UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K A
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: February 11, 1998
United States Surgical Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-9776 13-2518270
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification Number)
150 Glover Avenue, Norwalk, CT 06856
(Address of principal executive offices)
(203) 845-1000
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition of Valleylab, a division of Pfizer, Inc.
On January 30, 1998 United States Surgical Corporation (the
"Company") completed its acquisition of Valleylab, a division of
Pfizer, Inc. for $425 million in a cash transaction. The acquisition
was funded by a 364 day term loan with the Company's four lead
banks. Valleylab, based in Boulder, Colorado is the world leader in
electrosurgical and ultrasonic products with annual sales of
approximately $200 million. It is anticipated that the Company will
refinance a portion of the term loan with a new debt financing
transaction.
Item 7. Financial Statements.
(a) Audited financial statements and notes to financial statements
for Valleylab as a business of Pfizer, Inc. for the year ended
December 31, 1997.
2
<PAGE>
VALLEYLAB
(A Business of Pfizer Inc.)
Financial Statements for the
Year Ended December 31, 1997 and
Independent Auditors' Report
3
<PAGE>
VALLEYLAB
(A Business of Pfizer Inc.)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT 5
COMBINED FINANCIAL STATEMENTS FOR THE YEAR
ENDED DECEMBER 31, 1997
Combined Balance Sheet 6
Combined Statement of Income 7
Combined Statement of Cash Flows 8
Notes to Combined Financial Statements 9-17
4
<PAGE>
Independent Auditors' Report
The Board of Directors
Pfizer Inc.:
We have audited the accompanying combined balance sheet of Valleylab, a Business
of Pfizer Inc., as of December 31, 1997, and the related combined statements of
income and cash flows for the year then ended. These combined financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the combined financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall combined financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Valleylab, a
Business of Pfizer Inc., at December 31, 1997 and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
New York, New York
February 26, 1998
5
<PAGE>
VALLEYLAB
(A Business of Pfizer Inc.)
COMBINED BALANCE SHEET
AS OF DECEMBER 31,1997
(Dollars in Thousands)
- --------------------------------------------------------------------------------
ASSETS
Current assets:
Cash $ 982
Accounts receivable, less allowance for doubtful
accounts-$561 39,477
Due from parent and affiliates 14,528
Inventories 35,976
Prepaid expenses and other assets 7,836
--------
Total current assets 98,799
Property, plant and equipment, less accumulated depreciation 39,488
Goodwill and other intangible assets, net 57,776
Other assets 3,915
--------
Total assets $199,978
========
LIABILITIES AND BUSINESS UNIT EQUITY
Current liabilities:
Accounts payable $ 3,728
Due to parent and affiliates 14,018
Income taxes payable 10,789
Accrued compensation and related items 10,362
Other current liabilities 4,535
--------
Total current liabilities 43,432
Deferred taxes 13,195
Other noncurrent liability 3,350
Business unit equity 140,001
--------
Total liabilities and business unit equity $199,978
========
See accompanying notes to combined financial statements.
6
<PAGE>
VALLEYLAB
(A Business of Pfizer Inc.)
COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31,1997
(Dollars in Thousands)
- --------------------------------------------------------------------------------
Net sales $197,580
Costs and expenses
Cost of sales 85,578
Selling, informational and administrative expenses 63,195
Research and development expenses 14,688
Corporate and division overhead costs 6,078
Other deductions--net 2,436
--------
Income before provision for taxes on income 25,605
Provision for taxes on income 10,161
--------
Net income $ 15,444
========
See accompanying notes to combined financial statements.
7
<PAGE>
VALLEYLAB
(A Business of Pfizer Inc.)
COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31,1997
(Dollars in Thousands)
- -------------------------------------------------------------------------------
Operating Activities
Net income $ 15,444
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization of intangibles 7,800
Other 338
Changes in assets and liabilities:
Accounts receivable (10,398)
Inventories 4,073
Prepaid and other assets (498)
Accounts payable and accrued liabilities 2,213
Other noncurrent liabilities 1,201
Due from/to parent and affiliates 93,018
---------
Net cash provided by operating activities 113,191
---------
Investing Activities
Purchases of property, plant and equipment (2,862)
Other (49)
---------
Net cash used in investing activities (2,911)
---------
Financing Activities - Dividend to parent company (110,000)
---------
Effect of exchange rate changes on cash 172
---------
Net increase in cash 452
Cash at beginning of year 530
---------
Cash at end of year $ 982
=========
See accompanying notes to combined financial statements.
8
<PAGE>
Valleylab
(A Business of Pfizer Inc.)
Notes to Combined Financial Statements
December 31, 1997
(Dollars in Thousands)
1. Organization and Subsequent Event
Valleylab was a business line within the Medical Technology Group ("MTG") of
Pfizer Inc. ("Pfizer") until January 30, 1998 when it was acquired by U.S.
Surgical Corporation ("USS"). The acquisition provided for the purchase of the
outstanding common stock of Valleylab Inc. and Vesta Medical Inc. by USS. In
addition, USS purchased certain net assets relating to the Valleylab business of
Howmedica GmbH (Germany and Austria); Pfizer Hospital Products (Belgium) N.V.;
Pfizer Medical Technology Group (Netherlands) B.V.; Howmedica France S.C.A.;
Howmedica International Limited; Pfizer Canada Inc.; Pfizer Seiyaku Kabushiki
Kaisha (Japan); Pfizer Overseas Inc.; Pfizer S.A. (Spain) and Pfizer Italiana
S.p.A. (collectively, the "Asset Selling Corporations").
Valleylab manufactures a line of electrosurgical and ultrasonic systems and
disposable medical products.
2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying combined financial statements present the financial position,
results of operations and cash flows for Valleylab Inc., Vesta Medical Inc. and
the Asset Selling Corporations ("Valleylab") as if Valleylab became a separate
legal entity on January 1, 1997. All significant intercompany transactions and
balances have been eliminated. Operations outside of the U.S. are included on a
fiscal year basis ending November 30. The combined financial statements include
the accounts specifically attributed to Valleylab, including allocations of
certain assets, liabilities and expenses relating to shared services and
administrative functions incurred at the corporate and business segment
operating levels of Pfizer. Cash from Valleylab's domestic operations is not
included in cash in the accompanying Combined Balance Sheet since this cash is
included in Pfizer's centralized cash management system. Accordingly,
Valleylab's cash at December 31, 1997 may not be representative of an
independent company.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the combined financial statements and
accompanying notes. Actual results could differ from those estimates.
Significant accounting estimates used include estimates for sales returns and
allowances and estimates used in allocating certain assets, liabilities and the
costs of shared services and administrative functions. Management believes that
it exercised reasonableness in deriving these amounts.
Summary of Significant Accounting Policies
Due from/to parent and affiliates - Due from/to parent and affiliates reflects
balances and transactions among Valleylab, Pfizer and other Pfizer entities.
Valleylab participates in Pfizer's centralized cash management system and, as
such, its cash funding requirements are met by and generally all excess cash is
transferred to Pfizer.
9
<PAGE>
Valleylab
(A Business of Pfizer Inc.)
Notes to Combined Financial Statements (Continued)
December 31, 1997
(Dollars in Thousands)
Inventories - Inventories are valued at the lower of cost or market, with cost
determined for finished goods and work-in-process at average actual cost and raw
materials and supplies at average or latest actual cost.
Property, plant and equipment - Property, plant and equipment is carried at cost
less accumulated depreciation. Major improvements are capitalized while
maintenance and repairs are expensed when incurred. Depreciation is computed
generally on a straight-line basis over the following estimated useful lives:
Buildings 33 1/3 years
Machinery and equipment 8 - 12 years
Furniture, fixtures and other 3 - 12 years
Goodwill and other intangible assets - Goodwill represents the excess of
purchase price over fair value of the net tangible and identified intangible
assets acquired in purchase transactions. Goodwill is being amortized on a
straight-line basis over 40 years. Other intangible assets are amortized on a
straight-line basis over their estimated useful lives. Amortization expense of
goodwill and other intangible assets is included in "Other deductions--net" in
the accompanying Combined Statement of Income. The carrying values of goodwill
and other intangible assets are reviewed for impairment whenever events or
changes in business conditions indicate they may not be recoverable. Valleylab
considers assets to be impaired and writes them down to fair value if expected
associated cash flows are less than the carrying amounts.
Foreign currency translation - The financial statements of operations outside of
the U.S. are maintained in their local currency. Valleylab translates assets and
liabilities to their U.S. dollar equivalents at rates in effect at the balance
sheet date. Income and expense items are translated into their U.S. dollar
equivalents at average rates of exchange for the period. Translation gains and
losses are accumulated in a separate component of business unit equity. Gains
and losses on foreign currency transactions are included in earnings.
Financial instruments - The carrying values of Valleylab's financial instruments
approximate their estimated fair values. At December 31, 1997, the cost of each
type of financial instrument, primarily accounts receivable, due from/to parent
and affiliates and accounts payable, approximates fair value because of the
short maturity period of these instruments.
Concentration of Credit Risk - Valleylab does not have significant
concentrations of credit risk from its customers. Periodically, Valleylab
reviews the credit quality of its customers' financial condition. In general,
there is no requirement for collateral from customers.
Income taxes - As an operating unit of Pfizer, Valleylab does not file separate
Federal tax returns but rather is included as part of the various returns filed
by Pfizer or its subsidiaries. As such, Valleylab's tax provision is computed as
if it were a separate company. Allocated domestic income taxes are settled with
Pfizer on a current basis. Deferred tax assets and liabilities are recognized
for the expected future tax consequences of differences between the financial
reporting and tax bases of assets and liabilities using enacted tax rates and
laws. No provision is made for taxes on overseas retained earnings that are
deemed to be permanently reinvested.
10
<PAGE>
Valleylab
(A Business of Pfizer Inc.)
Notes to Combined Financial Statements (Continued)
December 31, 1997
(Dollars in Thousands)
Revenue recognition and product warranty costs - Revenues from product sales and
sales-type leases are generally recognized when the product has been shipped,
installed and financing arrangements have been completed. Revenues from
operating leases are recognized over the term of the respective contracts.
Valleylab provides a standard one year warranty on all of its products and an
extended warranty of up to 7 years on certain products. Any revenue from these
extended warranty contracts is recognized on a straight-line basis over the life
of the warranty. Valleylab provides for an accrual of estimated future warranty
costs based on its history of actual warranty costs incurred. The accrued
liability for warranty costs is included in "other current liabilities" in the
accompanying Combined Balance Sheet.
3. Corporate and Division Overhead Costs
Pfizer allocates certain corporate service and employee benefit expenses (based
on actual costs incurred) to Valleylab on the basis of number of personnel,
occupied office space and third party sales. Pfizer does not allocate various
other corporate overhead expenses to its operating divisions. However, for
purposes of the accompanying combined financial statements, an allocation of
such expenses has been included in the accompanying Combined Statement of Income
and is summarized as follows:
Pfizer corporate overhead costs $ 2,685
MTG division overhead costs 3,393
-------
$ 6,078
=======
Pfizer corporate overhead costs represent a portion of corporate functions such
as personnel, legal, accounting, treasury and information systems which are
primarily allocated based on sales of Valleylab compared to total Pfizer
revenues.
MTG division overhead costs represent personnel, quality control, regulatory
compliance, finance and business development which are primarily allocated based
on sales to third party customers of Valleylab compared to total MTG sales.
Management believes that all allocations are made on a reasonable basis;
however, these costs are not necessarily representative of the costs that would
have been or will be incurred by Valleylab as an independent company.
4. Inventory
Finished goods $ 24,910
Work in process 5,156
Raw materials 11,991
--------
42,057
Less: allowance for obsolescence (6,081)
--------
$ 35,976
========
11
<PAGE>
Valleylab
(A Business of Pfizer Inc.)
Notes to Combined Financial Statements (Continued)
December 31, 1997
(Dollars in Thousands)
5. Financial Agreements
Valleylab leases certain of its products to customers under sales-type leases.
These leases are generally for periods of 1 to 5 years. The current portion of
the net investment in sales-type leases of $1,307 is included in "Prepaid
expenses and other assets" in the accompanying Combined Balance Sheet. The
noncurrent portion of the net investment in sales-type leases of $2,501 is
included in "Other assets" in the accompanying Combined Balance Sheet.
6. Property, Plant and Equipment
Land and buildings $ 29,750
Machinery and equipment 27,734
Furniture, fixtures and other 11,860
Construction in progress 805
--------
70,149
Less: Accumulated depreciation (30,661)
--------
Net property, plant and equipment $ 39,488
========
Depreciation expense totaled $5,163 for the year ended December 31, 1997.
7. Goodwill and Other Intangible Assets
Goodwill $ 39,007
Patents 26,830
Trademarks 4,800
--------
70,637
Less: Accumulated amortization (12,861)
--------
Net goodwill and other intangible assets $ 57,776
========
8. Income Taxes
The components of the income tax provision (benefit) are:
Current:
Federal $ 9,466
State and local 719
Foreign taxes 881
--------
Total current 11,066
--------
Deferred:
Federal (898)
State and local (7)
--------
Total deferred (905)
--------
Total $ 10,161
========
12
<PAGE>
Valleylab
(A Business of Pfizer Inc.)
Notes to Combined Financial Statements (Continued)
December 31, 1997
(Dollars in Thousands)
A reconciliation of the U.S. income tax rate to our effective rate is as
follows:
Federal statutory income tax rate 35.0%
State and local taxes, net of Federal
income tax benefit 2.8%
Nondeductible permanent items 1.8%
-----
Effective income tax rate 39.6%
=====
Deferred income taxes are provided for the temporary differences between the
financial reporting basis and the tax basis of Valleylab's assets and
liabilities. Deferred tax assets and liabilities are comprised of the following:
Assets Liabilities
------ -----------
Prepaid/other intangibles $ 2,375 $10,543
Inventories 2,099 143
Employee benefits 590 79
Property, plant and equipment 1,326 6,193
Other 441 --
------- -------
Total deferred taxes $ 6,831 $16,958
------- -------
Net deferred tax liability $10,127
=======
At December 31, 1997, the net current deferred tax asset of $3,068 is included
in "Prepaid expenses and other assets" in the accompanying Combined Balance
Sheet. The net noncurrent deferred tax liability was $13,195 at December 31,
1997.
9. Pension and Postretirement Benefits
Valleylab participates in Pfizer's pension plans for employees. Plan benefits
depend on years of service and employee final average earnings. Participants
vest in their benefits after as few as five years of service. No detailed
financial information regarding the funded status of the plans and components of
net periodic pension cost, as related to Valleylab, is available.
The plans' assets as of December 31, 1997 consisted primarily of listed stocks
and bonds. Pfizer contributes to the pension plans at a rate intended to remain
at a level percentage of compensation. Since the principal plan is overfunded,
Pfizer did not make a contribution in 1997. Pfizer funds international pension
plans as required by local government and tax requirements. For the year ended
December 31, 1997, a pension credit of $195 was allocated to Valleylab due to
the overfunded status of the plans. Pfizer does not fund postretirement plans,
but contributes to the plans as benefits are paid. As of December 31, 1997, the
postretirement benefit obligation related to Valleylab was $3,350 and is
included in "Other noncurrent liability" in the accompanying Combined Balance
Sheet.
13
<PAGE>
Valleylab
(A Business of Pfizer Inc.)
Notes to Combined Financial Statements (Continued)
December 31, 1997
(Dollars in Thousands)
The following tables reflect the components of net pension cost and the funded
status of all funded retirement plans of Pfizer which include Valleylab.
The cost related to these plans and the assumptions used consist of the
following:
Post-
Pension retirement
------- ----------
Assumptions:
Expected long-term rate of
return on plan assets:
U.S. plans 10.0% --
International plans 7.5% --
Expected return on plan assets:
Actual return $ (491,000) --
Deferred return 283,000 --
---------- ---------
Net expected return (208,000) --
Service cost-benefits earned
during the period 105,000 $ 7,000
Interest cost on benefit
obligation 145,000 19,000
Net amortization and deferral 31,000 (25,000)
---------- ---------
Net periodic pension cost $ 73,000 $ 1,000
========== =========
The following tables set forth the benefit obligations of the plans, the funded
status of the Pfizer pension plans and the assumptions used:
Post-
Pension retirement
------- ----------
Assumptions:
Discount rate:
U.S. plans 7.0% 7.0%
International plans 5.9% --
Rate of increase in salary levels:
U.S. plans 4.5% --
International plans 3.9% --
Fair value of plan assets $2,793,000 --
---------- ---------
Actuarial present value of
accumulated benefit obligation:
Vested 1,821,000 --
Non-vested 270,000 --
---------- ---------
Total 2,091,000 --
Effect of future salary increases 583,000 --
---------- ---------
Projected benefit obligation 2,674,000 --
---------- ---------
14
<PAGE>
Valleylab
(A Business of Pfizer Inc.)
Notes to Combined Financial Statements (Continued)
December 31, 1997
(Dollars in Thousands)
Post-
Pension retirement
------- ----------
Postretirement benefit obligation for:
Retirees -- $ 180,000
Fully eligible active plan
participants -- 33,000
Other active plan participants -- 74,000
--------- ---------
Accumulated postretirement
benefit obligation -- 287,000
--------- ---------
Plan assets in excess of/(less
than) benefit obligation 119,000 (287,000)
Unrecognized overfunding at date
of adoption (10,000) --
Unrecognized net (gains)/losses (86,000) (24,000)
Unrecognized prior service
costs/(gains) 310,000 (83,000)
Minimum liability adjustment (196,000) --
--------- ---------
Prepaid/(accrued) costs included
in Pfizer's balance sheet $ 137,000 $(394,000)
========= =========
An average increase of 8.2% in the cost of covered health care benefits was
assumed for 1998 and is projected to decrease to 5.2% after seven years and to
then remain at that level.
A 1% increase in the medical trend rate assumed for postretirement benefits
would cause an increase of $13,100 in the accumulated benefit obligation at
December 31, 1997 and an increase in the periodic cost of $900.
10. Business Unit Equity
The changes in business unit equity during the year ended December 31, 1997 were
as follows:
Business Unit
Equity
Exclusive of Accumulated
Translation Translation Business Unit
Adjustment Adjustment Equity
------------- ----------- -------------
Balance at January 1, 1997 $ 232,371 $ 587 $ 232,958
Net income 15,444 -- 15,444
Dividend to parent company (110,000) -- (110,000)
Translation adjustment -- (937) (937)
Other activity with Pfizer 2,536 -- 2,536
--------- --------- ---------
Balance at December 31, 1997 $ 140,351 $ (350) $ 140,001
========= ========= =========
15
<PAGE>
Valleylab
(A Business of Pfizer Inc.)
Notes to Combined Financial Statements (Continued)
December 31, 1997
(Dollars in Thousands)
11. Stock Option Awards
Stock options are granted to Valleylab employees under the Pfizer Inc. Stock and
Incentive Plan. Options are exercisable after five years or less, subject to
continuous employment and certain other conditions and expire 10 years after the
grant date. Once exercisable, the employee can purchase shares of Pfizer common
stock at the market price on the date the option was granted. The
weighted-average fair value per stock option granted was $16.77, $10.90 and
$6.46 for the options granted in 1997, 1996 and 1995, respectively. The fair
values were estimated using the Black-Scholes option pricing model, modified for
dividends and using the following assumptions:
1997 1996 1995
------ ------ ------
Expected dividend yield 1.76% 1.97% 2.85%
Risk-free interest rate 6.23% 6.38% 6.26%
Expected stock price
volatility 25.56% 25.45% 26.00%
Expected term until
exercise (years) 5.50 5.25 5.25
Compensation expense was not recognized for the issuance of employee stock
options. If Pfizer had recorded compensation expense for option grants,
Valleylab's pro forma net income for the year ended December 31, 1997 reflecting
the compensation cost for the fair value of stock options awarded to Valleylab
employees in 1997, 1996 and 1995 would have approximated $13,570.
12. Contingent Liabilities and Commitments
As of January 30, 1998, Valleylab had 56 product liability matters (24 suits and
32 claims) pending, all of which seek money damages for personal injuries
resulting from allegedly defective electrosurgical equipment. All but one of
these cases alleges burns secondary to an electrosurgical procedure; one case
currently pending in Alabama state court alleges penile atrophy following a
circumcision. In the electrosurgical burn matters, specified damages claimed
range from $25 to $1,600. In the penile atrophy case, the plaintiff has demanded
$11,400.
Liability for product liability lawsuits and claims brought prior to January 30,
1998 will be retained by Pfizer and not transferred to USS as part of the
acquisition. In the opinion of Pfizer's management, the liability, if any,
resulting from all pending product liability lawsuits and claims (with the
exception of the Alabama state court case noted above) would not have a material
adverse effect on Valleylab if such liability were not retained by Pfizer.
Valleylab licenses technology used in certain of its products. Under an existing
license agreement with Birtcher Medical Systems, Inc. ("Birtcher"), if Valleylab
were no longer a wholly-owned subsidiary of Pfizer, the contractual royalty
rates would be increased retroactively. All prior royalty payments would be
recalculated using the higher royalty rates and approximately $317 in additional
royalties would be payable to Birtcher.
16
<PAGE>
Valleylab
(A Business of Pfizer Inc.)
Notes to Combined Financial Statements (Continued)
December 31, 1997
(Dollars in Thousands)
Valleylab is obligated under various noncancelable vehicle and office equipment
operating leases. Total rent expense under operating leases was $577 for the
year ended December 31, 1997. Future minimum lease payments under these leases
with initial or remaining terms in excess of one year as of December 31, 1997
are:
Years ended December 31,
1998 $ 512
1999 469
2000 358
2001 96
2002 37
=====
17
<PAGE>
(b) Pro forma financial information.
The following unaudited pro forma combined financial statements as of and
for the year ended December 31,1997 (the "Pro Forma Financial Statements")
are based on the historical balance sheet and statement of operations of
the Company as of and for the year ended December 31, 1997 adjusted to
give effect to the purchase of Valleylab and the related financing. The
Pro Forma Statement of Operations give effect to the transactions as if
they had occurred as of January 1, 1997 and the Pro Forma Balance Sheet
give effect to the transactions as if they occurred as of December 31,
1997. The transactions and the related adjustments are described in the
accompanying notes. The pro forma adjustments are based upon available
information and certain assumptions that the Company's management believes
are reasonable, including the satisfaction of certain conditions set forth
in the Valleylab purchase agreement. The Pro Forma Financial Statements do
not purport to represent what the Company's results of operations or
financial condition would actually have been had the transactions in fact
occurred on such dates or to project the Company's results of operations
or financial condition for any future period or date. The Pro Forma
Financial Statements should be read in conjunction with the historical
combined financial statements of Valleylab included elsewhere in this Form
8-K A and the historical financial statements of the Company.
The acquisition will be accounted for using the purchase method of
accounting. The total purchase price of the acquisition will be allocated
to the tangible and intangible assets and liabilities of the Company based
upon their respective fair values. The allocation and amount of the
aggregate purchase price included in the Pro Forma Financial Statements is
preliminary, as certain aspects of the transaction, including a working
capital adjustment to the preliminary purchase price, and appraisals have
not yet been finalized. However, the Company does not expect the final
determination of the amount and the allocation of the purchase price will
materially alter the pro forma financial position and results of
operations as indicated below.
18
<PAGE>
Unaudited Pro Forma Condensed Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
United States Surgical
Corporation and Subsidiaries Valleylab Pro forma
Consolidated Balance Combined Balance Balance Sheet
Sheet As Of Sheet As Of Pro forma As Of
December 31, 1997 December 31, 1997 Adjustments December 31, 1997
----------------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 18,300 $ 1,000 $ (1,000) (A) $ 18,300
Receivables, less allowance 355,900 39,500 395,400
Inventories 208,700 36,000 -- (B) 244,700
Other current assets 94,100 22,300 (19,700) (A) 96,700
---------- -------- --------- ----------
Total Current Assets 677,000 98,800 (20,700) 755,100
Property, Plant and Equipment (net) 421,200 39,500 9,800 (C) 470,500
Other Assets (net) 627,800 61,700 260,500 (C) 950,000
---------- -------- --------- ----------
Total Assets $1,726,000 $200,000 $ 249,600 $2,175,600
========== ======== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 32,800 $ 3,700 $ -- $ 36,500
Accrued liabilities 210,000 28,900 (13,700) (A) 225,200
Income taxes payable 64,900 10,800 (10,800) (A) 64,900
Current portion of long-term debt 4,800 -- 130,000 (D) 134,800
---------- -------- --------- ----------
Total Current Liabilities 312,500 43,400 105,500 461,400
Long-Term Debt and Liabilities 131,300 3,400 296,600 (A,D) 431,300
Deferred Income Taxes 25,300 13,200 (12,500) (A) 26,000
Stockholders' Equity
Common Stock-at par value 8,300 8,300
Additions paid-in-capital common stock 973,600 973,600
Retained Earnings 395,800 395,800
Treasury Stock-at cost (96,800) (96,800)
Accumulated translation adjustments (28,300) (28,300)
Unrealized gain on marketable securities 4,300 -- -- 4,300
---------- -------- --------- ----------
Total Stockholders' Equity 1,256,900 1,256,900
Business Unit Equity - 140,000 $(140,000) (E) -
---------- -------- --------- ----------
Total Liabilities and Stockholders' Equity $1,726,000 $200,000 $ 249,600 $2,175,600
========== ======== ========= ==========
</TABLE>
Footnotes
A. The above pro forma information reflects the removal of certain assets and
liabilities not acquired in the transaction. Cash, intercompany
receivables and payables, income tax assets and liabilities, and certain
pension and post retirement medical benefits were not purchased or assumed
by the Company from Pfizer.
19
<PAGE>
B. The Company has recorded a fair value adjustment to inventory of $2
million. In addition the Company has excluded approximately $2 million of
inventory which will not be purchased from Pfizer.
C. The Company has recorded a fair value adjustment of approximately $10
million to property, plant, and equipment. In addition, the following
values have been assigned to intangibles: patents $34 million, non-compete
agreement $8 million, customer lists $40 million, trademarks $15 million,
and goodwill $207 million. The allocation of the purchase price is
preliminary as certain aspects of the transaction, including a working
capital adjustment to the preliminary purchase price, and appraisals have
not yet been finalized. In addition, several foreign locations legal
closings have been delayed due to statutory, regulatory or other approvals
pending. Closing costs which are estimated to be $5 million are also
included in other assets.
D. The transaction has been financed with a 364 day term loan, therefore,
$300 million of the total loan is recorded as long-term debt because the
Company can refinance this amount with its existing long term facility.
The balance of the borrowings are reflected in current liabilities. It is
anticipated that the Company will refinance a portion of the term loan
with a new financing transaction.
E. Eliminate business unit equity.
F. The preliminary purchase price, book value of net assets acquired and
purchase accounting adjustments are as follows:
(In millions)
Preliminary purchase price $425
Fees and expenses 5
----
Preliminary purchase price and fees and expenses 430
Net assets of Valleylab business 140
Assets not acquired (30)
Liabilities not acquired 33
Deferred taxes not acquired 13
----
Preliminary Book value of net assets acquired 156
Excess of Total costs over preliminary book value 274
Preliminary purchase accounting adjustments:
Inventories 2
Property, plant, and equipment 10
Elimination of historical intangible assets (47)
Transaction closing and financing fees 5
Patents 34
Non compete agreements 8
Customer lists 40
Trademarks 15
----
Total preliminary adjustments 67
Excess of preliminary purchase price over preliminary
book value of assets acquired $207
====
The expected amortization periods for intangible assets acquired are as follows
(straight line basis):
Years
-----
Patents 10
Non-compete agreements 5
Customer lists 30
Trademarks 40
Goodwill 40
20
<PAGE>
Unaudited Pro Forma Statement of Operations
(Dollars in thousands)
<TABLE>
<CAPTION>
United States Surgical
Corporation and Subsidiaries Valleylab Pro-forma
Consolidated Statement Combined Statement Statement of
Of Operations Of Operations Operations
For the Year Ended For the Year Ended Pro forma For the Year Ended
December 31, 1997 December 31, 1997 Adjustments December 31, 1997
----------------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C>
Net Sales $1,172,100 $197,600 $ -- $1,369,700
Costs and Expenses:
Cost of products sold 471,200 85,600 -- (A) 556,800
Research and development 71,800 14,700 -- 86,500
Selling, general and administrative 464,800 71,700 3,900 (B) 540,400
Interest (net) 1,200 -- 27,100 (C) 28,300
Special Items:
Litigation and related costs 24,300 -- -- 24,300
Restructuring charges 17,800 -- -- 17,800
---------- -------- -------- ----------
Total costs and expenses 1,051,100 172,000 31,000 1,254,100
Income (loss) before income taxes 121,000 25,600 (31,000) 115,600
Income taxes (benefit) 26,900 10,200 (12,400) (D) 24,700
---------- -------- -------- ----------
Net Income (loss) 94,100 15,400 (18,600) 90,900
Preferred stock dividends 4,700 4,700
---------- ----------
Net income applicable to common stock $ 89,400 $ 86,200
========== ==========
Average number of basic common shares
outstanding 72,100 72,100
========== ==========
Net income per basic common share $1.24 $1.20
========== ==========
Average number of diluted common
shares outstanding 73,700 73,700
========== ==========
Net income per diluted common share $1.21 $1.17
========== ==========
</TABLE>
Footnotes
A. Excluded from cost of product sold are non-recurring fair value
adjustments to inventory which approximate $2 million and which will be
expensed during 1998.
B. The above pro forma adjustments exclude certain incremental allocations of
Pfizer divisional and corporate expenses totalling $6 million that were
reflected as an allocation from Pfizer to Valleylab in the audited
Valleylab combined statement of income for the year ended December 31,
1997, as such amounts will no longer be allocated to Valleylab due to the
acquisition and are not a continuing cost of the business acquired. In
addition, adjustments for incremental intangible amortization and
depreciation of $10 million have been reflected in selling, general and
administrative expense.
C. Interest expense of $27 million has been calculated assuming the
borrowings used to acquire Valleylab had been outstanding the entire year
with an estimated interest rate of 6.23%.
D. The pro forma tax adjustment was calculated at a combined statutory rate
of 40%.
21
<PAGE>
(c) Exhibits
Exhibit 10 Material Contracts
(a) Stock and Asset Purchase Agreement among Pfizer Inc.,
the Asset Selling Corporations (named herein) and
United States Surgical Corporation dated as of
December 8, 1997
Exhibit 23 Consent of Experts
(a) Consent of KPMG Peat Marwick LLP, Independent
Certified Public Accountants
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNITED STATES SURGICAL CORPORATION
Date: March 5, 1998 By: /s/ Richard A. Douville
------------------------
Richard A. Douville
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
23
================================================================================
STOCK AND ASSET PURCHASE AGREEMENT
among
PFIZER INC.,
the
ASSET SELLING CORPORATIONS
(named herein)
and
UNITED STATES SURGICAL CORPORATION
Dated as of December 8, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I - DEFINITIONS AND TERMS........................................ 2
Section 1.1 Certain Definitions.................................... 2
Section 1.2 Other Terms............................................ 22
Section 1.3 Other Definitional Provisions.......................... 22
ARTICLE II - PURCHASE AND SALE............................................. 22
Section 2.1 Purchase and Sale of Shares............................ 22
Section 2.2 Purchase and Sale of Assets............................ 23
Section 2.3 Purchase Price......................................... 28
Section 2.4 Allocation of the Aggregate Purchase
Price.................................................. 31
Section 2.5 Closing; Delivery and Payment.......................... 33
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF PFIZER..................... 35
Section 3.1 Organization........................................... 35
Section 3.2 Authority; Binding Effect.............................. 35
Section 3.3 Conveyed Subsidiaries.................................. 36
Section 3.4 Non-Contravention...................................... 38
Section 3.5 Consents and Approvals................................. 39
Section 3.6 Financial Information; Books and Records............... 39
Section 3.7 Absence of Certain Changes or Events................... 40
Section 3.8 Litigation and Claims.................................. 40
Section 3.9 Compliance with Laws................................... 41
Section 3.10 Product Registrations; Regulatory
Compliance............................................. 41
Section 3.11 Environmental Matters.................................. 42
Section 3.12 Material Contracts..................................... 43
Section 3.13 Intellectual Property.................................. 45
Section 3.14 Real Property.......................................... 48
Section 3.15 Assets................................................. 49
Section 3.16 Taxes.................................................. 50
Section 3.17 Employee Benefits...................................... 50
Section 3.18 Brokers................................................ 53
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF PURCHASER................... 53
Section 4.1 Organization and Qualification......................... 53
Section 4.2 Corporate Authorization................................ 53
Section 4.3 Binding Effect......................................... 54
Section 4.4 Non-Contravention...................................... 54
Section 4.5 Consents and Approvals................................. 54
Section 4.6 Financial Capability................................... 54
Section 4.7 Securities Act......................................... 54
Section 4.8 Purchaser's Investigation.............................. 55
Section 4.9 Brokers................................................ 55
ARTICLE V - COVENANTS...................................................... 56
i
<PAGE>
Section 5.1 Access................................................. 56
Section 5.2 Conduct of Business.................................... 56
Section 5.3 Reasonable Best Efforts; Certain
Governmental Matters................................. 59
Section 5.4 Tax Matters............................................ 63
Section 5.5 Employees and Employee Benefits........................ 77
Section 5.6 Certain Dividends, Etc................................. 86
Section 5.7 Notification of Certain Matters........................ 87
Section 5.8 Further Assurances; Consents........................... 87
Section 5.9 Resignations........................................... 88
Section 5.10 Bulk Transfer Laws..................................... 88
Section 5.11 Noncompetition......................................... 89
Section 5.12 Transitional Services.................................. 92
Section 5.13 Transitional Intellectual Property
License Agreement...................................... 93
Section 5.14 Compliance with WARN, Etc.............................. 93
Section 5.15 Foreign Implementing Agreements........................ 93
Section 5.16 Litigation Support..................................... 93
ARTICLE VI - CONDITIONS TO CLOSING......................................... 94
Section 6.1 Conditions to the Obligations of
Purchaser and Pfizer................................... 94
Section 6.2 Conditions to the Obligations of
Purchaser.............................................. 95
Section 6.3 Conditions to the Obligations of Pfizer................ 96
ARTICLE VII - SURVIVAL AND INDEMNIFICATION................................. 97
Section 7.1 Survival............................................... 97
Section 7.2 Indemnification by Purchaser........................... 98
Section 7.3 Indemnification by Pfizer.............................. 99
Section 7.4 Indemnification Procedures.............................100
Section 7.5 Indemnification Procedures for Remedial
Actions on Conveyed Properties.........................103
Section 7.6 Characterization of Indemnification
Payments...............................................106
Section 7.7 Computation of Losses Subject to
Indemnification........................................107
Section 7.8 Certain Other Matters..................................107
ARTICLE VIII - TERMINATION.................................................108
Section 8.1 Termination............................................108
Section 8.2 Effect of Termination..................................109
ARTICLE IX - MISCELLANEOUS.................................................109
Section 9.1 Notices................................................109
Section 9.2 Amendment; Waiver......................................111
Section 9.3 Assignment.............................................111
Section 9.4 Entire Agreement.......................................112
Section 9.5 Fulfillment of Obligations.............................112
ii
<PAGE>
Section 9.6 Parties in Interest....................................112
Section 9.7 Public Disclosure......................................112
Section 9.8 Return of Information..................................113
Section 9.9 Expenses...............................................113
Section 9.10 Schedules..............................................115
Section 9.11 Governing Law..........................................115
Section 9.12 Counterparts...........................................115
Section 9.13 Headings...............................................115
Section 9.14 Severability...........................................116
iii
<PAGE>
List of Schedules
1.1(a) Asset Selling Corporations
1.1(b) Excluded Contracts
2.2(a)(i) Leased Real Property
2.2(c) Product Claims and Excluded Product Liability Lawsuits
2.4 Allocation of Purchase Price
3.3(a) Name and Jurisdiction of the Conveyed Subsidiaries
3.3(c) Name and Jurisdiction of the Subsidiaries of the Conveyed
Subsidiaries
3.4 Required Third Party Consents
3.5 Required Governmental Consents
3.6 Financial Statements
3.7 Material Occurrences
3.8 Pending or Threatened Litigation
3.10 Product Registrations
3.11 Environmental Matters
3.12 Material Contracts
3.13(a) Seller Patent Rights
3.13(c) Infringements
3.13(d)(i) Seller Trademark Rights
3.13(d)(ii) Shared Trademark Rights
3.14(a) Owned Real Property
3.16 Taxes
4.5 Purchaser Required Governmental Consents
iv
<PAGE>
5.5(a) Employee Benefits (US)
5.5(a)(i) Employee Severance Program
5.5(a)(ii) Employees (US)
5.5(a)(iv) Purchaser Benefit Plans
5.5(b)(ii) Purchaser Qualified Plans
5.5(e) Employees (non-US)
5.11 Exceptions to Noncompete Covenant
v
<PAGE>
List of Exhibits
A. Pfizer Employee Separation Plan
B. Release Agreement (Individual Termination)
C. Release Agreement (Group Termination)
D. Form of Transitional Services Agreement
E. Form of Transitional Intellectual Property License
Agreement
vi
<PAGE>
STOCK AND ASSET PURCHASE AGREEMENT, dated as of December 8, 1997,
among Pfizer Inc., a Delaware corporation ("Pfizer"), the Asset Selling
Corporations (as defined below) (Pfizer and the Asset Selling Corporations are
sometimes referred to, collectively, as the "Seller Corporations") and United
States Surgical 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 the issued and
outstanding shares of common stock of Valleylab Inc., a Colorado corporation,
and Vesta Medical Inc., a California corporation (collectively, the "Conveyed
Subsidiaries");
WHEREAS, the Asset Selling Corporations own the Conveyed Assets (as
defined below); and
WHEREAS, the parties hereto desire that Pfizer shall sell and
transfer to Purchaser and Purchaser shall purchase from Pfizer all of the issued
and outstanding shares of common 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
<PAGE>
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
Section I.1 Certain 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 (US) or Employee
(non-US) who shall accept an offer of employment or continuation of employment
by Purchaser on or prior to the Closing Date and work for Purchaser or any of
its Affiliates at least one day, or (ii) an Employee (US) or Employee (non-US)
whose initial position offer 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. This definition
pertains to all Employees (US) and Employees (non-US), including those whose
compensation is subject to individual approval by the Pfizer Employee
Compensation and Management Development Committee.
"Affiliate" shall mean, with respect to any Person, any other person
directly or indirectly controlling, controlled by,
2
<PAGE>
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
2.3(a) hereof.
"Aggregate Purchase Price" shall have the meaning set forth in
Section 2.3(a)(ii) 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 2.4
hereof.
"Asset Purchase Price" shall have the meaning set forth in Section
2.3(a)(ii) hereof.
"Asset Selling Corporations" shall mean those entities listed on
Schedule 1.1(a) hereto.
"Assumed Contracts" shall have the meaning set forth in Section
2.2(a)(iii) hereof.
"Assumed Liabilities" shall have the meaning set forth in Section
2.2(b) hereof.
"Business" shall mean the worldwide business of developing,
manufacturing, distributing and selling electrosurgical and ultrasonic medical
devices as conducted on the date hereof by Pfizer through the Conveyed
Subsidiaries (and the Subsidiaries of the Conveyed Subsidiaries) and by the
Valleylab divisions of the Asset Selling Corporations.
3
<PAGE>
"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.
"Claim" shall have the meaning set forth in Section 7.4 hereof.
"Claim Notice" shall have the meaning set forth in Section 7.4
hereof.
"Closing" shall mean the closing of the transactions contemplated
by this Agreement.
"Closing Date" shall have the meaning set forth in Section 2.5(a)
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"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.
"Confidentiality Agreement" shall mean the Confidentiality Agreement
between Pfizer and Purchaser relating to the Business.
"Consolidated Taxes" shall mean all federal, state, provincial or
local Income Taxes, domestic or foreign, that are paid on a consolidated,
unitary, combined or similar basis with
4
<PAGE>
respect to Tax Returns ("Consolidated 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(a)
hereof, it being understood that the Conveyed Assets do not include the Excluded
Assets or the Shares.
"Conveyed Properties" shall mean properties owned or operated as of
the Closing Date by the Conveyed Subsidiaries or their Subsidiaries, or
constituting part of the Conveyed Assets.
"Conveyed Subsidiaries" shall have the meaning set forth in the
Recitals above.
"Employee" shall mean an Employee (US) or an Employee (non-US).
"Employee (non-US)" shall mean any individual who as of the Business
Day immediately preceding 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 Business Day immediately preceding the Closing Date, or (B) shall have
been
5
<PAGE>
absent as of 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 180 consecutive days prior to the Closing
Date or (D) shall have received and accepted 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 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 Business Day
immediately preceding 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, perform) services on behalf of the Business and
(ii) either (A) shall have been employed and at work on the Business Day
immediately preceding the Closing Date, or (B) shall have been absent as of the
Closing Date because of illness or on short-term disability (including
6
<PAGE>
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 180 consecutive days prior to the Closing
Date or (D) shall have received and accepted 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, but shall have not yet commenced work as of the Closing
Date.
"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 in effect at the Closing Date relating
directly or indirectly to (i) the environmental aspects of product approvals
including occupational health and safety, (ii) the protection of the environment
(including, without limitation, air, water vapor, surface water, groundwater,
drinking water supply, surface or subsurface land), (iii) occupational safety
and health, or (iv) the exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labelling, protection, release
or disposal of Hazardous Materials or Hazardous Substances.
"Environmental Liability" means the Losses resulting
7
<PAGE>
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 person, to public health, or to
the environment as a result of actual or threatened exposure to Hazardous
Materials or Hazardous Substances.
"Environmental Permit" 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(a)(ii)
hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that together with any Seller Corporation would have been deemed a
"single employer" within the meaning of Section 4001(b) of ERISA at any time
within the five-year period ending on the Closing Date.
"Excluded Assets" shall mean, with respect to any Conveyed
Subsidiary (or a Subsidiary of a Conveyed Subsidiary) or any Asset Selling
Corporation, (i) all cash and cash equivalents, (ii) all intercompany payables,
other than amounts due and owing among the Conveyed Subsidiaries, their
Subsidiaries and the Asset Selling Corporations in respect of the Business,
(iii) all losses, loss carry forwards and rights to receive refunds,
8
<PAGE>
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, (iv) the corporate books and
records of the Asset Selling Corporations, (v) all insurance policies, (vi) all
insurance recoveries relating to periods prior to the Closing Date, (vii) except
as expressly set forth herein, all assets of any employee benefit plan, (viii)
the "Pfizer" name and logo and (ix) all assets to be retained by Pfizer and its
Affiliates but made available to Purchaser pursuant to the Transitional Services
Agreement or Transitional Intellectual Property License Agreement, excluding in
any event all of the assets of the Conveyed Subsidiaries.
"Excluded Liabilities" shall have the meaning set forth in
Section 2.2(c) hereof.
"Excluded Environmental Liabilities" shall mean all Environmental
Liability associated with or arising from (i) all facilities formerly or
currently owned, leased or operated by the Business, the Conveyed Subsidiaries
or the Asset Selling Corporations, other than (A) those owned by a Conveyed
Subsidiary or any of their Subsidiaries as of the Closing Date or (B) those
constituting part of the Conveyed Assets transferred pursuant to this Agreement,
(ii)(A) Environmental Liabilities, including, but not limited to, the cost of
Remedial Action, attributable to the Lowry Landfill and the Marshall Boulder
Superfund Sites;
9
<PAGE>
(B) Environmental Liabilities as set forth in subsection (C) and (D) of the
definition of Environmental Liabilities, in excess of one million dollars
($1,000,000), to the extent resulting from a claim received within three and a
half years of the Closing Date concerning the Release or threat of Release of
any Hazardous Material or Hazardous Substance on or prior to the Closing Date at
any location owned or operated by a Conveyed Subsidiary or any of their
Subsidiaries as of the Closing Date or constituting part of the Conveyed Assets.
Pfizer shall be responsible for the cost of a Remedial Action only to the extent
that such Remedial Action is taken to comply with applicable Environmental Law
or the requirements of a Governmental Authority. Pfizer shall not be responsible
for those costs incurred in connection with a Remedial Action to the extent that
such costs arise from or are exacerbated by actions of the Purchaser after the
Closing Date; and (C) fines and penalties and the cost of defending against an
action seeking fines and penalties, to the extent resulting from a claim
received within two years of the Closing Date concerning any non-compliance with
Environmental Law or failure to obtain or comply with any Environmental Permit
in the operation of the Business on or prior to the Closing Date, (iii) all
off-site locations not used by the Business following the Closing Date where any
of the Conveyed Subsidiaries (or a Subsidiary of a Conveyed Subsidiary) or the
Asset Selling Corporations, directly or through third parties, disposed, stored
or treated, or arranged for the disposal, storage or treatment of, Hazardous
Materials on or prior to the Closing Date, (iv) all off-site locations used by
the Business following the Closing Date where any of the Conveyed Subsidiaries
(or a Subsidiary of a Conveyed Subsidiary) or the Asset Selling Corporations,
directly or through third parties, disposed, stored or treated, or
10
<PAGE>
arranged for disposal, storage or treatment of Hazardous Materials on or prior
to the Closing Date, subject to an allocation by volume if possible or, if not
possible, subject to equitable sharing of liability between Pfizer and
Purchaser, or (v) any failures by the Business prior to the Closing Date to
comply with the provisions of the California Safe Drinking Water and Toxic
Enforcement Act of 1986 where there are specific claims related to the sale of
products by the Business prior to the Closing. Notwithstanding anything to the
contrary set forth in this Agreement, capital and other costs of
environmental-related compliance with Environmental Laws in the ordinary course
of operating the Business from and after the Closing Date shall not be deemed to
be Excluded Environmental Liabilities.
"Financial Statements" shall mean the financial data set forth in
Schedule 3.6 hereto.
"Foreign Implementing Agreements" shall mean the various agreements
to be executed by the Asset Selling Corporations and Purchaser Affiliates after
the date of this Agreement for the purpose of implementing the transfer and
11
<PAGE>
conveyance on the Closing Date, or as soon thereafter as can be effected, of
assets to Purchaser Affiliates by the Asset Selling Corporations, the value of
which assets are reflected in Schedule 2.4, as may be adjusted as set forth in
said Schedule and setting forth certain local matters in connection with the
transactions contemplated hereby.
"GAAP" shall mean generally accepted accounting principles and
practices in effect in the United States of America from time to time as applied
by Pfizer.
"Governmental Authority" shall mean any supranational, national,
federal, state or local judicial, legislative, executive or regulatory
authority.
"Governmental Authorization" 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.
"Governmental Order" shall mean any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with
Governmental Authority.
"Hazardous Materials" shall mean all materials regulated by law as
capable of causing harm or injury to human health or the environment, including
oils, petroleum and petroleum products.
"Hazardous Substances" shall mean any hazardous
12
<PAGE>
substances within the meaning of 101(14) of the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et. seq., or any
pollutant or constituent that is regulated under any Environmental Law.
"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,
distributions (other than wages).
"Indemnified Parties" shall have the meaning set forth in Section
7.3(a) hereof.
"Indemnifying Party" shall have the meaning set forth in Section
7.4 hereof.
"Intellectual Property" shall mean Patent Rights, inventions,
discoveries, trade secrets, know-how and ideas, rights in research and
development, and commercially practiced
13
<PAGE>
processes and inventions, whether patentable or not in any jurisdiction,
Trademark Rights in any jurisdiction, copyrights and registrations or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof.
"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 or, with respect to the environmental and health and safety
provisions, as well as the employee benefit provisions, of this Agreement, an
environmental or health and safety manager or a human resources manager, as
appropriate, of Pfizer or one of its Subsidiaries engaged in the Business
including, without limitation, Valleylab Inc., Vesta Medical Inc. and the Asset
Selling Corporations.
"Laws" shall include any federal, state, foreign or local law,
statute, ordinance, rule, regulation, order, injunction, judgment or decree.
"Leases" shall have the meaning set forth in Section 3.14(a)
hereof.
"Leased Real Property" shall have the meaning set forth
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in Section 2.2(a)(i) 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.
"Losses" shall have the meaning set forth in Section 7.2 hereof.
"Material Adverse Effect" shall mean an effect that is materially
adverse to the business results, operations or financial condition of the
Business taken as a whole, but shall exclude any effect resulting from general
economic conditions or any occurrence or condition affecting the electrosurgical
and ultrasonic medical device industry generally.
"Material Contracts" shall have the meaning set forth in Section
3.12(a) hereof.
"Notice Period" shall have the meaning set forth in Section 7.4
hereof.
"Patent Rights" means patents together with any extensions,
reexaminations and reissues of such patents, patents of addition, patent
applications, divisions, continuations, continuations-in-part, and any
subsequent filings in any country claiming priority therefrom.
"PBGC" shall mean the Pension Benefit Guaranty
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Corporation.
"Permits" shall have the meaning set forth in Section 3.9(b)
hereof.
"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 Taxes not yet subject to
penalties for nonpayment or which are being actively contested in good faith by
appropriate proceedings.
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust or other entity or organization.
"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).
"Product Claim" shall mean a written claim from a third
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party addressed to, and received by, either of the Conveyed Subsidiaries, their
Subsidiaries, the Asset Selling Corporations or Pfizer 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.
"Product Registration" shall have the meaning set forth in
Section 3.10 hereof.
"Purchaser Affiliates" shall mean the Subsidiaries wholly-owned
(except for any directors' qualifying or nominee shares) by Purchaser to be
designated by Purchaser in writing delivered to Pfizer at the Closing.
"Purchaser" shall have the meaning set forth in the recitals and
its wholly owned Subsidiaries.
"Purchaser Competitive Business" shall have the meaning set forth in
Section 5.11(a) hereof.
"Purchaser Indemnified Parties" shall have the meaning set forth in
Section 7.3(a) hereof.
"Qualified Plans" shall have the meaning set forth in Section
3.17(c) hereof.
"Real Property" shall have the meaning set forth in Section 3.14(a)
hereof.
"Release" means any spill, leaking, pumping, injection,
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deposit, disposal, discharge, dispersal, or leaching into the environment,
including, but not limited to, air, surface water, soil or groundwater of any
property.
"Remedial Action" shall mean action to cleanup soil, surface water,
groundwater or sediments in response to a Release of Hazardous Materials or
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 Materials or Hazardous Substances and associated actions.
"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.
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"Seller Indemnified Parties" shall have the meaning set forth in
Section 7.2 hereof.
"Seller Patent Rights" shall have the meaning set forth in Section
3.13(a) hereof.
"Seller Trademark Rights" shall have the meaning set forth in
Section 3.13(d) hereof.
"Shares" shall have the meaning set forth in the Recitals hereto.
"Share Purchase Price" shall have the meaning set forth in Section
2.3(a)(i) hereof.
"Subsidiary" shall mean an entity as to which Pfizer or Purchaser or
any other relevant entity, as the case may be, owns directly or indirectly 50%
or more of the voting power or other similar interests. Any Person which comes
within this definition as of the date of this Agreement but thereafter fails to
meet such definition shall from and after such time not be deemed to be a
Subsidiary of Pfizer or Purchaser, as the case may be. Similarly, any Person
which does not come within such definition as of the date of this Agreement but
which thereafter meets such definition shall from and after such time be deemed
to be a Subsidiary of Pfizer or Purchaser, 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,
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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 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.
"Trademark Rights" shall mean registered and unregistered
trademarks, service marks, brand names, certification marks, trade dress,
goodwill associated with the foregoing and registrations in any jurisdiction of,
and applications in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or application.
"Transitional Intellectual Property License Agreement" shall have
the meaning set forth in Section 5.13 hereof.
"Transitional Services Agreement" shall have the meaning set forth
in Section 5.12 hereof.
"WARN" shall mean the Worker Adjustment and Retraining Notification
Act.
"Working Capital of the Business" shall mean the current assets
(excluding cash) less the current liabilities
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(excluding accrued Taxes) of the Business, determined in accordance with GAAP on
a basis consistent with the preparation of the Financial Statements.
Section I.2 Other Terms. Other terms may be defined elsewhere in the
text of this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
Section I.3 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.
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ARTICLE II
PURCHASE AND SALE
Section II.1 Purchase and Sale of Shares. On the terms and subject
to the conditions set forth herein, at the Closing, Pfizer agrees to sell to
Purchaser, and Purchaser agrees to purchase from Pfizer, free and clear of all
Liens, the Shares.
Section II.2 Purchase and Sale of Assets.
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(a) On the terms and subject to the conditions set forth herein, at
the Closing, Pfizer agrees to cause each Asset Selling Corporation to sell,
convey, assign and transfer to the Purchaser and the Purchaser agrees to
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 of such Asset Selling Corporation identified on the books and records of,
or dedicated for use in connection with, or primarily used by, the Business, of
every kind and description, wherever located, whether tangible or intangible,
real, personal or mixed, as the same shall exist as of the Closing, but
excluding the Excluded Assets (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 5.2 hereof) and, except as expressly provided
otherwise herein, shall include, without limitation, those certain assets,
properties and rights described in the following clauses (i) through (xii): (i)
the leasehold interests, including any prepaid rent, security deposits and
options to renew or purchase in connection therewith, of Asset Selling
Corporations in real property (the "Leased Real Property") set forth on Schedule
2.2(a)(i) and the
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real property which is set forth on Schedule 3.14(a); (ii) the furniture,
equipment, machinery, supplies, vehicles, spare parts, tools, personal property
and other tangible property owned, used, leased or licensed by Asset Selling
Corporations and identified on the books and records of, or dedicated for use in
connection with, or primarily used by, the Business (the "Equipment"); (iii) the
contracts, licenses, agreements and commitments identified on the books and
records of, or dedicated for use in connection with, or primarily used by, the
Business (excluding the contracts and agreements set forth in Schedule 1.1(b))
("Assumed Contracts"); (iv) the Inventories of the Asset Selling Corporations;
(v) all rights to the Intellectual Property owned, utilized or licensed by the
Asset Selling Corporations relating principally 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 for the
Business and is or could be used by one or more other businesses of Pfizer and
its Affiliates, then such Intellectual Property will be retained by Pfizer or
one of its Affiliates and at the Closing Pfizer and/or its applicable Affiliate
will grant to Purchaser and its Affiliates a perpetual, worldwide, royalty-free,
transferable license of such Intellectual Property for the continuation of use
by the Business; (vi) Product Registrations (and applications therefor) owned,
utilized or licensed by the Asset Selling Corporations
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relating to the products of the Business; (vii) transferable Governmental
Authorizations owned, utilized or licensed (subject to the terms of such
licenses) by the Asset Selling Corporations relating to the Business; (viii) all
computer systems, computer hardware, databases and software programs, source
codes and user manuals owned, used, leased by or licensed to the Asset Selling
Corporations used principally in the operation of the Business; to the extent
any of the foregoing is utilized in the Business and one or more other
businesses of Pfizer and its Affiliates, such computer systems, computer
hardware, databases and software programs will be made available to Purchaser
and its Affiliates pursuant to the Transitional Services Agreement; (ix) all
rights of the Asset Selling Corporations under or pursuant to all warranties,
representations and guarantees made by suppliers, manufacturers and contractors
to the extent relating to the Business or affecting the Conveyed Assets; (x) all
customer and vendor lists to the extent relating to the Business, and all files
and documents (including credit information) to the extent relating to customers
and vendors of the Business, and other business and financial records, files,
books and documents (whether in hard copy or computer format) to the extent
relating to the Conveyed Assets and/or the Business; (xi) the goodwill and going
concern value of the Business and (xii) the accounts receivable of the Business.
Notwithstanding the foregoing, but subject to the provisions of Section 5.8, an
Asset Selling
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Corporation shall be required to transfer, assign or convey any of its interest
in any leased property, Assumed Contract, Intellectual Property, Product
Registration (or application therefor) or Governmental Authorization only to the
extent that such Asset Selling Corporation has the right to make such transfer
and no action hereunder shall constitute an assignment thereof except to such
extent.
(b) Upon the terms and subject to the conditions of this Agreement,
Purchaser agrees, effective at the Closing, to assume all Liabilities of Pfizer
and the Asset Selling Corporations to the extent relating principally to 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 Excluded Liabilities (the "Assumed
Liabilities"). Except for Liabilities expressly within the definition of
Excluded Liabilities or as otherwise provided in this Agreement, the Assumed
Liabilities shall include, without limitation, all lawsuits arising after the
Closing to the extent resulting from the conduct of the Business or the
ownership of the Shares or the Conveyed Assets on, prior to or after the Closing
Date, all Environmental Liabilities and all Liabilities arising from the
manufacture, distribution or sale of any product
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of the Business on, prior to or after the Closing Date, including warranty
obligations.
(c) Notwithstanding any provision in this Agreement or any other
writing to the contrary, the Purchaser is not assuming the following Liabilities
of the Business, and Pfizer shall be responsible for the satisfaction or
discharge of such Liabilities, including such Liabilities of the Conveyed
Subsidiaries and their Subsidiaries (the "Excluded Liabilities"): (i) the
Excluded Environmental Liabilities; (ii) Liabilities resulting from all Product
Claims and lawsuits pending as of the Closing Date, including, without
limitation, the Product Claims and lawsuits listed on Schedule 2.2(c) hereto;
(iii) Liabilities resulting from indebtedness for borrowed money; (iv)
Liabilities for which Pfizer expressly has responsibility pursuant to the terms
of this Agreement; (v) Liabilities associated with the Excluded Assets; (vi)
intercompany Liabilities, other than amounts due and owing among the Conveyed
Subsidiaries, their Subsidiaries and the Asset Selling Corporations in respect
of the Business; (vii) Liabilities to Employees with respect to periods prior to
the Closing, except as provided herein; (viii) Liabilities under all Pfizer
employee plans affecting Affected Employees including, without limitation, the
Pfizer Savings and Investment Plan, except to the extent of the assets
transferred pursuant to Section 5.5(b) and (ix) the Pfizer Retirement Annuity
Plan.
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(d) Pfizer may take (or cause one or more of its Affiliates to take)
such action as is necessary or advisable to transfer effective as of the Closing
Date the Excluded Assets from the Conveyed Subsidiaries (and the Subsidiaries of
any Conveyed Subsidiary) and Asset Selling Corporations to itself or one or more
of its Affiliates for such consideration or for no consideration, as may be
determined by Pfizer in its sole discretion. After the Closing Date, Purchaser
shall take all actions (or shall cause its Affiliates to take all actions)
reasonably requested by Pfizer to effect the provisions of this Section 2.2(d).
Section II.3 Purchase Price. (a) In consideration of the sale and
transfer of the Shares and the sale and transfer of the Conveyed Assets,
Purchaser shall pay to Pfizer (for itself and as agent for the benefit of the
Asset Selling Corporations), an aggregate amount of U.S. $425,000,000.00 (the
"Aggregate Payment"), subject to adjustment as described below, allocated as
described below:
(i) In consideration of the sale and transfer of the Shares,
Purchaser agrees to purchase from Pfizer the Shares for an aggregate
purchase price of U.S. $386,853,000.00, allocated among the Shares as
described in Section 2.4 (the "Share Purchase Price").
(ii) In consideration of the sale and transfer of the Conveyed
Assets, the Purchaser agrees to purchase from each
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Asset Selling Corporation the Conveyed Assets owned by such Asset Selling
Corporation for an aggregate purchase price of U.S. $38,147,000.00,
allocated among the Asset Selling Corporations as described in Section 2.4
(the "Asset Purchase Price" and, together with the Shares Purchase Price,
the "Aggregate Purchase Price").
(b) (i) As promptly as practicable after the Closing Date, Pfizer
shall prepare a statement of the Working Capital of the Business as of the
Closing Date (the "Working Capital Statement"). The Working Capital Statement,
which will be unaudited, shall be prepared and the valuations therein made on a
basis consistent with the applicable items of Working Capital included in the
Financial Statements. Purchaser shall provide Pfizer with access to the books,
records, and personnel of the Business necessary for Pfizer to prepare the
Working Capital Statement.
(ii) Pfizer shall deliver a copy of the Working Capital
Statement to Purchaser within 60 days after the Closing Date. If Purchaser
disagrees with the Working Capital Statement, Purchaser may, within 30 days
after its receipt thereof, deliver a written notice to Pfizer disagreeing with
such statement. Any such notice of disagreement shall specify those items or
amounts as to which Purchaser disagrees, and Purchaser shall be deemed to have
agreed with all other items and amounts contained in the Working Capital
Statement.
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(iii) If a notice of disagreement shall be timely delivered
pursuant to subclause (ii) above, the parties shall, during the 10 Business Days
following such delivery (as such time period may be extended by the mutual
agreement of the parties), use their reasonable best efforts to reach agreement
on the disputed items. If, during such period (or extension thereof), the
parties are unable to reach agreement, an accounting firm to which the parties
mutually agree (the "Accounting Referee") shall promptly review this Agreement
and the disputed items or amounts. In connection therewith, the Accounting
Referee shall consider only those items or amounts in the Working Capital
Statement as to which Purchaser has disagreed. The Accounting Referee shall
deliver to Pfizer and Purchaser, as promptly as possible, a report setting forth
its adjustments, if any, to the Working Capital Statement and the calculations
supporting such adjustments. Such report shall be final and binding on the
parties. The cost of such review and report shall be borne by the party whose
calculations of Working Capital was furthest from that of the Accounting
Referee. As used herein, Final Working Capital shall mean (x) if no notice of
disagreement is delivered by Purchaser within the period provided in subclause
(ii) above, as shown in the Working Capital Statement as prepared by Pfizer or
(y) if such a notice of disagreement is delivered by Purchaser, either (1) as
agreed to in writing by Pfizer and Purchaser or (2) as shown in the Accounting
Referee's calculation
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delivered pursuant to this subclause (iii).
(iv) If the Final Working Capital is less than $59,157,000.00,
then Pfizer shall pay to Purchaser, as an adjustment to the Aggregate Purchase
Price, the amount of such shortfall. If the Final Working Capital is greater
than $59,157,000.00, then Purchaser shall pay to Pfizer, as an adjustment to the
Aggregate Purchase Price, the amount of such excess. Any such payment shall be
made by wire transfer to an account designated by the receiving party on the
fifth Business Day following the date on which the amount of such payment is
finally determined.
Section II.4 Allocation of the Aggregate Purchase
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Price. Pfizer, on behalf of itself and the Asset Selling Corporations, and
Purchaser have agreed to the allocation of the Aggregate Purchase Price among
the Conveyed Subsidiaries and the Asset Selling Corporations as set forth in
Schedule 2.4. As promptly as practicable after the date hereof, Purchaser will
engage at its expense a third party valuation firm for the purpose of valuing
the assets of Valleylab Inc., other than the stock of Valleylab Australia Pty.
Ltd. (the allocated value of which is set forth on Schedule 2.4, as it may be
adjusted). Purchaser will prepare a proposed allocation among the assets of
Valleylab Inc. 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 Closing Date
as possible, but in no event later than 5 Business Days prior to the Closing
Date. Pfizer shall have the right to consent to such allocation, which consent
shall not be unreasonably withheld. The allocation set forth in Schedule 2.4 as
well as the allocation among the assets of Valleylab Inc. as agreed to by the
parties pursuant to the foregoing procedures hereinafter is referred to as the
"Allocation." Each of Pfizer and the Asset Selling Corporations on the one hand
and Purchaser on the other shall (a) be bound by the Allocation for purposes of
determining any Taxes, (b) prepare and file, and cause its Affiliates to prepare
and file, its Tax Returns on a basis consistent with the Allocation and (c) take
no position, and cause its Affiliates to take no position,
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inconsistent with the Allocation on any applicable Tax Return or in any
proceeding before any taxing authority or otherwise. In the event that the
Allocation is disputed by any taxing authority, the party receiving notice of
the dispute shall promptly notify the other party hereto concerning resolution
of the dispute. Pfizer, 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.
Section II.5 Closing; Delivery and Payment.
(a) The Closing shall take place at the places specified in the
Foreign Implementing Agreements and at the offices of Weil, Gotshal & Manges
LLP, New York, New York, at 10:00 A.M., New York time, on the second Business
Day following the satisfaction or waiver of the conditions precedent specified
in Article VI (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, but in no event prior
to the last week of January 1998. The date on which the Closing occurs is called
the "Closing Date". The Closing shall be deemed to occur and be effective as of
the close of business on the Closing Date.
(b) At the Closing, (i) Pfizer shall deliver to Purchaser (u)
certificates representing the Shares duly endorsed and in form for transfer to
Purchaser, (v) the certificate referred to in Section 6.2(a) hereof, (w)
executed copies of the
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Transitional Services Agreement and the Transitional Intellectual Property
License Agreement, (x) executed copies of any licenses required by Section
2.2(a)(v), (y) a receipt for the Aggregate Payment and (z) a good standing
certificate for each of Pfizer and the Conveyed Subsidiaries and a certificate
of the Secretary or an Assistant Secretary of Pfizer as to the resolutions
adopted by the Board of Directors of Pfizer relating to the transactions
contemplated hereby, and (ii) each Asset Selling Corporation shall deliver to
the applicable Purchaser Affiliate the instruments and documents required by the
applicable Foreign Implementing Agreements to be delivered by such Asset Selling
Corporation.
(c) At the Closing, (i) Purchaser shall deliver to the Seller
Corporations (v) the sum of the Aggregate Payment by wire transfer in
immediately available funds to one or more accounts specified in writing by
Pfizer on or prior to the Closing Date (w) the certificate referred to in
Section 6.3(a) hereof, (x) executed assumption agreements and all other
instruments appropriate to evidence Purchaser's assumption of the Assumed
Liabilities, (y) executed copies of the Transitional Services Agreement and the
Transitional Intellectual Property License Agreement and (z) a good standing
certificate for Purchaser and a certificate of the Secretary or an Assistant
Secretary of Purchaser as to the resolutions adopted by the Board of Directors
of Purchaser relating to the transactions contemplated hereby,
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and (ii) each Purchaser Affiliate shall deliver to the applicable Asset Selling
Corporation the instruments and documents required by the applicable Foreign
Implementing Agreements to be delivered by such Purchaser Affiliate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PFIZER
Pfizer hereby represents and warrants to Purchaser as follows:
Section III.1 Organization. Pfizer is a corporation duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
incorporation and each Asset Selling Corporation is validly existing under the
Laws of the jurisdiction of its organization.
Section III.2 Authority; Binding Effect.
(a) Pfizer and each Asset Selling Corporation have full 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 Pfizer and each Asset Selling
Corporation of this Agreement, and the performance by Pfizer and each Asset
Selling Corporation 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 legally
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binding obligation of Pfizer and each Asset Selling Corporation, enforceable
against them in accordance with its terms.
Section III.3 Conveyed Subsidiaries.
(a) Schedule 3.3(a) sets forth the name and the jurisdiction of
organization of both Conveyed Subsidiaries. Each Conveyed Subsidiary is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, with full corporate power to own, operate or lease
the properties and assets owned, operated or leased by such Conveyed Subsidiary
and to carry on its business as currently conducted, and is duly qualified to do
business and is in good standing in each jurisdiction in which the properties
owned or leased by it or the operation of its business makes such qualification
necessary.
(b) The Shares are validly issued, fully paid and nonassessable, and
Pfizer owns the Shares, free and clear of all Liens and free and clear of
preemptive rights. (i) The Shares constitute all of the issued and outstanding
shares of capital stock of the Conveyed Subsidiaries, (ii) there are no
outstanding or authorized options, rights, warrants, calls, convertible
securities, rights to subscribe, conversion rights or other agreements or
commitments providing for the issuance or transfer of additional shares of
capital stock of any Conveyed Subsidiary and (iii) there are no voting trusts or
any other agreements or understandings with respect to the Shares.
(c) Schedule 3.3(c) sets forth the name and the
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jurisdiction of incorporation of all Subsidiaries of the Conveyed Subsidiaries.
Each such Subsidiary is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, with full corporate power to
own, operate or lease the properties and assets owned, operated or leased by
such Subsidiary and to carry on its business as currently conducted, and is duly
qualified to do business and is in good standing in each jurisdiction in which
the properties owned or leased by it or the operation of its business makes such
qualification necessary. 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 owns such shares, free and clear of all Liens and free and
clear of preemptive rights. Such shares constitute all of the issued and
outstanding shares of capital stock of each such Subsidiary, there are no
outstanding or authorized options, rights, warrants, calls, convertible
securities, rights to subscribe, conversion rights or other agreements or
commitments providing for the issuance or transfer of additional shares of
capital stock of such Subsidiary and there are no voting trusts or any other
agreements or understandings with respect to such shares.
Section III.4 Non-Contravention. The execution, delivery and
performance of this Agreement by Pfizer and each Asset Selling Corporation and
the consummation of the transactions contemplated hereby does not and will not
(i)
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violate any provision of the certificate of incorporation, bylaws or other
comparable organizational documents of Pfizer, either of a Conveyed Subsidiary
(or any Subsidiary or a Conveyed Subsidiary) or any Asset Selling Corporation,
(ii) subject to obtaining the consents referred to in Schedule 3.4, 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,
either Conveyed Subsidiary (or any Subsidiary of a Conveyed Subsidiary) or any
Asset Selling Corporation under, or to a loss of any benefit of the Business to
which Pfizer, either Conveyed Subsidiary (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 3.5 and 4.5, 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 Pfizer, either Conveyed Subsidiary (or a Subsidiary of a Conveyed
Subsidiary) or any Asset Selling Corporation is subject, including any
Governmental Authorization, or (iv) result in the creation or imposition of any
Lien, other than Permitted Encumbrances.
Section III.5 Consents and Approvals. Other than as
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set forth in Schedule 3.5, the execution and delivery of this Agreement by
Pfizer and the Asset Selling Corporations do not require any material consent or
approval of any Governmental Authority.
Section III.6 Financial Information; Books and Records. Except as
set forth in Schedule 3.6, the Financial Statements have been recorded 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) the
results of operations of the Business for the periods covered thereby and (B)
the financial condition of the Conveyed Subsidiaries. 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 reflected in the Financial Statements consist of
materials, work in progress and finished goods, and are valued at the lower of
cost or market value. Cost is determined on the first in first out method and,
in the case of work in progress and manufactured finished goods, includes an
appropriate portion of manufacturing overheads. Inventory reserves have been
recorded, when necessary, in accordance with Pfizer policies, which policies are
in accordance with GAAP.
Section III.7 Absence of Certain Changes or Events. Except to the
extent arising out of transactions contemplated by
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this Agreement or as set forth in Schedule 3.7, since September 26, 1997, the
Business has been conducted in all material respects in the ordinary course
consistent with past practices and the Business has not suffered a Material
Adverse Effect.
Section III.8 Litigation and Claims. Except for matters arising
under Environmental Laws (which are the subject of Section 3.11), matters in
connection with Product Registrations (which are the subject of Section 3.10)
and as set forth in Schedule 2.2(c), to the Knowledge of Pfizer Schedule 3.8
sets forth a true, correct and complete list of every civil, criminal or
administrative action, suit, demand, claim, hearing, proceeding or investigation
pending or threatened against any Seller Corporation or Conveyed Subsidiary with
respect to the Business or the transactions contemplated hereby.
Section III.9 Compliance with Laws.
(a) Except with respect to Environmental Laws (which is the subject
of Section 3.11) and Product Registrations (which is the subject of Section
3.10), there are no violations by any Seller Corporation or Conveyed Subsidiary
of applicable Law or Governmental Orders that would have a Material Adverse
Effect.
(b) Each Seller Corporation and each Conveyed Subsidiary possesses
all permits, licenses, authorizations, certificates, exemptions and approvals of
Governmental Authorities (collectively, "Permits") necessary for the conduct of
the Business as it is currently conducted and all such Permits
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are being complied with by each Seller Corporation and each Conveyed Subsidiary,
except for such failures to possess or comply with that would not have a
Material Adverse Effect.
Section III.10 Product Registrations; Regulatory Compliance.
Schedule 3.10 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"). Except as set forth in Schedule 3.10,
all products sold under the Product Registrations are manufactured and marketed
in accordance with the specifications and standards contained in such Product
Registrations. Except as set forth in Schedule 3.10, 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 III.11 Environmental Matters. To the Knowledge of
Pfizer, and except as set forth in Schedule 3.11:
(i) the Conveyed Subsidiaries (and their Subsidiaries) and, with
respect to the Conveyed Assets, the Asset Selling Corporations are in
compliance with and not subject to Remedial Action or enforcement action
under any or all applicable Environmental Laws and/or Environmental
Permits, except for such actions that would not have a Material Adverse
Effect;
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(ii) the Business has obtained all Environmental Permits required
under all applicable Environmental Laws, except for such failures as would
not have a Material Adverse Effect;
(iii) no claims have been made or threatened that could reasonably
be expected to result in Environmental Liability arising from or as a
result of (a) on-site exposures to Hazardous Materials or Hazardous
Substances; (b) Releases of Hazardous Materials or Hazardous Substances at
or from any facility of the Business; (c) off-site treatment, storage or
disposal of Hazardous Materials or Hazardous Substances; (d) 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 by the Business
or by others; or (e) non-compliance with any Environmental Law; and
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(iv) Pfizer has made available to the Purchaser during Purchaser's
due diligence review of the Business all Pfizer corporate environmental
health and safety reports and audits of the Boulder, Colorado facility.
Section III.12 Material Contracts.
(a) Schedule 3.12 lists each of the following contracts and
agreements of either Conveyed Subsidiary (or a Subsidiary of a Conveyed
Subsidiary) or any Asset Selling Corporation relating to the Business (such
contracts and agreements being "Material Contracts"):
(i) each contract, agreement and 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 six months or the
terms of which provide for financial commitments in excess of $300,000;
(ii) each 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;
(iii) all 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
$300,000;
(iv) all contracts and agreements relating to
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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 a Conveyed Subsidiary) or
Asset Selling Corporation is an obligor;
(v) all patent and technology licenses and trademark licenses and
agreements, and 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 a Conveyed Subsidiary)
or Asset Selling Corporation in excess of $500,000;
(vi) all agreements entered into since September 1, 1995 providing
for the acquisition or disposition of any capital stock of any Conveyed
Subsidiary (or a Subsidiary of a Conveyed Subsidiary); and
(vii) all agreements entered into since September 1, 1995 providing
for the acquisition or disposition of any Conveyed Assets or assets of a
Conveyed Subsidiary outside of the ordinary course of business.
(b) Except as disclosed in Schedule 3.12: (i) each Material Contract
is valid and binding on the Seller Corporation or Conveyed Subsidiary (or a
Subsidiary of a Conveyed Subsidiary) that is a party thereto, and to the
Knowledge of Pfizer, the
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other party thereto, and is in full force and effect, (ii) each Material
Contract by its terms does not prohibit or in any way restrict or penalize
assignment to Purchaser (or, in the case of Material Contracts to which a
Conveyed Subsidiary (or a Subsidiary of a Conveyed Subsidiary) is a party, does
not prohibit or in any way restrict or penalize the transfer of the Shares to
the Purchaser), and (iii) no Asset Selling Corporation or any Conveyed
Subsidiary (or a Subsidiary of a Conveyed Subsidiary) is in breach of, or
default under, any such Material Contract, which breach or default would result
in a Material Adverse Effect.
Section III.13 Intellectual Property.
(a) Schedule 3.13(a) sets forth a list, as of the date hereof, of
all Patent Rights which are owned by or licensed to any Conveyed Subsidiary (or
a Subsidiary of a Conveyed Subsidiary) or Asset Selling Corporation and which
are used principally in the Business ("Seller Patent Rights"). Schedule 3.13(a)
also sets forth a list, as of the date hereof, of all Patent Rights which are or
could be used in the Business as well as one or more other businesses of Pfizer
and its Affiliates. All Seller Patent Rights not owned by either Conveyed
Subsidiary (or a Subsidiary of a Conveyed Subsidiary) will be transferred to
Purchaser and all Patent Rights used in the Business that are not Seller Patent
Rights will be licensed to Purchaser as contemplated by this Agreement.
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(b) (i) A Conveyed Subsidiary (or a Subsidiary of a Conveyed
Subsidiary) or an Asset Selling Corporation owns, controls, or licenses the
Seller Patent Rights, the copyrights and commercially practiced processes used
in the Business and (ii) the Seller Patent Rights, the copyrights and
commercially practiced processes used in the Business are to the Knowledge of
Pfizer free and clear of any Liens other than Permitted Encumbrances and (iii)
to the Knowledge of Pfizer, issued patents included in the Seller Patent Rights
are valid and are in full force and effect.
(c) To the Knowledge of Pfizer, except as disclosed in Schedule
3.13(c), with respect to the Business: (i) no Conveyed Subsidiary (or a
Subsidiary of any Conveyed Subsidiary) or Asset Selling Corporation is
infringing any Patent Right, Trademark Right or other Intellectual Property
right of any third party; (ii) there is no violation, breach, misappropriation
or infringement by any third party of any Seller Patent Right, Seller Trademark
Right or other Intellectual Property right owned by a Conveyed Subsidiary (or a
Subsidiary of any Conveyed Subsidiary) or any Asset Selling Corporation and
(iii) there are no pending opposition, interference, arbitration, invalidity,
declaratory judgment, revocation, nullity or similar actions in respect of any
Seller Patent Rights or copyrights used in the Business owned by a Conveyed
Subsidiary (or a Subsidiary of any Conveyed Subsidiary) or Asset Selling
Corporation and there are
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no pending opposition, revocation or cancellation proceedings in respect of any
Seller Trademark Rights owned by a Conveyed Subsidiary (or a Subsidiary of any
Conveyed Subsidiary) or Asset Selling Corporation.
(d) Schedule 3.13(d)(i) sets forth a list, as of the date hereof, of
all registrations and applications for Trademark Rights owned by or licensed to
Asset Selling Corporations and Conveyed Subsidiaries (or a Subsidiary of any
Conveyed Subsidiary) which are used principally in connection with the Business
(the "Seller Trademark Rights") and which will be transferred to Purchaser.
Schedule 3.13(d)(ii) sets forth a list, as of the date hereof, of all Trademark
Rights which are used in the Business as well as one or more other businesses of
Pfizer and its Affiliates. All Schedule 3.13(d)(ii) Trademark Rights not owned
by either Conveyed Subsidiary (or a Subsidiary of any Conveyed Subsidiary) will
be licensed to Purchaser as contemplated by this Agreement.
(e) (i) A Conveyed Subsidiary (or a Subsidiary of any Conveyed
Subsidiary) or an Asset Selling Corporation exclusively owns, controls, or
licenses the Seller Trademark Rights, (ii) the Seller Trademark Rights are to
the Knowledge of Pfizer free and clear of any Liens other than Permitted
Encumbrances, and (iii) to the Knowledge of Pfizer, the registrations included
in the Seller Trademark Rights are valid and in full force and effect.
Section III.14 Real Property.
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(a) Schedule 3.14(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 prior to Closing will set forth a
description of any title insurance policies and surveys related thereto
(collectively, the "Real Property"). Schedule 2.2(a)(i) sets forth all of the
Leased Real Property pursuant to lease agreements to be transferred to Purchaser
(collectively, the "Leases").
(b) The Real Property is free and clear of any and all Liens, other
than Permitted Encumbrances.
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(c) Except as set forth in Schedule 2.2(a)(i), no Leased Property is
subject to any sub-lease, license or other agreement granting to any person or
entity any right to the use, occupancy or enjoyment of such Leased Property or
any portion thereof.
Section III.15 Assets.
(a) Each Asset Selling Corporation owns, leases or has the legal
right to use all of its Conveyed Assets (other than Real Property, which is the
subject of Section 3.14) and each Conveyed Subsidiary (or a Subsidiary of any
Conveyed Subsidiary) owns, leases or has the legal right to use its assets
(other than Real Property, which is the subject of Section 3.14). 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 Real Property,
which is the subject of Section 3.14) 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, without giving effect to the Excluded
Assets and the Excluded Liabilities, the assets held by Conveyed Subsidiaries
(or a Subsidiary of any Conveyed Subsidiaries) as of the date hereof and those
assets used by the Business which are to be retained by Pfizer and its
Affiliates but made available to Purchaser pursuant to an agreement executed
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and delivered at the Closing, constitute, all the properties, assets and rights
sufficient to conduct the Business in all material respects as conducted as of
the date of this Agreement.
Section III.16 Taxes. Except as set forth in Schedule 3.16, (a) all
material Tax Returns that are required to be filed on or before the date hereof
by or on behalf of the Conveyed Subsidiaries, their 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 Tax Liens upon any of the assets of the Business, except for Liens for
Taxes not yet due and payable or being contested in good faith. Except as set
forth on Schedule 3.16, no Tax Return that includes either Conveyed Subsidiary,
its Subsidiaries or any of the Asset Selling Corporations is currently being
examined by any taxing authority, and there are no outstanding agreements or
waivers extending the statute of limitations applicable to any such Tax Return.
Pfizer represents and warrants that no transactions have occurred between the
Conveyed Subsidiaries and their Subsidiaries and the Asset Selling Corporations
so as to result in Purchaser taking a carryover basis for U.S. federal income
tax purposes in any of the Conveyed Assets or any of the assets which Purchaser
acquires from the Conveyed Subsidiaries and their Subsidiaries by purchase or
deemed purchase.
Section III.17 Employee Benefits.
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(a) Schedule 5.5(a) sets forth a list of each of the Plans in effect
as of the date hereof.
(b) To the Knowledge of Pfizer, none of the Conveyed Subsidiaries,
their Subsidiaries or any Asset Selling Corporation or any ERISA Affiliate has
incurred any liability to the PBGC under, arising out of or by operation of
Title IV of ERISA (other than any liability for premiums to the PBGC arising in
the ordinary course of business). Except as set forth on Schedule 5.5(a), to the
Knowledge of Pfizer, no complete or partial termination has occurred within the
five (5) years preceding the date hereof with respect to any Plan.
(c) Each of the Plans intended to qualify under Section 401 of the
Code ("Qualified Plans") has received a favorable determination letter from the
IRS that such plan is so qualified, and to the Knowledge of Pfizer, since the
date of such IRS determination, except as disclosed on Schedule 5.5(a), nothing
has occurred with respect to the operation of any such plan which, either
individually or in the aggregate, would likely cause the loss of such
qualification.
(d) To the Knowledge of Pfizer, all contributions and premiums
required by Law or by the terms of any Plan or any agreement relating thereto
have been timely made and, except as disclosed on Schedule 5.5(a), to the
Knowledge of Pfizer no accumulated funding deficiencies exist in any of the
Plans subject to Section 412 of the Code.
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(e) Except as disclosed on Schedule 5.5(a), to the Knowledge of
Pfizer, there has been no "reportable event" as that term is defined in Section
4043 of ERISA and the regulations thereunder with respect to any of the Plans
subject to Title IV of ERISA which would require the giving of notice, or any
event requiring notice to be provided under Section 4063(a) of ERISA.
(f) To the Knowledge of Pfizer, there has been no violation of ERISA
with respect to the filing of applicable returns, reports, documents and notices
regarding any of the Plans with the Secretary of Labor or the Secretary of the
Treasury or the furnishing of such notices or documents to the participants or
beneficiaries of the Plans which violations, either individually or in the
aggregate, could result in a Material Adverse Effect.
(g) Complete and correct copies of the following documents, with
respect to each of the Plans (as applicable), have been delivered to Purchaser
or will be delivered as soon as practicable following the Closing Date: (i) any
relevant plan documents and subsequent amendments thereto; (ii) the most recent
Forms 5500 and schedules thereto; (iii) the most recent IRS determination
letter; and (iv) the most recent summary plan descriptions.
(h) To the Knowledge of Pfizer, each of the Plans has been
maintained, in all material respects, in accordance with its terms and all
provisions of applicable Laws, except where
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noncompliance would not have a Material Adverse Effect.
Section III.18 Brokers. Except for Lazard Freres & Co. L.L.C., 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 Lazard Freres & Co. L.L.C.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Pfizer as follows:
Section IV.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 IV.2 Corporate Authorization. Purchaser has full corporate
power and authority to execute and deliver this Agreement, and to perform its
obligations hereunder. The execution, delivery and performance by Purchaser of
this Agreement have been duly authorized by all requisite corporate action on
the part of Purchaser and no other corporate proceedings on the part of
Purchaser are required in connection with the execution, delivery and
performance by Purchaser of this Agreement.
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Section IV.3 Binding Effect. This Agreement constitutes a valid and
legally binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms.
Section IV.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
3.5 and 4.5, 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, including any Governmental Authorization.
Section IV.5 Consents and Approvals. Other than as set forth in
Schedule 4.5, 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 IV.6 Financial Capability. On the Closing Date, Purchaser
will have sufficient funds to pay the Aggregate Payment on the terms and
conditions contemplated by this Agreement.
Section IV.7 Securities Act. Purchaser is acquiring the Shares
solely for the purpose of investment and not with a view to, or for sale in
connection with, any distribution thereof in violation of the Securities Act.
Purchaser acknowledges that
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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 IV.8 Purchaser's Investigation. Purchaser acknowledges and
agrees that, except as specifically set forth in this Agreement, Pfizer has not
made and shall have no Liability for any representation or warranty, express or
implied, in connection with the transactions contemplated by this Agreement,
including, without limitation, any representation or warranty as to the accuracy
or completeness of any information regarding the Business furnished to Purchaser
or its representatives in connection with Purchaser's due diligence review of
the Business.
Section IV.9 Brokers. Except for Chase Securities, Inc., no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Purchaser. Purchaser is solely
responsible for the fees and expenses of Chase Securities, Inc.
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ARTICLE V
COVENANTS
Section V.1 Access.
(a) Prior to the Closing, Pfizer shall permit Purchaser and its
representatives to have access, during regular business hours and upon
reasonable advance notice, to the assets, employees, books and records of the
Selling Corporations and Conveyed Subsidiaries and its 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.
(b) All information provided to Purchaser by or on behalf of Pfizer,
any other Seller Corporation or Conveyed Subsidiary and its Subsidiaries in
connection with this Agreement and the transactions contemplated hereby will be
held by Purchaser and its Affiliates, agents and representatives as Information,
as defined in, and pursuant to the terms of, the Confidentiality Agreement.
Section V.2 Conduct of Business. During the period from the date
hereof to the Closing, except as otherwise contemplated by this Agreement or as
Purchaser shall otherwise consent in writing, which consent shall not be
unreasonably withheld, Pfizer agrees that it will conduct the Business, and will
cause the Business to be conducted, in the ordinary and
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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. During the period from the date hereof to the Closing, except as
otherwise contemplated by this Agreement, 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 covenants and agrees that it
shall with respect to the Business, and shall cause the Conveyed Subsidiaries
to, and with respect to the Business, the Asset Selling Corporations to:
(i) maintain insurance coverage at levels consistent with
presently existing levels so long as such insurance is available at
commercially reasonable rates;
(ii) not incur, create or assume any Lien with respect to any
material asset other than Permitted Encumbrances;
(iii) not acquire, sell, lease or otherwise dispose of any
assets outside of the ordinary course of business consistent with past
practice, provided that except as set forth in Schedule 5.2 hereto, there
shall not be any sale, lease or other disposition of any of the
Intellectual Property;
(iv) not amend any term of, or waive any
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right under, any Material Contract;
(v) not change or amend the charter or bylaws of any Conveyed
Subsidiary (or a Subsidiary of any Conveyed Subsidiary);
(vi) 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) (other than directors' qualifying shares), 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);
(vii) not enter into any agreements, commitments or contracts
that would come within the definition of Material Contract; and
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(viii) not agree to take any of the foregoing actions.
Section V.3 Reasonable Best Efforts; Certain Governmental
Matters.
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(a) Upon the terms and subject to the conditions herein provided,
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 under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including, without limitation,
(i) to comply promptly with all legal requirements which may be imposed on it
with respect to this Agreement and the transactions contemplated hereby (which
actions shall include, without limitation, furnishing all information required
by applicable Law in connection with approvals of or filings with any
Governmental Authority), (ii) to satisfy the conditions precedent to the
obligations of such party hereto, (iii) to obtain any consent, authorization,
order or approval of, or any exemption by, any Governmental Authority or other
public or private third party required to be obtained or made by Purchaser, the
Conveyed Subsidiaries or any of their respective Subsidiaries or the Seller
Corporations 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 to vigorously defend, lift, mitigate, rescind the effect of any
litigation or
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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 5.3, Purchaser and Pfizer agree to take or cause to be taken the
following actions: (i) provide promptly to Governmental Authorities with
regulatory jurisdiction over enforcement of any applicable Competition Laws
("Governmental Antitrust Entity") information and documents requested by any
Government Antitrust Entity or necessary, proper or advisable to permit
consummation of the acquisition of the Shares and the Conveyed Assets and the
transactions contemplated by this Agreement; (ii) without in any way limiting
the other provisions of this Section 5.3, file any notification and report form
and related material required under the HSR Act as soon as
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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, with respect only to any products
sold, made or in research and development by any third Person as of the date of
this Agreement including, but not limited to, Circon Corporation (without regard
to Purchaser's current ownership interest therein) or products in research and
development by Purchaser on the date of this Agreement or thereafter, to (A)
sell or otherwise dispose of, or hold separate and agree to sell or otherwise
dispose of, such assets, 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 Government 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; and (iv) Purchaser shall take promptly, in
the event that any
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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 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 5.3. 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 5.3 shall include representatives of Pfizer and the Purchaser.
(d) The parties expressly agree: (i) that any breach by Purchaser of
its obligations under Section 5.3(c) will cause irreparable harm to the Seller
Corporations; (ii) that Seller Corporations have agreed to this transaction with
Purchaser in
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specific reliance on Purchaser's obligations under Section 5.3(c), and would not
have otherwise agreed to go forward with Purchaser; and (iii) therefore Seller
Corporations are entitled to specific performance of Purchaser's obligations
under Section 5.3(c), and Purchaser hereby agrees in advance to the granting of
such specific performance of such obligations without proof of actual damages or
harm.
Section V.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,
provincial, local and foreign Tax Returns in respect of the Conveyed
Subsidiaries, their Subsidiaries and the Asset Selling Corporations, their
assets or activities that (i) are required to be filed (taking into account
extensions) on or before the Closing Date or (ii) are required to be filed
(taking into account extensions) after the Closing Date and (A) are Consolidated
Tax Returns of Pfizer and its Affiliates or (B) are with respect to Income Taxes
and are required to be filed on a separate Tax Return basis for any tax period
ending on or before the Closing Date or (C) are to be filed by an Asset Selling
Corporation. Purchaser shall prepare or cause to be prepared and shall file or
cause to be filed all other Tax Returns required of the Conveyed Subsidiaries
and their Subsidiaries, or in respect of their assets or activities. Any such
Tax Returns that include periods ending on or before the
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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 5.4(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
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or in respect of the Conveyed Subsidiaries or any of their Subsidiaries with
respect to which Purchaser is not obligated to prepare or cause to be prepared
the original such Tax Returns pursuant to this Section 5.4(a) without the prior
written consent of Pfizer. Notwithstanding any provision of this Agreement, (a)
Pfizer may cause an election pursuant to IRS Treas. Reg. Sec. 301.7701-3 to be
filed, effective from a date at least 10 days prior to the Closing Date, for
Valleylab Australia Pty. Ltd. to be treated as a branch of Valleylab Inc.; and
(b) Purchaser may opt, by notice to Pfizer at least 45 days prior to the Closing
Date, to make an election under Section 338(g) of the Code with respect to its
purchase of the Conveyed Subsidiaries and their Subsidiaries but Purchaser shall
be solely responsible for, and shall pay, any and all Taxes resulting from such
Section 338 election and shall indemnify Pfizer (in the manner provided herein)
with respect to such Taxes. In the event that Purchaser does not opt to make
such a Section 338 election with respect to Valleylab Inc., Pfizer and Purchaser
agree that an election shall be jointly made by Pfizer and Purchaser pursuant to
Section 338(h)(10) of the Code with respect to the acquisition by Purchaser of
the stock of Valleylab Inc. Pfizer shall be solely responsible for, and shall
pay, any and all Taxes resulting from such election and shall indemnify
Purchaser (in the manner provided herein) with respect to such Taxes.
(b) Payment of Taxes. Pfizer shall pay or cause to be
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paid (A) all Taxes due with respect to Tax Returns which Pfizer is obligated to
prepare and file or cause to be prepared and filed pursuant to Section 5.4(a),
(B) all Taxes due with respect to Tax Returns for Straddle Periods for which
Pfizer is responsible pursuant to Section 5.4(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 5.4(a) other than Taxes described in the preceding sentence and (B) all
Taxes owed by the Conveyed Subsidiaries or their Subsidiaries other than Taxes
described in the preceding sentence. Notwithstanding the foregoing, Pfizer shall
be liable for and shall pay any and all Taxes due arising out of the operations
of the Conveyed Subsidiaries and their Subsidiaries to the extent that such
Taxes relate to periods up to and including the Closing Date, regardless of
whether the Tax Returns relating to such Taxes are required to be filed by
Pfizer or by Purchaser.
(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
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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
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
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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.
(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 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 arises as a result of the use or application (as provided
in Section 5.4(d)) of any net capital loss, foreign tax credit or research and
development credit of
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the Conveyed Subsidiaries or any of their Subsidiaries for any tax year 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
refund or credit with respect to Taxes with respect to a Straddle Period.
(f) Tax Cooperation. Each of Purchaser and Pfizer shall provide the
other party with such information and records and make such of its officers,
directors, employees and agents
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available as may reasonably be requested by such other party in connection with
the preparation of any Tax Return or any audit or other proceeding that relates
to the Conveyed Subsidiaries, any of their Subsidiaries or the Asset Selling
Corporations. Purchaser shall within the earlier to occur of 60 days after
Pfizer's year-end, and 120 days after the Closing Date, prepare or cause the
Conveyed Subsidiaries and their Subsidiaries to prepare, in a manner consistent
with the Conveyed Subsidiary's past practice, the tax work paper preparation
package or packages necessary to enable Pfizer to prepare Tax Returns Pfizer is
obligated to prepare or cause to be prepared.
(g) Tax Indemnification.
(i) Pfizer shall indemnify, defend and hold the Purchaser and
its Affiliates harmless from and against all liability for Taxes of the
Conveyed Subsidiaries, their Subsidiaries and any Asset Selling
Corporation (with respect to the Business) for any 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 Section 3.16, (B) all liability (as a result of Treasury
Regulation Section 1.1502-6(a) or otherwise) for Income Taxes of Pfizer or
any other Person (other than the Conveyed Subsidiaries or any of their
Subsidiaries) which is or has ever been
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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 5.4(g)(i) shall be reduced by refunds of Taxes
(excluding carrybacks from post-Closing Date years to the extent permitted
hereunder) with respect to such periods received after the Closing Date by
Purchaser or any of its Affiliates and not previously remitted to Pfizer.
Notwithstanding the foregoing, Pfizer shall not indemnify, defend or hold
harmless the Purchaser or any of its Affiliates from any liability for
Taxes attributable to any 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
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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"). Further, Pfizer's obligation
to indemnify, defend or hold harmless the Purchaser or any of its
Affiliates from any liability shall terminate effective with the
expiration of the applicable statute of limitations (including extensions)
in respect of such liability.
(ii) Purchaser shall, and shall cause the Conveyed
Subsidiaries and each of their Subsidiaries to, indemnify, defend and hold
Pfizer and its Affiliates harmless from and against (A) except to the
extent Pfizer is otherwise required to indemnify Purchaser for such Tax
pursuant to Section 5.4(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 expiration of the applicable statute of
limitations (including extensions) in respect of such liability.
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(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
5.4(g)(iii)(A) above) shall be computed as if such taxable period ended as
of the close of business on the Closing Date, and, in the case of any
Taxes of the Conveyed Subsidiaries and their Subsidiaries attributable to
the ownership by the Conveyed Subsidiaries or any of their Subsidiaries of
any equity interest in any partnership or other "flowthrough" entity, as
if a taxable period of such partnership or other "flowthrough" entity
ended as of the close of business on the Closing Date.
(iv) Any indemnity payment required to be made pursuant to
this Section 5.4(g) shall be paid within 30 days after the indemnified
party makes written demand upon the indemnifying party, but in no case
earlier than five Business Days prior to the date on which the relevant
Taxes are required to be paid to the relevant taxing authority
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(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 5.4 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 5.4, Purchaser or Pfizer, as the case may be,
shall promptly make payments to Pfizer or Purchaser as and when Purchaser or
Pfizer, as the case may be, actually realizes any Tax benefits as a result of
such timing difference (or under such other method for determining the present
value of any such anticipated Tax benefits as agreed to by the parties). Such
Tax benefit for federal, state and local income tax purposes shall be computed
for any year using the Purchaser's or Pfizer's, as the case may be, actual tax
liability with and without giving effect to such timing difference.
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(i) Tax Contests.
(i) 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 5.4(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.
(ii) 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
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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.
(iii) Except as otherwise provided in Section 5.4(i)(ii),
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.
(iv) Except as otherwise provided in Section 5.4(i)(ii),
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 in the conduct of such proceedings involving a Tax
Claim and no such matter shall be settled without the prior written
consent of Pfizer, which shall not be unreasonably withheld.
(v) 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
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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 V.5 Employees and Employee Benefits.
(a) Employees (US) - Offer of Employment; Continued Employment;
Severance. Purchaser agrees to offer employment as of 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 Business Day immediately preceding the Closing Date and
with benefits which shall be substantially comparable to the employee benefits
as are set forth in Schedule 5.5(a), and identical to such other benefits as are
set forth in the Employee Severance Program in Schedule 5.5(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 5.5(a)(iv). For purposes of
this Section 5.5, references to "pay" shall include base pay plus any
commission, bonus or incentive pay, but excluding special stay
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incentive 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 Business Day immediately preceding the Closing Date).
Schedule 5.5(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 5.5(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 Business Day immediately preceding 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 5.5(a) and do not work for Purchaser or its Affiliates 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 on or 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 5.5(a) and (ii) pay and benefits comparability
requirements, employee separation plan obligations and other benefits described
in
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Schedule 5.5(a)(i), all of which matters shall 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 A, the Pfizer Employee Separation Plan) so 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 B (individual
termination) or Exhibit C (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 5.5(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
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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 5.5(a)(iv) 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.
(b) Qualified Plans.
(i) Pfizer sponsors the following qualified plans under
Section 401(a) of the Code (collectively, the "Pfizer Qualified Plans"):
the Pfizer Savings and Investment Plan (the "Savings Plan") and the Pfizer
Retirement Annuity Plan (the "Retirement Plan"). Effective as of the
Closing Date, the Seller Corporations shall cause each Affected Employee
who is a participant in each Pfizer Qualified Plan to become one hundred
percent (100%) vested in his or her accrued benefit under such plan.
(ii) Effective on 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 of
the Purchaser Qualified Plan as listed in Schedule 5.5(b)(ii) (such plans
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being collectively referred to as the "Purchaser Qualified Plans"), as the
case may be. Purchaser shall ensure that the Purchaser Qualified Plans
will recognize the accrued service of Affected Employees with Pfizer and
its Affiliates prior to the Closing Date for all purposes, to the extent
credited under the terms of the corresponding Pfizer Qualified Plan as in
effect on the Closing Date. As soon as practicable after the Closing Date,
Pfizer shall deliver such service data to Purchaser.
(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 corresponding Purchaser Qualified Plan as of the
valuation date next preceding the date of transfer. In addition to its
current investment options in its defined contribution plan, Purchaser
shall establish an account which may receive Pfizer common stock from
Pfizer's Savings and Investment Plan. Such account need not permit further
accruals of Pfizer stock. Purchaser, on the one hand, and Pfizer, on the
other hand, each agree to use its best efforts and to cooperate with the
other to effect as promptly as possible the transfers of assets
contemplated under this Section 5.5(b)(iii), subject to Pfizer's receipt
of satisfactory evidence that the Purchaser Qualified Plans are in
compliance with all relevant Tax and labor Laws; such
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evidence shall include, but not be limited to, a current determination
letter from the IRS, if available, and satisfactory representations from
the administrators of the Purchaser Qualified Plans. If a current
determination letter has not been obtained, Purchaser and its counsel
shall each provide a representation that the Purchaser Qualified Plans are
qualified under Section 401(a) of the Code and that a timely application
for a determination letter is pending and that Purchaser will take all
necessary steps to secure a determination letter.
(iv) Pfizer will give Purchaser reasonable access to any
records of Pfizer necessary to administer the retirement benefits of
Affected Employees transferred to the Purchaser Qualified Plans.
(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. On 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 prior to the
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Closing Date. Claims by an Affected Employee for medical and dental services
rendered on or after 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 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 the Closing
Date.
(e) Employees (non-US) - Offer of Employment; Continued Employment;
Severance. Purchaser agrees to offer employment as of 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 Business Day immediately preceding the
Closing Date and, for the purposes of recognizing the contribution of Affected
Employees prior to the Closing Date, with benefits which shall be substantially
comparable to the employee's benefits on the Business Day immediately preceding
the transfer date or as required by Law. Schedule 5.5(e), which will be updated
on the Closing Date, sets forth the name of each 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
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benefit continuation matters for Employees (non-US) in a manner substantially
similar to the way Employee (US) matters have been dealt with in this Article V,
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 on short-term 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 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 V for similarly
situated Employees (US) and Employees
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(non-US).
(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 Corporations 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 V, are
for the sole benefit of the parties to this Agreement and are not for the
benefit of any third party.
Section V.6 Certain Dividends, Etc. Notwithstanding any provision
herein to the contrary (including, without limitation, Section 5.2 hereof), each
Conveyed Subsidiary or any Subsidiary of a Conveyed Subsidiary will be permitted
to dividend to Pfizer, effective as of the Closing Date, up to the amount of its
retained earnings accrued through the Closing Date, but not in excess of cash on
hand and in no event to be effected through any additional borrowings from
Pfizer, any of its Affiliates or any third person. In addition, Pfizer and its
Affiliates shall be permitted to continue to conduct their activities regarding
cash management matters relating to the Business (including, without limitation,
the collection and transfer of accounts receivable and disbursement of funds by
Pfizer) in accordance
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with the practice in effect as of the date of this Agreement, except as may be
affected by actions taken pursuant to Section 2.2(d). After the Closing Date,
Purchaser shall take all actions (or shall cause its Affiliates to take all
actions) reasonably requested by Pfizer to effect the provisions of this Section
5.6.
Section V.7 Notification of Certain Matters. Pfizer shall give
prompt notice to Purchaser and Purchaser shall give prompt notice to Pfizer of
the occurrence, or non-occurrence, of any event the occurrence or non-occurrence
of which would be reasonably likely to cause (i) any representation or warranty
of Pfizer or Purchaser, as the case may be, contained in this Agreement to be
untrue or inaccurate in any material respect at or prior to the Closing, as the
case may be, or (ii) any Seller Corporation or Purchaser, as the case may be, to
fail to comply with or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 5.7 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section V.8 Further Assurances; Consents. At any time after the
Closing Date, the Seller Corporations and Purchaser shall promptly execute,
acknowledge and deliver any other assurances or documents reasonably requested
by Pfizer or Purchaser, as the case may be, and necessary for such Seller
Corporations or Purchaser, as the case may be, to satisfy their
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respective obligations hereunder or obtain the benefits contemplated hereby.
With respect to any consents required of a third party to a contract or right of
the Business which shall not be obtained, Pfizer or one or more of its
Affiliates shall, at the reasonable request of Purchaser and at Pfizer's
expense, enter into such arrangements with Purchaser to place Purchaser in
substantially the same economic position as if such consent(s) had been
obtained. The obligations of Pfizer pursuant to the preceding sentence shall not
extend beyond the remaining term of such contract or right as of the Closing
Date.
Section V.9 Resignations. At the Closing and except as otherwise
requested by Purchaser in writing, Pfizer will deliver to Purchaser the
resignations (effective on or prior to Closing) of all directors of the Conveyed
Subsidiaries and their Subsidiaries from their positions as directors.
Section V.10 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. Pfizer agrees to indemnify and hold Purchaser harmless against any
claim, suit or action with respect to, or Losses arising from, such
non-compliance.
Section V.11 Noncompetition. (a) Subject to the provisions of this
Section 5.11 and as except as set forth in Schedule 5.11 hereto, Pfizer agrees
that for a period of five
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years from the Closing Date in respect of products developed internally by
Pfizer and its Affiliates and four years from the Closing Date in respect of any
other products, Pfizer and its Subsidiaries shall not, except for unintentional
de minimis occurrences, (i) market anywhere in the world any products which
compete with the products sold or under development by the Business on the
Closing Date (a "Purchaser Competitive Business"), or (ii) directly or
indirectly, other than pursuant to an investment in debt securities or other
debt obligations, invest in, manage, operate, join or control as a partner,
stockholder, consultant or otherwise, any Person that competes with Purchaser in
marketing any products that are a Purchaser Competitive Business; provided,
however, that it shall not be deemed to be a violation of this subsection for
Pfizer or any of its Subsidiaries (v) to acquire a Purchaser Competitive
Business as part of an acquisition, by joint venture, merger, or other business
combination or purchase, of the assets of, or the majority of the voting
interest in, another Person which conducts one or more businesses other than a
Purchaser Competitive Business (such purchased businesses being referred to as
"Target Businesses") if the revenue derived by the Target Businesses from the
Purchaser Competitive Business in the fiscal year preceding such acquisition
constituted no more than the lesser of (1) 15% of the aggregate net revenues of
the Target Businesses or (2) $25 million, (w) to invest in securities having
less than
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five percent of the outstanding voting power of any Person, the securities of
which are publicly traded or listed on any securities exchange or automated
quotation system, (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, (y) to
own any equity interests through any employee benefit plan or pension plan or
(z) to invest in any third Person (including, without limitation, any
corporation or mutual or other fund) which invests in, manages or operates a
Purchaser Competitive Business so long as Pfizer's investment in such third
Person is less than 20% of the outstanding ownership interests in such third
Person and Pfizer does not control or conduct such third Person or Purchaser
Competitive Business. Each investment made by Pfizer which is subject to the
provisions of this Section 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. For a period of three 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 principally 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
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such Affiliate, except that nothing in this sentence shall restrict or preclude
the rights of Pfizer and its Subsidiaries to make generalized searches for
employees by the use of advertisements in the media (including trade media) or
by engaging search firms to engage in searches that are not targeted or focused
on the employees employed by the Business.
(b) Notwithstanding anything to the contrary contained in subsection
(a) of this Section 5.11, Pfizer and its Subsidiaries shall not be deemed to
have violated the restrictions contained in this Section 5.11 in the event that
Pfizer or a Subsidiary acquires a Purchaser Competitive Business as part of an
acquisition, by joint venture, merger, or other business combination or
purchase, of Target Businesses if (i) the revenue derived by the Target Business
from the Purchaser Competitive Business in the fiscal year preceding such
acquisition is greater than the lesser of (i) 15% of the aggregate net sales of
the Target Businesses or (ii) $25 million and (iii) Pfizer or such Subsidiary
thereafter divests such Purchaser Competitive Business within 12 months from the
date of purchase of the Purchaser Competitive Business by way of "auction" or
other competitive bidding process, negotiated sale, or such other manner of
divestiture as Pfizer shall deem appropriate.
(c) Pfizer and the Purchaser acknowledge that this Section 5.11
constitutes an independent covenant and shall not be
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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 5.11 are reasonable and proper. It is the desire and intent of the
parties that the provisions of this Section 5.11 shall be enforced to the
fullest extent permissible under applicable law. If all or part of this Section
5.11 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 5.11
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.
Section V.12 Transitional Services. At the Closing, Purchaser and
Pfizer shall enter into, execute and deliver a transitional services agreement
in substantially the form set forth in Exhibit D (the "Transitional Services
Agreement").
Section V.13 Transitional Intellectual Property License Agreement.
At the Closing, Purchaser and Pfizer shall enter into, execute and deliver a
transitional intellectual property license agreement in substantially the form
set forth in Exhibit E (the "Transitional Intellectual Property License
Agreement").
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Section V.14 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 V.15 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 V.16 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 Product Claim or lawsuit
involving the Business for which they have responsibility 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 5.16. Pfizer shall keep Purchaser
informed of the status of the pendency of the Product Claims and lawsuits
involving the Business for which it has responsibility under this Agreement,
will advise Purchaser of material issues involved in the
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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
Product Claims or lawsuits involving the Business for which Pfizer has
responsibility 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.
ARTICLE VI
CONDITIONS TO CLOSING
Section VI.1 Conditions to the Obligations of Purchaser and Pfizer.
The obligations of the parties hereto to effect the Closing are subject to the
satisfaction prior to the Closing of the following conditions:
(a) HSR and Foreign Laws. Any waiting period (and any extension
thereof) under the HSR Act or any waiting period or approval required under any
foreign Law where there is a pre-Closing filing requirement shall have expired
or shall have been earlier terminated and any investigations by a Governmental
Authority relating to the transactions contemplated hereby (by means of a
request for additional information or otherwise), shall have been terminated.
(b) No Injunctions. There shall not be in effect any statute,
regulation, order, decree or judgment which makes
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illegal or enjoins or prevents in any respect the consummation of the
transactions contemplated by this Agreement.
Section VI.2 Conditions to the Obligations of Purchaser. The
obligation of Purchaser to effect the Closing is subject to the satisfaction (or
waiver by the Purchaser) prior to the Closing, of the following conditions:
(a) Representations and Warranties. 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 that representations and warranties that are made as of a specific date
need be true only as of such date), except for such failures as would not 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 condition set forth in this Section 6.2(a).
(b) Covenants. The covenants and agreements of Pfizer to be
performed on or prior to the Closing shall have been duly performed in all
material respects.
(c) Deliveries. Pfizer shall have made or caused to be made delivery
to the Purchaser of the items required by Section 2.5(b).
Section VI.3 Conditions to the Obligations of Pfizer. The obligation
of Pfizer to effect the Closing is subject to the
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satisfaction (or waiver by Pfizer, on behalf of the Seller Corporations) prior
to the Closing of the following conditions:
(a) Representations and Warranties. 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 that
representations and warranties that are made as of a specific date need be true
in all material respects only as of such date). Pfizer shall have received a
certificate of Purchaser, dated as of the Closing Date and signed by an officer
of Purchaser, certifying as to the fulfillment of the conditions set forth in
this Section 6.3(a).
(b) Covenants. The covenants and agreements of Purchaser to be
performed on or prior to the Closing shall have been duly performed in all
material respects.
(c) Deliveries. Purchaser and the Purchaser Affiliates shall have
made or caused to be made delivery to Pfizer of the items required by Section
2.5(c).
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
Section VII.1 Survival. The representations and warranties of Pfizer
and Purchaser contained in this Agreement shall survive the Closing for the
period set forth in this
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Section 7.1. All of the representations and warranties of Pfizer and Purchaser
contained in this Agreement and all claims and causes of action with respect
thereto shall terminate upon expiration of 18 months after the Closing Date
except that (i) the representations and warranties in Section 3.16 shall survive
until the expiration of the statute of limitations, including extensions for the
assessment of federal income tax with respect to the Tax Returns to which such
representations and warranties relate; and (ii) the representations and
warranties in Section 3.11 and all claims and causes of action with respect
thereto shall terminate upon the expiration of 42 months after the Closing Date.
The covenants and agreements of the parties set forth in this Agreement shall
survive indefinitely except as expressly provided herein. In the event notice of
any claim for indemnification under Section 7.2(i) or Section 7.3(a)(i) hereof
shall have been given (within the meaning of Section 9.1) within the applicable
survival period, the representations and warranties that are the subject of such
indemnification claim shall survive until such time as such claim is finally
resolved.
Section VII.2 Indemnification by Purchaser. Purchaser hereby agrees
that it shall indemnify, defend and hold harmless Pfizer, its Subsidiaries,
Affiliates, and, if applicable, their respective directors, officers,
shareholders, partners, attorneys, accountants, agents and employees and their
heirs, successors and assigns (the "Seller Indemnified Parties") from,
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against and in respect of any actual out-of-pocket damages, claims, losses,
charges, actions, suits, proceedings, deficiencies, interest, penalties, and
reasonable costs and expenses (including without limitation reasonable
attorneys' and consultants' fees) (collectively, the "Losses") imposed on,
sustained, incurred or suffered by or asserted against any of the Seller
Indemnified Parties relating to or arising out of (i) any breach of any
representation or warranty made by Purchaser contained in this Agreement; (ii)
the breach of any covenant or agreement of Purchaser contained in this
Agreement; and (iii) the Assumed Liabilities.
Section VII.3 Indemnification by Pfizer. (a) Pfizer hereby agrees
that it shall indemnify, defend and hold harmless Purchaser, its Affiliates
(including, without limitation, the Conveyed Subsidiaries subsequent to the
Closing Date) and, if applicable, their respective directors, officers,
shareholders, partners, attorneys, accountants, agents and employees and their
heirs, successors and assigns (the "Purchaser Indemnified Parties" and,
collectively with the Seller Indemnified Parties, the "Indemnified Parties")
from, against and in respect of any actual out-of-pocket Losses imposed on,
sustained, incurred or suffered by or asserted against any of the Purchaser
Indemnified Parties relating to or arising out of (i) any breach of any
representation or warranty made by Pfizer contained in this Agreement; (ii) the
breach of any covenant or agreement of Pfizer
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made in this Agreement; and (iii) the Excluded Liabilities, and (iv) the
Excluded Environmental Liabilities.
(b) Notwithstanding the provisions of this Article VII, Pfizer shall
not be liable to the Purchaser Indemnified Parties for any Losses with respect
to the matters contained in Section 7.3(a)(i) except to the extent the Losses
therefrom exceed $5 million, inclusive of the $1 million set forth in the
definition of "Excluded Environmental Liabilities", in which event Pfizer shall
be liable to the Purchaser Indemnified Parties for all such Losses in excess of
such amount up to an aggregate amount equal to $150 million.
Section VII.4 Indemnification Procedures. With respect to
third-party claims other than those relating to Taxes and Remedial Actions on
Conveyed Properties, all claims for indemnification by any Indemnified Party
hereunder shall be asserted and resolved as set forth in this Section 7.4. In
the event that any claim or demand by a third party for which an indemnifying
party, Pfizer or Purchaser, as the case may be (an "Indemnifying Party"), may be
liable to any Indemnified Party hereunder (a "Claim") is asserted against or
sought to be collected from any Indemnified Party by a third party, such
Indemnified Party shall as promptly as practicable notify the Indemnifying Party
in writing of such Claim and the amount or the estimated amount thereof to the
extent then feasible (which estimate shall not be conclusive of the final amount
of such
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Claim) (the "Claim Notice"). The failure on the part of the Indemnified Party to
give any such Claim Notice in a reasonably prompt manner shall not relieve the
Indemnifying Party of any indemnification obligation hereunder unless, and only
to the extent that, the Indemnifying Party is materially prejudiced thereby. The
Indemnifying Party shall have 60 days from the personal delivery or mailing of
the Claim Notice (the "Notice Period") to notify the Indemnified Party (a)
whether or not the Indemnifying Party disputes the liability of the Indemnifying
Party to the Indemnified Party hereunder with respect to such Claim and (b)
whether or not it desires to defend the Indemnified Party against such Claim.
All costs and expenses incurred by the Indemnifying Party in defending such
Claim shall be a liability of, and shall be paid by, the Indemnifying Party;
provided, however, that the amount of such costs and expenses that shall be a
liability of the Indemnifying Party hereunder shall be subject to the
limitations set forth in Section 7.3(b) hereof. Except as hereinafter provided,
in the event that the Indemnifying Party notifies the Indemnified Party within
the Notice Period that it desires to defend the Indemnified Party against such
Claim, the Indemnifying Party shall, at its sole cost and expense, have the
right to defend the Indemnified Party by appropriate proceedings and shall have
the sole power to direct and control such defense. If any Indemnified Party
desires to participate in any such defense, it may do so at its sole cost and
expense. The
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Indemnified Party shall not settle a Claim for which it is indemnified by the
Indemnifying Party without the written consent of the Indemnifying Party, unless
the Indemnifying Party elects not to defend the Indemnified Party against such
Claim. Notwithstanding the foregoing, the Indemnified Party shall have the sole
right to defend, settle or compromise any Claim with respect to which it has
agreed in writing to waive its right to indemnification pursuant to this
Agreement. Notwithstanding the foregoing, the Indemnified Party, during the
period the Indemnifying Party is determining whether to elect to assume the
defense of a matter covered by this Section 7.4, may take such reasonable
actions as it deems necessary to preserve any and all rights with respect to the
matter, without such actions being construed as a waiver of the Indemnified
Party's rights to defense and indemnification pursuant to this Agreement. If the
Indemnifying Party elects not to defend the Indemnified Party against such
Claim, whether by not giving the Indemnified Party timely notice as provided
above or otherwise, then the amount of any such Claim, or, if the same be
contested by the Indemnified Party, then that portion thereof as to which such
defense is unsuccessful (and the reasonable costs and expenses pertaining to
such defense) shall be the liability of the Indemnifying Party hereunder,
subject to the limitations set forth in Section 7.3(b) hereof. To the extent the
Indemnifying Party shall direct, control or participate in the defense or
settlement of any third
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party claim or demand, the Indemnified Party will give the Indemnifying Party
and its counsel access to, during normal business hours, the relevant business
records and other documents, and shall permit them to consult with the employees
and counsel of the Indemnified Party. The Indemnified Party shall use its
reasonable best efforts in the defense of all such claims.
Section VII.5 Indemnification Procedures for Remedial Actions on
Conveyed Properties.
(a) Pfizer shall have the right to control the management of a
Remedial Action at a Conveyed Property that is subject to indemnification
pursuant to this Agreement. Pfizer must notify Purchaser, within thirty (30)
days of receipt of notice of Purchaser's claim for indemnification for such
matter, that (i) it intends to undertake said responsibility or (ii) 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
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Environmental Laws 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 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, 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 Environmental Law. 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 notices, correspondence, draft reports, submissions, work
plans, and final reports and shall give Purchaser a reasonable opportunity (at
Purchaser's own expense) to comment on any submissions Pfizer intends to deliver
or submit to the
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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
Pfizer shall provide Purchaser with the results of all such field work.
Notwithstanding the above, Purchaser shall not take any actions that shall
unreasonably interfere with Pfizer's performance of the Remedial Action. Pfizer
shall undertake any such work required herein in a manner designed to minimize
any disruption, to the greatest extent possible, with the conduct of operations
at the Conveyed Property. Purchaser shall allow Pfizer reasonable access to
conduct any of the work contemplated herein and shall fully cooperate with
Pfizer in the performance of the Remedial Action, including, but not limited to,
providing Pfizer with reasonable access to employees and documents as necessary.
(c) If Pfizer declines to undertake the performance of a Remedial
Action as provided in Section 7.5(a), Purchaser shall be entitled to undertake
the Remedial Action. 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
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Remedial Action, including any field work undertaken by Purchaser, and Purchaser
shall provide Pfizer with the results of all such field work. Notwithstanding
the above, Pfizer shall not take any actions that shall unreasonably interfere
with Buyer'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 as otherwise
provided in this Agreement.
Section VII.6 Characterization of Indemnification Payments. All
amounts paid by Pfizer or Purchaser under Article V and this Article VII shall
be treated for all Tax purposes as adjustments to the Aggregate Purchase Price
except to the extent such treatment is not permitted by the applicable Tax Law,
in which case the Indemnifying Party's indemnification obligation shall be
increased such that the indemnification payment less the Income Taxes payable by
the Indemnified Party with respect to the inclusion of such amount in the
Indemnified Party's taxable income equals the Loss giving rise to the
indemnification payment. The calculation of the amount due in the preceding
sentence shall take into account any decrease in the Indemnified Party's
liability for Taxes arising as a result of recognizing on any Tax Return the
Loss giving rise to the indemnification payment. To the extent such Loss does
not result in a decrease in the Indemnified Party's liability for Taxes in the
taxable period in which such Loss is incurred, the Indemnified Party
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shall promptly transfer to the Indemnifying Party the entire amount of such
decrease at the time such decrease is realized, whether by paying less Taxes or
receiving a refund. In the event that treatment as an adjustment to the
Aggregate Purchase Price is disputed by any taxing authority, the party
receiving notice of such dispute shall promptly notify and consult with the
other party concerning resolution of such dispute.
Section VII.7 Computation of Losses Subject to Indemnification. The
amount of any Loss for which indemnification is provided under this Article VII
or otherwise in this Agreement shall be computed net of any insurance proceeds
when actually received by the Indemnified Party from the Indemnifying Party's
insurance carrier(s); provided that such indemnification amounts shall be paid
when due pursuant to the terms hereof and the Indemnified Party, upon receipt of
such proceeds, shall transfer to the Indemnifying Party the entire amount of
such proceeds.
Section VII.8 Certain Other Matters. There shall be no
indemnification by Pfizer or the Purchaser for any special, incidental, punitive
or consequential damages.
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ARTICLE VIII
TERMINATION
Section VIII.1 Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by written agreement of Purchaser and Pfizer;
(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 June 8, 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 any of its obligations under this Agreement, including,
without limitation, the obligations of Purchaser and Pfizer under Section 5.3
hereof 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 Law, in which event Purchaser may not rely upon this
Section 8.1(b) to terminate this Agreement until the first anniversary of the
date of this Agreement); or
(c) 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
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nonappealable.
Section VIII.2 Effect of Termination. (a) In the event of the
termination of this Agreement in accordance with Section 8.1 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 8.2 and in Sections 5.1(b), 9.1, 9.7,
9.8, 9.9 and 9.11 hereof, and except that nothing herein will relieve any party
from liability for any breach of any covenant set forth in Article V of this
Agreement prior to such termination.
(b) If this Agreement is terminated in accordance with Section 8.1,
Purchaser agrees that the prohibition in the Confidentiality Agreement
restricting Purchaser's ability to solicit any Employee to join the employ of
Purchaser or any of its Affiliates shall be extended to a period of three (3)
years from the date of this Agreement.
ARTICLE IX
MISCELLANEOUS
Section IX.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
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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
With a copy to:
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, NY 10153
Telephone: 212-310-8000
Telecopy: 212-310-8007
Attn: Dennis J. Block, Esq.
To Purchaser:
UNITED STATES SURGICAL CORPORATION
150 Glover Avenue
Norwalk, CT 06856
Telephone: 203-845-1055
Telecopy: 203-845-1393
Attn: Thomas R. Bremer, Esq.
Senior Vice President and
General Counsel
With a copy to:
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
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919 Third Avenue
New York, New York 10022
Telephone: 212-735-3000
Telecopy: 212-735-2000
Attn: Morris J. Kramer, Esq.
Section IX.2 Amendment; Waiver. Any provision of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Purchaser and Pfizer, or in the case of
a waiver, by the party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
Section IX.3 Assignment. No party to this Agreement may assign any
of its rights or obligations under this Agreement 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 IX.4 Entire Agreement. This Agreement (including all
Schedules and Exhibits hereto) contains the entire agreement between the parties
hereto with respect to the subject
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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 IX.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 IX.6 Parties in Interest. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any Person other than Purchaser, Seller Corporations,
or their successors or permitted assigns, any rights or remedies under or by
reason of this Agreement.
Section IX.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
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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 IX.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 IX.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 relating to the
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transfer or deemed transfer of real property or any interest therein, by
Purchaser;
(b) in respect of any such Taxes which are refundable or in respect
of which a credit is or becomes available, by Purchaser; and
(c) in respect of any other such Taxes not falling within
subsections (a) or (b) 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 the Purchaser, 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 by the Purchaser solely. 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 IX.10 Schedules. The disclosure of any matter in any
Schedule to this Agreement, as may be amended or supplemented prior to the
Closing, shall be deemed to be a disclosure for all purposes of this Agreement
to which such matter could reasonably be expected to be pertinent, but shall
expressly not be deemed to constitute an admission by any Seller Corporation or
Purchaser, or to otherwise imply, that any such
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matter is material for the purposes of this Agreement.
SECTION IX.11 Governing Law. THE AGREEMENT SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK, ITS RULES OF CONFLICT OF LAWS NOTWITHSTANDING.
Pfizer and the Purchaser hereby agree and consent to be subject to the
jurisdiction of the United States District Court for the Southern District of
New York and in the absence of such Federal jurisdiction, the parties consent to
be subject to the jurisdiction of the Supreme Court of the State of New York,
County of New York.
Section IX.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 IX.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 IX.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
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valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
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IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
PFIZER INC.
By: /s/ David L. Shedlarz
------------------------------
Name: David L. Shedlarz
Title: Senior Vice President &
Chief Financial Officer
HOWMEDICA FRANCE S.C.A.
HOWMEDICA GmbH
HOWMEDICA INTERNATIONAL LIMITED
PFIZER CANADA INC.
PFIZER HOSPITAL PRODUCTS
(BELGIUM) N.V.
PFIZER MEDICAL TECHNOLOGY GROUP
(NETHERLANDS) B.V.
PFIZER ITALIANA S.p.A.
PFIZER OVERSEAS INC.
PFIZER S.A.
PFIZER SEIYAKU KABUSHIKI KAISHA
By: /s/ David L. Shedlarz
------------------------------
Name: David L. Shedlarz
UNITED STATES SURGICAL CORPORATION
By: /s/ Howard M. Rosenkrantz
------------------------------
Name: Howard M. Rosenkrantz
Title: President and Chief
Operating Officer
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Exhibit 23(a)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Pfizer Inc.:
We consent to the incorporation by reference in the registration statement (No.
333-46239) on Form S-3 of United States Surgical Corporation of our report dated
February 26, 1998, with respect to the combined balance sheet of Valleylab, a
Business of Pfizer Inc., as of December 31, 1997, and the related combined
statements of income and cash flows for the year then ended, which report
appears in the Form 8-K/A of United States Surgical Corporation filed March 5,
1998.
/s/ KPMG Peat Marwick LLP
New York, New York
March 5, 1998
