Asset Purchase Agreement - Syntex (F.P.) Inc. and ICN Pharmaceuticals Inc.
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "Agreement") dated as of June 13, 1997, by and
between Syntex (F.P.) Inc., a Delaware corporation ("Seller"), Syntex (U.S.A.)
Inc., a Delaware corporation ("Syntex"), ICN Puerto Rico, Inc., a Puerto Rico
corporation ("Buyer"), and ICN Pharmaceuticals, Inc., a Delaware corporation
("ICN").
WITNESSETH:
WHEREAS, Seller owns the plant site located at. Mariana Ward, Road 909 Km 1.1,
Humacao, Puerto Rico, including the real property on which the plant is located
and the buildings, site improvements, furniture, fixtures, equipment and other
assets (except for certain leased equipment) located at the plant site (the
"Plant Site") ; and
WHEREAS, subject to the terms and conditions hereinafter set forth, Seller
desires to sell and Buyer desires to purchase, the Real Property (as hereinafter
defined) and the Equipment and Other Assets (as hereinafter defined); and
WHEREAS, Buyer agrees that Buyer is not purchasing any interest in the Excluded
Property (as hereinafter defined) at the Plant Site, any product of Seller or
its affiliates, and all know how and other confidential information of Seller
and its affiliates; and
WHEREAS, Buyer desires to manufacture and supply for Seller and/or certain of
its affiliates, certain of Seller's or its affiliates' products at the Plant
Site and provide certain other services to Seller and/or its affiliates at the
Plant Site after the Closing Date; and
WHEREAS, simultaneously on the Closing Date, Seller will lease back the Assets,
including but not limited to the Real Property, Equipment and Other Assets (as
hereinafter defined) pursuant to the Lease attached hereto as Exhibit ____; and
enter into the Toll Manufacturing Agreement attached as Exhibit ____; and
WHEREAS, Seller may lease certain of Buyer's employees and portions of the Plant
Site after the expiration of the Lease (as hereinafter defined) with respect to
the production of certain of Seller or its affiliates' products and for other
purposes after the Closing Date; and
WHEREAS, ICN agrees to guarantee, jointly and severally, with the Buyer, the
payment and performance of all of the obligations of the Buyer under this
Agreement and any other related agreement; and
WHEREAS, Syntex agrees to guarantee, jointly and severally with the Seller, the
payment and performance of all of the obligations of the Seller upon this
Agreement and any other related agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I - SALE AND PURCHASE OF ASSETS
Section 1.1 Sale and Purchase of Assets
Subject to the terms and conditions set forth in this Agreement, Seller agrees
to convey, assign, transfer and deliver, or cause to be conveyed, assigned,
transferred and delivered, to Buyer at the Closing Date (as hereinafter
defined), and Buyer agrees to acquire and accept from Seller, good and
marketable title to all of Seller's right, title and interest in the following
(collectively, the "Assets"):
a) Real Property. All real property described on Schedule 1.1(a)
hereto, together with all land, buildings, improvements and fixtures thereof and
all rights, privileges and easements appurtenant thereto (the "Real Property"),
subject to any and all exceptions of record;
b) Equipment. All machinery, equipment, parts, supplies, fixtures,
computers, trade fixtures and furnishings, whether leased, licensed or owned,
that are located on the Real Property as of the date hereof (except for Excluded
Assets as hereinafter defined) (the "Equipment"), subject to the terms of any
lease or agreement;
c) Other Assets. Except for the Excluded Assets(as hereinafter
defined) and Inventory (as hereinafter defined),
i) All materials and supplies that are currently used or useful in the
maintenance and operation of the Plant Site, the Real Property and the
Equipment;
ii) All assignable service agreements related to the Plant Site, the
Real Property, and the Equipment;
iii) All information, drawings, files, records, data and plans
relating to the Assets, including equipment manuals, maintenance records,
and engineering drawings, excluding any confidential information of Seller
and its affiliates and other records which Seller determines must be
retained by Seller in order to comply with any governmental or legal
requirements.
<PAGE>
Section 1.2 Excluded Assets
The Assets shall not include any , company vehicles assigned to an employee,
pension assets, 401-K assets, and financial systems records and programs,
proprietary or leased computer software,confidential machinery and equipment and
other items listed on Schedule 1.2 hereto, consumable manufacturing supplies,
raw materials, packaging, finished goods, and work-in-process relating to
Seller's or its affiliates' products, records which Seller determines must be
retained by Seller in order to comply with any governmental or legal
requirements, permits, and any confidential information, , proprietary
information, intellectual property, know how, patents, trademarks, and
copyrights of Seller or its affiliates, including but not limited to any of the
foregoing pertaining to any of Seller or its affiliates products (the "Excluded
Assets"). Buyer acknowledges and agrees that Buyer is not acquiring any rights
to any product of Seller or any of its affiliates. Buyer agrees that Seller may
remove any of the Excluded Assets either before or after the Closing Date (or
after the expiration of the Lease) as it may be necessary for Buyer to use some
of the Excluded Assets after the Closing Date or after the expiration of the
Lease, but Buyer shall not obtain any rights to such Excluded Assets and Seller
may remove the same at any time.
On the expiration of the Lease, Buyer shall purchase, at Seller's cost, any and
all of Seller's inventory (excluding finished products), work-in-process,
packaging, raw materials, manufacturing supplies and other related products
concerning any of Seller's products which Buyer will continue to produce after
the expiration of the Lease (the "Inventory"). Buyer and Seller shall consult on
appropriate levels of Inventory prior to expiration of the lease.
Section 1.3 The Closing Date
Subject to satisfaction of Closing Conditions set forth below, Buyer agrees that
Buyer shall be unconditionally obligated to purchase the Assets as of the date
of this Agreement; provided however, that Seller shall retain title to the
Assets and will not transfer title to the Assets to Buyer until August -1, l997,
11:00 a.m. (the "Closing Date") at the offices of McConnell Valdes, San Juan,
Puerto Rico, or at such other time, date and place as mutually agreed between
the parties; . Notwithstanding anything herein to the contrary, Seller shall
retain the ownership, benefit and possession of, and bear all risk of loss of,
or damage to, the Assets until the Closing Date.
Section 1.4 AS IS, WHERE IS
EXCEPT AS SPECIFICALLY PROVIDED FOR IN THIS AGREEMENT, BUYER AGREES THAT THE
ASSETS AND INVENTORY ARE SOLD ON AN AS IS, WHERE IS BASIS WITHOUT ANY
REPRESENTATION OR WARRANTY, AND THAT SELLER SHALL HAVE NO LIABILITY OR
OBLIGATION WITH RESPECT TO THE ASSETS OR INVENTORY EITHER BEFORE OR AFTER THE
CLOSING DATE.,
From the date of execution of this Agreement to the Closing Date, Seller agrees
to maintain the Assets, reasonable wear and tear excepted.
Upon shutdown of the oral contraceptives operations, Seller agrees to use
reasonable efforts to sanitize, in accordance with reasonable industry 's
standards, the oral contraceptive process area such that Buyer may utilize the
area for the production of other dissimilar products, but Buyer agrees that
Seller may be unable to complete this task prior to the Closing Date and Buyer
agrees that Seller may complete this task during the term of the Lease. Seller
agrees to maintain any and all governmental permits between the date of the
execution of this Agreement and the Closing Date except as may be mutually
agreed between the parties. Prior to the expiration of the Lease, , Buyer agrees
to secure any and all approvals which Buyer must obtain in order to produce
Seller's products at the Plant Site.
Section 1.5 Joint Inspection and Walk-Through
Seller and Buyer shall provide personnel to conduct a joint inspection and
walk-through of the Assets on a mutually agreed upon date prior to the Closing
Date. Based on the joint inspection, Seller and Buyer shall jointly identify in
writing any items requiring action, if any, to be taken by either party or both
parties prior to or after the Closing Date; provided however, that Seller shall
have no obligation to repair or replace any of the Assets, that Seller's
obligations shall be limited as provided in this Agreement and that Buyer's
remedies shall be limited as provided in this Agreement. Buyer agrees that
notwithstanding any such inspection, Buyer shall be obligated to purchase the
Assets on the Closing Date on the terms set forth in this Agreement.
ARTICLE II - NO ASSUMPTION OF LIABILITIES
Except as otherwise expressly provided herein, each party shall not assume or
incur any liability or obligation of the other party arising out of or relating
to events that occur prior to the Closing Date, including but not limited to the
following:
a) any federal, state or local income or other tax (i) payable with
respect to the Assets for any period prior to the Closing Date or (ii) incident
to or arising as a consequence of the negotiation or consummation by such party
of this Agreement and the transaction contemplated hereby;
b) any liability or obligation of Seller arising or incurred in
connection with the Excluded Assets; or
c) any liability or obligation of such party arising or incurred in
connection with the negotiation, preparation, execution and performance of this
Agreement and the transactions contemplated hereby, including but not limited to
all fees and expenses of such party's counsel, accountants, surveyors and other
experts.
ARTICLE III - CONSIDERATION FOR TRANSFER
Section 3.1 Consideration to be Paid by Buyer
On the Closing Date, as consideration for the sale of the Assets, Buyer shall
pay to Seller the sum of Fifty-Five Million ($55,000,000.00) Dollars (the
"Purchase Price") payable as follows: (i) Eleven Million ($11,000,000.00)
Dollars in cash or a Promissory Note in favor of Seller for the amount of
$11,000,000 secured by a purchase money first mortgage and other financial
security for this sum in a form acceptable to Seller, but in no event shall
payment of the full amount of the Promissory Note extend beyond Ninety(90 ) days
after the Closing Date, and it is understood that Buyer will pay all expenses of
recording any documents necessary to perfect the purchase money first
mortgage;(ii) Forty Million ($40,000,000.00) by the Buyer assuming all
obligations, and having Seller and any of its affiliates released from any and
all obligations or guarantees, regarding the Puerto Rico Industrial, Medical,
Educational and Environmental Pollution Control Facilities Financing Authority
Industrial Revenue Bonds 1990 Series A Bonds Due May 1, 2015 (the "Industrial
Revenue Bonds"); (iii) Four Million ($4,000,000.00) Dollars in credit against
the First Year Rent Payment under the Lease; (iv) paying Seller for any
difference between the principal amount of the Bonds outstanding as of the
Closing Date and any interest or other charges due thereon, together with any
prepaid amounts paid by Seller, and $40,000,000 provided that if the total
exceeds $40,000,000, such excess shall be credited to Buyer; and (v) any
prorations or other amounts to be paid pursuant to the terms of this Agreement.
The Purchase Price shall be allocated as set forth on Schedule 3.1.
Simultaneously with the closing of title, Buyer and Seller shall execute the
Lease attached hereto as Schedule 3.1 (a) which shall be of a term which shall
expire no sooner than July 31, 1999 (the "Lease"). Buyer agrees to take such
action and/or execute such documents as may be reasonably necessary to assure
Seller that a mortgage lender shall have no right to disturb Seller's possession
of the leased Premises, provided Seller is at all relevant times in compliance
with the terms of the Lease. The parties agree that the Lease will be recorded
(at Seller's expense) simultaneous with the recording of the Deed. The Lease
shall be superior in right to any mortgage on the Property during the two (2)
year term, provided, however, that if Seller receives, in its opinion,
satisfactory assurances and protections from any mortgage lender to Buyer of
Seller's right to remain in possession during the Lease, and Buyer can document
savings in its borrowing costs thereby, Seller will subordinate its Lease to
such mortgage.
In the event that prior to ninety (90) days after the the Closing Date, after
using due diligence, Buyer is unable to assume the Industrial Revenue Bonds and
release Seller and its affiliates from any and all obligations under the
Industrial Revenue Bonds and related agreements or guarantees, then in such
event Buyer shall pay Seller Fifty-Five Million ($55,000,000.00) Dollars, plus
interest to be accumulated on the Industrial Revenue Bonds from the Closing Date
through the date of prepayment, and the Seller will pay off the Industrial
Revenue Bonds; provided however that the provisions of the Industrial Revenue
Bonds permit Seller to prepay the same and the prepayment is made on or before
to November 1, 1998.
<PAGE>
In the event that Seller cannot prepay the Industrial Revenue Bonds and Seller
cannot be released from liability on the Industrial Revenue Bonds, then Buyer
shall (1) pay Seller $ 40,000,000 in cash or (2) assume the Industrial Revenue
Bonds and provide Seller with a purchase money first mortgage lien on the Assets
as security for Buyer's performance or a letter of credit or some other form of
financial security acceptable to the Seller and the guarantor of the Industrial
Revenue Bonds, and an indemnification agreement, all in form and substance which
is acceptable to Seller and its counsel. Buyer shall be responsible for any
costs or expenses associated with providing Seller with acceptable security,
including, without limitation, any fees associated with the letter of credit,
recording fees and other related costs of the mortgage, letter of credit and
other security documents.
Section 3.2 Method of Payment
The Purchase Price and all other moneys owed by Buyer to Seller shall be paid by
wire transfer of immediately available funds in US dollars to Seller. Seller
shall designate an account to receive such funds in writing at least five
business days prior to Closing.
Section 3.3 Remedies
Notwithstanding anything to the contrary as may be set forth herein, in the
event the Asset Purchase Agreement of even date herewith between Buyer and
F.Hoffmann-La Roche Ltd concerning acquisition of certain pharmaceutical
products closes (the Product Agreement), thereafter Buyer shall not have the
right of rescission, which might otherwise be available. Except as so limited,
each of the parties hereto may pursue all remedies available to it in the event
of a breach of this Agreement by the other.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
<PAGE>
Section 4.1 Corporate Existence
Seller and Syntex are corporations duly organized under the laws of Delaware and
Seller is qualified to do business in Puerto Rico.
Section 4.2 Corporate Power; Authorization; Enforceable Obligations
Seller and Syntex each has all requisite corporate power and authority to
execute, deliver and perform this Agreement and all other instruments and
agreements required to be executed, delivered or performed by them pursuant
hereto ("Seller's Documents"). As of the execution of this Agreement or on the
Closing Date, the execution, delivery and performance of this Agreement, and all
other Seller's Documents, will have been duly authorized by all necessary
corporate action on the part of Seller and Syntex. This Agreement has been, and
on the Closing Date, all other Seller's Documents will have been duly authorized
by all necessary corporate action on the part of Seller. This Agreement has
been, and as of the execution of this Agreement or on the Closing Date, all
other Seller's Documents will have been, duly executed and delivered by
authorized officers of Seller and Syntex and constituteor will constitute the
legal, valid and binding obligations of Seller and Syntex enforceable against
them in accordance with their respective terms.
Section 4.3 Validity of Contemplated Transactions
The execution, delivery and performance of this Agreement by Seller and Syntex
does not and will not violate, conflict with or result in the breach of any
term, condition or provision of, or require the consent of any other person
under the charter documents of Seller or any securities issued by Seller and/or
Syntex, or any material mortgage, indenture, agreement, contract, commitment,
lease, plan, document or understanding, oral or written, to which Seller or
Syntex is a party by which Seller or Syntex or any of the Assets may be bound or
affected, or give any party with material rights thereunder the right to
terminate, modify, accelerate or otherwise change the existing rights or
obligations of Seller thereunder, except under the Industrial Revenue Bonds and
any lease or service agreement pertaining to the Plant Site or Assets.
Section 4.4 No Third Party Options
There are no existing agreements, options, commitments or rights with, or to any
person to acquire any of the Assets or any interest therein.
Section 4.5 Taxes
All property taxes, general or special assessments and any other taxes relating
to the Assets applicable to periods prior to the Closing Date have been or shall
be paid by Seller in a timely manner.
Section 4.6 Existing Condition
Seller has not as of the date of the execution of this Agreement:
a) failed to pay or discharge when due any liabilities of which the
failure to pay or discharge has caused or could reasonably be expected to cause
any material damage or risk of material loss to any of the Assets;
b) sold, encumbered, assigned or transferred any Assets, except for
the Industrial Revenue Bonds and any lease or service agreement;
c) subjected any of the Assets to any mortgage, lien, pledge, security
interest, conditional sales contract or other encumbrance of any nature
whatsoever, except for the Industrial Revenue Bonds and any leased equipment or
service agreement;
d) to the best of Seller's knowledge, after due inquiry, suffered any
material damage, destruction or loss, whether or not covered by insurance,
adversely affecting the Assets;
e) to the best of Seller's knowledge, after due inquiry, suffered any
material adverse change in or relating to the Assets; or
f) to the best of Seller's knowledge, after due inquiry, received
notice or had knowledge of any actual or threatened material labor trouble,
strike or other occurrence, event or condition of any similar character which
has had or could reasonably be expected to have a material adverse effect on the
operation of the Plant Site.
Section 4.7 Compliance with Law
Except as provided in this Agreement, to the best of Seller's knowledge, Seller
has complied in all material respects with any law, ordinance, or governmental
or regulatory rule or regulation, order, judgment or decree whether federal,
state, commonwealth, local or foreign, to which the Assets or Seller's
operations at the Plant Site are subject.
Section 4.8 Litigation
Except as provided in Schedule 4.8, no action, suit, litigation, arbitration,
arbitrator or governmental or regulatory official , body or authority, including
without limitation the United States Food and Drug Administration, relating to
the Assets, the Plant Site or the transactions contemplated by this Agreement is
pending or, to the best knowledge of Seller, threatened against Seller, nor does
Seller know or have reason to know of any basis for any such action, suit,
litigation, arbitration, investigation or proceeding; Seller is not aware of any
claim, event or occurrence that would require Seller to give notice to any
insurer under any of Seller's insurance policies; and Seller is not a party to
or subject to the provisions of any judgment, order, writ, injunction, decree or
award of any court, arbitrator or governmental or regulatory official, body or
authority that relates in any material way to the Assets, the Plant Site or the
transactions contemplated by this Agreement.
Section 4.9 Insurance
The Assets are adequately insured under various policies of general liability
and other forms of insurance or self insurance.
Section 4.10 Labor Matters
Seller represents that it is not a party to any contract of employment, employee
lease contract, collective bargaining agreement or other labor agreement that
relates to or covers any Transferred Employee (as defined in Section 10.1) as of
the Closing Date.
Section 4.11 Real Property
a) Title to Real Property. Title to the Real Property is, and at
Closing Date shall be, good and marketable, fee simple absolute, free and clear
of all liens, adverse claims and other matters affecting Seller's title to or
possession of the Real Property, including, but not limited to, all
encroachments, boundary disputes, covenants, restrictions, reservations,
easements, rights of way, mortgages, security interests, leases, and
encumbrances, except as set forth in any title binder or policy procured by or
given to either party, except for the Industrial Revenue Bonds.
b) Eminent Domain. Seller has received no notices, oral or written, and
has no reason to believe, that any governmental body having the power of eminent
domain over the Real Property has commenced or intends to exercise the power of
eminent domain or a similar power with respect to all or any part of the Real
Property.
c) Public Improvements. Except for a portion of the Plant Site
dedicated for public use and for exceptions of record, no work for municipal
improvements has been commenced on or in connection with the Real Property or
any street adjacent thereto. No assessment for public improvements has been made
against the Real Property which remains unpaid. No notice from any governmental
body has been served upon the Real Property or received by Seller requiring or
calling attention to the need for any work, repair, construction, alteration or
installation on or in connection with the Real Property which has not been
complied with.
Section 4.12 Environmental Matters
a) For purposes of this Agreement, the following terms shall have the
following meanings:
(i) "Environmental Claims" means any and all administrative,
regulatory, or judicial actions, suits, demand letters, claims, liens,
notices of noncompliance or violations, investigations or proceedings
relating to any Environmental Law or Environmental Permit (as those
terms are hereinafter defined) (collectively "Claims"), including,
without limitation, (A) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response,
remedial or other actions or damages pursuant to any applicable
Environmental Law, and (B) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Substances
(as hereinafter defined) or arising from alleged injury or threat of
injury to the environment.
(ii) "Environmental Laws" means any federal, state, commonwealth
or local statute, law, rule, regulation, ordinance, code, policy or
rule of common law in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment, relating
to human health and the environment or Hazardous Substances,
including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. ss.
9601 et seq.; the Emergency Planning and Community Right-to- Know Act,
42 U.S.C ss. 11001 et. seq., the Resource Conservation and Recovery
Act, 42 U.S.C. ss. 6901 et. seq.; the Federal Water Pollution Control
Act, 33 U.S.C. ss. 1251 et. seq.; the Clean Air Act, as amended, 42
U.S.C. S 7401 et. seq. ; the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. ss. 136 et. seq.; the Safe Drinking Water
Act, 42 U.S.C. ss. 300f et. seq., the Toxic Substances Control Act, 15
U.S.C. ss. 2601 et. seq.; the Oil Pollution Act of 1990, 33 U.S.C. ss.
1001 et. seq.; the Hazardous Materials Transportation Act, as amended,
49 U.S.C. ss. 1801 et. seq.; the Occupational Safety and Health Act,
as amended, 29 U.S.C. ss. 651 et. seq.; or the Federal Food, Drug and
Cosmetic Act, as amended, 21 U.S.C. ss. 301 et. seq., the Puerto Rico
Environmental Policy Act, 12 L.P.R.A. ss. 1121 et. seq., the Puerto
Rico Environmental Emergencies Fund Act 12 L.P.R.A. ss. 1271 et. seq.;
the Puerto Rico Sold Waste Authority Act, 12 L.P.R.A. ss. 1301 et.
seq.; the Puerto Rico Harmful Spills Law, 12 L.P..R.A. ss. 1141 et.
seq., the Puerto Rico Organic Act of the Department of The Environment
And Natural Resources, 3 L.P.R.A.ss. 151 et. seq.; or any
environmental transfer laws which regulate the transfer of property
and the corresponding state or commonwealth laws, regulations and
local ordinances which may be applicable, as any such acts have been
or may be amended.
(iii) "Environmental Permits" means all permits, approvals,
identification numbers, licenses and other authorizations required
under any applicable Environmental Law.
(iv) "Hazardous Substances" means any chemicals, materials or
substances defined as or included in the definition of "hazardous
substances," "hazardous wastes, " "hazardous materials," "hazardous
solid waste," "toxic waste," "toxic or hazardous waste," "industrial
waste," "harmful substances," "extremely hazardous wastes," "regulated
substances, ""restricted hazardous wastes," "toxic substances," "toxic
pollutants," "hazardous air pollutants," "pollutants," "contaminants,"
"toxic chemicals," "petroleum or petroleum products," "toxins,"
"hazardous chemicals," "extremely hazardous substances," "pesticides"
or related materials, as now, in the past, or hereafter defined in any
applicable Environmental Law.
b) Buyer acknowledges that Buyer has inspected the Assets and will
receive Seller's report and a third party's report concerning the environmental
status of the Assets prior to Closing. Seller representsthat: (i) Seller has
complied in all material respects with any applicable Environmental Law; (ii)
Seller has obtained all necessary Environmental Permits and is in compliance in
all material respects with their requirements as of the date hereof; (iii) the
Assets (including, without limitation, soils and surface, ground waters and
buildings) are not contaminated with any Hazardous Substances; (iv) there are no
past, pending or , to the best knowledge of Seller, threatened Environmental
Claims or circumstances that could reasonably be anticipated to form the basis
thereof against Seller; and (v) the Real Property is not listed on the National
Priorities List or any similar state, commonwealth or local listing nor is it
included in an area included in such a list, and Seller is not aware that such a
listing is pending or contemplated (except for listing on CERCLIS and equivalent
local listing) as of the date hereof.
c) Seller agrees to indemnify and hold harmless Buyer for any and all
losses, claims, damages, penalties, liabilities, fines, injuries, costs and
expenses (including attorney's fees, administrative expenses, prejudgment
interest and court costs), or response costs, including the cost of any required
or reasonable investigation, testing, monitoring, repair, cleanup or
detoxification, decontamination, preparation of any closure or other required
plans, removal, response or remedial action) (collectively, "Environmental
Liabilities") in connection with the Assets or any Environmental Claims but only
to the extent arising from or out of activities occurring, or undertaken by
Seller, prior to Closing Date with respect to, as a direct or indirect result
of, or arising out of the presence of Hazardous Substances at, on, beside, above
or under the Real Property, or any breach of subsection (b) above; provided,
however, that Seller shall not be required to indemnify Buyer for any
Environmental Liabilities or Environmental Claims that result from Buyer's or
its representatives activities at the Plant Site, whether arising before or
after Closing Date. Notwithstanding anything contained herein to the contrary,
in no event shall Seller be required to indemnify Buyer as provided herein for
any Environmental Liabilities if Seller has not been notified in writing of the
matter within five (5) years of the Closing Date.
d) Buyer agrees to indemnify and hold harmless Seller for any and all
Environmental Liabilities in connection with the Assets or any Environmental
Claims but only to the extent arising from or out of activities occurring, or
undertaken by Buyer, after the Closing Date with respect to, as a direct or
indirect result of, or arising out of the presence of Hazardous Substances at,
on, beside, above or under the Real Property, or any breach of subsection (b)
above, or Buyer's manufacture of Seller's products after the Closing Date.
e) Except as provided for in Section 8.5, in the event of potential
joint or shared responsibility for Environmental Liabilities or Environmental
Claims, Seller and Buyer agree (i) to mutually cooperate with each other on all
matters in which cooperation is necessary and (ii) to share in responsibility
according to the final decision of the applicable governmental, regulatory, or
judicial authority, or as otherwise mutually agreed.
f) Except as may be mutually agreed, Seller hereby agrees to maintain
all Environmental Permits currently in effect and assign them to Buyer to the
extent they may be lawfully transferred. Seller and Buyer agree to notify the
other party in the event either is contacted by a third party regarding
Environmental Laws, Claims, or Liabilities pertaining to the other party's
operations at the Plant Site.
SECTION 4.13 Availability of Documents
Prior to Closing, Seller will make available to Buyer copies of all material
and relevant documents, including without limitation all agreements, contracts,
commitments, insurance policies, leases, plans, instruments, undertakings,
authorizations, permits and licenses referred to herein, except documents
subject to confidentiality obligations.
SECTION 4.14 Assets
The Assets include all rights and property located or situated at the Plant
Site, other than the Excluded Assets or any lease or service agreement, and the
Real Property constitutes all of the real estate that comprises the Plant Site.
SECTION 4.15 Contracts and Commitments
Schedule 4.15 sets forth a list of all material agreements, contracts and leases
necessary to the operations of the Plant Site and the use and maintenance of the
Assets (collectively, "Contracts"). Each Contract is valid and enforceable in
all material respects in accordance with its terms. Seller is, and to Seller's
knowledge all other parties thereto are, in compliance with the material
provisions thereof. Seller is not, and to Seller's knowledge no other party
thereto is, in material default in the performance, observance or fulfillment of
any material obligation, covenant or condition contained therein, and no event
has occurred which with or without the giving of notice or lapse of time, or
both, would constitute a default thereunder. No Contract requires the consent of
any party to effect its assignment in connection with the transactions
contemplated hereby except for such consents as set forth on Schedule 4.15, the
Industrial Revenue Bonds, and as have been obtained or will be obtained by the
Closing Date. Notwithstanding the foregoing, Buyer agrees that the failure to
obtain any consent or failure to observe any obligation, covenant, or condition
of any Contract, shall not constitute a breach of this Agreement and Buyer shall
be obligated to close on the Closing Date.
Section 4.16 No Finder's or Broker's Fee
Seller and Seller's Affiliates have not incurred or caused to be incurred any
liability for any fee or commission in the nature of a finder's, originator's or
broker's fee in connection with the transactions contemplated hereby.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer and ICN hereby represent and warrant to Seller as follows:
Section 5.1 Organization
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of Puerto Rico. ICN is a corporation duly organized, validly
existing and in good standing under the laws of Delaware.
Section 5.2 Corporate Power; Authorization; Enforceable Obligations
Buyer and ICN each has all requisite corporate power and authority to execute,
deliver and perform this Agreement and all other instruments and agreements
required to be executed, delivered or performed by Buyer or ICN pursuant hereto
("Buyer's Documents"). As of the date of the execution of this Agreement and on
the Closing Date, the execution, delivery and performance of this Agreement, and
all other Buyer's Documents, will have been duly authorized by all necessary
corporate action on the part of Buyer and ICN. This Agreement has been, and on
the Closing Date all other Buyer's Documents will have been, duly executed and
delivered by authorized officers of Buyer and ICN, and constitutes or will
constitute the legal, valid and binding obligations of Buyer and ICN enforceable
against Buyer and ICN in accordance with their respective terms.
Section 5.3 Validity of Contemplated Transactions
The execution, delivery and performance of this Agreement by Buyer and ICN does
not and will not violate, conflict with or result in the breach of any term,
condition or provisions of, or require the consent of any other person under the
charter documents of Buyer or any securities issued by Buyer and/or ICN, or any
material mortgage, indenture, agreement, contract, commitment, lease, plan,
document or understanding, oral or written, to which Buyer or ICN was a party
immediately prior to the Closing.
Section 5.4 No Finder's or Broker's Fee
Buyer and ICN have not incurred or caused to be incurred any liability for any
fee or commission in the nature of a finder's, originator's or broker's fee in
connection with the transactions contemplated hereby.
ARTICLE VI - COVENANTS
Section 6.1 Further Assurances; Cooperation
Seller hereby covenants and agrees that, from and after the Closing Date,
Seller shall, at its expense, execute and deliver to Buyer or its designee all
such deeds, conveyances, bills of sale, assurances, transfers, assignments and
consents, approvals, agreements and contracts and any other documents, and shall
cooperate fully with Buyer and do all such other things, as may be necessary to
effectively transfer the Assets to, and to perfect and confirm the ownership of
the Assets by Buyer. Buyer and Seller each agree to fully and diligently
cooperate with and assist the other party to obtain any necessary or appropriate
governmental or other approvals, including but not limited to all tax grants,
the Industrial Revenue Bonds and any other applicable tax exemptions; provided
however, that Buyer and ICN agree that Seller shall have no obligation to secure
any consent or other approval from any third party or governmental agency,
relatedto the Industrial Revenue Bonds.
Section 6.2 Transfer Tax
The parties agree that all sales, use and transfer taxes resulting from the sale
of the Assets shall be paid as customary under Puerto Rico practice. Buyer shall
pay the recording fees and stamps for the first certified copy of the deed and
Seller for the stamps of the original deed. Buyer pays for all recording fees
and stamps of the original and first copy of the purchase money first mortgage,
chattel mortgage and any other security to be placed on the Assets. The Lease
shall be recorded and Seller shall pay any fees and expense to record the Lease.
Section 6.3 Title Insurance
Buyer shall obtain, at its sole cost and expense, an ALTA owners title insurance
policy, or other title insurance policy in a form and amount satisfactory to
Buyer, issued and underwritten by the title company of its choosing, insuring a
merchantable fee simple title to the Real Property in Buyer as of the date of
recording the deed to the Real Property.
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Section 6.4 Prorations
Seller and Buyer each agree that all real estate taxes and all personal property
taxes payable with respect to the Assets for the year in which the Closing Date
occurs shall be prorated between Seller and Buyer as of the Closing Date. If the
amount of any such tax cannot be ascertained on the Closing Date, proration
shall be computed based upon the amount thereof for the immediately preceding
year and shall be later adjusted, if the taxes actually paid are higher or
lower, based upon the number of calendar days during the year each party owned
the Assets.
As provided by law or local custom, Seller shall pay the notarial tariff and
internal revenue stamps for the deed of purchase and sale or other original
public instrument of conveyance and Buyer shall pay the internal revenue stamps
for the certified copy and the fee for recording it in the Registry of Property.
Seller and Buyer agree that any other tax stamps, or similar governmental
assessment shall be paid pursuant to law or local custom. The party bearing any
Notarial fee obligation hereunder shall be entitled to designate the Notary to
be used.
ARTICLE VII - CONDITIONS TO OBLIGATION OF SELLER TO CLOSE
The obligation of Seller to consummate the transactions contemplated hereby
shall be subject to the fulfillment, to the reasonable satisfaction of Seller,
prior to or on the Closing Date, of each of the following conditions precedent;
provided however, that any of such conditions may be waived by Seller at or
prior to the Closing Date.
Section 7.1 Representations and Warranties True and Correct
The representations and warranties of Buyer set forth in Article V hereof shall
be true and correct when made and as of the Closing Date with the same effect as
though made on and as of such date.
Section 7.2 Payment of Purchase Price; Execution on the Payment Date and
Delivery Documents
Buyer shall have paid the Purchase Price and executed and delivered or otherwise
have caused to have delivered all documents required to be delivered by Buyer
pursuant to Section 9.3 hereof.
Section 7.3 Performance
Buyer shall have performed and complied with all material agreements, covenants
and conditions contained herein required to be performed or complied with by it
on or prior to the Closing Date.
Section 7.4 Tax Exemption
Seller and its affiliates shall have received in form and substance satisfactory
to them amendments to their existing Puerto Rico tax exemption grants or a
comfort letter acceptable to Seller and its affiliates. Buyer shall provide
Seller and its affiliates with such assistance as may be reasonably requested in
obtaining such amendments.
Section 7.5 Approvals
Seller shall have received notice of early termination of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or
shall be aware that the waiting period shall have expired without receipt of a
second Request for Information.
Sectin 7.6 Product Agreement Closing
There shall have been or will simultaneously be a Closing of the Product
Agreement.
ARTICLE VIII - BUYER'S OBLIGATION TO CLOSE
The obligation of Buyer to consummate the transactions contemplated hereby shall
be subject to the fulfillment to the reasonable satisfaction of Buyer, prior to
or on the Closing Date, of each of the following conditions precedent; provided,
however, that any of such conditions may be waived by Buyer at or prior to the
Closing Date.
Section 8.1 Representations and Warranties True and Correct
The representations and warranties of Seller set forth in Article IV hereof
shall be true and correct in all material respects when made and as of the
Closing Date with the same effect as though made on and as of such date.
Section 8.2 Delivery of Documents
Seller shall have delivered all documents required to be delivered by Seller
pursuant to Section 9.1 hereof.
Section 8.3 Performance
Seller shall have performed and complied with all material agreements, covenants
and conditions contained herein required to be performed or complied with by it
on or prior to the Closing Date.
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Section 8.4 Tax Exemption
Buyer or its affiliates shall have received in form and substance satisfactory
to them Puerto Rico tax exemption grants, or a comfort letter acceptable to
Buyer. Seller shall provide Buyer with such assistance as may be reasonably
requested in obtaining such grants.
Section 8.5 Approvals
Buyer shall have received notice of early termination of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or
shall be aware that the waiting period shall have expired without receipt of a
second Request for Information.
Section 8.6 Cooperation
Seller shall have supplied information to Buyer necessary to comply with the
requirements of Regulation S-X of the Securities & Exchange Commission, if
applicable, which shall be at Buyer's expense.
Section 8.7 Product Agreement Closing
There shall have been or will simultaneously be a Closing of the Product
Agreement.
ARTICLE IX - DOCUMENTS TO BE DELIVERED AT CLOSING
Section 9.1 Documents to be Delivered by Seller
Seller shall deliver or cause to be delivered the following documents to Buyer
on the Closing Date:
a) a certificate of good standing of Seller and Syntex, issued by the
State of Delaware as of a date not more than 20 days prior to the Closing Date;
b) a duly executed, acknowledged, and recordable deed of purchase and
sale with covenants (i) against grantor's acts, and (ii) regarding Buyer's and
Buyer's affiliates non-use and non-disclosure of the Assets or any know-how
inherent in them to manufacture products of Seller or Seller's affiliates, or
other deed by which Seller received the Real Property, conveying to Buyer the
Real Property or equivalent deed of purchase and sale under Commonwealth law;
c) a duly executed bill of sale, conveying the Equipment;
d) a duly executed officer's certificate stating that the
representations and warranties of Seller set forth herein are true and correct
as of the Closing Date;
e) a notarized certificate of the secretary or assistant secretary of
Seller in respect of (i) each of its officers who is authorized to execute and
deliver this Agreement and all other Seller's Documents, (ii) certified copies
of the Certificate of Incorporation and Bylaws of Seller, and (iii) resolutions
of the Board of Directors of Seller authorizing the making and performance by
Seller of this Agreement and each of the other Seller's Documents and the
consummation of the transactions contemplated hereby and thereby;
f) an executed counterpart of the Toll Manufacturing Agreement, the
Lease, leased employee agreement, and any other agreement as contemplated by
Buyer and Seller in form and substance acceptable to the Seller;
g) guarantees by Syntex in form and substance satisfactory to Buyer;
h) such other documents as Buyer may reasonably require for the
consummation of the transactions contemplated by this Agreement.
Section 9.2 Documents to be Delivered by Buyer
Buyer and ICN shall deliver the following documents to Seller on the Closing
Date:
a) certificates of good standing of Buyer issued by Puerto Rico and
ICN issued by the State of Delaware as of a date not more than 20 days prior to
the Closing Date;
b) a notarized secretary's certificate of the secretary or assistant
secretary of Buyer and ICN in respect of (i) each of its officers who is
authorized to execute and deliver this Agreement and all other Documents to be
executed by Buyer and ICN in connection with the Agreement, (ii) certified
copies of the Certificate of Incorporation and Bylaws of Buyer and ICN, and
(iii) resolutions of the Board of Directors of Buyer and ICN authorizing the
making and performance by Buyer and ICN of this Agreement and each of the
Buyer's and ICN's Documents and the consummation of the transactions
contemplated hereby and thereby;
c) an executed counterpart of the Toll Manufacturing Agreement, the
Lease, leased employee agreement and any other agreement as contemplated by
Buyer and Seller in form and substance acceptable to the Buyer, as well as a
purchase money first mortgage lien on the property to secure Buyer's production
of Seller and its affiliates products after the Closing;
d) an assumption of leases of certain items of Equipment;
e) guarantees by ICN in form and substance satisfactory to Seller;
f) an agreement in form acceptable to counsel for Seller and Buyer,
regarding Buyer's and Buyer's affiliates non-use and non-disclosure of any
know-how or confidential information or equipment inherent in the products and
the manufacture of such products of Seller or its affiliates; and
g) such other documents as Seller may reasonably require for the
consummation of the transactions contemplated by this Agreement.
ARTICLE X - EMPLOYEES
Section 10.1 Transferred Employees
Buyer will offer employment to all of the employees of Seller or of its
affiliate companies assigned to the Plant Site (collectively referred to as
"Employees"), who are employees on the expiration of the Lease, at a base salary
equal to or higher than the base salary Employees were receiving from Seller
prior to the expiration date of the Lease. However, Seller shall have no
obligation to employ any specific employee up to the expiration date of the
Leasee. "Employees" shall mean any person who, on the expiration date of the
Lease, is employed by Seller, or its affiliate companies, and assigned to the
Plant Site, excluding those on long term disability leave, but including those
who are inactive on the expiration date of the Lease, such as those on
short-term disability leave, authorized leave of absence or military service.
Buyer shall provide written offers of employment to Employees, setting forth job
titles, responsibilities and salary, no later than 90 days prior to the
expiration date of the Lease. Those Employees who accept such offers of
employment effective as of the expiration date of the Lease shall be hired by
Buyer and shall be referred to herein as "Transferred Employees". Based upon the
estimated guaranteed volume of production in Schedule 2.1 of the Toll
Manufacturing Agreement, the number of Transferred Employees shall not exceed
190 people. If the guaranteed production volume increases, the parties will
negotiate the additional number of Employees required to be hired hereunder.
Buyer agrees not to lay-off or otherwise terminate any Transferred Employees for
a period of one year, provided, however, Buyer may terminate Transferred
Employees for cause. "Cause" shall not include a reorganization or reduction in
force or sale or divestiture of all or a portion of Buyer's business.
Section 10.2 Benefits
Except as set forth in Section 10.10 hereof, Transferred Employees will be
eligible to participate, from and after the expiration date of the Lease, in all
employee benefit plans offered by Buyer to similarly situated employees of
Buyer, on the same terms and conditions applicable to Buyer's similarly situated
employees, as they may be amended from time to time, which are listed at
Schedule 10.2.
Section 10.3 Accrued Wages and Salaries
Buyer shall not be obligated to make any payments of wages, salary or other
compensation accrued prior to the expiration date of the Lease, whether or not
earned or payable by the expiration of the Lease.
Section 10.4 Employment Liabilities
Except as specifically described herein, Seller shall retain and be responsible
for all liabilities in connection with claims incurred on or prior to the
expiration of the Lease by Transferred Employees under Seller's employee benefit
plans. Buyer shall assume and be responsible for all liabilities in connection
with claims incurred after the expiration date of the Lease by Transferred
Employees under any of Buyer's employee benefit plans. Claims under an employee
benefit welfare plan (as defined in Section 3 (1) of ERISA) shall be considered
incurred on the date treatment is rendered or a service performed. Worker's
Compensation claims of any Transferred Employees shall be the responsibility and
liability of Seller if the claim is based on events that occurred on or prior to
the expiration date of the Lease and shall be the responsibility and liability
of Buyer if the claim is based on events that occurred after the expiration date
of the Lease.
Section 10.5 Service Credit
Buyer shall grant service credit under Buyer's employee benefit plans and/or
other benefit or other employee programs which are calculated on the basis of
service and/or for purposes of Puerto Rico's Law 80 of May 30, 1976, as amended,
equal to the Seller's credited service time for Transferred Employees for all
applicable purposes under such plans and programs. Service Credit under any
defined benefit pension plan shall be given for purposes of eligibility for
participation, and vesting.
Section 10.6 Savings Plans
a) Effective as of the expiration date of the Lease, Buyer shall extend
coverage under Buyer's Savings Plan which is a defined contribution plan and
shall be qualified under applicable Puerto Rico Laws to Transferred Employees
who were eligible to participate in the Savings Plans of Seller, or its
affiliate companies ("Seller's Savings Plan"), as of the day prior to the
expiration date of the Lease and to other Transferred Employees in accordance
with the Buyer's Savings Plan (giving Service Credit as required pursuant to
Section 10.5).
b) To the extent permitted by the Code and subject to the terms of this
Section 10.6(b), the Buyer's Savings Plan will accept a direct rollover within
the meaning of Section 401 (a) (31) of the Code of the Transferred Employee's
entire account balance (and accumulated reserves related thereto, if any) in the
Seller's Saving Plan. Direct rollovers shall be in cash.
Section 10.7 Welfare Plans
On the expiration date of the Lease, the Transferred Employees shall be eligible
to enroll themselves and their dependents in Buyer's welfare benefit plans. If a
Transferred Employee enrolls for coverage under the medical or dental plans of
Buyer within thirty (30) days of first becoming eligible, the Buyer's medical or
dental plan shall waive any waiting period and limitations for pre-existing
medical or dental conditions.
Section 10.8 Post Retirement Welfare Benefits
The post retirement welfare benefits for Transferred Employees who retire under
the Seller's Pension Plan and who are eligible for post welfare benefits shall
be the responsibility of the Seller, provided that Buyer shall provide primary
medical and dental coverage to such Transferred Employees while they are
actively employed by the Buyer. Other Transferred Employees shall be eligible
for post-retirement welfare benefits, if any, from Buyer in accordance with
Buyer's plan terms as they may be amended from time to time. Nothing in this
Section 10.8 shall prevent Seller from amending or terminating its
post-retirement welfare benefits.
Section 10.9 Vacation
Buyer shall provide vacation entitlement to Transferred Employees in accordance
with Buyer's vacation policies applicable to its employees (giving Service
Credit as required pursuant to Section 10.5). Transferred Employees will receive
a cash out by Seller of the unused portion of their accrued vacation entitlement
as of the expiration date of the Lease.
Section 10.10 Severance Pay
Subject to Section 10.1, in the event Buyer terminates the employment of any
Transferred Employee, Buyer shall pay severance to such Transferred Employee
only in accordance with Buyer's severance plan in effect at the time of such
termination or as required by law.
Section 10.11 Continuation Coverage
If, on or before the expiration date of the Lease, Seller determines, in its
discretion, with respect to all group health plans (as defined in Code Section
5000(b)(1)) maintained by Seller that the continuation health care coverage
requirements of Code Section 4980B and ERISA Sections 601 through 608 (the
"continuation coverage requirements") apply to this transaction, Seller shall be
solely responsible for compliance with the continuation health care coverage
requirements for all "qualifying events," within the meaning of Code Section
4980B(f)(3) and ERISA Section 603, affecting any current or former employee of
Seller and any qualified beneficiary related to such employee or former employee
(as defined in Code Section 4980B(g)(1)) which occurred at any time on or prior
to the expiration date of the Lease. With respect to all qualifying events
occurring after the expiration date of the Lease and affecting Transferred
Employees or their dependents, Buyer agrees to provide continuation health care
coverage to affected qualified beneficiaries, in accordance with Sections 601
through 608 of ERISA ("COBRA"). Seller shall be solely responsible for
compliance with the continuation health care coverage requirements for
Employees, who are not Transferred Employees, and/or their qualified
beneficiaries.
Section 10.12 Third Party Beneficiary; Termination At Will
Nothing in this Article 10 shall create any third party beneficiary rights in
any employee or former employee of Seller. Seller and Buyer agree and
acknowledge that the transactions contemplated by this Agreement will not affect
the "at will" employment status of the Transferred Employees.
Section 10.13 Notification of Hire
In order to assist Seller in the proper administration of its severance pay
program, Buyer agrees to inform Seller whenever it hires, either as an employee
or as an independent contractor or consultant, any former Employee of Seller
receiving severance pay from Seller at any time within three years after the
expiration date of the Lease, and Seller shall periodically provide Buyer with a
list ofpersons receiving severance payments.
ARTICLE XI - INDEMNIFICATION
Section 11.1 Survival
The representations and warranties made herein shall survive the Closing Date
but only for the enforcement of the indemnification provisions of this Agreement
and for damages; provided however, that under no circumstances shall the
transactions contemplated herein be voided following Closing of the Asset
Purchase Agreement referenced in Section 3.3. All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of any party hereto pursuant hereto or in connection with the
transactions contemplated hereby shall be deemed to be representations and
warranties by such party hereunder as of the Closing Date. Sections 1.2 and 1.4
shall survive the termination of this Agreement.
Section 11.2 Indemnification of Buyer by Seller
Subject to the limitations set forth in Section 11.5 of this Agreement, Seller
agrees to hold harmless, indemnify and defend Buyer and ICN and their respective
directors, officers and employees thereof, from and against, and will reimburse
such indemnified parties with respect to, any and all claims, demands, causes of
action, proceedings, losses, damages, debts, expenses, liabilities, fines,
penalties, deficiencies, judgments or costs, including, without limitation,
reasonable accountants' and attorneys' fees, court costs, amounts paid in
settlement and costs and expenses of investigations (collectively, "Claims") at
any time and from time to time asserted against or incurred by any such
indemnified party insofar as such Claims are based upon:
a) any breach or nonfulfillment of, or any inaccuracy in, any
covenant, representation or warranty contained herein on behalf of Seller in
connection with the transactions contemplated hereby;
b) any injury to any person, or damage to any property, occurring
before or after the Closing Date related in any way to the Plant Site that is
attributable to Seller's negligence or willful misconduct, excluding injuries
that relate to the supervision by Buyer (or an affiliate of Buyer) of an
employee of Seller or Buyer;
c) any Claim against Buyer relating to the Plant Site or the Assets
that arises from or is based upon any action, event or condition existing on or
occurring before the Closing Date, excluding Claims attributable to Buyer's
negligence or willful misconduct;
d) any Claim by an Employee for severance or termination pay as a
result of the transactions contemplated by this Agreement (except as otherwise
provided in this Agreement), excluding Claims attributable to Buyer as provided
in this Agreement;
e) the failure of Seller to comply with the "bulk transfer" laws of
any jurisdiction in connection with the transactions contemplated hereby;
f) the failure of Seller to pay any taxes, applicable to periods prior
to Closing including, without limitation, any sales tax resulting from the
transfer of the Assets to Buyer, or to make any unemployment compensation
insurance contribution that was due prior to the Closing Date;
g) any Claim based upon or relating to the manufacture, usage,
distribution or sale by Seller of its or its affiliates' products manufactured
at the Plant Site prior to the Closing Date; or
h) any Claim that arises out of a Claim of infringement or
unauthorized use of any patent, copyright, trade secret, know how or other
intellectual property right resulting from Seller's activities at the Plant Site
or Buyer's production of Seller or its affiliates' products at the Plant Site
after the Closing Date.
Section 11.3 Indemnification of Seller by Buyer
Buyer agrees to hold harmless, indemnify and defend Seller and its affiliates,
and the directors, officers and employees thereof, from and against, and will
reimburse such indemnified parties with respect to Claims at any time and from
time to time asserted against or incurred by any such indemnified party insofar
as such Claims are based upon:
a) any breach or nonfulfillment of, or any inaccuracy in, any
covenant, representation or warranty contained herein or otherwise made in
writing by or on behalf of Buyer in connection with the transactions
contemplated hereby;
b) any injury to any person, or damage to any property, occurring
before or after the Closing Date related in any way to the Plant Site that is
attributable to Buyer's negligence or willful misconduct or, with respect to a
Claim or suit relating to an employee of Seller, is attributable to Buyer's sole
negligence or willful misconduct;
c) any Claim against Seller or involving any of the Assets that arises
from or is based upon any action, event or condition existing or occurring after
the Closing Date, excluding Claims attributable to Seller's negligence or
willful misconduct; or
d) any Claim based upon or relating to the validation, manufacture,
usage, distribution or sale of Buyer's products manufactured at the Plant Site
whether prior or after the Closing Date;
e) any Claim arising out of or relating to the employment or
termination of employees of Buyer;
f) the failure of Buyer to comply with the "bulk transfer" laws of any
jurisdiction in connection with the transactions contemplated hereby;
g) the failure of Buyer to pay any taxes, including, without
limitation, any sales tax resulting from the transfer of the Assets to Buyer, or
to make any unemployment compensation insurance contribution that was due after
the Closing Date;
h) the failure of Buyer to comply with any of the obligations provided
for in Sections 10.1 and 10.10 if such failure results in Seller being obligated
to pay any severance or termination pay or provide benefits to any Employee or
Transferred Employee.
Section 11.4 Indemnification Procedure
The indemnification obligations under this Article XI shall survive until the
fifth anniversary of the Closing Date, and shall survive any termination of this
Agreement until the third anniversary of the termination. The indemnification
obligations in section 11.2 (F) shall survive until the statute of limitation
has expired for such tax obligation. In the event of any Claim for which
indemnification is sought under this Article XI by a person or entity specified
in Section 11.2 or 11.3 hereof (an "Indemnified Party"):
a) The Indemnified Party will give the indemnifying party prompt
written notice of the Claim asserted against or imposed upon or incurred by the
Indemnified Party (which notice shall set forth the basis of the Claim).
b) The Indemnified Party shall not compromise or settle such claim
without the approval of the indemnifying party, which approval shall not be
unreasonably withheld or delayed.
Section 11.5 Limitation of Liability
a) Notwithstanding anything contained in this Agreement to the
contrary, Buyer agree that the total liability of Seller and Synrex to Buyer and
ICN for any damages or other injury which Buyer or ICN may sustain or incur as a
result of a breach of any provision or covenant of this Agreement by Seller and
Syntex, any indemnification provisions of Article XI, Section 4.12, or any other
provision of this Agreement shall not exceed Twenty Five Million
($25,000,000.00) Dollars in the aggregate for any and all claims, whether past,
present and future, and in the event that Seller and/or Syntex shall pay such
amount, Seller and Syntex shall be discharged of any liability to Buyer and ICN.
b) Notwithstanding anything contained in this Agreement to the
contrary, Seller and Syntex agree that the total liability of Buyer and ICN to
Seller and Syntex for any damages or other injury which Seller or Syntex may
sustain or incur as a result of a breach of any provision or covenant of this
Agreement by Buyer or ICN, any indemnification provisions of Article XI, Section
4.12, or any other provision of this Agreement shall not exceed Twenty Five
Million ($25,000,000.00) Dollars in the aggregate for any and all claims,
whether past, present and future, and in the event that Buyer and/or ICN shall
pay such amount, Buyer and ICN shall be discharged of any liability to Seller
and Syntex.
ARTICLE XII - TERMINATION
Section 12.1 Termination by Seller
Without prejudice to other rights and remedies which it may have,
Seller may, at its option, terminate this Agreement at any time prior to the
Closing by giving notice thereof to the other party if:
a) A bona fide legal action or proceeding is pending or threatened
against the other party as of the date of such notice of termination, an
unfavorable judgment, decree or order in such action or proceeding would prevent
or make unlawful the consummation of the transaction contemplated by this
Agreement and an unfavorable judgment, order or decree is likely;
b) Any representation, warranty or covenant in this Agreement shall
prove to have been incorrect, incomplete or misleading at the time it was made
in any material respect; or
c) Any of the conditions precedent do not occur.
Section 12.2 Eminent Domain; Damage or Destruction
If prior to the Closing Date all or any material part of the Real Property is
(i) taken or threatened by eminent domain or (ii) damaged or destroyed, in
Seller's opinion, Seller may, by written notice to Buyer, elect to cancel this
Agreement. If a material part of the Real Property is taken by eminent domain,
damaged or destroyed but this Agreement is not so canceled with respect thereto,
or if an immaterial part of the Real Property is so taken, damaged or destroyed,
then in either of said events, Buyer shall be obligated to close the
transactions contemplated by this Agreement and Buyer shall be entitled to
receive any and all condemnation or insurance proceeds as the case may be.
Section 12.3 Effect of Termination
In the event of termination of this Agreement as expressly permitted under this
Article XII, this Agreement shall forthwith become void and there shall be no
liability on the part of either party, or their respective officers, directors,
or affiliated companies, to the other, except that the provisions of Article XI
and Section 13.2 hereof shall survive any such termination.
ARTICLE XIII - CONFIDENTIALITY
Section 13.1 Confidentiality
a) The commitments set forth in this Section 13.2 shall be effective
as of the date hereof and shall survive the termination of this Agreement.
b) Seller , ICN and Buyer each acknowledge and agree that each party
may have access to certain proprietary information of the other party by virtue
of their activities at the Plant Site ("Confidential Information").
c) Seller, ICN and Buyer, as the case may be, hereby agree as follows
with respect to the Confidential Information received by or to which access is
provided to the other party:
(i) that the disclosure of or access to Confidential Information
will be held in strict confidence by Seller, ICN and Buyer;
(ii) that Seller, ICN and Buyer will take all steps as are
necessary to prevent the disclosure of Confidential Information to
others; and
(iii) the Seller, ICN and Buyer will not commercially utilize
Confidential Information for purposes out the scope of this Agreement.
d) In the event that any party is legally required by a court or
governmental agency of competent jurisdiction to disclose Confidential
Information, prompt notice shall be given by the party required to make such
disclosure to the other party to enable the other party to seek a protective
order or other appropriate remedy or to waive compliance with the provisions of
this Section 13.2 as to such required disclosure. If no protective order has
been obtained by not later than the date upon which the party of whom disclosure
is required must disclose or suffer penalty of contempt or other censure, the
other party shall be deemed to have waived compliance with the provisions of
this Section 13.2 as to such disclosure.
e) The commitments set forth in this Section 13.2 shall not extend to
any portion of Confidential Information:
(i) that was in the public domain prior to disclosure;
(ii) that was not acquired, directly or indirectly, in any
manner from Seller, ICN or Buyer and that Seller, ICN or Buyer, as the
case may be, lawfully had in its possession prior to the Closing Date
or that Seller, ICN or Buyer, as the case may be, lawfully acquires
from a source not under an obligation of secrecy to Seller, ICN or
Buyer, as the case may be; or
(iii) that, after the Closing Date, through no act on the part
of Seller, ICN or Buyer, becomes information generally available to the
public.
(iv) developed independently by ICN or Buyer without any
use of the Confidential Information;
f) Seller, ICN and Buyer agree that the terms of the confidentiality
agreement between affiliate of Seller and ICN dated as of March 21, l997 are in
full force and effect and are not affected by this Agreement.
g) Seller and Buyer agree to cooperate regarding joint communication of
this transaction to their respective employees and will not make any
communication without the prior consent of the other party.
ARTICLE XIV - MISCELLANEOUS
Section 14.1 Notices
All notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed duly given if and when delivered personally or sent
by certified mail (return receipt requested, postage prepaid) or telecopy:
TO BUYER OR ICN: ICN Puerto Rico, Inc.
American Industrial Plaza
250 Munoz Riviera Avenue
San Juan, Puerto Rico 00918
Attn: Walter Chow
Fax: 787-753-8944
WITH A COPY TO: ICN Pharmaceuticals, Inc.
ICN Plaza
3300 Hyland Avenue
Costa Mesa, California 92626
Attn: General Counsel
Fax: 714-641-7274
TO SELLER: Syntex (F.P.) Inc.
B.O.Mariana
Road 909 Km 1.1
Humacao, Puerto Rico 00791-9731
Attn: Plant Manager
Fax: 787-850-6160
Syntex (U.S.A.) Inc.
c/o Roche Bioscience
3401 Hillview Avenue
Palo Alto, CA 94304
Attn: Law Department
Fax: 415-852-1338
WITH A COPY TO: Frederick C. Kentz III
340 Kingsland Street
Building 85, 8th floor
Nutley, NJ 07110-1199
Fax: 201-235-3500
or to such other address as either party may notify the other party in writing.
All notices and copies shall be sent simultaneously.
Section 14.2 Expenses
Except as specifically set forth in this Agreement, each party hereto shall bear
all of its own costs, fees and expenses in connection with the transactions
contemplated hereby.
Section 14.3 Assignment
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns. No party
hereby may assign any of its rights hereunder without the prior written consent
of the other party hereto, except that Buyer or Seller may assign its rights
hereunder to any of their respective affiliates; provided, however, that neither
Buyer nor Seller shall be relieved of its obligations hereunder.
Section 14.4 Governing Law
This Agreement shall be governed and construed in accordance with the laws of
the Commonwealth of Puerto Rico.
Section 14.5 Waiver and Amendment
Except as otherwise expressly provided herein, no provision hereof may be
waived, amended or otherwise modified except by a written agreement signed by
each party hereto.
Section 14.6 Entire Agreement
This Agreement, together with the exhibits and schedules hereto, and the
Confidentiality Agreement between an affiliate of Seller and ICN dated as of
March 21, l997, embody the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings relating thereto.
Section 14.7 Binding Agreement
The Agreement constitutes, and all other agreements and instruments entered into
or delivered in connection with the transactions contemplated hereby will
constitute, the valid and binding obligations of the parties and are enforceable
against the parties in accordance with their terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting the enforcement of creditor's rights, or rules of law governing
specific performance, injunctive relief or other equitable remedies.
<PAGE>
Section 14.8 Headings
The headings of this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning hereof.
Section 14.9 Severability
If all or any portion or provision of this Agreement shall to any extent be held
invalid or unenforceable in whole or in part by a court or agency having valid
jurisdiction pursuant to a valid decision or decree, then the parties hereto
expressly agree to be bound by any lesser covenant imposing the maximum legal
duty permitted by law that is subsumed within the terms of such covenant, as if
the resulting covenants were separately stated in and made a part of this
Agreement, and the remainder of this Agreement shall remain in full force and
effect.
Section 14.10 Counterparts
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which taken together shall constitute one and
the same instrument.
Section 14.11 Hart-Scott-Rodino
Following execution, the parties shall cooperate to facilitate a timely filing
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Section 14.12 Puerto Rico Bulk Sales Act
Buyer agrees to comply with the provisions of the Puerto Rico Sales Transfer Act
10 L.P.R.A. ss. 61 et. seq. Seller agrees to furnish information to Buyer
necessary to comply.
Section 14.13 ICN Guarantee
ICN hereby agrees to guarantee, jointly and severally with the Buyer, the
payment and performance of all of the obligations of the Buyer under this
Agreement and any of the related agreements. This guaranty is an absolute and
unconditional guaranty of the full and punctual payment and performance of the
Buyer's obligations under this Agreement and any related agreement and in no way
conditioned upon any requirement that the Seller first attempt to collect or
make performance of any such obligations from the Buyer or resort to any
security or other means of obtaining payment or performance of Buyer.
<PAGE>
Section 14.14 Syntex (U.S.A.) Inc. Guarantee
Syntex (U.S.A.) Inc. hereby agrees to guarantee, jointly and severally with the
Seller, the payment and performance of all of the obligations of the Seller
under this Agreement and any of the related agreements. This guaranty is an
absolute and unconditional guaranty of the full and punctual payment and
performance of the Seller's obligations under this Agreement and any related
agreement and in no way conditioned upon any requirement that the Buyer first
attempt to collect or make performance of any such obligations from the Seller
or resort to any security or other means of obtaining payment or performance of
Seller.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first set forth above.
SELLER BUYER
SYNTEX (F.P.) INC. ICN PUERTO RICO, INC.
By: /s/ Edward C. Thiele By: /s/ Bill A. MacDonald
Name: Edward C. Thiele Name: Bill A. MacDonald
Title: Vice President Title: President
SYNTEX (U.S.A.) INC. ICN PHARMACEUTICALS, INC.
By: /s/ David R. Austin By: /s/ Bill A. MacDonald
Name: David R. Austin Name: Bill A. MacDonald
Title: Vice President Title: Executive Vice President