EXECUTION COPY
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SALE AND PURCHASE AGREEMENT
(MDD BUSINESS)
dated as of January 28, 1998
between
THE BOC GROUP PLC
and
BECTON, DICKINSON AND COMPANY
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms................................................ 2
SECTION 1.02. Other Defined Terms.................................................. 9
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Business, the MSD/SPD Business, the PPD
Business............................................................. 12
SECTION 2.02. [Reserved]........................................................... 14
SECTION 2.03. Assumption of Liabilities............................................ 14
SECTION 2.04. Purchase Price; Allocation of Purchase Price......................... 15
SECTION 2.05. Adjustment of Purchase Price......................................... 15
SECTION 2.06. Closing.............................................................. 25
SECTION 2.07. Closing Deliveries by the BOC Group.................................. 26
SECTION 2.08. Closing Deliveries by the Purchaser.................................. 26
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BOC GROUP
SECTION 3.01. Subsidiaries of the Business; Discontinued Operations................ 27
SECTION 3.02. Incorporation and Authority of the BOC Group and the BOC
Companies............................................................ 27
SECTION 3.03. Capital Stock of the Subsidiaries; Title to Transferred Assets....... 28
SECTION 3.04. No Conflict.......................................................... 28
SECTION 3.05. Consents and Approvals............................................... 29
SECTION 3.06. Financial Information................................................ 29
SECTION 3.07. Absence of Undisclosed Liabilities, Etc.............................. 31
SECTION 3.08. Absence of Certain Changes or Events................................. 32
SECTION 3.09. Litigation........................................................... 32
SECTION 3.10. Compliance with Laws; Certain Regulatory Matters..................... 33
SECTION 3.11. Licenses and Permits................................................. 33
SECTION 3.12. Environmental Matters................................................ 34
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SECTION 3.13. Receivables........................................................... 35
SECTION 3.14. Inventories........................................................... 35
SECTION 3.15. Intellectual Property................................................. 35
SECTION 3.16. Material Contracts.................................................... 36
SECTION 3.17. Real Property......................................................... 37
SECTION 3.18. Employee Benefit Matters.............................................. 38
SECTION 3.19. Labor Matters......................................................... 40
SECTION 3.20. Taxes................................................................. 41
SECTION 3.21. Assets of the Business................................................ 42
SECTION 3.22. Insurance............................................................. 42
SECTION 3.23. Books and Records..................................................... 42
SECTION 3.24. Warranties............................................................ 42
SECTION 3.25. Brokers............................................................... 43
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
SECTION 4.01. Incorporation and Authority of the Purchaser.......................... 43
SECTION 4.02. No Conflict........................................................... 43
SECTION 4.03. Consents and Approvals................................................ 44
SECTION 4.04. Litigation............................................................ 44
SECTION 4.05. Investment Purpose.................................................... 44
SECTION 4.06. Financing............................................................. 44
SECTION 4.07. Brokers............................................................... 44
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing.............................. 45
SECTION 5.02. Access to Information; Confidentiality................................ 48
SECTION 5.03. Investigation......................................................... 50
SECTION 5.04. Books and Records..................................................... 51
SECTION 5.05. Satisfaction of Conditions Precedent; Regulatory and Other
Authorizations; Notices and Consents.................................. 52
SECTION 5.06. Notification to Governmental Authorities.............................. 54
SECTION 5.07. Payment of Intercompany Accounts Payable.............................. 54
SECTION 5.08. Non-Competition....................................................... 55
SECTION 5.09. No Solicitation....................................................... 55
SECTION 5.10. Bulk Transfer Laws.................................................... 55
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Page
SECTION 5.11. Use of the BOC Group's Name........................................ 56
SECTION 5.12. Intercompany Debt.................................................. 56
SECTION 5.13. Insurance Coverage................................................. 56
SECTION 5.14. Guaranties......................................................... 57
SECTION 5.15. Transition Services................................................ 57
SECTION 5.16. Shared Facilities.................................................. 58
SECTION 5.17. Further Action..................................................... 58
SECTION 5.18. Conduct of Retained Litigation..................................... 58
SECTION 5.19. Notice of Certain Events or Occurrences............................ 58
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. Certain Severance Benefits; Certain Arrangements................... 58
SECTION 6.02. [Reserved]......................................................... 59
SECTION 6.03. Additional Provisions Relating to Foreign Employees................ 59
SECTION 6.04. Other Employee Benefits Matters.................................... 62
SECTION 6.05. Collective Bargaining Agreements; Certain Employee Benefits........ 64
ARTICLE VII
TAX MATTERS
SECTION 7.01. Sales, Use and Other Transfer Taxes................................ 65
SECTION 7.02. Property Taxes..................................................... 65
SECTION 7.03. Tax Indemnities.................................................... 66
SECTION 7.04. Refunds and Tax Benefits........................................... 68
SECTION 7.05. Contests........................................................... 69
SECTION 7.06. Preparation of Tax Returns......................................... 71
SECTION 7.07. Cooperation and Exchange of Information............................ 72
SECTION 7.08. Allocation of Purchase Price....................................... 72
SECTION 7.09. Miscellaneous...................................................... 73
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of the BOC Group......................... 73
SECTION 8.02. Conditions to Obligations of the Purchaser......................... 74
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Page
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Survival of Representations and Warranties.............. 76
SECTION 9.02. Indemnification by the Purchaser........................ 76
SECTION 9.03. Indemnification by the BOC Group........................ 78
ARTICLE X
TERMINATION AND WAIVER
SECTION 10.01. Termination............................................. 81
SECTION 10.02. Effect of Termination................................... 81
SECTION 10.03. Waiver.................................................. 82
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Expenses................................................ 82
SECTION 11.02. Notices................................................. 82
SECTION 11.03. Public Announcements.................................... 83
SECTION 11.04. Headings................................................ 83
SECTION 11.05. Severability............................................ 83
SECTION 11.06. Entire Agreement........................................ 84
SECTION 11.07. Assignment.............................................. 84
SECTION 11.08. No Third Party Beneficiaries............................ 84
SECTION 11.09. Amendment............................................... 84
SECTION 11.10. Specific Performance.................................... 84
SECTION 11.11. Governing Law; Submission to Jurisdiction............... 85
SECTION 11.12. Payments on Behalf of Affiliates........................ 85
SECTION 11.13. Counterparts............................................ 85
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EXHIBITS
A Non-U.S. Subsidiaries
B-1 MDD Non-U.S. Subsidiaries
B-2 MSD/SPD Non-U.S. Subsidiaries
C Certain Non-U.S. Subsidiaries
D Second Tier Subsidiaries
1.01(a) Form of License Agreement
2.04(b) Allocation of Purchase Price
5.01(c)(viii) Capital Expenditures Budget
5.15 Form of Transition Services Agreement
5.16 Shared Facilities Procedures
8.01(b) Required Governmental Approvals
SCHEDULES
1.01(a) Excluded Assets
1.01(b) Responsible Persons
3.06(a) Financial Statements
3.06(b) Divisional Financial Statements
3.06(c) Ohmeda Center Financial Statements
3.06(d) Financial Statement Reconciliation
3.06(e) Reference Balance Sheet
3.06(f) Reference Divisional Balance Sheet
3.06(g) Reference Ohmeda Center Divisional Balance Sheet
5.11 Zeta Device
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SALE AND PURCHASE AGREEMENT (MDD BUSINESS) dated as of January 28,
1998 between THE BOC GROUP PLC, a company organized under the laws of England
(the "BOC GROUP"), and BECTON, DICKINSON AND COMPANY, a New Jersey corporation
(the "PURCHASER").
W I T N E S S E T H:
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WHEREAS, the BOC Group, through various entities, is engaged in
certain businesses (collectively, the "OHMEDA BUSINESS") described in the
Descriptive Memorandum dated August 4, 1997 previously distributed to the
Purchaser (the "DESCRIPTIVE MEMORANDUM"), namely, the businesses of the Medical
Devices Division ("MDD"), the Medical Systems Division ("MSD"), the Specialty
Products Division ("SPD") and the Pharmaceutical Products Division ("PPD");
WHEREAS, the BOC Group wishes to sell to the Purchaser, and the
Purchaser wishes to purchase from the BOC Group, the business engaged in by MDD,
the assets, liabilities and results of operations of which are reflected in the
Descriptive Memorandum, as modified by the Carve-Out Allocation Protocol (as
defined below) (the "BUSINESS"), upon the terms and subject to the conditions
set forth herein;
WHEREAS, the BOC Group and the Purchaser intend that the sale and
purchase of the Business contemplated hereby shall have economic effect as of
the earlier of the actual closing date and April 4, 1998, such that the profits
and losses of the Business and other normal business risks of the Business after
such date would, subject to the representations, warranties and indemnities
contained herein, be the responsibility of the Purchaser, and that the Business
be operated in trust for the account of the Purchaser from such date to the
actual closing date; and
WHEREAS, simultaneously herewith, the BOC Group is entering into (i) a
Sale and Purchase Agreement (MSD/SPD Business) (the "MSD/SPD PURCHASE
AGREEMENT") with Instrumentarium Corporation ("INSTRUMENTARIUM"), pursuant to
which the BOC Group has agreed to sell to Instrumentarium, and Instrumentarium
has agreed to purchase from the BOC Group, the businesses engaged in by MSD and
SPD, upon the terms and subject to the conditions set forth therein, (ii) a Sale
and Purchase Agreement PPD Business) (the "PPD PURCHASE AGREEMENT") with Baxter
International Inc. ("BAXTER"), pursuant to which the BOC Group has agreed to
sell to Baxter and Baxter has agreed to purchase from the BOC Group, the
business engaged in by PPD, upon the terms and subject to the conditions set
forth therein, and (iii) a Sale and Purchase Agreement (INO Business) (the "INO
PURCHASE AGREEMENT") with INO Holdings LLC, a Delaware limited liability company
("NEWCO"), pursuant to which the BOC Group has agreed to sell to Newco, and
Newco has agreed to purchase from the BOC
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Group, the business relating to the INO Development Program, upon the terms and
subject to the conditions set forth therein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the BOC Group and the Purchaser
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
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following terms shall have the following meanings:
"ACTION" means any claim, action, suit, arbitration or proceeding by
or before any Governmental Authority or arbitrator.
"AFFILIATE" means, with respect to any specified Person, any other
Person that, directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"AFFILIATED GROUP" means any "affiliated group" as defined in Section
1504(a) of the Code.
"AGREEMENT" means this Sale and Purchase Agreement (MDD Business)
dated as of January 28, 1998 between the BOC Group and the Purchaser (including
the Exhibits and Schedules attached hereto and the Disclosure Schedule) and all
amendments hereto made in accordance with the provisions hereof.
"ANCILLARY AGREEMENTS" means (a) the Asset Transfer and Assumption
Agreements, (b) the License Agreement and (c) the Transition Services Agreement.
"ASSET TRANSFER AND ASSUMPTION AGREEMENT" means an agreement, the form
of which shall be agreed upon by the BOC Group and the Purchaser prior to the
Closing, to be dated the Closing Date, pursuant to which a Subsidiary will
transfer to the Purchaser or one or more of its direct or indirect wholly owned
subsidiaries the assets owned by such Subsidiary and used primarily in the
Business, and the Purchaser will assume certain liabilities of such Subsidiary.
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"AUDITED BALANCE SHEET" means the combined balance sheet of the Ohmeda
Business dated as of September 30, 1997 included in the Financial Statements.
"BOC GROUP CONTROLLED PERSON" means all majority owned subsidiaries of
the BOC Group other than Afrox Limited.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized to be closed in the cities of New
York or London.
"CODE" means the United States Internal Revenue Code of 1986, as
amended.
"CUT-OFF DATE" means the earlier of (a) the Closing Date and (b) April
4, 1998.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule dated as of the
date hereof delivered to the Purchaser by the BOC Group.
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien,
charge or other encumbrance of any kind.
"ENVIRONMENTAL LAW" means any applicable Law relating to protection of
the environment.
"ENVIRONMENTAL PERMIT" means any permit, approval, registration,
waiver, identification number or license required under any Environmental Law.
"EPA" means the United States Environmental Protection Agency.
"ERISA" means the United States Employee Retirement Income Security
Act of 1974, as amended.
"EXCLUDED ASSETS" means all right, title and interest of the BOC Group
or any BOC Company in the assets listed on Schedule 1.01(a).
"EXCLUDED LIABILITIES" means:
(a) liabilities to employees and former employees of the BOC
Companies retained by the BOC Group pursuant to Article VI or the
applicable Asset Transfer and Assumption Agreement;
(b) liabilities arising from the Retained Litigation;
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(c) liabilities arising from or in connection with any discontinued
businesses and disposed real property;
(d) liabilities arising primarily from the Excluded Assets;
(e) any intercompany debt between the Business, on the one hand, and
the BOC Group and its Affiliates (including MSD, SPD and PPD), on the other
hand, other than normal and customary accounts receivable and accounts
payable within the scope of Section 5.07(c);
(f) liabilities arising from or in connection with the conduct prior
to the Closing Date of any business of the BOC Group or any of its
Affiliates other than the Business;
(g) any costs or expenses incurred by the BOC Group or any of its
Subsidiaries in connection with the Transactions, including the fees and
expenses of JP Morgan referred to in Section 3.24 and the costs associated
with the restructuring of the activities of the Business in Sweden;
(h) except as otherwise specifically provided for in Articles VI and
VII of this Agreement and the Ancillary Agreements, any liabilities of any
Subsidiary for or in respect of Taxes arising in respect of any taxable
period ending on or before the Closing Date (including, except as provided
in Section 7.01, Taxes imposed in connection with the Transactions and the
transactions contemplated by the MDD Purchase Agreement, the PPD Purchase
Agreement and the INO Purchase Agreement), but only to the extent such
Taxes are in excess of the amount specifically reserved on the Cut-Off Date
Carve-Out Balance Sheet for Taxes (as identified on a schedule attached
thereto, but excluding any reserves for deferred Taxes) imposed on or with
respect to the Assets or the Subsidiaries;
(i) liabilities arising from Existing Personal Injury Claims;
(j) indebtedness for borrowed money and other liabilities required by
U.K. GAAP to be reflected on a balance sheet as debt;
(k) long-term disability and, in the case of clause (i),
postretirement medical and life insurance, coverage relating to (i) employees of
the Business who are on long-term disability under a BOC Benefit Plan as of the
Closing Date and (ii) employees of the Business who are on short-term disability
under a BOC Benefit Plan as of the Closing Date who become eligible for long-
term disability benefits after the Closing Date;
5
(l) the obligation to provide continuation coverage (including,
without limitation, continuation coverage under the consolidated Omnibus Budget
Reconciliation Act of 1985, as amended), which obligation relates to events
arising prior to the Closing Date under a BOC Benefit Plan which is a medical or
dental plan;
(m) liabilities relating to The BOC Group Pension Plan, the BOC 401(k)
Plan or any Shared Plan, other than any liabilities that (i) are assumed by the
Purchaser pursuant to Article VI or (ii) result from an act or omission by the
Business or any third party that is acting at the request or on behalf of the
Business that constitutes a violation of the terms of such plan or applicable
Law or relates to the administration of such plan;
(n) unfunded liabilities accrued prior to the Closing Date under (i)
The BOC Group, Inc. Deferred Compensation Plan or (ii) The BOC Group, Inc.
Pension Excess Plan;
(o) medical and insurance claims incurred prior to the Closing Date
under a welfare plan that is (i) a self-insured BOC Benefit Plan or (ii) an
insured BOC Benefit Plan that is not transferred to or assumed by the Purchaser
(and for this purpose, medical claims shall be deemed to be incurred as of the
date the related services are performed, and life insurance claims shall be
deemed to be incurred on the applicable date of death);
(p) workers' compensation coverage relating to employees of the
Business for events arising prior to the Closing Date under a workers'
compensation program maintained by the BOC Group or any of its Affiliates (other
than the BOC Companies); and
(q) any liabilities that are specifically designated as "Excluded
Liabilities" under Section 6.01 or 6.03(a)(ii); provided, however, that to the
extent that reserves relating to any Excluded Liabilities described in
subsection (m), (n), (o) or (p) above have been reflected in the Reference
Balance Sheet, such reserves shall be reallocated to the BOC Group prior to the
Cut-Off Date.
"EXISTING PERSONAL INJURY CLAIMS" means Actions arising from personal
injuries (i) that occurred prior to the Cut-Off Date which were caused or
allegedly caused by products or services manufactured, sold or distributed by
the Business and (ii) whenever occurring, which were caused or allegedly caused
by (x) services that were part of a line of service of the Business that was
discontinued prior to the Cut-Off Date or (y) a product of the Business if such
product or an updated modified version thereof was no longer being manufactured,
sold or distributed by the Business as of the Cut-Off Date.
"FOREIGN EMPLOYEES" means employees of the Business employed by a BOC
Company which is incorporated or organized outside the United States, other than
those employees listed on Section 3.18(a) of the Disclosure Schedule.
6
"FTC" means the United States Federal Trade Commission.
"GOVERNMENTAL AUTHORITY" means any government, governmental,
statutory, regulatory or administrative authority, agency, body or commission or
any court, tribunal, or judicial or arbitral body whether federal, state,
provincial, local or foreign.
"GOVERNMENTAL ORDER" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered or made by or with any
Governmental Authority.
"HAZARDOUS MATERIALS" means chemicals or substances regulated as toxic
or hazardous under Environmental Laws.
"HEALTHCARE PRODUCTS" means products manufactured, sold or
distributed, or in development, by the Business on the date hereof.
"HSR ACT" means the United States Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"INCLUDING" means including, without limitation.
"INO DEVELOPMENT PROGRAM" means the Ohmeda Business's existing
clinical development program for products based on inhaled nitric oxide,
together with the assets and liabilities to be allocated thereto pursuant to the
INO Carve-Out Allocation Protocol.
"INTELLECTUAL PROPERTY" means (a) inventions, ideas and conceptions,
whether or not patentable, whether or not reduced to practice or whether or not
yet made the subject of a pending patent application or applications, (b)
patents, patent registrations and patent applications (including all reissues,
divisions, continuations, continuations-in-part, extensions and reexaminations)
and all rights therein, (c) trademarks, service marks, trade dress, logos,
whether or not registered, including all common law rights, and registrations
and applications for registration thereof, and the goodwill associated
therewith, (d) copyrights (registered or otherwise) and registrations and
applications for registration thereof, (e) computer software, including source
code, object code, executable code, operating systems and specifications, and
other materials related thereto and (f) trade secrets and confidential,
technical or business information including know-how and show-how, manufacturing
and production processes and techniques, testing and analytical methods,
research and development information, drawings, specifications, designs, plans,
proposals, technical data, and the like.
"INTERIM PERIOD" means the period from and including the first day
after the Cut-Off Date through and including the Closing Date.
7
"IRS" means the United States Internal Revenue Service.
"KNOWLEDGE" means, with respect to the BOC Group and the BOC
Companies, the actual knowledge, after due inquiry, of the persons set forth on
Schedule 1.01(b), and any successor to the responsibilities of such persons at
the time in question.
"LAW" means any statute, law, ordinance, regulation, rule, code, order
or requirement of any Governmental Authority.
"LEASED REAL PROPERTY" means all the real property that is leased by a
BOC Company and is used primarily in the Business, together, in each case, with
all buildings, fixtures and improvements located thereon.
"LICENSED INTELLECTUAL PROPERTY" means all Intellectual Property that
is licensed by a BOC Company from a third party and is used primarily in the
Business.
"LICENSE AGREEMENT" means an agreement, to be dated the Closing Date,
between the BOC Group and the Purchaser substantially in the form of Exhibit
1.01(a) hereto.
"MATERIAL ADVERSE EFFECT" means any change in, or effect on, the
Business as currently conducted that is materially adverse to the business,
results of operations or financial condition of the Business, taken as a whole.
"MEDICAL GASES BUSINESS" means the development, manufacture, sale and
distribution of medical gases, including oxygen, nitrous oxide, nitrogen, carbon
dioxide, helium and breathing air, for non-anesthesia purposes (other than
nitrous oxide and xenon), together with equipment used in the supply,
calibration or storage of such medical gases, including flow meters, medical gas
regulators, cascade manifold systems, automatic switchover systems, calibration
equipment, valve outlets, cylinders and adapters, connector storage systems and
related accessories.
"MEDICAL PRODUCT PERMIT" means any Permit from or issued by any
Medical Product Regulatory Authority.
"MEDICAL PRODUCT REGULATORY AUTHORITY" means any Governmental
Authority that is concerned with the safety, efficacy, reliability, manufacture,
sale or marketing of medical products.
"MSD/SPD BUSINESS" means the "Business" as defined in the MSD/SPD
Purchase Agreement.
8
"OHMEDA UK" means the English unlimited company Ohmeda, registered
number 536128.
"OWNED INTELLECTUAL PROPERTY" means all Intellectual Property owned by
a BOC Company and used primarily in the Business.
"OWNED REAL PROPERTY" means all the real property owned by a BOC
Company and used primarily in the Business, together, in each case, with all
buildings, fixtures and improvements thereon.
"PERMITTED ENCUMBRANCES" means any Encumbrances that do not
significantly interfere, individually or in the aggregate, with the value or
uses (current or anticipated by the Business as of the date of this Agreement)
of the assets to which they relate.
"PERSON" means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the United States Securities Exchange Act of 1934, as
amended.
"PPD BUSINESS" means the "Business" as defined in the PPD Purchase
Agreement.
"PURCHASER'S 401(K) PLAN" means a defined contribution plan to be
designated by the Purchaser.
"REAL PROPERTY" means the Leased Real Property and the Owned Real
Property.
"REFERENCE AMOUNT" means US$95.4 million.
"REFERENCE BALANCE SHEET" means the unaudited combined statement of
capital employed of the Ohmeda Business as of December 31, 1997, attached hereto
as Schedule 3.06(b).
"REFERENCE DIVISIONAL BALANCE SHEET" means the unaudited statement of
capital employed of MDD as of December 31, 1997, attached hereto as Schedule
3.06(c).
"RETAINED LITIGATION" means the pending litigation matters entitled
(a) Spectramed vs. Gould, #92 CH 7239, Circuit Court of Cook County, Chancery
Division, Illinois, (b) Red Lion Medical Safety, et al vs. Ohmeda, Inc., #Civ-S-
96-1919 DFL, GGH, (c) The BOC Group Inc., Ohmeda Pharmaceutical Products
Division Inc., Ohmeda Caribe Inc. vs. Inhalon Pharmaceuticals Inc., Michael
Fitiak, D. Kollmorgen, Ross Terrell, John
9
Wynne, #1995 CE 2312, Court of Common Pleas of Northampton County, Commonwealth
of Pennsylvania and any derivative claim arising therefrom, (d) O.E. Meyer &
Sons v. The BOC Group, Inc., No. 87-CV-419, Court of Common Pleas of Erie, Ohio,
and (e) the dispute between Ohmeda, Inc. and Dragerwerk AG arising out of the
Patent-Technology License Agreement dated May 23, 1991.
"TAX" or "TAXES" means (a) all taxes, charges, fees, levies, duties,
imposts, or other similar assessments, including income, gross receipts, ad
valorem, excise, real property, personal property, windfall profit, sales, use,
transfer, stamp, licensing, withholding, employment, payroll, minimum, estimated
and franchise taxes imposed by the United States or any state, local, or foreign
government, or any subdivision, agency, or other similar person of the United
States, or any such government and (b) any interest, fines, penalties,
assessments, or additions to tax resulting from, attributable to, or incurred in
connection with, any such tax or taxes.
"TRANSFERRED ASSETS" means the Assets and the other assets of the
Subsidiaries to be purchased, directly or indirectly, by the Purchaser pursuant
to Section 2.01.
"U.K. GAAP" means United Kingdom generally accepted accounting
principles as in effect from time to time.
"UNITED STATES" means the United States of America and its
territories, including Puerto Rico.
"UNITED STATES EMPLOYEES" means employees of the Business, other than
Foreign Employees.
"VAT" means the tax imposed by the Sixth Council Directive of the
European Communities and any national legislation implementing that directive
together with legislation supplemental thereto and any equivalent or similar tax
in any other jurisdiction in which there is to be a sale of assets.
SECTION 1.02. Other Defined Terms. The following terms shall have
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the meanings defined for such terms in the Sections set forth below:
Term: Section:
----- --------
Agreed Transfer Payment 6.03(b)(i)
Assets 2.01
Assumed Liabilities 2.03
Base Purchase Price 2.04(a)
Baxter Recitals
10
BOC Benefit Plans 3.18(a)
BOC Companies 2.01
BOC Group Preamble
BOC Group's Accountants 2.05(c)
BOC Group Indemnified Party 9.02(a)
BOC Group's Threshold Amount 9.03(b)
BOC Group's Severance Plan 6.01
Business Recitals
Canadian Shared Plan 6.03(b)(i)
Capital Employed 2.05(h)
Carve-Out Allocation Protocol 2.05(a)
Closing 2.06
Closing Date 2.06
Closing Date Carve-Out Balance Sheet 2.05(d)(ii)
Closing Date Carve-Out Financial
Statements 2.05(d)(ii)
Closing Date Carve-Out Profit and
Loss Statement 2.05(d)(ii)
Closing Date Special Purpose Accounts 2.05(d)(ii)
Competitive Products 5.08
Confidentiality Agreement 5.02(c)
Contest 7.05(b)
Cut-Off Date Balance Sheet 2.05(c)
Cut-Off Date Carve-Out Balance Sheet 2.05(d)(i)
Cut-Off Date Divisional Balance Sheet 2.05(c)
Cut-Off Date Special Purpose Accounts 2.05(c)
Descriptive Memorandum Recitals
Designated Amount 9.03(b)
Designated Employees 6.03(a)(i)
Designated Non-U.S. Subsidiaries 2.01(d)
Diversified Company 5.08
Divisional Financial Statements 3.06(b)
Financial Statements 3.06(a)
Foreign BOC Plan 3.18(c)
Government Antitrust Authority 5.05(b)(i)
Independent Accounting Firm 2.05(e)(ii)
INO Allocation Protocol 2.05(a)
INO Purchase Agreement Recitals
Instrumentarium Recitals
LIBOR 2.05(i)
Lazard 4.07
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Losses 9.02(a)
JP Morgan 3.25
Material Contracts 3.16(a)
MDD Recitals
MDD Non-U.S. Subsidiaries 2.01(d)
Modified Reference Amount 2.05(b)
MSD Recitals
MSD/SPD Purchase Agreement Recitals
MSD/SPD Non-U.S. Subsidiaries 2.01(d)
Net Cash Flow 2.05(h)
Newco Recitals
Non-Competition Period 5.08
Non-Exclusive Contract 5.05(e)
Non-U.S. Subsidiaries 2.01(d)
Ohmeda Business Recitals
Ohmeda Center Financial Statements 3.06(c)
Other Purchasers 6.03(a)(ii)
Post-Closing Date Tax Benefit 7.04(b)
PPD Recitals
PPD Purchase Agreement Recitals
Purchase Price 2.04(a)
Purchaser Preamble
Purchaser's Accountants 2.05(e)(ii)
Purchaser Group 7.04(b)
Purchaser Indemnified Party 9.03(a)
Reference Ohmeda Center Divisional
Balance Sheet 2.05(g)
Retained Names and Marks 5.11
Returns 7.01
Second Tier Shares 3.03(a)
Second Tier Subsidiaries 3.03(a)
Shared Plans 6.03(b)(i)
Shares 2.01
SPD Recitals
Subsidiaries 2.01
12
Tax Adjusted Operating Loss 2.05(h)
Tax Adjusted Operating Profit 2.05(h)
Transactions 2.01
Transfer Date 6.03(b)(i)
Transfer Laws 6.03(a)(ii)
Transferred Employees 6.03(a)(i)
Transition Services Agreement 5.15
U.S. Subsidiaries 2.01(b)
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the Business, the MSD/SPD
----------------------------------------------
Business, the PPD Business and the INO Development Program. Upon the terms and
- ----------------------------------------------------------
subject to the conditions of this Agreement, the MSD/SPD Purchase Agreement, the
PPD Purchase Agreement and the INO Purchase Agreement, at the Closing, the
following transactions shall take place in the sequence indicated (the
"TRANSACTIONS"):
(a) First, the BOC Group shall cause the transfers referred to in
-----
Section 5.01(b)(ii) hereof and in Section 5.01(b)(ii) of each of the INO
Purchase Agreement, the MSD/SPD Purchase Agreement and the PPD Purchase
Agreement to occur.
(b) Second, the BOC Group (i) shall cause Ohmeda Pharmaceutical
------
Products Division, Inc. and its other subsidiaries, as applicable, to sell,
assign, transfer, convey and deliver to Newco, and Newco shall purchase,
all the assets allocated to the INO Development Program in accordance with
the Carve-Out Allocation Protocol, pursuant to the INO Purchase Agreement,
(ii) shall cause Ohmeda, Inc., Ohmeda Pharmaceutical Products Division,
Inc. and Ohmeda Caribe, Inc. (the "U.S. SUBSIDIARIES") to sell, assign,
transfer, convey and deliver to the Purchaser, and the Purchaser shall
purchase, all the assets of the U.S. Subsidiaries relating primarily to the
Business, (iii) shall cause Ohmeda Pharmaceutical Products Division, Inc.
and Ohmeda Caribe, Inc. to sell, assign, transfer, convey and deliver to
Instrumentarium, and Instrumentarium shall purchase, all the assets of
Ohmeda Pharmaceutical Products Division, Inc. and Ohmeda Caribe, Inc.
relating primarily to the MSD/SPD Business, pursuant to the MSD/SPD
Purchase Agreement, (iv) shall cause Ohmeda, Inc. to sell, assign,
transfer, convey and deliver to Baxter, and Baxter shall purchase, all the
issued and outstanding shares of capital stock of Ohmeda Pharmaceutical
Products Division, Inc. and Ohmeda Caribe, Inc., pursuant to the PPD
Purchase Agreement and (v) shall
13
cause all the issued and outstanding shares of capital stock of Ohmeda
Medical Devices Division, Inc. to be distributed to BOC Delaware, Inc.
(c) Third, the BOC Group shall cause BOC Delaware, Inc. to sell,
-----
assign, transfer, convey and deliver to Instrumentarium, and
Instrumentarium shall purchase, all the issued and outstanding shares of
capital stock of Ohmeda, Inc., pursuant to the MSD/SPD Purchase Agreement.
(d) Fourth, the BOC Group (i) shall, and shall cause its direct and
------
indirect subsidiaries listed on Exhibit A (the "NON-U.S. SUBSIDIARIES") to,
sell, assign, transfer, convey and deliver to Baxter, and Baxter shall
purchase, all the assets of the Non-U.S. Subsidiaries relating primarily to
the PPD Business, including the patent rights, goodwill and other assets
held by the BOC Group relating primarily to Brevibloc, pursuant to the PPD
Purchase Agreement, (ii) shall cause the Non-U.S. Subsidiaries listed on
Exhibit B-1 (the "MDD NON-U.S. SUBSIDIARIES"), the Non-U.S. Subsidiaries
listed on Exhibit C, Ohmeda GmbH Medizintechnik and BOC Ohmeda AB to sell,
assign, transfer, convey and deliver to Instrumentarium, and
Instrumentarium shall purchase, all the assets of such companies relating
primarily to the MSD/SPD Business, including all intangible assets held by
Ohmeda UK relating to Tec6, pursuant to the MSD/SPD Purchase Agreement and
(iii) shall cause the Non-U.S. Subsidiaries listed on Exhibit B-2 (the
"MSD/SPD NON-U.S. SUBSIDIARIES") and the Non-U.S. Subsidiaries listed on
Exhibit C to sell, assign, transfer, convey and deliver to the Purchaser,
and the Purchaser shall purchase, all of the assets of such companies
relating primarily to the Business.
(e) Fifth, the BOC Group (i) shall sell, assign, transfer, convey and
-----
deliver, or shall cause the sale, assignment, transfer, conveyance and
delivery, to the Purchaser, and the Purchaser shall purchase, all the
issued and outstanding shares of capital stock of the MDD Non-U.S.
Subsidiaries and (ii) shall sell, assign, transfer, convey and deliver, or
shall cause the sale, assignment, transfer, conveyance and delivery, to
Instrumentarium, and Instrumentarium shall purchase, all of the issued and
outstanding shares of capital stock of the MSD/SPD Non-U.S. Subsidiaries,
pursuant to the MSD/SPD Purchase Agreement.
(f) The parties acknowledge that the cash to be received by certain
Subsidiaries upon the sale of assets pursuant to the MSD/SPD Purchase
Agreement and the PPD Purchase Agreement is an Excluded Asset and that the
parties intend that such cash be paid to the BOC Group as a dividend or as
a return of capital or used to repay any indebtedness of such Subsidiaries
immediately prior to the sale of such Subsidiaries to the Purchaser. The
parties also acknowledge that it may not be legally possible to make such
payments and, in such an event, the parties will cooperate to develop
14
mutually advantageous means to make the payments to the BOC Group. BOC
shall notify the Purchaser no later than 14 days prior to the anticipated
date of Closing of the proposed method of payment, which shall be subject
to the approval of the Purchaser. If no such means can be developed, the
parties shall amend this Agreement to increase the purchase price to be
paid for any Subsidiary from which such cash cannot be paid to the BOC
Group by an amount equal to the amount of such cash.
If the Purchaser or the relevant Subsidiary suffers any financial
detriment (to include any loss, cost, expense or liability) as a result of
either (i) such payment of cash to the BOC Group (howsoever effected) or
(ii) in the event that an amendment is made to the purchase price, as a
result of the Purchaser not being able to obtain equivalent value in
relation to the cash remaining in the relevant Subsidiary (including,
without limitation, as a result of being unable to make a payment, making a
delayed payment out of such cash, making a dividend payment to the
Subsidiary's U.S. parent or suffering any loss, cost or deduction in
relation thereto), the parties shall in either such case make appropriate
adjustments to the purchase price for the relevant Subsidiary of an amount
necessary to fully compensate the Purchaser or the relevant Subsidiary for
such detriment (including any Tax, costs, expenses or liabilities and any
loss, costs, expenses or liabilities resulting from the inability to use,
the delayed ability to use, or any transfer or distribution (including
dividends to the U.S. parent) of such cash).
The U.S. Subsidiaries and the Non-U.S. Subsidiaries are sometimes
referred to herein as the "BOC COMPANIES", and the U.S. Subsidiaries and the
Non-U.S. Subsidiaries (other than those listed on Exhibit C) are sometimes
referred to herein as the "SUBSIDIARIES".
The shares of capital stock purchased by the Purchaser hereunder are
referred to herein as the "SHARES". The assets purchased by the Purchaser
hereunder (other than the Shares) are referred to herein as the "ASSETS". It is
expressly understood that, notwithstanding anything to the contrary in this
Section 2.01, the Transferred Assets shall not include (a) the Excluded Assets
or (b) Tax claims or refunds attributable to Taxes paid in respect of any
taxable period ending on or before the Closing Date).
SECTION 2.02. [Reserved]
SECTION 2.03. Assumption of Liabilities. Upon the terms and subject
-------------------------
to the conditions of this Agreement, the Purchaser and the BOC Group shall, on
the Closing Date, execute and deliver one or more Asset Transfer and Assumption
Agreements, pursuant to which the Purchaser or one or more direct or indirect
wholly owned subsidiaries of the
15
Purchaser shall assume, and agree to pay, perform and discharge when due, any
and all debts, liabilities and obligations of each of the Subsidiaries (other
than the Subsidiaries to be acquired by the Purchaser hereunder) arising
primarily from the Business, of whatever nature (whether fixed or contingent,
matured or unmatured, arising by law or by contract or otherwise, on or prior to
the Closing Date or thereafter), other than the Excluded Liabilities (the
"ASSUMED LIABILITIES").
SECTION 2.04. Purchase Price; Allocation of Purchase Price. (a) The
--------------------------------------------
aggregate purchase price for the Business shall be US$451,000,000.00 (the "BASE
PURCHASE PRICE") plus an amount equal to the accretion, if any, on the Base
Purchase Price at LIBOR from the Cut-Off Date to the Closing Date (together, the
"PURCHASE PRICE").
(b) The Purchase Price shall be allocated among the Assets and the
Shares as of the Closing Date in accordance with Exhibit 2.04(b). The
allocation of the Purchase Price hereunder shall be adjusted in a manner that
reflects the facts underlying any adjustment to the Purchase Price and the
Closing Date Carve-Out Balance Sheet as agreed to by the Purchaser and the BOC
Group. For all Tax purposes, the Purchaser and the BOC Group agree to report
the transactions contemplated by this Agreement in a manner consistent with the
terms of this Agreement, including the allocation provided in Exhibit 2.04(b)
and Section 7.08, and neither the BOC Group nor the Purchaser will take any
position inconsistent therewith in any Tax return, in any refund claim, in any
litigation or otherwise.
SECTION 2.05. Adjustment of Purchase Price. The Purchase Price shall
----------------------------
be subject to adjustment as specified in this Section 2.05:
(a) No later than February 28, 1998, the Purchaser, together with
the purchasers under the MSD/SPD Purchase Agreement, the PPD Purchase
Agreement and the INO Purchase Agreement, shall deliver to the BOC
Group (i) a protocol for the allocation of the assets, liabilities,
revenues and costs of the INO Development Program (as reflected in the
Reference Balance Sheet) among MDD, MSD/SPD, PPD and the INO
Development Program (the "INO ALLOCATION PROTOCOL") and (ii) a
protocol for the allocation of (A) the assets and liabilities of MDD,
MSD/SPD, PPD, Ohmeda Center and the INO Development Program (as
reflected in the Reference Balance Sheet) among MDD, MSD/SPD, PPD and
the INO Development Program, and (B) the revenues and costs of MDD,
MSD, SPD, PPD, Ohmeda Center and the INO Development Program, which
will provide for, among other things, the allocation of BOC Group
intercompany charges as among MDD, MSD/SPD, PPD and the INO
Development Program and as between MDD, MSD/SPD, PPD and the INO
Development Program, on the one hand, and the BOC Group, on the other
hand, during the Interim Period (together with the
16
allocations set forth in the INO Allocation Protocol, the "CARVE-OUT
ALLOCATION PROTOCOL"). The Carve-Out Allocation Protocol (including
the INO Allocation Protocol included therein, shall be subject to the
approval of the BOC Group, which approval shall not be unreasonably
withheld (it being understood that the Purchaser and the purchasers
under the MSD/SPD Purchase Agreement, the PPD Purchase Agreement and
the INO Purchase Agreement shall have the right to allocate the total
assets, liabilities, revenues and costs among them in such manner as
they deem appropriate).
(b) Modified Reference Amount. Promptly after receipt of the INO
-------------------------
Allocation Protocol, but in any event no later than thirty days after
receipt of the INO Allocation Protocol, the BOC Group shall (i) calculate a
modified Reference Amount (the "MODIFIED REFERENCE AMOUNT") which reflects
a reallocation of the Capital Employed in the INO Development Program in
accordance with the INO Allocation Protocol (which reallocation will not
change the aggregate of the Reference Amount herein and the reference
amounts in the MSD/SPD Purchase Agreement, the PPD Purchase Agreement and
the INO Purchase Agreement) and (ii) deliver to the Purchaser (x) notice of
the Modified Reference Amount, (y) a summation of the Modified Reference
Amount and the corresponding modified reference amounts of the businesses
being sold by the BOC Group under the MSD/SPD Purchase Agreement, the PPD
Purchase Agreement and the INO Purchase Agreement, and (z) a reconciliation
between the Reference Amount and the Modified Reference Amount. To the
extent that any liability included in the Reference Balance Sheet is
subsequently determined to be an Excluded Liability (under paragraphs (k)
through (q) of the definition of "Excluded Liabilities" in Section 1.01),
the Modified Reference Amount, together with the modified reference amounts
in the MSD/SPD Purchase Agreement, the PPD Purchase Agreement and the INO
Purchase Agreement, will be adjusted (in the proportions specified by the
Purchaser, Instrumentarium and Baxter) in an aggregate amount equal to the
amount included in the Reference Balance Sheet with respect to such
Excluded Liability.
(c) Cut-Off Date Balance Sheet. As promptly as practicable, but in
--------------------------
any event within sixty calendar days following the Cut-Off Date, the BOC
Group shall deliver to the Purchaser (i) audited special purpose accounts
of the Ohmeda Business as of the Cut-Off Date (the "CUT-OFF DATE SPECIAL
PURPOSE ACCOUNTS", and the statement of capital employed included therein,
the "CUT-OFF DATE BALANCE SHEET"), which shall use the same foreign
currency exchange rates used in and otherwise be prepared on a basis
consistent with that used in, the preparation of the Financial Statements,
and shall be prepared in accordance with U.K. GAAP (except (x) as
specifically disclosed in paragraph (a) ("Accounting Convention") in the
"Principal accounting policies" disclosure which is part of the Financial
Statements and (y) the use of the same foreign
17
currency exchange rates used in the preparation of the Financial
Statements) and fairly present the capital employed, profit/(loss) from
operations and net cash flow from operations of the Ohmeda Business as of
the Cut-Off Date, together with a report thereon of Coopers & Lybrand, the
Chartered Accountants and Registered Auditors ("BOC GROUP'S ACCOUNTANTS"),
stating that, except as described therein, the Cut-Off Date Balance Sheet
was prepared in accordance with U.K. GAAP and fairly presents the capital
employed, profit/(loss) from operations and net cash flow from operations
of the Ohmeda Business as of the Cut-Off Date, (ii) an unaudited divisional
balance sheet of MDD as of the Cut-Off Date (the "CUT-OFF DATE DIVISIONAL
BALANCE SHEET"), prepared on a basis consistent with that used in the
preparation of the Divisional Financial Statements (as modified by the INO
Allocation Protocol), and (iii) an unaudited reconciliation between the
audited Cut-Off Date Balance Sheet of the Ohmeda Business and the summation
of the Cut-Off Date Divisional Balance Sheet of MDD and the corresponding
Cut-Off Date divisional balance sheets of the businesses being sold by the
BOC Group under the PPD Purchase Agreement, the MSD/SPD Purchase Agreement
and the INO Purchase Agreement, together with copies of such balance
sheets. Such reconciliation will separately identify the Ohmeda Center net
assets which are excluded from the Purchase Price adjustment set forth in
Section 2.05(g). The Cut-Off Date Divisional Balance Sheet (x) shall
reflect all of the Transferred Assets and Assumed Liabilities and shall not
reflect any of the Excluded Liabilities or Excluded Assets (except to the
extent resulting solely from the allocations set forth in the INO
Allocation Protocol) and (y) shall reflect the product basis allocation
principles in effect at the relevant time, which allocation principles
Ohmeda management shall believe to be reasonable for the construction of
divisional financial statements and shall be applied on a consistent basis,
and based thereon the Cut-Off Date Divisional Balance Sheet shall fairly
present the capital employed in the Business as of the Cut-Off Date (as
modified by the INO Allocation Protocol).
(d) Carve-Out Statements. (i) As promptly as practicable, but in any
--------------------
event within sixty days following the Cut-Off Date, the BOC Group shall
deliver to the Purchaser (x) an unaudited balance sheet of the Business as
of the Cut-Off Date (the "CUT-OFF DATE CARVE-OUT BALANCE SHEET"), which
shall (subject to the allocations set forth in the Carve-Out Allocation
Protocol, and the application of the appropriate foreign currency exchange
rates as in effect on the Cut-Off Date) be prepared on a basis consistent
with that used in the preparation of the Divisional Financial Statements,
and (y) an unaudited reconciliation between the Cut-Off Date Balance Sheet
of the Ohmeda Business and the summation of the Cut-Off Date Carve-Out
Balance Sheet of the Business and the corresponding divisional balance
sheets of the businesses being sold by the BOC Group under the PPD Purchase
Agreement, the MSD/SPD Purchase Agreement and the INO Purchase Agreement,
together with copies of such balance sheets. The Cut-Off Date Carve-Out
Balance Sheet shall reflect all of the Transferred
18
Assets and Assumed Liabilities and shall not reflect any of the Excluded
Liabilities or Excluded Assets (except to the extent resulting solely from
the allocations set forth in the Carve-Out Allocation Protocol). For
informational purposes only, the BOC Group shall also provide a statement
of capital employed of the Business prepared on the same basis as that used
in the preparation of the Cut-Off Date Carve-Out Balance Sheet, except that
it shall use the same foreign currency exchange rates used in the Financial
Statements.
(ii) As promptly as practicable, but in any event within sixty
days following the Closing Date, the BOC Group shall deliver to the
Purchaser (x) audited special purpose accounts of the Ohmeda Business
as of the Closing Date (the "CLOSING DATE SPECIAL PURPOSE ACCOUNTS"),
which shall be prepared in accordance with U.K. GAAP (except as
specifically disclosed in paragraph (a) ("Accounting Convention") in
the "Principal accounting policies" disclosure which is part of the
Financial Statements) on a basis consistent with that used in the
preparation of the Financial Statements, and shall fairly present the
capital employed, profit/(loss) from operations and net cash flow from
operations of the Ohmeda Business as of the Closing Date, together
with a report thereon of the BOC Group's Accountants stating that,
except as described therein, the Closing Date Special Purpose Accounts
were prepared in accordance with U.K. GAAP and fairly present the
capital employed, profit/(loss) from operations and net cash flow from
operations of the Ohmeda Business as of the Closing Date, (y) an
unaudited balance sheet of the Business as of the Closing Date (the
"CLOSING DATE CARVE-OUT BALANCE SHEET") and an unaudited profit and
loss statement of the Business for the Interim Period (the "CLOSING
DATE CARVE-OUT PROFIT AND LOSS STATEMENT" and together with the
Closing Date Carve-Out Balance Sheet, the "CLOSING DATE CARVE-OUT
FINANCIAL STATEMENTS"), which shall (subject to the allocations set
forth in the Carve-Out Allocation Protocol and the application of the
appropriate foreign currency exchange rate as in effect during the
Interim Period), be prepared on a basis consistent with that used in
the preparation of the Divisional Financial Statements and the Cut-Off
Date Carve-Out Balance Sheet, and (z) an unaudited reconciliation
between the audited Closing Date Special Purpose Accounts of the
Ohmeda Business and the summation of the unaudited Closing Date Carve-
Out Financial Statements and the corresponding financial statements of
the businesses being sold by the BOC Group under the MSD/SPD Purchase
Agreement, the PPD Purchase Agreement and the INO Purchase Agreement,
together with copies of such financial statements. The Closing Date
Carve-Out Balance Sheet shall reflect all of the Transferred Assets
and Assumed Liabilities and shall not reflect any of the Excluded
Liabilities or Excluded Assets (except to the extent resulting solely
from the allocations set forth in the Carve-Out Allocation Protocol).
19
(iii) Together with the deliveries to be made under clauses (i)
and (ii) of this Section 2.05(d), the BOC Group shall deliver a report
of the BOC Group's Accountants stating that the Cut-Off Date Carve-Out
Balance Sheet and the Closing Date Carve-Out Financial Statements were
prepared in accordance with the Carve-Out Allocation Protocol, and the
reconciliation described in Section 2.05(d)(i) and the reconciliation
described in Section 2.05(d)(ii) reconcile to the aggregate amounts
for the Ohmeda Business.
(e) Disputes. (i) Subject to Section 2.05(f) and clauses (ii), (iii)
--------
and (v) of this Section 2.05(e), the Modified Reference Amount, the Cut-Off
Date Special Purpose Accounts, the Cut-Off Date Divisional Balance Sheet,
the Cut-Off Date Carve-Out Balance Sheet, the Closing Date Special Purpose
Accounts, and the Closing Date Carve-Out Financial Statements delivered by
the BOC Group to the Purchaser shall be deemed to be and shall be final,
binding and conclusive on the parties hereto.
(ii) Subject to Section 2.05(f), the Purchaser may dispute the
Modified Reference Amount or any amounts reflected on the Cut-Off Date
Balance Sheet or the Cut-Off Date Divisional Balance Sheet; provided,
however, that the Purchaser shall have notified the BOC Group and the
BOC Group's Accountants in writing of each disputed item, specifying
the amount thereof in dispute and setting forth, in reasonable detail,
the basis for such dispute, within 20 Business Days of the BOC Group's
delivery of the relevant balance sheet to the Purchaser. In the event
of such a dispute, the BOC Group's Accountants, together with the BOC
Group, and Ernst & Young LLP (the "PURCHASER'S ACCOUNTANTS"), together
with the Purchaser, shall attempt to reconcile their differences, and
any resolution by them as to any disputed amounts shall be final,
binding and conclusive on the parties hereto. If the BOC Group's
Accountants, together with the BOC Group, and the Purchaser's
Accountants, together with the Purchaser, are unable to resolve any
such dispute within 40 Business Days of the BOC Group's delivery of
the relevant balance sheet to the Purchaser and the items remaining in
dispute are such that the Purchase Price would be adjusted by at least
US$200,000, the BOC Group's Accountants and the Purchaser's
Accountants shall submit the items remaining in dispute for resolution
to another independent accounting firm of international reputation
mutually acceptable to the BOC Group and the Purchaser (the
"INDEPENDENT ACCOUNTING FIRM"), which shall, within 30 Business Days
after such submission, determine and report to the BOC Group and the
Purchaser upon such remaining disputed items, and such report shall be
final, binding and conclusive on the BOC Group and the Purchaser. If
the items successfully disputed by the Purchaser are such that the
Purchase Price would be adjusted by less than US$200,000, the items
shall be deemed to be resolved in favor of the
20
BOC Group and shall not result in any further adjustment of the
Purchase Price; however, such amount shall be deemed a Loss to the
Purchaser for purposes of Section 9.03. The fees and disbursements of
the Independent Accounting Firm shall be allocated to the Purchaser in
the same proportion that the aggregate amount of such remaining
disputed items so submitted to the Independent Accounting Firm that is
unsuccessfully disputed by the Purchaser (as finally determined by the
Independent Accounting Firm) bears to the total amount of such
remaining disputed items so submitted, and the balance shall be paid
by the BOC Group.
(iii) Subject to Section 2.05(f), the Purchaser may dispute any
amounts reflected on the Cut-Off Date Carve-Out Balance Sheet, the
Closing Date Special Purpose Accounts or the Closing Date Carve-Out
Financial Statements; provided, however, that the Purchaser shall have
notified the BOC Group and the BOC Group's Accountants in writing of
each disputed item, specifying the amount thereof in dispute and
setting forth, in reasonable detail, the basis for such dispute,
within 20 Business Days of the BOC Group's delivery of the relevant
financial statements to the Purchaser. In the event of such a
dispute, the BOC Group's Accountants, together with the BOC Group, and
the Purchaser's Accountants, together with the BOC Group, and the
Purchaser's Accountants, together with the Purchaser, shall attempt to
reconcile their differences, and any resolution by them as to any
disputed amounts shall be final, binding and conclusive on the parties
hereto. If the BOC Group's Accountants, together with the BOC Group,
and the Purchaser's Accountants, together with the Purchaser, are
unable to resolve any such dispute within 40 Business Days of the BOC
Group's delivery of the relevant financial statements to the
Purchaser, the BOC Group's Accountants and the Purchaser's Accountants
shall submit the items remaining in dispute for resolution to the
Independent Accounting Firm, which shall, within 30 Business Days
after such submission, determine and report to the BOC Group and the
Purchaser upon such remaining disputed items, and such report shall be
final, binding and conclusive on the BOC Group and the Purchaser. The
fees and disbursements of the Independent Accounting Firm shall be
allocated to the Purchaser in the same proportion that the aggregate
amount of such remaining disputed items so submitted to the
Independent Accounting Firm that is unsuccessfully disputed by the
Purchaser (as finally determined by the Independent Accounting Firm)
bears to the total amount of such remaining disputed items so
submitted, and the balance shall be paid by the BOC Group.
(iv) In acting under this Agreement, the Independent Accounting
Firm shall be entitled to the privileges and immunities of
arbitrators.
21
(v) Notwithstanding the procedures set forth in Section
2.05(e)(ii) and 2.05(e)(iii), in the event a purchaser under the
MSD/SPD Purchase Agreement, the PPD Purchase Agreement or the INO
Purchase Agreement asserts a dispute of the type set forth in Section
2.05(f)(i) or Section 2.05(f)(iii), the BOC Group shall notify the
Purchaser of such a dispute as soon as practicable after it is
notified of such dispute by such other purchaser(s), and the
Purchaser's Accountants shall be permitted to participate in all of
the dispute resolution procedures set forth in Section 2.05(e)(ii) and
Section 2.05(e)(iii), as the case may be, relating to such dispute, as
if it were a party to the dispute, including the right to participate
in the appointment and selection of the Independent Accounting Firm.
If upon resolution of such dispute, a reallocation would result in the
BOC Group owing additional amounts to one or more of the purchasers
under the MSD/SPD Purchase Agreement, the PPD Purchase Agreement or
the INO Purchase Agreement, and all or any portion of such amounts
improperly reduced the amount of the fully adjusted Purchase Price
paid by the Purchaser, then the Purchaser shall reimburse the BOC
Group to the extent of such reduction.
(f) The following bases of dispute shall be the sole basis upon
which a dispute may be asserted by the Purchaser under Section 2.05(e):
(i) the amounts reflected on the relevant financial statement
are erroneous, provided, however, that with respect to the following
financial statements, error may be a basis of dispute only to the
extent the amounts reflected on the relevant financial statement are
erroneous in summation on an item by item basis with the corresponding
amounts on the corresponding balance sheets delivered under the
MSD/SPD Purchase Agreement, the PPD Purchase Agreement and the INO
Purchase Agreement: (w) Modified Reference Amount, (x) Cut-Off Date
Divisional Balance Sheet, (y) Cut-Off Date Carve-Out Balance Sheet and
(z) Closing Date Carve-Out Financial Statements;
(ii) the amounts reflected on the relevant financial statement
are not permitted to be reflected thereon by the terms of this
Agreement;
(iii) with respect to the following financial statements, the
relevant financial statement was not prepared in accordance with the
allocation protocol indicated below:
FINANCIAL STATEMENT: RELEVANT ALLOCATION PROTOCOL:
- -------------------- -----------------------------
Modified Reference Amount INO Allocation Protocol
22
Cut-Off Date Divisional Balance Sheet INO Allocation Protocol
Cut-Off Date Carve-Out Balance Sheet Carve-Out Allocation Protocol
Closing Date Carve-Out Financial Statements Carve-Out Allocation Protocol
(iv) with respect to the following financial statements, the
relevant financial statement was not prepared on a basis consistent
with the item indicated below:
RELEVANT FINANCIAL STATEMENT: PREPARED ON A BASIS CONSISTENT WITH THE:
- ----------------------------- --------------------------------------------
Cut-Off Date Balance Sheet Financial Statements
Cut-Off Date Divisional Balance Sheet Divisional Financial Statements (subject to
allocations in the INO Allocation Protocol)
Cut-Off Date Carve-Out Balance Sheet Divisional Financial Statements
(subject to allocations in the Carve-Out
Allocation Protocol)
Closing Date Special Purpose Accounts Financial Statements
Closing Date Carve-Out Financial Statements Divisional Financial Statements and Cut-Off
Dated Carve-Out Balance Sheet
(subject to allocations in the Carve-Out
Allocation Protocol)
(v) the Cut-Off Date Balance Sheet was not prepared in
accordance with U.K. GAAP (except (x) as specifically disclosed in
paragraph (a) ("Accounting Convention") in the "Principal accounting
policies" disclosure which is part of the Financial Statements and (y)
the use of the same foreign currency exchange rates used in the
preparation of the Financial Statements) or does not fairly present
the capital employed of the Ohmeda Business as of the Cut-Off Date;
and
(vi) the Closing Date Special Purpose Accounts were not prepared
in accordance with U.K. GAAP (except as specifically disclosed in
paragraph (a) ("Accounting Convention") in the "Principal accounting
policies" disclosure which is part of the Financial Statements) or do
not fairly present the capital employed and profit/(loss) of the
Ohmeda Business as of the Closing Date; and
(g) Capital Employed Purchase Price Adjustment. The Modified
------------------------------------------
Reference Amount and the Cut-Off Date Divisional Balance Sheet shall be
deemed final for the purposes of this Section 2.05 upon the earlier of (i)
the failure of the Purchaser to
23
notify the BOC Group of a dispute within 20 Business Days of the BOC
Group's delivery of the relevant financial statement to the Purchaser or
(ii) the resolution of all disputes pursuant to Section 2.05(e)(ii) and
(v). Within three Business Days of the later of the Modified Reference
Amount and the Cut-Off Date Amount being deemed final, a Purchase Price
adjustment shall be made as follows:
(A) in the event that the amount of Capital Employed reflected on
the Cut-Off Date Divisional Balance Sheet is less than the Modified
Reference Amount, then the Purchase Price shall be adjusted downward
in an amount equal to such shortfall, and the BOC Group shall, within
three Business Days of such determination, pay such amount to the
Purchaser by wire transfer in immediately available funds; or
(B) in the event that the amount of Capital Employed reflected on
the Cut-Off Date Divisional Balance Sheet exceeds the Modified
Reference Amount, then the Purchase Price shall be adjusted upward in
an amount equal to the amount of such excess, and the Purchaser shall,
within three Business Days of such determination, pay the amount of
such excess to the BOC Group by wire transfer in immediately available
funds.
(h) Net Cash Flow Purchase Price Adjustment: The Cut-Off Date Carve-
---------------------------------------
Out Balance Sheet and the Closing Date Carve-Out Financial Statements shall
be deemed final for the purposes of this Section 2.05 upon the earlier of
(i) the failure of the Purchaser to notify the BOC Group of a dispute
within 20 Business Days of the BOC Group's delivery of the relevant
financial statements to the Purchaser or (ii) the resolution of all
disputes pursuant to Section 2.05(e)(iii) and (v). Within three Business
Days of the later of the Cut-Off Date Carve-Out Balance Sheet and the
Closing Date Carve-Out Financial Statements being deemed final, a Purchase
Price adjustment shall be made as follows:
(A) in the event that Net Cash Flow is a positive number,
then the Purchase Price shall be adjusted downward in an amount
equal to the absolute value of Net Cash Flow, and the BOC Group
shall, within three Business Days of such determination (but in
no event prior to the Closing Date), pay such amount to the
Purchaser by wire transfer in immediately available funds; or
(B) in the event that Net Cash Flow is a negative number,
then the Purchase Price shall be adjusted upward in an amount
equal to the absolute value of Net Cash Flow, and the Purchaser
shall, within three Business Days of such determination (but in
no event prior to the
24
Closing Date), pay such amount to the BOC
Group by wire transfer in immediately available funds.
The BOC Group and the Purchaser agree that there shall be no double
counting of items in the Purchase Price adjustments under Section 2.05(g) and
this Section 2.05(h). For purposes of the financial statements delivered under
this Section 2.05 (x), there shall be no reversals of tax reserves and (y) the
basis of reference for determining foreign exchange rates shall still be used
consistently.
The current transfer pricing policies of the Ohmeda Business and the
current accounting policies with respect to accruals and reserves of the Ohmeda
Business shall be maintained in effect through the Closing, except as may be
agreed in writing by the Purchaser, Instrumentarium and Baxter and except as
provided in the preceding paragraph. During the Interim Period the BOC Group
shall not and shall not permit its Affiliates to make capital and other
extraordinary expenditures not budgeted in the budget attached hereto as Exhibit
5.01(c)(viii) without the written consent of the Purchaser, Instrumentarium and
Baxter.
For purposes of this Section 2.05, the following terms have the
following meanings:
"NET CASH FLOW" means (w) the amount, if any, of the Tax Adjusted
Operating Profit of the Business reflected on the Closing Date Carve-Out
Profit and Loss Statement, minus (x) the amount, if any of the absolute
value of the Tax Adjusted Operating Loss of the Business reflected on the
Closing Date Carve-Out Profit and Loss Statement, plus (y) the amount, if
any, by which the Capital Employed in the Business on the Cut-Off Date
Carve-Out Balance Sheet exceeds the Capital Employed in the Business on the
Closing Date Carve-Out Balance Sheet, minus (z) the amount, if any, by
which the Capital Employed in the Business on the Closing Date Carve-Out
Balance Sheet exceeds the Capital Employed in the Business on the Cut-Off
Date Carve-Out Balance Sheet.
"TAX ADJUSTED OPERATING PROFIT" means profit from operations of the
Business, as defined in the special purpose accounts of the Ohmeda Business
for the fiscal year ended as of September 30, 1997, as adjusted to remove
profits from discontinued operations and to account for 100% of the
development costs incurred in the INO Development Program, less Taxes
resulting therefrom (calculated at an assumed tax rate equal to 28%).
"TAX ADJUSTED OPERATING LOSS" means loss from operations of the
Business, as defined in the special purpose accounts of the Ohmeda Business
for the fiscal year ended as of September 30, 1997, as adjusted to remove
profits from discontinued
25
operations and to account for 100% of the development costs incurred in the
INO Development Program, net of any Tax benefit resulting therefrom
(calculated at an assumed tax rate equal to 28%).
"CAPITAL EMPLOYED" means the capital employed in the Business as of
the date in question, calculated on a basis consistent with the
calculations used in the preparation of the Financial Statements.
(i) Interest. Any payment required to be made by the BOC Group
--------
or the Purchaser pursuant to Section 2.05(f) or 2.05(g) shall bear interest
from the Closing Date through the date of payment at an interest rate equal
to the London Interbank Offered Rate for three-month Eurodollar deposits in
effect from time to time ("LIBOR").
(j) Maximum Additional Consideration. The aggregate amount of
--------------------------------
additional consideration payable to the BOC Group under this Agreement and
under the MSD/SPD Purchase Agreement, the PPD Purchase Agreement and the
INO Purchase Agreement (including additional consideration payable pursuant
to the Purchase Price adjustments in this Section 2.05 and in Section 2.05
of each of such other agreements and pursuant to Section 5.20 of the INO
Purchase Agreement), when aggregated with the total initial consideration
payable to the BOC Group pursuant to this Agreement, the MSD/SPD Purchase
Agreement, the PPD Purchase Agreement and the INO Purchase Agreement (but
taking account of any reduction in such consideration pursuant to any of
such agreements), shall not exceed US$1 less than the amount which would
require the BOC Group to obtain shareholder approval under the Rules of The
London Stock Exchange (or such greater amount as The London Stock Exchange
may agree).
(k) Access. The Purchaser shall provide the BOC Group and the
------
BOC Group's Accountants with full access to the books, records, facilities
and employees of the Business, and shall cooperate fully with the BOC Group
and the BOC Group's Accountants, to the extent required by the BOC Group
and the BOC Group's Accountants in order to prepare the financial
statements required by this Section 2.05. The BOC Group shall provide the
Purchaser and the Purchaser's Accountants with full access to the BOC
Group's Accountants, and to the books, records, facilities and employees of
the BOC Group (and, so long as the Purchaser complies with the standard
procedures of the BOC Group's Accountants relating to access to their audit
work papers, the BOC Group shall cause the BOC Group's Accountants to
provide to the Purchaser and the Purchaser's Accountants full access to
such audit work papers) (including those relating to the financial
statements required by this Section 2.05), and shall cooperate fully with
the Purchaser and the Purchaser's Accountants, to the extent
26
required by the Purchaser and the Purchaser's Accountants in order to
investigate any potential dispute subject to this Section 2.05.
SECTION 2.06. Closing. Subject to the terms and conditions of this
-------
Agreement, the sale and purchase of the Shares and the Assets and the assumption
of the Assumed Liabilities contemplated by this Agreement shall take place at a
closing (the "CLOSING") to be held at the offices of Shearman & Sterling, 599
Lexington Avenue, New York, New York at 10:00 A.M. New York time on the fifth
Business Day following the satisfaction of the conditions to the obligations of
the parties set forth in Sections 8.01(b) and 8.02(b), or at such other place or
at such other time or on such other date as the BOC Group and the Purchaser may
mutually agree upon in writing, but in any event concurrently (subject to
Section 2.01) with the closings under the MSD/SPD Purchase Agreement, the PPD
Purchase Agreement and the INO Purchase Agreement (the day on which the Closing
takes place being the "CLOSING DATE").
SECTION 2.07. Closing Deliveries by the BOC Group. At the Closing,
-----------------------------------
the BOC Group shall deliver or cause to be delivered to the Purchaser:
(a) executed counterparts of the Ancillary Agreements;
(b) bills of sale, and such other instruments as may be reasonably
requested by the Purchaser to transfer the Assets to the Purchaser or one
or more of its direct or indirect wholly owned subsidiaries or to evidence
such transfer on the public records;
(c) certificates representing the Shares, duly endorsed in blank or
accompanied by stock powers or other applicable documents of transfer duly
executed in blank;
(d) a receipt for the Purchase Price;
(e) a certificate complying with the Code and Treasury Regulations, in
form and substance satisfactory to the Purchaser, duly executed and
acknowledged, certifying that the transactions contemplated hereby are
exempt from withholding under Section 1445 of the Code; and
(f) the certificates and other documents required to be delivered
pursuant to Section 8.02.
SECTION 2.08. Closing Deliveries by the Purchaser. At the Closing,
-----------------------------------
the Purchaser shall deliver to the BOC Group:
27
(a) the Purchase Price by wire transfer of immediately available
funds to the bank account or bank accounts specified by the BOC Group in a
written notice delivered to the Purchaser at least three Business Days
prior to the Closing Date;
(b) executed counterparts of the Ancillary Agreements;
(c) such documents as may be reasonably requested by the BOC Group to
effect the assumption by the Purchaser of the Assumed Liabilities; and
(d) the certificates and other documents required to be delivered
pursuant to Section 8.01.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BOC GROUP
Except as set forth in the referenced section of the Disclosure
Schedule, the BOC Group hereby represents and warrants to the Purchaser as
follows:
SECTION 3.01. Subsidiaries of the Business; Discontinued Operations.
-----------------------------------------------------
(a) Section 3.01 of the Disclosure Schedule sets forth, with respect to each
Subsidiary, its type of entity, the jurisdiction of its incorporation or
organization, its authorized capital stock, partnership capital or equivalent
and the number and type of its issued and outstanding shares of capital stock,
partnership interests or similar ownership interests.
(b) Section 3.01(b) of the Disclosure Schedule sets forth a list of
all real property previously owned or occupied by the Ohmeda Business disposed
in the 10 years prior to the date hereof and all businesses previously conducted
by the Ohmeda Business discontinued in the 10 years prior to the date hereof.
SECTION 3.02. Incorporation and Authority of the BOC Group and the
----------------------------------------------------
BOC Companies. The BOC Group and each BOC Company is a corporation or other
- -------------
legal entity duly incorporated or organized, validly existing and, to the extent
applicable, in good standing under the laws of its jurisdiction of incorporation
or organization and has all necessary corporate power and authority to enter
into this Agreement and the Ancillary Agreements to which it is to be a party,
to carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Each BOC Company has the
corporate power and authority to own, operate or lease the properties and assets
now owned, operated or leased by it and to carry on that portion of the Business
currently conducted by such BOC Company, except for failures to have such power
and authority that do not,
28
individually or in the aggregate, have a Material Adverse Effect. The execution
and delivery of this Agreement by the BOC Group and each of the Ancillary
Agreements by either the BOC Group or each BOC Company which is a party thereto,
the performance by the BOC Group and each BOC Company of its obligations
hereunder and thereunder, and the consummation by the BOC Group and each BOC
Company of the transactions contemplated hereby and thereby have been (or, with
respect to the BOC Companies, on the Closing Date will be) duly authorized by
all requisite corporate action (including all requisite shareholder action) on
the part of the BOC Group and each BOC Company, respectively. This Agreement has
been duly executed and delivered by the BOC Group, and upon their execution and
their delivery the Ancillary Agreements will be duly executed and delivered by
either the BOC Group or each BOC Company that is a party thereto, and (assuming
due authorization, execution and delivery by the Purchaser) this Agreement
constitutes, and upon their execution the Ancillary Agreements will constitute,
legal, valid and binding obligations of, in the case of this Agreement, the BOC
Group, and in the case of the Ancillary Agreements, either the BOC Group or each
BOC Company that is a party thereto, enforceable against the BOC Group and each
BOC Company that is a party thereto in accordance with their respective terms.
SECTION 3.03. Capital Stock of the Subsidiaries; Title to Transferred
-------------------------------------------------------
Assets. (a) Except as set forth in Section 3.03(a) of the Disclosure Schedule,
- ------
there are no options, warrants, convertible securities or other rights,
agreements, arrangements or commitments relating to the capital stock of, or
equity interests in, any of the Subsidiaries obligating the BOC Group or any of
its subsidiaries to issue or sell any shares of capital stock of, or equity
interests in, any Subsidiary. The Shares constitute all of the issued and
outstanding shares of capital stock of each MDD Non-U.S. Subsidiary and are
owned of record and beneficially solely by the BOC Group or a wholly owned
subsidiary of the BOC Group, free and clear of all Encumbrances. All of the
issued and outstanding shares of capital stock of each subsidiary listed on
Exhibit D (the "SECOND TIER SHARES") are owned of record and beneficially,
directly or indirectly, by an MDD Non-U.S. Subsidiary, in each case free and
clear of all Encumbrances. All of the Shares and the Second Tier Shares have
been duly authorized and validly issued and are fully paid and nonassessable and
were not issued in violation of any preemptive rights. Except as set forth in
Section 3.03(a) of the Disclosure Schedule, there are no voting trusts,
stockholder agreements, proxies or other agreements or understandings in effect
with respect to the voting or transfer of any of the Shares or the Second Tier
Shares.
(b) Except as described in Section 3.03(b) of the Disclosure Schedule
and except as would not have a Material Adverse Effect, as of the Closing the
BOC Companies will own good and marketable title to, lease under valid leases or
have the legal right to use, all the Transferred Assets, free and clear of all
Encumbrances other than Permitted Encumbrances.
29
SECTION 3.04. No Conflict. Assuming that all consents, approvals,
-----------
authorizations and other actions described in Section 3.05 of the Disclosure
Schedule have been obtained and all filings and notifications described in
Section 3.05 have been made, and except as set forth in Section 3.04 of the
Disclosure Schedule or as may result from any facts or circumstances relating
solely to the Purchaser, the execution, delivery and performance of this
Agreement by the BOC Group and the Ancillary Agreements by the BOC Group or the
BOC Companies parties thereto do not and will not (a) violate or conflict with
the articles of association or memorandum of association of the BOC Group or the
certificate of incorporation or by-laws (or other similar organizational
documents) of any BOC Company, (b) conflict with or violate any Law or
Governmental Order applicable to the BOC Group, any BOC Company or the Business,
(c) result in any breach of, or constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any Material Contract or any other note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument relating to or included in the Assets or to which the BOC Group or
any BOC Company is a party or by which any of the Shares, the Assets or any of
the assets owned by the Subsidiaries is bound, or (d) result in the creation of
any Encumbrance on the Shares, any of the Assets or any of the assets owned by
the Subsidiaries, except, with respect to clauses (b), (c) and (d), in any such
case for any violations, conflicts, breaches, defaults or other matters which
would not have a Material Adverse Effect or prevent or materially delay the
consummation by the BOC Group and the BOC Companies of the transactions
contemplated hereby.
SECTION 3.05. Consents and Approvals. The execution, delivery and
----------------------
performance of this Agreement by the BOC Group and the Ancillary Agreements by
the BOC Group or the BOC Companies parties thereto do not and will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Governmental Authority, except (a) the requirements of any
applicable antitrust or merger control Laws and regulations, (b) where failure
to obtain such consent, approval, authorization or action, or to make such
filing or notification, would not prevent or materially delay the consummation
by the BOC Group and the BOC Companies of the transactions contemplated by this
Agreement and the Ancillary Agreements and would not have, individually or in
the aggregate, a Material Adverse Effect, (c) as disclosed in Section 3.05 of
the Disclosure Schedule and (d) as may be necessary as a result of any facts or
circumstances relating solely to the Purchaser or its Affiliates.
SECTION 3.06. Financial Information. (a) Attached hereto as
---------------------
Schedule 3.06(a) are true and complete copies of audited special-purpose
accounts of the Ohmeda Business for each of the fiscal years ended as of
September 30, 1997, 1996, 1995 and 1994, accompanied by the reports thereon of
the BOC Group's Accountants (collectively, the "FINANCIAL STATEMENTS"). The
Financial Statements (i) were prepared in accordance with the
30
books of account and other financial records of the Ohmeda Business and the
applicable accounting and valuation principles set forth in the Ohmeda Finance
Manual and the BOC Group Finance Manual in effect at the relevant time and (ii)
except as specifically disclosed in paragraph (a) ("Accounting Convention") in
the "Principal accounting policies" disclosure which is part of the Financial
Statements, have been prepared in accordance with U.K. GAAP and fairly present
the capital employed, profit/(loss) from operations and net cash flow from
operations of the Ohmeda Business as of, and for the periods ended on, such
dates.
(b) Attached hereto as Schedule 3.06(b) are true and complete copies
of the capital employed and profit and loss statements of MDD on a product basis
for the fiscal year ended as of September 30, 1997 (collectively, the
"DIVISIONAL FINANCIAL STATEMENTS"). The Divisional Financial Statements were
prepared in accordance with the books of account and other financial records of
the Ohmeda Business on a product basis and the applicable accounting and
valuation principles set forth in the Ohmeda Finance Manual and the BOC Group
Finance Manual in effect at the relevant time and the Ohmeda product basis
allocation principles in effect at the relevant time, which allocation
principles Ohmeda management believes to be reasonable for the construction of
divisional financial statements and which have been applied on a consistent
basis, and based thereon the Divisional Financial Statements fairly present the
capital employed and profit/(loss) from operations of MDD (as described in the
Descriptive Memorandum) as of, and for the period ended, September 30, 1997.
(c) Attached hereto as Schedule 3.06(c) are true and complete copies
of the capital employed and profit and loss statements of Ohmeda Center for the
fiscal year ended as of September 30, 1997 (collectively, the "OHMEDA CENTER
FINANCIAL STATEMENTS"). The Ohmeda Center Financial Statements were prepared in
accordance with the books of account and other financial records of the Ohmeda
Business and the applicable accounting and valuation principles set forth in the
Ohmeda Finance Manual and the BOC Group Finance Manual in effect at the relevant
time and the Ohmeda product basis allocation principles in effect at the
relevant time, which allocation principles Ohmeda management believes to be
reasonable for the construction of divisional financial statements and which
have been applied on a consistent basis, and based thereon the Ohmeda Center
Financial Statements fairly present the capital employed and profit/(loss) from
operations of Ohmeda Center (as described in the Descriptive Memorandum) as of,
and for the period ended, September 30, 1997.
(d) Attached hereto as Schedule 3.06(d) is a reconciliation of the
Divisional Financial Statements and the Ohmeda Center Financial Statements to
the Financial Statements, which reconciles the capital employed and the
profit/(loss) from the operations of MDD and Ohmeda Center and the capital
employed and the profit/(loss) from the operations of MSD, SPD and PPD to that
of the Ohmeda Business.
31
(e) Attached hereto as Schedule 3.06(e) is a true and complete copy
of the Reference Balance Sheet. The Reference Balance Sheet (i) has been
prepared in a manner consistent with the preparation of the Audited Balance
Sheet, (ii) fairly presents the capital employed (net of working capital) of the
Ohmeda Business as of December 31, 1997 plus the average of the month-end
working capital balances of the Ohmeda Business as of the end of each of
October, November and December 1997, and (iii) reflects all of the Transferred
Assets and the transferred assets under the MSD/SPD Purchase Agreement, the PPD
Purchase Agreement and the INO Purchase Agreement and none of the Excluded
Assets or Excluded Liabilities or excluded assets or excluded liabilities under
the MSD/SPD Purchase Agreement, the PPD Purchase Agreement and the INO Purchase
Agreement (other than the Excluded Liabilities described in clauses (k) through
(q) of the definition of "Excluded Liabilities" in Section 1.01 and the
corresponding clauses of the MSD/SPD Purchase Agreement, the PPD Purchase
Agreement and the INO Purchase Agreement).
(f) Attached hereto as Schedule 3.06(f) is a true and complete copy
of the Reference Divisional Balance Sheet. The Reference Divisional Balance
Sheet (i) has been prepared on a product basis in a manner consistent with the
preparation of the Divisional Financial Statements utilizing the Ohmeda product
basis allocation principles in effect at the relevant time, which allocation
principles Ohmeda management believes to be reasonable for the construction of
divisional financial statements and which have been applied on a consistent
basis, (ii) based on such allocations, fairly presents the capital employed (net
of working capital) of MDD as of December 31, 1997 plus the average of the
month-end working capital balances of MDD as of the end of each of October,
November and December 1997, and (iii) reflects all of the Transferred Assets and
none of the Excluded Assets or Excluded Liabilities (other than the Excluded
Liabilities described in clauses (k) through (q) of the definition of "Excluded
Liabilities" in Section 1.01).
(g) Attached hereto as Schedule 3.06(g) is a true and complete copy
of the estimated divisional balance sheet of Ohmeda Center as of December 31,
1997 (the "REFERENCE OHMEDA CENTER DIVISIONAL BALANCE SHEET"). The Reference
Ohmeda Center Divisional Balance Sheet (i) has been prepared in a manner
consistent with the preparation of the Divisional Financial Statements utilizing
the Ohmeda product basis allocation principles in effect at the relevant time,
which allocation principles Ohmeda management believes to be reasonable for the
construction of divisional financial statements and which have been applied on a
consistent basis, and (ii) based on such allocations, fairly presents the
Capital Employed (net of working capital) of Ohmeda Center as of December 31,
1997 plus the average of the month-end working capital balances of Ohmeda Center
as of the end of each of October, November and December 1997.
32
(h) True and complete copies of each of the Ohmeda Finance Manual
and the BOC Group Finance Manual in effect as of September 30, 1997 have been
delivered to the Purchaser prior to the date hereof.
SECTION 3.07. Absence of Undisclosed Liabilities, Etc. As of the
---------------------------------------
Cut-Off Date, there shall be no liabilities of the Business whether or not
required to be reflected on a balance sheet prepared in accordance with U.K.
GAAP, except (a) liabilities set forth in or otherwise disclosed in the
Disclosure Schedule, (b) liabilities reflected or reserved against in the
Closing Date Carve-Out Balance Sheet or referred to in the notes thereto, (c)
Excluded Liabilities and (d) liabilities which would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.08. Absence of Certain Changes or Events. (a) Except as
------------------------------------
disclosed in Section 3.08(a) of the Disclosure Schedule, since the date of the
Audited Balance Sheet, the Business has been conducted in the ordinary course
consistent with past practice, in substantially the same manner as it would have
been conducted if the Transactions had not been contemplated, and except as
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, there has not been with respect to the Business:
(i) Any change in the condition and repair of the physical
properties and assets of the Business such that such condition and repair
are inconsistent with the uses in which such properties and assets are
presently employed, ordinary wear and tear excepted;
(ii) A failure to replenish inventories and supplies of the Business
in a manner consistent with past practice in the ordinary course of
business;
(iii) A purchase commitment of the Business inconsistent with past
practice or in excess of the normal, ordinary and usual requirements;
(iv) Any acquisition (by merger, consolidation, or acquisition of
stock or assets) by any BOC Company of any corporation, partnership,
limited liability company, or other business organization or division
thereof related to the Business;
(v) Any cancellation or waiver of any claim or right of substantial
value to the Business; or
(vi) Any change or event of a kind described in Section 5.01(d).
(b) Except as disclosed in Section 3.08(b) of the Disclosure
Schedule, since the date of the Audited Balance Sheet, there has not been any
event or occurrence which has
33
had, or could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect other than (i) changes or effects resulting from the
transactions contemplated by this Agreement, (ii) currency fluctuations, (iii)
changes in general economic, regulatory or political conditions, (iv) changes in
the levels of financial markets or (v) other changes that affect the healthcare
industry in general.
SECTION 3.09. Litigation. There are no Actions pending or, to the
----------
knowledge of the BOC Group, threatened against the Business, that are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect or
prevent or materially delay the consummation by the BOC Group or the BOC
Companies of the transactions contemplated by this Agreement and the Ancillary
Agreements. None of the BOC Group, any BOC Company or any of the assets of the
Business is subject to any Governmental Order having, individually or in the
aggregate, a Material Adverse Effect. To the knowledge of the BOC Group, there
exist no facts which could reasonably be expected to give rise to any Action or
Governmental Order of a kind described in this Section 3.09. Section 3.09 of
the Disclosure Schedule identifies all pending or, to the knowledge of the BOC
Group, threatened Actions which affect or may affect the Business and which
involve or reasonably could be expected to involve claims in excess of
US$1,000,000 or its equivalent.
SECTION 3.10. Compliance with Laws; Certain Regulatory Matters. (a)
------------------------------------------------
Except as disclosed in Section 3.10(a) of the Disclosure Schedule or as would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, the Business has been and is being conducted in compliance with
all Laws and Governmental Orders applicable to the Business (as such Laws and
Governmental Orders are interpreted as of the date of the conduct in question by
the relevant Governmental Authority), the Real Property complies with all Laws
and Governmental Orders applicable thereto (as such Laws and Governmental Orders
are interpreted as of the date of the conduct or circumstance in question by the
relevant Governmental Authority), and neither the BOC Group nor any BOC Company
has received any written notice to the effect that the Business or the Real
Property is not in compliance with any applicable Law.
(b) Except as disclosed in Section 3.10(b) of the Disclosure
Schedule or as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, (i) no Healthcare Product is defective in
a manner so as not to meet any applicable standards promulgated by any Medical
Product Regulatory Authority, and, to the knowledge of the BOC Group, no
facility in which any Healthcare Product is manufactured fails to meet any
applicable standards promulgated by any Medical Product Regulatory Authority,
and (ii) there have been no recalls, field notifications or seizures ordered or,
to the knowledge of the BOC Group, threatened by any Medical Product Regulatory
Authority with respect to any Healthcare Product. Subject to normal and
customary warranty repair and replacement, products of the Business when shipped
and products of the Business in inventory were not
34
mislabeled and conformed to product specifications as set forth in the
Business's literature concerning such products; provided that the representation
and warranty contained in this sentence shall not serve as the basis for an
indemnification claim by a Purchaser Indemnified Party pursuant to Section
9.03(a)(i) for Losses resulting from a personal injury claim.
SECTION 3.11. Licenses and Permits. Except as set forth in Section
--------------------
3.11 of the Disclosure Schedule or as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, the Business (a)
holds all governmental licenses, permits and authorizations, including all
Environmental Permits necessary for the current use, occupancy and operation of
the Business, and is in compliance with all such licenses, permits and
authorizations and (b) has made all required filings with, or notifications to,
all Medical Product Regulatory Authorities pursuant to applicable requirements
of all Laws applicable to the Business.
SECTION 3.12. Environmental Matters. (a) Except as set forth in
---------------------
Section 3.12(a) of the Disclosure Schedule or as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect:
(i) There are no underground or aboveground storage tanks or any
surface impoundments, septic tanks, pits, sumps or lagoons in which
Hazardous Materials are being or since September 30, 1994 have been
treated, stored or disposed on any of the Real Property;
(ii) The BOC Group is not conducting, and since September 30, 1994
has not undertaken or completed, or paid, reimbursed or been subject to any
claim for payment or reimbursement of the cost of, any remedial action
relating to any release or threatened release at the Real Property or at
any other site, location or operation pursuant to the order of any
Governmental Authority or the requirements of any Environmental Law or
Environmental Permit;
(iii) There are no circumstances or conditions at or arising out of
any Owned Real Property or Leased Real Property, including but not limited
to on-site or off-site disposal or other release of Hazardous Materials,
which may give rise to any environmental liabilities and costs that would
have a Material Adverse Effect;
(iv) There are no Hazardous Materials in any inactive, closed or
abandoned storage or disposal areas or facilities on assets, properties or
installations currently owned or operated by the BOC Group in connection
with the Business, and no investigation or review with respect to such
matters is pending or, to the knowledge of the BOC Group, threatened, nor
has any Governmental Authority or other third party provided written notice
of an intention to conduct the same;
35
(v) The Business is in material compliance with all applicable
Environmental Laws and there are no material liabilities under any
Environmental Law with respect to the Business;
(vi) There are no outstanding material orders, decrees, judgments,
agreements or notices, nor any actions, suits, proceedings or
investigations pending or, to the knowledge of the BOC Group, threatened,
relating to compliance with or liability under any Environmental Law
affecting the Business; and
(vii) The BOC Group has not received notice of any material violation
or alleged violation of, or any material liability under, any Environmental
Law in connection with the Business since September 30, 1994.
(b) None of the Real Property is listed, or proposed for listing,
on the United States National Priorities List under the United States Federal
Comprehensive Environmental Response, Compensation and Liability Act.
(c) The BOC Group has provided the Purchaser with true and complete
copies of all of the environmental assessment reports prepared with respect to
the Business, each of which is listed in Section 3.12(c) of the Disclosure
Schedule.
(d) Neither the execution of this Agreement nor the consummation of
the transactions contemplated hereby will require notice to or consent of
Governmental Authorities or third parties pursuant to any applicable
Environmental Law or Environmental Permit, except as set forth in Section
3.12(d) of the Disclosure Schedule.
SECTION 3.13. Receivables. Except to the extent reserved on the
-----------
Reference Divisional Balance Sheet and the Closing Date Carve-Out Balance Sheet,
all receivables reflected on such balance sheets arose, or will have arisen,
from the sale of inventory or services in the ordinary course of business, and
constitute, or will constitute, valid claims of the Business not subject to any
valid claims of setoff or other defenses or counterclaims other than normal cash
discounts, sales commissions or returns in the ordinary course of the Business
consistent with past practice, and the Business owns, or will own, all such
receivables, free and clear of all Encumbrances other than Permitted
Encumbrances.
SECTION 3.14. Inventories. Except to the extent reserved on the
-----------
Reference Divisional Balance Sheet and the Closing Date Carve-Out Balance Sheet,
the values at which all inventories are carried on such balance sheets reflect
the historical inventory valuation policy of the Business as set forth in the
Ohmeda Finance Manual and the BOC Group Finance Manual in effect on the date of
the Audited Balance Sheet, and the Business owns, or will own, such inventories,
free and clear of all Encumbrances other than Permitted Encumbrances.
36
There has been no material change in inventory management and/or production
planning for the Business from July 1, 1997 through the date of this Agreement.
SECTION 3.15. Intellectual Property. (a) Section 3.15 of the
---------------------
Disclosure Schedule sets forth a list of (i) all patents, patent applications,
trademark applications and trademark registrations owned by the BOC Companies
relating to the Business and (ii) all patents, patent applications, trademark
applications and trademark registrations licensed to the BOC Companies relating
to the Business by a third party.
(b) Except as would not have, individually or in the aggregate, a
Material Adverse Effect, (i) neither the BOC Group nor any BOC Company has
received any written claim or written notice from any Person that use of any
Intellectual Property in the Business infringes upon the rights of any other
Person, nor (ii) to the knowledge of the BOC Group, does the use of any
Intellectual Property in the Business infringe upon the rights of any other
Person.
(c) All the Owned Intellectual Property is owned by the BOC Group
or one of its Affiliates, free and clear of any Encumbrance other than Permitted
Encumbrances.
SECTION 3.16. Material Contracts. (a) Section 3.16 of the
------------------
Disclosure Schedule lists all material contracts relating to the Business (the
"MATERIAL CONTRACTS") in effect as of the date of this Agreement to which any
BOC Company is a party, including:
(i) any contract or agreement (excluding routine checking account
overdraft agreements involving petty cash amounts) under which any
Subsidiary has created, incurred, assumed or guaranteed (or may create,
incur, assume or guarantee) indebtedness for borrowed money or under which
any BOC Company has granted a security interest or lien on any assets of
the Business, whether tangible or intangible, to secure such indebtedness;
(ii) any lease of personal property involving any annual expense in
excess of US$250,000 that is not cancelable by the Business within 90 days;
(iii) any contract or agreement containing covenants limiting the
freedom of the Business to engage in any line of business or to compete
with any Person;
(iv) any contract or agreement pursuant to which any material Owned
Intellectual Property or material Licensed Intellectual Property is
licensed or sublicensed to a third party;
37
(v) any contract or agreement pursuant to which the Business has
the right to use any material Licensed Intellectual Property;
(vi) any contract or agreement granting to any Person any right to
market, distribute or resell any Healthcare Product, or to represent the
Business with respect to any such Healthcare Product, or act as agent for
the Business in connection with the marketing, distribution or sale of any
Healthcare Product, that, in any case, is not cancelable by the Business
within 90 days;
(vii) any contract or agreement between or among a BOC Company, on
the one hand, and the BOC Group or any of its Affiliates, on the other hand
(other than contracts and agreements between Subsidiaries), and relating to
the Business, which are identified as such in Section 3.16 of the
Disclosure Schedule;
(viii) any contract or agreement establishing any joint venture,
strategic alliance or other collaboration that is material to the Business;
(ix) any lease of Real Property involving annual expense in excess
of US$250,000 that is not cancelable by the Business within 90 days;
(x) any contract or agreement for the purchase or sale by a BOC
Company of products or services for the Business during the fiscal year
ended September 30, 1997 that resulted in, or during the fiscal year ending
September 30, 1998 reasonably is expected to result in, purchases or sales
by the BOC Companies in excess of US$1,000,000 and that is not cancelable
by the Business within 90 days;
(xi) any sole source supply contract for the purchase of a raw
material or a component that is otherwise not generally available and that
is used in the manufacture of any Healthcare Product, which Healthcare
Product during the fiscal year ended September 30, 1997 had sales in excess
of US$1,000,000;
(xii) any contract or agreement between the BOC Group and any
director, officer or senior manager of any Subsidiary, other than contracts
or agreements listed in Section 3.18(a) of the Disclosure Schedule; and
(xiii) any contract or agreement relating to the Business that was
not entered into in the ordinary course of business.
(b) The BOC Group has previously made available to the Purchaser
true and complete copies of the Material Contracts.
38
(c) Except as set forth in Section 3.16(c) of the Disclosure
Schedule, no BOC Company is (and, to the knowledge of the BOC Group, no other
party is) in material breach or material violation of, or material default
under, any of the Material Contracts. Except as set forth in Section 3.16(c) of
the Disclosure Schedule, each Material Contract is a valid agreement,
arrangement or commitment of the BOC Company that is a party thereto,
enforceable against such BOC Company in accordance with its terms and, to the
knowledge of the BOC Group, is, as of the date of this Agreement and will not,
as a result of the transactions contemplated hereby, cease to be, a valid
agreement, arrangement or commitment of each other party thereto, enforceable in
all material respects against each such party in accordance with its terms.
SECTION 3.17. Real Property. The Owned Real Property is, and the
-------------
leasehold interests with respect to the Leased Real Property are, owned by the
BOC Group or a BOC Company free and clear of Encumbrances other than Permitted
Encumbrances.
SECTION 3.18. Employee Benefit Matters. (a) Set forth in Section
------------------------
3.18 of the Disclosure Schedule is a list of each "employee benefit plan" (as
defined in Section 3(3) of ERISA) and all other material employee benefit,
bonus, incentive, deferred compensation, pension, welfare, termination
indemnities and long service leave programs, stock purchase, stock option,
severance, change in control and fringe benefit plans, programs and agreements
maintained or contributed to by any BOC Company for current or former employees
or directors of the Business, or with respect to which any BOC Company could
incur any material liability (other than any of the foregoing that are imposed
by statute, and are not separately maintained by any BOC Company) (collectively,
the "BOC BENEFIT PLANS"). No BOC Benefit Plan is a multiemployer plan within
the meaning of Section 4001(a)(3) of ERISA. With respect to each BOC Benefit
Plan, the BOC Group has made available to the Purchaser a true and complete copy
of the following, if applicable: (i) the most recent summary plan description
for each BOC Benefit Plan for which a summary plan description is required, (ii)
such BOC Benefit Plan, and each trust agreement relating to such BOC Benefit
Plan, (iii) in the case of each BOC Benefit Plan applicable to United States
Employees, the most recent annual report (Form 5500) filed with the IRS, and
(iv) the most recent determination letter issued by the IRS with respect to any
BOC Benefit Plan qualified under Section 40l(a) of the Code. Each BOC Benefit
Plan complies, and has been administered to comply, with all requirements of Law
applicable thereto, and there has been no notification by any Governmental
Authority questioning or challenging such compliance, except where any such
violation or failure to comply would not have, individually or in the aggregate,
a Material Adverse Effect. There are no actions, suits or claims pending (other
than routine claims for benefits) or, to the knowledge of the BOC Group,
threatened with respect to any BOC Benefit Plan or against the assets of any BOC
Benefit Plan, except where any such action, suit or claim would not have,
individually or in the aggregate, a Material Adverse Effect. No BOC Company has
incurred or might reasonably expect to incur any liability (whether direct or
39
indirect, absolute or contingent) under ERISA, the Code or any other Law
applicable to any BOC Benefit Plan, except for any such liability that would not
have, individually or in the aggregate, a Material Adverse Effect and except for
any such liability that is paid or incurred in the ordinary course pursuant to
the terms of such BOC Benefit Plan. Except as disclosed in Section 3.18 of the
Disclosure Schedule, no BOC Company has any material obligations under any of
the BOC Benefit Plans which are welfare plans or otherwise to provide health or
death benefits to or in respect of former employees, except as specifically
required by applicable Law. Each BOC Benefit Plan which is intended to qualify
under Section 401 of the Code (or under the corresponding provision of the tax
code of Puerto Rico) has received a favorable determination letter from the IRS
and, with respect to any such BOC Benefit Plan applicable to Caribe employees,
the Department of Hacienda in Puerto Rico with respect to such qualification
(except that, in the case of The BOC Group Pension Plan, an application to
obtain such letter from the Department of Hacienda will be filed promptly after
the date hereof, and the BOC Group shall use its best efforts to obtain such
letter prior to the Closing Date) and nothing has occurred since the date of any
such letter that has had or is likely to have an adverse effect on such
qualification, except where a loss of such qualification would not have,
individually or in the aggregate, a Material Adverse Effect. Section 3.18 of the
Disclosure Schedule sets forth a list of all persons who are (i) active
employees of the Business, (ii) employees on a leave of absence or (iii) former
employees of a BOC Company who are entitled to enhanced severance benefits under
a BOC Benefit Plan (and such list shall be updated within 30 days after the
Closing Date).
(b) With respect to the BOC Benefit Plans, to the knowledge of the
BOC Group, no event has occurred and there exists no condition or set of
circumstances in connection with which any BOC Company could be subject to any
liability under the terms of such BOC Benefit Plans, ERISA, the Code or any
other applicable Law which would have, individually or in the aggregate, a
Material Adverse Effect, except for any such liability that is paid or incurred
in the ordinary course pursuant to the terms of a BOC Benefit Plan.
(c) Except as would not have, individually or in the aggregate, a
Material Adverse Effect, with respect to each BOC Benefit Plan that is subject
to or governed by the law of any jurisdiction other than the United States or
any State or Commonwealth of the United States (each, a "FOREIGN BOC PLAN"):
(i) all employer and employee contributions to each separately
funded Foreign BOC Plan required by Law or by the terms of such Foreign BOC
Plan have been made, or if applicable, accrued in accordance with normal
accounting practices prevailing in the country where such plan is
established;
40
(ii) all payments (including premiums due) and all employer and
employee contributions required to have been collected in respect of each
insured Foreign BOC Plan have been paid when due;
(iii) all amounts required to be reserved under each book reserved
Foreign BOC Plan have been so reserved in accordance with normal accounting
practices prevailing in the country where such plan is established;
(iv) each Foreign BOC Plan required to be registered with a
Governmental Authority has been registered, has been maintained in good
standing with the appropriate Governmental Authorities and has been
maintained and operated in accordance with its terms and applicable Law;
(v) the fair market value of the assets of each funded Foreign BOC
Plan (other than a Shared Plan) that is a defined benefit pension plan, and
the liability of each insurer for any Foreign BOC Plan (other than a Shared
Plan) that is a defined benefit pension plan and is funded through
insurance or the book reserve established for any Foreign BOC Plan (other
than a Shared Plan) that is a defined benefit pension plan, together with
any accrued contributions, is sufficient to procure or provide for the
liability for accrued benefits (including, in the case of any such plan
that is maintained for Foreign Employees in Japan, any benefits that would
be payable under such plan on a voluntary termination of employment by all
such Foreign Employees as of the Cut-Off Date) as of the Cut-Off Date with
respect to those current and former employees of the Business that
participate in such plan according to the actuarial or other applicable
assumptions and valuations most recently used to determine employer
contributions to or the funded status or book reserve of such Foreign BOC
Plan, except where such liabilities would not have, individually or in the
aggregate, a Material Adverse Effect; and
(vi) there is no Foreign BOC Plan that (i) is maintained for Foreign
Employees in Sweden (including for this purpose the Swedish mandatory
retirement plans) or France and (ii) is a book reserve defined benefit
pension plan.
(d) There are no outstanding agreements or arrangements providing
for severance or change in control payments with respect to any employees of the
Business which would have, individually or in the aggregate, a Material Adverse
Effect.
SECTION 3.19. Labor Matters. (a) Section 3.19 of the Disclosure
-------------
Schedule lists each collective bargaining agreement or other labor union
contract applicable to persons employed in the Business, and no collective
bargaining agreement is being negotiated by any BOC Company and there is no
organizing activity pending or, to the knowledge of the BOC
41
Group, threatened, except where such activity would not have, individually or in
the aggregate, a Material Adverse Effect.
(b) Except as set forth in Section 3.09 or 3.19 of the Disclosure
Schedule:
(i) the Business has not, within the last two years, experienced
any organized slowdown, work interruption, strike or work stoppage by the
employees of any BOC Company that would have, individually or in the
aggregate, a Material Adverse Effect;
(ii) to the knowledge of the BOC Group, neither the BOC Group nor
any BOC Company has, within the last two years, been charged with any
unfair labor practice or violation of any collective bargaining agreement
in connection with the Business that would have, individually or in the
aggregate, a Material Adverse Effect; and
(iii) each BOC Company is in compliance with all applicable laws
relating to the employment of personnel and labor, except where a failure
to be in compliance would not have, individually or in the aggregate, a
Material Adverse Effect.
SECTION 3.20. Taxes. (a) Except as set forth in Section 3.20(a) of
-----
the Disclosure Schedule, (i) each Subsidiary has timely filed or been included
in, or will timely file or be included in, all material Returns required to be
filed by it or in which it is to be included with respect to Taxes for any
period ending on or before the Closing Date, taking into account any extension
of time to file granted to, or obtained on behalf of, the BOC Group, any
Affiliate or any Subsidiary, (ii) to the best knowledge of the BOC Group, all
such Returns are true, correct and complete in all material respects, and (iii)
all Taxes shown to be payable on such Returns have been or will be paid, and all
moneys required to be withheld by each Subsidiary from its employees or from
third parties for income and payroll taxes have been or will be withheld and
either paid to the appropriate tax authorities or set aside in accounts for such
purpose in accordance with the requirements of applicable law.
(b) Except as set forth in Section 3.20(b) of the Disclosure
Schedule, (i) the material income tax returns of each Subsidiary (and any
consolidated, combined or unitary group of which such Subsidiary is a member)
have been audited and settled, or are closed to assessment, for all years
through the fiscal year ending September 30, 1993; (ii) there is no claim or
assessment pending against any Subsidiary for any alleged deficiency in Taxes,
and neither the BOC Group nor any Subsidiary has received notice of any audit or
investigation with respect to any liability of any Subsidiary for Taxes; and
(iii) there are no agreements in effect to extend the period of limitations for
the assessment or collection of any Tax for which any Subsidiary may be liable.
42
(c) None of the Subsidiaries is or has ever been a United States
Real Property Holding Corporation as defined in Section 897(c)(2) of the Code.
(d) None of the Subsidiaries has elected to reattribute any net
operating loss carryovers or carrybacks under United States Treasury regulations
Section 1.1502-20(g).
(e) Except as set forth in Section 3.20(e) of the Disclosure
Schedule, there is no contract, agreement or intercompany account system in
existence under which the Subsidiaries have, or may at any time in the future
have, an obligation to contribute to the payment of any portion of a Tax (or pay
any amount calculated with reference to any portion of a Tax) determined on a
consolidated, combined or unitary basis with respect to a group of corporations
of which any of the Subsidiaries is a part.
(f) None of the Non-U.S. Subsidiaries is engaged in trade or
business in the United States as defined in Section 864(b) of the Code or is a
controlled foreign corporation as defined in Section 957 of the Code.
SECTION 3.21. Assets of the Business. Upon consummation of the
----------------------
Transactions pursuant to this Agreement and the Ancillary Agreements, the
Purchaser shall have acquired (directly or indirectly) the Transferred Assets,
free and clear of all Encumbrances other than Permitted Encumbrances and any
Encumbrances which may be created by the Purchaser. Except (i) as set forth in
Section 3.21 of the Disclosure Schedule, (ii) for services the Purchaser is
entitled to receive pursuant to the Transition Services Agreement (whether or
not the Purchaser elects to receive such services), (iii) for contracts and
agreements not transferred to the Purchaser due to the failure to obtain the
necessary consents and waivers therefor and which are not material, individually
or in the aggregate, to the Business, (iv) for assets related to (x) shared
sales facilities, (y) customer account management contracts and joint
distribution contracts or (z) shared software, (which in the cases described in
clauses (x) and (z) above are not related to manufacturing or distribution,
which are delivered to Instrumentarium, Baxter or Newco pursuant to the MSD/SPD
Purchase Agreement, the PPD Purchase Agreement or the INO Purchase Agreement,
(v) the Excluded Assets (other than those that are Excluded Assets as a result
of clause (viii) of Schedule 1.01(a)), and (vi) Employees that cease to be
Employees of the BOC Group or its Affiliates from or after the date hereof, the
Transferred Assets constitute all the properties, assets and services necessary
to, forming a part of, or used or held for use in, the Business and the
Transferred Assets are sufficient to permit the operation of the Business in the
same manner as it is currently conducted and as proposed in the Descriptive
Memorandum to be conducted.
SECTION 3.22. Insurance. Section 3.22 of the Disclosure Schedule
---------
sets forth a preliminary list of insurance policies currently applicable to the
Business other than any policies related to the BOC Benefit Plans (as to the
completeness of which the BOC Group
43
makes no representation or warranty). On or prior to February 15, 1998, the BOC
Group shall deliver to the Purchaser an updated Section 3.22 of the Disclosure
Schedule supplementing, by adding to but not deleting from, the preliminary list
delivered on the date hereof and which together lists all insurance policies
applicable to the Business. The BOC Group has provided the Purchaser with
summaries of all such insurance policies currently applicable to the Business.
SECTION 3.23. Books and Records. Except as set forth in Section 3.23
-----------------
of the Disclosure Schedule, the books and records of the BOC Group relating to
the Business have been maintained in accordance with good business practices and
applicable legal, regulatory and accounting requirements and are complete and
correct in all material respects.
SECTION 3.24. Warranties. Neither the BOC Group nor any of its
----------
Affiliates has granted any warranty with respect to a Healthcare Product to any
purchaser or user of such Healthcare Product other than (a) warranties expressly
made in the packaging, package inserts or label accompanying such product, (b)
warranties implied by Law, (c) warranties set forth in standard form customer
purchase orders and (d) warranties contained in contracts or agreements which
have been made available to the Purchaser and which are listed or described in
Section 3.24 of the Disclosure Schedule.
SECTION 3.25. Brokers. Except for Morgan Guaranty Trust Company of
-------
New York ("JP MORGAN"), no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the BOC Group or any Subsidiary. The BOC Group is solely
responsible for the fees and expenses of JP Morgan.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the BOC Group as
follows:
SECTION 4.01. Incorporation and Authority of the Purchaser. The
--------------------------------------------
Purchaser is a corporation duly incorporated validly existing and in good
standing under the laws of New Jersey and has all necessary corporate power and
authority to enter into this Agreement and the Ancillary Agreements, to carry
out its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by the Purchaser of
this Agreement and the Ancillary Agreements, the performance by the Purchaser of
its obligations hereunder and thereunder and the consummation by the Purchaser
44
of the transactions contemplated hereby and thereby have been duly authorized by
all requisite corporate action on the part of the Purchaser. This Agreement has
been, and upon their execution the Ancillary Agreements will be, duly executed
and delivered by the Purchaser, and (assuming due authorization, execution and
delivery by the BOC Group and the BOC Companies parties thereto) this Agreement
constitutes, and upon their execution the Ancillary Agreements will constitute,
legal, valid and binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with their respective terms.
SECTION 4.02. No Conflict. Assuming that all consents, approvals,
-----------
authorizations and other actions described in Section 4.03 have been obtained
and all filings and notifications described in Section 4.03 have been made, and
except as may result from any facts or circumstances relating solely to the BOC
Group or a BOC Company, the execution, delivery and performance by the Purchaser
of this Agreement and the Ancillary Agreements to which the Purchaser is to be a
party do not and will not (a) violate or conflict with the Certificate of
Incorporation or By-laws (or other similar organizational documents) of the
Purchaser, (b) conflict with or violate any Law or Governmental Order applicable
to the Purchaser or (c) result in any breach of, or constitute a default (or
event which with the giving of notice or lapse of time, or both, would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument to which the
Purchaser or any of its subsidiaries is a party or by which any of their assets
or properties is bound, except in any such case for any violations, conflicts,
breaches, defaults or other matters which would not prevent or materially delay
the consummation by the Purchaser of the transactions contemplated hereby.
SECTION 4.03. Consents and Approvals. The execution, delivery and
----------------------
performance by the Purchaser of this Agreement and the Ancillary Agreements do
not and will not require any consent, approval, authorization or other action
by, or filing with or notification to, any Governmental Authority, except (a)
the notification requirements of the HSR Act and the requirements of any other
applicable antitrust or merger control Laws, (b) where failure to obtain such
consent, approval, authorization or action, or to make such filing or
notification, would not prevent or materially delay the consummation by the
Purchaser of the transactions contemplated by this Agreement and (c) as may be
necessary as a result of any facts or circumstances relating solely to the BOC
Group or its Affiliates.
SECTION 4.04. Litigation. There are no Actions pending or, to the
----------
knowledge of the Purchaser, threatened against the Purchaser, that are
reasonably likely to prevent or materially delay the consummation by the
Purchaser of the transactions contemplated by this Agreement.
45
SECTION 4.05. Investment Purpose. The Purchaser is acquiring the
------------------
Shares solely for the purpose of investment and not with a view to, or for offer
or sale in connection with, any distribution thereof.
SECTION 4.06. Financing. The Purchaser has available to it, and on
---------
the Closing Date will have, all funds necessary to consummate the transactions
contemplated by this Agreement. The Purchaser has delivered true and correct
copies of all loan commitments issued to the Purchaser in connection with the
financing of such funds.
SECTION 4.07. Brokers. Except for Lazard Freres & Co, LLC) and its
-------
Affiliates ("LAZARD"), no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Purchaser. The Purchaser is solely responsible for the fees
and expenses of Lazard.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing. (a) The BOC
----------------------------------------
Group agrees that, between the date hereof and the Closing Date, the Business
shall be conducted in the ordinary course and consistent in all material
respects with past practice, except as described in Section 5.01(a) of the
Disclosure Schedule or as otherwise expressly contemplated by this Agreement and
the Ancillary Agreements.
(b) The BOC Group agrees that, between the date hereof and the
Closing Date, (i) it will cause the BOC Companies to use their reasonable best
efforts to preserve intact the Business, to keep available to the Purchaser the
services of the employees of the Business and to preserve the current
relationships of the Business with its customers, suppliers and other persons
with which the Business has significant business relationships and (ii) it will
cause each Subsidiary to transfer any Excluded Assets held by it to another
Person (other than another Subsidiary) and will cause all Excluded Liabilities
to which any Subsidiary is subject to be satisfied or assumed by another Person
(other than another Subsidiary); provided, however, that the form, substance and
structure of each of such transfers will be subject to the approval of the
Purchaser, which approval may not be unreasonably withheld so long as the
proposed form, substance and structure of such transfers does not adversely
affect the tax planning of the Purchaser or otherwise impose liability (whether
or not contingent) upon the Purchaser or the Business. If any such transfer of
Excluded Assets and Excluded Liabilities shall not have been completed on or
prior to the Closing Date, the parties shall use all
46
reasonable efforts to complete such transfer as promptly as practicable
following the Closing Date.
(c) The BOC Group agrees that, between the date hereof and the
Closing Date, it will cause the BOC Companies to cooperate and consult with the
Purchaser with respect to information technology matters and, unless the
Purchaser shall request otherwise, cause the "AIM 2000" program to be carried
out in accordance with its terms and cause the funding of such program to be
maintained at current levels.
(d) Notwithstanding anything to the contrary herein, except as set
forth on Schedule 5.01(d) of the Disclosure Schedule, without the prior written
consent of the Purchaser, which shall not be unreasonably withheld, between the
date hereof and the Closing Date, the BOC Group shall not, and shall not permit
any BOC Company to:
(i) amend the certificate of incorporation or by-laws or other
equivalent organizational document of any Subsidiary, or permit any
Subsidiary to merge or consolidate, or obligate itself to do so, with or
into any other entity;
(ii) issue or sell any shares of capital stock of, or other equity
interests in, any Subsidiary, or securities convertible into or
exchangeable for such shares or equity interests or sell or transfer any
Assets or any assets of any Subsidiary, except for sales of assets in the
ordinary course of business consistent with past practice;
(iii) permit any Subsidiary to declare, set aside, make or pay any
dividend or other distribution, payable in stock, property or otherwise
(other than in cash), with respect to any of its capital stock;
(iv) establish or increase the benefits under any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing,
stock option (including, without limitation, the granting of stock options,
stock appreciation rights, performance awards, or restricted stock awards),
stock purchase or other employee benefit plan, or otherwise increase the
compensation payable or to become payable to any directors, officers or
employees of any BOC Company whose services are substantially devoted to
the Business, except in the ordinary course of business consistent with
past practice or as may be required by Law or by existing contractual
arrangements;
(v) enter into any employment or severance agreement with any of
its employees whose services are substantially devoted to the Business or
establish, adopt or enter into any collective bargaining agreement covering
employees whose services are substantially devoted to the Business except
in the ordinary course of business
47
consistent with past practice or as may be required by Law or by existing
contractual arrangements;
(vi) permit any Subsidiary to acquire (including, without
limitation, by merger, consolidation or acquisition of stock or assets) any
corporation, partnership, limited liability company, other business
organization or any division thereof;
(vii) permit any Subsidiary to (A) assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations of
any person (other than another Subsidiary), or make any loans or advances,
except in the ordinary course of business consistent with past practice in
an aggregate amount not in excess of US$1,000,000, (B) issue any debt
securities or (C) otherwise incur any indebtedness for borrowed money in an
aggregate amount in excess of US$25,000,000 (all of which indebtedness
shall, in any event, be repaid as of or prior to the Closing or, with the
written consent of the Purchaser, be deemed an Excluded Liability);
(viii) authorize or make any capital expenditure for the Business
that is not provided for in the Capital Expenditures Budget attached hereto
as Exhibit 5.01(d)(viii);
(ix) permit any BOC Company to make a purchase commitment of the
Business inconsistent with past practice or in excess of the normal,
ordinary and usual requirements;
(x) enter into or amend any contract, agreement, commitment or
arrangement with respect to any matter set forth in this Section 5.01(d);
(xi) permit any sale, transfer, lease or other disposition of any of
the Transferred Assets (other than the sale of assets immaterial to the
Business or inventory in the ordinary course of business), or enter into
any other transaction, contract or commitment not in the ordinary course of
business consistent with past practice;
(xii) permit any Subsidiary to mortgage, pledge or subject to any
Encumbrance (other than Permitted Encumbrances) any of its properties, or
permit any other BOC Company to mortgage, pledge or subject to any
Encumbrance (other than Permitted Encumbrances) any of the Transferred
Assets, except in each case in the ordinary course of business consistent
with past practice;
(xiii) discharge or satisfy any material Encumbrance or pay or
satisfy any material obligation or liability (fixed or contingent) or
compromise, settle or otherwise adjust any material claim or litigation;
48
(xiv) permit any transfer, grant or modification of, or enter into
any settlement regarding the breach or infringement of, any Intellectual
Property rights relating to the Business;
(xv) permit any alteration in the customary practices of the
Business with respect to the pricing of its products or offer to any
customer of the Business special discounts or rebates in excess of those
existing under current agreements with such customer;
(xvi) permit any alteration in the payment or collection terms or
the customary practices of the Business with respect to the collection of
receivables or the payment of payables;
(xvii) enter into any non-competition agreement placing limitations
on the conduct of the Business;
(xviii) (A) fail to maintain all of its assets and properties in
their current condition, normal wear and tear excepted, or (B) fail to
maintain insurance upon all of such properties in such amounts and of such
kinds substantially comparable to that in effect on the date hereof on such
properties and with respect to such operation with insurers of the same or
better financial condition;
(xix) fail to maintain its books, accounts and records in the
usual, regular and ordinary manner, on a basis consistent with prior years
or fail to comply with any contractual or other third party obligations
applicable to the operation of the Business;
(xx) terminate, cancel, surrender, modify, amend, assign or give
notice of its intention to terminate, cancel, surrender, modify, amend or
assign any lease relating to any Leased Real Property; or
(xxi) agree to do any of the foregoing.
(e) Between the date hereof and the Closing Date, the Business
shall be conducted in compliance with all Laws and Governmental Orders
applicable to the Business (as such Laws and Governmental Orders are interpreted
as of the date of the conduct in question by the relevant Governmental
Authority).
SECTION 5.02. Access to Information; Confidentiality. (a) The
--------------------------------------
Purchaser acknowledges and agrees that it (i) has made its own inquiry and
investigation into, and based thereon, has formed an independent judgment
concerning, the Business, the Assets and the Assumed Liabilities, (ii) has been
furnished with or given adequate access to such information about the Business,
the Assets and the Assumed Liabilities as it has requested, (iii) has had
49
independent legal, financial and technical advice relating to the Business, the
purchase of the Shares and the Assets and the terms of this Agreement and the
documents to be executed pursuant hereto and (iv) will not assert any claim
against the BOC Group or any of its Affiliates or any of the BOC Group's or its
Affiliates' respective directors, officers, employees, agents, stockholders,
consultants, investment bankers, accountants or representatives, or hold the BOC
Group or any such persons liable, for any inaccuracies, misstatements or
omissions with respect to information (other than the representations and
warranties of the BOC Group contained in this Agreement) furnished by the BOC
Group or such persons concerning the BOC Group, the BOC Companies, the Business,
the Assets or the Assumed Liabilities, provided, however, that nothing contained
in this Agreement shall preclude the assertion by the Purchaser or its
Affiliates of any causes of action that may exist, not based upon breach of
contract, for fraud. Any implied warranty or other rights applicable to any of
the transactions contemplated hereby under the law of any jurisdiction is hereby
expressly and irrevocably waived by the Purchaser to the fullest extent
permitted by such Law, and the Purchaser agrees that it shall not seek to
enforce any such implied warranties or other rights.
(b) In connection with the Purchaser's investigation of the
Business, the Assets and the Assumed Liabilities, the Purchaser has received
from the BOC Group certain estimates, projections and other forecasts for the
Business, and certain plan and budget information. The Purchaser acknowledges
that there are uncertainties inherent in attempting to make such estimates,
projections, forecasts, plans and budgets, that the Purchaser is familiar with
such uncertainties, that the Purchaser is taking full responsibility for making
its own evaluation of the adequacy and accuracy of all estimates, projections,
forecasts, plans and budgets so furnished to it, and that the Purchaser will not
assert any claim against the BOC Group or any of its Affiliates or any of the
BOC Group's or its Affiliates' respective directors, officers, employees,
agents, stockholders, consultants, investment bankers, accountants or
representatives, or hold the BOC Group or any such persons liable with respect
thereto. Accordingly, the BOC Group makes no representation or warranty with
respect to any estimates, projections, forecasts, plans or budgets referred to
in this Section 5.02.
(c) The terms of the letter agreement dated as of July 31, 1997
(the "CONFIDENTIALITY AGREEMENT") between JP Morgan, as agent for the BOC Group,
and the Purchaser are incorporated by reference herein and shall continue in
full force and effect until the Closing Date, at which time the Confidentiality
Agreement and the obligations of the Purchaser under this Section 5.02(c) shall
terminate; provided, however, that the Confidentiality Agreement shall terminate
only in respect of that portion of the Proprietary Information (as defined in
the Confidentiality Agreement) exclusively relating to the transactions
contemplated by this Agreement. If this Agreement is, for any reason, terminated
prior to the Closing Date, the Confidentiality Agreement shall continue in full
force and effect thereafter in accordance with its terms.
50
(d) Following the Closing, the BOC Group agrees to, and will
cause its agents, representatives, Affiliates, employees, officers and directors
to (i) treat and hold as confidential (and not disclose or provide access to any
Person), in a manner consistent with its practices prior to the date hereof, all
information related to the Business previously treated by the BOC Group and its
Affiliates as confidential, (ii) in the event that the BOC Group or any such
agent, representative, Affiliate, employee, officer or director becomes
compelled by Law (including any requirement of the London Stock Exchange or the
Panel for Takeovers and Mergers in London) to disclose any such information,
provide the Purchaser with prompt written notice of such requirement so that the
Purchaser may seek a protective order or other remedy or waive compliance with
this Section 5.02(d) and (iii) in the event that such protective order or other
remedy is not obtained or is not available, or the Purchaser waives compliance
with this Section 5.02(d), furnish only that portion of such confidential
information that is legally required to be provided and use all reasonable
efforts to obtain assurances that confidential treatment will be accorded such
information; provided, however, that this sentence shall not apply to any
information that, at the time of disclosure, is available publicly and was not
disclosed in breach of this Section 5.02(d) by the BOC Group, its agents,
representatives, Affiliates, employees, officers or directors or otherwise in
breach of any obligation of confidentiality by any third party. The BOC Group
shall request the return and destruction and use its reasonable efforts to
secure the return and destruction of all Proprietary Information regarding the
Business that was provided to other potential purchasers (and their Affiliates
and representatives) of the Business or the businesses of MSD, SPD and PPD. The
BOC Group covenants and agrees that it shall not under any circumstance waive
any confidentiality rights or protections that it has against other potential
purchasers of the Business or the businesses of MSD, SPD and PPD with respect to
such Proprietary Information and that at the Closing it shall transfer all such
rights and protections to the Purchaser (to the extent related to the Business)
(and to the extent not transferable to the Purchaser, act as agent of the
Purchaser for purposes of enforcing such rights and protections).
SECTION 5.03. Investigation. (a) From the date hereof until the
-------------
Closing Date, upon reasonable notice, the BOC Group shall, and shall cause each
of the BOC Companies and each of their respective officers, directors,
employees, auditors and agents to, (i) afford the officers, employees and
authorized agents and representatives of the Purchaser reasonable access, during
normal business hours, to the offices, properties, books and records of the
Business and (ii) furnish to the officers, employees and authorized agents and
representatives of the Purchaser such additional financial and operating data
and other information regarding the Business, the Assets and the Assumed
Liabilities as the Purchaser may from time to time reasonably request; provided,
however, that such investigation shall not unreasonably interfere with any of
the businesses or operations of the BOC Group or any of its Affiliates and shall
be at the cost of the Purchaser.
51
(b) In order to facilitate the resolution of any claims made by or
against or incurred by the BOC Group or any Affiliate or for which the BOC Group
or any of its Affiliates remains liable, after the Closing Date, upon reasonable
notice, the Purchaser shall (i) afford the officers, employees and authorized
agents and representatives of the BOC Group reasonable access, during normal
business hours, to the offices, properties, books and records of the Purchaser
in respect of the Business, the Assets, the Excluded Assets, the Assumed
Liabilities and the Excluded Liabilities, (ii) furnish to the officers,
employees and authorized agents and representatives of the BOC Group such
additional financial and other information regarding the Business, the Assets,
the Excluded Assets, the Assumed Liabilities and the Excluded Liabilities as the
BOC Group or such officers, employees and authorized agents and representatives
may from time to time reasonably request and (iii) make available to the BOC
Group the employees of the Purchaser in respect of the Business whose
assistance, testimony or presence is necessary to assist the BOC Group in
evaluating any such claims and in defending such claims, including the presence
of such persons as witnesses in hearings or trials for such purposes; provided,
however, that such investigation shall not unreasonably interfere with the
business or operations of the Purchaser or any of its Affiliates and shall be at
the cost of the BOC Group.
(c) Notwithstanding the foregoing, the BOC Group shall not be
required, prior to the Closing Date, to disclose, or cause the disclosure of, to
the officers, employees or authorized agents or representatives of the Purchaser
(or provide access to any offices, properties, books or records of the BOC Group
or any of its Affiliates that could result in the disclosure to such persons or
others of) any confidential information relating to pricing and marketing plans,
to the extent that the BOC Group receives the written advice of Shearman &
Sterling or other outside legal counsel reasonably satisfactory to the Purchaser
that disclosure of such information would be inconsistent with any applicable
antitrust or competition law, nor shall the BOC Group be required to permit or
cause others to permit the officers, employees or authorized agents or
representatives of the Purchaser to copy or remove from the offices or
properties of the BOC Group or any of its Affiliates any documents, drawings or
other materials that might reveal any such confidential information.
SECTION 5.04. Books and Records. (a) Except as otherwise provided
-----------------
in Article VII, the Purchaser agrees that it shall preserve and keep all books
and records in respect of the Business in the Purchaser's possession for a
period of at least eight years from the Closing Date. After such eight-year
period, before the Purchaser shall dispose of any of such books and records, at
least 90 calendar days' prior written notice to such effect shall be given by
the Purchaser to the BOC Group, and the BOC Group shall be given an opportunity,
at its cost and expense, to remove and retain all or any part of such books and
records as the BOC Group may select. During such eight-year period, duly
authorized representatives of the BOC Group shall, upon reasonable notice, have
access thereto during normal business hours to examine, inspect and copy such
books and records.
52
(b) If, in order properly to prepare documents required to be filed
with Governmental Authorities or its financial statements or required under any
applicable Law, it is necessary that either party hereto (or any of their
respective Affiliates) or any successors be furnished with additional
information relating to the Business, the Assets, the Excluded Assets, or the
Assumed Liabilities or the Excluded Liabilities, and such information is in the
possession of the other party hereto or any of its Affiliates, such party agrees
to use its best efforts to furnish such information to such other party as soon
as reasonably practicable, at the cost and expense of the party being furnished
such information.
(c) Notwithstanding the foregoing, the Purchaser shall not be
required, after the Closing Date, to disclose, or cause the disclosure of, to
the officers, employees or authorized representatives or agents of the BOC Group
(or provide access to any offices, properties, books and records of the
Purchaser or any of its Affiliates that could result in the disclosure to such
persons or others of) any confidential information relating to pricing and
marketing plans, to the extent that the Purchaser receives the written advice of
outside legal counsel reasonably satisfactory to the BOC Group that the
disclosure of such information would be inconsistent with any applicable
antitrust or competition law, nor shall the Purchaser be required to permit or
cause others to permit the officers, employees or authorized representatives or
agents of the Purchaser to copy or remove from the offices or properties of the
Purchaser or any of its Affiliates any documents, drawings or other materials
that might reveal any such confidential information.
SECTION 5.05. Satisfaction of Conditions Precedent; Regulatory and
----------------------------------------------------
Other Authorizations; Notices and Consents. (a) The BOC Group and the
- ------------------------------------------
Purchaser shall use their reasonable best efforts to cause the satisfaction of
the conditions precedent contained in Article VIII. Each party hereto shall use
its reasonable best efforts to obtain all authorizations, consents, orders and
approvals of all Governmental Authorities that may be or become necessary for
its and its Affiliates' execution and delivery of, and the performance of their
obligations pursuant to, this Agreement and the Ancillary Agreements and shall
cooperate fully with the other party in promptly seeking to obtain all such
authorizations, consents, orders and approvals. Each party hereto agrees to
make any appropriate filing of a Notification and Report Form pursuant to the
HSR Act with respect to the transactions contemplated hereby as soon as
practicable following the date hereof and to supply promptly any additional
information and documentary material that may be requested pursuant to the HSR
Act.
(b) Without limiting the generality of the Purchaser's undertakings
pursuant to Section 5.05(a), but subject to the proviso following clause (iv) of
this Section 5.05(b), the Purchaser shall:
(i) take promptly any or all of the following actions to the extent
necessary to eliminate any concerns on the part of any Governmental
Authority with jurisdiction
53
over the enforcement of any applicable antitrust laws, anti-competition or
similar laws ("GOVERNMENT ANTITRUST AUTHORITY") regarding the legality
under any antitrust law, anti-competition or similar law of the Purchaser's
acquisition of the Business: entering into negotiations, providing
information, making proposals, entering into and performing agreements or
submitting to judicial or administrative orders, or selling or otherwise
disposing of, or holding separate (through the establishment of a trust or
otherwise), particular assets or categories of assets, or businesses, of
the Business or the Purchaser or any of its subsidiaries or Affiliates;
(ii) use its reasonable best efforts to prevent the entry in a
judicial or administrative proceeding brought under any antitrust law,
anti-competition or similar law by any Government Antitrust Authority or
any other party of any permanent or preliminary injunction or other
Governmental Order that would make consummation of the acquisition of the
Business in accordance with the terms of this Agreement and the Ancillary
Agreements unlawful or that would prevent or delay such consummation,
including, without limitation, taking the steps contemplated by Section
5.05(b)(i);
(iii) take promptly, in the event that such an injunction or order
has been issued in such a proceeding, any and all steps, including, without
limitation, the appeal thereof, the posting of a bond or the steps
contemplated by Section 5.05(b)(i), necessary to vacate, modify or suspend
such injunction or order so as to permit such consummation on a schedule as
close as possible to that contemplated by this Agreement and the Ancillary
Agreements; and
(iv) take promptly all other actions and do all other things
necessary and proper to avoid or eliminate each and every impediment under
any antitrust law that may be asserted by any Government Antitrust
Authority or any other party to the consummation of the acquisition of the
Business by the Purchaser in accordance with the terms of this Agreement
and the Ancillary Agreements;
provided, however, that nothing contained in this Agreement shall require the
Purchaser to forgo acquiring or to divest any of the interests intended to be
acquired hereunder in, or accept any condition that could in any way materially
affect the Purchaser's ownership, control or operation of, BOC Ohmeda AB or any
of the assets or facilities of the Business in Sweden.
(c) The BOC Group and the Purchaser shall jointly give promptly such
notices to third parties and use reasonable efforts to obtain such third party
consents as the Purchaser may reasonably deem necessary or desirable in
connection with the transactions contemplated by this Agreement and the
Ancillary Agreements, including, without limitation, all consents from other
Persons that are necessary or desirable in connection with the transfer of the
Material Contracts; provided that the BOC Group and its Affiliates shall not be
required
54
to make any payment to any such Person to induce such Person to grant such
consent or waiver.
(d) To the extent the necessary consents and waivers for the
transfer of any contractual right or benefit are not obtained prior to the
Closing Date, then neither this Agreement nor any of the Ancillary Agreements
shall constitute a transfer or assignment of such right or benefit, and the BOC
Group and the Purchaser shall use their reasonable best efforts to establish
arrangements that are reasonable and lawful as to both parties and that provide
to the Purchaser the full benefits (economic and otherwise) and burdens of such
contractual right or benefit for the remainder of its term; provided, however,
that nothing in this Section 5.05(d) shall prejudice the Purchaser's rights to
indemnification under Article IX of this Agreement.
(e) To the extent that the Business receives the benefit of any
material license, permit, contract, lease or other right included in the
Business that is not used primarily in the Business (a "NON-EXCLUSIVE
CONTRACT"), then neither this Agreement nor any of the Ancillary Agreements
shall constitute an assignment or transfer of such Non-Exclusive Contract.
Except as provided in the form of Transition Services Agreement attached hereto,
with respect to each Non-Exclusive Contract, the BOC Group shall, or shall cause
its Affiliates to, use its reasonable best efforts to enter into arrangements
for the period ending on the expiration date of such Non-Exclusive Contract, in
accordance with its terms, so as to provide the Purchaser with the benefits and
burdens thereunder (A) relating to the Business and (B) on terms which reflect
the proportionate share that such benefits and burdens relating to the Business
bears to the entire Non-Exclusive Contract. Set forth in Section 5.05(e) of the
Disclosure Schedule is a preliminary description of the Non-Exclusive Contracts
identified by the BOC Group as of the date of this Agreement (as to the
completeness of which the BOC Group makes no representation or warranty). On or
prior to the tenth Business Day prior to the Closing, the BOC Group shall
deliver to the Purchaser an updated Section 5.05(e) of the Disclosure Schedule
setting forth a true and complete list of those contracts and agreements which,
to the knowledge of the BOC Group, are Non-Exclusive Contracts.
SECTION 5.06. Notification to Governmental Authorities. The
----------------------------------------
Purchaser shall, as promptly as practicable after the Closing, and in any event
not later than the expiration date of the applicable notification period, notify
each Governmental Authority which requires such notification which is
responsible for the regulatory supervision and administration of the Business
with respect to the Purchaser's ownership of the Business and with respect to
the names of the then current officers and directors of the Purchaser.
SECTION 5.07. Payment of Intercompany Accounts Payable. (a) The
----------------------------------------
Purchaser shall cause the payment to the BOC Group and its Affiliates of all
accounts payable
55
to the BOC Group or any of its Affiliates that are properly accrued by any BOC
Company with respect to the Business prior to or upon the Closing Date.
(b) The BOC Group and its Affiliates shall cause the payment to the
Purchaser and its Affiliates of all accounts payable to the Purchaser or any of
its Affiliates that are properly accrued by any BOC Company or any of its
Affiliates with respect to the Business prior to or upon the Closing Date.
(c) For purposes of this Section 5.07, Section 5.12 and clause (e)
of the definition of "Excluded Liabilities" in Section 1.01, "ACCOUNTS
RECEIVABLE" and "ACCOUNTS PAYABLE" mean accounts receivable or payable incurred
in the ordinary course of business consistent with past practice in respect of
goods and services sold or provided by (i) the BOC Group and its Affiliates
(other than the Ohmeda Business) to the Ohmeda Business or (ii) the Business to
the BOC Group and its Affiliates (other than the Business) and shall not in any
event include any amounts in respect of any type of debt or any funding of the
Business by the BOC Group or its Affiliates.
SECTION 5.08. Non-Competition. For a period of five years after the
---------------
Closing Date (the "NON-COMPETITION PERIOD"), neither the BOC Group nor any BOC
Group Controlled Person will manufacture, sell or distribute any product or
services that compete directly or indirectly with any products or services that
are manufactured, sold or distributed as part of the Business on the Closing
Date (the "COMPETITIVE PRODUCTS"); provided, however, that the foregoing shall
not prohibit the BOC Group or any BOC Group Controlled Person from (a)
acquiring, directly or indirectly, securities of any Person traded in a public
market that sells any Competitive Products; provided that the BOC Group and its
Affiliates do not, in the aggregate, own more than 5% of any class of securities
of such Person; or (b) acquiring a company (the "DIVERSIFIED COMPANY") or a
business having not more than 25% of its gross revenues attributable to the
manufacture, sale or distribution of Competitive Products, so long as, with
respect to such Diversified Company or business acquired, the BOC Group shall
have divested itself within 18 months of its acquisition of such Diversified
Company of the assets of such Diversified Company that sell Competitive
Products; and (c) engaging in the Medical Gases Business.
SECTION 5.09. No Solicitation. For a period of two years following
---------------
the Closing, (a) neither the BOC Group nor any BOC Group Controlled Person
shall, directly or indirectly, actively solicit or induce any employee of the
Purchaser or any of its Affiliates whose services are substantially devoted to
the Business to leave such employment and become an employee of the BOC Group or
any BOC Group Controlled Person and (b) the Purchaser shall not, directly or
indirectly, actively solicit or induce any employee of the BOC Group or any
Affiliate of the BOC Group with whom the Purchaser or any of its Affiliates come
into contact in connection with the transactions contemplated hereby to leave
such employment and
56
become an employee of the Purchaser or any of its Affiliates; provided, however,
that nothing in this Section 5.09 shall prohibit the BOC Group or any BOC Group
Controlled Person or the Purchaser or any of its Affiliates from employing any
person who contacts them on his or her own initiative and without any direct or
indirect solicitation by the BOC Group or any BOC Group Controlled Person or the
Purchaser or any of its Affiliates, as the case may be, or as a result of a
general solicitation to the public; and provided further that the BOC Group and
the BOC Group Controlled Persons shall have the right to solicit or induce those
persons who do not remain in the employ of the Purchaser following the Closing
Date.
SECTION 5.10. Bulk Transfer Laws. The Purchaser hereby waives
------------------
compliance by the BOC Group and the BOC Companies with the provisions of any
bulk transfer Laws or other similar creditor notice requirements of any
jurisdiction in connection with the sale to the Purchaser of the Assets. The
BOC Group shall indemnify and hold the Purchaser harmless from any claims
relating to bulk transfer laws which may be applicable to the transactions
contemplated hereby.
SECTION 5.11. Use of the BOC Group's Name. Notwithstanding any other
---------------------------
provision of this Agreement to the contrary, no interest in or right to use the
name "BOC", any corporate name of the BOC Group or its Affiliates (other than
the Subsidiaries) or the "zeta device" set forth on Schedule 5.11, or any logo,
trademark or trade name or any derivation thereof of the BOC Group or its
Affiliates with respect to, or associated with, the foregoing (but not including
any logo, trademark or trade name referred to in Section 3.15 of the Disclosure
Schedule) (collectively, the "RETAINED NAMES AND MARKS") is being transferred to
the Purchaser pursuant to the transactions contemplated hereby, and the use of
any Retained Names and Marks in connection with the Business by the Purchaser
and its Affiliates shall cease as soon as practicable following the Closing
Date. The Purchaser, as soon as practicable following the Closing Date, will,
and will cause its Affiliates to, (a) remove or obliterate all the Retained
Names and Marks from its signs, purchase orders, invoices, sales orders, labels,
letterheads, shipping documents, and other items and materials of the Business
and otherwise, and not to put into use after the Closing Date any such items and
materials not in existence on the Closing Date that bear any Retained Name or
Mark or any name, mark or logo similar thereto and (b) change the corporate name
of each Subsidiary whose corporate name includes the name "BOC" or any name,
mark or logo similar thereto, to another corporate name that does not include
the name "BOC" or any name, mark or logo similar thereto. Notwithstanding the
foregoing, the Purchaser and the Subsidiaries may, for a period of nine months
following the Closing Date, use any purchase orders, invoices, sales orders,
labels, letterheads, or shipping documents existing on the Closing Date that
bear any Retained Name or Mark or any name, mark or logo similar thereto, where
the removal of any Retained Name or Mark or any such similar name, mark or logo
would be impractical, and shall not in any event be prohibited from selling
inventories existing as of the Closing Date which are pre-labelled in a manner
such that the removal of any Retained Name or Mark or any name, mark or logo
similar
57
thereto would be impractical (provided that the Purchaser shall use reasonable
efforts to sell such inventories before selling comparable inventories which are
not so labelled). The Purchaser agrees that the BOC Group shall have no
responsibility for claims by third parties arising out of, or relating to, the
use by the Purchaser, the Subsidiaries or any Affiliate thereof of any Retained
Name or Mark after the Closing Date, and the Purchaser agrees to indemnify and
hold harmless the BOC Group from any and all claims that may arise out of the
use thereof by the Purchaser, the Subsidiaries or any Affiliate thereof.
SECTION 5.12. Intercompany Debt. Prior to or upon the Closing Date,
-----------------
all intercompany debt among the Subsidiaries, on the one hand, and the BOC Group
and its other Affiliates, on the other hand, other than normal and customary
accounts receivable and accounts payable within the scope of Section 5.07(c) and
reflected on the Closing Date Carve-Out Balance Sheet, will be repaid or
otherwise eliminated.
SECTION 5.13. Insurance Coverage. (a) Not later than February 15,
------------------
1998, the BOC Group shall provide the Purchaser with a reasonable, good faith
estimate of the premium that would be required by a third party insurer to
provide insurance coverage to the Business during the Interim Period comparable
to the insurance currently provided by Priestly Limited. On or prior to
February 28, 1998, the Purchaser shall make an election, by written notice to
the BOC Group, to either (i) avail itself of the insurance coverage provided by
Priestly Limited, in which event the calculation of Tax Adjusted Operating
Profit or Tax Adjusted Operating Loss for purposes of Section 2.05 shall include
both a charge for such insurance at the market rate quoted by the BOC Group and
the proceeds of such insurance received during the Interim Period, or (ii) not
avail itself of the insurance provided by Priestly Limited, in which event the
calculation of Tax Adjusted Operating Profit or Tax Adjusted Operating Loss for
purposes of Section 2.05 shall not include either a charge for such insurance or
any proceeds thereof.
(b) Effective 12:01 a.m. on the Closing Date, the Subsidiaries and the
Assets shall cease to be insured by the BOC Group's or its Affiliates' insurance
policies, and the Purchaser shall have no rights with respect to any such
policy.
SECTION 5.14. Guaranties. To the knowledge of the BOC Group, Section
----------
5.14 of the Disclosure Schedule sets forth a true and correct list of all
guaranties and guaranty obligations of the BOC Group and its Affiliates (other
than the Subsidiaries) relating to obligations of the Subsidiaries or otherwise
relating principally to the Business. The Purchaser shall use its reasonable
efforts to cause the BOC Group and its Affiliates (other than the Subsidiaries)
to be released as of the Closing, or as soon thereafter as possible, from all
guaranties and guaranty obligations of the BOC Group and such Affiliates
relating principally to the Business (whether or not listed in Section 5.14 of
the Disclosure Schedule). The Purchaser agrees to indemnify the BOC Group and
its Affiliates for any and all Losses
58
incurred by the BOC Group and its Affiliates arising out of any such guaranty or
guaranty obligation (whether or not listed in Section 5.14 of the Disclosure
Schedule), to the extent such Loss relates to a default or other circumstance or
event arising out of the Business.
SECTION 5.15. Transition Services. Following the Closing Date, the
-------------------
BOC Group shall provide, or cause to be provided, to the Purchaser, and the
Purchaser shall provide, or cause to be provided, to the BOC Group and its
Affiliates, on a fairly allocated cost basis determined in a manner consistent
with past practice, certain services which are currently provided by the BOC
Group and its Affiliates to the Business or by the Business to the other
businesses of the BOC Group and its Affiliates, all as more fully set forth in
an agreement (the "TRANSITION SERVICES AGREEMENT"), to be entered into by the
BOC Group and the Purchaser as of the Closing Date, substantially in the form
attached hereto as Exhibit 5.15. Except as specifically set forth in the
Transition Services Agreement or in Section 6.04(h), no other services
(including, without limitation, legal, accounting, tax or personnel services)
will be provided to the Purchaser by the BOC Group or its Affiliates.
SECTION 5.16. Shared Facilities. The BOC Group and the Purchaser
-----------------
agree to put into effect the procedures described in Exhibit 5.16 with respect
to the facilities set forth on such Schedule that are occupied by both the
Business and other businesses of the BOC Group and its Affiliates.
SECTION 5.17. Further Action. Each of the parties hereto shall
--------------
execute and deliver such documents and other papers and take such further
actions as may be reasonably required to carry out the provisions hereof and
give effect to the transactions contemplated hereby.
SECTION 5.18. Conduct of Retained Litigation. From and after the
------------------------------
date hereof, the BOC Group agrees (i) to keep the Purchaser informed with
respect to all significant developments in the Retained Litigation that relate
to claims for injunctive relief and (ii) without the prior written consent of
the Purchaser (which consent shall not be unreasonably withheld), not to settle
or compromise, or consent to the entry of any judgment in connection with, the
Retained Litigation if such settlement, compromise or judgment would impose any
restrictions on the conduct of the Business.
SECTION 5.19. Notice of Certain Events or Occurrences. Each party
---------------------------------------
hereto agrees that at all times prior to the Closing Date it shall notify the
other in writing promptly after becoming aware of any event or occurrence which
will or is reasonably likely to result in (i) the failure of any of the
conditions set forth in Article VIII to be satisfied or (ii) the failure of any
of its representations or warranties to be true and correct in all respects on
the date hereof or the Cut-Off Date (except for representations and warranties
that are made as of another date, which must be true and correct as of such
date), without giving effect to any
59
standard, qualification or exception with respect to "materiality" or "Material
Adverse Effect" contained therein.
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. Certain Severance Benefits; Certain Arrangements. In
------------------------------------------------
the event that the employment of an employee of the Business who is eligible for
coverage immediately prior to the Closing Date under the BOC Group's (i)
Severance Security Plan or (ii) severance plans for Foreign Employees, as set
forth in Section 6.01 of the Disclosure Schedule (copies of which have been made
available to the Purchaser) (collectively, the "BOC GROUP'S SEVERANCE PLAN"), is
terminated by the Purchaser within nine months after the Closing Date, the
Purchaser shall pay such terminated employee severance benefits in accordance
with and subject to the terms of the BOC Group's Severance Plan as in effect on
the date hereof, as if the BOC Group's Severance Plan were then maintained by
the Purchaser. Service with the BOC Group, the BOC Companies and the Purchaser
for periods prior to and after the Closing Date shall be aggregated for purposes
of calculating severance benefits. On the Closing Date, the Purchaser shall,
subject to the last sentence of this Section 6.01, assume, and agree to perform
and discharge the obligations of the BOC Group and its Affiliates under, the
employment agreements and severance arrangements with or for employees of the
Business (other than (except as otherwise provided in this Article VI) in the
case of the Designated Employees any terms of such employment agreements and
severance arrangements relating to employees' rights to old-age, invalidity or
survivors' benefits under supplementary company or inter company pension schemes
outside the statutory social security schemes in Member States of the European
Community) which employees, agreements and arrangements are listed in Section
6.01(a) of the Disclosure Schedule. The BOC Group shall reasonably cooperate and
consult with the Purchaser with respect to the provision of information relating
to the payment of severance benefits following the Closing Date. The BOC Group
shall assume or retain, as appropriate, full responsibility with respect to the
retention bonus arrangements established in connection with the transactions
contemplated by this Agreement, as set forth in Section 6.01(b) of the
Disclosure Schedule (but not including any arrangement set forth in Section
6.01(a) of the Disclosure Schedule), which retention bonus arrangements shall be
treated as Excluded Liabilities hereunder.
SECTION 6.02. [Reserved]
SECTION 6.03. Additional Provisions Relating to Foreign Employees.
---------------------------------------------------
(a) Employee Transfer. (i) Section 6.03(a) of the Disclosure Schedule
-----------------
identifies all
60
employees of the Non-U.S. Subsidiaries designated to be employed following the
Closing Date by the Purchaser (the "DESIGNATED EMPLOYEES"). The BOC Group has,
except as set forth in Section 6.03(a) of the Disclosure Schedule, previously
made available to the Purchaser copies of the representative employment terms
and conditions for the Designated Employees, and shall make reasonable efforts
to make available to the Purchaser prior to the Closing the significant
employment terms and conditions for each of the Designated Employees. In the
event that any Designated Employee has not automatically been transferred to the
Purchaser pursuant to the Transfer Laws (as defined below) or the purchase of
shares of a Non-U.S. Subsidiary, upon becoming aware of such failure to
transfer, the Purchaser shall make offers of employment, to be effective as of
the Closing Date, to such Designated Employees. The employees who accept such
offer of employment made by the Purchaser, or are automatically transferred to
the Purchaser under Section 6.03(a)(ii) or upon the purchase of shares of a Non-
U.S. Subsidiary, shall be referred to as the "TRANSFERRED EMPLOYEES". Without
limiting the Purchaser's obligations under any other provision of this Article
VI, the Purchaser's initial terms of employment for such Transferred Employees
shall be at least the current wage or salary rate for such employees, as set
forth in Section 6.03(a) of the Disclosure Schedule. The continuity of service
of all Transferred Employees shall be preserved by the Purchaser.
(ii) The Purchaser acknowledges that the Acquired Rights Directive
(77/187 EEC) as enacted in the Member States of the European Union and similar
Laws in other jurisdictions which safeguard the rights of employees in transfers
of undertakings, businesses or parts of businesses (collectively, the "TRANSFER
LAWS") may operate to automatically transfer all or some of the Designated
Employees to the Purchaser. If any contract of employment of a person who is
not a Designated Employee of the Purchaser or any of the Other Purchasers (as
defined below) has effect as if originally made between the Purchaser and such
person as a result of the application of the Transfer Laws: (A) the Purchaser
may within 30 days of becoming aware of the application of the Transfer Laws to
such contract, give notice to such person to terminate such contract; and (B)
any Losses arising out of or in connection with such termination and any Losses
payable to or in relation to such person under or in connection with such
contract to the date of such termination shall be assumed or retained by the BOC
Group and shall be Excluded Liabilities. The Purchaser agrees that after the
Closing Date, the contracts of employment of the Transferred Employees (except
for any rights or obligations which do not transfer under the Transfer Laws, or
are not otherwise assumed by the Purchaser) will have effect as if originally
entered into between the Purchaser and the Transferred Employees. For purposes
hereof, the term "OTHER PURCHASERS" shall mean Instrumentarium, Baxter and
Newco.
(iii) The BOC Group and the Purchaser shall comply with their
respective obligations under the Transfer Laws, including, without limitation,
the provision of information to/and or consultation with representatives of the
Designated Employees in relation to the sale of the Business whether pursuant to
the Transfer Laws or any other legal
61
requirement as enacted in the Member States of the European Union and similar
laws in other jurisdictions) or any collective agreement or otherwise. The BOC
Group and the Purchaser shall reasonably consult and cooperate with each other
with respect to the foregoing.
(b) Foreign Pension and Retirement Plans. (i) With respect to each
------------------------------------
Foreign BOC Plan that is (x) designated as a "shared plan" in Section 6.03(b) of
the Disclosure Schedule (collectively, the "SHARED PLANS") and (y) a defined
benefit pension plan, the Purchaser shall make available with effect as of the
Closing Date to each Foreign Employee who is a participant in such Shared Plan
(other than the Canadian Shared Plan, as defined below) and who becomes an
employee of the Purchaser (or who remains an employee of a Non-U.S. Subsidiary)
at Closing (a "Foreign Transferred Employee") a defined benefit pension plan
(which plan, and the applicable jurisdictions, are set forth in Exhibit 6.03(b)
hereto) into which each Foreign Transferred Employee may transfer his or her
benefits in respect of service up to the Closing Date in any relevant Shared
Plan. The BOC Group and the Purchaser shall each use all reasonable efforts to
cause such transfer to be made, subject to any required consents of the Foreign
Transferred Employees being obtained, on a date as soon as practicable after the
Closing that is mutually agreed upon by the BOC Group and the Purchaser and, if
possible, within one year following the Closing (the "TRANSFER DATE"). Subject
to receiving the Agreed Transfer Payment (as defined below), the Purchaser's
defined benefit pension plan will provide only in respect of service accrued in
the relevant Shared Plan up to the Closing Date and not in respect of any
benefits to be accrued in respect of each Foreign Transferred Employee from the
Closing Date for each such Foreign Transferred Employee who transfers past
service membership to the Purchaser's plan, back-up service, retirement and
death benefits which are substantially comparable overall and based on such
Foreign Transferred Employee's pensionable service in the applicable Shared Plan
to the Closing Date and pensionable salary as at the date of retirement or
leaving service and which are of at least equivalent actuarial value (based on
the applicable actuarial assumptions set forth in Section 6.03(b) of the
Disclosure Schedule) to such benefits for that service as each Foreign
Transferred Employee has accrued in each relevant Shared Plan. The "AGREED
TRANSFER PAYMENT" shall be, except in the case of the BOC Canada Pension Plan
(the "CANADIAN SHARED PLAN"), for which no Agreed Transfer Payment shall be
made, and subject to any further limitations set forth in Section 6.03(b) of the
Disclosure Schedule, an amount of assets attributable to the liabilities for
accrued benefits in respect of the Foreign Transferred Employees transferring
past service membership calculated as of the Closing Date based on pensionable
service to the Closing Date and pensionable earnings (based upon projected
salary increases to retirement as set forth in the actuarial assumptions set
forth in Section 6.03(b) of the Disclosure Schedule) plus (x) a pro rata portion
of the plan's earnings on such transferred assets from the Closing Date through
the Transfer Date less (y) any pensions (or other benefits) paid to such Foreign
Transferred Employees from such plan from the Closing Date through the Transfer
Date. The calculation of the payment shall be made using the actuarial
assumptions set forth in Section 6.03(b) of the Disclosure Schedule. Prior to
such transfers,
62
the BOC Group's actuary shall provide the Purchaser's actuary with information
sufficient to confirm the calculation of the proposed payments under this
Section. In the event that the Purchaser's actuary does not agree with such
calculation, and the parties are unable to resolve such disagreement, an
independent actuary shall be selected by the parties (at the shared expense of
the BOC Group and the Purchaser) and such actuary's determination as to the
calculation of such payments shall be binding on the parties. Prior to the
receipt of the Agreed Transfer Payment, the Shared Plans (and the BOC Group)
shall provide all benefit payments for Foreign Transferred Employees under the
Shared Plans in respect of benefits accrued under such Shared Plans as of the
Closing Date.
(ii) With respect to each Shared Plan that is a defined contribution
pension plan, the Purchaser shall make available with effect as from the Closing
Date to each Foreign Transferred Employee who is a participant in such Shared
Plan a defined contribution pension plan (which plan, and the applicable
jurisdictions, are set forth in Exhibit 6.03(b) hereto) into which in respect of
service accrued in the relevant Shared Plans each Foreign Transferred Employee
may transfer his or her vested and, if any, unvested account balance as of the
date of transfer in the relevant plan. The BOC Group shall use its best
endeavors to arrange the transfer in cash to the Purchaser's plan of the account
balances held for each such Foreign Transferred Employee who transfers
membership and requests such asset transfer. The Purchaser shall have full
responsibility for payment of the benefits attributable to the assets so
transferred.
(iii) Effective as of the Closing Date, Foreign Transferred Employees
who are participants in the Canadian Shared Plan shall cease benefit accruals
under the Canadian Shared Plan. All benefits accrued by such Foreign Transferred
Employees in the Canadian Shared Plan shall be fully vested as of the Closing
Date and payable at such time and in such form as specified by the terms of the
Canadian Shared Plan. No assets shall be transferred from the Canadian Shared
Plan to any employee benefit plan of the Purchaser.
(iv) If the total amount transferred by the trustees, administrators
or managers (as appropriate to the plan) with respect to a Shared Plan is less
than the Agreed Transfer Payment applicable to such Shared Plan (the amount of
such deficiency defined for purposes of this provision as the "short-fall") or
if such trustees, administrators or managers (as appropriate to the plan) fail
to make all or any portion of the Agreed Transfer Payment, the BOC Group shall
within 14 days of the Transfer Date pay to the Purchaser by way of repayment of
the Purchase Price a sum in cash equal to the short-fall (net of any tax benefit
realized by the Purchaser) and the Purchaser shall forthwith pay that amount to
the trustees, administrators or managers of the Purchaser's plan.
(v) The principles of Section 2.05(a) shall apply with respect to
the allocation of the Designated Employees and any transferred assets and
liabilities under a
63
Foreign BOC Plan (other than a Shared Plan) that is to be split between the
Purchaser and one or more Other Purchasers.
SECTION 6.04. Other Employee Benefits Matters. (a) Continued
------------------------------- ---------
Communication. To the extent necessary, the BOC Group may continue to
- -------------
communicate with the employees of the Business regarding their rights and
entitlement to any benefits under the BOC Benefit Plans, subject to the
Purchaser's prior review of such communication and approval, which shall not be
unreasonably withheld, and the parties shall cooperate with each other in the
administration of all applicable employee benefit plans and programs.
(b) Service Credit. Under the Purchaser's employee benefit plans
--------------
arrangements and policies, each employee of the Business shall receive credit
for service accrued or deemed accrued prior to the Closing Date with the BOC
Group, any BOC Company or any of their respective Affiliates for all purposes of
such plans (except for purposes of benefit accruals under a defined benefit
pension plan (other than (i) any defined benefit plan described in Exhibit
6.03(b) hereto or (ii) the Purchaser's Defined Benefit Plan, in each case for
which an asset transfer for such employee occurs)), with such credited service
counting towards the application of any applicable waiting periods; provided,
however, that this provision shall not act to allow any employees to receive a
duplication of benefits. The Purchaser shall also permit (consistent with its
obligations under Section 6.04(e) of this Agreement) the employees of the
Business and their eligible dependents to participate in its group health plans
or other health coverage provided for similarly situated employees of the
Purchaser (or its Affiliates) in the applicable jurisdiction and shall credit
service with the BOC Group, any BOC Company or any of their respective
Affiliates towards the satisfaction of any waiting periods (including any
waiting periods relating to any restrictions and limitations on preexisting
medical conditions); provided, however, that this provision shall not act to
allow any employees to receive a duplication of benefits.
(c) Benefit Information. After the Closing Date, and within a
-------------------
reasonable time following any request by the BOC Group or any of its Affiliates,
the Purchaser shall provide to the BOC Group and its Affiliates such information
as may be necessary to calculate the accrued benefits under the employee benefit
plans for the BOC Group and its Affiliates' employees which is within the
Purchaser's, and not within the BOC Group and its Affiliates', control. As
promptly as practicable after the date hereof, the BOC Group shall, at the
reasonable request of the Purchaser, provide the Purchaser with copies of the
following documents relating to the BOC Benefit Plans: any filings with the
Department of Hacienda regarding the qualified status of the BOC 401(k) Plan and
the BOC Cash Balance Plan; any plan documents, summary plan descriptions,
contracts, enrollment materials and employer and participant cost information
relating to the BOC Benefit Plans; and employer and participant cost information
for all BOC Benefit Plans covering employees of the Business.
64
(d) Plant Closing Laws. The Purchaser shall be responsible for
------------------
providing any notice required, pursuant to the United States Federal Worker
Adjustment and Retraining Notification Act of 1988, any successor United States
federal law, and any applicable plant closing notification Law with respect to a
layoff or plant closing relating to the Business that occurs as a result of or
after the Closing. The BOC Group shall be responsible for providing any such
notice with respect to a layoff or plant closing occurring prior to the Closing.
The BOC Group agrees to provide to the Purchaser at Closing a list of all
employees of the Business, or otherwise employed at any facility to be
transferred to the Purchaser, that have been laid off or otherwise terminated by
any BOC Company during the 90 days prior to the Closing Date.
(e) Post-Closing Benefits. The Purchaser shall sponsor or maintain
---------------------
employee benefit plans and arrangements which will provide a level of total
compensation and benefits to active and retired employees of the Business,
considered as a group and not individually, that is no less favorable in the
aggregate than the level provided under the employee benefit plans and
arrangements of Purchaser (or its Affiliates) for existing similarly situated
employees of Purchaser (or its Affiliates). In the event that there is a
jurisdiction where there are no existing similarly situated employees of
Purchaser (or its Affiliates), the Purchaser shall instead, for a period of one
year following the Closing Date, sponsor or maintain employee benefit plans and
arrangements which will provide a level of total compensation and benefits to
active and retired employees of the Business (other than employees covered by a
collective bargaining agreement), considered as a group and not individually,
that is no less favorable in the aggregate than the level provided under the
employee benefit plans and arrangements of the BOC Group and its Affiliates and
the BOC Companies as in effect immediately prior to the Closing Date; provided,
however, that changes may be made to such level of benefits to the extent
necessary to comply with applicable Law.
(f) Accrued Vacation. The Purchaser will allow the employees of
----------------
the Business to take any vacation which is accrued but unused as of the Closing
Date with respect to the annual vacation period in which the Closing Date
occurs, or any prior vacation period to the extent such prior vacation is
reflected or reserved against in the Closing Date Balance Sheet or referred to
in the notes thereto, subject to the terms of the Purchaser's vacation policies.
(g) Payroll Taxes. The BOC Group and the Purchaser shall, to the
-------------
extent permissible under applicable Law, cooperate to treat employees of the
Business as continuing employment for U.S. or foreign payroll tax purposes.
(h) Certain Welfare Benefits. Following the date hereof, the BOC
------------------------
Group and the Purchaser shall, if requested by the Purchaser, use reasonable
best efforts to permit the active employees of the Business to participate in
the BOC Group's welfare plans for a short transition
65
period after the Closing, subject to the parties reaching an agreement as to the
reimbursement of the cost of providing such participation and any other
applicable terms and conditions, which agreement shall be negotiated in good
faith.
SECTION 6.05. Collective Bargaining Agreements; Certain Employee
--------------------------------------------------
Benefits. (a) On the Closing Date, the BOC Group and its Affiliates shall
- --------
assign to the Purchaser, and the Purchaser shall assume, the collective
bargaining agreements (including, without limitation, the written and unwritten
informal governing arrangements and plant matters entered into by the BOC Group
and its Affiliates and the collective bargaining representatives, which
arrangements and plant matters are listed or described in Section 6.05 of the
Disclosure Schedule) listed in Section 6.05 of the Disclosure Schedule insofar
as they relate to employees employed in the Business. The BOC Group shall give
the Purchaser reasonable access to unionized employees of the Business following
the date hereof.
ARTICLE VII
TAX MATTERS
SECTION 7.01. Sales, Use and Other Transfer Taxes. (a) The Purchaser
-----------------------------------
shall provide the Subsidiaries with resale or other similar exemption
certificates as is appropriate. Subject to paragraph (b) below, the BOC Group
and the Purchaser shall each be responsible for one-half of any and all excise,
sales, value added, VAT, use, registration, stamp, notarial, franchise, property
transfer, transfer and similar Taxes, levies, charges and fees (including all
real estate transfer taxes, stamp duties, registration costs, notarial fees and
similar duties, costs and fees) arising in connection with the transactions
contemplated by this Agreement. The Purchaser will not be responsible for any
costs or Taxes described in this Section 7.01(a) relating to the transfer of (i)
any Excluded Assets or (ii) any assets which are to be transferred to the
purchaser under the MSD/SPD Purchase Agreement, the PPD Purchase Agreement or
the INO Purchase Agreement. The Purchaser and the BOC Group agree to cooperate
in the filing of all necessary documentation and all Tax returns, reports and
forms ("RETURNS") with respect to all such Taxes, including any available pre-
sale filing procedure.
(b) The BOC Group and the Purchaser will cooperate to ensure that
the transfer of Assets will attract no VAT. If there is an unavoidable charge to
VAT in respect of any of the Asset transfers, and on being supplied with the tax
invoice or other evidence of payment, the Purchaser will recover the whole of
the VAT, then the Purchase Price will be increased by the VAT and such increase
shall be paid promptly after the Purchaser recovers such VAT by way of refund or
offset against VAT otherwise currently payable. In the event any VAT will not be
refunded to the Purchaser, such that the transaction involves some
66
element of irrecoverable cost of VAT, each of the BOC Group and the Purchaser
shall be responsible for one-half of such cost.
SECTION 7.02. Property Taxes. All real and personal property Taxes
--------------
attributable to each Asset for a taxable period that begins before the Closing
Date and ends after the Closing Date shall be the responsibility of the BOC
Group in an amount equal to the Tax for the entire taxable period multiplied by
a fraction, the numerator of which is the number of days in the period ending on
the Closing Date and the denominator of which is the number of days in the
entire period, except to the extent that the amount of such Tax is specifically
reserved on the Cut-Off Date Divisional Balance Sheet (as identified in a
schedule attached thereto). The remainder of the Tax shall be the
responsibility of the Purchaser. Each of the Subsidiaries and the Purchaser
shall be entitled to indemnification by the other party to the extent it pays
real or personal property Taxes that were the responsibility of the other party
under this Section 7.02.
SECTION 7.03. Tax Indemnities. (a) From and after the Closing Date,
---------------
the BOC Group agrees to indemnify the Purchaser and each Subsidiary against any
claim under any tax sharing or similar agreement entered into prior to the
Closing Date to which such Subsidiary is a party, and all Taxes (i) imposed on
any member of an affiliated group (other than the Subsidiaries) with which any
Subsidiary has filed a consolidated, combined group or similar type of income
tax return with respect to any taxable period that ends on or before the Closing
Date or includes the Closing Date (including, without limitation, by reason of
the application of Treasury Regulation Section 1.1502-6 or any similar provision
of state, local or foreign tax law or regulation), (ii) imposed on any
Subsidiary with respect to any taxable period or portion thereof that ends on or
before the Closing Date (including, for the avoidance of doubt, Taxes resulting
from any Subsidiary ceasing to be a member of any Affiliated Group on or before
the Closing Date) and (iii) arising in connection with the formation of
Healthcare Holding in Sweden AB and any transfers of the stock of Health Care
Holding in Sweden AB, BOC Ohmeda Oy, or the patent rights, goodwill and other
intangible assets relating to Brevibloc by or among the BOC Group or any
Affiliate and, except as provided in Section 7.01, the Transactions and the
transactions contemplated by the PPD Purchase Agreement, the MSD/SPD Purchase
Agreement and the INO Purchase Agreement; provided, however, that in each case,
the BOC Group shall be liable only to the extent that such Taxes are in excess
of the amount specifically reserved for such Taxes on the Cut-Off Date
Divisional Balance Sheet (as identified in a schedule attached thereto; for
these purposes no Tax reserves for any deferred Taxes will be taken into
account); provided further, however, that no indemnity shall be provided under
this Agreement for any Taxes resulting from (i) an actual or a deemed election
under Section 338 of the Code or comparable provisions of any state, foreign or
other tax law with respect to the transactions contemplated by this Agreement
(except to the extent attributable to a Non-U.S. Subsidiary being deemed, as of
the time immediately preceding the Closing, to be a "controlled foreign
corporation" as defined in Section 957 of the Code or a
67
foreign corporation engaged in trade or business in the United States as defined
in Section 864(b) of the Code), (ii) the non-availability, loss or a reduction
of any net operating loss, capital loss or Tax credit carryover or any other
similar Tax relief allocable to any Subsidiary or (iii) any transaction of any
Subsidiary occurring on the Closing Date after the Closing that is not in the
ordinary course of business other than those contemplated by this Agreement, the
MSD/SPD Purchase Agreement, the PPD Purchase Agreement and the INO Purchase
Agreement.
(b) From and after the Closing Date, the Purchaser shall indemnify
the BOC Group and its Affiliates against all Taxes imposed on or with respect to
the Subsidiaries that are not subject to indemnification pursuant to paragraph
(a) of this Section 7.03, including, but not limited to, Taxes (i) resulting
from an actual or a deemed election under Section 338 of the Code or comparable
provisions of any state (except to the extent attributable to a Non-U.S.
Subsidiary being deemed, as of the time immediately preceding the Closing, to be
a "controlled foreign corporation" as defined in Section 957 of the Code or a
foreign corporation engaged in trade or business in the United States as defined
in Section 864(b) of the Code), foreign or other tax law with respect to the
transactions contemplated by this Agreement, (ii) resulting from any transaction
of the Subsidiaries occurring on the Closing Date after the Closing that is not
in the ordinary course of business and is not contemplated by this Agreement,
the MSD/SPD Purchase Agreement, the PPD Purchase Agreement or the INO Purchase
Agreement or (iii) that are allocable to or incurred with respect to any taxable
period or portion thereof that begins on or after the Closing Date.
(c) Payment by the indemnitor of any amount due under this Section
7.03 shall be made within thirty days following written notice by the indemnitee
that payment of such amounts to the appropriate Tax authority is due, provided
that the indemnitor shall not be required to make any payment earlier than five
days before it is due to the appropriate Tax authority. If the BOC Group or any
Affiliate receives an assessment or other notice of Taxes due with respect to
the BOC Group or any of the Subsidiaries for any period ending on or before the
Closing Date for which the BOC Group is not responsible, in whole or in part,
pursuant to paragraph (a) of this Section 7.03 because all or a part of such Tax
does not exceed the amount specifically reserved for such Taxes on the Cut-Off
Date Divisional Balance Sheet (as identified on a schedule attached thereto),
then the Purchaser shall pay the amount of such Tax for which the BOC Group is
not responsible, or if the BOC Group or any Affiliate pays such amount, then the
Purchaser shall pay to the BOC Group, in accordance with the first sentence of
this Section 7.03(c), such amount. In the case of a Tax that is contested in
accordance with the provisions of Section 7.05, payment of the Tax to the
appropriate Tax authority will not be considered to be due earlier than the date
a final determination to such effect is made by the appropriate Tax authority or
a court. Notwithstanding anything contained herein to the contrary, in the case
of any sale of Shares by the BOC Group or an Affiliate thereof resident in the
United Kingdom, the payment of any amount due under this
68
Section 7.03 shall be paid by the selling entity to the Purchaser, or by the
Purchaser to the selling entity, as the case may be, such payment to be treated
as an adjustment to the Purchase Price as provided in Section 7.08 hereof.
(d) For purposes of this Agreement, in the case of any Tax incurred
by a Subsidiary that is imposed on a periodic basis and is payable for a period
that begins before the Closing Date and ends after the Closing Date, the portion
of such Taxes payable for the period ending on the Closing Date shall be (i) in
the case of any Tax other than a Tax based upon or measured by income, the
amount of such Tax for the entire period (or, in the case of such Taxes
determined on an arrears basis, the amount of such Taxes for the immediately
preceding period) multiplied by a fraction, the numerator of which is the number
of days in the period ending on the Closing Date and the denominator of which is
the number of days in the entire period and (ii) in the case of any Tax based
upon or measured by income, the amount which would be payable if the taxable
year ended on the Closing Date (and in any jurisdiction where appropriate, based
on the income for such period utilized in preparing the Closing Date Carve-Out
Balance Sheet). Any credit shall be determined based upon clause (i) or (ii), as
appropriate, of the next preceding sentence. In the case of any Tax based upon
or measured by capital (including net worth or long-term debt) or intangibles,
any amount thereof required to be allocated under this Section 7.03(d) shall be
computed by reference to the level of such items on the Closing Date.
SECTION 7.04. Refunds and Tax Benefits. (a) The Purchaser shall
------------------------
promptly pay to the BOC Group an amount equal to any refund (such refund having
been either actually refunded or credited to or offset against a current tax
liability) (including any interest paid or credited with respect thereto)
received by the Purchaser (but only with respect to a Subsidiary) or any
Subsidiary of Taxes (i) relating to taxable periods or portions thereof ending
on or before the Closing Date or (ii) attributable to Taxes that gave rise to a
payment by the BOC Group under Section 7.03. The Purchaser shall, if the BOC
Group so requests and at the BOC Group's expense, cause the relevant entity to
file for and obtain any refund which would give rise to a payment under this
Section 7.04. The Purchaser shall permit the BOC Group to control (at the BOC
Group's expense) the prosecution of any such refund claim, and shall cause the
relevant entity to authorize by appropriate power of attorney such persons as
the BOC Group shall designate to represent such entity with respect to such
refund claim; provided, that no such refund claim or the settlement or other
disposition thereof will increase a tax liability of the Purchaser or any
Subsidiary in any taxable period ending after the Closing Date. Neither the
Purchaser nor any Subsidiary shall be required to pay to the BOC Group or any
Affiliate thereof any refund or credit of Taxes that results from the carryback
to any taxable period ending on or before the Closing Date of any net operating
loss, capital loss or tax credit incurred by any Subsidiary in any taxable
period beginning after the Closing Date (and in the event such refund or credit
is received by the BOC Group then the BOC Group shall pay such refund or the
benefits of such credit to the Purchaser); provided that in
69
determining whether any such carryback results in a refund or credit, such
carryback shall be taken into account only after giving effect to all other
items of benefit.
(b) Any amount otherwise payable by the BOC Group under Section
7.03 shall be reduced by any post-Closing Date Tax benefit actually realized
(determined after giving effect to all other items of benefit) that the
Purchaser, any Subsidiary or any Affiliate of the Purchaser or any Subsidiary
with which any Subsidiary files a consolidated, combined or unitary Tax return
for a period or portion thereof beginning after the Closing Date (all such
companies referred to collectively as the "PURCHASER GROUP") would not have
become entitled to but for the Tax or circumstances that gave rise to the BOC
Group's payment pursuant to Section 7.03 (a "POST-CLOSING DATE TAX BENEFIT")
(such as a reduction in Taxes for any member of the Purchaser Group for a period
after the Closing Date resulting from a Tax deduction for any member of the
Purchaser Group for a period after the Closing Date). If a payment is made by
the BOC Group in accordance with Section 7.03, and if in a subsequent taxable
year a Post-Closing Date Tax Benefit is realized by any member of the Purchaser
Group (that was not previously taken into account pursuant to the preceding
sentence to reduce an amount otherwise payable by the BOC Group under Section
7.03), the Purchaser shall cause such member of the Purchaser Group to pay to
the BOC Group at the time of such realization of the amount of such Post-Closing
Date Tax Benefit to the extent that the Post-Closing Date Tax Benefit would have
resulted in a reduction in the amount paid by the BOC Group under Section 7.03
if the Post-Closing Date Tax Benefit had been obtained prior to or in the year
of such payment. A Post-Closing Date Tax Benefit will be considered to be
realized for purposes of this Section 7.04 at the time that it actually reduces
Taxes payable on a Tax return of any member of the Purchaser Group. Any Tax
benefit that is taken into account in determining the amount of a Post-Closing
Date Tax Benefit that is subsequently disallowed shall be treated as a Tax that
is subject to indemnification pursuant to Section 7.03.
SECTION 7.05. Contests. (a) After the Closing Date, the Purchaser
--------
shall promptly notify the BOC Group in writing of the commencement of any Tax
audit or administrative or judicial proceeding or of any demand or claim on the
Purchaser or any Subsidiary which, if determined adversely to the taxpayer or
after the lapse of time, would be grounds for indemnification under Section
7.03. Such notice shall contain factual information (to the extent known to the
Purchaser or the relevant Subsidiary) describing the asserted Tax liability in
reasonable detail and shall include copies of any notice or other document
received from any Tax authority in respect of any such asserted Tax liability.
If the Purchaser fails to give the BOC Group prompt notice of an asserted Tax
liability as required by this Section 7.05, then if the BOC Group is precluded
by the failure to give prompt notice from contesting the asserted Tax liability
in both the administrative and judicial forums, then the BOC Group shall not
have any obligation to indemnify for any loss arising out of such asserted Tax
liability.
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(b) The BOC Group may elect to direct, through counsel of its own
choosing and at its own expense, any audit, claim for refund and administrative
or judicial proceeding involving any asserted liability with respect to which
indemnity may be sought under Section 7.03 relating to any taxable period ending
on or before the Closing Date (any such audit, claim for refund or proceeding
relating to an asserted Tax liability is referred to herein as a "CONTEST"). If
the BOC Group elects to direct a Contest, it shall within 30 calendar days of
receipt of the notice of asserted Tax liability notify the Purchaser in writing
of its intent to do so, and the Purchaser shall cooperate and shall cause any
Subsidiary or its respective successors to cooperate, at the BOC Group's
expense, in each phase of such Contest; provided, however, that the BOC Group
shall not settle, compromise or abandon, without the Purchaser's prior written
consent (such consent not to be unreasonably withheld) any claim for Tax that
would have an adverse effect on the Tax liability of the Purchaser or any
Subsidiary in any period (or portion thereof) beginning after the Closing Date
after taking into account the present value of any Tax savings available to the
Purchaser or any Subsidiary in any such period and the present value of any Tax
liability payable by the Purchaser or any Subsidiary in any such period, in each
case (i) resulting directly from the adjustments that gave rise to the claim for
Tax that is proposed to be settled, compromised or abandoned and (ii) taken into
account at such time that the Purchaser reasonably believes that it would
realize such savings or pay such tax liability; provided further, however, that
no loss or reduction in the amount of any pre-Closing net operating loss,
capital loss or Tax credit carryover or other similar Tax relief allocable to
any Subsidiary will be treated as resulting in an additional Tax liability
payable by the Purchaser or such Subsidiary. If the BOC Group elects not to
direct the Contest, fails to notify the Purchaser of its election as herein
provided or contests its obligation to indemnify under Section 7.03, the
Purchaser or any Subsidiary may pay, compromise or contest, at its own expense,
such asserted Tax liability. However, in each such case, neither the Purchaser
nor any Subsidiary may settle or compromise any asserted Tax liability over the
objection of the BOC Group; provided, however, that consent to settlement or
compromise shall not be unreasonably withheld. In any event, the BOC Group may
participate, at its own expense, in the Contest. If the BOC Group chooses to
direct the Contest, the Purchaser shall promptly empower and shall cause the
relevant Subsidiary or its successors promptly to empower (by power of attorney
and such other documentation as may be necessary and appropriate) such
representatives of the BOC Group as it may designate to represent the Purchaser
or the relevant Subsidiary or their respective successors in the Contest insofar
as the Contest involves an asserted Tax liability for which the BOC Group would
be liable under Section 7.03.
(c) In the event of any audit, claims for refund or administrative
or judicial proceeding involving any asserted Tax liability relating to any
taxable period ending after the Closing Date (any such audit, claim for refund
or proceeding relating to an asserted Tax liability is referred to herein as a
"POST-CLOSING CONTEST") with respect to which indemnity may be sought under
Section 7.03(a), the Purchaser or its Affiliates, as the case may be, shall
71
contest such claim if the BOC Group shall reasonably request in writing from
time to time; provided that (i) within 30 days (or such earlier date that any
payment of Taxes is due by the Purchaser or the relevant Affiliate) after the
notice described in Section 7.05(a) has been delivered to the BOC Group, the BOC
Group requests that such claim be contested; (ii) the BOC Group shall have
agreed to pay to the Purchaser or the relevant Affiliate on demand the costs and
expenses which the Purchaser or the relevant Affiliate may incur in connection
with contesting such claim (or appeal), including, without limitation,
reasonable attorneys' and accountants' fees and disbursements; and (iii) if the
Purchaser or the relevant Affiliate is requested or the Purchaser or such
relevant Affiliate shall determine to pay the Tax claimed and sue for a refund,
the BOC Group shall have advanced to the Purchaser or the relevant Affiliate, on
an interest-free basis, the portion of such Tax for which it is obligated to
indemnify. If the BOC Group is only obligated to indemnify for a portion of the
Tax liability resulting from an adjustment to a particular item, the BOC Group
shall only be obligated to pay its proportionate share of the costs and expenses
of contesting or appealing such adjustment, based on the proportion that the
amount of BOC's indemnity obligation with respect to such adjustment bears to
the total amount of the Tax liability arising from such adjustment. In the case
of any such claim referred to above, the Purchaser or the relevant Affiliate, as
the case may be, shall not make payment of such claim for at least 30 days (or
such shorter period as may be required by applicable law) after the giving of
such notice, shall give to the BOC Group any information reasonably requested by
the BOC Group relating to such claim and otherwise shall cooperate with the BOC
Group in good faith in order to contest effectively any such claim, and to the
extent not inconsistent with the Purchaser's or the relevant Affiliate's control
over any proceedings insofar as they relate to issues other than those subject
to this indemnity, shall permit the BOC Group to participate in such proceedings
relating to such claim. The Purchaser or its Affiliates may not settle,
compromise or refuse to contest any claims made in a Post-Closing Contest which
it is otherwise obligated to contest pursuant to this Section 7.05(c) without
the express written consent of the BOC Group (such consent not to be
unreasonably withheld); provided that the Purchaser or an Affiliate thereof, as
the case may be, may, in its sole discretion, settle, compromise or refuse to
contest any claims made in a Post-Closing Contest which it is otherwise
obligated to contest pursuant to this Section 7.05(c) if the Purchaser or such
Affiliate releases the BOC Group from its indemnity obligation with respect to
that claim.
SECTION 7.06. Preparation of Tax Returns. (a) The BOC Group shall
--------------------------
prepare and file, or cause to be prepared and filed, any Return relating to any
Subsidiary, for any taxable period that ends on or before the Closing Date.
Such Returns shall be prepared on a basis consistent with those prepared for
prior taxable periods unless a different treatment of any item is required by an
intervening change in law.
(b) The Purchaser shall prepare and file, or cause to be prepared
and filed, any Return relating to any Subsidiary for any taxable period that
ends after the Closing Date.
72
Such Returns for any taxable period that includes the Closing Date shall be
prepared on a basis consistent with those prepared for prior taxable periods
unless a different treatment of any item is required by an intervening change in
law.
(c) The BOC Group shall be entitled to review and comment on any
Returns for any Subsidiary for any taxable period that includes the Closing Date
before it is filed. In the case of any Non-U.S. Subsidiary, the Purchaser shall
submit a draft of any such Return to the BOC Group at least 60 days before the
date such Return is required to be filed with the relevant Tax authority. The
BOC Group shall have 25 days after the date of receipt thereof to submit to the
Purchaser in writing the BOC Group's comments with respect to such Return. The
Purchaser shall notify the BOC Group within 10 days after receipt of such
comments of (i) the extent, if any, to which the Purchaser accepts such comments
and will file such Return in accordance therewith and (ii) the extent, if any,
to which the Purchaser rejects such comments. In the case of any U.S.
Subsidiary, the Purchaser agrees to consult with the BOC Group in connection
with the preparation and filing of any Returns of such Subsidiary for any
taxable period that includes the Closing Date and to consider in good faith any
comments that the BOC Group may make with respect to any position to be taken on
such Returns.
(d) In the case of any Non-U.S. Subsidiary, to the extent the
Purchaser rejects the comments of the BOC Group, the Purchaser and the BOC Group
shall, within 5 days, appoint an independent public accounting firm of
internationally recognized standing that does not then audit the books of the
Purchaser, the BOC Group or any relevant Subsidiary to determine the correct
manner for reporting the items that are in dispute. The BOC Group and the
Purchaser agree promptly to provide to such accounting firm all relevant
information, and such accounting firm shall have 10 days to submit its
determination. The determination of such accounting firm shall be binding upon
the parties and the Purchaser shall file such Return in accordance therewith.
The fees and expenses of such accounting firm shall be paid one-half by the BOC
Group and one-half by the Purchaser.
SECTION 7.07. Cooperation and Exchange of Information. The BOC Group
---------------------------------------
and the Purchaser will provide each other with such cooperation and information
as either of them reasonably may request of the other in filing any Tax return,
amended return or claim for refund, determining a liability for Taxes or a right
to a refund of Taxes or participating in or conducting any audit or other
proceeding in respect of Taxes. Such cooperation and information shall include
providing copies of relevant Tax returns or portions thereof, together with
accompanying schedules and related work papers and documents relating to rulings
or other determinations by Tax authorities. Each party shall make its employees
available on a mutually convenient basis to provide explanations of any
documents or information provided hereunder. Each party will retain all
returns, schedules and work papers and all material records or other documents
relating to Tax matters of the Subsidiaries for the taxable period first ending
after the Closing Date and for all prior taxable periods until the later of (i)
the
73
expiration of the statute of limitations of the taxable periods to which such
returns and other documents relate, without regard to extensions except to the
extent notified by the other party in writing of such extensions for the
respective Tax periods or (ii) eight years following the filing date (without
extension) for such returns. Any information obtained under this Section 7.07
shall be kept confidential, except as may be otherwise necessary in connection
with the filing of returns or claims for refund or in conducting an audit or
other proceeding.
SECTION 7.08. Allocation of Purchase Price. Neither the BOC Group
----------------------------
nor the Purchaser shall, or permit any of its Affiliates to, file any Return, or
take a position with a Tax authority, that is inconsistent with the allocation
of the Purchase Price set forth in Exhibit 2.04(b) (as adjusted pursuant to
Section 2.04(b)), or that treats the transactions contemplated by this Agreement
in a manner inconsistent with the terms of this Agreement. Neither the BOC Group
nor the Purchaser shall agree to any adjustment to the allocation as set forth
in Exhibit 2.04(b) (as adjusted pursuant to Section 2.04(b)) without the prior
written consent of the other party, which consent shall not be unreasonably
withheld. The parties agree to treat all payments made under this Article VII,
under any other indemnity provision contained in this Agreement, and for any
misrepresentations or breaches of warranties or covenants as adjustments to the
Purchase Price for Tax purposes.
SECTION 7.09. Miscellaneous. (a) Except as expressly provided
-------------
otherwise and except for the representations contained in Section 3.20 of this
Agreement, this Article VII shall be the sole provision governing Tax matters
and indemnities therefor under this Agreement.
(b) For purposes of this Article VII, all references to the
Purchaser, the BOC Group and the Subsidiaries include successors.
(c) The covenants and agreements of the parties hereto contained in
this Article VII shall survive the Closing and shall remain in full force and
effect until the expiration of all statutes of limitations with respect to any
Taxes that would be indemnifiable by the BOC Group under Section 7.03(a) of this
Agreement or by the Purchaser under Section 7.03(b) of this Agreement.
(d) Any tax sharing agreement to which any Subsidiary is a party
shall be deemed to be terminated to the extent permitted by applicable law as of
a date no later than the Closing Date as to such Subsidiary. The organshaft to
which Ohmeda GmbH Medizintechnik is a party shall be terminated as of October 1,
1997.
74
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of the BOC Group. The
------------------------------------------
obligations of the BOC Group to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) Representations and Warranties; Covenants. The representations
-----------------------------------------
and warranties of the Purchaser contained in this Agreement shall have been
true and correct when made and shall be true and correct in all material
respects as of the Closing, with the same force and effect as if made as of
the Closing, other than such representations and warranties as are made as
of another date (in any case without giving effect to any standard,
qualification or exception with respect to "materiality"); the covenants
and agreements contained in this Agreement to be complied with by the
Purchaser at or before the Closing shall have been complied with in all
material respects; and the BOC Group shall have received a certificate of
the Purchaser to such effect signed by a duly authorized officer thereof;
(b) Governmental Approvals. Any waiting period (and any extension
----------------------
thereof) under the HSR Act applicable to the purchase of the Shares or the
Assets contemplated hereby and each other waiting period or approval
required under the antitrust and competition laws set forth on Exhibit
8.01(b) shall have expired or shall have been terminated or shall have been
obtained, as the case may be;
(c) No Order. No Governmental Authority shall have enacted,
--------
issued, promulgated, enforced or entered any Law or Governmental Order
(whether temporary, preliminary or permanent) which is in effect and has
the effect of making the transactions contemplated by this Agreement
illegal or otherwise restraining or prohibiting consummation of such
transactions; provided, however, that the parties hereto shall use all
reasonable efforts to have any such Governmental Order vacated;
(d) Ancillary Agreements. The Purchaser shall have duly executed
--------------------
and delivered to the BOC Group counterparts of each of the Ancillary
Agreements; and
(e) Other Closings. The closings under the MSD/SPD Purchase
--------------
Agreement and the PPD Purchase Agreement shall have occurred simultaneously
(subject to Section 2.01) with the Closing.
75
SECTION 8.02. Conditions to Obligations of the Purchaser. The
------------------------------------------
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) Representations and Warranties; Covenants. (i) The
-----------------------------------------
representations and warranties of the BOC Group contained in this Agreement
shall have been true and correct when made and shall be true and correct as
of the Closing, with the same force and effect as if made as of the
Closing, other than such representations and warranties as are made as of
another date (after giving effect to the allocation of revenues, costs,
assets and liabilities implicit in the description of the MDD business set
forth in the Descriptive Memorandum, but in any case without giving effect
to any reallocation of revenues, costs, assets and liabilities following
the date hereof in accordance with the Carve-Out Allocation Protocol, and
without giving effect to any standard, qualification or exception with
respect to "materiality" or to "Material Adverse Effect" contained
therein), except as would not, individually or in the aggregate, have a
Material Adverse Effect (which, for purposes of this Section 8.02(a), shall
mean any change in, or effect on, the Business as currently conducted that
is materially adverse to the business, results of operations or financial
condition of the Ohmeda Business, taken as a whole); the covenants and
agreements contained in this Agreement to be complied with by the BOC Group
at or before the Closing shall have been complied with in all material
respects; and the Purchaser shall have received a certificate of the BOC
Group to such effect signed by a duly authorized officer thereof; and
(ii) (x) The representations and warranties of the BOC Group
contained in this Agreement and in the MSD/SPD Purchase Agreement, the PPD
Purchase Agreement and the INO Purchase Agreement shall have been true and
correct when made and shall be true and correct as of the Closing, with the
same force and effect as if made as of the Closing, other than such
representations and warranties as are made as of another date (after giving
effect to the allocation of revenues, costs, assets and liabilities
implicit in the description of the MDD business set forth in the
Descriptive Memorandum, but in any case without giving effect to any
reallocation of revenues, costs, assets and liabilities following the date
hereof in accordance with the Carve-Out Allocation Protocol and without
giving effect to any standard, qualification or exception with respect to
"materiality" or to "Material Adverse Effect" contained therein), except as
would not, individually or in the aggregate, have a Material Adverse Effect
(which, for purposes of this Section 8.02(a), shall mean any change in, or
effect on, the businesses of MDD, MSD, SPD and PPD as currently conducted
that is materially adverse to the business, results of operations or
financial condition of the Ohmeda Business, taken as a whole), and (y) the
Purchaser and the purchasers under the MSD/SPD Purchase Agreement, the PPD
Purchase Agreement and the INO
76
Purchase Agreement shall not have delivered to the BOC Group a certificate
to the effect that they have agreed in writing that this Section
8.02(a)(ii)(y) is triggered;
(b) Governmental Approvals. Any waiting period (and any extension
----------------------
thereof) under the HSR Act applicable to the purchase of the Shares or the
Assets contemplated hereby and each other waiting period or approval
required under the antitrust and competition laws set forth on Exhibit
8.01(b) shall have expired or shall have been terminated or shall have been
obtained, as the case may be;
(c) No Order. No Governmental Authority shall have enacted, issued,
--------
promulgated, enforced or entered any Law or Governmental Order (whether
temporary, preliminary or permanent) which is in effect and has the effect
of making the transactions contemplated by this Agreement illegal or
otherwise restraining or prohibiting consummation of such transactions;
provided, however, that the parties hereto shall use all reasonable efforts
to have any such Governmental Order vacated;
(d) Ancillary Agreements. The BOC Group and its Affiliates shall
--------------------
have duly executed and delivered to the Purchaser counterparts of each of
the Ancillary Agreements to which each such Person is a party;
(e) Other Closings. The closings under the MSD/SPD Purchase
--------------
Agreement and the PPD Purchase Agreement shall have occurred simultaneously
(subject to Section 2.01) with the Closing; and
(f) Transfer Documents. The Purchaser shall have received from the
------------------
BOC Group and its Affiliates such bills of sale and other instruments as
may be reasonably requested by the Purchaser to transfer the Assets to the
Purchaser or one or more of its wholly owned subsidiaries or to evidence
such transfer on the public records.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Survival of Representations and Warranties. Subject to
------------------------------------------
the limitations and other provisions of this Agreement, the representations and
warranties of the parties hereto contained herein shall survive the Closing and
shall remain in full force and effect until the later of (x) the 90th day
following the end of the first full fiscal year of the Purchaser commencing
after the Closing Date; provided, however, that (i) the representations and
warranties set forth in Sections 3.01, 3.02, 3.03, 3.21 and 4.01 shall survive
indefinitely, (ii) the representations and warranties set forth in Section 3.12
shall survive until the seventh
77
anniversary of the Closing Date, (iii) all representations and warranties
relating to Tax matters shall be governed by Section 3.20 and Article VII and
shall survive so long as the applicable statute of limitations period remains
open, including by reason of any waiver of such limitations period, and (iv) the
representations and warranties set forth in the second and penultimate sentences
of Section 3.18(a) shall survive so long as the applicable statute of
limitations period remains open.
SECTION 9.02. Indemnification by the Purchaser. (a) The Purchaser
--------------------------------
agrees, subject to the other terms and conditions of this Agreement, to
indemnify the BOC Group and its Affiliates, officers, directors, employees,
agents, successors and assigns (each a "BOC GROUP INDEMNIFIED PARTY") against
and hold them harmless from all liabilities, losses, damages, claims, costs and
expenses (including reasonable attorney's fees) (collectively, "LOSSES")
actually incurred by them arising out of (i) the failure of any representation
or warranty of the Purchaser herein to be true and correct in all respects on
the date hereof or the Cut-Off Date (except for representations and warranties
that speak as of a specific date, which must be true and correct as of such
date, and the representations and warranties set forth in Sections 4.01 through
4.03, 4.05 and 4.06, which must be true and correct on the date hereof and on
the Closing Date), without giving effect to any standard, qualification or
exception with respect to "materiality" contained therein, (ii) the breach of
any covenant or agreement of the Purchaser herein (other than Article VII, it
being understood and agreed that the sole remedy for breach thereof shall be
pursuant to Article VII) or in the Ancillary Agreements, (iii) the Assumed
Liabilities, (iv) the conduct of the Business following the Closing, and (v) any
amounts (other than Excluded Liabilities) required to be paid by the BOC Group
pursuant to Section 74 of the Insolvency Act of 1986 as a result of the BOC
Group's ownership of Ohmeda UK. Notwithstanding anything in Article IX to the
contrary, no claim may be asserted nor may any action be commenced against the
Purchaser pursuant to Section 9.02(a)(i), unless written notice of such claim or
action is received by the Purchaser describing in reasonable detail the facts
and circumstances with respect to the subject matter of such claim or action on
or prior to the date on which the representation or warranty on which such claim
or action is based ceases to survive as set forth in Section 9.01.
(b) A BOC Group Indemnified Party shall give the Purchaser prompt
written notice of any claim, assertion, event or proceeding by or in respect of
a third party of which a BOC Group Indemnified Party has knowledge concerning
any Loss as to which a BOC Group Indemnified Party may request indemnification
hereunder. The Purchaser shall have the right to assume, through counsel of its
own choosing, the defense or settlement of any such claim or proceeding at its
own expense. If the Purchaser elects to assume the defense of any such claim or
proceeding, the BOC Group Indemnified Party may participate in such defense, but
in such case the expenses of the BOC Group Indemnified Party shall be paid by
the BOC Group Indemnified Party. The BOC Group Indemnified Party shall provide
the Purchaser with access to its records and personnel relating to any such
claim, assertion, event or proceeding during
78
normal business hours and shall otherwise cooperate with the Purchaser in the
defense or settlement thereof, and the Purchaser shall reimburse the BOC Group
Indemnified Party for all the reasonable out-of-pocket expenses of such BOC
Group Indemnified Party in connection therewith. If the Purchaser elects to
assume the defense of any such claim or proceeding, the BOC Group Indemnified
Party shall not pay, or permit to be paid, any part of any claim or demand
arising from such asserted liability, unless the Purchaser consents in writing
to such payment or unless the Purchaser, subject to the last sentence of this
Section 9.02(b), withdraws from the defense of such asserted liability, or
unless a final judgment from which no appeal may be taken by or on behalf of the
Purchaser is entered against the BOC Group Indemnified Party for such liability.
The Purchaser shall not, without the prior written consent of the BOC Group
Indemnified Party, settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened claim or proceeding in respect of
which indemnification may be sought hereunder (whether or not the BOC Group
Indemnified Party is an actual or potential party to such claim or proceeding)
unless such settlement, compromise or consent (x) includes an unconditional
release of each BOC Group Indemnified Party from all liability arising out of
such claim or proceeding and (y) does not include a statement as to or an
admission of fault, culpability or failure to act by or on behalf of a BOC Group
Indemnified Party. If the Purchaser shall fail to undertake any such defense,
the BOC Group Indemnified Party shall have the right to undertake the defense or
settlement thereof, at the Purchaser's expense. If the BOC Group Indemnified
Party assumes the defense of any such claim or proceeding pursuant to this
Section 9.02(b) and proposes to settle such claim or proceeding prior to a final
judgment thereon or to forgo appeal with respect thereto, then the BOC Group
Indemnified Party shall give the Purchaser prompt written notice thereof and the
Purchaser shall have the right to participate in the settlement or assume or
reassume the defense of such claim or proceeding.
(c) The BOC Group hereby acknowledges and agrees that its sole and
exclusive remedy with respect to any and all claims relating to the subject
matter of this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby, shall be pursuant to the indemnification
provisions set forth in Article VI, Article VII and in this Article IX and
specific performance as contemplated by Section 11.10. In furtherance of the
foregoing, the BOC Group hereby waives, to the fullest extent permitted under
applicable Law, any and all rights, claims and causes of action it may have
against the Purchaser arising under or based upon any Law (including, without
limitation, any such rights, claims or causes of action arising under or based
upon common law or otherwise).
(d) Except as expressly set forth in this Agreement, the Purchaser
is not making any representation, warranty, covenant or agreement with respect
to the matters contained herein. Anything herein to the contrary
notwithstanding, no breach of any representation, warranty, covenant or
agreement contained herein shall give rise to any right on the part of the BOC
Group, after the consummation of the purchase and sale of the Business
79
contemplated by this Agreement, to rescind this Agreement or any of the
transactions contemplated hereby.
SECTION 9.03. Indemnification by the BOC Group. (a) The BOC Group
--------------------------------
agrees, subject to the other terms and conditions of this Agreement, to
indemnify the Purchaser and its Affiliates, officers, directors, employees,
agents, successors and assigns (each a "PURCHASER INDEMNIFIED PARTY") against
and hold them harmless from all Losses actually incurred by them arising out of
(i) the failure of any representation or warranty of the BOC Group herein to be
true and correct in all respects on the date hereof or the Cut-Off Date (except
for representations and warranties that speak as of a specific date, which must
be true and correct as of such date, and the representations and warranties set
forth in Sections 3.01 through 3.05, 3.16(c), 3.18, 3.20 and 3.21, which must be
true and correct on the date hereof and on the Closing Date), after giving
effect to the allocation of revenues, costs, assets and liabilities implicit in
the description of the MDD business set forth in the Descriptive Memorandum, but
without giving effect to any reallocation of revenues, costs, assets and
liabilities following the date hereof in accordance with the Carve-Out
Allocation Protocol and without giving effect to any standard, qualification or
exception with respect to "materiality" or to "Material Adverse Effect"
contained therein (except in Section 3.21), (ii) the breach of any covenant or
agreement of the BOC Group herein (other than Section 3.20 and Article VII, it
being understood and agreed that the sole remedy for breach of such provisions
shall be pursuant to Article VII) or in the Ancillary Agreements, (iii) the
Excluded Assets and (iv) the Excluded Liabilities. The BOC Group further
agrees, subject to the other terms and conditions of the Agreement, to indemnify
hereunder the Purchaser Indemnified Parties against and hold them harmless from
all Losses actually incurred by them, directly or indirectly through an
ownership interest in Newco, arising out of (w) the failure of any
representation or warranty of the BOC Group in the INO Purchase Agreement to be
true and correct in all respects on the date hereof or the Cut-Off Date (except
for representations and warranties that speak as of a specific date, which must
be true and correct as of such date), without giving effect to any standard,
qualification or exception with respect to "materiality" or to "Material Adverse
Effect" contained therein and without giving effect to any reallocation of
revenues, costs, assets and liabilities following the date hereof in accordance
with the Carve-Out Allocation Protocol or the INO Allocation Protocol, (x) the
breach of any covenant or agreement of the BOC Group in the INO Purchase
Agreement or in the Ancillary Agreements (as defined in the INO Purchase
Agreement), (y) the Excluded Assets (as defined in the INO Purchase Agreement)
and (z) the Excluded Liabilities (as defined in the INO Purchase Agreement).
Notwithstanding anything in this Article IX to the contrary, no claim may be
asserted nor may any action be commenced against the BOC Group pursuant to
Section 9.03(a)(i) or Section 9.03(a)(w) unless written notice of such claim or
action is received by the BOC Group describing in reasonable detail the facts
and circumstances with respect to the subject matter of such claim or action on
or prior to the date on which the representation or warranty on which
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such claim or action is based ceases to survive as set forth in Section 9.01
hereunder or in Section 9.01 of the INO Purchase Agreement, as applicable.
(b) Notwithstanding anything in this Article IX to the contrary,
and except with respect to claims arising as a result of a representation or
warranty set forth in Section 3.21 hereof or Section 3.21 of the INO Purchase
Agreement, (x) no claim may be made against the BOC Group for indemnification
pursuant to Section 9.03(a)(i) or Section 9.03(a)(w) with respect to any
individual item of Loss or items of Losses arising out of substantially similar
facts and circumstances, unless such item or items of Losses exceed US$50,000
(the "DESIGNATED AMOUNT"), and (y) no claim may be made against the BOC Group
pursuant to Section 9.03(a)(i) or Section 9.03(a)(w) unless the aggregate of all
such Losses of the Purchaser Indemnified Parties referred to in Section
9.03(a)(i) and Section 9.03(a)(w) shall exceed US$4,300,000 (the "BOC GROUP'S
THRESHOLD AMOUNT"), and the BOC Group shall not be required to pay or be liable
for the amount equal to the first US$4,300,000 in aggregate amount of any such
Losses. Notwithstanding anything in this Article IX to the contrary, and except
with respect to claims arising as a result of a representation or warranty set
forth in Section 3.21 hereof or Section 3.21 of the INO Purchase Agreement, no
Purchaser Indemnified Party shall be indemnified pursuant to Section 9.03(a)(i)
or Section 9.03(a)(w) if, and to the extent that, the aggregate of all Losses of
the Purchaser Indemnified Parties for which the Purchaser Indemnified Parties
previously shall have received indemnification pursuant to Section 9.03(a)(i)
and Section 9.03(w) shall have exceeded US$113,000,000. In addition, no claim
may be made against the BOC Group for indemnification pursuant to this Section
9.03 with respect to any individual item of Loss, if (x) an adjustment was made
in respect of such Losses in connection with the Purchase Price adjustment
procedures set forth in Section 2.05, (y) such Loss was the subject of a dispute
by the Purchaser pursuant to Section 2.05(c) but no adjustment was made in
respect of such Loss in connection with the Purchase Price adjustment procedures
set forth in Section 2.05 or (z) such Loss has been or is the subject of a claim
for indemnification from the BOC Group pursuant to the INO Purchase Agreement.
(c) A Purchaser Indemnified Party shall give the BOC Group prompt
written notice of any claim, assertion, event or proceeding by or in respect of
a third party of which such Purchaser Indemnified Party has knowledge concerning
any Loss as to which such Purchaser Indemnified Party may request
indemnification hereunder or any Loss as to which the US$4,300,000 amount
referred to in Section 9.03(b) may be applied. The BOC Group shall have the
right to assume, through counsel of its own choosing, the defense or settlement
of any such claim or proceeding at its own expense. If the BOC Group elects to
assume the defense of any such claim or proceeding, the Purchaser Indemnified
Party may participate in such defense, but in such case the expenses of the
Purchaser Indemnified Party shall be paid by the Purchaser Indemnified Party.
The Purchaser Indemnified Party shall provide the BOC Group with access to its
records and personnel relating to any such claim, assertion, event or
81
proceeding during normal business hours and shall otherwise cooperate with the
BOC Group in the defense or settlement thereof, and the BOC Group shall
reimburse the Purchaser Indemnified Party for all its reasonable out-of-pocket
expenses in connection therewith. If the BOC Group elects to assume the defense
of any such claim or proceeding, the Purchaser Indemnified Party shall not pay,
or permit to be paid, any part of any claim or demand arising from such asserted
liability unless the BOC Group consents in writing to such payment or unless the
BOC Group, subject to the last sentence of this Section 9.03(c), withdraws from
the defense of such asserted liability or unless a final judgment from which no
appeal may be taken by or on behalf of the BOC Group is entered against the
Purchaser Indemnified Party for such liability. The BOC Group shall not, without
the prior written consent of the Purchaser Indemnified Party, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim or proceeding in respect of which indemnification may be
sought hereunder (whether or not the Purchaser Indemnified Party is an actual or
potential party to such claim or proceeding) unless such settlement, compromise
or consent (x) includes an unconditional release of each Purchaser Indemnified
Party from all liability arising out of such claim or proceeding, (y) does not
include a statement as to or an admission of fault, culpability or failure to
act by or on behalf of a Purchaser Indemnified Party and (z) does not impose any
restrictions on the conduct of the Business. If the BOC Group shall fail to
undertake any such defense, the Purchaser Indemnified Party shall have the right
to undertake the defense or settlement thereof, at the BOC Group's expense. If
the Purchaser Indemnified Party assumes the defense of any such claim or
proceeding pursuant to this Section 9.03(c) and proposes to settle such claim or
proceeding prior to a final judgment thereon or to forgo any appeal with respect
thereto, then the Purchaser Indemnified Party shall give the BOC Group prompt
written notice thereof and the BOC Group shall have the right to participate in
the settlement or assume or reassume the defense of such claim or proceeding.
(d) The Purchaser hereby acknowledges and agrees that its sole and
exclusive remedy with respect to any and all claims relating to the subject
matter of this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby, shall be pursuant to the indemnification
provisions set forth in Article V, Article VI, Article VII and in this Article
IX and specific performance as contemplated by Section 11.10. In furtherance of
the foregoing, the Purchaser hereby waives, to the fullest extent permitted
under applicable Law, any and all rights, claims and causes of action it may
have against the BOC Group or its Affiliates arising under or based upon any Law
(including, without limitation, any such rights, claims or causes of action
arising under or based upon common law or otherwise); provided, however, that
nothing contained in this Agreement shall preclude the assertion by the
Purchaser or its Affiliates of any cause of action that may exist, not based
upon breach of contract, for fraud.
(e) Except as expressly set forth in this Agreement, the BOC Group
is not making any representation, warranty, covenant or agreement with respect
to the Business or
82
any other matter contained herein. Anything herein to the contrary
notwithstanding, no breach of any representation, warranty, covenant or
agreement contained herein shall give rise to any right on the part of the
Purchaser, after the consummation of the purchase and sale of the Business
contemplated hereby, to rescind this Agreement or any of the transactions
contemplated hereby.
ARTICLE X
TERMINATION AND WAIVER
SECTION 10.01. Termination. This Agreement may be terminated at any
-----------
time prior to the Closing:
(a) by the mutual written consent of the BOC Group and the
Purchaser; or
(b) by either the BOC Group or the Purchaser, if the Closing shall
not have occurred prior to July 31, 1998; provided, however, that the right
to terminate this Agreement under this Section 10.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the
failure of the Closing to occur prior to such date.
SECTION 10.02. Effect of Termination. In the event of termination of
---------------------
this Agreement as provided in Section 10.01, this Agreement shall forthwith
become void and there shall be no further liability on the part of any party
hereto (a) except as set forth in Section 5.02(c) and Section 11.01 and (b)
nothing herein shall relieve either party from liability for any breach hereof.
SECTION 10.03. Waiver. Either party hereto may (a) extend the time
------
for the performance of any of the obligations or other acts of the other party
hereto, (b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered pursuant hereto or (c)
waive compliance with any of the agreements of the other party contained herein.
Any such extension or waiver shall be valid only if set forth in an instrument
in writing signed by the party to be bound thereby.
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ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Expenses. Except as otherwise specified in this
--------
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Closing
shall have occurred.
SECTION 11.02. Notices. All notices, requests, demands, claims and
-------
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by telecopy or by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to the BOC Group:
The BOC Group plc
Chertsey Road
Windlesham
Surrey GU20 6HJ
Telecopy No.: 44-1276-477-550
Attention: Chief Executive - Legal
with copies to:
The BOC Group, Inc.
575 Mountain Avenue
Murray Hill, New Jersey 0794-2082
Telecopy No.: (908) 464-2234
Attention: General Counsel
84
and
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopy No.: (212) 848-7179
Attention: Mark Kessel, Esq.
Attention: Peter D. Lyons, Esq.
(b) if to the Purchaser:
Becton, Dickinson and Company
One Becton Drive
Franklin Lakes, New Jersey 07417
Telecopy No.: (201) 848-9228
Attention: Richard Carbone, Esq.
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy No.: (212) 403-2000
Attention: David M. Silk, Esq.
SECTION 11.03. Public Announcements. Except as required by Law or
--------------------
the rules of any stock exchange to which the BOC Group or the Purchaser are
subject, no party to this Agreement shall make, or cause to be made, any press
release or public announcements in respect of this Agreement or the transactions
contemplated hereby or otherwise communicate with any news media without prior
approval of the other party, and the parties shall cooperate as to the timing
and contents of any such announcement.
SECTION 11.04. Headings. The headings contained in this Agreement
--------
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 11.05. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any
85
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the greatest extent possible.
SECTION 11.06. Entire Agreement. This Agreement, together with the
----------------
Exhibits and Schedules hereto, the Disclosure Schedule and the Ancillary
Agreements, constitute the entire agreement of the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements and
undertakings, both written and oral, other than the Confidentiality Agreement,
with respect to the subject matter hereof. In the event of any conflict between
the terms of this Agreement and the terms of any Ancillary Agreement, the terms
of this Agreement shall prevail.
SECTION 11.07. Assignment. This Agreement shall not be assigned
----------
without the express written consent of the BOC Group and the Purchaser (which
consent may be granted or withheld in the sole discretion of the BOC Group and
the Purchaser), except that (a) either party hereto may assign its rights
hereunder (in whole or in part) to one or more direct or indirect wholly owned
subsidiaries of such party (provided that any assignment by the Purchaser
hereunder to any of its wholly owned subsidiaries shall cease to be effective if
such subsidiary ceases to be a wholly owned subsidiary of the Purchaser), (b)
the Purchaser may assign its rights hereunder (in whole or in part) to the
purchaser of any identifiable division, unit or line of business within the
Business, to the extent such rights relate to such division, unit or line of
business, at any time prior to the first anniversary of the Closing Date, if the
sale thereof is consummated in order to comply with the Purchaser's obligations
under Section 5.05(b), and (c) the Purchaser may assign its rights hereunder if
necessary in order to comply with any contractual obligation not to compete in
existence as of the date hereof; provided, however, that any such assignment
shall not relieve the assigning party of its obligations hereunder.
SECTION 11.08. No Third Party Beneficiaries. Except as provided in
----------------------------
Article IX, this Agreement is for the sole benefit of the parties hereto, their
Affiliates and their successors and permitted assigns and nothing herein,
express or implied, is intended to or shall confer upon any other Person any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
SECTION 11.09. Amendment. This Agreement may not be amended or
---------
modified except by an instrument in writing signed by the BOC Group and the
Purchaser.
SECTION 11.10. Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event any provision of this Agreement or
the Ancillary
86
Agreements were not performed in accordance with the terms hereof or thereof
and, accordingly the parties shall be entitled to specific performance of the
terms hereof and thereof, in addition to any other remedy available at law or in
equity.
SECTION 11.11. Governing Law; Submission to Jurisdiction. This
-----------------------------------------
Agreement shall be governed by the laws of the State of New York. All actions
and proceedings arising out of or relating to this Agreement shall be heard and
determined in any New York state or federal court sitting in The City of New
York, and the parties hereto hereby irrevocable submit to the exclusive
jurisdiction of such courts in any such action or proceeding and irrevocably
waive the defense of an inconvenient forum to the maintenance of any such action
or proceeding.
SECTION 11.12. Payments on Behalf of Affiliates. Payments made or
--------------------------------
received by the BOC Group pursuant to Section 2.05, Article VII or Article IX
hereof shall, in appropriate circumstances, be made on behalf of, or received in
trust for the benefit of, the Affiliate of the BOC Group that is the appropriate
seller of Shares or the appropriate seller of Assets. Payments made or received
by the Purchaser pursuant to Section 2.05, Article VII or Article IX hereof
shall, in appropriate circumstances, be made on behalf of, or received in trust
for the benefit of, the relevant Subsidiary or Affiliate of the Purchaser. The
BOC Group or the Purchaser, as the case may be, may direct in writing any such
payment to be made by or to the appropriate Affiliate, and the other party shall
comply with any such direction received at least two Business Days prior to the
date such payment is due.
SECTION 11.13. Counterparts. This Agreement may be executed in one
------------
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the BOC Group and the Purchaser have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
THE BOC GROUP PLC
By_________________________________________
Name:
Title:
BECTON, DICKINSON AND COMPANY
By_________________________________________
Name:
Title: