EXHIBIT 10.1
EXECUTION COPY
FEBRUARY 22, 2002
SEPARATION AGREEMENT
between
NESTLE S.A., ave. Xxxxxx 00, XX-0000 Xxxxx, Xxxxxxxxxxx
(hereinafter NESTLE)
and
ALCON, INC., Xxxxx 00, XX-0000 Xxxxxxxxx, Xxxxxxxxxxx
(hereinafter ALCON)
Nestle and Alcon together hereinafter referred to as the PARTIES or each a
PARTY.
HOMBURGER
TABLE OF CONTENTS
1 DEFINITIONS................................................. 1
2 THE SEPARATION.............................................. 1
2.1 General................................................. 1
2.2 Pre-IPO Corporate Restructurings........................ 1
2.3 Pre-IPO Restructuring of Share Capital.................. 2
2.4 Share Certificates and Share Register................... 5
2.5 Registration Matters.................................... 5
2.6 Registration Statement.................................. 6
2.7 Financial Matters....................................... 7
3 CORPORATE GOVERNANCE OF THE ALCON GROUP..................... 7
3.1 General................................................. 7
3.2 Governance of the Alcon Group........................... 8
3.3 Board of Directors...................................... 8
3.4 Executive Management.................................... 9
3.5 Accounting and Reporting................................ 10
3.6 Dividend Resolutions.................................... 11
4 ALLOCATION OF LIABILITIES................................... 11
4.1 General................................................. 11
4.2 Product Liability....................................... 11
4.3 Environmental, Health & Safety Matters.................. 11
5 EMPLOYMENT MATTERS.......................................... 12
5.1 Employees............................................... 12
5.2 Pension Funds........................................... 13
5.3 Alcon Incentive Plan.................................... 13
6 FURTHER OBLIGATIONS OF THE PARTIES.......................... 13
6.1 Contracts of the Alcon Group............................ 13
6.2 Shared Sites............................................ 13
6.3 Services provided by Nestle to Alcon.................... 13
6.4 Insurance............................................... 14
6.5 Intellectual Property Rights............................ 14
6.6 Omitted Matters......................................... 14
6.7 Misdirected Funds....................................... 14
7 RESTRICTIVE COVENANTS....................................... 14
7.1 Covenant not to Compete................................. 14
7.2 Non-Interference and Non-Solicitation................... 15
7.3 Remedies................................................ 16
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8 INDEMNITY................................................... 16
8.1 Scope................................................... 16
8.2 Third Party Claims...................................... 16
8.3 Direct Claims........................................... 17
8.4 Adjustment of Indemnifiable Losses...................... 17
8.5 No Third Party Beneficiaries............................ 18
8.6 Statute of Limitations.................................. 18
9 COSTS AND TAXES............................................. 18
9.1 Costs................................................... 18
9.2 Taxes................................................... 18
10 GENERAL PROVISIONS.......................................... 19
10.1 Effect on Third Parties................................ 19
10.2 Notices................................................ 20
10.3 Entire Agreement....................................... 20
10.4 Amendments and Waivers................................. 20
10.5 Severability; Good Faith............................... 20
10.6 Confidentiality........................................ 20
10.7 Public Announcements................................... 21
11 GOVERNING LAW AND DISPUTE RESOLUTION........................ 21
11.1 Governing Law.......................................... 21
11.2 Dispute Resolution..................................... 21
11.3 Arbitration............................................ 21
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THIS
SEPARATION AGREEMENT is made on February 22, 2002, between Nestle
S.A., a company organized under the laws of Switzerland with places of
incorporation in Cham and Vevey, and Alcon, Inc., a company organized under the
laws of Switzerland with place of incorporation in Hunenberg.
WHEREAS --:
A. The share capital of Alcon is CHF 60,000,000, divided into 300,000,000
fully paid registered shares with a par value of CHF 0.20 each. All shares of
Alcon are beneficially owned by Nestle, as set out in Exhibit 0.
B. On October 19, 2001, Nestle publicly announced its intention to effect
an initial public offering (IPO) of Alcon. Following the IPO, Nestle intends to
continue to hold a majority interest in the share capital and voting rights of
Alcon.
C. Nestle and Alcon intend to effect the IPO pursuant to the terms and
conditions set forth in this Agreement. This Agreement further contains the
principles for the corporate governance of Alcon and the principles governing
the business relations between Nestle and Alcon after the IPO.
NOW, THEREFORE, the Parties hereto agree as follows --:
1 DEFINITIONS
Capitalized terms used in this Agreement shall have the meaning specified
in Annex A.
2 THE SEPARATION
2.1 General
The terms and conditions of this Agreement shall govern the overall
relationship between Nestle and Alcon with respect to the following:
(a) the corporate restructuring of Alcon prior to the IPO;
(b) the refinancing of intercompany debt, and the termination or
continuation of other intercompany agreements with effect as of the IPO;
(c) the corporate governance of the Alcon Group after the IPO;
(d) rights and obligations of the Parties after the IPO.
It is understood and agreed by the Parties that the IPO of Alcon may be
cancelled by Nestle, acting in its sole discretion, at any time prior to pricing
of the Alcon shares. If the IPO is cancelled, the provisions set forth in
Section 2.2 and Section 2.3.1(a) shall continue to apply, while the remaining
provisions shall lapse or not take any force and effect.
Whenever this Agreement refers to a third party, in particular any
financial institutions engaged in the IPO process, it is understood and agreed
that such third party shall not be bound or obligated in any manner by the
provisions of this Agreement. The Parties will, however, use their best efforts
to procure that any such third party or parties shall take the steps outlined in
this Agreement, and the Parties will enter into appropriate arrangements with
such third party or parties to this effect.
2.2 Pre-IPO Corporate Restructurings
2.2.1 Germany
The capital structure of Alcon Pharma GmbH, Freiburg im Breisgau, Germany,
is set out in Exhibit 2.2.0.
All shares in Alcon Pharma GmbH which were held by Nestle Unternehmungen
Deutschland GmbH, Frankfurt am Main, Germany, have been transferred to Alcon at
a purchase price of EUR 46,400,000, payable in cash, with effective date January
1, 2002 (the EFFECTIVE DATE) and a value
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date of January 3, 2002. The share purchase was closed as of January 1, 2002.
The share purchase was made as per the deed attached hereto as Exhibit 2.2.1.
2.2.2 Belgium
The capital structure of X.X. Xxxxx-Xxxxxxxx N.V., Puurs, Belgium, is set
out in Exhibit 2.2.0.
The 77 shares in X.X. Xxxxx-Xxxxxxxx N.V. which were held by Nestle
Belgilux S.A., Brussels, Belgium, have been transferred to Alcon Pharmaceuticals
Ltd., Hunenberg, Switzerland at a purchase price of EUR 95,982.04, with
effective date November 30, 2001.
2.2.3 Thailand
The capital structure of Alcon Laboratories (Thailand) Ltd., Bangkok,
Thailand, is set out in Exhibit 2.2.0.
Nestle and Alcon have entered into appropriate agreements allowing for a
transfer of the economic risks and rewards of Alcon Laboratories (Thailand) Ltd.
from Nestle to Alcon.
2.2.4 Alcon Holdings, Inc.
The capital structure of Alcon Holdings, Inc., Wilmington DE, USA, is set
out in Exhibit 2.2.0.
The 40 class D preferred shares of Alcon Holdings, Inc. which were held by
Nestle have been transferred to Alcon at a purchase price of CHF 3,626,000, with
effective date November 30, 2001.
2.2.5 Nominee Shareholders
To the extent any shares in an Alcon Group company are held by nominee
directors or representatives appointed by Nestle, the Parties shall enter into
appropriate arrangements for the transfer of such nominee shares to any
replacement nominees designated by Alcon in such Alcon Group companies, as
further set out in Section 3.4.3.
2.3 Pre-IPO Restructuring of Share Capital
2.3.1 Reclassification of Shares prior to IPO
Prior to the IPO, Nestle, in its capacity as sole shareholder of Alcon,
shall reclassify the share capital of Alcon in the following steps and within
the following deadlines:
(a) On December 20, 2001, Alcon has held an extraordinary general
meeting (EGM) in which its current share capital of CHF 60,000,000, divided
into 60,000 registered shares of CHF 1,000 par value each, was subdivided
into 300,000,000 fully paid registered common shares of CHF 0.20 par value
each.
This share split was recorded in the commercial register of the Canton
of Zug prior to December 31, 2001.
(b) On or by February 25, 2002, Alcon shall hold an EGM in which the
following resolutions shall be taken:
(i) conversion of 69,750,000 fully paid registered common shares of
CHF 0.20 par value each into 69,750,000 fully paid registered nonvoting
preferred shares (Vorzugs-Partizipationsscheine) of CHF 0.20 par value
each. The articles of association of Alcon shall hold that the non-
voting preferred shares shall have special dividend and liquidation
rights, the amount and scope of which shall be left to the discretion of
the shareholders of the company;
(ii) ordinary capital increase (ordentliche Kapitalerhohung) in
which the Board of Directors of Alcon is authorized, within 3 months
after the date of the resolution, to issue up to 69,750,000 fully paid
registered common shares of CHF 0.20 par value each. For this ordinary
capital
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increase, Nestle shall, in the deed of capital increase, formally waive
its pre-emptive rights to subscribe for new shares pursuant to Art. 652b
of the Swiss Federal Code of Obligations (CO) in favor of Credit Suisse
First Boston, Zurich (CSFB ZURICH), acting on behalf of a syndicate of
financial institutions undertaking the IPO;
(iii) authorized capital increase (genehmigte Kapitalerhohung)
allowing the Board of Directors to increase Alcon's share capital, no
later than July 31, 2002, by issuing up to 6,975,000 fully paid
registered common shares of CHF 0.20 par value each. The Board of
Directors shall be authorized to withdraw the pre-emptive rights of
existing shareholders if the shares are to be used in connection with
the over-allotment option conferred on the underwriting banks, as
further set out in Section 2.3.5;
(iv) conditional capital increase (bedingte Kapitalerhohung) by
which Alcon's share capital shall be increased by a maximum amount of
CHF 6,000,000 through the issuance of a maximum of 30,000,000 fully paid
registered common shares of CHF 0.20 par value each. Such shares will be
issued upon exercise of option rights which employees and members of the
Board of Directors of Alcon Group companies are granted pursuant to the
Alcon Incentive Plan referred to in Section 2.3.6;
(v) election of members of the Board of Directors pursuant to
Section 3.3.1, to become effective as of the Pricing Date;
(vi) election of the special auditors pursuant to Section 3.5.1,
second paragraph, to become effective as of the Pricing Date.
The resolutions passed pursuant to this Section 2.3.1(b), other than the
resolutions under subsections (v) and (vi) shall be recorded in the commercial
register of the Canton of Zug no later than March 1, 2002.
2.3.2 Pre-IPO Special Dividend
The EGM convened pursuant to Section 2.3.1(b) shall, in addition to the
resolutions referred to therein, resolve on a special dividend in the amount of
up to CHF 2,100,000,000, to the extent permitted under applicable Swiss law,
payable in CHF. This dividend resolution shall be passed on the basis of year
end financial statements prepared by Alcon as of December 31, 2001 and certified
by Alcon's statutory auditors.
The dividend resolved by the EGM shall be paid from Alcon to Nestle prior
to the date of pricing of the Alcon shares sold in the IPO (the PRICING DATE).
If necessary, Alcon shall take out a short-term loan to procure the cash amount
required to pay out the special dividend.
Nestle and Alcon shall use their best efforts to procure that the Swiss
withholding tax of 35% due on the dividend payment can be waived pursuant to the
notification procedure (Meldeverfahren) under the Swiss Federal Withholding Tax
Act.
2.3.3 Issuance of Firm Shares
The shares to be sold in the IPO on the Pricing Date shall be issued as
follows:
(a) Prior to publication of the preliminary prospectus for the IPO,
Nestle shall determine the number of shares to be issued in the IPO on the
basis of investor demand and expectations of the estimated IPO proceeds
(the FIRM SHARES). The number of Firm Shares shall be communicated to Alcon
and to CSFB Zurich.
(b) CSFB Zurich shall pay in the par value for the Firm Shares, and
shall de-liver a subscription form to Alcon's Board of Directors, no later
than 5:00 p.m. Central European Time 3 business days prior to the Pricing
Date.
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(c) Upon receipt of such confirmation and subscription form, the Board
of Directors of Alcon shall immediately resolve, in a notarized deed of
capital increase, to increase Alcon's share capital by issuing the Firm
Shares. The capital increase shall be filed for registration with the
commercial register of the Canton of Zug, Switzerland, no later than 2:00
p.m. Central European Time 2 business days prior to the Pricing Date.
(d) The capital increase by issuance of Firm Shares shall be recorded
in the commercial register of the Canton of Zug no later than 1 business
day prior to the Pricing Date. The newly issued shares shall be delivered
to or to the order of CSFB Zurich, for account of the underwriters, and
shall be recorded in the share register of Alcon accordingly.
2.3.4 Redemption of Preferred Shares
Immediately following the Pricing Date, Alcon shall resolve on a redemption
of non-voting preferred shares pursuant to the following principles:
(a) Alcon shall convene an EGM to be held on or around 10:00 a.m.
Central European Time on the business day following the Pricing Date. Such
EGM shall resolve, on the basis of an interim balance sheet drawn up by
Alcon and certified by Alcon's statutory auditors in a special report
pursuant to Art. 732 para. 2 CO, to reduce Alcon's issued and outstanding
share capital by redemption of all 69,750,000 non-voting preferred shares
of CHF 0.20 par value each, the proceeds of which shall be paid to Nestle.
The amount at which the redemption shall be made shall correspond to
the net proceeds of the sale of Firm Shares then ascertained by Alcon.
(b) Immediately following the shareholders' resolution set forth in
the preceding paragraph, Alcon shall publish the notice to creditors
pursuant to Art. 733 CO.
(c) Unless otherwise agreed by the Parties, the preferred shares shall
be redeemed, and the proceeds of the redemption shall be paid to Nestle, as
soon as practicable following the statutory waiting period set forth in
Art. 734 CO, but in no event later than May 31, 2002.
(d) Pending redemption of the preferred shares, the net proceeds of
the IPO shall remain with Alcon, and shall be invested in such manner as
Alcon's executive officers deem appropriate. Any proceeds from such
investment shall go to Alcon.
2.3.5 Issuance of Option Shares
The shares to be sold in the IPO as a result of an exercise by the
underwriters of the over-allotment option (which may be exercised once or twice)
granted pursuant to the Underwriting Documentation shall be issued as follows:
(a) Credit Suisse First Boston Corporation, New York (CSFB NEW YORK),
in its capacity as global coordinator for the IPO and following
consultation with Xxxxxxx Xxxxx, shall inform Nestle and Alcon of its
intention to exercise the over-allotment option, and of the number of
shares to which the over-allotment option relates (the OPTION SHARES).
(b) Upon exercise by CSFB New York of the over-allotment option, CSFB
Zurich shall pay in the par value for the Option Shares, and shall deliver
a subscription form to Alcon's Board of Directors, no later than 10:00 a.m.
on the business day following the exercise of the over-allotment option.
(c) Upon receipt of such confirmation and subscription form, the Board
of Directors of Alcon shall immediately resolve, in a notarized deed of
capital increase,
(i) to increase Alcon's share capital out of authorized capital by
issuing the Option Shares, and
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(ii) to make the corresponding changes to Alcon's articles of
association,
and shall file such capital increase for registration with the commercial
register of the Canton of Zug, Switzerland, immediately thereafter.
(d) The capital increase by issuance of Option Shares shall be
recorded in the commercial register of the Canton of Zug no later than 3
business days following exercise of the over-allotment option. The newly
issued shares shall be delivered to CSFB Zurich, for account of the Joint
Lead Managers, and shall be recorded in the share register of Alcon
accordingly.
It is understood and agreed that there will be no dividend payment made for
the financial year 2002 on the non-voting preferred shares, whether pursuant to
Section 2.3.2 or otherwise.
2.3.6 Shares for Incentive Plan
It is understood and agreed that out of the 30,000,000 shares of
conditional capital created pursuant to Section 2.3.1(b)(iv), a number of shares
of CHF 0.20 par value each shall be used for the roll-over of Alcon's existing
phantom stock scheme (the ROLLOVER SHARES). The Rollover Shares shall be issued
as follows:
(a) Alcon shall make available to qualifying employees the preliminary
prospectus for the IPO, and shall allow such employees to convert the value
of their existing phantom stock into Rollover Shares. Such converting
employees will receive an additional 20% of the value of such phantom stock
in the form of non-qualified stock options (the exact parameters of
valuation to be made by Alcon). Employees shall be requested to make their
election with respect to conversion within ten calendar days after the date
of publication of the preliminary prospectus;
(b) Alcon and its subsidiaries shall determine the number of phantom
stock being rolled over, and the value (calculated in USD) attributable to
such phantom stock, and will communicate these numbers to Nestle no later
than two Business Days prior to the Pricing Date;
(c) The value (calculated in USD) attributable to such phantom stock
being converted into Rollover Shares shall be divided by the offering price
(in USD) determined on the Pricing Date in order to obtain the exact number
of Rollover Shares to be issued;
(d) Alcon shall subscribe, or designate an Alcon Group company to
subscribe, for the Rollover Shares, such subscription to be effected no
later than July 15, 2002;
(e) The Board of Directors shall issue the Rollover Shares, and shall
deliver such shares to the subscribing Alcon Group company for the account
of the beneficial owners of Rollover Shares, on or by July 31, 2002.
2.4 Share Certificates and Share Register
The share register of Alcon shall be maintained at Alcon's offices until
the Pricing Date. All share certificates issued by Alcon shall be destroyed on
or by the Pricing Date.
As from the Pricing Date, the share register of Alcon shall be maintained
by the Bank of New York, New York, U.S.A. The Parties shall enter into
appropriate arrangements with the Bank of New York allowing for a keeping of the
share register in line with U.S. market practice, to the extent Swiss statutory
law so permits. Alcon shall further authorize Bank of New York to issue share
certificates to record shareholders of Alcon from time to time in accordance
with market practice in the United States of America. Any such share
certificates shall be validly issued both under Swiss and under applicable U.S.
federal and state laws.
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2.5 Registration Matters
2.5.1 General
Nestle shall have the right, in its sole discretion, to require that Alcon
file a registration statement with the U.S. Securities and Exchange Commission
(SEC) with respect to its common shares.
Nestle shall not sell or otherwise transfer or dispose of any common shares
of Alcon (excluding shares acquired in or following the IPO) for such period of
time as required by the underwriters in the Underwriting Documentation, such
period not to exceed 180 days following the effective date of the registration
statement for such offering. All registration expenses, costs and taxes incurred
in connection with the filing of the registration statement for the IPO shall be
borne by Alcon, provided, however, that the following costs shall be borne by
Nestle:
(a) the costs of Nestle's Swiss and U.S. legal and tax advisers;
(b) any taxes, duties and levies payable or reimbursable by Nestle
pursuant to Section 9.2.2.
2.5.2. Registration Rights
Immediately prior to the Pricing Date, Nestle and Alcon shall enter into a
registration rights agreement substantially in the form attached hereto as
Exhibit 2.5.2.
2.6 Registration Statement
2.6.1 General
The Registration Statement on Form F-1 (file no. 333-[ ]) and the
prospectus which forms a part of such registration statement (collectively, the
REGISTRATION STATEMENT) registering the sale of Alcon's common shares in the IPO
shall be prepared by officers of the Alcon Group with the advice and assistance
of counsel and financial institutions. Nestle shall be entitled to review,
verify and change those sections of the Registration Statement that directly or
indirectly relate to Nestle's business and the transactions contemplated by this
Agreement.
To the extent any indemnity has to be given to third parties (including
financial institutions) for misstatements and omissions in the Registration
Statement or for any other claims arising out of or in connection with the
offering, such indemnity shall be given by Alcon only.
The provisions of Section 8 shall apply mutatis mutandis.
2.6.2. Post-IPO Indemnification
Alcon shall indemnify and hold harmless Nestle and each director, officer,
Subsidiary and Affiliate of Nestle (each, a NESTLE INDEMNITEE) from and against
any and all liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in any document filed with the U.S.
Securities and Exchange Commission (the SEC) by Nestle or any other Nestle
Indemnitee pursuant to the U.S. Securities Act of 1933, as amended, or the U.S.
Securities Exchange Act of 1934, as amended, or caused by any omission or
alleged omission to state therein a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
those liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information that is either furnished to
any Nestle Indemnitee by Alcon or any of its Subsidiaries or Affiliates or
incorporated by reference by any Nestle Indemnitee from any filings made by
Alcon or any of its Subsidiaries or Affiliates with the SEC under the Securities
Act or the Securities Exchange Act, if that statement or omission was made or
occurred after the date of the IPO.
Nestle shall indemnify and hold harmless each director, officer, Subsidiary
and Affiliate of Alcon (each, an ALCON INDEMNITEE) from and against any and all
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in any document filed with the SEC by Alcon or any
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other Alcon Indemnitee pursuant to the U.S. Securities Act or the Securities
Exchange Act, or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that those liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information that is either furnished to any Alcon Indemnitee by Nestle or any of
its Subsidiaries or Affiliates or incorporated by reference by any Alcon
Indemnitee from any filings made by Nestle or any of its Subsidiaries or
Affiliates with the SEC under the Securities Act or the Securities Exchange Act,
if that statement or omission was made or occurred after the date of the IPO.
Unless this Section 2.6.2 explicitly provides otherwise, the provisions of
Section 8 shall apply mutatis mutandis.
2.7 Financial Matters
2.7.1 Refinancing of Intercompany Debt
Except as otherwise listed in Exhibit 2.7.1, the outstanding intercompany
debt between the Nestle Group on the one hand, the Alcon Group on the other hand
shall be refinanced on or immediately after the Pricing Date by bank loans or by
the issuance by Alcon of commercial paper under a newly established commercial
paper program fully guaranteed by Nestle.
With respect to any future financing of Alcon or an Alcon Group company,
Nestle shall have the opportunity to offer financing to Alcon, and Alcon shall
be at liberty either to accept financing on such terms or to procure independent
third party financing with or without the backing of Nestle.
2.7.2 Refinancing of Third-Party Financial Indebtedness
All third party financial indebtedness of the Alcon Group shall, unless
specifically otherwise agreed, not be refinanced as of the IPO.
The Parties may agree, with respect to any third party financing procured
after the Effective Date, whether such financing shall be procured by Alcon on a
stand-alone basis or whether Nestle shall provide guarantees or similar
undertakings to support such third party financing, in which case Nestle shall
be reimbursed with a guarantee commission at arm's length terms. Any decision
with respect to future third party financial indebtedness shall be made by Alcon
at its discretion, and Alcon shall not be obligated to procure third party
financing with the consent or backing of Nestle.
2.7.3 Guarantees
All guarantees, commitments and undertakings given by Nestle or any Nestle
Group company in favor of Alcon or any of the Alcon Group companies, particulars
of which as of the date of this Agreement are set forth in Exhibit 2.7.3, shall
continue to be effective after the IPO in accordance with their terms.
Following the Effective Date, the Parties shall agree, on a case-by-case
basis, whether any such guarantees, commitments or undertakings shall be
renewed, and if such renewal is made, under what terms Alcon shall reimburse
Nestle for such guarantees, commitments and undertakings.
2.7.4 Cash Management and Treasury
All cash management and treasury functions currently undertaken by the
Nestle Group in favor of the Alcon Group shall be continued with effect as from
the Effective Date as set out in Exhibit 2.7.4.
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3 CORPORATE GOVERNANCE OF THE ALCON GROUP
3.1 General
3.1.1 Place of Incorporation
Alcon shall be and remain the holding company of the Alcon Group, with
place of incorporation and registered office at Xxxxx 00, XX-0000 Xxxxxxxxx,
Xxxxxxxxxxx.
Alcon shall qualify as a holding company domiciled and taxed in Switzerland
for purposes of Swiss tax legislation.
3.1.2 Constituting Documents
The articles of association of Alcon shall be in the form set out in
Exhibit 3.1.2(a).
The organizational regulations of Alcon shall be substantially in the form
as set out in Exhibit 3.1.2(b).
3.2 Governance of the Alcon Group
The Parties understand and agree that all business and operational
decisions (including cost control and similar measures) as well as decisions of
business strategy of the Alcon Group going forward shall be determined by the
Alcon Board of Directors. Any managerial, strategic or operational influence
taken by Nestle on the Alcon Group shall be made through Nestle's
representatives in the Alcon Board of Directors, and shall not be taken directly
by the Nestle Board of Directors or Group Executive Management of Nestle.
3.3 Board of Directors
3.3.1 Composition
The Board of Directors of Alcon shall comprise no less than 7 members.
The initial Board of Directors of Alcon shall consist of 8 members, of
which 4 shall be appointees of Nestle, 1 shall be the chief executive officer of
Alcon Laboratories, Inc. (ALCON LABS), and 3 shall be independent (as that term
is defined under the listing rules of the NYSE (the NYSE RULES)). The initial
board members appointed by Nestle respectively representing Alcon Labs shall be
as follows:
- Nestle Appointees: Messrs. Xxxxx Xxxxxxx-Xxxxxxxx, Xxxxxxxxx Xxxxxxxx,
Xxxxxxxx X. Xxxxxxxxxxxxx, and Xxxxxx Xxxxx;
- Alcon Labs CEO: Xx. Xxxxxxx X.X. Xxxx.
- Independent Directors to be designated by Nestle, following consultation
with Alcon, prior to the Pricing Date.
All directors of Alcon who do not yet serve on the Board of Directors shall be
elected to office in a shareholders' meeting prior to the Pricing Date, and
shall be recorded in the commercial register of the Canton of Zug on or
immediately after the Pricing Date.
3.3.2 Board Committees
Alcon shall have the Board Committees set forth in Article V of the form of
Organizational Regulations attached hereto as Exhibit 3.1.2(b). The initial
composition of the Board Committees shall be determined on or immediately after
the Pricing Date.
In addition to the above committees, Alcon shall appoint a Research and
Development Scientific Advisory Board, the members of which shall not form part
of the governing bodies of Alcon or the Alcon Group.
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3.3.3 Board Vacancies
As further set out in Article III of Alcon's form of Organizational
Regulations attached hereto as Exhibit 3.1.2(b), any member of the Board of
Directors of Alcon shall be appointed for a term of office of 3 years. All
directors shall be re-eligible, provided, however, that non-executive directors
shall be re-eligible only for a maximum of two additional terms. Board members
shall retire from office no later than the annual general meeting after their
72nd birthday.
Vacancies on the board, whether by retirement, removal, voluntary
resignation, death, incapacity or otherwise, shall be filled as follows:
(a) Any Nestle appointees terminating their office shall be replaced
by other appointees nominated by Nestle.
(b) If the Alcon Labs CEO terminates his office, his or her successor
shall be nominated by the Alcon Board of Directors.
(c) If any independent board members terminate their office, their
successor (who shall fulfill the same qualifications as to independence)
shall be nominated by the Alcon Board of Directors.
In any deliberations of the Board of Directors pursuant to lit. (b) or (c)
of this Section 3.3.3, the resigning board member shall abstain from
deliberation and voting on the matter.
Any replacement board members nominated in accordance with this Section
3.3.3 shall be proposed to be elected to the board at the next annual general
shareholders' meeting of Alcon. Until such meeting, the nominee shall be invited
to participate in board meetings as a guest, and shall receive all information
otherwise made available to members of the Board of Directors.
Nestle undertakes, for so long as it holds a Majority Shareholding in
Alcon, to vote its shares at Alcon's shareholders' meetings in favor of the
proposals of the Board of Directors made in accordance with this Section 3.3.3.
The nomination rights of Nestle shall become inapplicable if Nestle no longer
holds a Majority Shareholding in Alcon.
3.4 Executive Management
3.4.1 Executive Management of Alcon
All business and operational decisions (including cost control and similar
measures) as well as decisions of business strategy of the Alcon Group shall be
determined by the Alcon Board of Directors.
In addition, the executive officers of the Company will have the following
functions:
(a) conducting the administrative affairs of a holding company,
including contact with the competent commercial register and tax
authorities and keeping of Alcon's statutory books and records;
(b) exercise of shareholder rights with respect to those subsidiaries
that are directly held by Alcon;
(c) administration of trademarks owned by the company; and
(d) funding of research and development projects of the Alcon Group on
a Group-wide basis, administration of intellectual property rights derived
or acquired from such research and development projects, and collection of
license income relating to intellectual property rights derived from such
research and development projects; and purchase of intellectual property
rights.
The executive management of Alcon on and after the Pricing Date shall
consist of the CEO, Messrs. Xxxxx Xxxxxx and Xxxxxx Xxxxxx.
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3.4.2 Group Executive Management
The executive management of Alcon Labs will, other than conducting the
business and affairs of Alcon Labs, coordinate the activities of the Group,
subject to the ultimate direction and control by the board of directors of the
Company. In this capacity, the executive management of Alcon Labs will
(a) coordinate the ongoing business and operations of the operating
subsidiaries of the Alcon Group;
(b) coordinate research and development, manufacturing, sales and
distribution activities of the Alcon Group;
(c) coordinate marketing activities of the Alcon Group;
(d) coordinate financing, treasury, risk management, insurance, legal
and tax functions (other than matters relating directly to the holding
company).
The executive officers of Alcon Labs and members of Group Executive
Management on and after the Pricing Date shall be as follows:
- Xx. Xxxxxxx X.X. Xxxx (Chief Executive Officer);
- Xx. Xxxxxxx X. Xxxxxx, Xx. (Senior Vice President and Chief Financial
Officer);
- Dr. G. Xxxxx Xxxx (Senior Vice President Global Manufacturing and
Technical Support);
- Xx. Xxxxxx X. Xxxxx (Senior Vice President Research and Development);
- Xx. Xxxx X. Xxxxxxxxx (Senior Vice President Alcon International);
- Xx. Xxxx X. Xxxxxxx (Senior Vice President Alcon United States).
3.4.3 Directors of Group Companies
Promptly after the Effective Date, the Parties shall procure that all
directors of the Alcon Group companies (other than Alcon Group companies
incorporated in Switzerland) appointed or employed by Nestle shall be replaced
by directors appointed or employed by Alcon.
Directors of the Alcon Group companies incorporated in Switzerland shall be
replaced promptly after the Pricing Date.
The Parties shall execute all documents and take all resolutions and
actions necessary to give effect to such replacements (including, where
appropriate, the transfer of nominee shares).
3.5 Accounting and Reporting
3.5.1 Auditors
KPMG shall be the statutory auditors of Alcon and the group auditors for
the Alcon Group on and after the IPO.
Alcon shall further appoint a special auditor charged with rendering the
reports and valuations necessary in connection with certain capital increases
under Swiss law.
3.5.2 Accounting Rules
The financial statements of Alcon as a holding company shall be drawn up in
accordance with Swiss statutory law, and shall use CHF as reporting currency.
The consolidated financial statements of the Alcon Group shall be drawn up
in accordance with U.S. Generally Accepted Accounting Principles, and shall use
USD as reporting currency. The auditors of the Alcon Group shall devise suitable
procedures, together with the auditors of the Nestle Group, to provide
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for a reconciliation of the Alcon Group financial information into the
consolidated financial statements of Nestle which are be drawn up in accordance
with IAS.
3.5.3 External Financial Reporting
Alcon shall report its financial information on a quarterly basis, and
shall, to the extent practicable, establish publication dates in line with
comparable companies active in the ophthalmic industry in the United States of
America. Any financial reporting made by Alcon shall be made in compliance with
the applicable NYSE Rules. Relevant financial information reported by Alcon
shall also be published by Nestle in accordance with reporting requirements of
the SWX Swiss Exchange and all other relevant exchanges the rules of which apply
to Nestle.
3.5.4 Management Reporting
Alcon will continue to comply with all Nestle internal management reporting
requirements and will supply to Nestle directly all reports and analyses which
are requested pursuant to a format and reporting schedule communicated by Nestle
to Alcon. In addition, Alcon will comply with any ad-hoc information requests
reasonably made by Nestle.
Any information provided by Alcon to Nestle pursuant to this Section 3.5.4
shall be subject to statutory restrictions on xxxxxxx xxxxxxx and similar
matters, as well as to restrictions under applicable internal guidelines of
Alcon or Nestle, as the case may be.
3.6 Dividend Resolutions
Nestle undertakes, for so long as it holds a Majority Shareholding in
Alcon, to vote in favor of the dividend proposals made by the Alcon Board of
Directors to its shareholders.
The Parties understand and agree that for purposes of Swiss statutory law,
all dividends must be declared and paid in CHF. The Board of Directors of Alcon
will, however, announce the dividend payment in USD and CHF, and will cause, if
advisable, Alcon to enter into appropriate currency forward agreements hedging
the currency exchange risk between the date of the announcement of a dividend
proposal and the dividend payment date.
4 ALLOCATION OF LIABILITIES
4.1 General
As from the Effective Date, the business and operations of Alcon and the
Alcon Group companies shall be conducted as a separate and independent matter
for the risk and benefit of Alcon only. Alcon shall, to the fullest extent
permitted under applicable law, be the only and ultimate beneficiary and
responsible person for all claims raised by third parties arising out of or in
connection with the business and operations of Alcon, whether by contract or
otherwise (collectively, the ALCON CLAIMS).
Alcon shall assume the full responsibility for any and all Alcon Claims,
and shall fully indemnify Nestle and each Nestle Group company for, and shall
hold such companies harmless against, any costs, liabilities, losses and damages
arising out of or in connection with the assertion of any Alcon Claims against
Nestle or any Nestle Group company. The provisions of Section 8 shall apply
mutatis mutandis.
4.2 Product Liability
As from the Effective Date, Alcon and the Alcon Group companies shall be
fully responsible for all matters arising out of or in connection with past,
present or future production, distribution and sales activities of the Alcon
Group, including without limitation product liability and related claims.
Alcon shall assume the full responsibility for any and all product
liability and related claims, and shall fully indemnify Nestle and each Nestle
Group company for, and shall hold such companies harmless against, any costs,
liabilities, losses and damages arising out of or in connection with the
assertion of any
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Alcon Claims against Nestle or any Nestle Group company. The provisions of
Section 8 shall apply mutatis mutandis.
4.3 Environmental, Health & Safety Matters
As from the Effective Date, Alcon shall be fully responsible for any and
all Environmental Matters and any and all health and safety matters arising out
of or in connection with past, present or future activities of the Alcon Group
that may give rise to any claim or investigation under applicable environmental,
health or safety laws. Responsibility for Environmental Matters shall include,
without limitation, any contaminated sites and any claims asserted in connection
with liability under applicable law (including listing as a potentially
responsible party).
If any investigation or monitoring of Environmental Matters is made or
threatened to be made against Nestle or Alcon in connection with any sites owned
or operated by the Alcon Group of companies, or if any claims and litigation are
made or threatened in relation to such investigation, or if any claims are made
for indemnity or contribution or cost recovery in connection with any such sites
(each, a REMEDIATION), the following shall apply:
(a) All Remediations at or of sites owned or operated by the Alcon
Group after the IPO shall be managed by Alcon in its sole discretion.
(b) The following procedures and responsibilities shall apply with
respect to the management of any Remediations by Alcon:
(i) Subject to Section 4.3(b)(iv), Alcon shall have the right, and
shall be required, (aa) to conduct all Remediations, maintain contacts
with relevant governmental and administrative authorities in respect of
such Remediations, shall make all submissions and determine the
positions to be taken with and in respect of all such relevant agencies;
(bb) to contract for, oversee, and pay for all activities in respect of
such Remediations; and (cc) to conduct and defend all litigations
respecting such Remediations.
(ii) Nestle shall have the right to attend any meeting with any
governmental or administrative authorities if it so chooses and, if so
requested by Alcon, Nestle shall attend such meetings; provided,
however, that if Nestle attends such a meeting, it shall act as an
observer and shall not take any position contrary to the position taken
by Alcon.
(iii) Nestle shall have the right to review all reports or
memoranda submitted to and significant correspondence (and file
memoranda memorializing significant communication) with any governmental
or administrative authorities or other claimant and any significant
litigation documents.
(iv) Alcon and Nestle shall confer as to all significant decisions
with respect to any Remediations, and Alcon shall consider and take into
account the reasonable suggestions and proposals of Nestle. In order to
give effect to the preceding sentence, the parties will establish a
joint steering committee in which Alcon will be represented by two
persons and Nestle will be represented by one person; such steering
committee shall use reasonable efforts to resolve any matters brought
before it by unanimity.
Alcon shall assume the full responsibility for any claims and procedures
arising out of or in connection with Environmental Laws and Environmental
Matters, as well as any claims and procedures arising out of or in connection
with applicable health and safety laws, rules and best practices, and shall
fully indemnify Nestle and each Nestle Group company for, and shall hold such
companies harmless against, any costs, liabilities, losses and damages arising
out of or in connection with the assertion of any Alcon Claims against Nestle or
any Nestle Group company. The provisions of Section 8 shall apply mutatis
mutandis.
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5 EMPLOYMENT MATTERS
5.1 Employees
The transactions contemplated by this Agreement shall not in any manner
affect the current employment relationships of the employees of the Alcon Group.
5.2 Pension Funds
Exhibit 5.2(a) contains a list of those countries or companies in which
employees of the Alcon Group will continue to benefit from Nestle's existing
pension funds, occupational old age and retirement, or death and disability
insurance policies or plans currently in effect for the benefit of the employees
of the Alcon Group (collectively, the BENEFIT PLANS). In countries where Benefit
Plans shall continue to be operated by Nestle or a designee of Nestle, the
relevant group companies shall fully and promptly inform each other of any
matters relating to claims made under such Benefit Plans.
Exhibit 5.2(b) contains a list of the countries or companies in which Alcon
is operating independent Benefit Plans as of the date of this Agreement. The
arrangements made under such Benefit Plans shall continue in full force and
effect, and shall not be affected in any manner by the transactions contemplated
under this Agreement.
As of the IPO, there will be no countries or companies in respect of which
new benefit plans shall be established by Alcon.
5.3
Alcon Incentive Plan
The Alcon Group shall establish an Incentive Plan to enter into effect as
of the Pricing Date. The Incentive Plan shall, among other things, provide for
the conversion of the existing phantom stock grants in operation for the Alcon
Group as of the date of this Agreement. Particulars of the Incentive Plan are
set out in Exhibit 5.3.
6 FURTHER OBLIGATIONS OF THE PARTIES
6.1 Contracts of the Alcon Group
Unless specifically otherwise agreed, contracts of the Alcon Group,
including those entered into with the Nestle Group shall not be affected by the
IPO.
Particulars of the continuation and termination of certain contracts of the
Alcon Group with the Nestle Group are provided in Exhibit 6.1.
6.2 Shared Sites
With respect to the sites listed in Exhibit 6.2 which are leased from
Nestle Group companies to Alcon Group companies, the Parties will enter into
separate agreements on the sharing of facilities and on the appropriate terms of
lease in connection therewith, it being understood and agreed that the current
terms of the leases shall be substantially unchanged.
6.3 Services provided by Nestle to Alcon
6.3.1 Information Technology Services
Following the Pricing Date, Nestle will continue to provide in favor of the
Alcon Group companies the information technology services listed in Exhibit
6.3.1 at arm's length terms.
6.3.2 Corporate Internal Audit
Following the Pricing Date, Alcon will continue to use the services of the
corporate internal audit team of Nestle. All services rendered by the corporate
internal audit team shall be remunerated from Alcon to Nestle on an arm's length
basis.
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6.3.3 Other Services
The parties may separately agree on other services to be provided by the
Nestle Group companies to the Alcon Group companies.
6.4 Insurance
The insurance arrangements currently in place for Alcon shall continue in
full force and effect after the Pricing Date. Any insurance arrangements put in
place in favor of an Alcon Group company by Nestle or a Nestle Group company
shall be re-invoiced to the relevant Alcon Group company at arm's length terms.
Alcon may procure directors' and officers' liability insurance in line with
best practices applicable to U.S. listed pharmaceutical companies. The costs of
any such insurance shall be borne by Alcon.
6.5 Intellectual Property Rights
The Parties understand and agree that all intellectual property rights
required by Alcon for the conduct of the Alcon business are owned or validly
licensed from third parties to Alcon or an Alcon Group company.
6.6 Omitted Matters
To the extent any matters governing the business relationships of the
Nestle Group and the Alcon Group going forward have not been dealt with by this
Agreement, the Parties shall endeavor in good faith to find the most suitable
solution in light of the provisions of this Agreement.
6.7 Misdirected Funds
Unless otherwise agreed,
(a) any cash or funds received by Nestle or any of the Nestle Group
companies subsequent to the Effective Date (or subsequent to the effective
date of an asset transfer referred to in Section 2.2) relating to the
business of the Alcon Group shall be refunded to Alcon, or to any Alcon
Group company as directed by Alcon, within 10 Business Days of receipt of
such cash or funds;
(b) any cash or funds paid by the Nestle Group subsequent to the
Effective Date (or subsequent to the effective date of an asset transfer
referred to in Section 2.2) relating to the business of the Alcon Group
shall be refunded to Nestle, or to any Nestle Group company as directed by
Nestle, within 10 Business Days of delivery of an invoice and the
underlying documentation explaining the nature of such refund to Alcon in
respect of such payment;
(c) any cash or funds received by Alcon or any of the Alcon Group
companies subsequent to the Effective Date (or subsequent to the effective
date of an asset transfer referred to in Section 2.2) relating to the
businesses or assets of the Nestle Group shall be refunded to Nestle, or to
any other of the Nestle Group companies as directed by Nestle, within 10
Business Days of receipt of such cash or funds;
(d) any cash or funds paid by the Alcon Group subsequent to the
Effective Date (or subsequent to the effective date of an asset transfer
referred to in Section 2.2) relating to the businesses or assets of the
Nestle Group shall be refunded to Alcon, or to any of the Alcon Group
companies as directed by Alcon, within 10 Business Days of delivery of an
invoice and the underlying documentation explaining the nature of such
refund to Nestle in respect of such payment.
All payments shall be made without any deduction, any set-off or
counterclaim in immediately available, freely transferable, cleared funds by
wire transfer to an account designated by the person entitled to receive such
payment pursuant to this Section 6.7.
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7 RESTRICTIVE COVENANTS
7.1 Covenant not to Compete
Nestle undertakes that for so long as its holds a Majority Shareholding in
Alcon, it will not, directly or indirectly, engage in or participate in the
ownership, management or control of, any business that is active in the sector
of pharmaceutical products treating or curing vision, ear and nose diseases, as
well as vision defects (a COMPETING BUSINESS). This undertaking applies to (i)
drugs and medicines, usually administered in topical form, which are either
prescribed or sold over-the-counter, and (ii) surgical equipment and instruments
for all types of eye procedures and products for contact lens care.
Nothing contained in this Agreement shall limit or restrict the right of
Nestle or any company of the Nestle Group
(a) subject to the preceding paragraph, to carry on or further develop
its world-wide business that does not constitute a Competing Business;
(b) to hold securities that it currently owns or purchase additional
securities of Business Associations in which it currently holds securities
(provided that the aggregate equity interest of the Nestle Group in any
Business Association operating a Competing Business does not exceed 20% of
the voting rights of such Business Association);
(c) to make investments in securities of any other Business
Associations that are listed on a national or international securities
exchange or regulated market in the ordinary course of business, provided
that the aggregate equity interest of the Nestle Group in such Business
Associations does not exceed 20% of the voting rights of such Business
Associations;
(d) to manufacture and/or market nutritional supplements, vitamins,
antioxidants or any other such products to be taken orally or otherwise,
registered or not, whose first aim is to prevent or contribute to the
treatment of vision, ear and nose diseases;
(e) to engage in any other pharmaceutical sector not related to eye,
ear and nose diseases or conditions;
(f) to engage in any business (whether as a new investment or as an
acquisition opportunity) described in the first paragraph of this Section
7.1 where the Board of Directors of Alcon has decided not to engage in such
business.
Notwithstanding any provisions of this Section 7.1 to the contrary, if
Nestle or any company of the Nestle Group acquires the assets or securities of,
or merges with, any Business Association that is engaged in a Competing
Business, such acquisition or merger shall not be deemed to be in violation of
this Section 7.1 if at the time of acquisition or merger the Competing Business
represents less than 50% of the gross revenues of the acquired Business
Association (or the Business Association merged with) for such Business
Association's most recently completed fiscal year, provided, however, that
Nestle will (i) fully and promptly inform Alcon of particulars of the competing
business to be acquired, and (ii) give Alcon a right of first refusal to acquire
these products on the basis of fair value. Should Alcon fail to exercise this
right within 30 business days of being so notified, Nestle may sell such
products or business segments to a third party or retain the products or
business segments.
7.2 Non-Interference and Non-Solicitation
Nestle agrees that it shall not, and shall procure that the companies of
the Nestle Group will not, for the duration of two years after the Pricing Date,
without written consent of Alcon, actively solicit for employment or hiring any
employee of the Alcon Group; provided, however, that the foregoing will not
prevent Nestle or its Subsidiaries
(a) from employing any such employee who contacts Nestle or any
company of the Nestle Group on his or her own initiative;
15
(b) from responding to an advertisement for employment published by
any such employee without any prior encouragement from Nestle or a Nestle
Group company; or
(c) from publishing and hiring through general advertisements or
solicitations not targeted to any such employee.
7.3 Remedies
In case of a breach by Nestle of the restrictive covenants set out in this
Section 7, Alcon shall have the right to assert, in its own name and acting on
behalf of any Alcon Group company affected by such breach, to seek any remedies
available under applicable law, including damages, specific performance and
injunctions against Nestle, in which case Section 11 shall apply.
The provisions of Section 8 shall apply mutatis mutandis.
8 INDEMNITY
8.1 Scope
The Parties have, under this Agreement, promised indemnity to each other in
various instances. In all these cases the provisions of this Section 8 shall
apply unless otherwise stated herein.
Unless otherwise agreed,
(a) the party liable for indemnification (the INDEMNIFYING PARTY)
shall be liable to the party benefiting from indemnification (the
INDEMNIFIED PARTY) for any direct damages, losses and liabilities incurred,
costs paid (including court costs and attorney's fees) and reimbursements
made by the Indemnified Party;
(b) the Indemnifying Party shall further be liable to the Indemnified
Party for any indirect, incidental, consequential or punitive damages,
provided, however, that such obligation to indemnify shall only exist to
the extent that liability has been successfully asserted by a third party
that is not an Affiliate of a Party against the Indemnified Party.
8.2 Third Party Claims
(a) If any third party shall make any claim or commence any proceeding
against the Indemnified Party with respect to which the Indemnified Party
intends to make any claim for indemnification against the Indemnifying
Party, the Indemnified Party shall promptly give written notice to the
Indemnifying Party of such third party claim or proceeding. Failure to give
such notice shall not, however, affect the Indemnified Party's right to
indemnification hereunder except to the extent the Indemnifying Party
suffers a harm, prejudice or additional cost directly caused by such
failure.
The Indemnifying Party shall have 20 business days after receipt of
such notice to notify the Indemnified Party that it elects to conduct and
control the defense of such claim, proceeding or suit (the INDEMNIFICATION
NOTICE).
(b) If the Indemnifying Party gives the Indemnification Notice, it
shall have the right to undertake, conduct and control the conduct and
settlement of such claim or proceeding at its sole expense. For such
purpose, the Indemnifying Party may appoint counsel reasonably acceptable
to the Indemnified Party. The Indemnified Party shall cooperate with the
Indemnifying Party in connection therewith; provided that
(i) the Indemnifying Party shall not permit any injunction against
or any lien, encumbrance or other charge on any asset of the Indemnified
Party or its Group companies;
(ii) the Indemnifying Party shall permit the Indemnified Party (and
counsel chosen and paid by the Indemnified Party) to monitor its conduct
or settlement and to appoint its own
16
counsel for purposes of such monitoring, and the Indemnifying Party
shall provide the Indemnified Party with all information regarding such
claim or proceeding as the Indemnified Party may reasonably request;
(iii) the Indemnifying Party shall not, without the prior written
consent of the Indemnified Party, settle or compromise any claim, or
consent to the entry of any judgment, unless such settlement or judgment
includes an unconditional release from all liability given by the
claimant or the plaintiff to the Indemnified Party in respect of such
claim or judgment; and
(iv) the Indemnifying Party shall promptly reimburse to the extent
required under this Section 8.2 the Indemnified Party for the full
amount of any claim or loss resulting from such claim or proceeding and
all related expenses incurred by the Indemnified Party (other than the
expenses for counsel mentioned in Section 8.2(b)(ii)).
Notwithstanding the foregoing, if the Indemnified Party, in the belief
that a claim may materially and adversely affect it other than as a result
of money damages or other money payments, advises the Indemnifying Party
that it has determined to make settlement of a claim, the Indemnified Party
shall have the right to do so at its own costs and expense, without any
requirement to contest such claim at the request of the Indemnifying Party,
but without any right for the indemnification by the Indemnifying Party.
(c) If the Indemnifying Party does not give the Indemnification
Notice, the Indemnified Party shall have the right to defend or settle such
claim or proceeding in the exercise of its exclusive discretion subject to
the provisions of this Section 8.2, and the Indemnifying Party shall, upon
request from the Indemnified Party, promptly pay to the Indemnified Party
in accordance with the other terms of this Section 8.2 the amount of any
claim or loss (including court cost and reasonable attorneys' fees)
resulting from its liability to the third party claimant.
In such case, the Indemnifying Party shall nevertheless be entitled to
monitor the conduct or settlement of such claim by the Indemnified Party.
The Indemnified Party shall provide the Indemnifying Party and its counsel
with information reasonably requested, but all costs and expenses incurred
in connection with such monitoring shall be borne by the Indemnifying
Party.
(d) So long as the Indemnifying Party is contesting any claim or
proceeding in good faith, the Indemnified Party shall not pay or settle any
such claim or proceeding. If the Indemnified Party pays or settles any such
claim or proceeding, it shall lose any right to be indemnified by the
Indemnifying Party.
8.3 Direct Claims
Any claim for indemnity on account of an indemnifiable loss made directly
by the Indemnified Party against the Indemnifying Party and which does not
result from a third party claim may be asserted by written notice from the
Indemnified Party to the Indemnifying Party at any time during the applicable
statute of limitations (it being expressly understood that any prompt notice
requirement under applicable statutory law is herewith waived). Such
Indemnifying Party shall have a period of 30 business days within which to
respond thereto.
8.4 Adjustment of Indemnifiable Losses
(a) The amount which the Indemnifying Party is required to pay to the
Indemnified Party shall be reduced (including, without limitation,
retroactively) by any insurance proceeds and other amounts actually
recovered from third parties by the Indemnified Party in reduction of the
related claim or loss.
The Indemnified Party agrees that the Indemnifying Party shall be
subrogated to the Indemnified Party under any insurance policy to the
extent it has actually indemnified the Indemnified Party.
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(b) If the Indemnified Party realizes a tax benefit or detriment in
one or more tax periods by reason of having incurred a claim or loss for
which it receives an Indemnity Payment from the Indemnifying Party, then,
as the case may be,
(i) the Indemnified Party shall pay to the Indemnifying Party an
amount equal to the tax benefit; or
(ii) the Indemnifying Party shall pay to the Indemnified Party an
additional amount equal to the tax detriment;
in either case taking into account any tax detriment resulting from the receipt
of such additional amounts. Any payment due under this Section 8.4(b) with
respect to a tax benefit or tax detriment realized by an Indemnified Party in a
tax period shall be due and payable within 30 days from the time the return for
such tax period is due.
8.5 No Third Party Beneficiaries
The indemnification provided for in this Agreement shall not inure to the
benefit of any third party or parties (other than group companies of the
Parties) and shall not relieve any insurer or other third party who would
otherwise be obligated to pay any claim or the responsibility with respect
thereto or, solely by virtue of the indemnification provisions hereof, provide
any subrogation rights with respect thereto, and each party agrees to waive such
rights against the other to the fullest extent permitted.
8.6 Statute of Limitations
The statute of limitations of any indemnity provided under this Agreement
shall be ten years from the date a claim for indemnification comes into
existence.
9 COSTS AND TAXES
9.1 Costs
Subject to the provisions set forth in Section 2.5.1, each Party shall bear
its own costs arising out of or in connection with the negotiations of this
Agreement or the consummation of the transactions contemplated by this
Agreement.
9.2 Taxes
9.2.1 Taxes for Transactions under this Agreement
Nestle shall as from the closing of the offering indemnify and hold Alcon
and the Alcon Group companies harmless against any and all costs, liabilities,
losses and damages actually suffered or incurred by Alcon or any Alcon Group
companies arising out of or resulting from any Taxes due or payable by any Alcon
Group company or as a result of the consummation of the transactions
contemplated by this Agreement, provided, however, that the following taxes
shall be borne or reimbursed by Alcon:
(a) the Swiss issuance stamp tax (Emissionsabgabe) due on the issuance
and sale of the Firm Shares and the Option Shares, and on the issuance of
shares used for the
Alcon Incentive Plan;
(b) any and all Swiss transfer stamp taxes (Umsatzabgabe) due on any
secondary share sales made in, or in connection with, the IPO (but not, for
the avoidance of doubt, any secondary share sales made in the aftermarket
following the IPO); and
(c) any Swiss and other transfer stamp taxes, stamp duties and other
levies arising as a result of or in connection with the transactions
contemplated under Section 2.2 (but not, for the avoidance of doubt, any
income taxes, capital gains taxes or taxes on the profit of asset sales, if
any).
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9.2.2 Futures Taxes
All future taxes levied on Alcon or any Alcon Group company for any tax
periods ending on or after the Pricing Date shall be the sole responsibility of
Alcon. Alcon shall fully indemnify Nestle and each Nestle Group company for, and
shall hold such companies harmless against, any costs, liabilities, losses and
damages arising out of or in connection with the assertion of any claims for
Taxes against Nestle or any Nestle Group company. The provisions of Section 8
shall apply mutatis mutandis.
The provisions of the foregoing paragraph shall not apply with respect to
any tax claims made by the Swiss Federal tax administration against Alcon for
recapture of the Swiss issuance stamp tax (Emissionsabgabe) relating to the
corporate restructuring of Alcon closed on January 15, 1999 (the 1999
RESTRUCTURING). The Swiss issuance stamp tax on said corporate restructuring was
waived subject to the condition that Nestle's shareholding in Alcon does not
fall below 66 2/3% of Alcon's voting rights on or before January 15, 2004. If,
(a) as a result of share sales by Nestle or as a result of capital
increases of Alcon in which Nestle does not subscribe for shares, Nestle's
shareholding in Alcon falls below 66 2/3% of Alcon's voting rights on or by
January 15, 2004, and
(b) as a consequence thereof, Alcon is obligated to pay the Swiss
issuance stamp tax relating to the 1999 Restructuring,
Nestle shall fully indemnify Alcon for, and shall hold Alcon harmless
against, any costs, liabilities, losses and damages arising out of or in
connection with the payment of this tax. The provisions of Section 8 shall apply
mutatis mutandis.
10 GENERAL PROVISIONS
10.1 Effect on Third Parties
Unless specifically otherwise provided herein, no person other than the
Parties hereto shall have any rights or benefits under this Agreement, and
nothing in this Agreement is intended to confer on any person other than the
Parties hereto any rights, benefits or remedies. Notwithstanding the foregoing,
it is understood and agreed by the Parties that,
(a) with respect to this Agreement and the matters covered thereby,
Nestle is acting on its own behalf and on behalf of (and with the
obligation to procure the performance of certain undertakings by) the
Nestle Group companies, and Alcon is acting on its own behalf and on behalf
of (and with the obligation to procure the performance of certain
undertakings by) the Alcon Group companies;
(b) unless explicitly stated in this Agreement or in any ancillary
agreement made hereunder, nothing in this Agreement shall confer on any of
the Nestle Group companies or the Alcon Group companies any right to
require performance, or to make any claim of any nature in its favor, under
or in connection with this Agreement;
(c) unless explicitly stated in this Agreement or in an ancillary
agreement, any damages incurred by any of the Nestle Group companies or the
Alcon Group companies and any right to require performance and to make any
claims, as the case may be, under or in connection with this Agreement
shall be claimed and enforced by and against Nestle and Alcon only;
(d) unless otherwise explicitly set out herein, to the extent that
there were any conflicts between this Agreement and the ancillary
agreements made hereunder, the provisions of this Agreement shall prevail.
No Party to this Agreement shall assign any of the rights or obligations
under this Agreement to any third party without the prior written consent of the
other party, it being understood that each of Alcon and Nestle shall be at
liberty to fulfill their obligations under this Agreement through a Subsidiary
or an Affiliate under their control.
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10.2 Notices
All notices or other communications to be given under or in connection with
this Agreement shall be made in writing and shall be delivered by hand, by
registered mail (return receipt requested) or by telefax (followed by registered
mail) to the following addresses:
IF TO ALCON:
Address for service Xxxxx 00, XX-0000 Xxxxxxxxx Attn. Chairman of the Board
Telefax No. + 41 41 785 8887
with a copy to Alcon Laboratories, Inc. Attn. President
0000 Xxxxx Xxxxxxx
Xxxx Xxxxx, Xxxxx 00000, XXX
Telefax No. x0 000 000 0000
IF TO NESTLE:
Address for service Ave. Xxxxxx 00, XX-0000 Xxxxx Attn. General Counsel
Telefax No. + 41 21 924 4568
with a copy to Pharma & Cosmetics Management
Telefax No. x00 00 000 0000
10.3 Entire Agreement
This Agreement, including the Exhibits and any other documents referred to
herein, constitutes the entire Agreement and understanding among the Parties
with respect to the subject matter hereof, and shall supersede all prior oral
and written agreements or understandings of the Parties relating hereto. All
references to this Agreement shall be deemed to include the Exhibits hereto.
10.4 Amendments and Waivers
This Agreement may only be modified or amended by a document signed by both
Parties. Any provision contained in this Agreement may only be waived by a
document signed by the Party waiving such provision.
10.5 Severability; Good Faith
Should any part or provision of this Agreement be held to be invalid or
unenforceable by any competent court, governmental or administrative authority
having jurisdiction, the other provisions of this Agreement shall nonetheless
remain valid. In this case, the Parties shall endeavor to negotiate a substitute
provision that best reflects the economic intentions of the Parties without
being unenforceable, and shall execute all agreements and documents required in
this connection.
If a Party to this Agreement (the FAILING PARTY) should fail to take any
action to be taken or to deliver any document to be delivered as of a specified
date, the other Party shall not resort to any contractual remedies under this
Agreement if such failure is promptly and fully cured in good faith by the
Failing Party.
10.6 Confidentiality
The Parties undertake to keep all information obtained in the course of the
due diligence and in any negotiations and discussions prior to or after Closing
in strict confidence, and further undertake not to disclose any such information
to third parties (unless such third parties are also covered by a
confidentiality obligation), and the Parties to this Agreement shall in all
respects keep confidential and not
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at any time disclose to anyone or use for their own or any other person's
benefit or to the detriment of the other Party or parties any confidential
information, in each case unless:
(a) a Party is required to do so by a competent court or
administrative authority under compulsory law;
(b) a Party is required to do so under applicable stock exchange
regulations;
(c) such information is already in the public domain by reason other
than a breach of this confidentiality undertaking.
This confidentiality undertaking shall remain in force until 31 December
2004.
10.7 Public Announcements
All public announcements or press releases in connection with the
transactions contemplated under this Agreement shall only be issued after the
Parties have consulted and agreed on the contents of such public announcements
or press releases.
11 GOVERNING LAW AND DISPUTE RESOLUTION
11.1 Governing Law
This Agreement shall be governed by and construed in accordance with the
substantive laws of Switzerland.
11.2 Dispute Resolution
Should there be any disputes between the Parties as to the respective
rights and obligations under this Agreement, the Parties shall strive to find an
amicable settlement. Should such an amicable settlement not be possible after no
less than 30 business days of discussions among the Parties, the Parties shall
refer the matter to a joint committee consisting of the Chief Executive Officer
of Alcon Labs and General Manager/Executive Vice President Pharma and Cosmetics
of Nestle (the JOINT COMMITTEE). The Joint Committee shall strive to find an
amicable solution within 30 business days after the dispute has been submitted
to it. A party can resort to arbitration pursuant to Section 11.3 only if no
amicable solution can be found by the Joint Committee.
11.3 Arbitration
If no amicable settlement can be found pursuant to Section 11.2, all
disputes arising out of or in connection with this Agreement, including disputes
on its conclusion, validity, effects or termination, shall be settled (to the
exclusion of the ordinary courts) by a three-person arbitral tribunal formed
pursuant to the domestic arbitration rules of the Zurich Chamber of Commerce.
Each Party shall have the right to appoint one arbitrator, and the arbitrators
so appointed shall designate a chairman. The seat of the arbitral tribunal shall
be Zurich. Arbitral proceedings shall be conducted in English. The award
rendered by the
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arbitral tribunal shall contain a decision on the merits, an apportionment of
costs and an award for reimbursement of fees.
SO AGREED on
------------------------------ in
------------------------------------.
NESTLE S.A.
-------------------------------------------- --------------------------------------------------------
By:
Title:
ALCON, INC.
-------------------------------------------- --------------------------------------------------------
By:
Title:
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ANNEX A
DEFINITIONS
As used in this Agreement in capitalized form, the following terms shall
have the following meaning:
Affiliate shall mean a person or Business Association which exercises
Control over a second person or Business Association, or is under Control by it,
or is under common Control by the same person or Business Association.
Agreement shall mean this Agreement including all of its Annexes and
Exhibits.
Alcon Labs shall mean Alcon Laboratories, Inc., Fort Worth TX, U.S.A.
Alcon shall mean Alcon, Inc., Hunenberg, Switzerland.
Alcon Group shall mean Alcon and all Business Associations under the
Control of Alcon.
Benefit Plans shall have the meaning set forth in Section 5.2.
Board Committees shall mean the committees of the board of directors of
Alcon as constituted from time to time.
Board of Directors shall mean the board of directors of Alcon, constituted
in accordance with Swiss law, the articles of association and the organizational
regulations of Alcon.
Business Association shall mean a general or limited partnership, a
corporation, a business trust, a limited liability company, a trust, an
unincorporated organization doing business, a government or any department or
agency thereof, a joint venture or any other person or entity doing business.
Business Day shall mean shall mean any day, other than Saturday, Sunday or
any other day on which commercial banks in Zurich are required by applicable law
to close.
CHF shall mean Swiss Francs, being the lawful currency of Switzerland.
CO shall mean the Swiss Federal Code of Obligations (Obligationenrecht) of
1911, as amended.
Competing Business shall have the meaning set forth in Section 7.1.
Control shall be deemed to exist if a person or Business Association
(either alone or with its Affiliates) owns more than half of the voting rights
or equity capital of a Business Association, or is otherwise able to exert a
controlling influence over another person or Business Association.
Effective Date shall mean January 1, 2002.
Controlling Shareholding shall mean a shareholding that confers Control of
a Person or Business Association over another Business Association.
EGM shall mean an extraordinary general meeting of shareholders of Alcon.
Environment means (i) land, including, without limitation, surface land,
sub-surface strata, sea bed and river bed under water and natural and man-made
structures; (ii) water, including, without limitation, coastal and inland
waters, surface waters, ground waters and water in drains and sewers; (iii) air,
including, without limitation, air inside buildings and in other natural and
man-made structures above or below ground; and (iv) any and all living organisms
or systems supported by those media, including, without limitation, humans.
Environmental Laws means all or any international, European, national,
federal, state, district or local, civil or criminal law, common law, statutes,
statutory instruments, regulation, directive, statutory guidance and regulatory
codes of practice, order, decree, injunction or judgment which relate to the
pollution or the protection of the Environment or Environmental Matters and
which is in force as at Closing or which are no longer in force but under which
the Alcon Group companies still have obligations and liabilities.
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Environmental Matters means (i) pollution or contamination of the
Environment; (ii) the generation, manufacture, processing, handling, storage,
distribution, use, treatment, removal, transport, disposal, release, spillage,
deposit or discharge of Hazardous Substances; (iii) the exposure of any person
to Hazardous Substances; or (iv) the creation of any noise, vibration,
radiation, nuisance or other material adverse impact on the Environment.
Failing Party shall have the meaning set forth in Section 10.5.
Firm Shares shall mean the shares to be sold initially in the IPO, as
further set out in the Underwriting Documentation.
Group Executive Management shall mean the management of the Alcon Group, as
further described in Section 3.4.2.
IAS shall mean the International Accounting Standards as promulgated by the
International Accounting Standards Committee.
Incentive Plan shall mean the incentive plan to be established for
employees and directors of the Alcon Group with effect as of or after the
Pricing Date.
Indemnified Party shall have the meaning set forth in Section 8.1.
Indemnifying Party shall have the meaning set forth in Section 8.1.
IPO shall mean the Initial Public Offering of Alcon.
Joint Committee shall have the meaning set forth in Section 11.2.
Majority Shareholding shall mean ownership by a Person or group of Persons
acting in concert of more than half of the voting rights (whether or not such
voting rights may be exercised) in a Business Association.
Nestle shall mean Nestle S.A., Cham and Vevey, Switzerland.
Nestle Group shall mean shall mean Nestle and all Business Associations
under the Control of Nestle (other than the Alcon Group).
NYSE shall mean New York Stock Exchange.
NYSE Rules shall mean the listing rules and regulations of the NYSE in
effect from time to time.
Offer Price shall mean the gross offering price at which Firm Shares and
the IPO Shares are sold to the public.
Option Shares shall mean the shares to be sold in the IPO pursuant to the
Underwriters' over-allotment option, as further set out in the Underwriting
Documentation.
Pricing Date shall mean the date of pricing of the Firm Shares.
Registration Statement shall have the meaning set forth in Section 2.6.1.
Remediation shall have the meaning set forth in Section 4.3.
SEC shall mean the United States Securities and Exchange Commission.
Rollover Shares shall have the meaning set forth in Section 2.3.6.
Subsidiaries shall mean with respect to any Person, any Business
Association of which such Person, either directly or through or together with
any other Subsidiary of such Person owns more than 50% of the voting power or
can otherwise determine the election of directors or their equivalents, other
than as affected by events of default.
Tax and Taxes shall mean all tax liabilities, including income taxes
(personal or corporate), capital taxes, stamp duties (both on the issuance and
on the transfer or securities), withholding taxes, value added
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taxes and all other taxes, duties, charges, levies, contributions or imposts
payable to any competent taxing authority in any jurisdiction, as well as any
interest, penalties, costs and expenses reasonably related thereto.
Taxing Authority or Authorities means any government, state or municipality
or any local, state, federal or other fiscal, revenue, customs or excise
authority, body or official anywhere in the world.
Underwriting Documentation shall mean all agreements and instruments to be
entered into between Nestle, Alcon and the financial institutions advising on
the IPO.
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