STOCK AND ASSET PURCHASE AGREEMENT
among
PFIZER INC.,
PFIZER HOLDINGS IRELAND,
the
ASSET SELLING CORPORATIONS
(named herein)
and
BOSTON SCIENTIFIC CORPORATION
DATED AS OF JUNE 15, 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 17
ARTICLE II PURCHASE AND SALE 18
Section 2.1. Purchase and Sale of Shares of the
Conveyed Subsidiaries 18
Section 2.2. Purchase and Sale of Assets of the Asset
Selling Corporations 18
Section 2.3. Consents 20
Section 2.4. Excluded Assets of the Business 23
Section 2.5. Assumption of Certain Obligations of the Business 24
Section 2.6. Retained Liabilities by Business 25
Section 2.7. Purchase Price 26
Section 2.8. Purchase Price Adjustment 26
Section 2.9. Allocation of the Aggregate Payment 29
ARTICLE III CLOSING 30
Section 3.1. Closing 30
ARTICLE IV CONDITIONS TO CLOSING 31
Section 4.1. Conditions to the Obligations of Purchaser
and Pfizer 31
Section 4.2. Conditions to the Obligations of Purchaser 32
Section 4.3. Conditions to the Obligations of Pfizer 33
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PFIZER 33
Section 5.1. Organization 34
Section 5.2. Authority; Binding Effect 34
Section 5.3. Conveyed Subsidiaries; Capital Structure 34
Section 5.4. Non-Contravention 36
Section 5.5. Pfizer Consents and Approvals 37
Section 5.6. Financial Information; Books and Records 37
Section 5.7. Absence of Material Changes 38
Section 5.8. No Litigation 39
Section 5.9. Compliance with Laws 40
Section 5.10. Product Registrations; Regulatory Compliance 40
Section 5.11. Environmental Matters 41
Section 5.12. Material Contracts 42
Section 5.13. Intellectual Property 44
Section 5.14. Real Property 45
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Section 5.15. Assets 45
Section 5.16. Taxes 46
Section 5.17. Employee Benefits 47
Section 5.18. Brokers 48
Section 5.19. Y2K Compliance 48
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER 48
Section 6.1. Organization and Qualification 48
Section 6.2. Corporate Authorization 48
Section 6.3. Binding Effect 49
Section 6.4. Non-Contravention 49
Section 6.5. Purchaser Consents and Approvals 49
Section 6.6. Financial Capability 49
Section 6.7. Securities Act 49
Section 6.8. Conditions of Conveyed Assets 50
Section 6.9. Brokers 51
ARTICLE VII COVENANTS 51
Section 7.1. Information and Documents 51
Section 7.2. Conduct of Business 52
Section 7.3. Reasonable Best Efforts; Certain Governmental
Matters 53
Section 7.4. Tax Matters 57
Section 7.5. Employees and Employee Benefits 68
Section 7.6. Certain Dividends, Etc. 75
Section 7.7. Resignations 76
Section 7.8. Bulk Transfer Laws 76
Section 7.9. Noncompetition 76
Section 7.10. Transitional Services 79
Section 7.11. Transitional Intellectual Property License
Agreement 79
Section 7.12. Compliance with WARN, Etc. 79
Section 7.13. Foreign Implementing Agreements 79
Section 7.14. Litigation Support 79
Section 7.15. Insurance 80
ARTICLE VIII INDEMNIFICATION
Section 8.1. Indemnification by Pfizer 80
Section 8.2. Indemnification; by Purchaser 80
Section 8.3. Notice of Claims 82
Section 8.4. Third Party Claims 83
Section 8.5. Expiration 84
Section 8.6. Certain Limitations 85
Section 8.7. Losses Net of Insurance, Etc. 85
Section 8.8. Other Limitations 86
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Section 8.9. Sole Remedy/Waiver 86
Section 8.10. Indemnification Procedures for Remedial Actions on
Conveyed Properties 87
Section 8.11. Limitation on Indemnification for Remedial Actions
and Compliance Actions 89
Section 8.12. No Consequential Damages 91
ARTICLE IX TERMINATION 91
Section 9.1. Termination 91
Section 9.2. Effect of Termination 92
ARTICLE X MISCELLANEOUS 93
Section 10.1. Notices 93
Section 10.2. Amendment; Waiver 94
Section 10.3. Assignment 95
Section 10.4. Entire Agreement 95
Section 10.5. Fulfillment of Obligations 95
Section 10.6. Parties in Interest 95
Section 10.7. Public Disclosure 96
Section 10.8. Return of Information 96
Section 10.9. Expenses 96
Section 10.10. Schedules 97
Section 10.11. Governing Law 97
Section 10.12. Counterparts 98
Section 10.13. Headings 98
Section 10.14. Severability 98
Section 10.15. Specific Enforcement 98
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List of Schedules
1.1 Asset Selling Corporations
1.1(a) Facilities
1.1(b) Financial Statements/Working Capital Adjustment
2.2(a) Leased Real Property
2.2(e)(i) Pfizer Intellectual Property
2.2(e)(ii) Restrictions on Pfizer Intellectual Property
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(a) Intellectual Property
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5.13(b) Intellectual Property Litigation
5.14(a) Real Property
5.15 Assets: Exceptions to Title
5.16 Taxes
6.5 Purchaser Consents and Approvals
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 (non-US)
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List of Exhibits
A. List of instruments and documents provided by Seller Corporations to
Purchaser
B. List of instruments and documents provided by Purchaser to Seller
Corporations
C. Form of Transitional Services Agreement
D. Form of Transitional Intellectual Property License Agreement
E. Pfizer Employee Separation Plan
F. Release Agreement (Individual Termination)
G. Release Agreement (Group Termination)
STOCK AND ASSET PURCHASE AGREEMENT
This Stock And Asset Purchase Agreement is made and entered into
as of the 15th day of June 1998 among Pfizer Inc., a Delaware corporation
("Pfizer"), Pfizer Holdings Ireland, a company organized under the laws of
Ireland ("Pfizer Ireland"), the Asset Selling Corporations (as defined below)
(Pfizer, Pfizer Ireland and the Asset Selling Corporations are sometimes
referred to, collectively, as the "Seller Corporations") and Boston Scientific
Corporation, a Delaware corporation ("Purchaser").
W I T N E S 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 (a) all of
the issued and outstanding shares of common stock of Schneider (USA) Inc, a
Minnesota corporation ("Schneider USA"), Corvita Corporation, a Florida
corporation ("Corvita USA"), and Schneider Holland B.V., a corporation
organized under the laws of the Netherlands ("Schneider Netherlands"), and (b)
99% of the issued and outstanding shares of common stock (and beneficially
owns all of the remaining issued and outstanding shares of common stock) of
Schneider Belgium N.V., a corporation organized under the laws of Belgium
("Schneider Belgium");
WHEREAS, Pfizer Ireland is the record holder of 199,000 Swiss Franc
quota shares, and beneficially owns all remaining shares, of the issued and
outstanding shares of capital stock of Schneider (Europe) GmbH, a corporation
organized under the laws of Switzerland ("Schneider Europe" and together with
Schneider USA, Corvita USA, Schneider Netherlands and Schneider Belgium, the
"Conveyed Subsidiaries" or individually, a "Conveyed Subsidiary");
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WHEREAS, the Asset Selling Corporations own the Conveyed Assets (as
defined below); and
WHEREAS, the parties hereto desire that Pfizer and Pfizer Ireland
shall sell and transfer to Purchaser and Purchaser shall purchase from Pfizer
and Pfizer Ireland all of the 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 1.1. Definitions. As used in this Agreement, the
following terms shall have the meanings set forth or as referenced below:
"Affected Employee" shall mean (i) an Employee who shall accept an
offer of employment or offer of continuation of employment by Purchaser on or
prior to the Closing Date and work for Purchaser or any of its Affiliates at
least one day or whose employment as a matter of law automatically continues
with Purchaser, or (ii) an Employee 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
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employee 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 hereof.
"Agreement" shall mean this Agreement, as the same may be amended
or supplemented from time to time in accordance with the terms hereof.
"Allocation" shall have the meaning set forth in Section 2.9
hereof.
"Applicable Remedial Action Standard" shall have the meaning set
forth in this Section 8.11 hereof.
"Asset Selling Corporations" shall mean those entities listed on
Schedule 1.1 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 of medical devices for the diagnosis
and interventional treatment of human vascular, respiratory and digestive
systems as conducted on the date hereof by Pfizer and Pfizer Ireland through
the Conveyed Subsidiaries (and the Subsidiaries of the Conveyed Subsidiaries)
and by the Asset Selling Corporations.
"Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banks in New York City are authorized or obligated by law or
executive order to close.
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"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.
"Competition Laws" shall mean statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines, and other laws that
are designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization, lessening of competition or restraint of
trade.
"Competitive Activity" shall have the meaning set forth in Section
7.9(a) hereof.
"Compliance Action" shall have the meaning set forth in this
Section 1.1 under the definition of Excluded Environmental Liabilities.
"Confidentiality Agreement" shall mean the Confidentiality
Agreement between Pfizer and Purchaser relating to the Business.
"Consent Agreements" shall have the meaning set forth in Section
2.3(a) hereof.
"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
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with respect to Tax Returns which 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 have the meaning set forth in the
Recitals above.
"Corvita USA" shall have the meaning set forth in the Recitals
above.
"Deemed Conveyed Assets" shall mean the assets of a U.S.
Consolidated Tax Return corporation of Pfizer for which a joint election
pursuant to Section 338(h)(10) of the Code will be made.
"Disputed Item" shall have the meaning set forth in Section
2.8(b).
"Employee" shall mean an Employee (US) or an Employee (non-US).
"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, or other absence or leave
of absence consistent with the Seller Corporations' policies, practices and
procedures in effect at the time such absence or leave commenced, 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
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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, or other absence or leave of absence consistent
with the Seller Corporations' policies, practices and procedures in effect at
the time such absence or leave commenced, or (C) shall have been receiving
short-term disability benefits for no more than one hundred eighty (180)
consecutive days as of the Closing Date, or (D) shall have received an offer
of employment with the Business with a Conveyed Subsidiary (or a Subsidiary of
a Conveyed Subsidiary), an Asset Selling Corporation or another Affiliate of
Pfizer, in the ordinary course of business on or prior to the Closing Date,
but shall have not yet commenced work as of the Closing Date. Employee (US)
shall also include such employees, as designated by Pfizer on or prior to the
Closing Date who, although employed by another Subsidiary of Pfizer in the
United States, perform services for the Business under a shared services
arrangement.
"Environmental Law" shall mean any applicable federal, state,
local or foreign law, common law, statute, ordinance, rule, regulation, code,
order, judgment, decree or injunction as
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in effect at the Closing Date relating directly or indirectly to the
protection of the environment (including, without limitation, air, water
vapor, surface water, groundwater, drinking water supply, surface or
subsurface land), including the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
recycling, release or disposal of Hazardous Substances.
"Environmental Liability" means the Losses resulting from (A)
failure to comply with any requirement of an Environmental Law; (B) failure to
obtain or comply with any required Environmental Permit; (C) a Remedial
Action; or (D) harm or injury to any real property (other than a Remedial
Action), to any person, to public health, or natural resource as a result of
exposure to Hazardous Substances.
"Environmental Permits" shall mean a permit held by a Conveyed
Subsidiary, a Subsidiary of a Conveyed Subsidiary or an Asset Selling
Corporation 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:
(i) Environmental Liabilities associated with or arising from
all facilities other than (A) those owned or leased by the Conveyed
Subsidiaries or any of their Subsidiaries as of the Closing Date, or (B)
those constituting part of the Conveyed Assets as of the Closing Date;
8
(ii) Environmental Liabilities arising from Remedial Action at
any Facility to the extent the underlying environmental condition
resulting in such Environmental Liabilities existed or had occurred as
of the Closing Date;
(iii) Environmental Liabilities constituting fines and
penalties imposed by Governmental Authorities resulting from the pre-
Closing failure to comply with any requirement of Environmental Law or
failure to obtain or comply with any required Environmental Permit with
respect to a time period through the Closing Date.
(iv) Environmental Liabilities resulting from the off-site
transportation, storage, disposal, treatment or recycling of Hazardous
Substances generated by or taken off-site by or on behalf of the
Business through the Closing Date.
(v) Environmental Liabilities resulting from the failure of
the Business prior to the Closing Date to comply with the provisions of
the California Safe Drinking Water and Toxic Enforcement Act of 1986
with respect to the sale of products by the Business through the Closing
Date.
(vi) Other than fines and penalties as described in clause
(iii) of this definition, Environmental Liabilities constituting capital
and related costs (but not including routine operation and maintenance
costs) resulting from the pre-Closing failure to comply with any
requirement of Environmental Law or failure to obtain or comply with any
Environmental Permit with respect to a time period through the Closing
Date.
"Facilities" shall mean the manufacturing and research and
development facilities listed on Schedule 1.1(a).
"Final Working Capital" shall have the meaning set forth in
Section 2.8(c) hereof.
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"Financial Statements" shall mean the financial data set forth on
Schedule 5.6 hereof including the audited financial statements for the year
ended December 31, 1997.
"Foreign Implementing Agreements" shall mean the various
agreements to be executed by the Asset Selling Corporations and the Purchaser
or any Affiliates of the Purchaser 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 Conveyed Assets and Assumed Liabilities
to the Purchaser or any Affiliate of the Purchaser by the Asset Selling
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, program, 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).
"GAAP" shall mean generally accepted accounting principles and
practices in effect in the United States of America and from time to time 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, ordinances or regulations of any Governmental Authority.
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"Governmental Order" shall mean any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Hazardous Substances" shall mean any petroleum or petroleum based
products and hazardous substances within the meaning of Section 101(14) of the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601 et. seq.
"HSR Act" shall mean the Hart-Scott-Rodino 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 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
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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.
"Knowledge of Pfizer" shall mean the actual knowledge of a senior
executive of the Business or Pfizer or, with respect to the environmental and
health and safety provisions of this Agreement, the environmental or health
and safety manager of Pfizer or Pfizer's Medical Technology Group or, with
respect to the intellectual property, litigation and Tax provisions of this
Agreement, the in-house counsel or officer of Pfizer or Pfizer's Medical
Technology Group having regular involvement with such matters and, with
respect to the employee benefit provisions, the employee resources manager of
Pfizer or Pfizer's Medical Technology Group.
"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.
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"Loss" or "Losses" shall have the meaning set forth in Section
8.1(a) hereof.
"Material Adverse Effect" shall mean an effect that is materially
adverse to the business, results of, operations or financial condition of the
Business taken as a whole, but shall exclude any effect resulting from general
economic conditions or any occurrence or condition affecting the industry for
medical devices for the diagnosis and interventional treatment of the human
vascular, respiratory and digestive systems generally. Notwithstanding
anything to the contrary herein, in no event shall the continued employment of
any Employee or group of Employees (or the resulting impact on the Business of
any failure of such continued employment) be considered a Material Adverse
Effect or otherwise be asserted by Purchaser as a condition precedent to
Closing or as a claim under this Agreement, regardless of the basis therefor
or theory thereof.
"Material Contracts" shall have the meaning set forth in Section
5.12(a) hereof.
"Patent Rights" means all patents and patent applications together
with any extensions, reexaminations and reissues of such patents, patents of
addition, divisions, continuations, continuations-in-part, and all rights
therein provided by international conventions or treaties 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, security
interests, mortgages, charges or encumbrances approved in writing by the
Purchaser, (ii) statutory liens, security interests, mortgages, charges or
encumbrances 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, security interests, mortgages, charges or encumbrances and other
imperfections of title as do not materially detract from the value or impair
the use of the property subject thereto, or (iv) liens for
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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 Ireland" shall have the meaning set forth in the heading
of this Agreement.
"Pfizer Qualified Plans" shall have the meaning set forth in
Section 7.5(b)(i) hereof.
"Plan" shall mean any material employee benefit plan as defined in
Section 3(3) of ERISA and any other plan, program, agreement or arrangement,
whether qualified under applicable Law or not, maintained (or contributed to
or required to be contributed to) by any Seller Corporation, for the benefit
of any Employee (US).
"Pre-Closing Tax Period" shall have the meaning set forth in
Section 7.4(g)(iii) hereof.
"Product Claim" shall mean a written claim from a third party
addressed to or received by the Conveyed Subsidiaries, their Subsidiaries, or
the Selling Corporations on or prior to the Closing Date 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 irrespective of the legal theory of liability and in respect of
which no lawsuit has been commenced on or prior to the Closing Date.
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"Product Registrations" shall have the meaning set forth in
Section 5.10 hereof.
"Purchaser" shall have the meaning set forth in the recitals and
its wholly owned Subsidiaries.
"Purchaser Qualified Plan" shall have the meaning set forth in
Section 7.5(b)(ii) 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 spill, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, or leaching into surface water, soil or
groundwater of any property.
"Remedial Action" shall mean action to clean up soil, surface
water, groundwater or sediments in response to a Release of Hazardous
Substances, 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" shall
also 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 governmental
information requests; 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 soil, surface water, groundwater, and
sediments in response to a Release of Hazardous Substances and associated
actions. "Remedial Action" shall not include any environmental related
compliance matter described in Section (vi) of the definition of "Excluded
Environmental Liabilities."
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"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.
"Savings Plan" shall have the meaning set forth in Section
7.5(b)(i) hereof.
"Schneider Belgium" shall have the meaning set forth in the
Recitals hereto.
"Schneider Europe" shall have the meaning set forth in the
Recitals hereto.
"SCHNEIDER/NAMIC" shall mean SCHNEIDER/NAMIC, a Delaware
corporation.
"Schneider Netherlands" shall have the meaning set forth in the
Recitals hereto.
"Schneider USA" shall have the meaning set forth in the Recitals
hereto.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Seller Corporations" shall have the meaning set forth in the
heading of this Agreement.
"Shares" shall have the meaning set forth in the Recitals hereto.
"Share Purchase Price" shall have the meaning set forth in Section
2.7(a) hereof.
"Specified Sections" shall have the meaning set forth in Section
8.7 hereof.
"Straddle Period" shall have the meaning set forth in Section
7.4(a) hereof.
"Subject Agreements" shall have the meaning set forth in Section
5.12(b) 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 be deemed not to
be a Subsidiary of Pfizer or Purchaser, as the case may be. Similarly, any
Person which
16
does not come within such definition as of the date of this Agreement but
which thereafter meets such definition shall from and after such time be
deemed to be a Subsidiary of Pfizer or Purchaser, 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)
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 all registered and unregistered
trademarks, service marks, brand names, certification marks, trade dress,
goodwill associated with the foregoing, all rights therein provided by
international treaties or conventions and registrations in any jurisdiction
of, and applications in any jurisdiction to register whether an actual or
intended use, 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.
17
"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 unaudited financial
statements attached hereto as Schedule 1.1(b), provided that there shall be
excluded from such determination the Excluded Assets and the Retained
Liabilities and there shall be included in such determination Cash Equivalents
(notwithstanding that Cash Equivalents were excluded in the preparation of the
unaudited financial statements attached hereto as Schedule 1.1(b)) and
accruals of deferred Taxes or reserves for deferred Taxes as reflected on the
unaudited financial statements attached hereto as Schedule 1.1(b).
"Working Capital Statement" shall have the meaning set forth in
Section 2.8(a) hereof.
Section 1.2. 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
18
ARTICLE II
PURCHASE AND SALE
Section 2.1. Purchase and Sale of Shares of the Conveyed
Subsidiaries. Upon the terms and subject to the conditions set forth herein,
at the Closing, Pfizer and Pfizer Ireland agree to sell to Purchaser, and
Purchaser agrees to purchase from Pfizer and Pfizer Ireland, free and clear of
all Liens, the Shares.
Section 2.2. Purchase and Sale of Assets of the Asset Selling
Corporations. Upon the terms and subject to the conditions set forth herein,
at the Closing, Pfizer shall cause each 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 on the date hereof
relating solely to the Business or acquired by any of the Asset Selling
Corporations solely 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 prior to Closing) (collectively,
the "Conveyed Assets"). Without limiting the foregoing, the Conveyed Assets
shall include all assets, properties and rights reflected on the Financial
Statements (except to the extent disposed of in the ordinary course of
business since the date thereof but only to the extent permitted by Section
7.2 hereof) and, except as expressly provided otherwise herein, shall include,
without limitation, those certain assets, properties and rights described in
the following clauses (a) through (j):
(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
19
property (the "Leased Real Property" and the leases relating to such Leased
Real Property, the "Real Property Leases") set forth on Schedule 2.2(a) and
the Real Property 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 and solely used by the
Business (the "Equipment" and leases relating to such Equipment so leased by
the Asset Selling Corporations, the "Equipment Leases");
(c) the contracts, licenses, agreements and commitments
relating solely to the Business (excluding contracts, licenses, agreements and
commitments relating to the Excluded Assets) ("Assumed Contracts");
(d) the Inventories of the Asset Selling Corporations;
(e) all Intellectual Property owned, utilized or licensed by
or to the Asset Selling Corporations (the licenses relating to Intellectual
Property so licensed by or to the Asset Selling Corporations sometimes
referred to as the "Intellectual Property Licenses") relating solely to 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 by one or more other businesses of Pfizer and its
Affiliates or is not transferable by Pfizer or any Affiliate (all such
Intellectual Property being listed on Schedule 2.2(e)(i) hereto), then such
Intellectual Property will be retained by Pfizer or one of its Affiliates and
at the Closing, Pfizer and/or its applicable Affiliate will, subject to
Section 2.3 and except to the extent Pfizer's rights to such Intellectual
Property do not allow it to grant such license as described in Schedule
2.2(e)(ii) hereto, grant to Purchaser and its Affiliates a non-exclusive
perpetual, royalty-free license to use such Intellectual Property in
connection with the Business;
20
(f) Product Registrations (and applications therefor) owned,
utilized or licensed by the Asset Selling Corporations relating solely to the
Business;
(g) transferable Governmental Authorizations and Environmental
Permits owned, utilized or licensed (subject to the terms of such licenses) by
the Asset Selling Corporations relating solely to the Business;
(h) (i) the databases and software programs, source codes and
user manuals owned, used, leased by or licensed by or to the Asset Selling
Corporations and used solely in the operation of the computer systems of the
Business and (ii) the computer hardware used solely in the Business;
(i) all customer and vendor lists relating solely to the
Business, and all files and documents (including credit information) to the
extent relating solely to customers and vendors of the Business, and other
business and financial records, files, books and documents (whether in hard
copy or computer format) to the extent relating solely to the Business;
(j) the accounts receivable of the Business; and
(k) except those that constitute Excluded Assets, all claims,
causes of action, choses in action, rights of recovery and rights of set-off
of any kind (including rights under and pursuant to all warranties,
representations and guaranties made by suppliers of products, materials or
equipment, or components thereof), relating solely to the Business.
Section 2.3. Consents. (a) There shall be excluded from the
transactions contemplated by this Agreement any Real Property Lease, Equipment
Lease, Intellectual Property License, Assumed Contract, agreement, lease,
license or right which is not assignable or transferable (the "Consent
Agreements") without the consent of any Person other than the Seller
Corporations, or the Conveyed Subsidiaries (or the Subsidiaries of the
Conveyed Subsidiaries)
21
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
and, prior to the Closing, Pfizer shall provide to the Purchaser a list of all
material Consent Agreements for which such consent shall not have been
obtained 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 endeavor to obtain all
necessary consents to the assignment thereof (provided that neither the Seller
Corporations nor any of their respective Subsidiaries shall be required to
expend money, commence any litigation or offer or grant any accommodation
(financial or otherwise) to any third party) 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 Consent Agreement, after the Closing,
the parties shall cooperate with each other, upon written request, (i) in
endeavoring to obtain the requisite third-party consents(s) to the assignment
thereof to Purchaser, without either party being obligated, however, to make
any payment to any such third party which is not otherwise due in order to
obtain such consent, unless Purchaser shall make such payment or agree to
reimburse the Seller Corporations for such payment, and (ii) if any such
requisite consent cannot be obtained, in endeavoring to obtain for Purchaser,
at no cost to the Seller Corporations, an arrangement which Purchaser
reasonably shall desire designed to provide for Purchaser the benefits thereof
in some other manner.
(c) Purchaser acknowledges that certain consents to the
transactions contemplated by this Agreement may be required from parties to
the Consent Agreements and
22
that such consents have not been and may not be obtained. Purchaser agrees
that the Seller Corporations shall not have any liability whatsoever arising
out of or relating to the failure to obtain any consents that may have been or
may be required in connection with the transactions contemplated by this
Agreement or because of the default under or acceleration or termination of
any Consent Agreement, as a result thereof. Purchaser further agrees that no
representation, warranty or covenant of the Seller Corporations contained
herein shall be breached or deemed breached, and no condition to Purchaser's
obligations to close the transactions contemplated by this Agreement shall be
deemed not satisfied as a result of (i) the failure to obtain any such consent
or as a result of any such default, acceleration or termination or (ii) any
lawsuit, action, claim, proceeding or investigation commenced or threatened by
or on behalf of any Person arising out of or relating to the failure to obtain
any consent or any such default, acceleration or termination.
(d) Each of the Seller Corporations 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 itself or one or more of its
Affiliates for such consideration or for no consideration, as may be
determined by the Seller Corporations in their sole discretion. After the
Closing Date, Purchaser shall take all actions (or shall cause 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(d) 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.
23
Section 2.4. Excluded Assets of the Business. Notwithstanding
any provision in this Agreement, the Seller Corporations shall retain, with
respect to the Business, any Conveyed Subsidiary (or a Subsidiary of a
Conveyed Subsidiary) or any Asset Selling Corporation, the following (the
"Excluded Assets"):
(a) Cash Equivalents (except to the extent that Cash
Equivalents are not transferred pursuant to Section 2.3(d) and are reflected
in the calculation of the Working Capital of the Business pursuant to Section
2.8);
(b) all intercompany receivables, other than amounts due and
owing among the Conveyed Subsidiaries, their Subsidiaries and the Asset
Selling Corporations in respect of the Business;
(c) to the extent provided by Sections 7.4(d) and 7.4(e)
hereof, all losses, loss carry forwards and rights to receive refunds, credits
and credit carry forwards with respect to any and all Taxes, to the extent
attributable to a taxable period ending on or prior to the Closing Date,
including, without limitation, interest thereon, whether or not the foregoing
are 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
through and including the Closing Date;
(f) except as expressly set forth herein, all assets of any
employee benefit plan;
(g) the "Pfizer" name and logo;
24
(h) subject to Section 2.3, all Consent Agreements for which a
consent to assign or transfer such agreement to the Purchaser shall not have
been obtained prior to the Closing; and
(i) all assets not related exclusively to the Business.
Section 2.5. Assumption of Certain Obligations 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 solely 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"). Assumed Liabilities shall include, without limitation, the
following:
(a) all lawsuits and claims commencing after the Closing Date
to the extent resulting from the conduct of the Business or the ownership of
the Shares or the Conveyed Assets, prior to, on or after the Closing Date;
(b) all Liabilities for Taxes to the extent accrued or
reserved against in the Working Capital Statement;
(c) all Liabilities arising from the manufacture, distribution
or sale of any products of the Business prior to, on, or after the Closing
Date, including, without limitation, warranty obligations; and
(d) any Liabilities of the Seller Corporations, or the
Conveyed Subsidiaries or their Subsidiaries (or, in the case of each of the
foregoing, their respective Affiliates) to Purchaser
25
(or any Affiliate of Purchaser) arising out of any lawsuit with Purchaser or
its Affiliates to the extent resulting from the conduct of the Business by any
Seller Corporation or Conveyed Subsidiary or their Affiliates prior to the
Closing Date, including, without limitation, the pending lawsuit with
Purchaser listed on Schedule 5.8 hereto.
Section 2.6. Retained Liabilities of Business.
Notwithstanding any provision in this Agreement, the Seller Corporations shall
retain and be responsible for the following (the "Retained Liabilities"):
(a) the Excluded Environmental Liabilities;
(b) except as set forth in Section 2.5(d), Liabilities
resulting from all lawsuits pending as of the Closing Date solely to the
extent resulting from the conduct of the Business by any Seller Corporation or
Conveyed Subsidiary or their Affiliates prior to the Closing Date, including,
without limitation, the pending lawsuits and claims listed on Schedule 5.8
hereto;
(c) Liabilities for which Pfizer, the Asset Selling
Corporations or Pfizer Ireland 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 to Employees with respect to periods prior to
the Closing, except as provided herein;
(g) Liabilities arising from Product Claims pending as of the
Closing Date including, without limitation, the pending Product Claims listed
on Schedule 5.8; and
26
(h) any and all Liabilities for Taxes related to the Seller
Corporations, the Business or the Conveyed Assets for taxable periods or
portions thereof prior to and including the Closing Date, except for (1) Taxes
attributable to actions of Purchaser, occurring after the Closing, and (2) to
the extent accrued or reserved against in the Working Capital Statement.
Section 2.7. Purchase Price. 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 Two Billion One Hundred Million Dollars ($2,100,000,000)
(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 in accordance with Section 2.9 hereof.
Section 2.8. Purchase Price Adjustment.
(a) Within ninety (90) days after the Closing Date, Pfizer
shall deliver to Purchaser a statement of the Working Capital of the Business
as of the Closing Date (the "Working Capital Statement"). The Working Capital
Statement shall be unaudited and shall state the Working Capital of the
Business as of the Closing Date, taking into account any transfers made
pursuant to Section 2.3(d) and the settlement of any Liabilities referred to
in Section 2.6(e) after the Closing Date, which for the purposes of the
Working Capital Statement shall be deemed to have been settled on the Closing
Date at the amount settled. Purchaser shall provide Pfizer with access to the
books, records, and personnel of the Business necessary for Pfizer to prepare
the Working Capital Statement.
27
(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 unaudited
financial statements described on Schedule 1.1(b) hereto and the date of the
Working Capital Statement, (ii) an entry contained on such Working Capital
Statement was not made in a manner consistent with the unaudited financial
statements attached hereto as Schedule 1.1(b), (iii) a Disputed Item does not
reflect, or has not been made in a manner consistent with, the provisions of
this Agreement, and (iv) to the extent the amount disputed with respect to any
one Disputed Item exceeds $1,000,000 and all such Disputed Items exceed
$5,000,000 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 thirty (30) days after receipt of the
Working Capital Statement. The failure by Purchaser to provide a notice of
Disputed Items to Pfizer within such thirty (30) day period will constitute
Purchaser's acceptance of all the items in the Working Capital Statement.
(c) If a notice of Disputed Items shall be timely delivered
pursuant to subclause (b) above, Pfizer and the Purchaser shall, during the
ten (10) Business Days following the date of such delivery (the "Resolution
Period"), negotiate in good faith to resolve the Disputed Items. If, during
such Resolution Period, the parties are unable to reach agreement, Pfizer and
the Purchaser shall refer all unresolved Disputed Items to Arthur Andersen &
Co., or any other "big six" 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
28
with the rules set forth in this Section 2.8. The Independent Accountant
shall deliver to Pfizer and Purchaser, within such fifteen (15) day period, a
report setting forth its adjustments, if any, to the Working Capital Statement
and the calculations supporting such adjustments. Such report shall be final,
binding on the parties and conclusive. Pfizer and Purchaser shall each pay
one-half of all the costs incurred in connection with the engagement of the
Independent Accountant. As used herein, "Final Working Capital" shall mean
(i) if no notice of Disputed Items is delivered by Purchaser within the period
provided in subclause (b) above, Working Capital of the Business as shown in
the Working Capital Statement as prepared by Pfizer, or (ii) if such a notice
of Disputed Items is delivered by Purchaser, either (x) Working Capital of the
Business as agreed to in writing by Pfizer and Purchaser, or (y) Working
Capital of the Business as shown in the Independent Accountant's calculation
delivered pursuant to this subclause (c).
(d) If the Final Working Capital is less than $13,433,000,
then Pfizer, on behalf of the Seller Corporations, shall, within ten (10) days
after the determination of the Final Working Capital, pay to Purchaser, by
wire transfer of immediately available funds in accordance with written
instructions given to Pfizer by Purchaser, the amount of such shortfall,
together with interest on such amount from the Closing Date to the date of
such payment at a 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
$13,433,000, 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 a rate equal to
the
29
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 2.9. Allocation of the Aggregate Payment. Pfizer, on
behalf of itself, Pfizer Ireland and the Asset Selling Corporations, and
Purchaser have agreed to the allocation of the Aggregate Payment among the
Conveyed Subsidiaries and the Conveyed Assets of the Asset Selling
Corporations as set forth in Schedule 2.9 (the "Allocation"). With respect to
each Conveyed Subsidiary for which a joint election under Section 338(h)(10)
will be made, Pfizer and the Purchaser shall agree to allocate the Allocation
made to such Conveyed Subsidiary among the Deemed Conveyed Assets of such
corporation. As promptly as practicable following the Closing Date, Purchaser
will engage at its own expense a third party valuation firm for the purpose of
valuing the assets of the Conveyed Subsidiary for which a Section 338(h)(10)
election will be made. The total net value of the underlying assets of any
such Conveyed Subsidiary shall equal the value of the stock of such Conveyed
Subsidiary as set forth in the Allocation. Purchaser will prepare a proposed
allocation among the assets of each such Conveyed Subsidiary on the basis of
such valuation and will furnish a copy thereof and the valuation to Pfizer for
its review as far in advance of the due date for the filing of the Section
338(h)(10) election as possible, but in no event later than 90 days prior to
such due date. Pfizer shall have the right to consent to such allocation,
which consent shall not be unreasonably withheld. Each of Pfizer, Pfizer
Ireland and the Asset Selling 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 each case,
30
unless required by final determination by an applicable taxing authority. In
the event that the Allocation is disputed by any taxing authority, the party
receiving notice of the dispute shall promptly notify the other party hereto,
and both Pfizer and Purchaser agree to use their best efforts to defend such
Allocation in any audit or similar proceeding. Pfizer, Pfizer Ireland, each
of the Asset Selling Corporations and Purchaser acknowledge that the
Allocation was done at arm's length based upon a good faith estimate of fair
market values. If the allocation set forth in Schedule 2.9 results in an
allocation to an Asset Selling Corporation of an amount which, when converted,
if necessary, into local currency at the rate of exchange used by Pfizer in
preparing its relevant financial statements, is less than the net book value
of the Conveyed Assets of such Asset Selling Corporation in the relevant local
currency as of the Closing Date determined in accordance with GAAP, then such
allocation shall be adjusted so that it is equal to such local currency net
book value, with a corresponding adjustment to the allocation to Schneider
(Europe) or Schneider USA, as is appropriate.
ARTICLE III
CLOSING
Section 3.1. Closing (a) The Closing shall take place at the
offices of Dechert Price & Rhoads, 30 Rockefeller Plaza, New York, New York,
at 10:00 A.M., New York time, on the later of (i) July 31, 1998, or (ii) 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 the Closing shall not occur later than
the date specified in Section 9.1(b) of this Agreement. The date
31
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.
(b) At the Closing, Pfizer and Pfizer Ireland 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.
(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) days prior to
the Closing Date, (ii) the instruments and documents set forth in Exhibit B
hereto and the annexes to such Exhibit.
ARTICLE IV
CONDITIONS TO CLOSING
Section 4.1. Conditions to the Obligations of Purchaser and
Pfizer. The respective obligations of each of the parties to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction of the following conditions precedent:
(a) Subject to Section 7.3(e), there shall not (i) be in
effect any statute, regulation, order, decree or judgment which makes illegal
or enjoins or prevents in any respect the consummation of the transactions
contemplated by this Agreement, or (ii) have been commenced, and shall be
continuing, or threatened any action or proceeding by any Governmental
Authority which seeks to prevent or enjoin in any respect the transactions
contemplated by this Agreement;
(b) 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
32
request for additional information or otherwise shall have terminated, and no
other waiting period (including any extensions thereof) under Competition Laws
solely of Switzerland or investigation by a Governmental Authority solely of
Switzerland relating to the transactions contemplated hereby shall be
unexpired or pending which, in the reasonable opinion of counsel, is likely to
result in an action or proceeding seeking to enjoin the entire transaction
contemplated herein; and
(c) Subject to Section 7.3(e), any approvals or actions of any
Governmental Authority having jurisdiction necessary lawfully to consummate
the transactions contemplated hereby shall have been given or taken.
Section 4.2. 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) Each of the Seller Corporations 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 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 contemplated or permitted by
this Agreement or attributable to matters disclosed by Pfizer in the Schedules
hereto, (ii) changes that would not, individually or in the aggregate, have a
Material Adverse Effect, and (iii) those representations and warranties that
address matters as of a particular date, which shall be true and correct in
all material respects as of such date except for changes that would not,
individually or in the aggregate, have a Material Adverse Effect). Purchaser
shall have received a certificate of Pfizer, dated as of the Closing Date and
signed by an officer of Pfizer, certifying as to the fulfillment of the
foregoing.
33
(b) Pfizer shall have made or caused to be made delivery to
the Purchaser of the items required by Section 3.1(b).
Section 4.3. Conditions to the Obligations of Pfizer. The
obligation of Pfizer to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction of the following conditions
precedent:
(a) Purchaser shall have performed in all material respects
its agreements and obligations contained in this Agreement required to be
performed by it at or before the Closing, and the representations and
warranties of Purchaser contained herein shall have been true and correct in
all material respects when made and shall be true and correct in all material
respects as of the Closing, as if made as of the Closing (except for (i)
changes contemplated or permitted by this Agreement or attributable to matters
disclosed by Purchaser in the Schedules hereto, and (ii) those representations
and warranties that address matters as of a particular date, which shall be
true and correct in all material respects as of such date except for changes
that would not, individually or in the aggregate, have a material adverse
effect on Purchaser's ability to consummate the transactions contemplated
hereby). 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.
(b) Purchaser and the Purchaser Affiliates shall have made or
caused to be made delivery to Pfizer of the items required by Section 3.1(c).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PFIZER
Pfizer hereby represents and warrants to Purchaser as follows:
34
Section 5.1. Organization. Pfizer is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. Pfizer Ireland is a corporation duly organized, validly existing
under the laws of Ireland. Each Asset Selling Corporation is a corporation
duly organized, validly existing and, where applicable, in good standing under
the Laws of the jurisdiction of its organization.
Section 5.2. Authority; Binding Effect.
(a) Each of the Seller Corporations has all requisite
corporate power and authority to carry on their business as it is now being
conducted and to execute and deliver this Agreement and to perform their
obligations hereunder. The execution and delivery by each of the Seller
Corporations of this Agreement, and the performance by Pfizer and each of the
Seller Corporations of their 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 each of the Seller Corporations, enforceable against them in accordance
with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or law).
Section 5.3. Conveyed Subsidiaries; Capital Structure.
(a) Each of the Conveyed Subsidiaries is duly organized,
validly existing and 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 its business as currently conducted.
Each of the Conveyed Subsidiaries is duly qualified to do business and is in
good
35
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.
(b) Schedule 5.3(b) sets forth the authorized capital stock of
the Conveyed Subsidiaries and the number of shares of each class of capital
stock in each such Conveyed Subsidiary which are validly issued and
outstanding, fully paid and nonassessable. Except as set forth on Schedule
5.3(b), 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. Pfizer owns of record
and beneficially all of the outstanding Shares of Schneider USA, Corvita USA
and Schneider Netherlands and 99% of record and 100% beneficially the issued
and outstanding shares in the capital of Schneider Belgium, in each case, free
and clear of all Liens. Schneider Europe owns of record 1% of the shares
issued and outstanding in the capital of Schneider Belgium, free and clear of
all Liens. Pfizer Ireland owns of record 199,000 Swiss Franc quota shares,
and beneficially all the remaining outstanding shares of capital stock of
Schneider Europe, free and clear of all Liens. Upon consummation of the
transactions contemplated by Section 3.1, the Purchaser will acquire the
Shares free and clear of all Liens, other than Liens imposed as a result of
actions of the Purchaser and its Affiliates.
(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 is, where applicable in its
jurisdiction, in good standing under the laws of its
36
jurisdiction of organization, and has the corporate power and authority to own
and operate its properties and assets and to carry on its business as
currently conducted. Each Subsidiary is duly qualified to do business and,
where applicable, is in good standing in each jurisdiction where the nature of
its business or properties makes such qualification necessary, except in
jurisdictions where the failure to be so qualified would not, individually or
in the aggregate, have a Material Adverse Effect. All of the shares of
capital stock of each Subsidiary of a Conveyed Subsidiary are validly issued,
fully paid and nonassessable, and a Conveyed Subsidiary or Subsidiary of a
Conveyed Subsidiary owns such shares, free and clear of all Liens. There are
no issued and 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 5.4. Non-Contravention. The execution, delivery and
performance of this Agreement by each of the Seller Corporations and the
consummation of the transactions contemplated hereby does not and will not (i)
violate any provision of the certificate of incorporation, bylaws or other
comparable organizational documents of Pfizer, Pfizer Ireland, the Conveyed
Subsidiaries (or any Subsidiary of a Conveyed Subsidiary) or any Asset Selling
Corporation, (ii) subject to obtaining the consents referred to in Schedule
5.4, conflict with, or result in the breach of, or constitute a default under,
or result in the termination, cancellation or acceleration (whether after the
giving of notice or the lapse of time or both) of any right or obligation of
Pfizer, Pfizer Ireland, 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
37
which Pfizer, Pfizer Ireland, the Conveyed Subsidiaries (or any Subsidiary of
a Conveyed Subsidiary) or any Asset Selling Corporation is entitled under, any
agreement, contract or other instrument to which any Seller Corporation or
Conveyed Subsidiary (or Subsidiary of a Conveyed Subsidiary) is a party or to
which its assets are subject, (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 court or Governmental
Authority to which any Seller Corporation or Conveyed Subsidiary (or
Subsidiary of a Conveyed Subsidiary) is subject, except, with respect to
clauses (ii) and (iii), for any violations, conflicts, defaults, terminations,
cancellations or accelerations as will not, individually or in the aggregate,
have a Material Adverse Effect.
Section 5.5. Pfizer 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, except consents or approvals, the failure of which to
obtain, will not have a Material Adverse Effect.
Section 5.6. Financial Information; Books and Records.
(a) Except as set forth in Schedule 5.6(a), the Financial
Statements have been prepared in accordance with Pfizer's policies and
procedures, which are in accordance with GAAP, and present fairly in
accordance with such policies and procedures (A) 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 (B) 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 and, to the
Knowledge of Pfizer, are adequate. The Inventories of the Business reflected
in the Financial Statements are
38
valued at the lower of cost or fair value with allowance for obsolescence, in
accordance with GAAP. Schedule 5.6(b) sets forth the descriptions and amounts
of Deferred Taxes as shown in the Financial Statements.
(b) To the Knowledge of Pfizer, there are no Liabilities of
the Business other than Liabilities (i) reflected or reserved against on the
Financial Statements, (ii) disclosed on Schedule 5.6(b), (iii) incurred in the
ordinary course of business consistent with past practice which do not or
would not have a Material Adverse Effect or (iv) the incurrence of which would
not have a Material Adverse Effect.
Section 5.7. Absence of Material Changes. Since December 31,
1997, except to the extent as set forth in Schedule 5.7 or as otherwise
contemplated by this Agreement, the Business has been conducted in the
ordinary course consistent with past practice. Since December 31, 1997, there
has not been any:
(a) change in the assets, liabilities or results of operations
of the Business which has a Material Adverse Effect;
(b) damage, destruction, condemnation, loss (whether or not
covered by insurance) or other event that would have a Material Adverse
Effect;
(c) sale, lease, license, abandonment or other disposition by
any of the Conveyed Subsidiaries or the Asset Selling Corporations of any
material assets, except in the ordinary course of the Business;
(d) increase or enhancement of the compensation or benefits of
Employees other than in the ordinary course of the Business;
(e) lapse or abandonment of Intellectual Property (including
under the Subject Agreements) of the Business, except (i) in accordance with
the terms thereof (other than as a
39
result of breach thereof by Pfizer or its Affiliates) or (ii) where the lapse
or abandonment thereof would not have a Material Adverse Effect;
(f) incurrence of any indebtedness for borrowed money by the
Conveyed Subsidiaries (or any Subsidiary of a Conveyed Subsidiary), other than
incurrences pursuant to overdraft facilities in the ordinary course of
business;
(g) material transaction relating to the Business with the
Seller Corporations (or any of their Subsidiaries) or any officer or director
of the Seller Corporations, the Conveyed Subsidiaries or any Subsidiary of any
of them, other than on an arms-length basis;
(h) cancellation or waiver of any claim or right of
substantial value to the Business, which cancellation or waiver would have a
Material Adverse Effect;
(i) the taking of any Tax position that is inconsistent with
past practice or the making or changing of any material Tax election with
respect to the Conveyed Subsidiaries or their Subsidiaries, or the Deemed
Conveyed Assets other than an election that is made or changed on behalf of
all of the members of a Consolidated Tax Return group that includes any of the
Conveyed Subsidiaries or their Subsidiaries, or the Deemed Conveyed Assets and
other than an election that is necessary to effectuate the transactions
contemplated by this Agreement; and
(j) agreement or arrangement to take any of the actions
specified in this Section 5.7, except as expressly contemplated by this
Agreement.
Section 5.8. No Litigation. Except as may be set forth on
Schedule 5.8, as of the date hereof, no litigation, investigation or
proceeding by or before any court or Governmental Authority or arbitrator is
pending against or, to the Knowledge of Pfizer, threatened in writing against
any Seller Corporation or Conveyed Subsidiary (or Subsidiary of a Conveyed
Subsidiary) which will have a Material Adverse Effect.
40
Section 5.9. Compliance with Laws. Except with respect to
Environmental Laws (which are the subject of Section 5.11) and Product
Registrations (which are the subject of Section 5.10), and except as to
matters otherwise set forth in the Agreement or set forth in Schedule 5.9:
(a) each Seller Corporation and each Conveyed Subsidiary (and
Subsidiary of a Conveyed Subsidiary) is in compliance in all material respects
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 permits,
licenses and authorizations necessary for the conduct of the Business as it is
currently conducted, except where the failure to possess such permit, license
or authorization would not have a Material Adverse Effect.
Section 5.10. Product Registrations; Regulatory Compliance.
Except with respect to Environmental Permits (which are the subject of Section
5.11):
(a) Schedule 5.10 sets forth, as of the date hereof, a list of
all licenses and approvals 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) except as set forth in Schedule 5.10, 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
41
(c) except as set forth in Schedule 5.10, a Seller Corporation
or Conveyed Subsidiary is the sole and exclusive owner of the Product
Registrations and has not granted any right of reference with respect thereto.
Section 5.11. Environmental Matters. To the Knowledge of
Pfizer, and except as set forth in Schedule 5.11:
(a) the Facilities (i) are in compliance with all applicable
Environmental Laws and/or Environmental Permits, and (ii) none of the
Facilities are undertaking, nor has Pfizer 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) the Business has obtained all Environmental Permits
required under all applicable Environmental Laws in relation to the
Facilities, except for such failures as would not have a Material Adverse
Effect;
(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 at the Facilities;
(ii) Releases of Hazardous Substances at or from any Facilities; (iii) off-
site treatment, storage or disposal of Hazardous Substances 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 treatment, storage or
disposal from the Facilities; or (v) non-compliance with any Environmental Law
at any of the Facilities;
(d) no Releases of Hazardous Substances have occurred at or
from the Facilities, any other properties owned by the Conveyed Subsidiaries
or any of their Subsidiaries,
42
or any other properties constituting part of the Conveyed Assets, except where
any such Release would not have a Material Adverse Effect; and
(e) Pfizer has made available to the Purchaser during
Purchaser's due diligence review of the Business all material Pfizer corporate
environmental health and safety audit reports and environmental assessments of
the Facilities. There are no documents not otherwise made available to
Purchaser which disclose environmental matters that would have a Material
Adverse Effect which matters are not disclosed in materials otherwise made
available to Purchaser.
Section 5.12. Material Contracts.
(a) Except for agreements entered into after the date hereof
in accordance with Section 7.2 or as otherwise contemplated by this Agreement,
or as set forth on Schedule 5.12 (the "Material Contracts"), none of the
Conveyed Subsidiaries (or a Subsidiary of a Conveyed Subsidiary) nor any Asset
Selling Corporation is a party to or bound by:
(i) any contract, agreement or other arrangement for the
purchase of Inventories, or other personal property with any supplier or
for the furnishing of services to the Business extending beyond one year
from the date hereof or the terms of which provide for financial
commitments in excess of $1,000,000;
(ii) any contract, agreement and other arrangement for the
sale of Inventories or other personal property or for the furnishing of
services by the Business with firm commitments in excess of three years
from the date hereof;
(iii) any broker, distributor, dealer, manufacturer's
representative, franchise and agency agreements related to the Business
the terms of which provide for financial commitments in excess of
$1,000,000;
43
(iv) any contracts and agreements relating to indebtedness for
borrowed money, factoring arrangements, sale and leaseback transactions,
deferred purchase price of property and other similar financing
transactions relating to the Business with respect to which a Conveyed
Subsidiary (or a Subsidiary of the Conveyed Subsidiary) or Asset Selling
Corporation is an obligor in excess of $1,000,000;
(v) any research and development 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 $1,000,000;
(vi) any agreements entered into since March 1, 1995 providing
for the acquisition or disposition of any capital stock of any Conveyed
Subsidiary (or a Subsidiary of a Conveyed Subsidiary), Conveyed Assets
or assets of a Conveyed Subsidiary or Asset Selling Corporation related
to the Business 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;
(vii) any contract or agreement relating to the Business that
provides for any exclusive arrangement relating to the sale of any
product produced, distributed or sold by the Business or that limits or
purports to limit the ability of the Conveyed Subsidiaries and each
Subsidiary of a Conveyed Subsidiary or the Asset Selling Corporations to
compete in any line of business or with any Person or in any geographic
area or during any period of time; and
(viii) any contract, agreement or arrangement with an
Affiliate.
44
(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, (x)
any Material Contract, which breach or default would result in a Material
Adverse Effect or (y) (i) the Settlement and License Agreement among Schneider
(Europe) AG, Schneider (USA) Inc. and Advanced Cardiovascular Systems, Inc.,
dated December 17, 1991, as amended, (ii) the Settlement and License Agreement
by and among Schneider (Europe) AG, Schneider (USA) Inc., C.R. Bard, Inc. and
E.I. duPont de Nemours and Company, dated January 24, 1992, as amended, or
(iii) the Settlement and License Agreement by and among Schneider (Europe) AG,
Schneider (USA) Inc., Cordis Europa N.V. and Cordis Corporation, dated
September 7, 1995, as amended ((i), (ii) and (iii) are herein collectively
referred to as the "Subject Agreements").
Section 5.13. Intellectual Property.
(a) Schedule 5.13(a) sets forth a list of all material
Intellectual Property owned by or licensed to or by any Conveyed Subsidiary
(or a Subsidiary of a Conveyed Subsidiary) or Asset Selling Corporation and
which are used in connection with the Business. Except as set forth in
Schedule 5.13(b), (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 such Intellectual Property used
in the Business which objection or claim would have a Material Adverse Effect;
(ii) a Conveyed Subsidiary (or a Subsidiary of a Conveyed Subsidiary) or an
Asset Selling Corporation owns, or licenses such Intellectual Property; (iii)
such Intellectual Property is, to the Knowledge of Pfizer, free and clear of
any Liens other than
45
Permitted Encumbrances; (iv) to the Knowledge of Pfizer, no claim has been
asserted in writing to the Seller Corporations, the Conveyed Subsidiaries or
any Subsidiary of a Conveyed Subsidiary that the use of such material
Intellectual Property or the operation of the Business in a manner consistent
with past practice infringes upon the patent, trademark, copyright, or other
proprietary rights of any third party; (v) the Asset Selling Corporations, the
Conveyed Subsidiaries (and any Subsidiary of a Conveyed Subsidiary) have not
granted any license to any third party with respect to such material
Intellectual Property; (vi) the consummation of the transactions contemplated
by this Agreement will not result in the restriction, impairment, termination
or cancellation of any such Intellectual Property, except for restrictions,
impairments, terminations or cancellations which would not have a Material
Adverse Effect; and (vii) with respect to each material license of such
Intellectual Property such license is valid and binding on the Seller
Corporation or Conveyed Subsidiary (or Subsidiary of the Conveyed Subsidiary)
that is a party thereto, and to the Knowledge of Pfizer, no party to such
license is in breach thereof or default thereunder.
Section 5.14. Real Property.
(a) Schedule 5.14(a) sets forth 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 solely in connection
with the Business and prior to Closing will set forth a description of any
title insurance policies and surveys related thereto (collectively, the "Real
Property"). The Real Property is free and clear of any and all Liens, other
than Permitted Encumbrances.
(b) Schedule 2.2(a) sets forth all of the Real Property
Leases.
Section 5.15. Assets. (a) Except as set forth on Schedule
5.15 or as otherwise provided in this Agreement, each Asset Selling
Corporation owns, leases or has the
46
legal right to use all of its Conveyed Assets (other than Real Property, which
is the subject of Section 5.14) and each Conveyed Subsidiary (or a Subsidiary
of a Conveyed Subsidiary) owns, leases or has the legal right to use its
assets (other than Real Property, which is the subject of Section 5.14).
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 is 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.
(b) The Conveyed Assets and the assets of the Conveyed
Subsidiaries (and the assets of each Subsidiary of a Conveyed Subsidiary),
together with the services to be provided and the rights to be licensed to the
Purchaser under Section 2.2 hereof and under the Transitional Services
Agreement and the Transitional Intellectual Property License Agreement,
include all the properties, assets and rights sufficient to conduct the
Business in all material respects as conducted as of the date of this
Agreement.
Section 5.16. Taxes. Except as set forth in Schedule 5.16,
(a) all material Tax Returns that are required to be filed on or before the
date hereof by or on behalf of each Conveyed Subsidiary, its Subsidiaries and
the Asset Selling Corporations have been filed and, (b) all Taxes shown to be
due and payable on such Tax Returns have been paid. To the Knowledge of
Pfizer, there are no Liens for Taxes upon any of the assets of the Business,
except for Liens for Taxes not yet due and payable or being contested in good
faith. To the Knowledge of Pfizer, except as set forth on Schedule 5.16, no
Tax Return that includes any Conveyed Subsidiary, any Subsidiaries of a
Conveyed Subsidiary or any of the Asset Selling Corporations is
47
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. Schneider Europe has a valid election in effect under
Section 301.7701-3 of the U.S. Treasury regulations to be treated as a branch
or partnership (and not as a corporation or association) for U.S. federal Tax
purposes.
Section 5.17. Employee Benefits.
(a) Set forth on Schedule 7.5(a) is a list of each Plan in
effect as of the date of this Agreement.
(b) As applicable with respect to each Plan, Pfizer has made
or will make available to Purchaser, copies of (i) each Plan, including all
amendments thereto, (ii) the current summary plan description and each summary
of material modifications thereto and (iii) the most recent IRS determination
letter.
(c) To the Knowledge of Pfizer, (i) 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, and (ii)
neither Pfizer nor any of its Affiliates has incurred, or could reasonably be
expected to incur, any liability under Title IV of ERISA that could 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.
48
Section 5.18. Brokers. Except for Morgan Stanley & 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 Morgan Stanley & Co. Incorporated and Lazard Freres &
Co. LLC.
Section 5.19. Y2K Compliance. The Asset Selling Corporations
and the conveyed Subsidiaries believe that they have taken commercially
reasonable measures to (i) bring the computer systems (and software thereof)
of the Business into compliance with the impact of Year 2000 and (ii) obtain
assurances from certain key customers, suppliers, consultants and service
providers that they, too, have achieved Year 2000 compliance as to computer
systems and software having an interface with or impact on the Business.
Notwithstanding the foregoing or anything to the contrary in this Agreement,
none of the Selling Corporations or the Asset Selling Corporations make any
representation or warranty of any kind, express or implied, as to the state of
Year 2000 compliance of the computer systems or software of the Business or
those of any customer, supplier, consultant, service provider or any other
Person.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Pfizer as follows:
Section 6.1. Organization and Qualification. Purchaser is a
corporation duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation.
Section 6.2. Corporate Authorization. Purchaser has all
requisite corporate power and authority to execute and deliver this Agreement,
and to perform its obligations
49
hereunder. The execution, delivery and performance by Purchaser of this
Agreement have been duly authorized by all requisite corporate action on the
part of Purchaser and no other corporate proceedings on the part of Purchaser
are required in connection with the execution, delivery and performance by
Purchaser of this Agreement.
Section 6.3. Binding Effect. This Agreement constitutes a
valid and legally binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally or by general principles of equity
(regardless or whether enforcement is sought in a proceeding in equity or
law).
Section 6.4. Non-Contravention. The execution, delivery and
performance by Purchaser of this Agreement, and the consummation of the
transactions contemplated hereby, do not and will not (i) violate any
provision of the certificate of incorporation, bylaws or other organizational
documents of Purchaser, or (ii) assuming compliance with the matters set forth
in Sections 5.5 and 6.5, violate or result in a breach of or constitute a
default under any Law or other restriction of any court or Governmental
Authority to which Purchaser is subject.
Section 6.5. Purchaser Consents and Approvals. Except as set
forth in Schedule 6.5, the execution and delivery of this Agreement by
Purchaser do not and will not, require any material consent or approval of any
Governmental Authority.
Section 6.6. Financial Capability. On the Closing Date,
Purchaser will have sufficient funds to make the Aggregate Payment on the
terms and conditions contemplated by this Agreement.
Section 6.7. Securities Act. Purchaser is acquiring the
Shares solely for the purpose of investment and not with a view to, or for
sale in connection with, any distribution
50
thereof in violation of the Securities Act. Purchaser acknowledges that the
Shares are not registered under the Securities Act, any applicable state
securities Law or any applicable foreign securities Laws, and that such Shares
may not be transferred or sold except pursuant to the registration provisions
of such Securities Act or applicable foreign securities Laws or pursuant to an
applicable exemption therefrom and pursuant to state securities Laws as
applicable.
Section 6.8. Conditions of Conveyed Assets. Purchaser and its
representatives and agents have had and exercised, prior to the date hereof,
the right to enter upon the Real Property and Leased Real Property and to make
all inspections and investigations of the Business and the Conveyed Assets
deemed necessary or desirable by Purchaser. Purchaser is purchasing the
Shares and the Conveyed Assets based solely on the results of its inspections
and investigations, and not on any representation or warranty of the Seller
Corporations not expressly set forth in this Agreement. In light of these
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. Purchaser further
represents that neither any of the Seller Corporations nor any other Person
has made any representation or warranty, express or implied, as to the
accuracy or completeness of any information regarding any of the Seller
Corporations, the Business, the Conveyed Subsidiaries, the Shares, the
Conveyed Assets or the Assumed Liabilities not expressly set forth in this
Agreement, and neither Pfizer nor any other
51
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, the
confidential memorandum distributed by Morgan Stanley & Co. Incorporated,
relating to the Business, any other offering memorandum or other publication
provided to Purchaser or its representatives, or any other document or
information provided to Purchaser or its representatives in connection with
the sale of the Business.
Section 6.9. Brokers. 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.
ARTICLE VII
COVENANTS
Section 7.1. Information and Documents. From and after the
date hereof and pending Closing, upon reasonable advance notice, the Seller
Corporations shall permit Purchaser and its representatives to have access,
during regular business hours, to the 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 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 business, including, without
limitation, the Business; provided further, that all information received by
Purchaser and given by or on behalf of the Seller Corporations, or the
Conveyed Subsidiaries and their Subsidiaries in connection with this Agreement
and the transactions contemplated hereby will be held by Purchaser and its
Affiliates,
52
agents and representatives as Information, as defined in, and pursuant to the
terms of, the Confidentiality Agreement.
Section 7.2. Conduct of Business. From and after the date
hereof and to Closing, except as otherwise contemplated by this Agreement or
as Purchaser shall otherwise consent in writing, which consent shall not be
unreasonably withheld, Pfizer and Pfizer Ireland agree that they 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 Closing,
except as otherwise contemplated by this Agreement, or as Purchaser shall
otherwise consent in writing, which consent shall not be unreasonably
withheld, and except as may be necessary to remove the Excluded Assets, Pfizer
and Pfizer Ireland covenant and agree that they shall cause the Conveyed
Subsidiaries and each Subsidiary of a Conveyed Subsidiary and the Asset
Selling Corporations, in each case with respect to the Business, to:
(a) maintain insurance coverage at levels consistent with
presently existing levels so long as such insurance is available at
commercially reasonable rates;
(b) not incur, create or assume any Lien with respect to any
material 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 enter into any Material Contract described in clause
(vii) of Section 5.12 or, other than in the ordinary course of business
consistent with past practice, any other
53
Material Contract, or modify, terminate or amend any term of, or waive any
right under, any Material Contract;
(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 to take any action that would cause a breach of
Section 5.7; and
(h) not agree to take any of the foregoing actions.
Section 7.3. Reasonable Best Efforts; Certain Governmental
Matters.
(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 and regulations to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitations, (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
54
exemption by, any Governmental Authority or other public or private third
party required to be obtained or made by Purchaser, the Seller Corporations or
the Conveyed Subsidiaries or any of their respective Subsidiaries in
connection with the acquisition of the Shares and the Conveyed Assets or the
taking of any action contemplated by this Agreement, (iv) to effect all
necessary registrations and filings including, without limitation, all
materials required under Environmental Laws and all transfer requests required
for Environmental Permits, and (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, 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 and, upon request, any other information supplied by such party to a
Governmental Authority in connection with this Agreement and the transactions
contemplated hereby.
(c) Without limiting the generality of the undertakings
pursuant to this Section 7.3, Purchaser and Pfizer agree to take or cause to
be taken the following actions: (i) provide promptly to Governmental
Authorities with regulatory jurisdiction over enforcement of any applicable
Competition Laws ("Governmental Antitrust Entity") information and documents
requested by any Government Antitrust Entity or necessary, proper or advisable
to permit consummation of the acquisition of the Shares and the Conveyed
Assets and the transactions
55
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 five (5) 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; (iii) the proffer by
Purchaser 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 Purchaser's other assets or businesses now owned or
presently or hereafter sought to be acquired by Purchaser; (B) terminate any
existing relationships and contractual rights and obligations and (C) amend or
terminate such existing licenses or other intellectual property agreements and
to enter into such new licenses or other intellectual property agreements
(and, in each case, to enter into agreements with the relevant Governmental
Antitrust Entity giving effect thereto) in each case with respect to the
foregoing clauses (A), (B) or (C) if such action is necessary or reasonably
advisable to obtain approval or consummation of the transactions contemplated
by the Agreement by any Governmental Antitrust Entity; provided, however, that
nothing in this Agreement shall require the Purchaser to proffer a willingness
to or agree to dispose of, hold separate, agree to sell, otherwise dispose of,
terminate, modify, amend or otherwise impair or divest any rights under
(collectively, a "Disposition") any Subject Agreement, other than to grant to
third parties a license to practice the inventions covered by each Subject
Agreement to the extent permitted by the terms of such Subject Agreement if
such license can be granted unilaterally by Purchaser pursuant to the express
terms of any Subject Agreement; provided, further, that Purchaser shall not be
required to incur any cost or liability in connection with granting any such
license or to offer any inducement
56
or other consideration to any such licensor in connection with granting any
such license; and (iv) 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 the Shares and the Conveyed Assets or the other transactions
contemplated by this Agreement, any and all steps (including the appeal
thereof, the posting of a bond or the taking of the steps contemplated by
clause (iii) of this subsection (c)) 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. 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
acquisition of the Shares and the Conveyed Assets or any of the matters
described in this Section 7.3. Pfizer and the Purchaser agree that all
telephone calls and meetings with a Government Antitrust Entity regarding the
acquisition of the Shares and the Conveyed Assets or any of the matters
described in this Section 7.3 shall include representatives of Pfizer and the
Purchaser.
(d) The parties expressly agree: (i) that any breach by
Purchaser of its obligations under Section 7.3(c) will cause irreparable harm
to the Seller Corporations and the Conveyed Subsidiaries; (ii) that Seller
Corporations and the Conveyed Subsidiaries have agreed to this transaction
with Purchaser in specific reliance on Purchaser's obligations under Section
7.3(c), and would not have otherwise agreed to go forward with Purchaser; and
(iii) therefore, the Seller Corporations and the Conveyed Subsidiaries are
entitled to specific performance of Purchaser's obligations under Section
7.3(c), and Purchaser hereby agrees in advance to the
57
granting of such specific performance of such obligations without proof of
actual damages or harm.
(e) In the event an approval or action of a Governmental
Authority (other than a Governmental Authority of the United States of America
(or any state or subdivision thereof) or Switzerland (or any 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 Aggregate Payment), 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 given or
taken, as the case may be, and upon the occurrence of such approval or action,
the parties hereto shall effect transfer of the effected Conveyed Assets and
Assumed Liabilities in accordance with the Foreign Implementing Agreements for
the jurisdiction relating thereto. Each such transfer, upon occurrence, shall
be retroactive to and be deemed to have occurred on the Closing Date.
Section 7.4. Tax Matters.
(a) 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
58
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. Any such Tax Returns that include periods
ending on or before the Closing Date or that include the activities of the
Conveyed Subsidiaries or their Subsidiaries or an Asset Selling Corporation
(with respect to the Business) prior to the Closing Date shall, insofar as
they relate to the Conveyed Subsidiaries or their Subsidiaries or an Asset
Selling Corporation (with respect to the Business) prior to the Closing Date,
be on a basis consistent with the last previous such Tax Returns filed in
respect of the Conveyed Subsidiaries or their Subsidiaries or such Asset
Selling Corporation (with respect to the Business), unless Pfizer or
Purchaser, as the case may be, concludes that there is no reasonable basis for
such position. 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 20 days
prior to the due date for the filing of such Tax Return (taking into account
extensions), to Pfizer a statement setting forth the amount of Tax for which
Pfizer is responsible pursuant to Section 7.4(g)(i) and (iii) and copies of
such Tax Return. Pfizer shall have the right to review such Tax Return and
the statement prior to the filing of such Tax Return. Pfizer and the
Purchaser agree to consult and resolve in good faith any issue arising as a
result of the review of such Tax Return and statement and mutually to consent
to the filing as promptly as possible of such Tax Return. Neither Purchaser
nor any of its Affiliates shall file any amended Tax Returns for any periods
for or in respect of the Conveyed Subsidiaries or any of their Subsidiaries
with respect to which Purchaser is not obligated to prepare or cause to be
prepared the original such Tax Returns pursuant to this
59
Section 7.4(a) without the prior written consent of Pfizer (which consent
shall not be unreasonably withheld). Notwithstanding any other provision of
this agreement, (i) Pfizer and Purchaser agree that, at the option of
Purchaser, an election shall be jointly made by Pfizer and Purchaser pursuant
to Section 338(h)(10) of the Code with respect to the acquisition by Purchaser
of the stock of any Conveyed Subsidiary that is a member of a U.S.
Consolidated Tax Return group, in which event Pfizer shall be solely
responsible for, and shall pay, any and all Taxes resulting from such an
election with respect to a Conveyed Subsidiary but Purchaser shall reimburse
Pfizer to the extent that such Taxes, computed at the highest marginal
corporate tax rate with respect to the gain realized from such election,
exceeds the amount of Taxes that would have been payable by Pfizer in respect
of its sale of the stock of such Conveyed Subsidiary absent such election
(including any Taxes resulting from such reimbursement); provided that the
amount for which Purchaser shall be obligated to reimburse Pfizer hereunder
shall be limited to $105 million in the aggregate for all eligible Conveyed
Subsidiaries, or $60 million in the aggregate if elections are made only with
respect to Schneider USA and SCHNEIDER/NAMIC (Purchaser shall make payment of
such reimbursement within 30 days of Pfizer's quarterly federal estimated
income tax payment immediately following Closing), and (ii) Purchaser may, at
its option, make an election under Section 338(g) of the Code with respect to
its purchase of any Conveyed Subsidiary not included in a U.S. Consolidated
Tax Return group, in which event Purchaser shall be solely responsible for
preparing the separate return reflecting the consequences of such election,
and shall be responsible for and shall pay, any and all Taxes resulting from
such election and shall indemnify Pfizer (in the manner provided herein) with
respect to such Taxes.
(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
60
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) and (iii), and (C) all Taxes other than Income
Taxes due on or before the Closing Date for which no Tax Return is required to
be filed. Purchaser shall pay or cause to be paid (A) all Income Taxes due
with respect to separate Tax Returns which Purchaser is obligated to prepare
and file or cause to be prepared and filed pursuant to Section 7.4(a) other
than Taxes which Pfizer shall pay or cause to be paid in accordance with the
preceding sentence and (B) all Taxes owed by the Conveyed Subsidiaries or
their Subsidiaries other than Taxes which Pfizer shall pay or cause to be paid
in accordance with the preceding sentence.
(c) Tax Sharing Agreements. On the Closing Date, all Tax
sharing agreements and arrangements 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, 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, charitable contribution or other item
arising after the Closing Date that could, in the absence of such an election,
be carried back to a taxable period of the Conveyed Subsidiaries or any of
their Subsidiaries ending on or before the Closing Date in which the Conveyed
61
Subsidiaries or any of their Subsidiaries were included in a Consolidated Tax
Return of Pfizer and its Affiliates. Purchaser, on its own behalf and on
behalf of its Affiliates, hereby waives any right to use or apply any net
operating loss, charitable contribution or other item (other than any net
capital loss, foreign tax credit or research and development credit) of the
Conveyed Subsidiaries or any of their Subsidiaries for any tax year ending on
any date following the Closing Date to any period of the Conveyed Subsidiaries
or any of their Subsidiaries ending on or before the Closing Date and reserves
the right to use or apply any such net capital loss, foreign tax credit or
research and development credit of the Conveyed Subsidiaries or any of their
Subsidiaries for any tax year ending on any date following the Closing Date to
any period of the Conveyed Subsidiaries or any of their Subsidiaries ending on
or before the Closing Date; provided, however, that if any such net capital
loss, foreign tax credit or research and development credit 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.
Notwithstanding anything to the contrary herein, Purchaser shall be entitled
to the benefit of any loss carryforward of the Conveyed Subsidiaries and their
Subsidiaries relating to taxable periods ending on or prior to the Closing
Date; provided that Purchaser agrees to reimburse Pfizer (for the Taxes and
any Taxes resulting from such reimbursement) to the extent that the Taxes of
the Conveyed Subsidiaries and their Subsidiaries for any taxable period ending
on or prior to the Closing Date are increased as a result of a Tax Claim, as
defined in Section 7.4(i) hereof, and such Taxes would have been reduced or
avoided but for the use of such carryforward by Purchaser.
(e) Refunds. Pfizer shall be entitled to retain, or receive
immediate payment from Purchaser or any of its Subsidiaries or Affiliates
(including the Conveyed Subsidiaries and
62
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 immediate payment from
Pfizer of, any such refund or credit to the extent that such refund or credit,
(A) is reflected on the Working Capital Statement, or (B) arises as a result
of the use or application (as provided in Section 7.4(d)) of any net capital
loss, foreign tax credit or research and development credit) of the Conveyed
Subsidiaries or any of their Subsidiaries for any tax year ending on any date
following the Closing Date to any period of the Conveyed Subsidiaries or any
of their Subsidiaries ending on or before 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), would, but for the carryback by
the Conveyed Subsidiaries or any of their Subsidiaries of any such net capital
loss, foreign tax credit or research and development credit, be entitled to a
refund or credit in respect of any net capital loss, foreign tax credit or
research and development credit of Pfizer or any of Pfizer's Affiliates (other
than the Conveyed Subsidiaries or any of their Subsidiaries), Pfizer shall be
entitled to receive immediate payment from Purchaser of any such amount to the
extent Purchaser has previously received a refund or credit from a carryback
to Pfizer's return. Purchaser, the Conveyed Subsidiaries and their
Subsidiaries shall be entitled to retain, or receive immediate payment from
Pfizer of, any refund or credit 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
63
refund or credit with respect to Taxes with respect to a Straddle Period,
except that any refund or credit reflected on the Working Capital Statement
shall be the property of the Purchaser.
(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 use its best efforts within the earlier to occur of sixty (60)
days after Pfizer's year-end, and one hundred twenty (120) days after the
Closing Date, to 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; provided that such package or packages shall be due no earlier
than thirty (30) days following Pfizer's written request thereof (which
request shall include copies of the tax work paper preparation packages for
completion).
(g) Tax Indemnification.
(i) Pfizer shall indemnify, defend and hold the
Purchaser and its Affiliates harmless from and against all liability for
Taxes of the Conveyed Subsidiaries, their Subsidiaries and any Asset
Selling Corporation (with respect to the Business) for any 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
64
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 paid by the Conveyed Subsidiaries or
their Subsidiaries which would not have been paid by the Conveyed
Subsidiaries or any of their Subsidiaries, but for adjustment resulting
from the resolution or settlement of a pending tax audit, and (D) all
liability for reasonable legal, accounting and appraisal fees and
expense with respect to any item described in clause (A), (B) or (C)
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
to which it is entitled under Section 7.4(e) hereof, and that are
received after the Closing Date by Purchaser or any of its Affiliates
and not previously remitted to Pfizer. Notwithstanding the foregoing,
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 or 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
65
effective with the 60th day following the expiration of the applicable
statute of limitations (including extensions) in respect of such
liability.
(ii) Purchaser shall, and shall cause the Conveyed
Subsidiaries and each of their Subsidiaries to, indemnify, defend and
hold Pfizer and its Affiliates harmless from and against, (A) except to
the extent Pfizer is otherwise required to indemnify Purchaser for such
Tax pursuant to Section 7.4(g)(i), all liability for Taxes of the
Conveyed Subsidiaries and their Subsidiaries, (B) all liability for
Taxes attributable to a Purchaser Tax Act, and (C) all liability for
reasonable legal, accounting and appraisal fees and expenses with
respect to any item described in clause (A) or (B) above. Purchaser's
obligation to indemnify, defend or hold harmless Pfizer or any of its
Affiliates from any liability shall terminate effective with the 60th
day following the expiration of the applicable statute of limitations
(including extensions) in respect of such liability.
(iii) In the case of any Straddle Period:
(A) The periodic Taxes of the Conveyed Subsidiaries and
their Subsidiaries that are not based on income or receipts (e.g.,
property Taxes) for the portion of any Straddle Period ending on the
Closing Date (the "Pre-Closing Tax Period") shall be computed based upon
the ratio of the number of days in the Pre-Closing Tax Period and the
number of days in the entire Tax Period; and
(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
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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) Purchaser shall indemnify Pfizer for all
incremental Taxes (including Taxes resulting from the indemnification of
such Taxes) resulting from the Section 338(h)(10) election described in
Section 7.4(a), in the manner and limited to the amount described
therein.
(v) Any indemnity payment required to be made pursuant
to this Section 7.4(g) shall be paid within thirty (30) days after the
indemnified party makes written demand upon the indemnifying party, but
in no case earlier than five (5) Business Days prior to the date on
which the relevant Taxes are required to be paid to the relevant taxing
authority (including estimated Tax payments).
(h) Timing Adjustment. In the event that a final
determination (which shall include the execution of an IRS Form 870-AD or
successor form) 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
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or Pfizer's, as the case may be, actual tax liability with and without giving
effect to such timing difference.
(i) Tax Contests.
(A) If a claim shall be made by any taxing authority (a
"Tax Claim") which, if successful, might result in an indemnity payment to the
Purchaser or any of its Affiliates pursuant to Section 7.4(g), Purchaser shall
promptly notify Pfizer of such claim; provided, however, that the failure to
give such notice shall not affect the indemnification provided hereunder
except to the extent Pfizer has actually been 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 sue for a refund where applicable law permits
such refund suits or contest the Tax Claim in any permissible manner.
Purchaser shall be entitled to be informed of such Tax Claim within a
reasonable time after such Claim is asserted and the developments with respect
to such Tax Claim at any administrative meeting, conference, hearing or other
proceeding, and Purchaser shall have the right to participate at its own
expense in the conduct of any such proceeding involving a Tax Claim which
would adversely affect the Purchaser.
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(C) Except as otherwise provided in Section 7.4(i)(B),
Pfizer and Purchaser shall jointly control and participate in all proceedings
taken in connection with any Tax Claim relating to Taxes of the Conveyed
Subsidiaries or any of their Subsidiaries for any Straddle Period. Neither
Pfizer nor Purchaser shall settle any such Tax Claim without the prior written
consent of the other, which shall not be unreasonably withheld.
(D) Except as otherwise provided in Section 7.4(i)(B),
Purchaser shall control all proceedings with respect to Taxes for any taxable
period beginning after the Closing Date. Pfizer shall have the right to
participate at its own expense in the conduct of such proceedings involving a
Tax Claim, which would adversely affect Pfizer.
(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 7.5. Employees and Employee Benefits.
(a) Employees (US) - Offer of Employment; Continued
Employment; Severance. Purchaser agrees to offer employment as of 12:01 a.m.
on the day immediately following the Closing Date to each Employee (US) (or to
cause the Conveyed Subsidiaries and their Subsidiaries to offer to continue
the employment of each of their Employees (US)) in the same or a comparable
position and at a rate of pay at least equal to the Employee's rate of pay in
effect on the Closing Date and with benefits which shall be substantially
comparable to the
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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). For the purposes of recognizing the contribution of Affected
Employees prior to the Closing Date, Purchaser shall be deemed to satisfy this
substantial comparability requirement with respect to benefits for Employees
(US) by providing such benefits as set forth on Schedule 7.5(a)(iii) hereto.
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 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 with respect to Employees (non-US) as provided for in
Section 7.5(e), 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 as of the Closing Date, or (ii) Employees who do
not accept the offer of employment or continuation of employment given by the
Purchaser in accordance with this Section 7.5(a) and do not work for Purchaser
or its Affiliates for at least one day, unless such Employee is otherwise an
Affected Employee. Purchaser shall be solely responsible for all salaries or
wages (including bonuses, incentive payments and commissions) accruing after
the Closing Date with respect to the Affected Employees. Purchaser may, at
its discretion, change the conditions of employment after the Closing Date
except for (i) the location requirement described in this Section 7.5(a) and
(ii) the pay and benefits comparability requirements described in this Section
7.5(a), employee separation plan obligations and other benefits described in
Schedule 7.5(a)(i), all of which matters shall
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remain unchanged until the date immediately following the second anniversary
of the Closing Date. Notwithstanding the foregoing sentence, Purchaser or its
Affiliates may terminate an Employee during such two (2) year period due to
"Performance-Related Terminations" or "Curtailment or Cessation of
Operations/Reorganization/Position Elimination" (as those terms are described
in Exhibit E, the Pfizer Employee Separation Plan) as long as Purchaser or its
Affiliates (i) first offers such Employee the opportunity to sign a release
agreement in substantially the form attached hereto as Exhibit F (individual
termination) or Exhibit G (group termination), as appropriate, (ii) pays or
otherwise provides severance benefits to such Employee in accordance with
Pfizer's Employee Separation Plan and (iii) provides benefits continuation and
other benefits as set forth in Schedule 7.5(a)(i), provided, however, that
Purchaser or its Affiliates may terminate an Employee 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). Notwithstanding anything to
the contrary herein, on the date immediately following the second anniversary
of the Closing Date, Purchaser shall provide pay and benefits and severance
plans, programs and policies which are no less favorable than those provided
to other similarly situated employees of Purchaser, as the case may be.
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 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 Employee's severance benefits.
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(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 Savings 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
Qualified Plans to become one hundred percent (100%) vested in his or
her accrued benefit under each such Plan. The Seller Corporations shall
retain all assets and liabilities of the Retirement Plan. In addition,
the Seller Corporations shall retain all liabilities (and related
assets, if any) with respect to the Pfizer Inc. Nonfunded Deferred
Compensation and Supplemental Savings Plan and the Pfizer Inc. Nonfunded
Supplemental Retirement 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 the Purchaser
qualified defined contribution plan listed in Schedule 7.5(b)(ii) or a
new qualified defined contribution plan to be established for the
Affected Employees (such plan being referred to as the "Purchaser
Qualified Plan"). Purchaser shall ensure that the Purchaser Qualified
Plan 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 Savings 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.
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(iii) 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 Purchaser Qualified Plan as of the
valuation date next preceding the date of transfer. In addition to its
current investment options in its qualified defined contribution plan,
Purchaser shall establish an account which may receive Pfizer common
stock from the Savings Plan. Such account need not permit future
accruals of Pfizer stock. Except as provided in the immediately
preceding sentence, the account balances to be transferred hereunder
shall consist exclusively of cash. 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 account balances contemplated under this Section 7.5(b)(iii), subject
to Pfizer's receipt of satisfactory evidence that the Purchaser
Qualified Plan is in compliance with all relevant Laws; such evidence
shall include, but not be limited to, a current determination letter
from the IRS, if available, and representations satisfactory to Pfizer
from the administrators of the Purchaser Qualified Plan. If a current
determination letter has not been obtained, Purchaser and its counsel
shall provide a representation that the Purchaser Qualified Plan is
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) Pfizer will give Purchaser reasonable access to
records of Pfizer necessary to administer the account balances of
Affected Employees transferred to the Purchaser Qualified Plan.
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(c) Accrued Entitlements. Purchaser shall be responsible for
all accrued entitlements, including vacation days, for Affected Employees as
of the Closing Date consistent with Pfizer's policy in respect thereof.
(d) Medical and Welfare Plan Obligations. Commencing as of
12:01 a.m. on the day immediately following the Closing Date, Purchaser shall
include the Affected Employees in its welfare plans 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
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 the 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 (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 the Employee's rate
of pay in effect on the Closing Date and with benefits which shall be
substantially comparable to the Employee's benefits which are in effect on the
Closing Date or as required by Law. Schedule 7.5(e) (which shall be updated
by Pfizer on the Closing Date) shall set forth the name of each
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Employee (non-US). 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, subject to: such modifications as are necessary to comply with
applicable Laws of the foreign countries and their political subdivisions;
applicable labor agreements; local Pfizer policies, programs and practices;
and established local business custom in similar transactions.
(f) Employees (US) and Employees (non-US) Absent on Disability
or Leaves of Absence - Offer of Employment; Continued Employment; Severance.
When an Employee 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 the 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 returning from authorized leaves of absence such as 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.
(g) No Third Party Beneficiaries. Except as expressly
provided herein, nothing contained herein, expressed or implied, is intended
to confer upon any Employee of Seller
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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.
Section 7.6. Certain Dividends, Etc. Notwithstanding any
provision herein to the contrary (including, without limitation, Section 7.2
hereof), each Conveyed Subsidiary or any Subsidiary of a Conveyed Subsidiary
will be permitted to make cash distributions to Pfizer, Pfizer Ireland or
their 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,
Pfizer Ireland and their 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(d). After the Closing Date, Purchaser
shall take all actions (or shall cause its Affiliates to take all actions)
reasonably requested by Pfizer and Pfizer Ireland 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.
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Section 7.7. Resignations. At the Closing and except as
otherwise requested by Purchaser in writing, Pfizer and Pfizer Ireland will
deliver to Purchaser the resignations (effective on or prior to Closing) of
all directors of each of the Conveyed Subsidiaries and their Subsidiaries from
their positions as directors.
Section 7.8. Bulk Transfer Laws. Purchaser acknowledges that
the Seller Corporations have not taken, and do not intend to take, any action
required to comply with any applicable bulk sale or bulk transfer laws or
similar laws.
Section 7.9. Noncompetition. (a) Subject to the provisions of
this Section 7.9, Pfizer agrees that for a period of two (2) years from the
Closing Date, Pfizer and its Subsidiaries shall not compete in any material
respect with the business of the manufacture or sale of medical devices that
are commercially available from, or under development by, Pfizer and its
Subsidiaries as of the Closing Date that are used for the diagnosis and
interventional treatment of human vascular, respiratory and digestive systems
("Competitive Activity"); provided, however, that it shall not be deemed to be
a violation of this subsection for Pfizer or any of its Subsidiaries (s) to
engage, directly or indirectly, in the research, manufacture or sale of any
pharmaceutical product or any medical device for the delivery of
pharmaceutical products, (t) to invest in or own any debt securities or other
debt obligations, (u) to 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, (v) to invest in, own an interest
in, or acquire a majority of the stock or assets of any Person which is not
engaged primarily in a Competitive Activity, (w) to invest in securities
having less than five percent (5%) of the
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outstanding voting power of any Person, the securities of which are publicly
traded or listed on any securities exchange or automated quotation system, (x)
to 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 which has been disclosed to
Purchaser, or (y) to own any equity interests through any employee benefit
plan or pension plan, or (z) conduct the business of designing, manufacturing
and marketing of products and services for the treatment of urologic
disorders. 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, 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. For a period of two (2)
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 solely
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
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(including trade media) or by engaging search firms to engage in searches that
are not targeted or focused on the employees employed by the Business.
(b) Notwithstanding anything to the contrary contained in
subsection (a) of this Section 7.9, Pfizer and its Subsidiaries shall not be
deemed to have violated the restrictions contained in this Section 7.9 in the
event that Pfizer or a Subsidiary acquires or invests in any Person engaged
primarily in a Competitive Activity; provided, that Pfizer or such Subsidiary
thereafter divests 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.
(c) Prior to Closing, except as otherwise agreed in writing,
neither Purchaser nor any of its Affiliates will offer or provide employment
on a full-time or part-time or consulting basis to any individual employed by
Pfizer or any of its Affiliates in the operation of the Business.
(d) Pfizer and the Purchaser acknowledge that this Section 7.9
constitutes an independent covenant and shall not be affected by performance
or nonperformance of any other provision of this Agreement. Each of Pfizer
and the Purchaser has independently consulted with its counsel and after such
consultation agrees that the covenants set forth in this Section 7.9 are
reasonable and proper. It is the desire and intent of the parties that the
provisions of this Section 7.9 shall be enforced to the fullest extent
permissible under applicable law. If all or part of this Section 7.9 is held
invalid, illegal or incapable of being enforced by any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect. If any part of this Section 7.9 is held to be
excessively broad as to duration, scope, activity or subject, such part will
be construed by limiting and reducing it so as to be enforceable to the
maximum extent compatible with applicable law.
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Section 7.10. Transitional Services. At the Closing,
Purchaser and Pfizer shall enter into, execute and deliver a transitional
services agreement substantially to the effect set forth in Exhibit C (the
"Transitional Services Agreement").
Section 7.11. Transitional Intellectual Property License
Agreement. At the Closing, Purchaser and Pfizer shall enter into, execute and
deliver a transitional intellectual property license agreement substantially
to the effect set forth in Exhibit D (the "Transitional Intellectual Property
License Agreement").
Section 7.12. Compliance with WARN, Etc. With respect to WARN
or other similar statutes or regulations of any jurisdiction, Purchaser will
timely give any notices required to be given thereunder.
Section 7.13. Foreign Implementing Agreements. As promptly as
practicable after the date hereof, Pfizer and Purchaser shall cause the
Foreign Implementing Agreements to be prepared and executed by their
applicable Affiliates.
Section 7.14. Litigation Support. Purchaser and its
Affiliates on the one hand and Pfizer and its Affiliates on the other hand
will cooperate with each other in the defense or settlement of any Liabilities
(including, without limitation, Product Claims) 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
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relevant Liabilities and lawsuits involving the Business for which it has
responsibility under this Agreement, will advise Purchaser of material issues
involved in the litigation and will use its reasonable best efforts to seek a
confidentiality agreement with respect to any settlements of such lawsuits.
For so long as any Liabilities or lawsuits involving the Business for which
Pfizer has responsibility under this Agreement remain outstanding, Purchaser
will advise Pfizer of material issues involved in the lawsuits involving the
Business for which it has responsibility and will use its reasonable best
efforts to seek a confidentiality agreement with respect to any settlements of
such lawsuits.
Section 7.15. Insurance. 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 maintain insurance
materially consistent with the Purchaser's current coverages and agrees not to
seek, through any means, to benefit from any of Seller Corporations' or their
Affiliates' insurance policies which may provide coverage for claims relating
in any way to the Business on or prior to the Closing Date.
ARTICLE VIII
INDEMNIFICATION
Section 8.1. Indemnification by Pfizer.
(a) Pfizer agrees to defend, indemnify and hold harmless
Purchaser and its Affiliates, and, if applicable, its 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 breach by the Seller Corporations of
any of its covenants or agreements
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contained in this Agreement or in any agreement; (iii) any breach of any
warranty or representation of the Seller Corporations contained in this
Agreement; or (iv) any non-compliance with bulk transfer or similar laws.
(b) Purchaser acknowledges and agrees that Pfizer shall not
have any liability under any provision of this Agreement for any Loss to the
extent that such Loss relates to action taken by Purchaser or any of its
Affiliates after the Closing Date. Purchaser shall and shall cause its
Affiliates to mitigate any Loss to the extent required by Law.
(c) Notwithstanding the provisions of this Article VIII: (i)
Pfizer shall not be liable to the Purchaser or its Affiliates for any Loss
under Section 8.1(a)(i) with respect to clause (ii) of Excluded Environmental
Liabilities except to the extent such Losses exceed an aggregate of
$2,000,000, (calculated separately from the $2,000,000 in Section 8.1(c)(ii)
hereof) and then further subject to the limitations set forth in Section 8.5;
and (ii) Pfizer shall not be liable to the Purchaser or its Affiliates for any
Loss under Section 8.1(a)(i) with respect to clause (vi) of Excluded
Environmental Liabilities except to the extent such Losses exceed an aggregate
of $2,000,000 (calculated separately from the $2,000,000 in Section 8.1(c)(i)
hereof) and then further subject to the limitations set forth in Section 8.5.
(d) Nothing in this Section 8.1 shall be construed to impose
liabilities with respect to Taxes, it being understood that the sole remedy of
the parties with respect to Tax matters shall be pursuant to Section 7.4.
(e) 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, if earlier, unless written notice of
a claim has been provided to Pfizer prior to such time in accordance with
Section 8.3.
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Section 8.2. Indemnification by Purchaser.
(a) Purchaser agrees to defend, indemnify and hold harmless
the Seller Corporations and their Affiliates, and, if applicable, its
directors, officers, agents, employees, successors and assigns from and
against any and all Loss claimed or arising directly from (i) any Assumed
Liability, (ii) any breach by Purchaser of any of its covenants or agreements
in this Agreement, (iii) any breach of any warranty or representation of
Purchaser contained in this Agreement, or (iv) events occurring on or after
the Closing Date in connection with the Business, 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. Seller
Corporations shall and shall cause their Affiliates to mitigate any Loss to
the extent required by Law.
(b) Nothing in this Section 8.2 shall be construed to impose
liabilities with respect to Taxes, it being understood that the sole remedy of
the parties with respect to Tax matters shall be pursuant to Section 7.4.
Section 8.3. Notice of Claims.
(a) If any of the Persons to be indemnified under this Article
VIII (the "Indemnified Party") has suffered or incurred any Loss, the
Indemnified Party shall so notify the party from whom indemnification is
sought (the "Indemnifying Party") promptly in writing describing such Loss,
the amount or estimated amount thereof, if known or reasonably capable of
estimation, and the method of computation of such Loss, all with reasonable
particularity and containing a reference to the provisions of this Agreement
or any other agreement, instrument or certificate delivered pursuant hereto in
respect of which such Loss shall have occurred. If any
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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 Indemnified
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 an immediate notice, report or other filing
must be filed pursuant to Environmental Law, Purchaser will provide notice and
an opportunity to comment to Pfizer before Purchaser files any Required
Governmental Report or any other report, notification or filing with any
Governmental Authority or third party that would be reasonably likely to
result in a Loss. In the event Purchaser is required to file an immediate
Required Governmental Report or any other immediate report, notification or
filing, Purchaser will provide simultaneous notice to Pfizer when it files the
report with the Governmental Authority.
Section 8.4. Third Party Claims.
(a) The Indemnifying Party under this Article VIII shall have
the right, but not the obligation, to conduct and control, through counsel of
its choosing, any third party claim, action or suit (a "Third Party Claim") if
the Indemnifying Party acknowledges in writing its obligation to indemnify the
Indemnified Party hereunder against any Loss that may result from such 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, and provided, further, that
the Indemnifying Party may not
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compromise or settle any Third Party Claim involving other than monetary
damages without the prior written consent of the Indemnified Party, which
consent shall not unreasonably be withheld. If the Indemnifying Party elects
to control or conduct the defense of any Third Party Claim, the Indemnifying
Party shall permit the Indemnified Party to participate in, but not control,
the defense of any such action or suit through counsel chosen by the
Indemnified Party, provided that the fees and expenses of such counsel shall
be borne by the Indemnified Party. If the Indemnifying Party elects not to
control or conduct the defense or prosecution of a Third Party Claim, the
Indemnifying Party shall have the right to participate in, but not conduct or
control, the defense or prosecution of any Third Party Claim and, at its own
expense, to employ counsel of its own choosing for such purpose.
(b) The parties hereto shall cooperate in the defense or
prosecution of any Third Party Claim, with such cooperation to include (i) the
retention and the provision of the Indemnifying Party records and information
that are reasonably relevant to such Third Party Claim, and (ii) the making
available of employees on a mutually convenient basis for proving additional
information and explanation of any material provided hereunder.
Section 8.5. Expiration. Notwithstanding anything in this
Agreement to the contrary, if the Closing shall have occurred, all covenants,
agreements, warranties and representations made herein or in any certificate
delivered pursuant hereto shall survive the Closing, but all representations
and warranties made herein or in any certificate delivered pursuant hereto,
and all indemnification obligations under Sections 8.1. and 8.2 with respect
to any such representation or warranty, shall terminate and expire on, and no
action or proceeding seeking damages or other relief for breach of any thereof
or for any misrepresentation or inaccuracy with respect thereto shall be
commenced after, the first anniversary of the Closing Date with respect to
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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. As to indemnification
obligations under Section 8.1(a)(i) with respect to clause (ii) 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 third anniversary of the Closing Date unless
written notice thereof was previously given to Pfizer under Section 8.3; and
as to indemnification obligations under Section 8.1(a)(i) with respect to
clauses (iii) and (vi) of Excluded Environmental Liabilities, such obligations
shall terminate and expire on, and no action or proceeding seeking damages,
relief or indemnity with respect thereto shall be commenced, after the second
anniversary of the Closing Date unless written notice thereof was previously
given to Pfizer under Section 8.3.
Section 8.6. Certain Limitations. Pfizer shall not have any
liability under clause 8.1(a)(iii) for Losses unless the aggregate of all such
Losses, for which Pfizer would, but for this provision, be liable exceeds on a
cumulative basis $25,000,000, but if such amount is exceeded, Pfizer shall be
required to pay only the amount of such Loss which exceeds $25,000,000;
provided, however, that Pfizer shall not have any liability for Losses (i) for
any individual item under clause 8.1(a)(iii) where the Loss relating thereto
is less than $250,000, and (ii) for all Losses under clause 8.1(a)(iii) in
excess of $375,000,000.
Section 8.7. Losses Net of Insurance, Etc. The amount of any
Loss for which indemnification is provided under Sections 8.1 or 8.2 (the
"Specified Sections") shall be net of (i) any accruals or reserves on the
Financial Statements or the Working Capital Statement and (ii) an amount equal
to the present value of the Tax benefit or detriment, if any, attributable to
such Loss, as and when actually realized by the indemnifying party. If the
Indemnifying Party
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acknowledges in writing its obligation to indemnify the Indemnified Party
hereunder against any Loss, the Indemnified Party shall assign to the
Indemnifying Party all of its rights to seek recovery pursuant to any
indemnification by or indemnification agreement with any third party, any
insurance proceeds or other sources of reimbursement receivable as an offset
against any such Loss and otherwise reasonably cooperate to provide the
Indemnifying Party with the benefit thereof and, thereafter, the Indemnifying
Party shall be responsible for pursuing such claim at its own expense. If the
amount to be netted hereunder from any payment required under Sections 8.1 or
8.2 is determined after payment by the Indemnifying Party of any amount
otherwise required to be paid to an Indemnified Party to this Article VIII,
the Indemnified Party shall repay to the Indemnifying Party, promptly after
such determination, any amount that the Indemnifying Party would not have had
to pay pursuant to this Article VIII had such determination been made at the
time of such payment.
Section 8.8. Other Limitations. In the event Closing occurs
under this Agreement, no claim for breach of representation or warranty shall
be made by Purchaser under Section 8.1(a)(iii) if (a) such claim is based on a
fact or an event occurring prior to Closing (whether or not also occurring
prior to the date of this Agreement), and (b) such fact or event was disclosed
in writing by Pfizer or its Affiliates to Purchaser prior to Closing and
specifically identified in such writing as a breach of any representation or
warranty.
Section 8.9. Sole Remedy/Waiver. The parties hereto
acknowledge and agree that the remedies provided for in this Agreement shall
be the parties' sole and exclusive remedy with respect to the subject matter
of this Agreement. In furtherance of the foregoing, the parties hereby waive,
to the fullest extent permitted by applicable law, any and all other rights,
claims and causes of action (including rights of contributions, if any) known
or unknown, foreseen or
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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 with respect to the subject matter of this
Agreement, arising under or based upon any federal, state or local statute,
law, ordinance, rule, regulation or judicial decision (including, without
limitation, any such statute, law, ordinance, rule, regulation or judicial
decision relating to environmental matters or arising under or based upon any
securities law, common law or otherwise) except for any action based upon a
claim of fraud.
Section 8.10. Indemnification Procedures for Remedial Actions
on Conveyed Properties.
(a) Notwithstanding anything to the contrary in Section 8.4(a)
hereof, 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
if Pfizer acknowledges in writing its obligation to indemnify the Purchaser
hereunder. 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) that more information is
needed from Purchaser before Pfizer can reasonably determine that 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 necessary to comply with applicable Environmental laws
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or address conditions that pose an immediate and acute health risk (unless
additional actions are approved by Pfizer).
(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 accordance with applicable
Environmental Laws and shall not cause, through its own inaction, any undue
delay in obtaining written notice from the appropriate Governmental Authority
that no further investigation or remediation is necessary with respect to the
matter that is the subject of the indemnification claim to meet the Applicable
Remedial Action Standards, or, if no Governmental Authority is involved in
such matter, a good faith determination from its environmental consultant that
no further investigation or remediation is required to bring the Conveyed
Property into conformance with Applicable Remedial Action Standards. Pfizer
shall comply with all applicable laws, including all applicable Environmental
Laws, with respect to its performance pursuant to this Section. Pfizer shall
promptly provide copies to Purchaser of all written notices, correspondence,
final submissions, final work plans, results of field work, and final 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 prior to said
submission. Purchaser may, at its own expense, hire its own consultants,
attorneys or other professionals to monitor the Remedial Action, including any
field work undertaken by Pfizer, and Purchaser shall provide Pfizer with the
results of all such monitoring. Notwithstanding the above, Purchaser shall
not take any actions that shall unreasonably interfere with Pfizer's
performance of the Remedial Action. Pfizer shall undertake
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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.
(c) If Pfizer declines to undertake the performance of a
Remedial Action as provided in Section 8.10(a), Purchaser shall be entitled to
undertake the Remedial Action to the Applicable Remedial Action Standards.
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 on any submissions Purchaser intends to deliver or submit to the
appropriate Governmental Agency 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 Pfizer shall provide to Purchaser the results of all such monitoring.
Notwithstanding the above, Pfizer shall not take any actions that shall
unreasonably interfere with Purchaser's performance of the Remedial Action.
Pfizer's decision to allow Purchaser to undertake Remedial Action hereunder
shall not limit or affect Pfizer's obligation to indemnify Purchaser for said
Remedial Action to the Applicable Remedial Action Standards as otherwise
provided in this Agreement.
Section 8.11. Limitation on Indemnification for Remedial and
Compliance Actions.
(a) Notwithstanding anything to the contrary in this
Agreement, Pfizer's indemnification obligations under Section 8.1 hereof, in
respect to clause (ii) of the definition of
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Excluded Environmental Liabilities, are subject to the provisions of this
paragraph (a). With respect to such Excluded Environmental Liabilities,
Pfizer shall be responsible for the cost of such Remedial Action only to the
extent necessary to meet the least stringent applicable remediation standard
consistent with the use of the property as of the Closing Date or a similar
use, which standard is acceptable to the federal or state Governmental
Authority (or their foreign equivalents) asserting jurisdiction thereof and is
acceptable under any promulgated and applicable local authority standard (or
any less stringent standard negotiated by Pfizer or the Purchaser, as
applicable, with the local authority) through the use of the most cost-
effective alternative (the "Applicable Remedial Action Standard"). Pfizer
shall not be responsible for those costs incurred in connection with a
Remedial Action to the extent such costs arise from or are exacerbated by
actions of the Purchaser after the Closing Date. With respect to Remedial
Actions that are the result of discoveries or actions encouraged or initiated
by the Purchaser, Pfizer shall only be responsible for those Losses incurred
in connection with any such Remedial Action if the decision to undertake the
investigation which led to the discovery of the environmental condition giving
rise to such Remedial Action is consistent with the decision that would have
been made by a Person exercising its reasonable business judgment and not
having the benefit of any indemnification rights similar to those contained
herein.
(b) Notwithstanding anything to the contrary in this
Agreement, Pfizer's indemnification obligations under Section 8.1 hereof, in
respect to clause (vi) of the definition of Excluded Environmental
Liabilities, are subject to the provisions of this paragraph (b). With
respect to such Excluded Environmental Liabilities, Pfizer shall be
responsible only for Environmental Liabilities constituting capital and
related costs (but not including routine operation and maintenance costs) and
then only for the most cost effective means of attaining
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compliance with applicable Environmental Laws. Pfizer shall not be
responsible for costs incurred to the extent such costs arise from or are
exacerbated by actions of the Purchaser or its Affiliates after the Closing
Date.
Section 8.12. No Consequential Damages.
Notwithstanding anything to the contrary contained herein, 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 9.1. Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by written agreement of Purchaser and Pfizer, acting as
agent for the Seller Corporations;
(b) by either Purchaser or Pfizer, by giving written notice of
such termination to the other party, if the Closing shall not have occurred on
or prior to December 31, 1998 (unless the failure to consummate the Closing by
such date (i) shall be due to the failure of the party seeking to terminate
this Agreement to have fulfilled in all material respects any of its
obligations under this Agreement, or (ii) is due to the continuance of a
waiting period or lack of an approval required under or an injunction or
equivalent thereof entered based upon any Competition Laws, in which event
neither Pfizer nor Purchaser may rely upon this Section 9.1 to terminate this
Agreement until the first anniversary of the date of this Agreement; provided,
however, that even
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on or after the first anniversary of the date of this Agreement, a party shall
not be permitted to seek to terminate this Agreement if it shall not
theretofore have fulfilled in all material respects all of its obligations
under this Agreement (including without limitation Section 7.3 hereof)); and
(c) except as set forth in and subject to Section 7.3(e), by
either Pfizer or Purchaser if any court of competent jurisdiction or other
competent Governmental Authority shall have issued a statute, rule,
regulation, order, decree or injunction or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement and such statute, rule, regulation, order, decree or
injunction or other action shall have become final and nonappealable.
Section 9.2. Effect of Termination. (a) In the event of the
termination of this Agreement in accordance with Section 9.1 hereof, this
Agreement shall thereafter become void and have no effect, and no party hereto
shall have any liability to the other party hereto or their respective
Affiliates, directors, officers or employees, except 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 as a
result of any party's 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. Upon termination of this Agreement by
Pfizer or Purchaser, by reason of a breach or default by the other hereunder,
the damages recoverable by the party so terminating this Agreement shall
include, without limiting the generality of the
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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 certain Employees will remain in
full force and effect for the term provided therein.
ARTICLE X
MISCELLANEOUS
Section 10.1. Notices. All notices or other communications
hereunder shall be deemed to have been duly given and made if in writing and
if served by personal delivery upon the party for whom it is intended, if
delivered by registered or certified mail, return receipt requested, or by a
national courier service, or if sent by telecopier, provided that the telecopy
is promptly confirmed by telephone confirmation thereof, to the person at the
address set forth below, or such other address as may be designated in writing
hereafter, in the same manner, by such person:
To any Seller Corporation:
PFIZER INC.
235 East 42nd Street
New York, NY 10017
Telephone: 212-573-3637
Telecopy: 212-573-1445
Attn: Paul S. Miller, Esq.
Senior Vice President and
General Counsel
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With a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Telephone: 215-994-4000
Telecopy: 215-994-2222
Attn: Henry N. Nassau, Esq.
James J. Lawless, Jr., Esq.
To Purchaser:
Boston Scientific Corporation
One Boston Scientific Place
Natick, Massachusetts 01760
Telephone: (508) 650-8616
Telecopy: (508) 650-8956
Attn: General Counsel
With a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telephone: (212) 848-4000
Telecopy: (212) 848-7179
Attn: Peter D. Lyons, Esq.
Clare O'Brien, Esq.
Section 10.2. Amendment; Waiver. Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver
is in writing and signed, in the case of an amendment, by Purchaser and
Pfizer, or in the case of a waiver, by the party against whom the waiver is to
be effective. No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege.
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Section 10.3. Assignment. No party to this Agreement may
assign any of its rights or obligations under this Agreement including by sale
of stock, operation of law in connection with a merger or sale of
substantially all the assets of Purchaser without the prior written consent of
the other party hereto except that Purchaser may without such consent assign
its rights to purchase the Shares and the Conveyed Assets hereunder to one or
more Purchaser Affiliates, provided that no such assignment by Purchaser shall
relieve Purchaser of any of its obligations hereunder.
Section 10.4. Entire Agreement. This Agreement (including all
Schedules and Exhibits hereto) contains the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral or written, with respect to such
matters, except for the Confidentiality Agreement which will remain in full
force and effect for the term provided for therein and other than any written
agreement of the parties that expressly provides that it is not superseded by
this Agreement.
Section 10.5. Fulfillment of Obligations. Any obligation of
any party to any other party under this Agreement, which obligation is
performed, satisfied or fulfilled by an Affiliate of such party, shall be
deemed to have been performed, satisfied or fulfilled by such party.
Section 10.6. Parties in Interest. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or
implied, is intended to confer upon any Person other than Purchaser, Seller
Corporations, or their successors or permitted assigns, any rights or remedies
under or by reason of this Agreement except for persons specifically
identified in Article VIII.
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Section 10.7. Public Disclosure. Notwithstanding anything
herein to the contrary, each of the parties to this Agreement hereby agrees
with the other party hereto that, except as may be required to comply with the
requirements of any applicable Laws, and the rules and regulations of each
stock exchange upon which the securities of one of the parties is listed, if
any, no press release or similar public announcement or communication shall,
if prior to the Closing, be made or caused to be made concerning the execution
or performance of this Agreement unless the parties shall have consulted in
advance with respect thereto.
Section 10.8. Return of Information. If for any reason
whatsoever the transactions contemplated by this Agreement are not
consummated, Purchaser shall promptly return to Pfizer all books and records
furnished by Pfizer, any other Seller Corporation, any Conveyed Subsidiary,
any of their respective Affiliates or any of their respective agents,
employees, or representatives (including all copies, summaries and abstracts,
if any, thereof) in accordance with the terms of the Confidentiality
Agreement.
Section 10.9. Expenses. Except as otherwise expressly
provided in this Agreement, whether or not the transactions contemplated by
this Agreement are consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be borne by
the party incurring such expenses. Notwithstanding the foregoing, 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 Pfizer and Purchaser shall be borne as follows:
(a) in respect of any such Taxes which are refundable or in
respect of which a credit is or becomes available, by the party which will be
entitled to such refund or credit; and
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(b) in respect of any other such Taxes not falling within
subsection (a) above, by Pfizer and Purchaser equally, provided that if any
such Tax or any other Tax from which there is otherwise an exemption becomes
payable as a result of an action by or omission of either the Purchaser or any
of the Seller Corporations, including, without limitation, changing the nature
of the Business or part thereof transferred or failing to register or become
liable for value added Tax or causing a significant break in the conduct of
the Business or part thereof transferred, such Tax shall be borne solely by
the responsible party. Pfizer and Purchaser, as the case may be, will, on
demand, reimburse the other for its share of any such Taxes paid by the other
in accordance with the foregoing provisions of this Section.
Section 10.10. Schedules. The disclosure of any matter in any
Schedule to this Agreement, (as may be amended or supplemented prior to the
Closing provided, that, any such amendment or supplement shall (i) not involve
a matter, the disclosure of which reveals a Material Adverse Effect and (ii)
constitute written disclosure for purposes of Section 8.8 hereof), 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 10.11. Governing Law. THE AGREEMENT SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK, ITS RULES OF CONFLICT OF LAWS
NOTWITHSTANDING. Pfizer and the Purchaser hereby agree and consent to be
subject to the jurisdiction of the United States District Court for the
Southern District of New York and in the absence of such Federal jurisdiction,
the parties consent to be subject to the jurisdiction of the Supreme Court of
the State of New York, County of New York.
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Section 10.12. Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, and
all of which shall constitute one and the same agreement.
Section 10.13. Headings. The heading references herein and
the table of contents hereto are for convenience purposes only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
Section 10.14. Severability. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other
provisions hereof. If any provision of this Agreement, or the application
thereof to any person or entity or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in
any other jurisdiction.
Section 10.15. Specific Enforcement The parties hereto agree
that irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at Law or equity, without the necessity of
demonstrating the inadequacy of money damages.
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IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
PFIZER INC.
By: /s/ David L. Shedlarz
Name: David L. Shedlarz
Title: Senior Vice President and
Chief Financial Officer
PFIZER HOLDINGS IRELAND
By: /s/ Alan G. Levin
Name: Alan G. Levin
Title: Director
ASSET SELLING CORPORATIONS
PFIZER SEIYAKU K.K.
SHILEY LTD.
HOWMEDICA FRANCE S.C.A.
HOWMEDICA GmbH
PFIZER CANADA INC.
PFIZER LABORATORIES (PTY) LTD. (SOUTH AFRICA)
PFICONPROD PTY LTD. (AUSTRALIA)
By: /s/ Paul S. Miller
Name: Paul S. Miller
Attorney-in-Fact
BOSTON SCIENTIFIC CORPORATION
By: /s/ Lawrence C. Best
Name: Lawrence C. Best
Title: Senior Vice President and
Chief Financial Officer