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EXHIBIT 2.1
STOCK AND ASSET PURCHASE AGREEMENT
BETWEEN
PFIZER INC.
AND
STRYKER CORPORATION
DATED AS OF AUGUST 13, 1998
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND TERMS......................................... 2
Section 1.1. Definitions.......................................... 2
Section 1.2. Other Definitional Provisions........................ 26
ARTICLE II PURCHASE AND SALE............................................ 27
Section 2.1. Purchase and Sale of Shares of the
ConveyeSubsidiaries.................................. 27
Section 2.2. Purchase and Sale of Assets of the Asset
Selling Corporations................................. 27
Section 2.3. Consents............................................. 32
Section 2.4. Excluded Assets of the Business...................... 34
Section 2.5. Assumption of Certain Obligations of the
Business............................................. 35
Section 2.6. Retained Liabilities of Business..................... 37
Section 2.7. Purchase Price....................................... 39
Section 2.8. Purchase Price Adjustment............................ 40
Section 2.9. Allocation of the Aggregate Purchase
Price................................................ 44
ARTICLE III CLOSING..................................................... 47
Section 3.1. Closing.............................................. 47
ARTICLE IV CONDITIONS TO CLOSING ....................................... 48
Section 4.1. Conditions to the Obligations of
Purchaser and Pfizer................................. 48
Section 4.2. Conditions to the Obligations of
Purchaser............................................ 49
Section 4.3. Conditions to the Obligations of Pfizer.............. 51
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PFIZER...................... 52
Section 5.1. Organization......................................... 52
Section 5.2. Authority; Binding Effect............................ 52
Section 5.3. Conveyed Subsidiaries; Capital Structure............. 53
Section 5.4. Non-Contravention.................................... 56
Section 5.5. Seller Corporation Consents and Approvals............ 57
Section 5.6. Financial Information; Books and Records............. 57
Section 5.7. Absence of Material Changes.......................... 58
Section 5.8. No Litigation........................................ 59
Section 5.9. Compliance with Laws................................. 59
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Section 5.10. Product Registrations; Regulatory
Compliance........................................... 60
Section 5.11. Environmental Matters................................ 61
Section 5.12. Material Contracts................................... 63
Section 5.13. Intellectual Property................................ 65
Section 5.14. Real Property........................................ 67
Section 5.15. Assets............................................... 68
Section 5.16. Taxes................................................ 69
Section 5.17. Employee Benefits.................................... 70
Section 5.18. Brokers.............................................. 73
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER.................. 73
Section 6.1. Organization and Qualification....................... 73
Section 6.2. Corporate Authorization.............................. 73
Section 6.3. Binding Effect....................................... 74
Section 6.4. Non-Contravention.................................... 74
Section 6.5. Purchaser Consents and Approvals..................... 75
Section 6.6. Financial Capability................................. 75
Section 6.7. Securities Act....................................... 75
Section 6.8. Condition of Business................................ 75
Section 6.9. Brokers.............................................. 77
ARTICLE VII COVENANTS .................................................. 77
Section 7.1. Information and Documents............................ 77
Section 7.2. Conduct of Business.................................. 79
Section 7.3. Reasonable Best Efforts; Certain
Governmental Matters................................. 81
Section 7.4 Tax Matters.......................................... 86
Section 7.5. Employees and Employee Benefits...................... 104
Section 7.6. Certain Dividends, Etc............................... 117
Section 7.7. Resignations......................................... 118
Section 7.8. Bulk Transfer Laws................................... 118
Section 7.9. Noncompetition....................................... 119
Section 7.10. Transitional Services................................ 123
Section 7.11. Transitional Intellectual Property
License Agreement.................................... 123
Section 7.12. Compliance with WARN, Etc............................ 123
Section 7.13. Foreign Implementing Agreements...................... 123
Section 7.14. Litigation Support................................... 124
Section 7.15. Insurance............................................ 125
Section 7.16. Audited Financial Statements......................... 126
Section 7.17. Change of Name....................................... 126
Section 7.18. Notification of Certain Matters...................... 126
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ARTICLE VIII INDEMNIFICATION ........................................... 127
Section 8.1. Indemnification by Pfizer............................ 127
Section 8.2. Indemnification by Purchaser......................... 129
Section 8.3. Notice of Claims..................................... 130
Section 8.4. Third Party Claims................................... 131
Section 8.5. Expiration........................................... 132
Section 8.6. Certain Limitations.................................. 134
Section 8.7. Losses Net of Insurance, Etc......................... 134
Section 8.8. Intentionally Omitted................................ 136
Section 8.9. Sole Remedy/Waiver................................... 136
Section 8.10. Indemnification Procedures for Remedial
Actions on Conveyed Properties ...................... 137
Section 8.11. Remedial Action Obligations.......................... 141
Section 8.12. Compliance With ISRA................................. 142
Section 8.13. No Consequential Damages............................. 147
ARTICLE IX TERMINATION ................................................. 148
Section 9.1. Termination.......................................... 148
Section 9.2. Effect of Termination................................ 148
ARTICLE X MISCELLANEOUS ................................................ 150
Section 10.1. Notices.............................................. 150
Section 10.2. Amendment; Waiver.................................... 151
Section 10.3. Assignment........................................... 151
Section 10.4. Entire Agreement..................................... 152
Section 10.5. Fulfillment of Obligations........................... 152
Section 10.6. Parties in Interest.................................. 152
Section 10.7. Public Disclosure.................................... 153
Section 10.8. Return of Information................................ 153
Section 10.9. Expenses............................................. 153
Section 10.10. Schedules............................................ 154
Section 10.11. Governing Law........................................ 155
Section 10.12. Counterparts......................................... 155
Section 10.13. Headings............................................. 155
Section 10.14. Severability......................................... 155
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List of Schedules
1.1(a) Asset Selling Corporations
1.1(b) Conveyed Subsidiaries
1.1(c) Facilities
1.1(d) Stock Selling Corporations
1.1(e) Knowledge
2.2(a) Leased Real Property
2.2(e) Restrictions on Intellectual Property Sublicenses
2.2(m) Assigned Litigation
2.4(i) Excluded Assets
2.9 Allocation of the Aggregate Purchase Price
5.3(b) Capital Structure
5.3(c) Subsidiaries of Conveyed Subsidiaries
5.4 Non-Contravention
5.5 Consents and Approvals
5.6(a) Financial Statements: Exceptions
5.6(b) Financial Statements: Deferred Taxes
5.7 Absence of Material Changes
5.8 No Litigation
5.9 Compliance with Laws
5.10 Product Registrations; Regulatory Compliance
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5.11 Environmental Matters
5.12 Material Contracts
5.13 Intellectual Property
5.13(a) Intellectual Property Ownership, Validity
5.13(b) Third Party Intellectual Property Infringement
5.14(a) Real Property
5.14(c) Real Property Rights
5.15 Assets: Exceptions to title
5.16 Taxes
6.5 Purchaser Consents and Approvals
7.2 Reorganization Steps and Refinancing Matters
7.4 Check-The-Box Elections
7.4(c) Tax Sharing Agreements and Arrangements
7.5(a) Employee Benefits (US)
7.5(a)(i) Employee Severance Program
7.5(a)(ii) Employees (US)
7.5(a)(iii) Purchaser Benefit Plans
7.5(b)(ii) Purchaser Qualified Plans
7.5(e) Employees (Bargaining Unit)
7.5(f) Purchaser Benefits (non-US)
7.5(f)(i) Employees (non-US)
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7.5(f)(ii) Employee Benefits (non-US)
7.9 Existing Investments
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List of Exhibits
A. List of instruments and documents provided by Seller Corporations
to Purchaser
B. List of instruments and documents provided by Purchaser to Seller
Corporations
C. Form of Transitional Services Agreement
D. Form of Transitional Intellectual Property License Agreement
E. Pfizer Employee Separation Plan
F. Release Agreement (Individual Termination)
G. Release Agreement (Group Termination)
H. Collective Bargaining Agreement
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Copies of the Schedules and Exhibits to the Stock and Asset Purchase Agreement
will be furnished supplementally to the Securities and Exchange Commission upon
request.
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STOCK AND ASSET PURCHASE AGREEMENT
This Stock And Asset Purchase Agreement is made and entered into as of
the 13th day of August, 1998 between Pfizer Inc., a Delaware corporation
("Pfizer"), and Stryker Corporation, a Michigan corporation.
W I T N E S E T H:
WHEREAS, Pfizer through certain of its Subsidiaries is engaged in the
Business (as defined below);
WHEREAS, Pfizer is the record and beneficial owner of all of the
issued and outstanding shares of common stock of Howmedica Inc., a Delaware
corporation ("Howmedica");
WHEREAS, the Stock Selling Corporations (as defined below) are the
record and beneficial owners of all of the outstanding shares of capital stock
of the Conveyed Subsidiaries (as defined below);
WHEREAS, the Asset Selling Corporations (as defined below) own the
Conveyed Assets (as defined below); and
WHEREAS, the parties hereto desire that Pfizer shall cause the Stock
Selling Corporations to sell and transfer to Purchaser (as defined below) and
Purchaser shall purchase from the Stock Selling Corporations all of the issued
and outstanding shares of capital stock of the Conveyed Subsidiaries (the
"Shares"), and that Pfizer shall cause the Asset Selling
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Corporations to sell and transfer to Purchaser and Purchaser shall purchase from
the Asset Selling Corporations all of the Conveyed Assets and assume all of the
Assumed Liabilities (as defined below), upon the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and undertakings contained herein, subject to and on the terms and
conditions herein set forth, and intending to be bound hereby, the parties agree
as follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1. Definitions. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
"ADR" shall have the meaning set forth in Section 8.12(e) hereof.
"Affected Employee" shall mean an Employee (i) who shall accept an
offer of employment or offer of continuation of employment by Purchaser on or
prior to the Closing Date and work for Purchaser or any of its Affiliates at
least one day, or (ii) whose employment, as a matter of Law, automatically
continues with Purchaser, or (iii) whose initial offer of employment by the
Purchaser requires a relocation which is rejected, resulting in termination of
employment, whether or not such Employee
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worked for Purchaser or any of its Affiliates at least one day. For purposes of
this definition, the term "Employee" includes an Employee whose compensation is
subject to individual approval by the Pfizer Employee Compensation and
Management Development Committee.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person at any time during the period for which the determination of
affiliation is being made.
"Aggregate Payment" shall have the meaning set forth in Section 2.7(a)
hereof.
"Aggregate Purchase Price" shall have the meaning set forth in Section
2.7(c) hereof.
"Agreement" shall mean this Agreement, as the same may be amended or
supplemented from time to time in accordance with the terms hereof.
"Allocation" shall have the meaning set forth in Section 2.9 hereof.
"Applicable Remedial Action Standard" shall have the meaning set forth
in Section 8.11.
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"Asset Purchase Price" shall have the meaning set forth in Section
2.7(c) hereof.
"Asset Selling Corporations" shall mean those entities listed on
Schedule 1.1(a) hereof.
"Assumed Contracts" shall have the meaning set forth in Section 2.2(c)
hereof.
"Assumed Liabilities" shall have the meaning set forth in Section 2.5
hereof.
"Business" shall mean the worldwide business of developing,
manufacturing, distributing and selling (i) reconstructive, trauma and specialty
products utilized by medical professionals in the treatment of musculoskeletal
disorders and (ii) specialty surgical instrumentation and related products
focused on stereotactic surgery, as conducted on the date hereof by Pfizer
through the Conveyed Subsidiaries (and their Subsidiaries) and by the Asset
Selling Corporations.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banks in New York City are authorized or obligated by law or
executive order to close.
"Cash Equivalents" shall mean cash, checks, money orders, marketable
securities, short-term instruments and other cash equivalents, funds in time and
demand deposits or similar
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accounts, and any evidence of indebtedness issued or guaranteed by any United
States Governmental Authority.
"Closing" shall mean the closing of the transactions contemplated by
this Agreement.
"Closing Date" shall have the meaning set forth in Section 3.1(a)
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral Source" shall have the meaning set forth in Section 8.7
hereof.
"Collective Bargaining Agreement" shall have the meaning set forth in
Section 7.5(e) hereof.
"Competition Laws" shall mean statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines, and other Laws that are designed
or intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization, lessening of competition or restraint of trade.
"Competitive Activity" shall have the meaning set forth in Section
7.9(a) hereof.
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"Confidentiality Agreement" shall mean the Confidentiality Agreement
between Pfizer and Purchaser relating to the Business.
"Consolidated Tax Returns" shall mean any Tax Returns with respect to
Consolidated Taxes.
"Consolidated Taxes" shall mean all federal, state, provincial or
local Income Taxes, domestic or foreign, that are paid on a consolidated,
unitary, combined or similar basis with respect to Tax Returns that include
Conveyed Subsidiaries, or any of their Subsidiaries, on the one hand, and Pfizer
or any of its Subsidiaries or Affiliates (other than the Conveyed Subsidiaries
or any of their Subsidiaries) on the other.
"Conveyed Assets" shall have the meaning set forth in Section 2.2
hereof, it being understood that the Conveyed Assets do not include the Excluded
Assets or the Shares.
"Conveyed Subsidiaries" shall mean those entities listed on Schedule
1.1(b) hereof.
"Disputed Item" shall have the meaning set forth in Section 2.8(b).
"Employee" shall mean an Employee (US), an Employee (non-US) or an
Employee (Bargaining Unit).
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"Employee (Bargaining Unit)" shall mean an employee of Howmedica who
is also a member of the local Union No. 485 of the International Union of
Electronic, Electrical, Salaried, Machine and Furniture Workers, AFL-CIO.
"Employee (non-US)" shall mean any individual who as of the Closing
Date, (i) shall be (or in the case of clause (ii)(D) below, is scheduled to
become) an employee outside the United States of America of a Conveyed
Subsidiary (or a Subsidiary of a Conveyed Subsidiary), an Asset Selling
Corporation or another Affiliate of Pfizer who primarily performs (or will, on
commencing work, primarily perform) services on behalf of the Business and (ii)
either (A) shall have been employed and at work on the Closing Date, or (B)
shall have been absent on the Closing Date because of illness or on short-term
disability (including maternity disability), workers' compensation, vacation,
parental leave of absence, family and medical leave of absence, military leave
of absence or other absence or leave of absence where return to work is subject
to statutory requirements, or (C) shall have been receiving short-term
disability benefits for no more than one hundred eighty (180) consecutive days
as of the Closing Date, or (D) shall have received an offer of employment with
the Business with a Conveyed Subsidiary (or a Subsidiary of a Conveyed
Subsidiary), an Asset Selling Corporation or another Affiliate of Pfizer, in
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the ordinary course of business on or prior to the Closing Date, but shall have
not yet commenced work as of the Closing Date.
"Employee (US)" shall mean any individual who as of the Closing Date,
(i) shall be (or in the case of clause (ii)(D) below, is scheduled to become) an
employee in the United States of America of a Conveyed Subsidiary (or a
Subsidiary of a Conveyed Subsidiary), an Asset Selling Corporation or another
Affiliate of Pfizer who primarily performs (or will, on commencing work,
primarily perform) services on behalf of the Business and (ii) either (A) shall
have been employed and at work on the Closing Date, or (B) shall have been
absent on the Closing Date because of illness or on short-term disability
(including maternity disability), workers' compensation, vacation, parental
leave of absence, family and medical leave of absence, military leave of absence
or other absence or leave of absence where return to work is subject to
statutory requirements, or (C) shall have been receiving short-term disability
benefits for no more than one hundred eighty (180) consecutive days as of the
Closing Date, or (D) shall have received an offer of employment with the
Business with a Conveyed Subsidiary (or a Subsidiary of a Conveyed Subsidiary),
an Asset Selling Corporation or another Affiliate of Pfizer, in the ordinary
course of business on or prior to the Closing Date,
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but shall have not yet commenced work as of the Closing Date. Employee (US)
shall not include Employees (Bargaining Unit).
"Environmental Law" shall mean any applicable federal, state, local or
foreign Law, common Law, statute, ordinance, rule, regulation, code, order,
judgment or decree as in effect at the Closing Date relating directly or
indirectly to (i) the environmental aspects of product approvals, including
occupational health and safety, (ii) the protection of the environment
(including, without limitation, air, water vapor, surface water, groundwater,
drinking water supply, surface or subsurface land), (iii) occupational safety
and health, or (iv) the exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, recycling, Release
or disposal of Hazardous Substances or Hazardous Materials.
"Environmental Liability" means the Losses resulting from (i) failure
to comply with any requirement of an Environmental Law, (ii) failure to obtain
or comply with any required Environmental Permit, (iii) a Remedial Action or
(iv) harm or injury to any real property, to any person, to public health, or to
natural resource (other than Remedial Action) as a result of exposure to
Hazardous Substances or Hazardous Materials.
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"Environmental Permits" shall mean all permits, licenses,
certificates, approvals and other authorizations required to be held by a
Conveyed Subsidiary, a Subsidiary of a Conveyed Subsidiary or an Asset Selling
Corporation or to carry on the Business pursuant to an Environmental Law.
"Equipment" shall have the meaning set forth in Section 2.2(b) hereof.
"Equipment Leases" shall have the meaning set forth in Section 2.2(b)
hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Excluded Assets" shall have the meaning set forth in Section 2.4
hereof.
"Excluded Environmental Liabilities" shall mean: all Environmental
Liability associated with or arising from (i) all facilities formerly or
currently owned, leased or operated by the Business, the Conveyed Subsidiaries
or any of their Subsidiaries or the Asset Selling Corporations, other than (A)
those owned, leased or operated by a Conveyed Subsidiary or any of their
Subsidiaries as of the Closing Date or (B) those constituting part of the
Conveyed Assets transferred pursuant to this Agreement, (ii)(A) Environmental
Liabilities as set forth in subsections (iii) and (iv) of the definition of
Environmental
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Liabilities (other than those Environmental Liabilities described in subsection
(vi) of this definition), in excess of one million dollars ($1,000,000) in the
aggregate in the case of subsection (iii) of the definition of Environmental
Liabilities and with respect to non-third party claims brought by Purchaser
pursuant to subsection (iv) of the definition of Environmental Liabilities, to
the extent resulting from a claim received within three years of the Closing
Date concerning the Release or threat of Release of any Hazardous Material or
Hazardous Substance on or prior to the Closing Date at any location owned,
leased or operated by a Conveyed Subsidiary or any of their Subsidiaries as of
the Closing Date or constituting part of the Conveyed Assets. Pfizer shall be
responsible for the cost relating to a Remedial Action taken or required to
comply with applicable Environmental Law or the requirements of a Governmental
Authority or where there is a substantial likelihood that a Governmental
Authority would take or require Remedial Action in the near future; and (B)fines
and penalties and the cost of defending against an action seeking fines and
penalties, to the extent resulting from a claim received within three years of
the Closing Date concerning any non-compliance with Environmental Law or failure
to obtain or comply with any Environmental Permit in the operation of the
Business on or prior to the Closing Date, (iii) all off-site locations not used
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by the Business following the Closing Date where any of the Conveyed
Subsidiaries (or a Subsidiary of a Conveyed Subsidiary) or the Asset Selling
Corporations, directly or through third parties, disposed, stored or treated, or
arranged for the disposal, storage or treatment of, Hazardous Materials or
Hazardous Substances on or prior to the Closing Date, (iv)all off-site locations
used by the Business following the Closing Date where any of the Conveyed
Subsidiaries (or a Subsidiary of a Conveyed Subsidiary) or the Asset Selling
Corporations, directly or through third parties, disposed, stored or treated, or
arranged for the disposal, storage or treatment of Hazardous Materials or
Hazardous Substances on or prior to the Closing Date, subject to an allocation
by volume if possible or, if not possible, subject to equitable sharing of
liability between Pfizer and Purchaser, (v) any failures by the Business prior
to the Closing Date to comply with the provisions of the California Safe
Drinking Water and Toxic Enforcement Act of 1986 where there are claims related
to the sale of products by the Business prior to the Closing and where such
claims are presented to Pfizer within two years of Closing, or (vi) the New
Jersey Industrial Site Recovery Act ("ISRA"), 13 N.J.S.A., 1 K-6 et seq., the
Connecticut Transfer Act, Conn. Gen. Stat. Section 22a-134 et. seq., and other
similar Environmental Laws in connection
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with the execution of this Agreement and the transactions contemplated by this
Agreement.
The following two categories shall not be deemed to be Excluded
Environmental Liabilities: (i) the capital, operation and maintenance costs
incurred by Purchaser to continue to operate the Facilities, fixtures and
Equipment which as of the Closing Date are being operated by the Conveyed
Subsidiaries, any of their Subsidiaries, or the Asset Selling Corporations in
compliance with Environmental Laws and (ii) the closure and post-closure
expenditures related to such Facilities, fixtures and Equipment.
"Facilities" shall mean the facilities listed on Schedules 1.1(c),
2.2(a) and 5.14(a).
"Final Working Capital" shall have the meaning set forth in Section
2.8(c) hereof.
"Financial Statements" shall mean the financial data set forth on
Schedule 5.6 hereof.
"Foreign Implementing Agreements" shall mean the various agreements to
be executed by certain of the Seller Corporations after the date of this
Agreement for the purpose of implementing the transfer and conveyance on the
Closing Date, or as soon thereafter as can be effected, of Shares, Conveyed
Assets and Assumed Liabilities of Conveyed Subsidiaries and
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Asset Selling Corporations located outside of the United States to the
designated Affiliate of the Purchaser by such Seller Corporations.
"Foreign Plans" shall mean each material pension, profit sharing,
savings, retirement, health, life, disability, deferred compensation, incentive,
severance and fringe benefit plan, program, or arrangement maintained or
contributed to by any Seller Corporation for the benefit of any Employees
(non-US), other than plans, programs, or arrangements required to be maintained
or contributed to by the Laws of the relevant jurisdiction and Plans maintained
for the benefit of Employees (US) or Employees (Bargaining Unit).
"GAAP" shall mean generally accepted accounting principles and
practices in effect in the United States of America as consistently applied by
Pfizer.
"Governmental Antitrust Entity" shall have the meaning set forth in
Section 7.3(c) hereof.
"Governmental Authority" shall mean any supranational, national,
federal, state or local judicial, legislative, executive or regulatory
authority.
"Governmental Authorizations" shall mean all licenses, permits,
certificates and other authorizations and approvals required to carry on the
Business as conducted as of the date of
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this Agreement under the applicable Laws of any Governmental Authority.
"Governmental Order" shall mean any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with Governmental
Authority.
"Hazardous Materials" shall mean all materials regulated pursuant to
Environmental Law as capable of causing harm or injury to human health or the
environment, including oils, petroleum, and petroleum products.
"Hazardous Substances" shall mean any hazardous substances within the
meaning of Section 101(14) of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., or any pollutant or
contaminant that is regulated under any Environmental Law.
"Howmedica" shall have the meaning set forth in the heading of this
Agreement.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Income Tax" or "Income Taxes" shall mean all Taxes based upon,
measured by, or calculated with respect to (i) gross or net income or gross or
net receipts or profits (including, but not limited to, any capital gains,
minimum taxes and any Taxes on items of tax preference, but not including sales,
use,
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real or personal property transfer or other similar Taxes), (ii) multiple bases
(including, but not limited to, corporate franchise, doing business or
occupation Taxes) if one or more of the bases upon which such Tax may be based
upon, measured by, or calculated with respect to, is described in clause (i)
above or (iii) withholding taxes measured by, or calculated with respect to, any
payments or distributions (other than wages).
"Indemnified Party" shall have the meaning set forth in Section 8.3(a)
hereof.
"Indemnifying Party" shall have the meaning set forth in Section
8.3(a) hereof.
"Independent Accountant" shall have the meaning set forth in Section
2.8(c) hereof.
"Intellectual Property" shall mean Patent Rights, inventions,
discoveries, trade secrets, know-how and ideas, rights in research and
development, and commercially practiced processes and inventions, whether
patentable or not in any jurisdiction, Trademark Rights in any jurisdiction,
copyrights and registrations or applications for registration of copyrights in
any jurisdiction, and any renewals or extensions thereof.
"Intellectual Property Licenses" shall have the meaning set forth in
Section 2.2(e) hereof.
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"Inventories" shall mean all inventory, including raw materials,
packaging supplies, work-in-process or finished goods owned by each of the
Conveyed Subsidiaries (or a Subsidiary of a Conveyed Subsidiary) or Asset
Selling Corporations and relating to the Business.
"IRS" shall mean the Internal Revenue Service of the United States.
"ISRA Buyout" shall have the meaning set forth in Section 8.12(b)
hereof.
"ISRA Buyout Payment" shall have the meaning set forth in Section
8.12(c) hereof.
"Knowledge of Pfizer" shall mean the actual knowledge of (i) an
officer of Pfizer, (ii) with respect to the environmental and health and safety
provisions of this Agreement, the Vice President, Environment, Health and Safety
of Pfizer or Pfizer's Medical Technology Group Director of Environmental Affairs
as of June 30, 1998, (iii) with respect to the employee benefit provisions of
this Agreement, the employee resources manager of Pfizer or Pfizer's Medical
Technology Group, and (iv) the individuals listed on Schedule 1.1(e).
"Laws" shall include any federal, state, foreign or local law,
statute, ordinance, rule, regulation, order, injunction, judgment or decree.
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"Leased Real Property" shall have the meaning set forth in Section
2.2(a) hereof.
"Liabilities" shall mean any and all debts, liabilities and
obligations, whether accrued or fixed, known or unknown, absolute or contingent,
matured or unmatured or determined or determinable.
"Liens" shall mean any lien, security interest, mortgage, charge or
similar encumbrance.
"Loss" or "Losses" shall have the meaning set forth in Section 8.1(a)
hereof.
"Material Adverse Effect" shall mean an effect that is materially
adverse to the business results, operations or financial condition of the
Business taken as a whole, but shall exclude any effect resulting from (i) the
execution of this Agreement, (ii) general economic conditions or (iii) any
occurrence or condition generally affecting the industries in which the Business
conducts its operations.
"Material Contracts" shall have the meaning set forth in Section
5.12(a) hereof.
"NFA/CNS" shall have the meaning set forth in Section 8.12(a) hereof.
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"NJDEP" shall have the meaning set forth in Section 8.12(a) hereof.
"Patent Rights" means patents together with any extensions,
reexaminations and reissues of such patents, patents of addition, patent
applications, divisions, continuations, continuations-in-part, and any
subsequent filings in any country claiming priority therefrom.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" shall mean (i) all Liens approved in writing
by the Purchaser, (ii) statutory Liens arising out of operation of Law with
respect to a Liability incurred in the ordinary course of business and which is
not delinquent, (iii) such Liens and other imperfections of title, other than
mortgages and judgment Liens, as do not materially detract from the value or
impair the use of the property subject thereto or make such property
unmarketable, or (iv) Liens for Taxes not yet subject to penalties for
nonpayment or which are being actively contested in good faith by appropriate
proceedings, or (v) mechanics', materialmen's, carriers', workmen's,
warehousemen's, repairmen's, landlords' or other like Liens and security
obligations that are not delinquent.
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"Person" shall mean an individual, a corporation, a partnership, an
association, a trust or other entity or organization.
"Pfizer" shall have the meaning set forth in the heading of this
Agreement.
"Pfizer Qualified Plans" shall have the meaning set forth in Section
7.5(b)(i) hereof.
"Plan" shall mean any material employee benefit plan as defined in
Section 3(3) of ERISA and any other plan, program, agreement or arrangement,
whether qualified under applicable Law or not, maintained (or contributed to or
required to be contributed to) by any Seller Corporation, for the benefit of any
Employee (US) or Employees (Bargaining Unit).
"Pre-Closing Tax Period" shall have the meaning set forth in Section
7.4(g)(iii)(A) hereof.
"Product Registrations" shall have the meaning set forth in Section
5.10 hereof.
"Purchaser" shall mean Stryker Corporation and its majority owned
Subsidiaries.
"Purchaser Qualified Plans" shall have the meaning set forth in
Section 7.5(b)(ii) hereof.
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"RAWP" shall have the meaning set forth in Section 8.12(b) hereof.
"Real Property" shall have the meaning set forth in Section 5.14(a)
hereof.
"Real Property Leases" shall have the meaning set forth in Section
2.2(a) hereof.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, injecting, deposit, disposing, discharging, dispersal, escaping,
dumping or leaching into the environment, including without limitation, surface
water, soil or groundwater (including the abandonment or discarding of barrels,
containers, and other receptacles containing Hazardous Substances or Hazardous
Materials) or as otherwise defined under Environmental Laws.
"Remedial Action" shall mean action required under Environmental Law
to clean up the environment (including, without limitation, soil, surface water,
groundwater or sediments) in response to a Release of Hazardous Substances or
Hazardous Materials, including, but not limited to, associated action taken to
investigate, monitor, assess and evaluate the extent and severity of any such
Release; action taken to remediate any such Release; post-remediation monitoring
of any such Release; and preparation of all reports, studies, analyses
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or other documents relating to the above. "Remedial Action" also shall refer to
any judicial, administrative or other proceeding relating to any of the above,
including, but not limited to, the negotiation and execution of judicial or
administrative consent decrees; responding to information requests by any
Governmental Authority; or defending claims brought by any Governmental
Authority or any other Person, whether such claims are equitable or legal in
nature, relating to the cleanup of the environment (including, without
limitation, soil, surface water, groundwater, and sediments) in response to a
Release of Hazardous Substances or Hazardous Materials and associated actions.
"Required Governmental Report" shall mean any written notice, report
or other filing by Purchaser and required by Environmental Law as a result of
actions taken in the ordinary course of operating the Business; provided,
however, that actions taken in the ordinary course of operating the Business
shall not include any investigation undertaken voluntarily by the Purchaser or
at the request of a third party that is not required by Environmental Law.
"Resolution Period" shall have the meaning set forth in Section 2.8(c)
hereof.
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"Retained Liabilities" shall have the meaning set forth in Section 2.6
hereof.
"Retirement Plan" shall have the meaning set forth in Section
7.5(b)(i) hereof.
"Xxxxxxxxxx Plan" shall have the meaning set forth in Section 5.17(h)
hereof.
"Savings Plan" shall have the meaning set forth in Section 7.5(b)(i)
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller Corporations" shall mean collectively Pfizer, the Asset
Selling Corporations and the Stock Selling Corporations.
"Shares" shall have the meaning set forth in the Recitals hereto.
"Share Purchase Price" shall have the meaning set forth in Section
2.7(b) hereof.
"Specified Sections" shall have the meaning set forth in Section 8.7
hereof.
"Stock Selling Corporations" shall mean those entities listed on
Schedule 1.1(d) hereof.
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"Straddle Period" shall have the meaning set forth in Section
7.4(a)(i) hereof.
"Subsidiary" shall mean an entity as to which Pfizer or Purchaser or
any other relevant entity, as the case may be, owns directly or indirectly 50%
or more of the voting power or other similar interests. Any Person which comes
within this definition as of the date of this Agreement but thereafter fails to
meet such definition shall from and after such time not be deemed to be a
Subsidiary of Pfizer or Purchaser or any other relevant entity, as the case may
be. Similarly, any Person which does not come within such definition as of the
date of this Agreement but which thereafter meets such definition shall from and
after such time be deemed to be a Subsidiary of Pfizer or Purchaser or any other
relevant entity, as the case may be.
"Tax" or "Taxes" shall mean all taxes, charges, duties, fees, levies
or other assessments, including but not limited to, income, excise, property,
sales, value added, profits, license, withholding (with respect to compensation
or otherwise), payroll, employment, net worth, capital gains, transfer, stamp,
social security, environmental, occupation and franchise taxes, imposed by any
Governmental Authority, and including any interest, penalties and additions
attributable thereto.
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"Tax Claim" shall have the meaning set forth in Section 7.4(i)(A)
hereof.
"Tax Return" or "Tax Returns" shall mean any return, report,
declaration, information return, statement or other document filed or required
to be filed with any Governmental Authority, in connection with the
determination, assessment or collection of any Tax or the administration of any
Laws relating to any Tax.
"Third Party Claim" shall have the meaning set forth in Section 8.4(a)
hereof.
"Trademark Rights" shall mean registered and unregistered trademarks,
service marks, brand names, certification marks, trade dress, goodwill
associated with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or application.
"Transitional Intellectual Property License Agreement" shall have the
meaning set forth in Section 7.11 hereof.
"Transitional Services Agreement" shall have the meaning set forth in
Section 7.10 hereof.
"WARN" shall mean the Worker Adjustment and Retraining Notification
Act.
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"Working Capital of the Business" shall mean the current assets less
the current liabilities of the Business, determined in accordance with GAAP on a
basis consistent with the preparation of the Financial Statements, provided that
there shall be excluded from such determination the Excluded Assets and the
Retained Liabilities and there shall be included in such determination (i) Cash
Equivalents to the extent transferred to Purchaser as provided in the
parenthetical to Section 2.4(a) (notwithstanding that Cash Equivalents were
excluded in the preparation of the Financial Statements), (ii) accruals or
reserves for deferred Taxes, (iii) the book value of Howmedica's investment in
the common stock of Orthovita Inc. and (iv) the amount of the capital
expenditure by Howmedica in respect of the renovations of the executive office
building in Rutherford, New Jersey.
"Working Capital Statement" shall have the meaning set forth in
Section 2.8(a) hereof.
Section I.2. Other Definitional Provisions.
(a) The words "hereof", "herein", "hereto" and "hereunder" and words
of similar import, when used in this Agreement, shall refer to this Agreement as
a whole and not to any particular provision of this Agreement.
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(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States dollars.
ARTICLE II
PURCHASE AND SALE
Section 2.1. Purchase and Sale of Assets of the Asset Selling
Corporations. Upon the terms and subject to the conditions set forth herein, at
the Closing, Pfizer shall cause each Stock Selling Corporation to sell to
Purchaser, and Purchaser shall purchase from each Stock Selling Corporation,
free and clear of all Liens, the Shares.
Section 2.2. Purchase and Sale of Assets of the Asset Selling
Corporations. Upon the terms and subject to the conditions set forth herein, at
the Closing, Pfizer shall cause each . Upon the terms and subject to the
conditions set forth herein, at the Closing, Pfizer shall cause each Asset
Selling Corporation to sell, convey, assign and transfer to the Purchaser and
the Purchaser shall purchase, acquire and accept from each Asset Selling
Corporation, free and clear of all Liens, other than Permitted Encumbrances, all
of the respective Asset Selling Corporation's right, title and interest in the
assets, properties and rights owned or held by each such Xxxxx
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Selling Corporation or by Pfizer or any other wholly owned Subsidiary of Pfizer
on the date hereof relating primarily to the Business or acquired by any of the
Asset Selling Corporations or by Pfizer or any other wholly owned Subsidiary of
Pfizer primarily for the Business in the ordinary course of the Business prior
to the Closing (subject to any decreases or dispositions thereof as may occur in
the ordinary course of the Business or made in accordance with Section 7.2 prior
to Closing) (collectively, the "Conveyed Assets"). Without limiting the
foregoing, the Conveyed Assets shall include all assets, properties and rights
reflected on the Financial Statements (except to the extent disposed of in the
ordinary course of business since the date thereof but only to the extent
permitted by Section 7.2 hereof or disclosed in Schedule 5.7) and, except as
expressly provided otherwise herein, shall include, without limitation, those
certain assets, properties and rights described in the following clauses (a)
through (n):
(a) the leasehold interests, including any prepaid rent, security
deposits and options to renew or purchase in connection therewith, of the Asset
Selling Corporations in real property (the "Leased Real Property" and the leases
relating to such Leased Real Property, the "Real Property Leases") which,
together with leasehold interests of the Conveyed Subsidiaries (and their
Subsidiaries) in real property, are set forth on
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Schedule 2.2(a) and the Real Property owned by any of the Asset Selling
Corporations as set forth on Schedule 5.14(a);
(b) the furniture, equipment, machinery, supplies, vehicles, spare
parts, tools, personal property and other tangible property owned, leased or
licensed by the Asset Selling Corporations or by Pfizer or any other wholly
owned Subsidiary of Pfizer and primarily used by the Business (the "Equipment"
and leases relating to such Equipment so leased by the Asset Selling
Corporations or by Pfizer or any other wholly owned Subsidiary of Pfizer, the
"Equipment Leases");
(c) the contracts, licenses, agreements and commitments relating
solely to the Business (excluding contracts, licenses, agreements and
commitments relating solely to the Excluded Assets) ("Assumed Contracts");
(d) the Inventories of the Asset Selling Corporations;
(e) all rights to the Intellectual Property owned, utilized or
licensed by the Asset Selling Corporations (the licenses relating to
Intellectual Property so licensed by the Asset Selling Corporations sometimes
referred to as the "Intellectual Property Licenses") that are used primarily in
the operation of the Business; to the extent any of said Intellectual Property,
other than the Pfizer name and logo, is
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owned, utilized or licensed by Pfizer or any Affiliate and is used for the
Business and is or could be used by one or more other businesses of Pfizer and
its Affiliates, then such Intellectual Property will be retained by Pfizer or
one of its Affiliates and at the Closing, Pfizer and/or its applicable Affiliate
will, subject to Section 2.3 and except to the extent Pfizer's rights to such
Intellectual Property do not allow it to grant such license as set forth on
Schedule 2.2(e), grant to Purchaser and its Affiliates a non-exclusive license
of such Intellectual Property for the continuation of use by the Business;
(f) Product Registrations (and applications therefor) owned, utilized
or licensed by the Asset Selling Corporations relating to the products of the
Business;
(g) transferable Governmental Authorizations, including Environmental
Permits, owned, utilized or licensed (subject to the terms of such licenses) by
the Asset Selling Corporations that are required in the operation of the
Business;
(h) the databases and software programs, source codes and user manuals
owned, used, leased by or licensed to the Asset Selling Corporations and used
primarily in the Business and (ii) the computer hardware used primarily in the
Business;
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(i) all customer and vendor lists to the extent relating to the
Business, and all files and documents (including credit information) to the
extent relating to customers and vendors of the Business, and other business and
financial records, files, books and documents (whether in hard copy or computer
format) to the extent relating to the Business;
(j) all rights of the Asset Selling Corporations under or pursuant to
prepayments, deposits, claims in bankruptcy and causes in action,
indemnification agreements and indemnification rights provided to the Asset
Selling Corporations by third parties to the extent relating to the Business;
(k) all rights of the Asset Selling Corporations under or pursuant to
all warranties, representations and guarantees made by suppliers, manufacturers
and contractors to the extent relating to the Business or to the extent
affecting the Conveyed Assets;
(l) the goodwill and going concern value of the Business;
(m) all rights of the Asset Selling Corporations under or pursuant to
the lawsuits against third parties listed on Schedule 2.2(m) hereto; and
(n) the accounts receivable of the Business.
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Section 2.3. Consents. (a) There shall be excluded from the
transactions contemplated by this Agreement any Real Property Lease, Equipment
Lease, Intellectual Property License, Assumed Contract, agreement, lease,
license or right which is not assignable or transferable without the consent of
any Person other than the Seller Corporations, or the Conveyed Subsidiaries (or
the Subsidiaries of the Conveyed Subsidiaries) or any Subsidiary of Pfizer or
Purchaser or any Subsidiary of Purchaser, to the extent that such consent shall
not have been given prior to the Closing, provided, however, that each of the
Seller Corporations and Purchaser shall have the continuing obligation after the
Closing to use its commercially reasonable efforts to obtain all necessary
consents to the assignment thereof and, upon obtaining the requisite third party
consents thereto, such Real Property Leases, Equipment Leases, Intellectual
Property Licenses, Assumed Contracts, agreements, leases, licenses or rights, if
otherwise includable in the Conveyed Assets or the transactions contemplated
hereby, shall be transferred and assigned to Purchaser hereunder.
(a) Hidden Text
(b) With respect to any Real Property Lease, Equipment Lease,
Intellectual Property License, Assumed Contract, agreement, lease, license or
right that is not included in the Conveyed Assets or assigned to Purchaser at
the
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Closing by reason of Section 2.3(a), after the Closing and until any requisite
consent is obtained and the foregoing transferred and assigned to Purchaser, the
parties shall cooperate with each other, upon written request, to obtain for
Purchaser an arrangement which Purchaser reasonably shall desire designed to
provide for Purchaser the benefits thereof in some other manner. With respect to
any consents required of a third party that shall not be obtained within a
reasonable period of time after the Closing, Pfizer or one or more of its
Affiliates shall, at the reasonable request of Purchaser and at Pfizer's
expense, enter into such arrangements with Purchaser to place Purchaser in
substantially the same economic position as if such consents had been obtained.
The obligations of Pfizer pursuant to the preceding sentence shall not extend
beyond the remaining term of such agreement, lease, license or right as of the
Closing Date.
(c) Pfizer may take (or cause one or more of its Affiliates to take)
such action as is necessary or advisable to transfer effective as of the Closing
Date the Excluded Assets from the Conveyed Subsidiaries (and the Subsidiaries of
any Conveyed Subsidiary) and each of the Asset Selling Corporations to Pfizer or
one or more of its Affiliates for such consideration or for no consideration, as
may be determined by the Seller Corporations in their sole discretion. After the
Closing Date, Purchaser shall take all actions (or shall cause
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its Affiliates to take all actions) reasonably requested by the Seller
Corporations to effect the provisions of this Section 2.3. Any action taken
pursuant to this Section 2.3(c) after the Closing Date shall be deemed for the
purposes of Section 2.8 to have occurred on the Closing Date and shall be
reflected in the calculation of the Working Capital of the Business pursuant to
such Section 2.8.
Section 2.4. Excluded Assets of the Business. Notwithstanding any
provision in this Agreement, the Seller Corporations shall retain, with respect
to the Business, any Conveyed Subsidiary (or a Subsidiary of a Conveyed
Subsidiary) or any Asset Selling Corporation, the following (the "Excluded
Assets"):
(a) Cash Equivalents (except to the extent that Cash Equivalents are
not transferred pursuant to Section 2.3(c) and are reflected in the calculation
of the Working Capital of the Business pursuant to Section 2.8);
(b) all intercompany receivables, other than amounts due and owing
among the Conveyed Subsidiaries, their Subsidiaries and the Asset Selling
Corporations in respect of the Business;
(c) except as included in the Working Capital Statement, all Tax
losses, Tax loss carry forwards and rights to
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receive refunds, credits and credit carry forwards with respect to any and all
Taxes, that are attributable to a taxable period ending on or prior to the
Closing Date, including, without limitation, interest thereon, whether or not
the foregoing is derived from the Business;
(d) the corporate books and records of the Asset Selling Corporations;
(e) all current and prior insurance policies and all rights of any
nature with respect thereto, including all insurance recoveries thereunder and
rights to assert claims with respect to any such insurance recoveries;
(f) except as expressly set forth herein, all assets of any employee
benefit plan;
(g) the "Pfizer" name and logo;
(h) except as specifically provided in Section 2.2, all assets not
related primarily to the Business; and
(i) any legal or beneficial interest in the share capital of the
entities, and the other assets, listed on Schedule 2.4(i), none of which are
used or engaged in the operation of the Business.
Section 2.5. Assumption of Certain Obligations of the Business. Upon
the terms and subject to the conditions of this
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Agreement, Purchaser agrees, effective at the Closing, to assume all Liabilities
of the Seller Corporations to the extent relating to the Conveyed Assets or the
Business and to cause the Conveyed Subsidiaries and their Subsidiaries to
satisfy and discharge their respective Liabilities, whether arising on, prior to
or after the Closing Date, and whether accrued or fixed, known or unknown,
absolute or contingent, matured or unmatured or determined or determinable as of
the Closing Date, other than the Retained Liabilities (all of the foregoing
liabilities and obligations being herein collectively called the "Assumed
Liabilities"). Except for Liabilities expressly within the definition of
Retained Liabilities or as otherwise provided in this Agreement, Assumed
Liabilities shall include, without limitation, the following:
(a) except as provided in Section 2.6(g), all lawsuits commenced and
claims made after the Closing Date to the extent resulting from the conduct of
the Business or the ownership of the Shares or the Conveyed Assets prior to, on
or after the Closing Date;
(b) all Liabilities for Taxes to the extent accrued or reserved
against in the Working Capital Statement; and
(c) all Liabilities resulting from a claim by a third party for money
or other compensation (beyond the cost of a
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particular product) in respect of injury allegedly due and owing as a result of
the use or application of a product of the Business sold after the Closing Date,
including, without limitation, warranty obligations and irrespective of the
legal theory asserted.
Section 2.6. Retained Liabilities of Business. Notwithstanding any
provision in this Agreement, the Seller Corporations shall retain and be
responsible for the following (the "Retained Liabilities"):
(a) the Excluded Environmental Liabilities, including those items
listed on Schedule 5.11 which otherwise satisfy the definition of Excluded
Environmental Liabilities;
(b) Liabilities resulting from all lawsuits (including, without
limitation, workers' compensation claims) pending as of the Closing Date and all
other claims with respect to which Pfizer or any Seller Corporation has received
written notice on or prior to the Closing Date solely to the extent resulting
from the conduct of the Business by any Seller Corporation or Conveyed
Subsidiary or their Affiliates on or prior to the Closing Date, including,
without limitation, the pending lawsuits listed on Schedule 5.8 hereto, but
excluding any Liabilities resulting from the lawsuits referred to in Section
2.2(m);
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(c) Liabilities for which any Seller Corporation expressly has
responsibility pursuant to the terms of this Agreement;
(d) Liabilities associated with the Excluded Assets;
(e) intercompany Liabilities, other than amounts due and owing among
the Conveyed Subsidiaries, their Subsidiaries and the Asset Selling Corporations
in respect of the Business;
(f) Liabilities with respect to Employees, Plans and Foreign Plans
with respect to periods prior to the Closing, except as provided herein;
(g) Liabilities resulting from a claim by a third party for money or
other compensation (beyond the cost of a particular product) in respect of
injury allegedly due and owing as a result of the use or application of a
product of the Business sold on or prior to the Closing Date, including, without
limitation, warranty obligations and irrespective of the legal theory asserted;
and
(h) any and all Liabilities for Taxes and workers' compensation
premiums related to the Business or the Conveyed Assets for periods prior to and
including the Closing Date, except for (1) Taxes and workers' compensation
premiums solely attributable to actions of Purchaser other than those
contemplated by this Agreement, occurring after the Closing, or
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(2) to the extent accrued or reserved against in the Working Capital Statement.
Section 2.7. Purchase Price. (a) In consideration of the sale and
transfer of the Shares and the sale and transfer of the Conveyed Assets,
Purchaser shall pay to Pfizer, as agent for the Seller Corporations (or to
Pfizer's Affiliates as Pfizer may on behalf of the Seller Corporations direct in
the written transfer instructions hereinafter referred to), an aggregate amount
of One Billion, Nine Hundred Million Dollars ($1,900,000,000) (the "Aggregate
Payment"), in immediately available funds, by wire transfer in accordance with
written instructions given by Pfizer to Purchaser not less than two (2) Business
Days prior to the Closing, which consideration shall be subject to the purchase
price adjustment provided for in Section 2.8 and shall be allocated as described
below.
(a) In consideration of the sale and transfer of the Shares, Purchaser
agrees to purchase from the Stock Selling Corporations the Shares for an
aggregate purchase price of $620,300,000, allocated among the Shares as
described in Schedule 2.9 (the "Share Purchase Price").
(b) In consideration of the sale and transfer of the Conveyed Assets,
the Purchaser agrees to purchase from each Asset Selling Corporation the
Conveyed Assets owned by such
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Asset Selling Corporation for an aggregate purchase price of $1,279,700,000,
allocated among the Asset Selling Corporations as described in Section 2.9 (the
"Asset Purchase Price" and, together with the Share Purchase Price, the
"Aggregate Purchase Price").
Section 2.8. Purchase Price Adjustment.
(a) Within ninety (90) days after the Closing Date, Pfizer shall
deliver to Purchaser a statement of the Working Capital of the Business as of
the Closing Date (the "Working Capital Statement"). The Working Capital
Statement shall be unaudited and shall state the Working Capital of the Business
as of the Closing Date, calculated using the spot exchange rates for the
appropriate currencies as published in the Wall Street Journal, Eastern Edition,
on the Closing Date taking into account any transfers made pursuant to Section
2.3(c) and the settlement of any Liabilities referred to in Section 2.6(e) after
the Closing Date, which for the purposes of the Working Capital Statement shall
be deemed to have been settled on the Closing Date at the amount settled.
Purchaser shall provide Pfizer with access to the books, records, and personnel
of the Business necessary for Pfizer to prepare the Working Capital Statement.
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(b) Purchaser may dispute the amounts reflected on the line items of
the Working Capital Statement (a "Disputed Item"), but only (i) on the basis
that an entry contained on such Working Capital Statement is based on facts or
occurrences arising solely between the date of the Financial Statements and the
date of the Working Capital Statement, (ii) a Disputed Item does not reflect, or
has not been made in a manner consistent with, the provisions of this Agreement,
and (iii) to the extent the amount disputed with respect to all Disputed Items
exceeds $2,750,000 in the aggregate; provided, however, the Purchaser shall
notify Pfizer in writing of each Disputed Item, and specify the amount thereof
in dispute and the basis therefor, within ninety (90) days after receipt of the
Working Capital Statement. The failure by Purchaser to provide a notice of
Disputed Items to Pfizer within such ninety (90) day period will constitute
Purchaser's acceptance of all the items in the Working Capital Statement.
(c) If a notice of Disputed Items shall be timely delivered pursuant
to subclause (b) above, Pfizer and the Purchaser shall, during the ten (10)
Business Days following the date of such delivery (the "Resolution Period"),
negotiate in good faith to resolve the Disputed Items. If during such Resolution
Period the parties are unable to reach agreement, Pfizer and the Purchaser shall
refer all unresolved Disputed
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Items to PriceWaterhouseCoopers, or any other independent accounting firm as
Pfizer and Purchaser shall mutually agree upon (the "Independent Accountant").
The Independent Accountant shall make a determination with respect to each
unresolved Disputed Item within fifteen (15) days after its engagement by Pfizer
and Purchaser to resolve such Disputed Items, which determination shall be made
in accordance with the rules set forth in this Section 2.8. The Independent
Accountant shall deliver to Pfizer and Purchaser, within such fifteen (15) day
period, a report setting forth its adjustments, if any, to the Working Capital
Statement and the calculations supporting such adjustments. Such report shall be
final, binding on the parties and conclusive. Pfizer and Purchaser shall each
pay one-half of all the costs incurred in connection with the engagement of the
Independent Accountant. As used herein, "Final Working Capital" shall mean (i)
if no notice of Disputed Items is delivered by Purchaser within the period
provided in subclause (b) above, Working Capital of the Business as shown in the
Working Capital Statement as prepared by Pfizer, or (ii) if such a notice of
Disputed Items is delivered by Purchaser, either (x) Working Capital of the
Business as agreed to in writing by Pfizer and Purchaser, (y) Working Capital of
the Business as shown in the Independent Accountant's calculation delivered
pursuant to this subclause (c) provided that such calculation is at least
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$2,750,000 less than the amount shown in the Working Capital Statement as
prepared by Pfizer or (z) if such Independent Accountant's calculation is not at
least $2,750,000 less than the amount shown in the Working Capital Statement as
prepared by Pfizer, Working Capital of the Business as shown in the Working
Capital Statement as prepared by Pfizer.
(d) If the Final Working Capital is less than $289,484,000, then
Pfizer, on behalf of the Seller Corporations, shall, within ten (10) days after
the determination of the Final Working Capital, pay to Purchaser, by wire
transfer of immediately available funds in accordance with written instructions
given to Pfizer by Purchaser, the amount of such shortfall, together with
interest on such amount from the Closing Date to the date of such payment at an
annual rate equal to the ninety (90) day commercial paper rate for high grade
unsecured notes as published in the Wall Street Journal, Eastern Edition, on the
Closing Date. If the Final Working Capital is greater than $289,484,000, then
Purchaser shall, within ten (10) days after the determination of the Final
Working Capital, pay to Pfizer, by wire transfer of immediately available funds
in accordance with written instructions given by Pfizer to Purchaser, the amount
of such excess, together with interest on such amount from the Closing Date to
the date of such payment at an annual rate equal to the ninety (90) day
commercial paper
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rate for high grade unsecured notes as published in the Wall Street Journal,
Eastern Edition, on the Closing Date.
Section 2.9. Allocation of the Aggregate Purchase Price. Pfizer, on
behalf of itself and the Seller Corporations, and Purchaser (i) have agreed to
the allocation of the Aggregate Purchase Price among the Conveyed Subsidiaries
and the Asset Selling Corporations as set forth in Schedule 2.9 (the "Section
2.9(i) Allocation") and (ii) shall agree prior to Closing on (A) the portion of
the Aggregate Purchase Price that shall be allocated to Howmedica Leibinger Inc.
(the "Section 338(h)(10) Aggregate Purchase Price"), (B) an allocation of the
Section 338(h)(10) Aggregate Purchase Price among the assets of Howmedica
Leibinger Inc. (the "Section 2.9(ii)(B) Allocation") and (C) the portion of the
Aggregate Purchase Price that shall be allocated to, and the allocation of such
portion among, the Conveyed Assets of Howmedica (the "Section 2.9(ii)(C)
Allocation" and, together with the Section 2.9(i) Allocation and the Section
2.9(ii)(B) Allocation, the "Allocation"). Each of Seller Corporations on the one
hand and Purchaser on the other shall (i) be bound by the Allocation for
purposes of determining any Taxes, (ii) prepare and file, and cause its
Affiliates to prepare and file, its Tax Returns on a basis consistent with the
Allocation, and (iii) take no position, and cause its Affiliates to take no
position, inconsistent with the Allocation on any
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applicable Tax Return or in any proceeding before any taxing authority or
otherwise. In the event that the Allocation is disputed by any taxing authority,
the party receiving notice of the dispute shall promptly notify the other party
hereto concerning the existence of the dispute and the proposed resolution of
the dispute. Each of the Seller Corporations and Purchaser acknowledge that the
Section 2.9(i) Allocation was done at arm's length based upon a good faith
estimate of fair market values. Pfizer and Purchaser agree that Purchaser shall
choose an independent appraisal firm to perform an appraisal to support the
Section 2.9(ii)(B) Allocation and the Section 2.9(ii)(C) Allocation. The cost of
such appraisal firm shall be borne by Purchaser. Pfizer shall be provided with a
copy of the appraiser's report at least 15 days prior to Closing and, provided
that Pfizer consents to the report (which consent shall not be unreasonably
withheld), the Section 2.9(ii)(B) Allocation and the Section 2.9(ii)(C)
Allocation each shall be made as specified in the report. If Pfizer does not
consent to the appraiser's report, Pfizer and Purchaser shall mutually agree
prior to Closing on any changes to be made to the report and the Section
2.9(ii)(B) Allocation and the Section 2.9(ii)(C) Allocation each shall be made
as specified in the report as so changed. Notwithstanding the foregoing, the
parties agree that, for purposes of the Section 2.9(ii)(C) Allocation, the
amounts
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to be allocated for goodwill (defined for these purposes as the value of trade
or business attributable to the expectancy of continued customer patronage) of
Howmedica International Inc., Howmedica GmbH and Howmedica Leibinger GmbH & Co.
KG shall not be less than $40,000,000, $35,000,000 and $20,000,000,
respectively. Working capital adjustments pursuant to Section 2.8 and other
post-Closing adjustments, if any, to the Aggregate Purchase Price shall be
allocated to the Conveyed Subsidiary (and its Subsidiaries) or to the Asset
Selling Corporation to which the adjustment relates, and shall be further
allocated (if relevant for purposes of any applicable Law) to the assets to
which the adjustment relates. The Aggregate Purchase Price allocation to such
Conveyed Subsidiary (or Subsidiary) or Asset Selling Corporation shall be
correspondingly increased or decreased. If after all other adjustments to the
Allocation are made, the Allocation with respect to any Asset Selling
Corporation, when expressed in the relevant local currency at the rate of
exchange used to determine Final Working Capital, is less than the local
currency net book value, determined in accordance with GAAP, of the Conveyed
Assets of such Asset Selling Corporation as of the Closing Date, then the
Allocation with respect to such Asset Selling Corporation shall be adjusted so
that it is equal to such local currency net book value converted at the rate of
exchange used to determine Final
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Working Capital and a corresponding adjustment to the Allocation with respect to
Howmedica International Inc. will be made.
ARTICLE III
CLOSING
Section 3.1. Closing. (a) The Closing shall take place at the offices
of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00
A.M., New York time, on the fifth (5th) Business Day following the satisfaction
or waiver of the conditions precedent specified in Article IV (other than the
conditions to be satisfied on the Closing Date, but subject to the waiver or
satisfaction of such conditions), or at such other times and places as the
parties hereto may mutually agree; provided, however, that without the agreement
of Pfizer and Purchaser, the Closing shall not occur later than the date
specified in Section 9.1(b) of this Agreement nor earlier than October 30, 1998.
The date on which the Closing occurs is called the "Closing Date." The Closing
shall be deemed to occur and be effective as of the close of business on the
Closing Date.
(a) At the Closing, the Seller Corporations shall deliver or cause to
be delivered to Purchaser the instruments and documents set forth in Exhibit A
hereto and the annexes to such Exhibit, in form reasonably acceptable to
Purchaser.
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(b) At the Closing, Purchaser shall deliver to Pfizer, as agent for
the Seller Corporations, the following: (i) the sum of the Aggregate Payment by
wire transfer in immediately available funds to one or more accounts specified
in writing by Pfizer at least two (2) Business Days prior to the Closing Date
and (ii) the instruments and documents set forth in Exhibit B hereto and the
annexes to such Exhibit, in form reasonably acceptable to Pfizer.
ARTICLE IV
CONDITIONS TO CLOSING
Section 4.1. Conditions to the Obligations of Purchaser and Pfizer.
The respective obligations of each of the parties to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction of the
following conditions precedent:
(a) There shall not (i) be in effect any Law or Governmental Order
that makes illegal or enjoins or prevents in any respect the consummation of the
transactions contemplated by this Agreement, or (ii) have been commenced, and
shall be continuing, or threatened in writing any action or proceeding by any
Governmental Authority which seeks to prevent or enjoin in any respect the
transactions contemplated by this Agreement; and
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(b) (i) the waiting period required under the HSR Act, including any
extensions thereof, shall have expired and any investigations relating to the
sale hereunder that may have been opened by either the Department of Justice or
the Federal Trade Commission by means of a request for additional information or
otherwise shall have terminated, (ii) any approval or action of a Governmental
Authority that is necessary to lawfully consummate the transactions contemplated
hereby in Ireland, Germany, Austria, France and Switzerland shall have been
obtained or taken, (iii) Purchaser shall have all Environmental Permits pursuant
to applicable Environmental Laws necessary in the United States and the
countries specified in clause (ii) above, or equivalent authorizations or
assurances that operations can lawfully continue while Purchaser is seeking to
obtain Environmental Permits to replace those Environmental Permits that are not
transferable to Purchaser, and (iv) with respect to manufacturing and
distribution facilities in the United States and the countries specified in
clause (ii) above, any required approvals to transfer leasehold interests with
respect to property leased by Asset Selling Corporations, Conveyed Subsidiaries
or Subsidiaries of Conveyed Subsidiaries.
Section 4.2. Conditions to the Obligations of Purchaser. The
obligation of Purchaser to consummate the
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transactions contemplated by this Agreement shall be subject to the satisfaction
of the following conditions precedent:
(a) Pfizer shall have performed in all material respects its
agreements and obligations contained in this Agreement required to be performed
by it at or before the Closing, and the representations and warranties of Pfizer
contained herein (without regard to any materiality exception or qualification
set forth in any representation and warranty) shall have been true and correct
when made and shall be true and correct as of the Closing, as if made as of the
Closing, except for (i) changes directly resulting from or permitted by this
Agreement or attributable to matters disclosed by Pfizer in the Schedules
hereto, (ii) those representations and warranties that address matters as of a
particular date, which need be true only as of such date, and (iii) changes that
would not, individually or in the aggregate, have a Material Adverse Effect.
Purchaser shall have received a certificate of Pfizer, dated as of the Closing
Date and signed by an officer of Pfizer, certifying as to the fulfillment of the
foregoing;
(b) Pfizer shall have made or caused to be made delivery to the
Purchaser of the items required by Section 3.1(b);
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(c) Purchaser shall have received funds pursuant to the credit
facilities provided for in the commitment letter, dated as of the date hereof,
between Purchaser and Xxxxxxx Sachs Credit Partners L.P., a copy of which has
been furnished to Pfizer (the "Goldman Commitment Letter"); and
(d) Pfizer shall have performed such obligations under the Connecticut
Transfer Act, ISRA and other similar Environmental Laws required to consummate
lawfully the transactions contemplated by this Agreement.
Section 4.3. Conditions to the Obligations of Pfizer. The obligation
of Pfizer to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction of the following conditions precedent:
(a) Purchaser shall have performed in all material respects its
agreements and obligations contained in this Agreement required to be performed
by it at or before the Closing, and the representations and warranties of
Purchaser contained herein shall have been true and correct in all material
respects when made and shall be true and correct in all material respects as of
the Closing, as if made as of the Closing (except for (i) changes contemplated
or permitted by this Agreement or attributable to matters disclosed by Purchaser
in the Schedules hereto, and (ii) those representations and
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warranties that address matters as of a particular date, which need be true only
as of such date). Pfizer shall have received a certificate of Purchaser, dated
as of the Closing Date and signed by an officer of Purchaser, certifying as to
the fulfillment of the foregoing; and
(b) Purchaser shall have made or caused to be made delivery to Pfizer
of the items required by Section 3.1(c).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PFIZER
Pfizer hereby represents and warrants to Purchaser as follows:
Section 5.1. Organization. Pfizer is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Delaware.
Each Stock Selling Corporation and Asset Selling Corporation is a corporation
duly organized, validly existing and, where applicable, in good standing under
the Laws of the jurisdiction of its organization.
Section 5.2. Authority; Binding Effect.
(a) Each of the Seller Corporations has all requisite corporate power
and authority to carry on the Business as it is now being conducted and to
execute, deliver and perform the Foreign Implementing Agreements in accordance
with the terms of this Agreement. Pfizer has all requisite corporate power and
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authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery by Pfizer of this Agreement, and the
performance by Pfizer of its obligations hereunder, have been duly authorized by
all requisite corporate action and no other corporate proceedings are required
in connection with the execution, delivery and performance of this Agreement.
(b) This Agreement constitutes a valid and binding obligation of
Pfizer, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally or by general principles
of equity (regardless of whether enforcement is sought in a proceeding in equity
or law).
Section 5.3. Conveyed Subsidiaries; Capital Structure.
(a) Each of the Conveyed Subsidiaries is duly organized, validly
existing and, where applicable, is in good standing under the Laws of its
jurisdiction of organization, with corporate power and authority to own and
operate its properties and assets and to carry on the Business as currently
conducted. Each of the Conveyed Subsidiaries is duly qualified to do business
and, where applicable, is in good standing in
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each jurisdiction where the nature of its business or properties makes such
qualification necessary, except in jurisdictions where the failure to be so
qualified would not, individually or in the aggregate, have a Material Adverse
Effect. Schedule 1.1 (b) sets forth the jurisdiction of incorporation of each
Conveyed Subsidiary and within 45 days prior to the Closing such schedule shall
be supplemented to show the jurisdictions in which it is qualified to do
business as a foreign corporation.
(b) Schedule 5.3(b) sets forth the authorized capital stock of the
Conveyed Subsidiaries and the number of shares of each class of capital stock in
each such Conveyed Subsidiary which are validly issued and outstanding, fully
paid and nonassessable. There are no outstanding warrants, options, agreements,
subscriptions, convertible or exchangeable securities or other commitments
pursuant to which any of the Conveyed Subsidiaries is or may become obligated to
issue, sell, purchase, return or redeem any shares of capital stock or other
securities of the Conveyed Subsidiaries and no equity securities of any of the
Conveyed Subsidiaries are reserved for issuance for any purpose. The Stock
Selling Corporations own of record and beneficially the outstanding Shares as
indicated on Schedule 5.3(b), free and clear of all Liens.
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(c) Schedule 5.3(c) sets forth the name and the jurisdiction of
incorporation of all Subsidiaries of the Conveyed Subsidiaries. Each such
Subsidiary is duly organized, validly existing and, where applicable, in good
standing under the Laws of its jurisdiction of organization, and has the
corporate power and authority to own and operate its properties and assets and
to carry on its business as currently conducted. Each Subsidiary is duly
qualified to do business and, where applicable, is in good standing in each
jurisdiction where the nature of its business or properties makes such
qualification necessary, except in jurisdictions where the failure to be so
qualified would not, individually or in the aggregate, have a Material Adverse
Effect. All of the shares of capital stock of each Subsidiary of a Conveyed
Subsidiary are validly issued, fully paid and nonassessable, and a Conveyed
Subsidiary or Subsidiary of a Conveyed Subsidiary owns such shares, free and
clear of all Liens. There are no outstanding warrants, options, agreements,
subscriptions, convertible or exchangeable securities or other commitments
pursuant to which any such Subsidiary is or may become obligated to issue, sell,
purchase, return or redeem any shares of capital stock or other security of each
such Subsidiary and no equity securities of each such Subsidiary are reserved
for issuance for any purpose.
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Section 5.4. Non-Contravention. The execution, delivery and
performance of this Agreement by each of the Seller Corporations and the
consummation of the transactions contemplated hereby does not and will not (i)
violate any provision of the certificate of incorporation, bylaws or other
comparable organizational documents of Pfizer, the Stock Selling Corporations,
the Conveyed Subsidiaries (or any Subsidiary of a Conveyed Subsidiary) or any
Asset Selling Corporation, (ii) subject to obtaining the consents referred to in
Schedule 5.4, conflict with, or result in the breach of, or constitute a default
under, or result in the termination, cancellation or acceleration (whether after
the giving of notice or the lapse of time or both) of any right or obligation of
Pfizer, the Stock Selling Corporations, the Conveyed Subsidiaries (or any
Subsidiary of a Conveyed Subsidiary) or any Asset Selling Corporation under, or
to a loss of any benefit of the Business to which Pfizer, the Stock Selling
Corporations, the Conveyed Subsidiaries (or any Subsidiary of a Conveyed
Subsidiary) or any Asset Selling Corporation is entitled under, any Material
Contract, lease of real estate or license of Intellectual Property to which any
Seller Corporation or Conveyed Subsidiary (or Subsidiary of a Conveyed
Subsidiary) is a party or to which its assets are subject or result in the
creation or imposition of any Lien, other than a Permitted Encumbrance, on any
of the
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Shares or any Conveyed Asset, (iii) assuming compliance with the matters set
forth in Sections 5.5 and 6.5, violate or result in a breach of or constitute a
default under any Law or other restriction of any Governmental Authority to
which any Seller Corporation or Conveyed Subsidiary (or Subsidiary of a Conveyed
Subsidiary) is subject, except, with respect to clauses (ii) and (iii), for any
violations, conflicts, defaults, terminations, cancellations or accelerations as
would not, individually or in the aggregate, have a Material Adverse Effect.
Section 5.5. Seller Corporation Consents and Approvals. Other than as
set forth in Schedule 5.5, the execution and delivery of this Agreement by each
of the Seller Corporations do not require any consent or approval of any
Governmental Authority.
Section 5.6. Financial Information; Books and Records. (a) Except as
set forth in Schedule 5.6(a), the Financial Statements have been prepared in
accordance with Pfizer's policies and procedures, which are in accordance with
GAAP, and present fairly in accordance with such policies and procedures (i) in
all material respects, the financial condition, assets and liabilities of the
Business (excluding Excluded Assets and Retained Liabilities) as of the dates
therein specified and (ii) the results of operations of the Business for the
periods then ended. The accounts receivable of
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the Business reflected in the Financial Statements arose from bona fide
transactions and the reserves in respect thereof reflected on the Financial
Statements are in accordance with GAAP. The Inventories of the Business
reflected in the Financial Statements are valued at the lower of cost or market
with allowance for obsolescence in accordance with GAAP. Schedule 5.6(b) sets
out the descriptions and amounts of deferred Taxes as shown in the Financial
Statements.
(a) Hidden Text
(b) The financial statements to be delivered by Pfizer to Purchaser
pursuant to Section 7.16 will be prepared in accordance with Pfizer's policies
and procedures, which are in accordance with GAAP, and will present fairly in
accordance with such policies and procedures (i) in all material respects, the
financial condition, assets and liabilities of the Business as of the date
therein specified and (ii) the results of operations of the Business for the
periods then ended.
Section 5.7. Absence of Material Changes. Since December 31, 1997,
except to the extent set forth in Schedule 5.7, there has not been any:
(a) Material Adverse Effect;
(b) damage, destruction or condemnation (whether or not covered by
insurance) of any asset of any Conveyed
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Subsidiary (or Subsidiary of a Conveyed Subsidiary) or any Conveyed Asset
resulting in a loss, individually or in the aggregate, in excess of $5,000,000;
(c) sale, lease, license, abandonment or other disposition by any of
the Conveyed Subsidiaries (or any of their Subsidiaries) or the Asset Selling
Corporations of any material assets, except in the ordinary course of the
Business; and
(d) increase or enhancement of the compensation or benefits of
Employees other than in the ordinary course of the Business.
Section 5.8. No Litigation. Except as may be set forth on Schedule
5.8, as of the date hereof, no litigation, investigation or proceeding by or
before any court or Governmental Authority or arbitrator is pending against or,
to the Knowledge of Pfizer, threatened in writing against any Seller Corporation
or Conveyed Subsidiary (or Subsidiary of a Conveyed Subsidiary) which would have
a Material Adverse Effect.
Section 5.9. Compliance with Laws. Except with respect to
Environmental Laws (which are the subject of Section 5.11) and Product
Registrations (which are the subject of Section 5.10), and except as to matters
otherwise set forth in the Agreement or set forth in Schedule 5.9:
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(a) each Seller Corporation and each Conveyed Subsidiary (and
Subsidiary of a Conveyed Subsidiary) is in compliance with all Laws applicable
to the ownership or operation of its assets or the Business, except to the
extent that the failure to comply therewith would not have a Material Adverse
Effect; and
(b) each Seller Corporation and each Conveyed Subsidiary (or
Subsidiary of a Conveyed Subsidiary) possesses all Governmental Authorizations
necessary for the conduct of the Business as it is currently conducted, except
where the failure to possess any such Governmental Authorization would not have
a Material Adverse Effect. Schedule 5.9 shall be updated at least 45 days prior
to Closing to disclose the Governmental Authorizations, including Environmental
Permits, held by the Business that, to Pfizer's Knowledge, are not transferable
to Purchaser.
Section 5.10. Product Registrations; Regulatory Compliance. Except
with respect to Environmental Permits (which are the subject of Section 5.11):
(a) Schedule 5.10 sets forth, as of the date hereof, a list of all
Governmental Authorizations granted to Pfizer or any of its Affiliates by or
pending with any Governmental
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Authority in any particular country to market any product of the Business (the
"Product Registrations");
(b) to the Knowledge of Pfizer, all products sold under the Product
Registrations are manufactured and marketed in accordance with the
specifications and standards contained in such Product Registrations, except
where the failure to comply therewith would not, in the aggregate, have a
Material Adverse Effect; and
(c) an Asset Selling Corporation or Conveyed Subsidiary (or a
Subsidiary of a Conveyed Subsidiary) is the sole and exclusive owner of the
Product Registrations and has not granted any right of reference with respect
thereto.
Section 5.11. Environmental Matters. To the Knowledge of Pfizer, and
except as set forth in Schedule 5.11:
(a) the Facilities, each Seller Corporation and each Conveyed
Subsidiary (and each Subsidiary of a Conveyed Subsidiary) are in compliance with
all applicable Environmental Laws and/or Environmental Permits, and none are
undertaking, nor have Pfizer or any of them received notice that they are
subject to, Remedial Action or enforcement action under any or all applicable
Environmental Laws and/or Environmental Permits, except for such non-compliance,
Remedial Actions or enforcement actions that would not have a Material Adverse
Effect;
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(b) each Seller Corporation and each Conveyed Subsidiary (and each
Subsidiary of a Conveyed Subsidiary) has obtained all Environmental Permits
required under all applicable Environmental Laws in relation to the Business;
(c) no claims have been made or threatened that could reasonably be
expected to result in Environmental Liability arising from or as a result of (i)
on-site exposures to Hazardous Substances or Hazardous Materials at the
Facilities, (ii) Releases of Hazardous Substances or Hazardous Materials at or
from any Facilities, (iii) generation, transportation, treatment, storage,
migration or disposal of Hazardous Substances or Hazardous Materials at or from
the Facilities, (iv) the handling of products by employees of others or by the
release of products into the environment as a result of generation,
transportation, treatment, storage, migration or disposal at or from the
Facilities or (v) non-compliance with any Environmental Laws or Environmental
Permits at any of the Facilities; and
(d) Pfizer has made available to the Purchaser during Purchaser's due
diligence review of the Business all material environmental health and safety
audit reports and environmental assessments of the Facilities in the possession
of Pfizer, the
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Conveyed Subsidiaries or a Subsidiary of a Conveyed Subsidiary and any Asset
Selling Corporation.
Section 5.12. Material Contracts.
(a) Except for agreements entered into after the date hereof in
accordance with Section 7.2 or as set forth on Schedule 5.12 (the "Material
Contracts"), none of the Conveyed Subsidiaries (or a Subsidiary of a Conveyed
Subsidiary) nor any Asset Selling Corporation is a party to or bound by:
(i) any contract, agreement or other arrangement for the
purchase of Inventories, or other personal property with any supplier
or for the furnishing of services to the Business extending beyond one
year from the date hereof or the terms of which provide for financial
commitments in excess of $1,000,000;
(ii) any contract, agreement and other arrangement for the
sale of Inventories or for the furnishing of services by the Business
with firm commitments in excess of one year from the date hereof (in
the case of the United States) and three years from the date hereof
(in the case of all other locations);
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(iii) any broker, distributor, dealer, manufacturer's
representative, franchise and agency agreements related to the
Business that is not cancelable on 60 days' notice or less without
financial penalty;
(iv) any contracts and agreements relating to indebtedness
for borrowed money, factoring arrangements, sale and leaseback
transactions and deferred purchase price of property or other similar
financial arrangement relating to the Business with respect to which a
Conveyed Subsidiary (or a Subsidiary of the Conveyed Subsidiary) or
Asset Selling Corporation is an obligor in excess of $1,000,000;
(v) any patent or technology or trademark licenses or
agreements or research and development or design agreements relating
to the Business the terms of which provide for aggregate commitments
to be paid by or to a Conveyed Subsidiary (or a Subsidiary of the
Conveyed Subsidiary) or Asset Selling Corporation in excess of
$100,000; and
(vi) other than intercompany agreements that are not being
assigned to or assumed by Purchaser, all
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agreements entered into since March 1, 1995 providing for (A) the
disposition of any capital stock of any Conveyed Subsidiary (or a
Subsidiary of a Conveyed Subsidiary), or (B) the acquisition or
disposition of any Conveyed Assets or assets of a Conveyed Subsidiary
and having an aggregate value in excess of $2,000,000, other than the
sale of Inventories in the ordinary course of the Business consistent
with past practice or the sale of obsolete equipment.
(b) Except as disclosed in Schedule 5.12, (i) each Material Contract
is valid and binding on the Seller Corporation or Conveyed Subsidiary (or a
Subsidiary of the Conveyed Subsidiary) that is a party thereto, and to the
Knowledge of Pfizer, the other party thereto, and is in full force and effect,
and (ii) no Asset Selling Corporation or Conveyed Subsidiary (or a Subsidiary of
a Conveyed Subsidiary) is in breach of, or default under, any such Material
Contract, which breach or default would result in a Material Adverse Effect.
Section 5.13. Intellectual Property.
(a) Schedule 5.13 sets forth a list of all material Intellectual
Property owned by or licensed to any Conveyed Subsidiary (or a Subsidiary of a
Conveyed Subsidiary) or Asset Selling Corporation and which are used in
connection with the
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Business, all of which will be transferred to Purchaser on the Closing Date,
subject to obtaining the consents referred to in Schedule 5.4. Except as set
forth in Schedule 5.13(a), (i) to the Knowledge of Pfizer, there is no notice of
any objection or claim being asserted in writing by any Person with respect to
the ownership, validity or enforceability of any Intellectual Property used in
the Business, (ii) a Conveyed Subsidiary (or a Subsidiary of a Conveyed
Subsidiary) or an Asset Selling Corporation owns, controls, or licenses such
Intellectual Property and (iii) such Intellectual Property is, to the Knowledge
of Pfizer, free and clear of any Liens, other than Permitted Encumbrances.
(b) To the Knowledge of Pfizer, except as disclosed in Schedule
5.13(b), (i) with respect to the Business no Conveyed Subsidiary (or a
Subsidiary of any Conveyed Subsidiary) or Asset Selling Corporation has received
a claim in writing asserting that the use of the Intellectual Property in the
operation of the Business infringes rights of any third party and (ii) there are
no pending opposition, interference, arbitration, invalidity, declaratory
judgment, revocation, nullity or similar actions in respect of any Patent Rights
or copyrights used in the Business conducted by a Conveyed Subsidiary (or a
Subsidiary of any Conveyed Subsidiary) or Asset Selling Corporation and there
are no pending opposition,
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revocation or cancellation proceedings in respect of any Trademark Rights owned
by a Conveyed Subsidiary (or a Subsidiary of any Conveyed Subsidiary) or Asset
Selling Corporation.
Section 5.14. Real Property.
(a) Schedule 5.14(a) sets forth a description of all of the real
property owned in fee by any of the Asset Selling Corporations or the Conveyed
Subsidiaries (or a Subsidiary of any Conveyed Subsidiary) and used primarily in
connection with the Business and at least 45 days prior to Closing will set
forth a description of any title insurance policies and surveys related thereto
(collectively, the "Real Property"). Each Asset Selling Corporation and Conveyed
Subsidiary (or a Subsidiary of a Conveyed Subsidiary) has good title to its Real
Property, free and clear of any Liens, other than Permitted Encumbrances.
(b) Schedule 2.2(a) sets forth a list of all of the Real Property
Leases and all leasehold interests of the Conveyed Subsidiaries (and their
Subsidiaries) in real property. Each Asset Selling Corporation has a valid
leasehold interest in its Real Property Leases and each Conveyed Subsidiary (or
a Subsidiary of a Conveyed Subsidiary) has a valid leasehold interest in its
real property subject to lease, in either case except for Permitted
Encumbrances.
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(c) Except as set forth in Schedule 5.14(c), no Real Property is
subject to any lease, sublease, license or other agreement granting to any
person or entity any right to the use, occupancy or enjoyment of such Real
Property or any portion thereof.
Section 5.15. Assets. Except as set forth on Schedule 5.15 or as
otherwise provided in this Agreement, each Asset Selling Corporation owns,
leases or has the legal right to use all of its Conveyed Assets (other than
Intellectual Property and Real Property, which are the subject of Sections 5.13
and 5.14, respectively) and each Conveyed Subsidiary (or a Subsidiary of a
Conveyed Subsidiary) owns, leases or has the legal right to use its assets
(other than Intellectual Property and Real Property, which are the subject of
Sections 5.13 and 5.14, respectively). Except as disclosed on Schedule 5.15,
each Asset Selling Corporation has good title to (or in the case of leased
Conveyed Assets, valid leasehold interests in) all its Conveyed Assets (other
than Intellectual Property and Real Property, which are the subject of Sections
5.13 and 5.14, respectively) and each Conveyed Subsidiary (or a Subsidiary of
any Conveyed Subsidiary) has good title to (or in the case of leased assets, a
valid leasehold interest in) its assets, in either case except for Permitted
Encumbrances. The Conveyed Assets, without giving effect to the Excluded Assets
and the Excluded Liabilities, the
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assets held by Conveyed Subsidiaries (or a Subsidiary of any Conveyed
Subsidiary) as of the date hereof and those assets used by the Business which
are to be retained by Pfizer and its Affiliates but made available to Purchaser
pursuant to an agreement executed and delivered at the Closing, constitute all
the properties, assets and rights sufficient to conduct the Business in all
material respects as conducted as of the date of this Agreement.
Section 5.16. Taxes. (a) All material Tax Returns that are required to
be filed on or before the date hereof by or on behalf of each Conveyed
Subsidiary, its Subsidiaries and the Asset Selling Corporations have been filed
and (b) all Taxes shown to be due and payable on such Tax Returns have been
paid. To the Knowledge of Pfizer, there are no Liens for Taxes upon any of the
assets of the Business, except for Liens for Taxes not yet due and payable or
being contested in good faith. To the Knowledge of Pfizer, except as set forth
on Schedule 5.16, no Tax Return that includes any Conveyed Subsidiary, any
Subsidiaries of a Conveyed Subsidiary or any of the Asset Selling Corporations
(to the extent related to the Business) is currently being examined by any
taxing authority and there are no outstanding agreements or waivers extending
the statute of limitations applicable to any such Tax Return (in the case of any
Asset Selling Corporation, to the extent related to the
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Business). No election has been made by Pfizer with respect to the Conveyed
Subsidiaries, their Subsidiaries, or the Asset Selling Corporations which would
result in Purchaser taking a carryover basis for U.S. federal income tax
purposes in any of the Conveyed Assets or any of the assets which Purchaser
acquires from the Conveyed Subsidiaries and their Subsidiaries by purchase or
deemed purchase.
Section 5.17. Employee Benefits.
(a) Set forth on Schedule 7.5(a) is a list of each Plan in effect as
of the date of this Agreement.
(b) As applicable with respect to each Plan, Pfizer has made or will
make available to Purchaser, copies of (i) each Plan, including all amendments
thereto, (ii) the current summary plan description and each summary of material
modifications thereto and (iii) the most recent IRS determination letter.
(c) To the Knowledge of Pfizer, each Plan has been maintained,
operated and administered in compliance in all material respects with its terms
and the applicable provisions of ERISA and the Code, except where such
noncompliance would not have a Material Adverse Effect.
(d) To the Knowledge of Pfizer, each Foreign Plan has been maintained,
operated and administered in compliance in all material respects with its terms
and the applicable Laws of the
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relevant jurisdiction, except where such noncompliance would not have a Material
Adverse Effect.
(e) With respect to each Plan that is an "employee pension benefit
plan" as defined in Section 3(2) of ERISA (each a "Pension Plan"), the IRS has
issued a favorable determination letter with respect to the qualification under
the Code of each Pension Plan and the IRS has not taken any action to revoke any
such letter.
(f) No event has occurred, or, to Pfizer's Knowledge, is threatened or
about to occur, which would constitute a reportable event (for which the notice
requirement has not been waived) within the meaning of Section 4043(b) of ERISA
with respect to any Pension Plan.
(g) To Pfizer's Knowledge, no material Liability has been or is
expected to be incurred by Seller Corporations or their Affiliates under or
pursuant to Title I or IV of ERISA or the penalty, excise tax or joint and
several Liability provisions of the Code or ERISA applicable to the Plans and no
material event, transaction or condition has occurred or exists that would
reasonably be expected to result in any such Liability to the Conveyed
Subsidiaries, Subsidiaries of the Conveyed Subsidiaries, the Conveyed Assets, or
following the Closing, the Purchaser. The Conveyed Subsidiaries, the
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Subsidiaries of the Conveyed Subsidiaries or the Conveyed Assets are not subject
to any Lien in favor of, or enforceable by, the PBGC.
(h) With respect to the Xxxxxxxxxx Hourly Paid Pension Plan (the
"Xxxxxxxxxx Plan") and its trust thereunder: (i) such plan has been maintained
in compliance with the minimum funding standards of ERISA and the Code, no
"accumulated funding deficiency" as such term is defined in Section 412 of the
Code and 302(a) of ERISA (whether or not waived) has been incurred, and no
liability to the PBGC has been incurred; (ii) neither any Seller Corporation nor
any Conveyed Subsidiary or Subsidiary of a Conveyed Subsidiary has sought or
received a waiver of its funding requirements with respect to such plan, and all
contributions payable with respect to such plan have been timely made; (iii) no
liability under Title IV of ERISA has been incurred by any Seller Corporation,
Conveyed Subsidiary or Subsidiary of a Conveyed Subsidiary that has not been
satisfied in full, no condition exists that could reasonably be expected to
result in any Seller Corporation, Conveyed Subsidiary or Subsidiary of a
Conveyed Subsidiary incurring a liability under such Title, and no proceeding
has been initiated by the PBGC to terminate or appoint a trustee to administer
such plan; and (iv) the present value of the Projected Benefit Obligation
("PBO"), determined using the actuarial assumptions established by Pfizer
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under Financial Accounting Standard No. 87 as in effect on the date of
determination, does not as of the date hereof and will not as of the Closing
Date exceed the fair market value of the assets (which for this purpose shall
not include any accrued but unpaid contributions) of such plan.
Section 5.18. Brokers. Except for Xxxxxx Xxxxxxx & Co. Incorporated
and Lazard Freres & Co. LLC, 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 Pfizer. Pfizer is solely responsible for the fees and expenses of
Xxxxxx Xxxxxxx & Co. Incorporated and Lazard Freres & Co. LLC.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Pfizer as follows:
Section 6.1. Organization and Qualification. Purchaser is a
corporation duly organized, validly existing and in good standing under the Laws
of the jurisdiction of its incorporation.
Section 6.2. Corporate Authorization. Purchaser has all requisite
corporate power and authority to execute and
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deliver this Agreement, and to perform its obligations hereunder. The execution,
delivery and performance by Purchaser of this Agreement have been duly
authorized by all requisite corporate action on the part of Purchaser and no
other corporate proceedings on the part of Purchaser are required in connection
with the execution, delivery and performance by Purchaser of this Agreement.
Section 6.3. Binding Effect. This Agreement constitutes a valid and
legally binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or by general principles of equity (regardless or whether
enforcement is sought in a proceeding in equity or law).
Section 6.4. Non-Contravention. The execution, delivery and
performance by Purchaser of this Agreement, and the consummation of the
transactions contemplated hereby, do not and will not (i) violate any provision
of the certificate of incorporation, bylaws or other organizational documents of
Purchaser, or (ii) assuming compliance with the matters set forth in Sections
5.5 and 6.5, violate or result in a breach of or constitute a default under any
Law or other restriction of any Governmental Authority to which Purchaser is
subject.
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Section 6.5. Purchaser Consents and Approvals. Except as set forth in
Schedule 6.5, the execution and delivery of this Agreement by Purchaser do not
and will not require any material consent or approval of any Governmental
Authority.
Section 6.6. Financial Capability. On the Closing Date, Purchaser will
have sufficient funds to make the Aggregate Payment on the terms and conditions
contemplated by this Agreement.
Section 6.7. Securities Act. Purchaser is acquiring the Shares solely
for the purpose of investment and not with a view to, or for sale in connection
with, any distribution thereof in violation of the Securities Act. Purchaser
acknowledges that the Shares are not registered under the Securities Act, any
applicable state securities Law or any applicable foreign securities Laws, and
that such Shares may not be transferred or sold except pursuant to the
registration provisions of such Securities Act or applicable foreign securities
Laws or pursuant to an applicable exemption therefrom and pursuant to state
securities Laws as applicable.
Section 6.8. Condition of Business. Purchaser is purchasing the Shares
and the Conveyed Assets based solely on the results of its inspections and
investigations, and not on any representation or warranty of the Seller
Corporations not expressly set forth in this Agreement. In light of these
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inspections and investigations and the representations and warranties made to
Purchaser by Pfizer in Article V hereof, Purchaser is relinquishing any right to
any claim based on any representations and warranties other than those
specifically included in Article V hereof. Any claims Purchaser may have for
breach of representation or warranty shall be based solely on the
representations and warranties of Pfizer set forth in Article V hereof. All
warranties of habitability, merchantability and fitness for any particular
purpose, and all other warranties arising under the Uniform Commercial Code (or
similar foreign laws), are hereby waived by Purchaser. In addition, without
limitation, Purchaser acknowledges that the Seller Corporations make no
representation or warranty of any kind as to the state of Year 2000 compliance
of the computer systems or software of the Business or of any of the Seller
Corporations or those of any customer of or supplier, consultant or service
provider to the Business. Purchaser further represents that neither any of the
Seller Corporations nor any other Person has made any representation or
warranty, express or implied, as to the accuracy or completeness of any
information regarding any of the Seller Corporations, the Business, the Conveyed
Subsidiaries, the Shares, the Conveyed Assets or the Assumed Liabilities not
expressly set forth in this Agreement, and neither Pfizer nor any other Person
will have or be subject
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to any liability to Purchaser or any other Person resulting from the
distribution to Purchaser or its representatives or Purchaser's use of, any such
information, including, without limitation, any confidential memoranda
distributed on behalf of Pfizer relating to the Business or other publication
provided to Purchaser or its representatives, or any other document or
information provided to Purchaser or its representatives in connection with the
sale of the Business.
Section 6.9. Brokers. Except for Xxxxxxx, Xxxxx & Co., 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 Purchaser. Purchaser is solely
responsible for the fees and expenses of Xxxxxxx, Sachs & Co.
ARTICLE VII
COVENANTS
Section 7.1. Information and Documents. From and after the date hereof
and pending Closing, upon reasonable advance notice, the Seller Corporations
shall permit Purchaser and its representatives to have access, during regular
business hours, to the Facilities, assets, employees, books and records of the
Selling Corporations and the Conveyed Subsidiaries and their Subsidiaries
relating to the Business, and shall furnish,
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or cause to be furnished, to Purchaser, such financial, tax and operating data
(including independent accountants' work papers with respect to the audited
financial statements of the Business, subject to Purchaser's or its
representatives' execution of standard industry practice work papers access
letters and foreign accounting rules and customary practices) and other
available information with respect to the Business as Purchaser shall from time
to time reasonably request; provided, that no such access shall unreasonably
interfere with the Selling Corporations' and the Conveyed Subsidiaries' and
their Subsidiaries' operation of their respective businesses, including, without
limitation, the Business; provided further, that all information received by
Purchaser and given by or on behalf of the Seller Corporations, or the Conveyed
Subsidiaries and their Subsidiaries in connection with this Agreement and the
transactions contemplated hereby will be held by Purchaser and its Affiliates,
agents and representatives as Information, as defined in, and pursuant to the
terms of, the Confidentiality Agreement. Pfizer shall, at the reasonable request
of Purchaser, provide assistance to Purchaser in its preparation of a narrative
description of the historical results of operations and financial condition of
the Business for purposes of arranging the financing necessary to effect the
Closing hereunder. Purchaser acknowledges that it alone bears
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responsibility for the contents and use of any such narrative description and
Pfizer shall have no responsibility or liability resulting therefrom. Purchaser
agrees that any such narrative description furnished to prospective lenders or
other third parties shall clearly disclose that neither Pfizer nor any of its
Affiliates assume responsibility for the accuracy of such narrative description
or shall have any liability resulting therefrom.
Section 7.2. Conduct of Business. From and after the date hereof and
to the Closing, except as otherwise specifically contemplated by this Agreement
or as Purchaser shall otherwise consent in writing, which consent shall not be
unreasonably withheld, Pfizer agrees that it will conduct the Business, and will
cause the Business to be conducted, in the ordinary and usual course consistent
with past practice, and use its reasonable best efforts to preserve intact the
Business and related relationships with customers, suppliers and other third
parties and keep available the services of the present Employees. From and after
the date hereof and to the Closing, except as otherwise specifically
contemplated by this Agreement, as Purchaser shall otherwise consent in writing,
which consent shall not be unreasonably withheld, and except as may be necessary
or advisable, in the sole discretion of Pfizer, to remove the Excluded Assets
and except for the internal
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reorganization and refinancing matters as described in Schedule 7.2 and except
for the execution of third party foreign exchange hedging contracts with a
notional value not to exceed $300,000,000 and a duration not to exceed ninety
(90) days to replace intercompany arrangements, Pfizer covenants and agrees that
it shall cause the Conveyed Subsidiaries and their Subsidiaries and the Asset
Selling Corporations, in each case with respect to the Business, to:
(a) maintain insurance coverage at levels consistent with presently
existing levels so long as such insurance is available at commercially
reasonable rates;
(b) not incur, create or assume any Lien with respect to any asset
other than Permitted Encumbrances;
(c) not acquire or dispose of any assets outside of the ordinary
course of business consistent with past practice;
(d) not amend any term of, or waive any right under, any Material
Contract or enter into any contract, agreement or other arrangement of the type
referenced in Section 5.12(a)(i)-(vi);
(e) not change or amend the charter or bylaws of any Conveyed
Subsidiary (or a Subsidiary of any Conveyed Subsidiary);
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(f) not issue, sell, pledge, transfer, repurchase or redeem or propose
to issue, sell, pledge, transfer, repurchase or redeem any shares of capital
stock of any Conveyed Subsidiary (or a Subsidiary of any Conveyed Subsidiary),
or securities convertible into or exchangeable or exercisable for, or options
with respect to, or warrants to purchase or rights to subscribe for, shares of
capital stock of any Conveyed Subsidiary (or a Subsidiary of any Conveyed
Subsidiary);
(g) not settle any litigation listed on Schedule 2.2(m); and
(h) not agree to take any of the foregoing actions.
Section 7.3. Reasonable Best Efforts; Certain Governmental Matters;
Goldman Commitment Letter.
(a) Upon the terms and subject to the conditions herein provided
(including, without limitation, Section 2.3 hereof), each of the parties hereto
agrees to use its reasonable best efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary for it to do under
applicable Laws to consummate and make effective the transactions contemplated
by this Agreement, including, without limitation, (i) to comply promptly with
all legal requirements which may be imposed on it with respect to this Agreement
and the transactions contemplated hereby (which actions shall
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include, without limitation, furnishing all information required by applicable
Law in connection with approvals of or filings with any Governmental Authority),
(ii) to satisfy the conditions precedent to the obligations of such party
hereto, (iii) to obtain any consent, authorization, order or approval of, or any
exemption by, any Governmental Authority or other public or private third party
required to be obtained or made by Purchaser, the Seller Corporations or the
Conveyed Subsidiaries or any of their respective Subsidiaries in connection with
the acquisition of the Shares and the Conveyed Assets or the taking of any
action contemplated by this Agreement, (iv) to effect all necessary
registrations and filings including, without limitation, all materials required
under Environmental Laws and all transfer requests required for Environmental
Permits and to provide copies of all such documents to Purchaser, and (v) to
take any action reasonably necessary vigorously to defend, lift, mitigate,
rescind the effect of any litigation or administrative proceeding adversely
affecting the acquisition of the Shares and the Conveyed Assets or this
Agreement, including promptly appealing any adverse court or administrative
decision.
(b) Subject to appropriate confidentiality protections and applicable
Law, each of the parties hereto will furnish to the other party such necessary
information and reasonable assistance as such other party may reasonably request
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in connection with the foregoing and will provide the other party with copies of
all filings made by such party with any Governmental Authority and, upon
request, any other information supplied by such party to a Governmental
Authority in connection with this Agreement and the transactions contemplated
hereby.
(c) Without limiting the generality of the undertakings pursuant to
this Section 7.3, Purchaser and Pfizer agree to take or cause to be taken the
following actions: (i) provide promptly to Governmental Authorities with
regulatory jurisdiction over enforcement of any applicable Competition Laws
("Governmental Antitrust Entity") information and documents requested by any
Government Antitrust Entity or necessary, proper or advisable to permit
consummation of the acquisition of the Shares and the Conveyed Assets and the
transactions contemplated by this Agreement; (ii) without in any way limiting
the other provisions of this Section 7.3, file any notification and report form
and related material required under the HSR Act as soon as practicable and in
any event not later than ten (10) Business Days after the date hereof, and
thereafter use its reasonable efforts to certify as soon as practicable its
substantial compliance with any requests for additional information or
documentary material that may be made under the HSR Act; and (iii) Purchaser
shall take promptly, in the event that any permanent or preliminary injunction
or other order is
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entered or becomes reasonably foreseeable to be entered in any proceeding that
would make consummation of the acquisition of the Shares and the Conveyed Assets
and the transactions contemplated hereby in accordance with the terms of this
Agreement unlawful or that would prevent or delay consummation of the
acquisition of the Shares and the Conveyed Assets or the other transactions
contemplated by this Agreement, any and all steps (including the appeal thereof
or the posting of a bond) 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; provided, however, that nothing in this
Section 7.3 or otherwise in this Agreement shall require the proffer by either
party of its willingness to (A) sell or otherwise dispose of, or hold separate
and agree to sell or otherwise dispose of specific assets or categories of
assets or businesses of the Conveyed Subsidiaries and the Conveyed Assets or any
of such party's other assets or businesses, (B) terminate any existing
relationships and contractual rights and obligations or (C) amend or terminate
such existing licenses or other intellectual property agreements and to enter
into such new licenses or other intellectual property agreements. Each of Pfizer
and the Purchaser will provide to the other copies of all correspondence between
it (or its advisor) and any Government Antitrust Entity
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relating to the acquisition of the Shares and the Conveyed Assets or any of the
matters described in this Section 7.3. Pfizer and the Purchaser agree that all
telephone calls and meetings with a Government Antitrust Entity regarding the
acquisition of the Shares and the Conveyed Assets or any of the matters
described in this Section 7.3 shall include representatives of Pfizer and the
Purchaser.
(d) Purchaser shall use its best efforts to cause the conditions to
funding under the Goldman Commitment Letter to be satisfied and to satisfy the
condition set forth in Section 4.2(c).
(e) In the event an approval or action of a Governmental Authority
(other than a Governmental Authority of the United States of America, Ireland,
Germany, Austria, France or Switzerland (or any state or subdivision thereof))
having jurisdiction that is necessary to lawfully consummate the transactions
contemplated hereby is not obtained on or prior to the Closing Date, Pfizer and
the Purchaser agree to effect Closing (including payment of the total Aggregate
Payment and Aggregate Purchase Price), subject to the terms of this Agreement,
with respect to all Conveyed Assets and Assumed Liabilities outside of the
jurisdiction of any such Governmental Authority; provided, however, that the
obligations of the
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parties hereto set forth in this Section 7.3 shall continue with respect to any
such approval or action until such approval or action is obtained or taken, as
the case may be, and upon the occurrence of such approval or action, the parties
hereto shall effect transfer of the affected Conveyed Subsidiaries, Conveyed
Assets and Assumed Liabilities in accordance with the Foreign Implementing
Agreements for the jurisdictions relating thereto. As of the Closing Date,
Pfizer and the Purchaser shall, subject to applicable Law, enter into mutually
agreeable alternative business arrangements consistent with the terms of this
Agreement or other arrangements which provide Purchaser with the net economic
benefit or loss of the affected Conveyed Subsidiaries and Conveyed Assets from
and after the Closing Date and continuing until any such approval or action is
obtained or taken.
Section 7.4. Tax Matters.
(a) (i) Preparation and Filing of Tax Returns. Pfizer shall prepare
and timely file or shall cause to be prepared and timely filed all Federal,
state, local and foreign Tax Returns in respect of the Conveyed Subsidiaries,
their Subsidiaries and the Asset Selling Corporations, their assets or
activities that (i) are required to be filed (taking into account extensions) on
or before the Closing Date, or (ii) are required to be filed (taking into
account extensions) after the
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Closing Date and (A) are Consolidated Tax Returns of Pfizer and its Affiliates,
or (B) are with respect to Income Taxes and are required to be filed on a
separate Tax Return basis for any tax period ending on or before the Closing
Date, or (C) are to be filed by an Asset Selling Corporation. Purchaser shall
prepare or cause to be prepared and shall file or cause to be filed all other
Tax Returns required of the Conveyed Subsidiaries and their Subsidiaries, or in
respect of their assets or activities or required to be filed after the Closing
Date with respect to the Conveyed Assets or the Business. In the event the
Closing Date is on or before November 30, 1998, any such Tax Returns that
include periods ending on or before the Closing Date or that include the
activities of the Conveyed Subsidiaries or their Subsidiaries or an Asset
Selling Corporation (with respect to the Business) prior to the Closing Date
shall, insofar as they relate to the Conveyed Subsidiaries or their Subsidiaries
or an Asset Selling Corporation (with respect to the Business) prior to the
Closing Date, be on a basis consistent with the last previous such Tax Returns
filed in respect of the Conveyed Subsidiaries or their Subsidiaries or such
Asset Selling Corporation (with respect to the Business), unless Pfizer or
Purchaser, as the case may be, concludes that there is no reasonable basis for
such position. In the event that the Closing Date is after November 30, 1998,
Purchaser may file any
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Tax Return required by this Section 7.4(a)(i) for any Conveyed Subsidiary or any
of its Subsidiaries on a basis inconsistent with the last previous Tax Return
filed for such Conveyed Subsidiary or any of its Subsidiaries (as the case may
be) provided that there is a reasonable basis for such inconsistent position and
Pfizer consents to such inconsistent position (which consent shall not be
unreasonably withheld). With respect to any Tax Return required to be filed by
the Purchaser for a taxable period that includes (but does not end on) the
Closing Date (a "Straddle Period"), the Purchaser shall deliver, at least 30
days prior to the due date for the filing of such Tax Return (taking into
account extensions), to Pfizer a statement setting forth the amount of Tax for
which Pfizer is responsible pursuant to Section 7.4(g)(i) and (iii) and copies
of such Tax Return. Pfizer shall have the right to review such Tax Return and
the statement prior to the filing of such Tax Return. Pfizer and the Purchaser
agree to consult and resolve in good faith any issue arising as a result of the
review of such Tax Return and statement and mutually to consent to the filing as
promptly as possible of such Tax Return. Neither Purchaser nor any of its
Affiliates shall file any amended Tax Returns for any periods for or in respect
of the Conveyed Subsidiaries or any of their Subsidiaries with respect to which
Purchaser is not obligated to prepare or cause to be prepared
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the original such Tax Returns pursuant to this Section 7.4(a)(i) without the
prior written consent of Pfizer. Notwithstanding any provision of this
Agreement, Purchaser may, at its option, make an election under Section 338(g)
of the Code with respect to its purchase or deemed purchase of any of the
Conveyed Subsidiaries and their Subsidiaries other than Howmedica Leibinger
Inc., in which event Purchaser shall be solely responsible for preparing the
separate return for any U.S. corporation reflecting the consequences of such
election, and shall be responsible for and shall pay, any and all Taxes
resulting from such election and shall indemnify Pfizer (in the manner provided
herein) with respect to such Taxes. Notwithstanding the foregoing, if Purchaser
makes such election with respect to Howmedica Iberica S.A. or Jaquet Orthopedie
S.A., Pfizer shall be responsible for and shall pay any and all Taxes resulting
from such election and shall indemnify Purchaser (in the manner provided herein)
with respect to such Taxes.
(ii) Check-The-Box Election. Pfizer shall cause an election
pursuant to Treasury Regulations Section 301.7701-3 to be filed,
effective from a date at least 10 days prior to the Closing Date, for
those of the Conveyed Subsidiaries or their Subsidiaries listed on
Schedule 7.4 which are not United States entities to be treated as a
branch for U.S. federal
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income tax purposes, and to undertake any restructuring (including any
acquisition of minority interests in any of such Conveyed Subsidiaries
or the Subsidiaries) as outlined in Schedule 7.2 necessary or
advisable, in Pfizer's sole discretion, to effect such election.
(iii) Section 338(h)(10) Election. Pfizer and Purchaser
agree that an election shall be jointly made by Pfizer and Purchaser
pursuant to Section 338(h)(10) of the Code with respect to the
acquisition by Purchaser of the stock of Howmedica Leibinger Inc.,
provided that such election does not result in a Tax detriment to
Purchaser. Pfizer shall be solely responsible for, and shall pay, any
and all Taxes resulting from such election and shall indemnify
Purchaser (in the manner provided herein) with respect to such Taxes.
(b) Payment of Taxes. Except for taxes that are accrued or reserved
against in the Working Capital Statement, Pfizer shall pay or cause to be paid
(A) all Taxes due with respect to Tax Returns which Pfizer is obligated to
prepare and file or cause to be prepared and filed pursuant to Section 7.4(a),
(B) all Taxes due with respect to Tax Returns for
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Straddle Periods for which Pfizer is responsible pursuant to Section 7.4(g)(i).
Purchaser shall pay or cause to be paid (A) all Income Taxes due with respect to
separate Tax Returns which Purchaser is obligated to prepare and file or cause
to be prepared and filed pursuant to Section 7.4(a) other than Taxes which
Pfizer shall pay or cause to be paid in accordance with the preceding sentence
and (B) all Taxes owed by the Conveyed Subsidiaries or their Subsidiaries other
than Taxes which Pfizer shall pay or cause to be paid in accordance with the
preceding sentence.
(c) Tax Sharing Agreements. Schedule 7.4(c) lists all Tax sharing
agreements and arrangements other than those prescribed by statute or
regulations between (i) the Conveyed Subsidiaries or any of their Subsidiaries,
on the one hand, and (ii) Pfizer or any of its Subsidiaries or Affiliates (other
than the Conveyed Subsidiaries and their Subsidiaries), on the other hand. On
the Closing Date, all such Tax sharing agreements and arrangements shall be
terminated effective as of the close of the Closing Date and have no further
effect for any taxable year or period (whether a past, present or future year or
period), and no additional payments shall be made thereunder with respect to any
period after the Closing Date in respect of a redetermination of tax liabilities
or otherwise.
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(d) Carryforwards and Carrybacks. Purchaser shall cause the Conveyed
Subsidiaries and their Subsidiaries to elect, when permitted by law, to carry
forward any net operating loss, net capital loss, foreign tax credit, research
and development credit, or other item or credit arising after the Closing Date
that could, in the absence of such an election, be carried back to a taxable
period of the Conveyed Subsidiaries or any of their Subsidiaries that ends on or
before the Closing Date or that includes the Closing Date, provided such
election does not preclude Purchaser from recognizing the benefit of any net
operating loss, net capital loss, foreign tax credit, research and development
credit, or other item or credit before it expires under applicable local Tax
law. Purchaser, on its own behalf and on behalf of its Affiliates, hereby waives
any right to use or apply any such net operating loss, net capital loss, foreign
tax credit, research and development credit, or other item or credit of the
Conveyed Subsidiaries or any of their Subsidiaries as such a carryback except as
provided in the preceding sentence. If as required by Law or to prevent the
expiration of the Tax benefits referred to in the preceding sentence any net
operating loss, net capital loss, foreign tax credit, research and development
credit, or any other item or credit of the Conveyed Subsidiaries or any of their
Subsidiaries shall be carried back to any such period, Purchaser shall
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indemnify Pfizer and its Affiliates (other than the Conveyed Subsidiaries or any
of their Subsidiaries) for all reasonable costs and expenses incurred by Pfizer
or any of such Affiliates in filing such claims or in connection with any audit
of such claims.
(e) Refunds. Except for refunds, receivables or credits that are
included in the Working Capital Statement or have reduced Taxes that are accrued
or reserved against in the Working Capital Statement, Pfizer shall be entitled
to retain, or receive prompt payment from Purchaser or any of its Subsidiaries
or Affiliates (including the Conveyed Subsidiaries and their Subsidiaries) of,
any refund or credit with respect to Taxes (including, without limitation,
refunds and credits arising by reason of amended Tax Returns filed after the
Closing Date or otherwise) with respect to any Tax period ending on or before
the Closing Date relating to the Conveyed Subsidiaries, any of their
Subsidiaries or any Asset Selling Corporation, provided, however, that (i)
Purchaser, the Conveyed Subsidiaries and their Subsidiaries shall be entitled to
retain, or receive prompt payment from Pfizer of, any such refund or credit to
the extent that such refund or credit arises as a result of the use or
application (as provided in Section 7.4(d)) of any net operating loss, net
capital loss, foreign tax credit, research and development credit or other item
or credit of the Conveyed
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Subsidiaries or any of their Subsidiaries arising in any tax year ending on any
date following the Closing Date to any period of the Conveyed Subsidiaries or
any of their Subsidiaries that ends on or before the Closing Date or that
includes the Closing Date, and (ii) to the extent that Pfizer or any of its
Affiliates (other than the Conveyed Subsidiaries or any of their Subsidiaries)
incurs any detriment as a result of the carryback by the Conveyed Subsidiaries
or any of their Subsidiaries of any such net operating loss, net capital loss,
foreign tax credit, research and development credit, or other item or credit,
such as, for example, a dilution in the foreign tax credit allowed to Pfizer or
any of its Affiliates (other than the Conveyed Subsidiaries or any of their
Subsidiaries), Pfizer shall be entitled to receive prompt payment from Purchaser
of the refund or credit received or enjoyed by the Purchaser or any of its
Affiliates (including the Conveyed Subsidiaries or their Subsidiaries) as a
result of such carryback. Purchaser, the Conveyed Subsidiaries and their
Subsidiaries shall be entitled to retain, or receive immediate payment from
Pfizer of, any refund or credit not described in Section 7.4(e)(ii) with respect
to Taxes with respect to any taxable period beginning after the Closing Date
relating to any of the Conveyed Subsidiaries and their Subsidiaries. Purchaser
and Pfizer shall equitably apportion any refund or credit with respect to Taxes
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not described in Section 7.4(e)(ii) with respect to a Straddle Period.
(f) Tax Cooperation. Each of Purchaser and Pfizer shall provide the
other party with such information and records and make such of its officers,
directors, employees and agents available as may reasonably be requested by such
other party in connection with the preparation of any Tax Return or any audit or
other proceeding that relates to the Conveyed Subsidiaries, any of their
Subsidiaries or the Asset Selling Corporations. Purchaser shall within the
earlier to occur of sixty (60) days after Pfizer's year-end, and one hundred
twenty (120) days after the Closing Date, prepare or cause the Conveyed
Subsidiaries and their Subsidiaries to prepare, in a manner consistent with the
Conveyed Subsidiary's past practice, the tax work paper preparation package or
packages necessary to enable Pfizer to prepare Tax Returns Pfizer is obligated
to prepare or cause to be prepared.
(g) Tax Indemnification.
(i) Pfizer shall indemnify, defend and hold the Purchaser and its
Affiliates harmless from and against all liability for Taxes of the
Conveyed Subsidiaries, their Subsidiaries and any Asset Selling
Corporation (with respect to the Business) for any
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taxable period that ends on or before the Closing Date and the portion
of any Straddle Period ending on the Closing Date, including, without
limitation (A) all liability for any breach of Pfizer's
representations and warranties contained in Article V, (B) all
liability (as a result of Treasury Regulation Section 1.1502-6(a) or
otherwise) for Income Taxes of Pfizer or any other Person (other than
the Conveyed Subsidiaries or any of their Subsidiaries) which is or
has ever been affiliated with the Conveyed Subsidiaries or any of
their Subsidiaries, or with whom the Conveyed Subsidiaries or any of
their Subsidiaries otherwise joins or has ever joined (or is or has
ever been required to join) in filing any consolidated, combined or
unitary Tax Return, prior to the Closing, (C) all liability for Income
Taxes arising as a result of an election under Section 338(h)(10) of
the Code (or any similar provision of state, local or foreign law)
with respect to the sale or deemed sale of the shares of capital stock
of Howmedica Leibinger Inc., (D) all Tax liability for Subpart F
income includable in the income of Purchaser or its Affiliates
relating to taxable periods and attributable to transactions occurring
on or before
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the Closing Date, and (E) all liability for reasonable legal,
accounting and appraisal fees and expense with respect to any item
described in clause (A), (B), (C) or (D) above; provided, however,
that Pfizer's indemnity obligation for Taxes pursuant to this Section
7.4(g)(i) shall be reduced by refunds of Taxes (excluding carrybacks
from post-Closing Date years to the extent permitted hereunder) with
respect to such periods received after the Closing Date by Purchaser
or any of its Affiliates and not previously remitted to Pfizer.
Notwithstanding the foregoing, and except as provided in the last
sentence of Section 7.4(a)(i), Pfizer shall not indemnify, defend or
hold harmless the Purchaser or any of its Affiliates from any
liability for Taxes attributable (i) to any Code Section 338(g)
election (other than with respect to Howmedica Leibinger Inc. for
which an election under Section 338(h)(10) of the Code will be made)
or (ii) any other action taken or failure to act (which would
otherwise give rise to a Pfizer Tax indemnity payment) after the
Closing by Purchaser, any of its Affiliates (including the Conveyed
Subsidiaries or any of their Subsidiaries), or any transferee of
Purchaser or any of its Affiliates (other than any such action
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expressly required or otherwise expressly contemplated by this
Agreement or with the written consent of Pfizer) (a "Purchaser Tax
Act") or (ii) to the extent accrued or reserved against in the Working
Capital Statement. Further, Pfizer's obligation to indemnify, defend
or hold harmless the Purchaser or any of its Affiliates from any
liability shall terminate effective with the expiration of the
applicable statute of limitations (including extensions) in respect of
such liability.
(ii) Purchaser shall, and shall cause the Conveyed
Subsidiaries and each of their Subsidiaries to, indemnify, defend and
hold Pfizer and its Affiliates harmless from and against, (A) except
to the extent Pfizer is otherwise required to indemnify Purchaser for
such Tax pursuant to Section 7.4(g)(i), all liability for Taxes of the
Conveyed Subsidiaries and their Subsidiaries, (B) all liability for
Taxes attributable to a Purchaser Tax Act, (C) except as provided in
the last sentence of Section 7.4(a)(i), all liability for Taxes
resulting from Purchaser making an election under Section 338(g) of
the Code with respect to its purchase or deemed purchase of any
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of the Conveyed Subsidiaries and their Subsidiaries, other than
Howmedica Leibinger Inc. for which an election under Section
338(h)(10) of the Code will be made, (D) all Tax liability for Subpart
F income includable in the income of Pfizer or its Affiliates relating
to taxable periods and attributable to transactions occurring after
the Closing Date, and (E) all liability for reasonable legal,
accounting and appraisal fees and expenses with respect to any item
described in clause (A), (B), (C) or (D) above. Purchaser's obligation
to indemnify, defend or hold harmless Pfizer or any of its Affiliates
from any liability shall terminate effective with the expiration of
the applicable statute of limitations (including extensions) in
respect of such liability.
(iii) In the case of any Straddle Period:
(A) The periodic Taxes of the Conveyed Subsidiaries and their
Subsidiaries that are not based on income or receipts (e.g., property Taxes) for
the portion of any Straddle Period ending on the Closing Date (the "Pre-Closing
Tax Period") shall be computed based upon the ratio of the number of days in the
Pre-Closing Tax Period and the number of days in the entire Tax Period; and
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(B) Taxes of the Conveyed Subsidiaries and their Subsidiaries for the
Pre-Closing Tax Period (other than Taxes described in Section 7.4(g)(iii)(A)
above) shall be computed as if such taxable period ended as of the close of
business on the Closing Date, and, in the case of any Taxes of the Conveyed
Subsidiaries and their Subsidiaries attributable to the ownership by the
Conveyed Subsidiaries or any of their Subsidiaries of any equity interest in any
partnership or other "flowthrough" entity, as if a taxable period of such
partnership or other "flowthrough" entity ended as of the close of business on
the Closing Date.
(iv) Any indemnity payment required to be made pursuant to
this Section 7.4(g) shall be paid within thirty (30) days after the
indemnified party makes written demand upon the indemnifying party,
but in no case earlier than five (5) Business Days prior to the date
on which the relevant Taxes are required to be paid to the relevant
taxing authority (including estimated Tax payments).
(h) Timing Adjustment. In the event that a final determination (which
shall include the execution of an IRS Form 870-AD or successor form, or similar
action under the Law of any other Taxing Authority) results in a timing
difference (e.g., an
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acceleration of income or delay of deductions) that would increase Pfizer's
liability for Taxes pursuant to this Section 7.4 or results in a timing
difference (e.g., an acceleration of deductions or delay of income) that would
increase Purchaser's liability for Taxes pursuant to this Section 7.4, Purchaser
or Pfizer, as the case may be, shall promptly make payments to Pfizer or
Purchaser as and when Purchaser or Pfizer, as the case may be, actually realizes
any Tax benefits as a result of such timing difference (or under such other
method for determining the present value of any such anticipated Tax benefits as
agreed to by the parties). Such Tax benefit for federal, state and local Income
Tax purposes shall be computed for any year using the Purchaser's or Pfizer's,
as the case may be, actual tax liability with and without giving effect to such
timing difference.
(i) Tax Contests.
(A) If a claim shall be made by any taxing authority (a "Tax Claim")
which, if successful, might result in an indemnity payment to the Purchaser or
any of its Affiliates pursuant to Section 7.4(g), Purchaser shall promptly
notify Pfizer of such claim; provided, however, that the failure to give such
notice shall not affect the indemnification provided hereunder except to the
extent Pfizer has actually been
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prejudiced as a result of such failure and for this purpose, any failure to give
such notice that results in Pfizer not controlling or participating in any
proceeding shall be deemed to prejudice Pfizer.
(B) With respect to any Tax Claim relating to a taxable period ending
on or before the Closing Date or relating to a Consolidated Tax Return, Pfizer
shall control all proceedings and may make all decisions taken in connection
with such Tax Claim (including selection of counsel) and, without limiting the
foregoing, may in its sole discretion pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with any taxing
authority with respect thereto, and may, in its sole discretion, either pay the
Tax claimed and xxx for a refund where applicable law permits such refund suits
or contest the Tax Claim in any permissible manner. Purchaser shall be entitled
to be informed of such Tax Claim within a reasonable time after such Claim is
asserted and the developments with respect to such Tax Claim at any
administrative meeting, conference, hearing or other proceeding. Subject to
contractual obligations existing on the date of this Agreement, Pfizer will not
settle any Tax Claim with regard to the Tax liability of any Conveyed Subsidiary
which would materially adversely affect the continuing Tax liability of such
Conveyed Subsidiary after the Closing Date without prior written
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consent of the Purchaser, which consent shall not be unreasonably withheld.
(C) Except as otherwise provided in Section 7.4(i)(B), Pfizer and
Purchaser shall jointly control and participate in all proceedings taken in
connection with any Tax Claim relating to Taxes of the Conveyed Subsidiaries or
any of their Subsidiaries for any Straddle Period. Neither Pfizer nor Purchaser
shall settle any such Tax Claim without the prior written consent of the other,
which shall not be unreasonably withheld.
(D) Except as otherwise provided in Section 7.4(i)(B), Purchaser shall
control all proceedings with respect to Taxes for any taxable period beginning
after the Closing Date.
(E) Purchaser, the Conveyed Subsidiaries, each of their Subsidiaries
and each of their respective Affiliates, on the one hand, and Pfizer and its
respective Affiliates, on the other, shall cooperate in contesting any Tax
Claim, which cooperation shall include the retention and (upon request) the
provision to the requesting party of records and information which are
reasonably relevant to such Tax Claim, and making employees available on a
mutually convenient basis to provide additional information or explanation of
any material provided
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hereunder or to testify at proceedings relating to such Tax Claim.
Section 7.5. Employees and Employee Benefits.
(a) Employees (US) - Offer of Employment; Continued Employment;
Severance. Purchaser agrees to offer employment as of 12:01 a.m. on the day
immediately following the Closing Date to each Employee (US) (or to cause the
Conveyed Subsidiaries and their Subsidiaries to offer to continue the employment
of each of their Employees (US)) in the same or a comparable position and at a
rate of pay at least equal to such Employee's rate of pay in effect on the
Closing Date and with benefits which shall be substantially comparable to the
employee benefits as are set forth in Schedule 7.5(a), and identical to such
other benefits as are set forth in the Employee Severance Program in Schedule
7.5(a)(i). The benefits set forth in Schedule 7.5(a)(iii) shall be deemed to
satisfy the substantial comparability requirement with respect to benefits for
Employees (US). For purposes of this Section 7.5, references to "pay" shall
include base pay plus any commission, bonus or incentive pay, but excluding
retention and retention/performance allowances. Such employment shall be at a
location within a twenty-five (25) mile radius of the employee's location of
employment as of the Closing Date (which, in the case of a sales employee, shall
mean such employee's sales territory residential base on the Closing
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Date). Schedule 7.5(a)(ii) (which shall be updated by Pfizer on the Closing
Date) shall set forth the name of each Employee (US), and his or her current
rate of pay, position and date of hire. Except to the extent assets have been
transferred to cover the funding or to the extent reflected in the Working
Capital Statement, Purchaser shall have no obligation whatsoever with regard to
(i) former employees of the Business who are retired, or who are not or shall
have ceased to be Employees (US) as of the Closing Date, or (ii) employees who
do not accept the offer of employment or continuation of employment given by the
Purchaser in accordance with this Section 7.5(a) and do not work for Purchaser
or its Affiliates for at least one day, unless such employee is otherwise an
Affected Employee. Purchaser shall be solely responsible for all salaries or
wages (including bonuses, incentive payments and commissions) accruing after the
Closing Date with respect to the Affected Employees. Purchaser may, at its
discretion, change the conditions of employment after the Closing Date except
for (i) the location requirement described in this Section 7.5(a) and (ii) the
pay and benefits comparability requirements described in this Section 7.5(a),
employee separation plan obligations and other benefits described in Schedule
7.5(a)(i), all of which matters shall remain unchanged until the date
immediately following the second anniversary of the Closing Date, provided,
however, that
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Purchaser or its Affiliates may amend any benefit program contained in Schedule
7.5(a)(iii) covering Affected Employees during such two-year period to the same
extent such amendments affect similarly situated employees of Purchaser
generally, or as required by applicable Laws. Notwithstanding the foregoing
sentence, Purchaser or its Affiliates may terminate an Employee (US) during such
two (2) year period due to "Performance-Related Terminations" or "Curtailment or
Cessation of Operations/ Reorganization/Position Elimination" (as those terms
are described in Exhibit E, the Pfizer Employee Separation Plan) as long as
Purchaser or its Affiliates (i) first offers such employee the opportunity to
sign a release agreement in substantially the form attached hereto as Exhibit F
(individual termination) or Exhibit G (group termination), as appropriate, (ii)
pays or otherwise provides severance benefits to such employee in accordance
with Pfizer's Employee Separation Plan and (iii) provides benefits continuation
and other benefits as set forth in Schedule 7.5(a)(i), provided, however, that
Purchaser or its Affiliates may terminate an Employee (US) without paying or
otherwise providing severance benefits to such employee in accordance with such
policy and practice if such employee is terminated, in the reasonable discretion
of Purchaser or its Affiliates, "for cause" (as such term is defined in the
Pfizer Employee Separation Plan). Employees
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shall also be provided credit by the Purchaser for all service with Pfizer and
its Affiliates, to the same extent as such service was credited for such purpose
by Pfizer and its Affiliates, under (x) all employee benefit plans, programs,
policies and fringe benefits of Purchaser described in Schedule 7.5(a)(iii) for
purposes of eligibility, vesting and benefit accrual and (y) severance plans,
programs and policies for purposes of calculating the amount of each such
employee's severance benefits. Nothing herein shall obligate Pfizer, Howmedica,
any Conveyed Subsidiary (or a Subsidiary of any Conveyed Subsidiary) or Asset
Selling Corporation, even if so requested by Purchaser, to terminate, amend or
otherwise modify any Plan, program, policy or other arrangements prior to the
Closing Date. Pfizer shall take no action prior to the Closing which would
increase benefits under any such Plan, program, policy or other arrangements, or
take any action which would impair Purchaser's ability to amend or terminate any
of the foregoing subsequent to the Closing.
(b) Qualified Plans.
(i) Pfizer sponsors the following Plans which are intended
to be qualified under Section 401(a) of the Code (collectively, the
"Pfizer Qualified Plans"): the Pfizer Savings and Investment Plan (the
"Savings Plan") and
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the Pfizer Retirement Annuity Plan (the "Retirement Plan"). Effective
as of the Closing Date, the Seller Corporations shall cause each
Affected Employee who is a participant in one or both Pfizer Qualified
Plans to become one hundred percent (100%) vested in his or her
accrued benefit under each such Plan. In addition, Howmedica sponsors
the Xxxxxxxxxx Plan which is intended to be qualified under Section
401(a) of the Code but which is not included in the definition of
"Pfizer Qualified Plan".
(ii) Effective as of 12:01 a.m. on the day immediately
following the Closing Date, each participant in a Pfizer Qualified
Plan who is an Affected Employee shall cease to be an active
participant under each such Plan, and shall become a participant in
one of the Purchaser Qualified Plans as listed in Schedule 7.5(b)(ii)
(such plans being collectively referred to as the "Purchaser Qualified
Plans"). Purchaser shall ensure that the Purchaser Qualified Plans
will recognize the accrued service of Affected Employees with Pfizer
and its Affiliates up to and including the Closing Date for all
purposes, to the extent credited under the terms of the corresponding
Pfizer Qualified Plan as in effect on the Closing Date. As soon as
practicable after the Closing
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Date, Pfizer shall deliver such accrued service data to Purchaser.
(iii) If Purchaser and Pfizer shall so agree, Pfizer shall
cause, as soon as practicable after the Closing Date, the Savings Plan
to transfer the account balance of each Affected Employee to the
corresponding Purchaser Qualified Plan as of the valuation date next
preceding the date of transfer. In such event, Purchaser, on the one
hand, and Pfizer, on the other hand, each agree to use its best
efforts and to cooperate with the other to effect as promptly as
possible the transfers of assets contemplated under this Section
7.5(b)(iii), subject to Pfizer's receipt of satisfactory evidence that
the Purchaser Qualified Plans are in compliance with all relevant Laws
and Purchaser's receipt of satisfactory evidence that the Savings Plan
is in compliance with all relevant Laws; such evidence shall include,
but not be limited to, a favorable determination letter that considers
the Tax Reform Act of 1986 (a "current determination letter") from the
IRS, if available, and representations satisfactory to Pfizer and
Purchaser, respectively, from the administrators of the Purchaser
Qualified Plans. If a current determination letter has not been
obtained,
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Purchaser and its counsel shall provide a representation that the
Purchaser Qualified Plans are qualified under Section 401(a) of the
Code and that a timely application for a determination letter is
pending and that Purchaser will take all necessary steps to secure a
determination letter.
(iv) Effective as of 12:01 a.m. on the day immediately
following the Closing Date, Purchaser shall adopt and assume the
Xxxxxxxxxx Plan. Pfizer and Purchaser shall cooperate in causing such
steps to be taken as may be necessary to cause Purchaser to be
substituted for Howmedica as the plan sponsor under the Xxxxxxxxxx
Plan, including for purposes of the Collective Bargaining Agreement,
and to succeed to Howmedica under the related trust or other funding
vehicle.
(v) Pfizer will give Purchaser reasonable access to records
of Pfizer necessary to administer the retirement benefits of Affected
Employees transferred to the Purchaser Qualified Plans and will cause
the transfer to Purchaser of all records relating to the Xxxxxxxxxx
Plan.
(c) Accrued Entitlements. To the extent reflected in the Working
Capital Statement, Purchaser shall be responsible
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for all accrued entitlements, including vacation days, for Affected Employees as
of the Closing Date consistent with Pfizer's policy in respect thereof.
(d) Medical and Welfare Plan Obligations. Commencing as of 12:01 a.m.
on the day immediately following the Closing Date, Purchaser shall include the
Affected Employees in the welfare plans listed on Schedule 7.5(a)(iii) and
agrees to waive any waiting periods or limitations for preexisting conditions
under its medical, dental, and short-term and long-term disability plans and
shall ensure that such employees are given credit for any amounts paid toward
deductibles, out-of-pocket limits or other fees on or prior to the Closing Date.
Claims by an Affected Employee for medical and dental services rendered as of
12:01 a.m. on the day immediately following the Closing Date shall be the
responsibility of the medical and dental plans provided by Purchaser to such
employees. Claims incurred for medical and dental services for Affected
Employees rendered prior to and including the Closing Date shall be the
responsibility of the group medical and dental plans of Pfizer or the Seller
Corporation which covered such employees prior to and including the Closing
Date.
(e) Employees (Bargaining Unit). The terms and conditions of
employment of Employees (Bargaining Unit) are
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contained in the agreement between Howmedica and the International Union of
Electronic, Electrical, Salaried, Machine and Furniture Workers, AFL-CIO, Local
485 ("Collective Bargaining Agreement") attached hereto as Exhibit H. Schedule
7.5(e) (which shall be updated by Pfizer on the Closing Date) shall set forth
the name of each Employee (Bargaining Unit), and his or her current rate of pay,
position and date of hire. Purchaser agrees to continue the employment as of
12:01 a.m. on the day immediately following the Closing Date of each Employee
(Bargaining Unit) pursuant to the terms of the Collective Bargaining Agreement.
Except to the extent assets have been transferred to cover the funding or to the
extent reflected in the Working Capital Statement, Purchaser shall have no
obligation whatsoever with regard to (i) former employees of the Business who
are retired, or who are not or shall have ceased to be Employees (Bargaining
Unit) as of the Closing Date, or (ii) employees who do not accept the offer of
employment or continuation of employment given by the Purchaser in accordance
with this Section 7.5(e) and do not work for Purchaser or its Affiliates for at
least one day, unless such employee is otherwise an Affected Employee.
Pfizer and Purchaser shall cooperate in causing such steps to be taken
as may be necessary to enable Purchaser to establish, effective immediately
following the Closing Date, any
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plan required under the terms of the Collective Bargaining Agreement.
(f) Employees (non-US) - Offer of Employment; Continued Employment;
Severance. Purchaser agrees to offer employment as of 12:01 a.m. on the day
immediately following the Closing Date to each Employee (non-US) (or to cause
the Conveyed Subsidiaries and their Subsidiaries to offer to continue the
employment of each of their Employees (non-US)) in the same or a comparable
position and at a rate of pay at least equal to such employee's rate of pay in
effect on the Closing Date. With respect to benefits for Employees (non-US) in
those countries in which Purchaser has similarly situated employees, as of 12:01
a.m. on the day immediately following the Closing Date, Employees (non-US) of
Asset Selling Corporations and Conveyed Subsidiaries (and Subsidiaries of any
Conveyed Subsidiaries) shall be provided with benefits which are substantially
identical to benefits that, as of such date, are provided to similarly situated
employees of Purchaser in the relevant countries as set forth on Schedule
7.5(f). Schedule 7.5(f)(i) (which shall be updated by Pfizer on the Closing
Date) shall set forth the name of each Employee (non-US), current rate of pay,
position, and date of hire. Schedule 7.5(f)(ii) shall set forth the employee
benefit plans covering Employees (non-US) in effect on the Closing Date. Except
to the extent assets have been
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transferred to cover the funding or to the extent reflected in the Working
Capital Statement, Purchaser shall have no obligation whatsoever with regard to
(i) former employees of the Business who are retired, or who are not or shall
have ceased to be Employees (non-US) as of the Closing Date, or (ii) employees
who do not accept the offer of employment or continuation of employment given by
the Purchaser in accordance with this Section 7.5(f) and do not work for
Purchaser or its Affiliates for at least one day, unless such employee is
otherwise an Affected Employee. It is the intention of the parties to this
Agreement to deal with employee matters, including, without limitation, offers
of employment, compensation, benefits, and severance payment and benefit
continuation matters for Employees (non-US) in a manner substantially similar to
the manner in which Employees (US) matters have been dealt with in this Article
VII but without regard to the benefits and programs set forth on Schedule
7.5(a), Schedule 7.5(a)(i) and Schedule 7.5(a)(iii), and as modified to reflect
applicable Laws of the foreign countries and their political subdivisions;
applicable labor agreements; local Pfizer policies, programs and practices; and
established local business custom in similar transactions. For the purposes of
this Section 7.5(f), the substantial comparability standard shall be deemed
satisfied whenever Purchaser provides benefits that are substantially identical
to
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benefits that are provided to similarly situated employees of Purchaser or, in
those cases where Purchaser has no similarly situated employees, are at least at
the level required by applicable Law. Nothing herein shall obligate Pfizer,
Howmedica, any Conveyed Subsidiary (or a Subsidiary of any Conveyed Subsidiary)
or Asset Selling Corporation, even if so requested by Purchaser, to terminate,
amend or otherwise modify any Foreign Plan, program, policy or other
arrangements prior to the Closing Date. Pfizer shall take no action prior to the
Closing which would increase benefits under any such Foreign Plan, program,
policy or other arrangements, or to take any action which would impair
Purchaser's ability to amend or terminate any of the foregoing subsequent to the
Closing.
(g) Employees (US), Employees (Bargaining Unit) and Employees (non-US)
Absent on Disability or Leaves of Absence - Offer of Employment; Continued
Employment; Severance. When an Employee (US) or Employee (non-US) who is, on the
Closing Date, absent due to illness or on short-term disability (including
maternity disability) or workers' compensation seeks to return to active
employment, Purchaser shall offer immediate employment to such employee in the
same or a comparable position to that which the employee occupied before such
absence but only at such time that such employee is medically capable of
performing the essential functions of the position occupied immediately before
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such absence. In addition, immediate employment in the same or comparable
positions will be offered to those Employees (US) and Employees (non-US)
returning from parental, family and medical, and military leaves or other leaves
where return to work is subject to statutory requirements. Such employees,
returning from disability or leaves of absence, will be subject to the same pay,
benefits, severance and all other policies, plans, programs and arrangements as
stipulated in this Article VII for similarly situated Employees (US) and
Employees (non-US) and, in the case of Employees (non-US), as otherwise required
by applicable local law. If an Employee (Bargaining Unit) who is, on the Closing
Date, absent due to illness or on short-term disability (including maternity
disability) or workers' compensation or authorized leave of absence seeks to
return to active employment, such employee's return shall be governed by, and
handled in accordance with, the terms of the Collective Bargaining Agreement.
(h) No Third Party Beneficiaries. Except as expressly provided herein,
nothing contained herein, expressed or implied, is intended to confer upon any
Employee of Seller Corporations or the Conveyed Subsidiaries or their
Subsidiaries any benefits under any benefit plans, programs, policies or other
arrangements, including, but not limited to, severance benefits or right to
employment or continued employment with
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Purchaser or any Affiliate of Purchaser for any period by reason of this
Agreement. In addition, the provisions of this Agreement, in particular this
Article VII, are for the sole benefit of the parties to this Agreement and are
not for the benefit of any third party.
(i) Designation of Purchaser as Successor Employer. Seller
Corporations agree, if requested by Purchaser, to consent to the designation of
Purchaser as successor employer for purposes of employment insurance, payroll
taxes or contribution ratings and payroll credits under state and federal Law
and/or worker compensation contribution premium ratings under applicable state
Law, provided that such designation is not reasonably concluded, by Pfizer, to
be detrimental to Pfizer.
Section 7.6. Certain Dividends, Etc. Notwithstanding any provision
herein to the contrary (including, without limitation, Section 7.2 hereof), each
Conveyed Subsidiary or any Subsidiary of a Conveyed Subsidiary will be permitted
to distribute to Pfizer or any one or more of its designated Affiliates,
effective as of the Closing Date, up to the amount of its retained earnings
accrued through the Closing Date, but not in excess of cash on hand and in no
event to be effected through any additional borrowings from Pfizer, any of its
Affiliates or any third person. In addition, Pfizer and its
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Affiliates shall be permitted to continue to conduct their activities regarding
cash management matters relating to the Business (including, without limitation,
the collection and transfer of accounts receivable and disbursement of funds by
Pfizer) in accordance with the practice in effect as of the date of this
Agreement, except as may be affected by actions taken pursuant to Section 2.3(c)
and as may be necessary to settle intercompany payables and receivables and to
effect intercompany funding. After the Closing Date, Purchaser shall take all
actions (or shall cause its Affiliates to take all actions) reasonably requested
by Pfizer to effect the provisions of this Section 7.6. Any action taken
pursuant to this Section 7.6 after the Closing Date shall be deemed for the
purposes of Section 2.8 to have occurred on the Closing Date and shall be
reflected in the calculation of the Working Capital of the Business pursuant to
such Section 2.8.
Section 7.7. Resignations. At the Closing and except as otherwise
requested by Purchaser in writing, Pfizer will deliver to Purchaser the
resignations (effective on or prior to Closing) of all directors of each of the
Conveyed Subsidiaries and their Subsidiaries from their positions as directors.
Section 7.8. Bulk Transfer Laws. Purchaser acknowledges that the
Seller Corporations have not taken, and do
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not intend to take, any action required to comply with any applicable bulk sale
or bulk transfer laws or similar laws.
Section 7.9. Noncompetition. (a) Subject to the provisions of this
Section 7.9, Pfizer agrees that for a period of five (5) years from the Closing
Date, Pfizer and its Subsidiaries shall not compete with the business of the
manufacture or sale of (i) reconstructive, trauma and specialty products that
are commercially available from, or under development by, Pfizer and its
Subsidiaries as of the Closing Date that are used for the treatment of
musculoskeletal disorders or (ii) surgical instrumentation that are commercially
available from, or under development by, Pfizer and its Subsidiaries as of the
Closing Date that are focused on stereotactic surgery ("Competitive Activity");
provided, however, that it shall not be deemed to be a violation of this
subsection for Pfizer or any of its Subsidiaries to (t) engage, directly or
indirectly, in the research, manufacture or sale of any pharmaceutical product
or any medical device for the delivery of pharmaceutical products, (u) invest in
or own any debt securities or other debt obligations, (v) invest in any third
Person (including, without limitation, any corporation or mutual or other fund)
which invests in, manages or operates a Competitive Activity, so long as
Pfizer's or any of its Subsidiary's investment is less than 20% of the
outstanding
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ownership interest in such third Person and Pfizer and its Subsidiaries do not
control or conduct such third Person or Competitive Activity, (w) invest in, own
an interest in, or acquire all or a majority of the stock or assets of any
Person which is not engaged primarily in a Competitive Activity, (x) invest in
securities having less than five percent (5%) of the outstanding voting power of
any Person, the securities of which are publicly traded or listed on any
securities exchange or automated quotation system, (y) invest in any Person
after the Closing Date to the extent that Pfizer or a Subsidiary had, directly
or indirectly, acquired, or had a right to acquire, such interest prior to the
date of this Agreement as set forth on Schedule 7.9, or (z) own any equity
interests through any employee benefit plan or pension plan. Notwithstanding
anything to the contrary, the foregoing covenant shall not apply with respect to
any Person that acquires a majority of the stock or assets of Pfizer or any of
its Subsidiaries and that prior to such acquisition already was engaged in a
Competitive Activity. For purposes of this subsection, "engaged primarily in a
Competitive Activity" shall mean that greater than thirty-five percent (35%) of
the aggregate net revenue derived during the last complete fiscal year of such
Person is derived from the Competitive Activity. Each investment or acquisition
made by Pfizer or its Subsidiaries which is subject to the provisions of
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this Section 7.9 must be permissible hereunder at the time of such investment,
provided, however, that any such investment which was permissible when made
cannot thereafter be the basis of a claim of violation of this Section 7.9.
(a) For a period of three (3) years after the Closing Date, Pfizer and
its Subsidiaries shall not, directly or indirectly, induce or attempt to induce
any officers, employees, representatives or agents of Purchaser or any of its
Affiliates engaged primarily in the Business to leave the employ of Purchaser or
any such Affiliate, or violate the terms of their contracts, or any employment
arrangements, with Purchaser or any such Affiliate, except that nothing in this
sentence shall restrict or preclude the rights of Pfizer and its Subsidiaries to
make generalized searches for employees by the use of advertisements in the
media (including trade media) or by engaging search firms to engage in searches
that are not targeted or focused on the employees employed by the Business.
(b) Notwithstanding anything to the contrary contained in subsection
(a) of this Section 7.9, Pfizer and its Subsidiaries shall not be deemed to have
violated the restrictions contained in Section 7.9(a) in the event that Pfizer
or a Subsidiary acquires or invests in any Person engaged primarily in a
Competitive Activity; provided, that Pfizer or such Subsidiary thereafter
divests all or a portion of such
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Competitive Activity within 18 months from the date of purchase of such Person
so as to be in compliance with Section 7.9(a) hereof.
(c) Prior to Closing, except as otherwise agreed in writing, neither
Purchaser nor any of its Affiliates will offer or provide employment on a
full-time or part-time or consulting basis to any individual employed in the
operation of the Business by Pfizer or any of its Affiliates.
(d) Pfizer and the Purchaser acknowledge that this Section 7.9
constitutes an independent covenant and shall not be affected by performance or
nonperformance of any other provision of this Agreement. Each of Pfizer and the
Purchaser has independently consulted with its counsel and after such
consultation agrees that the covenants set forth in this Section 7.9 are
reasonable and proper. It is the desire and intent of the parties that the
provisions of this Section 7.9 shall be enforced to the fullest extent
permissible under applicable law. If all or part of this Section 7.9 is held
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect. If any part of this Section 7.9 is held to be excessively
broad as to duration, scope, activity or subject, such part will be construed by
limiting and
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reducing it so as to be enforceable to the maximum extent compatible with
applicable law.
Section 7.10. Transitional Services. At the Closing, Purchaser and
Pfizer shall enter into, execute and deliver a transitional services agreement
substantially to the effect set forth in Exhibit C (the "Transitional Services
Agreement").
Section 7.11. Transitional Intellectual Property License Agreement. At
the Closing, Purchaser and Pfizer shall enter into, execute and deliver a
transitional intellectual property license agreement substantially to the effect
set forth in Exhibit D (the "Transitional Intellectual Property License
Agreement").
Section 7.12. Compliance with WARN, Etc. With respect to WARN or other
similar statutes or regulations of any jurisdiction, Purchaser will timely give
any notices required to be given thereunder.
Section 7.13. Foreign Implementing Agreements. As promptly as
practicable after the date hereof, Pfizer and Purchaser shall cause the Foreign
Implementing Agreements to be prepared and executed by their applicable
Affiliates. The representations and warranties set forth in this Agreement,
subject to the limitations set forth herein, shall be deemed to be incorporated
by reference in the Foreign Implementing Agreements. To the extent of any
inconsistency between this
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Agreement and any Foreign Implementing Agreement, the provisions of this
Agreement shall govern.
Section 7.14. Litigation Support. Purchaser and its Affiliates on the
one hand and Pfizer and its Affiliates on the other hand will cooperate with
each other in the defense or settlement of any Liabilities or lawsuits involving
the Business for which they have responsibility under this Agreement by
providing the other party and such other party's legal counsel and other Persons
access to employees, records, documents, data, equipment, facilities, products,
parts, prototypes and other information regarding the Business and its products
as such other party may request, to the extent maintained or under the
possession or control of the requested party. The requesting party shall
reimburse the other party for its reasonable out-of-pocket expenses paid to
third parties in performing its obligations under this Section 7.14. Pfizer
shall keep Purchaser informed of the status of the pendency of the relevant
Liabilities and lawsuits involving the Business for which it has responsibility
under this Agreement, will advise Purchaser of material issues involved in the
litigation and will use its reasonable best efforts to seek a confidentiality
agreement with respect to any settlements of such lawsuits. For so long as any
Liabilities or lawsuits involving the Business for which Pfizer has
responsibility under this Agreement remain outstanding,
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Purchaser will advise Pfizer of material issues involved in the lawsuits
involving the Business for which it has responsibility and will use its
reasonable best efforts to seek a confidentiality agreement with respect to any
settlements of such lawsuits.
Section 7.15. Insurance.
(a) As of the Closing Date, the coverage under all insurance policies
related to the Business shall continue in force only for the benefit of the
Seller Corporations and their Affiliates and not for the benefit of Purchaser.
Purchaser agrees to arrange for its own insurance policies with respect to the
Business covering all periods and agrees not to seek, through any means, to
benefit from any of Seller Corporations' or their Affiliates' insurance policies
which may provide coverage for claims relating in any way to the Business on or
prior to the Closing Date.
(b) If any loss described in Section 5.7(b) shall occur in respect of
an asset other than a current asset prior to Closing, Pfizer shall use its best
efforts to collect under any available insurance policies and shall pay the
proceeds therefrom to Purchaser at Closing (or if collected thereafter, upon
collection), except to the extent applied in repairing or replacing such asset.
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Section 7.16. Audited Financial Statements. (a) Pfizer agrees to
furnish to Purchaser no later than September 15, 1998 audited financial
statements of the Business as of December 31, 1997 and for the three years then
ended that meet the requirements of Item 7 of Form 8-K under the Securities
Exchange Act of 1934, as amended ("Form 8-K").
(a) At Closing, Pfizer shall furnish to Purchaser unaudited financial
statements of the Business as of the most recently available accounting period
end and related statements of income that meet the requirements of Item 7 of
Form 8-K.
Section 7.17. Change of Name. Pfizer agrees to take such action as is
necessary to change the name of any Asset Selling Corporation that contains the
word "Howmedica" to a name that does not include such word, such change to be
effective on the Closing Date.
Section 7.18. Notification of Certain Matters. Pfizer shall give
prompt notice to Purchaser and Purchaser shall give prompt notice to Pfizer of
the occurrence, or non-occurrence, of any event the occurrence or non-occurrence
of which would be reasonably likely to cause (i) any representation or warranty
of Pfizer or Purchaser, as the case may be, contained in this Agreement to be
untrue or inaccurate in any material respect at or prior to the Closing, as the
case may be, or (ii) any Seller Corporation or Purchaser, as the case may be, to
fail to comply
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with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 7.18 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
ARTICLE VIII
INDEMNIFICATION
Section 8.1. Indemnification by Pfizer.
(a) Pfizer agrees to defend, indemnify and hold harmless Purchaser and
its Affiliates, and, if applicable, their respective directors, officers,
agents, employees, successors and assigns from and against any and all claims,
actions, causes of action, judgments, awards, liabilities, losses, costs or
damages (collectively, a "Loss" or the "Losses") claimed or arising directly
from (i) any Retained Liability, (ii) any Excluded Environmental Liabilities,
subject to the provisions of this Article, (iii) any breach by the Seller
Corporations of any of its covenants or agreements contained in this Agreement
or in any agreement, (iv) any breach of any representation and warranty of the
Seller Corporations contained in this Agreement, it being understood that for
purposes of this Article VIII, all materiality exceptions and qualifications set
forth in any representation and warranty of Pfizer contained in this Agreement
shall be disregarded, the materiality standard for
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Pfizer's obligations to indemnify Purchaser and its Affiliates, and, if
applicable, their respective directors, officers, agents, employees, successors
and assigns in respect of a breach of a representation and warranty contained
herein being set forth in Section 8.6 hereof, or (v) any non-compliance with
bulk transfer or similar Laws.
(b) Purchaser acknowledges and agrees that Pfizer shall not have any
liability under any provision of this Agreement for any Loss to the extent that
such Loss relates solely to action taken by Purchaser or its Affiliates after
the Closing Date. Purchaser shall take and shall cause its Affiliates to take
all reasonable steps to mitigate any Loss upon becoming aware of any event which
would reasonably be expected to, or does, give rise thereto.
(c) Nothing in this Section 8.1 shall be construed to impose
liabilities with respect to Taxes.
(d) Pfizer's obligation to indemnify, defend or hold harmless the
Purchaser or any of its Affiliates from any Loss shall terminate effective with
the expiration of the applicable statute of limitations in respect of such Loss
or as set forth in Section 8.5, whichever is earlier.
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Section 8.2. Indemnification by Purchaser.
(a) Purchaser agrees to defend, indemnify and hold harmless the Seller
Corporations and their Affiliates, and, if applicable, their respective
directors, officers, agents, employees, successors and assigns from and against
any and all Loss claimed or arising directly from (i) any Assumed Liability,
(ii) any breach by Purchaser of any of its covenants or agreements in this
Agreement, (iii) any breach of any warranty or representation of Purchaser
contained in this Agreement, or (iv) events occurring on or after the Closing
Date in connection with the Business (other than the Excluded Assets and the
Retained Liabilities), the Conveyed Assets, or the Shares including, without
limitation, the use, ownership, possession, operation or occupancy of any
Facility, Leased Real Property or Real Property, the Intellectual Property of
the Business, the Conveyed Assets, or the Shares or the Conveyed Subsidiaries
from and after the Closing Date.
(b) Seller Corporations shall take and shall cause its Affiliates to
take all reasonable steps to mitigate any Loss upon becoming aware of any event
which would reasonably be expected to, or does, give rise thereto.
(c) Nothing in this Section 8.2 shall be construed to impose
liabilities with respect to Taxes.
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Section 8.3. Notice of Claims.
(a) If any of the Persons to be indemnified under this Article VIII
(the "Indemnified Party") has suffered or incurred any Loss, the Indemnified
Party shall so notify the party from whom indemnification is sought (the
"Indemnifying Party") promptly in writing describing such Loss, the amount or
estimated amount thereof, if known or reasonably capable of estimation, and the
method of computation of such Loss, all with reasonable particularity and
containing a reference to the provisions of this Agreement or any other
agreement, instrument or certificate delivered pursuant hereto in respect of
which such Loss shall have occurred. If any action at law or suit in equity is
instituted by or against a third party with respect to which the Indemnified
Party intends to claim any liability or expense as a Loss under this Article
VIII, the Indemnified Party shall promptly notify the Indemnifying Party of such
action or suit and tender the Indemnified Party the defense of such action or
suit. A failure to give notice and to tender the defense of the action or suit
in a timely manner pursuant to this Section 8.3 shall not limit the obligation
of the responsible Person under this Article VIII, except (i) to the extent such
Indemnifying Party is prejudiced thereby, (ii) except to the extent expenses are
incurred during the period in which notice
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was not provided, and (iii) except as provided by Section 8.5 below.
(b) Except when a notice, report or other filing must be filed
immediately pursuant to Environmental Laws, Purchaser will provide a reasonable
opportunity under the circumstances to comment to Pfizer before Purchaser files
with respect to any Required Governmental Report it intends to file in
connection with an event which at the time of filing appears reasonably likely
to result in a Loss subject to the indemnification provisions of this Article.
In the event Purchaser is required to file such Required Governmental Report,
Purchaser will provide copies to Pfizer within a reasonable period of time under
the circumstances.
Section 8.4. Third Party Claims.
(a) The Indemnifying Party under this Article VIII shall have the
right, but not the obligation, to conduct and control, through counsel of its
choosing, any third party claim, action or suit (a "Third Party Claim"), and the
Indemnifying Party may compromise or settle the same, provided that the
Indemnifying Party shall give the Indemnified Party advance notice of any
proposed compromise of settlement. No Indemnified Party may compromise or settle
any Third Party Claim for which it is seeking indemnification hereunder without
the consent of
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the Indemnifying Party. The Indemnifying Party shall permit the Indemnified
Party to participate in, but not control, the defense of any such action or suit
through counsel chosen by the Indemnified Party, provided that the fees and
expenses of such counsel shall be borne by the Indemnified Party. If the
Indemnifying Party elects not to control or conduct the defense or prosecution
of a Third Party Claim, the Indemnifying Party shall have the right to
participate in, but not conduct or control, the defense or prosecution of any
Third Party Claim and, at its own expense, to employ counsel of its own choosing
for such purpose.
(b) The parties hereto shall cooperate in the defense or prosecution
of any Third Party Claim, with such cooperation to include (i) the retention and
the provision of the Indemnifying Party records and information that are
reasonably relevant to such Third Party Claim, and (ii) the making available of
employees on a mutually convenient basis for providing additional information
and explanation of any material provided hereunder.
Section 8.5. Expiration. Notwithstanding anything in this Agreement
to the contrary, if the Closing shall have occurred, all covenants, agreements,
warranties and representations made herein or in any certificate delivered
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pursuant hereto shall survive the Closing, but all representations and
warranties made herein or in any certificate delivered pursuant hereto, and all
indemnification obligations under Sections 8.1. and 8.2 with respect to any such
representation or warranty, shall terminate and expire on, and no action or
proceeding seeking damages or other relief for breach of any thereof or for any
misrepresentation or inaccuracy with respect thereto shall be commenced after,
the second anniversary of the Closing Date with respect to all claims of any
party, and of any indemnified persons under this Article VIII, which shall not
have been previously asserted, with reasonable specificity, by written notice
given under Section 8.3. The covenants, agreements and obligations of the
parties set forth in this Agreement shall survive indefinitely except as
expressly provided herein, provided, however, as to indemnification obligations
under Section 8.1(a)(ii) with respect to subparagraphs (i), (iii), (iv) and (vi)
of the definition of Excluded Environmental Liabilities, there shall be no
expiration date for such obligations, and with respect to subparagraphs (ii) and
(v) of the definition of Excluded Environmental Liabilities such obligations
shall terminate and expire on, and no action or proceeding seeking damages or
other relief with respect thereto shall be commenced after, the dates specified
in those respective subparagraphs unless claims shall
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have been made against the Indemnified Party and written notice thereof
previously given to Pfizer under Section 8.3.
Section 8.6. Certain Limitations. Neither Pfizer nor Purchaser shall
have any obligations to indemnify the other under Section 8.1(a)(iv) (in the
case of Pfizer's obligation) or Section 8.2(a)(iii) (in the case of Purchaser's
obligation) for Losses unless the aggregate of all such Losses for which either
party would, but for this provision, be liable exceeds on a cumulative basis
$17,500,000, but if such amount is exceeded, such party shall be required to pay
only the amount of such Losses which in the aggregate exceed $17,500,000;
provided, however, that neither party shall have any obligation to indemnify the
other under such Sections 8.1(a)(iv) or 8.2(a)(iii) for Losses (i) for any
individual item where the Loss relating thereto is less than $175,000, and (ii)
for Losses which in the aggregate are in excess of $700,000,000. The limitations
contained in this Section 8.6 do not apply to, limit or affect in any way
whatsoever Pfizer's indemnification obligations under Section 8.1(a)(ii).
Section 8.7. Losses Net of Insurance, Etc. The amount of any Loss for
which indemnification is provided under Sections 8.1 or 8.2 (the "Specified
Sections") shall be net of (i) any accruals or reserves on the Financial
Statements or the Working Capital Statement, (ii) any amounts recovered by the
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Indemnified Party pursuant to any indemnification by or indemnification
agreement with any third party, (iii) any insurance proceeds or other cash
receipts or sources of reimbursement received as an offset against such Loss
(each person from whom amounts are recovered or received pursuant to clauses
(ii) and (iii), a "Collateral Source"), and (iv) an amount equal to the present
value of the Tax benefit, if any, attributable to such Loss (the "NPV") that is
actually realized within three years after the indemnification payment by the
Indemnifying Party. To the extent that a Tax benefit in respect of such Loss is
not actually realized within such three year period, the Indemnified Party will
within thirty (30) days of the expiry of such three year period pay to the
Indemnifying Party the amount of the NPV. Indemnification under this Article
VIII shall not be available to Purchaser or Pfizer, as the case may be, unless
the party seeking indemnification under this Article VIII first uses all
reasonable efforts to seek recovery from all Collateral Sources. The
Indemnifying Party may require an Indemnified Party to assign the rights to seek
recovery pursuant to the preceding sentence; provided, that the Indemnifying
Party will then be responsible for pursuing such claim at its own expense. If
the amount to be netted hereunder from any payment required under Sections 8.1
or 8.2 is determined after payment by the Indemnifying Party of any amount
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otherwise required to be paid to an Indemnified Party to this Article VIII, the
Indemnified Party shall repay to the Indemnifying Party, promptly after such
determination, any amount that the Indemnifying Party would not have had to pay
pursuant to this Article VIII had such determination been made at the time of
such payment.
Section 8.8. Intentionally Omitted.
Section 8.9. Sole Remedy/Waiver. The parties hereto acknowledge and
agree that the remedies provided for in this Agreement shall be the parties'
sole and exclusive remedy with respect to the subject matter of this Agreement.
In furtherance of the foregoing, the parties hereby waive, to the fullest extent
permitted by applicable law, any and all other rights, claims and causes of
action (including rights of contributions, if any) known or unknown, foreseen or
unforeseen, which exist or may arise in the future, that it may have against the
Seller Corporations or any of their Affiliates, or Purchaser or any of its
Affiliates, as the case may be, arising under or based upon any federal, state
or local Law (including, without limitation, any such Law relating to
environmental matters or arising under or based upon any securities law, common
law or otherwise).
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Section 8.10. Indemnification Procedures for Remedial Actions on
Conveyed Properties.
(a) Pfizer shall have the right but not the obligation to conduct and
control the management of a Remedial Action at a property included in the
Conveyed Assets that is subject to indemnification pursuant to this Agreement.
Pfizer must notify Purchaser, within thirty (30) days of receipt of notice of
Purchaser's claim for indemnification for such matter, that (i) it intends to
undertake said responsibility or (ii) it requests more existing information from
Purchaser, that is readily available to or in Purchaser's possession, that is
reasonably needed to evaluate whether Purchaser's claim is subject to
indemnification pursuant to this Agreement. Purchaser shall promptly respond to
such requests for information (to the extent such information is reasonably
available to Purchaser) and, within thirty (30) days of receipt of such
information, Pfizer shall notify Purchaser as to whether it shall undertake the
Remedial Action. Prior to a determination by Pfizer that it will undertake a
Remedial Action pursuant to this Section, Purchaser shall take only those
actions reasonably necessary to comply with applicable Environmental laws or
address conditions that pose an immediate and acute health risk (unless
additional actions are approved by Pfizer, such approval not to be unreasonably
withheld). With
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respect to any Remedial Action, and any related engineering and/or institutional
controls, conducted at any Facilities, including without limitation in
connection with ISRA, the parties shall cooperate to ensure that any such
Remedial Action does not interfere with the activities conducted at the Facility
or reasonably contemplated planned activities at the Facility consistent with
the existing use and configuration of the Facility.
(b) In undertaking a Remedial Action pursuant to this Section, Pfizer
shall retain a qualified independent environmental consultant which consultant
shall be subject to Purchaser's approval (such approval not to be unreasonably
delayed or withheld). Pfizer shall undertake such Remedial Action in a prompt
and expeditious fashion in compliance with all applicable Environmental Laws and
shall not cause, through its own inaction, any undue delay in obtaining written
notice from the appropriate Governmental Authority that no further investigation
or remediation is necessary with respect to the matter that is the subject of
the indemnification claim to meet the Applicable Remedial Action Standards, or,
if no Governmental Authority is involved in such matter, a good faith
determination from its environmental consultant that no further investigation or
remediation is required to bring the Conveyed Property into conformance with
Applicable Remedial Action Standards, subject
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to Purchaser's approval not to be unreasonably withheld. Pfizer shall comply
with all applicable laws, including all applicable Environmental Laws, with
respect to its performance pursuant to this Section and take all steps necessary
to avoid the imposition of any fines, penalties, liens or the institution of any
actions or claims against Purchaser, the Conveyed Subsidiaries or a Subsidiary
of a Conveyed Subsidiary or the Facility. This provision shall not include any
institutional controls as part of any Remedial Action. Pfizer shall promptly
provide copies to Purchaser of all written notices, correspondence, draft
submissions, draft work plans, results of field work, and draft reports and
shall give Purchaser a reasonable opportunity given the circumstances (at
Purchaser's own expense) to comment on any submissions Pfizer intends to deliver
or submit to the appropriate Governmental Authority or third party prior to said
submission. Purchaser may, at its own expense, hire its own consultants,
attorneys or other professionals to monitor the Remedial Action, including any
field work undertaken by Pfizer, and Purchaser shall provide Pfizer with the
results of all such monitoring. Pfizer shall provide Purchaser with a reasonable
opportunity to monitor significant communications with Governmental Authorities
or third parties concerning the direction, scope and nature of such Remedial
Action, provided that Pfizer shall be in control of
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such communications. Notwithstanding the above, Purchaser shall not take any
actions that shall unreasonably interfere with Pfizer's performance of the
Remedial Action. Pfizer shall undertake any such work required herein in a
manner designed to minimize any disruption, to the greatest extent possible,
with the conduct of operations at the Conveyed Property. Purchaser shall allow
Pfizer reasonable access to conduct any of the work contemplated herein and
shall fully cooperate with Pfizer in the performance of the Remedial Action,
including, but not limited to, providing Pfizer with reasonable access to
employees and documents as necessary. Pfizer shall be responsible for protection
of worker and public health and safety in connection with any Remedial Action it
undertakes and manages. Purchaser shall cooperate with Pfizer with respect to
such protection.
(c) If Pfizer declines to undertake the performance of a Remedial
Action as provided in Section 8.10(a), Purchaser shall be entitled to undertake
the Remedial Action to the Applicable Remedial Action Standards and to be
indemnified for related costs to the extent consistent with other terms of this
Agreement. Purchaser shall promptly provide copies to Pfizer of all notices,
correspondence, draft reports, submissions, work plans, and final reports and
shall give Pfizer a reasonable opportunity (at Pfizer's own expense) to comment
to Purchaser on any submissions Purchaser intends to deliver or submit to the
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appropriate Governmental Authority or third party prior to said submission.
Pfizer may, at its own expense, hire its own consultants, attorneys or other
professionals to monitor the Remedial Action, including any field work
undertaken by Purchaser, and Purchaser shall provide to Pfizer the results of
all such field work. Notwithstanding the above, Pfizer shall not take any
actions that shall unreasonably interfere with Purchaser's performance of the
Remedial Action. Purchaser shall provide Pfizer with reasonable opportunity to
participate in significant communications with Governmental Authorities or third
parties, provided that Purchaser shall be in control of such communications.
Pfizer shall be responsible for the protection and health and safety of its
employees, representatives and agents. Pfizer shall comply with the site health
and safety requirements of Purchaser and its consultants and contractors.
Pfizer's decision to allow Purchaser to undertake Remedial Action hereunder
shall not limit or affect Pfizer's obligation to indemnify Purchaser for said
Remedial Action to the Applicable Remedial Action Standards as otherwise
provided in this Agreement.
Section 8.11. Remedial Action Obligations. Pfizer's indemnification
obligations under Section 8.1 hereof in respect of subsections (ii)(A) and (vi)
of the definition of Excluded Environmental Liabilities is subject to the
provisions of this
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Section 8.11. Pfizer shall be responsible for the commercially reasonable and
cost effective expenses of such Remedial Action conducted in conformance with
applicable Environmental Law (or any amendment in effect at the time of the
Remedial Action) and consistent with the industrial/commercial use of the
Facility (including any agreements with third parties relating thereto) as of
the Closing Date, or (consistent with any agreements with third parties in
effect as of the Closing Date) a standard pursuant to applicable Environmental
Laws acceptable at the time of Remedial Action to the relevant Governmental
Authorities making a claim for Remedial Action (the "Applicable Remedial Action
Standard"). Pfizer shall not be responsible for those additional costs incurred
in connection with a Remedial Action to the extent such costs arise from or are
exacerbated by actions of the Purchaser, including the initiation of Remedial
Action after the Closing Date by the Purchaser or at the request of a third
party in the absence of a requirement of Environmental Law or an obligation
under an agreement with a third party existing prior to the Closing Date.
Section 8.12. Compliance With ISRA.
(a) In addition to the provisions of Sections 8.10 and 8.11 above, the
following provisions apply to Pfizer's ISRA obligations pursuant to subparagraph
(vi) of the definition of Excluded Environmental Liabilities. Subject to the
provisions
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of this Section 8.12, for each Facility subject to the requirements of ISRA,
Pfizer shall be responsible, at its sole cost and expense, to comply with the
requirements of ISRA and all orders, directives and requirements of the New
Jersey Department of Environmental Protection ("NJDEP"). The limitations
contained in Section 8.6 do not apply to, limit or affect in any way whatsoever
Pfizer's ISRA obligations. For each ISRA subject Facility, Pfizer shall promptly
establish and maintain a remediation funding source and amount of funding to the
extent required by NJDEP and shall promptly remediate each ISRA subject Facility
to the extent required to obtain from NJDEP a No Further Action letter/Covenant
Not to Xxx ("NFA/CNS"), whether conditional or unconditional, or the equivalent
pursuant to ISRA.
(b) Pfizer and Purchaser agree that either party shall have the right
to require that responsibility for all compliance obligations related to ISRA at
a subject Facility be transferred to Purchaser in exchange for a payment to be
negotiated between the parties (referred to hereinafter as the "ISRA Buyout").
The right to implement the ISRA Buyout pursuant to this Paragraph may be
exercised after the approval by the NJDEP of a Remedial Action Work Plan
("RAWP") or at the time of the issuance by NJDEP of a conditional NFA/CNS that
imposes
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costs that would not otherwise be incurred in the ordinary operation of the
Facility.
(c) Upon the decision to invoke the provisions of this Section
8.12(b), Pfizer and Purchaser shall enter into a period of good faith
negotiations to attempt to agree to determine a mutually acceptable total dollar
amount for the ISRA Buyout (the "ISRA Buyout Payment").
(d) The total dollar amount of the ISRA Buyout Payment shall be
determined as the present value calculation of the following future costs
related to or arising out of ISRA compliance at each ISRA subject Facility:
1) all direct and indirect capital costs;
2) engineering costs;
3) all sampling, analytical and remedial costs;
4) environmental consulting costs and reasonable legal costs
solely related to ISRA;
5) annual operation, maintenance and monitoring costs and
transactional costs for providing financial assurances;
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6) costs associated with a conditional NFA/CNS that would not
be incurred in the ordinary course of operating the
Facility;
7) estimated NJDEP administrative fees and oversight costs;
8) reasonable additional internal costs solely related to ISRA
for the manager of the project; and
9) reasonable risk under the circumstances at the time of the
ISRA Buyout. (It is acceptable for the ADR judge or panel of
judges to value this risk at zero, if that seems
appropriate.) The parties may reach mutual agreement on
other criteria to be included in this payment calculation.
(e) If the parties cannot agree on a mutually acceptable ISRA Buyout
Payment pursuant to paragraph (c) above, either party has the right to initiate
a binding alternative dispute resolution ("ADR") between Pfizer and Purchaser to
be conducted by an ADR judge for the sole purpose of determining the amount of
the ISRA Buyout Payment. Both parties agree that the ADR judge shall be an
individual experienced in the estimation of remedial costs under ISRA. If the
parties are
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unable to agree on a single ADR judge, they shall each select an ADR judge, and
the two selected ADR judges shall choose a third ADR judge, in which case the
matter should be presented to the panel of three judges. The ADR judge or panel
of judges shall establish the rules by which the parties shall present their
cases and the decision shall be rendered.
(f) The ADR judge (or panel of ADR judges) shall select in writing,
after the conclusion of the ADR process, either the ISRA Buyout Payment proposed
by Pfizer or the ISRA Buyout Payment proposed by Purchaser as the appropriate
total dollar amount to be paid by Pfizer to Purchaser as the final ISRA Buyout
Payment based on the criteria set forth in subparagraph (d). The decision of the
ADR judge (or panel of ADR judges) on the ISRA Buyout Payment shall be final and
binding on both Pfizer and Purchaser. Pfizer and Purchaser shall each pay half
of any fees and disbursements of the ADR judge (or panel of judges).
(g) Pfizer's obligation pursuant to ISRA with respect to any Facility
shall terminate upon occurrence of any of the following (i) NJDEP issues an
Unconditional NFA/CNS with respect to that Facility; (ii)NJDEP issues a
conditional NFA/CNS which does not require the incurrence of costs that would
not be otherwise incurred in the operation of the Facility in the
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ordinary course; or (iii) the parties or the ADR judge (or panel of judges)
determine the amount of the ISRA Buyout Payment and Pfizer pays such amount.
(h) In the event of an ISRA Buyout Payment, Section 8.12(g)(iii) shall
not be effective if the Purchaser incurs more than one million dollars
($1,000,000) beyond the undiscounted value of the ISRA Buyout Payment in
responding to the requirements of the NJDEP pursuant to ISRA, in which case
Pfizer shall be responsible for all such costs thereafter and Pfizer may assume
control of the Remedial Action, if reasonable under the circumstances.
Section 8.13. No Consequential Damages.
INDEMNIFICATION HEREUNDER SHALL INCLUDE LIABILITY FOR ANY SPECIAL,
INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES TO THE EXTENT THE INDEMNIFIED
PARTY PAYS SUCH AMOUNT TO A THIRD PARTY IN RESPECT OF A CLAIM OF SUCH THIRD
PARTY. EXCEPT AS EXPRESSLY PROVIDED IN THE PRECEDING SENTENCE, NO PARTY TO THIS
AGREEMENT SHALL BE LIABLE TO OR OTHERWISE RESPONSIBLE TO ANY OTHER PARTY HERETO
OR ANY AFFILIATE OF ANY OTHER PARTY HERETO FOR CONSEQUENTIAL, INCIDENTAL OR
PUNITIVE DAMAGES OR FOR DIMINUTION IN VALUE OR LOST PROFITS THAT ARISE OUT OF OR
RELATE TO THIS AGREEMENT OR THE PERFORMANCE OR BREACH THEREOF OR ANY LIABILITY
RETAINED OR ASSUMED HEREUNDER.
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ARTICLE IX
TERMINATION
Section 9.1. Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by written agreement of Purchaser and Pfizer, acting as agent for
the Seller Corporations;
(b) by either Purchaser or Pfizer, by giving written notice of such
termination to the other party, if the Closing shall not have occurred on or
prior to December 31, 1998; or
(c) except as set forth in and subject to Section 7.3(e), by either
Pfizer or Purchaser if any court of competent jurisdiction or other competent
Governmental Authority shall have issued a Governmental Order or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such Governmental Order or other
action shall have become final and nonappealable.
Section 9.2. Effect of Termination.
(a) In the event of the termination of this Agreement in accordance
with Section 9.1 hereof, this Agreement shall thereafter become void and have no
effect, and no party hereto shall have any liability to the other party hereto
or their respective Affiliates, directors, officers or employees, except
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for the obligations of the parties hereto contained in this Section 9.2 and in
Sections 7.1, 10.1, 10.7, 10.8, 10.9 and 10.11 hereof, and except that nothing
herein will relieve any party from liability for any breach of any covenant set
forth in this Agreement prior to such termination.
(b) In the event this Agreement shall be terminated and at such time
any party is in material breach of or default under any term or provision hereof
or thereof, such termination shall be without prejudice to, and shall not
affect, any and all rights to damages that the other party may have hereunder or
otherwise under applicable Law. The damages recoverable by the non-defaulting
party shall include, without limiting the generality of the immediately
preceding sentence, all attorneys' fees reasonably incurred by such parties in
connection with the transactions contemplated hereby and thereby.
(c) If this Agreement is terminated in accordance with Section 9.1,
Purchaser agrees that the prohibition in the Confidentiality Agreement
restricting Purchaser's ability to solicit any Employee to join the employ of
Purchaser or any of its Affiliates shall be extended to a period of three (3)
years from the date of this Agreement.
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ARTICLE X
MISCELLANEOUS
Section 10.1. Notices. All notices or other communications hereunder
shall be deemed to have been duly given and made if in writing and if served by
personal delivery upon the party for whom it is intended, if delivered by
registered or certified mail, return receipt requested, or by a national courier
service, or if sent by telecopier, provided that the telecopy is promptly
confirmed by telephone confirmation thereof, to the person at the address set
forth below, or such other address as may be designated in writing hereafter, in
the same manner, by such person:
To any Seller Corporation:
PFIZER INC.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
Attn: Xxxx X. Xxxxxx, Esq.
Senior Vice President and
General Counsel
With a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
To Purchaser:
STRYKER CORPORATION
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
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Attention: Xxxx X. Xxxxx,
Chairman of the Board
With a copy to:
Xxxxxxx Breed Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxx, Esq.
Section 10.2. Amendment; Waiver. Any provision of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Purchaser and Pfizer, or in the case of
a waiver, by the party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
Section 10.3. Assignment. No party to this Agreement may assign any of
its rights or obligations under this Agreement including by sale of stock,
operation of law in connection with a merger or sale of substantially all the
assets of Purchaser without the prior written consent of the other party hereto;
except that Purchaser may without such consent assign its rights to purchase the
Shares and the Conveyed Assets hereunder to one or more Purchaser Affiliates and
may collaterally assign its other rights hereunder to the lenders under the
credit
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facilities contemplated by the Xxxxxxx Commitment Letter, provided that no such
assignment by Purchaser shall relieve Purchaser of any of its obligations
hereunder.
Section 10.4. Entire Agreement. This Agreement (including all
Schedules and Exhibits hereto) contains the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect to such matters,
except for the Confidentiality Agreement which will remain in full force and
effect for the term provided for therein and other than any written agreement of
the parties that expressly provides that it is not superseded by this Agreement.
Section 10.5. Fulfillment of Obligations. Any obligation of any party
to any other party under this Agreement, which obligation is performed,
satisfied or fulfilled by an Affiliate of such party, shall be deemed to have
been performed, satisfied or fulfilled by such party.
Section 10.6. Parties in Interest. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any Person other than Purchaser, Seller Corporations,
or their successors or permitted assigns, any rights or remedies under or by
reason of this Agreement.
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Section 10.7. Public Disclosure. Notwithstanding anything herein to
the contrary, each of the parties to this Agreement hereby agrees with the other
party hereto that, except as may be required to comply with the requirements of
any applicable Laws, and the rules and regulations of each stock exchange upon
which the securities of one of the parties is listed, if any, no press release
or similar public announcement or communication shall, if prior to the Closing,
be made or caused to be made concerning the execution or performance of this
Agreement unless the parties shall have consulted in advance with respect
thereto.
Section 10.8. Return of Information. If for any reason whatsoever the
transactions contemplated by this Agreement are not consummated, Purchaser shall
promptly return to Pfizer all books and records furnished by Pfizer, any other
Seller Corporation, any Conveyed Subsidiary, any of their respective Affiliates
or any of their respective agents, employees, or representatives (including all
copies, summaries and abstracts, if any, thereof) in accordance with the terms
of the Confidentiality Agreement.
Section 10.9. Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, all costs and expenses incurred in connection with this Agreement
and the
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transactions contemplated hereby shall be borne by the party incurring such
expenses. All Taxes (including, without limitation, any value added Taxes but
excluding any Income Taxes) and fees relating to the transfer of the Shares and
the Conveyed Assets shall be paid by the person liable therefor but the
liability for such Taxes as between the Seller Corporations and Purchaser shall
be borne as follows: (y) in respect of any such Taxes which are refundable or in
respect of which a credit is or becomes available, by Purchaser; and (z) in
respect of any other such Taxes not falling within subsection (y) above, equally
by the Seller Corporations on the one hand and Purchaser on the other hand,
provided that if any such Tax or any other Tax from which there is otherwise a
refund or a credit becomes payable or non-refundable as a result of Purchaser's
failing to register or become liable for such Tax, for example value added Tax,
such Tax shall be borne by the Purchaser solely. The Seller Corporations and
Purchaser, as the case may be, will on demand reimburse the other for its share
of any such Taxes paid by the other in accordance with the foregoing provisions
of this Section.
Section 10.10. Schedules. The disclosure of any matter in any Schedule
to this Agreement, as may be amended or supplemented prior to the Closing as
expressly permitted hereby, shall be deemed to be a disclosure for all purposes
of this
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Agreement, but shall expressly not be deemed to constitute an admission by any
Seller Corporation or Purchaser, or to otherwise imply, that any such matter is
material for the purposes of this Agreement.
Section 10.11. Governing Law. THE AGREEMENT SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK, ITS RULES OF CONFLICT OF LAWS NOTWITHSTANDING.
Pfizer and the Purchaser hereby agree and consent to be subject to the
jurisdiction of the United States District Court for the Southern District of
New York and in the absence of such Federal jurisdiction, the parties consent to
be subject to the jurisdiction of the Supreme Court of the State of New York,
County of New York.
Section 10.12. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
shall constitute one and the same agreement.
Section 10.13. Headings. The heading references herein and the table
of contents hereto are for convenience purposes only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.
Section 10.14. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity
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or enforceability of the other provisions hereof. If any provision of this
Agreement, or the application thereof to any person or entity or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
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IN WITNESS WHEREOF, the parties have executed or caused this Agreement
to be executed as of the date first written above.
PFIZER INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President and Chief Financial
Officer
STRYKER CORPORATION
By: /s/ Xxxx X. Xxxxx
----------------------------------------------
Name: Xxxx X. Xxxxx
Title: Chairman, President and Chief Executive
Officer