STOCK AND ASSET PURCHASE AGREEMENT
between
PFIZER INC.
and
STRYKER CORPORATION
DATED AS OF August 13, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS AND TERMS. . . . . . . . . . . . . 2
Section 1.1. Definitions . . . . . . . . . . . . . . . . . 2
Section 1.2. Other Definitional Provisions. . . . . . . . . 25
ARTICLE II PURCHASE AND SALE. . . . . . . . . . . . . . . 25
Section 2.1. Purchase and Sale of Shares of the
Conveyed Subsidiaries. . . . . . . . . . . . . 25
Section 2.2. Purchase and Sale of Assets of the
Asset Selling Corporations . . . . . . . . . . 26
Section 2.3. Consents . . . . . . . . . . . . . . . . . . . 30
Section 2.4. Excluded Assets of the Business. . . . . . . . 32
Section 2.5. Assumption of Certain Obligations
of the Business. . . . . . . . . . . . . . . . 34
Section 2.6. Retained Liabilities of Business . . . . . . . 35
Section 2.7. Purchase Price . . . . . . . . . . . . . . . . 37
Section 2.8. Purchase Price Adjustment. . . . . . . . . . . 38
Section 2.9. Allocation of the Aggregate
Purchase Price . . . . . . . . . . . . . . . . 42
ARTICLE III CLOSING. . . . . . . . . . . . . . . . . . . . 45
Section 3.1. Closing. . . . . . . . . . . . . . . . . . . . 45
ARTICLE IV CONDITIONS TO CLOSING. . . . . . . . . . . . . 47
Section 4.1. Conditions to the Obligations of
Purchaser and Pfizer . . . . . . . . . . . . . 47
Section 4.2. Conditions to the Obligations of
Purchaser. . . . . . . . . . . . . . . . . . . 48
Section 4.3. Conditions to the Obligations of
Pfizer . . . . . . . . . . . . . . . . . . . . 49
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PFIZER . . . 51
Section 5.1. Organzation. . . . . . . . . . . . . . . . . . 51
Section 5.2. Authority; Binding Effect. . . . . . . . . . . 51
Section 5.3. Conveyed Subsidiaries; Capital
Structure. . . . . . . . . . . . . . . . . . . 52
Section 5.4. Non-Contravention. . . . . . . . . . . . . . . 54
Section 5.5. Seller Corporation Consents and
Approvals. . . . . . . . . . . . . . . . . . . 56
Section 5.6. Financial Information; Books and
Records. . . . . . . . . . . . . . . . . . . . 56
Section 5.7 Absence of Material Changes. . . . . . . . . . 57
Section 5.8. No Litigation. . . . . . . . . . . . . . . . . 58
Section 5.9. Compliance with Laws . . . . . . . . . . . . . 58
Section 5.10. Product Registrations; Regulatory
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Compliance . . . . . . . . . . . . . . . . . . 59
Section 5.11. Environmental Matters. . . . . . . . . . . . . 60
Section 5.12. Material Contracts . . . . . . . . . . . . . . 61
Section 5.13. Intellectual Property. . . . . . . . . . . . . 64
Section 5.14. Real Property. . . . . . . . . . . . . . . . . 65
Section 5.15. Assets . . . . . . . . . . . . . . . . . . . . 66
Section 5.16. Taxes. . . . . . . . . . . . . . . . . . . . . 67
Section 5.17. Employee Benefits. . . . . . . . . . . . . . . 68
Section 5.18. Brokers. . . . . . . . . . . . . . . . . . . . 71
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER. . 71
Section 6.1. Organization and Qualification . . . . . . . . 71
Section 6.2. Corporate Authorization. . . . . . . . . . . . 72
Section 6.3. Binding Effect . . . . . . . . . . . . . . . . 72
Section 6.4. Non-Contravention. . . . . . . . . . . . . . . 72
Section 6.5. Purchaser Consents and Approvals . . . . . . . 73
Section 6.6. Financial Capability . . . . . . . . . . . . . 73
Section 6.7. Securities Act . . . . . . . . . . . . . . . . 73
Section 6.8. Condition of Business. . . . . . . . . . . . . 74
Section 6.9. Brokers. . . . . . . . . . . . . . . . . . . . 75
ARTICLE VII COVENANTS. . . . . . . . . . . . . . . . . . . 76
Section 7.1. Information and Documents. . . . . . . . . . . 76
Section 7.2. Conduct of Business. . . . . . . . . . . . . . 77
Section 7.3. Reasonable Best Efforts; Certain
Governmental Matters . . . . . . . . . . . . . 80
Section 7.4. Tax Matters. . . . . . . . . . . . . . . . . . 85
Section 7.5. Employees and Employee Benefits. . . . . . . .102
Section 7.6. Certain Dividends, Etc. . . . . . . . . . . .115
Section 7.7. Resignations . . . . . . . . . . . . . . . . .116
Section 7.8. Bulk Transfer Laws . . . . . . . . . . . . . .116
Section 7.9. Noncompetition . . . . . . . . . . . . . . . .117
Section 7.10. Transitional Services. . . . . . . . . . . . .121
Section 7.11. Transitional Intellectual Property
License Agreement. . . . . . . . . . . . . . .121
Section 7.12. Compliance with WARN, Etc. . . . . . . . . . .121
Section 7.13. Foreign Implementing Agreements. . . . . . . .121
Section 7.14. Litigation Support . . . . . . . . . . . . . .122
Section 7.15. Insurance. . . . . . . . . . . . . . . . . . .123
Section 7.16. Audited Financial Statements . . . . . . . . .124
Section 7.17. Change of Name . . . . . . . . . . . . . . . .124
Section 7.18. Notification of Certain Matters. . . . . . . .124
ARTICLE VIII INDEMNIFICATION. . . . . . . . . . . . . . . .125
Section 8.1. Indemnification by Pfizer. . . . . . . . . . .125
Section 8.2. Indemnification by Purchaser . . . . . . . . .127
Section 8.3. Notice of Claims . . . . . . . . . . . . . . .128
Section 8.4. Third Party Claims . . . . . . . . . . . . . .129
Section 8.5. Expiration . . . . . . . . . . . . . . . . . .130
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Section 8.6. Certain Limitations. . . . . . . . . . . . . .132
Section 8.7. Losses Net of Insurance, Etc. . . . . . . . .132
Section 8.8. Intentionally Omitted. . . . . . . . . . . . .134
Section 8.9. Sole Remedy/Waiver . . . . . . . . . . . . . .134
Section 8.10. Indemnification Procedures for
Remedial Actions on Conveyed
Properties . . . . . . . . . . . . . . . . . .135
Section 8.11. Remedial Action Obligations. . . . . . . . . .140
Section 8.13. No Consequential Damages . . . . . . . . . . .145
ARTICLE IX TERMINATION. . . . . . . . . . . . . . . . . .146
Section 9.1. Termination. . . . . . . . . . . . . . . . . .146
Section 9.2. Effect of Termination. . . . . . . . . . . . .146
ARTICLE X MISCELLANEOUS. . . . . . . . . . . . . . . . .148
Section 10.1. Notices. . . . . . . . . . . . . . . . . . . .148
Section 10.2. Amendment; Waiver. . . . . . . . . . . . . . .149
Section 10.3. Assignment . . . . . . . . . . . . . . . . . .149
Section 10.4. Entire Agreement . . . . . . . . . . . . . . .150
Section 10.5. Fulfillment of Obligations . . . . . . . . . .150
Section 10.6. Parties in Interest. . . . . . . . . . . . . .150
Section 10.7. Public Disclosure. . . . . . . . . . . . . . .151
Section 10.8. Return of Information. . . . . . . . . . . . .151
Section 10.9. Expenses . . . . . . . . . . . . . . . . . . .152
Section 10.10. Schedules. . . . . . . . . . . . . . . . . . .153
Section 10.11. Governing Law. . . . . . . . . . . . . . . . .153
Section 10.12. Counterparts . . . . . . . . . . . . . . . . .153
Section 10.13. Headings . . . . . . . . . . . . . . . . . . .153
Section 10.14. Severability . . . . . . . . . . . . . . . . .154
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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
5.11 Environmental Matters
5.12 Material Contracts
5.13 Intellectual Property
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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)
7.5(f)(ii) Employee Benefits (non-US)
7.9 Existing Investments
vi
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
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
2
issued and outstanding shares of capital stock of the Conveyed Subsidiaries
(the "Shares"), and that Pfizer shall cause the Asset Selling 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 I.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
3
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 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
4
Section 2.9 hereof.
"Applicable Remedial Action Standard" shall have the meaning set
forth in Section 8.11.
"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
5
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 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
6
forth in Section 7.9(a) hereof.
"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).
7
"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
8
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, 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
9
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, 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
10
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.
"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
11
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 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
12
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 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
13
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 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
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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 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
15
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 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
16
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 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, 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
17
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.
"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
18
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.
"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
19
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.
"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
20
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', materialmens',
carriers', workmens', warehousemens', repairmens', landlords' or other like
Liens and security obligations that are not delinquent.
"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
21
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.
"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
22
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 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
23
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.
"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
24
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.
"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
25
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.
"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,
26
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.
"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
27
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.
(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 II.1. Purchase and Sale of Shares of the Conveyed
Subsidiaries. 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,
28
and Purchaser shall purchase from each Stock Selling Corporation, free and
clear of all Liens, the Shares.
Section II.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 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 Asset 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
29
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 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
30
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 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
31
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) (i) 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;
(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
32
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.
Section II.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,
33
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.
(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 Closing by reason of Section 2.3(a), after the Closing and until any
requisite consent is obtained and the
34
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
35
discretion. After the Closing Date, Purchaser shall take all actions (or
shall cause 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 II.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;
36
(c) except as included in the Working Capital Statement, all
Tax losses, Tax loss carry forwards and rights to 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 II.5. Assumption of Certain Obligations
37
of the Business. Upon the terms and subject to the conditions of this
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
38
Statement; and
(c) all 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 after the Closing Date,
including, without limitation, warranty obligations and irrespective of the
legal theory asserted.
Section II.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
39
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);
(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
40
(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 (2) to the extent accrued or reserved against in the Working Capital
Statement.
Section II.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.
(b) In consideration of the sale and transfer of
41
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").
(c) 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 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 II.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
42
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.
(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
43
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 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
44
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
$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
45
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 rate for high
grade unsecured notes as published in the Wall Street Journal, Eastern
Edition, on the Closing Date.
Section II.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
46
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 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
47
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 to be allocated for
goodwill (defined for these purposes as
48
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
49
such local currency net book value converted at the rate of exchange used to
determine Final Working Capital and a corresponding adjustment to the
Allocation with respect to Howmedica International Inc. will be made.
ARTICLE III
CLOSING
Section III.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.
50
(b) 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.
(c) 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 IV.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
51
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
(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
52
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 IV.2. Conditions to the Obligations of Purchaser. The
obligation of Purchaser to consummate the 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
53
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);
(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 IV.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
54
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 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).
55
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PFIZER
Pfizer hereby represents and warrants to Purchaser as follows:
Section V.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 V.2. Authority; Binding Effect.
56
(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 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).
57
Section V.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 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
58
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.
(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
59
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.
Section V.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
60
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
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,
61
terminations, cancellations or accelerations as would not, individually or in
the aggregate, have a Material Adverse Effect.
62
Section V.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.
63
Section V.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 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.
(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
64
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 V.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 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 V.8. No Litigation. Except as may be
65
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 V.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:
(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
66
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 V.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 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.
67
Section V.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;
(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)
68
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 Conveyed Subsidiaries or a
Subsidiary of a Conveyed Subsidiary and any Asset Selling Corporation.
Section V.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
69
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);
(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;
70
(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 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.
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(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 V.13. Intellectual Property.
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(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 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
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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, 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 V.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
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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.
(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 V.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,
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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 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 V.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
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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 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 V.17. Employee Benefits.
(a) Set forth on Schedule 7.5(a) is a list of
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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 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.
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(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
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
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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 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.
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Section V.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 VI.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 VI.2. Corporate Authorization. Purchaser has all
requisite corporate power and authority to execute and 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
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other corporate proceedings on the part of Purchaser are required in
connection with the execution, delivery and performance by Purchaser of this
Agreement.
Section VI.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 VI.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.
Section VI.5. Purchaser Consents and Approvals. Except as set
forth in Schedule 6.5, the execution and
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delivery of this Agreement by Purchaser do not and will not require any
material consent or approval of any Governmental Authority.
Section VI.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 VI.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 VI.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
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Corporations not expressly set forth in this Agreement. In light of these
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
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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 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 VI.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.
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ARTICLE VII
COVENANTS
86
Section VII.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, 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
87
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 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 VII.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
88
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
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
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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);
(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
90
2.2(m); and
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(h) not agree to take any of the foregoing actions.
Section VII.3. Reasonable Best Efforts; Certain Governmental
Matters; Goldman Commitment Letter.
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(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 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
93
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 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
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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 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
95
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
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
96
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 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,
97
as the case may be, and upon the occurrence of such approval or action, the
parties hereto shall effect transfer of the effected 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.
98
Section VII.4. Tax Matters.
99
(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 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
100
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 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
101
(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 the original such Tax Returns pursuant to this
Section 7.4(a)(i) without the prior written consent of Pfizer. Notwith-
standing 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
102
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
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
103
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 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
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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.
(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
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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 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.
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(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 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
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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 not
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described in Section 7.4(e)(ii) with respect to a Straddle Period.
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(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.
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(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 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
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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 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)
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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 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
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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 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
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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
(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
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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 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.
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(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 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
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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 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
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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 hereunder or to testify at
proceedings relating to such Tax Claim.
Section VII.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
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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 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
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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 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. Notwith-
standing the foregoing sentence, Purchaser or its Affiliates may terminate an
Employee (US) during such two
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(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 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
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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 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
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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
Date, Pfizer shall deliver such accrued service data to Purchaser.
(iii) If Purchaser and Pfizer shall so agree,
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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, Purchaser and its counsel shall provide a representation that
the Purchaser Qualified Plans are
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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 for all accrued
entitlements, including
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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
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such steps to be taken as may be necessary to enable Purchaser to establish,
effective immediately following the Closing Date, any 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
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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 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
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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 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;
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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 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
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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
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
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contribution premium ratings under applicable state Law, provided that such
designation is not reasonably concluded, by Pfizer, to be detrimental to
Pfizer.
Section VII.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
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
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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 VII.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 VII.8. Bulk Transfer Laws. Purchaser acknowledges that
the Seller Corporations have not taken, and do not intend to take, any action
required to comply with any applicable bulk sale or bulk transfer laws or
similar laws.
Section VII.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
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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 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
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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 this Section 7.9 must be
permissible hereunder at the time of such investment,
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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.
(b) 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.
(c) 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
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Pfizer or such Subsidiary thereafter divests all or a portion of such
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.
(d) 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.
(e) 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
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held to be excessively broad as to duration, scope, activity or subject, such
part will be construed by limiting and reducing it so as to be enforceable to
the maximum extent compatible with applicable law.
Section VII.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 VII.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 VII.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 VII.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
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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 Agreement and any Foreign
Implementing Agreement, the provisions of this Agreement shall govern.
Section VII.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
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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, 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 VII.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
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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.
Section VII.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").
(b) 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 VII.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
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"Howmedica" to a name that does not include such word, such change to be
effective on the Closing Date.
Section VII.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 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 VIII.1. Indemnification by Pfizer.
(a) Pfizer agrees to defend, indemnify and hold
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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 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
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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.
Section VIII.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
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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.
Section VIII.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
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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 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
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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 VIII.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 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
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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 VIII.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 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
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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 have been made against the
Indemnified Party and written notice thereof previously given to Pfizer under
Section 8.3.
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Section VIII.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 VIII.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,
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(ii) any amounts recovered by the 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
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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
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 VIII.8. Intentionally Omitted.
Section VIII.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,
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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 VIII.10. Indemnification Procedures for Remedial Actions
on Conveyed Properties.
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(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
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unreasonably withheld). With 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
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environmental consultant that no further investigation or remediation is
required to bring the Conveyed Property into conformance with Applicable
Remedial Action Standards, subject 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
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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 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
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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 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.
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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.
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Section VIII.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 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
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Law or an obligation under an agreement with a third party existing prior to
the Closing Date.
Section VIII.12. Compliance With ISRA.
(a) In addition to the provisions of Section 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 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
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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 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
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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;
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.
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(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 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
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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
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 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 VIII.13. No Consequential Damages.
INDEMNIFICATION HEREUNDER SHALL INCLUDE LIABILITY FOR ANY SPECIAL,
INCIDENTAL, PUNITIVE OR CONSEQUENTIAL
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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.
ARTICLE IX
TERMINATION
Section IX.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
169
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 IX.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 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.
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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 X.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.
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To Purchaser:
STRYKER CORPORATION
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
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 X.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 X.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
173
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 facilities contemplated by the Xxxxxxx Commitment Letter, provided
that no such assignment by Purchaser shall relieve Purchaser of any of its
obligations hereunder.
Section X.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 X.5. Fulfillment of Obligations. Any obligation of any
party to any other party under this Agreement, which obligation is performed,
satisfied or
174
fulfilled by an Affiliate of such party, shall be deemed to have been
performed, satisfied or fulfilled by such party.
Section X.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.
Section X.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 X.8. Return of Information. If for any
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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 X.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 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
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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 X.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 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 X.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
000
Xxxxxxxx Xxxxxxxx xx Xxx Xxxx 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 X.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 X.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 X.14. Severability. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity 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)
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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.
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
Exhibit A
List of instruments and documents to be provided by Seller Corporations
(a) executed copies of the Transitional Services Agreement and the
Transitional Intellectual Property License Agreement;
(b) a receipt for the Aggregate Payment;
(c) a good standing certificate for each of the Seller Corporations and,
where available in their respective jurisdiction, the Conveyed Subsidiaries
and their Subsidiaries and a certificate of the Secretary or an Assistant
Secretary for Seller Corporations and Conveyed Subsidiaries and their
Subsidiaries as to the resolutions adopted by the Board of Directors of each
of the Seller Corporations relating to the transactions contemplated hereby;
(d) the certificate referred to in Section 4.2(a) hereof;
(e) Foreign Implementing Agreements;
(f) certificates representing the Shares duly endorsed and in form for
transfer to Purchaser or other appropriate instruments of transfer in respect
of the Shares;
(g) except as otherwise requested by Purchaser in writing, resignations
(effective on or prior to Closing) of each member of the board of directors of
the Conveyed Subsidiaries and the Subsidiaries of the Conveyed Subsidiaries;
(h) executed general warranty deeds, assignments, patent assignments (in
recordable form), a general trademark assignment (with trademark assignments
in recordable form to be delivered after the Closing), lease assignments
(where appropriate, in recordable or registrable form), with respect to
manufacturing and distribution facilities located in the United States,
landlord estoppel certificates, bills of sale or certificates of title, dated
the Closing Date, transferring to Purchaser all of each Asset Selling
Corporation's right, title and interest in and to the Conveyed Assets owned by
it;
(i) approvals referred to in Section 4.2(d); and
(j) opinions of counsel covering organization and good standing of
Conveyed Subsidiaries and their Subsidiaries and Asset Selling Corporations,
corporate power and authority regarding the transactions contemplated by the
Foreign Implementing Agreements and due authorization, execution and delivery
of the Foreign Implementing Agreements and the relevant conveyancing
documents, as applicable.
Exhibit B
List of instruments and documents to be provided by Purchaser
(a) Executed assumption agreements and all other instruments appropriate
to evidence Purchaser's assumption of the Assumed Liabilities;
(b) executed copies of the Transitional Services Agreement and the
Transitional Intellectual Property License Agreement;
(c) a good standing certificate for Purchaser and a certificate of the
Secretary or an Assistant Secretary of Purchaser as to the resolutions adopted
by the Board of Directors of Purchaser relating to the transactions
contemplated hereby; and
(d) the certificate referred to in Section 4.3(a) hereof;
(e) Foreign Implementing Agreements.
Exhibit C
Transitional Services Agreement
[See Schedules and Exhibits bound separately.]
Exhibit D
Transitional Intellectual Property License Agreement
[See Schedules and Exhibits bound separately.]
Exhibit E
Pfizer Employee Separation Plan
[See Schedules and Exhibits bound separately.]
Exhibit F
Release Agreement (Individual Termination)
[See Schedules and Exhibits bound separately.]
Exhibit G
Release Agreement (Group Termination)
[See Schedules and Exhibits bound separately.]
Exhibit H
Collective Bargaining Agreement
[See Schedules and Exhibits bound separately.]
