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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------------
AUGUST 20, 1995
Date of Report (Date of earliest event reported)
THE UPJOHN COMPANY
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 1-4147 38-1123360
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
7000 PORTAGE ROAD
KALAMAZOO, MICHIGAN 49001
(Address of principal executive offices) (Zip Code)
(616) 323-4000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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ITEMS 1-4. NOT APPLICABLE.
ITEM 5. OTHER EVENTS.
(a) On August 20, 1995, The Upjohn Company (the "Company"), a Delaware
corporation, Pharmacia Aktiebolag ("Pharmacia"), a Swedish corporation,
Bushwood, Inc. ("Bushwood"), a Delaware corporation and Bushwood Subsidiary,
Inc. ("Bushwood Sub"), a Delaware corporation and a wholly owned subsidiary of
Bushwood, entered into a Combination Agreement, dated as of August 20, 1995,
as amended on August 21, 1995 to reflect the change of Bushwood's name to
Pharmacia & Upjohn, Inc. ("Pharmacia & Upjohn") and the change of Bushwood
Sub's name to Pharmacia & Upjohn Subsidiary, Inc. ("Pharmacia & Upjohn Sub"),
(the "Combination Agreement"). Pursuant to the Combination Agreement Pharmacia
& Upjohn Sub will be merged with and into the Company (the "Merger"), subject
to the affirmative vote of a majority of all of the outstanding voting shares
of the Company and to the completion of an offer (the "Offer") by Pharmacia &
Upjohn for all of the issued and outstanding Class A Common Shares, par value
SEK 25 per share and Class B Common Shares, par value SEK 25 per share of
Pharmacia, and American Depositary Shares, each representing one Class A
Common Share of Pharmacia.
Pursuant to the Combination Agreement, (i) each outstanding share of
the Company's Common Stock, par value $1 per share, other than shares owned by
the Company as treasury stock and shares owned by Pharmacia or any subsidiary
of the Company or Pharmacia, will be converted into the right to receive 1.45
shares of Pharmacia & Upjohn Common Stock, par value $.01 per share, (ii) each
outstanding share of the Company's Preferred Stock (other than
<PAGE> 3
dissenting shares and shares owned by the Company as treasury stock, all of
which will be cancelled) will be converted into the right to receive one share
of Pharmacia & Upjohn Preferred Stock.
The foregoing description is qualified in its entirety by reference to
the Combination Agreement, which is attached hereto as Exhibit 2 and is
incorporated herein by reference. All capitalized terms used but not defined in
this subsection (a) shall have the meanings ascribed to such terms in the
Combination Agreement.
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(b) On August 19, 1995, the Board of Directors of the Company
unanimously adopted an amendment (the "Second Amendment") to the Rights
Agreement, dated as of June 17, 1986, as amended, between the Company and The
Bank of New York, as Rights Agent (the "Rights Agreement"). Pursuant to the
Second Amendment, the definition of Acquiring Person was amended so that none
of Pharmacia, AB Volvo, Forvaltningsaktiebolaget Stattum, Bushwood and
Bushwood Sub or any of their respective subsidiaries are not Acquiring persons
under the Rights Agreement.
The foregoing summary is qualified in its entirety by reference
to the Second Amendment, a copy of which is attached hereto as Exhibit 4
and is incorporated by reference herein. Capitalized terms not defined in this
subsection (b) shall have the meanings ascribed to such terms in the Rights
Agreement, as amended, which is incorporated herein by reference.
(c) Simultaneously with the execution of the Combination Agreement,
the Company and Pharmacia entered into a co-promotion agreement, dated August
20, 1995 (the "Co-promotion Agreement"), which becomes effective on the earlier
of the completion of the initial product promotion plans or April 1, 1996,
whereby the Company will have the right to co-promote Fragmin, Estring and
Mycobutin in the United States and Canada. Upon a change of control of either
the Company or Pharmacia, either party may terminate the Co-promotion Agreement.
The foregoing summary is qualified in its entirety by reference to the
Co-promotion Agreement, a copy of which is attached hereto as Exhibit 10 and
is incorporated herein by reference. Capitalized terms not defined in this
paragraph (c) shall have the meanings ascribed to such terms in the Co-promotion
Agreement which is incorporated herein by reference.
ITEM 6. NOT APPLICABLE.
ITEM 7. FINANCIAL STATEMENTS
PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a)-(b) Not Applicable.
(c) Exhibits Required by Item 601 of Regulation S-K
2 Combination Agreement among Pharmacia & Upjohn, Inc., Pharmacia
& Upjohn Subsidiary, Inc., The Upjohn Company, and Pharmacia
Aktiebolag, dated as of August 20, 1995, as amended.
4 Second Amendment, dated as of August 20, 1995, to the Rights
Agreement, dated as of June 17, 1986 and amended as of March
22, 1989, between The Upjohn Company and The Bank of New
York, as the Rights Agent.
10 Co-promotion Agreement between The Upjohn Company and
Pharmacia Aktiebolag dated August 20, 1995.
99 Press release.
ITEM 8. NOT APPLICABLE.
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SIGNATURE
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.
THE UPJOHN COMPANY
Date: August 21, 1995 By: /s/ Kenneth M. Cyrus
---------------------
Kenneth M. Cyrus
Executive Vice President,
Secretary and General Counsel
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EXHIBIT INDEX
2 Combination Agreement among Pharmacia & Upjohn, Inc., Pharmacia
& Upjohn Subsidiary, Inc., The Upjohn Company, and Pharmacia
Aktiebolag, dated as of August 20, 1995, as amended.
4 Second Amendment, dated as of August 20, 1995, to the Rights
Agreement, dated as of June 17, 1986 and amended as of March
22, 1989, between The Upjohn Company and The Bank of New
York, as the Rights Agent.
10 Co-promotion Agreement between The Upjohn Company and
Pharmacia Aktiebolag dated August 20, 1995.
99 Press release.
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Exhibit 2
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COMBINATION AGREEMENT
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AMONG
PHARMACIA AKTIEBOLAG,
THE UPJOHN COMPANY,
PHARMACIA & UPJOHN, INC.
AND
PHARMACIA & UPJOHN SUBSIDIARY, INC.
DATED AS OF AUGUST 20, 1995
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER
SECTION 1.01. The Merger............................................................
SECTION 1.02. Effective Time; Closing...............................................
SECTION 1.03. Effect of the Merger..................................................
SECTION 1.04. Certificate of Incorporation; By-Laws.................................
SECTION 1.05. Directors and Officers of the Surviving Corporation...................
ARTICLE II
CONVERSION OF SECURITIES IN THE MERGER
SECTION 2.01. Conversion of Capital Stock...........................................
SECTION 2.02. Exchange of Certificates..............................................
SECTION 2.03. Stock Transfer Books..................................................
SECTION 2.04. Stock Options and Deferred Awards.....................................
SECTION 2.05. Shares of Dissenting Holders of Upjohn Series B Preferred Stock.......
ARTICLE III
THE PHARMACIA TRANSACTION
SECTION 3.01. The Exchange Offer....................................................
SECTION 3.02. Depositary............................................................
SECTION 3.03. Compulsory Acquisition................................................
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF UPJOHN
SECTION 4.01. Organization and Qualification; Subsidiaries..........................
SECTION 4.02. Certificate of Incorporation and By-Laws..............................
SECTION 4.03. Capitalization........................................................
SECTION 4.04. Authority Relative to This Agreement..................................
SECTION 4.05. No Conflict; Required Filings and Consents............................
SECTION 4.06. Permits; Compliance...................................................
SECTION 4.07. SEC Filings; Financial Statements.....................................
SECTION 4.08 Absence of Certain Changes or Events..................................
SECTION 4.09 Employee Benefit Plans; Labor Matters.................................
SECTION 4.10 Accounting and Tax Matters............................................
SECTION 4.11 Contracts; Debt Instruments...........................................
SECTION 4.12 Litigation............................................................
SECTION 4.13 Environmental Matters.................................................
SECTION 4.14 Trademarks, Patents and Copyrights....................................
SECTION 4.15 Taxes.................................................................
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SECTION 4.16 Rights Agreement......................................................
SECTION 4.17 Opinion of Financial Advisor..........................................
SECTION 4.18 Brokers...............................................................
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PHARMACIA
SECTION 5.01 Organization and Qualification; Subsidiaries..........................
SECTION 5.02 Corporate Organization Documents......................................
SECTION 5.03 Capitalization........................................................
SECTION 5.04 Authority Relative to This Agreement..................................
SECTION 5.05 No Conflict; Required Filings and Consents............................
SECTION 5.06 Permits; Compliance...................................................
SECTION 5.07 Stock Exchange and SEC Filings; Financial Statements..................
SECTION 5.08 Absence of Certain Changes or Events..................................
SECTION 5.09 Employee Benefit Plans; Labor Matters.................................
SECTION 5.10 Accounting and Tax Matters............................................
SECTION 5.11 Contracts; Debt Instruments...........................................
SECTION 5.12 Litigation............................................................
SECTION 5.13 Environmental Matters.................................................
SECTION 5.14 Trademarks, Patents and Copyrights....................................
SECTION 5.15 Taxes.................................................................
SECTION 5.16 Opinion of Financial Advisor..........................................
SECTION 5.17 Brokers...............................................................
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NEWCO AND NEWCO SUB
SECTION 6.01 Organization and Qualification; Subsidiaries..........................
SECTION 6.02 Certificate of Incorporation and By-Laws..............................
SECTION 6.03 Capitalization........................................................
SECTION 6.04. Authority Relative to This Agreement..................................
SECTION 6.05. No Conflict...........................................................
SECTION 6.06. No Activities.........................................................
ARTICLE VII
COVENANTS
SECTION 7.01. Conduct of Business by Upjohn Pending the Closing.....................
SECTION 7.02. Conduct of Business by Pharmacia Pending the Closing..................
SECTION 7.03. Cooperation; Steering Committee.......................................
SECTION 7.04. Notices of Certain Events.............................................
SECTION 7.05. Contractual Consents..................................................
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ARTICLE VIII
ADDITIONAL AGREEMENTS
SECTION 8.01. Registration Statement; Disclosure Documents..........................
SECTION 8.02. Stockholders' Meeting.................................................
SECTION 8.03. Access to Information; Confidentiality................................
SECTION 8.04. No Solicitation of Transactions.......................................
SECTION 8.05. Employee Benefits Matters.............................................
SECTION 8.06. Directors' and Officers' Indemnification and Insurance................
SECTION 8.07. Pooling Affiliates....................................................
SECTION 8.08. Pooling...............................................................
SECTION 8.09. Letters of Accountants................................................
SECTION 8.10. Further Action; Consents; Filings.....................................
SECTION 8.11. Upjohn Rights Plan....................................................
SECTION 8.12. Newco Organization....................................................
SECTION 8.13. Depositary Facility for Newco Common Stock............................
SECTION 8.14. Plan of Reorganization................................................
SECTION 8.15. Public Announcements..................................................
SECTION 8.16. Obligations of Newco Sub..............................................
SECTION 8.17. Stock Exchange Listings and De-listings...............................
SECTION 8.18. Maintenance of Certain Facilities.....................................
SECTION 8.19. Cancellation of Newco Common Stock Owned by Pharmacia and Upjohn......
ARTICLE IX
CONDITIONS TO THE TRANSACTIONS
SECTION 9.01. Conditions to the Obligations of Each Party to Consummate the
Transactions........................................................
SECTION 9.02. Conditions to the Obligations of Upjohn...............................
SECTION 9.03. Conditions to the Obligations of Pharmacia............................
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. Termination...........................................................
SECTION 10.02. Effect of Termination.................................................
SECTION 10.03. Amendment.............................................................
SECTION 10.04. Waiver................................................................
SECTION 10.05. Expenses..............................................................
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ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Non-Survival of Representations, Warranties and Agreements............
SECTION 11.02. Notices...............................................................
SECTION 11.03. Certain Definitions...................................................
SECTION 11.04. Severability..........................................................
SECTION 11.05. Assignment; Binding Effect; Benefit...................................
SECTION 11.06. Incorporation of Exhibits.............................................
SECTION 11.07. Specific Performance..................................................
SECTION 11.08. Governing Law.........................................................
SECTION 11.09. Submission to Jurisdiction; Venue.....................................
SECTION 11.10. Headings..............................................................
SECTION 11.11. Counterparts..........................................................
SECTION 11.12. Entire Agreement......................................................
Annex A Employee Benefits.....................................................
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GLOSSARY OF DEFINED TERMS
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ADSs............................... Recitals
affiliate.......................... sec.11.03(a)
Agreement.......................... Preamble
beneficial owner................... sec.11.03(b)
Blue Sky Laws...................... sec.4.05(b)(i)
business day....................... sec.11.03(c)
CEO................................ sec.8.12(a)
CERCLA............................. sec.4.13(d)
Certificate of Merger.............. sec.1.02
Certificates....................... sec.2.02(a)
Chairman........................... sec.8.12(a)
Change of Control.................. sec.10.05(b)
Code............................... Recitals
Combination........................ sec.10.05(b)
Competing Transaction.............. sec.8.04(d)
Confidentiality Agreement.......... sec.8.03(b)
control............................ sec.11.03(d)
controlled by...................... sec.11.03(d)
Costs.............................. sec.8.06(d)
Deferred Award..................... sec.2.04(a)
Depositary......................... sec.3.02
DGCL............................... Recitals
Disclosure Documents............... sec.3.01(b)
Dissenting Upjohn Series B
Preferred Shares................. sec.2.05
Effective Time..................... sec.1.02
Enskilda........................... sec.5.17
Environmental Laws................. sec.4.13(d)
Environmental Permits.............. sec.4.13(d)
ERISA.............................. sec.4.09(a)
Exchange Act....................... sec.4.05(b)(i)
Exchange Agent..................... sec.2.02(a)
Exchange Fund...................... sec.2.02(a)
Exchange Offer..................... Recitals
Exchange Offer Commencement Date... sec.3.01(a)
Exchange Offer Conditions.......... sec.3.01(a)(iii)
Exchange Offer Ratio............... sec.3.01(a)
Exchange Ratio..................... sec.2.01(a)
Executive Management Committee..... sec.8.12(b)
Expenses........................... sec.10.05(a)
Expiration Date.................... sec.3.01(a)
Foreign Benefit Plan............... sec.5.09(c)
FSA................................ sec.3.01(b)
Goldman Sachs...................... sec.4.17
Governmental Entity................ sec.4.05(b)
Hazardous Materials................ sec.4.13(d)
HSR Act............................ sec.4.05(b)(i)
Indemnified Parties................ sec.8.06(d)
IRS................................ sec.4.09(a)(i)
knowledge.......................... sec.11.03(e)
KPMG Bohlins....................... sec.8.09(b)
Law................................ sec.4.05(a)(ii)
Merger............................. Recitals
Minimum Condition.................. sec.3.01(a)(i)
Morgan Stanley..................... sec.5.16
NASD............................... sec.8.01(a)
Newco.............................. Preamble
Newco Common Stock................. Recitals
Newco Series A Preferred Stock..... Recitals
Newco Shares....................... Recitals
Newco Sub.......................... Preamble
Newco Sub Common Stock............. sec.6.03(b)
NYSE............................... sec.2.02(e)
Order.............................. sec.8.10(b)(ii)
person............................. sec.11.03(f)
Pharmacia.......................... Preamble
Pharmacia Authorized Agent......... sec.11.09
Pharmacia Benefit Plans............ sec.5.09(a)
Pharmacia Class A Common Shares.... Recitals
Pharmacia Class B Common Shares.... Recitals
Pharmacia Disclosure Schedule...... sec.5.09(d)
Pharmacia Material Adverse
Effect........................... sec.5.01
Pharmacia Material Contract........ sec.5.11
Pharmacia Permits.................. sec.5.06
Pharmacia Reports.................. sec.5.07(a)
Pharmacia Securities............... Recitals
Pharmacia Shares................... Recitals
Pharmacia Subsidiaries............. sec.5.01
Pharmacia Transaction.............. Recitals
Pooling Affiliate.................. sec.8.07(a)
Preferred Certificates............. sec.2.02(b)
Proxy Statement.................... sec.8.01(a)(iii)
Registration Statement............. sec.8.01(a)(ii)
Registration Statement Effective
Date............................. sec.8.01(a)
Regulations........................ Recitals
Representatives.................... sec.8.03(a)(i)
Rights Agreement................... sec.4.16
Schedule 14D-1..................... sec.3.01(b)
Schedule 14D-9..................... sec.3.01(c)
SDSs............................... Recitals
SEAQ............................... sec.8.15
SEC................................ Recitals
Securities Act..................... sec.4.05(b)(i)
SSE................................ sec.3.01(b)
Stattum............................ Recitals
Steering Committee................. sec.7.03(b)
subsidiary(ies).................... sec.11.03(g)
Substitute Option.................. sec.2.04(b)
Surviving Corporation.............. sec.1.01
Swedish Newco...................... sec.3.03(a)
Taxes.............................. sec.4.15
Terminating Upjohn Breach.......... sec.10.01(g)
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Terminating Pharmacia Breach....... sec.10.01(h)
Third Party Provisions............. sec.11.05
Transactions....................... Recitals
under common control with.......... sec.11.03(d)
Upjohn............................. Preamble
Upjohn 1992 Incentive Program...... sec.2.04(a)
Upjohn Benefit Plans............... sec.4.09(a)
Upjohn Common Stock................ Recitals
Upjohn Disclosure Schedule......... sec.4.03
Upjohn Excess Shares............... sec.2.02(e)
Upjohn Incentive Programs.......... sec.2.04(a)
Upjohn Material Adverse Effect..... sec.4.01
Upjohn Material Contract........... sec.4.11
Upjohn Option...................... sec.2.04(a)
Upjohn Permits..................... sec.4.06
Upjohn Plan........................ sec.8.05(b)
Upjohn Series A Preferred Stock.... sec.4.03
Upjohn Series B Preferred Stock.... Recitals
Upjohn SEC Reports................. sec.4.07(a)
Upjohn Shares...................... Recitals
Upjohn Shares Trust................ sec.2.02(e)
Upjohn Stockholder Approval
Condition........................ sec.3.01(a)(ii)
Upjohn Stock Option Plans.......... sec.2.04(a)
Upjohn Stockholders' Meeting....... sec.8.01(a)(i)
Upjohn Subsidiaries................ sec.4.01
Volvo.............................. Recitals
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COMBINATION AGREEMENT
COMBINATION AGREEMENT, dated as of August 20, 1995 (as amended, this
"Agreement"), by and among PHARMACIA AKTIEBOLAG, a corporation organized under
the laws of the Kingdom of Sweden ("Pharmacia"), THE UPJOHN COMPANY, a
Delaware corporation ("Upjohn"), Pharmacia & Upjohn, Inc., a Delaware
corporation ("Newco"), and Pharmacia & Upjohn, Inc., a Delaware corporation and
a wholly-owned subsidiary of Newco ("Newco Sub").
WHEREAS, the Boards of Directors of Pharmacia and Upjohn have determined
that it is in the best interests of their respective companies and stockholders
to combine their respective businesses in a "merger of equals" transaction to be
effected as set forth in this Agreement, and the boards of directors of Newco
and Newco Sub have determined that it is also in the respective best interests
of their companies and stockholders to consummate the transactions contemplated
by this Agreement;
WHEREAS, upon the terms and subject to the conditions of this Agreement,
(i) Newco will acquire, pursuant to an exchange offer (the "Exchange Offer")
and, if necessary, through compulsory acquisition proceedings in accordance with
the Swedish Companies Act (collectively, the "Pharmacia Transaction"), all the
issued and outstanding Class A Common Shares, nominal value SEK 25 per share, of
Pharmacia (the "Pharmacia Class A Common Shares"), and Class B Common Shares,
nominal value SEK 25 per share, of Pharmacia (the "Pharmacia Class B Common
Shares", and together with the Pharmacia Class A Common Shares, the "Pharmacia
Shares") and American Depositary Shares, each representing one Pharmacia Class A
Common Share (the "ADSs" and, collectively with the Pharmacia Shares, the
"Pharmacia Securities") and (ii) Newco will acquire, pursuant to the merger (the
"Merger", and together with the Pharmacia Transaction, the "Transactions") of
Newco Sub with and into Upjohn in accordance with the General Corporation Law of
the State of Delaware ("DGCL"), all the issued and outstanding shares of Common
Stock, par value $1 per share, of Upjohn (the "Upjohn Common Stock") and all the
issued and outstanding shares of Series B Convertible Perpetual Preferred Stock,
par value $1 per share, of Upjohn (the "Upjohn Series B Preferred Stock", and
together with the Upjohn Common Stock, the "Upjohn Shares"), as more fully
described below;
WHEREAS, (A) as a result of the Transactions, Pharmacia and Upjohn will
become, directly or indirectly, wholly owned subsidiaries of Newco, (B) the
holders of Pharmacia Securities and Upjohn Common Stock will receive either (i)
newly issued shares of Common Stock, par value $.01 per share, of Newco (the
"Newco Common Stock"), or, (ii) in the case of certain holders of Pharmacia
Shares, Swedish Depositary Shares ("SDSs"), each SDS evidencing one share of
Newco Common Stock, and (C) the holders of Upjohn Series B Preferred Stock will
receive newly issued shares of Series A Convertible Perpetual Preferred Stock,
par value $.01 per share, of Newco (the "Newco Series A Preferred Stock" and,
together with the Newco Common Stock, the "Newco Shares");
WHEREAS, the Board of Directors of Pharmacia has approved the Pharmacia
Transaction and recommended that all the stockholders of Pharmacia tender their
Pharmacia Securities into the Exchange Offer;
WHEREAS, the Board of Directors of Upjohn has approved this Agreement and
recommended that the stockholders of Upjohn vote to adopt this Agreement upon
the terms and subject to the conditions contained herein;
WHEREAS, this Agreement has been approved by the Boards of Directors of
Newco and Newco Sub and adopted by Newco as sole stockholder of Newco Sub in
accordance with the DGCL;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Upjohn and Pharmacia to enter into this Agreement, each of AB
Volvo, a company organized under the laws of the Kingdom of Sweden ("Volvo"),
and Forvaltningsaktiebolaget Stattum, a company organized under the laws of the
Kingdom of Sweden ("Stattum"), has indicated its intention to support the
Transactions and has entered, or will enter, into an agreement with Newco,
Upjohn and Pharmacia concerning their Newco Common Stock;
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WHEREAS, for United States federal income tax purposes, the Merger is
intended to qualify as a reorganization under the provisions of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code") and
the Treasury Regulations (the "Regulations") thereunder, and the Exchange Offer,
together with the Merger, is intended to qualify as a transfer of property
described in Section 351(a) of the Code and Regulations thereunder, and it is
further intended that, for Swedish income tax purposes, none of Newco, Pharmacia
or the Pharmacia stockholders will recognize taxable income or gain as a result
of the Exchange Offer; and
WHEREAS, the parties intend that the Transactions will be accounted for
under applicable Swedish and U.S. accounting rules and applicable United States
Securities and Exchange Commission ("SEC") accounting standards as a "pooling of
interests" for financial reporting purposes.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Provided that this Agreement shall not have
been terminated in accordance with Section 10.01, upon the terms and subject to
the conditions set forth in this Agreement, and in accordance with Section 251
of the DGCL, at the Effective Time (as defined in Section 1.02) Newco Sub shall
be merged with and into Upjohn. As a result of the Merger, the separate
corporate existence of Newco Sub shall cease and Upjohn shall be the surviving
corporation of the Merger (the "Surviving Corporation").
SECTION 1.02. Effective Time; Closing. Provided that this Agreement shall
not have been terminated in accordance with Section 10.01, as promptly as
practicable after the satisfaction or, if permissible and effected as provided
in Section 10.04, waiver of the Exchange Offer Conditions (as hereinafter
defined) (or such other date as may be agreed to in writing by Pharmacia and
Upjohn), and substantially contemporaneously with Newco's purchase of Pharmacia
Securities pursuant to the Exchange Offer, the parties hereto shall cause the
Merger to be consummated by filing a certificate of merger (the "Certificate of
Merger") with the Secretary of State of the State of Delaware in such form as
required by, and executed in accordance with Section 251 of the DGCL (the date
and time of such filing, or such later date or time as set forth therein, being
the "Effective Time"). Immediately prior to the filing of the Certificate of
Merger, a closing will be held at the offices of Shearman & Sterling, 199
Bishopsgate, London, England.
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of Upjohn and Newco Sub shall be
vested in the Surviving Corporation, and all debts, liabilities and duties of
Upjohn and Newco Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 1.04. Certificate of Incorporation; By-Laws. At the Effective
Time, (a) the Certificate of Incorporation of the Surviving Corporation shall be
amended and restated in its entirety to read as the Certificate of Incorporation
of Newco Sub as in effect immediately prior to the Effective Time, and (b) the
By-Laws of Newco Sub, as in effect immediately prior to the Effective Time,
shall become the By-Laws of the Surviving Corporation.
SECTION 1.05. Directors and Officers of the Surviving Corporation. (a)
The directors of Newco Sub at the Effective Time shall, from and after the
Effective Time, become the directors of the Surviving Corporation until their
successors shall have been elected or appointed or qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-Laws and (b) the officers of
Upjohn at the Effective Time shall, from and after the Effective Time, be the
officers of the Surviving Corporation until their successors shall have been
elected or appointed or qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and By-Laws.
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ARTICLE II
CONVERSION OF SECURITIES IN THE MERGER
SECTION 2.01. Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of Upjohn, Newco Sub,
Newco or the holders of any Upjohn Shares:
(a) each share of Upjohn Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of Upjohn
Common Stock to be cancelled pursuant to Section 2.01(c)) shall be
converted, subject to Section 2.02(e), into the right to receive 1.45
shares of Newco Common Stock (the "Exchange Ratio");
(b) each share of Upjohn Series B Preferred Stock issued and
outstanding immediately prior to the Effective Time (other than any shares
of Upjohn Series B Preferred Stock to be cancelled pursuant to Section
2.01(c)) shall be converted into the right to receive one share of Newco
Series A Preferred Stock having the designations, preferences, rights and
limitations set forth in the Amended and Restated Certificate of
Incorporation of Newco, the form of which is attached hereto as Exhibit
A-3;
(c) each Upjohn Share held in the treasury of Upjohn and each Upjohn
Share owned by Pharmacia or any direct or indirect wholly owned subsidiary
of Pharmacia or of Upjohn shall be cancelled and extinguished without any
conversion thereof and no payment shall be made with respect thereto; and
(d) each issued and outstanding share of common stock, par value $.01
per share, of Newco Sub will be converted into one validly issued, fully
paid and non-assessable share of common stock of the Surviving Corporation.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. Newco shall
deposit, or shall cause to be deposited, promptly after the Effective Time with
a bank trust company designated by Upjohn and reasonably satisfactory to
Pharmacia (the "Exchange Agent"), for the benefit of the holders of certificates
that immediately prior to the Effective Time represented outstanding Upjohn
Common Stock (the "Certificates"), for exchange in accordance with this Article
II through the Exchange Agent, certificates representing the shares of Newco
Common Stock issuable pursuant to Section 2.01(a) (such certificates for shares
of Newco Common Stock, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange Fund"). Newco shall give
the Exchange Agent irrevocable instructions to deliver the shares of Newco
Common Stock contemplated to be issued pursuant to Section 2.01 out of the
Exchange Fund as promptly as practicable after the Effective Time. Except as
contemplated by Section 2.02(f) hereof, the Exchange Fund shall not be used for
any other purpose.
(b) Exchange Procedures. As promptly as practicable after the Effective
Time, Newco shall cause the Exchange Agent to mail to each registered holder of
a Certificate (y) a letter of transmittal (which shall be in customary form and
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent) and (z) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Newco Common
Stock and cash in lieu of any fractional shares. Upon surrender to the Exchange
Agent of a Certificate for exchange, together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, and
such other documents as may be reasonably required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Newco Common Stock that such holder has the right to receive in respect of such
Certificate (after taking into account all Upjohn Common Stock then held by such
holder), cash in lieu of any fractional shares of Newco Common Stock to which
such holder is entitled pursuant to Section 2.02(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.02(c), and
the Certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of Upjohn Common Stock that is not registered in the
transfer records of Upjohn, a certificate representing the proper number of
shares of Newco Common Stock, cash in lieu of any fractional shares of Newco
Common Stock to which such holder is entitled pursuant to Section 2.02(e) and
any dividends or other distributions to which such holder is entitled pursuant
to Section 2.02(c) may be issued to a transferee if the Certificate representing
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<PAGE> 11
such Upjohn Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.02, each Certificate shall be deemed at all times
after the Effective Time to represent only the right to receive upon such
surrender a certificate or certificates representing shares of Newco Common
Stock, cash in lieu of any fractional shares of Newco Common Stock to which such
holder is entitled pursuant to Section 2.02(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.02(c). As
promptly as practicable after the Effective Time, Newco shall cause the holder
of all the issued and outstanding shares of Upjohn Series B Preferred Stock to
surrender to Newco all certificates representing such shares in exchange for
certificates representing shares of Newco Series A Preferred Stock ("Preferred
Certificates") and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.02(c).
(c) Distributions with Respect to Unexchanged Newco Shares. No dividends
or other distributions declared or made after the Effective Time with respect to
the Newco Shares with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Upjohn Certificates or Preferred Certificates
with respect to the Newco Shares represented thereby, and no cash payment in
lieu of any fractional shares shall be paid to any such holder pursuant to
Section 2.02(e), until the holder of such Certificates of Preferred Certificates
shall surrender such Certificates of Preferred Certificates. Subject to the
effect of escheat, tax or other applicable Laws, following surrender of any such
Certificates or Preferred Certificates, there shall be paid to the holder of the
Certificates or Preferred Certificates representing whole Newco Shares issued in
exchange therefor, without interest, (i) promptly, the amount of any cash
payable with respect to a fractional share of Newco Common Stock to which such
holder is entitled pursuant to Section 2.02(e) and the amount of dividends or
other distributions with a record date after the Effective Time and theretofore
declared or made with respect to such whole Newco Shares but unpaid because of
such holder's failure to surrender such Certificates or Preferred Certificates,
and (ii) at the appropriate payment date, the amount of dividends or other
distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such whole Newco Shares.
(d) No Further Rights in Upjohn Shares. All Newco Shares issued upon
conversion of the Upjohn Shares in accordance with the terms hereof (and any
cash paid pursuant to Section 2.02(c) or (e)) shall be deemed to have been
issued in full satisfaction of all rights pertaining to such Upjohn Shares.
(e) No Fractional Shares. No certificates or scrip representing fractional
shares of Newco Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any other rights of a stockholder of Newco. Each holder of
a fractional share interest shall be paid an amount in cash representing such
holder's proportionate interest in the net proceeds from the sale by the
Exchange Agent on behalf of all such holders of the aggregate of the fractions
of shares of Newco Common Stock that would otherwise be issued to such holders
("Upjohn Excess Shares"). The sale of the Upjohn Excess Shares by the Exchange
Agent shall be executed on the New York Stock Exchange, Inc. (the "NYSE")
through one or more member firms of the NYSE and shall be executed in round lots
to the extent practicable. Until the net proceeds of such sale or sales have
been distributed to the former holders of Upjohn Common Stock, Newco will cause
the Exchange Agent to hold such proceeds in trust for the holders of such
fractional share interests (the "Upjohn Shares Trust"). Newco shall pay all
commissions, transfer taxes and other out-of-pocket transaction costs, including
the expenses and compensation, of the Exchange Agent incurred in connection with
such sale of the Upjohn Excess Shares. The Exchange Agent shall determine the
portion of the Upjohn Shares Trust to which each former holder of Upjohn Common
Stock shall be entitled, if any, by multiplying the amount of the aggregate net
proceeds comprising the Upjohn Shares Trust by a fraction the numerator of which
is the amount of the fractional shares of Newco Common Stock to which such
former holder of Upjohn Common Stock is entitled and the denominator of which is
the aggregate amount of fractional share interests to which all holders of
Upjohn Common Stock are entitled. As soon as practicable after the determination
of the amount of cash, if any, to be paid to former holders of Upjohn Common
Stock in lieu of any fractional shares of Newco Common Stock interests, the
Exchange Agent shall make available such amounts to such former holders of
Upjohn Common Stock without interest.
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<PAGE> 12
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the former holders of Upjohn Common Stock for three
months after the Effective Time shall be delivered to Newco, upon demand, and
any holders of Certificates shall thereafter look only to Newco for Newco Common
Stock, any cash in lieu of fractional shares of Newco Common Stock to which they
are entitled pursuant to Section 2.02(e) and any dividends or other
distributions with respect to the Newco Common Stock to which they are entitled
pursuant to Section 2.02(c). Any portion of the Exchange Fund remaining
unclaimed by holders of Certificates as of a date which is immediately prior to
such time as such amounts would otherwise escheat to or become property of any
government entity shall, to the extent permitted by applicable Law, become the
property of Newco free and clear of any claims or interest of any person
previously entitled thereto.
(g) Adjustment of Exchange Ratio. (i) In the event of any
reclassification, stock split or stock dividend with respect to the Upjohn
Common Stock, any change or conversion of Upjohn Common Stock into other
securities or any other dividend or distribution with respect thereto, other
than normal quarterly cash dividends in amounts not to exceed $.37 per share
(or, in the case of the quarter ending December 31, 1995 and any quarter ending
thereafter, a quarterly cash dividend in an amount not to exceed $.39 per share)
with respect to the Upjohn Common Stock (or if a record date with respect to any
of the foregoing should occur), prior to the Effective Time, appropriate and
proportionate adjustments, if any, shall be made to the Exchange Ratio, and all
references to the Exchange Ratio in this Agreement shall be deemed to be to such
Exchange Ratio as so adjusted and (ii) in the event of any reclassification,
stock split or stock dividend with respect to the Upjohn Series B Preferred
Stock, any change or conversion of Upjohn Series B Preferred Stock into other
securities or any other dividend or distribution with respect thereto, other
than normal quarterly cash dividends in amounts not to exceed $629.69 per share
with respect to the Upjohn Series B Preferred Stock (or if a record date with
respect to any of the foregoing should occur), prior to the Effective Time,
there shall be appropriate and proportional changes made to the certificate of
designations of the Newco Series A Preferred Stock to reflect any of the
foregoing.
(h) No Liability. Neither Newco nor the Surviving Corporation shall be
liable to any holder of Upjohn Shares for any such Upjohn Shares (or dividends
or distributions with respect thereto), or cash delivered to a public official
pursuant to any abandoned property, escheat or similar Law.
(i) Withholding Rights. Each of the Surviving Corporation and Newco shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Upjohn Shares such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or Newco, as the case
may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Upjohn Shares in respect of
which such deduction and withholding was made by the Surviving Corporation or
Newco, as the case may be.
(j) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond, in such reasonable
amount as the Surviving Corporation may direct, as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the Newco
Common Stock, any cash in lieu of fractional shares of Newco Common Stock to
which the holders thereof are entitled pursuant to Section 2.02(e) and any
dividends or other distributions to which the holders thereof are entitled
pursuant to Section 2.02(c).
SECTION 2.03. Stock Transfer Books. At the Effective Time, the stock
transfer books of Upjohn shall be closed and there shall be no further
registration of transfers of Upjohn Shares thereafter on the records of Upjohn.
From and after the Effective Time, the holders of Certificates and Preferred
Certificates representing Upjohn Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to Upjohn Shares
represented thereby, except as otherwise provided herein or by Law. On or after
the Effective Time, any Certificates and Preferred Certificates presented to the
Exchange Agent or Newco for any reason shall be converted into Newco Shares, any
cash in lieu of fractional shares of Newco Common
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<PAGE> 13
Stock to which the holders thereof are entitled pursuant to Section 2.02(e) and
any dividends or other distributions to which the holders thereof are entitled
pursuant to Section 2.02(c).
SECTION 2.04. Stock Options and Deferred Awards. (a) Prior to the
Effective Time, Upjohn shall effect such amendments or take such other actions
under the Upjohn Stock Option Plans (as defined below) as are necessary to
render inapplicable the provisions, if any, contained in such plans that provide
for the payment of cash by Upjohn in respect of the cancellation of Upjohn
Options resulting from the execution of this Agreement and the consummation of
the Transactions, and Newco and Upjohn shall take all such action as may be
necessary to cause each unexpired and unexercised option to purchase shares of
Upjohn Common Stock (an "Upjohn Option") pursuant to the Stock Option Plans
under Upjohn's (i) Management Incentive Program of 1992 (the "Upjohn 1992
Incentive Program"), (ii) Management Incentive Program of 1987 and (iii)
Management Incentive Program of 1982 (collectively, the "Upjohn Stock Option
Plans"), or otherwise granted by Upjohn other than pursuant to any Upjohn Stock
Option Plan, to be assumed by Newco at the Effective Time on the terms and
conditions set forth in Section 2.04(b). All shares of Upjohn Common Stock
credited to participants in the Upjohn 1992, 1987 and 1982 Management Incentive
Programs (the "Upjohn Incentive Programs") pursuant to a Deferred or Basic
Portion of an Award (as defined in the Upjohn Incentive Programs) (a "Deferred
Award") shall be converted into the number of credited shares of Newco Common
Stock (including fractional shares) obtained by multiplying the credited shares
of Upjohn Common Stock by the Exchange Ratio.
(b) At the Effective Time, assuming that the actions described in Section
2.04(a) have been taken, each Upjohn Option, whether vested or unvested, will be
automatically converted into an option (a "Substitute Option") to purchase a
number of shares of Newco Common Stock equal to the number of shares of Upjohn
Common Stock that could have been purchased immediately prior to the Effective
Time (assuming full vesting) under such Upjohn Option multiplied by the Exchange
Ratio (rounded up or down to the nearest whole number of shares of Newco Common
Stock) at a price per share of Newco Common Stock equal to the per share option
exercise price specified in such Upjohn Option divided by the Exchange Ratio
(rounded up or down to the nearest whole cent). Except as otherwise provided in
this Agreement, each Substitute Option shall provide the option holder with
rights and benefits that are no less favorable to him or her than were provided
under the Upjohn Option. The date of grant of each Substitute Option shall be
the date on which the corresponding Upjohn Option was granted. It is the
intention of the parties that, subject to applicable Law, the Substitute Options
will qualify, following the Effective Time, as incentive stock options, as
defined in section 422 of the Code, to the extent that the corresponding Upjohn
Options qualified as incentive stock options prior to the Effective Time.
Accordingly, the foregoing adjustments shall be effected in a manner consistent
with Section 424(a) of the Code. At the Effective Time, (i) all references in
the Upjohn Stock Option Plans, the applicable stock option or other award
agreements issued thereunder and in any other Upjohn Options to Upjohn shall be
deemed to refer to Newco; (ii) Newco shall assume the Upjohn Stock Option Plans
and the Deferred Awards and all of Upjohn's obligations with respect to the
Upjohn Options and the Deferred Awards, as so amended, and shall take all
actions necessary to reserve for issuance a sufficient number of shares of Newco
Common Stock for delivery under the assumed Upjohn Stock Option Plans and the
Deferred Awards; and (iii) Newco shall issue to each holder of an outstanding
Upjohn Option a document evidencing the foregoing assumption by Newco and
setting forth such holder's rights in respect thereof. As soon as practicable
after the Effective Time, to the extent necessary to provide for registration of
shares of Newco Common Stock subject to Substitute Options or Deferred Awards,
Newco shall file a registration statement on Form S-8 (or any successor form)
with respect to such shares of Newco Common Stock. With respect to individuals
who, subsequent to the Transactions, will be subject to the requirements under
Section 16(a) of the Exchange Act (as hereinafter defined), where applicable,
Newco shall administer the assumed Upjohn Stock Option Plans in a manner that
complies with Rule 16b-3 under the Exchange Act.
SECTION 2.05. Shares of Dissenting Holders of Upjohn Series B Preferred
Stock. Notwithstanding any provision of this Agreement to the contrary, shares
of Upjohn Series B Preferred Stock that are outstanding immediately prior to the
Effective Time and that are held by stockholders who shall not have voted in
favor of the Merger or consented thereto in writing and who shall have demanded
properly in writing appraisal for such shares of Upjohn Series B Preferred Stock
in accordance with Section 262 of the DGCL
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(collectively, the "Dissenting Upjohn Series B Preferred Shares") shall not be
converted into or represent the right to receive shares of Newco Series A
Preferred Stock. Such stockholders shall be entitled to receive payment of the
appraised value of such shares of Upjohn Series B Preferred Stock held by them
in accordance with the provisions of such Section 262, except that all
Dissenting Upjohn Series B Preferred Shares held by stockholders who shall have
failed to perfect or who effectively shall have withdrawn or lost their rights
to appraisal of such Dissenting Upjohn Series B Preferred Shares under such
Section 262 shall thereupon be deemed to have been converted into the right to
receive, and to have become exchangeable for, as of the Effective Time, shares
of Newco Series A Preferred Stock, without any interest thereon, upon surrender,
in the manner provided in Section 2.02 of this Agreement, of the Preferred Stock
Certificate or Certificates that formerly evidenced such shares of Upjohn Series
B Preferred Stock.
ARTICLE III
THE PHARMACIA TRANSACTION
SECTION 3.01. The Exchange Offer. (a) Provided that this Agreement shall
not have been terminated in accordance with Section 10.01, Newco shall commence
the Exchange Offer on or as soon as practicable after the Registration Statement
Effective Date (the "Exchange Offer Commencement Date") as contemplated by the
Disclosure Documents (as hereinafter defined) and otherwise in accordance with
applicable Laws. Pursuant to the Exchange Offer, (i) Newco shall offer to
exchange for each Pharmacia Share, subject to the conditions set forth below,
one share of Newco Common Stock or one SDS and (ii) Newco shall offer to
exchange for each ADS, subject to the conditions set forth below, one share of
Newco Common Stock (the "Exchange Offer Ratio"). The obligation of Newco to
accept for payment and pay for Pharmacia Shares tendered pursuant to the
Exchange Offer shall be subject only to this Agreement not having been
terminated pursuant to Section 10.01 and the satisfaction or waiver, if
permissible and effected as provided in Section 10.04, of (i) the condition that
a number of Pharmacia Shares representing more than 90% of the number of shares
and voting power of the then outstanding Pharmacia Securities shall have been
validly tendered and not withdrawn prior to the expiration of the Exchange Offer
(the "Minimum Condition"), (ii) the condition that this Agreement shall have
been adopted by the requisite affirmative vote of the stockholders of Upjohn in
accordance with the DGCL and Upjohn's Restated Certificate of Incorporation and
By-Laws (the "Upjohn Stockholder Approval Condition") and (iii) the other
conditions set forth in Article IX of this Agreement (together with the Minimum
Condition and the Upjohn Stockholder Approval Condition, the "Exchange Offer
Conditions"). The initial expiration date of the Exchange Offer shall be the
date which is 20 Business Days after the Exchange Offer Commencement Date (such
date, as it may be extended from time to time as hereinafter provided, the
"Expiration Date") and, provided that this Agreement shall not have been
terminated in accordance with Article 10.01, shall be extended by Newco from
time to time thereafter until such time as all of the Exchange Offer Conditions
have been satisfied; provided, however, that after the satisfaction of the
Upjohn Stockholder Approval Condition, with the consent of each of Pharmacia and
Upjohn, Newco may permit the Exchange Offer to expire at the next scheduled
expiration date. Subject only to the conditions set forth above, Newco shall
accept for exchange and shall exchange all Pharmacia Securities validly tendered
and not withdrawn pursuant to the terms of the Exchange Offer at the earliest
practicable time following the Expiration Date.
(b) On the Exchange Offer Commencement Date, Newco, Pharmacia and Upjohn
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (together
with all amendments and supplements thereto, the "Schedule 14D-1") with respect
to that portion of the Exchange Offer made in the United States. The Schedule
14D-1 shall contain or shall incorporate by reference the Proxy Statement (as
hereinafter defined) and forms of the related letter of transmittal and any
related summary advertisement (the Schedule 14D-1, the Schedule 14D-9 (as
defined below), the Proxy Statement and such other documents, together with all
supplements and amendments thereto, being referred to herein collectively as the
"Disclosure Documents"). Prior to or substantially contemporaneously with the
Exchange Offer Commencement Date, Newco shall also file the Proxy Statement (or
such Swedish language translations or summaries thereof as may be necessary
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<PAGE> 15
and appropriate in Sweden) with the Stockholm Stock Exchange (the "SSE") and
with the Financial Supervisory Authority (the "FSA"), as required by the Laws of
Sweden.
(c) Pharmacia shall file with the SEC, not later than the Exchange Offer
Commencement Date, a Tender Offer Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9"), which Schedule 14D-9 shall contain the unconditional and
unanimous recommendation by the Board of Directors of Pharmacia that the holders
of Pharmacia Securities tender their Pharmacia Securities into the Exchange
Offer; provided, however, that the Board of Directors of Pharmacia may, at any
time prior to the Effective Time, withdraw, modify or change any such
recommendation if the Board of Directors of Pharmacia determines in good faith
that failure to so withdraw, modify or change its recommendation would cause the
Board of Directors of Pharmacia to breach its fiduciary duties to Pharmacia's
stockholders or Pharmacia under applicable Laws after receipt of advice to such
effect from independent legal counsel (who may be Pharmacia's regularly engaged
independent legal counsel).
(d) Promptly after the Effective Time, Newco shall designate such number of
individuals, rounded up to the next whole number, on the Board of Directors of
Pharmacia as shall give Newco representation on the Board of Directors of
Pharmacia equal to the product of the total number of non-union directors on the
Board of Directors of Pharmacia (giving effect to the directors elected pursuant
to this sentence) multiplied by the percentage that the aggregate number of
Pharmacia Shares beneficially owned by Newco following the Effective Time bears
to the total number of Pharmacia Shares then outstanding, whom Pharmacia shall,
subject to compliance with applicable Laws and promptly following the Effective
Time and from time to time thereafter, cause to be elected as directors of
Pharmacia.
SECTION 3.02. Depositary. Newco shall appoint a bank or trust company
designated by Pharmacia and reasonably satisfactory to Upjohn to act as
depositary for the Exchange Offer (the "Depositary").
SECTION 3.03. Compulsory Acquisition. (a) As soon as practicable after
the Effective Time, assuming that the Minimum Condition has been satisfied and
not waived, Newco shall, unless the parties mutually agree that there is a more
effective method of achieving the objectives described in this Section 3.03 (in
which case such method shall be used), contribute all of the Pharmacia
Securities owned by it to a newly formed wholly-owned subsidiary organized under
the laws of the Kingdom of Sweden ("Swedish Newco") in exchange for all of the
capital stock of Swedish Newco, and shall cause Swedish Newco to take all
actions necessary and proper under the Swedish Companies Act to commence a
process leading to a compulsory acquisition under Section 14:31 of the Swedish
Companies Act to acquire all the issued and outstanding Pharmacia Securities not
acquired by Newco pursuant to the Exchange Offer. Newco shall, in connection
therewith, cause Swedish Newco to act to obtain advance title to such Pharmacia
Securities upon deposit of appropriate collateral with the statutory
arbitrators, and Newco shall transfer to Swedish Newco cash or other property
sufficient to make such deposit.
(b) In the event of consummation of the Transactions following the waiver
of the Minimum Condition effected as provided in Section 10.04, Newco shall, as
promptly as practicable following the Effective Time, conduct, directly or
indirectly, such other offers (including, without limitation, pursuant to open
market purchases) as are necessary to obtain, when aggregated with the number of
shares and vote of Pharmacia Shares already owned by it, more than 90% of the
number of shares and voting power of the then outstanding Pharmacia Shares.
Thereafter, Newco shall take the actions described in Section 3.03(a).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF UPJOHN
Upjohn hereby represents and warrants to Pharmacia that:
SECTION 4.01. Organization and Qualification; Subsidiaries. Each of
Upjohn and each subsidiary of Upjohn (the "Upjohn Subsidiaries") has been duly
organized, and is validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, as the case may be, and has
the requisite power and authority and all necessary governmental approvals to
own, lease and operate its properties and to
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carry on its business as it is now being conducted, except where the failure to
be so organized, existing or in good standing or to have such power, authority
and governmental approvals would not, individually or in the aggregate, have an
Upjohn Material Adverse Effect (defined below). Each of Upjohn and the Upjohn
Subsidiaries is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that would not, individually or in the aggregate, have an
Upjohn Material Adverse Effect. For purposes of this Agreement, "Upjohn Material
Adverse Effect" means any change in or effect on the business of Upjohn and the
Upjohn Subsidiaries that is, or is reasonably likely to be, materially adverse
to the business, assets (including intangible assets), liabilities (contingent
or otherwise), condition (financial or otherwise) or results of operations of
Upjohn and the Upjohn Subsidiaries taken as a whole.
SECTION 4.02. Certificate of Incorporation and By-Laws. The copies of
Upjohn's Restated Certificate of Incorporation and By-Laws that are set forth as
exhibits to Upjohn's Form 10-K for the year ended December 31, 1994 are complete
and correct copies thereof. Such Restated Certificate of Incorporation and
By-Laws are in full force and effect. Upjohn is not in violation of any of the
provisions of its Restated Certificate of Incorporation or By-Laws.
SECTION 4.03. Capitalization. The authorized capital stock of Upjohn
consists of (a) 600,000,000 shares of Upjohn Common Stock and (b) 12,000,000
shares of preferred stock, 650,000 shares of which are Series A Participating
Cumulative Preferred Stock (the "Upjohn Series A Preferred Stock") and 7,500
shares of which are the Upjohn Series B Preferred Stock. As of August 17, 1995,
(i) 171,688,135 shares of Upjohn Common Stock were issued and outstanding, all
of which were validly issued and fully paid and nonassessable, (ii) 18,903,388
shares of Upjohn Common Stock were held in the treasury of Upjohn or by the
Upjohn Subsidiaries, (iii) 10,867,250 shares of Upjohn Common Stock were
reserved for issuance upon exercise of current stock options granted pursuant to
the Upjohn Stock Option Plans and 1,771,299 shares of Upjohn Common Stock were
reserved for issuance upon exercise of future grants of stock options, (iv)
650,000 shares of Upjohn Series A Preferred Stock were reserved for issuance
under the Rights Agreement, (v) 7,322 shares of Upjohn Series B Preferred Stock
were issued and outstanding, all of which were held by State Street Bank and
Trust Company, as Trustee and (vi) 7,322,020 shares of Upjohn Common Stock were
reserved for issuance upon the conversion of the Upjohn Series B Preferred
Stock. As of the date of this Agreement, no shares of Upjohn Series A Preferred
Stock are issued and outstanding. Except for the Upjohn Options granted pursuant
to the Upjohn Stock Option Plans, the Upjohn Rights Agreement or pursuant to
agreements or arrangements described in Section 4.03 of the Disclosure Schedule
delivered by Upjohn to Pharmacia prior to the execution of (and forming part of)
this Agreement (the "Upjohn Disclosure Schedule"), there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character to which Upjohn is a party or by which Upjohn is bound relating to the
issued or unissued capital stock of Upjohn or any Upjohn Subsidiary or
obligating Upjohn or any Upjohn Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in, Upjohn or any Upjohn Subsidiary.
All shares of Upjohn Common Stock subject to issuance as aforesaid, upon
issuance prior to the Effective Time on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Except as set forth in Section
4.03 of the Upjohn Disclosure Schedule, there are no outstanding contractual
obligations of Upjohn or any Upjohn Subsidiary to repurchase, redeem or
otherwise acquire any shares of Upjohn Common Stock or any capital stock of any
Upjohn Subsidiary. Each outstanding share of capital stock of each Upjohn
Subsidiary is duly authorized, validly issued, fully paid and nonassessable and
each such share owned by Upjohn or another Upjohn Subsidiary is free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on Upjohn's or such other Upjohn Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever, except
where failure to own such shares free and clear would not, individually or in
the aggregate, have an Upjohn Material Adverse Effect. Except as set forth in
Section 4.03 of the Upjohn Disclosure Schedule, there are no material
outstanding contractual obligations of Upjohn or any Upjohn Subsidiary to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any Upjohn Subsidiary or any other person, other
than guarantees by Upjohn of any indebtedness of any Upjohn Subsidiary.
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SECTION 4.04. Authority Relative to This Agreement. Upjohn has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
(including, without limitation, the Transactions) contemplated herein to be
consummated by Upjohn. The execution and delivery of this Agreement by Upjohn
and the consummation by Upjohn of such transactions have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Upjohn are necessary to authorize this Agreement or to consummate
such transactions (other than, with respect to the Merger, the adoption of this
Agreement by the requisite affirmative vote of the stockholders of Upjohn as
required by the DGCL). This Agreement has been duly authorized and validly
executed and delivered by Upjohn and constitutes a legal, valid and binding
obligation of Upjohn, enforceable against Upjohn in accordance with its terms.
Upjohn has taken all appropriate actions so that the restrictions on business
combinations contained in Section 203 of the DGCL and Article VII of the Upjohn
Restated Certificate of Incorporation will not apply with respect to or as a
result of the Transactions.
SECTION 4.05. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Upjohn do not, and the performance
of this Agreement by Upjohn will not, (i) conflict with or violate any provision
of the Restated Certificate of Incorporation or By-Laws of Upjohn or any
equivalent organizational documents of any Upjohn Subsidiary, (ii) assuming that
all consents, approvals, authorizations and other actions described in Section
4.05(b) have been obtained and all filings and obligations described in Section
4.05(b) have been made, conflict with or violate any foreign or domestic law,
statute, ordinance, rule, regulation, order, judgment or decree ("Law")
applicable to Upjohn or any Upjohn Subsidiary or by which any property or asset
of Upjohn or any Upjohn Subsidiary is bound or affected, or (iii), except as set
forth in Section 4.05(a) of the Upjohn Disclosure Schedule, result in any breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of Upjohn or any Upjohn Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation, except, with
respect to clauses (ii) and (iii), for any such conflicts, violations, breaches,
defaults, or other occurrences which would neither, individually or in the
aggregate, (A) have an Upjohn Material Adverse Effect nor (B) prevent or
materially delay the performance of this Agreement by Upjohn.
(b) The execution and delivery of this Agreement by Upjohn do not, and the
performance of this Agreement by Upjohn will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any domestic or
foreign governmental or regulatory authority ("Governmental Entity"), except (i)
for applicable requirements of the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the "Exchange
Act"), the Securities Act of 1933, as amended (together with the rules and
regulations promulgated thereunder, the "Securities Act"), state securities or
"blue sky" laws ("Blue Sky Laws"), the NYSE, state takeover laws, the pre-merger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act"), the
filing of a notification with the European Commission under Council Regulation
(EEC) No. 4064/89, applicable requirements of the Investment Canada Act of 1985,
filing and recordation of the Certificate of Merger as required by the DGCL, and
as set forth in Section 4.05(b) of the Upjohn Disclosure Schedule and (ii) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not (A) prevent or materially delay
consummation of the Transactions, (B) otherwise prevent Upjohn from performing
its material obligations under this Agreement, and (C) individually or in the
aggregate, have an Upjohn Material Adverse Effect.
SECTION 4.06. Permits; Compliance. Each of Upjohn and the Upjohn
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for Upjohn or any
Upjohn Subsidiary to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Upjohn Permits"), except where the
failure to have, or the suspension or cancellation of, any of the Upjohn Permits
would neither, individually or in the aggregate, (A) have an Upjohn Material
Adverse Effect nor (B) prevent or materially delay the performance of this
Agreement by Upjohn, and, as of the date of this Agreement, no suspension or
cancellation of any of the Upjohn Permits is pending or, to the actual knowledge
of the executive
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<PAGE> 18
officers of Upjohn, threatened, except where the failure to have, or the
suspension or cancellation of, any of the Upjohn Permits would neither,
individually or in the aggregate, (A) have an Upjohn Material Adverse Effect nor
(B) prevent or materially delay the performance of this Agreement by Upjohn.
Neither Upjohn nor any Upjohn Subsidiary is in conflict with, or in default or
violation of, (i) any Law applicable to Upjohn or any Upjohn Subsidiary or by
which any property or asset of Upjohn or any Upjohn Subsidiary is bound or
affected or (ii) any Upjohn Permits, except for any such conflicts, defaults or
violations that would neither, individually or in the aggregate, (A) have an
Upjohn Material Adverse Effect nor (B) prevent or materially delay the
performance of this Agreement by Upjohn.
SECTION 4.07. SEC Filings; Financial Statements. (a) Upjohn has filed all
forms, reports and documents required to be filed by it under the Exchange Act
since January 1, 1993 through the date of this Agreement (collectively, the
"Upjohn SEC Reports"). The Upjohn SEC Reports (i) were prepared in accordance
with the requirements of the Exchange Act and (ii) did not at the time they were
filed contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. No Upjohn Subsidiary is subject to the periodic reporting
requirements of the Exchange Act.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the Upjohn SEC Reports was prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each presented fairly, in all material
respects, the consolidated financial position of Upjohn and the consolidated
Upjohn Subsidiaries as at the respective dates thereof and for the respective
periods indicated therein, except as otherwise noted therein (subject, in the
case of unaudited statements, to normal and recurring year-end adjustments which
were not and are not expected, individually or in the aggregate, to have an
Upjohn Material Adverse Effect).
(c) Except as and to the extent set forth on the consolidated balance sheet
of Upjohn and the consolidated Upjohn Subsidiaries as of December 31, 1994,
including the notes thereto, neither Upjohn nor any Upjohn Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) that would be required to be reflected on a balance sheet or in
notes thereto prepared in accordance with United States generally accepted
accounting principles, except for liabilities or obligations incurred in the
ordinary course of business since December 31, 1994 that would neither,
individually or in the aggregate, (A) have an Upjohn Material Adverse Effect nor
(B) prevent or materially delay the performance of this Agreement by Upjohn.
SECTION 4.08. Absence of Certain Changes or Events. Since January 1,
1995, except as contemplated by or as disclosed in this Agreement, as set forth
in Section 4.08 of the Upjohn Disclosure Schedule or as disclosed in any Upjohn
SEC Report filed since January 1, 1995, Upjohn and the Upjohn Subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since such date, there has not been (a) any
Upjohn Material Adverse Effect, (b) any event that could reasonably be expected
to prevent or materially delay the performance of this Agreement by Upjohn, (c)
any material change by Upjohn in its accounting methods, principles or
practices, (d) any declaration, setting aside or payment of any dividend or
distribution in respect of the shares of Upjohn Common Stock or any redemption,
purchase or other acquisition of any of Upjohn's securities other than the
regular quarterly dividend on each share of Upjohn Common Stock of $.37 and the
regular quarterly dividend on each share of Upjohn Series B Preferred Stock of
$629.69, or (e) any increase in the compensation or benefits or establishment of
any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option (including, without limitation, the granting of
stock options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any executive officers of
Upjohn or any Upjohn Subsidiary except in the ordinary course of business
consistent with past practice or except as required by applicable Law.
SECTION 4.09. Employee Benefit Plans; Labor Matters. (a) With respect to
each material employee benefit plan, program, arrangement and contract
(including, without limitation, any "employee benefit plan", as defined in
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
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<PAGE> 19
("ERISA")), maintained or contributed to by Upjohn or any Upjohn Subsidiary, or
with respect to which Upjohn or any Upjohn Subsidiary could incur material
liability under section 4069, 4212(c) or 4204 of ERISA (the "Upjohn Benefit
Plans"), Upjohn will make available to Pharmacia, promptly after the date
hereof, a true and complete copy of (i) the most recent annual report (Form
5500) filed with the Internal Revenue Service (the "IRS"), (ii) such Upjohn
Benefit Plan, (iii) each trust agreement relating to such Upjohn Benefit Plan,
(iv) the most recent summary plan description for each Upjohn Benefit Plan for
which a summary plan description is required, (v) the most recent actuarial
report or valuation relating to an Upjohn Benefit Plan subject to Title IV of
ERISA and (vi) the most recent determination letter, if any, issued by the IRS
with respect to any Upjohn Benefit Plan qualified under section 401(a) of the
Code.
(b) Except as set forth in Section 4.09(b) of the Upjohn Disclosure
Schedule, with respect to the Upjohn Benefit Plans, no event has occurred and,
to the knowledge of Upjohn, there exists no condition or set of circumstances in
connection with which Upjohn or any Upjohn Subsidiary could be subject to any
liability under the terms of such Upjohn Benefit Plans, ERISA, the Code or any
other applicable Law which would have an Upjohn Material Adverse Effect.
(c) Except as set forth in Section 4.09(c) of the Upjohn Disclosure
Schedule, neither Upjohn nor any Upjohn Subsidiary is a party to any collective
bargaining or other labor union contract applicable to persons employed by
Upjohn or any Upjohn Subsidiary and no collective bargaining agreement or other
labor union contract is being negotiated by Upjohn or any Upjohn Subsidiary. As
of the date of this Agreement, there is no labor dispute, strike or work
stoppage against Upjohn or any Upjohn Subsidiary pending or threatened in
writing which may interfere with the respective business activities of Upjohn or
any Upjohn Subsidiary, except where such dispute, strike or work stoppage would
not have an Upjohn Material Adverse Effect. As of the date of this Agreement, to
the knowledge of Upjohn, none of Upjohn, any Upjohn Subsidiary, or their
respective representatives or employees, has committed any unfair labor
practices in connection with the operation of the respective businesses of
Upjohn or any Upjohn Subsidiary, and there is no charge or complaint against
Upjohn or any Upjohn Subsidiary by the National Labor Relations Board or any
comparable state or foreign agency pending or threatened in writing, except
where such unfair labor practice, charge or complaint would not have an Upjohn
Material Adverse Effect.
(d) Upjohn has made available to Pharmacia true and complete (i) copies of
all severance and employment agreements with officers of Upjohn and each Upjohn
Subsidiary; (ii) copies of all severance programs and policies of Upjohn and
each Upjohn Subsidiary with or relating to its employees; and (iii) copies of
all plans, programs, agreements and other arrangements of Upjohn and each Upjohn
Subsidiary with or relating to its employees which contain change of control
provisions.
(e) Except as provided in Section 4.09 of the Upjohn Disclosure Schedule or
as otherwise required by Law, no Upjohn Benefit Plan provides retiree medical or
retiree life insurance benefits to any person.
SECTION 4.10. Accounting and Tax Matters. Neither Upjohn nor, to the
knowledge of Upjohn, any of its affiliates has taken or agreed to take any
action that would prevent the Merger and the Pharmacia Transaction from
qualifying for "pooling of interests" accounting treatment under applicable U.S.
and Swedish accounting rules including, without limitation, applicable SEC
accounting standards, or would prevent the Merger from constituting a
transaction qualifying under Section 368(a) of the Code or (in conjunction with
the acquisition of Pharmacia Shares pursuant to the Exchange Offer) from
constituting a transaction qualifying under Section 351(a) of the Code, or would
prevent the Exchange Offer (in conjunction with the acquisition of Upjohn Shares
pursuant to the Merger) from constituting a transaction qualifying under Section
351(a) of the Code or a transaction in which, for Swedish income tax purposes,
neither Newco, Pharmacia nor the Pharmacia stockholders will recognize taxable
income or gain. Upjohn is not aware of any agreement, plan or other circumstance
that would prevent the Merger or the Exchange Offer from so qualifying under
Section 368(a) or Section 351(a) of the Code or under applicable Swedish tax
Laws.
SECTION 4.11. Contracts; Debt Instruments. Except as disclosed in the
Upjohn SEC Reports or in Section 4.11 of the Upjohn Disclosure Schedule, there
is no contract or agreement that is material to the business, financial
condition or results of operations of Upjohn and the Upjohn Subsidiaries taken
as a whole (each, an "Upjohn Material Contract"). Neither Upjohn nor any Upjohn
Subsidiary is in violation of or in
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<PAGE> 20
default under (nor does there exist any condition which with the passage of time
or the giving of notice would cause such a violation of or default under) any
loan or credit agreement, note, bond, mortgage, indenture or lease, or any other
contract, agreement, arrangement or understanding to which it is a party or by
which it or any of its properties or assets is bound, except for violations or
defaults that would not, individually or in the aggregate, result in an Upjohn
Material Adverse Effect. Set forth in Section 4.11 of the Upjohn Disclosure
Schedule is a description of any material changes to the amount and terms of the
indebtedness of Upjohn and its subsidiaries as described in the notes to the
financial statements incorporated in Upjohn's Form 10-K for the year ended
December 31, 1994.
SECTION 4.12. Litigation. Except as disclosed in the Upjohn SEC Reports
or in Section 4.12 of the Upjohn Disclosure Schedule, there is no suit, claim,
action, proceeding or investigation pending or threatened in writing against
Upjohn or any Upjohn Subsidiary before any Governmental Entity that,
individually or in the aggregate, is reasonably likely to have an Upjohn
Material Adverse Effect. Except as disclosed in the Upjohn SEC Reports or in
Section 4.12 of the Upjohn Disclosure Schedule, in the case of any suit, claim,
action, proceeding or investigation relating to Halcion or any environmental
matters relating to Upjohn or any Upjohn Subsidiary, there has been no change
since January 1, 1995 in the status of any such matters that would be reasonably
likely to have an Upjohn Material Adverse Effect. Except as disclosed in the
Upjohn SEC Reports or in Section 4.12 of the Upjohn Disclosure Schedule, neither
Upjohn nor any Upjohn Subsidiary is subject to any outstanding Order, writ,
injunction or decree which, insofar as can be reasonably foreseen, individually
or in the aggregate, would have an Upjohn Material Adverse Effect.
SECTION 4.13. Environmental Matters. Except as disclosed in the Upjohn
SEC Reports or in Section 4.13 of the Upjohn Disclosure Schedule or as would
not, individually or in the aggregate, have an Upjohn Material Adverse Effect:
(a) Upjohn and the Upjohn Subsidiaries (i) are in compliance with all
applicable Environmental Laws (defined below), (ii) hold all Environmental
Permits (defined below), and (iii) are in compliance with their respective
Environmental Permits.
(b) Neither Upjohn nor any Upjohn Subsidiary has received any written
request for information, or been notified that it is a potentially
responsible party, under CERCLA (defined below) or any similar state, local
or foreign Law.
(c) Neither Upjohn nor any Upjohn Subsidiary has entered into or
agreed to any consent decree or order or is subject to any judgment, decree
or judicial order relating to compliance with Environmental Laws,
Environmental Permits or the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of Hazardous Materials (defined
below), and to the best knowledge of Upjohn, no investigation, litigation
or other proceeding is pending or threatened in writing with respect
thereto.
(d) None of the real property owned or leased by Upjohn or any Upjohn
Subsidiary is listed or, to the best knowledge of Upjohn, proposed for listing
on the "National Priorities List" under CERCLA, as updated through the date
hereof, or any similar state or foreign list of sites requiring investigation or
cleanup.
For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended as of the date hereof.
"Environmental Laws" means any federal, state, local or foreign statute,
law, ordinance, regulation, rule, code or order and any enforceable judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to pollution or protection of the
environment or natural resources, including, without limitation, those relating
to the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Materials, as in effect as of the date hereof.
"Environmental Permits" means any permit, approval, identification number,
license and other authorization required under any applicable Environmental Law.
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"Hazardous Materials" means (a) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (b) any chemical, material or
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
SECTION 4.14. Trademarks, Patents and Copyrights. Except as set forth in
Section 4.14 of the Upjohn Disclosure Schedule, or to the extent the inaccuracy
of any of the following (or the circumstances giving rise to such inaccuracy),
individually or in the aggregate, would not have an Upjohn Material Adverse
Effect, Upjohn and each of the Upjohn Subsidiaries own or possess adequate
licenses or other legal rights to use all patents, patent rights, trademarks,
trademark rights, trade names, trade dress, trade name rights, copyrights,
servicemarks, trade secrets, applications for trademarks and for servicemarks,
mask works, know-how and other proprietary rights and information used or held
for use in connection with the business of Upjohn and the Upjohn Subsidiaries as
conducted since December 31, 1992, and as currently conducted or as contemplated
to be conducted, and Upjohn is unaware of any assertion or claim challenging the
validity of any of the foregoing. The conduct of the business of Upjohn and the
Upjohn Subsidiaries as conducted since December 31, 1992, as currently conducted
and as contemplated to be conducted did not, does not and will not infringe in
any way any patent, patent right, license, trademark, trademark right, trade
dress, trade name, trade name right, service mark, mask work or copyright of any
third party that, individually or in the aggregate, could have an Upjohn
Material Adverse Effect. To Upjohn's knowledge, there are no infringements of
any proprietary rights owned by or licensed by or to Upjohn or any Upjohn
Subsidiary that, individually or in the aggregate, could have an Upjohn Material
Adverse Effect.
SECTION 4.15. Taxes. Except for such matters that would not have an
Upjohn Material Adverse Effect, (a) Upjohn and the Upjohn Subsidiaries have
timely filed or will timely file all returns and reports required to be filed by
them with any taxing authority with respect to Taxes for any period ending on or
before the Effective Time, taking into account any extension of time to file
granted to or obtained on behalf of Upjohn and the Upjohn Subsidiaries, (b) all
Taxes shown to be payable on such returns or reports that are due prior to the
Effective Time have been paid or will be paid, (c) as of the date hereof, no
deficiency for any material amount of Tax has been asserted or assessed by a
taxing authority against Upjohn or any of the Upjohn Subsidiaries, and (d)
Upjohn and the Upjohn Subsidiaries have provided adequate reserves in their
financial statements for any Taxes that have not been paid, whether or not shown
as being due on any returns. As used in this Agreement, "Taxes" shall mean any
and all taxes, fees, levies, duties, tariffs, imposts, and other charges of any
kind (together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any government or
taxing authority, including, without limitation: taxes or other charges on or
with respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer, value
added, or gains taxes; license, registration and documentation fees; and
customers' duties, tariffs, and similar charges.
SECTION 4.16. Rights Agreement. The copy of the Rights Agreement, dated
June 17, 1986, between Upjohn and the Bank of New York, as Rights Agent (the
"Rights Agreement"), including all amendments and exhibits thereto, that is set
forth as an exhibit to Upjohn's Form 10-K for the year ended December 31, 1994
is a complete and correct copy thereof. Upjohn has taken all necessary action to
amend the Rights Agreement, a copy of which amendment is attached hereto as
Exhibit A-2, so that neither the execution of this Agreement nor the
consummation of the Merger will (a) cause the Rights issued pursuant to the
Rights Agreement to become exercisable, (b) cause Volvo, Stattum, Pharmacia,
Newco or Newco Sub to become an Acquiring Person (as such term is defined in the
Rights Agreement) or (c) give rise to a Distribution Date or a Triggering Event
(as each term is defined in the Rights Agreement).
SECTION 4.17. Opinion of Financial Advisor. Goldman, Sachs & Co.
("Goldman Sachs") has delivered to Upjohn its oral opinion to the effect that,
as of the date of this Agreement, the Exchange Ratio is fair to Upjohn's
stockholders, which opinion will be confirmed in writing (and accompanied by an
authorization to include such opinion in the Disclosure Documents) promptly
after the date hereof. Upjohn will, promptly after receipt of such written
opinion, deliver a signed copy of such written opinion to Pharmacia.
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SECTION 4.18. Brokers. No broker, finder or investment banker (other than
Goldman Sachs and The Monitor Company) is entitled to any brokerage, finder's or
other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of Upjohn. Upjohn has heretofore made
available to Pharmacia a complete and correct copy of all agreements between
Upjohn and Goldman Sachs and between Upjohn and The Monitor Company pursuant to
which such firms would be entitled to any payment relating to the Transactions.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PHARMACIA
Pharmacia hereby represents and warrants to Upjohn that:
SECTION 5.01. Organization and Qualification; Subsidiaries. Each of
Pharmacia and each subsidiary of Pharmacia (the "Pharmacia Subsidiaries") has
been duly organized and is validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization, as the case may be,
and has the requisite power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to be so organized,
existing or in good standing or to have such power, authority and governmental
approvals would not, individually or in the aggregate, have a Pharmacia Material
Adverse Effect (defined below). Each of Pharmacia and the Pharmacia Subsidiaries
is duly qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that would not, individually or in the aggregate, have a Pharmacia
Material Adverse Effect. For purposes of this Agreement, "Pharmacia Material
Adverse Effect" means any change in or effect on the business of Pharmacia and
the Pharmacia Subsidiaries that is, or is reasonably likely to be, materially
adverse to the business, assets (including intangible assets), liabilities
(contingent or otherwise), condition (financial or otherwise) or results of
operations of Pharmacia and the Pharmacia Subsidiaries taken as a whole.
SECTION 5.02. Corporate Organization Documents. The copies of Pharmacia's
Articles of Association and all other corporate organization documents that are
set forth as exhibits to Pharmacia's Form 20-F for the year ended December 31,
1994 are complete and correct copies thereof. Such Articles of Association and
all other corporate organization documents are in full force and effect.
Pharmacia is not in violation of any of the provisions of its Articles of
Association or other corporate organization documents.
SECTION 5.03. Capitalization. The authorized share capital of Pharmacia
consists of a minimum of SEK 2,775,000,000 and a maximum of SEK 11,100,000,000
to be issued in Pharmacia Class A Shares and Pharmacia Class B Shares. As of the
date hereof, (i) 164,724,715 Pharmacia Class A Common Shares are issued and
outstanding, all of which are validly issued and fully paid and (ii) 91,027,398
Pharmacia Class B Common Shares are issued and outstanding, all of which are
validly issued and fully paid. There are no warrants or other rights,
arrangements or commitments of any character to which Pharmacia is a party or by
which Pharmacia is bound relating to the issued or unissued capital stock of
Pharmacia or any Pharmacia Subsidiary or obligating Pharmacia or any Pharmacia
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, Pharmacia or any Pharmacia Subsidiary. There are no outstanding
contractual obligations of Pharmacia or any Pharmacia Subsidiary to redeem or
otherwise acquire any Pharmacia Shares or any capital stock of any Pharmacia
Subsidiary. Each outstanding share of capital stock of each Pharmacia Subsidiary
is duly authorized, validly issued and fully paid and each such share owned by
Pharmacia or another Pharmacia Subsidiary is free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on Pharmacia's or such other Pharmacia Subsidiary's voting rights,
charges and other encumbrances of any nature whatsoever, except where failure to
own such shares free and clear would not, individually or in the aggregate, have
a Pharmacia Material Adverse Effect. There are no material outstanding
contractual obligations of Pharmacia or any Pharmacia Subsidiary to provide
funds to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Pharmacia Subsidiary or any other person, other than
guarantees by Pharmacia of any indebtedness of any Pharmacia Subsidiary.
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SECTION 5.04. Authority Relative to This Agreement. Pharmacia has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
(including, without limitation, the Transactions) contemplated herein to be
consummated by Pharmacia. The execution and delivery of this Agreement by
Pharmacia and the consummation by Pharmacia of such transactions have been duly
and validly authorized by all necessary corporate action and no other corporate
proceedings on the part of Pharmacia are necessary to authorize this Agreement
or to consummate such transactions. This Agreement has been duly authorized and
validly executed and delivered by Pharmacia and constitutes a legal, valid and
binding obligation of Pharmacia, enforceable against Pharmacia in accordance
with its terms.
SECTION 5.05. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Pharmacia do not, and the
performance of this Agreement by Pharmacia will not, (i) conflict with or
violate any provision of the Articles of Association or other corporate
organization documents of Pharmacia or any equivalent organizational documents
of any Pharmacia Subsidiary, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 5.05(b) have been obtained
and all filings and obligations described in Section 5.05(b) have been made,
conflict with or violate any Law applicable to Pharmacia or any Pharmacia
Subsidiary or by which any property or asset of Pharmacia or any Pharmacia
Subsidiary is bound or affected, or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Pharmacia or any Pharmacia Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation, except, with
respect to clauses (ii) and (iii), for any such conflicts, violations, breaches,
defaults, or other occurrences which would neither, individually or in the
aggregate, (A) have a Pharmacia Material Adverse Effect nor (B) prevent or
materially delay the performance of this Agreement by Pharmacia.
(b) The execution and delivery of this Agreement by Pharmacia do not, and
the performance of this Agreement by Pharmacia will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except (i) for applicable requirements of the SSE, the FSA,
the Exchange Act, the Securities Act, Blue Sky Laws, the NYSE and state takeover
laws, the pre-merger notification requirements of the HSR Act, the filing of a
notification with the European Commission under Council Regulation (EEC) No.
4064/89, the filing of a request with the Stockholm District Court with regard
to the compulsory acquisition described in Section 3.03, applicable requirements
of the Investment Canada Act of 1985 and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not (A) prevent or materially delay consummation of the
Transactions, (B) otherwise prevent Pharmacia from performing its material
obligations under this Agreement, and (C) individually or in the aggregate, have
a Pharmacia Material Adverse Effect.
SECTION 5.06. Permits; Compliance. Each of Pharmacia and the Pharmacia
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for Pharmacia or any
Pharmacia Subsidiary to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Pharmacia Permits"), except where
the failure to have, or the suspension or cancellation of, any of the Pharmacia
Permits would neither, individually or in the aggregate, (A) have a Pharmacia
Material Adverse Effect nor (B) prevent or materially delay the performance of
this Agreement by Pharmacia, and, as of the date of this Agreement, no
suspension or cancellation of any of the Pharmacia Permits is pending or, to the
actual knowledge of the executive officers of Pharmacia, threatened, except
where the failure to have, or the suspension or cancellation of, any of the
Pharmacia Permits would neither, individually or in the aggregate, (A) have a
Pharmacia Material Adverse Effect nor (B) prevent or materially delay the
performance of this Agreement by Pharmacia. Neither Pharmacia nor any Pharmacia
Subsidiary is in conflict with, or in default or violation of, (i) any Law
applicable to Pharmacia or any Pharmacia Subsidiary or by which any property or
asset of Pharmacia or any Pharmacia Subsidiary is bound or affected or (ii) any
Pharmacia Permits, except for any such conflicts, defaults or violations that
would neither, individually or in the aggregate, (A) have a
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Pharmacia Material Adverse Effect nor (B) prevent or materially delay the
performance of this Agreement by Pharmacia.
SECTION 5.07. Stock Exchange and SEC Filings; Financial Statements. (a)
Pharmacia has filed all forms, reports and documents required to be filed by it
under the Exchange Act or with the SSE since January 1, 1993 through the date of
this Agreement (collectively, the "Pharmacia Reports"). The Pharmacia Reports
(i) were prepared in accordance with the requirements of the Exchange Act, the
SSE or Swedish Laws or regulations, as the case may be, and (ii) did not at the
time they were filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading. No Pharmacia Subsidiary is subject to the
periodic reporting requirements of the Exchange Act or required to file any
form, report or other document with the SEC, the FSA, the SSE or any other
comparable Governmental Entity.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the Pharmacia Reports was prepared in accordance
with Swedish generally accepted accounting principles and, where indicated
therein, was reconciled to U.S. generally accepted accounting principles, in
each case applied on a consistent basis throughout the periods indicated (except
as may be indicated in the notes thereto) and each presented fairly, in all
material respects, the consolidated financial position of Pharmacia and the
consolidated Pharmacia Subsidiaries as at the respective dates thereof and for
the respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments which were not and are not expected, individually or in the
aggregate, to have a Pharmacia Material Adverse Effect).
(c) Except as and to the extent set forth on the consolidated balance sheet
of Pharmacia and the consolidated Pharmacia Subsidiaries as of December 31,
1994, including the notes thereto, neither Pharmacia nor any of the Pharmacia
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on a
balance sheet or in notes thereto prepared in accordance with Swedish generally
accepted accounting principles, except for liabilities or obligations incurred
in the ordinary course of business since December 31, 1994 that would neither,
individually or in the aggregate, (A) have a Pharmacia Material Adverse Effect
nor (B) prevent or materially delay the performance of this Agreement by
Pharmacia.
SECTION 5.08. Absence of Certain Changes or Events. Since January 1, 1995,
except as contemplated by or as disclosed in this Agreement or as disclosed in
any Pharmacia Report filed since January 1, 1995, Pharmacia and the Pharmacia
Subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and, since such date, there has not been
(a) any Pharmacia Material Adverse Effect, (b) any event that could reasonably
be expected to prevent or materially delay the performance of this Agreement by
Pharmacia, (c) any material change by Pharmacia in its accounting methods,
principles or practices, (d) any declaration, setting aside or payment of any
dividend or distribution in respect of the Pharmacia Shares or any redemption,
purchase or other acquisition of any of Pharmacia's securities other than the
regular annual dividend on each Pharmacia Share of SEK 2.60, or (e) any increase
in the compensation or benefits or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), or other
employee benefit plan, or any other increase in the compensation payable or to
become payable to any executive officers of Pharmacia or any Pharmacia
Subsidiary except in the ordinary course of business consistent with past
practice or except as required by applicable law.
SECTION 5.09. Employee Benefit Plans; Labor Matters. (a) Pharmacia will
make available to Upjohn, promptly after the date hereof, a true and complete
copy of each employee benefit plan, program, arrangement and contract maintained
by Pharmacia or any Pharmacia Subsidiary for the benefit of any current or
former employee, officer or director of Pharmacia or any Pharmacia Subsidiary or
with respect to which Pharmacia or any Pharmacia Subsidiary could incur material
liability (the "Pharmacia Benefit Plans"), and each material document prepared
in connection with each Pharmacia Benefit Plan. With respect to each
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Pharmacia Benefit Plan maintained for the benefit of employees in the United
States, Pharmacia will make available to Upjohn, promptly after the date hereof,
a true and complete copy of the items listed in Section 4.09(a)(i), (ii), (iii),
(iv), (v) and (vi) hereof.
(b) With respect to the Pharmacia Benefit Plans, no event has occurred and,
to the knowledge of Pharmacia, there exists no condition or set of circumstances
in connection with which Pharmacia or any Pharmacia Subsidiary could be subject
to any liability under the terms of such Pharmacia Benefit Plans or any
applicable Law which would have a Pharmacia Material Adverse Effect.
(c) In addition to the foregoing, and except as would not have a Pharmacia
Material Adverse Effect, with respect to each Pharmacia Benefit Plan that is not
subject to United States Law (a "Foreign Benefit Plan"):
(i) all employer and employee contributions to each Foreign Benefit
Plan required by Law or by the terms of such Foreign Benefit Plan have been
made, or if applicable, accrued in accordance with normal accounting
practices and a pro rata contribution for the period from the date hereof
to and including the Effective Time has been made or accrued in accordance
with normal accounting principles;
(ii) the fair market value of the assets of each funded Foreign
Benefit Plan, the liability of each insurer for any Foreign Benefit Plan
funded through insurance or the book reserve established for any Foreign
Benefit Plan, together with any accrued contributions, is sufficient to
procure or provide for the accrued benefit obligations, as of the Effective
Time, with respect to all current and former participants in such plan
according to the actuarial assumptions and valuations most recently used to
determine employer contributions to such Foreign Benefit Plan and no
transaction contemplated by this Agreement shall cause such assets or
insurance obligations to be less than such benefit obligations; and
(iii) each Foreign Benefit Plan required to be registered has been
registered and has been maintained in good standing with applicable
regulatory authorities.
(d) Except as set forth in Section 5.09(d) of the Disclosure Schedule
delivered by Pharmacia to Upjohn prior to the execution of (and forming part of)
this Agreement (the "Pharmacia Disclosure Schedule"), and except for such
collective bargaining or other labor union contracts applicable to employees of
Pharmacia or any Pharmacia Subsidiary located outside of Sweden (copies of which
Pharmacia undertakes to provide to Upjohn as soon as practicable after the date
hereof), neither Pharmacia nor any Pharmacia Subsidiary is a party to any
collective bargaining or other labor union contract applicable to persons
employed by Pharmacia or any Pharmacia Subsidiary and no collective bargaining
agreement or other labor union contract is being negotiated by Pharmacia or any
Pharmacia Subsidiary. As of the date of this Agreement, there is no labor
dispute, strike or work stoppage against Pharmacia or any Pharmacia Subsidiary
pending or threatened in writing that may interfere with the respective business
activities of Pharmacia or any Pharmacia Subsidiary, except where such dispute,
strike or work stoppage would not have a Pharmacia Material Adverse Effect. As
of the date of this Agreement, to the knowledge of Pharmacia, none of Pharmacia,
any Pharmacia Subsidiary, or their respective representatives or employees, has
committed any unfair labor practices in connection with the operation of the
respective businesses of Pharmacia or any Pharmacia Subsidiary, and there is no
charge or complaint against Pharmacia or any Pharmacia Subsidiary by the
National Labor Relations Board or any comparable state or foreign agency pending
or threatened in writing, except where such unfair labor practice, charge or
complaint would not have a Pharmacia Material Adverse Effect.
(e) Pharmacia will make available to Upjohn, promptly after the date
hereof, true and complete (i) copies of all severance and employment agreements
with the twenty most highly compensated officers of Pharmacia and the Pharmacia
Subsidiaries (taken as a whole); (ii) copies of all severance programs and
policies of Pharmacia with or relating to its twenty most highly compensated
officers and (iii) copies of all plans, programs, agreements and other
arrangements of Pharmacia and the Pharmacia Subsidiaries (taken as a whole) with
or relating to their twenty most highly compensated officers which contain
change of control provisions.
(f) Except as otherwise required by Law, no Pharmacia Benefit Plan provides
retiree medical or retiree life insurance benefits to any person.
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SECTION 5.10. Accounting and Tax Matters. Neither Pharmacia nor, to the
knowledge of Pharmacia, any of its affiliates has taken or agreed to take any
action that would prevent the Merger and the Pharmacia Transaction from
qualifying for "pooling of interests" accounting treatment under applicable U.S.
and Swedish accounting rules including, without limitation, applicable SEC
accounting standards or would prevent the Merger from constituting a transaction
qualifying under Section 368(a) of the Code or (in conjunction with the
acquisition of Pharmacia Shares pursuant to the Exchange Offer) from
constituting a transaction qualifying under Section 351(a) of the Code, or would
prevent the Exchange Offer (in conjunction with the acquisition of Upjohn Shares
pursuant to the Merger) from constituting a transaction qualifying under Section
351(a) of the Code or a transaction in which, for Swedish income tax purposes,
neither Newco, Pharmacia nor the Pharmacia stockholders will recognize taxable
income or gain. Pharmacia is not aware of any agreement, plan or other
circumstance that would prevent the Merger or the Exchange Offer from so
qualifying under Section 368(a) or Section 351(a) of the Code or under
applicable Swedish tax Laws.
SECTION 5.11. Contracts; Debt Instruments. Except as disclosed in the
Pharmacia Reports or in Section 5.11 of the Pharmacia Disclosure Schedule, there
is no contract or agreement that is material to the business, financial
condition or results of operations of Pharmacia and the Pharmacia Subsidiaries
taken as a whole (each, a "Pharmacia Material Contract"). Neither Pharmacia nor
any Pharmacia Subsidiary is in violation of or in default under (nor does there
exist any condition which upon the passage of time or the giving of notice would
cause such a violation of or default under) any loan or credit agreement, note,
bond, mortgage, indenture or lease, or any other contract, agreement,
arrangement or understanding to which it is a party or by which it or any of its
properties or assets is bound, except for violations or defaults that would not,
individually or in the aggregate, result in a Pharmacia Material Adverse Effect.
Set forth in Section 5.11 of the Pharmacia Disclosure Schedule is a description
of any material changes to the amount and terms of the indebtedness of Pharmacia
and its subsidiaries as described in Pharmacia's Form 20-F for the year ended
December 31, 1994.
SECTION 5.12. Litigation. Except as disclosed in Pharmacia Reports or in
Section 5.12 of the Pharmacia Disclosure Schedule, there is no suit, claim,
action, proceeding or investigation pending or threatened in writing against
Pharmacia or any Pharmacia Subsidiary before any Governmental Entity which,
individually or in the aggregate, is reasonably likely to have a Pharmacia
Material Adverse Effect. Except as disclosed in the Pharmacia Reports or in
Section 5.12 of the Pharmacia Disclosure Schedule, in the case of any suit,
claim, action, proceeding or investigation relating to Pharmacia's operations
in, or present or former personnel in, Italy, there has been no change since
December 31, 1994 in the status of any such matters that would be reasonably
likely to have a Pharmacia Material Adverse Effect. Except as disclosed in the
Pharmacia Reports or in Section 5.12 of the Pharmacia Disclosure Schedule,
neither Pharmacia nor any Pharmacia Subsidiary is subject to any outstanding
Order, writ, injunction or decree which, insofar as can be reasonably foreseen,
individually or in the aggregate, would have a Pharmacia Material Adverse
Effect.
SECTION 5.13. Environmental Matters. Except as disclosed in the Pharmacia
Reports or as would not, individually or in the aggregate, have a Pharmacia
Material Adverse Effect:
(a) Pharmacia and the Pharmacia Subsidiaries (i) are in compliance
with all applicable Environmental Laws, (ii) hold all Environmental
Permits, and (iii) are in compliance with its Environmental Permits.
(b) None of Pharmacia or any Pharmacia Subsidiary has received any
written request for information, or been notified that it is a potentially
responsible party, under CERCLA or any similar state, local or foreign Law.
(c) None of Pharmacia or any Pharmacia Subsidiary has entered into or
agreed to any consent decree or order or is subject to any judgment, decree
or judicial order relating to compliance with Environmental Laws,
Environmental Permits or the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of Hazardous Materials, and to
the best knowledge of Pharmacia, no investigation, litigation or other
proceeding is pending or threatened in writing with respect thereto.
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(d) None of the real property owned or leased by Pharmacia or any
Pharmacia Subsidiary is listed or, to the best knowledge of Pharmacia,
proposed for listing on the "National Priorities List" under CERCLA, as
updated through the date hereof, or any similar state or foreign list of
sites requiring investigation or cleanup.
SECTION 5.14. Trademarks, Patents and Copyrights. Except as set forth in
Section 5.14 of the Pharmacia Disclosure Schedule, or to the extent the
inaccuracy of any of the following (or the conditions giving rise to such
inaccuracy), individually or in the aggregate, would not have a Pharmacia
Material Adverse Effect, Pharmacia and the Pharmacia Subsidiaries own or possess
adequate licenses or other legal rights to use all patents, patent rights,
trademarks, trademark rights, trade names, trade dress, trade name rights,
copyrights, servicemarks, trade secrets, applications for trademarks and for
servicemarks, mask works, know-how and other proprietary rights and information
used or held for use in connection with the business of Pharmacia and the
Pharmacia Subsidiaries as conducted since December 31, 1992, and as currently
conducted or as contemplated to be conducted, and Pharmacia is unaware of any
assertion or claim challenging the validity of any of the foregoing. The conduct
of the business of Pharmacia and the Pharmacia Subsidiaries as conducted since
December 31, 1992, as currently conducted and as contemplated to be conducted
did not, does not and will not infringe in any way any patent, patent right,
license, trademark, trademark right, trade dress, trade name, trade name right,
service mark, mask work or copyright of any third party that, individually or in
the aggregate, could have a Pharmacia Material Adverse Effect. To Pharmacia's
knowledge, there are no infringements of any proprietary rights owned by or
licensed by or to Pharmacia or any Pharmacia Subsidiary that, individually or in
the aggregate, could have a Pharmacia Material Adverse Effect.
SECTION 5.15. Taxes. Except for such matters that would not have a
Pharmacia Material Adverse Effect, (a) Pharmacia and its subsidiaries have
timely filed or will timely file all returns and reports required to be filed by
them with any taxing authority with respect to Taxes for any period ending on or
before the Effective Time, taking into account any extension of time to file
granted to or obtained on behalf of Pharmacia and its subsidiaries, (b) all
Taxes shown to be payable on such returns or reports that are due prior to the
Effective Time have been paid or will be paid, (c) as of the date hereof, no
deficiency for any material amount of Tax has been asserted or assessed by a
taxing authority against Pharmacia or its subsidiaries, and (d) Pharmacia and
its subsidiaries have provided adequate reserves in their financial statements
for any Taxes that have not been paid, whether or not shown as being due on any
returns.
SECTION 5.16. Opinion of Financial Advisor. Morgan Stanley & Co. Limited
("Morgan Stanley") has delivered to Pharmacia its written opinion to the effect
that, as of the date of this Agreement, the Exchange Offer Ratio is fair to
Pharmacia's stockholders from a financial point of view. Morgan Stanley has
authorized the inclusion of its opinion in the Disclosure Documents, and
Pharmacia will promptly, after the date of this Agreement, deliver a signed copy
of such opinion to Upjohn.
SECTION 5.17. Brokers. No broker, finder or investment banker (other than
Morgan Stanley and Enskilda, Skandinaviska Enskilda Banken ("Enskilda")) is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Pharmacia.
Pharmacia has heretofore made available to Upjohn a complete and correct copy of
all agreements between Pharmacia and Morgan Stanley and between Pharmacia and
Enskilda pursuant to which such firms would be entitled to any payment relating
to the Transactions.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NEWCO AND NEWCO SUB
Newco and Newco Sub hereby jointly and severally represent and warrant to
Pharmacia and Upjohn that:
SECTION 6.01. Organization and Qualification; Subsidiaries. Each of Newco
and Newco Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
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properties and to carry on its business as it is now being conducted. Each of
Newco and Newco Sub is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary. Neither Newco nor Newco Sub has any subsidiaries other
than, in the case of Newco, Newco Sub.
SECTION 6.02. Certificate of Incorporation and By-Laws. Each of Newco and
Newco Sub has heretofore made available to each of Pharmacia and Upjohn a
complete and correct copy of its Certificate of Incorporation and By-Laws. Such
Certificates of Incorporation and By-Laws are in full force and effect. Neither
Newco nor Newco Sub is in violation of any of the provisions of its Certificate
of Incorporation or By-Laws.
SECTION 6.03. Capitalization. (a) As of the date of this Agreement, (i)
the authorized capital stock of Newco consists of 1,000 shares of Newco Common
Stock, (ii) 1,000 shares of Newco Common Stock are issued and outstanding, all
of which are validly issued, fully paid and nonassessable, and (iii) Pharmacia
and Upjohn each own 500 shares of Newco Common Stock free and clear of all
encumbrances of any kind. No shares of Newco capital stock are held in the
treasury of Newco. On or prior to the Effective Time, the Certificate of
Incorporation of Newco will be amended to provide that the authorized capital
stock of Newco will consist of (i) 1,500,000,000 shares of Newco Common Stock
and (ii) 100,000,000 shares of preferred stock, of which 7,500 shares will be
designated Newco Series A Convertible Perpetual Preferred Stock. As of the
Registration Statement Effective Date, 1,000 shares of Newco Common Stock will
be issued and outstanding, all of which will be validly issued, fully paid and
nonassessable, and no shares of Newco Series A Convertible Perpetual Preferred
Stock will be issued or outstanding. Except as provided in this Agreement, there
are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
either of Newco or obligating Newco to issue or sell any shares of capital stock
of, or other equity interests in, Newco. Each share of Newco capital stock is
duly authorized, validly issued, fully paid and nonassessable. The Newco Shares
to be issued in connection with the Transactions, when issued as contemplated
herein, will be duly authorized, validly issued, fully paid and nonassessable
and will not be issued in violation of any preemptive rights. The SDSs to be
issued in connection with the Pharmacia Transaction, when issued as contemplated
herein, will be validly issued. The depositary agreement under which the SDSs
will be issued, when the SDSs are issued as contemplated herein, will have been
duly authorized, executed and delivered by Newco and will constitute a legal,
valid and binding obligation of Newco enforceable against Newco in accordance
with its terms.
(b) The authorized capital stock of Newco Sub consists of 1,000 shares of
common stock, par value $.01 per share, of Newco Sub (the "Newco Sub Common
Stock"). As of the date of this Agreement, 1,000 shares of Newco Sub Common
Stock are issued and outstanding, all of which are validly issued, fully paid
and nonassessable. Each issued and outstanding share of Newco Sub Common Stock
is owned by Newco, free and clear of all encumbrances of any kind. No shares of
Newco Sub Common Stock are held in the treasury of Newco Sub. There are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of Newco Sub or
obligating either of them to issue or sell any shares of capital stock of, or
other equity interests in, Newco Sub. As of the Effective Time, all of the
outstanding shares of capital stock of the Surviving Corporation will be duly
authorized, validly issued, fully paid and nonassessable and will be owned by
Newco, free and clear of all encumbrances of any kind.
SECTION 6.04. Authority Relative to This Agreement. Each of Newco and
Newco Sub has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions (including, without limitation, the Transactions) contemplated
herein to be consummated by it. The execution and delivery of this Agreement by
each of Newco and Newco Sub and the consummation by each of Newco and Newco Sub
of such transactions have been duly and validly authorized by all necessary
corporate action (including, in the case of Newco Sub, the approval of Newco as
sole stockholder of Newco Sub) and no other corporate proceedings on the part of
either Newco or Newco Sub are necessary to authorize this Agreement or to
consummate such Transactions. This Agreement has been duly authorized and
validly executed and delivered by each of Newco and Newco Sub and constitutes a
legal, valid and binding obligation of each of Newco and Newco Sub, enforceable
against each of Newco and Newco Sub in accordance with its terms.
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SECTION 6.05. No Conflict. The execution and delivery of this Agreement
by each of Newco and Newco Sub do not, and the performance of this Agreement by
each of Newco and Newco Sub will not, conflict with or violate any provision of
the Newco or Newco Sub Certificate of Incorporation or By-laws.
SECTION 6.06. No Activities. Except for obligations or liabilities
incurred in connection with its respective incorporation or organization and the
Transactions, neither Newco nor Newco Sub has incurred, directly or indirectly,
through any subsidiary or affiliate, any obligations or liabilities or engaged
in any business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
ARTICLE VII
COVENANTS
SECTION 7.01. Conduct of Business by Upjohn Pending the Closing. Upjohn
agrees that, between the date of this Agreement and the Effective Time, except
as set forth in Section 7.01 of the Upjohn Disclosure Schedule or as
contemplated by any other provision of this Agreement, unless Pharmacia shall
otherwise agree in writing, which agreement shall not be unreasonably withheld
or delayed, (1) the businesses of Upjohn and the Upjohn Subsidiaries shall be
conducted only in, and Upjohn and the Upjohn Subsidiaries shall not take any
action except in, the ordinary course of business consistent with past practice
and (2) Upjohn shall use its reasonable best efforts to keep available the
services of such of the current officers, significant employees and consultants
of Upjohn and the Upjohn Subsidiaries and to preserve the current relationships
of Upjohn and the Upjohn Subsidiaries with such of the customers, suppliers and
other persons with which Upjohn or any Upjohn Subsidiary has significant
business relations as Upjohn deems reasonably necessary in order to preserve
substantially intact its business organization. By way of amplification and not
limitation, except as set forth in Section 7.01 of the Upjohn Disclosure
Schedule or as contemplated by any other provision of this Agreement, the Board
of Directors of Upjohn shall not (unless required by applicable Laws or stock
exchange regulations) cause or permit Upjohn or any Upjohn Subsidiary to, and
shall neither cause nor permit any of Upjohn's affiliates (over which it
exercises control), or any of their officers, directors, employees and agents
to, between the date of this Agreement and the Effective Time, directly or
indirectly, do, or agree to do, any of the following, without the prior written
consent of Pharmacia, which consent shall not be unreasonably withheld or
delayed:
(a) amend or otherwise change its Restated Certificate of
Incorporation or By-laws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease, license,
guarantee, encumber, or authorize the issuance, sale, pledge, disposition,
grant, transfer, lease, license, guarantee or encumbrance of, (i) any
shares of capital stock of Upjohn or any Upjohn Subsidiary of any class, or
securities convertible or exchangeable or exercisable for any shares of
such capital stock, or any options, warrants or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of Upjohn or any
Upjohn Subsidiary (except for the issuance of (A) a maximum of 10,867,250
shares of Upjohn Common Stock issuable pursuant to the Upjohn Options
outstanding on the date of this Agreement and the issuance, in the ordinary
course of business and consistent with past practice, of the Upjohn Options
to purchase a maximum of 1,771,299 shares of Upjohn Common Stock pursuant
to the Upjohn Stock Option Plans in effect on the date of this Agreement
and the shares of Upjohn Common Stock issuable pursuant to such Upjohn
Options, in accordance with the terms of the Upjohn Stock Option Plan; (B)
a maximum of 650,000 shares of Upjohn Series A Preferred Stock pursuant to
the Rights Agreement; (C) a maximum of 7,322,020 shares of Upjohn Common
Stock issuable upon conversion of the Upjohn Series A Preferred Stock or
the Upjohn Series B Preferred Stock; (D) subject to Section 7.01(f), any
securities required by virtue of (x) the Upjohn Incentive Programs and (y)
the Upjohn Deferred Compensation Plan for Directors; and (E) a maximum of
6,653,523 rights to purchase shares of Upjohn Series A Preferred Stock
issuable in connection with issuances of Upjohn Common Stock made in
accordance with this Section 7.01(b)); or
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(ii) any property or assets of Upjohn or any Upjohn Subsidiary, except in
the ordinary course of business and in a manner consistent with past
practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock, other than (i) any regular quarterly dividend
declared and paid in accordance with past practice and not in excess of
$.37 per share of Upjohn Common Stock for any fiscal quarter ending prior
to September 30, 1995, (ii) a quarterly dividend not in excess of $.39 per
share of Upjohn Common Stock for the fiscal quarter ending December 31,
1995 and any subsequent quarter and (iii) regular quarterly cash dividends
not in excess of $629.69 per share of Upjohn Series B Preferred Stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization, person or any
division thereof or any assets, other than acquisitions of assets in the
ordinary course of business consistent with past practice and any other
acquisitions for consideration that are not, in the aggregate, in excess of
$250,000,000; (ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person for
borrowed money, except for indebtedness for borrowed money incurred in the
ordinary course of business and consistent with past practice or incurred
to refinance outstanding indebtedness for borrowed money existing on the
date of this Agreement or other indebtedness for borrowed money with a
maturity of not more than one year in a principal amount not, in the
aggregate, in excess of $200,000,000; (iii) terminate, cancel or request
any material change in, or agree to any material change in any Upjohn
Material Contract or enter into any contract or agreement material to the
business, results of operations or financial condition of Upjohn and the
Upjohn Subsidiaries taken as a whole, in either case other than in the
ordinary course of business, consistent with past practice; (iv) make or
authorize any capital expenditure, other than capital expenditures that are
not, in the aggregate, in excess of $350,000,000 for Upjohn and the Upjohn
Subsidiaries taken as a whole; or (v) enter into or amend any contract,
agreement, commitment or arrangement that, if fully performed, would not be
permitted under this Section 7.01(e);
(f) increase the compensation payable or to become payable to its
officers or employees, except for increases in accordance with past
practices in salaries or wages of employees of Upjohn or any Upjohn
Subsidiary who are not officers of Upjohn, or grant any rights to severance
or termination pay to, or enter into any employment or severance agreement
with, any director, officer or other employee of Upjohn or any Upjohn
Subsidiary, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee, except as
contemplated by this Agreement or to the extent required by applicable Law
or the terms of a collective bargaining agreement;
(g) take any action with respect to accounting policies or procedures,
other than actions in the ordinary course of business and consistent with
past practice;
(h) waive, release, assign, settle or compromise any material claims
or litigation;
(i) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability; or
(j) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing.
SECTION 7.02. Conduct of Business by Pharmacia Pending the
Closing. Pharmacia agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section 7.02 of the Pharmacia Disclosure
Schedule or as contemplated by any other provision of this Agreement, unless
Upjohn
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shall otherwise agree in writing, which agreement shall not be unreasonably
withheld or delayed, (1) the business of Pharmacia and the Pharmacia
Subsidiaries shall be conducted only in, and the Pharmacia and the Pharmacia
Subsidiaries shall not take any action except in, the ordinary course of
business consistent with past practice and (2) Pharmacia shall use its
reasonable best efforts to keep available the services of such of the current
officers, significant employees and consultants of Pharmacia and the Pharmacia
Subsidiaries and to preserve the current relationships of Pharmacia and the
Pharmacia Subsidiaries with such of the customers, suppliers and other persons
with which Pharmacia or any Pharmacia Subsidiary has significant business
relations as Pharmacia deems reasonably necessary in order to preserve
substantially intact its business organization. By way of amplification and not
limitation, except as set forth in Section 7.02 of the Pharmacia Disclosure
Schedule or as contemplated by any other provision of this Agreement, the Board
of Directors of Pharmacia shall not (unless required by applicable Laws or stock
exchange regulations) cause or permit Pharmacia or any Pharmacia Subsidiary to,
and shall neither cause nor permit any of Pharmacia's affiliates (over which it
exercises control), or any of their officers, directors, employees and agents
to, between the date of this Agreement and the Effective Time, directly or
indirectly, do, or agree to do, any of the following without the prior written
consent of Upjohn, which consent shall not be unreasonably withheld or delayed:
(a) amend or otherwise change its Articles of Association or
equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease, license,
guarantee, encumber, or authorize the issuance, sale, pledge, disposition,
grant, transfer, lease, license, guarantee or encumbrance of, (i) any
shares of capital stock of Pharmacia or any Pharmacia Subsidiary of any
class, or securities convertible or exchangeable or exercisable for any
shares of such capital stock, or any options, warrants or other rights of
any kind to acquire any shares of such capital stock, or any other
ownership interest (including, without limitation, any phantom interest),
of Pharmacia or any Pharmacia Subsidiary or (ii) any property or assets of
Pharmacia or any Pharmacia Subsidiary, except in the ordinary course of
business and in a manner consistent with past practice;
(c) recommend to its stockholders that the stockholders declare, set
aside, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital stock,
other than any regular dividends declared and paid in accordance with past
practice and not in excess of SEK 2.60 per Pharmacia Share;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization, person or any
division thereof or any assets, other than acquisitions of assets in the
ordinary course of business consistent with past practice and any other
acquisitions for consideration that are not, in the aggregate, in excess of
$250,000,000; (ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person for
borrowed money, except for indebtedness for borrowed money incurred in the
ordinary course of business and consistent with past practice or incurred
to refinance outstanding indebtedness for borrowed money existing on the
date of this Agreement or other indebtedness for borrowed money with a
maturity of not more than one year in a principal amount not, in the
aggregate, in excess of $200,000,000; (iii) terminate, cancel or request
any material change in, or agree to any material change in any Pharmacia
Material Contract or enter into any contract or agreement material to the
business, results of operations or financial condition of Pharmacia and the
Pharmacia Subsidiaries taken as a whole, in either case other than in the
ordinary course of business, consistent with past practice; (iv) make or
authorize any capital expenditure, other than capital expenditures that are
not, in the aggregate, in excess of $350,000,000 for Pharmacia and the
Pharmacia Subsidiaries taken as a whole; or (v) enter into or amend any
contract, agreement, commitment or arrangement that, if fully performed,
would not be permitted under this Section 7.02(e);
(f) increase the compensation payable or to become payable to its
officers or employees, except for increases in accordance with past
practices in salaries or wages of employees of Pharmacia or any
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Pharmacia Subsidiary who are not officers of Pharmacia, or grant any rights
to severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or other employee of
Pharmacia or any Pharmacia Subsidiary, or establish, adopt, enter into or
amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer
or employee, except to the extent required by applicable Law or the terms
of a collective bargaining agreement;
(g) take any action with respect to accounting policies or procedures,
other than actions in the ordinary course of business and consistent with
past practice;
(h) waive, release, assign, settle or compromise any material claims
or litigation;
(i) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability; or
(j) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing.
SECTION 7.03. Cooperation; Steering Committee. (a) Pharmacia and Upjohn
shall coordinate and cooperate in connection with (i) the preparation of the
Registration Statement and the Disclosure Documents, (ii) determining whether
any action by or in respect of, or filing with, any Governmental Entity is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any Upjohn Material Contracts or Pharmacia Material
Contracts, in connection with the consummation of the Transactions and (iii)
seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith or with the
Registration Statement and the Disclosure Documents and timely seeking to obtain
any such actions, consents, approvals or waivers.
(b) Upon the execution and delivery of this Agreement, Pharmacia and Upjohn
will establish a committee (the "Steering Committee") for the purpose of, to the
extent permitted by applicable Laws, facilitating the efficient combination of
the respective businesses of Pharmacia and Upjohn as promptly as practicable
following the Effective Time. The Steering Committee will consist of four
members, two of whom will be designated by Pharmacia (and will initially be Jan
Ekberg and Goran Ando), and two of whom will be designated by Upjohn (and will
initially be John L. Zabriskie and Robert C. Salisbury). The Steering Committee
will be dissolved as of the Effective Time.
SECTION 7.04. Notices of Certain Events. Each of Pharmacia and Upjohn
shall give prompt notice to the other of (i) any notice or other communication
from any person alleging that the consent of such person is or may be required
in connection with the Transactions, (ii) any notice or other communication from
any Governmental Entity in connection with the Transactions, (iii) any actions,
suits, claims, investigations or proceedings commenced or, to the best of its
knowledge threatened in writing against, relating to or involving or otherwise
affecting Pharmacia, Upjohn or their subsidiaries that relate to the
consummation of the Transactions; (iv) the occurrence of a default or event
that, with notice or lapse of time or both, will become a default under any
Upjohn Material Contract or Pharmacia Material Contract; and (v) any change that
is reasonably likely to result in an Upjohn Material Adverse Effect or a
Pharmacia Material Adverse Effect or is likely to delay or impede the ability of
either Upjohn or Pharmacia to consummate the transactions contemplated by this
Agreement or to fulfill its obligations set forth herein.
SECTION 7.05. Contractual Consents. Prior to or at the Effective Time,
each of Pharmacia and Upjohn shall use its reasonable best efforts to prevent
the occurrence, as a result of the Transactions, of a change of control or any
event which constitutes a default (or an event which with notice or lapse of
time or both would become a default) under any material contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which it
or any of its subsidiaries is a party.
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ARTICLE VIII
ADDITIONAL AGREEMENTS
SECTION 8.01. Registration Statement; Disclosure Documents. (a) As
promptly as practicable after the execution of this Agreement, Pharmacia and
Upjohn shall jointly prepare and Newco shall file with the SEC a single document
that will constitute (i) the proxy statement of Upjohn relating to the special
meeting of Upjohn's stockholders (the "Upjohn Stockholders' Meeting") to be held
to consider adoption of this Agreement, (ii) the prospectus forming part of the
registration statement on Form S-4 of Newco (together with all amendments
thereto, the "Registration Statement"), in connection with the registration
under the Securities Act of the Newco Common Stock to be issued to the
stockholders of Pharmacia and Upjohn pursuant to the Exchange Offer in the
United States and the Merger, respectively, and (iii) the offer to purchase to
be used by Newco in connection with the Exchange Offer in the United States
(such document, together with any amendments thereof or supplements thereto, the
"Proxy Statement"). Substantially contemporaneously with the filing of the Proxy
Statement with the SEC, copies thereof shall be provided to the National
Association of Securities Dealers ("NASD"), the NYSE and the SSE. Pharmacia,
Upjohn and Newco each shall use its reasonable best efforts to cause the
Registration Statement to become effective as promptly as practicable, and,
prior to the effective date of the Registration Statement (the "Registration
Statement Effective Date"), Newco shall take all or any action required under
any applicable Laws in connection with the issuance of Newco Common Stock and
SDSs pursuant to the Merger and the Exchange Offer. Pharmacia or Upjohn, as the
case may be, shall furnish all information concerning Pharmacia or Upjohn as the
other party may reasonably request in connection with such actions and the
preparation of the Registration Statement and Disclosure Documents. As promptly
as practicable after the Registration Statement Effective Date, the Proxy
Statement will be mailed to the stockholders of Pharmacia and Upjohn, and, in
the case of Pharmacia, Swedish language translations or summaries thereof, as
may be necessary or appropriate, will be provided to its Swedish stockholders.
Pharmacia, Upjohn and Newco shall cause the Disclosure Documents to comply as to
form and substance in all material respects with the applicable requirements of
(i) the Exchange Act, including, without limitation, Sections 14(a) and 14(d)
thereof and the respective regulations promulgated thereunder, (ii) the NASD,
the NYSE, the SSE and the FSA, (iii) the Securities Act, (iv) the NBK
Recommendations Concerning Public Offers for the Acquisition of Shares (1988)
and (v) the DGCL.
(b) (i) The Disclosure Documents shall include the unanimous and
unconditional recommendation of the Board of Directors of Upjohn to the
stockholders of Upjohn that they vote in favor of adoption of this Agreement;
provided, however, that the Board of Directors of Upjohn may, at any time prior
to the Effective Time, withdraw, modify or change any such recommendation if the
Board of Directors of Upjohn determines in good faith that failure to so
withdraw, modify or change its recommendation would cause the Board of Directors
of Upjohn to breach its fiduciary duties to Upjohn's stockholders under
applicable Laws after receipt of advice to such effect from independent legal
counsel (who may be Upjohn's regularly engaged independent legal counsel). In
addition, the Disclosure Documents will include the opinion of Goldman Sachs
referred to in Section 4.17.
(ii) The Disclosure Documents shall include the unanimous and unconditional
recommendation of the Board of Directors of Pharmacia to the stockholders of
Pharmacia that they accept the Exchange Offer; provided, however, that the Board
of Directors of Pharmacia may, at any time prior to the Effective Time,
withdraw, modify or change any such recommendation if the Board of Directors of
Pharmacia determines in good faith that failure to so withdraw, modify or change
its recommendation would cause the Board of Directors of Pharmacia to breach its
fiduciary duties to Pharmacia or Pharmacia's stockholders under applicable Laws
after receipt of advice to such effect from independent legal counsel (who may
be Pharmacia's regularly engaged independent legal counsel). In addition, the
Disclosure Documents will include the opinion of Morgan Stanley referred to in
Section 5.16.
(c) No amendment or supplement to the Disclosure Documents or the
Registration Statement will be made without the approval of Pharmacia and
Upjohn, which approval shall not be unreasonably withheld or delayed. Each of
Newco, Pharmacia and Upjohn will advise the others, promptly after it receives
notice
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thereof, of the time when the Registration Statement has become effective or any
supplement or amendment has been filed, of the issuance of any stop order, of
the suspension of the qualification of Newco Common Stock or the SDSs issuable
in connection with the Merger and the Exchange Offer for offering or sale in any
jurisdiction, or of any request by the SEC, the NASD, the NYSE, the SSE or the
FSA for amendment of the Disclosure Documents or the Registration Statement or
comments thereon and responses thereto or requests by the SEC, the SSE or the
FSA for additional information.
(d) The information supplied by Pharmacia for inclusion in the Registration
Statement and the Disclosure Documents shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to the
stockholders of Pharmacia and Upjohn, (iii) the time of the Upjohn Stockholders'
Meeting, (iv) the Effective Time and (v) the Expiration Date, contain any untrue
statement of a material fact or fail to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time, any event or
circumstance relating to Pharmacia or any Pharmacia Subsidiary, or their
respective officers or directors, should be discovered by Pharmacia that should
be set forth in an amendment or a supplement to the Registration Statement or
Disclosure Documents, Pharmacia shall promptly inform Upjohn. All documents that
Pharmacia is responsible for filing in connection with the Transactions will
comply as to form and substance in all material aspects with the applicable
requirements of the SSE or the FSA, the DGCL, the Securities Act and the
Exchange Act.
(e) The information supplied by Upjohn for inclusion in the Registration
Statement and the Disclosure Documents shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to the
stockholders of Upjohn and Pharmacia, (iii) the time of the Upjohn Shareholder
Meeting, (iv) the Effective Time, and (v) the Expiration Date, contain any
untrue statement of a material fact or fail to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading. If at any time prior to the Effective Time any event or circumstance
relating to Upjohn or any Upjohn Subsidiary, or their respective officers or
directors, should be discovered by Upjohn that should be set forth in an
amendment or a supplement to the Registration Statement or Disclosure Documents,
Upjohn shall promptly inform Pharmacia. All documents that Upjohn is responsible
for filing with the SEC in connection with the Transactions will comply as to
form and substance in all material respects with the applicable requirements of
the DGCL, the Securities Act and the Exchange Act.
SECTION 8.02. Stockholders' Meeting. Upjohn shall call and hold the
Upjohn Stockholders' Meeting as promptly as practicable after the Registration
Statement Effective Date for the purpose of voting upon the adoption of this
Agreement and Pharmacia, Upjohn and Newco will cooperate with each other to
cause the Upjohn Stockholders' Meeting to be held on or proximate to the
Expiration Date of the Exchange Offer. Upjohn shall use its reasonable best
efforts (through its agents or otherwise) to solicit from its stockholders
proxies in favor of the adoption of this Agreement, and shall take all other
action necessary or advisable to secure the affirmative vote of its stockholders
required by the DGCL to secure such adoption, except to the extent that the
Board of Directors of Upjohn determines in good faith that doing so would cause
the Board of Directors of Upjohn to breach its fiduciary duties to Upjohn's
stockholders under applicable Laws after receipt of advice to such effect from
independent legal counsel (who may be Upjohn's regularly engaged independent
legal counsel).
SECTION 8.03. Access to Information; Confidentiality. (a) Except as
required pursuant to any confidentiality agreement or similar agreement or
arrangement to which Pharmacia or Upjohn or any of their respective subsidiaries
is a party or pursuant to applicable Law or the regulations or requirements of
any stock exchange or other regulatory organization with whose rules the parties
are required to comply, from the date of this Agreement to the Effective Time,
Pharmacia and Upjohn shall (and shall cause their respective subsidiaries to):
(i) provide to the other (and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives, collectively,
"Representatives") access at reasonable times upon prior notice to the officers,
employees, agents, properties, offices and other facilities of the other and its
subsidiaries and to the books and records thereof and (ii) furnish promptly such
information concerning the business, properties, contracts, assets, liabilities,
personnel and other aspects of the other party and its
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subsidiaries as the other party or its Representatives may reasonably request.
No investigation conducted pursuant to this Section 8.03 shall affect or be
deemed to modify any representation or warranty made in this Agreement.
(b) The parties shall comply with, and shall cause their respective
Representatives to comply with, all of their respective obligations under the
Confidentiality Agreement dated May 4, 1995 (the "Confidentiality Agreement")
between Pharmacia and Upjohn with respect to the information disclosed pursuant
to this Section 8.03.
SECTION 8.04. No Solicitation of Transactions. (a) Each party to this
Agreement will not, directly or indirectly, and will instruct its officers,
directors, employees, subsidiaries, agents or advisors or other representatives
(including, without limitation, any investment banker, attorney or accountant
retained by it), not to, directly or indirectly, solicit, initiate or knowingly
encourage (including by way of furnishing nonpublic information), or take any
other action knowingly to facilitate, any inquiries or the making of any
proposal or offer (including, without limitation, any proposal or offer to its
stockholders) that constitutes, or may reasonably be expected to lead to, any
Competing Transaction, or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of the officers, directors or employees
of such party or any of its subsidiaries, or any investment banker, financial
advisor, attorney, accountant or other representative retained by such party or
any of such party's subsidiaries, to take any such action. Each party to this
Agreement shall notify the other parties promptly if any proposal or offer, or
any inquiry or contact with any person with respect thereto, regarding a
Competing Transaction is made. Each party to this Agreement immediately shall
cease and cause to be terminated all existing discussions or negotiations with
any parties conducted heretofore with respect to a Competing Transaction and
promptly request that all confidential information furnished on behalf of such
party be returned. Each party to this Agreement agrees not to release any third
party from, or waive any provision of, any confidentiality or standstill
agreement to which it is a party.
(b) Notwithstanding anything to the contrary in Section 8.04(a), the Board
of Directors of each party to this Agreement may cause such party to furnish
information to, and may participate in discussions or negotiations with, any
person that, unsolicited by such party, has submitted a written proposal to such
Board of Directors relating to a Competing Transaction, in each case to the
extent that the Board of Directors of such party determines in good faith that
the failure to do so would cause the Board of Directors of such party to breach
its fiduciary duties to such party or its stockholders under applicable Laws
after receipt of advice to such effect from independent legal counsel (who may
be such party's regularly engaged independent legal counsel) and,
notwithstanding anything to the contrary contained in this Agreement, any such
furnishing of information and participation in discussions or negotiations shall
not constitute a breach of this Agreement by such party; provided, however, that
any party furnishing such information, or participating in such discussions or
negotiations shall notify the other promptly of such action and shall, in any
such notice, indicate the identity of the person making the written proposal
referred to in this Section 8.04(b) and, in reasonable detail, the terms and
conditions of such written proposal.
(c) Notwithstanding anything to the contrary in Section 8.04(a), the
provisions of Section 8.04(a) shall apply to directors of Pharmacia and Upjohn
solely in their capacity as directors of Pharmacia and Upjohn, respectively, and
no actions taken by such directors in their capacity as officers or directors of
any other person shall be deemed to be a violation of Section 8.04(a).
(d) A "Competing Transaction" means any of the following involving
Pharmacia or Upjohn, as the case may be (other than the Transactions
contemplated by this Agreement): (i) a merger, consolidation, share exchange,
business combination or other similar transaction; (ii) any sale, lease,
exchange transfer or other disposition of 25% or more of the assets of such
party and its subsidiaries, taken as a whole or (iii) a tender offer or exchange
offer for, or any other acquisition of, 10% or more of the outstanding voting
securities of such party.
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SECTION 8.05. Employee Benefits Matters. (a) Annex A hereto sets forth
certain agreements among the parties hereto with respect to employee benefits
matters and is incorporated herein by this reference.
(b) Prior to the Effective Time, Upjohn shall amend the Upjohn Employee
Savings Plan/Employee Stock Ownership Plan (the "Upjohn Plan") to provide that
the execution of this Agreement and the consummation of the Transactions will
not constitute a "change of control" (as defined in Section 16 of such Upjohn
Plan) resulting in automatic vesting under the Upjohn Plan.
SECTION 8.06. Directors' and Officers' Indemnification and
Insurance. (a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions that are set forth, as of the date of
this Agreement, in the Restated Certificate of Incorporation and the By-Laws,
respectively, of Upjohn, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would affect adversely the rights thereunder of individuals who at
or at any time prior to the Effective Time were directors, officers, employees,
fiduciaries or agents of Upjohn.
(b) For a period of six years after the Effective Time, Newco shall cause
to be maintained in effect the current directors' and officers' liability
insurance policies maintained by Upjohn and Pharmacia (provided that Newco may,
and in the event of the cancellation or termination of such policies, Newco
shall substitute therefor policies reasonably satisfactory to the indemnified
parties of at least the same coverage containing terms and conditions which are
no less advantageous) with respect to claims arising from facts or events that
occurred prior to the Effective Time.
(c) This Section 8.06 is intended to be for the benefit of, and shall be
enforceable by, the indemnified parties, their heirs and personal
representatives and shall be binding on Newco and the Surviving Corporation and
their respective successors and assigns.
(d) From and after the Effective Time, Newco agrees that it shall indemnify
and hold harmless each present and former director and officer of Upjohn or
Pharmacia, determined as of the Effective Time (the "Indemnified Parties"),
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "Costs") incurred
in connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent that Upjohn or Pharmacia would have been permitted under Delaware or
Swedish law, as the case may be, and their charter documents (each as in effect
on the date hereof) to indemnify such Indemnified Parties (and Newco shall also
advance expenses as incurred to the fullest extent permitted under applicable
Law; provided that the Indemnified Party to whom expenses are advanced provides
an undertaking to repay such advances if it is ultimately determined that such
Indemnified Party is not entitled to indemnification); and provided, further,
that any determination required to be made with respect to whether an officer's
or director's conduct complies with the standards set forth under Delaware or
Swedish law and Upjohn or Pharmacia's charter documents shall be made by
independent counsel selected by Newco.
(e) To the extent paragraph (d) shall not serve to indemnify and hold
harmless an Indemnified Party, for a period of six years after the date hereof,
Newco shall, subject to the terms set forth herein, indemnify and hold harmless,
to the fullest extent permitted under applicable Law (and Newco shall also
advance expenses as incurred to the fullest extent permitted under applicable
Law; provided that the Indemnified Party to whom expenses are advanced provides
an undertaking to repay such advances if it is ultimately determined that such
Indemnified Party is not entitled to indemnification), each Indemnified Party
against any Costs incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to the transactions contemplated by
this Agreement; provided, however, that Newco shall not be required to indemnify
any Indemnified Party pursuant hereto if it shall be determined that the
Indemnified Party acted in bad faith and not in a manner such Indemnified Party
believed to be in or not opposed to the best interests of Upjohn or Pharmacia,
as the case may be.
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(f) Any Indemnified Party wishing to claim indemnification under paragraphs
(d) or (e) of this Section 8.06, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Newco thereof, but the
failure to so notify shall not relieve Newco of any liability it may have to
such Indemnified Party if such failure does not materially prejudice Newco. In
the event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) Newco shall have the right to
assume the defense thereof and Newco shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the defense
thereof, except that if Newco elects not to assume such defense or counsel for
the Indemnified Parties advises that there are issues which raise conflicts of
interest between Newco and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them, and Newco shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that Newco shall be obligated pursuant
to this paragraph (f) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction unless the use of one counsel for such Indemnified
Parties would present such counsel with a conflict of interest, (ii) the
Indemnified Parties will cooperate in the defense of any such matter and (iii)
Newco shall not be liable for any settlement effected without its prior written
consent; and provided, further, that Newco shall not have any obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final, that
the indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable Law. If such indemnity is not available with respect
to any Indemnified Party, then Newco and the Indemnified Party shall contribute
to the amount payable in such proportion as is appropriate to reflect relative
faults and benefits.
(g) If Newco or any of its successors or assigns (i) shall consolidate with
or merge into any other corporation or entity and shall not be the continuing or
surviving corporation or entity or such consolidation or merger or (ii) shall
transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then and in each such case, proper
provisions shall be made so that the successors and assigns of Newco shall
assume all of the obligations set forth in this Section 8.06.
SECTION 8.07. Pooling Affiliates. (a) Not fewer than 45 days prior to the
Effective Time, Upjohn shall deliver to Pharmacia a list of names and addresses
of those persons who were, in Upjohn's reasonable judgment, at the record date
for the Upjohn Stockholders' Meeting, affiliates within the meaning of Rule 145
of the rules and regulations promulgated under the Securities Act or applicable
SEC accounting releases with respect to pooling-of-interests accounting
treatment (each such person, a "Pooling Affiliate") of Upjohn. Upjohn shall
provide Pharmacia with such information and documents as Pharmacia shall
reasonably request for purposes of reviewing such list. Upjohn shall use its
reasonable best efforts to deliver or cause to be delivered to the Pharmacia,
prior to the Effective Time, an affiliate letter in the form attached hereto as
Exhibit 8.07(a), executed by each of the Pooling Affiliates of Upjohn identified
in the foregoing list.
(b) Not fewer than 45 days prior to the Effective Time, Pharmacia shall
deliver to Upjohn a list of names and addresses of those persons who were, in
Pharmacia's reasonable judgment, at the record date for the Upjohn Stockholders'
Meeting, Pooling Affiliates of Pharmacia. Pharmacia shall provide Upjohn such
information and documents as Upjohn shall reasonably request for purposes of
reviewing such list. Pharmacia shall use its reasonable best efforts to deliver
or cause to be delivered to Upjohn, prior to the Effective Time, an affiliate
letter in the form attached hereto as Exhibit 8.07(b), executed by each of the
Pooling Affiliates of Pharmacia identified in the foregoing list.
SECTION 8.08. Pooling. From and after the date hereof and until the
Effective Time, none of Newco, Pharmacia or Upjohn, or any of their respective
subsidiaries or other affiliates over which they exercise control, shall
knowingly take any action, or knowingly fail to take any action, that is
reasonably likely to jeopardize the treatment of the Merger and the Pharmacia
Transaction as a "pooling of interests" for accounting purposes. Between the
date of this Agreement and the Effective Time, each of Newco, Pharmacia and
Upjohn shall take all reasonable actions necessary to cause the Merger and the
Pharmacia Transaction to be characterized as a pooling of interests for
accounting purposes if such a characterization shall be jeopardized by action
taken by Newco, Pharmacia or Upjohn, respectively, prior to the Effective Time.
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SECTION 8.09. Letters of Accountants. (a) Upjohn shall use its reasonable
best efforts to cause to be delivered to Pharmacia "comfort" letters of Coopers
& Lybrand, Upjohn's independent public accountants, dated and delivered on the
Registration Statement Effective Date and as of the Effective Time, and
addressed to Pharmacia, in form and substance reasonably satisfactory to
Pharmacia and reasonably customary in scope and substance for letters delivered
by independent public accountants in connection with transactions such as those
contemplated by this Agreement.
(b) Pharmacia shall use its reasonable best efforts to cause to be
delivered to Upjohn "comfort" letters of KPMG Bohlins AB ("KPMG Bohlins") (or of
an affiliated entity within the KPMG group), and Ohrlings Reveko AB, Pharmacia's
independent public accountants, dated and delivered the Registration Statement
Effective Date and as of the Effective Time, and addressed to Upjohn, in form
and substance reasonably satisfactory to Upjohn and reasonably customary in
scope and substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement.
SECTION 8.10. Further Action; Consents; Filings. (a) Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use its best
efforts to (i) take, or cause to be taken, all appropriate action, and do, or
cause to be done, all things necessary, proper or advisable under applicable Law
or otherwise to consummate and make effective the Transactions, (ii) obtain from
Governmental Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by Pharmacia or Upjohn
or any of their subsidiaries in connection with the authorization, execution and
delivery of this Agreement and the consummation of the Transactions, (iii) make
all necessary filings, and thereafter make any other submissions either required
or deemed appropriate by each of the parties, with respect to this Agreement and
the Transactions required under (A) the rules and regulations of the SSE or the
FSA, (B) the Securities Act, the Exchange Act and any other applicable federal
or Blue Sky Laws, (C) the HSR Act, (D) Council Regulation (EEC) No. 4064/89 and
(E) any other applicable Law. The parties hereto shall cooperate and consult
with each other in connection with the making of all such filings, including by
providing copies of all such documents to the nonfiling party and its advisors
prior to filing, and none of the parties will file any such document if any of
the other parties shall have reasonably objected to the filing of such document.
No party to this Agreement shall consent to any voluntary extension of any
statutory deadline or waiting party or to any voluntary delay of the
consummation of the Transactions at the behest of any Governmental Entity
without the consent and agreement of the other parties to this Agreement, which
consent shall not be unreasonably withheld or delayed.
(b) Without limiting the generality of Section 8.10(a), each of Pharmacia
and Upjohn shall:
(i) take promptly any or all of the following actions to the extent
necessary to obtain the approval of any Governmental Entity with
jurisdiction over the enforcement of any applicable Laws regarding the
legality of the Transactions: entering into negotiations, providing
information, making proposals, entering into and performing agreements or
submitting to judicial or administrative orders, or selling or otherwise
disposing of, or holding separate (through the establishment of a trust or
otherwise) particular assets or categories of assets, or businesses, of
Pharmacia, Upjohn or any of their affiliates; provided, however, neither
Pharmacia nor Upjohn shall be obligated to take any action that would have
a Pharmacia Material Adverse Effect or an Upjohn Material Adverse Effect,
as the case may be, assuming for purposes of this proviso that the
Transactions have been consummated;
(ii) use its best efforts to prevent the entry in a judicial or
administrative proceeding brought under any Law by any Government Entity or
any other party of any permanent or preliminary injunction or other order
(an "Order") that would make consummation of the Transactions in accordance
with the terms of this Agreement unlawful or that would prevent or delay
such consummation, including, without limitation, taking the steps
contemplated by Section 8.10(b)(i); and
(iii) take promptly, in the event that such an Order has been issued
in such a proceeding, any and all steps, including, without limitation, the
appeal thereof, the posting of a bond or the steps contemplated by Section
8.10(b)(i), 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.
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SECTION 8.11. Upjohn Rights Plan. Prior to the Effective Time, Upjohn
shall take all necessary action (i) to redeem, for $.05 per Right (as defined in
the Rights Agreement), all of the outstanding Rights to purchase Upjohn Series A
Preferred Stock issued pursuant to the Rights Agreement, effective immediately
prior to the Effective Time, and (ii) to ensure that after such redemption (A)
none of Upjohn, Newco or Newco Sub shall have any obligations under the Rights
or Rights Agreement and (B) none of the holders of the Rights shall have any
rights under the Rights or Rights Agreement.
SECTION 8.12. Newco Organization. (a) Immediately prior to the Effective
Time, Newco shall, and Pharmacia and Upjohn shall cause Newco to, take action to
(i) cause the full Board of Directors of Newco at the Effective Time to consist
of (A) eight persons who are currently directors of Pharmacia and are mutually
agreeable to Pharmacia and Upjohn and (B) eight persons who are currently
directors of Upjohn and are mutually agreeable to Pharmacia and Upjohn and (ii)
cause to be confirmed as (w) Chairman ("Chairman") of Newco, Jan Ekberg, (x)
President and Chief Executive Officer ("CEO") of Newco, John L. Zabriskie, (y)
Executive Vice President of Newco, Goran Ando, and (z) Executive Vice President
of Newco, Robert C. Salisbury. Pharmacia and Upjohn shall designate the persons
who will be the directors of Newco at the Effective Time no later than the
Registration Statement Effective Date.
(b) At the Effective Time, Pharmacia and Upjohn shall cause Newco to have
an Executive Management Committee (the "Executive Management Committee")
consisting of the Chairman, the CEO and the Executive Vice Presidents of Newco
referred to in Section 8.12(a). The CEO shall be the chairman of the Executive
Management Committee. The purpose of the Executive Management Committee shall be
to enhance communication, coordination, and effective shared decision making
among the senior executives of Newco, and the members of such committee shall
meet from time to time to consult with each other on key issues relating to the
business of Newco. The Executive Management Committee shall be dissolved at such
time as the Board of Directors of Newco determines that the synergies expected
to be obtained as a result of the combination of the businesses of Pharmacia and
Upjohn have been substantially realized.
(c) As soon as practicable after the Effective Time, but in no event later
than six months after the Effective Time, Newco shall establish its corporate
management group in the United Kingdom. The officers of Newco shall cause those
certain persons as shall be agreed to by Pharmacia and Upjohn prior to the date
hereof to have their principal place of business established in the United
Kingdom.
(d) Pharmacia, Upjohn and Newco shall take all action necessary to cause
the Restated Certificate of Incorporation and By-laws of Newco, as of the
Effective Time, to be in the forms attached hereto as Exhibits A-3 and A-4,
respectively. In addition, promptly after the date hereof, Pharmacia and Upjohn
shall take all action necessary to cause the name of Newco to be "Pharmacia &
Upjohn, Inc".
SECTION 8.13. Depositary Facility for Newco Common Stock. As soon as
practicable after the date hereof, Newco will use its reasonable best efforts to
cause a commercial bank to operate a depositary facility in Sweden for the Newco
Common Stock. Newco shall pay all fees of such commercial bank relating to the
establishment and operation of such depositary facility, including, without
limitation, any fees payable in connection with the trading of the SDSs and the
distribution of dividends.
SECTION 8.14. Plan of Reorganization. This Agreement is intended to
constitute a "plan of reorganization" within the meaning of section 1.368-2(g)
of the income tax regulations promulgated under the Code. From and after the
date of this Agreement and until the Effective Time, each party hereto shall use
its reasonable best efforts to cause the Merger to qualify, and will not,
without the prior written consent of the parties hereto, knowingly take any
actions or cause any actions to be taken which could prevent the Merger from
qualifying, as a reorganization under the provisions of section 368(a) of the
Code or (in conjunction with the acquisition of Pharmacia Shares pursuant to the
Exchange Offer) as a transfer of property described in Section 351(a) of the
Code. From and after the date of this Agreement and until the Effective Time,
each party hereto shall use its reasonable best efforts to cause the Exchange
Offer (in conjunction with the acquisition of Upjohn Shares pursuant to the
Merger) to qualify, and will not, without the prior written consent of the
parties hereto, knowingly take any actions or cause any actions to be taken
which could prevent the Exchange Offer from qualifying, as a transfer of
property described in Section 351(a) of the Code. Following the Effective Time,
and consistent with any such consent, none of the Surviving Corporation,
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Newco, Pharmacia or any of their affiliates shall knowingly take any action or
knowingly cause any action to be taken which would cause the Merger or the
Exchange Offer to fail to so qualify as a reorganization under section 368(a) of
the Code or as a transfer of property described in Section 351(a) of the Code,
as the case may be.
SECTION 8.15. Public Announcements. The initial press release concerning
the Transactions shall be a joint press release and, thereafter, Pharmacia and
Upjohn shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or any
Transaction and shall not issue any such press release or make any such public
statement prior to such consultation, except to the extent required by
applicable Law or the requirements of the SSE, the NASD, the Securities Exchange
Automated Quotation system ("SEAQ"), or the NYSE, in which case the issuing
party shall use its reasonable best efforts to consult with the other party
before issuing any such release or making any such public statement.
SECTION 8.16. Obligations of Newco Sub. Newco shall take all action
necessary to cause Newco Sub to perform its obligations under this Agreement and
to consummate the Merger on the terms and subject to the conditions set forth in
this Agreement.
SECTION 8.17. Stock Exchange Listings and De-listings. Newco shall use
its best efforts to cause the shares of Newco Common Stock to be issued in the
Merger and the Pharmacia Transaction to be approved for listing on the NYSE, the
LSE and the SSE, subject to official notice of issuance, prior to the Effective
Time. Newco shall use its best efforts to cause the SDSs to be issued in the
Pharmacia Transaction to be approved for listing on the SSE, subject to official
notice of issuance, prior to the Effective Time. Upjohn shall use its best
efforts to cause the Upjohn Common Stock to be de-listed from the NYSE and
de-registered under the Exchange Act as soon as practicable following the
Effective Time. Pharmacia shall use its best efforts to cause (i) the Pharmacia
Shares to be delisted from the SSE, (ii) the Pharmacia Shares to cease to be
quoted on SEAQ, (iii) the designation of the ADSs as NASDAQ National Market
Securities to be terminated, and (iv) the Pharmacia Class A Common Shares to be
de-registered under the Exchange Act, in each case as soon as permitted under
applicable Laws and regulations.
SECTION 8.18. Maintenance of Certain Facilities. As part of its global
capability, Newco intends to retain and develop regional operating centers in
each of Stockholm, Sweden, Kalamazoo, Michigan and Milan, Italy.
SECTION 8.19. Cancellation of Newco Common Stock Owned by Pharmacia and
Upjohn. The shares of Newco Common Stock owned by Pharmacia and Upjohn
immediately prior to the consummation of the Transactions will be cancelled
immediately upon consummation of the Transactions.
ARTICLE IX
CONDITIONS TO THE TRANSACTIONS
SECTION 9.01. Conditions to the Obligations of Each Party to Consummate
the Transactions. The obligations of Pharmacia, Upjohn, Newco and Newco Sub to
consummate the Transactions, or to permit the consummation of the Transactions,
are subject to the satisfaction or, if permitted by applicable Law, waiver of
the following conditions:
(a) the Registration Statement shall have been declared effective by
the SEC under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued by the
SEC and no proceeding for that purpose shall have been initiated by the
SEC;
(b) the Proxy Statement shall have been approved by the SSE and no
stop order suspending the effectiveness of the Proxy Statement shall have
been issued by the SSE and no proceeding for that purpose shall have been
initiated by the SSE;
(c) the Upjohn Stockholder Approval Condition;
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(d) no court of competent jurisdiction shall have issued or entered
any Order which is then in effect and has the effect of making any of the
Transactions illegal or otherwise prohibiting their consummation;
(e) any waiting period (and any extension thereof) applicable to the
consummation of the Transactions under the HSR Act and any other
competition, merger control or similar Law, including Council Regulation
(EEC) No. 4064/89, shall have expired or been terminated;
(f) all consents, approvals and authorizations required to be obtained
to consummate the Transactions shall have been obtained from all
Governmental Entities, except where the failure to obtain any such
consents, approvals and authorizations would not result in a change in or
effect on the business of Upjohn or Pharmacia that is, or is reasonably
likely to be, materially adverse to the business, assets (including
intangible assets), liabilities (contingent or otherwise), condition
(financial or otherwise) or results of operations of Upjohn, Pharmacia and
their respective subsidiaries, taken as a whole;
(g) each of Coopers & Lybrand, Upjohn's independent public
accountants, and KPMG Bohlins (or an affiliate thereof within the KPMG
group) will have issued an opinion, addressed to Pharmacia and Upjohn, that
each of the Merger and the Pharmacia Transaction will qualify as a "pooling
of interests" under applicable U.S. and Swedish accounting rules including,
without limitation, applicable SEC accounting standards;
(h) There shall have been received, each in form and substance
reasonably satisfactory to Pharmacia and Upjohn evidence that (i) Upjohn
shall have amended the Upjohn Stock Option Plans or taken such other
actions as are necessary to render inapplicable the provisions, if any,
contained in such plans that provide for the payment of cash by Upjohn in
respect of the cancellation of Upjohn Options resulting from the execution
of this Agreement and the consummation of the Transactions and to provide
in lieu thereof that each unexpired and unexercised Upjohn Option under
Upjohn's Stock Option Plans or otherwise granted by Upjohn other than
pursuant to any Upjohn Stock Option Plan shall be assumed by Newco at the
Effective Time on the terms and conditions set forth in Section 2.04(b) of
this Agreement, (ii) Upjohn shall have amended the Upjohn Plan to provide
that the execution of this Agreement and the consummation of the
Transactions will not constitute a "change of control" (as defined in
Section 16 of such Upjohn Plan) resulting in automatic vesting under the
Upjohn Plan and (iii) all consents necessary or desirable to preserve for
Newco any right or benefit under each note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument
or obligation listed in Section 4.05(a) of the Upjohn Disclosure Schedule
shall have been obtained, except, in the case of clause (iii), where the
failure to obtain any such consents would not result in a change in or
effect on the business of Upjohn that is, or is reasonably likely to be,
materially adverse to the business, assets (including intangible assets),
liabilities (contingent or otherwise), condition (financial or otherwise)
or results of operations of Newco and its subsidiaries, taken as a whole;
(i) (A) Sullivan & Cromwell shall have issued its opinion, addressed
to Newco, Upjohn and Pharmacia, based upon customary representations of
Upjohn and Newco, and, if required, Pharmacia, and customary assumptions,
to the effect that the Merger will be treated for federal income tax
purposes as a reorganization qualifying under the provisions of Section
368(a) of the Code and that each of Upjohn, Newco and Newco Sub will be a
party to the reorganization within the meaning of Section 368(b) of the
Code, and/or that the Merger (in conjunction with the acquisition of
Pharmacia Shares pursuant to the Exchange Offer) will be treated as a
transfer of property described in Section 351(a) of the Code, such opinion
to be dated on or about the date that is two business days prior to the
date the Proxy Statement is first mailed to stockholders of Upjohn and
Pharmacia, which opinion shall not have been withdrawn or modified in any
material respect;
(B) Shearman & Sterling shall have issued its opinion, addressed to
Newco, Pharmacia and Upjohn, based upon customary representations of
Pharmacia, Newco and Upjohn, and customary assumptions, to the effect that
the Exchange Offer (in conjunction with the acquisition of Upjohn Shares
pursuant to the Merger) will be treated for federal income tax purposes as
a transfer of property described in Section 351(a) of the Code, such
opinion to be dated on or about the date that is two business days
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prior to the date the Proxy Statement is first mailed to stockholders of
Upjohn and Pharmacia, which opinion shall not have been withdrawn in any
material respect.
(C) Mannheimer Swartling and KPMG Bohlins shall have issued their
opinion, addressed to Newco, Pharmacia and Upjohn, based upon
representations of Pharmacia and assumptions concerning, among other
things, the actions of holders of Pharmacia Shares, to the effect that,
under the income tax laws of Sweden, none of Newco, Pharmacia or the
Pharmacia stockholders will recognize taxable income or gain as a result of
the Exchange Offer.
(j) the shares of Newco Common Stock to be issued pursuant to the
Merger and the Exchange Offer shall have been authorized for listing on the
NYSE, subject to official notice of issuance, and the SDSs representing the
Newco Common Stock shall have been authorized for listing on the SSE; and
(k) the Minimum Condition.
SECTION 9.02. Conditions to the Obligations of Upjohn. The obligations of
Upjohn to consummate the Transactions, or to permit the consummation of the
Transactions, are subject to the satisfaction or, if permitted by applicable
Law, waiver of the following further conditions:
(a) each of the representations and warranties of Pharmacia contained
in this Agreement shall be true and correct as of the Effective Time as
though made on and as of the Effective Time, except where any such failure
or failures to be so true and correct, in the aggregate, would not have a
Pharmacia Material Adverse Effect, and except that those representations
and warranties that address matters only as of a particular date shall
remain true and correct as of such date, except where any such failure or
failures to be so true and correct, in the aggregate, would not have a
Pharmacia Material Adverse Effect, and Upjohn shall have received a
certificate of the Chairman, President or Chief Financial Officer of
Pharmacia to such effect; and
(b) Pharmacia shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and
Upjohn shall have received a certificate of the Chairman, President or
Chief Financial Officer of Pharmacia to that effect.
SECTION 9.03. Conditions to the Obligations of Pharmacia. The obligations
of Pharmacia to consummate the Transactions, or to permit the consummation of
the Transactions, are subject to the satisfaction or, if permitted by applicable
Law, waiver of the following further conditions:
(a) each of the representations and warranties of Upjohn contained in
this Agreement shall be true and correct as of the Expiration Date, as
though made on and as of the Expiration Date, except where any such failure
or failures to be so true and correct, in the aggregate, would not have an
Upjohn Material Adverse Effect, and except that those representations and
warranties that address matters only as of a particular date shall remain
true and correct as of such date, except where any such failure or failures
to be so true and correct, in the aggregate, would not have an Upjohn
Material Adverse Effect, and Pharmacia shall have received a certificate of
the Chairman, President or Chief Financial Officer of Upjohn to such
effect; and
(b) Upjohn shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and
Pharmacia shall have received a certificate of the Chairman, President or
Chief Financial Officer of Upjohn to that effect.
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ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. Termination. This Agreement may be terminated and the
Merger and the Exchange Offer may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement, as follows:
(a) by mutual written consent duly authorized by the Board of
Directors of each of Pharmacia and Upjohn;
(b) by either Pharmacia or Upjohn, if the Effective Time shall not
have occurred on or before February 15, 1996; provided, however, that (i)
the right to terminate this Agreement under this Section 10.01(b) shall not
be available to the party whose failure to fulfill any obligation under
this Agreement shall have been the cause of, or resulted in, the failure of
the Effective Time to occur on or before such date; (ii) if the applicable
federal antitrust authority shall seek an Order with respect to the
legality of the Transactions under applicable antitrust Laws, this
Agreement may be extended prior to the termination hereof by written notice
of either Pharmacia or Upjohn to the other to the date that is 30 days
following the date on which a ruling with respect to such an Order is
entered by a trial court or administrative body; and (iii) if such Order
shall have been entered which had the effect of enjoining the consummation
of the Transactions and any party hereto shall have commenced an appeal
thereof, this Agreement may be extended prior to the termination hereof by
written notice of either Pharmacia or Upjohn to the other to the date which
is 30 days following the issuance of a decision by the applicable appeals
court with respect to such an appeal; provided, further, that,
notwithstanding anything to the contrary in this paragraph (b), in no event
shall this Agreement be extended beyond May 31, 1996;
(c) by either Pharmacia or Upjohn, if any Order preventing the
consummation of the Merger or the Pharmacia Transaction shall have been
entered by any court of competent jurisdiction and shall have become final
and nonappealable;
(d) by Pharmacia, if (i) the Board of Directors of Upjohn withdraws,
modifies or changes its recommendation of this Agreement in a manner
adverse to Newco or Pharmacia or shall have resolved to do so, (ii) the
Board of Directors of Upjohn shall have recommended to the stockholders of
Upjohn a Competing Transaction or shall have resolved to do so, or (iii) a
tender offer or exchange offer for 10% or more of the outstanding shares of
capital stock of Upjohn is commenced, and the Board of Directors of Upjohn
fails to recommend against acceptance of such tender offer or exchange
offer by its stockholders (including by taking no position with respect to
the acceptance of such tender offer or exchange offer by its stockholders);
(e) by Upjohn, if (i) the Board of Directors of Pharmacia withdraws,
modifies or changes its recommendation of the Exchange Offer in a manner
adverse to Newco or Upjohn or shall have resolved to do so, (ii) the Board
of Directors of Pharmacia shall have recommended to the stockholders of
Pharmacia a Competing Transaction or shall have resolved to do so, or (iii)
a tender offer or exchange offer for 10% or more of the outstanding shares
of capital stock of Pharmacia is commenced (other than the Exchange Offer),
and the Board of Directors of Pharmacia fails to recommend against
acceptance of such tender offer or exchange offer by its stockholders
(including by taking no position with respect to the acceptance of such
tender offer or exchange offer by its stockholders);
(f) by Pharmacia or Upjohn if, (i) this Agreement shall fail to
receive the requisite vote for adoption at the Upjohn Stockholders' Meeting
or any adjournment or postponement thereof or (ii) the Exchange Offer
expires without any Pharmacia Shares having been accepted for payment;
(g) by Pharmacia, upon a breach of any material representation,
warranty, covenant or agreement on the part of Upjohn set forth in this
Agreement, or if any representation or warranty of Upjohn shall have become
untrue, in either case such that the conditions set forth in Section 9.03
would not be satisfied ("Terminating Upjohn Breach"); provided, however,
that, if such Terminating Upjohn Breach is
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curable by Upjohn through the exercise of its best efforts and for so long
as Upjohn continues to exercise such best efforts, Pharmacia may not
terminate this Agreement under this Section 10.01(g);
(h) by Upjohn, upon breach of any material representation, warranty,
covenant or agreement on the part of Pharmacia set forth in this Agreement,
or if any representation or warranty of Pharmacia shall have become untrue,
in either case such that the conditions set forth in Section 9.02 would not
be satisfied ("Terminating Pharmacia Breach"); provided, however, that, if
such Terminating Pharmacia Breach is curable by Pharmacia through best
efforts and for so long as Pharmacia continues to exercise such best
efforts, Upjohn may not terminate this Agreement under this Section
10.01(h);
(i) by Pharmacia, if the Board of Directors of Pharmacia shall,
following receipt of advice of independent legal counsel (who may be
Pharmacia's regularly engaged independent legal counsel) that failure to so
terminate would cause the Board of Directors of Pharmacia to breach its
fiduciary duties under applicable Laws, have withdrawn, modified or changed
its recommendation of the approval of the Exchange Offer in a manner
adverse to Newco or Upjohn and, on or prior to such date, any person (other
than Newco or Upjohn) shall have made a public announcement or otherwise
communicated to Pharmacia and its stockholders with respect to a Competing
Transaction; provided, however, that Pharmacia may not terminate this
Agreement pursuant to this subsection (i) until three business days have
elapsed following delivery to Upjohn of written notice of such
determination of Pharmacia (which written notice will inform Upjohn of the
material terms and conditions of the Competing Transaction); provided,
further, however, that such termination under this Section 10.01(i) shall
not be effective until Pharmacia has made payment to Upjohn of the amounts
required to be paid pursuant to Section 10.05(c); or
(j) by Upjohn, if the Board of Directors of Upjohn shall, following
receipt of advice of independent legal counsel (who may be Upjohn's
regularly engaged independent legal counsel) that failure to so terminate
would cause the Board of Directors of Upjohn to breach its fiduciary duties
under applicable Laws, have withdrawn, modified or changed its
recommendation of the adoption of this Agreement in a manner adverse to
Newco or Pharmacia and, on or prior to such date, any person (other than
Newco or Pharmacia) shall have made a public announcement or otherwise
communicated to Upjohn and its stockholders with respect to a Competing
Transaction; provided, however, that Upjohn may not terminate this
Agreement pursuant to this subsection (j) until three business days have
elapsed following delivery to Pharmacia of written notice of such
determination of Upjohn (which written notice will inform Pharmacia of the
material terms and conditions of the Competing Transaction); provided,
further, however, that such termination under this Section 10.01(j) shall
not be effective until Upjohn has made payment to Pharmacia of the amounts
required to be paid pursuant to Section 10.05(b).
SECTION 10.02. Effect of Termination. Except as provided in Section
11.01, in the event of termination of this Agreement pursuant to Section 10.01,
this Agreement shall forthwith become void, there shall be no liability under
this Agreement on the part of Pharmacia, Upjohn, Newco or Newco Sub or any of
their respective officers or directors, and all rights and obligations of each
party hereto shall cease, subject to the remedies of the parties set forth in
Sections 10.05(b), (c) and (d); provided, however, that nothing herein shall
relieve any party from liability for the wilful breach of any of its
representations and warranties or the breach of any of its covenants or
agreements set forth in this Agreement.
SECTION 10.03. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after the
approval of this Agreement by the stockholders of Upjohn, no amendment may be
made that would reduce the amount or change the type of consideration into which
each Upjohn Share shall be converted upon consummation of the Merger. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
SECTION 10.04. Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto,
and (c) waive compliance with any agreement or condition contained herein;
provided, however, that Newco and
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Newco Sub (x) will waive any of the conditions to the Transactions contained in
Article IX if so directed by Pharmacia and Upjohn, jointly, and (y) may not
waive any of such conditions without the prior written consent of each of Upjohn
and Pharmacia. Any waiver of a condition set forth in Section 9.01, or any
determination that such a condition has been satisfied, will be effective only
if made in writing by each of Upjohn and Pharmacia and, unless otherwise
specified in such writing, shall thereafter operate as a waiver (or
satisfaction) of such condition for any and all purposes of this Agreement. Any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
SECTION 10.05. Expenses. (a) Except as set forth in this Section 10.05,
all Expenses (as defined below) incurred in connection with this Agreement and
the Transactions shall be paid by the party incurring such expenses, whether or
not the Merger or the Exchange Offer is consummated, except that Pharmacia and
Upjohn each shall pay one-half of all Expenses relating to printing, filing and
mailing the Registration Statement and the Disclosure Documents and all SEC and
other regulatory filing fees incurred in connection with the Registration
Statement and the Disclosure Documents. "Expenses" as used in this Agreement
shall consist of all out-of-pocket expenses (including, without limitation, all
fees and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement, the preparation,
printing, filing and mailing of the Registration Statement and the Disclosure
Documents, the solicitation of stockholder approvals and all other matters
related to the closing of the Transactions.
(b) Upjohn agrees that, if (A) Upjohn shall terminate this Agreement
pursuant to Section 10.01(j), (B) (y) Pharmacia shall terminate this Agreement
pursuant to Section 10.01(d) and (z) at the time of such termination, any person
shall have made a public announcement or otherwise communicated to Upjohn and
its stockholders with respect to a Competing Transaction with respect to Upjohn,
or (C) (i) Pharmacia shall terminate this Agreement pursuant to Section
10.01(f)(i) due to the failure of the Upjohn Stockholder Approval Condition,
(ii) at the time of such failure, any person shall have made a public
announcement or otherwise communicated to Upjohn and its stockholders with
respect to a Competing Transaction with respect to Upjohn and (iii) within 12
months thereafter, such Competing Transaction shall be consummated, in each case
resulting in a Change of Control (as defined below) of Upjohn, then promptly
after such termination, or (in the case of clause (C)) promptly after the
consummation of such Competing Transaction, Upjohn shall reimburse Pharmacia for
all of its Expenses (upon receipt of reasonable documentation in respect
thereof) up to an aggregate amount of $50,000,000. For purposes of this
Agreement, the term "Change of Control," with respect to any particular person,
shall mean the occurrence of any of the following events with respect to such
person: (i) there shall be consummated (A) any merger, consolidation or
combination (any, a "Combination") involving such person in which such person is
not the continuing or surviving corporation, or pursuant to which shares of such
person's voting stock would be converted in whole or in part into cash, other
securities or other property, other than a Combination involving such person in
which the holders of such person's voting stock immediately prior to the
Combination have substantially the same proportionate ownership of voting stock
of the surviving corporation immediately after the Combination, or (B) any sale,
lease, exchange or transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of such person, or (ii)
any person, other than such person or a subsidiary thereof or any employee
benefit plan sponsored by such person or a subsidiary thereof or a corporation
owned, directly or indirectly, by the stockholders of such person in
substantially the same proportions in their ownership of stock of such person,
shall become the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of securities of such person representing 50% or more of the
combined voting power of then outstanding securities ordinarily (and apart from
rights accruing in special circumstances) having the right to vote in the
election of directors, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise.
(c) Pharmacia agrees that, if (A) Pharmacia shall terminate this Agreement
pursuant to Section 10.01(i), (B) (y) Upjohn shall terminate this Agreement
pursuant to Section 10.01(e) and (z) at the time of such termination, any person
shall have made a public announcement or otherwise communicated to Pharmacia and
its stockholders with respect to a Competing Transaction with respect to
Pharmacia or (C)
38
<PAGE> 46
(i) Upjohn shall terminate this Agreement pursuant to Section 10.01(f)(ii) due
to the fact that the Exchange Offer has expired without any Pharmacia Shares
having been accepted for payment, (ii) at the time of such failure, any person
shall have made a public announcement or otherwise communicated to Pharmacia and
its stockholders with respect to a Competing Transaction with respect to
Pharmacia and (iii) within 12 months thereafter, such Competing Transaction
shall be consummated, in each case resulting in a Change of Control of
Pharmacia, then promptly after such termination, or (in the case of clause (C))
promptly after the consummation of such Competing Transaction, Pharmacia shall
reimburse Upjohn for all its Expenses (upon receipt of reasonable documentation
in respect thereof) up to an aggregate amount of $50,000,000.
(d) Each of Pharmacia and Upjohn agrees that the payments provided for in
Sections 10.05(b) and (c) shall be the sole and exclusive remedies of the
parties upon a termination of this Agreement pursuant to Section 10.01(d), (e),
(f), (i) or (j), as the case may be, and such remedies shall be limited to the
payments stipulated in Sections 10.05(b) and (c); provided, however, that
nothing herein shall relieve any party from liability for the wilful breach of
any of its representations and warranties or the breach of any of its covenants
or agreements set forth in this Agreement.
(e) Any payment required to be made pursuant to Sections 10.05(b) or (c)
shall be made to the party entitled to receive such payment not later than two
business days after delivery to the other party of notice of demand for payment
and shall be made by wire transfer of immediately available funds to an account
designated by the party entitled to receive payment in the notice of demand for
payment delivered pursuant to this Section 10.05(e).
(f) In the event that Pharmacia or Upjohn, as the case may be, shall fail
to pay any Expenses when due, the amount of any such Expenses shall be increased
to include the costs and expenses actually incurred or accrued by the other
(including, without limitation, fees and expenses of counsel) in connection with
the collection under and enforcement of this Section 10.05, together with
interest on such unpaid Expenses, commencing on the date that such Expenses
became due, at a rate equal to the rate of interest publicly announced by
Citibank, N.A., from time to time, in the City of New York, as such bank's Prime
Rate plus 1.00%.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
and in any certificate delivered pursuant hereto shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
10.01, as the case may be, except that the agreements set forth in Articles I,
II and III and Sections 8.05(a), 8.06, 8.12, 8.13, 8.17, 8.18 and 8.19 and this
Article XI shall survive the Effective Time, those set forth in Sections
8.03(b), 8.06, and 10.05 and this Article XI shall survive termination, and
those set forth in Section 8.15 shall survive for a period of one year after
termination of this Agreement. Each party agrees that, except for the
representations and warranties contained in this Agreement and the respective
Disclosure Schedules, no party hereto has made any other representations and
warranties, and each party hereby disclaims any other representations and
warranties made by itself or any of its officers, directors, employees, agents,
financial and legal advisors or other representatives with respect to the
execution and delivery of this Agreement or the transactions contemplated
herein, notwithstanding the delivery or disclosure to any other party or any
party's representatives of any documentation or other information with respect
to any one or more of the foregoing.
39
<PAGE> 47
SECTION 11.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by telecopy
and facsimile or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 11.02):
if to Pharmacia:
Pharmacia Aktiebolag
Frosundaviks Alle 15
1171 97 Stockholm
Sweden
Attention: Mats Lidgard
Telecopier: 011-46-8-624-5467
with a copy to:
Shearman & Sterling
199 Bishopsgate
London EC2M 3TY
England
Attention: John A. Marzulli, Jr.
Telecopier: 011-44-171-920-9020
and a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Attention: Clare O'Brien
Telecopier: (212) 848-7179
if to Upjohn:
The Upjohn Company
7000 Portage Road
Kalamazoo, Michigan 49001
Attention: Kenneth M. Cyrus
Telecopier: (616) 323-4116
with copies to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Neil T. Anderson and Francis J. Aquila
Telecopier: (212) 558-3588
SECTION 11.03. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with, such specified person;
(b) "beneficial owner" with respect to any shares of capital stock
means a person who shall be deemed to be the beneficial owner of such
shares (i) which such person or any of its affiliates or associates (as
such term is defined in Rule 12b-2 promulgated under the Exchange Act)
beneficially owns, directly or indirectly, (ii) which such person or any of
its affiliates or associates has, directly or
40
<PAGE> 48
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
consideration rights, exchange rights, warrants or options, or otherwise,
or (B) the right to vote pursuant to any agreement, arrangement or
understanding, or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or associates or person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any shares of
capital stock;
(c) "business day" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in The City of New York, USA or in
Stockholm, Sweden;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(e) "knowledge" means, with respect to any matter in question, that
the executive officers of Pharmacia or Upjohn, as the case may be, (i) have
knowledge of such matter, or (ii) after due investigation, should have
known of such matter;
(f) "person" means an individual, corporation, company, limited
liability company, partnership, limited partnership, syndicate, person
(including, without limitation, a "person" as defined in section 13(d)(3)
of the Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government; and
(g) "subsidiary" or "subsidiaries" of any person means any
corporation, limited liability company, partnership, joint venture or other
legal entity of which such person (either alone or through or together with
any other subsidiary) owns, directly or indirectly, more than 50% of the
stock or other equity interests, the holders of which are generally
entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
SECTION 11.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 11.05. Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of Law or otherwise)
without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of Sections 8.06 and 8.13 (the "Third Party Provisions"), nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement. The
Third Party Provisions may be enforced by the beneficiaries thereof.
SECTION 11.06. Incorporation of Exhibits. The Pharmacia Disclosure
Schedule, the Upjohn Disclosure Schedule, Annex A and all Exhibits attached
hereto and referred to herein are hereby incorporated herein and made a part of
this Agreement for all purposes as if fully set forth herein.
41
<PAGE> 49
SECTION 11.07. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 11.08. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York to the greatest
extent permissible by law; provided, however, that the parties specifically
agree that all questions of Swedish corporate law and the interpretation thereof
(including, without limitation, questions relating to the fiduciary duties of
the directors of Pharmacia) shall be governed by the laws of the Kingdom of
Sweden.
SECTION 11.09. Submission to Jurisdiction; Venue. The parties hereto
unconditionally and irrevocably agree and consent to the exclusive jurisdiction
of, and service of process and venue in, the United States District Court for
the Southern District of New York and the courts of the State of New York
located in the County of New York, State of New York and waive any objection
with respect thereto, for the purpose of any action, suit or proceeding arising
out of or relating to this Agreement or the transactions contemplated hereby and
further agree not to commence any such action, suit or proceeding except in any
such court. Each party irrevocably waives any objections or immunities to
jurisdiction to which it may otherwise be entitled or become entitled (including
sovereign immunity, immunity to pre-judgment attachment, post-judgment
attachment and execution) in any legal suit, action or proceeding against it
arising out of or relating to this Agreement or the transactions contemplated
hereby which is instituted in any such court. If any such court shall enter a
judgment against Pharmacia, the parties agree to seek the enforcement of any
such judgment only in the courts of the Kingdom of Sweden and to seek execution
of such judgment only upon the assets and properties of Pharmacia located within
the Kingdom of Sweden. Pharmacia hereby appoints CT Corporation, New York, New
York, as its authorized agent (the "Pharmacia Authorized Agent") upon whom
process may be served in any such action arising out of or relating to this
Agreement or the transactions contemplated hereby which may be instituted in the
United States District Court for the Southern District of New York or the courts
of the State of New York by any other party hereto. Such appointment shall be
irrevocable. Pharmacia agrees to take any and all action, including the filing
of any and all documents and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid. Service of process upon the
Pharmacia Authorized Agent and written notice of such service to Pharmacia shall
be deemed, in every respect, effective service of process upon Pharmacia.
SECTION 11.10. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 11.11. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
SECTION 11.12. Entire Agreement. This Agreement (including Annex A, the
Exhibits, the Pharmacia Disclosure Schedule and the Upjohn Disclosure Schedule)
and the Confidentiality Agreement constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect thereto. No
addition to or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all parties hereto.
42
<PAGE> 50
IN WITNESS WHEREOF, Pharmacia, Upjohn, Pharmacia & Upjohn and Pharmacia &
Upjohn Sub have caused this Agreement to be executed as of the date first
written above by their respective officers thereunto duly authorized.
<TABLE>
<S> <C>
PHARMACIA AKTIEBOLAG (publ)
Attest by: /s/ MATS LIDGARD By /s/ SOREN GYLL
------------------------------ ------------------------------
Name: Mats Lidgard Name: Soren Gyll
Title: General Counsel Title: Chairman
Attest by: /s/ MATS LIDGARD By /s/ JAN EKBERG
------------------------------ ------------------------------
Name: Mats Lidgard Name: Jan Ekberg
Title: General Counsel Title: President and CEO
THE UPJOHN COMPANY
Attest by: /s/ KENNETH M. CYRUS By /s/ JOHN L. ZABRISKIE
------------------------------ ------------------------------
Name: Kenneth M. Cyrus Name: John L. Zabriskie
Title: Executive Vice President Title: Chairman of the Board
Secretary and General and Chief Executive
Counsel Officer
PHARMACIA & UPJOHN, INC.
Attest by: /s/ KENNETH M. CYRUS By /s/ ROBERT C. SALISBURY
------------------------------ ------------------------------
Name: Kenneth M. Cyrus Name: Robert C. Salisbury
Title: Executive Vice President, Title: President and Chief
Secretary and General Executive Officer
Counsel
PHARMACIA & UPJOHN SUBSIDIARY, INC.
Attest by: /s/ KENNETH M. CYRUS By /s/ ROBERT C. SALISBURY
------------------------------ ------------------------------
Name: Kenneth M. Cyrus Name: Robert C. Salisbury
Title: Executive Vice President, Title: President and Chief
Secretary and General Executive Officer
Counsel
</TABLE>
43
<PAGE> 51
ANNEX A
EMPLOYEE BENEFITS
Pharmacia, Upjohn and Newco agree to the following with respect to the
compensation and benefits programs of Pharmacia and the Pharmacia Subsidiaries
and Upjohn and the Upjohn Subsidiaries, respectively:
1. Continuation of Benefits. Except as contemplated by the Agreement
or this Annex A, for a period of 18 months following the Effective Time,
Pharmacia and Upjohn shall each maintain employee benefit plans and
arrangements (directly or in conjunction with Newco) which in the aggregate
will provide a similar level of benefits to active and retired employees of
Pharmacia and the Pharmacia Subsidiaries to those provided under Pharmacia
employee benefit plans and arrangements as in effect immediately prior to
the Effective Time and a similar level of benefits to active and retired
employees of Upjohn and the Upjohn Subsidiaries to those provided under
Upjohn employee benefit plans and arrangements as in effect immediately
prior to the Effective Time; provided, however, that changes may be made to
such employee benefit plans and arrangements to the extent necessary to
comply with applicable Law. From and after the Effective Time, Newco shall
honor, and shall cause Upjohn or Pharmacia, as the case may be, to honor in
accordance with their terms, all existing employment and severance
agreements and severance plans which apply to current or former employees
or directors of Upjohn or the Upjohn Subsidiaries or Pharmacia or the
Pharmacia Subsidiaries. Except as contemplated by the Agreement or this
Annex A, Newco shall honor all outstanding awards under the Upjohn
Incentive Programs, including the Compensation and Incentive Committee
resolutions in connection therewith attached hereto as Exhibit 1.
2. Service Recognition. To the extent that service is relevant for
purposes of eligibility, participation, vesting or benefit accrual under
any employee benefit plan, program or arrangement established or maintained
by Newco, Pharmacia or a Pharmacia Subsidiary or Upjohn or an Upjohn
Subsidiary, employees of Pharmacia and the Pharmacia Subsidiaries and
Upjohn and the Upjohn Subsidiaries shall be credited for service accrued or
deemed accrued prior to the Effective Time with Pharmacia or a Pharmacia
Subsidiary or Upjohn or an Upjohn Subsidiary, as the case may be; provided,
however, that such crediting of service does not result in the duplication
of benefits or an unintended windfall with respect to the accrual of
benefits.
3. Upjohn Employee Savings Plan/ESOP. Effective as of the Effective
Time, the Upjohn Plan will be amended to permit employees of Pharmacia and
the Pharmacia Subsidiaries who are United States citizens or are regularly
employed in the United States or its territories or possessions to
participate. Such participation will become effective as of the Effective
Time for those employees who have completed a "year of eligibility service"
(as defined in the Upjohn Plan, with the service recognition described in
paragraph 2 above) as of the Effective Time, and will become effective with
respect to other employees upon completion of such a year of eligibility
service.
4. Stock Plans for Non-U.S. Employees. The parties shall undertake a
review of the matters described in this paragraph 4, and to the extent they
conclude that it is desirable to do so, they shall take the necessary
action such that, as soon as practicable after the Effective Time, Newco
shall establish one or more employee stock ownership plans or equivalent
arrangements for non-U.S. employees (the "Non-U.S. Plans"), which will be
structured after taking into account local laws and practices as well as
tax and other relevant considerations, in which Pharmacia and Upjohn
employees at locations outside the United States will be eligible to
participate.
5. Equity Incentive Plan. Effective as of the Effective Time, Newco
shall adopt an equity-based management incentive plan or equivalent
arrangement (the "Newco Equity Plan") in which key employees of Pharmacia
and the Pharmacia Subsidiaries and Upjohn and the Upjohn Subsidiaries will
be eligible to participate on an equivalent basis. The Newco Equity Plan
will provide for the granting of stock options and/or other equity-based
awards, and it is anticipated that stock options under the Newco
44
<PAGE> 52
Equity Plan will be granted to participating key employees after the
Effective Time in accordance with past practice of Upjohn. The criteria to
be used to select key employees of Pharmacia and the Pharmacia Subsidiaries
and Upjohn and the Upjohn Subsidiaries to participate in the Newco Equity
Plan shall be at least as broad as the criteria that are used by Upjohn as
of the date hereof to select employees to participate in the Upjohn 1992
Incentive Program.
6. Incentive Compensation Plan. Effective as of the Effective Time,
Newco shall adopt an annual incentive compensation plan (the "Newco
Incentive Plan") in which key employees of Pharmacia and the Pharmacia
Subsidiaries and Upjohn and the Upjohn Subsidiaries will be eligible to
participate on an equivalent basis. The criteria to be used to select key
employees of Pharmacia and the Pharmacia Subsidiaries and Upjohn and the
Upjohn Subsidiaries to participate in the Newco Incentive Plan shall be at
least as broad as the criteria that are used by Upjohn as of the date
hereof to select employees to participate in the Upjohn Incentive
Compensation Plan of 1992. The terms and conditions of the Newco Incentive
Plan shall be comparable to those set forth in the existing Upjohn
incentive compensation arrangements (including, without limitation, the
Upjohn 1992 Incentive Program).
45
<PAGE> 1
Exhibit 4
SECOND AMENDMENT
TO
RIGHTS AGREEMENT
SECOND AMENDMENT, dated as of August 20, 1995 (this "Second
Amendment"), to the Rights Agreement, dated as of June 17, 1986, between The
Upjohn Company, a Delaware corporation (the "Company"), and The Bank of New
York, as Rights Agent (the "Rights Agent"), as amended by the First Amendment
thereto, dated as of March 22, 1989, between the Company and the Rights Agent
(as so amended, the "Rights Agreement").
Pursuant to Section 26 of the Rights Agreement, the Company and the
Rights Agent may, prior to the Distribution Date (as defined therein), amend any
provision of the Rights Agreement without the approval of any holders of
certificates representing the common stock of the Company. The Company now
desires to amend the Rights Agreement as set forth in this Second Amendment.
Pursuant to Section 26 of the Rights Agreement, the Company hereby directs that
the Rights Agreement should be amended as set forth in this Second Amendment.
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. Amendment of Section 1
The Rights Agreement is hereby amended to delete in its entirety the
definition of "Acquiring Person" contained in subsection (a) of Section 1
thereof and to
<PAGE> 2
substitute the following definition of "Acquiring Person" therefor:
"'Acquiring Person' shall mean any Person (as hereinafter defined)
who or which, together with all Affiliates (as hereinafter defined)
and Associates (as hereinafter defined) of such Person shall be the
Beneficial Owner (as hereinafter defined) of 20% or more of the
shares of Common Stock then outstanding, but shall not include (i)
the Company, any Subsidiary of the Company, any employee benefit plan
of the Company or any Subsidiary of the Company, any entity
organized, appointed or established by the Company or any Subsidiary
of the Company for or pursuant to the terms of any such plan or (ii)
Pharmacia Aktiebolag, AB Volvo, Forvaltningsaktiebolaget Stattum or
Bushwood, Bushwood Sub, or any of their respective Subsidiaries, but
only with respect to and to the extent of shares of Common Stock
acquired by such entities or their Affiliates in connection with the
transactions contemplated by the Combination Agreement (as
hereinafter defined)."
The Rights Agreement is hereby further amended to delete in its
entirety the definition of "Stock Acquisition Date" contained in subsection (m)
of Section 1 thereof and to substitute the following definition of "Stock
Acquisition Date" therefor:
"'Stock Acquisition Date' shall mean the first date on which the
Company shall have publicly announced (by any means) that an
Acquiring Person has become such."
2. Additions to Section 1
Section 1 of the Rights Agreement is hereby further amended to add
the following definitions:
-2-
<PAGE> 3
"(c) 'Pharmacia' shall mean Pharmacia Aktiebolag, a corporation
organized under the laws of the Kingdom of Sweden.
(e) 'Bushwood' shall mean Bushwood, Inc., a corporation organized
under the laws of the State of Delaware.
(f) 'Bushwood Sub' shall mean Bushwood Subsidiary, Inc., a
corporation organized under the laws of the State of Delaware.
(i) 'Combination Agreement' shall mean the Combination Agreement,
dated as of August 20, 1995, among Pharmacia, the Company, Bushwood
and Bushwood Sub.
(q) 'Stattum' shall mean Forvaltningsaktiebolaget Stattum, a
corporation organized under the laws of the Kingdom of Sweden.
(u) 'Volvo' shall mean AB Volvo, a corporation organized under the
laws of the Kingdom of Sweden."
3. Revision of subsections of Section 1
Subparagraphs (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m),
(n), and (o) of Section 1 of the Rights Agreement are hereby relettered to
become subparagraphs (d), (g), (h), (j), (k), (l), (m), (n), (o), (p), (r), (s)
and (t) thereof, respectively.
4. Amendment of Section 3(a)(i)
Clause (i) of Section 3(a) of the Rights Agreement is hereby amended
by deleting the parenthetical phrase immediately after the phrase "tenth day"
and substituting in its place the following parenthetical phrase:
"(or such later date after the Stock Acquisition Date as may be fixed
by resolution of the Board of Directors of the Company)"
-3-
<PAGE> 4
5. Amendment of Section 3(a)(ii)
Clause (ii) of Section 3(a) of the Rights Agreement is hereby amended
by adding the following parenthetical phrase after the words "exchange offer":
"(except that the transactions contemplated by the Combination Agreement shall
not be considered a tender or exchange offer for purposes of this Rights
Agreement)." Clause (ii) of Section 3(a) of the Rights Agreement is further
amended by adding the words "resolution of" immediately after the words "may be
fixed by" in the parenthetical phrase immediately following the words "tenth
business day".
6. Amendment to Section 3(c)
The legend in Section 3(c) of the Rights Agreement is hereby amended
by adding the following clause immediately following the words "as amended as of
March 22, 1989":
"and as of August 20, 1995."
7. Amendment to Section 11(a)(ii)
Clause (ii) of Section 11(a) of the Rights Agreement is hereby
amended by deleting the parenthetical phrase immediately after the phrase "tenth
day" and substituting in its place the following parenthetical phrase:
"(or such later date as may be fixed by resolution of the Board of
Directors of the Company)"
8. Amendment to Section 23(a)(i)
-4-
<PAGE> 5
Clause (a)(i) of Section 23 of the Rights Agreement is hereby amended
to delete in its entirety the parenthetical phrase following the phrase "tenth
day" and to substitute therefor the following parenthetical phrase:
"(or such later date as may be fixed by resolution of the Board of
Directors of the Company)"
9. Amendment to Form of Rights Certificate
The form of Right Certificate set forth in the Rights Agreement as
Exhibit B is hereby amended by amending and restating the second full paragraph
on page 3 thereof as follows:
"Subject to the provisions of this Rights Agreement, the Rights
evidenced by this Certificate may be, but are not required to be,
redeemed by the Board of Directors at a redemption price of $0.05 per
Right at any time prior to the close of business on the tenth day (or
later date, as may be fixed by resolution of the Board of Directors
of the Company) following the Stock Acquisition Date, as such term is
defined in the Rights Agreement. At any time after any Person becomes
an Acquiring Person, as such terms are defined in the Rights
Agreement, the Rights evidenced by this Certificate may be, but are
not required to be, exchanged by the Company for shares of Common
Stock of the Company at an exchange ratio of three shares of Common
Stock per Right. As provided in the Rights Agreement, the redemption
price and the exchange ratio set forth above are the redemption price
and exchange ratio as of June 17, 1986, March 22, 1989, and August
20, 1995, respectively. As provided in the Rights Agreement, the
redemption price and exchange ratio are subject to
-5-
<PAGE> 6
modification and adjustment in certain events."
10. Governing Law. This Second Amendment shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such state
applicable to contracts to be made and performed entirely within such state,
provided, however, that the rights and obligations of The Bank of New York, as
Rights Agent hereunder, shall be governed by the laws of the State of New York.
11. Counterparts. This Second Amendment may be executed in any number
of counterparts, each of which shall for all purposes be deemed an original, and
all of which together shall constitute but one and the same instrument.
Except as expressly set forth herein, this Second Amendment shall not
by implication or otherwise alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the Rights
Agreement, all of which are ratified and
-6-
<PAGE> 7
affirmed in all respects and shall continue in full force and effect.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed as of the day and year first above written.
Attest THE UPJOHN COMPANY
By: /s/ KENNETH M. CYRUS By: /s/ JOHN L. ZABRISKIE
------------------------ ---------------------------
Name: Kenneth M. Cyrus Name: John L. Zabriskie
Title: Executive Vice President, Title: Chairman of the Board
Secretary and General and Chief Executive
Counsel Officer
Attest THE BANK OF NEW YORK
By: /s/ JOSEPHINE L. BISHOP By: /S/ JOHN I. SIVERTSEN
------------------------ ---------------------------
Name: Josephine L. Bishop Name: John I. Sivertsen
Title: Assistant Vice President Title: Vice President
-8-
<PAGE> 1
Exhibit 10
CO-PROMOTION AGREEMENT
This Agreement (hereinafter referred to as the "AGREEMENT") in made as of
this 20th day of August, 1995, by and between
PHARMACIA AKTIEBOLAG, a Swedish company (hereinafter referred to as
"PHARMACIA"); and
THE UPJOHN COMPANY, a Delaware company (hereinafter referred to as "UPJOHN").
WITNESSETH
WHEREAS, the parties have by a Combination Agreement entered into on the date
hereof, committed themselves to initiate certain further actions and
transactions which, if consummated in accordance with the terms thereof, will
lead to a merger of equals between the parties with each of them becoming a
100% subsidiary of a new parent company.
WHEREAS, the parties' respective Boards of Directors have determined that it is
in the best interest of the parties hereto and their respective shareholders to
enter into the AGREEMENT so as to allow the parties to commence the preparation
for the integration in the USA and Canada of their promotional activities with
regard to certain PHARMACIA products and so as to expedite the launch of such
products.
WHEREAS, the parties' respective Boards of Directors have also determined that
even if the merger of equals is not completed for whatever reason it is in the
best interest of the parties hereto and their respective shareholders to enter
into the AGREEMENT.
NOW, THEREFORE both parties agree as follows:
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<PAGE> 2
Section 1. -- Definitions
In the AGREEMENT, capitalised terms shall have their defined meanings as
follows:
"PRODUCTS" shall mean the pharmaceutical products, Fragine(R), Estring(R) and
Mycobutin(R) manufactured, distributed, marketed and sold by or for PHARMACIA
in therapeutic formulations manufactured and packed under trademarks owned or
controlled by or licensed to PHARMACIA and ready for distribution and sale to
the ultimate user in such formulations and dosages as from time to time
provided by PHARMACIA and any products mutually agreed to by the parties
hereto from time to time;
"NET SALES" shall mean for any calendar year or appropriate part thereof, with
respect to any PRODUCT, the aggregate gross invoice price to the trade with
respect to the total number of units of such PRODUCT sold by PHARMACIA to
independent third parties in the TERRITORY in such period, less (A) cash, trade
and quantity discounts and rebates actually allowed, (B) sales or other excise
taxes, (C) credits or allowances, including those granted on account of price
adjustments, returns or rejections; and
"TERRITORY" means the United States of America and Canada.
Section 2. -- Co-Promotions of PRODUCTS
The parties agree that PHARMACIA and UPJOHN shall co-promote the PRODUCTS in
the TERRITORY under the following terms and conditions:
(1) The term of the co-promotion period will be from the completion of the
initial PROMOTIONAL PLAN (as defined in sub-section (3) below) and
terminating in the case of each PRODUCT, on the later of December 31st,
2000 and the date five years from the START UP DATE (as defined in
sub-section (3) below) for such PRODUCT.
2<PAGE> 3
(2) PHARMACIA and UPJOHN shall co-promote the PRODUCTS only under PHARMACIA's
respective trademarks for such PRODUCTS, and under the governmental regulatory
approvals and all other rights held or to be held by PHARMACIA.
(3) As soon as possible, following the execution of the AGREEMENT, the parties
shall cause to be formed and shall designate representatives to a joint
co-promotion group (hereinafter the "Group"). The Group shall have four
members, who shall be Mats Pettersson and Fernando da Costa on the PHARMACIA
side and ______________________________ and ______________________________ on
the UPJOHN side. The parties may each from time to time and at any time replace
one or more of their representatives on the Group. The Group may form and
designate representatives to subordinate co-promotion groups. The composition
of such subordinate groups shall be at the discretion of the Group subject to
the overall principle of equal numbers of representatives from each of the
parties. The Group may carry out its obligations through the appropriate
subordinate group.
To the extent that UPJOHN's selling costs are in excess of its compensation
pursuant to the AGREEMENT, the Group shall consider providing additional
consideration to UPJOHN.
The responsibilities of the Group will be the implementation of the terms and
conditions of the AGREEMENT, and of the PROMOTIONAL PLANS referred to in this
sub-section.
In particular, the Group shall forthwith upon its formation prepare a
promotional plan to provide for the co-promotional activities to be undertaken
by the parties during 1996, and, if so approved by the parties, for the
remainder of 1995. At the latest by each September 30th during the term of the
AGREEMENT, the Group shall determine a promotional plan for the next following
calendar year. All promotional plans (which are herein each referred to as the
"PROMOTIONAL PLAN") shall include the strategy to be followed for the promotion
of the PRODUCTS which strategy shall be consistent with the international
profile and positioning guidelines of
3<PAGE> 4
PHARMACIA. The first PROMOTIONAL PLAN to cover each of the PRODUCTS shall
indicate the first day for the co-promotion activity of such PRODUCT, which day
is, for each PRODUCT referred to as the "START UP DATE".
(4) The Group shall, subject to the written approval of PHARMACIA and
consistent with PHARMACIA's overall guidelines, supervise the creation and
development of all sales and promotional materials relating to the PRODUCTS for
distribution in the TERRITORY. PHARMACIA shall provide UPJOHN, at no cost to
UPJOHN, with the amount of promotional material necessary to cover UPJOHN's
reasonable requirements in accordance with its target of doctors, specialists,
hospitals, pharmacists, pharmaceutical wholesalers or other relevant persons as
appropriate to be visited by UPJOHN.
Both parties shall use the same promotional material relating to the PRODUCTS,
and UPJOHN shall not use any sales, promotion or other similar material
relating to any of the PRODUCTS for any purpose without the prior written
approval of PHARMACIA. All such promotional material shall bear PHARMACIA's
name only.
(5) The parties shall co-promote the PRODUCTS in an active manner under the
following rules:
(a) The parties shall each devote the efforts called for from them by
the relevant PROMOTIONAL PLAN to promoting the PRODUCTS; and
(b) Each party will cause its salesforce to use its best efforts to
promote the PRODUCTS.
(6) The parties shall from time to time provide each other with sufficient
evidence to demonstrate that the co-promotion efforts are being carried out as
contemplated herein.
(7) As between the parties, PHARMACIA shall have the sole responsibility and
right to manufacture, label, distribute and sell the PRODUCTS in the TERRITORY
4<PAGE> 5
or any part thereof and to establish and modify the terms and conditions with
respect to the sale of the PRODUCTS, including, without limitation, the
discounts applicable to payments or receivables and similar matters. PHARMACIA
shall use reasonable efforts to stock sufficient quantities of the PRODUCTS in
order promptly to fill orders from the trade in the TERRITORY. If, for any
reason, UPJOHN should receive sales orders for any PRODUCT or PRODUCTS in any
country in the TERRITORY, it shall forward such orders to PHARMACIA as soon as
practicable.
(8) Neither of the parties shall make any active effort to recruit the other
party's sales representatives. Each party shall request the authorization of
the director of human resources, or equivalent person of the other party prior
to hiring any person employed by such party or any person who has terminated
his or her labour relationship with such party within the three months
immediately preceding such anticipated hiring.
Furthermore, during the six months following the termination of the AGREEMENT
neither of the parties shall hire any ex-representative of the other party
without the letter's authorization.
(9) PHARMACIA shall have the sole right and responsibility, and shall bear all
costs related thereto, to take such actions as would normally be taken in
accordance with accepted business practices and legal requirements to obtain
and maintain the authorization and/or ability to market the PRODUCTS in the
TERRITORY.
(10) PHARMACIA shall retain exclusive authority and responsibility for the
handling of adverse reaction reports and UPJOHN shall notify PHARMACIA within
twenty-four (24) hours by telephone and in writing within three (3) working
days of any adverse reaction data it may receive.
(11) PHARMACIA may for good scientific reasons at any time cease to market any
PRODUCT or PRODUCTS in the TERRITORY. Upon receipt of notice of such cessation,
UPJOHN shall immediately cease its co-promotion activity in respect of such
PRODUCT or PRODUCTS in the relevant part or whole of the TERRITORY.
5
<PAGE> 6
Section 3. -- Compensation for the co-promotion of the PRODUCTS
3.1 PHARMACIA shall compensate UPJOHN for co-promotion services
performed by paying for each calendar quarter (or portion thereof) during the
co-promotion period an amount equal to such fraction of 25% of the aggregate
NET SALES of the PRODUCTS during such calendar quarter or portion thereof as
the amount of UPJOHN's promotional efforts under the AGREEMENT bears to the
aggregate amount of such efforts performed by both parties. Such promotional
efforts shall be measured by aggregate time spent by each party's relevant
salesforce on co-promotional activities. The Group shall in its preparation of
PROMOTIONAL PLANS always provide that UPJOHN shall be allocated at least 60% of
the promotional efforts under the AGREEMENT and shall therefore receive not
less than 15% of the aggregate NET SALES of the PRODUCTS.
3.2 The payment mentioned in 3.1 above, plus VAT or other sales or
similar tax, if applicable, shall be made in United States dollars and within
the thirty (30) days following the end of each calendar quarter based on the
previous quarter's NET SALES and the above fractional computation for such
previous quarter.
3.3 Either party shall have the right, at any time and from time to
time during regular business hours upon reasonable prior notice, to review and
audit the other party's call reporting records, and UPJOHN shall have the
right, at any time and from time to time during regular business hours upon
reasonable prior notice, to review and audit PHARMACIA's accounting records
relating to the calculation of any amounts due under the AGREEMENT.
Section 4. -- No other compensation
Neither party shall be entitled to any other compensation with respect to the
co-promotion of the PRODUCTS other than an explicitly stipulated in the
AGREEMENT.
6<PAGE> 7
Section 5. - Term and termination
5.1 The AGREEMENT shall be valid upon execution.
5.2 Subject to the extended period which may arise in respect
of any PRODUCT under Section 2(1) above, the AGREEMENT shall then
continue in force until and including December 31, 2000. The AGREEMENT
will thereafter be renewed for subsequent one year periods unless
terminated by either party giving the other not less than one year's
notice in writing prior to the end of the initial term or any such
renewal period provided that no such termination may prejudice the
above extension period for any PRODUCT. Any such termination shall be
fully applicable in respect of PRODUCTS that are not the subject of
any such extended period.
5.3 Should any of the parties at any time fail to fulfil any
covenant of the AGREEMENT or otherwise breach any of the terms
contained herein, the other party shall have the right to terminate
the AGREEMENT upon three (3) months' written notice whereupon the
AGREEMENT shall terminate unless the default is corrected within the
said notice period.
5.4 If either party hereto undergoes a change of control (as a
result of which more than 50% of its equity and voting interest is
acquired by a third party), then either party or its successors and
assigns may, in its sole discretion, upon written notice to the other
party, immediately terminate the AGREEMENT. Such right may be
exercised by a party at any time within the three months after such
change of control occurs or such party becomes aware of such change of
control.
5.5 Upon termination of the AGREEMENT, for any reason
whatsoever, PHARMACIA shall continue to have full proprietary and
marketing rights on each of the PRODUCTS, including exclusive
promotion rights, and neither party shall be entitled to any
compensation whatsoever other than arising from any breach of the
AGREEMENT.
7
<PAGE> 8
Section 6. -- Miscellaneous
6.1 Each of the parties hereto (the "Indemnifying Party") agrees to
indemnify and hold harmless the other party (the "Indemnified Party")
from and against any and all liabilities, losses, costs or damages,
including reasonable attorneys' fees incurred by the Indemnified Party
in connection with or arising out of the AGREEMENT to the extent that
any such liabilities, losses, costs or damages are directly attributable
to the negligence or intentional misconduct of or breach of the
AGREEMENT by the Indemnifying Party.
PHARMACIA will indemnify and hold UPJOHN harmless from and against all
liabilities, losses, costs or damages, including reasonable attorneys'
fees arising from the design, development, manufacture, labelling,
handling or use of the PRODUCTS or from any breach of third party
intellectual property rights resulting from the distribution of the
PRODUCTS save to the extent that any such liabilities, losses, costs or
damages are directly attributable to the negligence or intentional
misconduct of or breach of the AGREEMENT by UPJOHN.
The indemnification provided for in this Section 6.1 shall survive any
termination of the AGREEMENT.
6.2 All covenants, representations, warranties and agreements of the
parties contained herein shall be binding upon and inure to the benefit
of the parties, their respective successors and assignees.
UPJOHN shall not have the right to assign the AGREEMENT without the
prior written consent of PHARMACIA. However, either party may so assign
the AGREEMENT to any other corporation or business entity controlling,
controlled by or under common control with the party in question.
6.3 No modification or variation of, or amendment to the AGREEMENT shall
be of any force unless such modification, variation or amendment is in
writing and executed by each party.
8<PAGE> 9
6.4 No waiver by either party of any breach or non-observance of any of the
covenants, terms or provisions in the AGREEMENT on the part of any other party
to be performed or observed shall be or be construed to be a general waiver or
waiver of a continuing breach or non-observance. Any such waiver shall relate
only to the particular breach or non-observance in respect of which it is made.
6.5 Each of the parties represents that the AGREEMENT has been duly authorised,
executed and delivered by it and constitutes a legal, valid and binding
obligation of such party, enforceable against it in accordance with its terms.
6.6 Neither of the parties shall be liable on any account for any failure to
fulfil any terms of the AGREEMENT, if such fulfilment has been frustrated by
force majeure, including strikes, riots, lockouts, civil commotion, government
regulations or any unforeseeable supervening event of whatsoever nature beyond
the control of either of the parties hereto.
6.7 Notices required by or incidental to the performance by either party of its
obligations hereunder shall be in writing and shall be deemed as property given
when received by the other party.
6.8 The AGREEMENT supersedes and cancels all previous agreements in respect of
the subject matter hereof.
6.9 UPJOHN shall upon any termination of the AGREEMENT for whatever reason
return all promotional and other written material received hereunder including
all copies thereof, then in its possession.
6.10 The AGREEMENT shall be governed by and interpreted in accordance with the
laws of the State of New York.
6.11 In case of any dispute between the parties as to the interpretation or
performance of the terms of the AGREEMENT or any provision thereof, such dispute
shall be brought to any court in the state of New York.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties have caused the AGREEMENT to be executed by
their respective officers thereunto duly authorized the day and year first
above written.
PHARMACIA AKTIEBOLAG (publ) THE UPJOHN COMPANY
/s/ Mats Pettersson /s/ Robert C. Salisbury
---------------------- ------------------
Mats Pettersson Executive Vice President
Group Vice President and Chief Financial Officer
/s/ Mats Lidgard
----------------------
Mats Lidgard
General Counsel
10
<PAGE> 1
Exhibit 99
[Pharmacia Logo] [Upjohn Logo]
Contact: Phillip C. Carra Joe T. Heywood
The Upjohn Company The Upjohn Company
212-593-2655 616-323-7181
Jan Ekberg Anders Harfstrand Soren Densjo
Pharmacia AB Pharmacia AB Pharmacia AB
011 48 8 624 50 00 011 46 8 624 51 30 011 46 8 624 51 34
011 48 70 839 8281 011 46 70 585 0525
FOR IMMEDIATE RELEASE
PHARMACIA AND UPJOHN MERGER OF EQUALS TO FORM NEW TOP-10
GLOBAL PHARMACEUTICAL COMPANY
-- Complementary Products, R&D and Market Presence Strengthen
and Expand Positions in Medically Important Therapeutic Areas --
-- R&D Annual Investments to Exceed $1 Billion --
-- Enhanced Sales Growth Targeted Through
Deeper Market Penetration with Current and New Products --
-- Projected Annual Cost Synergies in Excess of $500 Million;
more than 85% Expected to be in Effect by the End of 1996 --
-- Additive Growth in 1996 EPS for Shareholders of Both Companies Expected;
Future Earnings Growth Acceleration Targeted --
-- Begins Operations with Strong Financial Platform for Future Growth --
-- Operating Margin Goal of 25%+ by 1998 --
KALAMAZOO, MICHIGAN and STOCKHOLM, SWEDEN, AUGUST 20, 1995 -- The Boards of
Directors of The Upjohn Company (NYSE:UPJ) and Pharmacia AB (NASDAQ:PHARY) have
unanimously approved a definitive agreement to merge the two entities to create
a new highly competitive pharmaceutical company for the 21st century.
The company, named Pharmacia & Upjohn, Inc., would have had combined 1994 sales
of nearly $7 billion, with prescription pharmaceutical sales placing it in the
top ten in the worldwide industry. Annual research and development expenditures
will exceed $1 billion, also in the top tier of the pharmaceutical industry.
The complementary geographic strengths of the two companies will give Pharmacia
& Upjohn a sales ranking among the top five pharmaceutical companies in Europe,
top 15 in North America and top 20 in
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<PAGE> 2
Japan. Pharmacia & Upjohn will have a broad product portfolio with sales
exceeding $500 million in six key therapeutic areas. Sales growth in Pharmacia
& Upjohn, led by 28 product introductions and line extensions in the next
three years and deeper penetration of existing markets, is expected to exceed
industry averages. Projected annual operating cost synergies of over $500
million, more than 85% of which are expected to be in effect by the end of
1996, are anticipated to further contribute to increased earnings and a strong
balance sheet as well as provide flexibility to take advantage of future growth
opportunities.
"Pharmacia & Upjohn will be a powerful new competitor in the global
pharmaceutical industry," said Jan Ekberg, President and CEO of Pharmacia, and
proposed chairman of Pharmacia & Upjohn. "For both Pharmacia and Upjohn, this
merger is a bold strategic move to build a highly competitive company as the
worldwide pharmaceutical industry continues to consolidate." John L. Zabriskie,
Ph.D., Chairman and CEO of Upjohn, and proposed President and Chief Executive
Officer of Pharmacia & Upjohn, said, "This is a merger that truly constitutes
far more than the sum of the parts. The new company will be able to take full
advantage of uniquely complementary geographic reach, product portfolio,
pipeline and R&D strengths. As a result of the merger, Pharmacia & Upjohn will
have extensive financial and operating resources, market scope and earnings
potential. Consequently, we fully expect the new company to achieve additional
growth in expected 1996 EPS as well as acceleration of future earnings growth.
Above all, Pharmacia & Upjohn is expected to generate significantly enhanced
value for shareholders."
Mr. Ekberg added, "The new company will be positioned to attain its goals of
revenue growth above the industry average and operating margins exceeding 25% by
1998. Through the merger, Pharmacia gains access to Upjohn's strong U.S. sales,
marketing and distribution infrastructure to fully exploit the sales of
Pharmacia products, while Upjohn gains additional sales and marketing support in
Europe to maximize the sales of its products." Dr. Zabriskie noted, "Uniting the
respective R&D strengths of Pharmacia and Upjohn in molecular biology,
chemistry, pharmacology and other key disciplines will create a powerful engine
for innovation and new product development."
Mr. Ekberg and Dr. Zabriskie emphasized that Pharmacia & Upjohn is a merger
of equals. Pharmacia and Upjohn have studied each other thoroughly over the past
several months. They have already completed detailed business and merger plans,
and have established the framework for integration teams composed of personnel
from both companies to proceed with the merger of operations immediately upon
closing of the transaction. They pledged that Pharmacia & Upjohn will rapidly
establish itself as a vigorous global competitor and a vital contributor to the
advancement of medical science and healthcare.
Soren Gyll, Chairman of the Board of Pharmacia, who will be a member of the
Board of Pharmacia & Upjohn, said, "This merger with Upjohn is a strategic move
to give Pharmacia the best possibilities and necessary resources both in
marketing and in research to the benefit of the shareholders, the company and
the employees."
2<PAGE> 3
Under the terms of the definitive agreement signed by both companies, Pharmacia
and Upjohn will be merged into the new company, through a tax-free exchange of
shares. The transactions will be accounted for as a "pooling of interests"
under both U.S. and Swedish accounting standards. Shareholders of Pharmacia
will be offered one share of Pharmacia & Upjohn common stock for each Class A
or Class B share. The shares offered to Pharmacia's shareholders in Sweden will
be in the form of Swedish Depositary Shares (SDSs) each representing one share
of Pharmacia & Upjohn common stock. Stockholders in Upjohn will receive 1.45
shares of Pharmacia & Upjohn common stock for each Upjohn share. Pharmacia
currently has 256 million Class A and B shares outstanding and Upjohn has
approximately 171 million primary shares of common stock outstanding. Pharmacia
& Upjohn will have approximately 504 million shares outstanding (including
SDSs), equally divided between current Pharmacia and Upjohn shareholders.
Pharmacia & Upjohn will begin operations with a strong balance sheet. Since
this merger will be a pooling of interests, rather than an acquisition of one
company by the other, there are no costs associated with financing or the
amortization of goodwill. On a combined basis, for the year ended December 31,
1994, Pharmacia & Upjohn would have had operating income of $1.2 billion and
net income of $835 million. This will make Pharmacia & Upjohn one of the most
unleveraged major pharmaceutical companies in the world. The strong financial
profile will immediately position Pharmacia & Upjohn to take advantage of
future strategic opportunities for growth.
On a combined basis, Pharmacia & Upjohn would have a market capitalization in
excess of $13 billion based on the closing prices and exchange rates on August
18, 1995. Pharmacia & Upjohn is expected to be listed on the New York,
Stockholm and London Stock Exchanges. Dividends are expected to be paid on a
quarterly basis. The first quarterly dividend for Pharmacia & Upjohn, for the
quarter ending December 31, 1995, has been set initially at $0.27 (SEK 1.99 at
the current exchange rate of SEK 7.378 to the U.S. dollar) per Pharmacia &
Upjohn common share. On an annualized basis, the indicated dividend would be
$1.08 per Pharmacia & Upjohn common share. Based on the exchange ratio for the
merger, this would equate to an indicated annual dividend of $1.57 per Upjohn
share and $1.28 (SEK 7.97) per Pharmacia share.
Given the merger of equals, the Board of Directors of Pharmacia & Upjohn will
be composed of an equal number of directors from the current Pharmacia and
Upjohn boards. Further, there will be equal representation from both companies
among the senior managers.
Reflecting the truly global scope of the business, the corporate management
center for the new company will be located in London, with operational
headquarters in Stockholm/Uppsala, Kalamazoo and Milan. These headquarters will
share global responsibilities for R&D, manufacturing and strategic marketing.
Pharmacia & Upjohn will be incorporated under Delaware (U.S.) law.
The transaction and the offering of Pharmacia & Upjohn shares are subject to
approval by
3
<PAGE> 4
holders of a majority of Upjohn shares, the acceptance of an exchange offer by
shares representing 90% of Pharmacia voting rights and capital and various
regulatory approvals in both the U.S. and Europe. It is currently anticipated
that the merger will be completed in late November, 1995.
Pharmacia's two largest shareholders, AB Volvo and Forvaltningsaktiebolaget
Stattum, a company wholly owned by the Kingdom of Sweden, which currently hold
27.8 and 11.8 percent of the voting rights, and 27.5 and 14.1 percent of the
share capital of Pharmacia respectively, have both declared their support for
the transaction and intend to participate in the proposed exchange offer.
Bert-Olof Svanholm, Chairman of Volvo AB, said, "This transaction to create a
highly competitive, new pharmaceutical industry leader is clearly in the best
interests of all Pharmacia shareholders. My experience from ABB shows that a
merger of two complementary companies can create new opportunities for growth
and development."
Sales Growth Driven by introductions of Pipeline Products and New Indications
Over Next 3 Years
Pharmacia & Upjohn will have a strong near-term flow of new products and new
indications. By 1998, the company expects to launch 18 new chemical entities
(NCEs) and 12 major new indications and line extensions. Innovative products
from both companies which could be launched during this timeframe include
Latanoprost (glaucoma), Freedox (sub-arachnoid hemorrhage), Caverject (erectile
dysfunction), Tolterodine (urinary incontinence), Rescriptor (AIDS), Camptosar
(cancer), Cabergoline (Parkinson's) and Etanolone (anesthesia).
Upjohn and Pharmacia have also entered into a separate five-year exclusive
co-promotion agreement to market Pharmacia's Fragmin (anti-thrombosis),
Mycobutin (infectious disease) and Estring (post-menopause) products in the
U.S. The co-promotion agreement is not conditioned upon the consummation
of the merger.
Combined R&D Budget of $1 Billion; Enhanced Expertise in Major Therapeutic Areas
Pharmacia & Upjohn's R&D budget of $1 billion will leverage the complementary
strengths of Pharmacia's and Upjohn's current research and development
activities and is expected to further accelerate revenue growth in the
company's major therapeutic markets. In addition to 28 introductions of
pipeline products and new indications in the next three years, Pharmacia &
Upjohn has 24 products in early phase clinical testing, including promising
agents in oncology, CNS, infectious disease, asthma, urinary incontinence and
vascular disease.
Pharmacia & Upjohn will have one of the world's strongest biotechnology
capabilities with more than 1,000 scientists experienced in the recombinant and
monoclonal technologies of molecular biology. This expertise has already led to
the successful development of three recombinant products, including the world's
largest selling growth hormone, Genotropin.
4<PAGE> 5
The biotechnology expertise will enhance the strength in other core
areas such as oncology in which Pharmacia & Upjohn will be a world research
leader. Molecular biology will also strengthen the company's efforts in
critical care and inflammation. Important R&D synergies will also occur in
other core disciplines including CNS disorders, metabolic disorders and
infectious diseases.
Global Sales Synergy
Through the combination of the sales and marketing organizations of the two
companies, Pharmacia & Upjohn will be in a position to significantly increase
sales of existing and new products in the U.S., Europe and Japan. In the U.S.,
Pharmacia & Upjohn expects to launch Pharmacia's Fragmin (anti-thrombosis),
Latanoprost (glaucoma), Estring (post-menopause) and Genotropin (growth hormone
deficiency), in addition to Upjohn's Caverject (erectile dysfunction) and
Freedox (sub-arachnoid hemorrhage) after regulatory approvals. In Europe, the
combined marketing resources will be adequate for launch of Cabergoline
(anti-Parkinson's), Latanoprost, Caverject, Freedox, Estring and Tolterodine,
as well as to further enhance sales of Genotropin (growth hormone deficiency in
adults), Xanax, Rogaine and Dalacin. In Japan, Pharmacia & Upjohn will have
about 1,000 employees in sales, marketing and distribution, and be among the
three largest non-Japanese companies. Marketing opportunities for the new
company in Japan include Medrol, the Provera family of products, and
antibiotics. Several other markets will also represent growth opportunities for
the new company.
Product Portfolio -- Strong Market Positions in Major Therapeutic Areas
Pharmacia & Upjohn will have leading positions (more than $500 million in sales
annually) in six medically important therapeutic areas:
- oncology -- Farmorubicin, Adriamycin
- metabolic diseases/growth hormones -- Genotropin, Micronase/Glynase
- critical care -- Fragmin, Freedox, Solu-Medrol
- CNS -- Xanax and Sermion
- infectious diseases -- Cleocin/Dalacin, Mycobutin, Vantin
- female/reproductive health -- Provera family of products, Ogen, Caverject,
Estring
In addition, Pharmacia & Upjohn will have two therapeutic areas each generating
annual revenues of more than $250 million:
- nutrition -- Intralipid, Vamin and Vitrimix
- ophthalmology -- Healon
Pharmacia & Upjohn will hold global leadership positions in specific product
groups within these categories, including cataract surgery, growth hormones,
and injectable contraceptives.
Broad product offerings and leading positions in important therapeutic areas
are expected to create expanded opportunity for sales to the increasing number
of institutions which prefer purchasing pharmaceuticals from fewer sources.
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<PAGE> 6
Strong OTC/Consumer Pharmaceutical Infrastructure
Pharmacia & Upjohn will have a strong over-the-counter products presence across
Europe and in the U.S. from which to accelerate sales. Further, both companies
have made significant switches of prescription products to OTC markets.
Pharmacia successfully transitioned Nicorette to OTC markets in Europe, and
Upjohn has made effective switches of Motrin and Cortaid in the U.S. and
intends to bring OTC versions of the hair regrowth treatment, Rogaine, and the
cholesterol lowering agent, Colestid, to the market. Further significant
investments are expected to be made in OTC products to accelerate sales growth.
Affiliated Health Care Businesses
Pharmacia & Upjohn will maintain affiliated health care businesses in
biotechnology supplies (instruments and chemicals for biochemical research and
production), allergy diagnostics (in vitro testing), pharmaceutical chemical
commercial services (R&D, manufacture and marketing of bulk pharmaceutical
chemicals and selected high-technology specialty chemicals) and animal health
(R&D, manufacture and marketing of a broad range of pharmaceutical products for
both food and companion animal markets). These businesses would have accounted
for 22% of total 1994 combined sales.
The Combined Company -- Estimated Cost Synergies
A substantial contribution to margin improvement is expected to be achieved
through cost reductions by the combination of the two companies. Pharmacia and
Upjohn are committed to the rapid realization of cost synergies through the
combination of their businesses. The total annual cost savings resulting from
the merger are expected to exceed $500 million at maturity. Management expects
to have completed in excess of 85% of the planned cost saving measures by the
end of 1996, with the first full year financial impact projected for 1997. The
combined workforce is 34,500. Anticipated workforce reductions will exceed
4,000 employees. In connection with the merger, restructuring charges totaling
$500 million are expected to be taken over the next five years, with
approximately $200 million taken in 1995.
Pharmacia AB is an international, research intensive pharmaceutical and
biotechnology company. The company is a market leader in such therapeutic areas
as growth-hormone deficiency, eye surgery, cancer treatment, nutritional
solutions, allergy diagnostics, and smoking cessation. Pharmacia is
headquartered in Stockholm, Sweden.
The Upjohn Company is a worldwide, research-based provider of human healthcare
products, animal health products and specialty chemicals. Headquartered in
Kalamazoo, Michigan, the company has been dedicated to improving health and
nutrition for more than a century.
The offering of shares of Common Stock and Preferred Stock of Pharmacia &
Upjohn, Inc. will be made only by means of a Prospectus/Proxy Statement/U.S.
Offer to Purchase to be distributed to Pharmacia and Upjohn shareholders.
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