1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 30, 1994
EASTMAN KODAK COMPANY
(Exact name of registrant as specified in its charter)
NEW JERSEY 1-87 16-0417150
(State of incorporation) (Commission File Number) (IRS Employer
Identification No.)
343 STATE STREET, ROCHESTER, NEW YORK 14650
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 716-724-4000
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 3, 1994, the Company completed the divestiture of its
Sterling Winthrop worldwide pharmaceuticals unit to Sanofi for $1.675 billion
in cash and Sanofi's interest in a separate European over-the-counter
medicines alliance, effective October 1, 1994. Details of the divestiture
are contained in a press release issued by the Company on October 3, 1994 and
set forth herein on page 12.
ITEM 5. OTHER EVENTS
On August 29, 1994, the Company issued a press release describing the proposed
sale of its Sterling Winthrop Inc. subsidiary to SmithKline Beecham plc. That
press release is set forth herein on page 9. On September 6, 1994, the
Company issued a press release describing the proposed sale of its Clinical
Diagnostics Division to Johnson & Johnson. That press release is set forth
herein on page 10. On September 26, 1994, the Company issued a press release
describing the proposed sale of the household products businesses of its L&F
Products unit to Reckitt & Colman plc. That press release is set forth herein
on page 11. On October 14, 1994, the Company issued a press release describing
the proposed sale of the do-it-yourself products businesses of L&F Products to
Forstmann Little & Co. That press release is set forth herein on page 13.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro forma financial information
(1) Eastman Kodak Company is filing pro forma consolidated financial
information detailed on pages 4-7 to provide historical financial
information reflecting the reclassification of financial information for
the following non-imaging health businesses which the Company announced
its intent to divest on May 3, 1994: the pharmaceutical and consumer
health businesses of Sterling Winthrop Inc., L&F Products and the Clinical
Diagnostics Division. The pharmaceutical business of Sterling Winthrop
Inc. was divested effective October 1, 1994.
This Current Report on Form 8-K is dated June 30, 1994 because as of June
30, 1994, the Company concluded that measurement dates had occurred for
the sales of the non-imaging health businesses.
(c) Filed herewith as Exhibit 10, pages 15 to 188 is the Amended and Restated
Asset Purchase Agreement among the Company, Sterling Winthrop Inc. and
Sanofi dated as of September 30, 1994.
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Eastman Kodak Company and Subsidiary Companies
Index to Exhibits and Financial Statement Schedules
Page No.
1. Pro forma consolidated financial information of Eastman
Kodak Company:
Consolidated statement of earnings 4
Consolidated statement of financial position 6
2. Other Information
- August 29, 1994 Press Release 9
- September 6, 1994 Press Release 10
- September 26, 1994 Press Release 11
- October 3, 1994 Press Release 12
- October 14, 1994 Press Release 13
4
Eastman Kodak Company and Subsidiary Companies
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS - UNAUDITED
1993 1992 1991
(in millions)
REVENUES
Sales $12,600 $12,900 $12,400
Earnings from equity interests and
other revenues 200 300 200
------- ------- -------
TOTAL REVENUES 12,800 13,200 12,600
------- ------- -------
COSTS
Cost of goods sold 6,600 6,700 6,400
Marketing and administrative expenses 3,400 3,700 3,500
Research and development costs 900 1,000 1,000
Interest expense 150 200 200
Restructuring costs 500 200 1,475
Other charges 200 100 200
------- ------- -------
TOTAL COSTS 11,750 11,900 12,775
------- ------- -------
Earnings (loss) from continuing operations
before income taxes 1,050 1,300 (175)
Provision (benefit) for income taxes from
continuing operations 400 475 (175)
------- ------- -------
Earnings from continuing operations
before extraordinary item and cumulative
effect of changes in accounting principle 650 825 -
Earnings from discontinued operations
before cumulative effect of changes in
accounting principle 17 169 17
------- ------- -------
Earnings before extraordinary item and
cumulative effect of changes in
accounting principle 667 994 17
Extraordinary item (14) - -
------- ------- -------
Earnings before cumulative effect of changes
in accounting principle 653 994 17
------- ------- -------
Cumulative effect of changes in accounting
principle from continuing operations (1,649) 100 -
Cumulative effect of changes in accounting
principle from discontinued operations (519) 52 -
------- ------- -------
Total cumulative effect of changes in
accounting principle (2,168) 152 -
------- ------- -------
NET EARNINGS (LOSS) $(1,515) $ 1,146 $ 17
======= ======= =======
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Eastman Kodak Company and Subsidiary Companies
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS - UNAUDITED
1993 1992 1991
Primary earnings per share from
continuing operations before extraordinary
item and cumulative effect of changes
in accounting principle $ 1.95 $ 2.55 $ -
Primary earnings per share from discontinued
operations before cumulative effect of changes
in accounting principle .07 .51 .05
------- ------- -------
Primary earnings per share before extraordinary
item and cumulative effect of changes in
accounting principle 2.02 3.06 .05
Extraordinary item (.04) - -
------- ------- -------
Primary earnings per share before cumulative
effect of changes in accounting principle 1.98 3.06 .05
------- ------- -------
Cumulative effect of changes in accounting
principle from continuing operations (5.02) .31 -
Cumulative effect of changes in accounting
principle from discontinued operations (1.58) .16 -
------- ------- -------
Total cumulative effect of changes in
accounting principle (6.60) .47 -
------- ------- -------
Primary earnings (loss) per share $ (4.62) $ 3.53 $ .05
======= ======= =======
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Eastman Kodak Company and Subsidiary Companies
PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION - UNAUDITED
(in millions) December 31,
1993 1992
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,635 $ 361
Marketable securities 331 186
Receivables (net of allowances of $92 and $98) 2,817 2,820
Inventories 1,532 1,592
Deferred income tax charges 339 143
Other 203 189
------- -------
Total current assets 6,857 5,291
------- -------
PROPERTIES
Land, buildings and equipment at cost 11,601 12,082
Less: Accumulated depreciation 6,574 6,562
------- -------
Net properties 5,027 5,520
OTHER ASSETS
Unamortized goodwill (net of accumulated
amortization of $179 and $145) 272 220
Long-term receivables and other noncurrent assets 912 1,107
Deferred income tax charges 393 -
Net assets of discontinued operations 5,349 6,900
------- -------
TOTAL ASSETS $18,810 $19,038
======= =======
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES
Payables $ 2,877 $ 2,425
Short-term borrowings 611 1,683
Taxes-income and other 384 449
Dividends payable 165 163
Deferred income tax credits 16 22
------- -------
Total current liabilities 4,053 4,742
OTHER LIABILITIES
Long-term borrowings 6,727 5,259
Postemployment liabilities 3,491 760
Other long-term liabilities 1,183 1,194
Deferred income tax credits - 526
------- -------
Total liabilities 15,454 12,481
------- -------
SHAREOWNERS' EQUITY
Common stock, par value $2.50 per share 948 936
950,000,000 shares authorized; issued
379,079,777 in 1993 and 374,479,114 in 1992
Additional capital paid in or transferred
from retained earnings 213 26
Retained earnings 4,469 7,721
Accumulated translation adjustment (235) (85)
------- -------
5,395 8,598
Less: Treasury stock, at cost 2,039 2,041
48,513,344 shares in 1993 and 48,562,835
shares in 1992
------- -------
Total shareowners' equity 3,356 6,557
------- -------
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $18,810 $19,038
======= =======
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Notes to Pro Forma Consolidated Statement of Earnings and Consolidated
Statement of Financial Position
DISCONTINUED OPERATIONS
On May 3, 1994, the Company announced its intent to divest the following
non-imaging health businesses: the pharmaceutical and consumer health
businesses of Sterling Winthrop Inc., L&F Products and the Clinical Diagnostics
Division. Beginning with the second quarter of 1994, these businesses are
being reported as discontinued operations with results for prior periods
restated. On June 23, 1994, the Company announced Sanofi has agreed to
acquire the pharmaceutical business of Sterling Winthrop Inc. for $1.675
billion in cash and its interest in the "Over-the-Counter" alliance with
Sterling Winthrop Inc. On October 1, 1994, the Company completed this sale.
On August 29, 1994, the Company announced SmithKline Beecham plc has agreed to
acquire the consumer health business of Sterling Winthrop Inc. for $2.925
billion in cash. On September 6, 1994, the Company announced Johnson & Johnson
has agreed to acquire the Clinical Diagnostics Division for $1.008 billion in
cash. On September 26, 1994, the Company announced Reckitt & Colman plc has
agreed to acquire the worldwide household businesses of L&F Products for
$1.55 billion in cash. On October 14, 1994, the Company announced Forstmann
Little & Co. has agreed to acquire the do-it-yourself products businesses of
L&F Products for $700 million in cash. The Company expects to complete these
transactions upon receipt of regulatory approvals. In addition, as part of the
divestiture, the Company is actively negotiating with potential buyers for its
pharmaceutical research and development facility and its NanoSystems unit, and
anticipates closing dates for these transactions over the next few months.
As of June 30, 1994, the Company concluded that measurement dates had occurred
for the sales of the non-imaging health businesses. Accordingly, the
financial statement information related to these businesses has been presented
on one line in the Consolidated Statement of Financial Position, "net assets
of discontinued operations", and in the "discontinued operations" section of
the Consolidated Statement of Earnings. The amounts presented for prior
periods have been restated for appropriate comparability. The "net assets of
discontinued operations" represents the assets intended to be sold offset by
the liabilities anticipated to be assumed by potential buyers of these
businesses. The amounts presented in the Consolidated Statement of Earnings
for prior periods have been restated to reflect the allocation of interest
expense from continuing operations to discontinued operations. The allocation
of interest expense was performed by reference to the interest expense on
indebtedness that is anticipated to be repaid from the net proceeds received
from the divestment transactions.
The Company currently does not anticipate an overall loss on the divestment
transactions including income from operations during the phase-out period
which is estimated to end on or about December 31, 1994. Consequently, all
gains estimated at this time will be recognized by the Company at the closing
date of such transactions.
Summarized results of the Health businesses, including an allocation of
interest expense, are as follows:
(in millions) 1993 1992 1991
Sales $3,764 $3,645 $3,551
====== ====== ======
Earnings (loss) before income taxes $ (165) $ (133) $ (272)
Provision (benefit) for income taxes (40) (35) 30
------ ------ ------
Earnings (loss) before cumulative effect
of changes in accounting principle $ (125) $ (98) $ (302)
====== ====== ======
Allocated interest expense included in earnings before income taxes was
approximately $450 million for 1993, $450 million for 1992 and $450 million for
1991.
Net assets of the Health businesses as reported in the Consolidated Statement
of Financial Position are comprised of the following:
Dec. 31, Dec. 31,
(in millions) 1993 1992
Current assets $1,164 $1,150
Land, buildings and equipment, net 1,339 1,244
Other assets 4,282 4,403
------ ------
Total assets 6,785 6,797
------ ------
Current liabilities 857 804
Long-term borrowings 126 143
Other liabilities 453 356
------ ------
Total liabilities 1,436 1,303
------ ------
Net assets of discontinued
operations $5,349 $5,494
====== ======
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Total net assets of the Health businesses at December 31, 1993 and December 31,
1992 reflect the expected settlement of intercompany balances.
On June 15, 1993, the Company announced a plan to spin-off its Eastman
Chemical Company operations, which was completed on December 31, 1993.
Summarized results of the Chemicals segment, including an allocation of
interest expense, are as follows:
(in millions) 1993 1992 1991
Earnings before cumulative effect of
changes in accounting principle $192 $267 $319
==== ==== ====
Net assets of the Chemicals segment as reported in the December 31, 1992
Consolidated Statement of Financial Position are $1,406 million.
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KODAK TO SELL STERLING WINTHROP TO SMITHKLINE BEECHAM FOR $2.9 BILLION
Continuing Progress in Divestiture Program
Strengthens Focus on Core Imaging Businesses
Rochester, N.Y. August 29, 1994--Eastman Kodak Company today announced an
agreement to sell its Sterling Winthrop Inc. subsidiary, a leading supplier of
consumer health products, to SmithKline Beecham for $2.925 billion in cash.
Under terms of the agreement, SmithKline Beecham will acquire from Kodak 100
percent of the stock of Sterling Winthrop Inc. This will provide SmithKline
Beecham with all of Sterling Winthrop's assets including its global consumer
health products business, all personnel, brands, facilities, intellectual
properties, and other assets.
The agreement follows Kodak's previously announced sale of Sterling Winthrop's
pharmaceutical business to Sanofi SA of France in exchange for $1.675 billion
in cash and Sanofi's interest in a consumer health products joint venture
between Sanofi and Sterling Winthrop.
Both transactions are expected to be completed upon receipt of regulatory
approvals.
"This agreement is a major step in our continuing divestiture program. When
complete, Kodak's resource base and management attention will be sharply
focused on its core imaging businesses," said George M.C. Fisher, Kodak's
chairman, president, and CEO. "We believe this transaction represents a solid
strategic fit between SmithKline Beecham, a world leader in healthcare, and
our Sterling Winthrop subsidiary."
SmithKline Beecham Chief Executive Jan Leschly said: "This is an important
step toward our goal of becoming the world's leading healthcare company. The
combination of Sterling Winthrop's extensive geographic reach and SmithKline
Beecham Consumer Healthcare's excellent brand portfolio creates a powerhouse
in the increasingly important field of self-medication, and is a landmark
opportunity to make SB the world leader in OTC medicines."
Sterling Winthrop's global consumer health products business generated more
than $1 billion in revenues during 1993. The company sells a wide array of
well known over-the-counter analgesics and other medicines.
Among the leading consumer health brands which SmithKline Beecham will acquire
with Sterling Winthrop are: Bayer aspirin in the U.S., Panadol analgesics (one
of the worlds' leading pain relievers); Phillips' milk of magnesia and
Andrew's gastrointestinal products; Valda cough-cold products; Neo-Synephrine
decongestants; and Stri-Dex and Hinds skin care products.
Sterling Winthrop manufactures consumer health products in more than 19
locations around the world including the U.S., Europe, Latin America and the
Pacific Rim. The company markets products under the Sterling Health name and
its product development efforts are supported by a dedicated, world-class
research and development organization.
Proceeds from the transaction will be used to substantially reduce Kodak's
debt and for other company purposes.
As part of its divestiture program, Kodak intends to sell in separate
transactions its Clinical Diagnostics Division, and the household and
do-it-yourself products businesses of its L&F Products unit.
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JOHNSON & JOHNSON TO ACQUIRE KODAK'S CLINICAL DIAGNOSTICS UNIT
Rochester, N.Y., and New Bruswick, N.J., Sept. 6, 1994--Eastman Kodak Company
and Johnson & Johnson today announced an agreement calling for Kodak to sell
its Clinical Diagnostics business, a leading worldwide supplier of diagnostic
products, to Johnson & Johnson for $1.008 billion in cash.
The agreement calls for Kodak to transfer to Johnson & Johnson essentially all
its assets relating to the Clinical Diagnostics business. This includes all
personnel, patents and technology, production equipment and products of the
clinical business.
Kodak also has agreed to continue to provide customer equipment service
support to Johnson & Johnson customers in order to maintain the current level
of service excellence.
During 1993, Kodak's Clinical Diagnostics division generated worldwide
revenues of $535 million.
Kodak Chairman, President and Chief Executive Officer George M.C. Fisher said:
"Thousands of medical professionals around the world depend on diagnostic
products from our Clinical Diagnostics Division. This agreement with a
worldclass health care company will enable Clinical Diagnostics to continue to
meet the needs of these valued customers."
"This announcement comes one week after our agreement with SmithKline Beecham
for the sale of Sterling Winthrop. It demonstrates our resolve to rapidly
achieve our strategic goal of total dedication and resource commitment to our
core imaging businesses," Fisher added.
Ralph S. Larsen, Chairman and CEO of Johnson & Johnson said: "This acquisition
fits perfectly our strategic objective of enhancing our business in diagnostic
products. The acquisition will add important positions in clinical chemistry
and immunodiagnostics to our existing diagnostics businesses and significantly
broaden our customer base in the hospital central diagnostic laboratories.
When combined with our existing blood virus screening and diagnostic products
used in blood donor centers, hospitals, and other laboratories, and our home
test products in blood glucose monitoring, pregnancy and other applications,
we believe this will raise our worldwide market position to number three in
diagnostics."
At the time the transaction is completed, Clinical Diagnostics will become an
operating company of Johnson & Johnson, based in Rochester, N.Y.
Current major Clinical Diagnostics manufacturing, research and administrative
facilities are located in Rochester, N.Y.; Cardiff, Wales; Pollards Wood,
England; and Strasbourg, France. Johnson & Johnson expects to continue to
operate from these sites.
Both parties expect to complete the transaction upon obtaining any necessary
regulatory approvals.
Proceeds from the transaction will be used to substantially reduce Kodak's
debt and for other company purposes.
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HOUSEHOLD BUSINESSES OF L&F PRODUCTS TO BE ACQUIRED BY RECKITT & COLMAN
Agreement Marks The Start Of Final Phase In Kodak's Continuing Divestiture
Program
Rochester, N.Y. Sept. 26 -- Eastman Kodak Company today announced an agreement
to sell the worldwide household businesses of its L&F Products unit, a leading
supplier of cleaners, disinfectants, personal care, and professional products,
to London, England-based Reckitt & Colman, plc for $1.55 billion in cash.
The agreement calls for Kodak to transfer to Reckitt & Colman all assets
relating to the household businesses of L&F Products. This includes
personnel, brand names, products, patents, technology, and production and
distribution facilities supporting the household products businesses.
During 1993, L&F Products generated worldwide revenues of approximately
$800 million from sales of these businesses.
"This transaction takes us much closer to our strategic goal of total
dedication and resource commitment to our core imaging businesses," said
George M.C. Fisher, Kodak's Chief Executive Officer. "I am pleased to achieve
an agreement that benefits all parties, including Kodak, Reckitt & Colman, the
people of L&F Products, and the many consumers who trust our well-known brand
name products."
Commenting on today's announcement, Veron Sankey, Chief Executive of Reckitt &
Colman, said: "The acquisition of L&F's household businesses represents a
unique opportunity for us to achieve two important objectives. First, we are
transforming the position and prospects of our U.S. household products
business and, second, we are taking a major step forward towards becoming one
of the leading worldwide household products groups."
Upon completion of the transaction, L&F Products' Household businesses will be
merged with Reckitt & Colman's businesses.
L&F's household businesses are headquartered in Montvale, N.J., as is its
technical center for product development. Manufacturing and distribution
facilitied are located in Belle Mead, N.J.; Lincoln, Ill.; Alliance, Ohio;
Sidney, Ohio; Toledo, Ohio; and Glasshutte, Germany (under the Shulke & Mayr
name).
L&F Products markets a family of well known products under a variety of leading
brand names, including Lysol cleaners and disinfectants, Mop & Glo cleaner and
polish, Resolve carpet cleaners, Ogilvie home permanents, Chubs Baby Wipes,
and Wet Ones moist towelettes. Products from L&F household businesses are
sold in 37 countries around the world.
Both parties expect to complete the transaction upon obtaining any necessary
regulatory approvals. In addition, Reckitt & Colman must obtain shareholder
approval for the transaction.
The "do-it-yourself" operation of L&F Products is the last large business
remaining to be sold as part of Kodak's divestiture program. In addition,
the company is selling its pharmaceutical research and development facility and
its NanoSystems subsidiary, a small technology development operation, both
located near Philadelphia, Pa.
Kodak has said that the proceeds from its divestiture program will be used to
substantially reduce debt and for other company purposes.
12
KODAK COMPLETES SALE OF STERLING WINTHROP PHARMACEUTICALS
BUSINESS TO SANOFI
Rochester, N.Y., October 3, 1994 -- Eastman Kodak Company and Sanofi SA
announced today the completion of the sale of Sterling Winthrop's worldwide
pharmaceuticals business to Sanofi, a leading French healthcare and beauty
products company.
The closing date for the transaction was October 1. Sanofi purchased Sterling
Winthrop's interest in its pharmaceutical alliance with Sanofi in exchange for
$1.675 billion in cash and Sanofi's interest in a separate European
over-the-counter medicines alliance.
Sanofi did not acquire Sterling Winthrop's research and development center
located near Philadelphia, Pa., or its NanoSystems unit, a technology
development unit established to commercialize pharmaceuticals based on
patented small particle technology. Both will be sold in separate
transactions.
Subsequent to the closing, Sanofi sold the diagnostic imaging portion of
Sterling Winthrop's business to Nycomed of Norway.
Kodak also will sell Sterling Winthrop's worldwide over-the-counter medicines
businesses to SmithKline Beecham in a separate transaction. That transaction
will close upon both parties obtaining regulatory approval.
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L&F PRODUCTS 'DIY' BUSINESSES
ACQUIRED BY FORSTMANN LITTLE
Kodak's Divestiture Program Essentially Complete
Company Now Focused on Core Imaging Businesses
Rochester, N.Y., October 14, 1994 -- Eastman Kodak Company today announced an
agreement to sell the do-it-yourself (DIY) products businesses of its L&F
Products unit to Forstmann Little & Co., a New York City-based investment
partnership, for $700 million in cash.
The agreement calls for Kodak to transfer to Forstmann Little all assets
relating to the DIY businesses of L&F Products. This includes personnel, brand
names, product formulations and technology, plus production and distribution
facilities supporting the DIY businesses.
"This transaction completes the major portion of our divestiture program. In
less than six months, we have reshaped Kodak. We are a smaller company with a
stronger balance sheet, focused exclusively on our core imaging businesses,"
said George M.C. Fisher, Kodak's Chief Executive Officer.
L&F Products' DIY businesses market a wide range of wood finishing products
including interior stains and clear finishes, exterior waterproofing products,
interior wood refinishing products and specialty enamels. Key brands include
Thompson's, Minwax, Formby's, Red Devil and Ronseal (in the United Kingdom and
Ireland).
The parties intend to close the transaction by mid-November. Kodak will use
the proceeds to reduce debt and for other company purposes.
As part of this divestiture program, Kodak also will sell its pharmaceutical
research and development facility and its NanoSystems unit, a small technology
development operation. Both are located near Philadelphia, Pa.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EASTMAN KODAK COMPANY
(Registrant)
Date October 17, 1994
C. Michael Hamilton, General Comptroller,
Principal Accounting Officer and
Duly Authorized Officer
15
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
among
EASTMAN KODAK COMPANY
and
STERLING WINTHROP INC.
and
SANOFI
Dated as of September 30, 1994
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Specific Definitions . . . . . . . . . . . . . . . . 25
Section 1.2 Other Terms . . . . . . . . . . . . . . . . . . . . . 42
Section 1.3 Other Definitional Provisions . . . . . . . . . . . . 42
ARTICLE II
PURCHASE AND SALE OF THE BUSINESS
Section 2.1 Purchase and Sale of Assets . . . . . . . . . . . . . 43
Section 2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . 44
Section 2.3 Assumption of Liabilities . . . . . . . . . . . . . . 46
Section 2.4 Excluded Liabilities . . . . . . . . . . . . . . . . 49
Section 2.5 Purchase Price . . . . . . . . . . . . . . . . . . . 51
Section 2.6 Business Post-Closing Adjustments . . . . . . . . . . 54
Section 2.7 Disposition of Cash and
Short-term Investments . . . . . . . . . . . . . . 59
Section 2.8 Transfer of the OTC Portion . . . . . . . . . . . . . 59
Section 2.9 Closing . . . . . . . . . . . . . . . . . . . . . . . 60
Section 2.10 Deliveries by Purchaser . . . . . . . . . . . . . . . 63
Section 2.11 Deliveries by Seller and Kodak . . . . . . . . . . . 64
Section 2.12 Agreement of Means of Transfer . . . . . . . . . . . 65
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND KODAK
Section 3.1 Organization and Qualification . . . . . . . . . . . 68
17
Page
Section 3.2 Subsidiaries; Joint Ventures, etc. . . . . . . . . . 69
Section 3.3 Corporate Authorization . . . . . . . . . . . . . . . 70
Section 3.4 Consents and Approvals . . . . . . . . . . . . . . . 71
Section 3.5 Non-Contravention . . . . . . . . . . . . . . . . . . 72
Section 3.6 Binding Effect . . . . . . . . . . . . . . . . . . . 73
Section 3.7 Financial Statements . . . . . . . . . . . . . . . . 73
Section 3.8 Litigation and Claims . . . . . . . . . . . . . . . . 74
Section 3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . 75
Section 3.10 Employee Benefits . . . . . . . . . . . . . . . . . . 78
Section 3.11 Compliance with Laws . . . . . . . . . . . . . . . . 82
Section 3.12 Environmental Matters . . . . . . . . . . . . . . . . 83
Section 3.13 Intellectual Property . . . . . . . . . . . . . . . . 84
Section 3.14 Collective Bargaining Agreements . . . . . . . . . . 85
Section 3.15 Contracts . . . . . . . . . . . . . . . . . . . . . . 86
Section 3.16 Title to Property . . . . . . . . . . . . . . . . . . 86
Section 3.17 Finders' Fees . . . . . . . . . . . . . . . . . . . . 88
Section 3.18 Absence of Change . . . . . . . . . . . . . . . . . . 89
Section 3.19 Reaffirmation of Representations . . . . . . . . . . 89
Section 3.20 Insurance . . . . . . . . . . . . . . . . . . . . . . 90
Section 3.21 Food and Drug Administration . . . . . . . . . . . . 90
Section 3.22 No Other Representations or
Warranties . . . . . . . . . . . . . . . . . . . . 92
18
Page
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.1 Organization and Qualification . . . . . . . . . . . 92
Section 4.2 Subsidiaries; Joint Ventures, etc. . . . . . . . . . 93
Section 4.3 Corporate Authorization . . . . . . . . . . . . . . . 94
Section 4.4 Consents and Approvals . . . . . . . . . . . . . . . 94
Section 4.5 Non-Contravention . . . . . . . . . . . . . . . . . . 95
Section 4.6 Binding Effect . . . . . . . . . . . . . . . . . . . 96
Section 4.7 OTC Assets . . . . . . . . . . . . . . . . . . . . . 97
Section 4.8 Title to Property . . . . . . . . . . . . . . . . . . 97
Section 4.9 Finders' Fees . . . . . . . . . . . . . . . . . . . . 98
Section 4.10 Financial Capability . . . . . . . . . . . . . . . . 98
Section 4.11 Reaffirmation of Representations . . . . . . . . . . 99
Section 4.12 No Other Representations
or Warranties . . . . . . . . . . . . . . . . . . . 99
ARTICLE V
COVENANTS
Section 5.1 Access . . . . . . . . . . . . . . . . . . . . . . . 99
Section 5.2 Conduct of Business . . . . . . . . . . . . . . . . . 101
Section 5.3 Reasonable Efforts; Good Faith . . . . . . . . . . . 104
Section 5.4 Tax Matters . . . . . . . . . . . . . . . . . . . . . 105
Section 5.5 Post-Closing Obligations of the
Business to Certain Employees . . . . . . . . 115
Section 5.6 UPT Facility Lease . . . . . . . . . . . . . . . . . 131
Section 5.7 Compliance with WARN, etc. . . . . . . . . . . . . . 132
19
Section 5.8 Further Assurances . . . . . . . . . . . . . . . . . 132
Section 5.9 Use of Corporate Names . . . . . . . . . . . . . . . 133
Section 5.10 License Agreements . . . . . . . . . . . . . . . . . 134
Section 5.11 Transition Services . . . . . . . . . . . . . . . . . 143
Section 5.12 Supply Agreement . . . . . . . . . . . . . . . . . . 144
Section 5.13 Sublease Agreement . . . . . . . . . . . . . . . . . 145
Section 5.14 Maintenance of Shared Service
Arrangements . . . . . . . . . . . . . . . . . . . 148
Section 5.15 Dental Agreements . . . . . . . . . . . . . . . . . 153
Section 5.16 Insurance . . . . . . . . . . . . . . . . . . . . . . 154
Section 5.17 Closing Asset and Liability Statement . . . . . . . . 156
Section 5.18 Schering Agreement . . . . . . . . . . . . . . . . . 156
Section 5.19 Confidentiality . . . . . . . . . . . . . . . . . . . 156
Section 5.20 Schedules . . . . . . . . . . . . . . . . . . . . . . 160
Section 5.21 Phiso . . . . . . . . . . . . . . . . . . . . . . . . 160
Section 5.22 Subrogation and Related Matters . . . . . . . . . . . 162
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to the Obligations of Kodak,
Purchaser and Seller . . . . . . . . . . . . . . . . 165
Section 6.2 Conditions to the Obligations of
Purchaser . . . . . . . . . . . . . . . . . . . . . 166
Section 6.3 Conditions to the Obligations of
Kodak and Seller . . . . . . . . . . . . . . . . . . 168
20
Page
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1 Survival . . . . . . . . . . . . . . . . . . . . . . 170
Section 7.2 Indemnification by Purchaser . . . . . . . . . . . . 171
Section 7.3 Indemnification by Seller and Kodak . . . . . . . . . 172
Section 7.4 Indemnification Procedures . . . . . . . . . . . . . 175
Section 7.5 Characterization of Indemnification
Payments . . . . . . . . . . . . . . . . . . . . . 178
ARTICLE VIII
TERMINATION
Section 8.1 Termination . . . . . . . . . . . . . . . . . . . . . 178
Section 8.2 Effect of Termination . . . . . . . . . . . . . . . . 180
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices . . . . . . . . . . . . . . . . . . . . . . . 180
Section 9.2 Amendment; Waiver . . . . . . . . . . . . . . . . . . 182
Section 9.3 Assignment . . . . . . . . . . . . . . . . . . . . . 182
Section 9.4 Entire Agreement . . . . . . . . . . . . . . . . . . 184
Section 9.5 Fulfillment of Obligations . . . . . . . . . . . . . 184
Section 9.6 Parties in Interest . . . . . . . . . . . . . . . . . 185
Section 9.7 Public Disclosure . . . . . . . . . . . . . . . . . . 185
Section 9.8 Return of Information . . . . . . . . . . . . . . . . 185
Section 9.9 Expenses . . . . . . . . . . . . . . . . . . . . . . 186
Section 9.10 Schedules . . . . . . . . . . . . . . . . . . . . . . 186
21
Page
Section 9.11 GOVERNING LAW; SUBMISSION TO
JURISDICTION . . . . . . . . . . . . . . . . . . . 186
Section 9.12 Counterparts . . . . . . . . . . . . . . . . . . . . 187
Section 9.13 Headings . . . . . . . . . . . . . . . . . . . . . . 187
Section 9.14 Severability . . . . . . . . . . . . . . . . . . . . 187
22
SCHEDULES AND
ANNEXES
ANNEXES
Annex 6.2(c) - Opinion of Seller's Counsel
Annex 6.3(c) - Opinion of Purchaser's Counsel
SCHEDULES
Schedule 1.1(a)(i) - [reserved]
Schedule 1.1(a)(ii) - [reserved]
Schedule 1.1(b) - Dual Product
Schedule 1.1(c)(i) - Dental Applications
Schedule 1.1(c)(ii) - [reserved]
Schedule 1.1(d) - Leased Real Property
Schedule 1.1(e) -
[reserved] Schedule 1.1(f) -
OTC Shares Schedule 1.1(g) -
[reserved] Schedule 1.1(h) - Owned
Real Property Schedule 1.1(i)
- - - [reserved] Schedule 1.1(j)
- - - Trade Names Schedule 1.1(k)
- - - [reserved] Schedule 1.1(l) - Principles for the
Computation of
Net Working Capital and Net Worth
Schedule 2.2(c) - Excluded Ethical Intellectual
Property
Schedule 2.2(f) - Fixtures and Equipment
Schedule 2.2(g) - Contracts
Schedule 2.3 - List of Newcos Schedule
2.5(b)(iii) - Net Debt Adjustment Payment Schedule
2.5(c)(i) - [reserved]
Schedule 2.12(a)(i) - Manner of Transfer
Schedule 3.1(a) - Organization and Qualification
Schedule 3.2(a)(i) - Subsidiaries; Joint Ventures, etc.
Schedule 3.2(a)(ii) - Certain Subsidiaries
Schedule 3.2(b) - Capital Stock of Subsidiaries
Schedule 3.4 - Consent and
Approvals Schedule 3.5 -
Non-Contravention Schedule 3.7(a)(i) -
Financial Statements Schedule 3.7(a)(ii) - Exceptions to GAAP
- - - Statement of Assets
and Liabilities
Schedule 3.7(a)(iii) - Exceptions to GAAP - Income Statement
Schedule 3.8(a) - Litigation and Claims
Schedule 3.8(b) - Orders and Judgments
Schedule 3.9 - Taxes
Schedule 3.10(a) - Benefit Plans
Schedule 3.10(b) - Benefit Plan Litigation
Schedule 3.10(e) - Retiree Benefits
23
Schedule 3.10(f) - Amended Plans
Schedule 3.10(h) - Unfunded Liabilities
Schedule 3.11 - Compliance with Laws
Schedule 3.12 - Environmental Matters Schedule
3.13(a) - Intellectual Property Related
to the Business
Schedule 3.13(b)(i) - Restrictions of Use Concerning
Ethical Intellectual Property
Schedule 3.13(b)(ii) - Trademarks
Schedule 3.14 - Collective Bargaining Agreements
Schedule 3.15(i) - Contracts
Schedule 3.15(ii) - Validity of Contracts
Schedule 3.15(iii) - Contracts in Default
Schedule 3.16(a) - Necessary Property
Schedule 3.16(b) - Encumbrances
Schedule 3.19 - Representations of Seller
Schedule 3.20 - Insurance
Schedule 4.1 - Organization and Qualification
Schedule 4.2(a)(i) -
[reserved] Schedule 4.2(a)(ii) -
[reserved] Schedule 4.2(b) -
[reserved] Schedule 4.4 - Consent and
Authorization Schedule 4.5 -
Non-Contravention Schedule 4.7(a) -
OTC Assets Schedule 4.7(b)(i) - Restrictions on Use of
OTC Assets Schedule 4.7(b)(ii) -
Trademarks Schedule 4.8(b) -
Encumbrances Schedule 4.11 - Reaffirmation of
Representations Schedule 5.5(b)(ii) - [reserved]
Schedule 5.5(g) - Shared Liabilities for Benefits to Former
Employees
Schedule 5.6 - UPT Facility Lease
Schedule 5.10(a) - Nanoparticulate License Agreement
Schedule 5.10(b) - Products Under Development -
Chemical
Schedule 5.10(c) - Products Under Development -
Medical Safety
Schedule 5.12 - Supply Agreement Pricing
Schedule 5.14(b)(ii) - Certain Provisions Schedule
5.14(c) - Countries Dual Products Marketed
as Ethical
24
AMENDED AND RESTATED ASSET PURCHASE AGREEMENT, dated as of
September 30, 1994, among EASTMAN KODAK COMPANY, a New Jersey corporation
("Kodak"), STERLING WINTHROP INC., a Delaware corporation ("Seller"), and
SANOFI, a societe anonyme organized under the laws of the Republic of
France ("Purchaser").
W I T N E S E T H:
WHEREAS, Seller, an indirectly wholly-owned subsidiary of
Kodak, is engaged worldwide in the ethical drug business through the Human
Ethical Pharmaceutical Products business and Sterling Organics, including
the manufacturing, marketing, sales, distribution, support operations and
research and development activities related thereto (the "Business");
WHEREAS, the parties hereto desire that Seller sell, transfer
and assign to Purchaser and Purchaser purchase and assume from Seller,
certain of the assets and liabilities of the Business, all as more
specifically provided herein;
WHEREAS, the parties hereto desire that Purchaser transfer to
Seller and Seller purchase from Purchaser, Purchaser's interest in the OTC
Venture, and certain related shares and assets, all as more specifically
provided herein; and
25
WHEREAS, Kodak and Purchaser desire to enter into one or more
license agreements with respect to the Kodak Licensed Intellectual
Property;
WHEREAS, pursuant to Section 9.2 of the Asset Purchase
Agreement, dated as of June 22, 1994, among Kodak, Seller and Purchaser
(the "Original Agreement");
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and
conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Specific Definitions. As used in this Agreement,
the following terms shall have the meanings set forth or as referenced
below:
"Accounts Payable to Kodak" shall mean all U.S. Intercompany Accounts
Payable of the Transferred Business that are outstanding at any time
prior to the Closing to (x) Kodak or (y) a U.S. Affiliate of Kodak
that does not constitute part of the Transferred Business.
"Accounts Receivable from Kodak" shall mean all U.S. Intercompany Accounts
Receivable of the Transferred Business that are outstanding at any
time prior to the Closing from (x) Kodak or (y) a U.S. Affiliate of
Kodak that does not constitute part of the Transferred Business.
"Actions" shall have the meaning set forth in Section 5.22.
"Adjusted Closing Net Worth Statement" shall have the meaning set forth in
Section 2.6(b).
26
"Adjusted Closing Working Capital Statement" shall have the meaning set
forth in Section 2.6(b).
"Affected Party" shall have the meaning set forth in Section 5.4(e).
"Affiliates" shall mean, with respect to any Person, any Persons directly
or indirectly controlling, controlled by, or under common control
with, such other Person.
"Aggregate Newco Net Worth" as of any date, shall mean (x) the sum, for all
Newcos, including the reserved activities in the United Kingdom and
Japan, of the Net Worth of each Newco, including the reserved
activities in the United Kingdom and Japan, as of such date
multiplied by Seller's percentage equity interest in such entities,
minus (y) the sum, for all OTC Newcos, of the Net Worth of each OTC
Newco as of such date multiplied by Purchaser's percentage equity
interest in such OTC Newco, all computed in accordance with the
principles set forth in Schedule 1.1(1).
"Agreement" shall mean this Amended and Restated Agreement, as the same may
be amended or supplemented from time to time in accordance with the
terms hereof.
"Allendale" shall have the meaning set forth in Section 5.22.
"Ancillary Agreements" shall mean the Trademark and Trade Name Agreement,
Trade Name Agreement, Nanoparticulate License Agreement, Chemical
License Agreement, Sanofi License Agreements, Shared Intellectual
Property License Agreements, Trade Name License Agreement, Ethical
Transitional Services Agreement, OTC Supply Agreement, Ethical Supply
Agreement and Real Property Lease Agreements, Dudley Supply
Agreement, Sublease Agreement, Shared Service Agreement, Marcaine
License Agreement and Toll Manufacturing Agreement.
"Asset and Liability Statement", shall mean the unaudited pro forma
statement of assets and liabilities of the Transferred Business at
December 31, 1993, attached as Schedule 3.7(a)(i) hereto.
"Assumed Liabilities" shall have the meaning set forth in Section 2.3.
"Assumed Pension Plans" shall have the meaning set forth in
Section 5.5(c)(ii).
27
"Audited Taxes" shall have the meaning set forth in Section 5.4(e).
"Benefit Plans" shall have the meaning set forth in Section 3.10(a).
"BMS Agreements" shall mean the agreements, each dated as of July 29, 1993,
among Seller, Sanofi and Bristol-Myers Squibb Company, including the
two letter agreements between Seller and Purchaser, dated as of the
same date, relating to Participation as SW Party in the BMS
Agreements.
"Books and Records" shall mean all books, ledgers, files, reports, plans
and operating records of, or maintained by, the Transferred Business
except to the extent included in or related to any Excluded Assets.
"Business" shall have the meaning set forth in the recitals of this
Agreement.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
on which banks in New York City are authorized or obligated by law or
executive order to close.
"Cash Portion" shall have the meaning set forth in Section 2.5(a).
"Chemical License Agreement" shall have the meaning set forth in Section
5.10(b).
"Claim Notice" shall have the meaning set forth in Section 7.4.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement.
"Closing Date" shall have the meaning set forth in Section 2.9(a).
"Closing Net Worth Statement" shall have the meaning set forth in
Section 2.6(a).
"Closing Statements" shall have the meaning set forth in Section 2.6(a).
"Closing Working Capital Statement" shall have the meaning set forth in
Section 2.6(a).
28
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" shall mean the Agreement, dated May 2, 1994
between Purchaser and Goldman, Sachs & Co.
"Consideration" shall have the meaning set forth in Section 5.4(f).
"Continuation Coverage" shall have the meaning set forth in Section 5.5(d).
"Contracts" shall mean all agreements, contracts, leases, purchase orders,
arrangements, commitments and licenses that are Related to the
Business or to which the Transferred Assets are subject except to the
extent included in the Excluded Assets.
"CPA Firm" shall have the meaning set forth in Section 2.6(b).
"Current Assets" shall mean all current assets of the Transferred Business,
(i) including cash, investment securities and other short- and
medium-term investments, Inventory, accounts receivable and prepaid
expenses but excluding (ii) (x) cash, investment securities and other
short- and medium-term investments of the Specified Companies and the
U.S. operations of the Business and (y) Accounts Receivable from
Kodak.
"Current Liabilities" shall mean all current liabilities of the Transferred
Business, (i) including accounts payable and accrued expenses and all
other current obligations of the Transferred Business but excluding
(ii) (x) indebtedness for money borrowed of the Specified Companies
and the U.S. operations of the Business and (y) Accounts Payable to
Kodak.
"Demolition" shall have the meaning set forth in Section 5.21(b).
"Dental Agreements" shall mean the Trademark License Agreement between
Sterling Winthrop Inc. and Kodak and the Master Purchase Agreement
between Sanofi Winthrop, L.P. and Kodak, each effective as of June
17, 1994.
"Development Agreement" shall mean the Development Collaboration Agreement
between Sterling Drug Inc. and Sanofi, dated April 26, 1991.
29
"Dual Product" shall mean the products set forth in Schedule 1.1(b) hereto.
"Dudley Supply Agreement" shall have the meaning set forth in Section
5.12(c).
"Due Date" shall have the meaning set forth in Section 5.4(c).
"Employees" shall mean, with respect to the Business, all current or former
employees of Seller or any of Seller's subsidiaries who were or are
dedicated to the Business (other than persons employed primarily in
the research, development or marketing of nanoparticulate technology,
except as otherwise agreed between the parties).
"Encumbrances" shall mean liens, charges, encumbrances, security interests,
options, or any other restrictions or third party rights.
"Environmental Law" shall mean any applicable federal, state, local or
foreign law, statute, ordinance, rule, regulation, code, order,
judgment, decree or injunction relating to (x) the protection of the
environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface or subsurface
land), (y) occupational safety and health to the extent it relates to
exposure to Hazardous Substances or (z) the exposure to, or the use,
storage, recycling, treatment, generation, transportation,
processing, handling, labelling, protection, release or disposal of,
radioactive materials or Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning set forth in Section 3.10(c).
"Ethical Intellectual Property" shall mean all of the Intellectual Property
Related to the Business which is not Shared Intellectual Property.
"Ethical Supply Agreement" shall have the meaning set forth in Section
5.12(a).
"Ethical Transitional Services Agreement" shall have the meaning set forth
in Section 5.11(a).
30
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Assets" shall have the meaning set forth in Section 2.2.
"Excluded Liabilities" shall have the meaning set forth in Section 2.4.
"FDA" shall have the meaning set forth in Section 3.21(a).
"FDC Act" shall have the meaning set forth in Section 3.21(a).
"Financial Statements" shall have the meaning set forth in Section 3.7(a).
"First Chooser" shall have the meaning set forth in Section 2.12(b)(2).
"Fixtures and Equipment" shall mean all furniture, fixtures, furnishings,
machinery, vehicles, equipment and other tangible personal property
Related to the Business except to the extent included in the Excluded
Assets.
"Former Employees" shall have the meaning set forth in Section 5.5(g).
"GAAP" shall mean United States generally accepted accounting principles.
"Gamma" shall mean Gamma CHEMIKLIEN, a Swiss Company.
"Governmental Authorizations" shall mean all licenses, permits,
certificates and other authorizations and approvals required to carry
on the Transferred Business or the business of the OTC Portion, as
the case may be, as currently conducted under the applicable laws,
ordinances or regulations of any Federal, state, local or foreign
governmental authority.
"Hazardous Substances" shall mean any hazardous substances within the
meaning of 101(14) of CERCLA, 42 U.S.C. sec. 9601(14), or any
pollutant or constituent that is regulated under any Environmental
Law.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Human Ethical Pharmaceutical Products" shall mean those articles and
devices (including chemical or biological
31
entities and devices consisting of pharmaceutical drug delivery systems or
technology) which
(i) are, in whole or in part, introduced in or applied to
the human body;
(ii) are intended (a) to (or, in the case of a device, for
use to) diagnose, cure, mitigate, treat, prevent or detect disease or
(b) to affect the structure or function of the human body; and
(iii) can be dispensed to or purchased by consumers in a
particular country (a) only by way of or pursuant to the prescription
or direction of a lawfully licensed or authorized practitioner or (b)
without such prescription or direction, where such dispensation or
purchase is reimbursable by any supranational, national, regional,
state or local government, court, governmental agency, authority,
board, bureau, instrumentality or regulatory body in such country,
except as may be otherwise mutually agreed by the parties to the
Pharm A Agreement and Pharm B Agreement.
Notwithstanding the foregoing, the term "Human Ethical
Pharmaceutical Products"
(A) shall not include (I) articles intended for the in
vitro diagnosis or detection of disease in the human body, (II) any
dental applications or indications of articles or devices otherwise
included in this definition, including those set forth on Schedule
1.1(c)(i) hereto, and (III) the product lines and businesses referred
to in Section 12.1(e) of the Pharm A Agreement and Section 10.01(e)
of the Pharm B Agreement; and
(B) shall only include those devices which (I) are used or
suitable for use in the delivery of articles which are themselves
Human Ethical Pharmaceutical Products, or (II) are otherwise included
in the Pharm Ventures by mutual agreement of the parties thereto.
"IND" shall have the meaning set forth in Section 3.21(d).
"Indemnified Parties" shall have the meaning set forth in Section 7.3(a).
"Indemnifying Party" shall have the meaning set forth in Section 7.4.
32
"Intellectual Property" shall mean trademarks, service marks, brand
names,
certification marks, trade dress, assumed names, trade names and
other indications of origin, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications
in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or
application; inventions, discoveries and ideas, whether patentable or
not in any jurisdiction; patents, applications for patents
(including, without limitation, divisions, continuations,
continuations in-part and renewal applications), and any renewals,
extensions or reissues thereof, in any jurisdiction; non-public
information, trade secrets and confidential information and rights in
any jurisdiction to limit the use or disclosure thereof by any
Person; writings and other works, whether copyrightable or not in any
jurisdiction; registrations or applications for registration of
copyrights in any jurisdiction, and any renewals or extensions
thereof; any similar intellectual property or proprietary rights; and
any claims or causes of action arising out of or related to any
infringement or misappropriation of any of the foregoing.
"Inventory" shall mean all inventory held for resale and all raw materials,
work in process, finished products, wrapping, supply and packaging
items Related to the Business, except to the extent included in the
Excluded Assets.
"Investment Canada Act" shall mean the Investment Canada Act, R.S.C. ch. 20
(1985), as amended.
"Kodak" shall have the meaning set forth in the recitals.
"Kodak Licensed Intellectual Property" shall mean the Intellectual Property
to be licensed to Purchaser by Kodak upon execution of the
Nanoparticulate License Agreement, the Chemical License Agreement and
the Medical Safety License Agreement.
"Last Closing" shall mean the later of (i) the Closing Date of the
transactions contemplated by this Agreement and (ii) the closing date
of the sale by Kodak of Seller or the sale by Seller of its consumer
health business, as the case may be.
"Laws" shall include any federal, state, foreign or local law, statute,
ordinance, rule, regulation, order, judgment or decree.
33
"Leased Real Property" shall mean all real property leased by Seller or its
Majority Owned Subsidiaries from parties other than Kodak, including
any buildings, structures and improvements thereon or appurtenances
and Property Related Rights thereto, Related to the Business. The
material Leased Real Property is set forth on Schedule 1.1(d) hereto.
"Listed Countries" shall have the meaning set forth in Section 2.12(b)(1).
"Losses" shall have the meaning set forth in Section 7.2(a).
"Majority Subsidiary" shall mean (i) all corporations and other entities
Related to the Business with respect to which more than 50% of the
voting shares or other voting equity interests are owned directly or
indirectly by Seller and (ii) Sanofi Winthrop Asia Pte Ltd.
"Marcaine License Agreement" shall have the meaning set forth in
Section 5.10(g).
"Material Adverse Change" shall mean a change that has had a Material
Adverse Effect.
"Material Adverse Effect" shall mean (x) in the case of the Business, an
effect that is materially adverse to the value of the Transferred
Assets and Kodak Licensed Intellectual Property taken as a whole or
materially adverse to the business, financial condition or results of
operations of the Business taken as a whole and (y) in the case of
the OTC Portion, an effect that is materially adverse to the value of
the OTC Venture or materially adverse to the business, financial
condition or results of operations of the OTC Venture, but shall
exclude in each case (x) and (y) any change or development involving
a prospective change arising out of any proposed or adopted national
healthcare legislation, or any other proposal or enactment by any
governmental or regulatory authority affecting the pharmaceutical
industry generally.
"Minority Subsidiary" shall mean all corporations and other entities
Related to the Business with respect to which less than 50% of the
voting shares or other voting equity interests are owned directly or
indirectly by Seller.
"Nanoparticulate License Agreement" shall have the meaning set forth in
Section 5.10(a).
34
"Net Adjustment Payment" shall have the meaning set forth
in Section 2.6(d).
"Net Working Capital" shall mean (x) Current Assets minus (y) Current
Liabilities. It is understood that, for purposes of determining Net
Working Capital, (i) Transferred Assets and Assumed Liabilities shall
be taken into account and (ii) Excluded Assets and Excluded
Liabilities shall not be taken into account.
"Net Worth", with respect to any Territory A Newco, Territory B Newco or
OTC Newco, including reserved activities in the United Kingdom and
Japan, and as of any date, shall mean the sum of (x) Net Working
Capital of such Newco, including reserved activities in the United
Kingdom and Japan, computed in accordance with Schedule 1.1(l), and
(y) long-term assets, net of long-term liabilities, including
deferred tax assets and liabilities, of such Newco, including
reserved activities in the United Kingdom and Japan, computed in
accordance with the principles set forth in Schedule 1.1(l), subject
to the relevant exceptions set forth in Schedule 3.7(a)(ii).
"Net Worth Statement" as of any date, shall mean a statement, prepared in
accordance with the principles set forth in Schedule 1.1(l), setting
forth the Aggregate Newco Net Worth as of such date.
"Newco" shall mean each entity listed in Schedule 2.3 hereto.
"Nonmedical Leave" shall mean maternity or paternity leave, leave under the
Family and Medical Leave Act of 1993, educational leave, military
leave with veteran's reemployment rights under federal law, or
personal leave (unless any of such is determined to be a medical
leave).
"Non-U.S. Venture Companies" shall have the meaning set forth in
Section 2.5(b)(iii).
"Notice Period" shall have the meaning set forth in Section 7.4.
"Oldcos" shall have the meaning given to such term in the Pharm A
Agreement.
"Opening Net Worth Statement" shall have the meaning set
forth in Section 2.6(a).
35
"Opening Statements" shall have the meaning set forth in Section 2.6(a).
"Opening Working Capital Statement" shall have the meaning set forth in
Section 2.6(a).
"OTC Agreement" shall mean the OTC Business Joint Venture Agreement between
Seller and Sanofi, dated as of April 26, 1991, as amended to and
including the amendment dated December 16, 1993.
"OTC Assets" shall mean all of the intangible assets owned by Purchaser
that are primarily related to, arising primarily out of or used
primarily in connection with the OTC Venture in Italy.
"OTC Newco" shall mean each entity listed on Schedule 1.1(f).
"OTC Business" shall mean the OTC Venture and the other consumer health
operations of Seller.
"OTC Owner" shall have the meaning assigned thereto in Section 5.14(b).
"OTC Portion" shall have the meaning set forth in Section 2.5(a).
"OTC Portion Permitted Encumbrances" shall have the meaning set forth in
Section 4.8(b).
"OTC Product Agreement" shall have the meaning set forth in Section
5.14(b).
"OTC Shares" shall mean all of the equity interests held by Purchaser in
the entities listed on Schedule 1.1(f).
"OTC Supply Agreement" shall have the meaning set forth in Section 5.12(b).
"OTC Trademark Agreement" shall have the meaning set forth in
Section 5.9(b).
"OTC Venture" shall mean the joint ventures established pursuant to the OTC
Agreement.
"Over-the-Counter Human Pharmaceutical Products" shall mean those articles
and devices (including chemical or biological entities and devices
consisting of pharmaceutical drug delivery systems or technology)
which (i) are, in whole or in part, introduced in or
36
applied to the human body; (ii) are intended (a) to (or in the case of a
device, for use to) diagnose, cure, mitigate, treat, prevent or detect
disease or (b) to affect the structure or function of the human body; (iii)
can be dispensed to or purchased by consumers in a particular country
without the prescription or direction of a lawfully licensed or authorized
practitioner; and (iv) are not reimbursable by any supranational, national,
regional, state or local government, court, governmental agency, authority,
board, bureau, instrumentality or regulatory body in such country, except
as may be otherwise mutually agreed by the parties to the OTC Agreement.
Notwithstanding the foregoing, the term "Over-the-Counter Human
Pharmaceutical Products" (A) shall not include articles intended for the in
vitro diagnosis or detection of disease in the human body and (B) shall
only include those devices which (I) are used or suitable for use in the
delivery of articles constituting products covered by the OTC Agreement, or
(II) are otherwise included in the OTC Venture by mutual agreement of the
parties to the OTC Agreement.
"Owned Real Property" shall mean all real property owned by Seller and its
Majority Owned Subsidiaries Related to the Business set forth on
Schedule 1.1(h) hereto, including any buildings, structures and
improvements thereon or appurtenances and Property Related Rights
thereto.
"Parent Entity" shall have the meaning set forth in Section 5.4(b)(ii).
"Payor" shall have the meaning set forth in Section 5.4(c).
"Pension Excess" shall have the meaning assigned thereto in Section 5.5(c).
"Pension Plan" shall have the meaning set forth in Section 3.10(b).
"Pension Shortfall Amount" shall have the meaning assigned thereto in
Section 5.5(c).
"Permitted Encumbrances" shall have the meaning set forth in Section
3.16(b).
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust or other entity or organization.
37
"Pharm A Agreement" shall mean the Prescription A Joint Venture Agreement
between Sterling Drug Inc. and Sanofi, dated as of April 26, 1991.
"Pharmaceutical License (or Sublicense)" shall mean a license (or
sublicense) for the manufacture, sale, marketing and distribution of
Over-the-Counter Human Pharmaceutical Products and Human Ethical
Pharmaceutical Products.
"Pharm B Agreement" shall mean the Prescription B Joint Venture Agreement
between Sterling Drug Inc. and Sanofi, dated as of April 26, 1991.
"Pharm Ventures" shall mean the joint ventures established pursuant to the
Pharm A Agreement and the Pharm B Agreement.
"Phiso Building" shall have the meaning set forth in Section 5.21(a).
"Phiso Products" shall have the meaning set forth in Section 5.21(a).
"Plans" shall have the meaning set forth in Section 3.10(b).
"Preparer" shall have the meaning set forth in Section 5.4(c).
"Property Related Rights" shall mean the bundle of rights and interests,
including without limitations all easements, privileges, permits,
rights of way, licenses, warranties, guaranties, if any, held by or
in possession of Seller relating to the use, occupancy, operation,
construction or development of leased or owned real property or
tangible personal property, to the extent legally transferable.
Whenever any provision of this Agreement or any of the Ancillary
Agreements specifically describes, defines, refers to or otherwise
addresses any right that could also be deemed to be a Property
Related Right, such provision shall supersede for all purposes any
other provision of this Agreement that describes, defines, refers to
or otherwise addresses Property Related Rights.
"Purchase Price" shall have the meaning set forth in Section 2.5(a).
"Purchaser" shall have the meaning set forth in the recitals.
38
"Purchaser Indemnified Parties" shall have the meaning set forth in Section
7.3(a).
"Purchaser's Objection" shall have the meaning set forth in Section 2.6(b).
"Recipient" shall have the meaning set forth in Section 5.4(e).
"Related Actions" shall have the meaning set forth in Section 5.22.
"Related to the Business" or "Relating to the Business" shall mean
primarily related to, arising primarily out of or used primarily in
connection with, the Business prior to the Closing; provided that (i)
manufacturing and related activities (together with any related
assets and liabilities, but not any related Intellectual Property)
that supply products primarily to Seller's businesses other than the
Transferred Business, but that are currently conducted as part of the
Transferred Business at a facility constituting an Owned Real
Property or a Leased Real Property, shall be considered Related to
the Business and (ii) manufacturing and related activities (together
with any related assets and liabilities, but not any related
Intellectual Property) that supply products primarily to the
Transferred Business, but that are currently conducted as part of
Seller's businesses other than the Transferred Business at a facility
that does not constitute an Owned Real Property or a Leased Real
Property, shall not be considered Related to the Business. The terms
"Related to the Transferred Assets" and "Relating to the Transferred
Assets" shall have meanings correlative to the foregoing.
"Rensselaer Site I" shall mean the Sterling Organics main manufacturing
plant located in Rensselaer, New York which has been used
continuously since 1889 for the manufacture of pharmaceutical and
chemical products. The plant is generally bordered by the Columbia
Turnpike, Rensselaer Avenue, Belmore Avenue, Riverside Avenue, a
common boundary with Wyandotte Corporation and a Conrail right-of-
way.
"Rensselaer Site II" shall mean those areas along the current site of
Route 9J in East Greenbush, New York where it is alleged that wastes
from the Rensselaer plant were disposed of in the past. This site is
currently owned by the New York State Department of Transportation
and is currently undergoing an
39
investigation by Sterling pursuant to a November 1993 Consent Order with
the New York State Department of Environmental Conservation.
"Rensselaer Site III" shall mean the former landfill site along Pepscanee
Creek in East Greenbush, New York on lands currently or formerly
owned by Graziano and Niagra Mohawk at which Sterling is currently
analyzing remedial measures for the landfill and a resulting off-site
plume.
"Requested Amount" shall have the meaning set forth in Section 5.4(c).
"Required Approvals" shall have the meaning set forth in Section 3.4.
"Reserved Activities" shall mean the Sterling Reserved Activities as
defined in the Shareholders' Agreement among Sterling-Winthrop Group
Limited and Sanofi UK Limited and Sanofi Winthrop Limited dated 31st
December 1991.
"Retirement Plan Employees" shall have the meaning set forth in Section
5.5(c).
"Rx Buyer" shall have the meaning assigned thereto in Section 5.4(i).
"Sanofi" shall mean Purchaser.
"Sanofi License Agreement" shall have the meaning set forth in
Section 5.10(d).
"SAR Plan" shall have the meaning set forth in Section 2.5(c).
"Savings Plan Employees" shall have the meaning set forth in Section
5.5(c).
"Schering" shall mean Schering Aktiengesellschaft.
"Schering Agreement" shall mean the Amended and Restated License Agreement
dated as of December 23, 1992 between Schering and Seller.
"Seller" shall have the meaning set forth in the recitals.
"Seller Indemnified Parties" shall have the meaning set forth in Section
7.2(a).
40
"Seller Retirement Plans" shall have the meaning set forth in Section
5.5(c).
"Seller Savings Plans" shall have the meaning set forth in Section 5.5(c).
"Settlement Payment" shall have the meaning set forth in Section 5.4(c).
"Shared Intellectual Property" shall mean all Intellectual Property used by
(i) one or both of the Pharm Ventures and (ii) the OTC Business in
the conduct of their respective businesses.
"Shared Intellectual Property License Agreements" shall have the meaning
set forth in Section 5.10(e).
"Shared Service Agreement" shall have the meaning set forth in Section
5.14(a).
"Specified Companies" shall mean Sterling Winthrop Products, Inc. (Panama),
Sterling Pharmaceutical, Inc. (PR), Gamma, STERWIN AG and STERPHARM
AG.
"Sublease Agreement" shall have the meaning set forth in Section 5.13.
"Subsidiaries" shall mean all corporations and other entities in which
Seller owns directly or indirectly any shares or other equity
interests, the shares of which or other equity interests in which are
determined pursuant to Section 2.12 to be transferred to Purchaser
pursuant to this Agreement.
"Tax Package" shall have the meaning set forth in Section 5.4(d).
"Tax Returns" shall mean all reports and returns required to be filed with
respect to Taxes.
"Taxes" shall mean all federal, state, local or foreign income, gross
receipts, windfall profits, value added, severance, property,
production, sales, use, license, excise, franchise, employment,
withholding or similar taxes, together with any interest, additions
or penalties with respect thereto and any interest in respect of such
additions or penalties.
"Trade Name License Agreement" shall have the meaning set forth in Section
5.10(f).
41
"Trade Names" shall mean the trade names set forth in Schedule 1.1(j).
"Trademark Agreement" shall have the meaning set forth in Section 5.9(a).
"Transfer Taxes" shall have the meaning set forth in Section 5.4(h).
"Transferee Pension Plans" shall have the meaning set forth in Section
5.5(c).
"Transferee Savings Plans" shall have the meaning set forth in Section
5.5(c).
"Transferred Assets" shall have the meaning set forth in Section 2.1.
"Transferred Business" shall mean the portion of the Business represented
by the Transferred Assets and the Assumed Liabilities.
"Transferred Employees" shall have the meaning set forth in Section 5.5(b).
"U.S. Antitrust Laws" shall mean and include the Sherman Act, as amended,
the Clayton Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other federal and state statutes,
rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade.
"UPT Facility" shall have the meaning set forth in Section 5.6.
"UPT Lease Agreement" shall have the meaning set forth in Section 5.6.
"U.S. Affiliate of Kodak" shall mean any Affiliate of Kodak (other than
Sterling Pharmaceuticals, Inc.) incorporated in a jurisdiction
located in the United States (other than Puerto Rico).
"U.S. Intercompany Accounts Payable of the Transferred Business" shall mean
accounts payable of the Transferred Business that arise out of the
portions of the Transferred Business conducted in the United States.
42
"U.S. Intercompany Accounts Receivable of the Transferred Business" shall
mean accounts receivable of the Transferred Business that arise out
of the portions of the Transferred Business conducted in the United
States.
"WARN" shall mean the Worker Adjustment and Retraining Notification Act.
"Welfare Plans" shall have the meaning set forth in Section 5.5(d).
"Wholly Owned Subsidiary" shall mean each corporation or other entity
Related to the Business, all of the voting shares or other voting
equity interests (other than directors' qualifying shares) in which
are owned directly or indirectly by Seller.
"Working Capital Statement", as of any date, shall mean a statement,
prepared in accordance with Schedule 1.1(l), setting forth the Net
Working Capital of the Transferred Business, other than the Newcos,
including the required activities in the United Kingdom and Japan, as
of such date.
Section 1.2 Other Terms. Other terms may be defined elsewhere
in the text of this Agreement and, unless otherwise indicated, shall have
such meaning throughout this Agreement.
Section 1.3 Other Definitional Provisions.
(a) The words "hereof", "herein", and "hereunder" and words
of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
43
(c) The terms "dollars" and "$" shall mean United States
dollars.
ARTICLE II
PURCHASE AND SALE OF THE BUSINESS
Section 2.1 Purchase and Sale of Assets.
On the terms and subject to the conditions set forth herein, at
the Closing, Seller agrees to sell, convey, transfer, assign and deliver to
Purchaser, and Purchaser agrees to purchase from Seller, all of Seller's
right, title and interest in and to the assets of Seller Related to the
Business, whether tangible or intangible, real or personal, except for the
Excluded Assets (the "Transferred Assets"), including without limitation
(other than as specifically limited by (a) through (l) of this Section
2.1), all of Seller's right, title and interest in the following:
(a) The joint ventures established by the Pharm A Agreement
and the Pharm B Agreement or the assets held by such joint ventures
and all other rights under the Pharm A Agreement and the Pharm B
Agreement;
(b) The Human Ethical Pharmaceutical Products;
(c) Seller's rights under the BMS Agreements;
(d) The Owned Real Property and Leased Real Property and no
other real property;
(e) The Fixtures and Equipment;
(f) All Current Assets as of the Closing Date;
44
(g) The Ethical Intellectual Property (subject to Kodak's
rights under the Dental Agreements), Trade Names and, subject to
Sections 5.10(e) and 5.10(f), the Shared Intellectual Property;
(h) Contracts;
(i) All of the stock of or other equity interests in the
Subsidiaries;
(j) All Books and Records of, or maintained by, the Business;
provided, however, that Seller may retain one copy of any such Books
and Records so long as Seller provides at least one copy of such
Books and Records to Purchaser;
(k) All refunds of Taxes to the extent such Taxes are Assumed
Liabilities; and
(l) All insurance policies owned by Seller or any Majority
Owned Subsidiary that relate primarily to Assumed Liabilities or are
Related to the Business, provided, in each case, that such policies
are assignable and remain in effect following the Closing.
Section 2.2 Excluded Assets. Notwithstanding anything herein
to the contrary, from and after the Closing, Seller shall retain all of its
right, title and interest in and to, and there shall be excluded from the
sale, conveyance, assignment or transfer to Purchaser hereunder, and the
Transferred Assets shall not include, the following (collectively, the
"Excluded Assets"):
45
(a) The joint ventures established by the OTC Agreement;
(b) Seller's consumer products business, including the
business conducted by the Sterling Health and L&F Products divisions
of Seller (including the manufacturing, marketing, sales,
distribution, support operations and research and development
activities related thereto and all inventories and other assets of
such businesses, in each case except to the extent Related to the
Business);
(c) All Ethical Intellectual Property set forth in Schedule
2.2(c) and, subject to Sections 5.10(e) and 5.10(f), Shared
Intellectual Property and all trademarks and trademark registrations
relating to any Dual Product in each jurisdiction in which such Dual
Product is sold as an Over-the-Counter Human Pharmaceutical Product;
(d) Subject to Section 5.16, Seller's rights under all
insurance policies, including insurance policies in respect of
directors and officers who are Transferred Employees, and to all
claims against insurance carriers (other than rights under any
insurance policy referred to in Section 2.1(l));
(e) The UPT Facility;
(f) The fixtures and equipment set forth in Schedule 2.2(f);
46
(g) The contracts set forth in Schedule 2.2(g);
(h) (i) Cash, investment securities and other short- and
medium-term investments of the Specified Companies and the U.S. and
Puerto Rican operations of the Business and (ii) Accounts Receivable
from Kodak;
(i) All refunds of Taxes that are not Assumed Liabilities;
(j) The capital lease relating to the SWIC manufacturing
facility (and related equipment) in Sharon Hill, Pennsylvania;
(k) All Tax Returns of Seller or Kodak;
(l) All real property or interests in real property other than
the Owned Real Property and the Leased Real Property;
(m) Any Books and Records that Seller is required by law to
retain so long as Seller delivers at least one copy thereof to
Purchaser; and
(n) All rights to the names "Eastman", "Kodak" and, subject to
Section 5.9(a) "Sterling".
Section 2.3 Assumption of Liabilities. On the terms and
subject to the conditions set forth herein, at the Closing, Purchaser
agrees to assume and discharge or perform when due, all debts, liabilities,
or obligations whatsoever, other than Excluded Liabilities, that are
Related to the Business or that otherwise are Related to the Transferred
Assets, whether arising before or after the Closing and
47
whether known or unknown, fixed or contingent (the "Assumed Liabilities"),
including, without limitation (other than as specifically limited by
Section 2.4 hereof), the following:
(a) The Contracts, including (i) the Pharm A Agreement and
the Pharm B Agreement; (ii) the Development Agreement; (iii) the BMS
Agreements; (iv) all licenses from third parties (including Kodak and
any Affiliate of Kodak that does not constitute part of the
Transferred Business) assigned or otherwise transferred to Purchaser;
and (v) subject to Section 5.15, the Dental Agreements;
(b) All Current Liabilities as of the Closing Date;
(c) All liabilities with respect to all actions, suits,
proceedings, disputes, claims or investigations that are Related to
the Business or otherwise Relating to the Transferred Assets, at law,
in equity or otherwise, including but not limited to (i) product
liability claims and (ii) liability for any damage arising out of or
relating to, and for any obligation to remediate, environmental
conditions associated with the Owned Real Property and Leased Real
Property, whether on-site or off-site (except to the extent such
liability or obligation arises out of or relates to the disposal at
Rensselaer Site II or Rensselaer Site III
48
of Hazardous Waste generated at Rensselaer Site I or any other Owned Real
Property or Leased Real Property);
(d) All liabilities for non-U.S. Taxes (whether imposed by
any national, state, departmental, provincial, local or other
jurisdiction) imposed on or with respect to each Newco to the extent
such Taxes are Related to the Transferred Assets or the Transferred
Business for the taxable periods, or portions thereof, ending on or
before the Closing Date; provided, however, that Assumed Liabilities
shall not include liabilities for any Taxes that are imposed on
Kodak, Seller, the Affiliates of either Kodak or Seller, any third
party that acquires Seller or any portion of the assets of Seller, or
Purchaser or any Affiliate of Purchaser and (X) are attributable to
any taxable periods ending before, on or after the Closing Date that
arise with respect to, or are attributable to, the Reserved
Activities, or (Y) for the taxable periods, or portions thereof,
ending on or before the Closing Date that arise as a result of
transfers (by distribution or otherwise) of cash or sales or
transfers (by distribution or otherwise) of other property, occurring
prior to the Closing (with respect to the country in which such cash
or other property is located prior to such sale or transfer), and in
the case of sales or transfers of property other than cash, also
occurring
49
outside of the ordinary course of business, in all cases including, without
limitation, sales and transfers of cash or other property contemplated by
Section 2.7 or 2.12 of this Agreement. Neither this Section 2.3(d) nor
Section 2.4(b) nor Section 2.4(g) shall govern the allocation between the
parties of any Transfer Taxes allocated pursuant to Section 5.4(h); and
(e) (i) All employee benefit, compensation and severance
liabilities and other similar liabilities associated with any
Transferred Employees to the extent provided in Sections 5.5 and 5.7,
(ii) one half of the severance liabilities due to any non-U.S.
Transferred Employee whose employment is deemed to be terminated by
operation of law as a result of the transactions contemplated herein
and (iii) all liabilities under all union contracts with respect to
all such Transferred Employees.
Section 2.4 Excluded Liabilities. Notwithstanding any other
provision of this Agreement, the liabilities and obligations of Seller or
any subsidiary, which are not to be assumed by Purchaser hereunder (the
"Excluded Liabilities") are the following:
(a) All liabilities arising out of or relating to the Excluded
Assets (including any liability or obligation arising out of or
relating to the disposal
50
at Rensselaer Site II or Rensselaer Site III of Hazardous Waste generated
at Rensselaer Site I or any other Owned Real Property or Leased Real
Property);
(b) All liabilities for Taxes imposed with respect to the
Transferred Business for the taxable periods, or portions thereof,
ending on or before the Closing Date (whether imposed by a Taxing
authority or by virtue of any Tax sharing agreement) not expressly
assumed pursuant to Section 2.3(d) hereof;
(c) All (i) indebtedness for money borrowed, if any, of the
Specified Companies, the Oldcos of Seller in Spain and Belgium and
the U.S. operations of the Business and (ii) Accounts Payable to
Kodak;
(d) The capital lease relating to the SWIC manufacturing
facility in Sharon Hill, Pennsylvania;
(e) All other liabilities and obligations for which Seller has
expressly assumed responsibility pursuant to this Agreement;
(f) All debts, liabilities, or obligations whatsoever, that
are not Related to the Business or that are not otherwise Related to
the Transferred Assets;
(g) All costs or expenses other than Taxes that arise as a
result of transfers (by distribution or otherwise) of cash or sales
or transfers (by distribution or otherwise) of other property
occurring
51
prior to the Closing (with respect to the country in which such cash or
other property is located prior to such sale or transfer), and in the case
of sales or transfers of property other than cash, also occurring outside
the ordinary course of business, in all cases including, without
limitation, sales and transfers of cash or property contemplated by Section
2.7 or 2.12 of this Agreement. Neither this Section 2.4(g) nor Section
2.3(d) nor Section 2.4(b) shall govern the allocation between the parties
of any Transfer Taxes allocated pursuant to Section 5.4(h); and
(h) All employee benefit, compensation, welfare and severance
liabilities and other liabilities associated with any Employees,
Transferred Employees or Former Employees, except to the extent
otherwise expressly provided in Section 5.5 and 5.7 hereof and
Section 2.3(e) hereof.
Section 2.5 Purchase Price.
(a) On the terms and subject to the conditions set forth
herein, Purchaser agrees (i) to pay Seller $1,602,763,000 (the "Cash
Portion") and (ii) in accordance with the provisions of Section 2.8 hereof
and without further consideration being paid by Seller, to sell, convey,
transfer, assign and deliver to Seller, all of Purchaser's right, title and
interest in and to the OTC Venture, the OTC Shares and the OTC Assets (and
all assets of Purchaser
52
related thereto that the parties determine, pursuant to Section 2.12(a)
hereof, to transfer otherwise than through the transfer of the OTC Venture,
the OTC Shares or the OTC Assets) (the "OTC Portion") (the Cash Portion and
the OTC Portion together being the "Purchase Price"). The Cash Portion
shall be subject to adjustment as provided in paragraphs (b) and (c) of
this Section 2.5 and Section 2.6 hereof.
(b) (i) In addition to the foregoing, immediately prior to the
Closing, the parties will settle the balances of any payments due between
them in connection with each of the Pharm A Agreement, the Pharm B
Agreement, the Development Agreement and the OTC Agreement in the manner
agreed by the parties. In addition, Purchaser shall pay Seller $72,237,000
pursuant to Section 12.2 of the Development Agreement in consideration of
the termination of such agreement. Upon the Closing, each of the Pharm A
Agreement, the Pharm B Agreement, the Development Agreement and the OTC
Agreement shall be automatically terminated.
(ii) In addition to the foregoing, at the Closing the
parties will settle the balance of any payments due, or to become due in
respect of periods prior to the Closing, to Seller or a related entity
under the BMS Agreements by Purchaser or a related entity. Notwithstanding
anything contained herein to the contrary,
53
any amounts paid to Seller in accordance with this Section 2.5(b)(ii) shall
not be considered to be Transferred Assets.
(iii) In addition to the foregoing, immediately prior to the
Closing, Seller shall pay to Purchaser an adjustment payment in an amount
equal to the excess of Seller's share of the aggregate indebtedness for
borrowed money of the companies and other entities established as part of
the Pharm Ventures and OTC Ventures outside the United States (the "Non-
U.S. Venture Companies") over Seller's share of the aggregate of the cash,
investment securities and other short- and medium-term investments of the
Non-U.S. Venture Companies, all as determined in accordance with
Schedule 2.5(b)(iii) hereto.
(c) In addition to the foregoing, Purchaser shall pay to
Seller within 30 days after the Closing Date:
(i) the sum of $1.6 million with respect to the
outstanding phantom stock appreciation rights under the Sterling
Winthrop Inc. Affiliates Phantom Stock Appreciation Rights Plan (the
"SAR Plan") of the Transferred Employees (as defined in
Section 5.5(b)) on the Closing Date; provided that Seller shall cause
such phantom stock appreciation rights to be fully vested on the
Closing Date and to remain outstanding for the balance of their
respective exercise periods as set forth in the applicable notice of
grant, except to the extent agreed otherwise by a Transferred
Employee; and
54
(ii) the sum of $4.0 million with respect to the account
balances of the Transferred Employees under the Sterling Winthrop
Inc. Deferred Compensation Plan on the Closing Date.
Section 2.6 Business Post-Closing Adjustments.
(a) Seller shall prepare (or cause to be prepared), and shall
deliver to Purchaser, (i) no later than the Closing Date, a Working Capital
Statement and a Net Worth Statement, in each case as of December 31, 1993
(respectively, the "Opening Working Capital Statement" and the "Opening Net
Worth Statement", and together, the "Opening Statements"), and (ii) within
60 days following the Closing, a Working Capital Statement and a Net Worth
Statement, in each case as of the Closing Date (respectively, the "Closing
Working Capital Statement" and the "Closing Net Worth Statement", and
together, the "Closing Statements"). The parties shall have the right to
correct manifest errors in the Opening Statements within 60 days after the
Closing Date (any corrected Opening Statement delivered to Purchaser shall
replace such Opening Statement delivered on the Closing Date for all
purposes under this Agreement and be deemed to have been delivered on the
Closing Date).
(b) Purchaser and Purchaser's accountants shall, within 60
days after the delivery by Seller of the Closing Statements, complete their
review of such Statements. In
55
the event that Purchaser determines that one or more of such Statements
have not been prepared in accordance with Schedule 1.1(1) and 3.7(a)(ii),
or that one or both Closing Statements have not been prepared on the same
basis as the related Opening Statement, Purchaser shall inform Seller in
writing (the "Purchaser's Objection"), setting forth a specific description
of the basis of Purchaser's Objection and the adjustments to the Net
Working Capital and/or the Aggregate Newco Net Worth which Purchaser
believes should be made, on or before the last day of such 60-day period.
Seller shall then have 30 days to review and respond to Purchaser's
Objection. If Seller and Purchaser are unable to resolve all of their
disagreements with respect to the determination of the foregoing items
within 10 days following the completion of Seller's review of Purchaser's
Objection, they shall refer their remaining differences to Coopers and
Lybrand or another internationally recognized firm of independent public
accountants as to which Seller and Purchaser mutually agree (the "CPA
Firm"), who shall, acting as experts and not as arbitrators, determine on
the basis of the principles set forth in Schedule 1.1(l) and 3.7(a)(ii),
and only with respect to the remaining differences so submitted, whether
and to what extent, if any, the Net Working Capital and/or the Aggregate
Newco Net Worth, as reflected on the Closing Statements, require
adjustment. The CPA Firm shall deliver its written
56
determination to Purchaser and Seller no later than the twentieth day
after
the remaining differences underlying the Purchaser's Objection are referred
to the CPA Firm, or such longer period of time as the CPA Firm determines
is necessary. The CPA Firm's determination shall be conclusive and binding
upon Purchaser and Seller. The fees and disbursements of the CPA Firm
shall be shared equally by Purchaser and Seller. Purchaser and Seller
shall make readily available to the CPA Firm all relevant books and records
and any work papers (including those of the parties' respective
accountants) relating to the Opening Statements and the Closing Statements
and all other items reasonably requested by the CPA Firm.
The "Adjusted Closing Statement" (or the "Adjusted Closing Net
Worth Statement") shall be (i) the Closing Working Capital Statement (or
the Closing Net Worth Statement, as the case may be) in the event that (x)
no Purchaser's Objection is delivered to Seller during the 30-day period
specified above with respect to such Statement, or (y) Seller and Purchaser
so agree, (ii) the Closing Working Capital Statement (or the Closing Net
Worth Statement, as the case may be), adjusted in accordance with the
Purchaser's Objection in the event that Seller does not respond to
Purchaser's Objection (to the extent related to such Statement) within the
30-day period following receipt by Seller of Purchaser's Objection, or
(iii) the Closing
57
Working Capital Statement (or the Closing Net Worth Statement, as the case
may be), as adjusted by either (x) the agreement of Seller and Purchaser or
(y) the CPA Firm.
In the event that the adjustment of a Closing Statement
pursuant to this Section 2.6(b) discloses that it is appropriate to include
an item in the calculation of Net Working Capital (or the Aggregate Newco
Net Worth, as the case may be) that had been omitted from the related
Opening Statement or to omit an item in the calculation of Net Working
Capital (or the Aggregate Newco Net Worth, as the case may be) that had
been included in the related Opening Statement, Seller shall prepare a
revised Opening Statement so that the differences between the amount of Net
Working Capital (or the Aggregate Newco Net Worth, as the case may be)
reflected on the Opening Statement and on the Closing Statement reflect
only the impact of the passage of time on the balances of the accounts
included in the determination of Net Working Capital (or the Aggregate
Newco Net Worth, as the case may be).
(c) Purchaser shall provide Seller and its accountants full
access to the Books and Records, any other information, including working
papers of its accountants, and to any employees to the extent necessary for
Seller to prepare the Closing Statements, the Adjusted Closing Working
Capital Statement and the Adjusted Closing Net Worth Statement.
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(d) Within 10 Business Days following issuance of both the
Adjusted Closing Working Capital Statement and the Adjusted Closing Net
Worth Statement, the net adjustment payment payable pursuant to this
Section 2.6(d) hereof (the "Net Adjustment Payment") shall be paid by wire
transfer of immediately available funds to a bank account designated by
Purchaser or Seller, as the case may be. The Net Adjustment Payment shall
be the arithmetic sum of the adjustment payment in respect of the Adjusted
Closing Working Capital Statement and the adjustment payment in respect of
the Adjusted Closing Net Worth Statement, each determined as follows:
(i) the adjustment payment in respect of the Adjusted Closing Working
Capital Statement shall be the difference, if any, between (x) Net
Working Capital, as reflected on the Adjusted Closing Working Capital
Statement, and (y) Net Working Capital, as reflected on the Opening
Working Capital Statement.
(ii) the adjustment payment in respect of the Adjusted Closing Net Worth
Statement shall be the difference, if any, between (x) the Aggregate
Newco Net Worth, as reflected on the Adjusted Closing Net Worth
Statement, and (y) the Aggregate Newco Net Worth, as reflected on the
Opening Net Worth Statement.
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The Net Adjustment Payment shall be payable by Purchaser to
Seller, if positive, and by Seller to Purchaser, if negative.
(e) On the date of any transfer of assets from a Seller
Retirement Plan to a Transferee Pension Plan, Seller shall pay to Purchaser
the Pension Shortfall Amount, if applicable, or the Purchaser shall pay to
the Seller the Pension Excess, if applicable.
Section 2.7 Disposition of Cash and Short-term Investments.
Prior to the Closing, Seller shall cause all cash balances, investment
securities and other short- and medium-term investments held by Gamma to be
distributed or otherwise paid, in a manner chosen by Seller, to Seller or
one of Seller's Affiliates that does not constitute a part of the
Transferred Business. All costs and expenses of the distributions or
payments contemplated by this Section 2.7 (including liabilities for any
Taxes arising as a result of such distributions or payments) shall be borne
by Seller.
Section 2.8 Transfer of the OTC Portion.
On the terms and subject to the conditions set forth herein, at
the Closing, Purchaser agrees to sell, convey, transfer, assign and deliver
to Seller, and Seller agrees to purchase from Purchaser, all of Purchaser's
right, title and interest in and to the OTC Venture, the OTC Shares and the
OTC Assets.
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Section 2.9 Closing.
(a) The Closing shall take place at the offices of Sullivan &
Cromwell, 125 Broad Street, New York, New York 10004 at 12:01 A.M. New York
City time, on October 1, 1994, provided that all of the conditions set
forth in Sections 6.1, 6.2(e) and 6.3(e) hereof have been satisfied or
waived with respect to at least (x) all Transferred Assets located in the
United States and Puerto Rico and (y) the OTC Portion of the Purchase
Price, or at such other time and place as the parties hereto may mutually
agree. The date on which the Closing occurs is called the "Closing Date".
(b) Notwithstanding anything to the contrary contained in
this Agreement, to the extent that the sale, assignment, transfer,
conveyance or delivery or attempted sale, assignment, transfer, conveyance
or delivery to (x) Purchaser of any Transferred Asset or (y) Seller of any
part of the OTC Portion is prohibited by any applicable law or would
require any governmental or third party authorizations, approvals, consents
or waivers and such authorizations, approvals, consents or waivers shall
not have been obtained prior to the Closing or, in the case of the
Transferred Assets, at the date of the Closing the conditions set forth in
Section 6.1 have not been satisfied with respect to Transferred Assets
located outside of the United States, this Agreement shall not constitute a
sale, assignment, transfer, conveyance or delivery, or any
61
attempted sale, assignment, transfer, conveyance or delivery, thereof.
Following the Closing, the parties shall use reasonable efforts, and
cooperate with each other, to obtain promptly such authorizations,
approvals, consents or waivers; provided, however, that neither Seller nor
Purchaser shall be required to pay any consideration therefor, other than
filing, recordation or similar fees payable to any governmental authority,
which fees shall be shared 2.9(b))equally by Purchaser and Seller.
Pending such authorization, approval, consent or waiver, (i) the parties
shall cooperate with each other in any reasonable and lawful arrangements
designed to provide to (x) Purchaser the benefits and liabilities of use of
such Transferred Asset and (y) Seller the benefits and liabilities of use
of such part of the OTC Portion, in each case from the Closing Date through
the date of the relevant closing, and (ii) to the extent legally
permissible, Seller shall transfer to Purchaser the effective management of
the Transferred Business and, to the extent such transfer is legally
impermissible, operate the Transferred Business in accordance with
Purchaser's instructions and at Purchaser's cost. Once such authorization,
approval, consent or waiver for the sale, assignment, transfer, conveyance
or delivery of a Transferred Asset or part of the OTC Portion, as the case
may be, not sold, assigned, transferred, conveyed or delivered at the
Closing is obtained, Seller or Purchaser,
62
as the case may be, shall promptly assign, transfer, convey and deliver
such Transferred Asset or part of the OTC Portion, as the case may be, to
Purchaser or Seller, as the case may be, at no additional cost. To the
extent that any such Transferred Asset or part of the OTC Portion, as the
case may be, cannot be transferred or the full benefits and liabilities of
use of any such Transferred Asset or part of the OTC Portion, as the case
may be, cannot be provided to Purchaser or Seller, as the case may be,
following the Closing pursuant to this Section 2.9(b), then Purchaser and
Seller shall enter into such arrangements (including subleasing or
subcontracting if permitted) to provide to the parties the economic (taking
into account Tax costs and benefits) and operational equivalent of
obtaining such authorization, approval, consent or waiver and the perfor-
mance by Purchaser and Seller of their respective obligations thereunder.
(c) Seller shall endeavor to transfer as many of the
Transferred Assets to Purchaser as is practical on the Closing Date. It is
understood, however, that Seller will be undertaking restructuring
transactions with respect to certain of the Transferred Assets that may not
be complete prior to the Closing Date. Subject to Section 2.9(b) above,
Seller will complete such transfers of Transferred Assets to Purchaser by
December 31, 1994 (it being understood that any ruling from Tax or other
governmental authorities regarding
63
the Tax effect of the transactions referred to in the previous sentence
shall not be deemed to constitute required governmental or third party
authorizations, approvals, consents or waivers referred to in Section
2.9(b)).
Section 2.10 Deliveries by Purchaser. At the Closing,
Purchaser shall deliver to Seller, and with respect to Sections 2.10(f) and
2.10(g) as applicable, to Kodak, the following:
(a) the Cash Portion, in immediately available funds by wire
transfer to an account designated by Seller not less than two business days
prior to the Closing;
(b) assignments, in form and substance acceptable to Seller,
assigning to Seller all of Seller's right, title and interest in the OTC
Venture, OTC Assets and all OTC Shares;
(c) such instruments of assumption and other instruments or
documents, in form and substance reasonably acceptable to Seller, as may be
necessary to effect Purchaser's assumption of the Assumed Liabilities;
(d) such other instruments and documents, in form and
substance reasonably acceptable to Seller, as may be necessary to effect
the Closing;
(e) a duly executed copy of each of the Ancillary Agreements;
(f) the certificates and other documents to be delivered
pursuant to Section 6.3 hereof; and
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(g) any payment required pursuant to Section 2.5(b) hereof.
Section 2.11 Deliveries by Seller and Kodak. At the Closing,
Seller, and with respect to Sections 2.11(b) and 2.11(f) and as applicable,
Kodak, shall deliver to Purchaser the following:
(a) bills of sale and any other appropriate instruments of
sale and conveyance, in form and substance reasonably acceptable to
Purchaser, transferring all tangible personal property included in the
Transferred Assets to Purchaser;
(b) assignments, in form and substance acceptable to
Purchaser, assigning to Purchaser all Ethical Intellectual Property and,
subject to Section 2.12 hereof, Seller's interests in all corporations,
partnerships and other entities which interests are included in the
Transferred Assets;
(c) deeds, in limited warranty or other similar form, and any
other customary instruments of sale or conveyance, in each case in form and
substance reasonably acceptable to Purchaser, transferring all Owned Real
Property to Purchaser subject to any and all Permitted Encumbrances;
(d) assignments or, where necessary, subleases, in form and
substance reasonably acceptable to Purchaser,
65
assigning or subleasing to Purchaser all Leased Real Property;
(e) such other instruments or documents, in form and substance
reasonably acceptable to Purchaser, as may be necessary to effect the
Closing;
(f) a duly executed copy of each of the Ancillary Agreements;
(g) copies of surveys and title insurance policies in the
possession of Seller or Seller's representatives, if any, with respect to
Owned Real Property and Leased Real Property and, if applicable, copies of
certificates in the possession of Seller or Seller's representatives with
respect to Owned Real Property and Leased Real Property;
(h) the certificates and other documents to be delivered
pursuant to Section 6.2 hereof; and
(i) any payments required pursuant to Section 2.5(b) hereof.
Section 2.12 Agreement of Means of Transfer.
(a) Notwithstanding anything contained in Section 2.1, 2.3, 2.8, 2.10 or
2.11 hereof, (i) Seller and Purchaser hereby agree to restructure and to
transfer the Transferred Assets (and related Assumed Liabilities and
Transferred Employees) and the assets (and related liabilities)
constituting part of the OTC Portion, in each case as described in Schedule
2.12(a)(i), in the manner therein described, and (ii) Seller
66
and Purchaser will negotiate in good faith to agree, on a country-by-
country basis as to the restructuring and means of transfer of the
Transferred Assets, Assumed Liabilities and Transferred Employees (e.g.,
the sale of the equity interests in corporate or unincorporated entities or
the sale of the assets held by and assumption of liabilities of such
entities) to the extent not described in Schedule 2.12(a)(i). If not
otherwise described in Schedule 2.12(a)(i) and subject to Section 2.12(c),
with respect to the OTC Portion, the OTC Shares will be transferred in
stock transactions and the OTC Assets will be transferred in an asset
transaction.
(b) If an agreement has not been reached pursuant to Section
2.12(a) on or before August 31, 1994 regarding the means of transfer of the
Transferred Assets (and related Assumed Liabilities and Transferred
Employees) in any country, the means of transfer in each such country shall
be determined in accordance with the following procedure which shall be
completed on or before September 1, 1994:
(1) A list shall be compiled of all such countries (the
"Listed Countries");
(2) Purchaser and Seller shall flip a coin to determine which
of them (the "First Chooser") shall choose the first country pursuant to
clause (3);
(3) The parties shall alternate, beginning with the First
Chooser, in selecting from the Listed Countries,
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countries that have not already been chosen. The party that selects any
country shall choose, as the means of transfer, either (i) a transfer of
equity interests or (ii) a transfer of assets in that country.
The means of transfer chosen pursuant to this Section 2.12(b)
shall be binding unless the parties agree otherwise.
(c) The parties acknowledge that, notwithstanding whether a
transfer of assets occurs by transferring an interest in an entity or the
assets held by such entity, or any other means chosen pursuant to Section
2.12(a) hereof, the transfer will be structured in a manner that gives
effect to the definitions of Transferred Assets, Excluded Assets, Assumed
Liabilities, Excluded Liabilities, OTC Assets and OTC Shares. The
foregoing shall include, without limitation, the right of Seller to remove
any Excluded Asset from an entity constituting a Transferred Asset prior to
transferring such entity.
(d) In the event that the parties determine, pursuant to this
Section 2.12, that any assets constituting part of the OTC Portion shall be
transferred otherwise than through the transfer of the OTC Venture, the OTC
Shares or the OTC Assets, Purchaser shall, as of the Closing Date, make
representations and warranties to Seller and Kodak, solely with respect to
such assets to be transferred by Purchaser or an Affiliate of Purchaser,
comparable in scope
68
to the representations made by Seller in Sections 3.3, 3.4, 3.5, and, if
applicable, Sections 3.16 and 4.7 relating to the transfer of the
Transferred Assets and the OTC Assets, as the case may be.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND KODAK
Seller, and with respect only to Sections 3.1, 3.3, 3.4, 3.5,
3.6, and 3.10 insofar as it relates to Plans maintained by Kodak, Kodak,
represent and warrant to Purchaser as of the date hereof and as of the
Closing Date (except that representations and warranties that are made as
of a specific date need be true only as of such date) as follows:
Section 3.1 Organization and Qualification. (a) Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own and operate the Transferred Assets and
to carry on the Business as currently conducted. Except as set forth on
Schedule 3.1(a) hereto, Seller is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the
ownership or operation of the Transferred Assets or the conduct of the
Business requires such qualification, except where the failure to be so
qualified or in good standing, as the case may be, would not
69
materially adversely affect Purchaser's ability to conduct the
Transferred
Business substantially as heretofore conducted.
(b) Kodak is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation.
Section 3.2 Subsidiaries; Joint Ventures, etc. (a) Schedule
3.2(a)(i) hereto sets forth a list of each corporation and other entity the
shares of which or interests in, or assets owned by, constitute Transferred
Assets (other than Minority Subsidiaries), together with its jurisdiction
of organization and its authorized and outstanding capital stock or other
equity interests as of the date hereof. Except as set forth on Schedule
3.2(a)(ii) hereto, each such entity is a corporation or other entity duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of organization and has all requisite corporate or similar
power and authority to own and operate its properties and assets and to
carry on its business as presently conducted and is duly qualified to do
business and is in good standing as a foreign corporation or other entity
in each jurisdiction where the ownership or operation of its properties and
assets or the conduct of its business requires such qualification, except
where the failure to be so duly organized, validly existing, qualified or
in good standing would not materially adversely affect
70
Purchaser's ability to conduct the Transferred Business substantially
as
heretofore conducted. Seller has heretofore delivered, or will deliver
prior to Closing, to Purchaser true and complete copies of the governing
documents of each Subsidiary.
(b) Except as set forth on Schedule 3.2(b) hereto, Seller
owns, directly or indirectly, all of the outstanding capital stock or other
equity interest of each Wholly Owned Subsidiary free and clear of all
Encumbrances. There are no preemptive or other outstanding rights,
options, warrants, conversion rights or agreements or commitments to issue
or sell any shares of capital stock or other equity interest of any such
Subsidiary or any securities or obligations convertible into or
exchangeable for, or giving any Person a right to subscribe for or acquire,
any shares of capital stock or other equity interest of any such
Subsidiary, and no securities or obligations evidencing such rights are
outstanding.
Section 3.3 Corporate Authorization. Seller and Kodak have
full corporate power and authority to execute and deliver this Agreement
and each of the Ancillary Agreements, and to perform their obligations
hereunder and thereunder. The execution, delivery and performance by
Seller and Kodak of this Agreement and each of the Ancillary Agreements
have been duly and validly authorized and no additional corporate
authorization or consent is required in connection with the
71
execution, delivery and performance by Seller and Kodak of this
Agreement
and each of the Ancillary Agreements.
Section 3.4 Consents and Approvals. Except as specifically
set forth in Schedule 3.4 or as required by U.S. Antitrust Laws, Argentina,
Australia, Brazil, Canada, Mexico, EC Competition Law (or France, Germany,
Italy, Spain, the United Kingdom, to the extent not subject to EC
jurisdiction), Comprehensive Drug Abuse Prevention and Control Act of 1970,
Drug Enforcement Agency, Bureau of Alcohol and Tobacco, Hazardous Waste
facility permits, air permits, water permits and any other permits required
by any other Environmental Law, Federal Food, Drug and Cosmetics Act, U.S.
state wholesale drug licensing laws, the Exchange Act, the Nuclear
Regulatory Act, the Investment Canada Act and any other similar laws or
regulations, no consent, approval, waiver or authorization is required to
be obtained by Seller, Kodak or any Majority Subsidiary from, and no notice
or filing is required to be given by Seller, Kodak or any Majority
Subsidiary to or made by Seller, Kodak or any Majority Subsidiary with, any
Federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by Seller of this
Agreement and each of the Ancillary Agreements, other than in all cases
where the failure to obtain such consent, approval, waiver or
authorization, or to give or make such notice of filing would not
materially adversely affect
72
Purchaser's ability to conduct the Transferred Business substantially
as
heretofore conducted or materially impair or delay the ability of Seller to
effect the Closing (together with the consents, approvals, waivers,
authorizations, notices and filings referred to in Section 4.4 and
Schedules 3.4 and 4.4 hereof, the "Required Approvals").
Section 3.5 Non-Contravention. Except as set forth on
Schedule 3.5, the execution, delivery and performance by Seller and Kodak
of this Agreement and each of the Ancillary Agreements, and the
consummation of the transactions contemplated hereby and thereby, does not
and will not (i) conflict with or violate any provision of the Articles of
Incorporation, Bylaws or other organizational documents of Seller or Kodak,
(ii) subject to obtaining the consents referred to in Section 3.4, conflict
with, or result in the breach of, or constitute a default under, or result
in the termination, cancellation or acceleration (whether after the filing
of notice or the lapse of time or both) of any right or obligation of
Seller or Kodak under, or to a loss of any benefit to which Seller or Kodak
is entitled under, any Contract or result in the creation of any
Encumbrance upon any of the Transferred Assets, or (iii) assuming the
consents and approvals listed in Sections 3.4 and 4.4 are obtained, violate
or result in a breach of or constitute a default under any law, rule,
regulation, judgment,
73
injunction, order, decree or other restriction of any court
or
governmental authority to which Seller or Kodak is subject, including any
Governmental Authorization, other than in the cases of clauses (ii) and
(iii), any conflict, breach, termination, default, cancellation,
acceleration, loss, violation or Encumbrance which, individually or in the
aggregate, would not materially impair Purchaser's ability to conduct the
Transferred Business substantially as heretofore conducted or materially
adversely affect or delay Seller's or Kodak's ability to perform its
obligations hereunder.
Section 3.6 Binding Effect. This Agreement constitutes, and
each of the Ancillary Agreements when executed and delivered by the parties
thereto will constitute, a valid and legally binding obligation of each of
Seller and Kodak enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
Section 3.7 Financial Statements. (a) The unaudited pro forma
Asset and Liability Statement of the Transferred Business and the unaudited
income statement of the Transferred Business for the year ended December
31, 1993 attached as Schedule 3.7(a)(i) hereto (together, the "Financial
Statements") fairly present the financial
74
condition of the Transferred Business as of the date thereof, or the period
then ended, as the case may be, and were prepared in accordance with GAAP
as interpreted and applied historically by Seller using such methodologies,
including such exceptions to GAAP, as are described in Schedule 3.7(a)(ii),
in the case of the Asset and Liability Statement, and as are described in
Schedule 3.7(a)(iii), in the case of the income statement. The Working
Capital Statement is derived from the Asset and Liability Statement. The
asset and liability statement, to be dated as of the Closing Date, will
fairly present the financial condition of the Transferred Business as of
the date thereof and will be prepared on the same basis as the Asset and
Liability Statement, except as will be described in the notes thereto.
(b) All of the liabilities reflected on the Asset and
Liability Statement are Related to the Business and arose out of or were
incurred in the conduct of the Transferred Business.
Section 3.8 Litigation and Claims. (a) Except as set forth
in Schedule 3.8(a), there is no civil, criminal or administrative action,
suit, demand, claim, hearing, proceeding or investigation pending or, to
the knowledge of Seller, threatened, involving the Transferred Business
(other than those related to Minority Subsidiaries) or any of the
Transferred Assets (except where owned by Minority Subsidiaries) other than
those which, individually or in the
75
aggregate, would not materially adversely affect Purchaser's ability
to
conduct the Transferred Business substantially as heretofore conducted or
materially impair or delay Seller's ability to effect the Closing.
(b) Except as set forth in Schedule 3.8(b), none of the
Transferred Assets (except where owned by Minority Subsidiaries) is subject
to any order, writ, judgment, award, injunction, or decree of any court or
governmental or regulatory authority of competent jurisdiction or any
arbitrator or arbitrators other than those which, individually or in the
aggregate, would not materially adversely affect Purchaser's ability to
conduct the Transferred Business substantially as heretofore conducted or
materially impair or delay the ability of Seller to effect the Closing.
Section 3.9 Taxes. Except as set forth in the Financial
Statements or Schedule 3.9:
(a) All Tax Returns that are required to be filed on or before
the date of this Agreement (taking into account any applicable extensions)
with respect to the Business by or with respect to those corporate or
unincorporated entities the interests in which, or assets held directly or
indirectly by Seller, constitute Transferred Assets, have been duly filed,
except for Tax Returns the failure to file which, when taken together with
all other such failures, do not result in a material understatement of the
aggregate Tax
76
liability of such entities; (b) all information provided in such Tax
Returns is true, complete and accurate in all material respects; (c) all
Taxes attributable to each entity described in clause (a) that are or were
due and payable (without regard to whether such Taxes have been assessed)
have been timely paid, except for such Taxes the failure to pay which, when
taken together with all other such failures, will not be material; (d) no
adjustments relating to the Tax Returns referred to in clause (a) have been
proposed by the Internal Revenue Service or the appropriate state, local or
foreign taxing authority, except for such adjustments which, when taken
together with all other such adjustments that have been proposed, are not
reasonably expected to be material; (e) there are no pending or, to the
knowledge of Seller, threatened actions or proceedings for the assessment
or collection of Taxes against any entity described in clause (a), except
for such actions or proceedings which, when taken together with all other
such actions and proceedings that are pending or have been threatened, are
not reasonably expected to be material; (f) there are no outstanding
waivers or agreements extending to the applicable statute of limitations
for any period with respect to any Taxes of any entity described in clause
(a), except for any such waiver or agreement, when taken together with all
other such waivers and agreements that are outstanding, are not reasonably
expected to be material;
77
(g) no audit examinations with respect to any entity described in clause
(a) are presently in progress, except for such audit examinations which,
when taken together with all other such audit examinations that are in
progress, are not reasonably expected to result in a liability that is
material; (h) Seller and each of the Subsidiaries have withheld from their
employees (and timely paid to the appropriate governmental entity or set
aside in an account for such purposes) proper and accurate amounts for all
periods through the date of this Agreement in compliance with all Tax
withholding provisions of applicable Federal, state, local and foreign laws
(including, without limitation, income, social security and employment Tax
withholding for all types of compensation) except such amounts, which when
added to all other such amounts not so withheld, paid or set aside, would
not be material; (i) there is no contract, agreement or intercompany
account system in existence under which Seller or any of the Subsidiaries
have, or may at any time in the future have, an obligation to contribute to
the payment of any portion of a Tax (or pay any amount calculated with
reference to any portion of a Tax) determined on a consolidated, combined
or unitary basis with respect to an affiliated group (as defined in Section
1504 of the Code) or other group of corporations of which the Subsidiaries
are or were a part which when taken together with all other such contracts,
78
agreements, or account systems result in an obligation that is
material;
and (j) adequate provisions in accordance with GAAP appropriately and
consistently applied (except as set forth on Schedule 3.7(a)(ii)) have been
made in the Asset and Liability Statement for the payment of all non-U.S.
Tax liabilities of the entities described in clause (a) with respect to the
Business for the periods covered thereby that were not yet due and payable
as of the dates thereof, regardless of whether the liability for such Taxes
is disputed other than Taxes which taken together are not material.
Section 3.10 Employee Benefits. (a) All benefit plans,
contracts or arrangements covering U.S. Employees, including, but not
limited to, "employee benefit plans" within the meaning of Section 3(3) of
ERISA, and plans of deferred compensation (the "Benefit Plans"), are listed
in Schedule 3.10(a). True and complete copies of all Benefit Plans,
including, but not limited to, any trust instruments and insurance
contracts forming a part of any Benefit Plans, and all amendments thereto
have been provided or made available to Purchaser.
(b) All employee benefit plans covering U.S. Employees (the
"Plans"), to the extent subject to ERISA or the Code, are in substantial
compliance with ERISA and the Code. Each Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA ("Pension
Plan")
79
and which is intended to be qualified under Section 401(a) of the Code, has
received a favorable determination letter from the Internal Revenue
Service, and Seller is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. Except as set forth
in Schedule 3.10(b), there is no material pending or threatened litigation
relating to the Plans and, to the knowledge of Seller, no such litigation
is likely. Neither Seller, Kodak, nor any of the Majority Owned
Subsidiaries has engaged in a transaction, and no event has occurred with
respect to any Plan that, assuming the taxable period of such transaction
expired as of the date hereof, could subject Seller or any Majority Owned
Subsidiary to a tax or penalty imposed by Section 4975 or 4976 of the Code
or Section 406 or 502(i) of ERISA in an amount which would be material.
(c) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by Seller or any of the Majority
Owned Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the single-employer
plan of any entity which is considered one employer with Seller under
Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate").
Seller and the Majority Owned Subsidiaries have not incurred any
80
withdrawal liability with respect to a multiemployer plan under Subtitle
E
of Title IV of ERISA. No notice of a "reportable event", within the
meaning of Section 4043 of ERISA for which the 30-day reporting requirement
has not been waived, has been required to be filed for any Pension Plan or
by any ERISA Affiliate within the 12-month period ending on the date
hereof.
(d) Neither any Pension Plan nor any single-employer plan of
an ERISA Affiliate has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section 302 of
ERISA and no ERISA Affiliate has an outstanding funding waiver. Neither
Seller nor any of the Majority Owned Subsidiaries has provided, or is
required to provide, security to any Pension Plan or to any single-employer
plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(e) Neither Seller nor any of the Majority Owned Subsidiaries
has any obligations for retiree health and life benefits under any Benefit
Plan, except as set forth on Schedule 3.10(e).
(f) Other than as set forth on Schedule 3.10(f), neither
Seller, its Majority Owned Subsidiaries nor Kodak has any announced plan or
legally binding commitment to establish any additional Benefit Plan or to
amend, modify or terminate any existing Benefit Plan.
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(g) Neither Seller nor the Majority Owned Subsidiaries have
any obligation to contribute to any multiemployer plan.
(h) All employee benefit plans, contracts or arrangements
covering non-U.S. Employees comply in all material respects with applicable
law. Except as set forth in Schedule 3.10(h), Seller and its Majority
Owned Subsidiaries have no material unfunded liabilities with respect to
non-U.S. Employees.
(i) The transactions contemplated by this Agreement will not
result in the payment or series of payments to a Transferred Employee or to
any other person of a parachute payment within the meaning of Section 280G
of the Code.
(j) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any Transferred Employee to severance pay
(other than any deemed termination indemnities due to non-U.S. Transferred
Employees), or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due to any such Transferred Employee or Former
Employee, except as expressly provided in this Agreement or as listed on
Schedule 3.10(a) and designated as a Section 3.10(j) plan.
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Section 3.11 Compliance with Laws. Except as set forth in
Schedule 3.11 hereto, the Transferred Business (except to the extent
conducted by Minority Subsidiaries) is being conducted in compliance with
all applicable laws, rules and regulations, except where the failure so to
comply, individually or in the aggregate, would not materially adversely
affect Purchaser's ability to conduct the Transferred Business
substantially as heretofore conducted, the Transferred Business (except to
the extent conducted by Minority Subsidiaries) has all Governmental
Authorizations necessary for the conduct of the Transferred Business as
currently conducted, other than those the absence of which would not
materially adversely affect Purchaser's ability to conduct the Transferred
Business substantially as heretofore conducted and there are no proceedings
pending, or to the knowledge of Seller, threatened which may result in the
revocation, cancellation or suspension of any such Governmental
Authorization except those that would not materially adversely affect
Purchaser's ability to conduct the Transferred Business substantially as
heretofore conducted; it being understood that nothing in this
representation is intended to address any compliance issue that is the
subject of any other representation or warranty set forth herein.
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Section 3.12 Environmental Matters. Except as set forth in
Schedule 3.12 hereto other than as relates to an Excluded Liability:
(a) to the knowledge of Seller, the Transferred Business
(except to the extent conducted by Minority Subsidiaries) is in compliance
with all applicable Environmental Laws and there are no liabilities under
any Environmental Law with respect to the Transferred Business (except to
the extent conducted by the Minority Subsidiaries), other than non-
compliance or liabilities which would not materially adversely affect
Purchaser's ability to conduct the Transferred Business substantially as
heretofore conducted;
(b) Seller and its Majority Owned Subsidiaries have not
received any notice of any material violation or alleged material violation
of, or any material liability under, any Environmental Law in connection
with the Transferred Business during the past three years;
(c) there are no material writs, injunctions, decrees, orders
or judgments outstanding, or any actions, suits, proceedings or
investigations pending or, to the knowledge of Seller, threatened, relating
to compliance with or liability under any Environmental Law affecting the
Transferred Business (except to the extent conducted by the Minority
Subsidiaries) or the Transferred Assets (except where owned by the Minority
Subsidiaries); and
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(d) to the knowledge of Seller, there are no environmental
liens affecting the Transferred Business (except to the extent conducted by
the Minority Subsidiaries) or the Transferred Assets (except where owned by
the Minority Subsidiaries), except for such liens as would not materially
adversely affect Purchaser's ability to conduct the Transferred Business
substantially as heretofore conducted.
Section 3.13 Intellectual Property. (a) Schedule 3.13(a)
sets forth a list and description (including where applicable the country
of registration) of (i) all patents, patent applications, registered
trademarks, trademark applications, copyrights and copyright applications
related to the Transferred Business that are owned by Seller or its
subsidiaries and (ii) all agreements under which Seller or its subsidiaries
are licensed or otherwise permitted to use patents, trademarks and
copyrights which are material to the Transferred Business.
(b) Except as set forth in Schedule 3.13(b)(i), to the
knowledge of Seller (i) with respect to Ethical Intellectual Property other
than trademarks, no product (or component thereof or process) used, sold or
manufactured by the Business infringes on or otherwise violates the
Intellectual Property of any other Person, (ii) with respect to trademarks
constituting Ethical Intellectual Property that are listed on
Schedule 3.13(b)(ii), there are no
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restrictions that would materially affect the use of those trademarks
in
connection with the Transferred Business and the trademarks do not infringe
upon or otherwise violate the trademarks of any other Person, and (iii) no
Person is challenging, infringing or otherwise violating the Ethical
Intellectual Property or Shared Intellectual Property (excluding trademarks
not included on Schedule 3.13(b)(ii)), except in each case for challenges,
infringements or violations, that individually or in the aggregate, would
not materially adversely affect Purchaser's ability to conduct the
Transferred Business substantially as heretofore conducted. The trademarks
that constitute Transferred Assets that are material to the Transferred
Business are listed on Schedule 3.13(b)(ii).
Section 3.14 Collective Bargaining Agreements. Except as set
forth in Schedule 3.14 hereto, neither Seller nor any Subsidiary (other
than a Minority Subsidiary) is a party to or bound by any material labor
agreement or collective bargaining agreement respecting the Transferred
Employees (other than any Employee of a Minority Subsidiary), nor is there
pending, or to the knowledge of Seller threatened, any strike, walkout or
other work stoppage or any union organizing effort by or respecting the
Transferred Employees.
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Section 3.15 Contracts. Schedule 3.15(i) sets forth a list,
as of the date hereof, of each written Contract that is material to the
Business other than purchase orders in the ordinary and usual course of
business. Except as set forth in Schedule 3.15(ii), to the knowledge of
Seller, each material Contract is a valid and binding agreement of Seller
or a subsidiary of Seller and is in full force and effect. Except as
otherwise provided in Schedule 3.15(iii), Seller has no knowledge of any
material default under any Contract listed on Schedule 3.15(i) which
default has not been cured or waived and which default would materially
adversely affect Purchaser's ability to conduct the Transferred Business
substantially as heretofore conducted.
Section 3.16 Title to Property. (a) Except as set forth in
Schedule 3.16(a) the Transferred Assets and the Kodak Licensed Intellectual
Property constitute all the assets, properties and rights necessary to
conduct the Transferred Business in all material respects as currently
conducted.
(b) Seller has good and (in the case of Owned Real Property)
marketable title to, or a valid and binding leasehold interest in, the
property included in the Transferred Assets (other than the Ethical
Intellectual Property subject to Section 3.13), free and clear of all
Encumbrances, except (i) as set forth in Schedule 3.16(b),
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(ii) any encumbrances disclosed in the Financial Statements, (iii) liens
for Taxes, assessments and other governmental charges not yet due and
payable or due but not delinquent or being contested in good faith by
appropriate proceedings, (iv) mechanics', workmen's, repairmen's,
warehousemen's, carriers' or other like liens arising or incurred in the
ordinary course of business, original purchase price conditional sales
contracts and equipment leases with third parties entered into in the
ordinary course of business, (v) with respect to real property, (A)
easements, quasi-easements, licenses, covenants, rights-of-way, and other
similar restrictions, including without limitation any other agreements,
conditions or restrictions which would be shown by a current title report
or other similar report or listing, (B) any conditions that may be shown by
a current survey or physical inspection and (C) zoning, building and other
similar restrictions and (vi) Encumbrances which, individually or in the
aggregate, would not materially adversely affect Purchaser's ability to
conduct the Transferred Business substantially as heretofore conducted (all
items included in (i) through (vi), together with any matter set forth in
Schedule 3.16(b), are referred to collectively herein as the "Permitted
Encumbrances").
(c) All of the leases relating to the material Leased Real
Property (except to the extent leased by Minority Subsidiaries) are valid,
subsisting and in full
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force and effect in accordance with their terms. All payments (including,
without limitation, rent) with respect to material Leased Real Property
(except to the extent leased by Minority Subsidiaries) due and payable and
not being contested by Seller have been paid by Seller.
(d) Seller makes no representation in this Agreement as to
the physical condition of the real or tangible personal property included
in the Transferred Assets.
Section 3.17 Finders' Fees. Except for Goldman, Sachs & Co.
and McKinsey and Co., whose fees will be paid by Seller, as of the date of
this Agreement there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf
of Kodak, Seller or any Majority Owned Subsidiary who might be entitled to
any fee or commission from Seller in connection with the transactions
contemplated by this Agreement. Seller and Kodak may retain one or more
brokers or other intermediaries in connection with the sale of the UPT
Facility as contemplated by Section 5.6. Any fees or commissions of such
brokers or other intermediaries may be paid as part of the transaction
costs out of the gross proceeds of such sale.
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Section 3.18 Absence of Change. Except (x) to the extent
arising out of or relating to the transactions contemplated by this
Agreement and the proposed sale of Seller and Seller's other businesses,
including restructuring transactions in connection with the offer and sale
of the Transferred Business or (y) contracts entered into since December
31, 1993 that are listed in Schedule 2.2(g), since December 31, 1993, (i)
the Transferred Business has been operated in the ordinary course in a
manner consistent with past practice and (ii) there has not been any change
in the operations, properties, assets, condition, financial or otherwise,
or prospects of the Transferred Business other than, in each case (i) and
(ii), changes which would not individually or in the aggregate materially
adversely affect Purchaser's ability to conduct the Transferred Business
substantially as heretofore conducted.
Section 3.19 Reaffirmation of Representations. Except as set
forth in Schedule 3.19, Seller hereby reaffirms that the representations
and warranties made by Seller in Article VII of the Pharm A Agreement were
true and correct as of the dates any assets were contributed by Seller to
the joint venture established pursuant to the Pharm A Agreement, provided
that with respect to any such representation and warranty qualified by the
knowledge (or any similar term) of Seller, Seller hereby confirms that, to
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the best of Seller's present knowledge, such representations and warranties
were true and correct as of the dates any assets were contributed by Seller
to the joint venture established pursuant to the Pharm A Agreement.
Section 3.20 Insurance. Schedule 3.20 is a true and complete
list of all insurance policies that relate primarily to Assumed Liabilities
or are Related to the Business.
Section 3.21 Food and Drug Administration. With respect to
Human Ethical Pharmaceutical Products included in the Transferred Business
and either currently sold or under development in the United States and
with respect to each facility in the United States at which Human Ethical
Pharmaceutical Products included in the Transferred Assets are
manufactured, packaged or distributed, as the case may be:
(a) Seller or its subsidiaries hold all permits, licenses,
certificates or other authorizations of the United States Food and Drug
Administration (the "FDA") and all similar state and local governmental
agencies necessary to sell its existing Human Ethical Pharmaceutical
Products other than those permits, licenses, certificates or authorizations
the absence of which would not materially adversely affect Purchaser's
ability to conduct the Transferred Business substantially as heretofore
conducted. To the knowledge of Seller, it is presently not in violation
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of, and has not received from the FDA or any similar state or local
governmental agency any notice or charge, which has not been complied with
or withdrawn, asserting any violation of, the Federal Food, Drug, and
Cosmetic Act, as amended (the "FDC Act") or any similar state or local law
(including the rules or regulations promulgated thereunder), which
violation would have a material adverse effect on Purchaser's ability to
conduct the Transferred Business substantially as heretofore conducted.
(b) To the knowledge of Seller, Seller and each Subsidiary is
in compliance with all FDA and similar state and local governmental agency
requirements concerning the maintenance, compilation and filing of reports,
including, without limitation, adverse drug experience reports, except
where such non-compliance would not materially adversely affect Purchaser's
ability to conduct the Transferred Business substantially as heretofore
conducted.
(c) To the knowledge of Seller, each facility included in the
Transferred Business which is used in connection with the manufacturing,
packaging, distribution or sale of Seller's existing Human Ethical
Pharmaceutical Products is in compliance with the FDC Act and the
regulations promulgated thereunder, including, without limitation, the
FDA's good manufacturing practice regulations, except where such non-
compliance would not materially adversely affect Purchaser's ability to
conduct
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the Transferred Business substantially as heretofore conducted.
(d) Each ongoing clinical investigation conducted by Seller
that is required by law to be conducted under an Investigational New Drug
application (an "IND") or similar application has an IND or similar
application that is currently in effect. To the knowledge of Seller, such
IND is not subject to a clinical hold (except WIN 8883), and such
investigation is in compliance with the terms and conditions of the IND and
applicable FDA regulations.
Section 3.22 No Other Representations or Warranties. Except
for the representations and warranties contained in this Article III,
neither Seller nor any other Person makes any other express or implied
representation or warranty on behalf of Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller and Kodak as of the
date hereof and as of the Closing Date (except that representations and
warranties that are made as of a specific date need be true only as of such
date), as follows:
Section 4.1 Organization and Qualification. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of
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its incorporation and has all requisite corporate power and authority to
own and operate the OTC Portion and to carry on such business as currently
conducted. Except as set forth on Schedule 4.1 hereto, Purchaser is duly
qualified to do business and is in good standing as a foreign corporation
in each jurisdiction where the ownership or operation of the OTC Portion or
the conduct of such business requires such qualification, except where the
failure to be so qualified or in good standing, as the case may be, would
not materially adversely affect Seller's ability to conduct the business of
the OTC Portion substantially as heretofore conducted.
Section 4.2 Subsidiaries; Joint Ventures, etc. Each of
Sterling Midy S.A. and Sterling Midy Industrie S.A., each a societe anonyme
under laws of the Republic of France, is a corporation duly organized,
validly existing, and in good standing under the laws of its jurisdiction
of organization and has all requisite corporate power and authority to own
and operate its properties and assets and to carry on its business as
presently conducted and is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the ownership
or operation of its properties and assets or the conduct of its business
requires such qualification, except where the failure to be so duly
organized, validly existing, qualified or in good standing would not
materially adversely affect
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Seller's ability to conduct the business of the OTC Portion substantially
as heretofore conducted. Purchaser has heretofore delivered to Seller true
and complete copies of each such entity's governing documents as in effect
as of the date hereof.
Section 4.3 Corporate Authorization. Purchaser has full
corporate power and authority to execute and deliver this Agreement and
each of the Ancillary Agreements, and to perform their obligations
hereunder and thereunder. The execution, delivery and performance by
Purchaser of this Agreement and each of the Ancillary Agreements have been
duly and validly authorized and no additional corporate authorization or
consent is required in connection with the execution, delivery and
performance by Purchaser of this Agreement and each of the Ancillary
Agreements.
Section 4.4 Consents and Approvals. Except as specifically
set forth in Schedule 4.4 or as required by U.S. Antitrust laws, Argentina,
Australia, Brazil, Canada, Mexico, EC Competition Law (or France, Germany,
Italy, Spain, the United Kingdom, to the extent not subject to EC
jurisdiction), Comprehensive Drug Abuse Prevention and Control Act of 1970,
Drug Enforcement Agency, Bureau of Alcohol and Tobacco, Hazardous Waste
facility permits, air permits, water permits and any other permits required
by any other Environmental Law, Federal Food, Drug and Cosmetics Act, U.S.
state wholesale drug licensing laws, the Exchange
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Act, the Nuclear Regulatory Act and any other similar laws and regulations,
no consent, approval, waiver or authorization is required to be obtained by
Purchaser from, and no notice or filing is required to be given by
Purchaser to or made by Purchaser with, any Federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by Purchaser of this Agreement and each of the
Ancillary Agreements, other than in all cases those the failure of which to
obtain, give or make would not materially adversely affect Seller's ability
to conduct the business of the OTC Portion substantially as heretofore
conducted or materially impair or delay the ability of Purchaser to effect
the Closing.
Section 4.5 Non-Contravention. Except as set forth on
Schedule 4.5, the execution, delivery and performance by Purchaser of this
Agreement and each of the Ancillary Agreements, and the consummation of the
transactions contemplated hereby and thereby, does not and will not
(i) conflict with or violate any provision of the Articles of
Incorporation, Bylaws or other organizational documents of Purchaser, (ii)
subject to obtaining the consents referred to in Section 4.4, conflict
with, or result in the breach of, or constitute a default under, or result
in the termination, cancellation or acceleration (whether after the filing
of notice or the lapse of time or both) of any right or obligation of
Purchaser under, or to a
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loss of any benefit to which Purchaser is entitled under, any OTC Portion
Contract or result in the creation of any Encumbrance upon the OTC Portion,
or (iii) assuming the consents and approvals listed in Sections 3.4 and 4.4
are obtained, violate or result in a breach of or constitute a default
under any law, rule, regulation, judgment, injunction, order, decree or
other restriction of any court or governmental authority to which Purchaser
is subject, including any Governmental Authorization, other than in the
cases of clauses (ii) and (iii), any conflict, breach, termination,
default, cancellation, acceleration, loss, violation or Encumbrance which,
individually or in the aggregate, would not materially adversely affect
Seller's ability to conduct the business of the OTC Portion substantially
as heretofore conducted or materially impair or delay Purchaser's ability
to perform its obligations hereunder.
Section 4.6 Binding Effect. This Agreement constitutes, and
each of the Ancillary Agreements when executed and delivered by the parties
thereto will constitute, a valid and legally binding obligation of
Purchaser enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
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Section 4.7 OTC Assets. (a) Schedule 4.7(a) sets forth a
list and description (including the country of registration) of all
material OTC Assets.
(b) Except as set forth in Schedule 4.7(b)(i), to the
knowledge of Purchaser (i) with respect to OTC Assets other than
trademarks, no product (or component thereof or process) used, sold or
manufactured by the OTC Portion infringes on or otherwise violates the
Intellectual Property of any other Person, (ii) with respect to trademarks
constituting OTC Assets, there are no restrictions upon the trademarks
listed in Schedule 4.7(b)(ii) that would materially affect the use of those
trademarks in connection with the business of the OTC Portion, and (iii) no
Person is challenging, infringing or otherwise violating the OTC Assets,
except in each case for challenges, infringements or violations, that
individually or in the aggregate, would not materially adversely affect
Seller's ability to conduct the business of the OTC Portion substantially
as heretofore conducted.
Section 4.8 Title to Property. (a) The OTC Assets and the
OTC Shares constitute all the assets, properties and rights of Purchaser
used in the conduct of the business of the OTC Portion in all material
respects as currently conducted.
(b) Purchaser has good title to the OTC Shares, free and
clear of all Encumbrances, except (i) as set forth
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in Schedule 4.8(b), (ii) liens for Taxes, assessments and other
governmental charges not yet due and payable or due but not delinquent or
being contested in good faith by appropriate proceedings, (iii) mechanics',
workmen's, repairmen's, warehousemen's, carriers' or other like liens
arising or incurred in the ordinary course of business, original purchase
price conditional sales contracts and equipment leases with third parties
entered into in the ordinary course of business, and (iv) Encumbrances
which, individually or in the aggregate, would not materially adversely
affect Seller's ability to conduct the business of the OTC Portion
substantially as heretofore conducted (all items included in (i) through
(iv), together with any matter set forth in Schedule 4.8, are referred to
collectively herein as the "OTC Portion Permitted Encumbrances").
Section 4.9 Finders' Fees. Except for Lehman Brothers Inc.
and The Blackstone Group, whose fees will be paid by Purchaser, there is no
investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of Purchaser who might be
entitled to any fee or commission from Purchaser in connection with the
transactions contemplated by this Agreement.
Section 4.10 Financial Capability. On the Closing Date,
Purchaser will have sufficient funds to effect
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the Closing and all other transactions contemplated by this Agreement.
Section 4.11 Reaffirmation of Representations. Except as set
forth in Schedule 4.11, Purchaser hereby reaffirms that the representations
and warranties made by Purchaser in Article IX of the OTC Agreement were
true and correct as of the dates any assets were contributed by Purchaser
to the OTC Venture, provided that with respect to any such representation
and warranty qualified by the knowledge (or any similar term) of Purchaser,
Purchaser hereby confirms that, to the best of Purchaser's present
knowledge, such representations and warranties were true and correct as of
the dates any assets were contributed by Purchaser to the OTC Venture.
Section 4.12 No Other Representations or Warranties. Except
for the representations and warranties contained in this Article IV,
neither Purchaser nor any other Person makes any other express or implied
representation or warranty on behalf of Purchaser.
ARTICLE V
COVENANTS
Section 5.1 Access. (a) Prior to the Closing, Seller shall
permit Purchaser, any potential acquiror of any part of Purchaser's
interest in the Transferred Assets designated by Purchaser (provided that
such potential
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acquiror shall have executed and delivered to each of Kodak, Seller and
Purchaser a confidentiality agreement in form and substance mutually
satisfactory to Kodak, Seller and Purchaser), and their respective
representatives to have access, during regular business hours and upon
reasonable advance notice, to the Transferred Assets, and Purchaser shall
permit Seller, any potential acquiror of any part of the OTC Venture and
their respective representatives to have access, during regular business
hours and upon reasonable advance notice, to the OTC Portion, subject to
reasonable rules and regulations of Seller or Purchaser, as the case may
be, and shall furnish, or cause to be furnished, to Purchaser or Seller, as
the case may be, any financial and operating data and other information
that is available with respect to (x) the Transferred Business as Purchaser
shall from time to time reasonably request or (y) the OTC Portion as Seller
shall from time to time reasonably request.
(b) Until the applicable statute of limitations (including
periods of waiver) has run for any Tax Returns filed or required to be
filed covering the periods up to and including the Closing Date, Purchaser,
with respect to the Transferred Assets and the Transferred Business, and
Seller, with respect to the OTC Portion, each agrees to retain all Books
and Records in existence on the Closing Date and after the Closing Date
will provide Seller and Kodak or Purchaser, as the case may be, with
information (including financial
101
information), and grant Seller and Kodak or Purchaser, as the case may
be,
access to such Books and Records for inspection and copying by Seller,
Kodak or Purchaser, as the case may be, and, in each case, their agents at
Seller's or Kodak's expense with respect to the Transferred Assets and the
Transferred Business and Purchaser's expense with respect to the OTC
Portion, upon reasonable request and upon reasonable notice. After the
expiration of such time period, no such Books and Records shall be
destroyed by Purchaser or Seller without first advising the tax director of
each of Kodak and Seller or Purchaser, as the case may be, in writing
detailing the contents of any such Books and Records and giving Kodak and
Seller or Purchaser, as the case may be, at least 120 days to obtain
possession thereof.
Section 5.2 Conduct of Business. (a) During the period from
the date hereof to the Closing, except as otherwise contemplated by this
Agreement or as Purchaser shall otherwise agree in writing in advance with
respect to the Business, Seller covenants and agrees that Seller and each
of the Subsidiaries (other than Minority Subsidiaries) shall conduct the
Business in the ordinary and usual course, and use its reasonable efforts
to preserve intact its business and relationships with third parties.
During the period from the date hereof to the Closing, except as otherwise
provided for in this Agreement or as Purchaser shall otherwise consent
(which consent shall not be
102
unreasonably withheld) Seller covenants and agrees that it will continue
to
perform its obligations under the Pharm A Agreement, the Pharm B Agreement,
the Development Agreement and the BMS Agreements in accordance with past
practice and that with respect to the Business, other than in the ordinary
and usual course, it shall and shall cause the subsidiaries (other than
Minority Subsidiaries) to:
(i) not approve any new individual capital expenditure that
is in excess of $1,000,000;
(ii) not dispose of or incur, create or assume any Encumbrance
on any individual capital asset of the Business if the greater of the book
value or the fair market value of such capital asset exceeds $1,000,000
other than Permitted Encumbrances;
(iii) not incur any indebtedness for money borrowed or enter
into any contract or other commitment (including any hedging arrangement or
other derivative transaction), in each case that constitutes an Assumed
Liability in excess of $1,000,000;
(iv) not enter into any transaction that would materially
adversely affect Purchaser's ability to conduct the Transferred Business
substantially as heretofore conducted;
(v) not increase materially the salary, wage, rate of
compensation, commission, bonus or other direct or indirect remuneration
payable to, or other compensation of,
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any Transferred Employees, or enter into any contract or other binding
commitment in respect of any such increase, nor amend, adopt or terminate
any Benefit Plan covering Transferred Employees or Former Employees in any
way that materially increases the amount of the Assumed Liability in
respect of such plan or enter into any negotiation in respect of or enter
into any collective bargaining agreement covering Transferred Employees
that would constitute an Assumed Liability;
(vi) not amend in any respect that would materially adversely
affect the use and enjoyment thereof by Purchaser, or terminate, any of the
leases relating to 90 Park Avenue, New York, New York or any other leases
relating to a material Leased Real Property or default in the performance
of any material covenant or obligation thereunder which default is not
cured within any applicable grace period; and
(vii) continue its pricing and sales practices substantially in
accordance with Seller's past practices.
(b) Notwithstanding the foregoing, the Business shall be
permitted at all times prior to the Closing Date to make distributions of
cash to Seller as provided in Section 2.7.
(c) During the period from the date hereof to the Closing,
except as otherwise contemplated by this Agreement or as Seller shall
otherwise agree in writing in advance,
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Purchaser covenants and agrees that Purchaser shall conduct the business of
the OTC Portion in the ordinary and usual course, and use its reasonable
efforts to preserve intact its business and relationships with third
parties. During the period from the date hereof to the Closing, except as
otherwise provided for in this Agreement or as Seller shall otherwise
consent (which consent shall not be unreasonably withheld) Purchaser
covenants and agrees that it shall continue to perform its obligations
under the OTC Agreement in accordance with past practice.
Section 5.3 Reasonable Efforts; Good Faith. Seller and
Purchaser will cooperate and use their respective reasonable efforts to
fulfill the conditions precedent to the other party's obligations
hereunder, including but not limited to, securing as promptly as
practicable all consents, approvals, waivers and authorizations required in
connection with the transactions contemplated hereby. In each instance in
which a consent, approval, waiver or authorization cannot be obtained prior
to the Closing Date, Seller shall use its reasonable efforts to enter into
such alternative arrangements and agreements with Purchaser as may be
appropriate in order to permit Purchaser to receive and enjoy substantially
similar rights and benefits and to enable Purchaser to conduct the
Transferred Business until such consent or waiver is obtained. If, after
the exercise of reasonable efforts, any such consent or waiver is not
105
obtained, Seller agrees to cooperate with Purchaser in establishing any
reasonable arrangements designed to provide, to the extent reasonably
practicable, Purchaser with any and all rights of Seller under the relevant
Contracts. Purchaser and Seller will promptly file documentary materials
required by the U.S. Antitrust laws, E.C. Competition law, Environmental
Law and each of the other items listed in Section 3.4 and Section 4.4 and
promptly file any additional information requested as soon as practicable
after receipt of request thereof.
Section 5.4 Tax Matters. (a) Proration of Taxes. Except as
otherwise agreed to by the parties, whenever it is necessary to determine
the liability for Taxes for a portion of a taxable year or period that
begins before and ends after the Closing Date, the determination of the
Taxes for the portion of the year or period ending on, and the portion of
the year or period beginning after, the Closing Date shall be determined by
assuming that the taxable year or period ended at the close of business on
the Closing Date, except that annual property taxes and exemptions,
allowances or deductions that are calculated on an annual basis shall be
prorated on a time basis.
(b) Computation of Tax Liabilities. (i) Whenever it is
necessary to determine the liability of Seller for Taxes, such
determination shall be made as if Seller had computed and paid such Taxes
separate from Kodak.
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(ii) Whenever it is necessary to determine the liability of
Purchaser for Taxes, the determination shall be made as if Purchaser had
computed and paid such Taxes separate from any entity owning an interest in
Purchaser (a "Parent Entity").
(iii) Whenever it is necessary to allocate the amount of Taxes
imposed on or with respect to any entity or any asset between the
Transferred Business and any business retained by Seller or the OTC Portion
and any business retained by Purchaser, such allocation shall be made by
allocating all items of expense, loss, deduction, and credit between such
businesses based upon the relative gross income of each such entity
attributable to each such business for the taxable year or period to which
each such item relates.
(c) Tax Returns. (i) Unless otherwise agreed to by the
parties, and except as otherwise appropriate by reason of any portion of
the Transferred Assets not being transferred on the Closing Date, for the
taxable year or period beginning before and ending on or after the Closing
Date, (A) Kodak or Seller shall file or cause to be filed when due all U.S.
Federal and U.S. state and local Tax Returns with respect to Taxes which
constitute Excluded Liabilities and (B) Purchaser shall file or cause to be
filed when due all Tax Returns (whether imposed by any national, state,
departmental, provincial, local or other jurisdiction) with respect to
Taxes which constitute Assumed
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Liabilities. To the extent permitted by law or administrative
practice,
the taxable year of each corporate or unincorporated entity which
constitutes a Transferred Asset shall be treated as closing at the close of
the Closing Date.
(ii) If either party shall be liable hereunder for any portion
of the Tax shown due on any Tax Returns required to be filed by the other
party, the party preparing such Tax Return (the "Preparer") shall deliver a
copy of the relevant portions of such Tax Return to the party so liable
(the "Payor") for its review and approval, which may not be unreasonably
withheld, not less than thirty (30) days prior to the date on which such
Tax Returns are due to be filed (taking into account any applicable
extensions) (the "Due Date"). If the Payor objects to any items reflected
on such returns, the parties shall attempt to resolve the disagreement. If
the parties are unable to resolve the disagreement, the dispute shall be
referred to the CPA Firm whose determination shall be binding upon the
parties. The fees and expenses of such CPA Firm shall be borne equally by
Seller and Purchaser. If the dispute has not been resolved or the CPA Firm
has not made its determination prior to the Due Date, the Payor shall pay
to the Preparer the amount requested by the Preparer (the "Requested
Amount"). When the amount due to the Preparer from the Payor in respect of
such Tax Return is finally determined, a settlement payment
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(the "Settlement Payment") shall be made in an amount equal to the
Requested Amount minus the amount finally determined to be due, from the
Preparer to the Payor if the Settlement Payment is a positive number, and
from the Payor to the Preparer if the Settlement Payment is a negative
number.
(iii) Purchaser shall cause the entities constituting
Transferred Assets organized under the laws of Brazil, Argentina, U.K.,
Japan and Mexico, Sanofi Winthrop PHARMA and any other corporate entity the
shares of which are transferred to Purchaser or an Affiliate of Purchaser
pursuant to Section 2.12 hereto not to take any action described in the
following sentence during the period beginning on the Closing Date and
ending on December 31, 1994. The actions referred to in the prior sentence
shall include only the following: selling (including a deemed sale
pursuant to Section 338 of the Code or a similar law of any other country),
exchanging, distributing, reorganizing or otherwise disposing of the stock
of any subsidiary corporation, disposing of any other property the sale of
which produces personal holding company income within the meaning of
Section 954(a)(1) of the Code and the regulations thereunder, and making
any distribution to shareholders in excess of current earnings and profits
as computed for U.S. Federal income tax purposes derived during the period
beginning on the day following the Closing Date and ending on the first
December 31 thereafter.
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(iv) All Tax Returns referred to in Section 5.4(c)(i) shall be
prepared and income, gain, expenses, losses, deductions and credits in
respect of such returns shall be calculated in a manner consistent with
prior years unless Kodak or Seller obtains the consent of Purchaser or
Purchaser obtains the consent of Kodak to do otherwise, which consent shall
not be unreasonably withheld in either case.
(d) Information to be Provided by Purchaser. With respect to
Tax Returns to be filed by Kodak or Seller pursuant to Section 5.4(c)(i)(A)
hereof, Purchaser shall promptly, following the end of the taxable year
beginning before and ending on or after the Closing Date, prepare and
provide to Seller a package of tax information materials (the "Tax
Package"), which shall be completed in accordance with past practice,
including past practice as to providing the information, schedules and work
papers and as to the method of computation of separate taxable income or
other relevant measures of income of the Seller.
(e) Contest Provisions. Each of Purchaser, Kodak and Seller
(the "Recipient") shall promptly notify each other party or parties whose
liability for Taxes (including any such liability assumed pursuant to this
Agreement and any obligation to indemnify any person in respect of such
Taxes pursuant to Article VII of this Agreement may be materially affected
thereby (each, an "Affected Party") in
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writing upon receipt by the Recipient, of notice of any pending or
threatened audits or assessments with respect to Taxes (the "Audited
Taxes"). For purposes of this Section 5.4(e), the term "Affected Party"
shall include a party whose Tax liability in respect of any period
subsequent to the period or periods in which such Audited Taxes arose may
be materially affected in any manner (including the reduction of asset
basis or cost adjustments, the reduction of credit carryovers, the
imposition of tax deficiencies and the increase of taxable income) by such
audit or assessment. The party liable for the Audited Taxes pursuant to
Article II of this Agreement shall control the complete defense of the
interests of itself and each Affected Party in any tax audit or
administrative or court proceeding relating to Taxes. Each Affected Party
shall be entitled to participate at its expense in such defense and to
employ counsel of its choice at its expense. No Affected Party may agree
to settle any claim for such Audited Taxes without the prior written con-
sent of each other Affected Party, which may not be unreasonably withheld.
(f) Allocation of Consideration. The parties to this
Agreement agree to determine the amount of and allocate the total
consideration transferred by Purchaser to Seller pursuant to this Agreement
(the "Consideration") in accordance with the fair market value of the
assets and liabilities transferred. Kodak, Seller and Purchaser shall
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each prepare one or more schedules determining and allocating the
Consideration and shall negotiate in good faith to reconcile such
schedules. If the Purchaser and Kodak cannot agree on a mutually
acceptable determination, allocation or determination and allocation of the
Consideration, Purchaser and Seller shall each determine, allocate or
determine and allocate, as the case may be, such Consideration in the
manner it considers appropriate. Seller and Purchaser each agree to
prepare and file an IRS Form 8594 in a timely fashion in accordance with
the rules under Section 1060 of the Code. To the extent that the
Consideration is adjusted after the Closing Date, the parties agree to
revise and amend the schedule and IRS Form 8594 in the same manner and
according to the same procedure. Any determination, allocation or
determination and allocation of the Consideration agreed upon by the
Parties pursuant to the second sentence of this subsection shall be binding
on Kodak, Seller and Purchaser for all tax reporting purposes.
(g) Employee Withholding and Reporting Matters. With respect
to the Transferred Employees, Purchaser shall, in accordance with and to
the extent permitted pursuant to Revenue Procedure 84-77, 1984-2 C.B. 753,
assume all responsibility for preparing and filing Form W-2, Wage and Tax
Statement, Form W-3, Transmittal of Income and Tax Statements, Form 941,
Employer's Quarterly Federal Tax
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Return, Form W-4, Employee's Withholding Allowance Certificate, and Form W-
5, Earned Income Credit Advance Payment Certificate. Seller and Purchaser
agree to comply with the procedures described in Section 5 of Revenue
Procedure 84-77.
(h) Transfer Taxes. All excise, sales, use, transfer,
(including real property transfer or gains), stamp, documentary, filing,
recordation and other similar taxes which may be imposed or assessed as the
result of (i) the transfer of the Transferred Assets to the Purchaser or an
Affiliate of Purchaser pursuant to this Agreement or (ii) the transfer of
the OTC Portion to Seller pursuant to this Agreement (the "Transfer
Taxes"), together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties shall be
borne equally by Seller and Purchaser. Any Tax Returns that must be filed
in connection with Transfer Taxes shall be prepared by the party primarily
or customarily responsible under the applicable local law for filing such
Tax Returns which will use its reasonable best efforts to provide such Tax
Returns to the other parties at least 10 days prior to the date such Tax
Returns are due to be filed. Such Tax Returns shall be prepared consistent
with the allocation of the Consideration pursuant to Section 5.4(f) hereof.
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(i) Foreign Tax Receipts. Purchaser shall deliver to the tax
director of Kodak certified copies of all receipts for any foreign Tax with
respect to which Kodak or Seller could claim a foreign tax credit, and any
other documentation required in connection with Seller or Kodak claiming or
supporting a claim for such foreign tax credits promptly following either a
request by Kodak for such receipts or documentation or payment of any such
foreign Taxes by Purchaser, any Affiliate of Purchaser or any other party
to whom Purchaser or an Affiliate of Purchaser transfers any portion of the
Transferred Assets. To the extent Purchaser transfers any equity interests
constituting a 50% or greater interest in any entity constituting a
Transferred Asset to a party or parties unrelated to Purchaser (each, an
"Rx Buyer"), Purchaser shall be relieved of the obligation described in the
preceding sentence to the extent that Purchaser obtains the written
agreement of the Rx Buyer to fulfill Purchaser's obligations pursuant to
the preceding sentence with respect to any taxes paid by Purchaser prior to
such transfer or by an Rx Buyer after such transfer.
(j) Assistance and Cooperation. The parties agree that,
after the Closing Date:
(A) The parties shall assist (and cause their respective
Affiliates to assist) the other parties in preparing any Tax Returns
with respect to the Business
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which such other parties are responsible for preparing and filing;
(B) The parties shall cooperate fully in preparing for any
audits of, or disputes with taxing authorities regarding, any Tax
Returns and payments in respect thereof;
(C) The parties shall make available to each other and to any
taxing authority as reasonably requested all relevant Books and
Records relating to Taxes;
(D) The parties shall provide timely notice to the other in
writing of any pending or proposed audits or assessments with respect
to Taxes for which the other may have a liability under this
Agreement;
(E) Each party shall furnish the other with copies of all
relevant correspondence received from any taxing authority in
connection with any audit or information request with respect to any
Taxes referred to in subsection (D) above; and
(F) The party requesting assistance or cooperation shall bear
the other party's out-of-pocket expenses in complying with such
request to the extent that those expenses are attributable to fees
and other costs of unaffiliated third-party service providers.
(k) The Purchaser will not make an election pursuant to
Section 338 of the Code or a similar law of any
115
other country with respect to any corporation transferred pursuant to
Section 2.12 hereof which is not a U.S. corporation, unless such election
is needed by Purchaser in order to avoid taking a carryover basis, for U.S.
Federal income tax purposes, in assets directly acquired from Seller or an
Affiliate of Seller.
Section 5.5 Post-Closing Obligations of the Business to
Certain Employees. (a) Purchaser shall offer employment in comparable
positions to all Transferred Employees on the Closing Date or upon the
return of any such Transferred Employee to active employment, and will
maintain for a period of two years after the Closing Date, without
interruption, employee compensation and benefit plans, programs and
policies and fringe benefits (including post-employment welfare benefits)
that, in the aggregate, will provide benefits to Transferred Employees
that, in the good faith judgment of Purchaser, are no less favorable than
those provided pursuant to such employee benefit plans, programs and
policies, and fringe benefits, of the Business as in effect on the Closing
Date and listed on Schedule 3.10(a) and designated therein as a Section
5.5(a) plan; provided, however, that the requirements of this sentence
shall not apply to: (i) Transferred Employees who are covered by a
collective bargaining agreement, (ii) benefits the value of which is based
on the value of the securities of Kodak or Seller or which gave Transferred
Employees the
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right to purchase securities of Kodak or Seller, (iii) benefits which vest,
or the payment of which is accelerated or increased in amount, upon a
change in control of Kodak, Seller or Purchaser, or (iv) benefits or
changes therein mandated by applicable law. Notwithstanding the foregoing,
for a period of two years after the Closing Date, Purchaser will provide to
each Transferred Employee (other than a Transferred Employee covered by a
collective bargaining agreement) severance pay and benefits which are no
less favorable than under Seller's severance plans, programs and policies
as in effect on the date of this Agreement and listed on Schedule 3.10(a)
and designated as a Section 5.5(a) severance plan, other than with respect
to Seller's "Employee Protection Plan" or any other benefit plan, program
or arrangement that provides benefits upon a change in control of Kodak.
To the extent permitted by applicable law, Transferred Employees shall be
given credit for all service with Seller or any subsidiary (or service
credited by Seller or any subsidiary) under all employee benefit plans,
programs and policies, and fringe benefits of the Business or Purchaser in
which they become participants for purposes of eligibility, vesting and
benefit accrual to the same extent as if rendered to Purchaser; provided,
however, that nothing herein shall require Purchaser to provide duplicate
benefits for the same period of service. In addition, and notwithstanding
the foregoing, Purchaser will
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assume the responsibility to pay, and shall provide to, Transferred
Employees the benefits due and owing under the SWPRD relocation program and
other Sterling Winthrop Inc. relocation programs and listed on Schedule
3.10(a).
(b) "Transferred Employees" means all of the following
Employees:
(i) Except as specifically agreed to between Seller and
Purchaser, all active Employees of (A) Sanofi Winthrop Territory B, (B)
Sterling Winthrop's research division, (C) Sterling Organics and (D)
Sterling Winthrop Pharmaceuticals Group headquarters, and in each case,
their subsidiaries;
(ii) Sterling Winthrop K.K.'s active pharmaceutical Employees
in Japan; and
(iii) those members of Seller's corporate staff as agreed by
Purchaser and Seller prior to Closing.
For purposes of (A)-(D) in subsection (i) above and of
subsection (ii) above, Employees shall be considered active even though on
the Closing Date, they are (x) on temporary leave for purposes of jury or
annual two-week national service/military duty; (y) on Nonmedical Leave of
absence; provided, however, that no such Employee shall be guaranteed
reinstatement to active service if his return to employment is contrary to
the terms of his leave, unless otherwise required by applicable law; or (z)
on disability or medical leave and for whom it has been 180 calendar days
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or less since their last day of active employment; provided, however, that
no such Employee shall be guaranteed reinstatement to active service if he
is incapable of working in accordance with the policies, practices and
procedures of Purchaser.
(c) (i) Effective as of the Closing Date, Purchaser shall
establish one or more defined contribution plans (the "Transferee Savings
Plans") for the benefit of Transferred Employees and Former Employees who
were participants in the Eastman Kodak Employees' Savings and Investment
Plan, the Sterling Winthrop Inc. Salaried Employees' Savings Plan and the
Sterling Winthrop Inc. Hourly Employees' Savings Plan (the "Seller Savings
Plans"). Such Transferred Employees are referred to hereinafter as the
"Savings Plan Employees".
Kodak and Seller shall cause to be transferred from the Seller
Savings Plans to the Transferee Savings Plans the liability for the account
balances of the Savings Plan Employees, together with assets (the form of
which shall be agreed to by the parties) the fair market value of which is
equal to such liability, and Purchaser shall cause the Transferee Savings
Plans to accept such transfers. The transfer of assets shall take place
within 90 days after the Closing Date; provided, however, that in no event
shall such transfer take place until the later of (i) the furnishing to
Seller by Purchaser of a favorable determination letter from
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the Internal Revenue Service with respect to the qualification of the
Transferee Savings Plans under Section 401(a) of the Code, and (ii) the
receipt by Seller of favorable determination letters from the Internal
Revenue Service with respect to the continued qualification of the Seller
Savings Plans under Section 401(a) of the Code, as amended to comply with
changes to the qualification requirements of Section 401(a) of the Code
made by the Tax Reform Act of 1986 and other recent legislation and
regulations.
(ii) On or before the Closing Date, Seller shall amend,
effective as of the Closing Date, the Sterling Winthrop Inc. Pension Plan
for Hourly Employees and the Sterling Winthrop Inc. International Chemical
Workers Union Pension Plan for Hourly Employees (the "Assumed Pension
Plans") to make Purchaser (or a subsidiary thereof) the "plan sponsor" (as
such term is defined in Section 3(16) of ERISA) thereof. Seller will make
appropriate amendments to the Assumed Pension Plans and the trust
agreements thereunder to implement such change of plan sponsor. Seller
shall take all other actions necessary to enable Purchaser (or a subsidiary
thereof) to assume, and Purchaser hereby agrees to assume (or cause a
subsidiary to assume), all benefit liabilities and obligations with respect
to the Assumed Pension Plans. Seller shall, not later than 90 days after
the Closing Date, cause the trustee of the trust under
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each Assumed Pension Plan to transfer to a trustee designated by Purchaser
all of the assets of such Plan. To the extent the assets are held in a
master trust, the transfer shall be made in the form of cash or cash
equivalents, or such marketable securities as the parties may agree. From
the date hereof to the date of such transfer (or if the assets are not held
in a master trust, the Closing Date), Seller shall not, and shall not
permit the trustee of any Assumed Pension Plan to, make any significant
changes in the investment policy in connection with the management of the
assets of such Plans.
(iii) Effective as of the Closing Date, Purchaser shall
establish one or more defined benefit plans (the "Transferee Pension
Plans") for the benefit of Retirement Plan Employees (as defined below) who
participated in the Kodak Retirement Income Plan and the Sterling Products
International Inc. Pension Plan for Salaried Employees who are Employed at
Facilities Located in Puerto Rico (the "Seller Retirement Plans"). For
purposes of this Agreement, "Retirement Plan Employees" means the
Transferred Employees, the Former Employees (other than Former Employees of
the Seller's L&F Division and Former Employees who are continuing to accrue
a benefit under the Seller Retirement Plans) and the applicable
beneficiaries thereof. The Transferee Pension Plans shall (A) recognize
for all purposes thereunder the service of the Retirement Plan
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Employees which was recognized under the Seller Retirement Plans and (B)
provide, upon the transfer of assets referred to below, that the benefit
liabilities of the Retirement Plans Employees under the Transferee Pension
Plans shall in no event be less than their benefit liabilities under the
Seller Retirement Plans as of the Closing Date.
With respect to each Seller Retirement Plan, Seller shall cause
to be transferred from the trust under such Seller Retirement Plan to the
trust under the Transferee Pension Plan assets, the value of which shall be
equal to the lesser of (x) the sum of (1) the "accumulated benefit
obligation" (as defined in Statement of Financial Accounting Standards
No. 87) of the Retirement Plan Employees under such Seller Retirement Plan
as of the Closing Date, calculated using the actuarial assumptions that
were used in preparing the audited financial statements of Kodak and the
Seller for the year ended December 31, 1993, except that the interest rate
assumption shall be equal to the sum of (A) the yield to maturity of 30-
year U.S. Treasury bonds on the Closing Date and (B) 75 basis points (such
sum is herein referred to as the "Interest Rate") and (2) interest on the
amount determined pursuant to the preceding clause (i) calculated at the
Interest Rate, compounded daily, for the period from and including the
Closing Date to, but excluding, the actual date of transfer or (y) the
maximum amount permitted to be transferred in
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accordance with Section 414(l) of the Code. With respect to each
Seller
Retirement Plan, the excess, if any, of the amount described in clause (x)
of the preceding sentence over the amount described in clause (y) therein,
is referred to herein as the "Pension Shortfall Amount".
Notwithstanding anything to the contrary in the preceding
paragraph, if the minimum amount required to be transferred in accordance
with Section 414(l) of the Code exceeds the amount described in clause (x)
of the first sentence of the preceding paragraph (such excess being
referred to as the "Pension Excess"), then Seller shall cause such minimum
amount to be transferred from the trust under the applicable Seller
Retirement Plan to the trust under the Transferee Pension Plan. Purchaser
shall cause the Transferee Pension Plans to accept such transfers.
The amount to be transferred shall be equitably adjusted to
take into account benefit payments made from the Seller Retirement Plans to
the Retirement Plan Employees after the Closing Date but prior to the date
of transfer. The amounts under the preceding two paragraphs shall be
determined jointly by the respective actuaries for the Seller Retirement
Plan and the Transferee Pension Plan.
The transfer of assets referred to above shall take place
within 180 days after the Closing Date; provided, however, that in no event
shall such transfer take place until the last to occur of the following:
(i) Purchaser has
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furnished to Seller a favorable determination letter from the Internal
Revenue Service with respect to the qualification of the applicable
Transferee Pension Plan under Section 401(a) of the Code, (ii) the receipt
by Seller of a favorable determination letter from the Internal Revenue
Service with respect to the continued qualification of the applicable
Seller Retirement Plan under Section 401(a) of the Code, as amended to
(A) comply with changes to the qualification requirements of Section 401(a)
of the Code made by the Tax Reform Act of 1986 and other recent legislation
and regulations and (B) provide for the transfer of assets and benefit
liabilities referred to in this Section, and (iii) the receipt of any other
necessary governmental approval. Such transfer shall be made in the form
of such readily marketable securities as the parties shall agree.
Notwithstanding anything contained in this Section to the
contrary, (A) in the event that the Internal Revenue Service or any other
governmental agency takes the position in a determination letter, ruling,
advisory opinion or other written or oral communication that the transfer
of assets referred to in this Section cannot be made unless (i) additional
contributions are made to a Seller Retirement Plan or a Transferee Pension
Plan or (ii) a Seller Retirement Plan retains primary or secondary
liability with respect to the benefit liabilities under such Seller
Retirement Plan attributable to Transferred Retirement Plan
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Employees or (B) in the event that a lawsuit is instituted by any of the
foregoing or by one or more participants in, or fiduciaries (other than
Seller, Kodak or Purchaser) of, a Seller Retirement Plan or a Transferee
Pension Plan which seeks to enjoin such transfer, to require additional
contributions to a Seller Retirement Plan or Transferee Pension Plan, or to
have a Seller Retirement Plan remain liable in whole or in part with
respect to any of the benefit liabilities under such Seller Retirement Plan
attributable to Transferred Retirement Plan Employees, then the transfer of
assets referred to in this Section from such Seller Retirement Plan will
not be made until the earliest of (I) the date the issues raised by the
Internal Revenue Service or any other governmental agency or such lawsuit
are resolved favorably, and Seller, Kodak and the Seller Retirement Plan
shall make every effort in good faith to carry out the asset transfer,
including, but not limited to, the vigorous defense of any lawsuit
described in clause (B), and the exhaustion of all rights of available
judicial review and appeal, or (II) the date Seller and Purchaser or Kodak
and Purchaser, as applicable, enter into a written agreement to resolve on
a basis mutually satisfactory to them the issues raised by the Internal
Revenue Service or any other governmental agency or such lawsuit. In the
event of any delay beyond two years from the Closing Date of the transfer
of assets and liabilities from a Seller Retirement
125
Plan by reason of the preceding sentence, Kodak shall hold Purchaser
harmless from any economic loss resulting from such delay. Furthermore, if
such transfer has not occurred by the fourth anniversary of the Closing
Date by reason of the second preceding sentence, then there shall be no
transfer of such assets and liabilities and Purchaser shall have no
obligations under this Section 5.5(c)(iii), including the obligation to
recognize service of the Retirement Plan Employees under the Transferee
Pension Plan.
(iv) Pending the completion of the transfers described in this
paragraph (c), Seller and Purchaser shall make arrangements for any
required payments (A) to the Savings Plan Employees and the Retirement Plan
Employees from the Seller Savings Plans and the Seller Retirement Plans and
(B) to participants and beneficiaries in the Assumed Pension Plans. Seller
and Purchaser shall provide each other with access to information
reasonably necessary in order to carry out the provisions of this paragraph
and shall otherwise cooperate in the administration of said Plans for the
benefit of the Transferred Employees and Former Employees.
(d) Effective as of the Closing Date, all Transferred
Employees shall cease to be covered by Seller's employee welfare benefit
plans, including plans, programs, policies and arrangements which provide
medical and dental coverage, life and accident insurance, disability
coverage,
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and vacation and severance pay (collectively, "Welfare Plans"), except to
the extent provided otherwise by the applicable Welfare Plan. Seller shall
retain responsibility for, and sole liability in respect of, providing
group health coverage required by Section 4980B of the Code or Section 601
of ERISA ("Continuation Coverage") under the terms of the health plan
maintained by Seller to (i) Employees of Seller who were employed in
connection with the Business, who terminated employment prior to the
Closing Date and who elected such Continuation Coverage or (ii) Employees
of Seller who are employed in connection with the Business and who are
entitled to such Continuation Coverage as a result of the transactions
contemplated by this Agreement.
(e) Seller shall retain responsibility for all Welfare Plan
claims incurred by Transferred Employees (i) under any medical, dental or
health plans for treatment or service rendered prior to the Closing Date;
(ii) under any life insurance plans with respect to deaths occurring prior
to the Closing Date; and (iii) any other payments or benefits due and
payable but not paid on or prior to the Closing Date under any other
Welfare Plans. For purposes of this paragraph, a claim shall be deemed to
have been incurred on the date on which medical or other treatment or
service was rendered and not the date of the inception of
