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EXECUTION COPY
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PURCHASE AGREEMENT
by and among
E.I. DU PONT DE NEMOURS AND COMPANY,
DUPONT PHARMA, INC.,
DUPONT PHARMACEUTICALS COMPANY,
DUPONT ELECTRONIC MATERIALS, INC.,
DUPONT DIAGNOSTICS INC.
and
BRISTOL-MYERS SQUIBB COMPANY
Dated as of June 7, 2001
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TABLE OF CONTENTS
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Page
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ARTICLE I -- DEFINITIONS
1.1 Definitions.................................................2
ARTICLE II -- THE PURCHASE AND SALE
2.1 Purchase and Sale..........................................25
2.2 Purchase Price.............................................27
2.3 The Closing................................................27
2.4 Purchase Price Adjustment..................................29
2.5 Allocation of Purchase Price...............................33
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF DUPONT
3.1 Organization, Etc..........................................34
3.2 Authority Relative to this Agreement, Etc..................34
3.3 Capitalization.............................................35
3.4 Consents and Approvals; No Violations......................36
3.5 Financial Statements.......................................36
3.6 Absence of Certain Changes.................................37
3.7 Compliance with Law, Permits...............................40
3.8 No Undisclosed Liabilities.................................42
3.9 Litigation.................................................42
3.10 Taxes......................................................43
3.11 Employee Benefit Plans; ERISA..............................45
3.12 Environmental Matters......................................51
3.13 Real Property..............................................52
3.14 Intellectual Property......................................53
3.15 Assets.....................................................55
3.16 Brokers and Finders........................................56
3.17 Inventories................................................56
3.18 Contracts..................................................56
3.19 Shared Services............................................59
3.20 Agreements Restricting Affiliates..........................59
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ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER SUB
4.1 Corporate Organization; Etc................................60
4.2 Authority Relative to this Agreement, Etc..................60
4.3 Consents and Approvals; No Violations......................60
4.4 Brokers and Finders........................................61
4.5 Financing..................................................61
4.6 Securities Act.............................................61
ARTICLE V -- COVENANTS
5.1 Conduct of Business........................................62
5.2 Access to Information......................................65
5.3 Consents and Approvals.....................................66
5.4 Further Assurances.........................................69
5.5 Intercompany Accounts and Arrangements.....................69
5.6 Provision of Corporate Records.............................70
5.7 Names......................................................71
5.8 Intellectual Property......................................72
5.9 Post-Closing Cooperation...................................76
5.10 Pending Litigation.........................................77
5.11 Employee Matters...........................................78
5.12 Post-Closing Access to Information.........................89
5.13 Production of Witnesses and Individuals....................89
5.14 Retention of Records.......................................90
5.15 Confidentiality............................................90
5.16 Privileged Matters.........................................92
5.17 Mail and Other Communications; Accounts....................94
5.18 Compliance with WARN Act and Similar Statutes..............95
5.19 Shared Contracts...........................................95
5.20 Certain Matters Relating to Intellectual Property and
Agreements with Merck & Co. Inc.........................96
5.21 Section 754 Election.......................................97
5.22 Responsibility for Subsidiaries............................97
5.23 Maintenance of Partnership Existence.......................98
5.24 Delivery of Financial Statements...........................98
5.25 Certain Real Estate Matters................................99
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ARTICLE VI -- TAX MATTERS
6.1 Tax Indemnification........................................99
6.2 Closing of Current Taxable Year, Etc......................101
6.3 Tax Returns...............................................101
6.4 Contest Provisions........................................102
6.5 Transfer Taxes............................................104
6.6 Certain Post-Closing Settlement Payments and Post-Closing
Actions................................................105
6.7 Mutual Cooperation........................................106
6.8 Maintenance of Books and Records..........................107
6.9 Miscellaneous.............................................108
ARTICLE VII -- CONDITIONS TO THE SALE
7.1 Conditions to the Obligations of the Sellers to Effect
the Sale...............................................108
7.2 Conditions to the Obligations of Buyer to Effect
the Sale...............................................109
ARTICLE VIII -- TERMINATION AND ABANDONMENT; INDEMNIFICATION
8.1 Termination...............................................111
8.2 Procedure and Effect of Termination.......................111
8.3 Survival of Representations, Warranties and Covenants.....112
8.4 Indemnification...........................................112
8.5 Environmental Matters.....................................117
ARTICLE IX -- MISCELLANEOUS
9.1 Amendment and Modifications...............................121
9.2 Extension; Waiver.........................................121
9.3 Representations and Warranties; Etc.......................121
9.4 Entire Agreement; Assignment..............................122
9.5 Validity..................................................122
9.6 Notices...................................................122
9.7 Governing Law.............................................123
9.8 Specific Performance......................................123
9.9 Publicity.................................................123
9.10 Jurisdiction; Forum, Etc..................................123
9.11 Descriptive Headings......................................125
9.12 Counterparts..............................................125
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9.13 Expenses..................................................125
9.14 Parties in Interest.......................................125
9.15 Interpretation............................................125
9.16 Schedules.................................................126
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PURCHASE AGREEMENT
PURCHASE AGREEMENT (this "Agreement"), dated as of June 7,
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2001, by and among E.I. du Pont de Nemours and Company, a Delaware corporation
("DuPont"), DuPont Pharma, Inc., a Delaware corporation ("DPI"), DuPont
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Pharmaceuticals Company, a general partnership formed under the laws of the
State of Delaware ("DPC"), DuPont Electronic Materials, Inc., a Delaware
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corporation ("DEMI"), DuPont Diagnostics Inc., a Delaware corporation ("DDI"),
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and Bristol-Myers Squibb Company, a Delaware corporation ("Buyer").
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WHEREAS, in addition to its other businesses, DuPont is
engaged through DPC, DuPont Pharma, Ltd., a corporation organized under the laws
of Bermuda ("DPL"), DuPont Pharmaceutical Research Labs, Inc., a Delaware
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corporation ("DPRL"), and DuPont Contrast Imaging, Inc., a Delaware corporation
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("DCI"), and their Subsidiaries (as defined herein) in the research,
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development, manufacturing, distribution, marketing and sale of human
pharmaceutical and radiopharmaceutical products and similar product lines; and
WHEREAS, DPC is the direct or indirect record and beneficial
owner of all of the issued and outstanding capital stock of DuPont Pharma SA, a
corporation formed under the laws of Belgium ("Pharma Belgium"), Du Pont
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Pharmaceuticals Limited, a corporation formed under the laws of the United
Kingdom ("Pharma UK"), DuPont Pharma Inc., a corporation formed under the laws
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of Canada ("Pharma Canada"), DuPont Pharma S.A., a corporation formed under the
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laws of France ("Pharma France"), DuPont Pharma Italia s.r.l., a corporation
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formed under the laws of Italy ("Pharma Italy"), DuPont Pharma GmbH, a
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corporation formed under the laws of Germany ("Pharma Germany"), Du Pont Sankyo
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Pharmaceuticals Co., Ltd, a corporation formed under the laws of Japan
("Pharma Japan"), Du Pont Farmaceutica, Ltda., a corporation formed under the
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laws of Brazil ("Pharma Brazil"), and DuPont Pharma S.A., a corporation formed
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under the laws of Spain ("Pharma Spain")(the "Controlled Foreign Subsidiary
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Shares"), other than directors' qualifying shares; and
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WHEREAS, DuPont and DPI are the record and beneficial owners
of all of the outstanding general partnership interests in DPC (the
"DPC Interests"); and
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WHEREAS, DuPont is the record and beneficial owner of all of
the issued and outstanding shares of capital stock of DCI (the "DCI Shares");
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and
WHEREAS, DPI is the record and beneficial owner of all of the
issued and outstanding shares of capital stock of DPRL (the "DPRL Shares"); and
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WHEREAS, DEMI and DDI are the record and beneficial owners of
all of the issued and outstanding shares of capital stock of DPL (the
"DPL Shares"); and
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WHEREAS, DuPont is the record and beneficial owner of the all
of the Transferred Equipment (as defined herein); and
WHEREAS, the parties hereto desire that (i) immediately prior
to any transactions described in clauses (ii) through (v) below, DPC sell,
convey, assign, transfer and deliver to one or more Subsidiaries of Buyer
(collectively, the "Foreign Buyer Subs"), all of the Controlled Foreign
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Subsidiary Shares owned by DPC, and that DPC immediately distribute the proceeds
of such sales to DuPont and DPI, (ii) DuPont sell, convey, assign, transfer and
deliver to a Subsidiary of Buyer ("Buyer Sub 1") the DPC Interests held by
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DuPont, the DCI Shares and the Transferred Equipment, (iii) DPI sell, convey,
assign, transfer and deliver to another Subsidiary of Buyer ("Buyer Sub 2") the
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DPC Interests held by DPI, (iv) DPI sell, convey, assign, transfer and deliver
to Buyer Sub 1 the DPRL Shares, and (v) DEMI and DDI sell, convey, assign,
transfer and deliver to Buyer Sub 1 the DPL Shares; and
WHEREAS, at or prior to the Closing (as defined herein),
DuPont, DPC, DPL and Buyer or its Affiliates will enter into the Related
Agreements (as defined herein); and
WHEREAS, the respective Boards of Directors of DuPont, DPI,
DEMI, DDI and Buyer, and of DuPont and DPI in their capacities as general
partners of DPC, have approved and declared advisable this Agreement, the
Related Agreements and the consummation of the transactions contemplated hereby
and thereby.
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements herein contained,
the parties hereto hereby agree as follows:
ARTICLE I
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DEFINITIONS
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1.1 Definitions. The terms defined in this Article I, whenever
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used herein, shall have the following meanings for all purposes of this
Agreement:
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"Action" shall mean any action, claim, suit, arbitration,
subpoena, discovery request, proceeding or investigation by or before any court
or grand jury, any Governmental Authority or arbitration tribunal.
"Additional Transferred Assets" shall mean the Transferred
Assets described in clauses (ii)-(v) of the definition of "Transferred Assets".
"Affiliate" shall mean, with respect to any specified Person,
a Person that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such specified
Person. For purposes of this definition, "control", when used with respect to
any specified Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through ownership of voting
securities, by Contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent" shall have the meaning set forth in Section 9.10(b).
"Agreement" shall have the meaning set forth in the recitals.
"Antitrust Laws" shall mean and include (i) the Sherman Act,
as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and the EC Merger Regulations and (ii) all other
Federal, state or foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines and other laws that are designed or
intended to regulate competition or investment or to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade.
"Applicable Buyer Plan" shall have the meaning set forth in
Section 5.11(b).
"Asset" shall mean, with respect to any Person, any and all of
such Person's title and ownership interest in and to all of the properties,
assets, claims, Contracts and businesses of every kind, character and
description, whether real, personal or mixed, whether tangible or intangible,
whether accrued, contingent or otherwise, and wherever located, including,
without limitation, the following: (i) all Cash, notes and accounts receivable
(whether current or non-current); (ii) all real properties, including plants,
buildings and other structures and improvements (including construction in
progress) located thereon, fixtures contained therein and appurtenances thereto
(including, in the case of the Transferred Business Companies, the Real
Property); (iii) all leases and subleases and all machinery, Equipment
(including all transportation and office equipment), fixtures, trade fixtures
and furniture; (iv) all office supplies, production supplies, spare parts, other
miscellaneous
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supplies and other tangible property of any kind; (v) all capital stock,
partnership interests and other equity or ownership interests or rights,
directly or indirectly, in any Subsidiary or other entity; (vi) all raw
materials, work-in-process, finished goods, consigned goods and other
inventories; (vii) all Intellectual Property; (viii) all rights existing under
all Contracts; (ix) all rights (including ownership rights or rights arising
under Contracts) relating to all computer hardware, software, computer programs,
systems and documentation relating thereto; all databases and reference and
resource materials; (x) all prepayments, deposits, performance bonds or prepaid
expenses and, to the extent they constitute an asset and not a liability of such
party, deferred tax accounts; (xi) all claims, causes of action, choses in
action, rights of recovery and rights of set-off of any kind; (xii) all customer
lists and records pertaining to customers and accounts, personnel records, all
lists and records pertaining to suppliers and agents, and all books, ledgers,
files and business records of every kind; (xiii) all advertising materials and
all other printed or written materials, including purchase orders, forms,
labels, shipping materials, catalogues, sales brochures, operating manuals, and
instructional documents; (xiv) all permits, licenses, approvals and
authorizations, to the extent transferable, of Governmental Authorities or third
parties relating to the ownership, possession or operation of the Assets; (xv)
all goodwill as a going concern and all other intangible properties; (xvi) all
employee contracts, including, without limitation, the right thereunder to
restrict an employee from competing in certain respects; and (xvii) all trucks,
automobiles and other vehicles.
"Assumed Liabilities" shall mean, except in each case as
otherwise expressly provided in Article VI, any and all Liabilities, arising
after the Closing Date, of DuPont, the Transferred Business Companies or any of
their Affiliates, Subsidiaries or divisions, solely to the extent relating to,
resulting from or arising out of the ownership or use of the Additional
Transferred Assets, other than in any case any Retained Liabilities.
"Audited Financial Statements" shall have the meaning set
forth in Section 5.24(a).
"Audited 1999 Financial Statements" shall have the meaning set
forth in Section 5.24.
"Audited 2000 Financial Statements" shall have the meaning set
forth in Section 5.24.
"Balance Sheet" shall have the meaning set forth in Section
3.5.
"Basket" shall have the meaning set forth in Section 8.4(h).
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"Belgian Pension Plan" shall have the meaning set forth in
Section 3.11(r)(vi).
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which United States banks are closed generally.
"Buyer" shall have the meaning set forth in the recitals.
"Buyer Business Material Adverse Effect" shall mean any actual
or prospective change, event or effect that, individually or in the aggregate
with all other such adverse actual or prospective changes, events or effects, is
materially adverse to the business, prospects, Assets, results of operations or
condition (financial or otherwise) of Buyer and its Subsidiaries, taken as a
whole.
"Buyer Caribe DC Plan" shall have the meaning set forth in
Section 5.11(h).
"Buyer Environmental Liabilities" shall have the meaning set
forth in Section 8.5(d).
"Buyer Indemnified Parties" shall have the meaning set forth
in Section 8.4(a).
"Buyer Material Adverse Effect" shall mean any actual change,
event or effect that, individually or in the aggregate with all other actual
changes, events and effects, impairs, hinders or adversely affects in any
material respect the ability of Buyer and its Subsidiaries to consummate the
Sale or the other material transactions contemplated hereby.
"Buyer Shared Know-how" means all trade secrets and
confidential business information, including confidential ideas, research and
development, know-how, discoveries, improvements, formulas, manufacturing and
production processes and techniques, technical data, designs, drawings, and
specifications owned by the Transferred Business Companies at the Closing and
used by DuPont or the Retained Subsidiaries in the conduct of the Retained
Business as of the Closing; provided that, for the avoidance of doubt, Buyer
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Shared Know-how shall not include any (x) Patents or (y) applied for or
registered Trademarks or Copyrights.
"Buyer Sub 1" shall have the meaning set forth in the
recitals.
"Buyer Sub 2" shall have the meaning set forth in the
recitals.
"Buyer Tax Act" shall have the meaning set forth in Section
6.1(a).
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"Cap" shall have the meaning set forth in Section 8.4(i).
"Caribe DC Plan" shall mean the DuPont Pharma (Puerto Rico)
Savings Plan.
"Cash" shall mean all (i) cash and cash equivalents
(including, without limitation, certificates of deposit and bankers acceptances)
and (ii) marketable debt instruments that mature within three months or less.
"Closing" shall have the meaning set forth in Section 2.3(a).
"Closing Date" shall have the meaning set forth in Section
2.3(a).
"Closing Purchase Price" shall have the meaning set forth in
Section 2.2.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Confidentiality Agreement" shall have the meaning set forth
in Section 5.2.
"Contract" shall mean any contract, agreement, Lease, license,
sales order, purchase order, instrument or other commitment or arrangement (oral
or written) that is binding on any Person or entity or any part of its property
under applicable Law.
"Controlled Foreign Subsidiaries" shall mean the Subsidiaries
of DPC set forth on Schedule 1.1(a).
"Controlled Foreign Subsidiary Shares" shall have the meaning
set forth in the recitals.
"Copyrights" means all copyrights, and all applications,
registrations, and renewals in connection therewith.
"Cox-2 Patents" shall mean the Patents set forth in Schedule
1.1(b).
"Current Assets" shall mean all current assets of the
Transferred Business Companies (and all Additional Transferred Assets to the
extent current assets), determined in accordance with GAAP applied on a
consistent basis with the Audited Financial Statements, other than (i) Cash,
(ii) accounts receivable of a Transferred Business Company, owed to it by DuPont
or any of its Subsidiaries (other than Subsidiaries which are Transferred
Business Companies), (iii) any Excluded
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Assets, (iv) the Endo Note, (v) any Assets relating to Taxes and (vi) any Assets
to be provided under the Related Agreements.
"DCI" shall have the meaning set forth in the recitals.
"DCI Shares" shall have the meaning set forth in the recitals.
"DEMI" shall have the meaning set forth in the recitals.
"Distributee" shall mean a Transferred Employee who elects to
receive a distribution from the DuPont 401(k) Plan, as contemplated by Section
5.11(g).
"DOJ" shall have the meaning set forth in Section 3.4.
"DPC" shall have the meaning set forth in the recitals.
"DPC Action" shall have the meaning set forth in Section 5.10.
"DPC Books and Records" shall mean the books and records of
the Transferred Business, including all computerized books and records of the
Transferred Business, to the extent they primarily relate to the Transferred
Business or the Transferred Assets, including, but not limited to, all such
books and records primarily relating to Transferred Employees, the purchase of
materials, Taxes (insofar as such books and records are reasonably necessary for
the determination of Tax Items for any Post-Closing Tax Period), supplies and
services, the development, marketing, manufacture and sale of products by the
Transferred Business or dealings with suppliers and customers of the Transferred
Business and all files primarily relating to any Action included in the Assumed
Liabilities.
"DPC Financial Statements" shall have the meaning set forth in
Section 3.5(a).
"DPC Interests" shall have the meaning set forth in the
recitals.
"DPI" shall have the meaning set forth in the recitals.
"DPL" shall have the meaning set forth in the recitals.
"DPL Shares" shall have the meaning set forth in the recitals.
"DPRL" shall have the meaning set forth in the recitals.
"DPRL Shares" shall have the meaning set forth in the
recitals.
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"Due Date" shall have the meaning set forth in Section 6.3(c).
"DuPont" shall have the meaning set forth in the recitals.
"DuPont Action" shall have the meaning set forth in Section
5.10.
"DuPont Books and Records" shall mean the books and records,
including all computerized books and records, of or owned by DuPont and its
Subsidiaries (including the Transferred Business Companies), other than the DPC
Books and Records.
"DuPont 401(k) Plan" shall mean the Savings & Investment Plan
of E.I. du Pont de Nemours and Company.
"DuPont Indemnified Parties" shall have the meaning set forth
in Section 8.4(b).
"DuPont Marks" shall have the meaning set forth in Section
5.7.
"DuPont Merck Agreement" shall have the meaning set forth in
Section 5.20.
"DuPont Shared Know-how" means all trade secrets and
confidential business information, including confidential ideas, research and
development, know-how, discoveries, improvements, formulas, manufacturing and
production processes and techniques, technical data, designs, drawings, and
specifications owned by DuPont or the Retained Subsidiaries at the Closing and
used by the Transferred Business Companies in the conduct of the Transferred
Business as of the Closing; provided that, for the avoidance of doubt, DuPont
Shared Know-how shall not include any (x) Patents or (y) applied for or
registered Trademarks or Copyrights.
"DuPont UK Plan" shall mean the DuPont Pharmaceutical (U.K.)
Limited Pensions Fund.
"EC Merger Regulations" shall mean Counsel regulation (EEC)
No. 4064/89 of December 21, 1989 on the Control of Concentrations Between
Undertakings, OJ (1989) L 395/1 and the regulations and decisions of the
Councilor Commission of the European Community or other organs of the European
Union or European Community implementing such regulations.
"Encumbrance" shall mean any lien, encumbrance, security
interest, charge, mortgage, deed of trust, deed to secure debt, option, pledge
or restriction on
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transfer of title or voting of any nature whatsoever, other than in the case of
securities, the restrictions imposed by federal, state and foreign securities
laws.
"Endo Note" shall mean the Amended and Restated Promissory
Note, dated as of August 26, 1997, between Endo Pharmaceuticals, Inc. and DPC,
and all other notes due to DPC of Endo Pharmaceuticals, Inc.
"Environment" shall mean any surface water, groundwater,
drinking water supply, land surface or subsurface strata, or ambient air.
"Environmental Claim" means any claim, action, cause of
action, investigation, demand, order, directive or written notice by or on
behalf of, any Governmental Authority or Person, including any Transferred
Employee or former employee, alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, medical monitoring or penalties) arising out of, based on or
resulting from: (i) the presence, Release or threatened Release of any Hazardous
Substance at any location; (ii) exposure to any Hazardous Substance; or (iii)
requirements or violation of any Environmental Laws or Environmental Permit.
"Environmental Laws" shall mean all Laws relating to pollution
or protection of human health or the Environment, including, without limitation,
the Comprehensive Environmental Response, Compensation, and Liability Act, the
Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act,
the Occupational Safety and Health Act, the Toxic Substances Control Act, any
amendments thereto and any rules and regulations promulgated pursuant to or
implementing the foregoing, similar state Laws and other Laws relating to any of
(i) Releases, threatened Releases or the presence of Hazardous Substances or the
manufacture, processing, distribution, use, treatment, storage, transport or
handling of Hazardous Substances, including the disposal of radioactive
materials, (ii) noise or odors, (iii) pollution or protection of the air,
surface water, groundwater, drinking water, land surface or subsurface strata,
or (iv) exposure to Hazardous Substances and employee health and safety.
"Environmental Permit" shall mean any permit, license,
approval or other authorization under any applicable Law or of any Governmental
Authority relating to Environmental Laws.
"Equipment" shall mean all equipment, fixtures, physical
facilities, machinery, inventory, spare parts, supplies, tools and other
tangible personal property.
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"ERISA" shall have the meaning set forth in Section 3.11(a).
"ERISA Affiliate" shall have the meaning set forth in Section
3.11(a).
"Estimated Closing Adjustment" shall have the meaning set
forth in Section 2.4(a).
"Estimated Closing Balance Sheet" shall have the meaning set
forth in Section 2.4(a).
"Estimated Net Assets" shall have the meaning set forth in
Section 2.4(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Excluded Assets" shall mean (i) all Cash and notes receivable
(whether current or non-current), including, without limitation, amounts
outstanding under the Master Note Agreements, but excluding the Endo Note, (ii)
the Cozaar/Hyzaar/Fortzaar patent estate set forth on Schedule 1.1(c) hereto as
amended pursuant to Section 5.20(a), and all associated royalty, profit sharing
and review and approval and other rights, (iii) the Cox-2 Patents and all
associated royalty, profit sharing and review and approval and other rights,
(iv) all rights (other than rights in related Intellectual Property owned by, or
to the extent licensed to, pursuant to a written license agreement, a
Transferred Business Company) to the compounds and information in DuPont's
Chemical and Biological Clearinghouse other than those compounds, and
information in the possession of a Transferred Business Company relating to
those compounds, set forth on Schedule 1.1(d) hereto, (v) all equity financial
instruments held by DPC set forth on Schedule 1.1(e) hereto, (vi) all rights of
the Sellers under this Agreement and any documents delivered or received in
connection herewith, (vii) all rights under the agreements set forth on Schedule
5.20(a)(i)(A) and the Patents and Trademarks set forth on Schedule
5.20(a)(i)(B), (viii) any rights to be licensed to DuPont pursuant to Section
5.8 (subject to the terms of the license agreements to be entered into in
connection therewith), (ix) the DuPont Marks and (x) the Real Property on
Schedule 1.1(f).
"FAS" shall mean the referenced Financial Accounting Standard
published by the Financial Accounting Standards Board.
"FDA" shall mean the United States Food and Drug
Administration.
"Final Closing Adjustment" shall have the meaning set forth in
Section 2.4(e).
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"Final Closing Balance Sheet" shall mean (i) the Preliminary
Closing Balance Sheet if deemed final pursuant to Section 2.4(c), (ii) any
balance sheet deemed by mutual agreement of Buyer and DuPont to be the Final
Closing Balance Sheet or (iii) the balance sheet determined by the Independent
Accounting Firm to be the Final Closing Balance Sheet in accordance with Section
2.4(d).
"Final Net Assets" shall mean (i) the Preliminary Net Assets
if deemed final pursuant to Section 2.4(c), (ii) the Net Assets deemed by mutual
agreement of Buyer and DuPont to be the Final Net Assets or (iii) the Net Assets
determined by the Independent Accounting Firm to be the Final Net Assets in
accordance with Section 2.4(d).
"Final Determination" means the final resolution of any Tax
(or other Tax matter) for a taxable period that, under applicable law, is not
subject to further appeal, review or modification through proceedings or
otherwise, including (i) by the expiration of a statute of limitations or a
period for the filing of claims for refunds, amending Tax Returns, appealing
from adverse determinations, or recovering any refund (including by offset),
(ii) by a decision, judgment, decree, or other order by a court of competent
jurisdiction, which has become final and unappealable, (iii) by a closing
agreement or an accepted offer in compromise under Section 7121 or 7122 of the
Code, or comparable agreements under laws of other jurisdictions, (iv) by
execution of an Internal Revenue Service Form 870 or 870AD, or by a comparable
form under the laws of other jurisdictions (excluding, however, with respect to
a particular Tax Item for a particular taxable period any such form that
reserves (whether by its terms or by operation of law) the right of the taxpayer
to file a claim for refund and/or the right of the Tax Authority to assert a
further deficiency with respect to such Tax Item for such period), or (v) by any
allowance of a refund or credit, but only after the expiration of all periods
during which such refund or credit may be recovered (including by way of
offset).
"Foreign Buyer Subs" shall have the meaning set forth in the
recitals.
"Foreign Tax Threshold Amount" shall have the meaning set
forth in Section 6.1(a).
"Former DPC Assets" means all Assets formerly owned by any of
the Transferred Business Companies or formerly used in the operation or conduct
of the Transferred Business, other than the Transferred Assets and the Assets
currently used in the Retained Business.
"FTC" shall have the meaning set forth in Section 3.4.
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"GAAP" shall mean United States generally accepted accounting
principles as in effect on the date or for the period with respect to which such
principles are applied (it being understood that all concepts of materiality
shall be measured by reference to the Transferred Business Companies and not to
DuPont and its Affiliates).
"Good Manufacturing Practices" shall mean current good
manufacturing practices, as set forth in 21 C.F.R. Parts 210 and 211.
"Governmental Antitrust Entity" shall mean any Governmental
Authority with regulatory jurisdiction over enforcement of any applicable
Antitrust Laws.
"Governmental Authority" shall mean any nation or government,
any state, municipality or other political subdivision thereof and any entity,
body, agency, commission or court, whether domestic, foreign or multinational,
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any executive official thereof.
"Governmental Filings" shall have the meaning set forth in
Section 3.4.
"Hazardous Substance" shall mean any substance, whether solid,
liquid or gaseous, which is listed, defined or regulated as a "hazardous
substance", "hazardous waste", "oil", "pollutant", "toxic substance", "hazardous
material waste", or "contaminant" or is otherwise classified as hazardous or
toxic, in or pursuant to any Environmental Laws; or which is or contains any
asbestos, polychlorinated biphenyls, urea formaldehyde foam insulation,
explosive, nuclear, or radioactive material, or motor fuel or other petroleum
hydrocarbons, or pesticides, insecticides, fungicides, or rodenticides, or
biohazardous materials or waste.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indebtedness" of any Person shall mean, (a) all obligations
of such Person for borrowed money, including with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property or Assets purchased by such Person, (e) all obligations of such Person
issued or assumed as the deferred purchase price of property or services, (f)
obligations of such Person under letters of credit, (g) all
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<PAGE>
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any mortgage,
lien, pledge, or other Encumbrance on property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (h) all
guarantees by such Person of Indebtedness of others, (i) all capital lease
obligations of such Person, and (j) all securities or other similar instruments
convertible or exchangeable into any of the foregoing.
"Indemnified Party" shall have the meaning set forth in
Section 8.4(e).
"Indemnifying Party" shall have the meaning set forth in
Section 8.4(e).
"Indemnitee" shall mean any party who is entitled to receive
payment from an Indemnifying Party pursuant to Section 8.4 or Section 8.5.
"Independent Accounting Firm" shall be an accounting firm
selected in the manner set forth in Section 2.4(d).
"Information" shall have the meaning set forth in Section
5.12.
"Intellectual Property" means (i) all Patents, (ii) all
Trademarks, (iii) all Copyrights, (iv) all trade secrets and confidential
business information, whether patentable or unpatentable, including confidential
ideas, research and development, know-how, discoveries, improvements, formulas,
manufacturing and production processes and techniques, technical data, designs,
drawings, and specifications and all customer and supplier lists and (v) all
Software.
"IP Disclosure" shall have the meaning set forth in Section
3.14(b).
"IRS" shall mean the United States Internal Revenue Service or
any successor agency.
"ISRA" shall have the meaning set forth in Section 5.3.
"Knowledge" shall mean, with respect to DuPont, the actual
knowledge, after reasonable inquiry, of any officer of DuPont or any of its
Subsidiaries (including the Transferred Business Companies) who has managerial
responsibility for any significant department or function of the Transferred
Business or any of the persons listed on Schedule 1.1(g) hereto.
"Law" shall mean any law, statute, ordinance, rule,
regulation, order, writ, judgment, Code, injunction or decree of any
Governmental Authority.
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<PAGE>
"Leased Real Property" means the real property leased or
subleased by one of the Transferred Business Companies pursuant to a Lease,
together with, to the extent also leased or owned by one of the Transferred
Business Companies, all buildings and other structures, facilities or
improvements currently or hereafter located thereon, all fixtures of one of the
Transferred Business Companies attached or appurtenant thereto and all
easements, licenses, rights and appurtenances relating to the foregoing.
"Leases" shall mean all leases, subleases, licenses,
concession agreements, use and occupancy agreements or similar arrangements,
pursuant to which any Transferred Business Company has a leasehold or similar
interest in Assets.
"Lemelson Agreement" shall have the meaning set forth in
Section 5.8(f).
"Liabilities" shall mean any and all Indebtedness, liabilities
and obligations, whether accrued, fixed or contingent, mature or inchoate, known
or unknown, reflected on a balance sheet or otherwise, including, but not
limited to, those arising under any Law or any judgment of any court of any kind
or any award of any arbitrator of any kind, and those arising under any
Contract, commitment or undertaking.
"Listed Agreements" shall have the meaning set forth in
Section 5.11(e).
"LNA" shall have the meaning set forth in Section 5.3(a).
"Losartan Manufacturing Agreements" shall have the meaning set
forth in Section 5.23.
"Losses" shall mean any and all damages, losses, deficiencies,
Liabilities, obligations, penalties, judgments, settlements, claims, payments,
fines, interest, costs and expenses (including, without limitation, the costs
and expenses of any and all Actions and demands, assessments, judgments,
settlements and compromises relating thereto and the costs and expenses of
attorneys', accountants', consultants' and other professionals' fees and
expenses incurred in the investigation or defense thereof or the enforcement of
rights hereunder), but excluding consequential damages, loss of profits and
punitive damages (other than such damages awarded to any third party against an
Indemnified Party). Notwithstanding the foregoing, (i) Losses shall expressly
include any diminution in the fair value of any Asset (other than goodwill) and
(ii) for purposes of Section 3.17, Losses in
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<PAGE>
respect of any breach thereof shall be limited to the cost of any excess
inventory to the extent such inventory constitutes a breach of such
representation.
"MAA" shall have the meaning set forth in Section 3.7(c)(ii).
"Master Note Agreements" shall mean (i) the Master Note
Agreement, dated as of August 14, 1998, between DuPont and DPC and (ii) the
Master Note Agreement, dated as of September 17, 1999, between DuPont and DCI.
"Material Adverse Effect" shall mean any actual or prospective
change, event or effect that, individually or in the aggregate with all other
such adverse actual or prospective changes, events and effects, (i) is
materially adverse to the business, prospects, Assets, results of operations or
condition (financial or otherwise) of the Transferred Business Companies
(including the Additional Transferred Assets), taken as a whole (after taking
into account insurance recoveries in respect thereof which remain with the
Transferred Business Companies after the Closing), or (ii) impairs, hinders or
adversely affects in any material respect the ability of DuPont and its
Subsidiaries to consummate the Sale or the other material transactions
contemplated hereby; provided, however, that the foregoing definition shall, for
-------- -------
purposes of Section 8.4(a)(iii), but not Section 7.2(a), exclude actual or
prospective changes, events or effects to the extent they result from the
development of products and compounds, or additional or new therapeutic
applications and uses of existing products and compounds, in each case by third
parties; provided, further, that the foregoing proviso shall not apply to the
-------- -------
extent that any change, event or effect is reflected in (1) the results of
operations or financial condition of the Transferred Business Companies prior to
the Closing or (2) to the extent related to currently marketed products, the
business or assets of the Transferred Business Companies prior to the Closing;
provided, further, that any actual or prospective effects, events, or changes to
-------- -------
the extent relating to or resulting from (a) any change or changes in general
economic conditions (including, without limitation, changes in financial or
market conditions) or any change or changes applying generally to the
pharmaceuticals industry in the geographical areas in which the Transferred
Business Companies operate (and not specifically to the Transferred Business
Companies), (b) the announcement or consummation of the transactions
contemplated by this Agreement (provided that the exception in this clause (b)
--------
shall not apply to the use of the term "Material Adverse Effect" in Section
3.4), or (c) any change in accounting requirements or principles or the
interpretation thereof, shall be deemed not to constitute a "Material Adverse
Effect"; provided, further, that the term "Material Adverse Effect" shall not
-------- -------
include or take into account (x) any change, effect or event relating to any of
the Transferred Business Companies' compounds which are not yet nominated for
development or (y) any of the matters referred to in the IP Disclosure. For
purposes of this definition of Material Adverse Effect, each Assumed Liability
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<PAGE>
shall be deemed to be a Liability of, and each Additional Transferred Asset
shall be deemed to be an Asset of, the Transferred Business Companies.
"Minimum Buyer Adjustment Amount" shall mean $20 million.
"Minimum DuPont Adjustment Amount" shall mean $50 million.
"NDA" shall mean a New Drug Application or Product License
Application for any product of the Transferred Business, as appropriate,
requesting permission to place a drug on the market in accordance with 21 C.F.R.
Part 314, and all supplements filed pursuant to the requirements of the FDA,
including all documents, data and other information concerning such product
which are necessary for FDA approval to market such product in the United
States.
"Net Assets" shall mean the Current Assets minus the Total
Liabilities, as of the close of business (New York time) on the Closing Date.
"Outside Date" shall have the meaning set forth in Section
8.1(b).
"Owned Real Property" means the real property owned by any of
the Transferred Business Companies, together with all buildings and other
structures, facilities or improvements currently or hereafter located thereon
(except to the extent set forth on Schedule 1.1(h)) and all fixtures attached or
appurtenant thereto and all easements, licenses, rights and appurtenances
relating to the foregoing.
"Patents" means all inventions (whether patentable or
unpatentable and whether or not reduced to practice), and all U.S. and foreign
patents, patent applications, and patent disclosures (and all rights related
thereto, including all reissues, divisions, continuations,
continuations-in-part, substitutions, extensions, or renewals of any of the
foregoing).
"Payor" shall have the meaning set forth in Section 6.3(c).
"PBGC" shall have the meaning set forth in Section 3.11(c).
"Pending Transferred Employees" shall have the meaning set
forth in Section 5.1(b)(4).
"Permits" shall have the meaning set forth in Section 3.7(a).
"Permitted Encumbrances" shall mean:
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<PAGE>
(a) Encumbrances identified on Schedule 1.1(i) or specifically
identified on the DPC Financial Statements (including in the notes
thereto);
(b) all Encumbrances approved in writing by Buyer;
(c) easements, rights-of-way, servitudes, permits, licenses,
surface leases and other rights; conditions, covenants or other
restrictions; and easements for streets, alleys, highways, telephone
lines, power lines and railways, and all matters of record (other than
liens securing indebtedness for borrowed money), over or in respect of
any Real Property, which in the case of each of the foregoing does not
and will not interfere in any material respect with the operation or
use of any of the affected Real Property as the Transferred Business is
currently conducted;
(d) Encumbrances for Taxes, assessments, or other governmental
charges not yet due or payable or that may be subsequently paid without
penalty or that are being contested in good faith by appropriate
proceedings;
(e) any materialman's, mechanics', repairman's, employees',
contractors', operators', landlord's or other similar liens arising in
the ordinary course of business;
(f) all Encumbrances, Contracts, agreements, instruments,
obligations, defects and irregularities affecting or encumbering the
Assets that individually or in the aggregate are not such as to
materially and adversely (i) impair the marketability or market value
of any material Asset not constituting Real Property in the Transferred
Business as currently conducted or (ii) interfere with the operation or
use of any material Asset in the Transferred Business as currently
conducted; and
(g) liens that have been placed by any developer, landlord or
other third party on property over which any Transferred Business
Company has easement rights or on any Leased Real Property and
subordination or similar agreements relating thereto.
"Person" shall mean any individual, corporation, limited
liability company, partnership, trust or other entity.
"Pharma Belgium" shall have the meaning set forth in the
recitals.
"Pharma Brazil" shall have the meaning set forth in the
recitals.
"Pharma Canada" shall have the meaning set forth in the
recitals.
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<PAGE>
"Pharma France" shall have the meaning set forth in the
recitals.
"Pharma Germany" shall have the meaning set forth in the
recitals.
"Pharma Japan" shall have the meaning set forth in the
recitals.
"Pharma Spain" shall have the meaning set forth in the
recitals.
"Pharma UK" shall have the meaning set forth in the recitals.
"Pharmaceutical Field of Use" shall mean all commercial
applications, including associated discovery, research, development, and
commercialization activities, of new drug products or diagnostic products or
over-the-counter drug products (including any biological products) intended for
use in the cure, mitigation, treatment or prevention or in vivo diagnosis of
disease or injury in humans, or intended to affect the structure or any function
of the body of humans or components thereof, which if commercialized would have
to be approved for marketing by appropriate regulatory agencies. Notwithstanding
the foregoing, such Pharmaceutical Field of Use shall not include products
intended for use as functional foods, nutraceuticals, supplements (including
vitamin or mineral supplements), animal drugs, biomaterials (whether or not
intended for use in medical devices), or any product produced in a plant.
"Post-Closing Tax Period" shall have the meaning set forth in
Section 6.1(b).
"Post-Retirement Period" shall have the meaning set forth in
Section 5.11(n).
"Pre-Adjusted Closing Purchase Price" shall have the meaning
set forth in Section 2.2.
"Pre-Closing Tax Period" shall have the meaning set forth in
Section 6.1(a).
"PR Tax Grant" shall mean the Grant of Industrial Tax
Exemption granted by the Puerto Rico Department of State-Office of Industrial
Tax Exemption to DuPont Pharma Ltd., Case No. 99-135-I-33, granted as of
December 30, 1999 as amended effective December 30, 1999.
"Preliminary Closing Balance Sheet" shall have the meaning set
forth in Section 2.4(b).
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<PAGE>
"Preliminary Net Assets" shall have the meaning set forth in
Section 2.4(b).
"Preparer" shall have the meaning set forth in Section 6.3(c).
"Privilege" shall have the meaning set forth in Section
5.16(a).
"Privileged Information" shall have the meaning set forth in
Section 5.16(a).
"PTO" shall have the meaning set forth in Section 5.11(f).
"Purchase Price" shall have the meaning set forth in Section
2.2.
"Purchase Price Allocation Schedule" shall have the meaning
set forth in Section 2.5.
"Real Property" means, collectively, the Leased Real Property
and the Owned Real Property.
"Recipient" shall have the meaning set forth in Section
6.4(a).
"Reference Net Assets" shall mean a net asset of $195 million.
"Related Agreements" shall mean the (i) Administrative
Services Agreement in the form to be agreed upon prior to the Closing by the
parties in good faith with terms consistent with those attached as Exhibit A
hereto, (ii) License and Supply Agreement in the form attached as Exhibit B
hereto, (iii) Agency Agreement in the form attached as Exhibit C hereto, (iv)
Drum Storage Agreement in the form attached as Exhibit D hereto, (v) Lease
Agreements for the Leased Real Property set forth in Schedule 1.1(j) in the form
attached as Exhibit E hereto and (vi) Site Services Agreements for the Real
Property set forth in Schedule 1.1(k) in the form to be agreed upon prior to the
Closing by the parties in good faith with terms consistent with those attached
as Exhibit F hereto.
"Release" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration
into the indoor or outdoor Environment or into or out of any property, including
the movement of Hazardous Substances through or in the air, soil, surface water
or groundwater.
"Representative" shall mean, with respect to any Person, each
of such Person's directors, officers, employees, representatives, attorneys,
accountants, advisors and agents.
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<PAGE>
"Required Antitrust Approvals" shall mean any required
filings, consents and approvals pursuant to (i) the HSR Act, (ii) the EC Merger
Regulations and (iii) all other antitrust approvals required in order to
consummate the Sale.
"Required Filings" shall mean any required filings pursuant to
(i) the HSR Act, (ii) the EC Merger Regulations and (iii) all other foreign or
domestic filings required in order to consummate the Sale.
"Retained Business" shall mean the businesses in which, and
the activities in which, DuPont and its Subsidiaries have been formerly or are
currently engaged, but excluding the Transferred Business.
"Retained Employees" shall mean all current and former
officers, directors and employees of DuPont and its Affiliates, other than the
Transferred Employees.
"Retained Environmental Assets" shall have the meaning set
forth in Section 8.5(a)(ii).
"Retained Liabilities" shall mean, except in each case as
otherwise expressly provided in Article VI, (a) any and all Liabilities, whether
arising before or after the Closing Date, of DuPont, its Subsidiaries (including
without limitation the Transferred Business Companies) or any of their
predecessor companies or businesses, or any of their Affiliates, Subsidiaries or
divisions, to the extent the same relates to, results from or arises out of the
present, past or future operations or conduct of the Retained Business or the
use or ownership of the Excluded Assets and (b) any Liabilities for Losses
allocated to DuPont or a Retained Subsidiary, determined pursuant to Section
5.19 or 8.5 hereof.
"Retained Subsidiary" shall mean any Subsidiary of DuPont,
other than the Transferred Business Companies.
"Retention Plan Liabilities" shall mean any Liabilities
arising under (i) the Strategic Performance Incentive Plan, (ii) the 25% bonus
increment to the 2001 Variable Compensation Plan and (iii) the increment to the
Sales Incentive Compensation Plan announced to DPC employees on February 7,
2001.
"Sale" shall have the meaning set forth in Section 2.2 hereof.
"Sale Process" shall mean all matters relating to DuPont's
sale of the Transferred Business and all activities by or for DuPont in
connection therewith, including the process undertaken by DuPont with respect to
soliciting proposals from
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third parties and the consideration of, and actions taken in connection with,
possible alternatives to the transactions contemplated by this Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Seller Environmental Liabilities" shall have the meaning set
forth in Section 8.5(b).
"Sellers" shall mean DuPont, DPI, DEMI and DDI.
"Shared Contracts" shall mean the Contracts listed on Schedule
1.1(l).
"Shared Contractual Liabilities" shall mean Liabilities in
respect of Shared Contracts.
"Software" shall mean all computer software, including all
software implementation of algorithms, models and methodologies, whether in
object code or source code, databases and compilations, and documentation and
user manuals relating to the foregoing, to the extent owned by or licensed to a
Transferred Business Company.
"Straddle Period" shall have the meaning set forth in Section
6.2(b).
"Subsidiary" of a Person shall mean a corporation,
partnership, joint venture, association, limited liability company or other
entity of which such Person owns, directly or indirectly, 50% or more of the
outstanding voting stock or other ownership interests.
"Substituted Assumptions" shall have the meaning set forth in
Section 5.11(j).
"Tax Asset" shall mean any Tax Item that could reduce a Tax,
including a net operating loss, net capital loss, investment tax credit, foreign
tax credit, or any other Tax credit or deduction.
"Tax Audit" shall have the meaning set forth in Section 6.4(a)
hereof.
"Tax Authority" shall mean a Governmental Authority or any
subdivision, agency, commission or authority thereof, or any quasi-governmental
or private body having jurisdiction over the assessment, determination,
collection or imposition of any Tax (including, without limitation, the IRS).
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<PAGE>
"Taxes" shall mean (x) any charges, fees, levies, imposts,
duties, or other assessments of a similar nature, including income, alternative
or add-on minimum, gross receipts, profits, lease, service, service use, wage,
wage withholding, employment, workers compensation, business occupation,
occupation, premiums, environmental, estimated, excise, employment, sales, use,
transfer, license, payroll, franchise, severance, stamp, occupation, windfall
profits, withholding, social security, unemployment, disability, ad valorem,
estimated, highway use, commercial rent, capital stock, paid up capital,
recording, registration, property, real property gains, real estate, value
added, business license, custom duties, or other tax or governmental fee of any
kind whatsoever, imposed or required to be withheld by any Tax Authority
including any interest, additions to tax, or penalties applicable or related
thereto, (y) Liability for the payment of any amounts of the type described in
clause (x) as a result of being a member of an affiliated, consolidated,
combined, unitary or aggregate group and (z) Liability for the payment of any
amounts as a result of being party to any Tax Sharing Agreement or as a result
of any express or implied obligation to indemnify any other Person with respect
to the payment of any amounts of the type described in clause (x) or (y).
"Tax Item" shall mean any item of income, gain, loss,
deduction or credit, or other attribute that may have the effect of increasing
or decreasing any Tax.
"Tax Return" shall mean any return, report, certificate, form
or similar statement or document (including any related or supporting
information or schedule attached thereto and any information return, amended tax
return, claim for refund or declaration of estimated tax) required or permitted
to be supplied to, or filed with, a Tax Authority in connection with the
determination, assessment or collection of any Tax or the administration of any
Laws relating to any Tax.
"Tax Sharing Agreement" means any existing agreement or
arrangement (whether or not written) binding any of the Transferred Business
Companies that provide for the allocation, apportionment, sharing or assignment
of any Tax liability or benefit, or the transfer or assignment of income,
revenues, receipts, or gains for the principal purpose of determining any
Person's Tax liability (including any advance pricing agreement, closing
agreement or other agreement relating to Taxes with any Taxing Authority).
"Third Party Claim" shall mean any Action brought, asserted or
commenced by any Person, other than by a DuPont Indemnified Party or a Buyer
Indemnified Party, against any DuPont Indemnified Party or Buyer Indemnified
Party.
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<PAGE>
"Total Liabilities" shall mean all Liabilities of the
Transferred Business Companies (and all Assumed Liabilities), determined in
accordance with GAAP applied on a basis consistent with the Audited Financial
Statements, other than (i) accounts payable of a Transferred Business Company,
owed by it to DuPont or any of its Subsidiaries (other than Subsidiaries which
are Transferred Business Companies), (ii) any Retained Liabilities, (iii) any
reserve related to the litigation described in Schedule 1.1(m), (iv) any
Liabilities relating to Taxes, (v) any non-current employee related Liabilities,
any Retention Plan Liabilities and any Liabilities under the Listed Agreements
and (vi) any accruals for Liabilities under the Related Agreements.
"Trademarks" means all registered and unregistered service
marks, trademarks, trade names, brand names, certification marks, corporate
names, trade dress, Internet domain names, identifying symbols, logos, emblems,
signs or insignia, including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith.
"Transfer Taxes" shall have the meaning set forth in Section
6.5.
"Transferred Assets" shall mean (i) any and all Assets of the
Transferred Business Companies, but excluding the Excluded Assets and the Assets
that the Related Agreements expressly contemplate being retained by DuPont and
the Retained Subsidiaries, (ii) the Transferred Equipment, (iii) all of DuPont's
rights under the Agreements set forth on Schedule 5.20(a)(ii)(A), (iv) all of
DuPont's rights related to the Intellectual Property set forth on Schedule
5.20(a)(ii)(B), and (v) any rights to be licensed to Buyer pursuant to Section
5.8 (subject to the terms of the license agreements to be entered into in
connection therewith).
"Transferred Business" shall mean the business of researching,
developing, manufacturing, distributing, marketing and selling human
pharmaceutical and radiopharmaceutical products and related product lines as
presently conducted by DuPont and its Subsidiaries (including the Transferred
Business Companies), but excluding, in any event, (i) the business and
activities currently or formerly conducted by DuPont and its Subsidiaries to the
extent related to the Excluded Assets and (ii) the business, currently or
formerly conducted by DuPont and its Subsidiaries, of researching, developing,
distributing, marketing and selling human pharmaceutical and radiopharmaceutical
products that incorporate one or more of the Patents described in clause (ii),
(iii) or (vii) of the definition of Excluded Assets and any related products.
"Transferred Business Companies" shall mean DPC, DPL, DCI,
DPRL and their respective Subsidiaries.
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<PAGE>
"Transferred Business Plans" shall have the meaning set forth
in Section 3.11(a).
"Transferred Business Title IV Plan" shall have the same
meaning as set forth in Section 3.11(d).
"Transferred Contracts" shall have the meaning set forth in
Section 3.18(b).
"Transferred Employees" means (x) those persons who are
employed as officers or employees of the Transferred Business Companies
immediately prior to or effective as of the Closing and (y) all former officers
and employees of the Transferred Business Companies; provided that, in the event
--------
any person shall have been employed by any of the Transferred Business
Companies, as well as in the Retained Business, such person shall be considered
a Transferred Employee if (i) as of the Closing Date such person's primary
employment shall be with a Transferred Business Company or (ii) such person's
employment with the Transferred Business Company terminated later than such
person's employment with the Retained Business.
"Transferred Environmental Assets" shall have the meaning set
forth in Section 8.5(a)(i).
"Transferred Equipment" shall mean the Equipment set forth on
Schedule 1.1(n).
"Transferred Pension Plans" shall have the meaning set forth
in Section 3.11(s).
"Treasury Regulations" shall mean the final, temporary and
proposed regulations promulgated by the United States Treasury Department under
the Code.
"Unaudited Interim Financial Statements" shall have the
meaning set forth in Section 5.24(b).
"Underfunding" shall have the meaning set forth in Section
5.11(j).
"WARN Act" shall have the meaning set forth in Section 5.18.
"Wholly-Owned Subsidiary" shall mean, with respect to any
Person, any Subsidiary of such Person if all of the common stock or other
similar equity ownership interests (but not including non-participating
preferred stock) in such Subsidiary (other than any director's qualifying shares
or investments by foreign
24
<PAGE>
nationals mandated by applicable Law) is owned directly or indirectly by such
Person.
ARTICLE II
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THE PURCHASE AND SALE
---------------------
2.1 Purchase and Sale.
--------------------------
(a) Upon the terms and subject to the conditions of
this Agreement, on the Closing Date:
(i) immediately prior to any of the
transactions described in clauses (ii) through (vi) of this Section
2.1(a), (A) DPC shall sell, convey, assign, transfer and deliver to a
Foreign Buyer Sub, and Buyer shall cause such Foreign Buyer Sub to,
purchase, acquire and accept from DPC, all of the shares of capital
stock of Pharma Belgium and DPC shall immediately distribute the
proceeds of such sale to DuPont and DPI, (B) DPC shall sell, convey,
assign, transfer and deliver to a Foreign Buyer Sub, and Buyer shall
cause such Foreign Buyer Sub to, purchase, acquire and accept from DPC,
all of the shares of capital stock of Pharma UK and DPC shall
immediately distribute the proceeds of such sale to DuPont and DPI, (C)
DPC (or DuPont if DPC has distributed Pharma Canada to DuPont prior to
the Closing) shall sell, convey, assign, transfer and deliver to a
Foreign Buyer Sub, and Buyer shall cause such Foreign Buyer Sub to,
purchase, acquire and accept from DPC (or DuPont if DPC has distributed
Pharma Canada to DuPont prior to the Closing), all of the shares of
capital stock of Pharma Canada and DPC shall immediately distribute the
proceeds of such sale to DuPont and DPI, (D) DPC shall sell, convey,
assign, transfer and deliver to a Foreign Buyer Sub, and Buyer shall
cause such Foreign Buyer Sub to, purchase, acquire and accept from DPC,
all of the shares of capital stock of Pharma France and DPC shall
immediately distribute the proceeds of such sale to DuPont and DPI, (E)
DPC shall sell, convey, assign, transfer and deliver to a Foreign Buyer
Sub, and Buyer shall cause such Foreign Buyer Sub to, purchase, acquire
and accept from DPC, all of the shares of capital stock of Pharma Italy
and DPC shall immediately distribute the proceeds of such sale to
DuPont and DPI, (F) DPC shall sell, convey, assign, transfer and
deliver to a Foreign Buyer Sub, and Buyer
25
<PAGE>
shall cause such Foreign Buyer Sub to, purchase, acquire and accept
from DPC, all of the shares of capital stock of Pharma Germany and DPC
shall immediately distribute the proceeds of such sale to DuPont and
DPI, (G) DPC shall sell, convey, assign, transfer and deliver to a
Foreign Buyer Sub, and Buyer shall cause such Foreign Buyer Sub to,
purchase, acquire and accept from DPC, all of the shares of capital
stock of Pharma Japan and DPC shall immediately distribute the proceeds
of such sale to DuPont and DPI, (H) DPC shall sell, convey, assign,
transfer and deliver to a Foreign Buyer Sub, and Buyer shall cause such
Foreign Buyer Sub to, purchase, acquire and accept from DPC, all of the
shares of capital stock of Pharma Brazil and DPC shall immediately
distribute the proceeds of such sale to DuPont and DPI, and (I) DPC
shall sell, convey, assign, transfer and deliver to a Foreign Buyer
Sub, and Buyer shall cause such Foreign Buyer Sub to, purchase, acquire
and accept from DPC, all of the shares of capital stock of Pharma Spain
and DPC shall immediately distribute the proceeds of such sale to
DuPont and DPI (excluding, in the case of each of the foregoing clauses
(A) through (I), any director's qualifying shares or investments by
foreign nationals mandated by applicable Law);
(ii) DuPont shall sell, convey, assign,
transfer and deliver to Buyer Sub 1, and Buyer shall cause Buyer Sub 1
to, purchase, acquire and accept from DuPont, all of (A) the DPC
Interests held by DuPont, (B) the DCI Shares and (C) DuPont's right,
title and interest in and to the Transferred Equipment;
(iii) DPI shall sell, convey, assign, transfer
and deliver to Buyer Sub 2, and Buyer shall cause Buyer Sub 2 to,
purchase, acquire and accept from DPI, immediately following the
transfer referred to in clause (ii)(A) above, all of the DPC Interests
held by DPI;
(iv) DPI shall sell, convey, assign, transfer
and deliver to Buyer Sub 1, and Buyer shall cause Buyer Sub 1 to,
purchase, acquire and accept from DPI, all of the DPRL Shares;
(v) DEMI and DDI shall sell, convey, assign,
transfer and deliver to Buyer Sub 1, and Buyer shall purchase, acquire
and accept from DEMI and DDI, all of the DPL Shares, in each case free
and clear of all Encumbrances (other than, in the case of the
Transferred Equipment, Permitted Encumbrances); and
26
<PAGE>
(vi) Buyer Sub 1 shall assume the Assumed
Liabilities (other than Assumed Liabilities which are solely
Liabilities of a Transferred Business Company).
(b) Prior to the Closing, DuPont shall, and shall
cause its Subsidiaries to, remove all Excluded Assets from the Transferred
Business Companies, other than at DuPont's election, and subject to the
provisions of Section 2.4(f), all or a portion of the Cash of the Transferred
Business Companies (in which case any Cash remaining in the Transferred Business
Companies at the Closing shall not be treated as an Excluded Asset for purposes
of this Agreement). The Excluded Assets shall be excluded from the Transferred
Business Companies and shall not be included in deriving the Estimated Closing
Balance Sheet, the Preliminary Closing Balance Sheet or the Final Closing
Balance Sheet and shall not be sold, conveyed or delivered to Buyer or its
Subsidiaries.
2.2 Purchase Price. The aggregate cash purchase price to be
--------------
paid by Buyer, Buyer Sub 1, Buyer Sub 2 and the Foreign Buyer Subs for the sale
of the Controlled Foreign Subsidiary Shares, the DPC Interests, the DCI Shares,
the DPRL Shares, the DPL Shares and the Additional Transferred Assets (the
"Sale") shall consist of $7,800,000,000 in cash (the "Pre-Adjusted Closing
---- --------------------
Purchase Price"), subject to adjustment pursuant to Section 2.4(a) (as so
--------------
adjusted pursuant to Section 2.4(a), the "Closing Purchase Price"), subject to
----------------------
further adjustment pursuant to Sections 2.4(e) and (f) (as so further adjusted
pursuant to Sections 2.4(e) and (f), the "Purchase Price").
--------------
2.3 The Closing.
--------------------
(a) The closing of the Sale (the "Closing") shall,
-------
subject to the satisfaction or waiver of the conditions set forth in Article
VII, be held at the offices of Cravath, Swaine & Moore in New York, New York (or
such other place or places as the parties may mutually agree, including, without
limitation, with respect to sales of the Controlled Foreign Subsidiary Shares,
such places outside of the United States as the parties may mutually agree), as
soon as practicable after the date of this Agreement upon (A) the second
Business Day after all the conditions precedent set forth in Article VII are
satisfied or waived or (B) such other time as the parties may mutually agree;
provided that the Closing Date shall not be extended beyond the date on which
--------
this Agreement terminates pursuant to Section 8.1(b) hereof. The date on which
the Closing actually occurs is hereinafter referred to as the "Closing Date."
------------
27
<PAGE>
(b) On the Closing Date, DuPont shall deliver or
cause to be delivered to Buyer the following:
(A) Certificates representing the DCI
Shares, the DPRL Shares and the DPL Shares, each duly endorsed
and in form for transfer to Buyer Sub 1.
(B) Certificates representing the Controlled
Foreign Subsidiary Shares, each duly endorsed and in form for
transfer to the applicable Foreign Buyer Sub.
(C) A duly executed instrument of transfer
of the DPC Interests being assigned and transferred to Buyer
Sub 1 and Buyer Sub 2 in a form to be reasonably agreed upon
by the parties.
(D) A duly executed bill of sale and
assignment and such other instruments or documents as may be
reasonably requested by Buyer to evidence its purchase of the
Transferred Equipment hereunder or otherwise necessary to
provide for the transactions contemplated hereby.
(E) The stock books, stock ledgers, minute
books and corporate seals of the Transferred Business
Companies and the Controlled Foreign Subsidiaries as of the
Closing Date; provided that any of the foregoing items shall
--------
be deemed to have been delivered pursuant to this Section
2.3(b)(E) if such item has been delivered to or is otherwise
certified to Buyer to be located at any of the Transferred
Business Companies as of the Closing Date or any of their
respective offices.
(F) The Related Agreements, duly executed by
DuPont or its Subsidiaries (to the extent that each is a party
thereto), to the extent not executed and delivered to Buyer
prior to the Closing; a duly executed instrument of assumption
of all Retained Liabilities, to the extent such Retained
Liabilities are Liabilities of any Transferred Business
Company on the Closing Date, being assumed by DuPont in a form
to be reasonably agreed upon by the parties; and all other
documents required to be delivered by DuPont or its
Subsidiaries on or prior to the Closing Date pursuant to this
Agreement or otherwise reasonably required by Buyer in
connection herewith.
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<PAGE>
(c) On the Closing Date, Buyer, Buyer Sub 1, Buyer
Sub 2 and the Foreign Buyer Subs shall deliver or cause to be delivered to
DuPont or its designee the following:
(A) the Closing Purchase Price in
immediately available funds by wire transfer to an account or
accounts at such bank or banks specified by DuPont at least
two Business Days prior to the Closing Date (such amount to be
exclusive of any amounts required to be paid at the Closing
pursuant to the Related Agreements).
(B) A duly executed instrument acknowledging
acceptance of the DPC Interests being transferred to Buyer Sub
1 and Buyer Sub 2 and the admission of Buyer Sub 1 and Buyer
Sub 2 to DPC as partners in a form to be reasonably agreed
upon by the parties.
(C) A duly executed instrument of assumption
of the Assumed Liabilities being assumed by Buyer Sub 1 in a
form to be reasonably agreed upon by the parties.
(D) The Related Agreements, duly executed by
Buyer (to the extent that it is a party thereto), to the
extent not executed and delivered to DuPont prior to the
Closing; and all other documents required to be delivered by
Buyer on or prior to the Closing Date pursuant to this
Agreement or otherwise reasonably required by DuPont in
connection herewith.
2.4 Purchase Price Adjustment.
----------------------------------
(a) No later than three (3) Business Days prior to
the Closing Date, DuPont shall deliver to Buyer an unaudited combined balance
sheet of the Transferred Business Companies, prepared by DuPont in accordance
with GAAP applied on a basis consistent with the Audited Financial Statements as
of the close of business (New York time) on the day specified in Schedule 3.5(a)
(which is based on the date on which the Closing occurs) (the "Estimated Closing
-----------------
Balance Sheet"), which shall be accompanied by (i) a calculation by DuPont of
-------------
Net Assets based on the Estimated Closing Balance Sheet and in accordance with
GAAP applied on a basis consistent with the Audited Financial Statements (the
"Estimated Net Assets") and (ii) a certificate of the Chief Financial Officer of
--------------------
DuPont stating that the Estimated Closing Balance Sheet and Estimated Net Assets
have been prepared in accordance with this Section 2.4(a). The Pre-Adjusted
Closing Purchase Price shall
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<PAGE>
be (i) increased, if the Estimated Net Assets exceed the Reference Net Assets,
by an amount equal to the amount of such excess, or (ii) decreased, if the
Reference Net Assets exceed the Estimated Net Assets, by an amount equal to the
amount of such excess (the "Estimated Closing Adjustment"); provided, however,
---------------------------- -------- -------
that if the Reference Net Assets exceed the Estimated Net Assets by an amount
that is greater than zero ($0) and less than the Minimum Buyer Adjustment
Amount, then the amount of the Estimated Closing Adjustment shall be zero ($0)
and the Estimated Net Assets shall be deemed to be equal to the Reference Net
Assets; provided, further that if the Estimated Net Assets exceed the Reference
--------
Net Assets by an amount that is greater than zero ($0) and less than the Minimum
DuPont Adjustment Amount, then the amount of the Estimated Closing Adjustment
shall be zero ($0) and the Estimated Net Assets shall be deemed to be equal to
the Reference Net Assets. The Pre-Adjusted Closing Price, as so increased or
decreased, as the case may be, is hereinafter referred to as the Closing
Purchase Price.
(b) As promptly as practicable following the Closing
Date but in no event later than seventy-five days (75) thereafter, Buyer shall
deliver to DuPont an unaudited combined balance sheet of the Transferred
Business Companies, prepared by Buyer in accordance with GAAP applied on a basis
consistent with the Audited Financial Statements, as of the close of business
(New York time) on the Closing Date (the "Preliminary Closing Balance Sheet"),
---------------------------------
which shall be accompanied by (i) a calculation by Buyer of Net Assets based on
the Preliminary Closing Balance Sheet (the "Preliminary Net Assets") and (ii) a
----------------------
certificate of the Chief Financial Officer of Buyer stating that, in his view,
the Preliminary Closing Balance Sheet and Preliminary Net Assets have been
prepared in accordance with this Section 2.4(b).
(c) DuPont shall have thirty (30) days following
delivery to DuPont of the Preliminary Closing Balance Sheet and the calculation
of Preliminary Net Assets during which to review the Preliminary Closing Balance
Sheet and such calculations, and to notify Buyer if it believes that (i) the
Preliminary Closing Balance Sheet was not prepared in accordance with Section
2.4(b) or contains mathematical error or (ii) that the calculation of
Preliminary Net Assets was not in accordance with the definition of Net Assets
contained herein, not calculated in accordance with Section 2.4(b) or contains
mathematical error, and, in each case, specifying the reasons therefor in
reasonable detail (in which case such notification shall be accompanied by a
certificate of the Chief Financial Officer of DuPont stating that he concurs
with DuPont's position set forth in such notice). In connection with such
review, Buyer shall provide (or, in the case of access to PricewaterhouseCoopers
LLP and its work papers, schedules, memoranda and other documents, shall use its
reasonable best efforts to provide) DuPont and its Representatives reasonable
access, during normal business hours and upon reasonable notice, to all work
papers,
30
<PAGE>
schedules, memoranda and other documents prepared by Buyer or its
Representatives in connection with its preparation of the Preliminary Closing
Balance Sheet and/or its calculation of Preliminary Net Assets (and shall be
entitled to copies thereof) and to finance personnel of Buyer and its
Subsidiaries and any other information which DuPont reasonably requests, and
Buyer shall, and shall cause its Subsidiaries to cooperate reasonably with
DuPont and its Representatives in connection therewith. If (A) DuPont fails to
notify Buyer of any such dispute within such 30-day period, or (B) the aggregate
amount of the items disputed by DuPont is such that, were DuPont's position
adopted, it would not result in an amount payable pursuant to Section 2.4(e)
that is at least $5 million greater or less than would be the case if the
Preliminary Closing Balance Sheet were deemed final, the Preliminary Closing
Balance Sheet and the calculation of Preliminary Net Assets shall be deemed
final. In the event that DuPont shall so notify Buyer of any dispute, DuPont and
Buyer shall cooperate in good faith to resolve such dispute as promptly as
possible, and upon such resolution, if any, any adjustments to the Preliminary
Closing Balance Sheet and Preliminary Net Assets shall be made in accordance
with the agreement of Buyer and DuPont.
(d) If Buyer and DuPont are unable to resolve any
such dispute within thirty (30) days (or such longer period as Buyer and DuPont
shall mutually agree in writing) of DuPont's delivery of such notice, such
dispute shall be resolved by the Independent Accounting Firm, and such
determination shall be final and binding on the parties; provided, however, that
-------- -------
(i) the calculation of Final Net Assets shall be based on the Final Closing
Balance Sheet and the definitions contained herein and (ii) unless the
Independent Accounting Firm determines that the Preliminary Closing Balance
Sheet was not prepared in accordance with Section 2.4(b) or contains
mathematical error, the Preliminary Closing Balance Sheet shall be the Final
Closing Balance Sheet. DuPont and Buyer shall mutually select the Independent
Accounting Firm, but if DuPont and Buyer cannot mutually agree on the identity
of the Independent Accounting Firm, then DuPont and Buyer shall each submit to
the other party's independent auditor the name of a national accounting firm
other than PricewaterhouseCoopers LLP, and the Independent Accounting Firm shall
be selected by lot from these two firms by the independent auditors of the two
parties. (If no national accounting firm shall be willing to serve as the
Independent Accounting Firm, then a nationally recognized (in the United States)
expert in public accounting shall be selected to serve as such, such selection
to be according to the above procedures.) Any expenses relating to the
engagement of the Independent Accounting Firm in respect of its services
pursuant to this Section 2.4(d)) shall be shared equally by DuPont and Buyer.
The Independent Accounting Firm shall be instructed to use every reasonable
effort to perform its services within 30 days of submission of the Preliminary
Closing Balance Sheet to it and, in any case, as promptly as practicable after
such submission. The calculation of Final Net Assets shall then be prepared by
Buyer in accordance with the written determination of the
31
<PAGE>
Independent Accounting Firm, and delivered to DuPont. DuPont and Buyer agree
that judgment may be entered upon the written determination of the Independent
Accounting Firm in any court having jurisdiction over the party against which
such determination is to be enforced.
(e) The Purchase Price shall, subject to any increase
pursuant to Section 2.4(f), be equal to the Closing Purchase Price, (i) plus, if
the Final Net Assets exceed the Estimated Net Assets, then the amount of such
excess, or (ii) minus, if the Estimated Net Assets exceed the Final Net Assets,
then the amount of such excess (either such excess amount, the "Final Closing
-------------
Adjustment"). Buyer or DuPont, as the case may be, shall, within ten (10)
----------
Business Days after the final determination of the Final Closing Balance Sheet
pursuant to Sections 2.4(c) and (d) hereof, make payment to the other by wire
transfer in immediately available funds of the amount of the Final Closing
Adjustment as determined pursuant to the preceding sentence, together with
interest thereon from the Closing Date to the date of payment at a floating rate
equal to the U.S. dollar prime rate per annum, as quoted by J.P. Morgan Chase &
Co., from time to time during such period. Such interest shall be calculated
based on a year of 365 days and the number of days elapsed since the Closing
Date.
(f) The parties acknowledge that DuPont intends to
cause all Cash held by the Transferred Business Companies prior to the Closing
to be transferred to DuPont or one or more of the Retained Subsidiaries and that
DuPont shall use reasonable best efforts to effect such transfers, provided,
--------
however, that DuPont shall have no obligation to transfer Cash held by Pharma
-------
Canada, but may transfer such Cash at its sole discretion. To the extent that
DuPont does not transfer some or all of the Cash of Pharma Canada prior to the
Closing, Buyer and DuPont agree that (i) Buyer will use reasonable best efforts
to effect the transfer of Cash from Pharma Canada to Buyer or any Affiliate of
Buyer at the lowest possible withholding tax cost to Buyer, and (ii) DuPont
shall reimburse Buyer or any Affiliate of Buyer for 50% of any Canada
withholding Taxes actually incurred by Buyer (calculated at the actual
applicable withholding tax rate, but not to exceed 5% for purposes of this
calculation) upon such transfer from Pharma Canada. In addition, to the extent
there is a legal impediment that prevents Cash held by Pharma Canada at the time
of the Closing from being distributed by Pharma Canada to Buyer or any Affiliate
of Buyer within 30 days of the Closing, DuPont shall reimburse Buyer for 50% of
the costs to Buyer of the delay in distributing such Cash (including without
limitation reasonable time value of money and cost of currency hedges to the
extent applicable), calculated up to the earlier of the date on which the
impediment to distribution no longer exists or December 31, 2002, and Buyer
shall use reasonable best efforts to minimize the costs resulting from the delay
in distributing such Cash. Any payments by DuPont under the preceding two
sentences of this Section 2.4(f) shall be made within 10 days
32
<PAGE>
of the receipt by DuPont of documentation from Buyer providing reasonable
evidence of the withholding taxes and or costs incurred by Buyer.
Notwithstanding any other provision of this Agreement, to the extent that any
Cash held by the Transferred Business Companies is not transferred to DuPont or
a Retained Subsidiary prior to the Closing, there shall be an upward adjustment
to the Closing Purchase Price in an amount equal to the amount of such
undistributed Cash. The amount of such adjustment shall be determined in
accordance with the Preliminary Closing Balance Sheet and, if disputed, the
Final Closing Balance Sheet, on the same time frame and in a manner analogous to
that applicable to the calculation of Preliminary Net Assets and Final Net
Assets, except that there shall be no minimum amount of such undistributed Cash
required as a precondition to making any such adjustment.
2.5 Allocation of Purchase Price. The Closing Purchase Price
----------------------------
shall be allocated among the DPC Interests, DCI Shares, DPRL Shares, the DPL
Shares, the Controlled Foreign Subsidiary Shares and the Transferred Equipment
and the Transferred Assets to the extent required by reason of Section 754,
Section 338(g) and/or Section 338(h)(10) elections having been made as agreed by
DuPont and Buyer (the "Purchase Price Allocation Schedule"), in accordance with
----------------------------------
Section 1060 of the Internal Revenue Code and the Treasury Regulations
promulgated thereunder and in accordance with local law. The Purchase Price
Allocation Schedule shall be amended, as appropriate, as agreed by DuPont and
Buyer from time to time to take into account purchase price adjustments pursuant
to Section 2.4 hereof, Section 8.4(d) hereof and otherwise. DuPont and Buyer
hereby agree that prior to Closing, they will agree to purchase price
allocations to each of the Controlled Foreign Subsidiaries, after taking into
account additional due diligence, Cash balances, estimated net income from April
30, 2001 through the Closing, and other relevant factors, provided that such
allocations shall be within the ranges indicated on Schedule 2.5 hereto (unless
DuPont and Buyer shall mutually agree otherwise) and that such agreed upon
allocations shall be included in the Purchase Price Allocation Schedule. The
parties shall (i) timely file all Tax Returns (including Internal Revenue
Service Form 8594 and any supplemental filings to reflect any revisions to the
Purchase Price Allocation Schedule) required to be filed in connection with the
Purchase Price Allocation Schedule, as amended, (ii) be bound by the Purchase
Price Allocation Schedule and take no position inconsistent with the Purchase
Price Allocation Schedule, as amended, for all Tax purposes (including, without
limitation, in any audit or judicial or administrative proceeding or otherwise),
and (iii) prepare and file all Tax Returns and determine all Taxes in a manner
consistent with the Purchase Price Allocation Schedule, as amended. Each of the
parties shall notify the other if it receives notice that any Tax Authority
proposes any allocation different from that set forth on the Purchase Price
Allocation Schedule, as amended.
33
<PAGE>
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF DUPONT
----------------------------------------
DuPont hereby represents and warrants to Buyer that, except as
set forth in the Schedules to this Agreement delivered by DuPont with reference
to the specific Section of this Agreement so qualified:
3.1 Organization, Etc. Each of the Sellers and the Transferred
------------------
Business Companies is a corporation (or, in the case of DPC, a general
partnership) duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization (in the case of good standing to
the extent such concept is recognized in such jurisdiction). Each of the
Transferred Business Companies has all requisite power and authority to conduct
its business as it is now being conducted and to own, lease and operate its
property and assets. Each of the Transferred Business Companies is qualified or
licensed to do business in each jurisdiction in which ownership of property or
the conduct of its business requires such qualification or license, except where
the failure to be so qualified or licensed would not reasonably be expected to
have a Material Adverse Effect. True and complete copies of (a) the certificate
of incorporation and by-laws of each of the Sellers and the Transferred Business
Companies (other than DPC) and (b) the partnership agreement of DPC, each as
presently in effect, have been made available to Buyer.
3.2 Authority Relative to this Agreement, Etc. Each of the
------------------------------------------
Sellers and DPC has all requisite corporate or partnership power and authority
to execute and deliver this Agreement and any other Related Agreements to which
it is a party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Related Agreements
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by the Board of Directors of each of the Sellers and DPC to
the extent party thereto. No other corporate or partnership proceedings on the
part of DuPont (and no action on the part of stockholders of DuPont) or any of
its Subsidiaries are necessary to authorize the execution, delivery and
performance in accordance with their respective terms of this Agreement, the
Related Agreements and the consummation of the transactions contemplated hereby
and thereby. This Agreement and the Related Agreements, and the consummation of
the transactions contemplated hereby and thereby, has been (or in the case of
the Related Agreements will be) duly and validly executed and delivered by each
of the Sellers and DPC to the extent party thereto and, assuming this Agreement
and such other agreements have been duly authorized, executed and delivered by
Buyer, Buyer Sub 1, Buyer Sub 2 or a Foreign Buyer Sub, as applicable, each of
this Agreement and such other agreements constitutes (or in the case of the
Related Agreements will constitute) a legal, valid and binding agreement
34
<PAGE>
of the Sellers and DPC to the extent party thereto, enforceable against each
such company in accordance with its terms.
3.3 Capitalization. (a) All of the authorized partnership
--------------
interests of DPC are owned 50% by DuPont and 50% by DPI. All of the DPC
Interests are duly authorized and validly issued. The authorized capital stock
of DCI consists of 2,000 shares of common stock, of which 1,000 shares of common
stock are issued and outstanding. The authorized capital stock of DPRL consists
of 40,000,000 shares of common stock, of which 13,489,604 shares of common stock
are issued and outstanding. The authorized capital stock of DPL consists of
12,000 shares of common stock, of which 12,000 shares of common stock are issued
and outstanding. Except as described in the prior four sentences, no partnership
interests, shares of capital stock or shares of preferred stock or other
securities of DPC, DCI, DPRL or DPL are issued and outstanding. All the issued
and outstanding DPC Interests, DCI Shares, DPRL Shares and DPL Shares are duly
authorized, validly issued, fully paid and non-assessable and free of any
Encumbrances in respect thereto. Schedule 3.3 sets forth the name of each
Transferred Business Company, its jurisdiction of organization, the amount of
its authorized capital stock (or partnership interests), the amount of its
outstanding capital stock (or partnership interests) and the record owners of
such outstanding stock (or partnership interests). There are no outstanding (i)
securities convertible into or exchangeable for the capital stock of, or equity
or partnership interests in, any of the Transferred Business Companies, (ii)
options, warrants or other rights to purchase or subscribe for capital stock of,
or equity or partnership interests in, any of the Transferred Business
Companies, (iii) bonds, debentures, notes or other indebtedness having the right
to vote on matters involving the Transferred Business Companies, or (iv)
Contracts or understandings of any kind, other than this Agreement, (A) relating
to the sale, issuance, transfer, repurchase, redemption, reacquisition or voting
of any capital stock of, or equity or partnership interests in, any of the
Transferred Business Companies, or of any such convertible or exchangeable
securities or any such options, warrants or rights, or (B) which provides the
economic equivalent of an equity ownership interest in a Transferred Business
Company pursuant to which, in any of the foregoing cases, any of the Transferred
Business Companies is subject or bound.
(b) Upon consummation of the Sale, Buyer Sub 1, Buyer
Sub 2 and the Foreign Buyer Subs, as the case may be, will own all of the issued
and outstanding DPC Interests, DCI Shares, DPRL Shares, DPL Shares and Foreign
Controlled Subsidiary Shares, free of any Encumbrances, other than Encumbrances
created by Buyer, Buyer Sub 1, Buyer Sub 2 or any of the Foreign Buyer Subs.
(c) Except for (i) their Subsidiaries set forth on
Schedule 3.3(c) and (ii) the Excluded Assets, the Transferred Business Companies
do not
35
<PAGE>
directly or indirectly own any capital stock of or other equity interests in any
corporation, partnership or other Person and none of the Transferred Business
Companies is a member of or participant in any partnership, joint venture or
similar Person. The Transferred Business Companies have good and valid title to
the capital stock of or other equity interests in the entities listed on
Schedule 3.3(c), in the amounts set forth on such Schedule, free and clear of
any Encumbrances.
3.4 Consents and Approvals; No Violations. Neither the
-------------------------------------
execution, delivery and performance of this Agreement by the Sellers and DPC nor
the execution, delivery and performance of the Related Agreements by the Sellers
and DPC party thereto, nor the consummation of the transactions contemplated
hereby and thereby by the Sellers and DPC, will (a) violate any provision of the
certificate of incorporation, by-laws or partnership agreement (or other
comparable governing documents) of the Sellers or any Transferred Business
Company, (b) require any consent, waiver, approval, license, authorization or
permit of, or filing with or notification to (collectively, the "Governmental
------------
Filings"), any Governmental Authority except for (i) filings with the Federal
-------
Trade Commission (the "FTC") and with the Antitrust Division of the United
---
States Department of Justice (the "DOJ") pursuant to the HSR Act, and the rules
---
and regulations promulgated thereunder, (ii) requirements of the EC Merger
Regulations or any other foreign Antitrust Laws and Laws regulating exchange or
currency controls and (iii) Governmental Filings that are not material, (c)
conflict with or give rise to any Encumbrance or material preferential purchase
rights, material rights of first refusal or similar material rights of any third
party or result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration or any obligation of any of the
Sellers or any Transferred Business Company) or a loss of any material benefit
to which any of the Sellers or any Transferred Business Company is entitled
under, any of the terms, conditions or provisions of any Indebtedness,
government registration, Contract, Plan, permit or other instrument or
obligation, in each case which is material, to which any of the Sellers or any
Transferred Business Company is a party or by which any of the Sellers or any
Transferred Business Company or any of its respective material properties or
material Assets may be bound, or (d) assuming the making or obtaining of the
Governmental Filings referred to in clause (b)(i) and (b)(ii) above, conflict
with, give rise to a loss of benefit under or violate any Law applicable to any
of the Sellers or any Transferred Business Company or by which any of their
respective properties or Assets may be bound, except for such conflicts or
violations which would not reasonably be expected to have a Material Adverse
Effect.
3.5 Financial Statements. (a) The DPC selected pro forma
--------------------
balance sheet items at December 31, 2000 (the "Balance Sheet") and at March 31,
-------------
2001, the DPC pro forma income statements and the DPC selected pro forma cash
36
<PAGE>
flow items for the fiscal years ended December 31, 1999 and 2000 and for the
three month periods ended March 31, 2000 and 2001, all as set forth in Schedule
3.5 (collectively, the "DPC Financial Statements"), have been prepared from the
------------------------
books and records of the Transferred Business Companies (including the
Additional Transferred Assets and Assumed Liabilities). The DPC selected pro
forma balance sheet items included in the DPC Financial Statements fairly
present in all material respects the combined financial position of the
Transferred Business Companies (including the Additional Transferred Assets and
Assumed Liabilities) as of their respective dates, and the other related
statements included in the DPC Financial Statements fairly present in all
material respects the combined results of operations (in the case of the pro
forma statements of income) and cash flows (in the case of the pro forma
selected cash flow items) of the Transferred Business Companies (including the
Additional Transferred Assets and Assumed Liabilities) for the respective
periods presented therein, all in conformity with the basis of presentation
stated in the DPC Financial Statements, applied on a consistent basis during the
periods involved. The adjustments as shown under the caption "Reconciliations"
in Schedule 3.5 fairly present in all material respects the items described
therein.
(b) The Audited Financial Statements and Unaudited
Interim Financial Statements, when delivered to Buyer pursuant to Section 5.24
of this Agreement, will fairly present in all material respects the financial
position, results of operations and cash flows of the Transferred Business
Companies (including the Additional Transferred Assets and the Assumed
Liabilities) as of the dates and for the periods presented therein, all in
conformity with GAAP, applied on a consistent basis during the periods involved,
except for such exceptions with respect to the Unaudited Interim Financial
Statements as are permitted under the requirements of Regulation S-X under the
Exchange Act, and shall conform to the requirements of Regulation S-X under the
Exchange Act.
(c) The financial position, results of operations and
cash flows of the Transferred Business as presented in the Audited Financial
Statements, including the notes thereto, as of December 31, 2000 and for the
fiscal years ended December 31, 1999 and 2000 and in the Unaudited Interim
Financial Statements, including the notes thereto, as of March 31, 2001 and for
the three month period ended March 31, 2001, in each case, shall not reflect an
adverse change, in any material respect, from the financial position, results of
operations and cash flows presented in the DPC Financial Statements as of such
respective dates for such respective periods.
3.6 Absence of Certain Changes. Since December 31, 2000,
--------------------------
the Transferred Business (including the Transferred Business Companies) has not
(a) suffered any actual or prospective change, event or effect to its prospects,
Assets,
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business, operations or position (financial or otherwise) which, individually or
in the aggregate when taken together with all other actual and prospective
adverse changes, events and effects, since such date, has had or would
reasonably be expected to have a Material Adverse Effect (in the case of the
Transferred Business' financial position and results of operations and cash
flows, as compared to its financial position and results of operations as
presented in the DPC Financial Statements), (b) as of the date of this
Agreement, except to the extent expressly contemplated by this Agreement or
consented to in writing by Buyer, conducted its business in any material respect
other than in the ordinary and usual course consistent with past practice, or
(c):
(i) incurred any long-term Indebtedness or
issued any debt securities or assumed, guaranteed or endorsed the
obligations of any other Person, except in the ordinary course of
business consistent with past practice and except for obligations of
another Transferred Business Company;
(ii) created or otherwise incurred any
Encumbrance on any material Asset, other than Permitted Encumbrances;
(iii) made any material loan or advance to or
any capital contributions to or investment in any Person other than
loans, advances or capital contributions to or investments in any of
its Wholly-Owned Subsidiaries;
(iv) suffered any damage, destruction or other
casualty loss (after taking into account any insurance recoveries to
the extent such recoveries remain with the Transferred Business
Companies) affecting its business or Assets which is material to the
Transferred Business Companies and the Transferred Equipment taken as a
whole;
(v) except (A) to the extent expressly
contemplated by this Agreement or consented to in writing by Buyer or
(B) in the ordinary course of business consistent with past practice,
or entered into any transaction or commitment, or any Contract relating
to its respective Assets or business (including the acquisition or
disposition of any Assets) or relinquished any Contract or other right,
in either case, material to the Transferred Business Companies, taken
as a whole, other than this Agreement and the Related Agreements;
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(vi) changed any method of accounting, or
accounting practice of any Transferred Business Company, except for any
such change required (A) by reason of a concurrent change in Law, SEC
guidelines or GAAP or (B) by reason of a change in DuPont's method of
accounting or accounting practices that, due to Law, SEC guidelines or
requirements or GAAP, requires a change in the accounting practices of
a Transferred Business Company;
(vii) (A) granted any severance or termination
pay to (1) any of its respective employees, other than ordinary course
grants in amounts consistent with past practice or (2) any of its
respective directors or officers, (B) increased benefits payable under
any existing severance or termination pay policies or employment
agreements, (C) entered into any material employment, consulting,
deferred compensation or other similar agreement (or adopted any
amendment to any such existing agreement) with any of its respective
directors or officers, (D) established, adopted or amended (except as
required by applicable Law) any collective bargaining, bonus, profit
sharing, thrift, pension, retirement, change-in-control, deferred
compensation, compensation, stock option, restricted stock or other
benefit plan or arrangement covering any of its respective directors,
officers or employees, (E) materially increased compensation, bonus or
other benefits payable to any of its respective directors or officers
or (F) except in the ordinary course consistent with past practice,
increased the compensation, bonus or other benefits payable to any of
its respective employees (other than directors or officers), where such
increases could, in the aggregate, be material;
(viii) failed to pay any creditor of the
Transferred Business any material amount when due or defaulted on any
material obligation relating to the conduct or operation of the
Transferred Business;
(ix) taken, or omitted to take, any action that
if taken or omitted to be taken on or after the date of this Agreement
would violate Sections 5.1(b) (1), (2), (7), (8), (10), (12), (13) or
(14); or
(x) committed to do any of the foregoing.
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3.7 Compliance with Law, Permits.
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(a) The Transferred Business is not being conducted
in violation of any applicable Law, except such violations which individually or
in the aggregate would not reasonably be expected to have a Material Adverse
Effect. The Transferred Business Companies have all governmental permits,
licenses, certificates, qualifications, registrations, approvals for their
products, other approvals and other similar authorizations necessary for the
conduct of their businesses as presently conducted and the ownership or current
use of the Transferred Assets (the "Permits") and are in compliance with the
-------
terms of the Permits, except where the failure to have such a Permit or for any
non-compliance which would not reasonably be expected to have a Material Adverse
Effect.
(b) The Transferred Business Companies hold all
Permits necessary as such activities are currently conducted to develop,
manufacture, distribute and sell the product known as Sustiva(TM) and are in
compliance in all material respects with the terms of such Permits. The NDA
relating to such product has been approved by, and none of DuPont or any of its
Subsidiaries has received any notice in writing which has, or reasonably should
have, led DuPont or any such Subsidiary to believe that the NDA relating to such
product is not currently in good standing in all material respects with the FDA.
To DuPont's Knowledge, no condition or state of facts exists that could
reasonably be expected to give rise to a violation of, or a material liability
or default under, any of the foregoing.
(c) (i) The Transferred Business, as conducted in the
United States, is conducted in compliance in all material respects with all
applicable Laws in connection with the preparation and submission to the FDA of
each of the NDAs relating to the material products of the Transferred Business,
and each of the NDAs relating to the material products of the Transferred
Business has been approved by, and none of DuPont or any of its Subsidiaries has
received any notice in writing which has, or reasonably should have, led DuPont
or any such Subsidiary to believe that any of the NDAs relating to the material
products of the Transferred Business are not currently in good standing with the
FDA. The Transferred Business Companies (or their designated agents) have filed,
or caused to be filed, with the FDA all required notices, supplemental
applications and annual or other reports, including adverse experience reports,
with respect to each NDA relating to each material product of the Transferred
Business required to be filed by the NDA holder except when the failure to file
such notices, applications and reports would not have a material adverse effect
with respect to the continued good standing of any such product with the FDA.
With respect to the material products of the Transferred Business for which an
NDA has been approved by the FDA, the applicant and all Persons performing
operations covered by the application acted in material
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compliance with 21 U.S.C. Sub. 355 or 357, 21 C.F.R. Parts 314 or 430 et seq.,
respectively, and all terms and conditions of such application.
(ii) The Transferred Business, as conducted
outside the United States, is conducted in compliance in all material respects
with all applicable Laws in connection with the preparation and submission to
each applicable Governmental Authority of each marketing authorization
application or its equivalent ("MAA"), amendment or variation or supplement to
---
an MAA, re-registration, safety report or necessary response relating to each
material product of the Transferred Business currently manufactured, marketed,
promoted or sold outside the United States, and, except for such failures as
would not have a material adverse effect on the continued good standing with the
applicable Governmental Authority of any such product, (A) each of the MAAs
relating to each such product of the Transferred Business has been approved by,
and (B) none of DuPont or any of its Subsidiaries has received any notice in
writing which has, or reasonably should have, led DuPont or any such Subsidiary
to believe that any of the MAAs relating to such product of the Transferred
Business are not currently in good standing with, each applicable Governmental
Authority. The Transferred Business Companies (or their designated agents) have
filed with each applicable Governmental Authority all required notices,
supplemental applications and annual or other reports, including adverse
experience reports, with respect to each MAA required to be filed by the holder
of the MAA, relating to each such product of the Transferred Business except
when the failure to file such notices, applications and reports would not have a
material adverse effect on the continued good standing of such product with the
regulatory jurisdiction which issued the MAA. With respect to such material
products of the Transferred Business for which an MAA has been approved by the
applicable Governmental Authority, the applicant and all Persons performing
operations covered by the application acted in material compliance with
applicable Law and all terms and conditions of such application.
(iii) None of DuPont or any of its Affiliates
have received any notice since January 1, 1999, that any Governmental Authority
(including the FDA) has commenced, or, to their Knowledge, threatened to
initiate any action to withdraw any approval for a material product or to limit
the ability of the Transferred Business to manufacture (or to have manufactured
for it by a third party) any material product or to request the recall of any
material product of the Transferred Business, or commenced or, to their
Knowledge, threatened to initiate any action to enjoin production of such
products at any facility.
(iv) Except as would not reasonably be expected
to have a Material Adverse Effect, all manufacturing operations conducted by the
Transferred Business Companies (or by third parties on behalf of the Transferred
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Business Companies) relating to the manufacturing of the products of the
Transferred Business are being conducted in compliance with Good Manufacturing
Practices, with appropriate industry standards in the country in which such
manufacturing is being conducted and with appropriate industry standards in each
country in which the Transferred Business Companies intend to market, promote or
sell such products.
(v) DuPont has made available to Buyer copies
of (A) all reports of inspection observations, (B) all establishment inspection
reports and (C) all warning letters as well as any other documents received by
DuPont or any of its Subsidiaries since January 1, 1999 from the FDA or any
other Governmental Authority relating to the products of the Transferred
Business and/or arising out of the conduct of the Transferred Business that in
the case of clauses (A), (B) and (C) (1) are in the possession of DuPont or any
of its Subsidiaries (including any of the Transferred Business Companies) and
(2) assert a material violation or material non-compliance with any applicable
laws or regulatory requirements (including those of the FDA).
3.8 No Undisclosed Liabilities. Except as and to the extent
--------------------------
reflected in the Balance Sheet, none of the Transferred Business Companies had
at December 31, 2000 any Liabilities of a type required by GAAP to be reflected
on a combined balance sheet of the Transferred Business Companies or in the
notes thereto (it being deemed for the purpose of this Section 3.8 that each
Assumed Liability is a Liability of (and incurred by) a Transferred Business
Company). Since December 31, 2000, none of the Transferred Business Companies
has incurred any Liabilities required by GAAP to be reflected on a combined
balance sheet of the Transferred Business Companies or in the notes thereto
except for such Liabilities which were incurred by a Transferred Business
Company since December 31, 2000, in the ordinary course of business consistent
with past practice or as expressly permitted by this Agreement. The Assumed
Liabilities do not include any Liabilities that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
3.9 Litigation. There is no action, suit or proceeding
----------
pending, or, to the Knowledge of DuPont, action, suit or proceeding threatened,
against a Transferred Business Company (or which would reasonably be expected to
result in a Liability that would be an Assumed Liability), before any
Governmental Authority or arbitration tribunal which individually or in the
aggregate would reasonably be expected to have a Material Adverse Effect.
Schedule 3.9 lists as of the date of this Agreement all actions, suits or
proceedings pending, or to the Knowledge of DuPont, threatened, which involve a
claim for damages or other monetary relief against a Transferred Business
Company (or which specifically relate to, or involve, a Transferred Business
Company or Transferred Asset other than actions, suits or
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proceedings pending against Buyer or its Affiliates) or which would reasonably
be expected to result in a Liability that would be an Assumed Liability in any
instance in excess of $5 million (or if no damages or other monetary relief are
specified, would reasonably be expected to result in damages or other monetary
relief of in excess of such amount), which seek material injunctive relief or
which would reasonably be expected to (x) give rise to any legal restraint on or
prohibition against the Sale or the other material transactions contemplated by
this Agreement or (y) limit in any material respect the ability of Buyer to
exercise full rights of ownership and control of the Transferred Business
Companies or any of the Additional Transferred Assets after the Closing. As of
the date of this Agreement, none of DuPont or any of its Subsidiaries is subject
to any material outstanding injunction, writ, judgment, order or decree of any