EXHIBIT 2
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CONTRIBUTION AND DISTRIBUTION AGREEMENT
by and between
▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB COMPANY
and
▇▇▇▇▇▇ HOLDINGS, INC.
Dated as of [ ], 2001
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions ................................................3
ARTICLE II
THE CONTRIBUTION
SECTION 2.01. Transfer of Zimmer Assets and
Assumption of Zimmer Liabilities.............................14
SECTION 2.02. Zimmer Assets ................................................16
SECTION 2.03. Zimmer Liabilities.............................................17
SECTION 2.04. Termination of Agreements......................................19
SECTION 2.05. Transfer Documents.............................................21
SECTION 2.06. Ancillary Agreements...........................................21
SECTION 2.07. The Non-U.S. Plan..............................................21
SECTION 2.08. Disclaimer of Representations and
Warranties...................................................22
SECTION 2.09. Financing Arrangements.........................................23
SECTION 2.10. Consents and Governmental Approvals............................23
SECTION 2.11. Novation of Assumed Zimmer
Liabilities..................................................24
SECTION 2.12. Novation of Liabilities other than
Zimmer Liabilities...........................................26
ARTICLE III
THE DISTRIBUTION
SECTION 3.01. The Distribution...............................................27
SECTION 3.02. Actions Prior to the Distribution..............................28
SECTION 3.03. Charter; Bylaws; Rights Plan...................................29
SECTION 3.04. Sole Discretion of ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb.......................................................29
SECTION 3.05. Conditions to Distribution.....................................30
SECTION 3.06. Fractional Shares..............................................32
SECTION 3.07. The Zimmer Board of Directors..................................32
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ARTICLE IV
MUTUAL RELEASES; INDEMNIFICATION
SECTION 4.01. Release of Pre-Distribution Claims.............................33
SECTION 4.02. Indemnification by Zimmer......................................36
SECTION 4.03. Indemnification by ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb.......................................................37
SECTION 4.04. Indemnification Obligations Net of
Insurance Proceeds and Other
Amounts......................................................38
SECTION 4.05. Procedures for Indemnification of
Third Party Claims...........................................39
SECTION 4.06. Additional Matters.............................................42
SECTION 4.07. Remedies Cumulative............................................43
SECTION 4.08. Survival of Indemnities........................................43
ARTICLE V
CONTINGENT GAINS AND CONTINGENT LIABILITIES
SECTION 5.01. Definitions Relating to Contingent
Gains and Contingent Liabilities.............................43
SECTION 5.02. Contingent Gains...............................................47
SECTION 5.03. Exclusive Contingent Liabilities...............................48
SECTION 5.04. Shared Contingent Liabilities..................................48
SECTION 5.05. Payments.......................................................49
SECTION 5.06. Procedures to Determine Status of
Contingent Liability or Contingent
Gain.........................................................50
SECTION 5.07. Certain Case Allocation Matters................................51
SECTION 5.08. Termination of Certain Article V
Provisions...................................................51
ARTICLE VI
INTERIM OPERATIONS AND CERTAIN OTHER MATTERS
SECTION 6.01. Insurance Matters..............................................52
SECTION 6.02. Certain Business Matters.......................................52
SECTION 6.03. Late Payments..................................................52
ARTICLE VII
EXCHANGE OF INFORMATION; CONFIDENTIALITY
SECTION 7.01. Agreement for Exchange of
Information; Archives........................................53
SECTION 7.02. Ownership of Information.......................................54
SECTION 7.03. Compensation for Providing
Information..................................................54
SECTION 7.04. Record Retention...............................................55
SECTION 7.05. Limitations of Liability.......................................55
SECTION 7.06. Other Agreements Providing for
Exchange of Information......................................56
SECTION 7.07. Production of Witnesses; Records;
Cooperation..................................................56
SECTION 7.08. Confidentiality................................................57
SECTION 7.09. Protective Arrangements........................................58
ARTICLE VIII
DISPUTE RESOLUTION
SECTION 8.01. Disputes.......................................................59
SECTION 8.02. Escalation; Mediation..........................................59
SECTION 8.03. Court Actions..................................................60
ARTICLE IX
FURTHER ASSURANCES
SECTION 9.01. Further Assurances.............................................62
ARTICLE X
TERMINATION
SECTION 10.01. Termination....................................................63
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Counterparts; Entire Agreement;
Corporate Power..............................................64
SECTION 11.02. Governing Law .................................................65
SECTION 11.03. Assignability .................................................65
SECTION 11.04. Third Party Beneficiaries......................................65
SECTION 11.05. Notices........................................................66
SECTION 11.06. Severability...................................................66
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SECTION 11.07. Force Majeure .................................................67
SECTION 11.08. Publicity......................................................67
SECTION 11.09. Expenses.......................................................67
SECTION 11.10. Headings.......................................................67
SECTION 11.11. Survival of Covenants..........................................67
SECTION 11.12. Waivers of Default.............................................68
SECTION 11.13. Amendments.....................................................68
SECTION 11.14. Interpretation.................................................68
SCHEDULES
Schedule 1.01(a)(i) Combined International Entities
Schedule 1.01(a)(ii) Assets -- Combined International
Entities
Schedule 1.01(a)(iii) Non-U.S. Plan -- Combined International
Entities
Schedule 1.01(b) International Assets/Excluded
International Assets
Schedule 1.01(c) International Liabilities/Excluded
International Liabilities
Schedule 1.01(d) Other Assets
Schedule 1.01(e)(i) Zimmer International Entities
Schedule 1.01(e)(ii) Shares -- Zimmer International Entities
Schedule 1.01(e)(iii) Non-U.S. Plan -- Zimmer International
Entities
Schedule 1.01(f) List of Oldco Subsidiaries
Schedule 1.01(g) Non-U.S. Plan
Schedule 2.01(c) Delayed Transfer Assets and
Liabilities
Schedule 2.02(b)(i) List of Excluded Assets
Schedule 2.03(a)(i) Separation Costs Liabilities
Schedule 2.03(b)(i) List of Excluded Liabilities
Schedule 2.03(b)(vii) Separation Costs Excluded Liabilities
Schedule 2.04(b)(ii) Arrangements not to be Terminated
Schedule 4.01(c)(iii) Excluded Ordinary Course Liabilities
Schedule 4.01(c)(iv) Excluded Liabilities Due on a Value-
Received Basis
Schedule 5.01(d) Exclusive ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
Contingent Gains
Schedule 5.01(e) Exclusive ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
Contingent Liabilities
Schedule 5.01(h) Exclusive Zimmer Contingent Gains
Schedule 5.01(i) Exclusive Zimmer Contingent
Liabilities
Schedule 5.01(k) Shared Contingent Gains
Schedule 5.01(l) Shared Contingent Liabilities
Schedule 5.06 Pending Claims
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EXHIBITS
Exhibit A Restated By-laws of Zimmer
Exhibit B Restated Certificate of Incorporation
of Zimmer
Exhibit C Employee Benefits Agreement
Exhibit D Interim Services Agreement
Exhibit E Patent Assignments
Exhibit F Rights Agreement
Exhibit G Tax Sharing Agreement
THIS CONTRIBUTION AND DISTRIBUTION
AGREEMENT, dated as of [ ], 2001, is by and between
▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB COMPANY, a Delaware corporation
("▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB") and ▇▇▇▇▇▇ HOLDINGS, INC., a
Delaware corporation ("ZIMMER"). Capitalized terms
used herein and not otherwise defined shall have the
respective meanings assigned to them in Article I
hereof.
R E C I T A L S:
WHEREAS, the Board of Directors of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb has
determined that it is in the best interests of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and its
stockholders to separate ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb's orthopaedics business from its
other existing businesses;
WHEREAS, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb's orthopaedics business is
currently conducted in the United States by ▇▇▇▇▇▇, Inc., a Delaware corporation
and a wholly owned Subsidiary of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb ("OLDCO");
WHEREAS, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb's orthopaedics business is
currently conducted outside of the United States by (i) Oldco's wholly owned
Subsidiaries (the "OLDCO SUBSIDIARIES"), (ii) certain wholly owned Subsidiaries
of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb that only conduct business and operations that relate to
the distribution or sale of Oldco's products ("ZIMMER INTERNATIONAL ENTITIES")
and (iii) certain wholly owned Subsidiaries of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb that conduct
business and operations that relate to the distribution or sale of Oldco's
products and ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Business ("COMBINED INTERNATIONAL ENTITIES");
WHEREAS, subject to the terms and conditions set forth herein,
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb will contribute or transfer, or cause to be contributed or
transferred,
(i) all of the issued and outstanding capital stock of Oldco
and the Zimmer International Entities listed on Schedule 1.01(f)(ii)
(the "SHARES") to Zimmer;
(ii) the assets of the Combined International Entities listed
on Schedule 1.01(a)(ii) related to the
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Zimmer Business to Zimmer or other entities designated by Zimmer;
(iii) all of the capital stock and assets of the Zimmer
International Entities listed on Schedule 1.01(e)(iii) and the
Combined International Entities listed on Schedule 1.01(a)(iii) to be
transferred to Zimmer or other entities designated by Zimmer pursuant
to the Non-U.S. Plan (as defined in Section 1.01); and
(iv) the remaining assets comprising the Zimmer Assets as set
forth in Section 2.02(a) to Zimmer or other entities designated by
▇▇▇▇▇▇;
and ▇▇▇▇▇▇ will assume the Zimmer Liabilities as set forth in Section 2.03(a)
(collectively, the "CONTRIBUTION");
WHEREAS, in connection with the Contribution, ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb will distribute, on a pro rata basis, to holders of shares of common
stock, par value $0.10 per share, of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb ("▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB
COMMON STOCK") all of the outstanding shares of common stock, par value $0.01
per share, of Zimmer ("ZIMMER COMMON STOCK") owned directly or indirectly by
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb (the "DISTRIBUTION"); and
WHEREAS, the Contribution is intended to qualify as a tax-free
transaction under Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as
amended (the "CODE") and the Distribution is intended to qualify as a tax-free
spin-off under Section 355 of the Code;
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties, intending to
be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. For the purpose of this Agreement
the following terms shall have the following meanings:
"ACTION" means any demand, action, suit, counter suit,
arbitration, inquiry, proceeding or investigation by or before any Federal,
state, local, foreign or
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international Governmental Authority or any arbitration or mediation tribunal.
"AFFILIATE" of any Person means a Person that controls, is
controlled by, or is under common control with such Person. As used herein,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through ownership of voting securities or other interests, by contract or
otherwise.
"AGENT" means the distribution agent to be appointed by
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb to distribute to the stockholders of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
pursuant to the Distribution all of the shares of Zimmer Common Stock held by
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb.
"AGREEMENT" means this Contribution and Distribution
Agreement, including all of the Schedules and Exhibits hereto.
"ANCILLARY AGREEMENTS" means the Employee Benefits Agreement,
the Interim Services Agreement, the Tax Sharing Agreement, the Patent
Assignment, the agreements and other documents comprising the Non-U.S. Plan, any
sublease entered into on or prior to the Distribution Date between any member of
the ▇▇▇▇▇▇ Group, on the one hand, and any member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
Group, on the other hand, and the supplemental and other agreements and
instruments related to the any of the foregoing.
"▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB" has the meaning set forth in the
Preamble.
"▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB BUSINESS" means: (a)(i) the business and
operations of the divisions and Subsidiaries of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb which
produce, distribute and sell (1) pharmaceutical prescription and consumer
medicines, including cardiovascular, anti-cancer, anti-infective and central
nervous drugs and analgesics, skin care products, cough and cold remedies,
deodorants and anti-perspirants, (2) nutritionals, including infant formula
products, (3) medical devices, including osmotic and wound care products, but
excluding the Zimmer Business, and (4) beauty care products, including of
haircoloring and hair care preparation products, and (ii) all other businesses
of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb as of the date hereof not otherwise included in the
Zimmer Business; and (b) except as otherwise expressly provided herein, any
terminated, divested or
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discontinued businesses or operations that at the time of termination,
divestiture or discontinuation primarily related to the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
Business (as described in subsection (a) above) as then conducted.
"▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB COMMON STOCK" has the meaning set forth
in the Recitals.
"▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB GROUP" means ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and
each Person (other than any member of the Zimmer Group) that is an Affiliate of
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb immediately after the Distribution Date.
"▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB INDEMNITEES" has the meaning set forth
in Section 4.02.
"BYLAWS" means the Restated Bylaws of Zimmer, substantially
in the form attached hereto as Exhibit A.
"CERTIFICATE OF INCORPORATION" means the Restated Certificate
of Incorporation of Zimmer, substantially in the form attached hereto as
Exhibit B.
"CODE" has the meaning set forth in the Recitals.
"COMBINED INTERNATIONAL ENTITIES" has the meaning set forth in
the Recitals. A comprehensive list of the Combined International Entities is set
forth in Schedule 1.01(a) hereto.
"COMMISSION" means the Securities and Exchange Commission.
"CONSENTS" means any consents, waivers or approvals from, or
notification requirements to, any third parties.
"CONTINGENT CLAIM COMMITTEE" has the meaning set forth in
Section 5.01(a).
"CONTINGENT GAIN" has the meaning set forth in Section
5.01(b).
"CONTINGENT LIABILITIES" has the meaning set forth in Section
5.01(c).
"CONTRIBUTION" has the meaning set forth in the Recitals.
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"CONTRIBUTION DATE" means the Distribution Date or such other
date as ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb may determine.
"DELAYED TRANSFER ASSETS" means any Zimmer Assets that are
expressly provided in this Agreement or any Ancillary Agreement to be
transferred after the Distribution Date.
"DELAYED TRANSFER LIABILITIES" means any Zimmer Liabilities
that are expressly provided in this Agreement or any Ancillary Agreement to be
assumed after the Distribution Date.
"DETERMINATION REQUEST" means a written request made to the
Contingent Claim Committee, pursuant to Section 4.05(b), for a determination as
to whether a Third Party Claim specified in such request constitutes a Shared
Contingent Liability.
"DISTRIBUTION" has the meaning set forth in the Recitals.
"DISTRIBUTION DATE" has the meaning set forth in Section 3.04.
"EMPLOYEE BENEFITS AGREEMENT" means the Employee Benefits
Agreement by and between ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer, substantially in the
form attached hereto as Exhibit C, as of the Distribution Date and thereafter as
amended.
"ENVIRONMENTAL LAW" means any Federal, state, local, foreign
or international statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, common law (including tort and environmental
nuisance law), legal doctrine, order, judgment, decree, injunction, requirement
or agreement with any Governmental Authority, now or hereafter in effect
relating to health, safety, pollution or the environment (including ambient air,
surface water, groundwater, land surface or subsurface strata) or to emissions,
discharges, releases or threatened releases of any substance currently or at any
time hereafter listed, defined designated or classified as hazardous, toxic,
waste, radioactive or dangerous, or otherwise regulated, under any of the
foregoing, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of any such substances,
including the Comprehensive Environmental Response, Compensation and Liability
Act, the Superfund Amendments and Reauthorization Act and the Resource
6
Conservation and Recovery Act and comparable provisions in state, local, foreign
or international law.
"ENVIRONMENTAL LIABILITIES" means all Liabilities relating to,
arising out of or resulting from any Environmental Law or contract or agreement
relating to environmental, health or safety matters (including all removal,
remediation or cleanup costs, investigatory costs, governmental response costs,
natural resources damages, property damages, personal injury damages, costs of
compliance with any product take back requirements or with any settlement,
judgment or other determination of Liability and indemnity, contribution or
similar obligations) and all costs and expenses, interest, fines, penalties or
other monetary sanctions in connection therewith.
"ESCALATION NOTICE" has the meaning set forth in Section 8.02.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"EXCLUDED ASSETS" has the meaning set forth in Section
2.02(b).
"EXCLUDED EMPLOYEE LIABILITIES" means the employee-related
liabilities, as set forth in the Employee Benefits Agreement, retained by
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb related to
(a) U.S. employees of Zimmer under the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
pension plans and
(b) postretirement medical and life insurance benefits for
U.S. employees of Zimmer who have retired, or who are eligible to retire, as of
the Distribution Date.
"EXCLUDED INTERNATIONAL ASSETS" has the meaning set forth in
Schedule 1.01(b).
"EXCLUDED INTERNATIONAL LIABILITIES" has the meaning set forth
in Schedule 1.01(c).
"EXCLUDED LIABILITIES" has the meaning set forth in Section
2.03(b).
"EXCLUSIVE ▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB CONTINGENT GAIN" has the
meaning set forth in Section 5.01(d).
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"EXCLUSIVE ▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB CONTINGENT LIABILITY" has the
meaning set forth in Section 5.01(e).
"EXCLUSIVE CONTINGENT GAIN" has the meaning set forth in
Section 5.01(f).
"EXCLUSIVE CONTINGENT LIABILITY" has the meaning set forth in
Section 5.01(g).
"EXCLUSIVE ZIMMER CONTINGENT GAIN" has the meaning set forth
in Section 5.01(h).
"EXCLUSIVE ZIMMER CONTINGENT LIABILITY" has the meaning set
forth in Section 5.01(i).
"FINANCING FACILITY" means the credit facility to be entered
into prior to the Distribution Date by and among ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb, Zimmer,
and an agent or co-agents selected by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer, pursuant
to which, prior to the Distribution Date, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb will borrow an
amount determined by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and, as of the Distribution Date,
Zimmer will become the sole obligor and ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb will have no
further liability or obligation thereunder.
"GOVERNMENTAL APPROVALS" means any notices, reports or other
filings to be made, or any consents, registrations, approvals, permits or
authorizations to be obtained from, any Governmental Authority.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local,
foreign or international court, government, department, commission, board,
bureau, agency, official or other regulatory, administrative or governmental
authority.
"GROUP" means the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group or the ▇▇▇▇▇▇
Group, as the context requires.
"INDEMNIFYING PARTY" has the meaning set forth in Section
4.04(a).
"INDEMNITEE" has the meaning set forth in Section 4.04(a).
"INDEMNITY PAYMENT" has the meaning set forth in Section
4.04(a).
"INFORMATION" means information, whether or not patentable or
copyrightable, in written, oral, electronic or
8
other tangible or intangible forms, stored in any medium, including studies,
reports, records, books, contracts, instruments, surveys, discoveries, ideas,
concepts, know-how, techniques, designs, specifications, drawings, blueprints,
diagrams, models, prototypes, samples, flow charts, data, computer data, disks,
diskettes, tapes, computer programs or other software, marketing plans, customer
names, communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data.
"INFORMATION STATEMENT" means the information statement
forming a part of the Registration Statement.
"INSURANCE POLICIES" means the insurance policies written by
any insurance carrier, pursuant to which Zimmer or one or more of its
Subsidiaries (or their respective officers or directors) will be insured parties
after the Distribution Date.
"INSURANCE PROCEEDS" means those monies:
(a) received by an insured from an insurance carrier; or
(b) paid by an insurance carrier on behalf of the insured, in
any such case net of any applicable premium adjustments (including reserves and
retrospectively rated premium adjustments) and net of any costs or expenses
incurred in the collection thereof.
"INTERIM SERVICES AGREEMENT" means the Interim Services
Agreement by and between ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer, substantially in the
form attached hereto as Exhibit D, as of the Distribution Date and thereafter as
amended.
"INTERNATIONAL ASSETS" means the assets set forth in Schedule
1.01(b) and the capital stock and assets of the Zimmer International Entities
listed on Schedule 1.01(e)(iii) and the Combined International Entities listed
on Schedule 1.01(a)(iii) to be transferred to Zimmer or other entities
designated by Zimmer pursuant to the Non-U.S. Plan.
"INTERNATIONAL LIABILITIES" means the Liabilities set forth in
Schedule 1.01(c) and the Liabilities contemplated to be assumed by Zimmer or
other entities designated by Zimmer pursuant to the Non-U.S. Plan.
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"LIABILITIES" means any and all losses, claims, charges,
debts, demands, actions, causes of action, suits, damages, obligations,
payments, costs and expenses, sums of money, accounts, reckonings, bonds,
specialties, indemnities and similar obligations, exoneration, covenants,
contracts, controversies, agreements, promises, doings, omissions, variances,
guarantees, make whole agreements and similar obligations, and other liabilities
and requirements, including all contractual obligations, whether absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, and including those arising under
any law, rule, regulation, Action, threatened or contemplated Action (including
the costs and expenses of demands, assessments, judgments, settlements and
compromises relating thereto and attorneys' fees and any and all costs and
expenses, whatsoever reasonably incurred in investigating, preparing or
defending against any such Actions or threatened or contemplated Actions), order
or consent decree of any Governmental Authority or any award of any arbitrator
or mediator of any kind, and those arising under any contract, commitment or
undertaking, including those arising under this Agreement or any Ancillary
Agreement, in each case, whether or not recorded or reflected or required to be
recorded or reflected on the books and records or financial statements of any
Person.
"NON-U.S. PLAN" means the Non-U.S. Plan, comprised of the
series of transactions, agreements and other arrangements, pursuant to which
certain of the non-U.S. Zimmer Assets and Zimmer Liabilities will be transferred
between the parties hereto, which are set forth or described in Schedule 1.01(g)
(as such Schedule may be supplemented by mutual consent of the parties prior to
the Distribution Date).
"NYSE" means The New York Stock Exchange, Inc.
"OLDCO" has the meaning set forth in the Recitals.
"OLDCO SUBSIDIARIES" has the meaning set forth in the
Recitals. A comprehensive list of the Oldco Subsidiaries is set forth in
Schedule 1.01(f) hereto.
"OTHER ASSETS" means the assets listed on Schedule 1.01(d).
"PATENT ASSIGNMENT" means the Patent Assignment, by and
between ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer,
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substantially in the form attached hereto as Exhibit E, as of the Distribution
Date and thereafter as amended.
"PERSON" means an individual, a general or limited
partnership, a corporation, a trust, a joint venture, an unincorporated
organization, a limited liability entity, any other entity and any Governmental
Authority.
"PRIME RATE" means the rate which The Chase Manhattan Bank (or
any successor thereto or other major money center commercial bank agreed to by
the parties hereto) announces from time to time as its prime lending rate, as in
effect from time to time.
"RECORD DATE" means the close of business on the date to be
determined by the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Board of Directors as the record date for
determining stockholders of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb entitled to receive shares of
Zimmer Common Stock in the Distribution.
"REGISTRATION STATEMENT" means the registration statement on
Form 10 filed under the Exchange Act on March 26, 2001 pursuant to which the
Zimmer Common Stock to be distributed in the Distribution will be registered,
together with all amendments thereto.
"RIGHTS PLAN" means the Rights Agreement to be entered into
between ▇▇▇▇▇▇ and Mellon Investor Services LLC, as rights agent, substantially
in the form attached hereto as Exhibit F.
"SECURITIES ACT" means the Securities Act of 1933, together
with the rules and regulations promulgated thereunder.
"SECURITY INTEREST" means any mortgage, security interest,
pledge, lien, charge, claim, option, right to acquire, voting or other
restriction, right-of-way, covenant, condition, easement, encroachment,
restriction on transfer, or other encumbrance of any nature whatsoever.
"SHARED ▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB PERCENTAGE" has the meaning set
forth in Section 5.01(j).
"SHARED CONTINGENT GAIN" has the meaning set forth in Section
5.01(k).
"SHARED CONTINGENT LIABILITY" has the meaning set forth in
Section 5.01(l).
11
"SHARED PERCENTAGE" has the meaning set forth in Section
5.01(m).
"SHARED ▇▇▇▇▇▇ PERCENTAGE" has the meaning set forth in
Section 5.01(n).
"SHARES" has the meaning set forth in the Recitals.
"SUBSIDIARY" of any Person means any corporation or other
organization whether incorporated or unincorporated of which at least a majority
of the securities or interests having by the terms thereof ordinary voting power
to elect at least a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its Subsidiaries;
PROVIDED, HOWEVER, that no Person that is not directly or indirectly wholly
owned by any other Person shall be a Subsidiary of such other Person unless such
other Person controls, or has the right, power or ability to control, that
Person.
"TAX SHARING AGREEMENT" means the Tax Sharing Agreement by and
between ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and ▇▇▇▇▇▇, substantially in the form attached
hereto as Exhibit G, as of the Distribution Date and thereafter as amended.
"TAXES" has the meaning set forth in the Tax Sharing
Agreement.
"THIRD PARTY CLAIM" has the meaning set forth in Section
4.05(a).
"▇▇▇▇▇▇" has the meaning set forth in the Preamble.
"▇▇▇▇▇▇ ASSETS" has the meaning set forth in Section 2.02(a).
"▇▇▇▇▇▇ BALANCE SHEET" means the audited combined balance
sheet of ▇▇▇▇▇▇, including the notes thereto, as of December 31, 2000, as
presented in the Information Statement.
"▇▇▇▇▇▇ BUSINESS" means (a) the business and operations of (i)
Oldco, (ii) the Oldco Subsidiaries, (iii) the ▇▇▇▇▇▇ International Entities and
(iv) the Combined
12
International Entities, but only to the extent that such Combined International
Entities' business and operations relate to the distribution or sale of Oldco's
products and (b) except as otherwise expressly provided herein, any terminated,
divested or discontinued businesses or operations that at the time of
termination, divestiture or discontinuation primarily related to the ▇▇▇▇▇▇
Business (as described in subsection (a) above) as then conducted, but in any
event not the businesses and operations related to the Excluded Assets.
"▇▇▇▇▇▇ COMMON STOCK" has the meaning set forth in the
Recitals.
"▇▇▇▇▇▇ GROUP" means ▇▇▇▇▇▇, each Subsidiary of ▇▇▇▇▇▇ and
each other Person that is either controlled directly or indirectly by ▇▇▇▇▇▇
immediately after the Distribution Date or that is contemplated to be controlled
by ▇▇▇▇▇▇ pursuant to the terms hereof or the Non-U.S. Plan.
"▇▇▇▇▇▇ INDEMNITEES" has the meaning set forth in Section
4.03(a).
"▇▇▇▇▇▇ INTERNATIONAL ENTITIES" has the meaning set forth in
the Recitals. A comprehensive list of the ▇▇▇▇▇▇ International Entities is set
forth in Schedule 1.01(e)(i) hereto.
"▇▇▇▇▇▇ LIABILITIES" has the meaning set forth in Section
2.03(a).
ARTICLE II
THE CONTRIBUTION
SECTION 2.01. TRANSFER OF ▇▇▇▇▇▇ ASSETS AND ASSUMPTION OF
▇▇▇▇▇▇ LIABILITIES. (a) On the terms and subject to the conditions set forth in
this Agreement and with effect as of the Contribution Date, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
hereby contributes, assigns, transfers, conveys and delivers to ▇▇▇▇▇▇, and
agrees to cause its applicable Subsidiaries to contribute, assign, transfer,
convey and deliver to ▇▇▇▇▇▇, and ▇▇▇▇▇▇ hereby accepts from ▇▇▇▇▇▇▇- ▇▇▇▇▇
Squibb and its Subsidiaries, all of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb's and its Subsidiaries'
respective rights, title and interest in and to all ▇▇▇▇▇▇ Assets, other than
the Delayed Transfer Assets.
13
(b) On the terms and subject to the conditions set forth in
this Agreement and with effect as of the Contribution Date, ▇▇▇▇▇▇ hereby
accepts, assumes and agrees faithfully to perform, discharge and fulfill all the
▇▇▇▇▇▇ Liabilities, other than the Delayed Transfer Liabilities, in accordance
with their respective terms. ▇▇▇▇▇▇ shall be responsible for all ▇▇▇▇▇▇
Liabilities, regardless of when or where such Liabilities arose or arise, or
whether the facts on which they are based occurred prior to or subsequent to the
date hereof, regardless of where or against whom such Liabilities are asserted
or determined (including any ▇▇▇▇▇▇ Liabilities arising out of claims made by
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb's, or ▇▇▇▇▇▇'▇ respective directors, officers, employees,
agents, Subsidiaries or Affiliates against any member of the ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb Group or the ▇▇▇▇▇▇ Group) or whether asserted or determined prior to the
date hereof, and regardless of whether arising from or alleged to arise from
negligence, recklessness, violation of law, fraud or misrepresentation by any
member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group or the ▇▇▇▇▇▇ Group or any of their
respective directors, officers, employees, agents, Subsidiaries or Affiliates.
(c) Each of the parties hereto agrees that the Delayed
Transfer Assets will be contributed, assigned, transferred, conveyed and
delivered, and the Delayed Transfer Liabilities will be accepted and assumed, in
accordance with the terms of the agreements that provide for such contribution,
assignment, transfer, conveyance and delivery, or such acceptance and
assumption, after the date of this Agreement or as otherwise set forth on
Schedule 2.01(c). Following such contribution, assignment, transfer, conveyance
and delivery of any Delayed Transfer Asset, or the acceptance and assumption of
any Delayed Transfer Liability, the applicable Delayed Transfer Asset or Delayed
Transfer Liability shall be treated for all purposes of this Agreement and the
Ancillary Agreements as a ▇▇▇▇▇▇ Asset or a ▇▇▇▇▇▇ Liability, as the case may
be.
(d) Each of the parties hereto agrees that until any Delayed
Transfer Asset is contributed to ▇▇▇▇▇▇ or an entity designated by ▇▇▇▇▇▇,
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and ▇▇▇▇▇▇ shall cooperate (at their own expense) in any
lawful and commercially reasonable arrangement proposed by ▇▇▇▇▇▇▇- ▇▇▇▇▇ Squibb
under which ▇▇▇▇▇▇ or an entity designated by ▇▇▇▇▇▇ shall obtain the economic
claims, rights and benefits under such Delayed Transfer Asset.
14
(e) Each of the parties hereto agrees that until any Delayed
Transfer Liability is assumed by ▇▇▇▇▇▇ or an entity designated by ▇▇▇▇▇▇,
▇▇▇▇▇▇ will indemnify and hold harmless the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group from such
Delayed Transfer Liability.
(f) In the event that any Delayed Transfer Asset has not been
contributed to ▇▇▇▇▇▇ or an entity designated by ▇▇▇▇▇▇ by December 31, 2001,
for any reason other than the gross negligence or wilful misconduct of any
member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall have the
option to liquidate such Delayed Transfer Asset at ▇▇▇▇▇▇'▇ expense; PROVIDED,
HOWEVER, that any net proceeds of such liquidation shall be for the account of
▇▇▇▇▇▇.
(g) In the event that at any time or from time to time
(whether prior to or after the Distribution Date), any party hereto (or any
member of such party's respective Group), shall receive or otherwise possess any
asset that is allocated to any other Person pursuant to this Agreement or any
Ancillary Agreement, such party shall promptly transfer, or cause to be
transferred, such asset to the Person so entitled thereto.
SECTION 2.02. ▇▇▇▇▇▇ ASSETS. (a) For purposes of this
Agreement, "▇▇▇▇▇▇ ASSETS" shall mean (without duplication):
(i) the Shares;
(ii) the International Assets;
(iii) the Other Assets;
(iv) subject to the terms of Article V, any Exclusive ▇▇▇▇▇▇
Contingent Gain and any Shared ▇▇▇▇▇▇ Percentage of any Shared
Contingent Gain; and
(v) except as expressly provided in this Agreement or any
Ancillary Agreement, any and all assets owned or held immediately prior
to the Distribution Date by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or any of its
Subsidiaries that are used primarily in the ▇▇▇▇▇▇ Business. The
intention of this clause (v) is only to rectify any inadvertent
omission of transfer or conveyance of any assets that, had the parties
given specific consideration to such asset as of the date hereof, would
have otherwise been classified as a ▇▇▇▇▇▇ Asset. No asset shall be
deemed to be a ▇▇▇▇▇▇ Asset solely as
15
a result of this clause (v) if such asset is expressly covered by the
subject matter of an Ancillary Agreement or utilized by ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb or its Affiliates to provide shared services to the ▇▇▇▇▇▇
Business or the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Business. In addition, no asset
shall be deemed a ▇▇▇▇▇▇ Asset solely as a result of this clause (v)
unless ▇▇▇▇▇▇ makes a claim with respect thereto on or prior to the
first anniversary of the Distribution Date.
(b) Notwithstanding Section 2.02(a), the ▇▇▇▇▇▇ Assets shall
not in any event include the Excluded Assets. For the purposes of this
Agreement, "EXCLUDED ASSETS" shall mean:
(i) the assets listed or described on Schedule 2.02(b)(i);
(ii) the Excluded International Assets;
(iii) any and all assets that are expressly contemplated by
this Agreement or any Ancillary Agreement (or the Schedules hereto or
thereto) as assets to be retained by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or any other
member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group; and
(iv) except to the extent expressly set forth in
Section 2.02(a)(iv), any Contingent Gains.
SECTION 2.03. ▇▇▇▇▇▇ LIABILITIES. (a) For purposes of this
Agreement, "▇▇▇▇▇▇ LIABILITIES" shall mean (without duplication):
(i) any and all Liabilities of Oldco, the Oldco Subsidiaries
and the ▇▇▇▇▇▇ International Entities listed in Schedule 1.01(e)(ii),
including any and all Liabilities relating to the separation costs and
expenses set forth in Schedule 2.03(a)(i);
(ii) any and all International Liabilities;
(iii) all Liabilities (other than federal income Taxes and
State Income Taxes for the Pre-Distribution Period, each as defined in
the Tax Sharing Agreement), including any employee-related Liabilities
(other than Excluded Employee Liabilities) and Environmental
Liabilities, primarily relating to, arising out of or resulting from:
16
(A) the operation of the ▇▇▇▇▇▇ Business, as
conducted at any time prior to, on or after the Distribution Date (including any
Liability relating to, arising out of or resulting from any act or failure to
act by any director, officer, employee, agent or representative (whether or not
such act or failure to act is or was within such Person's authority));
(B) the operation of any business conducted
by any member of the ▇▇▇▇▇▇ Group at any time after the Distribution Date
(including any Liability relating to, arising out of or resulting from any act
or failure to act by any director, officer, employee, agent or representative
(whether or not such act or failure to act is or was within such Person's
authority)); or
(C) any ▇▇▇▇▇▇ Assets;
in any such case whether arising before, on or after the Distribution Date;
(iv) subject to the terms of Article V, all Exclusive ▇▇▇▇▇▇
Contingent Liabilities and the Shared ▇▇▇▇▇▇ Percentage of any Shared
Contingent Liabilities;
(v) all Liabilities relating to, arising out of or resulting
from the Financing Facility, including any third party costs and
expenses incurred by any member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group;
(vi) all Liabilities relating to, arising out of or resulting
from any of the terminated, divested or discontinued businesses and
operations of the ▇▇▇▇▇▇ Business (other than the Liabilities set forth
on Schedule 2.03(b)(i); and
(vii) all Liabilities reflected as liabilities or obligations
of ▇▇▇▇▇▇ in the ▇▇▇▇▇▇ Balance Sheet, subject to any discharge of such
Liabilities subsequent to the date of the ▇▇▇▇▇▇ Balance Sheet.
(b) Notwithstanding Section 2.03(a), the ▇▇▇▇▇▇ Liabilities shall not
include the Excluded Liabilities. For the purposes of this Agreement, "EXCLUDED
LIABILITIES" shall mean:
(i) any Liabilities listed on Schedule 2.03(b)(i) hereto;
17
(ii) the Excluded International Liabilities;
(iii) the Excluded Employee Liabilities;
(iv) any and all liabilities relating to, arising out of or
resulting from any Excluded Assets;
(v) subject to the terms of Article V, all Exclusive
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Contingent Liabilities and the Shared
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Percentage of any Shared Contingent Liabilities;
(vi) except as set forth in any Ancillary Agreement, all
Environmental Liabilities accrued as of the date hereof solely relating
to, arising out of or resulting from the existence of any leasehold
interest that is a ▇▇▇▇▇▇ Asset if the applicable lessor, sublessor or
sub-sublessor under the applicable lease, sublease or subsublease is a
member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group; and
(vii) any and all Liabilities relating to the separation costs
and expenses set forth in Schedule 2.03(b)(vii).
SECTION 2.04. TERMINATION OF AGREEMENTS. (a) Except as set
forth in Section 2.04(b), in furtherance of the releases and other provisions of
Section 4.01 hereof, ▇▇▇▇▇▇ and each member of the ▇▇▇▇▇▇ Group, on the one
hand, and ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and each member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
Group, on the other hand, hereby terminate, any and all agreements,
arrangements, commitments or understandings, whether or not in writing, between
or among ▇▇▇▇▇▇ and/or any member of the ▇▇▇▇▇▇ Group, on the one hand, and
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and/or any member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group, on the
other hand, effective as of the Distribution Date. No such terminated agreement,
arrangement, commitment or understanding (including any provision thereof which
purports to survive termination) shall be of any further force or effect after
the Distribution Date. Each party shall, at the reasonable request of any other
party, take, or cause to be taken, such other actions as may be necessary to
effect the foregoing.
(b) The provisions of Section 2.04(a) shall not apply to any
of the following agreements, arrangements, commitments or understandings (or to
any of the provisions thereof): (i) this Agreement and the Ancillary Agreements
(and each other agreement or instrument expressly
18
contemplated by this Agreement or any Ancillary Agreement to be entered into
by any of the parties hereto or any of the members of their respective
Groups); (ii) any agreements, arrangements, orders, commitments or
understandings listed or described on Schedule 2.04(b)(ii); (iii) any
agreements, arrangements, commitments or understandings to which any Person
other than the parties hereto and their respective Affiliates is a party (it
being understood that to the extent that the rights and obligations of the
parties and the members of their respective Groups under any such agreements,
arrangements, commitments or understandings constitute ▇▇▇▇▇▇ Assets or
▇▇▇▇▇▇ Liabilities, they shall be assigned pursuant to Section 2.01); (iv)
any agreements, arrangements, commitments or understandings to which any
non-wholly owned Subsidiary of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or ▇▇▇▇▇▇, as the case
may be, is a party (it being understood that directors' qualifying shares or
similar interests will be disregarded for purposes of determining whether a
Subsidiary is wholly owned); and (v) any other agreements, arrangements,
commitments or understandings that this Agreement or any Ancillary Agreement
expressly contemplates will survive the Distribution Date.
SECTION 2.05. TRANSFER DOCUMENTS. In furtherance of the
contribution, assignment, transfer and conveyance of ▇▇▇▇▇▇ Assets and the
acceptance and assumption of ▇▇▇▇▇▇ Liabilities set forth in Section 2.01(a) and
2.01(b), simultaneously with the execution and delivery hereof or as promptly as
practicable thereafter, (i) ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall execute and deliver, and
shall cause its Subsidiaries to execute and deliver, such bills of sale, stock
powers, certificates of title, assignments of contracts and other instruments of
transfer, conveyance and assignment as and to the extent necessary to evidence
the transfer, conveyance and assignment of all of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb's and its
Subsidiaries' right, title and interest in and to the ▇▇▇▇▇▇ Assets to ▇▇▇▇▇▇
and (ii) ▇▇▇▇▇▇ shall execute and deliver, to ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and its
Subsidiaries such bills of sale, stock powers, certificates of title,
assumptions of contracts and other instruments of assumption as and to the
extent necessary to evidence the valid and effective assumption of the ▇▇▇▇▇▇
Liabilities by ▇▇▇▇▇▇.
SECTION 2.06. ANCILLARY AGREEMENTS. Effective on or prior to
the Distribution Date, the parties shall execute
19
and deliver each of the following Ancillary Agreements to which it is a party:
(i) the Employee Benefits Agreement;
(ii) the Interim Services Agreement;
(iii) the Tax Sharing Agreement;
(iv) the Patent Assignment;
(v) the agreements and other documents comprising the
Non-U.S. Plan; and
(vi) the supplemental and other agreements and instruments
related to the foregoing.
SECTION 2.07. THE NON-U.S. PLAN. Each of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
and ▇▇▇▇▇▇ shall take, and shall cause each member of its respective Group to
take, such action as reasonably necessary to consummate the transactions
contemplated by the Non-U.S. Plan (whether prior to or after the Distribution
Date). Notwithstanding anything in this Agreement or in any Ancillary Agreement
to the contrary, no party shall be entitled to receive or retain any asset
unless such party shall have paid any consideration contemplated to be paid in
connection therewith pursuant to the Non-U.S. Plan.
SECTION 2.08. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES.
(a) Each of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb (on behalf of itself and each member of the
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group), and ▇▇▇▇▇▇ (on behalf of itself and each member of
the ▇▇▇▇▇▇ Group) understands and agrees that, except as expressly set forth
herein or in any Ancillary Agreement, no party to this Agreement, any Ancillary
Agreement or any other agreement or document contemplated by this Agreement, any
Ancillary Agreement or otherwise, is representing or warranting in any way as to
the ▇▇▇▇▇▇ Assets or the ▇▇▇▇▇▇ Liabilities transferred or assumed as
contemplated hereby or thereby, as to any consents or approvals required in
connection therewith, as to the value or freedom from any Security Interests of,
or any other matter concerning, any ▇▇▇▇▇▇ Asset, or as to the absence of any
defenses or right of setoff or freedom from counterclaim with respect to any
claim or other ▇▇▇▇▇▇ Asset, including any accounts receivable, of any party, or
as to the legal sufficiency of any assignment, document or instrument delivered
hereunder to convey title to any ▇▇▇▇▇▇ Asset or thing of value upon
20
the execution, delivery and filing hereof or thereof. Except as may expressly be
set forth herein or in any Ancillary Agreement, all such ▇▇▇▇▇▇ Assets are being
transferred on an "as is," "where is" basis (and, in the case of any real
property, by means of a quitclaim or similar form deed or conveyance) and the
respective transferees shall bear the economic and legal risks that (i) any
conveyance shall prove to be insufficient to vest in the transferee good and
marketable title, free and clear of any Security Interest, and (ii) any
necessary Consents or Governmental Approvals are not obtained or that any
requirements of laws or judgments are not complied with.
SECTION 2.09. FINANCING ARRANGEMENTS. Prior to the
Distribution Date, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and ▇▇▇▇▇▇ will enter into the Financing
Facility. ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and ▇▇▇▇▇▇ agree to take all such reasonable
action as may be necessary to permit ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb to borrow such amount
as it shall determine under the Financing Facility prior to the Distribution
Date and to assure the assignment to and the assumption by ▇▇▇▇▇▇ of all
obligations thereunder and the full release and discharge of each of
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and any other member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group of
all of its obligations thereunder as of the Distribution Date in accordance with
the terms of the Financing Facility. ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and ▇▇▇▇▇▇ shall
participate in the preparation of all materials as may be reasonably necessary
to secure funding pursuant to the Financing Facility, including rating agency
presentations necessary to obtain the requisite ratings needed to secure the
financing under the Financing Facility and such assignment, assumption, release
and discharge. As of the time of such assignment, assumption, release and
discharge, ▇▇▇▇▇▇ shall pay all third party costs and expenses incurred by any
member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group associated with the Financing Facility.
SECTION 2.10. CONSENTS AND GOVERNMENTAL APPROVALS. (a) To the
extent that the Contribution requires any Consents or Governmental Approvals,
the parties will use their reasonable efforts to obtain any such Consents and
Governmental Approvals.
(b) If and to the extent that the valid, complete and
perfected transfer or assignment to the ▇▇▇▇▇▇ Group of any ▇▇▇▇▇▇ Assets would
be a violation of applicable law or require any Consent or Governmental Approval
in connection with the Contribution or the Distribution, then, unless
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall otherwise determine, the transfer
21
or assignment to the ▇▇▇▇▇▇ Group of such ▇▇▇▇▇▇ Assets shall be automatically
deemed deferred and any such purported transfer or assignment shall be null and
void until such time as all legal impediments are removed and/or such Consents
or Governmental Approvals have been obtained and such asset shall be deemed a
Delayed Transfer Asset. Notwithstanding the foregoing, any such asset shall be
deemed a ▇▇▇▇▇▇ Asset for purposes of determining whether any Liability is a
▇▇▇▇▇▇ Liability.
(c) If the transfer or assignment of any ▇▇▇▇▇▇ Asset intended
to be transferred or assigned hereunder including pursuant to the Non-U.S. Plan,
is not consummated prior to or at the Distribution Date, whether as a result of
the provisions of Section 2.10(b) or for any other reason, then the Person
retaining such ▇▇▇▇▇▇ Asset shall thereafter hold such ▇▇▇▇▇▇ Asset for the use
and benefit insofar as reasonably possible, of ▇▇▇▇▇▇ (at ▇▇▇▇▇▇'▇ expense). In
addition, the Person retaining such ▇▇▇▇▇▇ Asset shall take such other actions
as may be reasonably requested by ▇▇▇▇▇▇ in order to place ▇▇▇▇▇▇, insofar as
reasonably possible, in the same position as if such ▇▇▇▇▇▇ Asset had been
transferred as contemplated hereby and so that all the benefits and burdens
relating to such ▇▇▇▇▇▇ Assets, including possession, use, risk of loss,
potential for gain, and dominion, control and command over such assets, are to
inure from and after the Distribution Date to the ▇▇▇▇▇▇ Group.
(d) If and when the Consents and/or Governmental Approvals,
the absence of which caused the deferral of transfer of any ▇▇▇▇▇▇ Asset
pursuant to Section 2.10(b), are obtained, the transfer of the applicable ▇▇▇▇▇▇
Asset shall be effected in accordance with the terms of this Agreement and/or
the applicable Ancillary Agreement.
(e) The Person retaining any ▇▇▇▇▇▇ Asset due to the deferral
of the transfer of such ▇▇▇▇▇▇ Asset shall not be obligated, in connection with
the foregoing, to expend any money unless the necessary funds are advanced by
▇▇▇▇▇▇, other than reasonable out-of-pocket expenses, attorneys' fees and
recording or similar fees, all of which shall be promptly reimbursed by ▇▇▇▇▇▇.
SECTION 2.11. NOVATION OF ASSUMED ▇▇▇▇▇▇ LIABILITIES. (a) Each
of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and ▇▇▇▇▇▇, at the request of the other, shall use its
reasonable efforts to obtain, or to cause to be obtained, any consent,
substitution, approval or amendment required to novate or
22
assign all obligations under agreements, leases, licenses and other obligations
or Liabilities of any nature whatsoever that constitute ▇▇▇▇▇▇ Liabilities,
including any ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group guarantees of ▇▇▇▇▇▇ Liabilities, or to
obtain in writing the unconditional release of all parties to such arrangements
other than any member of the ▇▇▇▇▇▇ Group, so that, in any such case, ▇▇▇▇▇▇ and
its Subsidiaries will be solely responsible for such Liabilities; PROVIDED,
HOWEVER, that neither ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb nor ▇▇▇▇▇▇ shall be obligated to pay
any consideration therefor to any third party from whom such consents,
approvals, substitutions and amendments are requested.
(b) If ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or ▇▇▇▇▇▇ is unable to obtain, or
to cause to be obtained, any such required consent, approval, release,
substitution or amendment, the applicable member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
Group shall continue to be bound by such agreements, leases, licenses and other
obligations and, unless not permitted by law or the terms thereof, ▇▇▇▇▇▇ shall,
as agent or subcontractor for ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or such other Person and
where appropriate in the name thereof, as the case may be, pay, perform and
discharge fully all the obligations or other Liabilities of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
or such other Person, as the case may be, thereunder from and after the
Distribution Date. ▇▇▇▇▇▇ shall indemnify each ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Indemnitee
and hold each of them harmless against any Liabilities arising in connection
therewith. ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall, without further consideration, pay and
remit, or cause to be paid or remitted to ▇▇▇▇▇▇ promptly all money, rights and
other consideration received by it or any member of its Group in respect of such
performance (unless any such consideration is an Excluded Asset). If and when
any such consent, approval, release, substitution or amendment shall be obtained
or such agreement, lease, license or other rights or obligations shall otherwise
become assignable or able to be novated, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall thereafter
assign, or cause to be assigned, all its rights, obligations and other
Liabilities thereunder or any rights or obligations of any member of its Group
to ▇▇▇▇▇▇ without payment of further consideration and ▇▇▇▇▇▇ shall, without the
payment of any further consideration, assume such rights and obligations.
SECTION 2.12. NOVATION OF LIABILITIES OTHER THAN ▇▇▇▇▇▇
LIABILITIES. (a) Each of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and ▇▇▇▇▇▇, at the request of the
other, shall use its reasonable efforts to obtain, or to cause to be obtained,
23
any consent, substitution, approval or amendment required to novate or assign
all Excluded Liabilities, or to obtain in writing the unconditional release from
any Excluded Liability of all members of the ▇▇▇▇▇▇ Group, so that, in any such
case, the members of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group will be solely responsible
for such Excluded Liabilities; PROVIDED, HOWEVER, that neither ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb nor ▇▇▇▇▇▇ shall be obligated to pay any consideration therefor to any
third party from whom such consents, approvals, substitutions and amendments are
requested.
(b) If ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or ▇▇▇▇▇▇ is unable to obtain, or
to cause to be obtained, any such required consent, approval, release,
substitution or amendment, the applicable member of the ▇▇▇▇▇▇ Group shall
continue to be bound by such agreements, leases, licenses and other obligations
under which such Excluded Liabilities arise and, unless not permitted by law or
the terms thereof, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall cause a member of the
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group, as agent or subcontractor for such member of the
▇▇▇▇▇▇ Group and where appropriate in the name thereof, to pay, perform and
discharge fully all the Excluded Liabilities of such member of the ▇▇▇▇▇▇ Group
thereunder from and after the Distribution Date. ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall
indemnify each ▇▇▇▇▇▇ Indemnitee and hold each of them harmless against any
Excluded Liabilities arising in connection therewith. ▇▇▇▇▇▇ shall cause each
member of the ▇▇▇▇▇▇ Group without further consideration, to pay and remit, or
cause to be paid or remitted, to ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or to another member of
the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group specified by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb promptly all
money, rights and other consideration received by it or any member of the ▇▇▇▇▇▇
Group in respect of such performance. If and when any such consent, approval,
release, substitution or amendment shall be obtained or such agreement, lease,
license or other rights or obligations shall otherwise become assignable or able
to be novated, ▇▇▇▇▇▇ shall promptly assign, or cause to be assigned, all
Excluded Liabilities and related rights thereunder or any such Excluded
Liabilities and related rights of any member of the ▇▇▇▇▇▇ Group to
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or to another member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group
specified by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb without payment of further consideration and
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb, without the payment of any further consideration shall, or
shall cause such other member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group to, assume such
rights and Excluded Liabilities.
24
ARTICLE III
THE DISTRIBUTION
SECTION 3.01. THE DISTRIBUTION. (a) ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and
Zimmer shall use their reasonable efforts to consummate the Distribution. Such
actions shall include, but not necessarily be limited to, those specified in
this Article III.
(b) Subject to Section 3.05 hereof, on or prior to the
Distribution Date, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb will deliver to the Agent for the
benefit of holders of record of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Common Stock on the Record
Date, a single stock certificate, endorsed by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb in blank,
representing all of the outstanding shares of Zimmer Common Stock then owned by
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or any member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group, and shall
cause the transfer agent for the shares of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Common Stock to
instruct the Agent to distribute on the Distribution Date the appropriate number
of such shares of Zimmer Common Stock to each such holder or designated
transferee or transferees of such holder. The Distribution shall be effective at
11:59 p.m. Eastern Standard Time on the Distribution Date.
(c) Subject to Sections 3.05 and 3.06, each holder of
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Common Stock on the Record Date (or such holder's
designated transferee or transferees) will be entitled to receive in the
Distribution a number of shares of Zimmer Common Stock equal to the number of
shares of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Common Stock held by such holder on the Record
Date multiplied by the distribution ratio to be determined by ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb's Board of Directors when it declares the Distribution. The
distribution ratio to be determined by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb is intended to
approximate a fraction the numerator of which is the number of shares of
Zimmer Common Stock beneficially owned by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or any other
member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group on the Distribution Date and the
denominator of which is the number of shares of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Common
Stock outstanding on the Record Date. ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer, as the
case may be, will provide to the Agent all share certificates and any
information required in order to complete the Distribution on the basis
specified above.
SECTION 3.02. ACTIONS PRIOR TO THE DISTRIBUTION.(a)
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer shall cooperate in preparing, and Zimmer shall
file, the
25
Registration Statement, and such amendments or supplements thereto, as may be
necessary in order to cause the same to become and remain effective as required
by law, including filing such amendments to the Registration Statement as may be
required by the Commission or Federal, state or foreign securities laws.
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer shall also cooperate in preparing, filing with
the Commission and causing to become effective registration statements or
amendments thereof which are required to reflect the establishment of, or
amendments to, any employee benefit and other plans necessary or appropriate in
connection with the Contribution, the Distribution or the other transactions
contemplated by this Agreement and the Ancillary Agreements.
(b) Zimmer shall participate in the preparation of materials
and presentations as ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb's financial advisors shall deem
necessary or desirable.
(c) ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer shall prepare and mail, on
or prior to the Distribution Date, to the holders of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Common
Stock, such information concerning Zimmer, its business, operations and
management, the Distribution and such other matters as ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
shall reasonably determine and as may be required by law. ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
and Zimmer will prepare, and Zimmer will, to the extent required under
applicable law, file with the Commission any such documentation and any
requisite no action letters which ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb determines are necessary
or desirable to effectuate the Distribution and ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer
shall each use its reasonable efforts to obtain all necessary approvals from the
Commission with respect thereto as soon as practicable.
(d) ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer shall take all such action
as may be necessary or appropriate under the securities or blue sky laws of the
United States (and any comparable laws under any foreign jurisdiction) in
connection with the Distribution.
(e) ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer shall cooperate and take
all reasonable steps necessary and appropriate to cause the conditions set forth
in Section 3.05 (subject to Section 3.04 and Section 3.05(a)(viii)) to be
satisfied and to effect the Distribution on the Distribution Date.
(f) ▇▇▇▇▇▇ shall prepare and file, and shall use
its reasonable efforts to have approved, an application for
26
the listing of the Zimmer Common Stock to be distributed in the Distribution on
the NYSE, subject to official notice of distribution.
(g) Zimmer shall pay all third party costs, fees and
expenses relating to the costs of producing, printing, mailing and otherwise
distributing the Information Statement other than any such costs, fees and
expenses that are Excluded Liabilities.
SECTION 3.03. CHARTER; BYLAWS; RIGHTS PLAN. At or prior to the
Distribution Date, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer shall each take all actions
that may be required to provide for the adoption by Zimmer of the Certificate of
Incorporation, the Bylaws and the Rights Plan.
SECTION 3.04. SOLE DISCRETION OF ▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB.
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall have the sole and absolute discretion to determine
whether to proceed with all or part of the Distribution and all terms of the
Distribution, including the form, structure and terms of any transaction(s)
and/or offering(s) to effect the Distribution and the timing of and conditions
to the consummation of the Distribution. In addition, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb may,
in its sole and absolute discretion, determine the date of consummation of the
Distribution (such date as so determined by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb in accordance
with this Article III is referred to herein as the "DISTRIBUTION DATE") and may
at any time and from time to time until the completion of the Distribution
modify or change the terms of the Distribution including by accelerating or
delaying the timing of the consummation of all or part of the Distribution.
Zimmer shall cooperate with ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb in all respects to accomplish
the Distribution and shall, at ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb's direction, promptly take
any and all actions necessary or desirable to effect the Distribution, including
the registration under the Securities Act of the common stock of Zimmer on an
appropriate registration form or forms to be designated by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb.
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall select any investment banker(s) and manager(s) in
connection with the Distribution, as well as any financial printer, solicitation
and/or exchange agent and outside counsel for ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb, which shall
include Cravath, Swaine & ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP. ▇▇▇▇▇▇
acknowledges, for itself and the ▇▇▇▇▇▇ Group, that Cravath, Swaine & ▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP have acted only in the capacity as counsel to
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group, and not as counsel to
Zimmer or the ▇▇▇▇▇▇ Group, in connection with this Agreement and the Ancillary
Agreements and the documents and transactions contemplated herein or therein
(other than the transactions contemplated by Section 2.09).
SECTION 3.05. CONDITIONS TO DISTRIBUTION. (a) Subject to
Section 3.04, the following are the conditions,
27
to ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb's obligation to effect the Distribution:
(i) the Registration Statement shall have been filed and
declared effective by the Commission, and there shall be no stop-order
in effect with respect thereto and no proceeding for that purpose shall
have been instituted by the Commission;
(ii) ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall be satisfied in its sole
discretion that as of the Distribution Date it will have no further
liability or obligation whatsoever under the Financing Facility;
(iii) the actions and filings with regard to state securities
and blue sky laws of the United States (and any comparable laws under
any foreign jurisdictions) described in Section 3.02(d) shall have been
taken and, where applicable, have become effective or been accepted;
(iv) the Zimmer Common Stock to be distributed in the
Distribution shall have been accepted for listing on the NYSE, on
official notice of issuance;
(v) no order, injunction or decree issued by any court or
agency of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Contribution,
Distribution or any of the other transactions contemplated by this
Agreement or any Ancillary Agreement shall be in effect;
(vi) a private letter ruling from the Internal Revenue
Service shall have been obtained, and shall continue in effect, to the
effect that, among other things, the Distribution will qualify as a
tax-free distribution for federal income tax purposes under Section 355
of the Code and the transfer to ▇▇▇▇▇▇ of the ▇▇▇▇▇▇ Assets and the
assumption by ▇▇▇▇▇▇ of the Zimmer Liabilities in connection with the
Contribution will not result in the recognition of any gain or loss to
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb, Zimmer or ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb's or ▇▇▇▇▇▇'▇
stockholders for Federal income tax purposes, and such ruling shall be
in form and substance satisfactory to ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb in its sole
discretion;
28
(vii) any material Consents and Governmental Approvals
necessary to consummate the Distribution shall have been obtained and
be in full force and effect;
(viii) no other events or developments shall have occurred
subsequent to the date hereof that, in the judgment of ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb, would result in the Distribution having a material adverse
effect on ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or on the stockholders of ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb; and
(ix) this Agreement shall not have been terminated.
(b) The foregoing conditions are for the sole benefit of
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and shall not give rise to or create any duty on the part
of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb's board of directors to waive or
not waive such conditions or in any way limits ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb's right to
terminate this Agreement as set forth in Article X or alter the consequences of
any such termination from those specified in such Article. Any determination
made by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb prior to the Distribution concerning the
satisfaction or waiver of any or all of the conditions set forth in this Section
3.05 shall be conclusive.
SECTION 3.06. FRACTIONAL SHARES. ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall
direct the Agent to (i) determine the number of whole shares and fractional
shares of Zimmer Common Stock allocable to each holder of record or beneficial
owner of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Common Stock as of the Record Date, (ii) aggregate
all such fractional shares and sell the whole shares obtained thereby in open
market transactions as soon as practicable on or after the Distribution Date at
then prevailing trading prices and (iii) cause to be distributed to each such
holder or for the benefit of each such beneficial owner, in lieu of any
fractional share, such holder's or owner's ratable share of the proceeds of such
sale, after making appropriate deductions of the amount required to be withheld
for federal income tax purposes and after deducting an amount equal to all
brokerage charges, commissions and transfer taxes attributed to such sale.
SECTION 3.07. THE ▇▇▇▇▇▇ BOARD OF DIRECTORS. ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb and Zimmer shall each take all actions which may be required to elect or
otherwise appoint as directors of Zimmer, on or prior to the Distribution Date,
29
the persons designated as nominees to ▇▇▇▇▇▇'▇ board of directors in the
Information Statement.
ARTICLE IV
MUTUAL RELEASES; INDEMNIFICATION
SECTION 4.01. RELEASE OF PRE-DISTRIBUTION CLAIMS. (a) Except
as provided in Section 4.01(c), effective as of the Distribution Date, ▇▇▇▇▇▇
does hereby, for itself and each other member of the ▇▇▇▇▇▇ Group, their
respective Affiliates (other than any member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group),
successors and assigns, and all Persons who at any time prior to the
Distribution Date have been stockholders, directors, officers, agents or
employees of any member of the ▇▇▇▇▇▇ Group (in each case, in their respective
capacities as such), remise, release and forever discharge each of ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb, the members of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group, their respective
Affiliates (other than any member of the ▇▇▇▇▇▇ Group), successors and assigns,
and all Persons who at any time prior to the Distribution Date have been
stockholders, directors, officers, agents or employees of any member of the
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group (in each case, in their respective capacities as
such), and their respective heirs, executors, administrators, successors and
assigns, from any and all Liabilities whatsoever, whether at law or in equity
(including any right of contribution), whether arising under any contract or
agreement, by operation of law or otherwise, existing or arising from any acts
or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed on or
before the Distribution Date, including in connection with the transactions and
all other activities to implement the Contribution and the Distribution.
(b) Except as provided in Section 4.01(c), effective as of the
Distribution Date, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb does hereby, for itself and each other
member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group, their respective Affiliates (other
than any member of the ▇▇▇▇▇▇ Group), successors and assigns, and all Persons
who at any time prior to the Distribution Date have been stockholders,
directors, officers, agents or employees of any member of the ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb Group (in each case, in their respective capacities as such), remise,
release and forever discharge Zimmer, the respective members of the Zimmer
30
Group, their respective Affiliates (other than any member of the ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb Group), successors and assigns, and all Persons who at any time prior to
the Distribution Date have been stockholders, directors, officers, agents or
employees of any member of the ▇▇▇▇▇▇ Group (in each case, in their respective
capacities as such), and their respective heirs, executors, administrators,
successors and assigns, from any and all Liabilities whatsoever, whether at law
or in equity (including any right of contribution), whether arising under any
contract or agreement, by operation of law or otherwise, existing or arising
from any acts or events occurring or failing to occur or alleged to have
occurred or to have failed to occur or any conditions existing or alleged to
have existed on or before the Distribution Date, including in connection with
the transactions and all other activities to implement the Contribution and the
Distribution.
(c) Nothing contained in Section 4.01(a) or 4.01(b) shall
impair any right of any Person to enforce this Agreement, any Ancillary
Agreement or any agreements, arrangements, commitments or understandings that
are specified in Section 2.04(b) or the applicable Schedules thereto not to
terminate as of the Distribution Date, in each case in accordance with its
terms. Nothing contained in Section 4.01(a) or 4.01(b) shall release any Person
from:
(i) any Liability provided in or resulting from any
agreement among any members of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group or the
▇▇▇▇▇▇ Group that is specified in Section 2.04(b) or the applicable
Schedules thereto as not to terminate as of the Distribution Date, or
any other Liability specified in such Section 2.04(b) as not to
terminate as of the Distribution Date;
(ii) any Liability, contingent or otherwise, assumed,
transferred, assigned or allocated to the Group of which such Person is
a member in accordance with, or any other Liability of any member of
any Group under, this Agreement or any Ancillary Agreement;
(iii) except as expressly specified on Schedule 4.01(c)(iii)
or to the extent such Liability has been expressly forgiven in writing,
any Liability for the sale, lease, construction or receipt of goods,
property or services purchased, obtained or used in the ordinary course
of business by a member of one Group from a member of the other Group
prior to the Distribution Date;
31
(iv) except as expressly specified on Schedule 4.01(c)(iv) or
to the extent such Liability has been expressly forgiven in writing,
any Liability for unpaid amounts for products or services or refunds
owing on products or services due on a value-received basis for work
done by a member of one Group at the request or on behalf of a member
of the other Group;
(v) any Liability that the parties may have with respect to
indemnification or contribution pursuant to this Agreement for claims
brought against the parties by third Persons, which Liability shall be
governed by the provisions of this Article IV and Article V and, if
applicable, the appropriate provisions of the Ancillary Agreements; or
(vi) any Liability the release of which would result in the
release of any Person other than a Person released pursuant to this
Section 4.01.
In addition, nothing contained in Section 4.01(a) shall
release ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb from honoring its existing obligations to indemnify
any director, officer or employee of Zimmer who was a director, officer or
employee of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb on or prior to the Distribution Date, to the
extent such director, officer or employee becomes a named defendant in any
litigation involving ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and was entitled to such
indemnification pursuant to then existing obligations.
(d) Zimmer shall not make, and shall not permit any member of
the ▇▇▇▇▇▇ Group to make, any claim or demand, or commence any Action asserting
any claim or demand, including any claim of contribution or any indemnification,
against ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or any member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group or
any other Person released pursuant to Section 4.01(a), with respect to any
Liabilities released pursuant to Section 4.01(a). ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall
not, and shall not permit any member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group, to make
any claim or demand, or commence any Action asserting any claim or demand,
including any claim of contribution or any indemnification against ▇▇▇▇▇▇ or any
member of the ▇▇▇▇▇▇ Group, or any other Person released pursuant to Section
4.01(b), with respect to any Liabilities released pursuant to Section 4.0l(b).
(e) It is the intent of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer by
virtue of the provisions of this Section 4.01 to provide for a full and complete
release and discharge of all
32
Liabilities existing or arising from all acts and events occurring or failing to
occur or alleged to have occurred or to have failed to occur and all conditions
existing or alleged to have existed on or before the Distribution Date, between
or among Zimmer or any member of the ▇▇▇▇▇▇ Group, on the one hand, and
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or any member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group, on the
other hand (including any contractual agreements or arrangements existing or
alleged to exist between or among any such members on or before the Distribution
Date), except as expressly set forth in Section 4.01(c). At any time, at the
request of any other party, each party shall cause each member of its respective
Group to execute and deliver releases reflecting the provisions hereof.
SECTION 4.02. INDEMNIFICATION BY ZIMMER. Except as provided in
Section 4.04, Zimmer shall indemnify defend and hold harmless ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb, each member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group and each of their
respective directors, officers and employees, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the "▇▇▇▇▇▇▇-▇▇▇▇▇
SQUIBB INDEMNITEES") from and against any and all Liabilities of the
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Indemnitees relating to, arising out of or resulting from
any of the following items (without duplication):
(a) the failure of ▇▇▇▇▇▇ or any other member of the ▇▇▇▇▇▇
Group or any other Person to pay, perform or otherwise promptly discharge any
▇▇▇▇▇▇ Liability in accordance with its terms, whether prior to or after the
Distribution Date;
(b) the ▇▇▇▇▇▇ Business, any ▇▇▇▇▇▇ Asset or any ▇▇▇▇▇▇
Liability;
(c) any material breach by ▇▇▇▇▇▇ or any member of the ▇▇▇▇▇▇
Group of this Agreement or any of the Ancillary Agreements; and
(d) any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
with respect to all information contained in any Registration Statement or
Information Statement.
SECTION 4.03. INDEMNIFICATION BY ▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB.
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall indemnify, defend and hold harmless Zimmer, each
member of the ▇▇▇▇▇▇ Group and
33
each of their respective directors, officers and employees, and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively,
the "▇▇▇▇▇▇ INDEMNITEES"), from and against any and all Liabilities of the
▇▇▇▇▇▇ Indemnitees relating to, arising out of or resulting from any of the
following items (without duplication):
(a) the failure of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or any other member of
the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group or any other Person to pay, perform or otherwise
promptly discharge any Liabilities of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group other than
the Zimmer Liabilities whether prior to or after the Distribution Date;
(b) the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Business or any Liability of the
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group other than the Zimmer Liabilities; and
(c) any material breach by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or any member
of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group of this Agreement or any of the Ancillary
Agreements.
SECTION 4.04. INDEMNIFICATION OBLIGATIONS NET OF INSURANCE
PROCEEDS AND OTHER AMOUNTS. (a) The parties intend that any Liability subject to
indemnification or reimbursement pursuant to this Article IV or Article V will
be net of Insurance Proceeds that actually reduce the amount of the Liability.
Accordingly, the amount which any party (an "INDEMNIFYING PARTY") is required to
pay to any Person entitled to indemnification hereunder (an "INDEMNITEE") will
be reduced by any Insurance Proceeds theretofore actually recovered by or on
behalf of the Indemnitee in respect of the related Liability. If an Indemnitee
receives a payment (an "INDEMNITY PAYMENT") required by this Agreement from an
Indemnifying Party in respect of any Liability and subsequently receives
Insurance Proceeds, then the Indemnitee will pay to the Indemnifying Party an
amount equal to the excess of the Indemnity Payment received over the amount of
the Indemnity Payment that would have been due if the Insurance Proceeds had
been received, realized or recovered before the Indemnity Payment was made.
(b) In the case of any Shared Contingent Liability, any
Insurance Proceeds actually received, realized or recovered by any party in
respect of the Shared Contingent Liability will be shared among the parties in
such manner as may be necessary so that the obligations of the parties for such
Shared Contingent Liability, net of
34
such Insurance Proceeds, will remain in proportion to their respective Shared
Percentages, regardless of which party or parties may actually receive, realize
or recover such Insurance Proceeds.
(c) An insurer who would otherwise be obligated to pay any
claim shall not be relieved of the responsibility with respect thereto or,
solely by virtue of the indemnification provisions hereof, have any subrogation
rights with respect thereto, it being expressly understood and agreed that no
insurer or any other third party shall be entitled to a "wind-fall" (i.e., a
benefit they would not be entitled to receive in the absence of the
indemnification provisions) by virtue of the indemnification provisions hereof.
Nothing contained in this Agreement or any Ancillary Agreement shall obligate
any member of any Group to seek to collect or recover any Insurance Proceeds.
SECTION 4.05. PROCEDURES FOR INDEMNIFICATION OF THIRD PARTY
CLAIMS. (a) If an Indemnitee shall receive notice or otherwise learn of the
assertion by a Person (including any Governmental Authority) who is not a member
of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group or the ▇▇▇▇▇▇ Group of any claim or of the
commencement by any such Person of any Action (collectively, a "THIRD PARTY
CLAIM") with respect to which an Indemnifying Party may be obligated to provide
indemnification to such Indemnitee pursuant to Section 4.02 or 4.03, or any
other Section of this Agreement or any Ancillary Agreement, such Indemnitee
shall give such Indemnifying Party written notice thereof within 20 days after
becoming aware of such Third Party Claim. Any such notice shall describe the
Third Party Claim in reasonable detail. If any Person shall receive notice or
otherwise learn of the assertion of a Third Party Claim which may reasonably be
determined to be a Shared Contingent Liability, Zimmer, or ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb,
as appropriate depending on which Group such Person is a member of, shall give
the other party to this Agreement written notice thereof within 20 days after
such Person becomes aware of such Third Party Claim. Any such notice shall
describe the Third Party Claim in reasonable detail. Notwithstanding the
foregoing, the failure of any Indemnitee or other Person to give notice as
provided in this Section 4.05(a) shall not relieve the related Indemnifying
Party of its obligations under this Article IV, except to the extent that such
Indemnifying Party is actually prejudiced by such failure to give notice.
35
(b) If ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or Zimmer receives any notice
relating to a Third Party Claim and such party believes that the relevant Third
Party Claim is or may be a Shared Contingent Liability, such party may make a
Determination Request at any time following receipt of such notice. Unless the
parties have acknowledged that the applicable Third Party Claim (including any
Third Party Claim set forth on Schedule 5.06) is not a Shared Contingent
Liability or unless a determination to such effect has been made in accordance
with Section 5.06, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall be entitled (but not obligated) to
assume the defense of such Third Party Claim as if it were the Indemnifying
Party hereunder. In any such event, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall be entitled to
reimbursement of all the costs and expenses of such defense once a final
determination or acknowledgment is made as to the status of the Third Party
Claim; PROVIDED, HOWEVER, that, if such Third Party Claim is determined to be a
Shared Contingent Liability, such costs and expenses shall be shared as provided
in Section 4.05(c); PROVIDED, FURTHER, that if such Third Party Claim is
determined to be an Exclusive ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Contingent Liability, such
costs and expenses shall be borne by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb.
(c) ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall assume the defense of, and may,
subject to Section 4.05(g), seek to settle or compromise, any Third Party Claim
that is a Shared Contingent Liability, and the costs and expenses thereof shall
be included in the calculation of the amount of the applicable Shared Contingent
Liability in determining the reimbursement obligations of the other party with
respect thereto pursuant to Section 5.04. Any Indemnitee in respect of a Shared
Contingent Liability shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but all fees and expenses of such counsel shall be the expense of such
Indemnitee.
(d) Other than in the case of a Shared Contingent Liability,
an Indemnifying Party may elect to defend (and, unless the Indemnifying Party
has specified any reservations or exceptions, to seek to settle or compromise),
at such Indemnifying Party's own expense and by such Indemnifying Party's own
counsel, any Third Party Claim. Within 30 days after the receipt of notice from
an Indemnitee in accordance with Section 4.05(a) (or sooner, if the nature of
such Third Party Claim so requires), the Indemnifying Party shall notify the
Indemnitee of its election whether the Indemnifying Party will assume
responsibility for defending
36
such Third Party Claim, which election shall specify any reservations or
exceptions. After notice from an Indemnifying Party to an Indemnitee of its
election to assume the defense of a Third Party Claim, such Indemnitee shall
have the right to employ separate counsel and to participate in (but not
control) the defense, compromise, or settlement thereof, but the fees and
expenses of such counsel shall be the expense of such Indemnitee except as set
forth in the next sentence. In the event that (i) the Third Party Claim is not a
Shared Contingent Liability and (ii) the Indemnifying Party has elected to
assume the defense of the Third Party Claim but has specified, and continues to
assert, any reservations or exceptions in such notice, then, in any such case,
the reasonable fees and expenses of one separate counsel for all Indemnitees
shall be borne by the Indemnifying Party.
(e) Other than in the case of a Shared Contingent Liability,
if an Indemnifying Party elects not to assume responsibility for defending a
Third Party Claim, or fails to notify an Indemnitee of its election as provided
in Section 4.05(d), such Indemnitee may defend such Third Party Claim at the
cost and expense of the Indemnifying Party.
(f) No Indemnitee may settle or compromise any Third Party
Claim that is not a Shared Contingent Liability without the consent of the
Indemnifying Party, which, if the Indemnifying Party has failed to assume the
defense of the Third Party Claim in accordance with the terms of this Agreement,
shall not be unreasonably withheld. No Indemnitee may settle or compromise any
Third Party Claim that is a Shared Contingent Liability without the consent of
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb.
(g) In the case of a Third Party Claim that is not a Shared
Contingent Liability, no Indemnifying Party shall consent to entry of any
judgment or enter into any settlement of the Third Party Claim without the
consent of the Indemnitee if the effect thereof is to permit any injunction,
declaratory judgment, other order or other nonmonetary relief to be entered,
directly or indirectly against any Indemnitee. In the case of a Third Party
Claim that is a Shared Contingent Liability, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall not
consent to entry of any judgment or enter into any settlement of the Third Party
Claim without the consent of the Indemnitee if the effect thereof is to permit
any injunction, declaratory judgment, other order or other nonmonetary relief to
be entered, directly or indirectly, against any Indemnitee.
37
(h) The provisions of Section 4.05 and Section 4.06 shall not
apply to Taxes (which are covered by the Tax Sharing Agreement).
SECTION 4.06. ADDITIONAL MATTERS. (a) Any claim on account of
a Liability which does not result from a Third Party Claim shall be asserted by
written notice given by the Indemnitee to the related Indemnifying Party. Such
Indemnifying Party shall have a period of 30 days after the receipt of such
notice within which to respond thereto. If such Indemnifying Party does not
respond within such 30-day period, such Indemnifying Party shall be deemed to
have refused to accept responsibility to make payment. If such Indemnifying
Party does not respond within such 30-day period or rejects such claim in whole
or in part, such Indemnitee shall be free to pursue such remedies as may be
available to such party as contemplated by this Agreement and the Ancillary
Agreements.
(b) In the event of payment by or on behalf of any
Indemnifying Party to any Indemnitee in connection with any Third Party Claim,
such Indemnifying Party shall be subrogated to and shall stand in the place of
such Indemnitee as to any events or circumstances in respect of which such
Indemnitee may have any right, defense or claim relating to such Third Party
Claim against any claimant or plaintiff asserting such Third Party Claim or
against any other Person. Such Indemnitee shall cooperate with such Indemnifying
Party in a reasonable manner, and at the cost and expense of such Indemnifying
Party, in prosecuting any subrogated right, defense or claim.
(c) In the event of an Action in which the Indemnifying Party
is not a named defendant, if either the Indemnitee or Indemnifying Party shall
so request, the parties shall endeavor to substitute the Indemnifying Party for
the named defendant or, in the case of a Shared Contingent Liability, add the
Indemnifying Party as a named defendant, if at all practicable. If such
substitution or addition cannot be achieved for any reason or is not requested,
the named defendant shall allow the Indemnifying Party to manage the Action as
set forth in this Section, subject to Section 5.04 with respect to Shared
Contingent Liabilities, and the Indemnifying Party shall fully indemnify the
named defendant against all costs of defending the Action (including court
costs, sanctions imposed by a court, attorneys' fees, experts fees and all other
external expenses), the costs of any judgment or settlement, and the
38
cost of any interest or penalties relating to any judgment or settlement.
SECTION 4.07. REMEDIES CUMULATIVE. The remedies provided in
this Article IV shall be cumulative and, subject to the provisions of Article
VIII, shall not preclude assertion by any Indemnitee of any other rights or the
seeking of any and all other remedies against any Indemnifying Party.
SECTION 4.08. SURVIVAL OF INDEMNITIES. The rights and
obligations of each of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and ▇▇▇▇▇▇ and their respective
Indemnitees under this Article IV shall survive the sale or other transfer by
any party of any assets or the assignment by it of any Liabilities.
ARTICLE V
CONTINGENT GAINS AND CONTINGENT LIABILITIES
SECTION 5.01. DEFINITIONS RELATING TO CONTINGENT GAINS AND
CONTINGENT LIABILITIES. For the purpose of this Agreement the following terms
shall have the following meanings:
(a) "CONTINGENT CLAIM COMMITTEE" means a committee composed of
one representative designated from time to time by each of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
and ▇▇▇▇▇▇ that shall be established in accordance with Section 5.06.
(b) "CONTINGENT GAIN" means any claim or other right of
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb, ▇▇▇▇▇▇ or any of their respective Affiliates, whenever
arising, against any Person other than ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb, ▇▇▇▇▇▇ or any of
their respective Affiliates, if and to the extent that (i) such claim or right
has accrued as of the Distribution Date (based on then existing law) and (ii)
the existence or scope of the obligation of such other Person as of the
Distribution Date was not acknowledged, fixed or determined in any material
respect, due to a dispute or other uncertainty as of the Distribution Date or as
a result of the failure of such claim or other right to have been discovered or
asserted as of the Distribution Date. A claim or right meeting the foregoing
definition shall be considered a Contingent Gain regardless of whether there was
any Action pending, threatened or contemplated as of the
39
Distribution Date with respect thereto. For purposes of the foregoing, a claim
or right shall be deemed to have accrued as of the Distribution Date if all the
elements of the claim necessary for its assertion shall have occurred on or
prior to the Distribution Date, such that the claim or right, were it asserted
in an Action on or prior to the Distribution Date, would not be dismissed by a
court on ripeness or similar grounds. Notwithstanding the foregoing, none of (i)
any Insurance Proceeds, (ii) any Excluded Assets, (iii) any reversal of any
litigation or other reserve, or (iv) any matters relating to Taxes (which are
governed by the Tax Sharing Agreement) shall be deemed to be a Contingent Gain.
(c) "CONTINGENT LIABILITY" means any Liability, other than
Liabilities for Taxes (which are governed by the Tax Sharing Agreement), of
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb, ▇▇▇▇▇▇ or any of their respective Affiliates, whenever
arising, to any Person other than ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb, ▇▇▇▇▇▇ or any of their
respective Affiliates, if and to the extent that (i) such Liability has accrued
as of the Distribution Date (based on then existing law) and (ii) the existence
or scope of the obligation of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb, ▇▇▇▇▇▇ or any of their
respective Affiliates as of the Distribution Date with respect to such Liability
was not acknowledged, fixed or determined in any material respect, due to a
dispute or other uncertainty as of the Distribution Date or as a result of the
failure of such Liability to have been discovered or asserted as of the
Distribution Date (it being understood that the existence of a litigation or
other reserve with respect to any Liability shall not be sufficient for such
Liability to be considered acknowledged, fixed or determined). In the case of
any Liability a portion of which had accrued as of the Distribution Date and a
portion of which accrues after the Distribution Date, only that portion that had
accrued as of the Distribution Date shall be considered a Contingent Liability.
For purposes of the foregoing, a Liability shall be deemed to have accrued as of
the Distribution Date if all the elements necessary for the assertion of a claim
with respect to such Liability shall have occurred on or prior to the
Distribution Date, such that the claim, were it asserted in an Action on or
prior to the Distribution Date, would not be dismissed by a court on ripeness or
similar grounds. For purposes of clarification of the foregoing, the parties
agree that no Liability relating to, arising out of or resulting from any
obligation of any Person to perform the executory portion of any contract or
agreement existing as of the Distribution Date, or to satisfy any obligation
accrued under any Plan (as defined in the Employee Benefits Agreement) as of the
40
Distribution Date, shall be deemed to be a Contingent Liability.
(d) "EXCLUSIVE ▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB CONTINGENT GAIN" means any
Contingent Gain if such Contingent Gain primarily relates to the ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb Business, including the matters listed or described on Schedule 5.01(d)
hereto, or if such Contingent Gain is expressly assigned to ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
pursuant to this Agreement or any Ancillary Agreement.
(e) "EXCLUSIVE ▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB CONTINGENT LIABILITY"
means any Contingent Liability if such Contingent Liability primarily relates to
the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Business, including the matters listed or described on
Schedule 5.01(e) hereto, or if such Contingent Liability is expressly assigned
to ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb pursuant to this Agreement or any Ancillary Agreement.
(f) "EXCLUSIVE CONTINGENT GAIN" means any Exclusive
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Contingent Gain or Exclusive ▇▇▇▇▇▇ Contingent Gain.
(g) "EXCLUSIVE CONTINGENT LIABILITY" means any Exclusive
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Contingent Liability or Exclusive ▇▇▇▇▇▇ Contingent
Liability.
(h) "EXCLUSIVE ▇▇▇▇▇▇ CONTINGENT GAIN" means any Contingent
Gain if such Contingent Gain primarily relates to the ▇▇▇▇▇▇ Business, including
the matters listed or described on Schedule 5.01(h) hereto, or if such
Contingent Gain is expressly assigned to ▇▇▇▇▇▇ pursuant to this Agreement or
any Ancillary Agreement.
(i) "EXCLUSIVE ▇▇▇▇▇▇ CONTINGENT LIABILITY" means any
Contingent Liability if such Contingent Liability primarily relates to the
▇▇▇▇▇▇ Business, including the matters listed or described on Schedule 5.01(i)
hereto, or if such Contingent Liability is expressly assigned to ▇▇▇▇▇▇ pursuant
to this Agreement or any Ancillary Agreement.
(j) "SHARED ▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB PERCENTAGE" means 95%, unless
the parties shall agree to a different percentage with respect to any Shared
Contingent Gain or Shared Contingent Liability.
(k) "SHARED CONTINGENT GAIN" means any Contingent Gain that is
not an Exclusive ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Contingent Gain or an Exclusive ▇▇▇▇▇▇
Contingent Gain
41
including any Contingent Gain relating to, arising out of or resulting from the
matters set forth on Schedule 5.01(k).
(l) "SHARED CONTINGENT LIABILITY" means, without duplication:
(i) any Contingent Liability that is not an Exclusive
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Contingent Liability or an Exclusive ▇▇▇▇▇▇
Contingent Liability; and
(ii) any Liability (other than Taxes) relating to, arising out
of or resulting from the matters set forth on Schedule 5.01(l).
(m) "SHARED PERCENTAGE" means the Shared ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
Percentage or the Shared ▇▇▇▇▇▇ Percentage, as the case may be.
(n) "SHARED ▇▇▇▇▇▇ PERCENTAGE" means 5%, unless the parties
shall agree to a different percentage with respect to any Shared Contingent Gain
or Shared Contingent Liability.
SECTION 5.02. CONTINGENT GAINS. (a) Each of ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb and ▇▇▇▇▇▇ shall have sole and exclusive right to any benefit received
with respect to any Exclusive ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Contingent Gain, or Exclusive
▇▇▇▇▇▇ Contingent Gain, respectively. Each of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and ▇▇▇▇▇▇
shall have sole and exclusive authority to commence, prosecute, settle, manage,
control, conduct, waive, forego, release, discharge, forgive and otherwise
determine all matters whatsoever with respect to any Exclusive ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb Contingent Gain or Exclusive ▇▇▇▇▇▇ Contingent Gain, respectively.
(b) Any benefit that may be received from any Shared
Contingent Gain shall be shared among ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and ▇▇▇▇▇▇ in
proportion to the Shared ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Percentage and the Shared ▇▇▇▇▇▇
Percentage, respectively, and shall be paid in accordance with Section 5.05.
Notwithstanding the foregoing, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall have sole and
exclusive authority to commence, prosecute, settle, manage, control, conduct,
waive, forgo, release, discharge, forgive and otherwise determine all matters
whatsoever with respect to any Shared Contingent Gain. ▇▇▇▇▇▇ shall not take, or
permit any member of its Group to take, any action (including commencing any
claim) that would interfere with such rights and powers of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb.
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall use its
42
reasonable efforts to notify ▇▇▇▇▇▇ in the event that it commences an Action
with respect to a Shared Contingent Gain; PROVIDED, HOWEVER, that the failure to
provide such notice shall not give rise to any rights on the part of ▇▇▇▇▇▇
against ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or affect any other provision of this Section 5.02.
▇▇▇▇▇▇ acknowledges that ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb may elect not to pursue any Shared
Contingent Gain for any reason whatsoever (including a different assessment of
the merits of any Action, claim or right than ▇▇▇▇▇▇ or any business reasons
that are in the best interests of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or a member of the
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group, without regard to the best interests of any member
of the ▇▇▇▇▇▇ Group) and that no member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group shall
have any liability to any Person (including any member of the ▇▇▇▇▇▇ Group) as a
result of any such determination.
(c) In the event of any dispute as to whether any claim or
right is a Contingent Gain or whether any Contingent Gain is a Shared Contingent
Gain, an Exclusive ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Contingent Gain or an Exclusive ▇▇▇▇▇▇
Contingent Gain, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb may, but shall not be obligated to,
commence prosecution or other assertion of such claim or right pending
resolution of such dispute. In the event that ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb commences any
such prosecution or assertion and, upon resolution of the dispute, it is
determined hereunder that ▇▇▇▇▇▇ has the exclusive right to such claim or right,
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall, promptly upon the request of ▇▇▇▇▇▇, discontinue the
prosecution or assertion of such right or claim and transfer the control thereof
to ▇▇▇▇▇▇. In such event, ▇▇▇▇▇▇ shall reimburse ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb for all
costs and expenses, reasonably incurred prior to resolution of such dispute in
the prosecution or assertion of such claim or right.
SECTION 5.03. EXCLUSIVE CONTINGENT LIABILITIES. ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb shall be solely responsible for each Exclusive ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
Contingent Liability and ▇▇▇▇▇▇ shall be solely responsible for each Exclusive
▇▇▇▇▇▇ Contingent Liability. Each Exclusive Contingent Liability shall
constitute a Liability for which indemnification is provided by ▇▇▇▇▇▇▇-▇▇▇▇▇
Squibb or ▇▇▇▇▇▇, as the case may be, pursuant to Article IV hereof and shall be
subject to the procedures set forth in Article IV with respect thereto.
SECTION 5.04. SHARED CONTINGENT LIABILITIES. (a) As set forth
in Section 4.05(c) and subject to Section 4.05(g), ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall
assume the defense of, and may seek to settle or compromise, any Third
43
Party Claim that is a Shared Contingent Liability, and the costs and expenses
thereof shall be included in the calculation of the amount of the applicable
Shared Contingent Liability in determining the reimbursement obligations of the
other parties with respect thereto pursuant to this Section 5.04.
(b) Each of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and ▇▇▇▇▇▇ shall be
responsible for its Shared Percentage of any Shared Contingent Liability. It
shall not be a defense to any obligation by any party to pay any amount in
respect of any Shared Contingent Liability that such party was not consulted in
the defense thereof, that such party's views or opinions as to the conduct of
such defense were not accepted or adopted, that such party does not approve of
the quality or manner of the defense thereof or that such Shared Contingent
Liability was incurred by reason of a settlement rather than by a judgment or
other determination of liability (even if, subject to Section 4.05(g), such
settlement was effected without the consent or over the objection of such
party).
SECTION 5.05. PAYMENTS. (a) Any amount owed in respect of (i)
any Shared Contingent Liabilities, including reimbursement for the cost or
expense of defense, of any Third Party Claim that is a Shared Contingent
Liability, or (ii) any Shared Contingent Gains pursuant to this Article V shall
be remitted promptly after the party entitled to such amount provides an invoice
(including reasonable supporting information with respect thereto) to the party
owing such amount.
(b) In the case of any Shared Contingent Liability,
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall be entitled to reimbursement from ▇▇▇▇▇▇ in advance
of a final determination of any Action for amounts paid in respect of costs and
expenses related thereto, from time to time as such costs and expenses are paid.
In the case of any Shared Contingent Gain, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb shall be
entitled to retain from the amount of the Shared Contingent Gain otherwise
payable to ▇▇▇▇▇▇, ▇▇▇▇▇▇'▇ Shared Percentage of the costs and expenses paid or
incurred by or on behalf of any member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group in
connection with such Shared Contingent Gain.
(c) Any amounts billed and properly payable in accordance with
this Article V that are not paid within 30 days of such ▇▇▇▇ shall bear interest
at the Prime Rate plus 2% per annum.
44
SECTION 5.06. PROCEDURES TO DETERMINE STATUS OF CONTINGENT
LIABILITY OR CONTINGENT GAIN. (a) With respect to the Actions set forth on
Schedule 5.06, and with respect to any other matters not set forth on Schedules
5.01(d), 5.01(e), 5.01(h), 5.01(i), 5.01(k) or 5.01(l) (regardless of whether
such matters are currently pending but not set forth on such Schedules or are
asserted or filed hereafter), ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and ▇▇▇▇▇▇ will form the
Contingent Claim Committee for the purpose of resolving whether:
(i) any claim or right is a Contingent Gain;
(ii) any Contingent Gain is a Shared Contingent Gain, an
Exclusive ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Contingent Gain or an Exclusive ▇▇▇▇▇▇
Contingent Gain;
(iii) any Liability is a Contingent Liability; or
(iv) any Contingent Liability is a Shared Contingent
Liability, an Exclusive ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Contingent Liability or an
Exclusive ▇▇▇▇▇▇ Contingent Liability.
(b) Any of the parties may refer any potential Contingent
Gains or Contingent Liabilities to the Contingent Claim Committee for resolution
as described in Section 5.06(a) and if the Contingent Claim Committee reaches a
determination (which shall be made within 30 days of such referral), then that
determination shall be binding on all of the parties and their respective
successors and assigns. In the event that the Contingent Claim Committee cannot
reach a determination as to the nature or status of any such Liabilities or
claims or rights within 30 days after such referral, then the issue will be
submitted to the respective General Counsels of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and ▇▇▇▇▇▇
for determination. If the General Counsels cannot reach a determination, then
the procedures set forth in Article VIII of this Agreement shall govern.
(c) In resolving, with respect to any Action set forth on
Schedule 5.06 or any other matter not set forth in Schedules 5.01(d), 5.01(e),
5.01(h), 5.01(i), 5.01(k) or 5.01(l), whether (i) any Contingent Gain is a
Shared Contingent Gain, an Exclusive ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Contingent Gain or an
Exclusive ▇▇▇▇▇▇ Contingent Gain or (ii) any Contingent Liability is a Shared
Contingent Liability, an Exclusive ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Contingent Liability or
an Exclusive ▇▇▇▇▇▇ Contingent Liability, the categorization of Contingent Gains
and Contingent
45
Liabilities reflected in 5.01(d), 5.01(e), 5.01(h), 5.01(i), 5.01(k) or 5.01(l)
shall be considered and used as a presumptive guide.
SECTION 5.07. CERTAIN CASE ALLOCATION MATTERS. The parties
agree that if any Action not set forth on Schedule 5.01(d), 5.01(e), 5.01(h),
5.01(i), 5.01(k) or 5.01(l) involves separate and distinct claims that, if not
joined in a single Action, would constitute separate Exclusive Contingent
Liabilities of two or more parties, they will use their reasonable efforts to
segregate such separate and distinct claims so that the Liabilities associated
with each such claim (including all costs and expenses) shall be treated as
Exclusive Contingent Liabilities of the appropriate party and so that each party
shall have the rights and obligations with respect to each such claim (including
pursuant to Article V hereof) as would have been applicable had such claims been
commenced as separate Actions. Notwithstanding the foregoing provisions, this
Section 5.07 shall not apply to any separate and distinct claim that is de
minimis or frivolous in nature.
SECTION 5.08. TERMINATION OF CERTAIN ARTICLE V PROVISIONS. The
provisions set forth in this Article V related to sharing of Contingent Gains
and Contingent Liabilities shall terminate on the third anniversary of the
Distribution Date except for (a) any claim or action pending or asserted by
either party on or prior to such termination, or (b) any claim or action related
to any matter that has a statute of limitations that extends beyond such
termination date. Any claim or action referred to in (a) and (b) above shall
survive until the later of the final determination applicable to any such claim
or action or the applicable statute of limitations covering such claim or
action.
ARTICLE VI
INTERIM OPERATIONS AND CERTAIN OTHER MATTERS
SECTION 6.01. INSURANCE MATTERS. ▇▇▇▇▇▇ does hereby, for
itself and each other member of the ▇▇▇▇▇▇ Group, agree that no member of the
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group or any ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Indemnitee shall have any
Liability whatsoever as a result of the insurance policies and practices of
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and its Affiliates as in effect at any time prior to the
Distribution Date, including as a result of the level or scope of any such
46
insurance, the creditworthiness of any insurance carrier, the terms and
conditions of any policy, the adequacy or timeliness of any notice to any
insurance carrier with respect to any claim or potential claim or otherwise.
SECTION 6.02. CERTAIN BUSINESS MATTERS. No member of any Group
shall have any duty to refrain from (i) engaging in the same or similar
activities or lines of business as any member of the other Group, (ii) doing
business with any potential or actual supplier or customer of any member of the
other Group, or (iii) engaging in, or refraining from, any other activities
whatsoever relating to any of the potential or actual suppliers or customers of
any member of the other Group.
SECTION 6.03. LATE PAYMENTS. Except as expressly provided to
the contrary in this Agreement or in any Ancillary Agreement, any amount not
paid when due pursuant to this Agreement or any Ancillary Agreement (and any
amounts billed or otherwise invoiced or demanded and properly payable that are
not paid within 30 days of such ▇▇▇▇, invoice or other demand) shall accrue
interest at a rate per annum equal to the Prime Rate plus 2%.
ARTICLE VII
EXCHANGE OF INFORMATION; CONFIDENTIALITY
SECTION 7.01. AGREEMENT FOR EXCHANGE OF INFORMATION; ARCHIVES.
(a) Each of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and ▇▇▇▇▇▇, on behalf of its respective Group,
agrees to provide, or cause to be provided, to the other Group, at any time
before or after the Distribution Date, as soon as reasonably practicable after
written request therefor, any Information in the possession or under the control
of such respective Group which the requesting party reasonably needs (i) to
comply with reporting, disclosure, filing or other requirements imposed on the
requesting party (including under applicable securities laws) by a Governmental
Authority having jurisdiction over the requesting party, (ii) for use in any
other judicial, regulatory, administrative or other proceeding or in order to
satisfy audit, accounting, claims, regulatory, litigation or other similar
requirements, in each case other than claims or allegations that one party to
this Agreement has against the other or (iii) subject to foregoing clause (ii)
above, to comply with its obligations under this Agreement, or any
47
Ancillary Agreement; PROVIDED, HOWEVER, that in the event that any party
determines that any such provision of Information could be commercially
detrimental, violate any law or agreement, or waive any attorney-client
privilege, the parties shall take all reasonable measures to permit the
compliance with such obligations in a manner that avoids any such harm or
consequence. The parties acknowledge that the Tax Sharing Agreement shall govern
the exchange of Information with respect to Taxes.
(b) After the Distribution Date, ▇▇▇▇▇▇ shall have access
during regular business hours (as in effect from time to time) to the documents
and objects of historic significance that relate to the ▇▇▇▇▇▇ Business that are
located in archives retained or maintained by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb. ▇▇▇▇▇▇ may
obtain copies (but not originals) of documents for bona fide business purposes
and may obtain objects for exhibition purposes for commercially reasonable
periods of time if required for bona fide business purposes, provided that
▇▇▇▇▇▇ shall cause any such objects to be returned promptly in the same
condition in which they were delivered to ▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall comply with
any rules, procedures or other requirements, and shall be subject to any
restrictions (including prohibitions on removal of specified objects), that are
then applicable to ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb. ▇▇▇▇▇▇ shall pay the applicable fee or
rate per hour for archives research services (subject to increase from time to
time to reflect rates then in effect for ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb generally).
Nothing herein shall be deemed to restrict the access of any member of the
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group to any such documents or objects or to impose any
liability on any member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group if any such documents
or objects are not maintained or preserved by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb.
(c) After the date hereof, each of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and
▇▇▇▇▇▇ (i) shall maintain in effect at its own cost and expense adequate systems
and controls to the extent necessary to enable the members of the other Group to
satisfy their respective reporting, accounting, audit and other obligations, and
(ii) shall provide, or cause to be provided, to the other party in such form as
the requesting party shall request, at no charge to such requesting party, all
financial and other data and information as such requesting party determines
necessary or advisable in order to prepare its financial statements and reports
or filings with any Governmental Authority.
48
SECTION 7.02. OWNERSHIP OF INFORMATION. Any Information owned
by one Group that is provided to a requesting party pursuant to Section 7.01
shall be deemed to remain the property of the providing party. Unless
specifically set forth herein, nothing contained in this Agreement shall be
construed as granting or conferring rights of license or otherwise in any such
Information.
SECTION 7.03. COMPENSATION FOR PROVIDING INFORMATION. Except
as set forth in Section 7.01(c)(ii), the party requesting Information agrees to
reimburse the other party for the reasonable costs, if any, of creating,
gathering and copying such Information, to the extent that such costs are
incurred for the benefit of the requesting party. Except as may be otherwise
specifically provided elsewhere in this Agreement or in any other agreement
between the parties, such costs shall be computed in accordance with the
providing party's standard methodology and procedures.
SECTION 7.04. RECORD RETENTION. To facilitate the possible
exchange of Information pursuant to this Article VII and other provisions of
this Agreement after the Distribution Date, the parties agree to use their
reasonable efforts to retain all Information in their respective possession or
control on the Distribution Date in accordance with the policies of
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb as in effect on the Distribution Date or such other
policies as may be reasonably adopted by the appropriate party after the
Distribution Date. No party will destroy, or permit any of its Subsidiaries to
destroy, any Information which the other party may have the right to obtain
pursuant to this Agreement prior to the third anniversary of the date hereof
without first using its reasonable efforts to notify the other party of the
proposed destruction and giving the other party the opportunity to take
possession of such information prior to such destruction; PROVIDED, HOWEVER,
that in the case of any Information relating to employee benefits or
Environmental Liabilities, such period shall be extended to the expiration of
the applicable statute of limitations (giving effect to any extensions thereof);
PROVIDED, FURTHER, that in the event that any such Information is also subject
to a retention requirement contained in any Ancillary Agreement that is longer
than the requirement contained in this Section 7.04, then the requirement in
such agreement shall supersede this Section 7.04.
SECTION 7.05. LIMITATIONS OF LIABILITY. No party shall have
any liability to any other party in the event
49
that any Information exchanged or provided pursuant to this Agreement which is
an estimate or forecast, or which is based on an estimate or forecast, is found
to be inaccurate in the absence of willful misconduct by the party providing
such Information. No party shall have any liability to any other party if any
Information is destroyed after reasonable efforts by such party to comply with
the provisions of Section 7.04.
SECTION 7.06. OTHER AGREEMENTS PROVIDING FOR EXCHANGE OF
INFORMATION. The rights and obligations granted under this Article VII are
subject to any specific limitations, qualifications or additional provisions on
the sharing, exchange, retention or confidential treatment of Information set
forth in any Ancillary Agreement.
SECTION 7.07. PRODUCTION OF WITNESSES; RECORDS; COOPERATION.
(a) After the Distribution Date, except in the case of an adversarial Action by
one party against another party, each party hereto shall use its reasonable
efforts to make available to each other party, upon written request, the former,
current and future directors, officers, employees, other personnel and agents of
the members of its respective Group as witnesses and any books, records or other
documents within its control or which it otherwise has the ability to make
available, to the extent that any such person (giving consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books, records or other documents may reasonably be required in connection with
any Action in which the requesting party may from time to time be involved,
regardless of whether such Action is a matter with respect to which
indemnification may be sought hereunder. The requesting party shall bear all
costs and expenses in connection therewith.
(b) If an Indemnifying Party or ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb chooses
to defend or to seek to compromise or settle any Third Party Claim, the other
parties shall make available to such Indemnifying Party, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or
such other party, as the case may be, upon written request, the former, current
and future directors, officers, employees, other personnel and agents of the
members of its respective Group as witnesses and any books, records or other
documents within its control or which it otherwise has the ability to make
available, to the extent that any such person (giving consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books, records or other documents may reasonably be
50
required in connection with such defense, settlement or compromise, as the case
may be, and shall otherwise cooperate in such defense, settlement or compromise,
as the case may be.
(c) Without limiting the foregoing, the parties shall
cooperate and consult to the extent reasonably necessary with respect to any
Actions.
(d) Without limiting any provision of this Section 7.07, each
of the parties agrees to cooperate, and to cause each member of its respective
Group to cooperate, with each other in the defense of any infringement or
similar claim with respect any intellectual property and shall not claim to
acknowledge, or permit any member of its respective Group to claim to
acknowledge, the validity or infringing use of any intellectual property of a
third Person in a manner that would hamper or undermine the defense of such
infringement or similar claim.
(e) The obligation of the parties to provide witnesses
pursuant to this Section 7.07 is intended to be interpreted in a manner so as to
facilitate cooperation and shall include the obligation to provide as witnesses
inventors and other employees without regard to whether the witness or the
employer of the witness could assert a possible business conflict (subject to
the exception set forth in the first sentence of Section 7.07(a)).
(f) In connection with any matter contemplated by this Section
7.07, the parties will enter into a mutually acceptable joint defense agreement
so as to maintain to the extent practicable any applicable attorney-client
privilege or work product immunity of any member of any Group.
SECTION 7.08. CONFIDENTIALITY. (a) Subject to Section 7.09,
each of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer, on behalf of itself and each member of
its respective Group, agrees to hold, and to cause its respective directors,
officers, employees, agents, accountants, counsel and other advisors and
representatives to hold, in strict confidence, with at least the same degree of
care that applies to ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb's confidential and proprietary
information pursuant to policies in effect as of the Distribution Date, all
Information concerning each such other Group that is either in its possession
(including Information in its possession prior to any of the date hereof or the
Distribution Date) or furnished by any such other Group or its respective
directors, officers,
51
employees, agents, accountants, counsel and other advisors and representatives
at any time pursuant to this Agreement, any Ancillary Agreement or otherwise,
and shall not use any such Information other than for such purposes as shall be
expressly permitted hereunder or thereunder, except, in each case, to the extent
that such Information has been (i) in the public domain through no fault of such
party or any member of such Group or any of their respective directors,
officers, employees, agents, accountants, counsel and other advisors and
representatives, (ii) later lawfully acquired from other sources by such party
(or any member of such party's Group) which sources are not themselves bound by
a confidentiality obligation, or (iii) independently generated without reference
to any proprietary or confidential Information of the other party.
(b) Each party agrees not to release or disclose, or permit to
be released or disclosed, any such Information to any other Person, except its
directors, officers, employees, agents, accountants, counsel and other advisors
and representatives who need to know such Information (who shall be advised of
their obligations hereunder with respect to such Information), except in
compliance with Section 7.09. Without limiting the foregoing, when any
Information is no longer needed for the purposes contemplated by this Agreement
or any Ancillary Agreement, each party will promptly after request of the other
party either return to the other party all Information in a tangible form
(including all copies thereof and all notes, extracts or summaries based
thereon) or certify to the other party that it has destroyed such Information
(and such copies thereof and such notes, extracts or summaries based thereon).
SECTION 7.09. PROTECTIVE ARRANGEMENTS. In the event that any
party or any member of its Group either determines on the advice of its counsel
that it is required to disclose any Information pursuant to applicable law or
receives any demand under lawful process or from any Governmental Authority to
disclose or provide Information of any other party (or any member of any other
party's Group) that is subject to the confidentiality provisions hereof, such
party shall notify the other party prior to disclosing or providing such
Information and shall cooperate at the expense of the requesting party in
seeking any reasonable protective arrangements requested by such other party.
Subject to the foregoing, the Person that received such request may thereafter
disclose or provide Information to
52
the extent required by such law (as so advised by counsel) or by lawful process
or such Governmental Authority.
ARTICLE VIII
DISPUTE RESOLUTION
SECTION 8.01. DISPUTES. Except as otherwise specifically
provided in any Ancillary Agreement, the procedures for discussion, negotiation
and mediation set forth in this Article VIII shall apply to all disputes,
controversies or claims (whether arising in contract, tort or otherwise) that
may arise out of or relate to, or arise under or in connection with this
Agreement or any Ancillary Agreement, or the transactions contemplated hereby or
thereby (including all actions taken in furtherance of the transactions
contemplated hereby or thereby on or prior to the date hereof), or the
commercial or economic relationship of the parties relating hereto or thereto,
between or among any member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group and the ▇▇▇▇▇▇
Group.
SECTION 8.02. ESCALATION; MEDIATION. (a) It is the intent of
the parties to use their respective reasonable efforts to resolve expeditiously
any dispute, controversy or claim between or among them with respect to the
matters covered hereby that may arise from time to time on a mutually acceptable
negotiated basis. In furtherance of the foregoing, any party involved in a
dispute, controversy or claim may deliver a notice (an "ESCALATION NOTICE")
demanding an in person meeting involving representatives of the parties at a
senior level of management of the parties (or if the parties agree, of the
appropriate strategic business unit or division within such entity). A copy of
any such Escalation Notice shall be given to the General Counsel, or like
officer or official, of each party involved in the dispute, controversy or claim
(which copy shall state that it is an Escalation Notice pursuant to this
Agreement). Any agenda, location or procedures for such discussions or
negotiations between the parties may be established by the parties from time to
time; PROVIDED, HOWEVER, that the parties shall use their reasonable efforts to
meet within 30 days of the Escalation Notice.
(b) If the parties are not able to resolve the dispute,
controversy or claim through the escalation process referred to above, then the
matter shall be referred to
53
mediation. The parties shall retain a mediator to aid the parties in their
discussions and negotiations by informally providing advice to the parties. Any
opinion expressed by the mediator shall be strictly advisory and shall not be
binding on the parties, nor shall any opinion expressed by the mediator be
admissible in any other proceeding. The mediator may be chosen from a list of
mediators previously selected by the parties or by other agreement of the
parties. Costs of the mediation shall be borne equally by the parties involved
in the matter, except that each party shall be responsible for its own expenses.
Mediation shall be a prerequisite to the commencement of any action by either
party.
SECTION 8.03. COURT ACTIONS. (a) In the event that any party,
after complying with the provisions set forth in Section 8.02 above, desires to
commence an Action, such party may submit the dispute, controversy or claim (or
such series of related disputes, controversies or claims) to any court of
competent jurisdiction.
(b) The parties irrevocably submit to the exclusive
jurisdiction of (a) the Supreme Court of the State of New York, New York County,
and (b) the United States District Court for the Southern District of New York,
for the purposes of any Action arising out of this Agreement, the Ancillary
Agreements or any transaction contemplated hereby or thereby. The parties agree
to commence any Action relating hereto either in the United States District
Court for the Southern District of New York or if such Action may not be brought
in such court for jurisdictional reasons, in the Supreme Court of the State of
New York, New York County. The parties further agree that service of any
process, summons, notice or document by U.S. registered mail to their respective
addresses set forth above shall be effective service of process for any Action
in New York with respect to any matters to which each party has submitted to
jurisdiction in this Section 8.03(b). Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any Action
arising out of this Agreement or the transactions contemplated hereby in (i) the
Supreme Court of the State of New York, New York County, or (ii) the United
States District Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such Action brought in any such court has been brought in an
inconvenient forum.
54
(c) The parties each hereby waive to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in respect
of any litigation directly or indirectly arising out of, under or in connection
with this Agreement or any of the Ancillary Agreements or any transaction
contemplated hereby or thereby. Each party hereto (a) certifies that no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce that foregoing waiver and (b) acknowledges that it and the other
party hereto have been induced to enter into this Agreement and the Ancillary
Agreements by, among other things, the mutual waivers and certifications in this
Section 8.03.
(d) Unless otherwise agreed in writing, the parties will
continue to provide service and honor all other commitments under this Agreement
and each Ancillary Agreement during the course of dispute resolution pursuant to
the provisions of this Article VIII with respect to all matters not subject to
such dispute, controversy or claim.
ARTICLE IX
FURTHER ASSURANCES
SECTION 9.01. FURTHER ASSURANCES. (a) In addition to the
actions specifically provided for elsewhere in this Agreement, each of the
parties hereto shall use its reasonable efforts, prior to, on and after the
Distribution Date, to take, or cause to be taken, all actions, and to do, or
cause to be done, all things, reasonably necessary, proper or advisable under
applicable laws, regulations and agreements to consummate and make effective the
transactions contemplated by this Agreement and the Ancillary Agreements.
(b) Without limiting the foregoing, prior to, on and after the
Distribution Date, each party hereto shall cooperate with the other party, and
without any further consideration, but at the expense of the requesting party,
to execute and deliver, or use its reasonable efforts to cause to be executed
and delivered, all instruments, including instruments of conveyance, assignment
and transfer, and to make all filings with, and to obtain all consents,
approvals or authorizations of, any Governmental Authority or any other Person
under any permit, license, agreement, indenture or other instrument (including
any
55
Consents or Governmental Approvals), and to take all such other actions as such
party may reasonably be requested to take by any other party hereto from time to
time, consistent with the terms of this Agreement and the Ancillary Agreements,
in order to effectuate the provisions and purposes of this Agreement and the
Ancillary Agreements and the transfers of the Zimmer Assets and the assignment
and assumption of the Zimmer Liabilities and the other transactions contemplated
hereby and thereby. Without limiting the foregoing, each party will, at the
reasonable request, cost and expense of any other party, take such other actions
as may be reasonably necessary to vest in such other party good and marketable
title, free and clear of any Security Interest, if and to the extent it is
practicable to do so.
(c) On or prior to the Distribution Date, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
and Zimmer in their respective capacities as direct and indirect stockholders of
their respective Subsidiaries, shall each ratify any actions which are
reasonably necessary or desirable to be taken by ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb, Zimmer or
any other Subsidiary of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb or Zimmer, as the case may be, to
effectuate the transactions contemplated by this Agreement. On or prior to the
Distribution Date, ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer shall take all actions as may
be necessary to approve the stock-based employee benefit plans of Zimmer in
order to satisfy the requirement of Rule 16b-3 under the Exchange Act.
(d) Prior to the Distribution Date, if one or more of the
parties identifies any commercial or other service that is needed to assure a
smooth and orderly transition of the businesses in connection with the
consummation of the transactions contemplated hereby, and that is not otherwise
governed by the provisions of this Agreement or any Ancillary Agreement, the
parties will cooperate in determining whether there is a mutually acceptable
arm's-length basis on which the other party will provide such service.
56
ARTICLE X
TERMINATION
SECTION 10.01. TERMINATION. This Agreement and all Ancillary
Agreements may be terminated and the Distribution may be amended, modified or
abandoned at any time prior to the Distribution Date by and in the sole
discretion of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb without the approval of Zimmer or the
stockholders of ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb. In the event of such termination, no party
shall have any liability of any kind to any other party or any other Person.
After the Distribution Date, this Agreement may not be terminated except by an
agreement in writing signed by the parties.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. COUNTERPARTS; ENTIRE AGREEMENT; CORPORATE
POWER. (a) This Agreement and each Ancillary Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party.
(b) This Agreement, and the Ancillary Agreements and the
Exhibits, Schedules and Appendices hereto and thereto contain the entire
agreement between the parties with respect to the subject matter hereof,
supersede all previous agreements, negotiations, discussions, writings,
understandings, commitments and conversations with respect to such subject
matter and there are no agreements or understandings between the parties other
than those set forth or referred to herein or therein.
(c) ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb represents on behalf of itself and
each other member of the ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Group and Zimmer represents on
behalf of itself and each other member of the ▇▇▇▇▇▇ Group as follows:
(i) each such Person has the requisite corporate or other
power and authority and has taken all corporate or other action
necessary in order to execute, deliver and perform each of this
Agreement and
57
each other Ancillary Agreement to which it is a party and to consummate
the transactions contemplated hereby and thereby; and
(ii) this Agreement and each Ancillary Agreement to which it
is a party has been duly executed and delivered by it and constitutes a
valid and binding agreement of it enforceable in accordance with the
terms thereof.
(d) Each party hereto acknowledges that it and each other
party hereto is executing certain of the Ancillary Agreements by facsimile,
stamp or mechanical signature. Each party hereto expressly adopts and confirms
each such facsimile, stamp or mechanical signature made in its respective name
as if it were a manual signature, agrees that it will not assert that any such
signature is not adequate to bind such party to the same extent as if it were
signed manually and agrees that at the reasonable request of any other party
hereto at any time it will as promptly as reasonably practicable cause each such
Ancillary Agreement to be manually executed (any such execution to be as of the
date of the initial date thereof).
SECTION 11.02. GOVERNING LAW. This Agreement and, unless
expressly provided therein, each Ancillary Agreement, shall be governed by and
construed and interpreted in accordance with the laws of the State of New York
irrespective of the choice of laws principles of the State of New York, as to
all matters, including matters of validity, construction, effect,
enforceability, performance and remedies.
SECTION 11.03. ASSIGNABILITY. Except as set forth in any
Ancillary Agreement, this Agreement and each Ancillary Agreement shall be
binding upon and inure to the benefit of the parties hereto and thereto,
respectively, and their respective successors and assigns; PROVIDED, HOWEVER,
that no party hereto or thereto may assign its respective rights or delegate its
respective obligations under this Agreement or any Ancillary Agreement without
the express prior written consent of the other parties hereto or thereto.
SECTION 11.04. THIRD PARTY BENEFICIARIES. Except for the
indemnification rights under this Agreement of any ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb
Indemnitee or Zimmer Indemnitee in their respective capacities as such, (a) the
provisions of this Agreement and each Ancillary Agreement are solely for
58
the benefit of the parties and are not intended to confer upon any Person except
the parties any rights or remedies hereunder, and (b) there are no third party
beneficiaries of this Agreement or any Ancillary Agreement and neither this
Agreement nor any Ancillary Agreement shall provide any third Person with any
remedy, claim, liability, reimbursement, claim of action or other right in
excess of those existing without reference to this Agreement or any Ancillary
Agreement.
SECTION 11.05. NOTICES. All notices or other communications
under this Agreement or any Ancillary Agreement shall be in writing and shall be
deemed to be duly given when (a) delivered in person or (b) deposited in the
United States mail or private express mail, postage prepaid, addressed as
follows:
If to ▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb, to:
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
If to Zimmer to:
▇▇▇▇▇▇ Holdings, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Any party may, by notice to the other party, change the
address to which such notices are to be given.
SECTION 11.06. SEVERABILITY. If any provision of this
Agreement or any Ancillary Agreement or the application thereof to any Person or
circumstance is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof or thereof, or the
application of such provision to Persons or circumstances or in jurisdictions
other than those as to which it has been held invalid or unenforceable, shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated thereby, so long as the economic or legal substance of the
transactions contemplated hereby or thereby, as the case may be, is not affected
in any manner adverse to any party. Upon such determination, the parties shall
negotiate in good faith in an effort to
59
agree upon such a suitable and equitable provision to effect the original intent
of the parties.
SECTION 11.07. FORCE MAJEURE. No party shall be deemed in
default of this Agreement or any Ancillary Agreement to the extent that any
delay or failure in the performance of its obligations under this Agreement or
any Ancillary Agreement results from any cause beyond its reasonable control and
without its fault or negligence, such as acts of God, acts of civil or military
authority, embargoes, epidemics, war, riots, insurrections, fires, explosions,
earthquakes, floods, unusually severe weather conditions, labor problems or
unavailability of parts, or, in the case of computer systems, any failure in
electrical or air conditioning equipment. In the event of any such excused
delay, the time for performance shall be extended for a period equal to the time
lost by reason of the delay.
SECTION 11.08. PUBLICITY. Prior to the Distribution, each of
▇▇▇▇▇▇▇-▇▇▇▇▇ Squibb and Zimmer shall consult with each other prior to issuing
any press releases or otherwise making public statements with respect to the
Contribution, the Distribution or any of the other transactions contemplated
hereby and prior to making any filings with any Governmental Authority with
respect thereto.
SECTION 11.09. EXPENSES. Except as expressly set forth in this
Agreement or in any Ancillary Agreement, all third party fees, costs and
expenses paid or incurred in connection with the Distribution will be paid by
Zimmer.
SECTION 11.10. HEADINGS. The article, section and paragraph
headings contained in this Agreement and in the Ancillary Agreements are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement or any Ancillary Agreement.
SECTION 11.11. SURVIVAL OF COVENANTS. Except as expressly set
forth in any Ancillary Agreement, the covenants, representations and warranties
contained in this Agreement and each Ancillary Agreement, and liability for the
breach of any obligations contained herein or therein, shall survive the
Contribution and the Distribution and shall remain in full force and effect.
SECTION 11.12. WAIVERS OF DEFAULT. Waiver by any party of any
default by the other party of any provision of this Agreement or any Ancillary
Agreement shall not be
60
deemed a waiver by the waiving party of any subsequent or other default, nor
shall it prejudice the rights of the other party.
SECTION 11.13. AMENDMENTS. No provisions of this Agreement or
any Ancillary Agreement shall be deemed waived, amended, supplemented or
modified by any party, unless such waiver, amendment, supplement or modification
is in writing and signed by the authorized representative of the party against
whom it is sought to enforce such waiver, amendment, supplement or modification.
SECTION 11.14. INTERPRETATION. Words in the singular shall be
held to include the plural and vice versa and words of one gender shall be held
to include the other genders as the context requires. The terms "hereof,"
"herein," and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement (or the applicable Ancillary
Agreement) as a whole (including all of the Schedules, Exhibits and Appendices
hereto and thereto) and not to any particular provision of this Agreement (or
such Ancillary Agreement). Article, Section, Exhibit, Schedule and Appendix
references are to the Articles, Sections, Exhibits, Schedules and Appendices to
this Agreement (or the applicable Ancillary Agreement) unless otherwise
specified. The word "including" and words of similar import when used in this
Agreement (or the applicable Ancillary Agreement) shall mean "including, without
limitation," unless the context otherwise requires or unless otherwise
specified. The word "or" shall not be exclusive. Unless expressly stated to the
contrary in this Agreement or in any Ancillary Agreement, all references to "the
date hereof," "the date of this Agreement," "hereby"
61
and "hereupon" and words of similar import shall all be references to [ ],
2001, regardless of any amendment or restatement hereof.
IN WITNESS WHEREOF, the parties have caused this Contribution
and Distribution Agreement to be executed by their duly authorized
representatives.
▇▇▇▇▇▇▇-▇▇▇▇▇ SQUIBB COMPANY
By:___________________________
Name:
Title:
▇▇▇▇▇▇ HOLDINGS, INC.
By:___________________________
Name:
Title: