rate as Seller makes for its similarly
situated employees.
In Germany, Purchaser may ask for approval to continue the
membership of the relevant Employees in the BASF Pensionskasse VVaG
for life, and in such event Seller shall use its best endeavours to
assist Purchaser in securing such approval and assure that it will
be granted. Purchaser shall then be required to accept the statutes
and general policy conditions of the BASF Pensionskasse VVaG
provided that the statutes and policy conditions are applied on a
uniform and non-discriminatory basis as to the Seller's employees
and employees of the Companies. In particular, Purchaser shall be
required to pay as and when required the necessary contributions,
at an equivalent rate as Seller contributes for its similarly
situated employees, to fund the pension liabilities accruing after
Closing, including any reasonable administration fee to which
Seller and Purchaser shall mutually agree.
23.3 If a transfer of Pension Liabilities shall be made from a Group
Pension Arrangement to a pension arrangement of the Purchaser,
Seller and Purchaser agree to use their best endeavours to procure
that any necessary approval of the appropriate regulatory authority
is obtained as soon as reasonably practicable after the expiry of
the Seller's participation period in the Group Pension Arrangement.
If the Purchaser becomes responsible for meeting any Pension
Liabilities accrued prior to Closing under a Group Pension
Arrangement following transfer of such liabilities, Seller shall
use its best endeavours to ensure that assets held in trust funds
or insurance contracts in respect of such liabilities are
transferred to suitable pension arrangements of the Purchaser.
Seller will endeavour to ensure that such asset transfers shall be
equivalent to such amount required under locally applicable
Page 41
transfer law and regulations (the "Group Pension Transfer Amount").
Interest on the Group Pension Transfer Amount from the Closing Date
to the date of transfer at a rate of 6% compounded annually shall
be transferred along with the Group Pension Transfer Amount.
In the event that, during the period of temporary participation in
a Group Pension Arrangement, a contribution or premium is paid in
respect of Pension Liabilities that is subsequently assumed by the
Purchaser, then Seller shall use its best endeavours to ensure that
the amount of these premiums or contributions, including
appropriate interest, is transferred to the Purchaser's pension
arrangements, less reasonable deduction for administrative costs,
as determined by mutual agreement of Seller and Purchaser. In the
event any such transfer for post-Closing contributions or premiums,
or interest thereon, cannot be made for any reason, Seller shall
make a direct cash payment to Purchaser to reimburse Purchaser for
any such amounts. Such payment will be within 30 days after
Purchaser's notification to Seller.
23.4 Seller will permit no transfer of the Pension Liabilities and the
assets related thereto from a Group Pension Arrangement unless
Seller is satisfied as to the nature of the pension benefits which
will be provided by Purchaser for the respective Employees.
23.5 In transferring Pension Liabilities from the Group Pension
Arrangement to the pension arrangement of Purchaser, Seller and
Purchaser shall comply with all applicable legal requirements.
23.6 If under local requirements the consent of an employee is required
to a transfer of Pension Liabilities, such consent shall be sought
by Seller and Purchaser.
VII.
ADDITIONAL OBLIGATIONS PRIOR TO THE CLOSING
SECTION 24
CONDUCT OF BUSINESS PRIOR TO CLOSING
24.1.1 Seller covenants that it will, or, subject to the restrictions
established by applicable mandatory law, will cause the Companies
to, conduct the BASF Pharmaceutical Business in the ordinary
course of business and consistent with past practices for the
period between the execution of this Agreement and the Closing
and, to the extent consistent therewith, use their best efforts
to preserve intact their assets, including Intellectual Property
and Patents and current business organizations (except as
provided in Section 4), use their best efforts to keep available
the services of their key employees (without, however, any
obligation to improve their employment terms) and preserve their
relationships with those persons having business dealings with
them.
24.1.2 Except as required by law, Seller shall not, and will not permit
any of the Companies to, voluntarily take any action that would, or
that could reasonably be expected to, result in any of the Closing
Conditions not being satisfied.
24.1.3 (a) Upon the terms and subject to the conditions set forth in
this Agreement, including Section 32.6 hereof, each of the
parties will use their best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things,
necessary, proper or advisable to consummate and make
Page 42
effective, in the most expeditious manner practicable and, if
practicable, before March 31, 2001, the transactions contemplated
hereby, including best efforts to (i) obtain all necessary
actions or non-actions, waivers, consents and approvals from
governmental entities and make all necessary registrations and
filings (including filings with governmental entities) and take
all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any
governmental entity, (ii) obtain all necessary material consents,
approvals or waivers from third parties, (iii) execute and
deliver any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes
of, this Agreement, (iv) when the Structure Option is exercised
by Seller, have the Demerger registered in the Commercial
Register of both Knoll AG and the Partnership, and (v) with
respect to the India Shares and the Pakistan Shares, use best
efforts to effect their transfer to Purchaser by taking such
actions as may be necessary under applicable law.
24.1.4 Seller and the Companies shall continue their course of action and
strategies, as outlined to Purchaser in the presentations made on
November 13, 2000, with respect to state and federal regulatory
submissions affecting Synthroid.
24.1.5 Unless the Structure Option is exercised by Seller, Seller shall
cause Knoll Deutschland GmbH to be merged into Knoll AG pursuant to
Section 4.
24.2 During the period between the execution of this Agreement and the
Closing, Seller shall not, and, subject to the restrictions
established by applicable mandatory law, will procure that each of
the Companies shall not, without the prior written consent of
Purchaser such consent not to be unreasonably withheld, do any of
the following unless expressly provided for in Section 24.3 or
elsewhere in this Agreement:
a) sell, dispose of, pledge, license, assign or otherwise
encumber any of (i) the assets of the BASF Pharmaceutical
Business other than in the ordinary course of business
consistent with past practice or any of the Shares or (ii)
its Intellectual Property including without limitation the
patents and patent applications described in Section 15.1
(II);
b) authorize for issuance or issue any capital stock of the
Companies or securities or rights convertible into or
exchangeable for shares or securities or rights
convertible into or exchangeable for such shares or amend
their articles of association;
c) purchase or otherwise acquire or offer to purchase or
otherwise acquire any (i) shares or other participation in
a corporation, partnership or other entity by any of the
Companies, or (ii) other assets with the purchase price in
excess of EUR 500,000 other than in accordance with the
Companies' capital plan, a copy of which has been provided
to Purchaser;
d) enter into any collective bargaining or shop agreements
with respect to any of the Companies or, except for
increases required by applicable collective bargaining
agreements or shop agreements, grant any increase in the
rates of pay or benefits to, or enter into any new
Employee Benefit Plan or make any other change in the
employment terms for, any of their directors, officers and
employees in the BASF Pharmaceutical Business;
Page 43
e) enter into any contract or other arrangement which (i) may
result in a material change in the nature or scope of the
BASF Pharmaceutical Business, or (ii) if it existed on the
date hereof, would be required to be listed on Exhibit
13.13, 13.14 or 13.21, or amend or terminate any of the
agreements listed on Exhibit 13.13, 13.14 or 13.21;
f) abandon, or take or omit to take any action that may limit
the scope or value of, any of its assets, including
without limitation, any patent or patent application filed
by it or any of its Affiliates (including the Companies)
unless such abandonment, action or omission, individually
or in the aggregate would not reasonably be expected to
have a Material Adverse Effect;
g) except as otherwise expressly permitted by this Agreement
(i) initiate any action, suit, proceeding or submission
before any court or governmental authority; and (ii) enter
into any compromise or settlement of any litigation,
proceeding or governmental investigation relating to it or
its properties, operations or business, except for
settlements within applicable insurance coverage limits,
and settlements complying with the conditions of Section
20.3 or 26.4 and against which Seller shall indemnify
Purchaser;
h) lend any money or otherwise pledge its credit except in
the ordinary course of business consistent with past
practices;
i) materially increase the number of individuals employed by
the Companies;
j) take, and shall use its best efforts not to suffer or
permit, any action which would render untrue any of the
Representations of Seller contained herein;
k) accelerate orders or sales or offer any special terms,
discounts or purchase programs (including by providing
credit terms outside of ordinary and normal course);
l) materially change or diminish the nature, scope and level
of effort associated with research and development
activities (including protocols, clinical programs,
funding and expenditure levels), including, without
limitation, any of the foregoing associated with D2E7; or
m) enter into any nontrade, intercompany financing or loan
arrangement with any Company that is a non-wholly-owned
subsidiary or Affiliate of Seller.
24.3 During the period between the execution of this Agreement and the
Closing, Seller shall have the right, but shall not be obligated,
to take, or cause to be taken by the Companies, the following
action:
a) pay off Financial Debt,
b) except as otherwise provided in Section 24.2(m) distribute
cash dividends or withdraw cash from Companies that are
wholly owned by Seller in other forms permissible under
applicable law e.g. by repurchase of shares or reduction
of capital,
Page 44
c) eliminate debt of the BASF Pharmaceutical Business in
forms other than payment of debt, e.g. waive debt owed to
Seller, or cause the BASF Pharmaceuticals Business to be
released from debt owed to third party creditors,
d) cause the employees listed in Exhibit 24.3(f) to cease to
be employed by the BASF Pharmaceutical Business,
e) transfer the Shares to any other wholly-owned Affiliate
of BASF.
24.4 Seller shall ensure that each of the Companies shall have adequate
insurance coverage in line with past practice and custom with
regard to coverage, terms and costs from the date of this Agreement
until the Closing.
24.5 During the period between the execution of this Agreement and the
Closing, Seller covenants that it will, and will cause the
Companies to:
a) except with respect to competitively sensitive information
restricted by applicable merger control and antitrust
laws, permit Purchaser and its representatives to have
reasonable access, upon reasonable advance notice, to the
assets, employees, books and records of Seller and its
Affiliates, with respect to the BASF Pharmaceutical
Business and the Companies, and shall furnish, or cause to
be furnished, to Purchaser, such financial, tax,
regulatory, R&D, and operating data and other available
information with respect to the BASF Pharmaceutical
Business as Purchaser may from time to time reasonably
request or that may otherwise be reasonably required by
Purchaser, including such data and information as may be
necessary for Purchaser, Deloitte & Touche GmbH and
Purchaser's representatives to prepare the U.S. Financial
Statements and any pension calculations required to be
included therein;
b) permit Purchaser and its representatives to conduct
Phase I environmental reviews at the Real Property.
Purchaser shall conduct any such reviews in a manner that
minimizes the disruption conduct of the ongoing business
at the site; and
c) make available to Purchaser for its inspection and copying
such documents and instruments for the purpose of
establishing that Seller owns the Companies in the manner
and in the percentages as set forth on the Exhibits
identified in Sections 13.1-13.4.
24.6 Seller will promptly advise Purchaser in writing if it obtains
knowledge of (i) any Representation set forth in this Agreement
becoming untrue or inaccurate in any respect, or (ii) a failure by
it to comply with or satisfy any material covenant or agreement to
be complied with or satisfied under this Agreement which, in either
case would result in the failure of the condition described in
Section 11.1.2.
24.7. Purchaser shall as promptly as practicable after the date hereof,
with such assistance from Seller as Purchaser may reasonably
request, file for and use its best efforts to obtain all
applicable (including Drug Enforcement Agency "DEA") governmental
registrations and/or licenses regarding controlled substances
that are required for Purchaser to conduct the BASF
Pharmaceutical Business as currently conducted. In the event that
all applicable DEA and other registrations and/or licenses
regarding controlled substances required for Purchaser to conduct
the BASF Pharmaceutical Business as currently conducted are
Page 45
not in effect at the time of the Closing, Purchaser and Seller
agree to cooperate and use all commercially reasonable efforts to
obtain all DEA and other required registrations and/or licenses
regarding controlled substances that Purchaser may require to
conduct the BASF Pharmaceutical Business as currently conducted
and to own and operate the Companies. Upon Purchaser's request,
Seller shall apply to the DEA and other relevant government
entities and regulatory agencies for permission for Purchaser to
operate the BASF Pharmaceutical Business under Sellers' existing
DEA and comparable controlled substance registrations and/or
licenses from the Closing Date until Purchaser receives all
required DEA and controlled substance registrations and/or
licenses for the BASF Pharmaceutical Business.
24.8 After the Closing, Seller will exercise its ownership rights to
cause Hokuriku (and such other Companies, if any, the Shares of
which are not transferred at Closing pursuant to Section 12.5) to
conduct their business only in the ordinary course consistent with
past practice, and otherwise will exercise its ownership rights
with respect to Hokuriku in a manner consistent with Section 24.
Without limiting the generality of the foregoing, the business of
such Companies shall be operated after the Closing for the account
of Purchaser, and no dividends or distribution or other payments
with respect to shares held in such Companies may be made or
declared following the Closing.
24.9 Prior to Closing, the parties to this Agreement will negotiate in
good faith any amendments to the Intercompany Agreements or new
Intercompany Agreements (including a transition and support
services agreement) as may be necessary to meet the reasonable
needs of Purchaser, and otherwise to ensure that the BASF
Pharmaceutical Business continues to be operated after the Closing
in a manner consistent with the manner it was operated prior to the
Closing including, without limitation, any amendments to the lease
(the "Wyandotte Lease") of the real property located in Wyandotte,
Michigan ("Wyandotte Property"). Without limiting the foregoing,
the Wyandotte Lease will contain as of the Closing or will be
amended to contain appropriate cross-indemnity provisions relating
to Environmental Liabilities arising from the operations at the
Wyandotte Property by Purchaser and Seller, respectively.
Notwithstanding any provision in a given Intercompany Agreement,
Purchaser may elect at any time for a period of five years from the
Closing Date and upon 30 days prior written notice to Seller, to
terminate any of the Intercompany Agreements in whole or in part.
24.10 At Closing, as far as practicable, or after the Closing, Seller
shall, without further consideration, promptly execute and deliver,
or cause to be executed and delivered, to Purchaser such deeds,
assignments, bills of sale, Consents and other instruments in
addition to those required by this Agreement, in form and substance
satisfactory to Purchaser, and take all such other action, as
Purchaser may reasonably deem necessary or desirable to implement
any provision of this Agreement or to more effectively transfer,
convey and assign to Purchaser good and marketable title to, and to
put Purchaser in actual possession and operating control of the
Shares, the Transferred Patents and the BASF Pharmaceutical
Business, free and clear of all liens and encumbrances. Without
limiting the generality of the foregoing, if any assets or rights,
including any and all rights in Intellectual Property, that are to
be held by or transferred to the Companies or licensed for the
benefit of Purchaser in accordance with the terms of this
Agreement, have not been so held, transferred or licensed as of the
Closing, Seller shall, and shall cause its Affiliates to, as
applicable, take such actions as are necessary to ensure that the
title to such assets
Page 46
and/or licenses to use such rights are so held, transferred or
licensed without undue delay as soon as commercially practicable
or lawfully possible.
Within 60 days after the date of this Agreement, Seller will
provide or make available to Purchaser true, correct and complete
copies of all policies of insurance to which any of the Companies
is a party or is a beneficiary or named insured.
After the Closing, Seller will cooperate with Purchaser in ensuring
the effective transfer to Purchaser of any trade names, corporate
logos, the content of all websites of Seller that relate to the
BASF Pharmaceutical Business and any registered domain names that
relate to the BASF Pharmaceutical Business.
24.11 No later than the following dates Seller shall identify and
represent inventory levels, in sufficient detail to enable
Purchaser to understand inventory levels of the BASF Pharmaceutical
Business as of the listed dates:
- -----------------------------------------------------------------------------------------------------------
DELIVERY DATE INVENTORY DATE
- -----------------------------------------------------------------------------------------------------------
January 15, 2001 November 30, 2000
- -----------------------------------------------------------------------------------------------------------
January 31, 2001 December 31, 2000
- -----------------------------------------------------------------------------------------------------------
Each month end thereafter through Closing Previous month
- -----------------------------------------------------------------------------------------------------------
Purchaser and Seller shall work cooperatively and Seller shall use
and shall cause the Companies to use, their best efforts to reduce
inventory levels below *** for periods after December 31, 2000
through the Closing.
24.12 Prior to Closing Seller shall repay the intercompany loan payable
to Hokuriku.
24.13 Seller shall cooperate with Purchaser prior to closing to allow to
take such steps as are necessary to convert Knoll AG into a GmbH,
effective no earlier than one day after the Closing Date.
VIII.
ADDITIONAL OBLIGATIONS OF THE PARTIES
SECTION 25
SHARED SUBSTANCES LIBRARY, PATENTS, LICENSES
25.1 With respect to the Remaining Patents, Seller hereby grants to
Purchaser an irrevocable, exclusive, paid-up license for the life
of the respective patent, with the right to grant sublicenses, in
the Pharmaceutical Field and a corresponding exclusive license to
make, use and sell the Exclusive Active Ingredients and a
corresponding non exclusive license with respect to the Mutual
Active Ingredients, which licenses shall be subject to the terms
and conditions of a separate license agreement.
25.2 With respect to Shared Substances located on the premises of Seller
or Seller's Affiliates, Seller upon request of Purchaser shall
permit Purchaser or the Companies to screen such
- ------------------------
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
Page 47
Shared Substances free of charge subject to the provisions of
Section 25.4 below, and Seller hereby grants to Purchaser with
respect to Seller's Shared Substance Patents an irrevocable,
exclusive, paid-up license for the life of the respective patent
with the right to grant sublicenses in the Pharmaceutical Field
and the Pharmachemical Field. However, to the extent that
physical inventories of Shared Substances which are located on
the premises of Seller have been depleted, Seller shall not be
obligated to reproduce any Shared Substances for the Purchaser
which in its turn shall have the right to reproduce such Shared
Substances.
25.3 With respect to Shared Substances located on the premises of the
Partnership, Purchaser on request of Seller hereby permits Seller
or Affiliates of Seller to screen such Shared Substances free of
charge subject to the provisions of Section 25.4 below, solely for
use outside both the Pharmaceutical Field and the Pharmachemical
Field and hereby grants to Seller with respect to such Shared
Substance Patents an irrevocable, paid-up, exclusive license for
the life of the respective patent with the right to grant
sublicenses outside the Pharmaceutical Field and the Pharmachemical
Field. However, as far as Shared Substances which were located on
the premises of the Partnership have been depleted, Purchaser shall
not be obligated to reproduce any Shared Substances for the Seller
which in its turn shall have the right to reproduce Shared
Substances.
25.4 The right to screen Shared Substances shall not apply to (i) Shared
Substances which are available in less than 100 mg quantity, (ii)
Shared Substances being developed or sold commercially and closely
related structures thereto, or (iii) Shared Substances which have
been licensed to one or more third parties or are still subject to
active evaluation and/or development by a party and/or a
prospective or actual licensee of such party.
SECTION 26
CONDUCT AND LITIGATION
26.1 Indemnification. Seller agrees to indemnify and hold harmless
Purchaser and each of Purchaser's Affiliates and Subsidiaries,
including the Companies, from and against:
(i) any and all loss, liability, damage and expense
whatsoever arising from any pending and/or future claim, actions,
complaints, causes of action, and/or governmental investigation or
proceeding (collectively "action"), commenced or threatened, based
upon, arising out of, or related to the Section 26 Conduct;
(ii) any and all loss, liability, damage and expense
whatsoever arising from or related to the Section 26 Litigation;
(iii) any and all loss, liabilities, damage and expense
whatsoever arising from or relating to the Insurance Litigation;
and
(iv) any and all expense whatsoever (including the fees
and disbursements of counsel and other professional advisors and
experts chosen by Purchaser), reasonably incurred in responding to
requests of Seller to assist or cooperate in the Section 26
Litigation and/or the Insurance Litigation and/or any action under
Section 26(a)(i) above, including costs and expenses of discovery,
witness preparation or court testimony.
26.2 Actions against Parties; Notification. Purchaser shall give notice
as promptly as reasonably practicable to Seller of any action
commenced against it in respect of which indem-
Page 48
nity may be sought under this Section 26, but failure to so
notify Seller shall not relieve Seller from any liability
hereunder to the extent Seller is not materially prejudiced as a
result thereof and in any event shall not relieve it from any
liability which it may have otherwise than on account of this
Section 26. Subject to Section 26.3 below, Purchaser may, at its
own option, participate in or assume control of the defense of
any such action; provided, however, that counsel to the Purchaser
shall not (except with the consent of Seller) also be counsel to
the Seller. Seller shall indemnify Purchaser for all fees and
costs incurred if Purchaser decides to assume control of the
defense of any such action.
26.3 Control of Section 26 Litigation. Subject to Section 26.4 below and
provided that Seller shall have first agreed in writing to assume
responsibility for the action and acknowledged its indemnity
obligation hereunder, Seller shall retain control over and continue
the defense of the Section 26 Litigation, provided, however, that
(i) Purchaser shall retain control over all dealings,
communications and negotiations with and/or submissions to any
regulatory body, including but not limited to the United States
Food and Drug Administration and the Canadian Health Protection
Bureau; and (ii) Purchaser shall retain control over all dealings,
communications and negotiations with and/or submissions to any
state department of public health or advisory committees, or to any
state formulary, such as the Illinois formulary or equivalent.
Seller and the Purchaser shall cooperate and take such measures as
may be necessary to preserve the attorney-client and other
privileges arising from any Section 26 Litigation.
26.4 Compromise or Settlement. Seller may, without the prior written
consent of Purchaser, settle or compromise or consent to the entry
of any judgment with respect to the Section 26 Litigation, the
Insurance Litigation or any other action commenced against it in
respect of which indemnification is sought under this Section 26,
if such settlement, compromise or consent (i) includes an
unconditional release of Purchaser and its Affiliates and
Subsidiaries (including the Companies) from all liability arising
out of such action, (ii) includes no express or implied statement
as to or any admission of fault, culpability or a failure to act by
or on behalf of Purchaser, its Affiliates, or its Subsidiaries, and
(iii) provides for relief solely in the form of a liquidated
monetary payment (which in the case of the Section 26 Litigation
shall be paid fully by Seller). Seller may not, without the prior
written consent of Purchaser (which may be withheld for any
reason), settle or compromise or consent to the entry of any
judgment with respect to the Section 26 Litigation or the Insurance
Litigation, any other action, which provides for remedies other
than the payment of a liquidated monetary sum, including, without
limitation, any injunctive or declaratory relief, consent decree,
assurance of voluntary compliance and/or any other directive, order
or agreement issued by or entered with any other person or
governmental authority.
26.5 Access. To the extent that Seller shall direct or control the
defense or settlement of the Section 26 Litigation or any other
action in respect of which indemnification is sought hereunder,
Purchaser will give Seller and its counsel, during normal business
hours, access to the relevant business records and other documents
relating to the claim, and shall permit them to consult with
employees and counsel of Purchaser; provided, however, that any
expenses incurred by Purchaser, including reasonable disbursements
and fees and disbursements of counsel incurred in connection such
access and consultation, shall be at Seller's sole cost and expense
and reimbursed by Seller as incurred. In connection with any claim
hereunder which has been assumed by Seller, Seller shall keep
Purchaser reasonably informed of the status thereof at all stages,
including providing to Purchaser
Page 49
copies of all pleadings and other material papers and
correspondence in connection with any such claim.
26.6 Insurance Proceeds and Settlement Amounts. If and to the extent
that Seller has agreed to prosecute, at its own expense and with
its own counsel, the Insurance Litigation, and has performed its
obligations under this Section 26, Seller shall be entitled to (i)
any proceeds or recovery arising from or out of the Insurance
Litigation, and (ii) IN RE SYNTHROID-Registered Trademark-
MARKETING LITIGATION Settlement Amounts.
26.7 Certain Definitions. For purposes of this Agreement:
(i) "Section 26 Litigation" shall mean (1) , IN RE
SYNTHROID-Registered Trademark-MARKETING LITIGATION Lead Case
No. 97 C 6017, MDL No. 1182, United States District Court for
the Northern District of Illinois, including all consumer and/or
third party payor opt-out claims and any claims by state
Attorneys General, and any and all appeals therefrom; (2)
Uwimana v. Boots, et al. (Quebec, Canada); Annibale v. Boots, et
al. (Ontario, Canada); Tesluk v. Boots, et al. (Ontario,
Canada); Malc-Barmherzig v. Boots, et al. (Ontario, Canada); and
Aruliah v. Boots, et al. (British Columbia, Canada)
(collectively "Canadian Litigation") and such other actions as
are described in the Stipulation of Settlement and Compromise
for MDL No. 1182 Master File Number 97 C 6017, and any and all
appeals from the Canadian Litigation; and (3) IN RE BRAND NAME
PRESCRIPTION DRUGS ANTITRUST LITIGATION, Lead Case No. 94 C 987,
MDL No. 997, United States District Court for the Northern
District of Illinois, and any and all appeals therefrom
(ii) "Section 26 Conduct" shall mean the conduct
alleged, or conduct substantially similar to that alleged, in the
Section 26 Litigation;
(iii) "Insurance Litigation" shall mean Knoll
Pharmaceutical Co. v. Automobile Insurance Co. of Hartford, et
al., Case No. 00 C 6733, pending in the United States District
Court for the Northern District of Illinois, Eastern Division,
involving defendants Automobile Insurance Co. of Hartford
("Automobile"), National Union Fire Insurance Co. of Pittsburgh,
PA ("National Union"), and Royal Insurance Co. of America
("Royal"), or any insurance policy disputed in Case No. 00 C
6733, including but not limited to (i) Automobile issued to Boots
Pharmaceuticals, Inc. ("Boots") commercial general liability
policy no. 048 ACM 5269323; (ii) Automobile issued to Boots
commercial general liability policy no. 048 ACM 5602370; (iii)
Automobile issued to Boots commercial general liability policy
no. 048 ACM 5604447; (iv) Royal issued to Boots commercial
general liability policy no. PST 13 45 30; (v) National Union
issued to Boots commercial general liability policy no. GL
381-00-97; (vi) National Union issued to Boots commercial general
liability policy no. GL 381-10-54; and
(iv) "IN RE SYNTHROID-Registered Trademark-
MARKETING LITIGATION Settlement Amounts" shall mean alL
settlement amounts and funds described in Judge Bucklo's August
4, 2000, Memorandum Order and Opinion, in MDL 1182, including
but not limited to the consumer class fund, the third party
payor class fund, and funds relating to plaintiff's payment of
amounts to states' attorneys general and in cy pres remedies to
the pharmacy industry
Page 50
SECTION 27
NON-COMPETE COVENANT
27.1 For a period of *** effective from the Closing, or with
respect to the restrictions contained in clause (b) in countries
other than EU member countries the later of *** following the
Closing, neither Seller nor any of its Affiliates shall, anywhere
in the world, directly or indirectly (a) engage in the
Pharmaceutical Field, (b) agree to develop, import, register,
manufacture, distribute, supply or sell any BASF Pharmaceutical
Products or any Active Ingredient used in any BASF Pharmaceutical
Product for any third party, (c) otherwise assist any third party
to compete with Purchaser, in the BASF Pharmaceutical Business or
otherwise with respect to business or activities related to
Exclusive Active Ingredients, or (d) acquire a participation in a
company or other entity that competes in the BASF Pharmaceutical
Field, or business or activities related to Exclusive Active
Ingredients, except ownership of a less than *** equity interest in
a publicly traded company solely for investment purposes. For a
period of *** from the Closing, neither Seller nor its
Affiliates shall directly or indirectly solicit any employees of
the Companies to terminate his or her employment with any of the
Companies or Purchaser.
27.2 However, the preceding paragraph shall not prevent Seller from (I)
activities in the BASF Pharmachemical Field and (II) taking over by
purchase of shares or assets or by way of a merger another business
even if such business includes activities competing with Purchaser
in the BASF Pharmaceutical Field, provided that (a) the gross sales
with respect to competitive activity of such business in the year
preceding the acquisition constitute less than *** of the total
gross sales of such business, and (b) Seller, within 90 days from
the completion of such acquisition, offers to Purchaser the right
to purchase the activities taken over and which are competing with
Purchaser or the Companies specifying the price (which shall be
fair market value) and other reasonable terms and conditions of
such offer (the "Seller Terms"). If Purchaser has not accepted the
offer on Seller Terms or if Purchaser and Seller have not agreed
to different terms, in each case within 90 days from the receipt
of the offer, Seller shall use its best efforts to divest (by sale
or IPO or otherwise) the activities in question within a period of
*** from the date on which Seller had offered them for purchase to
the Purchaser at a price equal to, or higher than, the price and
at terms not more favorable to an acquiror than the ones previously
offered to Purchaser. Seller may only sell the activities in
question at a price lower than the price contained in the previous
offer to Purchaser if Seller has again offered the activities in
question to Purchaser at such lower price and Purchaser has not
accepted such offer within 15 working days from receipt of the
offer.
SECTION 28
USE OF TRADE NAMES
28.1 Seller (a) may change the corporate names of the Companies insofar
as this is necessary in order to eliminate from such corporate
names references to "BASF" and shall use its best efforts to give
Purchaser an opportunity to make proposals for the new corporate
name to be chosen in connection with the elimination of such
references, and (b) shall change the corporate names of all
Affiliates of Seller (other than the Companies) to eliminate from
such corporate names references to "Knoll." Seller shall use its
best efforts to complete such changes prior to the Closing or as
soon as possible thereafter. Purchaser shall assist Seller in
making or completing the changes after the Closing to the extent
they not have been completed by the time of the Closing.
- ------------------------
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
Page 51
28.2 As soon as commercially possible upon the consummation of the
Closing but in no event longer than the later to occur of (x) 12
months after the Closing, or (y) Purchaser's exhaustion and
depletion of all inventories and stores of materials described
below, Purchaser agrees to cause all of the Companies to cease
making use of the trade names and product or service marks of
Seller or any of its Affiliates containing "BASF" and to remove any
reference to any such names or marks from all products, products
promotions or advertising materials, business cards or any other
items. Seller hereby grants Purchaser a non exclusive, worldwide,
royalty free license to use such names for the period described in
this Section 28.2.
28.3 As soon as commercially possible upon the consummation of the
Closing but in no event longer than the later of (x) 12 months
after the Closing, or (y) Seller's exhaustion and depletion of all
inventories and stores of materials described below, Seller will
and will cause its Affiliates, including, without limitation, Knoll
AG, to cease making use of the trade names, trademarks and product
or service marks of the BASF Pharmaceutical Business or any of the
Companies, including "Knoll" and to remove any reference to any
such names or marks from all products, product promotions or
advertising materials, business cards or any other items. Purchaser
hereby grants Seller a non-exclusive, worldwide, royalty free
license to use such names for the period described in this Section
28.3.
SECTION 29
INDEMNITY AGAINST LIABILITIES OF KNOLL BUSINESS
29.1 Purchaser shall indemnify Seller and its Affiliates against any
responsibility under Section 133 Conversion Act (Umwandlungsgesetz)
for liabilities exclusively relating to the Knoll Business, other
than liabilities against which Purchaser is indemnified by Seller
pursuant to this Agreement, including Section 15 hereof. Seller
shall indemnify Purchaser and its Affiliates against any
responsibility under Section 133 Conversion Act (Umwandlungsgesetz)
for all liabilities of Knoll AG except for those exclusively
relating to the Knoll Business.
29.2 Seller shall ensure that no creditor of Knoll AG will request from
the Partnership a security interest pursuant to Sections 133, 125
and 22 Conversion Act.
29.3 Seller shall ensure that only those current employees of Knoll AG
and Knoll Deutschland GmbH who work exclusively or mainly for the
Knoll Business (the "Knoll Business Employees") will be transferred
to the Partnership, and should any employee of the Seller Group or
Knoll AG other than the Knoll Business Employees, be transferred to
the Partnership by operation of law or as a result of an act or
omission of a member of the Seller Group, Seller shall indemnify
and hold the Partnership, Purchaser and its Affiliates harmless
from any obligations or liabilities relating to such employees,
including such employees' remuneration or severance claims.
29.4 Seller shall ensure that, at the Closing, the Partnership will,
whether as a result of the Demerger or otherwise, not be liable for
any Pension Liabilities other than those of the Knoll Business
Employees.
Page 52
SECTION 30
MAINTENANCE OF PARTNERSHIP STRUCTURE
30.1 Purchaser shall be obligated to continue the operation of the
Partnership substantially as conducted as of the Closing Date by
the Partnership in the Federal Republic of Germany in the legal
form of the Partnership ***.
30.2 It is understood that the provision in Section 30.1 above does not
prevent the Purchaser from (a) transferring any activities,
personnel or assets of the Knoll Business or the Partnership to
locations or entities domiciled outside the Federal Republic of
Germany, or (b) transferring personnel of the Knoll Business or the
Partnership to other locations within the Federal Republic of
Germany.
30.3 If the laws in the Federal Republic of Germany concerning the Tax
treatment of a partnership are changed in a way that maintenance of
the legal form would have a Material Adverse Effect on the
Partnership, Purchaser shall have the right to change the legal
form of the Partnership as far as necessary to avoid that effect
subject to prior written approval by Seller which approval shall
not be unreasonably withheld.
30.4 In case of a sale of the Partnership or its business operation,
Purchaser shall impose the obligations under this Section 30 on the
acquirer.
SECTION 31
CONFIDENTIALITY, PUBLICATION
31.1 The Parties hereto shall keep the content of this Agreement
confidential except for reporting and disclosure requirements under
statutory law, including reporting and disclosure requirements
under the United States securities laws.
31.2 None of the Parties hereto will issue a press release on the
transaction without the prior written consent of the other Party
except as may be required by the reporting and disclosure
requirements under the United States securities laws.
31.3 From and after the Closing, neither Seller nor any of its
Affiliates or representatives shall use or disclose any non-public
or proprietary information including any such information included
in the Intellectual Property, exclusively relating to the BASF
Pharmaceutical Business except to perform their obligations
pursuant to this Agreement or the Intercompany Agreements. This
Section 25.11 shall not apply to any such information that (i)
through no fault of Seller becomes generally known in the relevant
industry, or (ii) is received after the Closing from a third party
free of any limitations on its use or disclosure. Seller may make
any legally required disclosure of the such information, but Seller
shall use its best efforts to notify Purchaser before making any
such disclosure, and at Purchaser's expense to limit the amount of
such information so disclosed and to protect its confidentiality to
the extent reasonably practicable. Upon request by Purchaser,
Seller shall permit Purchaser to have access to, with an
opportunity to make copies of, such information and to deliver all
of such information to Purchaser.
- ------------------------
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
Page 53
IX.
MERGER CONTROL, RIGHT OF WITHDRAWAL
SECTION 32
MERGER CONTROL
32.1 Purchaser will promptly notify the European Commission of the
merger provided for in this Agreement pursuant to the Merger
Control Regulation.
32.2 Purchaser will promptly file, and Seller will promptly cause any of
the Companies legally required to do so to file, for approval of
the transaction contemplated by this Agreement in accordance with
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 as
amended.
32.3 Seller and Purchaser shall promptly make all other filings legally
required with any other antitrust authorities or other governmental
authorities with respect to the transaction contemplated by this
Agreement, including, without limitation, the filings described in
Section 11.1.1(a).
32.4 No filing by a party hereunder shall be made without first having
provided a draft of the notification to the respective other party.
32.5 In the event that meetings with officials of the European
Commission, or the US Antitrust Authorities, or of any other
antitrust governmental authorities become necessary,
representatives of both Seller and Purchaser shall be entitled to
attend such meetings. Seller and Purchaser shall, without undue
delay (insofar as possible, in advance), exchange all information
about their contacts with authorities referred to in the preceding
sentence.
32.6 Seller and Purchaser shall, if necessary, provide such additional
information, as may be required to respond to a second request for
information, and shall take such action as may be reasonably
necessary to obtain the approvals required by this Agreement as
soon as possible.
SECTION 33
TERMINATION
33.1 This Agreement may be terminated at any time prior to the Closing.
a) by mutual written consent of Seller and Purchaser;
b) by either the Seller or Purchaser if:
(i) the transactions contemplated by this Agreement
are prohibited by any of the antitrust authorities mentioned in
Section 11.1 (a) above; or
(ii) the Closing Conditions have not been fulfilled on or
prior to ***, provided, however, that such party shall not
be entitled to the right to terminate which has caused the failure
of the Closing Condition by breaching any of its obligations under
this Agreement; provided further however that such date shall be
extended to *** if by *** the approvals described in Section
11.1(a) shall not have been obtained; or
- ------------------------
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
Page 54
c) by Purchaser if prior to the Closing Date there shall have
been a breach of any Representation, covenant or agreement
on the part of Seller contained in this Agreement, which
breach is (x)(i) incapable of being cured by Seller or is
not cured within 30 days of notice of such breach and (ii)
would cause a failure of a condition specified in Section
11.1.2. (a) or (b), or (y) constitutes an intentional and
material breach by Seller of any material covenant or
agreement of Seller contained in this Agreement that is
not cured within 30 days of notice of such breach; or
d) by Seller if prior to the Closing Date there shall have
been a breach of any Representation, covenant or agreement
on the part of Purchaser contained in this Agreement,
which breach constitutes an intentional and material
breach by Purchaser of any material covenant or agreement
of Purchaser contained in this Agreement that is not cured
within 30 days of notice of such breach.
33.2 Claims for breach of contract, if any, under this Agreement, of
either party shall not be affected by a termination. In case of a
termination, the parties are obligated to return all documents
received from the respective other party, to keep secret all
confidential information they have received in connection with the
transaction and shall not use any such information for their own
purposes. Seller's and Purchaser's legal counsel shall be exempt
from the obligation to return such documents to the extent they are
part of their files.
X.
MISCELLANEOUS
SECTION 34
NOTICES
All notices, statements and other communications to be given with respect to
this Agreement shall be in the English language and sent by registered mail, by
facsimile transmission or by messenger to the parties at the following addresses
or at such other addresses as shall be specified by the parties:
If to Seller: BASF Aktiengesellschaft
Central Legal Department
67056 Ludwigshafen, Germany
Telefax: 49.621.60.20410
If to Purchaser: Abbott Laboratories
One Abbott Park Road
Abbott Park, Illinois 60053-3500
Telephone: 847-937-6100
Attn: General Counsel
SECTION 35
ENTIRE AGREEMENT, WRITTEN FORM
35.1 This Agreement (including the attached Exhibits) constitutes the
entire agreement and supersedes all other prior agreements and
undertakings both written and oral among the
Page 55
parties. In the event of any translation of this Agreement, the
English version shall govern.
35.2 In case any provision of the Separate Sale and Transfer Contracts
is inconsistent with the provisions of this Agreement, the latter
shall prevail and the parties hereto shall treat each other
accordingly.
35.3 Any changes in this Agreement including, but not limited to, this
clause shall only be valid if made in writing and executed by both
Purchaser and Seller or, if necessary, in a stricter form.
SECTION 36
ASSIGNMENT, SET-OFF
36.1 Neither Seller nor Purchaser may assign any rights or obligations
under this Agreement to any third party without the consent of the
respective other party except for Purchaser's right to have any of
the Shares and Transferred Patents acquired by a designee.
36.2 Purchaser shall not be entitled to offset any claim it may have
against Seller (whether under this Agreement or otherwise) against
the claim of Seller for payment of the Aggregate Purchase Price
pursuant to Section 8 above unless Purchaser's claim has become
final (rechtskraftig) or is undisputed.
SECTION 37
GOVERNING LAW, JURISDICTION
37.1 This Agreement shall be governed by and construed in accordance
with the laws of the Federal Republic of Germany, other than
Section 26 which shall be governed by the law of the State of
Illinois, USA without regard to its choice of law rules.
37.2 Except as otherwise expressly stated elsewhere in this Agreement,
all disputes arising out of or in connection with this Agreement,
including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by
arbitration in accordance with the Rules of the German Institute of
Arbitration e.V. (DIS) without recourse to the ordinary courts of
law, provided that the Chairman of the Arbitral Tribunal shall not
be of the same nationality as that of any of the parties to a given
dispute. The place of arbitration shall be Frankfurt; the language
of the arbitration shall be English.
37.3 All disputes arising out of or in connection with Section 26 shall
be referred to and finally resolved by the court having
jurisdiction over the Section 26 Litigation or Insurance Litigation
to which the dispute relates.
SECTION 38
EXPENSES
38.1 Except as specifically provided otherwise in this Agreement, each
party shall bear its own expenses and fees (including attorneys',
accountants', consultants' and advisors' fees) in connection with
this Agreement or any of the transactions contemplated herein,
including any merger control filing and filings with other
governmental authorities made by such party.
Page 56
38.2 Fees and costs triggered by the implementation of this Agreement
(other than the Merger and the Demerger), including but not limited
to any notarial fees, any transfer or sales Tax (including value
added Tax and stamp duties and property transfer Tax according to
Section 5 para 3 Grunderwerbssteuergesetz), any registration or
publication fees shall be borne by Purchaser.
SECTION 39
SEVERABILITY
Should any of the provisions of this Agreement be or become fully or partly
invalid or unenforceable, the remainder of the Agreement shall be valid or
enforceable. The invalid or unenforceable provision shall be replaced by a
provision which shall come as close as possible to the economic purpose of the
invalid provision. Any gaps in this Agreement shall be filled by a provision
which the parties as prudent businessmen would in good faith have agreed to, had
they considered the matter not covered by this Agreement.
Page 57
TABLE OF CROSS-REFERENCES FOR ADDITIONAL DEFINITIONS
"FINAL BASF TENDER AMOUNT" shall have the meaning as described in
Section 7.4;
"BASF INTERCOMPANY OBLIGATIONS" shall have the meaning described in
Section 19.1;
"CLOSING" shall have the meaning as described in Section 11.1;
"CLOSING DATE" shall have the meaning as described in Section 11.1;
"CLOSING FINANCIAL STATEMENTS" shall have the meaning as described in
Section 10.1;
"CODE" shall have the meaning described in Section 13.11.1(a);
"CONSENTS" shall have the meaning described in Section 13.2;
"DEA" shall have the meaning as described in Section 24.7;
"DEMERGER" shall have the meaning as described in Section 4.2;
"EMPLOYEE BENEFIT PLAN" shall have the meaning described in
Section 13.11.1(b);
"ENVIRONMENTAL LIABILITIES" shall have the meaning described in
Section 13.18.5;
"ENVIRONMENTAL REPORT" shall have the meaning described in Section 13.18.5;
"ERISA" shall have the meaning described in Section 13.11.1(a);
"ERISA AFFILIATE" shall have the meaning described in Section 13.11.1(a);
"GENERAL CLOSING CONDITIONS" shall have the meaning as described in
Section 11.1.1;
"HOKURIKU OVERPAYMENT" shall have the meaning as described in Section 8.3;
"HOKURIKU UNDERPAYMENT" shall have the meaning as described in Section 8.3;
"HOKURIKU TENDER OFFER" shall have the meaning as described in Section 7.4;
"HSR ACT" shall have the meaning as described in Section 11.1.1;
"INDEMNIFIED CLAIM" shall have the meaning as described in Section 20.1;
"INDIVIDUAL CLAIM" shall have the meaning described in Section 15.2(a);
"PROVISIONAL HOKURIKU TENDER AMOUNT" shall have the meaning described in
Section 8.3;
"INSURANCE LITIGATION" shall have the meaning as described in Section 26.7(iii);
"INTELLECTUAL PROPERTY" shall have the meaning as described in Section 13.15.3;
"INTERCOMPANY MANUFACTURING AGREEMENTS" shall have the meaning described in
Section 13.2;
Page 58
"INTERCOMPANY TRADE ACCOUNTS" shall have the meaning described in Section 19.1'
"INTRACOMPANY TRADE ACCOUNTS" shall have the meaning described in Section 19.1'
"MATERIAL AGREEMENTS" shall have the meaning described in Section 13.21;
"MATERIAL AGREEMENT CONSENT" shall have the meaning described in Section 13.21;
"MERGER" shall have the meaning as described in Section 4.2;
"MERGER/DEMERGER AGREEMENTS" shall have the meaning described in Section 4.2;
"NON-HOKURIKU PURCHASE PRICE" shall have the meaning described in Section 8.3;
"PER SHARE TENDER PRICE" shall have the meaning described in Section 7.4;
"PURCHASER CONDITIONS" shall have the meaning as described in Section 11.1.2;
"PURCHASER GROUP" shall have the meaning described in Section 15.1;
"PURCHASER U.S. DEFINED BENEFIT PLAN" shall have the meaning as described in
Section 22.5.1;
"PURCHASER U.S. DEFINED CONTRIBUTION PLAN" shall have the meaning as described
in Section 22.6.;
"REAL PROPERTY" shall have the meaning described in Section 13.13;
"REPORT" shall have the meaning described in Section 13.20(a);
"REPORT PRINCIPLES" shall have the meaning described in Section 13.20(a);
"REPRESENTATIONS" shall have the meaning as described in the introductory
paragraph of Section 13;
"SECTION 26 CONDUCT" shall have the meaning as described in Section 26.7(ii);
"SECTION 26 LITIGATION" shall have the meaning as described in Section 26.7(i);
"SELLER'S AUDITORS" shall have the meaning as described in Section 10.1;
"SELLER COMPANY" shall have the meaning described in Section 19.1;
"SELLER U.S. DEFINED BENEFIT PLANS" shall have the meaning as described in
Section 22.5.1;
"SELLER U.S. QUALIFIED DEFINED BENEFIT PLAN" shall have the meaning as described
in Section 22.5.1;
"SELLER U.S. DEFINED CONTRIBUTION PLAN" shall have the meaning as described in
Section 22.6;
"SHARED SUBSTANCES" shall have the meaning as described in Section 5.3;
"U.S. FINANCIAL STATEMENTS" shall have the meaning described in Section 10.9;
Page 59
"U.S. PENSION TRANSFER AMOUNT" shall have the meaning described in
Section 22.5.2;
"U.S. SECURITIES LAWS" shall have the meaning described in Section 10.9.
LIST OF EXHIBITS TO THE PURCHASE AGREEMENT
EXHIBIT NUMBER EXHIBIT DESCRIPTION
Exhibit A Description of Generics Business
Exhibit 1.1 Description of BASF Pharmaceutical Corporation
Exhibit 1.2 Description of BASF Pharmaceutical Corporation subsidiaries
Exhibit 2 Description of Other Foreign Subsidiaries
Exhibit 4.2(b) List of Transferred Patents
Exhibit 5.1 List of Nottingham site compounds and substances
Exhibit 5.2 List of Remaining Patents
Exhibit 7.4 Description of Hokuriku Tender Offer
Exhibit 8.1 Allocation of Aggregate Purchase Price
Exhibit 9.1(a) Unaudited Proforma Balance Sheet
Exhibit 9.1(b) Reference Net Asset Value account adjustments
Exhibit 10.1 Closing Net Asset Value Statement adjustment principles
Exhibit 13.2(d) List of third party rights in the Shares
Exhibit 13.5 List if conflicts with the Purchase Agreement
Exhibit 13.7.3 List of ongoing tax audits with respect to the Companies
Exhibit 13.8 Tax rulings with respect to the Companies
Exhibit 13.10 List of Intercompany Agreements
Exhibit 13.11.2 List of certain Employee Benefit Plans
Exhibit 13.12(a) List of certain proceedings
Exhibit 13.14(a) List of certain patents and patent applications
Exhibit 13.14(b) List of certain license contracts
Exhibit 13.16.1 List of alleged infringement by certain products
Exhibit 13.16.2 List of alleged infringement by products in development
Exhibit 13.18.4 List of written notices alleging hazardous material releases
Exhibit 13.19 Compliance with laws
Exhibit 13.20(a) Report Principles
Exhibit 13.21 List of certain agreements
Exhibit 13.27(a) List of certain Pharmaceutical Products and Active Ingredients
Exhibit 13.27(b) List of certain compounds
Exhibit 13.27(c) List of Exclusive and Mutual Active Ingredients
Exhibit 13.27(d) List of certain BASF Pharmaceutical Products
Exhibit 22.5.2 Actuarial assumptions
Exhibit 24.3(f) List of certain employees
These exhibits are omitted as permitted under Item 601(b)(2) of Regulation
S-K. Abbott agrees to furnish supplementally a copy of any omitted exhibit to
the Purchase Agreement.