EXHIBIT 99.4
EXECUTION VERSION
================================================================================
TAX ALLOCATION AGREEMENT
Dated as of July 24, 2003,
Among
ROCHE HOLDING LTD,
66 ACQUISITION CORPORATION II,
IGEN INTERNATIONAL, INC.
And
IGEN INTEGRATED HEALTHCARE, LLC
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
ARTICLE II
Preparation and Filing of Tax Returns
SECTION 2.01. Tax Returns for Pre-Merger Periods and Straddle Periods ..................... 8
SECTION 2.02. Tax Returns for a Taxable Period Ending After the Effective Time (Other
than Straddle Periods) ................................................. 9
SECTION 2.03. Manner of Tax Return Preparation ............................................ 9
SECTION 2.04. Transfer Tax Returns ........................................................ 9
SECTION 2.05. Amended Returns and Claims for Refund ....................................... 10
ARTICLE III
Payment and Liability for Taxes
SECTION 3.01. Payment and Liability for Taxes ............................................. 10
SECTION 3.02. Distribution Gain Payment ................................................... 12
SECTION 3.03. Payment and Liability for Transfer Taxes .................................... 12
SECTION 3.04. Tax Obligations Arising Under a Pre-Merger Period Tax Sharing Agreement ..... 13
ARTICLE IV
Representations and Covenants
SECTION 4.01. Representations of Parent and the Company ................................... 13
SECTION 4.02. Covenants of Parent and the Company ......................................... 14
SECTION 4.03. Covenants of Newco .......................................................... 15
SECTION 4.04. Consistent Tax and Regulatory Reporting ..................................... 15
SECTION 4.05. Representation of Newco ..................................................... 16
i
ARTICLE V
Indemnification; Tax Proceedings; Cooperation and Exchange
of Information; Disputes
SECTION 5.01. Indemnification for Breach of Representations and Covenants.................. 16
SECTION 5.02. Tax Proceedings.............................................................. 16
SECTION 5.03. Indemnification Payments..................................................... 18
SECTION 5.04. Cooperation and Exchange of Information...................................... 19
SECTION 5.05. Retention of Information..................................................... 20
SECTION 5.06. Disputes..................................................................... 20
ARTICLE VI
Miscellaneous and General
SECTION 6.01. Modification or Amendment ................................................... 21
SECTION 6.02. Termination ................................................................. 21
SECTION 6.03. Notices ..................................................................... 22
SECTION 6.04. Interpretation .............................................................. 23
SECTION 6.05. Severability ................................................................ 23
SECTION 6.06. Counterparts ................................................................ 24
SECTION 6.07. Entire Agreement; Third-Party Beneficiaries ................................. 24
SECTION 6.08. Certain Obligations ......................................................... 24
SECTION 6.09. Governing Law ............................................................... 24
SECTION 6.10. Assignment .................................................................. 24
SECTION 6.11. Enforcement; Consent to Service of Process .................................. 25
SECTION 6.12. Extension; Waiver ........................................................... 25
TAX ALLOCATION AGREEMENT dated as of July
24, 2003 (this "Agreement"), among ROCHE HOLDING LTD,
a joint stock company organized under the laws of
Switzerland ("Parent"), 66 ACQUISITION CORPORATION
II, a Delaware corporation and a direct wholly owned
subsidiary of Parent ("Sub"), IGEN INTERNATIONAL,
INC., a Delaware corporation (the "Company"), and
IGEN INTEGRATED HEALTHCARE, LLC, a Delaware limited
liability company and a direct wholly owned
subsidiary of the Company ("Newco" and, collectively
with Parent, Sub and the Company, the "Companies").
WHEREAS, as of the date of this Agreement, the Company is the
common parent of an affiliated group of domestic corporations (the "Company
Consolidated Group") within the meaning of Section 1504(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), including Newco and its direct
and indirect subsidiaries, which has elected to file consolidated Federal income
Tax Returns (as defined in Article I);
WHEREAS the Company, Roche Diagnostics GmbH, a German limited
liability company ("R Diagnostics"), and Roche Diagnostics Corporation, an
Indiana corporation ("R Corp"), are entering into an agreement (the "Ongoing
Litigation Agreement") pursuant to which, among other things, R Diagnostics and
R Corp shall make several payments to the Company;
WHEREAS the Company and Newco are entering into an agreement
(the "Restructuring Agreement") pursuant to which, prior to the Effective Time
(as defined in Article I), the Restructuring (as defined in Article I) will be
effected, as part of which certain of the assets and liabilities of the Company
will be transferred to Newco or one or more of Newco's subsidiaries;
WHEREAS, the respective Boards of Directors of the Company and
Parent have proposed to cause the merger of Sub with and into the Company (the
"Merger") at the Effective Time in accordance with the Agreement and Plan of
Merger dated as of the date of this Agreement (the "Merger Agreement") among the
Companies and R Company;
WHEREAS, the Companies and R Company intend to treat the
exchange of Company Common Stock (as defined in Article I) for cash and the
exchange of Company Common Stock for Newco Common Stock (as defined in Article
I) pursuant to the Merger as a single integrated transaction comprising a
taxable sale or exchange of Company Common Stock as described in Section 1001 of
the Code and a complete redemption of the remaining Company Common Stock owned
by the relevant shareholders within the meaning of Section 302(b)(3) of the
Code, respectively;
WHEREAS, the Companies have determined and agreed that, as a
result of the Merger, for U.S. Federal income tax purposes (i) the Company
Consolidated Group will cease to exist on the Closing Date (as defined in
Article I) and (ii) the Company Consolidated Group's tax year will end on the
Closing Date;
WHEREAS, immediately after the Closing Date, the Company will
become a direct, wholly owned subsidiary of Parent; and
WHEREAS, the Companies desire on behalf of themselves, their
subsidiaries, and their successors to set forth their rights and obligations
with respect to Taxes (as defined in Article I) relating to taxable periods
before and after the Merger.
NOW, THEREFORE, in consideration of foregoing, and of the
representations, warranties, covenants and agreements set forth herein, the
Companies (each on behalf of itself, each of its subsidiaries as of the date of
this Agreement, its future subsidiaries and its successors) hereby agree as
follows:
ARTICLE I
Definitions
The following terms shall have the following meanings:
2
"Agreement" is defined in the preamble.
"Closing Date" is defined in the Merger Agreement.
"Code" is defined in the recitals.
"Companies" is defined in the preamble.
"Company" is defined in the preamble.
"Company Attributes" is defined in Section 3.01(c) of this
Agreement.
"Company Consolidated Group" is defined in the recitals.
"Company Common Stock" is defined in the Merger Agreement.
"Company Group" means (i) the corporations that are members of
the Company Consolidated Group and (ii) the corporations that would be members
of the Company Consolidated Group but for the fact they are not includible
corporations under Section 1504(b) of the Code.
"Confidentiality Agreement" is defined in the Merger
Agreement.
"Covered ECL Technology" is defined in the Merger Agreement.
"Distribution Gain Payment" shall mean the amount equal to the
product of (A) the excess, if any, of (i) the First Day Trading Value over (ii)
the sum of $100 million and the Newco Cash Amount multiplied by (B) 40%;
provided, however, the Distribution Gain Payment shall not exceed $20 million.
"Due Date" shall mean, with respect to any Tax Return or
payment, the date on which such Tax Return is due to be filed with, or such
payment is due to be made to, the appropriate Taxing Authority pursuant to
applicable law, giving effect to any applicable extensions of the time for such
filing or payment.
3
"Effective Time" is defined in the Merger Agreement.
"Final Determination" means the final resolution of liability
for any Tax for any taxable period by or as a result of: (i) a final and
unappealable decision, judgment, decree or other order by any court of competent
jurisdiction; (ii) a final settlement with the IRS, a closing agreement or
accepted offer in compromise under Sections 7121 or 7122 of the Code or a
comparable agreement under the laws of other jurisdictions, in each case which
resolves the entire Tax liability for any taxable period; (iii) any allowance of
a refund or credit in respect of an overpayment of Tax, but only after the
expiration of all periods during which such refund may be recovered by the
jurisdiction imposing the Tax; or (iv) any other final disposition, including,
without limitation, by reason of the expiration of the applicable statute of
limitations.
"First Day Trading Value" means the product of (A) the average
of the high and low trading price for a share of Newco Common Stock on the first
full day of trading after the Merger and (B) the number of shares of Newco
Common Stock distributed.
"Governmental Entity" is defined in the Merger Agreement.
"Group" means the Company Group, the Post-Merger Company
Group, or the Newco Group, as applicable.
"Indemnifying Party" is defined in Section 5.02(a) of this
Agreement.
"Indemnitee" is defined in Section 5.02(a) of this Agreement.
"Indemnity Issue" is defined in Section 5.02(a) of this
Agreement.
"Intended Tax Treatment" is defined in Section 4.04 of this
Agreement.
"IRS" means the United States Internal Revenue Service.
4
"Letter Agreement" means the letter agreement dated November
6, 2002, between R Diagnostics and the Company.
"License Agreement" is defined in the Restructuring Agreement.
"Loan" is defined in the Merger Agreement.
"Merger" is defined in the recitals.
"Merger Agreement" is defined in the recitals.
"Neutral Expert" is defined in Section 5.06 of this Agreement.
"Newco" is defined in the preamble.
"Newco Cash Amount" means the amount equal to the cash and
cash equivalents as reflected on Newco's balance sheet, as measured immediately
after the Effective Time.
"Newco Common Stock" is defined in the Merger Agreement.
"Newco Group" means Newco and each corporation that is,
immediately after the Merger, a direct or indirect subsidiary of Newco.
"Non-Transaction Taxes" means Taxes other than (i) Transaction
Taxes and (ii) Transfer Taxes.
"Ongoing Litigation Agreement" is defined in the recitals.
"Parent" is defined in the preamble.
"Person" means any individual, firm, corporation partnership,
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
"Post-Merger Company Group" means (i) any affiliated group of
corporations within the meaning of Section 1504(a) of the Code (or any other
similar state, local or foreign law) of which the Company or any
5
subsidiary of the Company (or any successor thereto) is or has been a member or
files or is required to file an affiliated, consolidated, combined, unitary or
aggregate Tax Return at any time after the Closing Date or (ii) in the event
that no group as described in the immediately preceding clause (i) exists, then
the group of corporations comprised of the Company (or any successor thereto)
and its direct and indirect subsidiaries.
"Post-Merger Period" means any taxable period beginning after
the Closing Date and, in the case of any Straddle Period, that portion of such
Straddle Period that begins on the day immediately following the Closing Date.
"Post-Signing Tax Returns" means any Tax Return of any member
of the Company Group that is required to be filed during the period commencing
on the first day after the date of this Agreement and ending on the Closing
Date.
"Pre-Merger Period" means any taxable period beginning on or
before the Closing Date and, in the case of any Straddle Period, that portion of
such Straddle Period ending on and including the Closing Date.
"Preliminary Transactions" means (i) the Loan and (ii) any
transaction undertaken by any member or members of the Company Group to prepare
for the Restructuring or Merger.
"R Corp" is defined in the recitals.
"R Diagnostics" is defined in the recitals.
"Responsible Party" is defined in Section 2.04 of this
Agreement.
"Restructuring" is defined in the Restructuring Agreement.
"Restructuring Agreement" is defined in the recitals.
"Straddle Period" means any taxable period that begins on or
before and ends after the Closing Date.
"Sub" is defined in the preamble.
6
"Surviving Corporation" is defined in the Merger Agreement.
"Tax Controversy" is defined in Section 5.02(a) of this
Agreement.
"Taxes" means (i) all forms of taxation or duties imposed, or
required to be collected or withheld, including, without limitation, charges,
together with any related interest, penalties or other additional amounts, (ii)
liability for the payment of any amount of the type described in the preceding
clause (i) as a result of being a member of an affiliated, consolidated,
combined or unitary group, and (iii) liability for the payment of any amounts as
a result of being party to any tax sharing agreement (other than this Agreement)
or as a result of any express or implied obligation to indemnify any other
person with respect to the payment of any amount described in the immediately
preceding clauses (i) or (ii) (other than an obligation to indemnify under this
Agreement).
"Taxing Authority" means the IRS and any other state, local,
foreign or other Governmental Entity responsible for the administration of
Taxes.
"Tax Return" means any return, filing, report, questionnaire,
information statement or other document required to be filed, including amended
returns that may be filed, for any taxable period with any Taxing Authority
(whether or not a payment is required to be made with respect to such filing).
"Tax Ruling" means a private letter ruling issued by the IRS.
"Transaction Agreements" is defined in the Merger Agreement.
"Transaction Taxes" means any Taxes directly or indirectly
resulting from, arising in connection with or otherwise related to (i) any of
the actions taken pursuant to the Ongoing Litigation Agreement, (ii) the
Preliminary Transactions, (iii) the Restructuring or (iv) the Merger; provided,
however, Transaction Taxes does not include Transfer Taxes.
7
"Transactions" is defined in the Merger Agreement.
"Transfer Taxes" is defined in the Merger Agreement.
"Treasury Regulations" means the regulations promulgated from
time to time under the Code as in effect for the relevant taxable period.
"Underpayment Rate" means, with respect to Federal Taxes, the
interest rate specified in Section 6621(a)(2) of the Code and, with respect to
any other Tax, the interest rate specified in applicable law with respect to
such Tax.
ARTICLE II
Preparation and Filing of Tax Returns
SECTION 2.01. Tax Returns for Pre-Merger Periods and Straddle
Periods. (a) Except as set forth in Section 2.01(b) of this Agreement, the
Company shall prepare and timely file (or cause to be prepared and timely filed)
all Tax Returns of each member of the Company Group for any Pre-Merger Period or
Straddle Period; provided, however, in the case of any Post-Signing Tax Return
(i) the Company shall deliver (or cause to be delivered) any such Post-Signing
Tax Return to Parent at least 20 days before it is due, (ii) Parent shall have
the right to examine and comment on such Post-Signing Tax Return prior to the
filing thereof and (iii) Parent shall provide the Company with any such
comments, in writing, no later than five days before such Post-Signing Tax
Return is due. Similar provisions shall apply with respect to any consolidated,
combined, unitary, or aggregate state, local, or foreign income Tax Return for
any Pre-Merger Period or Straddle Period that includes any member of the Company
Group or Post-Merger Company Group.
(b) Newco shall, with respect to any Pre-Merger
Period or Straddle Period, prepare (or cause to be prepared) and file
(or cause to be filed) all separate state, local or foreign Tax Returns
of each member of the Newco Group and any consolidated,
8
combined, unitary or aggregate state, local, or foreign Tax Returns
that do not include any member of the Company Group or Post-Merger
Company Group.
SECTION 2.02. Tax Returns for a Taxable Period Ending After
the Effective Time (Other than Straddle Periods). In the case of any Tax Return
for any Post-Merger Period (other than a Straddle Period, which shall be
governed by Section 2.01 of this Agreement), such Tax Returns shall be prepared
and filed by the Company (or by Parent on behalf of the Company) if they relate
to any member of the Post-Merger Company Group and by Newco if they relate to
any member of the Newco Group. No party shall have any responsibility for
preparing (or causing to be prepared) or filing (or causing to be filed) any Tax
Return with respect to any member that is not a member of its Group.
SECTION 2.03. Manner of Tax Return Preparation. All Tax
Returns described in this Article II shall be prepared (i) in a manner
consistent, and in accordance with, the representations, warranties, covenants,
agreements and statements set forth in this Agreement (including, without
limitation, Section 4.04 of this Agreement) and the other Transaction Agreements
and (ii) in a manner consistent, and in accordance with, the applicable
taxpayer's prior methods, practices and procedures (except to the extent that
departure from such methods, practices and procedures (X) would be required, in
the written opinion of nationally recognized Tax counsel, by a change in
relevant Tax law or (Y) would not adversely affect another party to this
Agreement). Notwithstanding the previous sentence, Tax Returns shall be prepared
in the manner required by, and in accordance with, any applicable Final
Determination.
SECTION 2.04. Transfer Tax Returns. Any Tax Return with
respect to any Transfer Tax incurred in connection with the Transactions shall
be prepared and filed by the party (whether such party is Parent, the Company,
Sub, the Surviving Corporation, or Newco (or any party related to, or affiliate
of, any of the foregoing)) ordinarily responsible therefor under applicable law
(in each case, the "Responsible Party"). Each Responsible Party shall use its
reasonable best efforts to avail itself
9
of any available exemption or exemptions from any Transfer Taxes. Each of
Parent, the Company, Sub, the Surviving Corporation and Newco (and any party
related to, or affiliate of, any of the foregoing) shall use its reasonable best
efforts to cooperate with, and assist, any Responsible Party described in the
immediately preceding sentence in the preparation of any such Tax Return,
including, without limitation, to furnish or otherwise provide such Responsible
Party with information or documentation that may be reasonably necessary to
obtain any exemption described in the immediately preceding sentence.
SECTION 2.05. Amended Returns and Claims for Refund. Neither
Parent nor any member of the Post-Merger Company Group (nor any entity that
directly or indirectly controls the Company) shall amend (or cause or permit to
be amended) a Tax Return or file (or cause or permit to be filed) a claim for
Tax refund with respect to any Tax Return described in Section 2.01(a) of this
Agreement without the prior written consent of Newco.
ARTICLE III
Payment and Liability for Taxes
SECTION 3.01. Payment and Liability for Taxes. (a) The Company
(or Parent) shall remit (or cause to be remitted) in a timely manner to the
appropriate Taxing Authority all Taxes due in respect of any Tax for which the
Company is required to file a Tax Return (as prepared in accordance with Section
2.03 of this Agreement and taking into account Section 3.01(c) of this
Agreement) pursuant to Section 2.01(a) of this Agreement. Parent and the Company
shall be liable for, shall, jointly and severally, indemnify each member of the
Newco Group against, and shall be entitled to receive and retain all refunds of,
all Taxes (other than Transfer Taxes, the responsibility for which is prescribed
in Section 3.03 of this Agreement) of each member of the Company Group for, or
attributable to, all
10
Pre-Merger Periods; provided, however, Newco shall be liable for, shall
indemnify Parent and each member of the Company Group against, and shall be
entitled to receive and retain all refunds of all Non-Transaction Taxes of each
member of the Company Group for, or attributable to, all Pre-Merger Periods,
except to the extent that such Non-Transaction Taxes arise or result from, or
otherwise relate to, any actions, inactions, omissions or disclosures taken or
made by Parent (or any party related to Parent) or, after the Closing Date, by
the Company or any member of the Post-Merger Company Group, except for actions,
inactions, omissions or disclosures required by (X) any Transaction Agreement or
(Y) applicable United States law. For the avoidance of doubt, Parent and the
Company shall be solely liable for, shall, jointly and severally, indemnify each
member of the Newco Group against, and shall be entitled to receive and retain
all refunds of all Transaction Taxes.
(b) Newco shall remit (or cause to be remitted) in a
timely manner to the appropriate Taxing Authority all Taxes due in
respect of any Tax for which Newco is required to file a Tax Return
pursuant to Section 2.01(b) of this Agreement. Newco shall be liable
for, shall indemnify each member of the Company Group against, and
shall be entitled to receive and retain all refunds of all
Non-Transaction Taxes of each member of the Newco Group for all Tax
periods. Parent and the Company shall be liable for, shall indemnify
each member of the Newco Group against and retain all refunds of all
Taxes of each member of the Post-Merger Company Group for all
Post-Merger Periods.
(c) For purposes of this Agreement, including for
purposes of computing the respective amounts of Taxes for which the
Company, on the one hand, and Newco, on the other hand, will be
responsible hereunder, the Companies agree that any and all losses,
credits, allowances or other similar Tax attributes of, or allocated
under applicable Tax law to, the Company (or any member of the Company
Group) arising in, or attributable to, any Pre-Merger Period
(collectively, "Company Attributes") shall be used first to offset
income, profits or gains of the Company (or any member of the Company
Group) that arise in, or are attributable to, any Pre-Merger Period and
that do not directly or indirectly result from, arise in connection
with or otherwise relate to the Preliminary Transactions, the
Restructuring or the Merger. For the avoidance of doubt, any Company
Attributes remaining after the application of the immediately preceding
11
sentence shall be used by the Company (or any member of the Company
Group or Post-Merger Company Group) to offset (i) income, profits or
gains that give rise to any Transaction Taxes and (ii) income, profits
or gains that arise in, or are attributable to, any Post-Merger Period.
(d) (i) To the extent permitted by law or
administrative practice, the taxable year of any member of the Company
Group that includes the Effective Time shall be treated as closing on
(and including) the Closing Date. The parties hereto agree that
Treasury Regulations Section 1.1502-76(b)(1)(ii)(B) shall not apply to
any transaction directly or indirectly resulting from, arising in
connection with or otherwise related to the Preliminary Transactions,
the Restructuring or the Merger.
(ii) Where it is necessary to apportion between
Newco, on the one hand, and the Company, on the other hand, the Tax
liability of an entity for a Straddle Period which is not treated under
this Section 3.01(d) as closing on the Closing Date, such liability
shall be apportioned between the Pre-Merger Period and the Post-Merger
Period on the basis of a "deemed" interim closing of the books, except
that Taxes (such as real property Taxes) imposed on a periodic basis
shall be allocated on a daily basis. For the avoidance of doubt, Parent
and the Company shall be solely liable for, shall, jointly and
severally, indemnify each member of the Newco Group against, and shall
be entitled to receive and retain all refunds of all Transaction Taxes.
SECTION 3.02. Distribution Gain Payment. Notwithstanding
anything to the contrary in this Agreement, Newco will pay to the Company the
Distribution Gain Payment in accordance with the principles of Sections 5.03(a)
and 5.03(b) of this Agreement.
SECTION 3.03. Payment and Liability for Transfer Taxes.
Notwithstanding anything to the contrary in this Agreement, the Responsible
Party shall remit (or cause to be remitted) in a timely manner to the
appropriate Taxing
12
Authority all Transfer Taxes. In any case where any member of the Newco Group is
the Responsible Party, Parent and the Company will be liable for, shall, jointly
and severally, indemnify each member of the Newco Group against, and shall be
entitled to receive refunds of one-half of the applicable Transfer Taxes. In the
case where a member of the Newco Group is not the Responsible Party, Newco will
be liable for, shall indemnify Parent and each member of the Company Group
against, and shall be entitled to receive refunds of one-half of the applicable
Transfer Taxes.
SECTION 3.04. Tax Obligations Arising Under a Pre-Merger
Period Tax Sharing Agreement. Except as set forth in this Agreement, any and all
existing Tax sharing agreements, arrangements, understandings and practices
regarding Taxes and their payment, allocation or sharing between any member of
the Company Group and any member of the Newco Group shall be terminated as of
the Effective Time and no remaining liabilities thereunder shall exist
thereafter. This Section 3.04 does not address Tax sharing agreements (if any)
solely among members of the Newco Group or solely among members of the Company
Group.
ARTICLE IV
Representations and Covenants
SECTION 4.01. Representations of Parent and the Company. Each
of Parent and the Company, jointly and severally, represents and warrants to
Newco that, as of the date of this Agreement, there is no plan or intention to:
(a) liquidate any of the members of the Company Group (as
comprised immediately before the Effective Time) or merge or consolidate any of
such persons with any other person subsequent to the Merger; or
(b) sell, dispose or cease to use and exploit the assets of
any member of the Company Group (as comprised immediately before the Effective
Time) subsequent to the Merger, except in the ordinary course of business; or
(c) take any position on any Tax Return, take any action, omit
to take any action or enter into any
13
transaction that is inconsistent with the Intended Tax Treatment.
SECTION 4.02. Covenants of Parent and the Company. (a) Each of
Parent and the Company agrees not to take, and not to permit (or cause) any
member of the Post-Merger Company Group to take, any action that would cause the
Company to be actually or constructively liquidated within two years of the
Effective Time.
(b) Each of Parent and the Company agrees that on or
after the Closing Date, the Company shall not, and shall not permit any
member of the Post-Merger Company Group to, make or change any tax
election, change any accounting method, amend any Tax Return or take
any position on any Tax Return, take any action, omit to take any
action or enter into any transaction that results in a material
increase in Tax liability of the Company with respect to any Pre-Merger
Period.
(c) Notwithstanding Section 4.01(a) of this
Agreement, Parent, the Company and the members of the Post-Merger
Company Group shall be permitted to take an action inconsistent with
the provisions of Section 4.02(a) of this Agreement if, prior to taking
such action, the Company:
(i) provides notification to Newco of its plans with
respect to such action, and promptly responds to any inquiries
by Newco following such notification; and
(ii) obtains and provides to Newco either:
(A) a Tax Ruling to the effect that such action shall
not cause any of the Transactions to be taxable
(directly or indirectly) to Newco or the historic
shareholders of the Company in a manner other than
the Intended Tax Treatment, or
(B) an opinion, in form and substance acceptable to
Newco in its sole discretion, of Cravath, Swaine &
▇▇▇▇▇ LLP (or of other independent counsel that is
nationally
14
recognized as being expert in Federal Tax matters and
is acceptable to Newco in its sole discretion) to the
effect that such action shall not cause any of the
Transactions to be taxable to Newco or the historic
shareholders of the Company in a manner other than
the Intended Tax Treatment.
SECTION 4.03. Covenants of Newco. Newco agrees that on or
after the Closing Date, Newco shall not, and shall not permit any member of the
Newco Group to, without the consent of the Company (which consent shall not be
unreasonably withheld, condition or delayed) make or change any tax election,
change any accounting method, amend any Tax Return or take any position on any
Tax Return, take any action, omit to take any action or enter into any
transaction that results in a material increase in Tax liability or a reduction
of any Tax attribute of the Company, except for actions, inactions or omissions
required by (X) any Transaction Agreement or (Y) applicable United States law.
SECTION 4.04. Consistent Tax and Regulatory Reporting. Parent,
Sub, the Company and Newco each agree to report the Transactions as follows, for
all Tax purposes (including, without limitation, all U.S. Federal income Tax
purposes) and all other regulatory or other reporting purposes (the "Intended
Tax Treatment"):
(a) the Restructuring, including, without limitation, the
transfer to Newco of the Covered ECL Technology subject to the License
Agreement, will be reported as a transaction described in Section 351 of the
Code whereby the Company will receive solely Newco Common Stock;
(b) the exchange of Company Common Stock for cash and the
exchange of Company Common Stock for Newco Common Stock, each pursuant to the
Merger, will be reported as a single integrated transaction comprising a taxable
sale or exchange of Company Common Stock as described in Section 1001 of the
Code and a complete redemption of the remaining Company Common Stock owned by
the relevant
15
shareholders within the meaning of Section 302(b)(3) of the Code, respectively.
SECTION 4.05. Representation of Newco. Newco represents and
warrants to Parent and the Company that, as of the date of this Agreement, there
is no plan or intention to take any position on any Tax Return, take any action,
omit to take any action or enter into any transaction that is inconsistent with
the Intended Tax Treatment.
ARTICLE V
Indemnification; Tax Proceedings; Cooperation
and Exchange of Information; Disputes
SECTION 5.01. Indemnification for Breach of Representations
and Covenants. Subject to the provisions of this Article V, Parent and the
Company shall, jointly and severally, indemnify, defend and hold harmless Newco
from and against, and pay or reimburse Newco for, all liabilities for Taxes as
incurred relating to or arising from the breach by Parent or the Company of any
of the representations or covenants set forth in Article IV of this Agreement.
Subject to the provisions of this Article V, Newco shall indemnify, defend and
hold harmless Parent or the Company from and against, and pay or reimburse
Parent or the Company for, all liabilities for Taxes as incurred relating to or
arising from the breach by Newco of any of the representations or covenants set
forth in Article IV of this Agreement. The obligations to indemnify and hold
harmless pursuant to this Section 5.01 shall terminate at the time the
applicable statutes of limitations with respect to the Taxes in question expire
(giving effect to any extension thereof); provided, however, that such
obligations to indemnify and hold harmless shall not terminate with respect to
any item as to which the person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim to the other party.
SECTION 5.02. Tax Proceedings. (a) Notification. Within 15
days after a party (the "Indemnitee") becomes aware of the existence of a Tax
issue (an "Indemnity Issue") that may give rise to an
16
indemnification claim under Article III or Section 5.01 of this Agreement (a
"Tax Controversy"), by it against the other party (the "Indemnifying Party"),
the Indemnitee shall promptly notify the Indemnifying Party of the Indemnity
Issue, and thereafter shall promptly forward to the Indemnifying Party copies of
notices and communications with a Taxing Authority relating to such Tax
Controversy (including, without limitation, any IRS revenue agent's reports or
similar reports, notices of proposed adjustment, or notices of deficiency).
(b) Control of Tax Proceedings. The Indemnifying
Party may elect to control, and may elect to have sole discretion in
handling, settling or contesting any audit inquiry, information
request, audit proceedings, suit, contest or any other action with
respect to a Tax Controversy for which it would be required to
indemnify the other party if it acknowledges in writing that it has
sole liability for any Taxes that might arise in such proceeding.
Notwithstanding anything to the contrary herein, the Indemnifying Party
shall, upon the written request of the Indemnitee, keep the Indemnitee
informed of all material developments relating to the applicable Tax
Controversy and the Indemnitee may, at its own cost and expense and
with its own counsel, monitor and participate in (but not control) the
defense of such applicable Tax Controversy. The Indemnifying Party
shall not admit any liability with respect to, or settle, compromise or
discharge, any Tax proceeding with respect to a Tax Controversy on a
basis that would adversely affect the Indemnitee without obtaining the
Indemnitee's written consent, which consent shall not be unreasonably
withheld, conditioned or delayed; provided, however, if the Indemnitee
unreasonably withholds such consent to any such settlement, compromise
or discharge recommended by the Indemnifying Party, then the
Indemnifying Party (i) shall not in any event be obligated to indemnify
the Indemnitee, or otherwise be responsible, for any amount in excess
of the amount of the settlement, compromise or discharge so recommended
by the Indemnifying Party and (ii) shall be entitled to reimbursement
of the fees and expenses of counsel incurred by the Indemnifying Party
after the date on which the recommendation was made to the
17
Indemnitee in the event the final and unappealable judgment in such Tax
Controversy exceeds the amount of the settlement, compromise or
discharge so recommended. The Indemnitee shall not admit any liability
with respect to, or settle, compromise or discharge, any Tax
Controversy without obtaining the Indemnifying Party's written consent,
which consent shall not be unreasonably withheld, conditioned or
delayed. Any out-of-pocket costs incurred in handling, settling or
contesting a Tax Controversy shall be borne by the Indemnifying Party.
SECTION 5.03. Indemnification Payments. (a) If an Indemnitee
has a claim for an indemnification payment from an Indemnifying Party under this
Agreement, the Indemnitee shall promptly provide to the Indemnifying Party
notice of such claim, including a description of such claim and a detailed
calculation of the amount of the indemnification payment that is claimed. The
Indemnifying Party shall pay the amount of such indemnification obligation to
the Indemnitee no later than 10 business days prior to the Due Date for the
payment of the relevant Tax or 10 business days after the Indemnifying Party
receives the Indemnitee's calculations of the Indemnifying Party's
indemnification obligation hereunder, whichever occurs last, unless the
Indemnifying Party reasonably disputes the amount of, or its liability for, such
payment. Interest shall accrue with respect to any indemnification payment
(including, without limitation, any disputed payment that is ultimately required
to be made) not made within the period provided for payment, at the Underpayment
Rate in effect under the Code at such time.
(b) The amount of all indemnification obligations
under this Agreement (other than the Distribution Gain Payment) shall
be calculated on an after-tax basis (without taking into account any
net operating loss or other similar tax credit or item available to
offset such amount). Any payments made to one party by another party
pursuant to this Agreement shall be treated for all Tax purposes as
nontaxable payments (distributions or capital contributions, as the
case may be) made immediately prior to the Merger, unless, and then
only to the extent, otherwise required by a Final Determination.
18
(c) All indemnification payments under this Agreement
shall be reduced to take account of the present value of any net Tax
benefit (including, but not limited to, any current or future
deductions, any reduction of income or gain upon a sale, disposition,
conveyance, license or other similar transaction as a result of
increased Tax basis, any Tax refunds received, any use of a credit of
Taxes and any increase in the amount of losses, reliefs, allowances or
other similar Tax attributes) realized by the Indemnitee in connection
with or otherwise arising (directly or indirectly) from a Tax
Controversy. Upon the written request of the Indemnifying Party, the
Indemnitee shall provide the amount of the Tax benefit realized by the
Indemnitee in connection with or otherwise arising (directly or
indirectly) from a Tax Controversy together with reasonable detail with
respect to such calculation. In computing the amount of any such Tax
benefit, the Indemnitee shall be deemed to recognize all other items of
income, gain, loss, deduction or credit before recognizing any item
arising from the receipt of any indemnification payment hereunder or
from a Tax Controversy. The Indemnitee shall cooperate fully with all
commercially reasonable requests from the Indemnifying Party in
connection with determining the present value of such net Tax benefit.
SECTION 5.04. Cooperation and Exchange of Information. (a)
Each member of the Company Group, Post-Merger Company Group, and the Newco Group
shall cooperate fully with all reasonable requests from the other party in
connection with the preparation and filing of Tax Returns, claims for refund,
and Tax proceedings concerning issues or other matters covered by this
Agreement. Such cooperation shall include, without limitation:
(i) the retention until the expiration of the
applicable statute of limitations (taking into account any
extensions or waivers thereof), and the provision upon
request, of Tax Returns, books, records (including, without
limitation, information regarding ownership and Tax basis of
property), documentation and other information relating to the
Tax Returns, including accompanying schedules, related work
papers, and
19
any other documents relating to rulings or other
determinations by Taxing Authorities;
(ii) the execution of any document that may be
necessary or reasonably helpful in connection with any Tax
proceeding, or the filing of a Tax Return or refund claim by a
member of the Company Group or Newco Group, including
certification, to the best of a party's knowledge, of the
accuracy and completeness of the information it has supplied;
and
(iii) the use of the parties' reasonable best efforts
to obtain any documentation that may be necessary or
reasonably helpful in connection with any of the foregoing.
Each party shall use its reasonable best efforts to make its employees and
facilities available on a reasonable and mutually convenient basis in connection
with the foregoing matters.
(b) If a party fails to comply with any of its
obligations set forth in Section 5.04(a) of this Agreement upon
reasonable request and notice by the other party, and such failure
results in the imposition of additional Taxes, the nonperforming party
shall be liable in full for such additional Taxes.
SECTION 5.05. Retention of Information. Without limiting
Section 5.04(a)(i) of this Agreement, if a party wishes to dispose of
documentation of the Company or Newco or any member of its respective Group,
including, without limitation, books, records, Tax Returns and all supporting
schedules and information relating thereto after the expiration of the
applicable statute of limitations (taking into account any extensions or waivers
thereof), then it shall provide written notice to the other party describing the
documentation to be destroyed or disposed of 60 days prior to taking such
action. The other party may arrange to take delivery of the documentation
described in the notice at its expense during the succeeding 60-day period.
SECTION 5.06. Disputes. If the parties disagree as to the
calculation of any Tax or the amount of (but not
20
liability for) any payment to be made under this Agreement, the parties shall
cooperate in good faith to resolve any such dispute, and any agreed-upon amount
shall be promptly paid to the appropriate party. If the parties are unable to
resolve such dispute within 30 days thereafter, such dispute shall be resolved
by a nationally recognized law firm or independent accounting firm mutually
acceptable to the Company and Newco or, if the Company and Newco are not able to
so agree within 10 days after the end of such 30-day period, then the Company
and Newco shall each select such a firm and such firms shall jointly select a
third nationally recognized law firm or independent accounting firm to resolve
the disputed matter (such firm or firms, the "Neutral Expert"). In all cases,
the firm (or, if applicable, each of the firms) selected to serve as the Neutral
Expert shall designate a partner who has had no prior contact with either party
to receive and review any and all submissions from the parties. The parties
shall instruct the Neutral Expert to render its decision in written form and as
promptly as practicable, but in no event later than 45 days after its selection.
The decision of the Neutral Expert shall be final and binding. The fees and
expenses incurred in connection with such decision shall be shared by the
Company and Newco in proportion to the final allocation of the Tax liability in
dispute. Following the decision of the Neutral Expert, the parties shall each
take (or cause to be taken) any action that is necessary or appropriate to
implement such decision, including the filing of amended Tax Returns.
ARTICLE VI
Miscellaneous and General
SECTION 6.01. Modification or Amendment. The parties hereto
may modify or amend this Agreement only by written agreement executed and
delivered by duly authorized officers of all of the respective parties hereto.
SECTION 6.02. Termination. In the event the Merger Agreement
is terminated pursuant to its terms prior to the Effective Time, this Agreement
shall automatically and simultaneously terminate. In the event of such
termination, no party shall have any liability to any other party pursuant to
this Agreement. It is understood that
21
the consummation of the Merger shall not constitute a termination of this
Agreement.
SECTION 6.03. Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties at the following addresses (or at such
other address for a party as shall be specified by like notice)
(a) if to the Company (from and after the Effective Time) or
to Parent or Sub, to
Roche Holdings LTD
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇-▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company (prior to the Effective Time) or to
Newco, to
IGEN International, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cravath, Swaine & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 6.04. Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall not be deemed
to be followed by the words "without limitation", unless so specified. The words
"hereof", "herein", "hereby" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The words "date hereof" shall refer to
the date of this Agreement. The term "or" is not exclusive. The word "extent" in
the phrase "to the extent" shall mean the degree to which a subject or other
thing extends, and such phrase shall not mean simply "if". The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms. Any agreement or instrument defined or referred to herein
or in any agreement or instrument that is referred to herein means such
agreement or instrument as from time to time amended, modified or supplemented.
References to a person are also to its permitted successors and assigns.
SECTION 6.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
applicable Law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
23
SECTION 6.06. Counterparts. This 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 parties. Each party
need not sign the same counterpart.
SECTION 6.07. Entire Agreement; Third-Party Beneficiaries.
This Agreement taken together with the other Transaction Agreements, the
Confidentiality Agreement and the Letter Agreement constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof and
thereof. Except for Section 3.01(a), Section 3.01(b), Section 3.03, Section 5.04
and Section 5.05 of this Agreement, nothing contained in this Agreement is
intended to confer upon any person or entity other than the parties hereto and
their respective successors and permitted assigns, any benefit, right or remedy
under or by reason of this Agreement.
SECTION 6.08. Certain Obligations. Whenever this Agreement
requires any of the subsidiaries of any party to take any action, this Agreement
will be deemed to include, without limitation, an undertaking on the part of
such party to cause such subsidiary to take such action; provided, however, for
the avoidance of doubt, at any time after the Effective Time, Newco and its
subsidiaries shall not be considered to be subsidiaries of the Company.
SECTION 6.09. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 6.10. Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties. Any purported assignment without
such consent shall be void; provided, however, the parties acknowledge and agree
that the conversion of Newco in accordance with Section 2.01 of the
Restructuring Agreement and the
24
continuation of Newco as a result thereof shall be deemed not to be an
assignment and shall not require any consent of any party. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 6.11. Enforcement; Consent to Service of Process. The
parties agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any New York state court or any Federal court located in the State
of New York, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of any New York state
court or any Federal court located in the State of New York in the event any
dispute arises out of this Agreement or any Transaction, (ii) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that it will not bring any
action relating to this Agreement or any Transaction in any court other than any
New York state court or any Federal court sitting in the State of New York and
(iv) waives any right to trial by jury with respect to any action related to or
arising out of this Agreement or any Transaction.
SECTION 6.12. Extension; Waiver. At any time prior to the
Restructuring, the parties may (a) extend the time for the performance of any of
the obligations or other acts of the other parties or (b) waive compliance with
any of the agreements or conditions contained herein. Any agreement on the part
of a party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
25
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed by its respective duly authorized officer as of the
date first set forth above.
ROCHE HOLDING LTD
by /s/ D. ▇▇▇▇▇ ▇. ▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chairman
by /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
66 ACQUISITION CORPORATION II
by /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
IGEN INTERNATIONAL, INC.
by /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
IGEN INTEGRATED HEALTHCARE, LLC
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Operating
Officer
26