1
Exhibit 4.2
CONFIDENTIAL TREATMENT
Note: Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Commission under Rule 24b-2. The omitted
confidential material has been filed separately with the Commission. The
location of the omitted confidential information is indicated herein by
asterisks.
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:
*** *** *** ***
--- --- --- ---
Germany ........................ *** *** *** ***
U.S.A .......................... *** *** *** ***
Japan Hokuriku ................. *** *** *** ***
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;
- ----------
*** 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.
- ----------
*** 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
- ----------
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
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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
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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
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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;
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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
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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
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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-
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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
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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
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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
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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
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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
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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
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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.
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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-
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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.
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(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-
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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.
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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.
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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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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.
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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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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
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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.
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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.
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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,
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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
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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
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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
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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)
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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-
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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
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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
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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;
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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,
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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
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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
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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.
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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-
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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
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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
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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.
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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.
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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.
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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.
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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
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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.
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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.
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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;
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"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;
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"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.
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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.
BASF agrees to furnish supplementally a copy of any omitted exhibit to the
Purchase Agreement.