EXHIBIT 2.1
EXECUTION COPY
--------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF COMBINATION
by and between
DIAGNOSTIC HOLDINGS, INC.
and
HOECHST AG
Dated as of June 24, 1997
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I TRANSFER OF BUSINESS ................................. 1
--------------------
1.1 Transfer of Stock to Dade ............................ 1
-------------------------
1.2 Consideration ........................................ 2
-------------
1.3 Closing Transactions ................................. 2
--------------------
1.4 Certain Post-Execution Agreements .................... 2
---------------------------------
1.5 Net Asset Adjustment ................................. 3
--------------------
1.6 Post-Closing Determination ........................... 4
--------------------------
1.7 Certain Related Party Receivables .................... 5
---------------------------------
ARTICLE II CONDITIONS TO CLOSING ................................ 5
---------------------
2.1 Conditions to Dade's Obligations ..................... 5
--------------------------------
2.2 Conditions to Hoechst's Obligations .................. 9
-----------------------------------
ARTICLE III COVENANTS PRIOR TO CLOSING ........................... 12
--------------------------
3.1 General .............................................. 12
-------
3.2 Affirmative Covenants of Hoechst ..................... 12
--------------------------------
3.3 Affirmative Covenants of Dade ........................ 14
-----------------------------
3.4 Negative Covenants of Hoechst ........................ 15
-----------------------------
3.5 Negative Covenants of Dade ........................... 15
--------------------------
3.6 Exclusivity .......................................... 15
-----------
3.7 Antitrust Regulatory Approvals ....................... 16
------------------------------
3.8 Public Announcements ................................. 16
--------------------
3.9 Approval Procedure ................................... 16
------------------
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF HOECHST ............ 17
-----------------------------------------
4.1 Organization and Corporate Power ..................... 17
--------------------------------
4.2 Subsidiaries and Affiliates .......................... 18
---------------------------
4.3 Capital Stock of Hoechst Subsidiary .................. 18
-----------------------------------
4.4 Authority of Hoechst ................................. 18
--------------------
4.5 No Breach ............................................ 19
---------
4.6 Financial Statements ................................. 19
--------------------
4.7 Product and Service Warranty; Product Recall ......... 20
--------------------------------------------
4.8 No Material Adverse Change ........................... 20
--------------------------
4.9 Absence of Certain Developments ...................... 20
-------------------------------
4.10 Real Property ........................................ 22
-------------
4.11 Business Assets ...................................... 23
---------------
4.12 Tax Matters .......................................... 24
-----------
4.13 Absence of Undisclosed Liabilities ................... 25
----------------------------------
-i-
4.14 Contracts and Commitments ............................ 25
-------------------------
4.15 Proprietary Rights ................................... 27
------------------
4.16 Litigation ........................................... 29
----------
4.17 Brokerage ............................................ 29
---------
4.18 Employees ............................................ 29
---------
4.19 Intercompany Services ................................ 30
---------------------
4.20 Employee Benefit Plans ............................... 30
----------------------
4.21 Insurance ............................................ 30
---------
4.22 Compliance with Laws; Permits; Certain Operations .... 31
-------------------------------------------------
4.23 Environmental and Safety Matters ..................... 31
--------------------------------
4.24 Officers and Directors; Bank Accounts ................ 32
-------------------------------------
4.25 Investment Representations of Hoechst ................ 33
-------------------------------------
4.26 Restructuring Documents .............................. 33
-----------------------
4.27 Closing Date ......................................... 33
------------
ARTICLE V REPRESENTATIONS AND WARRANTIES OF DADE ............... 33
--------------------------------------
5.1 Organization and Corporate Power ..................... 33
--------------------------------
5.2 Subsidiaries and Affiliates .......................... 34
---------------------------
5.3 Capital Stock of Dade Entities ....................... 34
------------------------------
5.4 Authority of Dade .................................... 34
-----------------
5.5 No Breach ............................................ 34
---------
5.6 Financial Statements ................................. 35
--------------------
5.7 Product and Service Warranty; Product Recall ......... 35
--------------------------------------------
5.8 No Material Adverse Change ........................... 35
--------------------------
5.9 Absence of Certain Developments ...................... 36
-------------------------------
5.10 Real Property ........................................ 37
-------------
5.11 Business Assets ...................................... 39
---------------
5.12 Tax Matters .......................................... 39
-----------
5.13 Absence of Undisclosed Liabilities ................... 40
----------------------------------
5.14 Contracts and Commitments ............................ 40
-------------------------
5.15 Proprietary Rights ................................... 42
------------------
5.16 Litigation ........................................... 43
----------
5.17 Brokerage ............................................ 44
---------
5.18 Employees ............................................ 44
---------
5.19 Employee Benefit Plans ............................... 44
----------------------
5.20 Insurance ............................................ 44
---------
5.21 Compliance with Laws; Permits; Certain Operations .... 45
-------------------------------------------------
5.22 Environmental and Safety Matters ..................... 45
--------------------------------
5.23 Closing Date ......................................... 46
------------
-ii-
ARTICLE VI TERMINATION .......................................... 46
-----------
6.1 Termination .......................................... 46
-----------
6.2 Effect of Termination ................................ 47
---------------------
ARTICLE VII ADDITIONAL AGREEMENTS ................................ 48
---------------------
7.1 Survival of Representations and Warranties ........... 48
------------------------------------------
7.2 General Indemnification .............................. 49
-----------------------
7.3 Expenses ............................................. 54
--------
7.4 Tax Matters .......................................... 55
-----------
7.5 Confidentiality ...................................... 57
---------------
7.6 Covenant Not to Compete .............................. 57
-----------------------
7.7 Further Transfers; Further Assistance ................ 59
-------------------------------------
7.8 Arbitration .......................................... 60
-----------
7.9 Use of Current Supplies and the Hoechst Name ......... 61
--------------------------------------------
7.10 Change of Structure .................................. 62
-------------------
7.11 Transition Countries ................................. 62
--------------------
7.12 U.S., Europe and Japan Restructuring Expenses ........ 64
---------------------------------------------
7.13 Italy Manufacturing Facility Restructuring Expenses .. 64
---------------------------------------------------
7.14 Break-Up Fee ......................................... 64
------------
7.15 SEP Liability ........................................ 64
-------------
7.16 Proprietary Rights Filing Expenses ................... 64
----------------------------------
7.17 Assignment of Intercompany Accounts .................. 65
-----------------------------------
7.18 Option Agreements .................................... 65
-----------------
7.19 Holding Periods ...................................... 66
---------------
7.20 Thai Business ........................................ 67
-------------
ARTICLE VIII EMPLOYEES AND EMPLOYEE BENEFITS ...................... 67
-------------------------------
8.1 Employees ............................................ 67
---------
8.2 Employee Compensation and Benefits ................... 67
----------------------------------
8.3 Pension Plans ........................................ 70
-------------
8.4 Hoechst Savings Plan ................................. 71
--------------------
8.5 COBRA ................................................ 71
-----
8.6 U.S. and Canadian Retiree Medical Plan ............... 72
--------------------------------------
8.7 Payment by Hoechst ................................... 72
------------------
8.8 InfraServ Employees .................................. 72
-------------------
ARTICLE IX MISCELLANEOUS ........................................ 72
-------------
9.1 Amendment and Waiver ................................. 72
--------------------
9.2 Financial Information ................................ 73
---------------------
9.3 Notices .............................................. 73
-------
9.4 Assignment ........................................... 75
----------
9.5 Severability ......................................... 76
------------
-iii-
9.6 Captions ............................................. 76
--------
9.7 Complete Agreement ................................... 76
------------------
9.8 Counterparts ......................................... 76
------------
9.9 GOVERNING LAW ........................................ 76
-------------
9.10 No Strict Construction; Word Meanings ................ 77
-------------------------------------
9.11 Specific Performance ................................. 77
--------------------
9.12 No Third-Party Beneficiaries ......................... 77
----------------------------
9.13 Schedules ............................................ 77
---------
9.14 Schedules and Exhibits ............................... 78
----------------------
9.15 Currency ............................................. 78
--------
9.16 Inconsistencies ...................................... 78
---------------
9.17 Delivery by Facsimile ................................ 78
---------------------
9.18 Definition of Knowledge .............................. 78
-----------------------
9.19 Definition of Affiliate .............................. 78
-----------------------
9.20 Definition of Governmental Entity .................... 78
---------------------------------
9.21 Definition of Person ................................. 79
--------------------
9.22 Definition of Ordinary Course of Business ........... 79
------------------------------------------
9.23 Definition of Applicable Law ......................... 79
----------------------------
9.24 Definition of Business Day ........................... 79
--------------------------
9.25 Definition of Indemnified Liability .................. 79
-----------------------------------
-iv-
LIST OF EXHIBITS
Exhibit A - Form of Warrant
Exhibit B - Form of Deed
Exhibit C - Restructuring Documents
Exhibit D - 1996 Balance Sheet
Exhibit E - INTENTIONALLY OMITTED
Exhibit F - Registration Agreement
Exhibit G - Stockholders Agreement
Exhibit H - Cooperation Agreement
Exhibit I - Hoechst Entities
Exhibit J - Form of Opinion of Hoechst's Counsel
Exhibits K1 and K2 - Amended Certificates of Incorporation
Exhibit L - Form of Opinion of Dade's Counsel
-v-
LIST OF SCHEDULES
Acquired Entities Capitalization Schedule
Affiliated Employees Schedule
Compliance Schedule
Contracts Schedule
Dade Capitalization Schedule
Dade Compliance Schedule
Dade Conflicts Schedule
Dade Contracts Schedule
Dade Developments Schedule
Dade Employee Benefits Schedule
Dade Encumbrances Schedule
Dade Environmental and Safety Schedule
Dade Insurance Schedule
Dade Key Employee Schedule
Dade Leased Real Property Schedule
Dade Litigation Schedule
Dade Owned Real Property Schedule
Dade Product Recall Schedule
Dade Proprietary Rights Schedule
Dade Tax Schedule
Dade Undisclosed Liabilities Schedule
Dade Warranty Schedule
Encumbrances Schedule
Environmental and Safety Schedule
Excluded Assets Schedule
Expenditure Schedule
Hoechst Conflicts Schedule
Hoechst Developments Schedule
Hoechst Employee Benefit Schedule
Hoechst Insurance Schedule
Hoechst Key Employee Schedule
Indemnified Liabilities Schedule
Intercompany Services Schedule
Leased Real Property Schedule
Litigation Schedule
Officers, Directors and Bank Account Schedule
Owned Real Property Schedule
Pending Asset Sales Schedule
Permits Schedule
Product Recall Schedule
-vi-
Proprietary Rights Schedule
SEP Schedule
Tax Schedule
U.S./Europe/Japan Restructuring Expenses Schedule
Undisclosed Liabilities Schedule
Warranty Schedule
-vii-
INDEX OF DEFINED TERMS
Acquired Entities.......................... 18
Acquired Companies......................... 1
affiliate.................................. 78
Agreement.................................. 1
Ancillary Agreements....................... 10
Applicable Law............................. 79
Bain....................................... 11
Basic Percentage........................... 51
Business................................... 1
Business Assets............................ 23
Business Employees......................... 29
CERCLA..................................... 32
Class L Common............................. 2
Closing.................................... 2
closing agreement.......................... 25
Closing Date............................... 2
Code....................................... 24
Combination Documents...................... 10
Combined Entities.......................... 7
Commission................................. 8
Common Stock............................... 2
Confidentiality Agreement.................. 57
Consents................................... 19
Continued Employees........................ 67
Cooperation Agreement...................... 8
Credit Agreement........................... 8
Dade....................................... 1
Dade Entities............................. 33
Dade Behring Holdings, Inc................. 1
Dade Behring, Inc.......................... 1
Dade Business.............................. 14
Dade Employees............................. 44
Dade Financial Statements.................. 35
Dade Improvements.......................... 39
Dade Latest Balance Sheet.................. 35
Dade Leased Real Property.................. 38
Dade Leasehold Improvements................ 38
Dade Owned Real Property................... 37
Dade Parties............................... 49
Dade Permitted Liens....................... 39
-viii-
Dade Proprietary Rights.................... 42
Dade Real Property......................... 38
Dade Real Property Leases.................. 38
Dade's Arbitrator.......................... 60
Defined Contribution Plans................. 71
Dispute.................................... 60
Draft Balance Sheet........................ 4
EC Merger Control.......................... 16
EC Merger Control Approval................. 9
EC Merger Control Decision................. 8
Employee List.............................. 30
Environmental and Safety Requirements...... 32
Environmental Permits...................... 31
ERISA...................................... 30
Excluded Stock............................. 1
FAS 87..................................... 70
Final Arbitration Determination............ 61
Financial Statements....................... 19
Firm....................................... 5
Firm Fees.................................. 5
GAAP....................................... 19
GmbH Company............................... 1
Goldman.................................... 11
Goodwill Termination Claims................ 13
Governmental Entity........................ 78
H-S-R...................................... 16
HDHC....................................... 1
Hoechst.................................... 1
Hoechst Entities.......................... 9,80
Hoechst Parties............................ 49
Hoechst Pension Plans...................... 70
Hoechst Percentage......................... 51
Hoechst Valuation.......................... 2
Hoechst's Arbitrator....................... 60
Improvements............................... 23
income Tax................................. 56
Indemnified Liability...................... 79
Indemnitee................................. 52
Indemnitor................................. 52
InfraServ.................................. 6
InfraServ Agreement........................ 6
Inventory.................................. 12
-ix-
Italian Facility Shutdown.............. 64
Latest Balance Sheet................... 19
Leased Real Property................... 22
Leasehold Improvements................. 23
Liens.................................. 1
Losses................................. 49
Material Adverse Effect................ 6
Merger Regulation...................... 8
Messer................................. 6
Messer Supply Agreement................ 6
Net Assets............................. 3
Non-Competition Period................. 57
Notice of Arbitration.................. 60
Objection Notice....................... 4
ordinary course of business............ 79
Other Hoechst Entities................. 12
Owned Real Property.................... 22
PBO.................................... 70, 71
PBO Shortfall.......................... 71
Permits................................ 31
Permitted Liens........................ 23
Person................................. 79
Plans.................................. 30
Prime Rate............................. 3
Proprietary Rights..................... 27
Purchase Price......................... 2
Real Property.......................... 23
Real Property Leases................... 22
Registration Agreement................. 8
Reimbursement Calculation.............. 5
Restricted Persons..................... 58
Restrictive Covenants.................. 58
Restructuring Documents................ 2
SEP.................................... 64
Stock.................................. 1
Stockholders Agreement................. 8
Tax.................................... 24
Tax Returns............................ 24
Taxes.................................. 24
Termination Date....................... 47
Third Party Claim...................... 52
Third Party Distribution Agreements.... 8
-x-
Transfer Taxes............................. 56
Transition Country......................... 62
Transition Employees....................... 63
Transition Period.......................... 62
Transition Services Agreement.............. 7
U.S. Company............................... 8
Valuation Drop Date........................ 2
Warrant.................................... 2
-xi-
AGREEMENT AND PLAN OF COMBINATION
---------------------------------
THIS AGREEMENT AND PLAN OF COMBINATION (this "Agreement"), is made and
---------
entered into as of June 24, 1997, by and between Diagnostic Holdings, Inc., a
Delaware corporation ("Dade"), and Hoechst AG, a German corporation ("Hoechst").
---- -------
Each of Hoechst and Dade possess substantial expertise, know-how,
skilled personnel, facilities and organization relating to the business of
developing, manufacturing and marketing in vitro diagnostic equipment, reagents,
consumable supplies and services worldwide.
Hoechst and certain of its subsidiaries currently operate the
worldwide business of the research, development, manufacture, marketing, sale,
distribution and service of human in vitro diagnostic equipment, reagents,
consumable supplies and services (the "Business").
--------
As of the Closing, substantially all of the assets, properties, rights
and obligations of the Business will be owned, directly or indirectly, by
Behring Diagnostics GmbH (the "GMBH Company"), Hoechst Diagnostics Holding
------------
Corporation ("HDHC") and certain affiliates of Hoechst identified on the
----
Acquired Entities Capitalization Schedule to be acquired directly by Dade
- -----------------------------------------
hereunder (collectively, the "Acquired Companies"). The issued and outstanding
------------------
stock of the Acquired Companies (other than the stock identified on the Acquired
--------
Entities Capitalization Schedule as "Excluded Stock") is hereinafter
- -------------------------------- --------------
collectively referred to as the "Stock."
-----
Subject to the terms and conditions set forth herein, Dade and Hoechst
desire to effect a combination of the Business with the business of Dade and its
subsidiaries by Hoechst transferring the Stock to Dade in exchange for an equity
interest in Dade. Following consummation of the combination, Dade shall change
its name to "Dade Behring Holdings, Inc." and shall cause its wholly owned
---------------------------
subsidiary, Dade International Inc., to change its name to "Dade Behring, Inc."
------------------
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE I
TRANSFER OF BUSINESS
--------------------
1.1 Transfer of Stock to Dade. On the terms and subject to the
-------------------------
conditions set forth in this Agreement, Dade shall acquire from Hoechst, and
Hoechst shall sell, transfer and deliver (or cause to be sold, transferred and
delivered) to Dade on the Closing Date, the Stock, free and clear of all liens,
mortgages, charges, security interests, encumbrances, and other restrictions of
whatever nature ("Liens").
-----
1.2 Consideration for Transfer of Stock to Dade. In consideration for
-------------------------------------------
the Stock (the "Purchase Price"), Dade shall: (a) sell, transfer and deliver,
--------------
free and clear of all Liens, to Hoechst 5,198,323 shares of Common Stock of
Dade, par value $.01 per share ("Common Stock"), and 519,451 shares of Class L
------------
Common Stock, Series B, of Dade, par value $.01 per share ("Class L Common,
---------------
Series B"), (b) issue to Hoechst a warrant (the "Warrant") in form and in
- -------- -------
substance as set forth in Exhibit A attached hereto, initially exercisable into
---------
1,279,587 shares of Common Stock and 127,865 shares of Class L Common, Series B,
and (c) transfer and deliver to Hoechst $100,000 in immediately available funds.
1.3 Closing Transactions. The closing of the transactions contemplated by
--------------------
this Agreement and the other Combination Documents (the "Closing") shall take
-------
place in New York, New York, at 6:00 p.m. New York time on July 31, 1997 or, if
the conditions to the Closing as set forth in Article II have not been satisfied
on or prior to such date, within 10 days following satisfaction of such
conditions on a date mutually selected by Dade and Hoechst. The date and time
of the Closing are referred to herein as the "Closing Date"; provided that, for
------------ --------
all purposes of this Agreement, the Closing shall be deemed to be effective as
of the opening of business on the Closing Date; provided further that the
-------- ------- ----
transfer of title of the issued and outstanding capital stock of the GMBH
Company shall occur in Basel, Switzerland in the presence of an authorized Swiss
notary immediately after the Closing pursuant to a deed in form and substance as
set forth in Exhibit B.
---------
1.4 Certain Post-Execution Agreements.
---------------------------------
(a) Hoechst and Dade shall in good faith discuss and shall use
reasonable best efforts to reach an agreement on (i) a valuation of the Purchase
Price and (ii) an allocation of such value among the Acquired Entities. If on
or before the date that is 20 Business Days following the date on which
representatives of Dade first meet with the Chief Financial Officer of Hoechst
to discuss a valuation, the parties cannot agree on a valuation of the Purchase
Price or allocation of such valuation, Hoechst shall deliver its valuation and
allocation to Dade (the "Hoechst Valuation"). Within Five Business Days after
-----------------
receipt of such valuation and allocation from Hoechst (the "Valuation Drop
--------------
Date"), Dade shall either accept such valuation and allocation or terminate this
agreement pursuant to Section 6.1(d) hereof. If Dade does not terminate this
Agreement pursuant to Section 6.1(d) hereof by the Valuation Drop Date, the
Hoechst Valuation shall be deemed to be the valuation of the Purchase Price and
the related allocation of the Purchase Price for purposes of this Agreement.
Dade and Hoechst agree upon determination of the allocation of the Purchase
Price to adhere (and to cause their respective affiliates to adhere) to such
allocations for tax reporting and accounting purposes. All allocations made
pursuant to this Section 1.4 shall be binding upon the parties, their affiliates
and each of their respective successors and assigns, and the parties and their
affiliates shall report the transactions contemplated by the restructuring
documents listed on the attached Exhibit C (the "Restructuring Documents") and
--------- -----------------------
the Combination Documents in accordance with such allocations.
-2-
(b) Hoechst and Dade shall in good faith negotiate a limit (the
"Consent Indemnity Limit") to the amount of the Loss in respect of the
- ------------------------
Indemnified Liability specified in Section 9.25(a)(vi) for which Hoechst shall
indemnify Dade. If on or before the Termination Date Hoechst and Dade cannot
agree upon the Consent Indemnity Limit, either Dade or Hoechst may terminate
this Agreement pursuant to Section 6.1(h) hereof.
(c) Hoechst and Dade shall in good faith negotiate additional
agreements with respect to the level of capital expenditures for the Business
since December 31, 1996 (the "Expenditure Agreement"). If by the Valuation Drop
---------------------
Date Hoechst and Dade cannot agree upon the Expenditure Agreement, Dade may
terminate this Agreement pursuant to Section 6.1(i) hereof on the Valuation Drop
Date.
(d) Hoechst and Dade shall in good faith negotiate an agreement as to
which additional stockholders' rights under the Stockholders Agreement shall be
"Designation Rights" for purposes of Section 7.6(a). If Hoechst and Dade cannot
reach agreement, Dade may terminate this Agreement after the Valuation Drop Date
pursuant to Section 6.1(j) hereof.
1.5 Net Asset Adjustment. Hoechst agrees that if Net Assets are less
--------------------
than $229.7 million on the Closing Date, then Hoechst shall pay Dade, within
five Business Days after the determination of Net Assets (as set forth in
Section 1.6 below), the difference between such amounts. Dade agrees that if
Net Assets are greater than $229.7 million on the Closing Date, then Dade shall
pay Hoechst, within five Business Days after the determination of Net Assets (as
set forth in Section 1.6 below), the difference between such amounts. Any
payment made under this Section 1.5 shall be made, together with interest
thereon from the Closing Date to the date of payment at the prime rate announced
by Bankers Trust Company from time to time (the "Prime Rate"), in immediately
----------
available funds by wire transfer. Exhibit D attached hereto contains certain
---------
balance sheet categories set forth on the Latest Balance Sheet (as defined in
Section 4.6(a) hereto). As used herein, "Net Assets" means the excess of the
----------
assets of the Business appropriately included within the asset categories set
forth under the "To JV" heading (and above the line entitled "Working Capital
(for Net Asset Test)") on Exhibit D, less the liabilities of the Business
---------
appropriately included within the liability categories set forth under such "To
JV" heading (and above the line entitled "Working Capital (for Net Asset Test)")
on Exhibit D (other than "Restructuring Costs" and "Income Taxes Payable"), less
---------
any long-term liabilities of the Business, determined in each case as of the
opening of business on the Closing Date, in United States Dollars at the
conversion rates used to prepare the Latest Balance Sheet, on a consolidated
basis in accordance with U.S. GAAP and on a basis consistent with the Latest
Balance Sheet. Without limiting the generality of the foregoing, Hoechst and
Dade agree that the audit procedures, scope of audit and materiality thresholds
(with respect to both individual items and cumulative reporting) utilized in the
preparation of the Latest Balance Sheet (and as disclosed to Dade's accountants)
will be utilized in the determination of Net Assets. In calculating Net Assets,
(A) the amount of any liability or other obligation (whether accrued, absolute
or contingent, whether known or unknown or whether due or to become due) for
which Hoechst is obligated to pay under this Agreement (or under any agreement
contemplated by
-3-
Section 7.2(g)) shall be excluded from the calculation of Net Assets, (B)
it shall be assumed that the options set forth in Sections 7.18(a) and
7.18(b) have been exercised (i.e., the pro forma effect of transfers under
such options shall have been taken into account by including the historical
recorded accounts in determining Net Assets) and the purchase prices therefor
have been paid (i.e., Net Assets shall be reduced by the amount of such purchase
price), (C) the purchase price for the transaction set forth in Section 7.20
shall be deducted from Net Assets (unless the amount of such purchase price
shall have been previously paid by Hoechst to Dade in cash) and the related Thai
assets and liabilities shall be excluded from Net Assets (except that any such
liabilities (of the kind used in calculating Net Assets) in excess of current
assets (of the kind used in calculating Net Assets) shall reduce Net Assets),
and (D) with respect to 1997 target bonuses (aggregating approximately $6.1
million for fiscal 1997), the liability reflected in the determination of Net
Assets shall be (x) 75% of such amount if the Closing occurs prior to October 1,
1997, or (y) a pro rata portion of such amount (based on days elapsed during
1997 on or prior to the Closing) if the Closing occurs on or after October 1,
1997; provided that, if the Closing occurs after December 31, 1997, the
--------
liabilities reflected in the determination of Net Assets shall equal the
aggregate 1997 target bonuses, plus a pro rata portion of such amount for the
portion of 1998 on or prior to the Closing, less any payment of 1997 target
bonuses made in 1998 but prior to the Closing. Notwithstanding the foregoing,
the "$229.7 million" amount set forth in this Section shall be increased by the
amount (if any, but in no event by more than $11.48 million in the aggregate) of
any liability or liabilities included in the determination of such $229.7
million target and which would be an Indemnified Liability (or for which Hoechst
would otherwise be obligated to pay hereunder (or under any agreement
contemplated by Section 7.2(g)), including pursuant to Sections 7.12 and 7.13
hereunder) if such liability or liabilities existed on the Closing Date;
provided that, in no event, shall the $229.7 million target exceed $241.18
- --------
million.
1.6 Post-Closing Determination. Within 90 days after the Closing Date,
--------------------------
Hoechst and its auditors will prepare and deliver to Dade an audited calculation
of Net Assets determined in accordance with Section 1.5 and from the audited
consolidated balance sheet of the Business as of the Closing Date (the "Draft
-----
Balance Sheet"). Dade and its auditors shall, during the preparation of the
- -------------
Draft Balance Sheet by Hoechst and during the period for which an objection may
be filed pursuant to the next sentence, have reasonable access to Hoechst, and
Hoechst and its auditors shall make available to Dade and its auditors all
records and work papers used in preparing the Draft Balance Sheet. If Dade
disagrees with the computation of Net Assets reflected on the Draft Balance
Sheet, Dade may, within 60 days after receipt of the Draft Balance Sheet,
deliver a written notice (an "Objection Notice") to Hoechst setting forth Dade's
----------------
calculation of Net Assets; provided that the running of such period will be
--------
suspended during any period that Hoechst or any of its subsidiaries fail to
comply with its obligations set forth in the immediately preceding sentence. If
an Objection Notice is not delivered within such time period, then the amount of
Net Assets set forth in the Draft Balance Sheet shall be conclusive and binding
upon Dade and Hoechst and their respective affiliates. Dade and Hoechst will use
reasonable efforts to resolve any disagreements as to the computation of Net
Assets, but if they do not obtain a final resolution within 30 days after
Hoechst has received the Objection Notice, Dade and Hoechst will jointly retain
an independent accounting firm (the
-4-
"Firm") to resolve any remaining disagreements. If Dade and Hoechst are
----
unable to agree on the choice of the Firm, the Firm shall be Deloitte & Touche
LLP. Dade and Hoechst shall direct the Firm to render a determination within 30
days of its retention and Dade, Hoechst and their respective employees shall
cooperate with the Firm during its engagement. The Firm shall consider only
those items and amounts in the Draft Balance Sheet set forth in the Objection
Notice that Dade and Hoechst are unable to resolve. The Firm's determination
shall be based on the definition of Net Assets included herein. The
determination of the Firm will be conclusive and binding upon Dade and Hoechst
and their respective affiliates. The fees and expenses ("Firm Fees") of the
---------
Firm shall be paid by Dade, subject to the reimbursement by Hoechst as set forth
in the next sentence. If any of the items set forth in the Objection Notice and
submitted to the Firm for determination are resolved in favor of Dade, Hoechst
shall promptly reimburse Dade by wire transfer of immediately available funds in
an amount equal to (the "Reimbursement Calculation") (if and only if a positive
--------------------------
number) the Firm Fees multiplied by a factor equal to A minus B plus twice
----- ----
A multiplied by B; where "A" is the quotient obtained by dividing the amount
----------
of the items in the Objection Notice resolved by the Firm in favor of Dade by
the total amount of such items, and "B" is the Hoechst Percentage. If the
Reimbursement Calculation yields a negative number, Dade shall promptly pay
Hoechst by wire transfer of immediately available funds in the absolute amount
of such Reimbursement Calculation.
1.7 Certain Related Party Receivables. Immediately after the Closing
---------------------------------
(and after taking into account the actions contemplated by Section 3.2(h)
hereof), Dade and Hoechst acknowledge and agree that the Acquired Companies will
own an aggregate of $26.9 million face amount of "accounts receivable from
owner" and "accounts receivable from related parties" (as such terms are used in
the Latest Balance Sheet referred to in Section 4.6 hereof). Within 30 days
after the Closing, Hoechst shall pay (or cause to be paid) to HDHC or the U.S.
Company the face amount of such receivable in immediately available funds by
wire transfer. In no event shall such accounts receivable be taken into account
in the calculations of Net Assets hereunder.
ARTICLE II
CONDITIONS TO CLOSING
---------------------
2.1 Conditions to Dade's Obligations. The obligation of Dade to
--------------------------------
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions as of the Closing:
(a) The representations and warranties set forth in Article IV hereof
shall be true and correct at and as of the Closing Date as though then made and
as though the Closing Date were substituted for the date of this Agreement
throughout such representations and warranties (without taking into account any
disclosures made by Hoechst to Dade pursuant to Section 3.2(j) below), other
than such representations and warranties as are made as of a specific date,
which shall be true
-5-
as of such date, except in each case as would not have a material adverse effect
on the business, financial condition, operating results, assets or operations (a
"Material Adverse Effect") of the Acquired Entities, taken as a whole;
-----------------------
(b) Hoechst shall have performed (or caused to be performed) all of
the covenants and agreements required to be performed (or caused to be
performed) by it under this Agreement on or prior to the Closing Date, except in
each case as would not have a Material Adverse Effect on the Acquired Entities,
taken as a whole; provided that if Hoechst shall have failed to perform (or
--------
cause to be performed) any such covenant or agreement intentionally or as a
result of gross negligence (regardless of whether or not resulting in any
Material Adverse Effect), such failure shall have been cured prior to Closing;
(c) Dade, Hoechst and their respective affiliates shall have received
or obtained all Consents of, to, with or from Governmental Entities that are
necessary for the consummation of the transactions contemplated by the
Restructuring Documents and the Combination Documents or the operation of the
Business following the Closing, designated in each case with an asterisk on the
attached Dade Conflicts Schedule or the attached Hoechst Conflicts Schedule;
----------------------- --------------------------
(d) (i) Hoechst shall have transferred, or caused to be transferred, a
partnership interest in InfraServ GmbH & Co. Marburg KG ("InfraServ") to the
---------
GMBH Company, (ii the GMBH Company shall have entered into an agreement with
InfraServ (the "InfraServ Agreement"), whereby the Business will be provided
-------------------
with, on terms reasonably satisfactory to Dade, site management, environmental
management and infrastructural services under contract to the Marburg site,
which agreement shall include (x) except for increases to be agreed upon based
on increases in costs and expenses (including cost increases as a result of
inflation and third-party pass-throughs), requisite services at fairly allocated
costs not to exceed 1996 historical costs (provided that historical costs shall
--------
be appropriately reduced by all costs and expenses attributable to or associated
with any employees who have been transferred to the Acquired Entities from other
Hoechst affiliates), (y) flexible and reasonable termination provisions for each
service and (z) indemnification by Hoechst for liabilities arising out of Dade's
limited partnership interest in InfraServ, (ii the InfraServ Agreement shall be
in full force and effect as of the Closing Date and (iv Hoechst shall have, in
good faith, considered any alternative structures to the InfraServ arrangement
as proposed by Dade, provided that the negotiations shall include the
consideration of services that may be required to be provided and taken as long
as the GMBH Company remains on the Marburg site (e.g., fire protection and
security) and provisions to prevent the cost of services from becoming
unreasonable to either party;
(e) The GMBH Company and the Messer Group ("Messer") shall have
------
entered into a long-term supply agreement ("Messer Supply Agreement"), on terms
-----------------------
reasonably satisfactory to Dade, with respect to the instrument requirements of
the Business, that will include (i) reasonable pricing not to exceed 1996
historical costs (except for increases to be agreed upon based on increases in
costs and expenses (including cost increases as a result of inflation and third-
party pass-
-6-
throughs), and provided that historical costs shall be appropriately reduced
--------
by all costs and expenses attributable to or associated with employees
who have been transferred to the Acquired Entities from other Hoechst
affiliates), (ii a right of first offer to purchase the diagnostics instrument
manufacturing operations of Messer at Schwalbach on terms to be negotiated, and
(ii flexible and reasonable termination provisions; Hoechst shall have made a
good faith effort to assist Dade in negotiating an option (in the Messer Supply
Agreement) to purchase the instrument manufacturing operations upon termination
of the Messer Supply Agreement; and the Messer Supply Agreement shall be in full
force and effect as of the Closing Date, provided the negotiations shall include
the consideration of provisions to prevent the pricing from becoming
unreasonable to either party;
(f) No suit, action or other proceeding, or injunction, order or
judgment relating thereto, shall be, in the case of any suit, action or other
proceeding, or injunction, order or judgment relating thereto, brought by a
governmental authority, threatened or, in any case, pending before any court or
other Governmental Entity in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with the transactions contemplated
by the Restructuring Documents or the Combination Documents, and that would be
reasonably likely to have a Material Adverse Effect on the Dade Entities and the
Acquired Entities, taken as a whole after giving effect to the transactions
contemplated hereby (the "Combined Entities"); provided that Dade shall use its
----------------- --------
reasonable best efforts to have such suit, action or proceeding dismissed, and
to resist the entry of any injunction, order or judgment, or, if entered, to
have such injunction, order or judgment vacated;
(g) Dade and its affiliates shall have entered into one or more
transition services agreements (the "Transition Services Agreement"), on terms
-----------------------------
reasonably satisfactory to Dade, that shall provide for services that, if
utilized by Dade, would enable the Business to operate on a stand-alone basis
and shall contain, among other things, (x) pricing not to exceed 1996 historical
costs (except for increases to be agreed upon based on increases in costs and
expenses (including cost increases as a result of inflation and third-party
pass-throughs), and provided that historical costs shall be appropriately
--------
reduced by all costs and expenses attributable to or associated with any
employees who have been transferred to the Acquired Entities from other Hoechst
affiliates) and (y) flexible and reasonable termination provisions, with the
expectation that Dade shall not require transition services such as MIS support,
payroll and human resources support and other similar corporate services for
longer than 24 months after the Closing; and the Transition Services Agreement
shall be in full force and effect as of the Closing Date;
(h) The GMBH Company and Behringwerke AG shall have entered into a
trademark license agreement (the "Trademark License Agreement") on terms
---------------------------
reasonably satisfactory to Dade, that shall provide for a royalty-free license
to the GMBH Company for the use of the "Behring" name in the field of human in
vitro diagnostics, and the Trademark License Agreement shall be in full force
and effect as of the Closing Date;
-7-
(i) Hoechst shall have entered into an amended and restated
registration rights agreement in form and in substance as set forth on Exhibit F
---------
attached hereto (the "Registration Agreement") and the Registration Agreement
----------------------
shall be in full force and effect as of the Closing Date;
(j) Hoechst shall have entered into an amended and restated
stockholders agreement in form and in substance as set forth on Exhibit G
---------
attached hereto (the "Stockholders Agreement") and the Stockholders Agreement
----------------------
shall be in full force and effect as of the Closing Date;
(k) Hoechst shall have entered into a cooperation and collaboration
agreement in form and in substance as set forth on Exhibit H attached hereto
---------
(the "Cooperation Agreement") and the Cooperation Agreement shall be in full
---------------------
force and effect as of the Closing Date;
(l) That certain Credit Agreement, dated as of May 7, 1996 (the
"Credit Agreement"), among Dade, Dade International, Inc., various lending
- -----------------
institutions and Bankers Trust Company, as Agent, as amended prior to the date
hereof, and related documents thereto shall have been amended in a manner
reasonably satisfactory to Dade;
(m) Subsequent to the date hereof, Hoechst shall not have received
notice that 40 or more employees covered by the SEP (as defined in Section 7.15
hereof) whose positions are Band 32 or higher under the SEP (as identified in a
list previously provided to Dade) have (i) voluntarily terminated their
employment and (ii made a claim for benefits under the SEP; provided that
--------
Hoechst shall not have proven in an arbitration proceeding pursuant to Section
7.8 that the departure of such employees would not be reasonably likely to have
a Material Adverse Effect on the United States operations of the Business;
(n) The Behring Diagnostics, Inc., a wholly owned subsidiary of HDHC
(the "U.S. Company"), and/or the GMBH Company shall have entered into
------------
distribution agreements ("Third Party Distribution Agreements"), on terms and
-----------------------------------
conditions reasonably satisfactory to Dade, for the distribution of the Business
products in South Korea and South Africa, and the Third Party Distribution
Agreements shall be in full force and effect as of the Closing Date;
(o) The U.S. Company and Hoechst Corporation shall have entered into
an amended Sublease Agreement (the "San Jose Sublease") whereby the U.S. Company
-----------------
shall have all rights and obligations of Hoechst Corporation under a certain
Lease Agreement, dated July 1, 1996 (the San Jose Lease"), by and between State
--------------
of California Public Employees' Retirement System and Hoechst Corporation;
(p) Without limiting the generality of Section 2.1(c) above, (i) the
Commission of the European Communities (the "Commission") shall have issued a
----------
decision (the "EC Merger Control Decision") pursuant to (A) Article 6(1)(b) or
--------------------------
Article 8(2) of Council Regulation (EEC) No. 4064/89 of December 23, 1989 on
the control of concentrations between undertakings (the "Merger Regulation")
-----------------
declaring the transaction contemplated hereunder compatible with the common
market
-8-
without attaching any conditions or obligations to this decision or (B)
Article 6(1)(a) of the Merger Regulation declaring that the transactions
contemplated hereunder do not fall within the scope of the Merger Regulation or
(ii no EC Merger Control Decision shall have been issued by the Commission
pursuant to Article 6(1)(c) or Article 8(3) of the Merger Regulation and no EC
Merger Control Decision shall be required to consummate the transactions
contemplated hereunder pursuant to Article 10(b) of the Merger Regulation
(subsections (i) and (ii) collectively referred to herein as the "EC Merger
---------
Control Approval"); and
- ----------------
(q) At the Closing, Hoechst shall have delivered to Dade all of the
following:
(i) a certificate signed by Hoechst, dated the date of the
Closing, stating that the conditions specified in subsections 2.1(a), (b),
(c), (d), (f) and (n) have been satisfied as of the Closing;
(ii) certificates or other evidence of transfer reasonably
satisfactory to Dade representing all of the Stock, duly endorsed in blank
or accompanied by stock powers duly endorsed in blank in proper form for
transfer, with appropriate transfer stamps, if any, affixed thereto;
(iii) to the extent required to consummate the transaction
contemplated by the Restructuring Documents and/or the Combination
Documents, certified copies of resolutions by the boards of directors of
each of Hoechst, the Acquired Entities and the other affiliates of Hoechst
listed on Exhibit I attached hereto (collectively, the "Hoechst Entities")
--------- ----------------
and by the stockholders of each Hoechst Entity authorizing and approving
the Restructuring Documents and/or the Combination Documents to which such
Hoechst Entity is a party and the transactions contemplated hereby or
thereby;
(iv) one or more opinions of counsel, containing the opinions set
forth on Exhibit J attached hereto; and
---------
(v) such other documents or instruments as are required to be
delivered at the Closing pursuant to the terms hereof or that Dade
reasonably requests prior to the Closing Date to effect the transactions
contemplated hereby.
2.2 Conditions to Hoechst's Obligations. The obligation of Hoechst to
-----------------------------------
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions as of the Closing:
(a) The representations and warranties set forth in Article V hereof
shall be true and correct at and as of the Closing Date as though then made and
as though the Closing Date were substituted for the date of this Agreement
throughout such representations and warranties (without taking into account any
disclosures made by Dade to Hoechst pursuant to Section 3.3(g) below),
-9-
other than such representations and warranties as are made as of a specific
date, which shall be true and correct as of such date, except in each case as
would not have a Material Adverse Effect on the Dade Entities, taken as a whole;
(b) Dade shall have performed all of the covenants and agreements
required to be performed by it under this Agreement on or prior to the Closing
Date, except in each case as would not have a Material Adverse Effect on the
Dade Entities, taken as a whole; provided that, if Dade shall have failed to
--------
perform (or cause to be performed) any such covenant or agreement intentionally
or as a result of gross negligence (regardless of whether or not resulting in
any Material Adverse Effect), such failure shall have been cured prior to
Closing;
(c) Dade, Hoechst and their respective affiliates shall have received
or obtained all Consents of, to, with or from Governmental Entities that are
necessary for the consummation of the transactions contemplated by the
Restructuring Documents and the Combination Documents or the operation of the
Business following the Closing, designated in each case with an asterisk on the
attached Dade Conflicts Schedule or the attached Hoechst Conflicts Schedule;
----------------------- --------------------------
(d) No suit, action or other proceeding, or injunction, order or
judgment relating thereto, shall be, in the case of any suit, action or other
proceeding, or injunction, order or judgment relating thereto, brought by a
governmental authority, threatened or, in any case, pending before any court or
other Governmental Entity in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with the transactions contemplated
by the Combination Documents, and that would reasonably be likely to have a
Material Adverse Effect on the Combined Entities; provided that Hoechst shall
--------
use its reasonable best efforts to have such suit, action or proceeding
dismissed, and to resist the entry of any injunction, order or judgment, or, if
entered, to have such injunction, order or judgment vacated;
(e) Dade and the other parties hereto (other than Hoechst) shall have
entered into the Stockholders Agreement, the Cooperation Agreement, the
Transition Services Agreement, the Registration Rights Agreement, the Trademark
License Agreement, the InfraServ Agreement and the Messer Supply Agreement
(collectively, the "Ancillary Agreements" and, together with this Agreement and
--------------------
the other agreements contemplated hereby and thereby, other than the
Restructuring Documents, the "Combination Documents"), and the Transition
---------------------
Services Agreement, the InfraServ Agreement, the Messer Supply Agreement and the
Trademark License Agreement shall have terms and conditions that are reasonably
satisfactory to Hoechst, and the Ancillary Agreements shall be in full force and
effect as of the Closing Date;
(f) (i) Dade shall have amended its Certificate of Incorporation and
shall have caused Dade International, Inc. to amend its Certificate of
Incorporation in form and in substance as set forth in Exhibit K1 and Exhibit
---------- -------
K2, respectively, attached hereto in order to (A) authorize the issuance of
additional capital stock by Dade in an amount sufficient to consummate the
transactions contemplated hereby, assuming the Warrant was exercised immediately
after the Closing Date,
-10-
(B) change the name of the Company to "Dade Behring Holdings, Inc." and (C)
change the name of Dade International, Inc. to "Dade Behring, Inc." and (ii such
Certificates of Incorporation, as amended thereby, shall be in full force and
effect as of the Closing and shall not have been further modified in any
respect;
(g) The representations and warranties made by various entities
controlled by Bain Capital, Inc. ("Bain") and Goldman, Sachs Co. ("Goldman") in
---- -------
the letter agreements delivered concurrently herewith shall be true and correct,
and Bain and Goldman shall not have breached any obligation contained in such
letter agreements;
(h) The U.S. Company and Hoechst Corporation shall have entered into
the San Jose Sublease whereby the U.S. Company shall have all rights and
obligations of Hoechst Corporation under the San Jose Lease.
(i) Without limiting the generality of Section 2.2 (c) above, the
Commission shall have issued the EC Merger Control Approval; and
(j) At the Closing, Dade shall have delivered to Hoechst all of the
following:
(i) a certificate signed by Dade, dated the date of the Closing,
stating that the conditions specified in subsections 2.2(a), (b), (c) and
(d) have been satisfied as of the Closing;
(ii) certified copies of resolutions by the board of directors
and stockholders of Dade authorizing and approving this Agreement and the
transactions contemplated hereby on behalf of Dade;
(iii) certificates representing all of the Common Stock and the
Class L Common, Class B;
(iv) the Warrant duly executed by Dade;
(v) one or more opinions of Dade's counsel, containing the
opinions set forth on Exhibit L attached hereto; and
---------
(vi) such other documents or instruments as are required to be
delivered at the Closing pursuant to the terms hereof or that Hoechst
reasonably requests prior to the Closing Date to effect the transactions
contemplated hereby.
-11-
ARTICLE III
COVENANTS PRIOR TO CLOSING
--------------------------
3.1 General. Subject to the terms of this Agreement, each party shall use
-------
its reasonable best efforts to cause the Closing to occur, including reasonable
best efforts to cause each of the conditions of the other party hereto set forth
in Article II to be satisfied.
3.2 Affirmative Covenants of Hoechst. Except as otherwise expressly
--------------------------------
provided herein or as expressly consented to in writing by Dade, prior to the
Closing, Hoechst shall and shall cause each of the other Hoechst Entities (the
"Other Hoechst Entities") to:
- -----------------------
(a) except for transactions contemplated by this Agreement, conduct
the Business only in the ordinary course of business, including, without
limitation, (i) maintenance and repair of the Business Assets, (ii) maintenance
of the levels of supplies, spare parts and inventories, raw materials, packaging
materials, work-in-process, goods consigned to third parties, finished goods
(collectively, the "Inventory") at customary operating levels consistent with
---------
past practices, (ii) maintenance of consistent credit and collection policies
and procedures with respect to billing and collection of trade receivables, (iv)
compliance with all material legal requirements and contractual obligations
applicable to it with respect to the Business and (v) maintenance and protection
of all Proprietary Rights so as not to affect adversely the validity or
enforceability thereof;
(b) use reasonable efforts to preserve intact its business
organization and goodwill and keep available the services of its officers and
employees and maintain satisfactory relationships with suppliers, customers and
others having business relationships with it with respect to the Business;
(c) make all reasonable efforts to afford, and cause its officers,
directors, employees, attorneys, accountants and other agents to afford, to Dade
and its accounting, legal and other representatives, as well as their respective
officers, employees, affiliates, advisors, and other agents, reasonable access
upon reasonable notice and at all reasonable times to its personnel and to
business, financial, legal, tax, environmental, compensation and other data and
information concerning the Business (other than such information as may be
reasonably determined by Hoechst to be competitively sensitive information after
consultation with Dade regarding the general nature thereof);
(d) maintain its books, accounts and records with respect to the
Business consistent with the custom and practice used in the preparation of the
financial statements described in Section 4.6 below;
(e) use reasonable best efforts to maintain in full force and effect
the existence of all Proprietary Rights and Permits of the Business and obtain
all necessary renewals thereof;
-12-
(f) make such transfers, and take such other actions, as are necessary
so that the transactions contemplated by the Restructuring Documents are
consummated pursuant to the terms thereof;
(g) give all notices and use reasonable best efforts to obtain all
Consents necessary for Hoechst and its affiliates to consummate the transactions
contemplated by the Restructuring Documents and the Combination Documents or to
permit the Business and the Business Assets to be operated by Dade and its
affiliates after the Closing as the Business is currently being operated;
provided that, notwithstanding the foregoing, Hoechst shall provide copies to
- --------
Dade for its review of all documentation necessary to obtain all such Consents
(other than Consents under H-S-R) prior to submitting such documentation to the
appropriate Persons;
(h) (i) assign all intercompany accounts between the Acquired
Entities on the one hand, and Hoechst and its Subsidiaries (other than the
Acquired Entities) on the other hand, to the GMBH Company and HDHC as
contemplated by Section 7.17 hereunder and as provided in the Restructuring
Documents, (ii terminate and eliminate all intercompany agreements and
arrangements except for (A) those agreements and arrangements expressly
contemplated in this Agreement, (B) those agreements and arrangements between
and among the Acquired Entities and (C) $26.9 million of intercompany
receivables as contemplated by Section 1.7 hereunder; and (ii forgive and
forever waive any claim ("Goodwill Termination Claims") to any compensation or
---------------------------
other amounts payable in respect of goodwill or otherwise to Hoechst (or its
affiliates) in connection with the termination or elimination of such
agreements and arrangements pursuant to Section 89(b) of the German Commercial
Code (or application by analogy of the principles of such statute);
(i) promptly inform Dade in writing if Hoechst obtains Knowledge of
any variances from the representations and warranties contained in Article IV
hereof or any breach of any covenant or agreement hereunder that, in each case,
would cause a condition to Closing not to be satisfied;
(j) prepare by July 31, 1997 a schedule of (i) the specific financial
information with respect to the Business that Hoechst shall prepare and deliver
(or cause to be prepared and delivered) to Dade pursuant to the Transition
Services Agreement or other agreements and (ii the timing for delivery thereof;
(k) use reasonable best efforts to follow the guidelines set forth on
the attached SEP Schedule; and
------------
(l) except as otherwise agreed by the parties, discharge all
liabilities and obligations of all Acquired Entities relating to indebtedness
for borrowed money and all guarantees of any of the foregoing (whether for
principal, interest, penalties, fees, expenses or otherwise).
-13-
3.3 Affirmative Covenants of Dade. Except as otherwise expressly provided
-----------------------------
herein or as expressly consented to in writing by Hoechst, prior to the Closing,
Dade shall and cause its affiliates to:
(a) except for the transactions contemplated by this Agreement,
conduct the business of Dade and the Dade Entities (the "Dade Business") only in
-------------
the ordinary course of business, including, without limitation, (i) maintenance
and repair of the Dade Assets (as defined in Section 5.11 hereof); (ii
maintenance of the levels of its Inventory, supplies and spare parts at
customary operating levels consistent with past practice, (ii maintenance of
consistent credit and collection policies and procedures with respect to billing
and collection of trade receivables, (iv compliance with all material legal
requirements and contractual obligations applicable to it and (v) maintenance
and protection of all Dade Proprietary Rights so as not to affect adversely the
validity or enforceability thereof;
(b) use reasonable efforts to preserve intact its business
organization and goodwill and keep available the services of its officers and
employees and maintain satisfactory relationships with suppliers, customers and
others having business relationships with it;
(c) make all reasonable efforts to afford, and cause its officers,
directors, employees, attorneys, accountants and other agents to afford, to
Hoechst and its accounting, legal and other representatives, as well as their
respective officers, employees, affiliates, advisors, and other agents,
reasonable access upon reasonable notice and at all reasonable times to
Hoechst's personnel and to business, financial, legal, tax, environmental,
compensation and other data and information concerning the Dade Business (other
than such information as may be reasonably determined by Dade to be
competitively sensitive information after consultation with Hoechst regarding
the general nature thereof);
(d) maintain its books, accounts and records consistent with past
custom and practice;
(e) use reasonable best efforts to maintain in full force and effect
the existence of all Dade Proprietary Rights and Permits and obtain all
necessary renewals thereof;
(f) give all notices and use reasonable best efforts to obtain all
Consents necessary for Dade and its affiliates to consummate the transactions
contemplated by the Combination Documents or to permit the Dade Business and the
Dade Assets to be operated by Dade and its affiliates after the Closing as the
Dade Business is currently being conducted;
(g) promptly inform Hoechst in writing if Dade obtains Knowledge of
any variances from the representations and warranties contained in Article V
hereof or any breach of any covenant or agreement hereunder that, in each case,
would cause a condition to Closing not to be satisfied; and
-14-
(h) prepare by July 15, 1997 a schedule of (i) the specific financial
information with respect to the Business that Hoechst shall prepare and deliver
(or cause to be prepared and delivered) to Dade pursuant to the Transition
Services Agreement or other agreements and (ii) the timing for delivery thereof.
3.4 Negative Covenants of Hoechst. Except as otherwise expressly provided
-----------------------------
herein or as expressly consented to in writing by Dade, prior to the Closing
Date, Hoechst shall not and shall cause each Other Hoechst Entity not to:
(a) except as expressly contemplated by this Agreement, take or omit
to take any action that, individually or in the aggregate, could be reasonably
anticipated to have a Material Adverse Effect upon the Business; or
(b) take any action referred to in Section 4.9 (other than Sections
4.9(d) and 4.9(e)) or take any action or omit to take any action that would
otherwise require disclosure pursuant to Section 3.2(i) hereof as if each
representation and warranty were remade as of the time of such action or
omission, except (i) as expressly authorized herein, or (ii upon prior or
concurrent written approval of Dade.
3.5 Negative Covenants of Dade. Except as otherwise expressly provided
--------------------------
herein or as expressly consented to in writing by Hoechst, prior to the Closing
Date, Dade shall not and shall cause each other Dade Entity not to:
(a) except as expressly contemplated by this Agreement, take or omit
to take any action that, individually or in the aggregate, could be reasonably
anticipated to have a Material Adverse Effect upon the Dade Business;
(b) take any action referred to in Section 5.9 (other than Section
5.9(d) and 5.9(e)) or take any action or omit to take any action that would
otherwise require disclosure pursuant to Section 3.3(g) hereof as if each
representation and warranty were remade as of the time of such action or
omission, except (i) as expressly authorized herein, or (ii upon prior or
concurrent written approval of Hoechst; or
(c) (i) pay any dividends or distribute or make any other payment of
cash or other property with respect to its capital stock other than dividends on
Dade's Preferred Stock, par value $.01 per share, in the ordinary course of
business or (ii except for payments contemplated by Section 7.3(b) hereof, pay
any amount to Bain or Goldman or their respective affiliates in excess of the
amounts permitted in Section 8.08 of the Credit Agreement as in effect on May 7,
1996.
3.6 Exclusivity. Until the consummation of the transactions contemplated
-----------
by the Combination Documents or termination of this Agreement in accordance with
the terms hereof, each of Dade and Hoechst agrees that neither it nor any of its
respective subsidiaries nor any of its or their
-15-
respective representatives, directors, officers or affiliates will (a) discuss
or pursue a possible joint venture, sale or other disposition of any of the
Business Assets or the Dade Assets (other than sales of assets in the ordinary
course of business and the assets listed on the Pending Asset Sales Schedule) or
----------------------------
the Business or any interest therein with any other party or provide any
information to any other party in connection therewith or (b) except (i) to the
extent permitted or required by Section 3.8, (ii to any advisors to Dade or
Hoechst or (ii to any of lenders of Dade or their respective advisors, disclose
to any other party the contents of any of the Combination Documents.
3.7 Antitrust Regulatory Approvals. Dade and Hoechst shall each file or
------------------------------
cause to be filed with each Governmental Entity any notifications required to be
filed under any Applicable Laws that are applicable to the transactions
contemplated hereby. Hoechst shall promptly pay the filing fees of Dade and the
Acquired Companies and their stockholders' respective filings. Dade and Hoechst
shall use their best efforts to make such filings promptly (and in any event
within 10 Business Days in the case of the initial filing under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended ("H-S-R"), and similar
-----
applicable European Community merger control laws ("EC Merger Control"))
-----------------
following the date hereof, to respond to any requests for additional information
made by any applicable Governmental Entities and to cause the waiting periods
under any such Applicable Laws to terminate or expire at the earliest possible
date and to resist, at each of their respective cost and expense (including the
institution or defense of legal proceedings), any assertion that the
transactions contemplated hereby or thereby constitute a violation of applicable
antitrust or competition laws, all to the end of expediting consummation of the
transactions contemplated hereby and thereby.
3.8 Public Announcements. Except as the parties shall mutually agree,
--------------------
Dade and Hoechst shall not issue any report, statement or press release or
otherwise make any public statements with respect to this Agreement or the
transactions contemplated hereby (other then the transactions under the
Restructuring Documents), except as in the reasonable judgment of the party
issuing or making such statements may be required by Applicable Law or in
connection with the obligations of a publicly held, exchange-listed company
(including any requirements of any stock exchange), in which case the party
making such report, statement or press release shall (a) allow the other party
at least five days to review and comment on such report, statement or press
release prior to its issuance (except when such review is not practicable, and
in such case, such review shall be as long as reasonably practicable) and (b)
make reasonable efforts to accommodate the comments of the other party.
3.9 Approval Procedure. In the event that either party to this Agreement
------------------
desires to take any action that is otherwise prohibited by Section 3.2, 3.3, 3.4
or 3.5 hereunder, such party shall provide timely notice, which shall be no less
than five Business Days prior to commencing such action, to the other party.
Such notice shall be made by telecopier in accordance with the time requirements
set forth in Section 9.3 (with receipt confirmed by telephone) to the persons
set forth below. Consent to such action shall be deemed to have occurred if the
requesting party shall not
-16-
have received a response within five Business Days after receipt of the notice
described in this Section 3.9.
If to Hoechst:
--------------
Ken Forde
Phone: (408) 239-4170
Telecopier: (408) 239-2112
-or-
Richard Burnham
Phone: (408) 239-2340
Telecopier: (408) 239-2568
If to Dade:
-----------
Jim Reid-Anderson
Phone: (847) 267-5320
Telecopier: (847) 267-1066
-or-
John Connaughton
Phone: (617) 572-2948
Telecopier: (617) 572-3274
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOECHST
-----------------------------------------
As an inducement to Dade to enter into this Agreement, Hoechst hereby
represents and warrants to Dade that:
4.1 Organization and Corporate Power. Hoechst is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of Germany and
has the corporate power to carry on its business as now being conducted. Each
of the Other Hoechst Entities is a corporation or other entity, duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation. The capitalization of each of the Acquired Entities (including place
of organization and record and beneficial ownership), as of and immediately
after the Closing, is listed on the attached
-17-
Acquired Entities Capitalization Schedule. The Acquired Companies and their
- ----------------------------------------- subsidiaries (collectively, the
"Acquired Entities") shall have, as of the Closing Date, all requisite power and
-----------------
authority necessary to own and operate the Business and to conduct the Business
as now conducted and are qualified to do business in every jurisdiction in which
the failure so to qualify has had or would reasonably be expected to have a
Material Adverse Effect upon the Acquired Entities, taken as a whole. The copies
of each Acquired Entity's constituent documents have been made available to Dade
prior to the date of this Agreement and reflect all modifications made thereto
and are accurate and complete.
4.2 Subsidiaries and Affiliates. Except as set forth in the attached
---------------------------
Acquired Entities Capitalization Schedule, the Acquired Entities do not own,
- -----------------------------------------
directly or indirectly, any stock, partnership interest, joint venture interest
or other security or other ownership interest or investment in any other Person.
4.3 Capital Stock of Hoechst Subsidiary. The authorized and outstanding
-----------------------------------
capital stock of each of the Acquired Entities (and the shareholders of such
stock) is set forth on the attached Acquired Entities Capitalization Schedule
-----------------------------------------
(subject to capital increases contemplated by the Combination Documents and the
Restructuring Documents), all of which is, or as of the Closing shall be, duly
authorized, validly issued and outstanding, fully paid and nonassessable.
Except for such capital stock, there are no shares of capital stock or other
equity interests in the Acquired Entities issued or outstanding. None of such
capital stock has been issued in violation of, and none of such capital stock is
subject to, any preemptive or subscription rights. None of such capital stock
is subject to any voting trust agreement or other agreement, contract,
instrument, lease, commitment, license, guaranty, settlement or other business
arrangement or understanding (a "Contract") including any of the foregoing
--------
relating to the voting, dividend rights or disposition of any such capital
stock. There are no issued or outstanding warrants, options, "phantom" stock
rights, agreements, convertible or exchangeable securities or other commitments
(other than this Agreement) pursuant to which any Person is or may become
obligated to issue, sell, purchase, return or redeem any shares of capital stock
or other securities of the Acquired Entities, and there are no equity securities
of the Acquired Entities reserved for issuance for any purpose. Upon delivery
to Dade at the Closing of certificates (or other evidence reasonably
satisfactory to Dade) representing the Stock, duly endorsed by the appropriate
Hoechst Entity for transfer to Dade, and upon Hoechst's receipt of the Purchase
Price, good and valid title to the Stock shall pass to and vest in Dade, free
and clear of any Liens.
4.4 Authority of Hoechst. Hoechst has full right, power and authority to
--------------------
enter into this Agreement, and Hoechst and each Other Hoechst Entity has or will
have full right, power and authority to enter into each of the other Combination
Documents and the Restructuring Documents to which it is a party and to carry
out the transactions contemplated hereby and thereby. The execution, delivery
and performance by Hoechst of this Agreement and by Hoechst and the Other
Hoechst Entities of each other Combination Document and the Restructuring
Documents to which it is a party has been or will be duly authorized by all
necessary corporate action and no other
-18-
corporate action on the part of such Hoechst Entity is required in connection
therewith. Each of the Restructuring Documents and each of the Combination
Documents to be executed and delivered by each Hoechst Entity a party thereto
constitutes, or will when executed and delivered constitute, a valid and binding
obligation of such Hoechst Entity, enforceable in accordance with its respective
terms.
4.5 No Breach. Except as set forth on the attached Hoechst Conflicts
--------- -----------------
Schedule, the execution, delivery and performance by each Hoechst Entity of the
- --------
Restructuring Documents and the Combination Documents to which it is a party and
the consummation of the transactions contemplated hereby and thereby (including
the operation by the Acquired Entities' of the Business following the Closing as
such operations are conducted on the date of this Agreement) do not and shall
not (a) conflict with or result in any breach of any of the provisions of, (b)
constitute a default under, (c) result in a violation of, (d) give any third
party the right to terminate or to accelerate any obligation under, (e) result
in the creation of any Lien upon the Business or any of the Business Assets or
(f) require any authorization, consent, approval, license, permit, exemption or
other action by or notice to or filing with (collectively, "Consents") any court
--------
or other Governmental Entity under the provisions of, Hoechst's or any of the
Other Hoechst Entities' constituent documents or any Contract listed on the
attached Hoechst Contracts Schedule, or any Applicable Law. Without limiting
--------------------------
the generality of the foregoing, neither Hoechst nor any Other Hoechst Entity
has entered into any agreement, or is bound by any obligation of any kind
whatsoever, directly or indirectly to transfer or dispose of (whether by sale of
stock or assets, assignment, merger, consolidation or otherwise) any portion of
the Business Assets to any Person, other than in the ordinary course of
business, or pursuant to this Agreement, the other Combination Documents, the
Restructuring Documents or in contemplation of the transactions contemplated
hereby or thereby. Except as set forth on the Hoechst Conflicts Schedule, none
--------------------------
of the Acquired Entities is subject to any restrictions upon making loans or
advances or paying dividends to, transferring property to, or repaying any
indebtedness owed to any affiliate thereof.
4.6 Financial Statements. Each of the following financial statements
--------------------
(including in all cases the notes thereto, if any) (collectively, the "Financial
---------
Statements") is (or when delivered shall be) consistent with the books and
- ----------
records of the Hoechst Entities and presents fairly in all material respects the
combined financial condition, results of operations, and cash flows of the
Business in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis as of the dates and for the
----
periods set forth therein:
(a) the audited combined balance sheets of the Business as of
December 31, 1995 and 1996, and the related statements of operations and cash
flows for the twelve-month periods ended December 31, 1995 and 1996,
respectively, with the "Latest Balance Sheet" being defined herein as the
--------------------
audited combined balance sheet of the Business as of December 31, 1996; and
(b) the unaudited combined balance sheets of the Business as of March
31, 1997 and as of any subsequent date for the balance sheets delivered pursuant
to Section 9.2(a) hereunder
-19-
and the related statements of operations and cash flows for the relevant
fiscal periods then ended, provided that such unaudited financial statements
--------
shall only include footnotes customarily included in interim financial
statements and shall be subject to normal and customary year-end adjustments.
4.7 Product and Service Warranty; Product Recall. The attached Warranty
-------------------------------------------- --------
Schedule contains copies of the standard terms and conditions of sale for
- --------
products delivered and services rendered to the extent relating to the Business.
Except as set forth on the attached Product Recalls Schedule, during the past
------------------------
three years there have been no general product recalls, withdrawals,
discontinuances or seizures with respect to any products manufactured or sold by
any Hoechst Entity with respect to the Business.
4.8 No Material Adverse Change. Since the date of the Latest Balance
--------------------------
Sheet, there has been no material adverse change in the business, financial
condition, operating results, assets or operations of the Business (including as
a consequence of the loss or pending or threatened loss, alone or in the
aggregate, of any significant customer, supplier, source of referral, right
pursuant to any Contract, or any Consent).
4.9 Absence of Certain Developments. Except for transactions contemplated
-------------------------------
by this Agreement or as set forth on the attached Hoechst Developments Schedule,
-----------------------------
since the date of the Latest Balance Sheet, none of the Hoechst Entities has
(with respect to the Business):
(a) mortgaged or pledged any of its properties or assets or subjected
them to any Lien except Permitted Liens;
(b) sold, assigned, licensed (as licensor), disposed or permitted any
other Person to use any of its tangible assets (other than in the ordinary
course of business) having a fair market value in excess of $500,000 in the
aggregate, or canceled without fair consideration any debts or claims owing to
or held by it;
(c) sold, assigned, licensed (as licensor), disposed of or transferred
any Permits, Proprietary Rights or other intangible assets having a fair market
value in excess of $500,000 in the aggregate, or disclosed any proprietary
confidential information to any Person except to Dade and its representatives
herewith or in the ordinary course of business;
(d) suffered any damage, destruction or casualty loss to its tangible
assets of the Business in excess of $500,000, whether or not covered by
insurance;
(e) suffered any extraordinary losses or canceled or waived any
rights having a value in excess of $500,000 in the aggregate;
(f) made any loans or advances to, guarantees for the benefit of, or
any investments in, any Persons in excess of $500,000 in the aggregate;
-20-
(g) instituted or settled any claim or lawsuit involving equitable or
injunctive relief or more than $500,000 in the aggregate;
(h) except (i) in the ordinary course of business or (ii as would
otherwise be permitted in Section 4.9(k) below, entered into, amended, modified
or supplemented any Contract with any of its officers, directors, equity
holders, agents or its or their affiliates, or with any family member of any
such individual, or with any entity in which any such person or individual owns
a beneficial interest;
(i) entered into any other Contracts involving liabilities or
obligations in excess of $500,000;
(j) accelerated, terminated, modified or canceled any Contracts
involving more than $500,000;
(k) entered into any employment contract (including with an
independent contractor) involving more than $200,000 or collective bargaining
agreement, written or oral (other than any oral contract for employment at the
will of Hoechst), or modified in any material respect the terms of any existing
such contract or agreement;
(l) adopted, amended, modified or terminated any bonus, profit-
sharing, incentive, benefit, welfare, severance or other plan, Contract or
commitment for the benefit of any of its directors, officers and employees;
(m) except (i) for ordinary course salary increases and bonuses paid
consistent with past practice and as contemplated by the current business plan
or (ii as required by pre-existing Contracts, made or granted any bonus or any
wage or salary increase to any employee or group of employees, or made or
granted any increase in any vacation or sick pay policy;
(n) engaged in any promotional sales or discount or other similar
activity with customers other than in the ordinary course of business;
(o) instituted or permitted any change involving more than $500,000 in
the conduct of the Business, or any significant change in its method of
manufacturing, purchase, distribution, sale, lease, management, marketing,
promotion or operation;
(p) made any change in any method of accounting or accounting
policies, other than those required by GAAP and which have been disclosed in
writing to Dade;
(q) entered into any transaction other than in the ordinary course of
business involving more than $500,000; or
-21-
(r) agreed or committed to do any of the foregoing.
4.10 Real Property.
-------------
(a) Owned Properties. For the purposes hereof, the term "Owned Real
---------------- ----------
Property" shall mean all land and all buildings, fixtures and other improvements
- --------
located thereon, including all easements, rights of way, servitudes, tenements,
hereditaments, appurtenances, privileges and other rights with respect thereto
owned by the Hoechst Entities (with respect to the Business). The Owned Real
----------
Property Schedule attached hereto sets forth the address and a true, correct and
- -----------------
complete legal description of the land for each Owned Real Property. Except as
set forth in the Owned Real Property Schedule attached hereto, with respect to
----------------------------
each parcel of Owned Real Property, immediately after giving effect to the
Closing: (i) the respective Acquired Entities shall have good and marketable
fee simple title to all such parcels, free and clear of all Liens, except
Permitted Liens; (ii there shall be no leases, subleases, licenses, concessions
or other agreements (written or oral) granting to any person the right to use or
occupy such parcel or any portion thereof; and (ii there shall be no outstanding
options, rights of first offer, rights of first refusal or similar rights
granted to third parties under local jurisdiction to purchase such parcel or any
portion thereof or interest therein.
(b) Leased Properties. For the purposes hereof, the term "Leased
----------------- ------
Real Property" shall mean all land, buildings, fixtures and other real property
- -------------
used or occupied by the Business pursuant to any lease, sublease, license,
concession or other similar real property interest held by any Hoechst Entity.
The Leased Real Property Schedule attached hereto sets forth the address and a
-----------------------------
list of all leases, subleases, licenses, concessions and other agreements
(written or oral) involving annual payments in excess of $250,000 (collectively,
the "Real Property Leases") for each Leased Real Property. Hoechst has made
--------------------
available to Dade a true, correct and complete copy of each such written Real
Property Lease (including all amendments, extensions, renewals, guaranties and
other documents with respect thereto), and in the case of any such oral Real
Property Leases a written summary of the basic terms thereof. Except as set
forth in the Leased Real Property Schedule attached hereto, with respect to each
-----------------------------
such Real Property Lease: (i) the Real Property Lease is (and immediately after
giving effect to the Closing shall continue to be) legal, valid, binding,
enforceable and in full force and effect; (ii neither the respective Hoechst
Entities nor any other party to the Real Property Lease is (or after giving
effect to the Closing shall be) in breach or default thereunder and no event has
occurred or circumstance exists which, with the delivery of notice, passage of
time or both, would constitute such a breach or default or permit the
termination, modification or acceleration of rent thereunder; (ii no party to
such Real Property Lease has repudiated (or, to Hoechst's Knowledge, after
giving effect to the Closing shall repudiate) any provision thereof, and there
are no (and, to Hoechst's Knowledge, after giving effect to the Closing there
shall not be any) disputes, oral agreements or forbearance programs in effect
with respect to the Real Property Lease; and (iv the respective Hoechst Entities
have not assigned, subleased, mortgaged, deeded in trust or otherwise
transferred or encumbered the Real Property Lease or any interest therein.
-22-
(c) Leasehold Improvements. For the purposes hereof, the term
----------------------
"Leasehold Improvements" shall mean all buildings, fixtures and other
- -----------------------
improvements owned by the respective Hoechst Entities and included in each
Leased Real Property, regardless of whether such improvements are subject to
reversion to the landlord or other third party upon the expiration or
termination of the lease, sublease or similar agreement for such Leased Real
Property. Immediately after giving effect to the Closing, the respective
Acquired Entities will (subject to such reversions, if any) have good and
marketable title to the Leasehold Improvements, free and clear of all Liens,
except Permitted Liens.
(d) Condemnation and Litigation. There are no condemnation,
---------------------------
expropriation or other eminent domain proceedings pending or, to Hoechst's
Knowledge, threatened, affecting any Owned Real Property, Leased Real Property
and Leasehold Improvements (collectively, the "Real Property") or any portion
-------------
thereof. There is no writ, injunction, decree, order or judgment outstanding,
nor any claims, litigation, administrative actions or similar proceedings
pending or threatened relating to the ownership, lease, use, occupancy or
operation of any Real Property or any portion thereof.
(e) Condition of Improvements. All buildings, structures, fixtures
-------------------------
and other improvements and all components thereof included within the Owned Real
Property and Leased Real Property and all Leasehold Improvements (collectively,
the "Improvements") are, in all material respects, in good condition and repair
------------
and sufficient for the continued operation of the Business. There are no
structural deficiencies or latent defects affecting any of the Improvements and
there are no facts or conditions affecting any of the Improvements which would,
individually or in the aggregate, interfere in any material respect with the use
or occupancy thereof in the continued operation of the Business.
(f) Access. Each parcel of Real Property and the Improvements thereon
------
have access to a public street.
4.11 Business Assets.
---------------
(a) Except as set forth on the Excluded Asset Schedule, on the Closing
-----------------------
Date, the Acquired Entities shall own good and marketable title to all right,
title and interest of the Hoechst Entities in, to and under all of the
properties, assets and rights of every kind, whether tangible or intangible,
real or personal, primarily related to, used in, or held in connection with, the
conduct of the Business ("Business Assets"), free and clear of all Liens, except
---------------
for (i) Liens described on the attached Encumbrances Schedule, (ii Liens for
---------------------
current property taxes not yet due and payable, and (ii other imperfections of
title or Liens, if any, which imperfections or Liens do not, or would not be
reasonably foreseeable to, individually or in the aggregate, impair the
continued use and operation of the Business Assets to which they relate and do
not affect the marketability of the title to the Business Assets to which they
relate (collectively, items (i), (ii) and (iii) above are referred to as the
"Permitted Liens"). Except as set forth on the Excluded Asset Schedule, such
- ---------------- -----------------------
properties,
-23-
assets and other rights, together with the rights of the Acquired Entities
available under the Trademark License Agreement, Transition Services Agreement,
the InfraServ Agreement, the Messer Supply Agreement and the Third Party
Distribution Agreements are all of the properties, assets and other rights
used by the Business in achieving, on a stand-alone basis, the historical
financial performance of the Business as reflected in the Financial Statements,
other than those properties, assets and other rights disposed of in the
ordinary course of business or in transactions reflected in such Financial
Statements. Either Hoechst, an Acquired Entity or an affiliate of Hoechst
identified on the attached Exhibit I own all of the Business Assets.
---------
(b) The level and category of services made available to Dade
pursuant to the Combination Documents are sufficient to operate the Business as
it is currently conducted. The price or cost of each service at December 31,
1996 identified on the Transition Services Schedule is fairly reflected in the
----------------------------
December 31, 1996 audited income statement of the Business. The cost and
expenses (including wages, salaries and benefits) relating to the employment of
the individuals of the Business employed by the Acquired Entities at December
31, 1996 are fairly reflected in the December 31, 1996 audited income statement
of the Business.
4.12 Tax Matters.
-----------
(a) Except as set forth on the attached Tax Schedule or events
------------
involving obligations or liabilities less than $250,000: (i) the Acquired
Entities have timely filed all federal, state, local and non-United States
income, information and other Tax returns (collectively "Tax Returns") which are
-----------
required to be filed with respect to their activities, properties or employees;
(ii all such returns are true, complete and accurate and such filings accurately
reflect the Tax liabilities of the Hoechst Entities; (ii all Taxes, assessments
and other governmental charges imposed upon the Hoechst Entities, or upon any of
the assets, income or franchises of the Acquired Entities, have been timely paid
or, if not yet payable, will be timely paid; and (iv there are no actual or
proposed Tax deficiencies, assessments or adjustments with respect to the
Business. "Tax" or "Taxes" means any (A) federal, state, local or non-United
--- -----
States income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall, profits, environmental, customs,
capital stock, franchise, employees, income withholding, foreign or domestic
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, value added, alternative or add-on minimum or
other similar tax, governmental fee, governmental assessment or governmental
charge of any kind whatsoever, including any interest, penalties or additions to
Tax or additional amounts with respect to the foregoing; (B) liability for the
payment of any amounts of the type described in clause (A) arising as a result
of being (or ceasing to be) a member of an affiliated group (as defined in (S)
1504(a) of the I.R.C. of 1986, as amended (the "Code")) or any analogous
----
combined, consolidated or unitary group defined under state, local or foreign
tax law; and (C) liability for the payment of any amounts of the type described
in clause (A) as a result of any express or implied obligations to indemnify or
otherwise assume or succeed to the liability of any other Person.
-24-
(b) The Acquired Entities are not liable for the Taxes of another
Person (x) as a transferee or successor, (y) by contract or indemnity or (z)
otherwise.
(c) Except as set forth on the attached Tax Schedule, no Acquired
------------
Entity is or shall become obligated (under any contract entered into on or
before the Closing Date) to make any payments that shall be nondeductible under
Section 280G of the Code (or any corresponding provision of state, local or
foreign Tax law). Except as set forth on the attached Tax Schedule, no Acquired
------------
Entity will be required as a result of a change in method of accounting, a
"closing agreement" as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign income Tax law), a deferred
intercompany gain described in Treasury Regulation Sections 1.1502-13, or an
excess loss account described in Treasury Regulation Sections 1.1502-19 (or any
corresponding or similar provision or administrative rule of federal, state,
local or foreign income tax law), to include any item of income in, or exclude
any item of deduction from, taxable income for any taxable year or portion
thereof beginning on or after the Closing Date.
4.13 Absence of Undisclosed Liabilities. As of the Closing, the Acquired
----------------------------------
Entities shall have no obligations or liabilities involving more than $250,000
relating to the Business or the Business Assets (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due and
regardless of when or by whom asserted), except (a) obligations under Contracts
described on the attached Contracts Schedule and the other Schedules attached
------------------
hereto or under Contracts and commitments entered into in the ordinary course of
business which are not required to be disclosed thereon due to specified dollar
thresholds (but not liabilities for breaches or alleged breaches thereof
occurring on or prior to the Closing Date which have not been disclosed pursuant
to the Schedules hereto), (b) liabilities reflected on the liability side of the
Latest Balance Sheet, (c) liabilities and obligations which have arisen after
the date of the Latest Balance Sheet in the ordinary course of business (none of
which is a liability for breach or alleged breach of contract, tort,
infringement, claim, lawsuit or breach of warranty which could cause or give
rise to obligations or liabilities in excess of $250,000), (d) other liabilities
and obligations expressly disclosed on the Undisclosed Liabilities Schedule
--------------------------------
attached hereto and (e) liabilities specified on the Draft Balance Sheet
following resolution of all disputes pursuant to Section 1.6.
4.14 Contracts and Commitments.
-------------------------
(a) Except as set forth on the attached Hoechst Contracts Schedule
--------------------------
(which Contracts Schedule indicates the parties thereto), with respect to the
------------------
Business, neither Hoechst nor any of the Other Hoechst Entities is a party to
any oral or written:
(i) plan or other Contract providing for bonuses, pensions,
options, stock purchases, deferred compensation, retirement payments,
profit sharing, collective bargaining or the like, or any Contract with any
labor union involving in any such case in excess of $200,000;
-25-
(ii) management agreement or other Contract for the employment of
any officer, partner, individual employee or other person on a full-time,
part-time or consulting basis or providing for the payment of any cash or
other compensation or benefits upon the sale of the Business or a change of
control (whether upon the occurrence of any additional events or conditions
or otherwise) involving in any such case in excess of $200,000 or otherwise
prohibiting competition;
(iii) Contract relating to the borrowing of money or to
mortgaging, pledging or otherwise placing a Lien on any of the Business
Assets, other than Permitted Liens;
(iv) Contract with respect to the lending or investing of funds
involving more than $250,000;
(v) license or royalty agreement involving more than $250,000;
(vi) guaranty, suretyship, letter of comfort or similar
undertaking involving more than $250,000 of any obligation for borrowed
money or that otherwise relates to the Business Assets, other than
endorsements made for collection;
(vii) Contract or group of related Contracts with the same party
for the purchase or sale of commodities, supplies, products or other
personal property or for the furnishing or receipt of services having a
selling price in excess of $500,000;
(viii) Contract that would impose any significant restrictions upon
the ability of any Acquired Entity or Dade Entity from freely engaging in
the Business anywhere in the world;
(ix) Contract relating to the manufacturing, distribution,
marketing, advertising or promotion of products or services (whether by the
Business or for the Business) involving in any such case more than
$500,000;
(x) Contract relating to the acquisition or sale of a business
(or any portion thereof) having a fair market value in excess of $250,000;
(xi) other Contract or group of related Contracts with the same
party involving a potential liability to any party thereto of more than
$500,000; or
(xii) other Contracts material to the Business, whether or not
entered into in the ordinary course of business, the absence of which would
reasonably be likely to have an adverse effect involving more than
$500,000.
-26-
(b) Except as specifically disclosed in the attached Hoechst Contracts
-----------------
Schedule or as would not reasonably involve liabilities or obligations in excess
- --------
of $500,000, (i) no Contract required to be disclosed on the Hoechst Contracts
-----------------
Schedule has been (or, by giving effect to the Closing, will be) breached in
- --------
any respect or has been (or, to Hoechst's Knowledge, after giving effect to the
Closing, will be) canceled by the other party thereto, and since the date of the
Latest Balance Sheet, none of the significant customers, suppliers, outside
service providers or sources of referral of the Business has notified Hoechst or
any of the Other Hoechst Entities in writing that it will stop or decrease the
rate of business done with or referred to the Business and (ii Hoechst and the
Other Hoechst Entities have performed all of their obligations under the
Contracts required to be listed on the Hoechst Contracts Schedule and, to
--------------------------
Hoechst's Knowledge, there is no breach of or default by any other party under
any Contract to which any of them is a party or any event which, upon giving of
notice or lapse of time or both, or upon and after giving effect to the
transactions contemplated by the Restructuring Documents and the Combination
Documents, would constitute such a breach or default.
(c) A true and correct copy of all Contracts which are referred to on
the attached Hoechst Contracts Schedule, together with all amendments, exhibits,
--------------------------
attachments, waivers or other changes thereto, have been made available to Dade
(or, in the case of any oral Contract or Contract withheld due to
confidentiality requirements, a summary of the material terms of such Contract
has been supplied to Dade).
4.15 Proprietary Rights.
------------------
(a) The Proprietary Rights Schedule sets forth, with respect to the
---------------------------
Business, a complete and correct list of all of the following that are owned by,
used by, filed by or on behalf of, or entered into by, Hoechst or any Other
Hoechst Entity: (i) patented or registered Proprietary Rights and pending
patent applications or other applications for registrations of Proprietary
Rights; (ii unregistered trademarks, unregistered service marks, trade names and
corporate names; (ii computer software (other than software purchased or
licensed for less than a total cost of $250,000); and (iv all licenses or
similar agreements or arrangements covering Proprietary Rights to which either
Hoechst or any Other Hoechst Entity is a party, either as licensee or licensor,
involving more than $250,000; provided, however, that such list may be amended
-------- -------
prior to the Closing as mutually agreed by Hoechst and Dade. "Proprietary
-----------
Rights" shall mean all of the following assets, properties and rights which are
- ------
related to, used in or necessary for the conduct of the Business: patents,
patent applications, inventors certificates, patent disclosures and inventions
(whether or not patentable and whether or not reduced to practice), including
any reissues, continuations, continuations-in-part, divisions, revisions,
extensions or reexaminations thereof; trademarks, service marks, trade dress,
trade names, corporate names, logos (and all translations, adaptations,
derivations and combinations of the foregoing) and Internet domain names,
together with all of the goodwill associated with each of the foregoing;
copyrights, copyrightable works and mask works and registrations and
applications for registration and renewals for any of the foregoing; computer
software, data, data bases and documentation thereof; trade secrets and other
confidential
-27-
information (including, without limitation, ideas, formulae, compositions, know-
how, manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs, plans, improvements,
proposals and technical data).
(b) Except as otherwise set forth on the attached Proprietary Rights
------------------
Schedule:
- --------
(i) Hoechst and the Other Hoechst Entities own and possess, and
immediately after the Closing the Acquired Entities (on a consolidated basis)
shall own and possess, all right, title and interest in and to, or have a valid
and enforceable license from affiliated or unaffiliated third parties to use,
free and clear of all Liens (including, but not limited to, any injunction,
judgment, order, decree, ruling or agreement), all of the Proprietary Rights
necessary for the operation of the Business as currently conducted;
(ii) neither Hoechst nor any Other Hoechst Entity has infringed,
misappropriated or otherwise conflicted with, and the operation of the Business
as currently conducted will not infringe, misappropriate or otherwise conflict
with, any valid proprietary rights of any third party, which infringement,
misappropriation or other conflict could reasonably be expected to result in an
adverse effect on the Business in excess of $250,000; and neither Hoechst nor
any Other Hoechst Entity has received any written notices regarding any of the
foregoing (including, without limitation, any demands or offers to license any
proprietary rights from any third party);
(iii) no claim by any third party contesting the validity,
enforceability, use or ownership of any Proprietary Rights owned or used by
Hoechst or any Other Hoechst Entity with respect to the Business has been made
within the past six years and not resolved, is currently outstanding or is, to
Hoechst's Knowledge, threatened;
(iv) Hoechst and the Other Hoechst Entities have taken all
necessary action to maintain and protect all Proprietary Rights owned by them
the loss of which would be reasonably likely to have an adverse effect on the
Business in excess of $250,000;
(v) to Hoechst's Knowledge, the owners of any of the Proprietary
Rights licensed to Hoechst or to any Other Hoechst Entity have taken all
necessary action to maintain and protect the Proprietary Rights subject to such
licenses;
(vi) no loss of Proprietary Rights by Hoechst or any of the Other
Hoechst Entities (other than by expiration in the ordinary course) is pending
or, to Hoechst's Knowledge, threatened; and
(vii) to Hoechst's Knowledge, none of the proprietary rights
owned or used by any third party would reasonably be expected to supersede or
make obsolete any product or process of Hoechst or any Other Hoechst Entity, or
to limit the Business as currently conducted.
-28-
4.16 Litigation. Except as set forth on the attached Litigation Schedule
---------- -------------------
or the attached Environmental and Safety Schedule, there are no actions, suits,
---------------------------------
proceedings, orders or investigations pending or, to Hoechst's Knowledge,
threatened against or adversely affecting any of the Acquired Entities, the
Business Assets or the Business at law or in equity, or before or by any
Governmental Entity involving in excess of $250,000. The Acquired Entities, the
Business Assets and the Business are not subject to or bound by any outstanding
orders, judgments, or decrees of any court or other Governmental Entity which
could cause or give rise to obligations or liabilities in excess of $250,000,
except as set forth on the attached Litigation Schedule or the attached
-------------------
Environmental and Safety Schedule.
- ---------------------------------
4.17 Brokerage. Except for fees payable to Lehman Brothers Inc. and Bear
---------
Stearns & Co., Inc. as agreed to by the parties pursuant to Section 7.3(b)
hereof, there are no claims for brokerage commissions, finder's fees or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of the Hoechst
Entities.
4.18 Employees.
---------
(a) To Hoechst's Knowledge, no key executive employee and no group of
employees of any of the Hoechst Entities has any plans to terminate or modify
his or her status as a Business Employee, including upon consummation of the
transactions contemplated hereby (other than to become an employee of an
Acquired Entity pursuant to the transactions contemplated by the Restructuring
Documents or immediately after the Closing). Except as set forth on the
attached Litigation Schedule, there are no claims, actions, proceedings or
-------------------
investigations pending or threat ened against any of the Hoechst Entities with
respect to or by any employee or former employee of the Business and there are
no claims, actions, proceedings or investigations pending or threatened against
any employee or former employee of the Business with respect to or concerning
the Business that would involve liabilities in excess of $250,000. The Hoechst
Entities have not experienced with respect to the Business, within the past
three years, any strikes, grievances, claims of unfair labor practices
(including violation of the German Shop Constitution Act) or other collective
bargaining disputes. The Hoechst Entities have not engaged, with respect to the
Business, in any unfair labor practices (including violation of the German Shop
Constitution Act). There are no organizational efforts presently made or to
Hoechst's Knowledge, threatened by or on behalf of any labor union with respect
to the Business Employees.
(b) Hoechst has provided or, to the extent not previously provided,
shall provide within 10 Business Days after the date hereof, Dade with a true,
complete and accurate list of each Person employed by the Hoechst Entities, as
of the date of such list, in connection with the Business (the "Business
--------
Employees"), dates of hire by Hoechst or the Other Hoechst Entities, position
- ---------
and title (if any), current rate of compensation (including bonuses, commissions
and incentive compen sation, if any), whether such employee is hourly or
salaried, whether such employee is exempt or
-29-
non-exempt (in the case of U.S. employees), whether such employee is absent from
active employment and, if so, the date such employee became inactive, the reason
for such inactive status and, if applicable, the anticipated date of return to
active employment (the "Employee List"). Hoechst shall provide Dade with an
--------------
updated Employee List at least two Business Days, but not more than 10 Business
Days, prior to Closing (red-lined to show changes) and such list will be true,
correct, accurate and complete as of the date such list is provided to Dade.
Except as indicated on the attached Affiliated Employee Schedule, Hoechst or the
----------------------------
Other Hoechst Entities employs all of the employees who perform work for the
Business.
(c) The persons who are employees of the Acquired Entities on and
after the Closing Date, together with the services available under the
Transition Services Agreement, the InfraServ Agreement, the Messer Agreement and
the Third Party Distribution Agreements, shall be of the type and number
sufficient to conduct and operate the Business as currently conducted.
4.19 Intercompany Services. The attached Intercompany Services Schedule
--------------------- ------------------------------
describes all intercompany services provided to or on behalf of the Business by
Hoechst and its affiliates (including the costs and expenses charged to the
Business in respect thereof for the last three years).
4.20 Employee Benefit Plans. Except as set forth on the Hoechst Employee
---------------------- ----------------
Benefit Schedule, none of the Acquired Entities maintains, or is required to
- ----------------
contribute, on behalf of any Business Employee to any (a) employee pension
benefit plan (including any plan defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), (b) employee
-----
welfare benefit plan (including any plan defined in ERISA Section 3(1)), or (c)
other deferred compensation, stock purchase, stock option, incentive, bonus, or
other plan, program or arrangement that provides compensation or benefits in
connection with employment that are not treated as either an employee pension
benefit plan or an employee welfare benefit plan (such plans, arrangements, and
programs as described in (a) through (b) are referred to herein as the "Plans").
-----
All Plans set forth on the Hoechst Employee Benefit Schedule, and their related
---------------------------------
trusts, if any, comply in form and have been administered in accordance with all
Applicable Laws of the countries in which such plans are maintained, including
the applicable requirements of ERISA, and any necessary Consents of the Plans by
Governmental Entities have been obtained.
4.21 Insurance. The attached Hoechst Insurance Schedule describes each
--------- --------------------------
insurance policy maintained with respect to the Business. Each such policy is
in full force and effect. Except as set forth on the attached Hoechst Insurance
-----------------
Schedule, with respect to the Business, neither Hoechst nor any of the Other
- --------
Hoechst Entities is in default with respect to its obligations under any
insurance policy maintained by it. The insurance coverage with respect to the
Business is customary for businesses of similar size engaged in similar lines of
business.
-30-
4.22 Compliance with Laws; Permits; Certain Operations.
-------------------------------------------------
(a) Except as set forth on the attached Compliance Schedule:
-------------------
(i) each of the Hoechst Entities has complied with all
Applicable Laws relating to the operation of the Business, and no written
notices have been received by, and no claims have been filed against, the
Hoechst Entities alleging a violation of any such Applicable Laws;
(ii) with respect to the Business, the Hoechst Entities have
complied with all Applicable Laws relating to the employment of labor,
including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other Taxes;
and
(iii) except as set forth on the attached Permits Schedule, the
----------------
Hoechst Entities hold all permits, licenses, certificates, accreditations
or other authorizations or Consents of Governmental Entities (collectively,
"Permits") required for the conduct of the Business (including the
-------
operation of the Real Property and the Business Assets) and hold ISO 9001
certification with respect to each manufacturing site (other than in Italy)
related to the Business.
(b) Except as set forth on the attached Permits Schedule, each Hoechst
----------------
Entity is in compliance with all terms and conditions of all of the Permits.
Hoechst or any Other Hoechst Entity, as the case may be, is the exclusive holder
of all such Permits, each of which is in full force and effect, and there is no
(and, to Hoechst's Knowledge, no reasonable basis for any) action, proceeding or
claim which affects the validity of any such Permit. Except as set forth on the
Permits Schedule, there are no proposed Permits pending before any Governmental
- ----------------
Entity. Except as set forth on the Permits Schedule, immediately after giving
----------------
effect to the Closing, all Permits will be held by the Acquired Entities.
4.23 Environmental and Safety Matters. Except as disclosed on the attached
--------------------------------
Environmental and Safety Schedule or as would not be reasonably expected to give
- ---------------------------------
rise individually or in the aggregate to liabilities or obligations in excess of
$250,000:
(a) The Hoechst Entities have complied (with respect to the Business)
and are in compliance with all Environmental and Safety Requirements, including
all Permits that may be required thereunder (collectively, the "Environmental
-------------
Permits").
- -------
(b) The Hoechst Entities have not (with respect to the Business)
received any written notice or, to Hoechst's Knowledge, any other notice
regarding any actual or potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any
-31-
investigatory, remedial or corrective obligations, arising under Environmental
and Safety Requirements.
(c) None of the following exists at any property or facility owned,
occupied or operated by the Hoechst Entities (with respect to the Business):
(i) underground storage tanks; (ii asbestos-containing material in friable or
damaged condition; (ii landfills, surface impoundments, or disposal areas for
regulated substances.
(d) The Hoechst Entities have not treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or released any
substance, including any hazardous substance, or owned or operated any facility
or property (and no such property is contaminated by any such substance), in a
manner that has given or would give rise to liabilities, including any liability
for response costs, corrective action costs, personal injury, property damage,
natural resource damages or attorneys fees pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") or any other Environmental and Safety Requirements.
- --------
(e) The execution, delivery and performance of the Restructuring
Documents and the Combination Documents shall not result in any obligations for
site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called "transaction-
triggered" or "responsible property transfer" Environmental and Safety
Requirements.
(f) The Hoechst Entities (with respect to the Business) have not,
either expressly or by operation of law, assumed or undertaken any liability,
including any obligation for corrective or remedial action, of any other Person
relating to Environmental and Safety Requirements.
"Environmental and Safety Requirements" shall mean all federal, state, local
-------------------------------------
United States and non-United States statutes, regulations, ordinances and
similar provisions having the force or effect of law, all judicial and
administrative orders and determinations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, dangerous wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation.
4.24 Officers and Directors; Bank Accounts. The attached Officers,
------------------------------------- ---------
Directors, and Bank Account Schedule lists all officers and directors of each
- ------------------------------------
Acquired Entity and all bank accounts of each Acquired Entity.
-32-
4.25 Investment Representations of Hoechst. In connection with the
-------------------------------------
issuance of the Common Stock, Class L Common, Series B, and the Warrant to
Hoechst hereunder, Hoechst is acquiring the Common Stock, Class L Common, Series
B, and the Warrant hereunder for its own account with the present intention of
holding such securities for investment purposes and has no intention of selling
such securities in a public distribution in violation of federal or state
securities laws.
4.26 Restructuring Documents. The Combination Documents and the
-----------------------
Restructuring Documents represent all Contracts pursuant to which the Business
Assets were or are to be transferred to the Acquired Entities in connection with
the transactions contemplated hereby.
4.27 Closing Date. All of the representations and warranties of Hoechst
------------
this Article IV and elsewhere in this Agreement and all information delivered in
any Schedule or Exhibit attached hereto or in any certificate delivered to Dade
are true and correct on the date of this Agreement and shall be true and correct
as of the Closing, other than such representations and warranties as are made as
of a specific date, which shall be true as of such date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF DADE
--------------------------------------
As an inducement to Hoechst to enter into this Agreement, Dade hereby
represents and warrants to Hoechst that:
5.1 Organization and Corporate Power. Dade is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of the state of
Delaware and has the corporate power to carry on its business as now being
conducted. Each subsidiary of Dade is a corporation or other entity, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation. The capitalization of Dade and each of its
subsidiaries (including place of organization and record and beneficial
ownership), as of and immediately after the Closing, is listed on the attached
Dade Capitalization Schedule. Dade and its subsidiaries (collectively, the
- ----------------------------
"Dade Entities") shall have, as of the Closing Date, all requisite power and
- ---------------
authority necessary to own and operate the Dade Business and to conduct the Dade
Business as now conducted and as presently proposed to be conducted and are
qualified to do business in every jurisdiction in which the failure so to
qualify has had or would reasonably be expected to have a Material Adverse
Effect upon the Dade Entities, taken as a whole. The copies of Dade's and each
of the other Dade Entities' constituent documents have been made available to
Hoechst prior to the date of this Agreement and reflect all modifications made
thereto and are accurate and complete.
-33-
5.2 Subsidiaries and Affiliates. Except as set forth in the attached Dade
--------------------------- ----
Capitalization Schedule, Dade does not own, directly or indirectly, any stock,
- -----------------------
partnership interest, joint venture interest or other security or other
ownership interest or investment in any other Person.
5.3 Capital Stock of Dade Entities. The authorized and outstanding
------------------------------
capital stock of each of the Dade Entities (and the shareholders of such stock)
is set forth on the attached Dade Capitalization Schedule, all of which is, or
----------------------------
as of the Closing shall be, duly authorized, validly issued and outstanding,
fully paid and nonassessable. Except for such capital stock, there are no
shares of capital stock or other equity interests in the Dade Entities issued or
outstanding. None of such capital stock has been issued in violation of, and
none of such capital stock is subject to, any preemptive or subscription rights.
Except pursuant to the Stockholders Agreement, the Registration Agreement and
this Agreement, none of such capital stock is subject to any voting trust
agreement or other Contract including any of the foregoing relating to the
voting, dividend rights or disposition of any such capital stock. Except as set
forth on the attached Dade Capitalization Schedules, there are no issued or
-----------------------------
outstanding warrants, options, "phantom" stock rights, agreements, convertible
or exchangeable securities or other commitments (other than this Agreement)
pursuant to which any Person is or may become obligated to issue, sell,
purchase, return or redeem any shares of capital stock or other securities of
the Dade Entities, and there are no equity securities of the Dade Entities
reserved for issuance for any purpose. Upon delivery to Hoechst at the Closing
of certificates representing the Common Stock and the Class L Common, Series B,
and upon Dade's receipt of the Stock, good and valid title to the Common Stock
and the Class L Common, Series B, shall pass to and vest in Hoechst, free and
clear of all Liens.
5.4 Authority of Dade. Dade has full right, power and authority to enter
-----------------
into this Agreement, and has or will have full right, power and authority to
enter into each of the other Combination Documents to which it is a party and to
carry out the transactions contemplated hereby and thereby. The execution,
delivery and performance by Dade of this Agreement and by Dade of each other
Combination Document to which it is a party has been or will be duly authorized
by all necessary corporate action and no other corporate action on the part of
Dade is required in connection therewith. Each of the Combination Documents to
be executed and delivered by Dade constitutes, or will when executed and
delivered constitute, a valid and binding obligation of Dade, enforceable in
accordance with its respective terms.
5.5 No Breach. Except as set forth on the attached Dade Conflicts
--------- --------------
Schedule, the execution, delivery and performance by Dade of the Combination
- --------
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby do not and shall not (a) conflict with or result
in any breach of any of the provisions of, (b) constitute a default under, (c)
result in a violation of, (d) give any third party the right to terminate or to
accelerate any obligation under, (e) result in the creation of any Lien upon
Dade, the Dade Business or any of the Dade Assets or (f) require any Consents of
any court or other Governmental Entity under the provisions of, Dade's or any of
the other Dade Entities' constituent documents or any Contract listed on the
attached Dade Contracts Schedule, or any Applicable Law. Without limiting the
-----------------------
generality
-34-
of the foregoing, except as set forth on the Pending Asset Sale Schedule,
---------------------------
neither Dade nor any other Dade Entity has entered into any agreement,
or is bound by any obligation of any kind whatsoever, directly or indirectly to
transfer or dispose of (whether by sale of stock or assets, assignment, merger,
consolidation or otherwise) any portion of the Dade Assets to any Person, other
than in the ordinary course of business, or pursuant to this Agreement, the
other Combination Documents, the Restructuring Documents or in contemplation of
the transactions contemplated hereby or thereby. Except as set forth on the Dade
----
Conflicts Schedule, none of the Dade Entities is subject to any restrictions
- ------------------
upon making loans or advances or paying dividends to, transferring property to,
or repaying any indebtedness owed to any affiliate thereof.
5.6 Financial Statements. Each of the following financial statements
--------------------
(including in all cases the notes thereto, if any) (collectively, the "Dade
----
Financial Statements") is (or when delivered shall be) consistent with the books
- --------------------
and records of the Dade Entities and presents fairly in all material respects
the consolidated financial condition, results of operations and cash flows of
Dade in accordance with United States GAAP applied on a consistent basis as of
the dates and for the periods set forth therein:
(a) the audited consolidated balance sheets of Dade as of December
31, 1995 and 1996, and the related statement of operations and cash flows for
the twelve-month periods ended December 31, 1995 and 1996, respectively, with
the "Dade Latest Balance Sheet" being defined herein as the audited consolidated
-------------------------
balance sheet of Dade as of December 31, 1996; and
(b) the unaudited consolidated balance sheet of Dade as of March 31,
1997 and as of any subsequent date for the balance sheets delivered pursuant to
Section 9.2(b) hereunder, and the related statements of operations and cash
flows for the relevant fiscal periods then ended; provided that such unaudited
--------
financial statements shall only include footnotes customarily included in
interim financial statements and shall be subject to normal and customary year-
end adjustments.
5.7 Product and Service Warranty; Product Recall. The attached Dade
-------------------------------------------- ----
Warranty Schedule contains copies of the standard terms and conditions of sale
- -----------------
for products delivered and services rendered by Dade. Except as set forth on
the attached Dade Product Recalls Schedule, during the past three years there
-----------------------------
have been no general product recalls, withdrawals, discontinuances or seizures
with respect to any products manufactured or sold by any Dade Entity.
5.8 No Material Adverse Change. Since the date of the Dade Latest
--------------------------
Balance Sheet, there has been no material adverse change in the business,
financial condition, operating results, assets or operations of the Dade
Business (including as a consequence of the loss or pending or threatened loss,
alone or in the aggregate, of any significant customer, supplier, source of
referral, right pursuant to any Contract, or any Consent).
-35-
5.9 Absence of Certain Developments. Except for transactions contemplated
-------------------------------
by this Agreement or as set forth on the attached Dade Developments Schedule,
--------------------------
since the date of the Dade Latest Balance Sheet, none of the Dade Entities has:
(a) mortgaged or pledged any of its properties or assets or subjected
them to any Lien except Dade Permitted Liens;
(b) sold, assigned, licensed (as licensor), disposed or permitted any
other Person to use any of its tangible assets (other than in the ordinary
course of business) having a fair market value in excess of $1,034,000 in the
aggregate, or canceled without fair consideration any debts or claims owing to
or held by it;
(c) sold, assigned, licensed (as licensor), disposed of or transferred
any Permits, Dade Proprietary Rights or other intangible assets having a fair
market value in excess of $1,034,000 in the aggregate, or disclosed any
proprietary confidential information to any Person except to Hoechst and its
representatives herewith or in the ordinary course of business;
(d) suffered any damage, destruction or casualty loss to its tangible
assets of the Dade Business in excess of $1,034,000, whether or not covered by
insurance;
(e) suffered any extraordinary losses or canceled or waived any
rights having a value in excess of $1,034,000 in the aggregate;
(f) made any loans or advances to, guarantees for the benefit of, or
any investments in, any Persons in excess of $1,034,000 in the aggregate;
(g) instituted or settled any claim or lawsuit involving equitable or
injunctive relief or more than $1,034,000 in the aggregate;
(h) except (i) in ordinary course of business or (ii) as would
otherwise be permitted in 5.9(k) below, entered into, amended, modified or
supplemented any Contract with any of its officers, directors, equity holders,
agents or its or their affiliates, or with any family member of any such
individual, or with any entity in which any such person or individual owns a
beneficial interest;
(i) entered into any other Contracts involving liabilities or
obligations in excess of $1,034,000;
(j) accelerated, terminated, modified or canceled any Contracts
involving more than $1,034,000;
-36-
(k) entered into any employment contract (including with an
independent contractor) involving more than $414,000 or collective bargaining
agreement, written or oral (other than any oral contract for employment at the
will of Dade), or modified in any material respect the terms of any existing
such contract or agreement;
(l) adopted, amended, modified or terminated any bonus, profit-
sharing, incentive, benefit, welfare, severance or other plan, Contract or
commitment for the benefit of any of its directors, officers and employees;
(m) except (i) for the ordinary course salary increases and bonuses
paid consistent with past practice and as contemplated by the current business
plan or (ii) as required by pre-existing Contracts, made or granted any bonus or
any wage or salary increase to any employee or group of employees, or made or
granted any increase in any vacation or sick pay policy;
(n) engaged in any promotional sales or discount or other similar
activity with customers other than in the ordinary course of business;
(o) instituted or permitted any change involving more than $1,034,000
in the conduct of the Dade Business, or any significant change in its method of
manufacturing, purchase, distribution, sale, lease, management, marketing,
promotion or operation;
(p) made any change in any method of accounting or accounting
policies, other than those required by GAAP and which have been disclosed in
writing to Hoechst;
(q) entered into any transaction other than in the ordinary course of
business or any other transaction involving more than $1,034,000 (whether or not
in the ordinary course of business); or
(r) agreed or committed to do any of the foregoing.
5.10 Real Property.
-------------
(a) Owned Properties. For the purposes hereof, the term "Dade Owned
---------------- ----------
Real Property" shall mean all land and all buildings, fixtures and other
- -------------
improvements located thereon, including all easements, rights of way,
servitudes, tenements, hereditaments, appurtenances, privileges and other rights
with respect thereto owned by the Dade Entities. The Dade Owned Real Property
------------------------
Schedule attached hereto sets forth the address and a true, correct and complete
- --------
legal description of the land for each Dade Owned Real Property. Except as set
forth in the Dade Owned Real Property Schedule attached hereto, with respect to
---------------------------------
each parcel of Dade Owned Real Property, immediately after giving effect to the
Closing: (i) the respective Dade Entities shall have good and marketable fee
simple title to all such parcels, free and clear of all Liens, except Dade
Permitted Liens; (ii there shall be no leases, subleases, licenses, concessions
or other agreements (written or
-37-
oral) granting to any person the right to use or occupy such parcel or any
portion thereof; and (ii there shall be no outstanding options, rights of first
offer, rights of first refusal or similar rights granted to third parties under
local jurisdictions to purchase such parcel or any portion thereof or interest
therein.
(b) Leased Properties. For the purposes hereof, the term "Dade
----------------- ----
Leased Real Property" shall mean all land, buildings, fixtures and other real
- --------------------
property used or occupied by the Dade Business pursuant to any lease, sublease,
license, concession or other similar real property interest held by any Dade
Entity. The Dade Leased Real Property Schedule attached hereto sets forth the
----------------------------------
address and a list of all leases, subleases, licenses, concessions and other
agreements (written or oral) involving annual payments in excess of $517,000
(collectively, the "Dade Real Property Leases") for each Dade Leased Real
-------------------------
Property. Dade has made available to Hoechst a true, correct and complete copy
of each such written Dade Real Property Lease (including all amendments,
extensions, renewals, guaranties and other documents with respect thereto), and
in the case of any such oral Dade Real Property Leases a written summary of the
basic terms thereof. Except as set forth in the Dade Leased Real Property
-------------------------
Schedule attached hereto, with respect to each such Dade Real Property Lease:
- --------
(i) the Dade Real Property Lease is (and immediately after giving effect to the
Closing shall continue to be) legal, valid, binding, enforceable and in full
force and effect; (ii neither the respective Dade Entities nor any other party
to the Dade Real Property Lease is (or after giving effect to the Closing shall
be) in breach or default thereunder and no event has occurred or circumstance
exists which, with the delivery of notice, passage of time or both, would
constitute such a breach or default or permit the termination, modification or
acceleration of rent thereunder; (ii no party to such Dade Real Property Lease
has repudiated (or, to Dade's Knowledge, after giving effect to the Closing
shall repudiate) any provision thereof, and there are no (and, to Dade's
Knowledge, after giving effect to the Closing there shall not be any) disputes,
oral agreements or forbearance programs in effect with respect to the Dade Real
Property Lease, and (iv the respective Dade Entities have not assigned,
subleased, mortgaged, deeded in trust or otherwise transferred or encumbered the
Dade Real Property Lease or any interest therein.
(c) Leasehold Improvements. For the purposes hereof, the term "Dade
---------------------- ----
Leasehold Improvements" shall mean all buildings, fixtures and other
- ----------------------
improvements owned by the respective Dade Entities and included in each Dade
Leased Real Property, regardless of whether such improvements are subject to
reversion to the landlord or other third party upon the expiration or
termination of the lease, sublease or similar agreement for such Dade Leased
Real Property. Immediately after giving effect to the Closing, the respective
Dade Entities will (subject to such reversions, if any) have good and marketable
title to the Dade Leasehold Improvements, free and clear of all Liens, except
Dade Permitted Liens.
(d) Condemnation and Litigation. There are no condemnation,
---------------------------
expropriation or other eminent domain proceedings pending or, to Dade's
Knowledge, threatened, affecting any Dade Owned Real Property, Dade Leased Real
Property and Dade Leasehold Improvements (collectively, the "Dade Real
---------
Property") or any portion thereof. There is no writ, injunction, decree, order
or
-38-
judgment outstanding, nor any claims, litigation, administrative actions or
similar proceedings pending or threatened relating to the ownership, lease, use,
occupancy or operation of any Dade Real Property or any portion thereof.
(e) Condition of Improvements. All buildings, structures, fixtures
-------------------------
and other improvements and all components thereof included within the Dade Owned
Real Property and Dade Leased Real Property and all Dade Leasehold Improvements
(collectively, the "Dade Improvements") are, in all material respects, in good
-----------------
condition and repair and sufficient for the continued operation of the Dade
Business. There are no structural deficiencies or latent defects affecting any
of the Dade Improvements and there are no facts or conditions affecting any of
the Dade Improvements which would, individually or in the aggregate, interfere
in any material respect with the use or occupancy thereof in the continued
operation of the Dade Business.
(f) Access. Each parcel of Dade Real Property and the Dade
------
Improvements thereon have access to a public street adjoining the Dade Real
Property.
5.11 Business Assets. On the Closing Date, the Dade Entities shall own
---------------
good and marketable title to all right, title and interest of the Dade Entities
in, to and under all of the properties, assets and rights of every kind, whether
tangible or intangible, real or personal, primarily related to, used in, or held
in connection with, the conduct of the Dade Business (the "Dade Assets"), free
-----------
and clear of all Liens, except for (a) Liens described on the attached Dade
----
Encumbrances Schedule, (b) Liens for current property taxes not yet due and
- ---------------------
payable, and (c) other imperfections of title or Liens, if any, which
imperfections or Liens do not, or would not be reasonably foreseeable to,
individually or in the aggregate, impair the continued use and operation of the
Dade Assets to which they relate and do not affect the marketability of the
title to the Dade Assets to which they relate (collectively, items (i), (ii) and
(iii) above are referred to as the "Dade Permitted Liens").
--------------------
5.12 Tax Matters.
-----------
(a) Except as set forth on the attached Dade Tax Schedule or events
-----------------
involving obligations or liabilities less than $517,000: (i) the Dade Entities
have timely filed all Tax Returns which are required to be filed with respect to
their activities, properties or employees; (ii) all such returns are true,
complete and accurate and such filings accurately reflect the Tax liabilities of
the Dade Entities; (iii) all Taxes, assessments and other governmental charges
imposed upon the Dade Entities, or upon any of the assets, income or franchises
of the Dade Entities, have been timely paid or, if not yet payable, will be
timely paid; and (iv) there are no actual or proposed Tax deficiencies,
assessments or adjustments.
(b) The Dade Entities are not liable for the Taxes of another Person
(x) as a transferee or successor, (y) by contract or indemnity or (z) otherwise.
-39-
(c) Except as set forth on the attached Dade Tax Schedule, no Dade
-----------------
Entity is or shall become obligated (under any contract entered into on or
before the Closing Date) to make any payments that shall be nondeductible under
Section 280G of the Code (or any corresponding provision of state, local or
foreign Tax law). Except as set forth on the attached Dade Tax Schedule, no
-----------------
Dade Entity will be required as a result of a change in method of accounting, a
"closing agreement" as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign income Tax law), a deferred
intercompany gain described in Treasury Regulation Sections 1.1502-13, or an
excess loss account described in Treasury Regulation Sections 1.1502-19 (or any
corresponding or similar provision or administrative rule of federal, state,
local or foreign income tax law), to include any item of income in, or exclude
any item of deduction from, taxable income for any taxable year or portion
thereof beginning on or after the Closing Date.
5.13 Absence of Undisclosed Liabilities. As of the Closing, the Dade
----------------------------------
Entities shall have no obligations or liabilities involving more than $517,000
(whether accrued, absolute, contingent, unliquidated or otherwise, whether due
or to become due and regardless of when or by whom asserted), except (a)
obligations under Contracts described on the attached Dade Contracts Schedule
-----------------------
and the other Schedules attached hereto or under Contracts and commitments
entered into in the ordinary course of business which are not required to be
disclosed thereon due to specified dollar thresholds (but not liabilities for
breaches or alleged breaches thereof occurring on or prior to the Closing Date),
(b) liabilities reflected on the liability side of the Dade Latest Balance
Sheet, (c) liabilities and obligations which have arisen after the date of the
Dade Latest Balance Sheet in the ordinary course of business (none of which is a
liability for breach or alleged breach of contract, tort, infringement, claim,
lawsuit or breach of warranty which could cause or give rise to obligations or
liabilities in excess of $517,000), and (d) other liabilities and obligations
expressly disclosed on the Dade Undisclosed Liabilities Schedule attached
-------------------------------------
hereto.
5.14 Contracts and Commitments.
-------------------------
(a) Except as set forth on the attached Dade Contracts Schedule
-----------------------
(which Dade Contracts Schedule indicates the parties thereto), neither Dade nor
-----------------------
any of the other Dade Entities is a party to any oral or written:
(i) plan or other Contract providing for bonuses, pensions, options,
stock purchases, deferred compensation, retirement payments, profit sharing,
collective bargaining or the like, or any Contract with any labor union
involving in any such case in excess of $414,000;
(ii) management agreement or other Contract for the employment of
any officer, partner, individual employee or other person on a full-time, part-
time or consulting basis or providing for the payment of any cash or other
compensation or benefits upon the sale of the Dade Business or a change of
control (whether upon the occurrence of any additional events or conditions or
otherwise) involving in any such case in excess of $414,000 or otherwise
prohibiting competition;
-40-
(iii) Contract relating to the borrowing of money or to
mortgaging, pledging or otherwise placing a Lien on any of the Dade Assets,
other than Dade Permitted Liens;
(iv) Contract with respect to the lending or investing of funds
involving more than $517,000;
(v) license or royalty agreement involving more than $517,000;
(vi) guaranty, suretyship, letter of comfort or similar
undertaking involving more than $517,000 of any obligation for borrowed money or
that otherwise relates to the Dade Assets, other than endorsements made for
collection;
(vii) Contract or group of related Contracts with the same party
for the purchase or sale of commodities, supplies, products or other personal
property or for the furnishing or receipt of services having a selling price in
excess of $1,034,000;
(viii) Contract that would impose any significant restrictions upon
the ability of any Dade Entity or Acquired Entity from freely engaging in the
Dade Business anywhere in the world;
(ix) Contract relating to the manufacturing, distribution,
marketing, advertising or promotion of products or services (whether by the Dade
Business or for the Dade Business) involving in any such case more than
$1,034,000;
(x) Contract relating to the acquisition or sale of a business (or
any portion thereof) having a fair market value in excess of $517,000;
(xi) other Contract or group of related Contracts with the same
party involving a potential liability to any party thereto of more than
$1,034,000;
(xii) other Contracts material to the Dade Business, whether or
not entered into in the ordinary course of business, the absence of which would
reasonably be likely to have an adverse effect involving more than $1,034,000.
(b) Except as specifically disclosed in the attached Dade
----
Contracts Schedule or as would not reasonably involve liabilities or obligations
- ------------------
in excess of $1,034,000, (i) no Contract required to be disclosed on the Dade
----
Contracts Schedule has been (or, by giving effect to the Closing, will be)
- ------------------
breached in any respect or has been (or, to Dade's Knowledge, after giving
effect to the Closing, will be) canceled by the other party thereto, and since
the date of the Dade Latest Balance Sheet, none of the significant customers,
suppliers, outside service providers or sources of referral of the Dade Business
has notified Dade or any of the other Dade Entities in writing that it will stop
or decrease the rate of business done with or referred to the Dade Business, and
(ii) Dade
-41-
and the other Dade Entities have performed all of their obligations under
the Contracts required to be listed on the Dade Contracts Schedule and, to
-----------------------
Dade's Knowledge, there is no breach of or default by any other party under any
Contract to which any of them is a party or any event which, upon giving of
notice or lapse of time or both, or upon and after giving effect to the
transactions contemplated by the Combination Documents, would constitute such a
breach or default.
(c) A true and correct copy of all Contracts which are referred
to on the attached Dade Contracts Schedule, together with all amendments,
-----------------------
exhibits, attachments, waivers or other changes thereto, have been made
available to Hoechst (or, in the case of any oral Contract or Contract withheld
due to confidentiality requirements, a summary of the material terms of such
Contract has been supplied to Hoechst).
5.12 Proprietary Rights.
------------------
(a) The Dade Proprietary Rights Schedule sets forth a complete and
--------------------------------
correct list of all of the following that are owned by, used by, filed by or on
behalf of, or entered into by, Dade or any other Dade Entity: (i) patented or
registered Dade Proprietary Rights and pending patent applications or other
applications for registrations of Dade Proprietary Rights; (ii) unregistered
trademarks, unregistered service marks, trade names and corporate names; (iii)
computer software (other than software purchased or licensed for less than a
total cost of $517,000); and (iv) all licenses or similar agreements or
arrangements covering Dade Proprietary Rights to which either Dade or any other
Dade Entity is a party, either as licensee or licensor, involving more than
$517,000; provided, however, that such list may be amended prior to the Closing
as mutually agreed by Hoechst and Dade. "Dade Proprietary Rights" shall mean
-----------------------
all of the following assets, properties and rights which are related to, used in
or necessary for the conduct of the Dade Business: patents, patent
applications, inventors certificates, patent disclosures and inventions (whether
or not patentable and whether or not reduced to practice), including any
reissues, continuations, continuations-in-part, divisions, revisions, extensions
or reexaminations thereof; trademarks, service marks, trade dress, trade names,
corporate names, logos (and all translations, adaptations, derivations and
combinations of the foregoing) and Internet domain names, together with all of
the goodwill associated with each of the foregoing; copyrights, copyrightable
works and mask works and registrations and applications for registration and
renewals for any of the foregoing; computer software, data, data bases and
documentation thereof; trade secrets and other confidential informa tion
(including, without limitation, ideas, formulae, compositions, know-how,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, improvements, proposals
and technical data).
(b) Except as otherwise set forth on the attached Dade Proprietary
----------------
Rights Schedule:
- ---------------
(i) Dade and the other Dade Entities own and possess, and immediately
after the Closing the Dade Entities (on a consolidated basis) shall own and
possess, all right, title
-42-
and interest in and to, or have a valid and enforceable license from affiliated
or unaffiliated third parties to use, free and clear of all Liens (including,
but not limited to, any injunction, judgment, order, decree, ruling or
agreement), all of the Dade Proprietary Rights necessary for the operation of
the Dade Business as currently conducted;
(ii) neither Dade nor any other Dade Entity has infringed,
misappropriated or otherwise conflicted with, and the operation of the Dade
Business as currently conducted to be conducted will not infringe,
misappropriate or otherwise conflict with, any valid proprietary rights of any
third party, which infringement, misappropriation or other conflict could
reasonably be expected to result in an adverse effect on the Dade Business in
excess of $517,000; and neither Dade nor any other Dade Entity has received any
written notices regarding any of the foregoing (including, without limitation,
any demands or offers to license any proprietary rights from any third party);
(iii) no claim by any third party contesting the validity,
enforceability, use or ownership of any Dade Proprietary Rights owned or used by
Dade or any other Dade Entity has been made within the past six years and not
resolved, is currently outstanding or is, to Dade's Knowledge, threatened;
(iv) Dade and the other Dade Entities have taken all necessary
action to maintain and protect all Dade Proprietary Rights owned by them the
loss of which would be reasonably likely to have an adverse effect on the Dade
Business in excess of $517,000;
(v) to Dade's Knowledge, the owners of any of the Dade Proprietary
Rights licensed to Dade or to any other Dade Entity have taken all necessary
action to maintain and protect the Dade Proprietary Rights subject to such
licenses;
(vi) no loss of Dade Proprietary Rights by Dade or any of the
other Dade Entities (other than by expiration in the ordinary course) is pending
or, to Dade's Knowledge, threatened; and
(vii) to Dade's Knowledge, none of the proprietary rights owned or
used by any third party would reasonably could be expected to supersede or make
obsolete any product or process of Dade or any other Dade Entity, or to limit
the Dade Business as currently conducted.
5.16 Litigation. Except as set forth on the attached Dade Litigation
---------- ---------------
Schedule or the attached Dade Environmental and Safety Schedule, there are no
- -------- --------------------------------------
actions, suits, proceedings, orders or investigations pending or, to Dade's
Knowledge, threatened against or adversely affecting any of the Dade Entities,
the Dade Assets or the Dade Business at law or in equity, or before or by any
Governmental Entity involving in excess of $517,000. The Dade Entities, the
Dade Assets and the Dade Business are not subject to or bound by any outstanding
orders, judgments, or decrees of any court or other Governmental Entity which
could cause or give rise to obligations or liabilities in
-43-
excess of $517,000, except as set forth on the attached Dade Litigation Schedule
------------------------
or the attached Dade Environmental and Safety Schedule.
--------------------------------------
5.17 Brokerage. There are no claims for brokerage commissions, finder's
---------
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of the
Dade Entities.
5.18 Employees. To Dade's Knowledge, no key executive employee and no
---------
group of employees of any of the Dade Entities has any plans to terminate or
modify his or her status as a Dade Employee, including upon consummation of the
transactions contemplated hereby. Except as set forth on the attached Dade
----
Litigation Schedule, there are no claims, actions, proceedings or investigations
- -------------------
pending or threatened against any of the Dade Entities with respect to or by any
employee or former employee of the Dade Business and there are no claims,
actions, proceedings or investigations pending or threatened against any
employee or former employee of the Dade Business with respect to or concerning
the Dade Business that would involve liabilities in excess of $517,000. The
Dade Entities have not experienced, within the past three years, any strikes,
grievances, claims of unfair labor practices (including violation of the German
Shop Constitution Act) or other collective bargaining disputes. The Dade
Entities have not engaged in any unfair labor practices (including violation of
the German Shop Constitution Act). There are no organizational efforts
presently made or, to Dade's Knowledge, threatened by or on behalf of any labor
union with respect to the Dade Employees.
5.19 Employee Benefit Plans. Except as set forth on the Dade Employee
---------------------- -------------
Benefit Schedule, none of the Dade Entities maintains, or is required to
- ----------------
contribute, on behalf of any Person employed in connection with the Dade
Business ("Dade Employees"), to any Plans. All Plans set forth on the Dade
-------------- -----
Employee Benefit Schedule, and their related trusts, if any, comply in form and
- -------------------------
have been administered in accordance with all Applicable Laws of the countries
in which such plans are maintained, including the applicable requirements of
ERISA, and any necessary Consents of the Plans by Governmental Entities have
been obtained.
5.20 Insurance. The attached Dade Insurance Schedule describes each
--------- -----------------------
insurance policy maintained with respect to the Dade Business. Each such policy
is in full force and effect. Except as set forth on the attached Dade Insurance
--------------
Schedule, neither Dade nor any of the other Dade Entities is in default with
- --------
respect to its obligations under any insurance policy maintained by it. The
insurance coverage with respect to the Dade Business is customary for businesses
of similar size engaged in similar lines of business.
-44-
5.21 Compliance with Laws; Permits; Certain Operations.
-------------------------------------------------
(a) Except as set forth on the attached Dade Compliance Schedule:
------------------------
(i) each of the Dade Entities has complied with all Applicable Laws
relating to the operation of the Dade Business, and no written notices have been
received by, and no claims have been filed against, the Dade Entities alleging a
violation of any such Applicable Laws;
(ii) the Dade Entities have complied with all Applicable Laws
relating to the employment of labor, including provisions thereof relating to
wages, hours, equal opportunity, collective bargaining and the payment of social
security and other Taxes; and
(iii) except as set forth on the attached Dade Permits Schedule,
---------------------
the Dade Entities hold all Permits required for the conduct of the business of
Dade (including the operation of the Dade Real Property and the Dade Assets).
(b) Except as set forth on the attached Dade Permits Schedule, each
---------------------
Dade Entity is in compliance with all terms and conditions of all of the
Permits. Dade or another Dade Entity, as the case may be, is the exclusive
holder of all such Permits, each of which is in full force and effect, and there
is no (and, to Dade's Knowledge, no reasonable basis for any) action, proceeding
or claim which affects the validity of any such Permit. Except as set forth on
the attached Dade Permits Schedule, there are no proposed Permits pending before
---------------------
any Governmental Entity.
5.22 Environmental and Safety Matters. Except as disclosed on the attached
--------------------------------
Dade Environmental and Safety Schedule or as would not reasonably be expected to
- --------------------------------------
give rise individually or in the aggregate to liabilities or obligations in
excess of $517,000:
(a) The Dade Entities have complied and are in compliance with all
Environmental and Safety Requirements, including all Environmental Permits.
(b) The Dade Entities have not received any written notice, or to
Dade's Knowledge, any other notice regarding any actual or potential liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise), including
any investigatory, remedial or corrective obligations, arising under
Environmental and Safety Requirements.
(c) None of the following exists at any property or facility owned,
occupied or operated by the Dade Entities: underground storage tanks;
asbestos-containing material in friable or damaged condition; landfills,
surface impoundments, or disposal areas for regulated substances.
(d) The Dade Entities have not treated, stored, disposed of, arranged
for or permitted the disposal of, transported, handled, or released any
substance, including any hazardous
-45-
substance, or owned or operated any facility or property (and no such property
is contaminated by any such substance), in a manner that has given or would give
rise to liabilities, including any liability for response costs, corrective
action costs, personal injury, property damage, natural resource damages or
attorneys fees pursuant to CERCLA or any other Environmental and Safety
Requirements.
(e) The execution, delivery and performance of the Combination
Documents shall not result in any obligations for site investigation or cleanup,
or notification to or consent of government agencies or third parties, pursuant
to any of the so-called "transaction-triggered" or "responsible property
transfer" Environmental and Safety Requirements.
(f) The Dade Entities have not, either expressly or by operation of
law, assumed or undertaken any liability, including any obligation for
corrective or remedial action, of any other Person relating to Environmental and
Safety Requirements.
5.23 Closing Date. All of the representations and warranties of Dade in
------------
this Article V and elsewhere in this Agreement and all information delivered in
any Schedule or Exhibit attached hereto or in any certificate delivered to
Hoechst are true and correct on the date of this Agreement and shall be true and
correct as of the Closing, other than such representations and warranties as are
made as of a specific date, which shall be true as of such date.
ARTICLE VI
TERMINATION
-----------
6.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing:
(a) by the mutual written consent of Dade and Hoechst;
(b) by Dade, if there has been a material breach by Hoechst of a
representation or warranty or a covenant or agreement set forth in this
Agreement, which has not been cured within 30 days after written notification
thereof by Dade and would cause a condition to Closing to be unable to be
satisfied by the dates set forth in Section 6.1(e) below;
(c) by Hoechst, if there has been a material breach by Dade of a
representation or warranty or a covenant or agreement set forth in this
Agreement, which has not been cured within 30 days after written notification
thereof by Hoechst and would cause a condition to Closing to be unable to be
satisfied by the date set forth in Section 6.1(e) below;
(d) by Dade, if Dade does not accept the Hoechst Valuation by the
Valuation Drop Date pursuant to Section 1.4 hereunder;
-46-
(e) by either Dade or Hoechst, if the Closing has not occurred by
December 31, 1997 (the "Termination Date"); provided that the party seeking
---------------- --------
termination pursuant to this clause (e) of Section 6.1 is not in material breach
of any of its representations, warranties, covenants or agreements contained in
this Agreement; provided further that, if Consents required under Sections
-------- -------
2.1(c) and 2.2(c) with respect to H-S-R and EC Merger Control have not been
obtained by the Termination Date, the Termination Date shall be automatically
extended to March 31, 1998 so long as neither Dade nor Hoechst determines in its
reasonable judgment that either (i) such H-S-R and EC Merger Control Consents
cannot be obtained on or prior to March 31, 1998 or (ii) the continuation of
this Agreement would have a Material Adverse Effect on either the Business,
taken as a whole, or the Dade Business, taken as a whole;
(f) by Dade within five Business Days after receipt by Dade of the
schedule described in Section 3.2(j) hereunder, if (i) Dade determines that it
is not reasonably satisfied with (A) the financial information that Hoechst has
indicated pursuant to such schedule that it will provide or (B) the timing for
delivery thereof or (ii Dade is not reasonably satisfied that Hoechst will be
able to provide such financial information within the time for delivery of such
financial information as set forth on such schedule;
(g) by Dade within five Business Days after receipt by Dade of the
audited financial statements for the Business for the fiscal year ended December
31, 1995 as contemplated by Section 9.2(a) hereof, if such financial statements
reflect a material adverse deviation from the revenues and results of operations
set forth in the draft of such financial statements delivered to Dade on or
prior to the date of this Agreement;
(h) by either Dade or Hoechst, if Dade and Hoechst have not agreed
upon the Consent Indemnity Limit prior to the Termination Date pursuant to
Section 1.4(b);
(i) by Dade on the Valuation Drop Date, if the parties have not agreed
upon the Expenditure Agreement pursuant to Section 1.4(c); or
(j) by Dade prior to the Termination Date, if Dade and Hoechst have
not agreed upon, pursuant to Section 1.4(d), which rights under the Stockholders
Agreement shall be Designation Rights.
In the event of termination by Hoechst or Dade pursuant to this Section 6.1,
written notice thereof (describing in reasonable detail the basis therefor)
shall forthwith be delivered to the other party.
6.2 Effect of Termination. In the event of termination of this Agreement
---------------------
by either Dade or Hoechst as provided above, this Agreement shall forthwith
become void and of no further force and effect, except that the covenants and
agreements set forth in Sections 3.8, 6.1, 6.2, 7.3, 7.5, 7.8 and 7.14 shall
survive such termination indefinitely, and except that nothing in Section 6.1 or
this Section 6.2 shall be deemed to release any party from any liability for any
breach by such party of
-47-
the terms and provisions of this Agreement or to impair the right of any party
to compel specific performance by another party of its surviving obligations
under this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
7.1 Survival of Representations and Warranties. The representations and
------------------------------------------
warranties in this Agreement shall survive the Closing as follows:
(a) the representations and warranties in Sections 4.1 (Organization
and Corporate Power), 4.3 (Capital Stock of Hoechst Subsidiary), 4.4 (Authority
of Hoechst), 4.17 (Brokerage), 4.25 (Investment Representations of Hoechst),
4.27 (Closing Date) (to the extent Section 4.27 relates back to any other
Sections referred to in this Section 7.1(a)), 5.1 (Organization and Corporate
Power), 5.3 (Capital Stock of Dade Entities), 5.4 (Authority of Dade), 5.17
(Brokerage) and 5.23 (Closing Date) (to the extent Section 5.23 relates back to
any other Sections referred to in this Section 7.1(a)) shall survive
indefinitely;
(b) the representations and warranties in Sections 4.12 (Tax Matters),
4.27 (Closing Date) (to the extent Section 4.27 relates back to any other
sections referred to in this Section 7.1(b)), 5.12 (Tax Matters) and 5.23
(Closing Date) (to the extent Section 5.23 relates back to any other sections
referred to in this Section 7.1(b)) shall survive through and until the
applicable statute of limitations expires; and
(c) all other representations and warranties in this Agreement shall
survive through and until, and terminate on, the third-year anniversary of the
Closing Date;
provided that any representation or warranty in respect of which indemnity may
- --------
be sought under Section 7.2, and the indemnity with respect thereto, shall
survive the time at which it would otherwise terminate pursuant to this Section
7.1 if written notice describing in reasonable detail the facts and
circumstances of the inaccuracy or breach thereof giving rise to such right of
indemnity shall have been received by the party against whom such indemnity may
be sought prior to such time. The representations and warranties in this
Agreement shall survive for the periods set forth in this Section 7.1 and shall
in no event be affected by any investigation, inquiry or examination made for or
on behalf of Dade or Hoechst, or the knowledge of any of the Dade Entities' or
the Hoechst Entities' officers, directors, shareholders, employees, agents, or
other representatives or the acceptance by Dade or Hoechst of any certificate or
opinion hereunder. Without limiting the generality of the foregoing, breaches
of representations and warranties falling within the exceptions to Sections
2.1(a) and 2.2(a) hereunder shall nonetheless survive for the periods set forth
in this Section 7.1.
-48-
7.2 General Indemnification.
-----------------------
(a) Indemnification for Benefit of Dade. Subject to the provisions of
-----------------------------------
Section 7.2(g), Hoechst shall indemnify Dade and its affiliates (including
affiliates after the Closing), and its and their stockholders, officers,
directors, employees, agents, representatives, successors and per mitted
assigns (collectively, the "Dade Parties") and save and hold each of them
------------
harmless against and pay on behalf of or reimburse such Dade Parties as and when
incurred for any loss, liability, demand, claim, action, cause of action, cost,
damage, deficiency, tax, penalty, fine or expense, whether or not arising out of
third party claims (including interest, penalties, reasonable attorneys' fees
and expenses and all reasonable amounts paid in investigation, defense or
settlement of any of the foregoing) (collectively, "Losses"), which any such
------
Dade Party may suffer, sustain or become subject to, as a result of, in
connection with, relating or incidental to or by virtue of:
(i) subject to Section 7.1, any breach of representation and
warranty set forth Article IV of this Agreement without regard to any
specified dollar limitations or thresholds set forth in such Article IV
(other than such dollar limitations or thresholds set forth in Sections
4.9(f), (g), (i), (j), (k), (o) and (r), 4.14(a)(i), (ii), (iv), (v), (vi),
(vii), (ix), (x) and (xi) and 4.15(a));
(ii) any nonfulfillment or breach of any covenant, agreement or
other provision by Hoechst under this Agreement; or
(iii) any liability or obligation which is an Indemnified
Liability (as defined in Section 9.25 herein);
provided that Hoechst shall not have any liability under clause (i) above with
- --------
respect to any particular breach of representation and warranty (other than
pursuant to Sections 4.1, 4.3 and 4.4 (and Section 4.27 to the extent related to
the foregoing Sections)) unless the Loss for such item exceeds $250,000 and the
aggregate of all Losses relating thereto for which Hoechst would, but for this
proviso, be liable exceeds on a cumulative basis an amount equal to $10,000,000,
and then only to the extent of any such excess; and provided further that the
-------- -------
aggregate amount for which Hoechst shall be liable under clause (i) above shall
in no event exceed $100,000,000. Dade shall take and shall cause its affiliates
to make a good faith attempt to mitigate all such Losses upon and after Dade
becomes aware of any circumstances which could reasonably be expected to give
rise to such Losses.
(b) Indemnification for Benefit of Hoechst. Dade shall indemnify
--------------------------------------
Hoechst and its affiliates (including affiliates after the Closing), and its and
their stockholders, officers, directors, employees, agents, representatives,
successors and permitted assigns (collectively, the "Hoechst Parties") and save
---------------
and hold each of them harmless against and pay on behalf of or reimburse such
Hoechst Parties as and when incurred for any Losses that the Hoechst Parties may
suffer, sustain or become subject to, as the result of, in connection with,
relating or incidental to or by virtue of:
-49-
(i) subject to Section 7.1, any breach of representation and
warranty set forth in Article V of this Agreement without regard to any
specified dollar limitations or thresholds set forth in such Article V
(other than such dollar limitations of thresholds set forth in Sections
5.9(f), (g), (i), (j), (k), (o) and (r), 5.14(a)(i), (ii), (iv), (v), (vi),
(vii), (ix), (x) and (xi) and 5.15(a));
(ii) any nonfulfillment or breach of any covenant, agreement or
other provision by Dade under this Agreement; or
(iii) payments, liabilities or other obligations under or with
respect to the San Jose Sublease.
(iv) other than Indemnified Liabilities and other than as
otherwise expressly provided in this Agreement, any liability or obligation
paid or discharged by Hoechst or any of its affiliates (other than Dade and
its subsidiaries) after the Closing (or any related Loss) that arises out
of or relates to the ownership, use or operation of the Business or the
Business Assets; or
(v) except with respect to the $26.9 million face amount of
receivables referred to in Section 1.7, any claims by Dade and its
affiliates against Hoechst and its affiliates with respect to intercompany
accounts referred to in Section 7.17 hereof;
provided that the amount of Losses (I) with respect to clause (i) above (other
- --------
than Losses relating to Section 5.3 (as it relates to the capital stock of Dade)
or 5.4) or for breach of any covenant set forth in Section 3.3, 3.5 or 7.3(b)
hereunder (but with respect to 7.3(b) hereunder, only for Losses due to payments
made to any Person in excess of the amounts agreed upon by the parties hereto
pursuant to Section 7.3(b) hereunder) shall be determined by multiplying, in
order to acknowledge in certain cases that Hoechst's Loss may be suffered
indirectly as a shareholder of Dade, the Hoechst Percentage times such Losses
and (II) with respect to clause (i) above for Losses relating to Section 5.3 (as
it relates to the capital stock of Dade) or 5.4 or for breach of any covenant
set forth in Section 3.6, 3.7 or 7.19 shall be determined by adding to such
Losses an amount equal to the Hoechst Percentage times such Losses; provided
--------
further that, Dade shall not have any liability under clause (i) above with
- -------
respect to any particular breach of representation and warranty (other than
pursuant to Sections 5.1, 5.3 and 5.4 (and Section 5.23 to the extent related to
the foregoing Sections)) unless the Loss for such item exceeds $517,000
(determined without applying the Hoechst Percentage to such Losses) and the
aggregate of all Losses relating thereto for which Dade would, but for this
proviso, be liable exceeds on a cumulative basis an amount equal to $20,769,000
(determined without applying the Hoechst Percentage to such Losses), and then
only to the extent of any such excess; and provided further that the aggregate
-------- -------
Losses for which Dade shall be liable under clause (i) above shall in no event
exceed $207,690,000 (determined without applying the Hoechst Percentage to such
Losses). Hoechst shall take and shall cause its affiliates to make a good faith
attempt to mitigate all such Losses upon and after Hoechst becomes aware of any
circumstances that
-50-
could reasonably be expected to give rise to such Losses. As used herein,
"Hoechst Percentage" shall be determined, in the case of each claim for
------------------
indemnification hereunder, as of the date of written notice of such claim
and shall equal the percentage (calculated to the fourth decimal point) obtained
by dividing (A) the Basic Percentage, by (B) one minus the Basic Percentage.
The "Basic Percentage" shall be determined as of the date of each such written
----------------
notice and shall equal the percentage (calculated to the fourth decimal point)
obtained by dividing (x) the aggregate number of shares of Common Stock and
Class L Common, Series B, owned by Hoechst at such time (but only to the extent
that such Common Stock and Class L Common, Series B, were either acquired by
Hoechst at the Closing hereunder or issued to Hoechst prior to the date of such
claims upon the exercise of the Warrant), by (y) the total number of shares of
Common Stock, Class L Common, Series B, and Class L Common Stock of Dade, par
value $.01 per share ("Class L Common"), outstanding at such time plus all
options to purchase shares of Common Stock, Class L Common and Class L Common,
Series B, that were originally issued to employees of Dade and its affiliates
and that are exercisable at such time. For example, if on the date of a written
notice (i) Hoechst owned an aggregate of 450 shares of Common Stock and Class L
Common, Series B, (80 acquired pursuant to the Warrant, 325 acquired pursuant to
this Agreement and 45 acquired by other means) and (ii) an aggregate of 1,200
shares of Common Stock, Class L Common and Class L Common, Series B, were
outstanding on a fully diluted basis (950 shares outstanding, vested employee
options to purchase 200 shares and other options to purchase 50 shares), then
the Basic Percentage would equal 35.2174% (405 / 1,150 = 0.352174) and the
Hoechst Percentage would equal 53.8462% (0.35/(1.00 - 0.35) = 0.538462).
(c) Manner of Payment. Any indemnification of the Dade Parties or the
-----------------
Hoechst Parties pursuant to this Section 7.2 shall be effected by wire transfer
of immediately available funds from Hoechst or Dade, as the case may be, to an
account designated by Dade or Hoechst, as the case may be, within 15 days after
the determination thereof. Any such indemnification payments shall include
interest at the Prime Rate from the date any such Loss is suffered or sustained
to the date of payment. Notwithstanding the foregoing, if in the good faith
judgment of Dade's board of directors Dade's payment of any portion of such
Losses in immediately available funds would impose a significant financial
burden on Dade, Dade shall have the option to issue for such portion pay-in-kind
preferred stock convertible into Common Stock at the Warrant Price (as defined
in the Warrant, but calculated on a per share basis), with a cumulative annual
dividend rate, determined by an Independent Investment Banker (as defined
below), based upon market conditions and for companies with a comparable credit
rating, in order to reflect the financial condition of Dade after such Losses so
as to give the preferred stock a market value equal upon issuance to its face
amount. Any indemnification payments made pursuant to this Agreement shall be
deemed to be adjustments to the Purchase Price for tax purposes. The parties
acknowledge and agree that a "significant financial burden" (as used in this
Section 7.2(c)) would be imposed on Dade in order to pay Losses in cash if, for
example, Dade's board of directors determined in its good faith judgment that
Dade, after taking into account such payment, should obtain additional credit
facilities (or expand existing credit facilities) in order to meet working
capital and other business needs in the ordinary course of business and that
obtaining such additional credit facilities (or expanding existing credit
facilities)
-51-
would be burdensome to Dade. "Independent Investment Banker" means, for
-----------------------------
the purposes of this Section 7.2(c), the remaining investment banking firm
from the list of the five highest ranking New York-based investment banking
firms (other than Goldman (or any successor or Affiliate)), rated by the gross
dollar value of underwritten public offerings lead-managed during the preceding
four -calendar - quarter period, after Hoechst and Dade shall each have
alternately eliminated one such firm from such list until only one such firm
remains.
(d) Defense of Third Party Claims. The party which is entitled to be
-----------------------------
indemnified under this Section 7.2 (an "Indemnitee") shall promptly give written
----------
notice hereunder to the party required to indemnify under this Section 7.2 (an
"Indemnitor") after obtaining notice of any claim as to which recovery may be
- -----------
sought against the Indemnitor because of the indemnity in this Section 7.2,
describing the claim, the amount thereof (if known and quantifiable), and the
basis thereof, in each case to the extent known by the Indemnitee; provided that
--------
the failure to so notify an Indemnitor shall not relieve the Indemnitor of its
obligations hereunder except to the extent that (and only to the extent that)
such failure shall have caused the Losses for which the Indemnitor is obligated
to be greater than such Losses would have been had the Indemnitee given the
Indemnitor prompt notice hereunder, including any Loss sustained by the
Indemnitee because of late notice of claims to its insurance carriers. Any
Indemnitor shall be entitled to participate in the defense of any claim of a
third party (a "Third Party Claim") giving rise to an Indemnitee's claim for
-----------------
indemnification at such Indemnitor's expense, and at its option (subject to the
limitations set forth below) shall be entitled to assume the defense thereof and
in connection therewith appoint a nationally recognized and reputable counsel
reasonably acceptable to the Indemnitee to be the lead counsel in connection
with such defense; provided that:
--------
(i) the Indemnitee shall be entitled to participate in the
defense of such Third Party Claim and to employ counsel of its choice
for such purpose; provided that the fees and expenses of such separate
--------
counsel shall be borne by the Indemnitee (other than any fees and
expenses of such separate counsel that are incurred prior to the date
the Indemnitor effectively assumes control of such defense which,
notwithstanding the foregoing, shall be borne by the Indemnitor);
(ii) if the Indemnitor does not assume the defense of such Third
Party Claim in accordance with this Section 7.2, the Indemnitee will
not be liable for any legal expenses subsequently incurred by the
Indemnitee in connection with the defense thereof; provided, however,
-------- -------
that if the Indemnitor fails to take reasonable steps necessary to
defend diligently such Third Party Claim, the Indemnitee may assume
its own defense, and the Indemnitor will be liable for all reasonable
costs or expenses paid or incurred in connection therewith; and
(iii) if the Indemnitor shall control the defense of any such
Third Party Claim, the Indemnitor shall obtain the prior written
consent of the Indemnitee (which shall not be unreasonably withheld)
before ceasing to defend such Third Party Claim
-52-
or before entering into any settlement of such Third Party Claim if
such settlement does not expressly and unconditionally release, with
prejudice, the Indemnitee from all liabilities and obligations with
respect to such Third Party Claim.
(e) Determination of Losses, etc. The amount of any Losses for which
-----------------------------
indemnification is provided under this Section 7.2 shall be (A) increased to
take account of any actual net Tax cost incurred by the Indemnitee (or its
affiliates) arising from the receipt of indemnity payments hereunder (grossed up
for such increase) and (B) reduced to take account of any actual net Tax benefit
realized by the Indemnitee (or its affiliates) arising from the incurrence or
payment of any such Loss. In computing the amount of any such Tax cost or
benefit, the Indemnitee (or its affiliates, if applicable) shall be deemed to
recognize all other items of income, gain, loss, deduction or credit before
recognizing any item arising from the receipt of any indemnity payment hereunder
or the incurrence or payment of any indemnified Losses. Any indemnification
payment hereunder shall initially be made without regard to this Section 7.2(e)
and shall be reduced to reflect any such net Tax benefit or increased to reflect
any such net Tax cost only after the Indemnitee (or its affiliates) has actually
realized such benefit or cost. For purposes of this Agreement, an Indemnitee
(or its affiliates) shall be deemed to have "actually realized" a net Tax
-----------------
benefit or net Tax cost to the extent that, and at such time as, the amount of
Taxes payable by such Indemnitee (or its affiliates) is reduced below or
increased above, as applicable, the amount of Taxes that such Indemnitee (or its
affiliates) would be required to pay but for the receipt of the indemnity
payment or the incurrence or payment of such Loss, as the case may be. The
amount of Losses for which indemnification is provided under this Section 7.2
shall not include any liabilities and obligations if and to the extent that any
such liabilities or obligations have actually reduced Net Assets.
(f) Sole Remedy. Except as otherwise expressly provided in this
-----------
Agreement, Hoechst and Dade hereby acknowledge and agree that the sole and
exclusive remedy of the Hoechst Parties and the Dade Parties with respect to any
and all Losses relating to the subject matter of this Agreement shall be
pursuant to the indemnification provisions set forth in this Article VII. In
furtherance of the foregoing, Dade and Hoechst hereby waive, to the fullest
extent permitted under Applicable Law, rights with respect to any and all other
Losses they or the other Hoechst Parties or the other Dade Parties may incur
relating to the subject matter of this Agreement. Except as set forth in this
Agreement, neither Dade nor Hoechst is making any representation, warranty,
covenant or agreement with respect to the matters contained herein. Anything
herein to the contrary notwithstanding, no breach of any representation,
warranty, covenant or agreement contained herein shall give rise to any right on
the part of Hoechst or Dade, after the consummation of the purchase and sale of
the Stock contemplated hereby, to rescind this Agreement or any of the
transactions contemplated hereby.
(g) Indemnification in Favor of the GMBH Company or HDHC. If Hoechst
----------------------------------------------------
enters into any agreement (including pursuant to the Restructuring Documents)
with the GMBH Company or HDHC prior to the Closing, which agreement provides
that Hoechst shall indemnify the GMBH Company or HDHC, as the case may be, for
the indemnification obligations of Hoechst
-53-
with respect to Section 7.4, 7.12, 7.13 or 7.15 or any Indemnified Liability,
Dade shall not be entitled to any indemnification from Hoechst under this
Agreement if and to the extent that Hoechst shall have indemnified the GMBH
Company or HDHC, as the case may be, for such indemnification obligations. It is
hereby agreed that such agreements to indemnify the GMBH Company shall cover
obligations related to the Acquired Entities located in Europe, other than in
the United Kingdom, Switzerland and Turkey (the "European Acquired Entities"),
--------------------------
and such agreements to indemnify HDHC shall cover obligations related to the
Acquired Entities in any other country, including the United Kingdom,
Switzerland and Turkey (the "Non-European Acquired Entities").
------------------------------
7.3 Expenses.
--------
(a) Hoechst will pay all taxes, costs, expenses and other obligations
incurred or payable (i) in connection with the transactions contemplated by the
Restructuring Documents and which taxes, costs, expenses and other obligations
are necessary to incur in connection with such transactions as described therein
or (ii) in connection with other transactions necessary to otherwise separate
the Business from Hoechst and its affiliated companies (including in connection
with transfers in or out of the Acquired Entities, whether before or after
Closing). In no event shall such taxes, costs, expenses and other obligations
include any liabilities if and to the extent that any such liabilities reduced
the amount of Net Assets.
(b) Upon the consummation of the transactions contemplated herein
(and, with respect to Hoechst (and its affiliates), only upon such
consummation), Dade shall pay (or reimburse Hoechst (or its affiliates), as the
case may be) for all third-party, out-of-pocket fees, costs and expenses of
Hoechst's (or its affiliates') and Dade's advisors for services rendered in
connection with the Combination Documents, including investment advisors,
accountants, lawyers and consultants, if any, subject to any prior agreements of
the parties hereto as to the amount of any particular fees, costs and expenses;
provided that such payments shall be limited to activities directly related to
- --------
the business combination contemplated hereby, such as due diligence and
negotiations, but excluding, with respect to Hoechst and the Business, audits,
other ordinary course activities and the transactions, agreements and
arrangements referred to in Section 7.3(a) above. To the extent that on or
prior to the Closing Hoechst has paid to any third-party any amount with respect
to any such fees, costs or expenses for which Dade is obligated to pay pursuant
to the foregoing, the amount of such payments by Hoechst shall be credited to
the Net Assets as of the Closing subject to receipt by Dade of reasonable and
appropriate documents for such fees, costs and expenses.
(c) Hoechst (with respect to the Business) and Dade (with respect to
Dade) will cooperate and use reasonable best efforts to obtain all requisite
third party Consents with respect to Contracts necessary to consummate the
transactions contemplated by the Combination Documents, but neither party will
be required to pay more than $2 million (exclusive of attorney and other advisor
fees) to third parties in connection therewith.
-54-
(d) In addition to all fees, costs and expenses contemplated by
Sections 7.3(a) and 7.3(c) above and other than those contemplated by Section
7.3(b) above, Hoechst shall also pay all transfer taxes, filing fees and other
costs and expenses in connection with the transfer of the Business to Dade;
provided that such transfer taxes (other than German real estate transfer
- --------
taxes), filing fees and other costs are not in excess of $750,000, with all
amounts exceeding such limit to be paid by Dade; and provided further that
-------- -------
expenditures made by Hoechst pursuant to this Section 7.3(d) which are not
required in connection with the transfer of the Business shall not be utilized
in computing such $750,000 limitation, unless Dade shall have approved such
expenditure by Hoechst, which approval shall not be unreasonably withheld.
Filing fees contemplated by Section 3.7 hereunder and the Transfer Taxes set
forth in Section 7.4(e) hereunder, to the extent paid in connection with the
transfer of the Business to Dade, are subject to the terms of this Section
7.3(d).
7.4 Tax Matters.
-----------
(a) Taxable Periods Ending on or Before the Closing Date. Hoechst
----------------------------------------------------
shall prepare and file, or cause to be prepared and filed, at Hoechst's expense,
all Tax Returns for the Acquired Entities for all taxable periods ending on or
prior to the Closing Date which are filed after the Closing Date. Hoechst shall
permit Dade to review and comment on each such Tax Return described in the
preceding sentence prior to filing. Hoechst shall pay all income Taxes of the
Acquired Entities with respect to taxable periods ending on or before the
Closing Date. Hoechst shall be entitled to all income Tax refunds for Acquired
Entities for all taxable periods ending on or prior to the Closing Date. Dade
shall pay Hoechst any such refund amounts within 15 days of Dade, its
affiliates', or Acquired Entities' receipt of the same.
(b) Taxable Periods Beginning Before and Ending After the Closing
-------------------------------------------------------------
Date. Dade shall prepare and file, or cause to be prepared and filed, any Tax
Returns of the Acquired Entities for taxable periods which begin before the
Closing Date and end after the Closing Date. Dade shall permit Hoechst to
review and comment on each such Tax Return described in the preceding sentence
prior to filing. Hoechst shall pay to Dade or the Acquired Companies within 15
days of the date on which income Taxes are paid with respect to such periods an
amount equal to the portion of such income Taxes which relates to the portion of
such taxable period ending on the Closing Date to the extent such income Taxes
have not been paid on or before the Closing Date. For purposes of this Section
7.4(b), in the case of any income Taxes that are payable for a taxable period
that includes (but does not end on) the Closing Date, the portion of such income
Tax which relates to the portion of such taxable period ending on the Closing
Date shall be deemed to be equal to the amount of income Taxes which would have
been payable if the relevant taxable period ended on the Closing Date. Any
income Tax refunds for taxable periods which begin before the Closing Date and
end after the Closing Date shall be apportioned as described in this Section
7.4(b). Dade, its affiliates, and the Acquired Entities and Hoechst and its
affiliates shall file for such refunds and fully cooperate to obtain the same.
Dade shall pay Hoechst any refund amount due Hoechst under this Section 7.4(b)
within 15 days of Dade's, its affiliates', or Acquired Entities' receipt of the
same. Hoechst shall bear a portion of the costs of preparing and filing the Tax
Returns governed by this
-55-
Section 7.4(b), such portion to be equal to the portion of the Tax shown on such
Tax Return for which Hoechst is liable under this action. For purposes of
Sections 7(a) and 7(b), an "income Tax" includes any Tax based on or measured in
----------
whole or in part by income.
(c) Additional Tax Indemnification. In addition to the Taxes
------------------------------
allocated to Hoechst under Sections 7.4(a) and 7.4(b) above, Hoechst shall be
liable for, and shall indemnify and hold Dade, its affiliates, and the Acquired
Entities harmless against, without duplication, (i) any Taxes arising out of the
transactions contemplated in the Restructuring Documents; and (ii) all liability
(whether as a result of Treasury Regulation (S) 1.1502-6, or any similar
provision of state, local, or foreign law, as a transferee, by contract, or
otherwise) for Taxes of any Person based on an affiliation, contractual
relationship or other relationship existing between such Person and any Acquired
Entity at any time prior to the Closing. In no event shall such Taxes or
liabilities include any liabilities if and to the extent that such liabilities
reduced the amount of Net Assets.
(d) Cooperation on Tax Matters. Dade and its affiliates and Hoechst
--------------------------
and its affiliates shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of Tax Returns
pursuant to this Section 7.4, or any amended return, claim for refund,
determining a liability for Taxes or a right to refund of Taxes, or any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the retention and (upon the other party's request) the provision of
records and information which are reasonably relevant to any such return,
analysis, audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. The Acquired Entities and Hoechst and its
other affiliates agree (A) to retain all books and records with respect to tax
matters pertinent to the Acquired Entities relating to any taxable period
beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Dade or Hoechst, any extensions
thereof) of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (B) to give the other
party reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if the other party so requests, the Acquired
Entities or Hoechst and their affiliates, as the case may be, shall allow the
other party to take possession of such books and records.
(e) All sales and transfer taxes, recording charges and similar taxes,
fees or charges imposed as a result of any of the transactions contemplated in
the Restructuring Documents or this Agreement (collectively, the "Transfer
--------
Taxes"), together with any interest, penalties or additions to such Transfer
Taxes shall be paid by Hoechst. In no event shall such Transfer Taxes,
interest, penalties or additions include any liabilities if and to the extent
that any such liabilities reduced the amount of Net Assets. Hoechst and Dade
shall cooperate in timely making or causing their affiliates to make all
filings, returns, reports and forms as necessary or appropriate to comply with
the provisions of all Applicable Laws in connection with the payment of such
Transfer Taxes, and shall cooperate in good faith to minimize, to the fullest
extent possible under such laws, the amount of any such Transfer Taxes payable
in connection therewith.
-56-
7.5 Confidentiality. Any information provided to Hoechst or its affiliates
---------------
by or on behalf of Dade and to Dade or its affiliates by or on behalf of Hoechst
pursuant to this Agreement shall be held by Hoechst, Dade and their respective
affiliates in accordance with, and shall be subject to the terms of, certain
Confidentiality Agreements, dated October 17, 1996 and February 25, 1997, each
by and between Hoechst and Dade (the "Confidentiality Agreements"), which are
--------------------------
hereby incorporated in this Agreement with the same effect as though fully set
forth herein.
7.6 Covenant Not to Compete.
-----------------------
(a) As an inducement for Dade to consummate the transactions
contemplated by the Combination Documents, Hoechst agrees that for a period (the
"Non-Competition Period") beginning on the Closing Date and ending on the later
----------------------
of (x) the third anniversary of the Closing Date and (y) the earlier of (A) the
date on which Hoechst no longer has (or, if Dade so requests, Hoechst waives)
all of its rights under paragraph 1 of the Stockholders Agreement and such other
provisions of the Stockholders Agreement, if any, as agreed to pursuant to
Section 1.4(d) (the "Designation Rights"), and (B) the date on which Dade
------------------
terminates the Cooperation Agreement, it shall not (other than in its capacity
as a stockholder of Dade and for the benefit of Dade in connection with the
Transition Services Agreement), and it shall not permit any of its affiliates
after the Closing to, directly or indirectly, either for itself or through any
other Person, engage in, participate in, or permit its name to be used by any
enterprise engaging in or participating in, any aspect of the human in vitro
diagnostics business in any part of the world; provided, however, that nothing
-------- -------
herein shall prohibit Hoechst or its affiliates from (i) participating in any
activity contemplated by the Cooperation Agreement, (ii participating in a joint
venture with any Person provided that the joint venture is not in competition
--------
with Dade in the human in vitro diagnostics business, and (ii acquiring any
Person or entering into any business combination with any Person or entering
into any joint venture in each case which is engaged in the human in vitro
diagnostics business but in which the human in vitro diagnostics business is not
the primary business of such Person or joint venture so long as Hoechst, in good
faith, offers to sell such business to Dade and if, the parties cannot agree on
a price, the price shall be the fair market value determined by an Independent
Investment Banker. If Dade does not purchase such human in vitro diagnostics
business, Hoechst shall enter into an agreement to sell such business to an
independent third party within one year after Dade declines to purchase such
human in vitro diagnostics business and shall consummate such sale within two
years after Hoechst's acquisition of such human in vitro diagnostics business.
For purposes of this Agreement, the term "participation" includes any direct or
-------------
indirect interest in any enterprise, whether as a stockholder, partner, joint
venturer, franchisor, franchisee or otherwise (other than by ownership of less
than five percent (5%) of the stock of a publicly held corporation). Hoechst
agrees that this covenant is reasonably designed to protect Dade's substantial
investment in the Business and is reasonable with respect to its duration,
geographical area and scope. The restrictions set forth in this Section 7.6(a)
shall terminate upon the seventh anniversary of the Closing Date.
-57-
(b) Prior to the later of (i) two years after the Closing Date and (ii
one year after the date as Hoechst shall no longer have the Designation Rights,
neither Hoechst nor any of its affiliates will solicit the employment (in any
capacity) of, or, to the extent not otherwise prohibited by Applicable Law,
hire, any employee of Dade or any of its affiliates (other than any employee
whose employment is terminated by Dade or such affiliate) without the prior
written consent of Dade (which consent shall not be withheld capriciously or
otherwise without a good business reason). Notwithstanding the foregoing,
nothing herein shall prohibit Hoechst from hiring Uwe Bicker in any capacity not
otherwise prohibited in any agreement between Uwe Bicker and Dade or any of its
affiliates.
(c) Prior to two years after the date of this Agreement, neither Dade
nor its affiliates (including the Acquired Entities after Closing) will solicit
the employment (in any capacity) of, or, to the extent not otherwise prohibited
by Applicable Law, hire any employee of Hoechst or any of its affiliates (other
than an employee of InfraServ or whose employment is terminated by Hoechst or
such affiliate), with whom Dade or any of its affiliates has had contact or who
became known to Dade or any of its affiliates in connection with the
consideration and consummation of the transactions contemplated by this
Agreement, without the prior written consent (which consent shall not be
withheld capriciously or otherwise without a good business reason) of Hoechst.
(d) Prior to one year after the date on which the Cooperation
Agreement shall have been terminated, neither Dade nor its affiliates (including
the Acquired Entities after Closing) will solicit the employment (in any
capacity) of, or, to the extent not otherwise prohibited by Applicable Law, hire
any employee of Hoechst or any of its affiliates (other than an employee of
InfraServ or whose employment is terminated by Hoechst or such affiliate), with
whom Dade or any of its affiliates will have had contact or who becomes known to
Dade or its affiliates in connection with the transactions contemplated by the
Cooperation Agreement, without the prior written consent (which consent shall
not be withheld capriciously or otherwise without a good business reason) of
Hoechst.
(e) If, at the time of enforcement of any of the provisions of this
Section 7.6, a court (or arbitrator or administrator) determines that the
restrictions stated herein are unreasonable under the circumstances then
existing, then the parties hereto agree that the maximum period, scope or
geographical area reasonable under the circumstances shall be substituted for
the stated period, scope or area. The parties further agree that such court (or
arbitrator or administrator) shall be allowed to revise the restrictions
contained herein to cover the maximum period, scope or geographical area
permitted by law. In no event shall any such substituted or revised period,
scope or geographical area exceed any restrictions set forth in Sections 7.6(a)
and 7.6(b).
(f) If Hoechst, Dade or any of their respective affiliates after the
Closing (the "Restricted Persons") breaches, or threatens to commit a breach of,
------------------
any of the provisions of this Section 7.6 (the "Restrictive Covenants"), Dade or
---------------------
Hoechst, as the case may be, shall have,
-58-
independent of any other rights and remedies under this Agreement, the right and
remedy to have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction without the need to post bond or other security, it being
agreed that any breach or threatened breach of the Restrictive Covenants would
cause irreparable injury to the parties hereto and that money damages would not
provide an adequate remedy to such party.
7.7 Further Transfers; Further Assistance.
-------------------------------------
(a) Hoechst shall (whether prior to or after the Closing) execute and
deliver such further instruments of conveyance and transfer and take such
additional action as Dade may reasonably request to effect, consummate, confirm
or evidence the transfer of the Stock to Dade, the transfer of the Business
Assets to the Acquired Entities and the conduct of the Business by the Acquired
Entities after the Closing (including with respect to obtaining and maintaining
all Permits and other Consents necessary or desirable in connection therewith),
and shall execute such documents as may be necessary to assist Dade in
preserving or perfecting its rights in the Stock after giving effect to the
Closing, and the Acquired Entities in preserving or perfecting their rights in
the Business Assets or their ability to conduct the Business. Without limiting
the foregoing, after the Closing, (i) Hoechst shall (and shall cause its
affiliates to) promptly forward to Dade any and all proceeds from accounts
receivable relating to the Business or the Business Assets that are received by
Hoechst or its affiliates after the Closing but which are part of the Business
Assets or which otherwise are for the account of Dade or its affiliates and (ii)
Dade shall (and shall cause its affiliates to) promptly forward to Hoechst any
and all proceeds from accounts relating to the business or assets (other than
the Business or the Business Assets) that are received by Dade or its affiliates
after the Closing but which are part of such business or assets or which
otherwise are for the account of Hoechst or its affiliates. In connection with
any transfer of Business Assets pursuant to this Section 7.7(a), no Hoechst
Entity shall transfer any liabilities (of the kind used in calculating Net
Assets), whether or not related to the Business, in excess of the amount of
current assets (of the kind used in calculating Net Assets) transferred
therewith.
(b) Without limiting the foregoing, to the extent that the assignment
by the Hoechst Entities to one of the Acquired Entities of any Contract pursuant
to the Restructuring Documents is not permitted or is prohibited by any
Governmental Entity or is not permitted without the consent of any other party
to such Contract, neither the Restructuring Documents, this Agreement nor any
other Combination Document shall be deemed to constitute an assignment of any
such Contract if such consent is not given or if such assignment otherwise would
constitute a breach of, or cause a loss of contractual benefits under, any such
Contract, and Hoechst will take such provisions as to ensure that no Acquired
Entity shall assume or be liable for any obligations or liabilities under any
such Contract. Hoechst shall (and shall cause the Other Hoechst Entities to)
use their reasonable efforts to advise Dade promptly in writing with respect to
any such Contract which any Hoechst Entity knows or has reason to believe will
or may not be subject to assignment to one of the Acquired Entities pursuant to
the Restructuring Documents. If any Consent with respect to any Contract is not
obtained or if such assignment is not permitted irrespective of consent
-59-
and the Closing hereunder is consummated, Hoechst shall (and shall cause the
Other Hoechst Entities to) cooperate with Dade following the Closing Date in any
reasonable arrangement designed to provide Dade with the rights and benefits
(subject to the obligations) under any such Contract, including, at Hoechst's
expense (but subject to the limit on payments to third parties as set forth in
Section 7.3(c) herein), enforcement for the benefit of the Acquired Entities of
any and all rights of the Hoechst Entities against any other party arising out
of any breach or cancellation of any such Contract by such other party and, if
requested by Dade, acting as an agent on behalf of the Acquired Entities or as
Dade shall otherwise reasonably require.
7.8 Arbitration.
-----------
(a) Procedure. At the election of Dade or Hoechst, by written
---------
delivery to the other party, any dispute or controversy to which Dade and
Hoechst are the principal parties arising out of or relating to the provisions
of this Agreement or any of the other Combination Documents (a "Dispute") shall
-------
be determined in accordance with the arbitration procedures set forth in this
Section 7.8, except as otherwise provided herein (including Section 1.6 above).
The parties hereby agree and acknowledge that, except as otherwise provided in
this Section 7.8 or otherwise in the Combination Documents, the arbitration
procedures and any Final Arbitration Determination (as defined below) hereunder
shall be governed by, and shall be enforced pursuant to, the Commercial
Arbitration Rules (as supplemented by its Supplementary Procedures for Large,
Complex Disputes) of the American Arbitration Association as in effect from time
to time. All arbitration proceedings shall be held in New York, New York.
(b) Notice of Arbitration. In the event that Dade or Hoechst asserts
---------------------
that there exists a Dispute, Dade or Hoechst, as the case may be, shall deliver
a written notice to the other party specifying the nature of the asserted
Dispute and requesting a meeting to attempt to resolve the same. If no such
resolution is reached within 10 calendar days after delivery of such notice,
Dade or Hoechst, as the case may be, may, within 45 Business Days after delivery
of such notice, commence arbitration hereunder by delivering to the other party
a notice of arbitration (a "Notice of Arbitration"). Such Notice of Arbitration
---------------------
shall specify the matter(s) as to which arbitration is sought, the nature of any
Dispute, the claim(s) of Dade or Hoechst, as the case may be, with respect to
the arbitration and shall specify the amount and nature of any damages sought to
be recovered as a result of the claim.
(c) Selection of Arbitrators. Dade, on the one hand, and Hoechst, on
------------------------
the other hand, shall each select one independent arbitrator expert in the
subject matter of the Dispute (the arbitrators so selected shall be referred to
herein as "Dade's Arbitrator" and "Hoechst's Arbitrator," respectively). In the
----------------- --------------------
event that either Dade or Hoechst fails to select an independent arbitrator as
set forth herein within 30 calendar days from delivery of a Notice of
Arbitration, then the matter shall be resolved by the arbitrator selected by the
other. Hoechst's Arbitrator and Dade's Arbitrator shall select a third
independent arbitrator expert in the subject matter of the dispute, and the
three arbitrators so selected shall resolve the matter according to the
procedures set forth in this Section
-60-
7.8. If Hoechst's Arbitrator and Dade's Arbitrator are unable to agree on a
third arbitrator within 20 calendar days after their selection, Hoechst's
Arbitrator and Dade's Arbitrator shall each prepare a list of three independent
arbitrators expert in the subject matter of the Dispute. Hoechst's Arbitrator
and Dade's Arbitrator shall each have the opportunity to designate as
objectionable and eliminate one arbitrator from the other arbitrator's list
within 7 calendar days after submission thereof, and the third arbitrator shall
then be selected by lot from the arbitrators remaining on the lists submitted by
Hoechst's Arbitrator and Dade's Arbitrator.
(d) Costs. The cost of arbitration ("Arbitration Cost") shall be paid
----- ----------------
by Hoechst, subject to the reimbursement by Dade as set forth in the next
sentence. If any of the items set forth in the Notice of Arbitration are
resolved by the arbitrator in favor of Hoechst, Dade shall promptly reimburse
Hoechst by wire transfer of immediately available funds in an amount equal to
(the "Arbitration Reimbursement Calculation") (if and only if a positive number)
-------------------------------------
the Arbitration Cost multiplied by a factor equal to A minus B plus twice A
----- ----
multiplied by B; where "A" is the quotient obtained by dividing the amount of
- ----------
the items in the Notice of Arbitration resolved by the arbitrator in favor of
Hoechst by the total amount of such items, and "B" is the Hoechst Percentage.
(e) Entry of Award. The arbitrator(s) shall conduct the arbitration
--------------
such that a final result, determination, finding, judgment and/or award (a
"Final Arbitration Determination") is made or rendered as soon as practicable,
- --------------------------------
but in no event later than 90 calendar days after the delivery of the Notice of
Arbitration nor later than 10 calendar days following completion of the
arbitration. The Final Arbitration Determination must be agreed upon and signed
by the sole arbitrator or by at least two of the three arbitrators (as the case
may be). The Final Arbitration Determination shall be final and binding on the
parties and there shall be no appeal from or reexamination of the Final
Arbitration Determination, except for fraud, perjury or misconduct by an
arbitrator prejudicing the rights of any party, and to correct manifest clerical
errors.
(f) Enforcement. Dade and Hoechst may enforce any Final Arbitration
-----------
Determination in any court of competent jurisdiction. If a party makes the
Section 7.8(a) arbitration election after the other party has instituted a
lawsuit (including a third-party suit) regarding the same Dispute, the other
party shall terminate the lawsuit (except the portion, if any, seeking the
relief permitted under Section 9.11) and the Dispute shall be resolved pursuant
to this Section 7.8.
(g) Other Remedies. Nothing in this Section 7.8 shall be construed to
--------------
impair the right of either party to seek injunctive or other equitable relief
pursuant to Section 9.11.
7.9 Use of Current Supplies and the Hoechst Name. Dade will have after
--------------------------------------------
the Closing in Inventory a quantity of work-in-process, preprinted stationery
invoices, receipts, forms, advertising and promotional materials, training and
source literature, packaging material and other supplies (including all
Inventory acquired by Dade) which bear Hoechst's or any Other Hoechst Entity's
name and logo. To the extent legally permissible, Hoechst hereby grants, and
shall cause the Other Hoechst Entities to grant, to Dade a paid-up license, to
remain in effect until the exhaustion of such
-61-
Inventory in the ordinary course of business, to use any trademarks, trade
names, trade dress, copyright or other proprietary rights of Hoechst associated
with such Inventory. Dade agrees to use reasonable best efforts to exhaust such
Inventory in the ordinary course of business as soon as is reasonably
practicable after the Closing. Such license shall be in addition to other
licenses granted hereunder or under the documents entered into in accordance
with the terms of this Agreement and the Restructuring Documents. Except as
provided in this Section 7.9 and as set forth in the Restructuring Documents, no
interest in or right to use the name "Hoechst" or the name of any Other Hoechst
Entity (other than the Acquired Entities) or any derivation thereof or any
trademark, trade name or trade dress with respect thereto is being transferred
to Dade pursuant hereto. Within 20 Business Days after the Closing, Dade shall
change the name of each Acquired Entity whose name currently includes "Hoechst"
so as to remove the "Hoechst" name therefrom. Notwithstanding anything in this
Section 7.9 or the Restructuring Documents to the contrary, for a period of
three (3) years after the Closing, Dade shall have the right to use the name
"Hoechst" in connection with the renamed Acquired Entities located in Japan,
Singapore, China and Korea by stating, in whatever form or medium, that each
such Acquired Entity is a "Hoechst Joint Venture" or a "Hoechst Diagnostics
Joint Venture."
7.10 Change of Structure. Notwithstanding anything to the contrary in this
-------------------
Agreement, if Dade or Hoechst proposes an alternative structure for the transfer
of the Business to Dade from that contemplated in this Agreement, and such
alternative structure does not adversely affect the Tax or accounting
consequences, allocation of liabilities, marketability of securities in the
public markets, valuation of enterprise or any other economic considerations
related to the transfer of the Business, Hoechst and Dade agree to negotiate in
good faith to modify (or cause their affiliates to modify), to the extent
legally permissible, the Restructuring Documents, this Agreement and the other
Combination Documents in such ways as are necessary to implement such
alternative structure. For purposes of this paragraph, alternative structures
which may be considered include (i) the acquisition of Acquired Entities
directly by Dade or its wholly owned subsidiaries, (ii) the acquisition of
Business Assets directly by Dade or its subsidiaries, and (iii) making elections
under Section 338 (or, if applicable, Section 338(h)(10)) of the Code (or any
similar provision of state, local or foreign Tax law) with respect to any
Acquired Company or Acquired Entity.
7.11 Transition Countries. Without limiting the provisions of Section 7.7
--------------------
and in furtherance thereof, if by the Closing Date, Dade and Hoechst or their
respective affiliates have not received regulatory clearance in one or more
countries to close the transactions contemplated by the Combination Documents (a
"Transition Country"), it is agreed that Hoechst shall, directly or indirectly,
------------------
on and after the Closing Date, and during the period from the Closing Date until
receipt of regulatory clearance in the country (the "Transition Phase"), carry
----------------
on that part of the Business as agent and trustee and for the account of Dade
and its affiliates (after the Closing Date) in accordance with the following
provisions:
(a) Hoechst shall within 30 days after the end of each calendar month
of the Transition Phase, and also within 30 days after the end of the Transition
Phase, prepare, or cause to
-62-
be prepared, an account for the Business in each Transition Country, showing for
each such calendar month or other period:
(i) All receipts received by Hoechst and its affiliates; and
(ii) All out-of-pocket expenses incurred by Hoechst and its
affiliates directly relating to the Business, other than pursuant to
arrangements otherwise contemplated by the Transition Services Agreement.
The account shall show the net difference between (i) and (ii), and shall be
accompanied by payment of the difference to Dade if (i) is greater than (ii), or
an invoice to Dade for the difference if (ii) is greater than (i), which invoice
Dade shall pay within ten (10) days after receipt.
(b) Any comments or objections which Dade may have with respect to the
accounts rendered for that Transition Country under Section 7.11(a) above shall
be discussed promptly between Dade and Hoechst. If such comments or objections
result in the matter under discussion being resolved, then any appropriate
amendment shall be made to such account and Dade and Hoechst shall account to
each other accordingly. If such comments or objections do not result in such
resolution, then the matter in dispute shall be dealt with in the manner
outlined in Section 7.8.
(c) If any claim which is covered by insurance of Hoechst or any of
its affiliates shall arise during the Transition Phase in respect of any of the
Business Assets relating to a part of the Business carried on in a Transition
Country, Hoechst shall promptly submit, or cause to be submitted, all relevant
documents to the insurers to substantiate such claim in trust for Dade and turn
over the proceeds to Dade. Hoechst shall promptly inform Dade of the
circumstances giving rise to such insurance claim.
(d) Except as otherwise provided in this Agreement, Dade shall have
sole liability and responsibility for and in respect of all employees, if any,
in each Transition Country (the "Transition Employees") on and after the
--------------------
Closing, and Dade shall indemnify or, cause its affiliates (after the Closing)
to indemnify, Hoechst and its affiliates (after the Closing), and keep them
indemnified in respect thereof. To facilitate an orderly transition of the
relevant part of the Business in each Transition Country, during the Transition
Phase, Hoechst or its affiliates (after the Closing) shall continue to employ
the Transition Employees, and, in consideration thereof, except as otherwise
provided in this Agreement with respect to such employees, Dade or its
affiliates (after the Closing) shall fully reimburse Hoechst and its affiliates
(after the Closing) the cost of the salary, benefits, and all other payments
payable to or liabilities in respect of the relevant Transition Employees
incurred with respect to the Transition Phase. All such sums so payable shall
be regarded as payment of expenses in respect of the Business within the meaning
of Section 7.11(a)(ii) above, and shall be reflected in the account(s) rendered
for the relevant Transition Country. Except as otherwise provided in this
Agreement, no liabilities shall attach to Hoechst or its affiliates (after
-63-
the Closing) in respect of any of such Transition Employees, who shall be the
sole responsibility of Dade and its affiliates (after the Closing), and over
whom Dade and its affiliates (after the Closing) shall have full management and
supervisory responsibility from and after the Closing.
7.12 U.S., Europe and Japan Restructuring Expenses. Hoechst will fund, as
---------------------------------------------
incurred, all costs and expenses relating to the restructuring plans previously
disclosed to Dade and its representatives for the categories of expenses set
forth on the attached U.S./Europe/Japan Restructuring Expenses Schedule. To the
-------------------------------------------------
extent the restructuring plans are not completed prior to Closing Date, Dade
will complete, at Hoechst's expense, such plans in a manner consistent with such
restructuring plans and will consult with Hoechst from time to time in
implementing such restructuring plans. The parties agree that the amounts set
forth on the U.S./Europe/Japan Restructuring Expenses Schedule are provided for
informational purposes only and that the actual costs and expenses to be funded
by Hoechst may be more or less than the amounts set forth thereon.
7.13 Italy Manufacturing Facility Restructuring Expenses. Hoechst shall
---------------------------------------------------
complete, at its sole expense, the planned shutdown (the "Italian Facility
----------------
Shutdown") of the Italy manufacturing facility. Hoechst hereby agrees to pay
- --------
for all costs, obligations and liabilities arising from or directly related to
such Italian Facility Shutdown.
7.14 Break-Up Fee. If this Agreement is terminated because the condition
------------
set forth in Section 2.1(n) shall not have been satisfied, Dade will promptly,
but in no event later than three Business Days after this Agreement has been
terminated due to the failure of such condition, pay Hoechst $25 million in
immediately available funds via wire transfer. Hoechst and Dade hereby agree
that the payment of such fee is a material inducement to Hoechst to enter into
this Agreement and is to compensate Hoechst for the opportunity costs and risks
of entering into this Agreement.
7.15 SEP Liability. Certain employees and former employees of the Syva
-------------
division of the Business are covered by the Special Employment Program ("SEP")
---
which provides certain severance and termination payments in the event
conditions set forth in the SEP are satisfied. Hoechst hereby agrees to
indemnify HDHC from all Losses arising out of or in connection with SEP.
Hoechst will have full responsibility for handling all claims or potential
claims, including all decisions relating to payment thereof, and will reimburse
HDHC for all out-of-pocket and other costs and expenses (including mutually
agreeable charges for employee time, facilities, document production, legal
fees, etc.). Prior to January 1, 1998, Dade agrees to comply with the
agreements set forth on the attached SEP Schedule with a view to mitigating
------------
Hoechst's exposure with respect to SEP. Hoechst agrees to make available to
Dade all available information, including reports generated with regard to SEP
and those benefits sought by Continued Employees under SEP, and, at the
reasonable request of Dade, will meet periodically with Dade to provide
additional information.
7.16 Proprietary Rights Filing Expenses. Hoechst shall prepare and file (or
----------------------------------
shall cause to be prepared and filed) all documents necessary or desirable for,
and shall bear all costs associated with, recording in the applicable patent,
trademark and copyright offices the GMBH Company's
-64-
ownership interest in those patents, trademarks and copyrights included among
the Proprietary Rights, including the recording of the assignments of patents
and trademarks from Syva Co. and Syntex (USA) Inc.
7.17 Assignment of Intercompany Accounts. Hoechst shall assign immediately
-----------------------------------
prior to Closing (a) to the GMBH Company the net balance of all intercompany
receivables less intercompany payables of Hoechst and its consolidated
affiliates on the one hand and the European Acquired entities on the other hand
and (b) to HDHC the balance of all intercompany receivables and intercompany
payables of Hoechst and its consolidated affiliates on the one hand and the Non-
European Acquired Entities on the other hand, in accordance with following:
(i) Hoechst shall cause to be assigned to Hoechst all
intercompany receivables on the books of its fully consolidated
subsidiaries (other than the Acquired Entities) as of the Closing against
each of the Acquired Entities.
(ii) Except as set forth in Section 1.7, Hoechst and each of the
Acquired Entities shall then enter into off-set agreements, pursuant to
which all claims then being held by Hoechst and all claims of such Acquired
Entity against Hoechst or any of its fully consolidated subsidiaries (other
than the Acquired Entities) shall be offset against each other.
(iii) Hoechst shall then assign the balance of each off-set
agreement with each European Acquired Entity to the GMBH Company and with
each Non-European Entity to HDHC to be treated, in each case, as a capital
contribution. Except as set forth in Section 1.7, if any such balance
shows a claim of any European Acquired Entity or any Non-European Acquired
Entity, then the GMBH Company and HDHC, respectively, shall assume such
claim in favor of Hoechst or its fully consolidated subsidiary.
7.18 Option Agreements.
-----------------
(a) Prior to the Closing, Hoechst and the GMBH Company shall enter
into an option agreement, governed by German law and which shall expressly
exclude any representations or warranties, rights to damages, indemnification or
rescission or any other similar rights, pursuant to which (i) Hoechst shall
grant to the GMBH Company the right, but not the obligation, to purchase,
between January 1, 1999 and January 31, 1999 (the "Finber Call Option"), from
------------------
Hoechst shares in Finber S.p.a., an Italian corporation, representing 30% of
Finber's outstanding stated capital (the "Finber Shares") free and clear of all
-------------
Liens and (ii the GMBH Company shall grant to Hoechst the right, but not the
obligation, to sell, between February 1, 1999 and February 28, 1999 (the "Finber
------
Put Option"), to the GMBH Company the Finber Shares free and clear of all Liens.
- ----------
The exercise price for the Finber Call Option shall be $3,150,000 (converted
into German Marks pursuant to the terms of the option agreement) and for the
Finber Put Option shall be $3,500,000 (converted into German Marks pursuant to
the terms of the option agreement). If Hoechst deposits
-65-
with the GMBH Company German Marks equal to the $3,150,000 exercise price under
the Finber Call Option, any interest earned with respect to such deposited funds
shall be payable to Hoechst.
(b) At the Closing, Hoechst, Dade and Dade Netherlands B.V., a Dutch
corporation ("Dade Netherlands"), shall enter into a duly notarized option
----------------
agreement, governed by German law and which shall expressly exclude any
representations or warranties, rights to damages, indemnification or rescission
or any other similar rights, pursuant to which (i) Hoechst shall grant to Dade
the assignable right, but not the obligation, to purchase, within 90 days after
the Closing (the "Real Estate Call Option"), from Hoechst certain real estate
-----------------------
located at Marburg, Germany and described on the attached Owned Real Estate
-----------------
Schedule (the "Guzhauser Real Estate") and (ii) Dade Netherlands or its assignee
- -------- ---------------------
shall grant to Hoechst the right, but not the obligation, to sell, between the
date which 91 days after the Closing and the date which is 180 days after the
Closing (the "Real Estate Put Option"), to Dade Netherlands or its assignee the
----------------------
Guzhauser Real Estate. Pending the exercise of the Real Estate Call Option or
the Real Estate Put Option, Hoechst shall provide the GMBH Company with a rent-
free lease for the Guzhauser Real Estate. The exercise price for the Real
Estate Call Option shall be DM34,228,000 and for the Real Estate Put Option
shall be DM36,000,000. If Hoechst deposits with Dade Netherlands German Marks
equal to the DM34,228,000 exercise price under the Real Estate Call Option, any
interest earned with respect to such deposited funds shall be payable to
Hoechst.
7.19 Holding Periods. Dade agrees that, in order to prevent the incurrence
---------------
of certain tax liabilities by Hoechst or its affiliates, it does not intend to
(and does not intend to permit any of its affiliates to) sell, transfer or
otherwise dispose of any shares of stock identified in this Section 7.19 as
follows for the periods set forth in this Section 7.19 for such shares:
(a) Shares constituting 84.16% of each class of capital stock of
Behring Diagnostics Benelux B.V. shall be held by the GMBH Company until April
1, 1998;
(b) Shares constituting 42.96% of each class of capital stock of
Behring Diagnostics AG shall be held by Syva Diagnostics Netherlands B.V. until
December 31, 2001; and
(c) Shares constituting all of the capital stock of Behring
Diagnostics Austria Ges.m.b.H. shall be held by the GMBH Company until December
31, 1998. Notwithstanding Dade's intentions, in the event that Dade, or an
affiliate of Dade, elects not to observe the holding periods set forth in this
Section 7.19 (or such other holding periods as may be mutually agreed upon),
Dade shall promptly notify Hoechst of such event and shall indemnify Hoechst and
its affiliates and save and hold each of them harmless from any Loss arising
from tax liabilities payable as a result of the failure of Dade to observe such
holding periods that Hoechst or such affiliate may suffer as a result of such
election.
-66-
7.20 Thai Business. On or before December 31, 1997 (or immediately
-------------
following the Closing, if the Closing shall occur after December 31, 1997), Dade
shall, or shall cause a newly formed subsidiary of Dade organized under the laws
of Thailand ("Thai Sub") or another subsidiary of Dade to, purchase from Hoechst
--------
Thai Ltd. ("Hoechst Thai") and Hoechst Thai shall sell to Thai Sub, all of the
------------
business assets and all liabilities and obligations relating to the Business
conducted by Hoechst Thai upon reasonable and mutually satisfactory terms and
conditions in order to achieve, to the extent practicable, identical economic
results to Dade and Hoechst that would have ensued if Dade had otherwise
acquired such Business Assets, liabilities and obligations at the Closing;
provided, however, that Hoechst Thai shall not be obligated to transfer current
- -------- -------
assets (of the kind used in calculating Net Assets) in excess of liabilities (of
the kind used in calculating Net Assets).
ARTICLE VII
EMPLOYEES AND EMPLOYEE BENEFITS
-------------------------------
8.1 Employees.
---------
(a) On or prior to the Closing Date, Hoechst shall cause the
employment of each Business Employee that is not employed at an Acquired Entity
as of the date hereof to be transferred to the appropriate Acquired Entity. All
Business Employees who are employed by the Acquired Entities as of the Closing
Date shall be referred to herein as the "Continued Employees." At least 10 days
-------------------
prior to the Closing Date, Hoechst shall notify Dade of the Business Employees
that have not been transferred to an Acquired Entity. Neither Dade nor the
Acquired Entities shall have any obligation under this Agreement or otherwise to
provide employment to any person who is not a Business Employee, and Hoechst
shall be fully responsible for any liability or obligation with respect to such
person.
(b) On and after the Closing Date, except as otherwise provided in
this Agreement, the Acquired Entities shall continue to be bound by the
provisions of each prior offer of employment that pertains to the Continued
Employees and by the applicable and relevant employment agreements, collective
bargaining agreements, collective employee agreements, customary practices and
other employment-related obligations, to the extent required by local law or the
provisions of such agreements. Nothing, except as otherwise provided herein,
shall prevent Dade or the Acquired Entities from modifying the Continued
Employee's terms and conditions of employment or establishing new terms and
conditions of employment to the extent such actions are permitted by local law
and the provisions of such agreements.
8.2 Employee Compensation and Benefits.
----------------------------------
(a) Except as otherwise specifically provided herein or as may be
agreed upon by Hoechst and Dade, the Acquired Entities shall no longer
participate in, and the Continued
-67-
Employees shall no longer accrue benefits under, any employee benefit plan,
arrangement, or program of Hoechst (or an affiliate thereof) after the Closing
Date or, if applicable, the end of the Transition Period (as defined below).
Dade or the Acquired Entities shall assume and be responsible for all
obligations relating to wages, salaries, bonuses and other forms of compensation
and related expenses and all employee benefits accrued or incurred under any and
all plans, programs or arrangements of Hoechst (or any affiliate) on or before
the Closing Date with respect to the Continued Employees to the extent such
amounts are included within the calculation of Net Assets pursuant to Section
1.5 hereof or if appropriate amounts have been transferred from Hoechst funds or
insurance contracts into corresponding Dade funds or insurance contracts. Except
as otherwise provided herein, Hoechst shall be responsible for all obligations
relating to compensation and related expenses and all employee benefits accrued
or incurred under any and all plans, programs or arrangements of Hoechst (or any
affiliate) on or before the Closing Date with respect to the Continued Employees
to the extent they are not included in the calculation of Net Assets pursuant to
Section 1.5 hereof and no appropriate amounts have been transferred from Hoechst
funds or insurance contracts into corresponding Dade funds or insurance
contracts.
(b) With respect to any Business Employee or former Business Employee
that is on short-term or long-term disability or workers compensation as of the
Closing Date, Hoechst shall be responsible for all employee benefit obligations
accrued or incurred by or payable to such person during the Disability Period as
though such person had remained an employee of Hoechst, and such person shall
remain a participant in such Hoechst plan during the Disability Period. The
Disability Period shall be the period beginning on the Closing Date and ending
on the date the person resumes active employment with Dade (or an affiliate)
after recovery from such condition. At the conclusion of the Disability Period,
Dade (or an affiliate) shall extend employment to such person in accordance with
all legal requirements and its existing personnel policies (to the extent such
policies are consistent with Applicable Law). Hoechst shall also be responsible
for all obligations related to or arising from any person who is not employed by
the Acquired Entities as of the Closing Date, including any person who has
retired or terminated employment on or prior to the Closing Date, and Hoechst
shall indemnify Dade and the Acquired Entities from and against any and all such
obligations.
(c) Each Continued Employee employed in the United States or Canada
shall be fully vested as of the Closing Date in his or her benefit under each
retirement or capital accumulation plan maintained by Hoechst (or an affiliate).
(d) Except as may be otherwise provided herein, from the Closing Date
and until at least December 31, 1997 (the "Transition Period"), Dade shall cause
-----------------
to be provided to the Continued Employees of the U.S. Company (the "U.S.
----
Continued Employees") employee benefits which are identical to the benefits
- -------------------
provided by Hoechst immediately prior to the Closing Date. In this regard, Dade
shall cause such benefit to be provided to the U.S. Continued Employees by
having such persons continue to participate in the Hoechst employee benefit
plans during the Transition Period as follows:
-68-
(i) Pension.
-------
(A) The U.S. Continued Employees shall continue to
participate in the Hoechst Celanese Retirement Plan (the "HCC Pension
-----------
Plan") until December 31, 1997, and service and compensation earned
----
with Dade (or an affiliate) shall be considered under the HCC Pension
Plan as if it were earned with Hoechst. Hoechst shall retain all of
the benefits accrued under the HCC Pension Plan as of December 31,
1997 with respect to each U.S. Continued Employee. In addition,
Hoechst shall amend the HCC Pension Plan to provide that a U.S.
Continued Employee's service with Dade (or an affiliate) after the
Closing Date shall be recognized as service under the HCC Pension Plan
for purposes of determining the U.S. Continued Employee's eligibility
for benefits thereunder (but not for purposes of determining
additional retirement benefit accruals beyond that accrued as of the
Closing Date).
(B) Dade shall pay Hoechst for the continued coverage of the
U.S. Continued Employees in the HCC Pension Plan an amount that shall
be based on the 1997 Service Cost determined with respect to each U.S.
Continued Employee (in accordance with FAS 87) and the number of
months in which such person participated in such plan during the
Transition Period.
(C) Dade shall not assume any obligation accrued under the
HCC Pension Plan, and no assets shall be transferred from the HCC
Pension Plan to Dade. Hoechst shall indemnify and save harmless Dade
and the Acquired Entities from and against any and all obligations and
liabilities, of whatever nature, arising from or related to the HCC
Pension Plan and the continued participation in such plan after the
Closing Date by the Continued Employees.
(ii) 401(k) Plan. The U.S. Continued Employees shall continue to
-----------
participate in the Hoechst Celanese 401(k) plan (the "HCC 401(k) Plan")
---------------
during the Transition Period as though they were employees of Hoechst
during such period. Dade shall reimburse Hoechst for the cost of the
contributions owing during such period with respect to the U.S. Continued
Employees.
(iii) Welfare Benefits. The U.S. Continued Employees shall
----------------
continue to participate in the employee welfare benefit plans maintained by
Hoechst until December 31, 1997. Dade shall reimburse Hoechst for the
direct cost of such coverage. For this purpose, the direct cost shall mean
the actual claims and expenses incurred by the U.S. Continued Employees
during the Transition Period or, with respect to life insurance,
survivorship coverage and disability coverage, a represented insured
premium cost as mutually agreed to by Hoechst and Dade.
-69-
(e) Dade shall cause to be provided the following benefits
(notwithstanding the fact that the actual payments would be made after December
31, 1997), provided, however, that Dade shall be reimbursed by Hoechst for any
-------- -------
portion of such benefit payment that is attributable to the period prior to, or
arising on account of an event occurring on or prior to, the Closing Date:
(i) a bonus payment for 1997, payable early in 1998, to all
eligible Continued Employees, which is determined in accordance with
the appropriate U.S. Company bonus plan, provided that such payment
-------- ----
shall be no less than the amount reflected in the calculation of Net
Assets;
(ii) Executive Perquisite Payments, payable early in 1998,
for all Continued Employees who would have been eligible for such
payments from the U.S. Company;
(iii) all relocation benefits, including the appropriate
cost of living adjustments, payable under the U.S. Company's
Relocation Plan, for all relocations which took place on or prior to
the Closing Date.
(f) Transition Benefit Arrangements. On or prior to the Closing Date,
-------------------------------
Dade and Hoechst shall agree upon the support services that Dade will need
Hoechst to provide after the Closing Date in order to effectuate a smooth
transition of the Continued Employees to Dade and the Hoechst employee benefit
plans that the Continued Employees will continue to participate in during a
transition period following the Closing Date.
8.3 Pension Plans.
-------------
(a) Non-US Pension Plans. Effective as of the Closing Date (or the
--------------------
end of any transition period), the Acquired Entities shall assume the pension
obligations of the Continued Employees under each pension plan, other than the
HCC Pension Plan, in which such employees participated as of the Closing Date
(the "Hoechst Pension Plans"). As soon as practicable after the Closing Date,
---------------------
or the end of the transition period, if applicable, to the extent permitted
under local Applicable Law, and consistent with local actuarial principles,
Hoechst shall transfer cash from the trust for each of the funded Hoechst
Pension Plans or, to the extent applicable, the applicable portion of the
insurance company contract maintained to fund such plan to the trust or other
funding vehicle for the plan established by Dade or an Acquired Entity.
(b) Non-U.S. PBO Shortfall Determination. As soon as practical after
------------------------------------
the Closing Date or, if applicable, at the end of the Transition Period, Hoechst
shall cause to be made a calculation in accordance with Financial Accounting
Standard 87 ("FAS 87") of the Projected Benefit Obligation ("PBO") under each
------ ---
of the Hoechst Pension Plans using the actuarial assumptions and factors used by
Hoechst in the Latest Balance Sheet (or, if no assumptions were used for any
such plan, Hoechst and Dade shall agree upon appropriate assumptions prior to
-70-
Closing) (the "PBO Amount"). Hoechst shall deliver to Dade a schedule of the
----------
PBO calculations with respect to each Hoechst Pension Plan along with such other
information which is necessary for Dade to verify such results. If the assets
transferred to the Acquired Entities with respect to any Hoechst Pension Plan
are less than the PBO Amount determined for such plan (the "PBO Shortfall"),
-------------
Hoechst shall cause a cash payment to be made to Dade equal to the PBO
Shortfall, if any, for such Hoechst Pension Plan; provided, however, that no
-------- -------
payment shall be made hereunder unless the sum of the PBO Shortfalls for all
Hoechst Pension Plans exceeds $26.9 million and then only to the extent that the
sum of the PBO Shortfalls exceeds $26.9 million; provided further, however, that
-------- ------- -------
if the PBO Shortfalls for all Hoechst Pension Plans exceed $28.9 million,
Hoechst shall not be obligated to cause a cash payment to be made to Dade, but
rather Hoechst and Dade shall agree on an alternative mechanism whereby the PBO
Shortfalls with respect to the pension obligations under the Hoechst Pension
Plans assumed by Dade shall not exceed $26.9 million (but shall not be less than
$24.9 million). Interest shall be added to the PBO Shortfall amount at the
Prime Rate from the Closing Date to the date the cash payment is made. In the
event the sum of the PBO Shortfalls is less than $26.9 million, Dade shall cause
a cash payment to be made to Hoechst equal to the difference between $26.9
million and the sum of the PBO Shortfalls. The payment shall be made by HDHC
and shall occur on the fifth anniversary of the Closing Date and include
interest from the Closing Date at the rate of 8% per annum.
(c) U.S. Nonqualified Plans. Hoechst shall retain all obligations of
-----------------------
the Continued Employee earned or accrued prior to January 1, 1998 under each
nonqualified deferred compensation plan or excess benefit plan.
(d) German Pension Plan. The Continued Employees in Germany and any
-------------------
future new entrants of the GMBH Company shall be permitted to participate in the
Hoechst group Pensionskasse, Hoechst group Sterbekasse (captive life insurance
company) and Hoechst group Betriebskrankenkasse (health fund) on the terms and
conditions applicable to all participating companies. Hoechst shall also
continue to provide to Dade administrative support with respect to the direct
benefit pledges under the Betriebliche Zusatzversorgung (BZV) and the self
insured death and disability benefit plans.
8.4 Hoechst Savings Plan. On a date that is mutually agreeable to Hoechst
--------------------
and Dade, which shall be no later than 90 days after the date Hoechst receives
evidence that Dade maintains the plans contemplated by this Section, there shall
be a transfer in cash from the defined contribution plans maintained by Hoechst
("Defined Contribution Plans") to the defined contribution plans maintained by
--------------------------
Dade. The amount of the transfer shall be equal to the aggregate account
balances (whether vested or not) under the Defined Contribution Plans of all
Continued Employees as of the date of the transfer. As of the transfer date,
Dade shall cause the plans of Dade referred to herein to assume benefits under
the Defined Contribution Plans.
8.5 COBRA. Hoechst shall retain liability for all persons receiving
-----
"continuation coverage", as of January 1, 1998, under any plan that is not
maintained exclusively by an Acquired
-71-
Entity. With respect to "group health plans" established by Dade on or after
January 1, 1998 for the benefit of the Continued Employees, Dade or its
affiliates shall comply with all COBRA obligations applicable to those plans.
8.6 U.S. and Canadian Retiree Medical Plan. Hoechst shall indemnify and
--------------------------------------
save Dade and the Acquired Entities harmless against any and all obligations and
liabilities, of whatever nature, arising from or related to the Hoechst retiree
medical plan and the commitments established thereunder.
8.7 Payment by Hoechst.
------------------
(a) If Dade shall change any pension plan for the U.S. Continued
Employees, Dade shall cause the pension plan in which the U.S. Continued
Employees shall participate on or after January 1, 1998 to recognize for vesting
and eligibility purposes the service of such persons under the HCC Pension Plan.
Within five Business Days after Hoechst receives notice that such Continued
Employees have received such recognition, Hoechst shall pay to Dade $2.1
million, plus interest at the Prime Rate, from the Closing Date to the actual
date of payment.
(b) Prior to June 30, 1997, the U.S. Company shall establish a
retention bonus program which shall provide retention bonuses to all or a select
group of the Continued Employees upon satisfaction of the conditions set forth
in the program. The U.S. Company's payment under this program shall not be less
than $1.8 million, and no payment shall be made thereunder prior to nine months
after the Closing Date. The total amount of the payments called for by any such
program shall reduce Net Assets as of the Closing Date.
8.8 InfraServ Employees. In the event any person employed by InfraServ
-------------------
becomes an employee of Dade (or an affiliate) after the Closing Date, the
principles of this Article 8 shall apply to such person as of the date of
employment with Dade (or the affiliate), and, to the extent Dade (or the
affiliate) assumes any obligation or liability related to such person's
employment with InfraServ, Hoechst shall cause Dade to be reimbursed for such
amounts in a manner consistent with this Article.
ARTICLE IX
MISCELLANEOUS
-------------
9.1 Amendment and Waiver. This Agreement may be amended, or any provision
--------------------
of this Agreement may be waived, so long as any such amendment or waiver is set
forth in a writing executed by each party hereto. No course of dealing between
or among the parties shall be deemed effective to modify, amend or discharge any
part of this Agreement or any rights or obligations of any party under or by
reason of this Agreement.
-72-
9.2 Financial Information.
---------------------
(a) Hoechst shall furnish or shall cause Hoechst's independent
accountants to furnish to Dade, at Hoechst's expense, audited financial
statements for the Business for the fiscal year ended December 31, 1995 prepared
in accordance with United States GAAP and in a form meeting the requirements of
Regulation S-X of the Securities Act of 1933, as amended (the "Securities Act"),
--------------
together with the consent of Hoechst's independent accountants to the use of
their reports thereon (such consent to also be supplied with respect to the
audited financial statements for the fiscal year ended December 31, 1996).
Hoechst shall provide (or cause its independent accountants to provide) such
audited financial statement on or prior to July 15, 1997; provided that Hoechst
--------
shall use reasonable best efforts to promptly cause the delivery of such audited
financial statement as soon as practicable after the execution of this
Agreement. Hoechst shall cooperate with Dade and shall furnish to Dade
unaudited interim financial statements for the Business as of and for the three-
month period ended March 31, 1997 on or prior to August 31, 1997, the six-month
period ending June 30, 1997, the nine-month period ending September 30, 1997
(if the Closing occurs after such date), and the period beginning January 1,
1997 and ending on the Closing Date on or prior to thirty days after the close
of such period, and the three-, six- and nine-month periods ended March 31,
1996, June 30, 1996 and September 30, 1996 on or prior to August 31, 1997, each
prepared in accordance with United States GAAP and in a form meeting the
requirements of Regulation S-X of the Securities Act; provided that Hoechst
--------
shall use reasonable efforts to cause the delivery of such unaudited financial
statements as soon as practicable after the execution of the Agreement.
(b) Dade shall cooperate with Hoechst and shall furnish to Hoechst
unaudited interim financial statements for Dade and its subsidiaries as of and
for the three-month period ended March 31, 1997, the six-month period ending
June 30, 1997, the nine-month period ending September 30, 1997 (if the Closing
occurs after such date), on or prior to thirty days after the close of such
period, and the three-, six- and nine-month periods ended March 31, 1996, June
30, 1996 and September 30, 1996 on or prior to July 15, 1997, each prepared in
accordance with United States GAAP and in a form meeting the requirements of
Regulation S-X of the Securities Act; provided that Dade shall use reasonable
--------
efforts to cause the delivery of such unaudited financial statements as soon as
practicable after the execution of the Agreement.
9.3 Notices. All notices, demands and other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when personally delivered, sent
by telecopy (with receipt confirmed) on a Business Day during regular business
hours of the recipient (or, if not, on the next succeeding Business Day) or two
Business Days after sent by reputable overnight express courier (charges
prepaid). Unless another address is specified in writing, notices, demands and
communications to Hoechst and Dade shall be sent to the addresses indicated
below:
-73-
Notices to Hoechst:
------------------
Hoechst AG
Bruningstrae 50
D-65929 Frankfurt a.M.
Germany
Attn: Chairman of the Management Board
with a copy (which shall not constitute notice hereunder) to:
------------------------------------------------------------
Hoechst Celanese Corporation
P.O. Box 4915
30 Independence Boulevard
Warren, NJ 07060-4915
Attn: General Counsel
and
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
U.S.A.
Attn: Creighton O'M. Condon
Notices to Dade:
---------------
Dade International
1717 Deerfield Road
P.O. Box 778
Deerfield, Illinois 60015
U.S.A.
Attn: President
with copies (which shall not constitute notice hereunder) to:
--------------------------------------------------------------
Dade International
1717 Deerfield Road
P.O. Box 778
Deerfield, Illinois 60015
U.S.A.
Attn: General Counsel
-74-
Bain Capital, Inc.
Two Copley Place
Boston, Massachusetts 02116
U.S.A.
Attn: Stephen G. Pagliuca
John Connaughton
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
U.S.A.
Attn: Joseph H. Gleberman
Neal Moszkowski
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
U.S.A.
Attn: Jeffrey C. Hammes
and
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attn: Lee Parks
9.4 Assignment.
----------
(a) This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, except that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned or delegated by
either party hereto without the prior written consent of the other party.
(b) Notwithstanding the provisions of Section 9.4(a) above, Dade may,
in its sole discretion, but subject to the provisions of Section 7.10, assign
(with guarantees reasonably satisfactory to Hoechst) in whole or in part, its
rights and obligations pursuant to this Agreement (excluding the right to
acquire all or a portion of the Stock) to one or more of its affiliates, and
Dade may, in its sole discretion, direct Hoechst to convey the Stock, in whole
or in part, to one or more of its wholly owned subsidiaries. Dade may assign
all or any portion of this Agreement, including its rights to indemnification,
to any of its or its subsidiaries' lenders as collateral security. After the
Closing, Dade may assign (with guarantees reasonably satisfactory to Hoechst)
this Agreement and
-75-
its rights and obligations hereunder to any purchaser of, or successor to, at
least 80% of the assets of Dade and its subsidiaries.
(c) Notwithstanding the provisions of Section 9.4(a), Hoechst may, in
its sole discretion, but subject to the provisions of Section 7.10, assign (with
guarantees reasonably satisfactory to Dade), in whole or in part, its rights and
obligations pursuant to this Agreement (excluding the right to acquire all or a
portion of the Common Stock and the Class L Common, Series B) to one or more of
its wholly owned subsidiaries, and Hoechst may, in its sole discretion, direct
Dade to convey the Common Stock and the Class L Common, Series B, in whole or in
part, to one or more of its wholly owned subsidiaries. Hoechst may assign all
or any portion of this Agreement, including the rights to indemnification, to
any of its or its subsidiaries' lenders as collateral security. After the
Closing, Hoechst may assign (with guarantees reasonably satisfactory to Dade)
this Agreement and its rights and obligations hereunder to any purchaser of, or
successor to, at least 80% of the assets of Hoechst and its subsidiaries.
9.5 Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such a manner as to be effective and valid under
applicable law, but, if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
9.6 Captions. The captions used in this Agreement are for convenience of
--------
reference only, do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
9.7 Complete Agreement. This Agreement and the agreements and documents
------------------
referred to herein contain the complete agreement between the parties and
supersede any prior understand ings, agreements or representations by or
between the parties, written or oral, which may have related to the subject
matter hereof in any way.
9.8 Counterparts. This Agreement may be executed in multiple counterparts
------------
all of which taken together shall constitute one and the same agreement.
9.9 GOVERNING LAW. THE VALIDITY, CONSTRUCTION, AND ENFORCEABILITY OF THIS
-------------
AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO ITS CONFLICT OF LAWS RULES. SUBJECT TO SECTIONS 7.8
AND 9.11, EACH OF HOECHST AND DADE HEREBY SUBMITS TO THE CO-EXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK COUNTY OVER ANY
LAWSUIT PERMITTED UNDER THIS AGREEMENT AND
-76-
WAIVES ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY
ACTION INSTITUTED THEREIN. EACH OF HOECHST AND DADE HEREBY WAIVES THE NECESSITY
FOR PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL (RETURN RECEIPT
REQUESTED), WITH A COPY ALSO BEING SENT BY FACSIMILE (WITH RECEIPT CONFIRMED),
IN EACH CASE DIRECTED TO HOECHST OR DADE AT ITS ADDRESS SET FORTH IN, AND WITH
COPIES SENT AS REQUIRED BY, SECTION 9.3 ABOVE, AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED ON THE DATE OF ACTUAL RECEIPT. EACH OF HOECHST AND DADE
HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID. NOTHING IN THIS SECTION 9.9
WILL PROHIBIT PERSONAL SERVICE IN LIEU OF THE SERVICE BY MAIL CONTEMPLATED
HEREIN.
9.10 No Strict Construction; Word Meanings. The language used in this
-------------------------------------
Agreement shall be deemed to be the language chosen by the parties hereto to
express their collective mutual intent, and no rule of strict construction shall
be applied against any person. The term "including" as used herein shall be by
---------
way of example, and shall not be deemed to constitute a limitation of any term
or provision contained herein. The use of the words "or," "either" and "any"
-- ------ ---
shall not be exclusive.
9.11 Specific Performance. Each of the parties acknowledges and agrees
--------------------
that the other party would be damaged irreparably in the event any of the
provisions of this Agreement is not performed in accordance with its specific
terms or otherwise is breached. Accordingly, each of the parties agrees that,
subject to the provisions of Section 7.8(f) hereunder, the other party shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the parties and the matter, in
addition to any other remedy to which they may be entitled, at law or in equity.
9.12 No Third-Party Beneficiaries. This Agreement is for the sole benefit
----------------------------
of the parties hereto and their permitted assigns, and nothing herein expressed
or implied shall give or be construed to give any Person, other than the parties
hereto and their permitted assigns, any legal or equitable rights hereunder.
9.13 Schedules. Nothing in any Schedule attached hereto shall be adequate
---------
to disclose an exception to a representation or warranty made in this Agreement
unless such Schedule expressly identifies the exception. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be adequate to disclose an exception to a
representation or warranty made in this Agreement, unless the representation or
warranty has to do with the existence of the document or other item itself. No
exceptions to any representations or warranties disclosed on one Schedule shall
constitute an exception to any other representations or
-77-
warranties made in this Agreement unless such exception is disclosed as provided
herein on each such other applicable Schedule.
9.14 Schedules and Exhibits. All Schedules and Exhibits attached hereto
----------------------
or, referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein.
9.15 Currency. Unless otherwise stated, all dollar amounts set forth
--------
herein are expressed in United States currency.
9.16 Inconsistencies. If there is any inconsistency between this Agreement
---------------
and any other Combination Document or Restructuring Agreement, then the
provisions of this Agreement will control.
9.17 Delivery by Facsimile. The Combination Documents and any signed
---------------------
agreement or instrument entered into in connection therewith or contemplated
thereby, and any amendments hereto or thereto, to the extent signed and
delivered by means of a facsimile machine, shall be treated in all manner and
respects as an original agreement or instrument and shall be considered to have
the same binding legal effect as if it were the original signed version thereof
delivered in person. At the request of any party hereto or to any such
agreement or instrument, each other party hereto or thereto shall re-execute
original forms thereof and deliver them to all other parties. No party hereto
or to any such agreement or instrument shall raise the use of a facsimile
machine to deliver a signature or the fact that any signature or agreement or
instrument was transmitted or communicated through the use of a facsimile
machine as a defense to the formation of a contract, and each such party forever
waives any such defense.
9.18 Definition of Knowledge. For purposes of this Agreement, the
-----------------------
capitalized term "Knowledge" when used (a) with respect to Hoechst, shall mean
---------
the actual knowledge of the individuals listed on the attached Hoechst Key
-----------
Employee Schedule and (b) with respect to Dade, shall mean the actual knowledge
- -----------------
of the individuals listed on the attached Dade Key Employee Schedule.
--------------------------
9.19 Definition of Affiliate. For purposes of this Agreement, the
-----------------------
uncapitalized term "affiliate" shall mean, with respect to any Person, any
---------
other Person controlling, controlled by, or under common control with such
Person; it being understood that Hoechst shall not, for purposes of this
definition, be deemed to be in control of (a) Dade or its subsidiaries or (b)
any Acquired Entity once such Acquired Entity has been acquired by Dade or one
of its subsidiaries.
9.20 Definition of Governmental Entity. For purposes of this Agreement,
---------------------------------
the capitalized term "Governmental Entity" will mean any foreign or domestic
-------------------
government, agency, governmental department, commission, board, bureau, court,
arbitration panel or instrumentality or any state or other political subdivision
thereof (whether now or hereafter constituted and/or existing) and any
-78-
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
9.21 Definition of Person. For purpose of this Agreement, the capitalized
--------------------
term "Person" will mean any individual, partnership, joint venture, corporation,
------
limited liability company, trust, unincorporated organization, Governmental
Entity or other entity.
9.22 Definition of Ordinary Course of Business. For purposes of this
------------------------------------------
Agreement, the uncapitalized term "ordinary course of business" will mean the
---------------------------
ordinary course of business consistent with past practice.
9.23 Definition of Applicable Law. For purposes of this Agreement,
----------------------------
the capitalized term "Applicable Law" will mean any statute, ordinance, code,
--------------
action, law, treaty, rule or regulation, determination or direction of an
arbitrator or Governmental Entity.
9.24 Definition of Business Day. For purposes of this Agreement, the
--------------------------
capitalized term "Business Day" shall mean any day that is not a Saturday, a
------------
Sunday or any other day on which banks are required or authorized by law to be
closed in the State of New York, the City of New York or the Federal Republic of
Germany.
9.25 Definition of Indemnified Liability. For purposes of this
-----------------------------------
Agreement, the capitalized term "Indemnified Liability" will mean:
---------------------
(a) the following liabilities or obligations of the Hoechst Entities
(including the Acquired Entities) that arise out of or relate to the ownership,
use or operation of the Business or Business Assets on or prior to Closing,
whether accrued, absolute or contingent, whether known or unknown, whether due
or to become due, and regardless of when or by whom asserted (but shall not
include any liability or obligation if and to the extent that such liability or
obligation reduced the amount of Net Assets):
(i) subject to the provisions of Section 7.17, any
intercompany payables or payables, obligations or liabilities to any
Hoechst, any affiliate thereof or any related party;
(ii) any liability or obligation relating to indebtedness for
borrowed money or guarantees of any of the foregoing (whether for
principal, interest, penalties, fees, expenses or otherwise);
(iii) any liability or obligation in respect of any assets set
forth on the attached Excluded Assets Schedule (including under any
------------------------
Contracts related thereto);
-79-
(iv) retention, bonus and other agreements with employees (A)
made in contemplation of the transactions contemplated hereby or (B)
otherwise entered into after December 31, 1996 (other than in the ordinary
course of business), including any senior executive agreements entered into
by any Hoechst Entity (including the Acquired Entities) prior to the
Closing;
(v) liabilities and obligations arising from or in connection
with Goodwill Termination Claims as set forth in Section 3.2(h)(iii) hereunder;
and
(vi) any Loss arising from the failure to obtain the Consents
identified with double asterisks on the Hoechst Conflicts Schedule, provided
------- --------- --------
that any such Losses shall be limited by the Consent Indemnity Limit, if any,
agreed to prior to Closing pursuant to Section 1.4(b);
(b) liabilities and obligations of the Hoechst Entities (including the
Acquired Entities), whether accrued, absolute or contingent, whether known or
unknown, whether due or to become due, and regardless of when or by whom
asserted (but shall not include any liability or obligation if and to the extent
that such liability or obligation reduced the amount of Net Assets) which are
unrelated to the Business (including any obligations or liabilities related to
discontinued or disposed operations and including any guarantees of any
obligations unrelated to the Business) or relating to any facility or property
(or operations conducted thereon) no longer utilized by the Business (including
any offsite waste disposal or management locations unrelated to the Business);
and
(c) the costs of services provided under the Transition Services
Agreement as incurred by Dade or its affiliates if and to the extent that
pricing thereof exceeds the amount described in clause (x) of Section 2.1(g) for
the period ending 24 months after the Closing Date.
For purposes of this Section 9.25 and Section 7.2, "Hoechst Entities" shall be
----------------
deemed to include all affiliates of the Hoechst Entities and any predecessors to
the Hoechst Entities and any Person with respect to which the Hoechst Entities
is a successor-in-interest (including by operation of law, merger, liquidation,
consolidation, assignment, assumption or otherwise).
* * * * *
-80-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
DIAGNOSTIC HOLDINGS, INC.
By: /s/ Stephen G. Pagliuca
Its:
HOECHST AG
By: /s/ K. Schnieder
Its:
By: /s/
Its:
-81-
The schedule and exhibits to this exhibit have been omitted in reliance
on Item 601(b)(2) of Regulation S-K. The Company shall furnish supplementally a
copy of any schedule or exhibit to the Commission upon request.
July 2, 1997
Diagnostic Holdings, Inc.
1717 Deerfield Road
Deerfield, IL 60015
Attention: Mr. Steve Pagliuca
President
Supplement to the
Agreement and Plan of Combination
---------------------------------
Dear Ladies and Gentlemen:
Reference is hereby made to that Agreement and Plan of Combination,
dated as of June 24, 1997 (the "Combination Agreement"), by and between
---------------------
Diagnostic Holdings, Inc. ("Dade") and Hoechst AG. Unless otherwise defined
----
herein, terms defined in the Combination Agreement are used herein as therein
defined.
It is hereby agreed by you and the undersigned as follows:
1. The Behring Diagnostics GmbH and Subsidiaries Combined Financial
Statements, dated June 20, 1997 and delivered the date hereof (the "Combined
--------
Statements"), as of and for the periods ended December 31, 1995 and December 31,
- ----------
1996, are and shall be deemed to be the Financial Statements described in
Section 4.6(a) of the Combination Agreement, as if delivered on the date of the
Combination Agreement, and shall supersede any other Financial Statements in
respect of such periods delivered prior to the date hereof. In addition, the
Latest Balance Sheet, as such term is defined in the Combination Agreement, is
and shall be deemed to be the audited combined balance sheet of the Business as
of December 31, 1996 set forth in the Combined Statements.
2. The Excluded Asset Schedule shall be amended to include,
"Hoechst shall retain certain accounts receivable of Behring Diagnostics Iberica
("Iberica") in an amount equal to $25.0 million, such amount being determined in
-------
accordance with the valuation methodology used with respect to Iberica accounts
receivable in preparation of the Latest Balance Sheet." In no event shall such
accounts receivable, or any reserves associated therewith, be taken into account
in the calculation of Net Assets hereunder.
3. Hoechst and Dade shall agree by July 15, 1997 upon a selection
method in order to determine which accounts receivable of Iberica shall be
retained by Hoechst (the "Selection Method"). In the event that no such
----------------
agreement is reached by July 15, 1997, Hoechst shall be entitled to deliver to
Dade a schedule of those accounts receivable that will be retained by Hoechst
(the "Retained Accounts Schedule"), which shall be determined pursuant to a
--------------------------
Selection Method selected by Hoechst and is reasonably designed to
result in the retention by Hoechst of accounts receivable with characteristics
(e.g. aging and collectability) that are reasonably representative of the
overall accounts receivable portfolio of Iberica; provided that, in no event
shall the Selection Method result in Dade obtaining accounts receivable of
Iberica which, as of the Closing Date, have been outstanding for more than one
year.
4. Exhibit D attached hereto is and shall be deemed to be Exhibit D
to the Combination Agreement, as if attached to, and delivered on the date of,
the Combination Agreement.
5. (a) Hoechst hereby agrees that (x) the Financial Statements
reflect and the Draft Balance Sheet will reflect all of the accounts receivable
of the Business as of their respective dates, (y) that all such accounts
receivable of the Business arising with respect to sales to third parties are
reflected on such Financial Statements and will be reflected on the Draft
Balance Sheet as "trade accounts receivable," and (z) no amounts included on the
Draft Balance Sheet as "trade accounts receivable" will relate to accounts
receivable for sales of the kind recorded as "accounts receivable to owner" or
"accounts receivable to related party" on the Latest Balance Sheet.
(b) In addition to any other right or remedy under the
Combination Agreement, if the agreement set forth in paragraph 5(a) above is
breached, Hoechst and Dade agree to negotiate in good faith an appropriate
amendment to the Combination Agreement, as required or desirable to address the
circumstances underlying any such breach. If prior to the Termination Date,
Hoechst and Dade cannot reach agreement on such amendment and the breach is a
material breach, then Dade may terminate the Combination Agreement. Any such
termination would have the effects set forth in Section 6.2 of the Combination
Agreement.
(c) For purposes of paragraph 5(b) above, Hoechst and Dade agree
that a material breach is any adjustment exceeding $10.0 million.
6. Section 1.4(c) of the Combination Agreement is hereby amended by
inserting "and research and development expenditures" after the words "capital
expenditures" therein
This Letter Agreement shall become effective as of the date first
above written when and if counterparts hereof shall have been executed and
delivered by you to the undersigned. The Combination Agreement, as supplemented
by this Letter Agreement, is and shall continue to be in full force and effect
and is hereby in all respects ratified and confirmed.
This Letter Agreement may be executed in counterparts which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a
signature page to this Letter Agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this Letter Agreement.
This Letter Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
If you agree to the provisions of this Letter Agreement, please
evidence such agreement by executing and returning the enclosed counterparts to
Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022, Attention:
Mr. Barry J. Benzing.
HOECHST AG
By: /s/ Uwe Bicker
--------------------------------
Its:
By: /s/ Andreas Pollman
--------------------------------
Its:
Acknowledged and
agreed to as of the date
first above written:
DIAGNOSTIC HOLDINGS, INC.
By: /s/ Stephen G. Pagliuca
-----------------------------
Its:
September 29, 1997
Diagnostics Holding, Inc.
1717 Deerfield Road
Deerfield, IL 60015
Attention: Mr. John Connaughton
Vice President
Second Supplement to the
Agreement and Plan of Combination
---------------------------------
Dear Ladies and Gentlemen:
Reference is hereby made to the Agreement and Plan of Combination, dated as
of June 24, 1997 (as supplemented, the "Combination Agreement"), by and between
---------------------
Diagnostics Holding, Inc. ("Dade") and Hoechst AG ("Hoechst"). Unless otherwise
---- -------
defined herein, terms defined in the Combination Agreement are used herein as
therein defined.
It is hereby agreed by you and the undersigned as follows:
1. Dade and Hoechst agree that the requirements of Section 1.4(b) of the
Combination Agreement have been satisfied and that neither Dade nor
Hoechst shall be permitted to terminate the Combination Agreement
pursuant to Section 6.1(h) of the Combination Agreement. Dade and
Hoechst also agree that Hoechst shall not be liable to Dade or any other
Dade Party for any Loss or obligation arising from or in connection with
the failure to obtain the Consents identified with double asterisks on
the Hoechst Conflicts Schedule, provided that the foregoing shall not
relieve Hoechst of any obligation after the date hereof under Sections
3.2(g) or 7.7 of the Combination Agreement.
2. Section 9.25(a)(vi) of the Combination Agreement is hereby deleted in
its entirety and replaced with "(vi) [INTENTIONALLY OMITTED]."
3. Dade and Hoechst agree that the requirements of Section 1.4(c) of the
Combination Agreement have been satisfied and that Dade shall not be
permitted to terminate the Combination Agreement pursuant to Section
6.1(i) of the Combination Agreement. Dade acknowledges and agrees that
the level of capital expenditures and the research and development
expenditures of the Business reflected in the unaudited Financial
Statements as of and for the period ending June 30, 1997 are at least
consistent with the conduct of the Business in the ordinary course for
such period.
4. Section 1.4(a) of the Combination Agreement is hereby deleted in its
entirety and replaced with "(a) 'Restructuring Documents' shall mean the
-----------------------
restructuring documents listed on the attached Exhibit C" and Dade
---------
agrees that it shall not be permitted to terminate the Combination
Agreement pursuant to Section 6.1(d) of the Combination Agreement.
5. On or prior to the Closing Date, Hoechst shall cause to be contributed
in cash to HDHC the sum of U.S. $10 million. Such amount shall be on
deposit in immediately available funds in an account owned and
controlled by HDHC (which account will be identified in a written notice
delivered by Hoechst to Dade at least three Business Days prior to
Closing) on and immediately after the Closing and shall not be taken
into account in the determination of Net Assets.
6. Pursuant to Section 1.4(d), the rights of Hoechst under paragraphs 1,
6(b), 10(b)(i) and 10(b)(iii) of the Stockholders Agreement are and
shall be deemed to be "Designation Rights" for purpose of Section 7.6(a)
of the Combination Agreement and Dade shall not be permitted to
terminate the Combination Agreement pursuant to Section 6.1(j) of the
Combination Agreement.
7. Section 7.6(a)(y)(A) of the Combination Agreement is hereby amended by
deleting the words "(or if Dade so requests, Hoechst waives)" after the
words "the date on which Hoechst no longer has" and replacing such
deleted words with "(or Hoechst waives)."
8. The second sentence of Section 7.6(a) of the Combination Agreement is
hereby amended by deleting the words "within two years after Hoechst's
acquisition of such human in vitro diagnostics business" after the words
"shall consummate such sale" and replacing such deleted words with "as
soon as reasonably practicable after all necessary approvals are
obtained and in any event within one year after entering into such
agreement."
This Letter Agreement shall become effective as of the date first above
written when and if counterparts hereof shall have been executed and delivered
by you to the undersigned. The Combination Agreement, as supplemented by this
Letter Agreement, is and shall continue to be in full force and effect and is
hereby in all respects ratified and confirmed.
This Letter Agreement may be executed in counterparts which taken together
shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Letter Agreement by telecopier shall
have the same effect as delivery of a manually executed counterpart of this
Letter Agreement.
This Letter Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
If you agree to the provisions of this Letter Agreement, please evidence
such agreement by executing and returning the enclosed counterparts to Shearman
& Sterling, Couvenstrae 8, D-40211 Dusseldorf, Germany, Attention: Dr. Alfred
Kossmann.
HOECHST AG
By: /s/ Andreas Pollman
-------------------------------
Its:
-------------------------------
By:
-------------------------------
Its:
-------------------------------
Acknowledged and agreed to
as of the date first above written:
DIAGNOSTICS HOLDING, INC.
By: /s/ John Connaughton
----------------------------
Its: Vice President
September 30, 1997
Diagnostics Holding, Inc.
1717 Deerfield Road
Deerfield, IL 60015
Attention: Mr. John Connaughton
Vice President
Third Supplement to the
Agreement and Plan of Combination
---------------------------------
Dear Ladies and Gentlemen:
Reference is hereby made to the Agreement and Plan of Combination,
dated as of June 24, 1997 (as supplemented, the "Combination Agreement"), by and
---------------------
between Diagnostics Holding, Inc. ("Dade") and Hoechst AG ("Hoechst"). Unless
---- -------
otherwise defined herein, terms defined in the Combination Agreement are used
herein as therein defined.
It is hereby agreed by you and the undersigned as follows:
1. Section 1.2 of the Combination Agreement is hereby deleted in
its entirety and shall be replaced by the following:
"1.2 Consideration for Transfer of Stock to Dade. In consideration
-------------------------------------------
for the Stock (the "Purchase Price"), Dade shall: sell, transfer and
--------------
deliver, free and clear of all Liens, to Hoechst 5,198,323 shares of Common
Stock of Dade, par value $.01 per share ("Common Stock"), and 504,060
------------
shares of Class L Common Stock, Series B, of Dade, par value $.01 per share
("Class L Common, Series B"); issue to Hoechst a warrant (the "Warrant")
------------------------ -------
in form and in substance as set forth in Exhibit A attached hereto,
---------
initially exercisable into 1,279,587 shares of Common Stock and 124,076
shares of Class L Common, Series B; and transfer and deliver to Hoechst
$100,000 in immediately available funds.";
2. Dade hereby represents and warrants that as of September 30,
1997 the aggregate Unpaid Yield (as such term is defined in the Company's Second
Amended and Restated Certificate of Incorporation) on the Class L Common (as
defined in the Stockholders Agreement) is equal to $16,632,664;
3. Dade hereby agrees that in the event that Dade issues from the
date hereof up to 31,965.77 shares of Class L Common or Class L Common, Series
B, to Behring members of the
management of the Business, Dade shall also issue and deliver for a nominal
price per share to Hoechst such number of shares of Class L Common, Series B,
and a Warrant exercisable into such number of shares of Class L Common, Series
B, such that Hoechst shall own the same percentage of the outstanding shares of
Class L Common, Series B, and Warrants exercisable into the same percentage of
shares of Class L Common, Series B, respectively, after such issuance as it
owned immediately prior to such issuance;
4. Hoechst hereby confirms to Dade that the appropriate personnel
of the Business have been notified and instructed to permanently discontinue, as
of the Closing, all sales and other related activities of the Business in or to
Iran, North Korea and Cuba;
5. In determining the PBO Shortfall (as set forth in Section 8.3
of the Combination Agreement), the applicable exchange rate shall be the New
York noon time exchange rate applicable to the relevant currencies on December
31, 1996 as published by The Wall Street Journal, or, if not published therein
on such date, as published therein on the last date prior to December 31, 1996
on which such exchange rate was published;
6. Within six months after the Closing, Dade shall amend the
Certificate of Incorporation of Dade International, Inc., a Delaware corporation
and a wholly owned subsidiary of Dade ("Dade Operating"), whereby the name of
--------------
Dade Operating shall be changed to "Dade Behring Inc.";
7. Without limiting and in connection with paragraph 6 above,
Hoechst hereby waives the Closing condition set forth in Section 2.2(f)(i)(C) of
the Combination Agreement;
8. Dade hereby acknowledges that nothing contained in the
Transitional Services Agreement shall require Hoechst or any Service Entity (as
such term is defined in the Transitional Services Agreement) to make any payment
of money on behalf of Dade or any of the Acquired Entities, including but not
limited to in connection with payroll services referred to in Section 9 below,
unless Dade or such Acquired Entity shall have paid in advance the relevant
funds (provided that, unless Dade or the relevant Acquired Entity has actual
knowledge of the amount, Dade shall have received 3 Business Days prior notice
of the amount of such funds) to Hoechst or the relevant Service Entity, and in
the event Hoechst or a Service Entity makes a payment on behalf of Dade or any
of the Acquired Entities without having received the full amount of such
payment, Dade or the relevant Acquired Entity shall promptly reimburse Hoechst
or the relevant Acquired Entity for such payment with interest from the date
such amount was paid at the Prime Rate. Any excess amounts advanced by Dade or
an Acquired Entity shall be promptly repaid with interest from the date paid at
the Prime Rate;
9. In connection with payroll services provided to Dade or any
Acquired Entity by Hoechst or any Service Entity pursuant to the Transitional
Services Agreement, Dade shall
indemnify and hold harmless Hoechst or any Service Entity for any liability to
any employee of Dade or any Acquired Entity resulting from the failure by Dade
or the relevant Acquired Entity to pay in advance (provided, unless Dade or the
relevant Acquired Entity has actual knowledge of the Amount, Dade or such
Acquired Entity shall have received 3 Business Days prior notice of the amount)
the amount of any payment of money to be made by Hoechst or a Service Entity on
behalf of Dade or any Acquired Entity;
10. Dade shall cause Dade Operating to guarantee the payment in
full of all obligations for the payment of money of Behring Diagnostics, Inc.
under the Transitional Services Agreement;
11. Hoechst hereby agrees to cause InfraServ to provide for a
period of no less than twenty (20) years from the Closing Date access to and use
of parking places at the Marburg site in Gorzhausen and Hinkelbachtal (the
"Parking Service"), with (i) the amount and nature of the Parking Service being
- ----------------
consistent with the amount and nature of such services provided to the GMBH
Company during 1996 (taking into consideration the number of parking places on
any real property owned by the GMBH Company at the Marburg site) and (ii) the
price for such Parking Service being no higher than the price charged to any
other resident at Gorzhausen;
12. (a) Hoechst hereby covenants and agrees that as soon as
practicable after the Closing and for a period ending on the earlier of 180 days
after Closing and the making of the Build Election, Hoechst shall cause Centeon
Pharma GmbH ("Centeon") to offer to enter into a written sublease agreement (the
-------
"Transition Sublease") with the GMBH Company for the premises currently owned
-------------------
and occupied by the GMBH Company on the 5th floor of the M300 building at the
Marburg site (the "M300 Premises"), on the following terms and conditions:
-------------
Term: Minimum five (5) year initial term, with the right of the GMBH
----
Company to terminate upon one (1) year written notice. Hoechst shall
use its reasonable efforts to obtain a longer initial term and
additional option periods.
Centeon Termination Right:
-------------------------
In the event that Centeon will lose its FDA or similar manufacturing
permits (a "Permit Loss") by reason of the GMBH Company's or its
-----------
successors' occupancy of the M300 Premises, Centeon shall have the
right to terminate (the "Centeon Termination Right") the sublease with
-------------------------
such notice period as permitted by the relevant regulatory authority
(which period Centeon will use its best efforts to have be as long as
possible) and in no event less than 12 months. In the event Centeon
exercises this right to terminate the sublease, Hoechst shall provide
the GMBH Company a suitable alternative location in the Marburg area
to the M300 Premises reasonably acceptable to the GMBH Company and
shall reimburse the GMBH Company for all reasonable costs ("Moving
------
Costs") associated with establishing, moving to and occupying such
-----
alternative location in excess of the costs of occupying the M300
Premises for the remainder of the initial five (5) year term and for
the cost of replacing any fixed assets which could not be moved from
the M300 Premises. If the GMBH Company can take certain actions with
respect to its use of the M300 Premises which would prevent a Permit
Loss, the GMBH Company can void the exercise of the Centeon
Termination Right by taking such actions. The costs of such actions,
but in no event more than the Moving Costs, shall be paid by Hoechst.
In the event that as a result of the exercise of the Centeon
Termination Right the GMBH Company moves the operations conducted at
the M300 Premises out of the Marburg site, Hoechst shall cause
InfraServ to negotiate in good faith appropriate adjustments to the
terms of the InfraServ Agreement, including appropriate reductions of
the minimum purchase requirements set forth therein.
Rent: Historical 1996 rent paid to Centeon, plus DM 90,000 per year paid
----
to Hoechst.
Other: All other terms and conditions as currently exist between Centeon
-----
and the GMBH Company, and the other standard terms and conditions for
such sublease agreements in Germany.
(b) Hoechst shall use its reasonable efforts for a period no longer
than five (5) years to cause Centeon to enter into, in substitution for the
Transition Sublease, a written, long-term sublease agreement the ("Long-Term
---------
Agreement") for the M300 Premises on the following terms and conditions:
- ---------
Term: Five (5) year initial term, with the GMBH Company's right to renew
----
for three (3) successive 5-year terms, with the right of the GMBH
Company to terminate upon two (2) years written notice.
Rent: For the first ten (10) years, historical 1996 rent paid to Centeon,
----
plus DM 90,000 per year paid to Hoechst; thereafter, fair market rent.
Other: All other terms and conditions as mutually agreed upon by Centeon
-----
and the GMBH Company.
(c) In the event that within 179 days after the Closing Date the GMBH
Company has not entered into the Long-Term Agreement or the Transition Sublease,
the GMBH Company may elect to terminate the existing lease arrangements,
effective no sooner than twelve (12) months after the date of such election, and
to build at the Marburg site an alternative manufacturing facility for the
operations conducted at the M300 Premises (a "Build Election"). The GMBH
--------------
Company may also make a Build Election within twelve (12) months following
exercise by Centeon of a Centeon Termination Right. Upon making a Build
Election, the GMBH Company
shall be entitled to lease from InfraServ, and Hoechst shall cause InfraServ to
lease to the GMBH Company, a parcel of land (having sufficient size and
characteristics necessary or reasonably desirable for the GMBH Company's full
use and enjoyment of the proposed manufacturing facility) at Gorzhausen, such
parcel to be the parcel available nearest to the GMBH Company's existing
manufacturing facilities at Gorzhausen. The lease of such parcel shall be rent-
free for an initial period of twenty (20) years and shall thereafter have a fair
market rental which amount per square meter shall be no greater than the lowest
land parcel rental charged to any other site resident for comparable parcels of
land.
(d) In connection with a Build Election, Hoechst shall reimburse
the GMBH Company for the reasonable costs associated with establishing, moving
to and occupying the newly built manufacturing facility and for the cost of
replacing any fixed assets which could not be moved from the M300 Premises.
(e) In no event shall the total liability of Hoechst under this
Section 12 for reimbursement of costs in connection with a relocation from the
M300 Premises or actions to void a Centeon Termination Right exceed
U.S.$500,000.00.
13. Hoechst hereby covenants and agrees that as soon as practicable
after the Closing, but in no event later than October 31, 1997, Hoechst will
cause the current owner(s) and/or lessee(s) (the "Japan Landlord") to enter into
--------------
a written lease agreement with Dade or a subsidiary of Dade for the
manufacturing premises currently used and occupied by the Business in Japan (the
"Japan Premises"), on the following terms and conditions:
--------------
Term: Two (2) year initial term, with right of the GMBH Company to
----
terminate upon a notice to be agreed upon.
Rent: Historical 1996 rent.
----
Other: All other terms and conditions as currently exist between the Japan
-----
Landlord and the Business, and the other standard terms and conditions
for such lease agreements in Japan.
14. Hoechst hereby covenants and agrees that as soon as practicable
after the Closing, Hoechst will cause Hoechst Italia, S.p.A. ("Hoechst Italia")
--------------
to take all actions, execute such deeds and agreements, and obtain all third
party consents to: (i) convey to Istituto Behring S.p.A. ("Istituto Behring") a
----------------
fee simple interest in (A) its land located in Scoppito, L'Aquila, Italy (the
"Scoppito Land") which is currently used and occupied by Istituto Behring and
- --------------
(B) the related improvements to the Scoppito Land, for a nominal amount; (ii)
terminate the lease agreement between Hoechst Italia and Istituto Behring; and
(iii) cause the mortgage on the Scoppito Land (in addition to other land owned
by Hoechst Italia) in favor of Istituto Mobiliare Italiano S.p.A. ("IMI") (with
---
such mortgage securing a loan from IMI to Hoechst Italia for an aggregate amount
(principal and interest) equal to 2,510,000,000 Italian lira) (the "Mortgage")
--------
to be released from the Scoppito
Land, including, without limitation, taking or causing to be taken such action
as is necessary or useful in order to cause the above to occur, in compliance
with the all formalities required under Italian law, and in form and substance
reasonably satisfactory to the GMBH Company. In the event Hoechst Italia is not
the sole owner of the Scoppito Land or the Scoppito Land is substantially larger
than the parcel necessary for the full use and enjoyment of the building
occupied by Istituto Behring (the "Behring Building") or other buildings and
----------------
improvements are located on the Scoppito Land, and in any of the foregoing cases
the Scoppito Land cannot be appropriately subdivided, then Istituto Behring
shall receive a long-term lease or other comparable property rights to that part
of the Scoppito Land necessary for the full use and enjoyment of the Behring
Building by Istituto Behring, which lease or other property rights shall be
comparable to a mortgage free, fee simple ownership interest (e.g. a 999 year
lease). Hoechst shall cause Hoechst Italia and Dade shall cause Istituto
Behring to agree on reasonable rights of way, easements and similar mutual
encumbrances to allow both Hoechst Italia and Istituto Behring to use and
develop their adjoining land.
This Letter Agreement shall become effective as of the date first above
written when and if counterparts hereof shall have been executed and delivered
by you to the undersigned. The Combination Agreement, as supplemented by this
Letter Agreement, is and shall continue to be in full force and effect and is
hereby in all respects ratified and confirmed.
This Letter Agreement may be executed in counterparts which taken together
shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Letter Agreement by telecopier shall
have the same effect as delivery of a manually executed counterpart of this
Letter Agreement.
This Letter Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
* * * *
If you agree to all of the terms and provisions this Letter Agreement,
please evidence such agreement by executing and returning the attached copy of
this Letter Agreement in the space indicated below and returning it to:
Shearman & Sterling, Couvenstrasse 8, 40211 Dusseldorf, GERMANY, Attention: Dr.
Alfred Kossmann.
HOECHST AG
By: /s/ Tina Preissler
---------------------------------
Name: Tina Preissler
---------------------------------
Title: Attorney-in-fact
---------------------------------
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
Agreed and accepted as of the date first written above:
DIAGNOSTICS HOLDING, INC.
By: /s/ John Connaughton
---------------------------------
Name: John Connaughton
---------------------------------
Title: Vice President
---------------------------------