EXHIBIT 10.12
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TAX ALLOCATION AND INDEMNIFICATION AGREEMENT
Dated as of _________, 1996
Among
DEPUY, INC.
BOEHRINGER MANNHEIM CORPORATION
and
CORANGE LIMITED
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TAX ALLOCATION AND INDEMNIFICATION AGREEMENT (the "Agreement")
dated as of _________, 1996 among
DEPUY, INC., a Delaware Corporation
(the "Company"),
BOEHRINGER MANNHEIM CORPORATION, an Indiana corporation
("BMC") and CORANGE LIMITED,
a Bermuda corporation ("Corange").
WHEREAS, each of the Company and BMC is an indirect, wholly-owned
subsidiary of Corange, which is the ultimate holding company within the Corange
Limited group of companies (the "Corange Group"), and each of various
subsidiaries in the Corange Group listed in Exhibit A hereto is engaged in the
manufacture and/or the distribution of orthopaedic products for the DePuy
division of the Corange Group;
WHEREAS, Corange U.S. Holdings Inc., an Indiana corporation ("CUSHI") was
the common parent corporation, within the meaning of Section 1502 of the
Internal Revenue Code of 1986, as amended (the "Code"), of an affiliated group
of corporations (the "Affiliated Group") filing consolidated Federal income tax
returns and consolidated, combined or unitary state income tax returns, pursuant
to which CUSHI, BMC, and other members of the Affiliated Group have paid taxes
on a consolidated, combined or unitary basis;
WHEREAS, in connection with an overall plan of reorganization affecting
those corporations within the DePuy division of the Corange Group, which plan
was approved by the Board of Directors of Corange in resolutions adopted at a
meeting held on July 11, 1996: (i) CUSHI has sold all of the outstanding shares
of BMC to Pharminvest S.A., a Luxembourg corporation in the Corange Group (the
"BMC Share Sale"), (ii) Corange and certain direct and indirect subsidiaries of
Corange have sold or otherwise transferred to CUSHI or to newly-created
subsidiaries of CUSHI, their shareholding in certain subsidiaries within the
DePuy division of the Corange Group, and certain assets related to the DePuy
business previously owned by a foreign distribution subsidiary of Corange
affiliated with the Boehringer Mannheim business of the Corange Group, and (iii)
CUSHI has merged with and into the Company (the "Merger"), with the Company
being the surviving corporation in the Merger (collectively, the "Pre-Offering
Reorganization");
WHEREAS, pursuant to the Pre-Offering Reorganization, CUSHI ceased to be
the common parent of the Affiliated Group, BMC ceased to be a member of the
Affiliated Group, and the Company became the common parent corporation of the
Affiliated Group;
WHEREAS, Corange, BMC and the Company desire to allocate the liability for
the taxes (including any interest or penalties thereon) of members of the
Affiliated Group for any taxable period beginning before the Pre-Offering
Reorganization and to provide for certain other tax-related matters;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows.
1. Indemnification by Corange and BMC. (a) Corange shall indemnify and
hold harmless on an After-Tax Basis (as hereinafter defined) the Company and the
DePuy Subsidiaries (as hereinafter defined) against any Corange Tax Liabilities
(as hereinafter defined). The term "Corange Tax Liabilities" shall mean any
Taxes (as hereinafter defined): (i) imposed (x) with respect to any taxable
period that ends prior to the date upon which the Closing of the public offering
of the stock of the Company occurs (the "Closing Date") and (y) with respect to
a taxable period that begins before and ends after the Closing Date, the portion
of such period up to and including the the Closing Date (each period described
in clause (x) or clause (y), being hereinafter referred to as a "Pre-Closing Tax
Period"), or (ii) imposed as a result of the Pre-Offering Reorganization;
provided, however, that the Taxes subject to indemnification as Corange Tax
Liabilities under this Section 1(a) shall not include any "BMC Tax Liabilities"
(as hereinafter defined) subject to indemnification by BMC under Section 1(b)
hereof or any "DePuy Tax Liabilities" (as hereinafter defined) subject to
indemnification by the Company and the DePuy Subsidiaries under Section 2
hereof.
(b) BMC shall indemnify and hold harmless on an After-Tax Basis the
Company and the DePuy Subsidiaries against any BMC Tax Liabilities. The term
"BMC Tax Liabilities" shall mean: (i) the full amount of the Taxes of BMC or a
BMC Subsidiary (as hereinafter defined), as the case may be, for any taxable
period for which the Tax liability of BMC or a BMC Subsidiary, as applicable, is
determined on the basis of a separate Tax return, and (ii) in the case of any
taxable period for which the Tax liability of BMC or a BMC Subsidiary, as
applicable, is determined on the basis of a Consolidated Return (as hereinafter
defined), the portion of the Taxes of the Consolidated Group (as hereinafter
defined) attributable to BMC or to a BMC Subsidiary, as determined under Section
6 with respect to consolidated or combined returns, and under Section 7 with
respect to unitary returns; provided, however, that the term "BMC Tax
Liabilities" shall include no liabilities for Taxes imposed as a result of the
Pre-Offering Reorganization.
(c) Corange hereby guarantees BMC's obligation to indemnify and hold
harmless on an After-Tax Basis the Company and the DePuy Subsidiaries against
the BMC Tax Liabilities. In the event that BMC defaults on its obligations to
make indemnification payments with respect to any BMC Tax Liabilities in
accordance with this Agreement, the Company and the DePuy Subsidiaries shall be
entitled to collect such indemnification payments from Corange; provided,
however, that the Company and the DePuy Subsidiaries shall in no event be
entitled to receive more than the full amount of one indemnification payment
with respect to any single claim for Taxes under this Agreement.
2. Indemnification by the Company. The Company and each DePuy Subsidiary
shall indemnify and hold harmless on an After-Tax Basis Corange, BMC, the
Corange Subsidiaries (as hereinafter defined) and the BMC Subsidiaries against
any and all DePuy Tax Liabilities. The term "DePuy Tax Liabilities" shall mean:
(i) the full
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amount of the Taxes of the Company or a DePuy Subsidiary, as the case may be,
for any taxable period for which the Tax liability of the Company or a DePuy
Subsidiary, as applicable, is determined on the basis of a separate Tax return,
(ii) in the case of any taxable period for which the Tax liability of the
Company or a DePuy Subsidiary, as applicable, is determined on the basis of a
Consolidated Return, that portion of the Taxes of the Consolidated Group
attributable to the Company or to a DePuy Subsidiary, as determined under
Section 6 with respect to consolidated or combined returns, and as determined
under Section 7 with respect to unitary returns, and (iii) Taxes imposed as a
result of the Pre-Offering Reorganization solely by reason of one or more
actions taken by the Company or any DePuy Subsidiary in violation of any of its
obligations under the agreements entered into with respect to the Pre-Offering
Reorganization; provided, however, that the term "DePuy Tax Liabilities" shall
include (x) no liabilities for Taxes imposed as a result of the Pre-Offering
Reorganization except for liabilities for Taxes described in clause (iii)
hereof, and (y) no liabilities for any interest or any penalties relating to any
taxes, tariffs or governmental charges, in the case of liabilities for Taxes
described in clauses (i) and (ii) hereof, and all such liabilities for interest
and penalties shall be deemed to be Corange Tax Liabilities subject to
indemnification by Corange under Section 1(a) hereof.
3. Definitions. (a) The term "Tax" or "Taxes" means Federal, state, local
and foreign income, franchise, property, sales, excise, transfer, withholding
(with respect to amounts paid or received), employment or other taxes, tariffs
or governmental charges (and all interest and penalties relating thereto)
imposed by a governmental authority pursuant to the exercise of its power to
tax.
(b) The term "After-Tax Basis" means, with respect to any payment, an
amount calculated by taking into account the Tax consequences of the receipt of
such payment, as well as any Tax benefit associated with the liability giving
rise to the payment. In the case of any item which gives rise to a deduction,
the Tax benefit of such deduction shall be determined at the maximum statutory
tax rate in effect during the relevant taxable period, whether or not the
taxpayer actually realizes currently such Tax benefit. For this purpose, all
indemnification payments made by Corange under this Agreement shall be deemed to
be capital contributions to the Company.
(c) The term "DePuy Subsidiary" shall mean each entity listed in Exhibit A
hereto and shall be deemed to include any predecessor or transferee of (or
successor or transferor to) the Company or any entity listed in Exhibit A, but
shall not include CUSHI for any period prior to the Merger or any subsidiary in
the Corange Group affiliated with the Boehringer Mannheim business of the
Corange Group; provided, however, that the DePuy division of BMC, which was a
predecessor of DePuy, Inc. (incorporated on January 1, 1992) shall be deemed to
be a DePuy Subsidiary. The term "BMC Subsidiary" shall mean any subsidiary of
BMC, and shall be deemed to include any predecessor or transferee of (or
successor or transferor to) BMC or any subsidiary of BMC, but shall not include
CUSHI (or any predecessor thereof or transferor thereto),
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the Company or any DePuy Subsidiary. The term "Corange Subsidiary" shall mean
any subsidiary in the Corange Group, including CUSHI, and shall be deemed to
include any predecessor or transferee of (or successor or transferor to) Corange
or any subsidiary of Corange, but shall not include the Company, any DePuy
Subsidiary, BMC or any BMC Subsidiary.
(d) The term "Tax Asset" shall mean any net operating loss, net capital
loss, investment tax credit, foreign tax credit, target jobs tax credit, low
income housing credit, research and experimentation credit, charitable deduction
or any other credit or tax attribute, including additions to basis of property,
which could reduce any tax, including, without limitation, deductions, credits,
or alternative minimum net operating loss carryforwards related to alternative
minimum taxes.
(e) The term "BMC Sale Date" shall mean the date upon which the BMC Share
Sale occurs, and the term "Pre-BMC Sale Tax Period" shall mean (i) any taxable
period that ends prior to the BMC Sale Date and (ii) with respect to a taxable
period that begins before and ends after the BMC Sale Date, the portion of such
period up to and including the BMC Sale Date.
(f) The term "Consolidated Group" shall mean (i) the Affiliated Group and
(ii) any group filing consolidated, combined or unitary tax returns for state
tax purposes for any taxable period beginning before the BMC Sale Date which,
for such taxable period, is comprised of at least one corporation which is a BMC
Subsidiary and at least one corporation which is a DePuy Subsidiary. The term
"Consolidated Return" shall mean any Federal income tax return or any state tax
return filed by the Consolidated Group on a consolidated, combined or unitary
basis.
4. Tax Return Filing and Related Matters. (a) The Company shall prepare
all Consolidated Returns of the Consolidated Group for taxable periods beginning
on or after January 1, 1996 and ending on or before December 31, 1996, and all
separate Tax returns of the Company and the DePuy Subsidiaries. With respect to
any Consolidated Returns referred to in the first sentence of this Section 4(a),
BMC shall provide pro forma tax returns and other relevant data to the Company
at least forty-five (45) days prior to the due date of such Tax returns (taking
into account any applicable extensions). The Company shall provide BMC with
preliminary draft copies of such Tax returns at least thirty (30) days prior to
the due date for filing (taking into account any applicable extensions) for
review and approval by BMC with respect to BMC Tax Liabilities. If BMC objects
to any matter reflected in such draft Tax returns with respect to BMC Tax
Liabilities, BMC shall inform the Company within ten (10) days of receipt of the
draft Tax returns, and the Company shall revise such Tax returns as so directed
by BMC, and shall sign and timely file such Tax returns with the appropriate
taxing authorities.
(b) BMC shall prepare all Consolidated Returns of the Consolidated Group
for taxable priods ending on or before December 31, 1995, all separate Tax
returns of
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CUSHI for taxable periods ending on or before the Merger, and all separate Tax
returns of BMC and the BMC Subsidiaries. The provisions of this Section 4 shall
apply with respect to any action or inaction after the date of this Agreement in
connection with the preparation and filing of any such Tax returns. With respect
to any Consolidated Returns referred to in the first sentence of this Section
4(b), the Company shall provide pro forma tax returns and other relevant data to
BMC at least forty-five (45) days prior to the due date of such Tax returns
(taking into account any applicable extensions). BMC shall provide the Company
with preliminary draft copies of such Tax returns at least thirty (30) days
prior to the due date for filing (taking into account any applicable extensions)
for review and approval by the Company with respect to DePuy Tax Liabilities. If
the Company objects to any matter reflected in such draft Tax returns with
respect to DePuy Tax Liabilities, the Company shall inform BMC within ten (10)
days of receipt of the draft Tax returns and BMC shall revise such Tax returns
as so directed by the Company, and shall sign and timely file such Tax returns
with the appropriate taxing authorities.
(c) With respect to Consolidated Returns of the Consolidated Group for
taxable periods beginning on or after January 1, 1996 and ending on or before
December 31, 1996, BMC shall pay, or cause to be paid, to the Company an amount
equal to (1) BMC's share of the Consolidated Group's consolidated Federal Tax
liability and consolidated state Tax liability, determined in accordance with
Section 6, and (2) BMC's share of the Consolidated Group's unitary state Tax
liability, determined in accordance with Section 7, as provided below.
(i) Promptly after the Company makes an estimated Tax payment with
respect to any such Consolidated Return, the Company shall in good faith
determine the amount of BMC's share of such estimated Tax payment in
accordance with Section 6, in the case of any consolidated Federal Tax
liability or any consolidated state Tax liability of the Consolidated
Group, and in accordance with Section 7 using 1995 apportionment factors,
adjusted for significant dispositions or transfers of assets, in the case
of any unitary state Tax liability of the Consolidated Group. The Company
shall deliver a written statement to BMC reflecting the determination
described above. Within ten (10) business days after delivery of such
written statement, BMC shall notify the Company whether BMC agrees with
such determination. BMC shall pay to the Company or the Company shall pay
to BMC, as appropriate, the amount determined to be payable hereunder (x)
within ten (10) business days thereafter, if BMC agrees with such
determination, or (y) if the Company and BMC cannot agree on the
determination, within ten (10) business days after the date of the
determination of the amount payable pursuant to Section 11 hereof.
(ii) Promptly after the Company files an application to extend the
due date of any such Consolidated Return, the Company shall in good faith
determine the estimated amount of BMC's share of the Consolidated Group's
consolidated Federal Tax liability or consolidated state Tax liability for
such Consolidated
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Return in accordance with Section 6 or, in the case of a unitary state Tax
return, in accordance with Section 7 using 1995 apportionment factors,
adjusted for significant dispositions or transfers of assets. The amount
payable hereunder shall equal the difference, if any, between (x) the
amounts so determined and (y) the aggregate amount of estimated
installments paid with respect to BMC's share of such Tax liability for
such Consolidated Return, adjusted to take into account amounts previously
paid or received by BMC in connection with any previous extension payments.
The Company shall deliver to BMC a written statement of the amount payable
hereunder, as described above. Within ten (10) business days after delivery
of such written statement, BMC shall notify the Company whether BMC agrees
with such determination. BMC shall pay to the Company or the Company shall
pay to BMC, as appropriate, the amount determined to be payable hereunder
(x) within ten (10) business days thereafter, if BMC agrees with such
determination, or (y) if the Company and BMC cannot agree on the
determination, within ten (10) business days after the date of the
determination of the amount payable pursuant to Section 11 hereof.
(iii) Promptly after the Company files any such Consolidated
Return, the Company shall deliver to BMC a written statement setting forth
the difference between (x) BMC's share of the Consolidated Group's
consolidated Federal Tax liability, consolidated state Tax liability or
unitary state Tax liability for such Consolidated Return, determined in
accordance with Section 6 or Section 7, as the case may be, and (y) the
aggregate amount of payments with respect to BMC's share of such Tax
liability for such Consolidated Return previously made pursuant to this
Section. Within ten (10) business days of delivery of such written
statement, BMC shall notify the Company whether BMC agrees with such
determination. BMC shall pay to the Company or the Company shall pay to
BMC, as appropriate, the amount equal to such difference, if any, (x)
within ten (10) business days thereafter, if BMC agrees with such
determination, or (y) if the Company and BMC cannot agree on the
determination, within ten (10) business days after the date of the
determination of the amount payable pursuant to Section 11 hereof.
(d) With respect to Consolidated Returns of the Consolidated Group for
taxable periods ending on or before December 31, 1995, the Company shall pay, or
cause to be paid, to BMC the Company's share of the Consolidated Group's
consolidated Federal Tax liability, consolidated state Tax liability, and
unitary state Tax liability, determined in accordance with past practices.
(e) In the case of Consolidated Returns of the Consolidated Group for
taxable periods beginning on or after January 1, 1996 and ending on or before
December 31, 1996, if the Company determines that it will be necessary to incur
incremental out-of-pocket costs for legal, accounting or other related
professional fees and disbursements attributable to the preparation of tax
returns for BMC or the BMC Subsidiaries, the
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Company shall obtain from BMC its written approval of such incremental out-of-
pocket costs prior to incurring such costs. BMC shall reimburse the Company for
such incremental out-of-pocket costs which have been approved by BMC pursuant to
this Section 4(e) within thirty (30) days of delivery of a written statement of
such costs specifying such costs in reasonable detail.
(f) Without the prior written consent of BMC (in the case of BMC Tax
Liabilities), which shall not be unreasonably withheld, and the prior written
consent of Corange (in the case of Corange Tax Liabilities), which shall not be
unreasonably withheld, the Company shall refrain, and shall cause each of the
DePuy Subsidiaries to refrain, (i) from making, filing or amending any Tax
return that includes any Pre-Closing Tax Period or any Pre-BMC Sale Tax Period
that would materially affect the Tax liability of Corange, BMC, the Corange
Subsidiaries or the BMC Subsidiaries, and (ii) from making any material tax
election that would bind, or materially affect the Tax liability of, Corange,
BMC, the Corange Subsidiaries or the BMC Subsidiaries.
5. Contests. (a) If the Company or any DePuy Subsidiary receives oral or
written notice from the Internal Revenue Service or any other taxing authority
of the commencement of an audit, the assertion of a claim, an assessment, or
other dispute with respect to Taxes for which Corange or BMC are or may be
required to indemnify, in whole or in part, under this Agreement, the Company
shall provide notice to Corange and BMC (in the case of Corange Tax
Liabilities), or shall provide notice to BMC and Corange (in the case of BMC Tax
Liabilities) of the same in writing within ten (10) business days, specifying in
reasonable detail the basis of such claim and the facts pertaining thereto, and
shall not make payment of the Tax claimed for at least thirty (30) days after
the giving of such notice. Corange (in the case of Corange Tax Liabilities) or
BMC (in the case of BMC Tax Liabilities), at its own cost and expense, shall be
entitled to control any such contest, including the determination of whether and
when to settle any such contest; provided, however, that Corange or BMC, as the
case may be, will consider in good faith any reasonable requests by the Company
regarding the conduct of such contest and will promptly, and in any event within
ten (10) business days, notify the Company of any action taken or proposed to be
taken from time to time by Corange or BMC, as the case may be, with respect to
such contest, and provided, further, that Corange and BMC will not settle any
such contest that would materially affect the Tax liability of the Company or
the DePuy Subsidiaries without the prior written consent of the Company, which
shall not be unreasonably withheld. The Company agrees to provide to Corange and
BMC (in the case of a contest regarding Corange Tax Liabilities) or to BMC and
Corange (in the case of a contest regarding BMC Tax Liabilities) promptly, and
in any event within ten (10) business days, copies of any correspondence or
notices received from time to time from the Internal Revenue Service or any
other taxing authority with respect to such contest.
(b) If Corange, BMC, any Corange Subsidiary or any BMC Subsidiary receives
any oral or written notices from the Internal Revenue Service or any other
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taxing authority that relate to the Company or the DePuy Subsidiaries, Corange
(on behalf of Corange or such Corange Subsidiary) or BMC (on behalf of BMC or
such BMC Subsidiary) shall provide written notice to the Company of the same in
writing within ten (10) business days. The Company, at its cost and expense,
shall be entitled to control any contests with respect to the Tax liability of
the Company or the DePuy Subsidiaries, except for contests subject to control by
Corange and BMC pursuant to this Agreement.
(c) Indemnification payments required pursuant to this Agreement shall
become due and payable upon a final determination of the liability for Taxes of
the relevant taxpayer; provided, however, that indemnification payments which
Corange is required to pay as guarantor pursuant to Section 1(c) hereof shall be
due and payable ten (10) business days after the Company notifies Corange that
BMC has defaulted on its obligations to make such indemnification payments in
accordance with this Agreement. A "final determination" shall be deemed to occur
with respect to a contest when (i) there is a decision, judgment, decree or
other order by any court of competent jurisdiction, which decision, judgment,
decree or other order has become final with respect to the taxpayer (i.e., all
allowable appeals have been exhausted by either party to the action or the time
period within which such appeal may be filed has expired), (ii) there is a
closing agreement or other administrative settlement with the Internal Revenue
Service or other taxing authority, (iii) the time for instituting a claim for
refund in respect of the taxpayer has expired, or, if a claim was filed, the
time for instituting suit with respect thereto has expired, or (iv) the Taxes
which are the subject of such contest are paid, and pursuant to written
agreement between the Company and Corange or BMC, no claim for refund is filed
and no further contest is pursued.
6. Consolidated or Combined Tax Liability. (a) With respect to any
consolidated Federal Tax liability or consolidated state Tax liability, BMC and
the BMC Subsidiaries shall be responsible for the aggregate amount of such Tax
liability of BMC and all BMC Subsidiaries that are members of the relevant
Consolidated Group, and the Company and the DePuy Subsidiaries shall be
responsible for the aggregate amount of such Tax liability of the Company and
all DePuy Subsidiaries that are members of the relevant Consolidated Group. A
member's share of such Taxes shall be calculated as if such member were not and
never were part of the Consolidated Group, but rather were a corporation filing
separate income tax returns; provided, however, that (i) the applicable Tax rate
shall be the relevant maximum statutory rate in effect during the relevant
taxable period (with any applicable surtax exemption being ratably apportioned
among the members), and (ii) in no event shall the Company's and the DePuy
Subsidiaries' share of any consolidated Federal Tax liability or consolidated
state Tax liability exceed the amount that would have constituted the Company's
and the DePuy Subsidiaries' share of such Tax liability if such share had been
calculated in the manner set forth in Treasury Regulation Sections 1.1552-
1(a)(2) and 1.1502-33(d)(2).
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(b) For purposes of paragraph (a) above, "Tax liability" (1) shall
exclude any liability for the payment of alternative minimum tax, and (2)
shall refer to an actual out-of-pocket payment to any taxing authority,
after taking into account the utilization of net operating losses and any
other Tax Assets.
(c) Any alternative minimum Tax liability (and any Tax Assets
attributable to such Tax liability) and any environmental Tax imposed under
Section 59A of the Code shall be allocated among the members of the
Consolidated Group in accordance with the formulas referenced in Proposed
Treasury Regulation Section 1.1502-5(b)(6). With respect to foreign tax
credits under the Code, any consolidated unused foreign tax credits of the
Consolidated Group shall be apportioned to the members of such Consolidated
Group pursuant to Treasury Regulation Section 1.1502-79(d).
(d) Any interest imposed in connection with any Tax liability shall be
allocated in the same manner as the underlying Tax liability, as provided
above.
(e) Any penalty imposed in connection with any Tax liability shall be
the responsibility of the party whose action or inaction resulted in the
imposition of such penalty; provided, however, that if such a determination
cannot be made, the penalty shall be allocated in the same manner as the
underlying Tax liability, as provided above.
7. Unitary Tax Liability. (a) BMC's share of any unitary state Tax
liability shall be, with respect to each state, the aggregate amount of
unitary state Tax liability of BMC and all BMC Subsidiaries that are
members of the relevant Consolidated Group. The Company's share of any
unitary state Tax liability shall be, with respect to each state, the
aggregate amount of unitary state Tax liability of the Company and all
DePuy Subsidiaries that are members of the relevant Consolidated Group. A
member's liability for its share of unitary state Tax shall be determined
in accordance with paragraph (c) of this Section 7; provided, however, that
credits and any minimum taxes shall be allocated to the member responsible
for the generation of such credit or minimum taxes.
(b) BMC's share of any unitary state Tax Assets shall be, with respect
to each state, the aggregate amount of unitary state Tax Assets of BMC and
all BMC Subsidiaries that are members of the relevant Consolidated Group.
The Company's share of any unitary state Tax Assets shall be, with respect
to each state, the aggregate amount of unitary state Tax Assets of the
Company and all DePuy Subsidiaries that are memebers of the relevant
Consolidated Group. A member's share of such unitary state Tax Assets
shall be determined in accordance with paragraph (c) of this Section 7.
(c) In the case of a member of the Consolidated Group, such member's
share of any unitary state Tax liability or unitary state Tax Asset shall
be determined in accordance with past practices.
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(d) Any interest imposed in connection with any Tax liability shall be
allocated in the same manner as the underlying Tax liability, as provided
above.
(e) Any penalty imposed in connection with any Tax liability shall be
the responsibility of the party whose action or inaction resulted in the
imposition of such penalty; provided, however, that if such a determination
cannot be made, the penalty shall be allocated in the same manner as the
underlying Tax liability, as provided above.
8. Allocation of Taxes To Certain Tax Periods. In the case of any
taxable period that includes but does not end on either the Closing Date or
the BMC Sale Date (any such taxable period, being hereinafter referred to
as a "Straddle Period"),
(a) real, personal and intangible property Taxes, other than transfer
and similar Taxes, ("Property Taxes") allocated to the Pre-Closing Tax
Period or the Pre-BMC Sale Tax Period, as the case may be, shall be equal
to the amount of such Property Taxes for the entire Straddle Period
multiplied by a fraction, the numerator of which is the number of days
during the Straddle Period that are in the Pre-Closing Tax Period or the
Pre-BMC Sale Tax Period, as applicable, and the denominator of which is the
number of days in the Straddle Period; and
(b) all Taxes (other than Property Taxes) for the Pre-Closing Tax
Period or the Pre-BMC Sale Tax Period, as the case may be, shall be
computed in accordance with the principles of Treasury Regulation Section
1.1502-76; provided, however, that the transfers and transactions
(including Taxes attributable thereto) which occur to effectuate the Pre-
Offering Reorganization shall be allocated to the Pre-Closing Tax Period or
the Pre-BMC Sale Tax Period, as the case may be, and provided, further,
however, that in the case of any Taxes attributable to the ownership of any
equity interest in any partnership or other "flow through" entity, the
Taxes allocated to the Pre-Closing Tax Period or the Pre-BMC Sale Tax
Period, as the case may be, shall be determined on a daily proration basis.
9. Credits and Refunds. (a) If the Company or any DePuy Subsidiary
receives from any taxing authority any refunds or credits of Taxes which
are attributable to any item of income, loss, credit, deduction or other
tax attribute of Corange, BMC, a Corange Subsidiary, or a BMC Subsidiary,
the Company shall pay, or cause to be paid, the amount of such refund or
credit, together with any related interest actually received or credited,
to Corange (if attributable to an item or other tax attribute of Corange or
a Corange Subsidiary) or to BMC (if attributable to an item or other tax
attribute of BMC or a BMC Subsidiary) within twenty (20) business days of
receipt.
(b) If Corange, BMC, a Corange Subsidiary or a BMC Subsidiary receives
from any taxing authority any refunds or credits of Taxes which are
attributable to any item of income, loss, credit, deduction or other tax
attribute of the Company or a DePuy Subsidiary, Corange (in the case of
refunds or credits received by Corange or a Corange
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Subsidiary) or BMC (in the case of refunds or credits received by BMC or a
BMC Subsidiary) shall pay, or caused to be paid, the amount of such refund
or credit, together with any related interest actually received or
credited, to the Company or to such DePuy Subsidiary within twenty (20)
business days of receipt.
(c) The determination as to whether a refund or credit is attributable
to an item or other tax attribute of Corange, BMC, a Corange Subsidiary, a
BMC Subsidiary, the Company or a DePuy Subsidiary, as the case may be,
shall be made under Section 6 hereof with respect to consolidated or
combined returns, under Section 7 hereof with respect to unitary returns,
and on a separate return basis with respect to separate returns.
10. Cooperation. Corange, BMC and the Company agree to cooperate in
all reasonable respects with respect to Tax matters contemplated by this
Agreement, which cooperation shall include executing and filing such
waivers, consents, forms, court petitions, refund claims (including filing
refund claims as may be directed by another party hereto), complaints,
powers of attorney and other documents needed from time to time in
connection with such Tax matters. The Company agrees to furnish timely,
and to cause each of the DePuy Subsidiaries to so furnish, Corange and BMC
with any and all information reasonably requested by Corange and BMC in
order to carry out the provisions of this Agreement. Corange and BMC agree
to furnish timely, and to cause each of their subsidiaries to so furnish,
the Company with any and all information reasonably requested by the
Company in order to carry out the provisions of this Agreement.
11. Computations. If Corange or BMC and the Company cannot agree on
any computation of any amount payable under this Agreement, such
computation shall be made by a nationally recognized independent public
accounting firm acceptable to both such parties and the decision of such
firm shall be final and binding. The fees and expenses incurred in
connection with such calculation shall be borne equally by the disputing
parties.
12. Offsets. No payment shall be required to be made by one party
(the "first party") to another party (the "second party") pursuant to this
Agreement to the extent that there is an amount then due and payable under
this Agreement by the second party to the first party.
13. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole
or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of,
and be enforceable by, the parties hereto and their respective successors
and assigns.
11
14. Survival. The provisions of this Agreement shall survive for the
full period of all applicable statutes of limitations (giving effect to any
waiver or extensions thereof) and sixty (60) days thereafter.
15. Notices. All notices, requests or other communications hereunder
shall be given or made in writing and shall be (i) delivered personally
(including commercial courier), (ii) sent by registered or certified
airmail, postage prepaid, or (iii) sent by telecopier, addressed to the
party to whom they are directed at the following addresses, or at such
other address as may be designated by notice from such party.
To the Company:
DePuy, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Senior Vice President and Chief Financial Officer
with a copy to:
DePuy, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Senior Vice President, General Counsel
and Secretary
To BMC:
Boehringer Mannheim Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President, Taxes
with a copy to:
Boehringer Mannheim Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
General Counsel and Secretary
12
To Corange:
Corange Limited
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇
▇.▇. ▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ HX
Bermuda
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Coudert Brothers
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Any notice, request or other communication given or made in the manner
prescribed in this Section shall be deemed to have been given and to be
effective upon receipt or refusal by the addressee, or if later upon such
later date as is specified therein. Any party may change its address for
notices hereunder, effective upon giving of notice of such change hereunder
to the other parties.
16. Governing Law. This Agreement is made and shall be construed in
all respects in accordance with the laws of the State of New York without
regards to its conflicts of laws principles. Any controversy concerning the
interpretation or operation of this Agreement shall be resolved first by
resort to good faith negotiation between the parties for up to thirty (30)
days and, if that fails, by submitting the issue to arbitration in
accordance with the commercial arbitration rules of Conciliation and
Arbitration of the International Chamber of Commerce by three (3)
arbitrators approved in accordance with such rules. Such arbitration shall
be conducted in New York City, New York. The award of the arbitrator(s)
shall be final and binding on the parties. Judgement upon the award
rendered by the arbitration may be entered in any court having jurisdiction
thereof.
17. Entire Agreement. This Agreement (a) constitutes the entire
agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of
this Agreement and (b) is not intended to confer upon any person other than
the parties hereto any rights or remedies.
18. Counterparts. This Agreement may be executed in any number of
duplicate counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.
13
19. Severability. In the event any of the provisions of this
Agreement are held to be unenforceable or invalid by any court of competent
jurisdiction, unless the unenforceability or invalidity thereof causes a
substantial departure from the underlying intent and sense of the remainder
of this Agreement, the validity and enforceability of the remaining
provisions shall not be affected thereby, except those remaining provisions
of which the unenforceable or invalidated provisions comprise an integral
part or from which they are otherwise clearly inseparable. In the event
any provision is held unenforceable or invalid, the parties shall use their
best efforts to agree upon an enforceable and valid provision which shall
be a reasonable substitute for such unenforceable or invalid provision in
light of the purpose of this Agreement and, upon so agreeing, shall
incorporate such substitute provision in this Agreement.
20. Headings. Headings of sections in this Agreement are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
21. Amendments. This Agreement may be modified, amended or
supplemented only by the mutual written agreement of the parties hereto.
[Remainder Of Page Intentionally Left Blank.]
14
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
DEPUY, INC.
By: _______________________________________
Name:
Title:
BOEHRINGER MANNHEIM
CORPORATION
By: _______________________________________
Name:
Title:
CORANGE LIMITED
By: _______________________________________
Name:
Title:
15
EXHIBIT A
---------
DEPUY SUBSIDIARIES
Name and Registered Office/Principal Place of Business of Subsidiaries
----------------------------------------------------------------------
DePuy Orthopadie GmbH DePuy Japan Incorporated
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ Sulzbach ▇▇-▇ ▇▇▇▇▇▇▇▇ ▇-▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇-▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇
De Puy A.G.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ Yooksung Building
706-725 Yoksam-▇▇▇▇
▇▇▇▇▇ Orthopedie SA Kangnam-ku
▇ ▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ Evry Cedex Korea
France
DePuy Far East Pte Ltd.
DePuy Italia S.r.L. 21 Collyer Quay
▇▇▇▇▇▇▇ ▇▇▇▇▇ Polo #14-02/03 (c/o May Oh & Wee)
Il Girasole Hong Kong Bank Building
20084 ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇ DePuy GmbH
Torfstecherstrasse 1
DePuy Iberica, S.A. 5111 Burmoos
Avenida ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Austria
Almagro 23
28029 Madrid DePuy Olmed AB
Spain Dag Hammerskjolds vag 12
75183 Uppsala
Medical Trivest SL Sweden
▇▇▇▇▇ ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Kereskedelmi Kft
Spain 1134 Budapest
Apaly vtoa 4/A
1X em ▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇.▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇ Ltd.
Konopistska 16 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
CZ-101 00 Prague 10 ▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
DePuy New Zealand Canada
Limited
▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ Orthopaedics, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Corange U.K. Holdings Ltd.
St. Anthony's Road DePuy Orthopaedic Technology, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
DePuy International Ltd. DePuy ACE Medical Company
St. Anthony's Road 2260 ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
England
DePuy DuPont Orthopedics Partnership
DePuy Joints S.A. ▇.▇. ▇▇▇ ▇▇▇
Uribu 663 ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
1027 Buenos Aires Warsaw, IN 46581
Argentina (50% owned)
DePuy Taiwan DePuy Motech, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Taipei, Taiwan (80% owned)
Republic of China
Expanded Optics, Inc.
DePuy Australia Pty Limited ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇ DePuy Overseas Trading Ltd.
Australia ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ S.A. De C.V.
Huizaches 25
Colonia Ranchos los Colorines
▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇
