EXHIBIT 10.1
DRAFT: FEBRUARY 14, 2000
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REORGANIZATION AGREEMENT
Dated as of March 15, 2000
by and between
▇▇▇▇▇▇ INTERNATIONAL INC.
and
▇▇▇▇▇▇▇ LIFESCIENCES CORPORATION
TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS AND INTERPRETATION................................... 2
1.1. Definitions.......................................................... 2
1.2. Interpretation....................................................... 19
ARTICLE II - THE DISTRIBUTION................................................ 20
2.1. Issuance and Delivery of ▇▇▇▇▇▇▇ Shares.............................. 21
2.2. Distribution of ▇▇▇▇▇▇▇ Shares....................................... 21
2.3. Treatment of Fractional Shares....................................... 21
2.4. Baxter Board Action.................................................. 21
2.5. Additional Approvals................................................. 22
ARTICLE III - FOREIGN TRANSFERS.............................................. 22
3.1. ▇▇▇▇▇▇▇ World Trade.................................................. 22
3.2. Puerto Rico (936).................................................... 22
3.3. Puerto Rico (MS&P)................................................... 23
3.4. Dominican Republic................................................... 24
3.5. Mexico............................................................... 24
3.6. Brazil............................................................... 25
3.7. Canada............................................................... 25
3.8. China................................................................ 26
3.9. Taiwan............................................................... 26
3.10. Singapore and the Philippines........................................ 27
3.11. Malaysia............................................................. 27
3.12. Thailand............................................................. 28
3.13. Korea................................................................ 28
3.14. India................................................................ 28
3.15. Intentionally Blank.................................................. 29
3.16. Switzerland.......................................................... 29
3.17. EU Holdings (Denmark)................................................ 30
3.18. Germany.............................................................. 31
3.19. Austria.............................................................. 32
3.20. France............................................................... 33
3.21. Italy................................................................ 33
3.22. Belgium/Luxembourg................................................... 34
3.23. Netherlands.......................................................... 34
3.24. Uden................................................................. 35
3.25. Spain................................................................ 35
3.26. United Kingdom....................................................... 36
3.27. Restrictions on Intercompany Debt.................................... 36
3.28. Transfer of Assets................................................... 37
3.29. Transfer of Liabilities.............................................. 37
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TABLE OF CONTENTS
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(Continued)
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3.30. Transfer of ▇▇▇▇▇▇▇ World Trade to Baxter............................ 37
3.31. ▇▇▇▇▇▇▇ Holdings Switzerland......................................... 37
ARTICLE IV - TRANSFERS TO ▇▇▇▇▇▇▇ U.S. OPERATING SUBSIDIARY.................. 37
4.1. Organization of ▇▇▇▇▇▇▇ U.S. Operating Subsidiary.................... 37
4.2. Transfer of Assets................................................... 38
4.3. Transfer of Third-Party Distribution Contracts....................... 38
4.4. Assumption of Liabilities............................................ 38
4.5. Transfer of Operating Subsidiaries................................... 38
ARTICLE V - ORGANIZATION OF ▇▇▇▇▇▇▇ LIFESCIENCES CORPORATION................. 38
5.1. Organization of ▇▇▇▇▇▇▇.............................................. 38
5.2. Transfer of Certain Subsidiaries..................................... 39
5.3. Transfer of Assets................................................... 39
5.4. Transfer of Liabilities.............................................. 39
ARTICLE VI - EXCLUSIONS FROM TRANSFERS....................................... 39
6.1. Retained Assets...................................................... 39
6.2. Retained Liabilities................................................. 40
6.3. Termination of Existing Intercompany Agreements...................... 40
ARTICLE VII - ASSET SEPARATION CLOSING MATTERS............................... 41
7.1. Delivery of Instruments of Conveyance................................ 41
7.2. Delivery of Other Agreements......................................... 41
7.3. Non-Assignable Contracts............................................. 41
7.4. Further Assurances................................................... 42
7.5. Novation of Assumed Liabilities...................................... 43
7.6. Nominee Shares....................................................... 43
7.7. Provision of Corporate Records....................................... 43
ARTICLE VIII - REPRESENTATIONS AND WARRANTIES................................ 44
8.1. Organization, Good Standing and Authority of Baxter.................. 44
8.2. Organization, Good Standing and Authority of ▇▇▇▇▇▇▇................. 44
8.3. No Other Representations and Warranties.............................. 44
ARTICLE IX - CERTAIN COVENANTS............................................... 45
9.1. Conduct of ▇▇▇▇▇▇▇ Business Pending the Distribution Date............ 45
9.2. Registration and Listing............................................. 45
9.3. Funds Distributed to Baxter.......................................... 46
9.4. Post-Distribution Tax-Related Restrictions........................... 46
9.5. Intercompany Receivables and Payables, Cash Management and True-Up... 47
9.6. Collection of Accounts Receivable.................................... 48
9.7. Agreements Relating to Baxter and ▇▇▇▇▇▇▇............................ 48
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TABLE OF CONTENTS
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(Continued)
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9.8. Certain Releases..................................................... 49
9.9. Litigation........................................................... 49
9.10. Liability for Previously Delivered Products.......................... 49
9.11. ▇▇▇▇▇▇▇ Bank Accounts................................................ 51
9.12. Informal, Nondocumented Real Estate Leases........................... 51
9.13. Third Party Consents................................................. 52
9.14. Material Governmental Approvals and Consents......................... 52
9.15. Late Payments........................................................ 52
9.16. Nextran Heart........................................................ 52
ARTICLE X - INTELLECTUAL PROPERTY LICENSES................................... 52
10.1. License to Baxter of Transferred Intellectual Property............... 52
10.2. License to ▇▇▇▇▇▇▇ of Retained Baxter Intellectual Property.......... 54
10.3. Use by ▇▇▇▇▇▇▇ of ▇▇▇▇▇▇'▇ Trademarks................................ 56
10.3. Use by ▇▇▇▇▇▇▇ of ▇▇▇▇▇▇'▇ Trademarks................................ 56
ARTICLE XI - CONDITIONS TO THE DISTRIBUTION.................................. 57
11.1. Approval by Baxter Board of Directors................................ 57
11.2. Receipt of IRS Private Letter Tax Ruling............................. 57
11.3. Compliance with State and Foreign Securities and..................... 57
11.4. SEC Filings and Approvals............................................ 58
11.5. Filing and Effectiveness of Registration Statement; No Stop Order.... 58
11.6. Approval of NYSE Listing Application................................. 58
11.7. Receipt of Fairness Opinions of Financial Advisors................... 58
11.8. Ancillary Agreements................................................. 58
11.9. Resignations......................................................... 58
11.10. Election of ▇▇▇▇▇▇▇ Board............................................ 58
11.11. Consents............................................................. 58
11.12. No Actions........................................................... 59
11.13. New Credit Facility.................................................. 59
11.14. Consummation of Pre-Distribution Transactions........................ 59
11.15. No Other Events...................................................... 59
11.16. Satisfaction of Conditions........................................... 59
ARTICLE XII - EMPLOYEES AND EMPLOYEE BENEFIT MATTERS......................... 59
12.1. ▇▇▇▇▇▇▇ Employees.................................................... 59
12.2. Employment of ▇▇▇▇▇▇▇ Employees...................................... 59
12.3. Terminations/Layoff/Severance........................................ 60
12.4. International ▇▇▇▇▇▇▇ Employees...................................... 60
12.5. Employment Solicitation.............................................. 60
12.6. WARN Act............................................................. 61
12.7. Leave of Absence Policies............................................ 61
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TABLE OF CONTENTS
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(Continued)
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12.8. Withdrawal from Participation in Baxter Plans and
Establishment of ▇▇▇▇▇▇▇ Plans....................................... 62
12.9. Transfer of Account Balances and Accrued Benefits.................... 62
12.10. Entitlement to Distributions Under Pension Plan...................... 64
12.11. Welfare Benefits Provided Under ▇▇▇▇▇▇▇ Plans........................ 64
12.12. Stock Purchase Plans................................................. 65
12.13. Workers' Compensation................................................ 65
12.14. Vacation Pay Policy.................................................. 65
12.15. Non-Qualified Deferred Compensation Plans............................ 65
12.16. Split-Dollar Life Insurance.......................................... 65
12.17. Restricted Stock..................................................... 65
12.18. Information to be Provided to Baxter................................. 65
12.19. Corporate Action; Delegation of Authority............................ 66
12.20. Transfer of Employee Files........................................... 66
ARTICLE XIII - INSURANCE MATTERS............................................. 66
13.1. Insurance Prior to the Distribution Date............................. 66
13.2. Ownership of Existing Policies and Programs.......................... 66
13.3. Procurement of Insurance for ▇▇▇▇▇▇▇................................. 66
13.4. Acquisition and Maintenance of Post-Distribution
▇▇▇▇▇▇▇ Insurance Policies and Programs.............................. 67
13.5. ▇▇▇▇▇▇▇ Directors' and Officers' Insurance........................... 67
13.6. Pre-Distribution Insurance Claims Administration..................... 68
13.7 Post-Distribution Insurance Claims Administration.................... 68
13.8. Non-Waiver of Rights to Coverage..................................... 69
13.9. Scope of Affected Policies of Insurance.............................. 69
ARTICLE XIV - EXPENSE AND TAX MATTERS........................................ 69
14.1. Allocation of Expenses............................................... 69
14.2. Allocation of Taxes.................................................. 70
ARTICLE XV - RELEASE AND INDEMNIFICATION..................................... 70
15.1. Release of Pre-Distribution Claims................................... 70
15.2. Indemnification by ▇▇▇▇▇▇▇........................................... 72
15.3. Indemnification by Baxter............................................ 73
15.4. Applicability of and Limitation on Indemnification................... 74
15.5. Adjustment of Indemnifiable Losses................................... 74
15.6. Procedures for Indemnification of Third Party Claims................. 76
15.7. Procedures for Indemnification of Direct Claims...................... 77
15.8. Contribution......................................................... 78
15.9. No Third-Party Beneficiaries......................................... 78
15.10. Remedies Cumulative.................................................. 78
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TABLE OF CONTENTS
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(Continued)
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15.11. Survival............................................................. 78
ARTICLE XVI - DISPUTE RESOLUTION............................................. 78
16.1. General.............................................................. 78
16.2. Escalation........................................................... 79
16.3. Arbitration.......................................................... 79
16.4. Procedures........................................................... 79
16.5. Injunctive Relief.................................................... 80
ARTICLE XVII - ACCESS TO INFORMATION AND SERVICES............................ 80
17.1. Access to Financial Information...................................... 80
17.2. Ownership of Information............................................. 81
17.3. Compensation for Providing Information............................... 81
17.4. Retention of Records................................................. 81
17.5. Limitations.......................................................... 81
17.6. Production of Witnesses.............................................. 82
17.7. Confidentiality...................................................... 82
17.8. Privileged Matters................................................... 83
ARTICLE XVIII - MISCELLANEOUS................................................ 84
18.1. Entire Agreement..................................................... 84
18.2. Choice of Law and Forum.............................................. 84
18.3. Amendment............................................................ 84
18.4. Waiver............................................................... 84
18.5. Partial Invalidity................................................... 85
18.6. Execution in Counterparts............................................ 85
18.7. Successors and Assigns............................................... 85
18.8. Third Party Beneficiaries............................................ 85
18.9. Notices.............................................................. 85
18.10. Performance.......................................................... 86
18.11. Force Majeure........................................................ 86
18.12. No Public Announcement............................................... 86
18.13. Termination.......................................................... 86
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EXHIBITS
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Exhibit A - ▇▇▇▇▇▇▇ Business
Exhibit B - Implementation Agreements
Exhibit C - Operating Agreements
Exhibit D - Tax Sharing Agreement
Exhibit E - Amended and Restated Certificate of Incorporation of ▇▇▇▇▇▇▇
Exhibit F - Amended and Restated By-laws of ▇▇▇▇▇▇▇
Exhibit G - Form of ▇▇▇▇▇▇▇ Stockholder Rights Plan
Exhibit H - Board of Directors of ▇▇▇▇▇▇▇
SCHEDULES
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Schedule 1.1(b) - BHC Loans
Schedule 1.1(f) - CERCLA and OSHA Liabilities
Schedule 1.1(g) - Other Assumed Environmental Liabilities
Schedule 1.1(l) - Guarantees and Letters of Credit
Schedule 1.1(m) - Indemnification Agreements
Schedule 1.2(d) - Owned Real Property
Schedule 1.2(e) - Real Property Leases
Schedule 1.2(g)(ii) - Patents
Schedule 1.2(g)(iv) - Trademarks
Schedule 1.2(h)(i) - Contracts Related to Acquisitions or Divestitures
Schedule 1.2(h)(ii) - Customer Contracts
Schedule 1.2(h)(iv) - Government Contracts
Schedule 1.2(h)(v) - Supplier Contracts
Schedule 1.2(h)(vi) - Joint Development and Confidentiality Contracts
Schedule 1.2(h)(vii) - Consulting Contracts
Schedule 1.2(h)(viii) - Distribution Contracts
Schedule 1.2(h)(xi) - Personal Property Leases
Schedule 1.2(h)(xii) - Derivatives Contracts
Schedule 1.2(h)(xiii) - Other Contracts
Schedule 1.2(i) - Permits and Licenses
Schedule 1.2(j) - Claims and Indemnities
Schedule 1.2(k) - Subsidiaries, Joint Ventures and Minority Interests
Schedule 1.2(n) - Intellectual Property Licenses
Schedule 1.2(o) - Software and Software Contracts
Schedule 1.2(p) - Domain Names
Schedule 1.2(q) - Other Assets
Schedule 3.1 - Timing of Foreign Transfers
Schedule 4.3 - Foreign Subsidiaries' Third-Party Distribution Contracts
Schedule 6.1(h) - Baxter Distribution Countries
Schedule 6.2 - Retained Liabilities
Schedule 6.3 - Surviving Intercompany Agreements
Schedule 9.3 - Funds Distributed to Baxter
Schedule 9.7 - Shared Agreements
Schedule 9.9(a) - Assumed Actions
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Schedule 9.9(b) - Transferred Actions
Schedule 9.11 - Transferred Bank Accounts
Schedule 10.2(a) - Licensed Baxter Intellectual Property
Schedule 12.1 - ▇▇▇▇▇▇▇ Employees
Schedule 12.4 - Calculation of ▇▇▇▇▇▇▇ Foreign Employees' Pension Benefits
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REORGANIZATION AGREEMENT
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REORGANIZATION AGREEMENT, dated as of March 15, 2000, by and between
▇▇▇▇▇▇ International Inc., a Delaware corporation ("Baxter"), and ▇▇▇▇▇▇▇
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Lifesciences Corporation, a Delaware corporation ("▇▇▇▇▇▇▇") which is, as of the
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date hereof, a wholly-owned Subsidiary (as hereinafter defined) of Baxter.
WHEREAS, Baxter, through its Subsidiaries, provides, inter alia, a
comprehensive line of therapies and services to treat late-stage cardiovascular
disease (as more fully described in Exhibit A hereto, the "▇▇▇▇▇▇▇ Business");
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WHEREAS, the Board of Directors of Baxter has determined that it would
be advisable and in the best interests of Baxter and its stockholders for Baxter
to transfer to ▇▇▇▇▇▇▇ and/or one or more of its Subsidiaries the business,
operations, assets and liabilities related to the ▇▇▇▇▇▇▇ Business;
WHEREAS, Baxter has agreed to transfer and assign, or cause to be
transferred and assigned, to ▇▇▇▇▇▇▇ or one or more of its Subsidiaries
substantially all of the assets and properties related to the ▇▇▇▇▇▇▇ Business
held by ▇▇▇▇▇▇, ▇▇▇▇▇▇ Healthcare Corporation, a Delaware corporation ("BHC")
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and a wholly-owned Subsidiary of Baxter, and, subject to certain exceptions,
certain other Subsidiaries of Baxter, and ▇▇▇▇▇▇▇ has agreed to assume, or cause
to be assumed by one or more of its Subsidiaries, certain liabilities and
obligations arising out of or relating to the ▇▇▇▇▇▇▇ Business;
WHEREAS, the Board of Directors of Baxter has determined that it would
be advisable and in the best interests of Baxter and its stockholders for Baxter
to distribute on a pro-rata basis to the holders of record of Baxter common
stock, par value $1.00 per share (the "Baxter Common Stock"), without any
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consideration being paid by such holders, all of the outstanding shares of
▇▇▇▇▇▇▇ common stock, par value $1.00 per share (the "▇▇▇▇▇▇▇ Common Stock")
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owned directly and indirectly by Baxter (the "Distribution");
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WHEREAS, for United States federal income tax purposes, the
Distribution is intended to qualify as a tax-free spin-off within the meaning of
Sections 355 and 368(a)(1)(D) of the United States Internal Revenue Code of
1986, as amended (the "Code"); and
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WHEREAS, it is appropriate and desirable to set forth the principal
corporate transactions required to effect the Distribution and certain other
agreements that will govern the relationship of Baxter and ▇▇▇▇▇▇▇ following the
Distribution;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Baxter and ▇▇▇▇▇▇▇
agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
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1.1. Definitions. In this Agreement, the following terms have the
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meanings specified or referred to in this Section 1.1:
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"Act" has the meaning specified in Section 9.10(a).
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"Action" means any action, claim, suit, arbitration, inquiry,
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subpoena, discovery request, proceeding or investigation by or before any court
or grand jury, any governmental or other regulatory or administrative entity,
agency or commission or any arbitration tribunal.
"Active ▇▇▇▇▇▇▇ Employees" means any regular full-time or part-time
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employee of Baxter or one of its Subsidiaries who commences employment with
▇▇▇▇▇▇▇ or one of its Subsidiaries on the Distribution Date.
"Actually Using" has the meaning specified in Section 10.1(a).
-------------- ---------------
"Affiliate" means, with respect to any Person, any other Person that
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directly or indirectly controls, is controlled by or is under common control
with such Person. For the purpose of this definition, the term "control" means
the power to direct the management of an entity, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
term "controlled" has the meaning correlative to the foregoing. After the
Distribution Date, ▇▇▇▇▇▇▇ and Baxter shall not be deemed to be under common
control for purposes hereof due solely to the fact that ▇▇▇▇▇▇▇ and Baxter have
common stockholders.
"Anasco Division" has the meaning specified in Section 3.2.
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"Assumed Actions" has the meaning specified in Section 9.9(a).
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"Assumed Liabilities" means all contractual and other Liabilities of
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Baxter or any of its Subsidiaries (excluding the Retained Liabilities) arising
out of or relating to the ▇▇▇▇▇▇▇ Business, any Divested Business and/or any of
the past or present facilities of Baxter or any of its Subsidiaries used
primarily in connection with the ▇▇▇▇▇▇▇ Business or any Divested Business,
whether due or to become due, including:
(a) All Liabilities (excluding, except as provided in subparagraph (b)
below, Loans owed to Baxter or any of its Subsidiaries) that are reflected,
disclosed or reserved for on the Balance Sheet, as such Liabilities may be
increased or decreased in the operation of the ▇▇▇▇▇▇▇ Business from the
date of the Balance Sheet through the Distribution Date in the ordinary
course of business consistent with past practice;
(b) The Loans set forth on Schedule 1.1(b) hereto; [DETAILS OF DEBT
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PUSHDOWN TO COME FROM ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ AND ▇▇▇▇ ▇▇▇▇▇]
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(c) All Liabilities under or related to the Real Estate Leases and the
▇▇▇▇▇▇▇ Contracts, such assumption to occur as (i) assignee if such Real
Estate Leases and ▇▇▇▇▇▇▇ Contracts are assignable and are assigned or
otherwise transferred to ▇▇▇▇▇▇▇ or one of its Subsidiaries, or (ii)
subcontractor, sublessee or sublicensee as provided in Section 7.3 below if
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assignment of such Real Estate Leases and ▇▇▇▇▇▇▇ Contracts and/or the
proceeds thereof is prohibited by law, by the terms thereof or not
permitted by the other contracting party;
(d) All warranty, performance and similar obligations entered into or
made prior to the Distribution Date with respect to the products or
services of the ▇▇▇▇▇▇▇ Business;
(e) All Liabilities related to any and all Actions asserting a
violation of any law, rule or regulation related to or arising out of the
operations of the ▇▇▇▇▇▇▇ Business, whether before or after the
Distribution Date and the Liabilities relating to any Assumed Actions (as
hereinafter defined);
(f) All Liabilities arising under (i) CERCLA and any other foreign,
federal, state or local laws regarding the management, control and clean-up
of hazardous materials (including off-site waste disposal liabilities) or
(ii) the Occupational Safety and Health Act or similar state laws or
regulations, in either case relating to or arising out of the operations of
the ▇▇▇▇▇▇▇ Business, whether before or after the Distribution Date,
including those set forth on Schedule 1.1(f) hereto;
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(g) All environmental Liabilities relating to facilities transferred
to ▇▇▇▇▇▇▇ or one of its Subsidiaries in fee or by way of an assignment of
a lease or sublease from a third party, including those set forth on
Schedule 1.1(g) hereto;
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(h) All Liabilities in connection with claims of past or current
employees of the ▇▇▇▇▇▇▇ Business, whether incurred prior to, on or after
the Distribution Date;
(i) All Liabilities under any mortgage interest subsidy program on
behalf of any ▇▇▇▇▇▇▇ Employee; [▇▇▇▇ ▇▇▇▇▇▇ AND ▇▇▇ ▇▇▇▇▇▇]
(j) All Liabilities associated with the transfer of assets from the
Baxter Savings Plan to the ▇▇▇▇▇▇▇ Savings Plan;
(k) All Liabilities related to the Transferred Intellectual Property
included as part of the Transferred Assets;
(l) All Liabilities under each of the guarantees and letters of credit
set forth on Schedule 1.1(l) hereto; [▇▇▇ ▇▇▇▇▇▇▇]
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(m) All liabilities under the indemnification agreements set forth on
Schedule 1.1(m);
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(n) All Liabilities for property taxes with respect to any of the
Transferred Assets;
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(o) [All Liabilities for deferred taxes with respect to the ▇▇▇▇▇▇▇
Business]; and
(p) All other Liabilities (other than the Retained Liabilities)
relating to the ▇▇▇▇▇▇▇ Business or any Divested Business, whether existing
on the date hereof or arising at any time or from time to time after the
date hereof, and whether based on circumstances, events or actions arising
heretofore or hereafter, whether or not such Liabilities shall have been
disclosed herein, and whether or not reflected on the books and records of
Baxter or ▇▇▇▇▇▇▇ or the Balance Sheet.
"Balance Sheet" has the meaning specified in paragraph (a) of the
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definition of "Transferred Assets."
"Baxter" has the meaning specified in the first paragraph of this
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Agreement.
"Baxter Alaska" has the meaning specified in Section 3.2.
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"Baxter Austria" has the meaning specified in Section 3.19.
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"Baxter Asia" has the meaning specified in Section 3.10.
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"▇▇▇▇▇▇ Belgium" has the meaning specified in Section 3.22.
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"Baxter Cafeteria Plans" means the ▇▇▇▇▇▇ International Inc. Flexible
----------------------
Benefits Plan, the ▇▇▇▇▇▇ International Inc. Health Care Reimbursement Plan and
the ▇▇▇▇▇▇ International Inc. Dependent Care Reimbursement Plan.
"▇▇▇▇▇▇ Canada" has the meaning specified in Section 3.7.
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"Baxter China" has the meaning specified in Section 3.8.
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"Baxter Common Stock" has the meaning specified in the fifth paragraph
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of this Agreement.
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ AG, a company organized under
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the laws of Switzerland.
"Baxter Export Corporation" means Baxter Export Corporation, a Nevada
-------------------------
corporation.
"Baxter France " has the meaning specified in Section 3.20.
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"Baxter Germany" means ▇▇▇▇▇▇ Deutschland GmbH, a German limited
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company and a wholly-owned Subsidiary of Baxter Germany Holdings.
"Baxter Germany Holdings" means ▇▇▇▇▇▇ Deutschland Holding GmbH, a
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German limited company and a wholly-owned Subsidiary of Baxter World Trade.
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"Baxter Group Member" means Baxter and (a) any corporation that is a
-------------------
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as Baxter; (b) a trade or business (whether or not
incorporated) under common control (within the meaning of Section 414(c) of the
Code) with Baxter; (c) any organization (whether or not incorporated) that is a
member of an affiliated service group (within the meaning of Section 414(m) of
the Code) that includes Baxter, a corporation described in clause (a) of this
definition or a trade or business described in clause (b) of this definition or
(d) any other entity that is required to be aggregated with Baxter pursuant to
regulations promulgated under Section 414(o) of the Code.
"Baxter Hospitilar" means Baxter Hospitilar Ltda., a company organized
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under the laws of Brazil.
"Baxter Indemnified Parties" has the meaning specified in Section
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15.2.
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"Baxter Italy" has the meaning specified in Section 3.21.
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"Baxter Japan" means Baxter Limited, a Japanese corporation.
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"▇▇▇▇▇▇ Korea" has the meaning specified in Section 3.13.
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"▇▇▇▇▇▇ ▇▇▇▇▇" has the meaning specified in Section 10.4.
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"Baxter Mexico" has the meaning specified in Section 3.5.
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"Baxter Netherlands" has the meaning specified in Section 3.23.
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"Baxter Panama" has the meaning specified in Section 3.4.
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"Baxter Pension Plan" has the meaning specified in Section 12.10.
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"Baxter Pharmacy Services" means Baxter Pharmacy Services Corporation,
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a Delaware corporation.
"Baxter Philippines" has the meaning specified in Section 3.10.
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"Baxter Plans" has the meaning specified in Section 12.8(a).
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"Baxter Policy" and "Baxter Policies" have the meanings specified in
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Section 13.2.
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"▇▇▇▇▇▇ ▇▇ Pension Plan" has the meaning specified in Section 12.9(c).
---------------------- ---------------
"▇▇▇▇▇▇ ▇▇ Savings Plan" has the meaning specified in Section 12.9(b).
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"Baxter Products" means those products manufactured by Baxter or its
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Subsidiaries (as they would exist immediately following the Distribution Date)
(except for products manufactured for ▇▇▇▇▇▇▇ or its Subsidiaries by Baxter or
its Subsidiaries pursuant to
-5-
the Manufacturing Contracts but including those products manufactured for Baxter
and its Subsidiaries by ▇▇▇▇▇▇▇ or its Subsidiaries pursuant to the
Manufacturing Contracts).
"Baxter Retiree Welfare Plan" means the Baxter Retiree Medical Plan
---------------------------
and the post-retirement life insurance portion of the Baxter Group Term Life
Insurance Plan.
"Baxter Sales and Distribution" shall have the meaning specified in
-----------------------------
Section 3.3.
-----------
"Baxter Savings Plan" has the meaning specified in Section 12.9(a).
------------------- ---------------
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Pay Plan" means the ▇▇▇▇▇▇ International Inc. and
-------------------------
Subsidiaries Severance Pay Plan.
"Baxter Share" means one share of Baxter Common Stock.
------------
"▇▇▇▇▇▇ Spain" has the meaning specified in Section 3.25.
------------ ------------
"Baxter Stock Purchase Plan" means the ▇▇▇▇▇▇ International Inc.
--------------------------
Employee Stock Purchase Plan for United States Employees.
"Baxter Taiwan" has the meaning specified in Section 3.9.
------------- -----------
"Baxter Thailand" has the meaning specified in Section 3.12.
--------------- ------------
"▇▇▇▇▇▇ U.K." has the meaning specified in Section 3.26.
----------- ------------
"Baxter Welfare Plans" means the ▇▇▇▇▇▇ Medical Plan, the Baxter Long-
--------------------
Term Disability Plan, the Baxter Personal Accident Insurance Plan, the Baxter
Business Travel Accident Insurance Plan, the Baxter Group Universal Life
Insurance Plan and the Baxter Cafeteria Plans.
"Baxter Woodlands" means ▇▇▇▇▇▇ Healthcare Pte. Ltd. (Singapore), a
----------------
company organized under the laws of Singapore.
"▇▇▇▇▇▇ World Trade" has the meaning specified in Section 3.1.
------------------ -----------
"BCPL" means Baxter Cardiovascular Private Limited, a company
----
organized under the laws of India.
"BHC" has the meaning specified in the fourth paragraph of this
---
Agreement.
"BIPL" means Baxter (India) Private Limited, a company organized under
----
the laws of India.
"BPCL" means Baxter Participacoes e Commercial Ltda., a company
----
organized under the laws of Brazil.
"BRL" means Baxter Representacoes Ltda., a company organized under the
---
laws of Brazil.
-6-
"Board of Directors" means the board of directors of the referenced
------------------
corporation or any duly authorized committee thereof.
"CERCLA" means the Comprehensive Environmental Response, Compensation
------
and Liability Act, as amended.
"Code" has the meaning specified in the sixth paragraph of this
----
Agreement.
"Contracts" has the meaning specified in paragraph (h) of the
--------- ---
definition of "Transferred Assets.
"Conveyancing Instruments" has the meaning specified in Section 7.1.
------------------------ -----------
"Copyrights" means United States and foreign copyrights, both
----------
registered and unregistered, along with the registrations and applications to
register any such copyrights.
"CPR" means the Center for Public Resources Institute for Dispute
---
Resolution.
"Distribution" has the meaning specified in the fifth paragraph of
------------
this Agreement.
"Distribution Date" means the date determined by the Board of
-----------------
Directors of Baxter as the date on which the ▇▇▇▇▇▇▇ Shares are distributable to
holders of record of Baxter Common Stock as of the Record Date.
"Divested Business" means any business primarily related to the
-----------------
▇▇▇▇▇▇▇ Business that was divested by Baxter or any of its Subsidiaries at any
time prior to the Distribution Date, including any business divested pursuant to
any of the agreements listed on Schedule 1.2(h)(i) as "Divestitures."
------------------
"▇▇▇▇▇▇▇" has the meaning specified in the first paragraph of this
-------
Agreement.
"▇▇▇▇▇▇▇ Austria" has the meaning specified in Section 3.19(a).
--------------- ---------------
"▇▇▇▇▇▇▇ Belgium" has the meaning specified in Section 3.22(a).
--------------- ---------------
"▇▇▇▇▇▇▇ Business" has the meaning specified in the second paragraph
----------------
of this Agreement.
"▇▇▇▇▇▇▇ Canada" has the meaning specified in Section 3.7(a).
-------------- --------------
"▇▇▇▇▇▇▇ Common Stock" has the meaning specified in the fifth
--------------------
paragraph of this Agreement.
"▇▇▇▇▇▇▇ Contracts" has the meaning specified in paragraph (h) of the
----------------- ---
definition of "Transferred Assets".
"▇▇▇▇▇▇▇ Credit Facility" has the meaning specified in Section 9.3.
----------------------- -----------
-7-
"▇▇▇▇▇▇▇ Deferred Compensation Plan" has the meaning specified in
----------------------------------
Section 12.8(b).
---------------
"▇▇▇▇▇▇▇ Distributable Share" means for each holder of record of
---------------------------
Baxter Common Stock as of the Record Date one (1) ▇▇▇▇▇▇▇ Share for every five
(5) Baxter Shares outstanding and held of record by such holder as of the Record
Date.
"▇▇▇▇▇▇▇ Dominican Republic" has the meaning specified in Section
-------------------------- -------
3.4(a).
------
"▇▇▇▇▇▇▇ Employees" has the meaning specified in Section 12.1.
----------------- ------------
"▇▇▇▇▇▇▇ EU Holdings" has the meaning specified in Section 3.17(a).
------------------- ---------------
"▇▇▇▇▇▇▇ Foreign Employees" has the meaning specified in Section 12.4.
------------------------- ------------
"▇▇▇▇▇▇▇ Foreign Entity" means any Subsidiary of Baxter that is
----------------------
located or incorporated in a jurisdiction outside the United States and will,
upon consummation of the transactions contemplated by this Agreement, become a
Subsidiary of ▇▇▇▇▇▇▇.
"▇▇▇▇▇▇▇ France" has the meaning specified in Section 3.20(a).
-------------- ---------------
"▇▇▇▇▇▇▇ Germany" has the meaning specified in Section 3.18(b)(i).
--------------- ------------------
"▇▇▇▇▇▇▇ Germany Holdings" has the meaning specified in Section
------------------------ -------
3.18(a)(i).
----------
"▇▇▇▇▇▇▇ Holdings Switzerland" has the meaning specified in Section
---------------------------- -------
3.15.
----
"▇▇▇▇▇▇▇ Indemnified Parties" has the meaning specified in Section
--------------------------- -------
15.3.
----
"▇▇▇▇▇▇▇ Italy" has the meaning specified in Section 3.21(a).
------------- ---------------
"▇▇▇▇▇▇▇ Korea" has the meaning specified in Section 3.13(a).
------------- ---------------
"▇▇▇▇▇▇▇ Lifesciences AG" has the meaning specified in Section
----------------------- -------
3.16(a)(i).
----------
"▇▇▇▇▇▇▇ LLC" has the meaning specified in Section 4.1(a).
----------- --------------
"▇▇▇▇▇▇▇ Mexico" has the meaning specified in Section 3.5(a).
-------------- --------------
"▇▇▇▇▇▇▇ Netherlands" has the meaning specified in Section 3.23(a).
------------------- ---------------
"▇▇▇▇▇▇▇ ▇▇ Employees" has the meaning specified in Section 12.9(b).
-------------------- ---------------
"▇▇▇▇▇▇▇ Products" means those products manufactured by ▇▇▇▇▇▇▇ or its
----------------
Subsidiaries (as they would exist immediately following the Distribution Date)
(excluding products manufactured for Baxter and its Subsidiaries by ▇▇▇▇▇▇▇ or
its Subsidiaries pursuant to the Manufacturing Contracts but including those
products manufactured for ▇▇▇▇▇▇▇ and its Subsidiaries by Baxter or its
Subsidiaries pursuant to the Manufacturing Contracts).
-8-
"▇▇▇▇▇▇▇ Puerto Rico (936)" has the meaning specified in Section
------------------------- -------
3.2(a).
------
"▇▇▇▇▇▇▇ Puerto Rico (MS&P)" has the meaning specified in Section
-------------------------- -------
3.3(a).
------
"▇▇▇▇▇▇▇ Savings Plan" has the meaning specified in Section 12.8(b).
-------------------- ---------------
"▇▇▇▇▇▇▇ Severance Plan" has the meaning specified in Section 12.8(b).
---------------------- ---------------
"▇▇▇▇▇▇▇ Share" means one share of ▇▇▇▇▇▇▇ Common Stock.
-------------
"▇▇▇▇▇▇▇ Spain" has the meaning specified in Section 3.25(a).
------------- ---------------
"▇▇▇▇▇▇▇ Stock Purchase Plan" means the ▇▇▇▇▇▇▇ Lifesciences
---------------------------
Corporation Employee Stock Purchase Plan for United States Employees.
"▇▇▇▇▇▇▇ Swiss Commissionaire" has the meaning specified in Section
---------------------------- -------
3.16(b)(i).
----------
"▇▇▇▇▇▇▇ ▇▇▇▇" has the meaning specified in Section 3.24(a).
------------ ---------------
"▇▇▇▇▇▇▇ UK" has the meaning specified in Section 3.26(a).
---------- ---------------
"▇▇▇▇▇▇▇ U.S." has the meaning specified in Section 4.1(b).
------------ --------------
"▇▇▇▇▇▇▇ Welfare Plans" has the meaning specified in Section 12.8(b).
--------------------- ---------------
"▇▇▇▇▇▇▇ World Trade" has the meaning specified in Section 3.1.
------------------- -----------
"Escalation Notice" has the meaning specified in Section 16.2(a).
----------------- ---------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
(together with the rules and regulations promulgated thereunder).
"Exclusively" (and, with correlative meaning, "Exclusive") means, when
----------- ---------
used in connection with the ▇▇▇▇▇▇▇ Business, used only with or relating only to
the ▇▇▇▇▇▇▇ Business.
"Expenses" means any and all expenses incurred in connection with
--------
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including court filing
fees, court costs, arbitration fees or costs, witness fees, and reasonable fees
and disbursements of legal counsel, investigators, expert witnesses,
consultants, accountants and other professionals).
"F.R.C.P." has the meaning specified in Section 16.4.
-------- ------------
"Foreign Exchange Rate" means, with respect to any currency other than
---------------------
United States dollars, as of any date of determination, the average of the
opening bid and asked rates on such date at which such currency may be exchanged
for United States dollars as quoted by Bank One, NA.
-9-
"Foreign Subsidiaries" has the meaning specified in Section 4.4.
-------------------- -----------
"Governmental Authority" means any foreign, federal, state, local or
----------------------
other government, governmental, statutory or administrative authority,
regulatory body or commission or any court, tribunal or judicial or arbitral
body.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
-------
1976, as amended, and the regulations promulgated thereunder.
"Implementation Agreements" means the agreements set forth in Exhibit
------------------------- -------
B hereto implementing the transactions referred to in Articles III, IV and V.
- ------------ -- -
"Inactive Employee" means any employee of Baxter or one of its
-----------------
Subsidiaries who immediately prior to the Distribution Date is on an approved
medical leave of absence or short-term disability leave or is absent from active
employment due to occupational illness or injury covered by workers'
compensation, but excluding any employee who is classified by Baxter or any of
its Subsidiaries as totally and permanently disabled on the Distribution Date
who is not on workers' compensation.
"Indemnified Party" has the meaning specified in Section 15.5(a).
----------------- ---------------
"Indemnifying Party" has the meaning specified in Section 15.5(a).
------------------ ---------------
"Indemnity Payment" has the meaning specified in Section 15.5(a).
----------------- ---------------
"Information" has the meaning specified in Section 17.1(a).
----------- ---------------
"Information Statement" has the meaning specified in Section 9.2(a).
--------------------- --------------
"Insurance Amount" has the meaning specified in Section 13.5.
---------------- ------------
"Insurance Charges" has the meaning specified in Section 13.7.
----------------- ------------
"Insurance Policies" means the insurance policies written by insurance
------------------
carriers unaffiliated with Baxter pursuant to which ▇▇▇▇▇▇▇ 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 (i) received by an insured
------------------
from an insurance carrier, (ii) paid by an insurance carrier on behalf of the
insured or (iii) received from any third Person in the nature of insurance,
contribution or indemnification in respect of any Liability, in each such case
net of any applicable premium adjustments (including reserves and
retrospectively rated premium adjustments) and net of any costs or expenses
(including allocated costs of in-house counsel and other personnel) incurred in
the collection thereof.
"Insured Claims" means those liabilities that, individually or in the
--------------
aggregate, are covered within the terms and conditions of any of the Baxter
Policies, whether or not subject to deductibles, co-insurance, uncollectability,
premium adjustments (including reserves),
-10-
retrospectively-rated premium adjustments or retentions, but only to the extent
that such liabilities are within applicable Baxter Policy limits, including
aggregates and deductibles.
"Intellectual Property" means (a) Copyrights; (b) Patents; (c)
---------------------
Trademarks; (d) business and non-technical information; (e) non-patented or non-
patentable technical information, inventions, processes and formulations; and
(g) discoveries, trade secrets, know-how and technical data.
"Intercompany Agreements" means any Contract between Baxter and
-----------------------
▇▇▇▇▇▇▇ entered into on or before the Distribution Date.
"Intercompany Receivables and Payables" means any intercompany
-------------------------------------
receivables and payables (other than Loans) arising in the ordinary course of
business.
"IRS" means the Internal Revenue Service.
---
"Kits" means an aggregation by ▇▇▇▇▇▇▇ or Baxter of Baxter, ▇▇▇▇▇▇▇
----
and/or third-party products packaged together or repackaged for specific uses
and procedures.
"Liability" means any and all debts, liabilities and obligations,
---------
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising (unless otherwise
specified in this Agreement), including all costs and expenses relating thereto,
and including those debts, liabilities and obligations arising under any law,
rule, regulation, Action, threatened Action, order or consent decree of any
Governmental Authority or any award of any arbitrator of any kind, and those
arising under any contract, commitment or undertaking.
"Licensed Baxter Intellectual Property" has the meaning specified in
-------------------------------------
Section 10.2(a).
---------------
"Licensed ▇▇▇▇▇▇▇ Intellectual Property" has the meaning specified in
--------------------------------------
Section 10.1(a).
---------------
"Loan" means any intercompany indebtedness for borrowed money.
----
"Losses" means any and all losses, costs, obligations, liabilities,
------
settlement payments, awards, judgments, fines, penalties, damages, fees,
expenses, deficiencies, claims or other charges, absolute or contingent, matured
or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown
(including the costs and expenses of any and all Actions, threatened Actions,
demands, assessments, judgments, settlements and compromises relating thereto
and attorneys' fees and any and all expenses whatsoever reasonably incurred in
investigating, preparing or defending against any such Actions or threatened
Actions).
"Macchi" has the meaning specified in Section 3.6.
------ -----------
"Manufacturing Contracts" means the agreements set forth in Exhibit C
----------------------- ---------
hereto under the caption "Manufacturing Agreements."
-11-
"Material Governmental Approvals and Consents" means any material
--------------------------------------------
notices, reports or other filings to be made with or to, or any consents,
registrations, approvals, permits, clearances or authorizations to be obtained
from, any Governmental Authority.
"New Product" means a product that is either (a) based upon the design
-----------
of a product that is manufactured and distributed prior to the Distribution
Date, but the design of which is modified from such pre-existing product by
changing the size or other dimensions, the materials or the manufacturing
process; or (b) a replacement for a product that is manufactured and distributed
prior to the Distribution Date but has an improved feature or property while
retaining the overall functionality of such pre-existing product.
"NYSE" means the New York Stock Exchange, Inc. or any successor
----
thereto.
"Operating Agreements" means the agreements set forth in Exhibit C
-------------------- ---------
hereto regarding the ongoing business and service relationships between Baxter
and ▇▇▇▇▇▇▇ and their respective Affiliates following the Distribution.
"Party" means Baxter or ▇▇▇▇▇▇▇.
-----
"Pas ▇▇▇▇▇▇ KG" has the meaning specified in Section 3.18.
------------- ------------
"Pas ▇▇▇▇▇▇ Verwaltungs" has the meaning specified in Section 3.18.
---------------------- ------------
"Patents" means United States and foreign patents and applications for
-------
patents, including any continuations, continuations-in-part, re-examinations,
patents by addition, Supplemental Protection Certificates, patent term
extensions, divisions, renewals, reissues and extensions thereof.
"Person" means any individual, corporation, partnership, joint
------
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or Governmental Authority.
"Personal Property Leases" has the meaning specified in paragraph
------------------------
(h)(xii) of the definition of "Transferred Assets."
"PR Transferred Accounts" has the meaning specified in Section
----------------------- -------
12.9(b).
-------
"PR Transferred Accrued Benefits" has the meaning specified in Section
------------------------------- -------
12.9(c).
-------
"Pre-Distribution Claims Administration" has the meaning specified in
--------------------------------------
Section 13.6.
------------
"Prime Rate" means the rate that Bank One, NA (or any successor
----------
thereto or other major money center commercial bank agreed to by the Parties)
announces from time to time as its prime lending rate, as in effect from time to
time.
"Privilege" or "Privileges" has the meaning specified in Section
--------- ---------- -------
17.8(a).
-------
-12-
"Privileged Information" has the meaning specified in Section 17.8(a).
---------------------- ---------------
"Products" has the meaning specified in Section 9.10.
-------- ------------
"Real Estate Leases" has the meaning specified in paragraph (e) of the
------------------
definition of "Transferred Assets."
"Receivables" has the meaning specified in paragraph (b)(i) of the
-----------
definition of "Transferred Assets."
"Record Date" means the date determined by the Board of Directors of
-----------
Baxter as the record date for determining stockholders of Baxter entitled to
receive shares of ▇▇▇▇▇▇▇ Common Stock in the Distribution.
"Registration Statement" has the meaning specified in Section 9.2(a).
---------------------- --------------
"Repair or Replacement Period" has the meaning specified in Section
---------------------------- -------
9.10(a).
-------
"Retained Assets" has the meaning specified in Section 6.1.
--------------- -----------
"Retained Baxter Intellectual Property" means all of the Intellectual
-------------------------------------
Property owned by Baxter or its Subsidiaries as of the Distribution Date other
than the Transferred Intellectual Property.
"Retained Business" means those portions of the business of Baxter and
-----------------
its current Subsidiaries that are not part of the ▇▇▇▇▇▇▇ Business.
"Retained Liabilities" has the meaning specified in Section 6.2.
-------------------- -----------
"Rights Plan" means the rights plan referred to in Section 5.1.
----------- -----------
"SEC" means the United States Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended
--------------
(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 Agreements" has the meaning specified in Section 9.7(a).
----------------- --------------
"Software" means computer software programs, in source code and object
--------
code form, including all related source diagrams, flow charts, specifications,
documentation and all other materials necessary to allow a reasonably skilled
third-party programmer or technician to maintain, support and enhance the
Software.
-13-
"Subsidiary" means, when used with reference to any Person, 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.
"Swiss Sales Branch" has the meaning, specified in Section 3.16.
------------------ ------------
"Tax" (and, with correlative meaning, "Taxes" and "Taxable") means:
--- ----- -------
(i) any federal, state, local or foreign net income, gross income,
gross receipts, windfall profit, severance, property, production, sales,
use, license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum, ad valorem, value-added, transfer, stamp, or
environmental tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or penalty, addition to tax or additional amount imposed by any
Governmental Authority; and
(ii) any liability of either Party for the payment of amounts with
respect to payments of a type described in clause (i) as a result of being
a member of an affiliated, consolidated, combined or unitary group, or as a
result of any obligation of either Party under any Tax sharing arrangement
or Tax indemnity arrangement.
"Tax Sharing Agreement" means the tax sharing agreement in
---------------------
substantially the form of Exhibit D hereto.
---------
"Third Party Claim" has the meaning specified in Section 15.6(a).
----------------- ---------------
"Third Party Consents" has the meaning specified in Section 9.13.
-------------------- ------------
"Trademarks" means all United States, state and foreign trademarks,
----------
service marks, trade names and service names (including all assumed or
fictitious names under which Baxter is conducting the ▇▇▇▇▇▇▇ Business), whether
registered or unregistered, including all common law rights in and all goodwill
associated with the foregoing, and all registrations and pending applications to
register the foregoing.
"Transaction Taxes" has the meaning specified in Section 14.2.
----------------- ------------
"Transfer Agent" means First Chicago Trust Company of New York, a
--------------
division of EquiServe, the distribution agent appointed by Baxter to distribute
shares of ▇▇▇▇▇▇▇ Common Stock pursuant to the Distribution.
"Transferred Accounts" has the meaning specified in Section 12.9(a).
-------------------- ---------------
-14-
"Transferred Actions" has the meaning specified in Section 9.9(b).
------------------- --------------
"Transferred Assets" means the tangible and intangible assets,
------------------
properties, rights and interests relating Exclusively to the ▇▇▇▇▇▇▇ Business
(excluding the Retained Assets), including the following:
(a) Balance Sheet Assets. All assets reflected or disclosed on the
---------------------
audited balance sheet of the ▇▇▇▇▇▇▇ Business as of December 31, 1999
contained in the Registration Statement (the "Balance Sheet"), including
-------------
all machinery, equipment, furniture and other tangible personal property,
whether owned or leased, used Exclusively in the operation of the ▇▇▇▇▇▇▇
Business, subject to acquisitions, dispositions and adjustments in the
ordinary course of the ▇▇▇▇▇▇▇ Business, consistent with past practice,
after such date;
(b) Receivables.
-----------
(i) All accounts receivable, notes receivable, lease receivables,
prepayments (other than prepaid insurance), advances and other
receivables arising out of or produced by the ▇▇▇▇▇▇▇ Business and
owing by any Persons (the "Receivables");
-----------
(ii) all payments received after the Distribution Date on account
of the Receivables;
(iii) all manufacturers' warranties or guarantees related to the
Transferred Assets or related to any of the Assumed Liabilities; and
(iv) any and all manufacturers' or third-party service or
replacement programs relating to the Transferred Assets;
(c) Inventories.
-----------
(i) All work-in-process, finished goods and spare parts inventory
of ▇▇▇▇▇▇▇ Products, other than (x) ▇▇▇▇▇▇▇ Products transferred to
▇▇▇▇▇▇ World Trade or one of its Subsidiaries for distribution outside
the United States pursuant to an arrangement under which title to such
▇▇▇▇▇▇▇ Products passes to ▇▇▇▇▇▇ World Trade or any of its Subsidiaries
(in order to take account of ▇▇▇▇▇▇▇ Products transferred to the books
of ▇▇▇▇▇▇ World Trade or its Subsidiaries where such companies are to be
distributing the ▇▇▇▇▇▇▇ Products on behalf of ▇▇▇▇▇▇▇), and (y) ▇▇▇▇▇▇▇
Products manufactured by Baxter or one of its Subsidiaries pursuant to
the Manufacturing Contracts and with respect to which title has not yet
passed to ▇▇▇▇▇▇▇ or one of its Subsidiaries pursuant to the terms of
the Manufacturing Contracts;
(ii) all raw materials inventory related to ▇▇▇▇▇▇▇ Products other
than ▇▇▇▇▇▇▇ Products manufactured by Baxter or one of its
Subsidiaries pursuant to the Manufacturing Contracts;
-15-
(iii) all supplies, packaging and other inventories related to the
▇▇▇▇▇▇▇ Business but excluding any such items in the possession of
Baxter or one of its Subsidiaries that relate to ▇▇▇▇▇▇▇ Products
manufactured by Baxter or one of its Subsidiaries pursuant to the
Manufacturing Contracts; and
(iv) rights with respect to consignment inventory of ▇▇▇▇▇▇▇
Products held by others;
(d) Owned Real Property. Those certain parcels of land set forth on
-------------------
Schedule 1.2(d) hereto, together with any and all buildings and other
---------------
structures and improvements thereon, any and all rights and privileges
pertaining thereto or to any of such buildings or other structures or
improvements, including all ownership interests, oil and mineral interests,
water rights, easements, permits, licenses, rights of way, leases, and
purchase and option agreements with respect to real property, and, to the
extent constituting real property, any and all fixtures, machinery,
equipment and other property attached thereto or located thereon (other
than equipment and furniture located in property to be retained by Baxter
or its Subsidiaries hereunder) and all other rights and interests of any
nature in and to any such real estate or other real estate of the ▇▇▇▇▇▇▇
Business;
(e) Real Property Leases. Those certain real estate leases set forth
--------------------
on Schedule 1.2(e) hereto including any amendments thereto (collectively
---------------
the "Real Estate Leases") and all rights to use the leased premises
------------------
including any and all improvements, fixtures, machinery, equipment and
other property located on the premises demised under such Real Estate
Leases (other than equipment and furniture located in property to be
retained by Baxter or its Subsidiaries hereunder);
(f) Vehicles. All vehicles used Exclusively in connection with the
--------
▇▇▇▇▇▇▇ Business, whether owned or leased;
(g) Intellectual Property. All of the following Intellectual Property
---------------------
(collectively, the "Transferred Intellectual Property") along with (1) the
---------------------------------
right to ▇▇▇, recover and retain such recoveries for infringement of the
Transferred Intellectual Property occurring prior to the Distribution Date,
and (2) the right to continue in the name of Baxter any actions for
infringement of the Transferred Intellectual Property pending as of the
Distribution Date and to recover and retain such recoveries therefrom.
(i) All business and non-technical information; non-patented or
non-patentable technical information, inventions, processes and
formulations; and discoveries, trade secrets, know-how and technical
data (A) used Exclusively as of the Distribution Date and made or
conceived by employees, consultants or contractors of Baxter or its
Subsidiaries or any third-party; or (B) to be used Exclusively and to be
made or conceived by third parties pursuant to Contracts with said third
parties;
(ii) All Patents used Exclusively as of the Distribution Date
(including all such Patents set forth on Schedule 1.2(g)(ii) hereto),
-------------------
all other Patents set forth
-16-
on Schedule 1.2(g)(ii) hereto that are not used Exclusively (if any),
-------------------
and all invention records set forth on Schedule 1.2(g)(ii) hereto;
-------------------
(iii) All Copyrights used Exclusively as of the Distribution Date;
and
(iv) All Trademarks used Exclusively as of the Distribution Date
(including all such Trademarks set forth on Schedule 1.2(g)(iv)), all
-------------------
other Trademarks set forth on Schedule 1.2(g)(iv) that are not used
-------------------
Exclusively (if any), and all common law rights in the ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
LABORATORIES, EDLABS, ▇▇▇▇▇▇▇ CARDIOVASCULAR SYSTEM, ▇▇▇▇▇▇▇ CVS,
▇▇▇▇▇▇▇ CRITICAL CARE, and ▇▇▇▇▇▇▇ ▇▇▇ marks (whether used Exclusively
or not);
(h) Contracts. All contracts, agreements, arrangements, leases (other
---------
than Real Estate Leases), manufacturers' warranties, memoranda,
understandings and offers open for acceptance of any nature, whether
written or oral (the "Contracts") (such Contracts being referred to as the
---------
"▇▇▇▇▇▇▇ Contracts"):
-----------------
(i) all Contracts related Exclusively to the ▇▇▇▇▇▇▇ Business
related to acquisitions or divestitures of assets or stock, including
Contracts related to the transactions set forth on Schedule 1.2(h)(i)
------------------
hereto, except to the extent any such Contracts relate to the Retained
Business;
(ii) all Contracts with customers Exclusive to the ▇▇▇▇▇▇▇
Business, including those set forth on Schedule 1.2(h)(ii) hereto;
-------------------
(iii) all customer leases under which the underlying equipment is
the Exclusive marketing responsibility of ▇▇▇▇▇▇▇;
(iv) all government Contracts Exclusive to the ▇▇▇▇▇▇▇ Business,
including those set forth on Schedule 1.2(h)(iv) hereto;
-------------------
(v) all supplier Contracts Exclusive to the ▇▇▇▇▇▇▇ Business
relating either to raw materials or distributed products, including
those set forth on Schedule 1.2(h)(v) hereto;
------------------
(vi) all joint development and confidentiality Contracts
Exclusive to the ▇▇▇▇▇▇▇ Business, including those set forth on Schedule
--------
1.2(h)(vi) hereto;
----------
(vii) all consulting Contracts Exclusive to the ▇▇▇▇▇▇▇ Business,
including those set forth on Schedule 1.2(h)(vii) hereto;
--------------------
(viii) all third-party distribution Contracts Exclusive to the
▇▇▇▇▇▇▇ Business, including those set forth on Schedule 1.2(h)(viii)
---------------------
hereto;
(ix) all manufacturing Contracts Exclusive to the ▇▇▇▇▇▇▇
Business;
-17-
(x) the Shared Agreements set forth on Schedule 9.7 hereto that
------------
are designated as being assigned to ▇▇▇▇▇▇▇;
(xi) those certain machinery, equipment or other tangible
personal property leases (the "Personal Property Leases") set forth on
------------------------
Schedule 1.2(h)(xi) hereto;
-------------------
(xii) the Contracts related to derivatives set forth on Schedule
--------
1.2(h)(xii); and
-----------
(xiii) all other Contracts Exclusive to the ▇▇▇▇▇▇▇ Business,
including those set forth on Schedule 1.2(h)(xiii) hereto.
---------------------
(i) Permits and Licenses. All permits, approvals, licenses, franchises,
--------------------
authorizations or other rights granted by any Governmental Authority held
or applied for and that are used Exclusively in the ▇▇▇▇▇▇▇ Business or
that relate Exclusively to the Transferred Assets or any of the Transferred
Subsidiaries, and all other consents, grants and other rights that are used
Exclusively for the lawful ownership of the Transferred Assets or the
operation of the ▇▇▇▇▇▇▇ Business and that are legally transferable
including, in each case, those set forth on Schedule 1.2(i) hereto.
---------------
(j) Claims and Indemnities. All rights, claims, demands, causes of
----------------------
action, judgments, decrees and rights to indemnity or contribution, whether
contractual or otherwise, in favor of Baxter or any of its Subsidiaries
relating Exclusively to the ▇▇▇▇▇▇▇ Business or the Transferred Assets,
including those set forth on Schedule 1.2(j) hereto, including the right to
---------------
▇▇▇, recover and retain such recoveries and the right to continue in the
name of Baxter and its Subsidiaries any pending actions relating to the
foregoing, and to recover and retain any damages therefrom, but not
including any such rights, claims, demands, causes of action, judgments,
decrees and rights to indemnity or contribution relating to the Retained
Assets, including in particular any retained third-party distribution
agreements;
(k) Subsidiaries, Joint Ventures and Minority Interests. All shares of
---------------------------------------------------
capital stock or equity or debt or other interests owned by Baxter or its
Subsidiaries in the Subsidiaries, joint ventures and minority investments
set forth on Schedule 1.2(k) hereto;
---------------
(l) Books And Records. All books and records (including all records
-----------------
pertaining to customers, suppliers and personnel), wherever located, that
relate Exclusively to the ▇▇▇▇▇▇▇ Business;
(m) Supplies. All office supplies, production supplies, spare parts,
--------
purchase orders, forms, labels, shipping material, art work, catalogues,
sales brochures, operating manuals and advertising and promotional material
and all other printed or written material that relate Exclusively to the
▇▇▇▇▇▇▇ Business;
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(n) Intellectual Property Licenses. All permits, grants, contracts,
------------------------------
agreements and licenses running to or from Baxter or its Subsidiaries
relating to the Transferred Intellectual Property, including those set
forth on Schedule 1.2(n) hereto;
---------------
(o) Software. All (i) Software set forth on Schedule 1.2(o) hereto,
-------- ---------------
(ii) shrink-wrapped Software located on hardware included in the
Transferred Assets and (iii) any Contracts related to the aforementioned
Software including those set forth on Schedule 1.2(o) hereto;
---------------
(p) Domain Names. All domain names set forth on Schedule 1.2(p)
------------ ---------------
hereto; and
(q) Other Assets. All other assets, tangible or intangible, including
------------
all goodwill, that are Exclusive to the operations of, or otherwise relate
Exclusively to, the ▇▇▇▇▇▇▇ Business, including those set forth on Schedule
--------
1.2(q) hereto.
------
"Transferred Intellectual Property" means the Intellectual Property
---------------------------------
described in paragraph (g) of the definition of "Transferred Assets."
"Uden Manufacturing Facility" has the meaning specified in Section 3.24.
--------------------------- ------------
"Under Development" has the meaning specified in Section 10.1(a).
----------------- ---------------
"Voting Stock" means all of the capital stock of ▇▇▇▇▇▇▇ entitled to
------------
vote generally in the election of directors but excluding any class or series of
capital stock entitled to vote for directors only in the event of dividend
arrearages thereon, whether or not at the time of determination there are any
such dividend arrearages.
"WARN Act" has the meaning specified in Section 12.6.
-------- ------------
"Xenomedica" has the meaning specified in Section 3.16.
---------- ------------
1.2. Interpretation. (a) In this Agreement, unless the context clearly
--------------
indicates otherwise:
(i) words used in the singular include the plural and words in
the plural include the singular;
(ii) reference to any Person includes such Person's successors and
assigns, but only if such successors and assigns are permitted by this
Agreement;
(iii) reference to any gender includes the other gender;
(iv) the word "including" (and with correlative meaning "include")
means "including but not limited to";
(v) reference to any Article, Section, Exhibit or Schedule means
such Article or Section of, or such Exhibit or Schedule to, this
Agreement, as the case
-19-
may be, and references in any Section or definition to any clause
means such clause of such Section or definition;
(vi) the words "herein," "hereunder," "hereof," "hereto" and
words of similar import shall be deemed references to this Agreement
as a whole and not to any particular Section or other provision
hereof;
(vii) reference to any agreement, instrument or other document
means such agreement, instrument or other document as amended,
supplemented and modified from time to time to the extent permitted by
the provisions thereof and by this Agreement;
(viii) reference to any law (including statutes and ordinances)
means such law (including all rules and regulations promulgated
thereunder) as amended, modified, codified or reenacted, in whole or
in part, and in effect at the time of determining compliance or
applicability;
(ix) relative to the determination of any period of time, "from"
means "from and including," "to" means "to but excluding" and
"through" means "through and including";
(x) accounting terms used herein shall have the meanings
historically ascribed to them by Baxter and its Subsidiaries based
upon ▇▇▇▇▇▇'▇ internal financial policies and procedures in effect
prior to the date of this Agreement;
(xi) in the event of any conflict between the provisions of the
body of this Agreement and the Exhibits or Schedules hereto, the
provisions of the body of this Agreement shall control; and
(xii) the titles to Articles and headings of Sections contained in
this Agreement have been inserted for convenience of reference only
and shall not be deemed to be a part of or to affect the meaning or
interpretation of this Agreement.
(b) This Agreement was negotiated by the Parties with the benefit of
legal representation, and no rule of construction or interpretation otherwise
requiring this Agreement to be construed or interpreted against either Party
shall apply to any construction or interpretation hereof. Subject to Section
-------
18.5, this Agreement shall be interpreted and construed to the maximum extent
----
possible so as to uphold the enforceability of each of the terms and provisions
hereof, it being understood and acknowledged that this Agreement was entered
into by the Parties after substantial negotiations and with full awareness by
the Parties of the terms and provisions hereof and the consequences thereof.
ARTICLE II
THE DISTRIBUTION
----------------
-20-
2.1. Issuance and Delivery of ▇▇▇▇▇▇▇ Shares. ▇▇▇▇▇▇▇ shall issue to
---------------------------------------
Baxter the number of ▇▇▇▇▇▇▇ Shares required so that the total number of ▇▇▇▇▇▇▇
Shares held by Baxter on the Distribution Date is equal to the total number of
▇▇▇▇▇▇▇ Shares distributable pursuant to Section 2.2. Baxter shall deliver to
-----------
the Transfer Agent one or more stock certificates representing all the ▇▇▇▇▇▇▇
Shares then issued and outstanding, together with one or more stock power(s)
duly endorsed in blank. The Transfer Agent will then transfer and distribute
such shares in the manner described in Section 2.2 below.
-----------
2.2. Distribution of ▇▇▇▇▇▇▇ Shares. ▇▇▇▇▇▇▇ shall provide to the
------------------------------
Transfer Agent sufficient certificates in such denominations as the Transfer
Agent may request in order to effect the Distribution. Baxter shall instruct
the Transfer Agent to distribute to all holders of record of Baxter Common Stock
as of the Record Date the ▇▇▇▇▇▇▇ Distributable Share. All the distributed
▇▇▇▇▇▇▇ Shares shall be validly issued, fully paid and nonassessable and shall
be free of any preemptive rights.
2.3. Treatment of Fractional Shares. No certificates or scrip
------------------------------
representing fractional ▇▇▇▇▇▇▇ Shares shall be issued in the Distribution. In
lieu of receiving fractional shares, each holder of Baxter Common Stock who
otherwise would be entitled to receive a fractional ▇▇▇▇▇▇▇ Share pursuant to
the Distribution will receive cash (rounded to the nearest cent) for such
fractional share. Baxter and ▇▇▇▇▇▇▇ shall instruct the Transfer Agent to
determine the number of whole ▇▇▇▇▇▇▇ Shares and fractional ▇▇▇▇▇▇▇ Shares
(rounded to the eighth decimal place) allocable to each holder of record of
Baxter Common Stock as of the Record Date, to aggregate all such fractional
shares into whole shares and to sell the whole shares obtained thereby in the
open market at the then prevailing prices on behalf of holders who otherwise
would be entitled to receive fractional share interests, and the Transfer Agent
shall distribute to each such holder such holder's ratable share of the total
proceeds of such sale after making appropriate deductions of any amounts
required for federal tax withholding purposes and after deducting any taxes
attributable to the sale of such fractional share interests. Baxter shall bear
the costs of commissions incurred in connection with such sales.
2.4. Baxter Board Action. The Board of Directors of Baxter, or a duly
-------------------
authorized committee of the Board of Directors, shall, in its sole discretion,
determine the Record Date and the Distribution Date and all appropriate
procedures in connection with the Distribution. The Board of Directors of
Baxter or such committee also shall have the right to adjust at any time prior
to the Distribution Date the ▇▇▇▇▇▇▇ Distributable Share. The consummation of
the transactions provided for in this Article II shall be effected only after
----------
the Distribution has been declared by the Board of Directors of Baxter or such
committee and after all of the conditions set forth in Article XI hereof shall
----------
have been satisfied or waived by Baxter.
2.5. Additional Approvals. Baxter shall cooperate with ▇▇▇▇▇▇▇ in
--------------------
effecting, and if so requested by ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ shall, as the sole stockholder
of ▇▇▇▇▇▇▇ prior to the Distribution, ratify all actions that are reasonably
necessary or desirable to be taken by ▇▇▇▇▇▇▇ to effectuate, the transactions
referenced in or contemplated by this Agreement in a manner consistent with the
terms of this Agreement.
-21-
ARTICLE III
FOREIGN TRANSFERS
-----------------
3.1. ▇▇▇▇▇▇▇ Lifesciences World Trade. Prior to or promptly following
--------------------------------
the execution of this Agreement, Baxter shall cause to be incorporated, under
the General Corporation Law of Delaware, ▇▇▇▇▇▇▇ Lifesciences World Trade
Corporation ("▇▇▇▇▇▇▇ World Trade") as a wholly-owned Subsidiary of ▇▇▇▇▇▇ World
-------------------
Trade Corporation, a Delaware corporation and a wholly-owned Subsidiary of
Baxter ("Baxter World Trade"). ▇▇▇▇▇▇▇ World Trade shall be qualified as a
------------------
foreign corporation under the General Corporation Law of California. Subject to
the terms and conditions of this Agreement, Baxter and ▇▇▇▇▇▇▇ hereby agree to
take, or cause to be taken, any and all actions necessary to effect the
transactions described in this Article III, with each transaction occurring at
-----------
the approximate times and in the order described in Schedule 3.1 hereto.
------------
3.2. Puerto Rico (936). Baxter and ▇▇▇▇▇▇▇ hereby agree to take any
-----------------
and all actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all
of the right, title and interest of ▇▇▇▇▇▇ Healthcare Corporation of Puerto
Rico, an Alaska corporation and a wholly-owned Subsidiary of Baxter Pharmacy
Services ("Baxter Alaska"), in and to the Anasco division of Baxter Alaska which
-------------
is engaged in the ▇▇▇▇▇▇▇ Business, and all of the Transferred Assets and the
Assumed Liabilities related thereto (the "Anasco Division"), as follows:
---------------
(a) ▇▇▇▇▇▇▇ Lifesciences Corporation of Puerto Rico ("▇▇▇▇▇▇▇ Puerto
--------------
Rico (936)") shall be incorporated as a Delaware corporation;
----------
(b) ▇▇▇▇▇▇▇ Puerto Rico (936) shall be qualified as a foreign
corporation under the laws of Puerto Rico;
(c) Baxter Alaska shall transfer to ▇▇▇▇▇▇▇ Puerto Rico (936) all of
its right, title and interest in and to the Anasco Division in return for
100 shares of capital stock of ▇▇▇▇▇▇▇ Puerto Rico (936);
(d) Baxter Alaska shall transfer to Baxter Pharmacy Services as a
dividend, all of its right, title and interest in and to the capital stock
▇▇▇▇▇▇▇ Puerto Rico (936);
(e) Baxter Pharmacy Services shall transfer to ▇▇▇▇▇▇▇ Puerto Rico
(MS&P) as a contribution to capital, all of its right, title and interest
in and to the capital stock of ▇▇▇▇▇▇▇ Puerto Rico (936) as described in
Section 3.3(e)(ii) below;
------------------
(f) Baxter Pharmacy Services shall transfer to ▇▇▇▇▇▇ World Trade as
a dividend, all of its right, title and interest in and to the capital
stock of ▇▇▇▇▇▇▇ Puerto Rico (MS&P);
(g) ▇▇▇▇▇▇ World Trade shall transfer to ▇▇▇▇▇▇▇ World Trade as a
contribution to capital all of its right, title and interest in and to the
capital stock of ▇▇▇▇▇▇▇ Puerto Rico (MS&P); and
-22-
REORGANIZATION AGREEMENT
(h) After the Distribution Date, ▇▇▇▇▇▇▇ Puerto Rico (936) shall
transfer to ▇▇▇▇▇▇▇ Lifesciences AG all of its right, title and interest in
and to certain Transferred Assets and the Assumed Liabilities transferred
to ▇▇▇▇▇▇▇ Puerto Rico (936) by Baxter Alaska as part of the Anasco
Division, which assets and liabilities relate to the ▇▇▇▇▇▇▇ Business
conducted in the Dominican Republic prior to the Distribution Date, in
exchange for cash or other consideration equal to the net book value of the
Transferred Assets.
3.3 Puerto Rico (MS&P). Baxter and ▇▇▇▇▇▇▇ hereby agree to take any
-----------------
and all actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all
of the right, title and interest in and to the Transferred Assets and the
Assumed Liabilities held by Baxter Pharmacy Services and ▇▇▇▇▇▇ Sales and
Distribution Corporation, a Delaware corporation and a wholly-owned Subsidiary
of Baxter Pharmacy Services ("▇▇▇▇▇▇ Sales and Distribution"), as follows:
-----------------------------
(a) ▇▇▇▇▇▇▇ Lifesciences Sales Corporation ("▇▇▇▇▇▇▇ Puerto Rico
-------------------
(MS&P)") shall be incorporated as a Delaware corporation;
------
(b) ▇▇▇▇▇▇▇ Puerto Rico (MS&P) shall be qualified as a foreign
corporation under the laws of Puerto Rico;
(c) ▇▇▇▇▇▇ Sales and Distribution shall transfer to ▇▇▇▇▇▇▇ Puerto
Rico (MS&P) all of its right, title and interest in and to the Transferred
Assets and the Assumed Liabilities, including those assets and liabilities
relating to the marketing and sales business conducted in Puerto Rico, in
return for 100 shares of capital stock of ▇▇▇▇▇▇▇ Puerto Rico (MS&P);
(d) ▇▇▇▇▇▇ Sales and Distribution shall transfer to Baxter Pharmacy
Services as a dividend, all of its right, title and interest in and to the
capital stock of ▇▇▇▇▇▇▇ Puerto Rico (MS&P);
(e) Baxter Pharmacy Services shall transfer to ▇▇▇▇▇▇▇ Puerto Rico
(MS&P) as a contribution to capital, all of its right, title and interest
in and to (i) the Transferred Assets and the Assumed Liabilities, including
those assets, liabilities and employees relating to the perfusion business
conducted in Puerto Rico and (ii) the capital stock of ▇▇▇▇▇▇▇ Puerto Rico
(936) as described in Section 3.2(e) above;
--------------
(f) Baxter Pharmacy Services shall transfer to ▇▇▇▇▇▇ World Trade as
a dividend, all of its right, title and interest in and to the capital
stock of ▇▇▇▇▇▇▇ Puerto Rico (MS&P); and
(g) ▇▇▇▇▇▇ World Trade shall transfer to ▇▇▇▇▇▇▇ World Trade as a
contribution to capital all of its right, title and interest in and to the
capital stock of ▇▇▇▇▇▇▇ Puerto Rico (MS&P).
3.4 Dominican Republic. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any
------------------
and all actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all
of the right, title and interest of ▇▇▇▇▇▇ Healthcare S.A., a company organized
under the laws of Panama ("Baxter
------
-23-
Panama"), in and to the Transferred Assets and the Assumed Liabilities,
------
consisting of contracts for the construction and leasing of a manufacturing
facility located in the Dominican Republic, as follows:
(a) A branch office of ▇▇▇▇▇▇▇ Lifesciences AG ("▇▇▇▇▇▇▇ Dominican
-----------------
Republic") shall be established in the Dominican Republic;
--------
(b) ▇▇▇▇▇▇▇ Dominican Republic shall be qualified as a foreign entity
under the laws of the Dominican Republic;
(c) Baxter Panama shall transfer to ▇▇▇▇▇▇▇ Lifesciences AG all of
its right, title and interest in and to the Transferred Assets and the
Assumed Liabilities, consisting of contracts for the construction and
leasing of a manufacturing facility located in the Dominican Republic, in
return for_________________; and
(d) After the Distribution Date, ▇▇▇▇▇▇▇ Puerto Rico (936) shall
transfer to ▇▇▇▇▇▇▇ Lifesciences AG all of its right, title and interest in
and to certain Transferred Assets and the Assumed Liabilities transferred
to ▇▇▇▇▇▇▇ Puerto Rico (936) by Baxter Alaska as described in Section
-------
3.2(h) above in exchange for cash or other consideration equal to the net
------
book value of the Transferred Assets.
3.5. Mexico. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
------
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all of the
right, title and interest of ▇▇▇▇▇▇ ▇.▇. de C.V., a company organized under
the laws of Mexico ("Baxter Mexico"), in and to the Transferred Assets and the
-------------
Assumed Liabilities, which constitutes the ▇▇▇▇▇▇▇ Business conducted in Mexico,
as follows:
(a) ▇▇▇▇▇▇▇ Lifesciences Mexico, S.A. de C.V. ("▇▇▇▇▇▇▇ Mexico")
--------------
shall be incorporated as a Mexican corporation and a wholly-owned
Subsidiary of ▇▇▇▇▇▇▇ World Trade;
(b) Baxter Mexico shall transfer to ▇▇▇▇▇▇▇ Mexico all of its right,
title and interest in and to the Transferred Assets and the Assumed
Liabilities (except for third-party distribution agreements) in return
for _______________;
(c) Baxter Mexico shall transfer [all][certain] third-party
distribution agreements in its name but relating Exclusively to the ▇▇▇▇▇▇▇
Business conducted in Mexico to ▇▇▇▇▇▇▇ LLC [in return for
_______________]; and
(d) [Baxter Mexico shall enter into an agreement with ▇▇▇▇▇▇▇ Mexico
whereby Baxter Mexico will act as the manufacturing plant of record to hold
the product registrations applicable to the ▇▇▇▇▇▇▇ Business conducted in
Mexico.]
3.6. Brazil. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
------
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all the
right, title and interest in Macchi Engenharia Biomedica Ltda., a Brazilian
corporation ("Macchi"), held by BPCL and BRL, as follows:
------
-24-
(a) BRL shall transfer to BPCL all of its right, title and interest
in and to _____ shares of capital stock of Macchi for U.S. $_____;
(b) BRL shall transfer to _________ [▇▇▇ ▇▇▇▇▇▇▇▇ AND ▇▇ ▇▇▇▇▇ TO
IDENTIFY CORPORATE NOMINEE] all of its right, title and interest in and to
____ shares of capital stock of Macchi for U.S. $_____;
(c) BPCL shall transfer to BRL all of its right, title and interest
in and to _____ shares of capital stock of Baxter Hospitilar for U.S.
$_________;
(d) BPCL shall transfer to ____________ [▇▇▇ ▇▇▇▇▇▇ TO IDENTIFY
CORPORATE NOMINEE] all of its right, title and interest in and to _________
shares of capital stock of Baxter Hospitilar for U.S. $_________;
(e) ▇▇▇▇▇▇ World Trade shall transfer to ▇▇▇▇▇▇▇ World Trade as a
contribution of capital all of its right, title and interest in and to
_______ shares of capital stock of BPCL; and
(f) Baxter Export Corporation shall transfer to _________ [▇▇▇
▇▇▇▇▇▇▇▇ AND ▇▇ ▇▇▇▇▇ TO IDENTIFY CORPORATE NOMINEE] all of its right,
title and interest in and to ________ shares of capital stock of BPCL in
return for U.S. $____.
3.7. Canada. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
------
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all of the
right, title and interest of ▇▇▇▇▇▇ Corporation, a company organized under the
laws of Canada ("Baxter Canada"), and to the Transferred Assets and the Assumed
-------------
Liabilities, which constitutes the ▇▇▇▇▇▇▇ Business conducted in Canada, as
follows:
(a) ▇▇▇▇▇▇▇ Lifesciences [Canada] Inc. ("▇▇▇▇▇▇▇ Canada") shall be
--------------
incorporated as a Canadian corporation and a wholly-owned Subsidiary of
▇▇▇▇▇▇▇ World Trade; and
(b) Baxter Canada shall transfer to ▇▇▇▇▇▇▇ Canada all of its right,
title and interest in and to the Transferred Assets and the Assumed
Liabilities for U.S. $_______________.
3.8. China. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
-----
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all of the
right, title and interest of ▇▇▇▇▇▇ Healthcare Limited (Hong Kong), a company
organized under the laws of China ("Baxter China"), in and to the Transferred
------------
Assets and the Assumed Liabilities, which constitutes the ▇▇▇▇▇▇▇ Business
conducted in China, as follows:
(a) A representative office of ▇▇▇▇▇▇▇ World Trade shall be
established in ▇▇▇▇▇▇▇▇, ▇▇▇▇▇;
-▇▇-
(▇) ▇▇▇▇▇▇ ▇▇▇▇▇ shall transfer to ▇▇▇▇▇▇▇ World Trade all of its
right, title and interest in and to the Transferred Assets and the Assumed
Liabilities (except for third-party distribution agreements) in return for
________;
(c) Baxter China shall transfer all of its right, title and interest
in and to certain third-party distribution agreements involving U.S. $
sales in its name but relating Exclusively to the ▇▇▇▇▇▇▇ Business
conducted in China to ▇▇▇▇▇▇▇ LLC [in return for ________________________];
and
(d) Baxter China shall terminate the Labor Supply Contract dated as
of ________________ by and between Baxter China and FESCO, relating to the
contracting of Baxter China employees from FESCO and ▇▇▇▇▇▇▇ World Trade
shall enter into an agreement with FESCO providing for the same. [NOTE:
▇▇▇▇▇▇▇ ▇▇▇ TO PROVIDE DATE OF CONTRACT AND DEFINITION OF FESCO]
3.9. Taiwan. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
------
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all of the
right, title and interest of ▇▇▇▇▇▇ Healthcare Limited (Taiwan), a company
organized under the laws of Taiwan ("Baxter Taiwan"), in and to the Transferred
-------------
Assets and the Assumed Liabilities, which constitutes the ▇▇▇▇▇▇▇ Business
conducted in Taiwan, as follows:
(a) A branch office of ▇▇▇▇▇▇▇ World Trade shall be established in
Taipei, Taiwan;
(b) Baxter Taiwan shall transfer to ▇▇▇▇▇▇▇ World Trade all of its
right, title and interest in and to the Transferred Assets and the Assumed
Liabilities (except for third-party distribution agreements) in return for
_______________;
(c) Baxter Taiwan shall transfer all third-party distribution
agreements in its name but relating Exclusively to the ▇▇▇▇▇▇▇ Business
conducted in Taiwan to ▇▇▇▇▇▇▇ LLC [in return for ________________]; and
(d) ▇▇▇▇▇▇▇ World Trade shall enter into an agreement with ▇▇▇▇▇▇▇
LLC whereby the Taiwan branch of ▇▇▇▇▇▇▇ World Trade shall provide, for a
fee, certain sales and promotion activities on behalf of ▇▇▇▇▇▇▇ LLC in
connection with the distribution of ▇▇▇▇▇▇▇ Products by third-party
distributors in Taiwan.
3.10 Singapore and the Philippines. Baxter and ▇▇▇▇▇▇▇ hereby agree to
-----------------------------
take any and all actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade
of all of the right, title and interest of ▇▇▇▇▇▇ Healthcare (Asia) Pte. Ltd., a
company organized under the laws of Singapore ("Baxter Asia"), in and to the
-----------
Transferred Assets and the ▇▇▇▇▇▇ Healthcare Philippines Inc., a company
organized under the laws of the Philippines ("Baxter Philippines"), in and to
------------------
the Transferred Assets and the Assumed Liabilities, which constitutes the
▇▇▇▇▇▇▇ Business conducted in the Philippines, as follows:
-26-
(a) A representative office of ▇▇▇▇▇▇▇ World Trade shall be
established in Singapore;
(b) Baxter Asia shall transfer to ▇▇▇▇▇▇▇ World Trade all of its
right, title and interest in and to the Transferred Assets and the Assumed
Liabilities relating Exclusively to the ▇▇▇▇▇▇▇ Business conducted in
Singapore (except for certain public hospital contracts) in return
for_____________;
(c) Baxter Asia shall transfer all of its right, title and interest
in and to certain public hospital contracts relating Exclusively to the
▇▇▇▇▇▇▇ Business [conducted in Singapore] to a third-party distributor [in
return for _____];
(d) Baxter Asia shall transfer all of its right, title and interest
in and to certain supplier contracts in its name relating Exclusively to
the ▇▇▇▇▇▇▇ Business [conducted in Singapore] to ▇▇▇▇▇▇▇ LLC [in return
for _____];
(e) Baxter Philippines shall transfer to ▇▇▇▇▇▇▇ World Trade all of
its right, title and interest in and to the Transferred Assets and Assumed
Liabilities relating Exclusively to the ▇▇▇▇▇▇▇ Business conducted in the
Philippines (except for product registrations) in return for _____; and
(f) Baxter Philippines shall transfer all of its right, title and
interest in and to the product registrations in its name but relating
Exclusively to the ▇▇▇▇▇▇▇ Business conducted in the Philippines to _____
[in return for _____].
3.11 Malaysia. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
--------
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all of the
right, title and interest of Baxter Asia in and to the Transferred Assets and
the Assumed Liabilities, which constitutes the ▇▇▇▇▇▇▇ Business conducted in
Malaysia, as follows:
(a) A representative office of ▇▇▇▇▇▇▇ World Trade shall be
established in Malaysia;
(b) Baxter Asia shall transfer to ▇▇▇▇▇▇▇ World Trade all of its
right, title and interest in and to the Transferred Assets and the Assumed
Liabilities relating Exclusively to the ▇▇▇▇▇▇▇ Business conducted in
Malaysia (except for third-party distribution agreements) in return for
__________; and
(c) Baxter Asia shall transfer all of its right, title and interest
in and to all third-party distribution agreements in its name but relating
Exclusively to the ▇▇▇▇▇▇▇ Business conducted in Malaysia to ▇▇▇▇▇▇▇ LLC
[in return for __________].
3.12 Thailand. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
--------
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all of the
right, title and interest of ▇▇▇▇▇▇ Healthcare (Thailand) Co., Ltd., a company
formed under the laws of Thailand ("Baxter Thailand"), in and to the Transferred
---------------
Assets and the Assumed Liabilities, which constitutes the ▇▇▇▇▇▇▇ Business
conducted in Thailand, as follows:
-27-
(a) A representative office of ▇▇▇▇▇▇▇ World Trade shall be
established in Bangkok, Thailand;
(b) ▇▇▇▇▇▇ Thailand shall transfer to ▇▇▇▇▇▇▇ World Trade all of
its right, title and interest in and to the Transferred Assets and the
Assumed Liabilities (except for third-party distribution agreements and
product registrations) in return for ___________________;
(c) Baxter Thailand shall transfer all of its right, title and
interest in and to all third-party distribution agreements in its name but
relating Exclusively to the ▇▇▇▇▇▇▇ Business conducted in Thailand to
▇▇▇▇▇▇▇ LLC [in return for _____________]; and
(d) Baxter Thailand shall transfer to Osotspa Co., Ltd., a third-
party distributor of ▇▇▇▇▇▇▇ Products in Thailand, all of its right, title
and interest in and to all product registrations in its name but relating
Exclusively to the ▇▇▇▇▇▇▇ Business conducted in Thailand in return for
_____________.
3.13. Korea. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
-----
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all of the
right, title and interest of Baxter Korea Co. Ltd., a company organized under
the laws of Korea ("▇▇▇▇▇▇ Korea"), in and to the Transferred Assets and the
------------
Assumed Liabilities, which constitutes the ▇▇▇▇▇▇▇ Business conducted in Korea,
as follows:
(a) ▇▇▇▇▇▇▇ Lifesciences Korea Co., Ltd. ("▇▇▇▇▇▇▇ Korea") shall be
-------------
organized as a Korean private limited company (chusik hwesa) and a wholly-
owned Subsidiary of ▇▇▇▇▇▇▇ World Trade; and
(b) Baxter Korea shall transfer to ▇▇▇▇▇▇▇ Korea all of its right,
title and interest in and to the Transferred Assets and the Assumed
Liabilities in return for __________________.
3.14. India. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
-----
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of (i) all the
right, title and interest in BCPL held by BIPL and ▇▇▇▇▇▇ ▇▇▇▇▇ and (ii) all the
remaining right, title and interest of BIPL in and to the ▇▇▇▇▇▇▇ Business
conducted in India, as follows:
(a) BIPL shall transfer to ▇▇▇▇▇▇▇ World Trade all of its right,
title and interest in and to 2,999,980 shares of capital stock of BCPL for
29,999,800 Indian Rupees;
(b) ▇▇▇▇▇▇ ▇▇▇▇▇ shall transfer to ▇▇▇▇▇▇▇ all of his right, title
and interest in and to 20 shares of capital stock of BCPL for 200 Indian
Rupees;
(c) ▇▇▇▇▇▇▇ World Trade shall subscribe for 15,216,020 additional
shares of capital stock for BCPL for 152,160,200 Indian Rupees;
(d) ▇▇▇▇▇▇▇ shall subscribe for 183,980 additional shares of
capital stock of BCPL for 1,839,000 Indian Rupees; and
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(e) BIPL shall transfer to BCPL all of its right, title and interest
in and to the Transferred Assets and the Assumed Liabilities, which
constitutes the ▇▇▇▇▇▇▇ Business conducted by BIPL in return for _________.
3.15. Intentionally Blank.
-------------------
3.16. Switzerland. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
-----------
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of (i) all the
right, title and interest of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in and to the Transferred Assets and
the Assumed Liabilities, which constitutes the ▇▇▇▇▇▇▇ Business conducted in
Switzerland; (ii) all the right, title and interest in Xenomedica AG, a company
organized under the laws of Switzerland and a wholly-owned Subsidiary of ▇▇▇▇▇▇
World Trade ("Xenomedica"), held by ▇▇▇▇▇▇ World Trade; and (iii) all the right,
----------
title and interest of Baxter Woodlands in and to the Transferred Assets and the
Assumed Liabilities, which constitutes the Swiss sales branch ("Swiss Sales
-----------
Branch") of Baxter Woodlands, all as follows:
------
(a) ▇▇▇▇▇▇▇ Lifesciences AG (Swiss Principal).
----------------------------------------
(i) ▇▇▇▇▇▇▇ Lifesciences AG ("▇▇▇▇▇▇▇ Lifesciences AG") shall
-----------------------
be formed as a Swiss corporation;
(ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall transfer to ▇▇▇▇▇▇▇ Lifesciences AG
all of its right, title and interest in and to the Transferred Assets
and the Assumed Liabilities, which constitutes the ▇▇▇▇▇▇▇ Business
conducted by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (except for the sales employees and
related assets and liabilities) in return for ___ shares of capital
stock of ▇▇▇▇▇▇▇ Lifesciences AG;
(iii) Baxter Woodlands shall transfer the Swiss Sales Branch to
▇▇▇▇▇▇▇ Lifesciences AG in return for 25,000 Swiss francs and
assumption by ▇▇▇▇▇▇▇ Lifesciences AG of the liabilities of the Swiss
Sales Branch;
(iv) ▇▇▇▇▇▇▇ shall cause its Subsidiaries to apply for VAT
registrations in the European countries in which ▇▇▇▇▇▇▇' Subsidiaries
will have a legal presence as described in this Article III;
-----------
(v) The third-party distribution agreements applicable
Exclusively to the ▇▇▇▇▇▇▇ Business in the following countries shall
be transferred from the applicable Baxter Subsidiaries to ▇▇▇▇▇▇▇
Lifesciences AG: Africa, Balkans, Estonia, Lithuania, Latvia, Czech
Republic, Poland, Slovakia, Slovenia, Hungary, Iceland, Malta,
Abudabi, Bahrain, Dubai, Egypt, Israel, Jordan, Kuwait, Lebanon, Oman,
Saudi Arabia, Turkey, Portugal and Russia [in return for ___________];
(vi) Baxter France and Baxter Italy shall transfer certain
employees and all of their respective rights, title and interest in
and to certain related assets and liabilities to ▇▇▇▇▇▇▇ Lifesciences
AG;
(vii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall transfer to Baxter World Trade as a
dividend, all of its right, title and interest in and to the stock of
▇▇▇▇▇▇▇ Lifesciences AG;
-29-
(viii) [Baxter World Trade shall transfer to ▇▇▇▇▇▇▇
Lifesciences AG as a contribution to capital all of its right, title
and interest in and to the capital stock of Xenomedica;] and
(ix) ▇▇▇▇▇▇ World Trade shall transfer to ▇▇▇▇▇▇▇ World Trade
as a contribution to capital all of its right, title and interest in
and to the capital stock of ▇▇▇▇▇▇▇ Lifesciences AG.
(b) Third-Party Distributor. ▇▇▇▇▇▇ ▇▇, Volketswil, a third-party
-----------------------
distributor, will transfer all of its right, title and interest in certain
assets to ▇▇▇▇▇▇▇ Lifesciences AG in return for ___________.
(c) ▇▇▇▇▇▇▇ Swiss Commissionaire.
----------------------------
(i) ▇▇▇▇▇▇▇ Lifesciences GmbH ("▇▇▇▇▇▇▇ Swiss
-------------
Commissionaire") shall be organized as a Swiss limited company (GmbH)
--------------
and a wholly-owned Subsidiary of ▇▇▇▇▇▇▇ Lifesciences Holding A/S;
(ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall transfer to ▇▇▇▇▇▇▇ Swiss
Commissionaire all of the sales employees relating to the ▇▇▇▇▇▇▇
Business conducted by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ together with all of its right,
title and interest in certain related assets and liabilities in return
for ________; and
(iii) ▇▇▇▇▇▇▇ Lifesciences AG shall transfer to ▇▇▇▇▇▇▇ Swiss
Commissionaire the assets transferred to ▇▇▇▇▇▇▇ Lifesciences AG by
▇▇▇▇▇▇ ▇▇, Volketswil, as described above in Section 3.6(b) in return
--------------
for __________.
3.17. EU Holdings (Denmark). Baxter and ▇▇▇▇▇▇▇ hereby agree to take
---------------------
any and all actions necessary to establish a holding company in Europe to hold
the stock of all of the European entities described in Sections 3.18 through
-------------
3.23, 3.25 and 3.26 below, as follows:
---- ---- ----
(a) ▇▇▇▇▇▇▇ Lifesciences Holding A/S ("▇▇▇▇▇▇▇ EU Holdings") shall
-------------------
be formed as a Danish corporation;
(b) Baxter shall purchase all issued and outstanding capital stock
(___ shares) of ▇▇▇▇▇▇▇ EU Holdings from the organizer of ▇▇▇▇▇▇▇ EU
Holdings for __________;
(c) Baxter shall transfer to ▇▇▇▇▇▇ World Trade [as a contribution
to capital] all of its right, title and interest in and to the capital
stock of ▇▇▇▇▇▇▇ EU Holdings; and
(d) ▇▇▇▇▇▇ World Trade shall transfer to ▇▇▇▇▇▇▇ World Trade [as a
contribution to capital] all of its right, title and interest in and to the
capital stock of ▇▇▇▇▇▇▇ EU Holdings.
3.18. Germany. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
-------
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of (i) all the
right, title and interest of Baxter Germany in and to the Transferred Assets and
the Assumed Liabilities, which constitutes the ▇▇▇▇▇▇▇ Business conducted in
Germany; (ii) all the right, title and interest in Pas ▇▇▇▇▇▇
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GmbH & Co. KG, a German limited company ("Pas ▇▇▇▇▇▇ KG"), held by Baxter
-------------
Germany; and (iii) all the right, title and interest in Pas ▇▇▇▇▇▇ Verwaltungs-
GmbH, a German limited company ("Pas ▇▇▇▇▇▇ Verwaltungs"), held by Baxter
----------------------
Germany Holdings, all as follows:
(a) ▇▇▇▇▇▇▇ Germany Holdings.
------------------------
(i) ▇▇▇▇▇▇▇ Lifesciences Holding GmbH ("▇▇▇▇▇▇▇ Germany
---------------
Holdings") shall be formed as a German limited company (GmbH);
--------
(ii) Baxter World Trade shall purchase all issued and outstanding
capital stock (___ shares) of ▇▇▇▇▇▇▇ Germany Holdings from the
organizer of ▇▇▇▇▇▇▇ Germany Holdings for _________________;
(iii) After the steps outlined in Section 3.18 (b) below, ▇▇▇▇▇▇
----------------
World Trade shall transfer to ▇▇▇▇▇▇▇ World Trade as a contribution to
capital all of its right, title and interest in and to the capital
stock of ▇▇▇▇▇▇▇ Germany Holdings; and
(iv) ▇▇▇▇▇▇▇ World Trade shall transfer to ▇▇▇▇▇▇▇ EU Holdings as
a contribution to capital all of its right, title and interest in and
to the capital stock of ▇▇▇▇▇▇▇ Germany Holdings.
(b) ▇▇▇▇▇▇▇ Germany.
---------------
(i) ▇▇▇▇▇▇▇ Lifesciences GmbH ("▇▇▇▇▇▇▇ Germany") shall be
---------------
formed as a German limited company (GmbH);
(ii) Baxter Germany Holdings shall purchase all issued and
outstanding capital stock (___ shares) of ▇▇▇▇▇▇▇ Germany from the
organizer of ▇▇▇▇▇▇▇ Germany for _______________;
(iii) Baxter Germany shall transfer to ▇▇▇▇▇▇▇ Germany all of its
right, title and interest in and to the Transferred Assets and the
Assumed Liabilities (except for inventory) as well as its partnership
interest in Pas ▇▇▇▇▇▇ KG;
(iv) Baxter Germany shall transfer to Baxter Belgium all of its
right, title and interest in and to the inventory relating Exclusively
to the ▇▇▇▇▇▇▇ Business in Germany in return for
_____________________;
(v) Baxter Germany Holdings shall transfer to Baxter World Trade
as a dividend all of its right, title and interest in and to the
capital stock of ▇▇▇▇▇▇▇ Germany as well as its membership interest in
Pas ▇▇▇▇▇▇ Verwaltungs;
(vi) ▇▇▇▇▇▇ World Trade shall transfer to ▇▇▇▇▇▇▇ Germany
Holdings as a contribution to capital all of its right, title and
interest in and to the capital stock of ▇▇▇▇▇▇▇ Germany as well as its
membership interest in Pas ▇▇▇▇▇▇ Verwaltungs;
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(vii) After the Distribution Date, ▇▇▇▇▇▇▇ Germany shall
transfer to ▇▇▇▇▇▇▇ Lifesciences AG all of its right, title and
interest in and to the accounts receivable held by ▇▇▇▇▇▇▇ Germany in
return for _________; and
(viii) After the Distribution Date, ▇▇▇▇▇▇▇ Germany shall
transfer to ▇▇▇▇▇▇▇ Lifesciences AG the third-party distribution
agreements originally transferred to ▇▇▇▇▇▇▇ Germany by Baxter Germany
[in return for ________].
3.19. Austria. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
-------
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all of the
right, title and interest of Baxter Immuno Vertriebsgesellschaft GmbH, a company
organized under the laws of Austria ("Baxter Austria"), in and to the
--------------
Transferred Assets and the Assumed Liabilities, which constitutes the ▇▇▇▇▇▇▇
Business conducted in Austria, as follows:
(a) ▇▇▇▇▇▇▇ Lifesciences Austria GmbH ("▇▇▇▇▇▇▇ Austria") shall be
---------------
organized as an Austrian limited company (GmbH) and a wholly-owned
Subsidiary of ▇▇▇▇▇▇▇ EU Holdings;
(b) Baxter Austria shall transfer to ▇▇▇▇▇▇▇ Austria all of its
right, title and interest in and to the Transferred Assets and the Assumed
Liabilities (except for inventory) in return for _________;
(c) Baxter Austria shall transfer to Baxter Belgium all of its
right, title and interest in and to the inventory relating Exclusively to
the ▇▇▇▇▇▇▇ Business in Austria in return for __________;
(d) After the Distribution Date, ▇▇▇▇▇▇▇ Austria shall transfer to
▇▇▇▇▇▇▇ Lifesciences AG all of its right, title and interest in and to the
accounts receivable held by ▇▇▇▇▇▇▇ Austria in return for ________________.
3.20. France. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
------
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all of the
right, title and interest of ▇▇▇▇▇▇ ▇.▇. (France), a company organized under the
laws of France ("Baxter France"), in and to the Transferred Assets and the
-------------
Assumed Liabilities, which constitutes the ▇▇▇▇▇▇▇ Business conducted in France,
as follows:
(a) ▇▇▇▇▇▇▇ Lifesciences SAS ("▇▇▇▇▇▇▇ France") shall be organized
--------------
as a French SAS;
(b) Baxter France shall transfer to ▇▇▇▇▇▇▇ France all of its right,
title and interest in and to the Transferred Assets and the Assumed
Liabilities (except for inventory and third-party distribution agreements)
in return for ________shares of capital stock of ▇▇▇▇▇▇▇ France;
(c) Baxter France shall transfer to Baxter Belgium all of its right,
title and interest in and to the inventory relating Exclusively to the
▇▇▇▇▇▇▇ Business in France in return for _________________;
-32-
(d) Baxter France shall transfer to ▇▇▇▇▇▇▇ Lifesciences AG all of
its right, title and interest in and to [all] [certain] third-party
distribution agreements in its name but relating Exclusively to the ▇▇▇▇▇▇▇
Business conducted in France [in return for _____________________________];
(e) Baxter France shall transfer to ▇▇▇▇▇▇▇ EU Holdings all of its
right, title and interest in and to the capital stock of ▇▇▇▇▇▇▇ France for
___________________; and
(f) After the Distribution Date, ▇▇▇▇▇▇▇ France shall transfer to
▇▇▇▇▇▇▇ Lifesciences AG all of its right, title and interest in and to the
accounts receivable held by ▇▇▇▇▇▇▇ France in return for _________________.
3.21. Italy. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
-----
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all of the
right, title and interest of Baxter S.p.A., a company organized under the laws
of Italy ("Baxter Italy"), in and to the Transferred Assets and the Assumed
------------
Liabilities, which constitutes the ▇▇▇▇▇▇▇ Business conducted in Italy, as
follows:
(a) ▇▇▇▇▇▇ World Trade and ▇▇▇▇▇▇ Export Corporation, as
shareholders of Baxter Italy, shall spin off the Transferred Assets and the
Assumed Liabilities (except for accounts receivable, inventory and third-
party distribution agreements), which constitutes the ▇▇▇▇▇▇▇ Business
conducted in Italy, thus creating a new company, under the name ▇▇▇▇▇▇▇
Lifesciences Italia S.r.l. ("▇▇▇▇▇▇▇ Italy");
(b) As a result, ▇▇▇▇▇▇ World Trade and ▇▇▇▇▇▇ Export Corporation
shall jointly own the entire share capital of ▇▇▇▇▇▇▇ Italy;
(c) Baxter Italy shall transfer to ▇▇▇▇▇▇▇ Lifesciences AG all of
its right, title and interest in and to [all] [certain] third-party
distribution agreements in its name but relating Exclusively to the ▇▇▇▇▇▇▇
Business conducted in Italy [in return for ______________________________];
(d) Baxter Italy shall transfer to ▇▇▇▇▇▇▇ Lifesciences AG all of
its right, title and interest in and to the inventory relating Exclusively
to the ▇▇▇▇▇▇▇ Business conducted in Italy [in return for ______________];
(e) ▇▇▇▇▇▇ World Trade and ▇▇▇▇▇▇ Export Corporation shall transfer
to ▇▇▇▇▇▇▇ World Trade all of their respective rights, titles and interests
in and to the capital stock of ▇▇▇▇▇▇▇ Italy in return for
_________________; and
(f) ▇▇▇▇▇▇▇ World Trade shall transfer to ▇▇▇▇▇▇▇ EU Holdings as a
contribution to capital all of its right, title and interest in and to the
capital stock of ▇▇▇▇▇▇▇ Italy.
3.22. Belgium/Luxembourg. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any
------------------
and all actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all
of the right, title and interest of ▇▇▇▇▇▇ ▇.▇. (Belgium), a company organized
under the laws of Belgium ("Baxter
------
-33-
Belgium"), in and to the Transferred Assets and the Assumed Liabilities, which
-------
constitutes the ▇▇▇▇▇▇▇ Business conducted in Belgium and Luxembourg, as
follows:
(a) ▇▇▇▇▇▇▇ Lifesciences S.P.R.L. ("▇▇▇▇▇▇▇ Belgium") shall be
---------------
organized as a Belgian SRL with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as a 0.08% holder and
▇▇▇▇▇▇▇ EU Holdings as a 99.92% holder;
(b) Baxter Belgium shall transfer to ▇▇▇▇▇▇▇ Belgium all of its
right, title and interest in and to the Transferred Assets and the Assumed
Liabilities (except for inventory and third-party distribution agreements),
in return for ___________________;
(c) Baxter Belgium shall transfer to ▇▇▇▇▇▇▇ Lifesciences AG all of
its right, title and interest in and to the inventory relating Exclusively
to the ▇▇▇▇▇▇▇ Business in Germany, France, Belgium, Luxembourg, the
Netherlands, Austria and the U.K. in return for ________________;
(d) Baxter Belgium shall transfer to ▇▇▇▇▇▇▇ Lifesciences AG all of
its right, title and interest in and to [all] [certain] third-party
distribution agreements in its name but relating Exclusively to the ▇▇▇▇▇▇▇
Business conducted in Belgium and Luxembourg [in return for ____________];
and
(e) After the Distribution Date, ▇▇▇▇▇▇▇ Belgium shall transfer to
▇▇▇▇▇▇▇ Lifesciences AG all of its right, title and interest in and to the
accounts receivable held by ▇▇▇▇▇▇▇ Belgium in return for _____________.
3.23. Netherlands. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and
-----------
all actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all of
the right, title and interest of Baxter B.V., a company organized under the laws
of the Netherlands ( "Baxter Netherlands"), in and to the Transferred Assets and
------------------
the Assumed Liabilities, which constitutes ▇▇▇▇▇▇▇ Business conducted in the
Netherlands, except for the Uden Manufacturing Facility, as follows:
(a) ▇▇▇▇▇▇▇ Lifesciences BV ("▇▇▇▇▇▇▇ Netherlands") shall be
-------------------
organized as a Netherlands corporation and a wholly-owned Subsidiary of
▇▇▇▇▇▇▇ EU Holdings;
(b) Baxter Netherlands shall transfer to ▇▇▇▇▇▇▇ Netherlands all of
its right, title and interest in and to the Transferred Assets and the
Assumed Liabilities (except for inventory, third-party distribution
agreements and the Uden Manufacturing Facility) in return for ___________;
(c) Baxter Netherlands shall transfer to Baxter Belgium all of its
right, title and interest in and to the inventory relating Exclusively to
the ▇▇▇▇▇▇▇ Business in the Netherlands in return for ;
(d) Baxter Netherlands shall transfer to ▇▇▇▇▇▇▇ Lifesciences AG all
of its right, title and interest in and to [all] [certain] third-party
distribution agreements in its name but relating Exclusively to the ▇▇▇▇▇▇▇
Business conducted in the Netherlands [in return for ________________]; and
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(e) After the Distribution Date, ▇▇▇▇▇▇▇ Netherlands shall transfer
to ▇▇▇▇▇▇▇ Lifesciences AG all of its right, title and interest in and to
the accounts receivable held by ▇▇▇▇▇▇▇ Netherlands in return for
________________.
3.24. Uden. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
----
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all of the
right, title and interest of Baxter Netherlands in the manufacturing facility in
Uden that produces ▇▇▇▇▇▇▇ Products and all of the Transferred Assets and
Assumed Liabilities related thereto (the "Uden Manufacturing Facility), as
---------------------------
follows:
(a) ▇▇▇▇▇▇▇ Lifesciences Uden BV ("▇▇▇▇▇▇▇ ▇▇▇▇") shall be organized
------------
as a Dutch corporation and a wholly-owned Subsidiary of ▇▇▇▇▇▇▇ World
Trade; and
(b) Baxter Netherlands shall transfer to ▇▇▇▇▇▇▇ Uden all of its
right, title and interest in and to the Uden Manufacturing Facility in
return for _______________.
3.25. Spain. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and all
-----
actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all of the
right, title and interest of ▇▇▇▇▇▇ ▇.▇. (Spain), a company organized under the
laws of Spain ("Baxter Spain"), in and to the Transferred Assets and the Assumed
------------
Liabilities, which constitutes the ▇▇▇▇▇▇▇ Business conducted in Spain, as
follows:
(a) ▇▇▇▇▇▇▇ Lifesciences SL ("▇▇▇▇▇▇▇ Spain") shall be organized as
-------------
a Spanish Sociedad Limitada and a wholly-owned Subsidiary of ▇▇▇▇▇▇▇ EU
Holdings
(b) Baxter Spain shall transfer to ▇▇▇▇▇▇▇ Spain all of its right,
title and interest in and to the Transferred Assets and the Assumed
Liabilities (except for inventory and third-party distribution agreements)
in return for ___________;
(c) Baxter Spain shall transfer to ▇▇▇▇▇▇▇ Lifesciences AG all of
its right, title and interest in and to the inventory relating Exclusively
to the ▇▇▇▇▇▇▇ Business in Spain in return for ______________;
(d) Baxter Spain shall transfer to ▇▇▇▇▇▇▇ Lifesciences AG all of
its right, title and interest in and to the inventory and accounts
receivable held by ▇▇▇▇▇▇▇ Spain in return for _______________; and
(e) Baxter Spain shall transfer to ▇▇▇▇▇▇▇ Lifesciences AG all of
its right, title and interest in and to [all] [certain] third-party
distribution agreements in its name but relating Exclusively to the ▇▇▇▇▇▇▇
Business conducted in Spain [in return for ______________________________].
3.26. United Kingdom. Baxter and ▇▇▇▇▇▇▇ hereby agree to take any and
--------------
all actions necessary to effect the transfer to ▇▇▇▇▇▇▇ World Trade of all of
the right, title and interest of ▇▇▇▇▇▇ Healthcare Ltd., a company organized
under the laws of England ("▇▇▇▇▇▇ U.K."), in and to the Transferred Assets and
-----------
the Assumed Liabilities, which constitutes the ▇▇▇▇▇▇▇ Business conducted in the
United Kingdom, as follows:
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(a) ▇▇▇▇▇▇▇ Lifesciences Limited ("▇▇▇▇▇▇▇ U.K.") shall be organized
------------
as an English limited liability company and a wholly-owned Subsidiary of
▇▇▇▇▇▇▇ EU Holdings;
(b) Baxter U.K. shall transfer to ▇▇▇▇▇▇▇ U.K. all of its right,
title and interest in and to the Transferred Assets and the Assumed
Liabilities (except for inventory and third-party distribution agreements),
in return for _______________;
(c) Baxter U.K. shall transfer to Baxter Belgium all of its right,
title and interest in and to the inventory relating Exclusively to the
▇▇▇▇▇▇▇ Business in the United Kingdom in return for _____________________;
(d) Baxter U.K. shall transfer to ▇▇▇▇▇▇▇ Lifesciences AG all of its
right, title and interest in and to [all] [certain] third-party
distribution agreements in its name but relating Exclusively to the ▇▇▇▇▇▇▇
Business conducted in the United Kingdom [in return for ]; and
(e) After the Distribution Date, ▇▇▇▇▇▇▇ U.K. shall transfer to
▇▇▇▇▇▇▇ Lifesciences AG all of its right, title and interest in and to the
accounts receivable held by ▇▇▇▇▇▇▇ U.K. in return for ______________.
3.27. Restrictions on Intercompany Debt. Neither Baxter nor any
---------------------------------
Affiliate of Baxter shall make any Loan, other than in the ordinary course of
business, to any ▇▇▇▇▇▇▇ Foreign Entity from February __, 2000 through the
Distribution Date, except as specifically contemplated by this Agreement. [▇▇▇
▇▇▇▇▇▇▇: WILL THIS BE NECESSARY IN CONNECTION WITH THE DEBT PUSHDOWN?]
3.28. Transfer of Assets. Subject to the terms and conditions of this
------------------
Agreement, Baxter hereby agrees to convey, assign, transfer, contribute and set
over, or cause to be conveyed, assigned, transferred, contributed and set over,
to ▇▇▇▇▇▇▇ World Trade on or prior to the Distribution Date all of Baxter World
Trade's right, title and interest in and to the Transferred Assets, if any.
3.29. Transfer of Liabilities. Subject to the terms and conditions of
-----------------------
this Agreement, ▇▇▇▇▇▇▇ shall cause ▇▇▇▇▇▇▇ World Trade to assume, effective as
of the Distribution Date, and pay, comply with and discharge all Assumed
Liabilities of Baxter World Trade.
3.30. Transfer of ▇▇▇▇▇▇▇ World Trade to Baxter. Baxter and ▇▇▇▇▇▇▇
-----------------------------------------
hereby agree to take, or cause to be taken, any and all actions necessary to
effect the declaration of a dividend by Baxter World Trade to Baxter of all of
Baxter World Trade's right, title and interest in and to the common stock of
▇▇▇▇▇▇▇ World Trade.
3.31. ▇▇▇▇▇▇▇ Holdings Switzerland. After the Distribution Date,
----------------------------
▇▇▇▇▇▇▇ Lifesciences Holding AG ("▇▇▇▇▇▇▇ Holdings Switzerland") shall be formed
----------------------------
as a Swiss corporation, and ▇▇▇▇▇▇▇ World Trade shall transfer to ▇▇▇▇▇▇▇
Holdings Switzerland all of its right, title and interest in and to the capital
stock of ▇▇▇▇▇▇▇ Lifesciences AG, ▇▇▇▇▇▇▇
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Lifesciences Holding A/S and ▇▇▇▇▇▇▇ Lifesciences Uden BV in exchange for ____
shares of capital stock of ▇▇▇▇▇▇▇ Holdings Switzerland.
ARTICLE IV
TRANSFERS TO ▇▇▇▇▇▇▇ U.S. OPERATING SUBSIDIARY
----------------------------------------------
4.1. Organization of ▇▇▇▇▇▇▇ U.S. Operating Subsidiary. (a) Prior to
-------------------------------------------------
or promptly following the execution of this Agreement, Baxter shall cause to be
formed, under the Limited Liability Company Act of Delaware, ▇▇▇▇▇▇▇
Lifesciences LLC ("▇▇▇▇▇▇▇ LLC"), as a wholly-owned Subsidiary of BHC. ▇▇▇▇▇▇▇
-----------
LLC shall be qualified as a foreign limited liability company under the relevant
laws of each state within the United States and in each jurisdiction outside the
United States where the ownership of its assets or conduct of its business makes
such qualification necessary.
(b) Prior to or promptly following the execution of this Agreement, Baxter
shall cause to be formed, under the General Corporation Law of Delaware, ▇▇▇▇▇▇▇
Lifesciences (U.S.) Inc. ("▇▇▇▇▇▇▇ U.S."), as a wholly-owned Subsidiary of BHC.
------------
▇▇▇▇▇▇▇ U.S. shall be qualified as a foreign corporation under the relevant laws
of each state within the United States and in each jurisdiction outside the
United States where the ownership of its assets or conduct of its business makes
such qualification necessary.
4.2. Transfer of Assets. Subject to the terms and conditions of this
------------------
Agreement, on or prior to the Distribution Date, Baxter shall convey, assign,
transfer, contribute and set over, or cause to be conveyed, assigned,
transferred, contributed and set over, to ▇▇▇▇▇▇▇ LLC, and ▇▇▇▇▇▇▇ shall cause
▇▇▇▇▇▇▇ LLC to accept and receive, on or prior to the Distribution Date, all
right, title and interest of BHC in and to the Transferred Assets.
4.3. Transfer of Third-Party Distribution Contracts. Subject to the
----------------------------------------------
terms and conditions of this Agreement, Baxter shall cause the foreign
Subsidiaries of Baxter World Trade listed on Schedule 4.3 hereto (the "Foreign
------------ -------
Subsidiaries") to convey, assign, transfer, contribute and set over to ▇▇▇▇▇▇▇
------------
LLC, and ▇▇▇▇▇▇▇ shall cause ▇▇▇▇▇▇▇ LLC to accept and receive, on or prior to
the Distribution Date, all right, title and interest of the Foreign Subsidiaries
in and to the third-party distribution contracts relating Exclusively to the
▇▇▇▇▇▇▇ Business, except as indicated on Schedule 4.3.
------------
4.4. Assumption of Liabilities. Except as expressly limited in this
-------------------------
Article IV, ▇▇▇▇▇▇▇ shall cause an appropriate Subsidiary to assume, effective
----------
on or before the Distribution Date, and pay, comply with and discharge the
Assumed Liabilities.
4.5. Transfer of Operating Subsidiaries. Baxter and ▇▇▇▇▇▇▇ hereby
----------------------------------
agree to take, or cause to be taken, any and all actions necessary to effect the
following transactions on or prior to the Distribution Date, with each
transaction occurring at the approximate times and in the order described in
Schedule 3.1 hereto:
------------
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(a) BHC shall contribute to ▇▇▇▇▇▇▇ U.S., in exchange for all of the
capital stock of ▇▇▇▇▇▇▇ U.S. together with [certain intercompany
liabilities BHC owes Baxter], all of BHC's right, title and interest in and
to the membership interests of ▇▇▇▇▇▇▇ LLC and all of BHC's right, title
and interest in and to the capital stock of Perfusion Services of ▇▇▇▇▇▇
Healthcare Corporation, a Pennsylvania corporation; and
(b) [▇▇▇▇ ▇▇▇▇ TO PROVIDE INFORMATION RE: ASSIGNMENT OF DEBT.]
ARTICLE V
ORGANIZATION OF ▇▇▇▇▇▇▇ LIFESCIENCES CORPORATION
------------------------------------------------
5.1. Organization of ▇▇▇▇▇▇▇. Baxter and ▇▇▇▇▇▇▇ shall take any and
-----------------------
all action necessary so that, on the Distribution Date, the Certificate of
Incorporation and By-laws of ▇▇▇▇▇▇▇ shall be in the forms attached hereto as
Exhibits E and F, respectively. Prior to the Distribution Date, the Board of
---------- -
Directors of ▇▇▇▇▇▇▇ shall consider the adoption of a stockholder rights plan in
substantially the form attached hereto as Exhibit G. On the Distribution Date,
---------
the ▇▇▇▇▇▇▇ Board of Directors shall consist of, and Baxter and ▇▇▇▇▇▇▇ shall
take all actions that may be required to elect or otherwise appoint as directors
of ▇▇▇▇▇▇▇ on or prior to the Distribution Date, the persons named on Exhibit H.
---------
Following the transfers of Subsidiaries contemplated by Section 5.2, ▇▇▇▇▇▇▇
-----------
shall take appropriate action to be qualified as a foreign corporation under the
General Corporation Law of California.
5.2. Transfer of Certain Subsidiaries. Baxter and ▇▇▇▇▇▇▇ hereby
--------------------------------
agree to take, or cause to be taken, any and all actions necessary to effect the
following transactions, on or prior to the Distribution Date and at the
approximate times described in Schedule 3.1:
------------
(a) BHC shall distribute as a dividend to Baxter all of BHC's right,
title and interest in and to the capital stock of ▇▇▇▇▇▇▇ U.S.;
(b) Baxter shall contribute to ▇▇▇▇▇▇▇, in exchange for ___________,
all of ▇▇▇▇▇▇'▇ right, title and interest in and to the capital stock of
(i) ▇▇▇▇▇▇▇ U.S., (ii) ▇▇▇▇▇▇▇ World Trade, (iii) Research Medical Inc., a
Utah corporation; and (iv) Baxter CVG Sub, a Delaware corporation; and
(c) [▇▇▇▇ ▇▇▇▇ TO PROVIDE INFORMATION RE: ASSIGNMENT OF DEBT.]
5.3. Transfer of Assets. Subject to the terms and conditions of this
------------------
Agreement, Baxter hereby agrees to convey, assign, transfer, contribute and set
over, or cause to be conveyed, assigned, transferred, contributed and set over,
to ▇▇▇▇▇▇▇ on or prior to the Distribution Date, all of ▇▇▇▇▇▇'▇ right, title
and interest in and to the Transferred Assets.
5.4. Transfer of Liabilities. Subject to the terms and conditions of
-----------------------
this Agreement, ▇▇▇▇▇▇▇ shall assume, or cause to be assumed, effective as of
the Distribution Date,
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and pay, comply with and discharge, or cause to be paid, complied with or
discharged, all Assumed Liabilities of Baxter.
ARTICLE VI
EXCLUSIONS FROM TRANSFERS
-------------------------
6.1. Retained Assets. Notwithstanding anything to the contrary
---------------
herein, the following assets (the "Retained Assets") are not, and shall not be
---------------
deemed to be, Transferred Assets:
(a) Cash and cash equivalents, any cash on hand or in bank accounts,
certificates of deposit, commercial paper and similar securities, except
for (i) cash and cash equivalents of the Transferred Subsidiaries, (ii)
deposits securing bonds, letters of credit, leases and all other
obligations related to the ▇▇▇▇▇▇▇ Business and (iii) ▇▇▇▇▇ cash and
impressed funds related to the ▇▇▇▇▇▇▇ Business;
(b) Except as otherwise provided in the Tax Sharing Agreement, any
right, title or interest of Baxter or its Subsidiaries in any foreign,
federal, state or local tax refund, credit or benefit (including any income
with respect thereto) relating to the operations of the ▇▇▇▇▇▇▇ Business
prior to the Distribution Date;
(c) Any amounts accrued on the books and records of Baxter or its
Subsidiaries or the ▇▇▇▇▇▇▇ Business with respect to any Retained
Liabilities;
(d) All assets relating to all employee benefit plans of Baxter other
than the assets transferred in accordance with Section 12.9;
------------
(e) Any corporate allocations of non-▇▇▇▇▇▇▇ Business-related assets
heretofore made by Baxter or its Subsidiaries to the ▇▇▇▇▇▇▇ Business for
internal management responsibility reporting purposes, other than
allocations of accounts receivable and accounts payable as contemplated by
Section 9.6(d);
--------------
(f) Any proprietary rights in and to the BAXTER name and the related
emblem design, and any variants thereof, and the Trademarks used by Baxter
or its Subsidiaries in relation to the Retained Business, except as
provided in Article X;
---------
(g) All assets held by Baxter Japan;
(h) Contracts with customers or third-party distributors in or with
respect to the countries or regions listed on Schedule 6.1(h) hereto (which
---------------
are the countries and regions where Baxter, as principal, is serving as the
distributor for ▇▇▇▇▇▇▇ Products) together with the accounts receivable and
all other rights, claims, demands, causes of action and rights to
indemnification or contribution under such Contracts;
(i) All assets used in connection with ▇▇▇▇▇▇'▇ Tisseal product; and
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(j) All other assets, properties and rights of Baxter and its
Subsidiaries not used Exclusively in the conduct of the ▇▇▇▇▇▇▇ Business
and not specifically included as Transferred Assets.
6.2. Retained Liabilities. Notwithstanding anything to the contrary
--------------------
in this Agreement, neither ▇▇▇▇▇▇▇ nor any of its Subsidiaries shall assume any
of the following Liabilities of Baxter and its Subsidiaries (the "Retained
--------
Liabilities"):
-----------
(a) Liabilities of Baxter Japan; and
(b) The environmental liabilities set forth on Schedule 6.2 hereto.
------------
Nothing contained in this Section 6.2 shall be construed as in any way limiting
-----------
the Liabilities of ▇▇▇▇▇▇▇ or any of its Subsidiaries under any of the Operating
Agreements.
6.3. Termination of Existing Intercompany Agreements. Except as
-----------------------------------------------
otherwise expressly provided in this Agreement, the Conveyancing Instruments,
the Implementation Agreements, the Operating Agreements or the agreements set
forth on Schedule 6.3, all Intercompany Agreements and all other intercompany
------------
arrangements and course of dealings, whether or not in writing and whether or
not binding, in effect immediately prior to the Distribution Date, shall be
terminated and be of no further force and effect from and after the Distribution
Date. [ARE THERE INTERNATIONAL AGREEMENTS THAT SHOULD SURVIVE?]
ARTICLE VII
ASSET SEPARATION CLOSING MATTERS
--------------------------------
7.1. Delivery of Instruments of Conveyance. In order to effectuate
-------------------------------------
the transactions contemplated by Articles III, IV and V, the Parties shall
------------ -- -
execute and deliver, or cause to be executed and delivered, prior to or as of
the Distribution Date such deeds, bills of sale, instruments of assumption,
instruments of assignment, stock powers, certificates of title and other
documents of assignment, transfer, assumption and conveyance (collectively, the
"Conveyancing Instruments") as the Parties shall reasonably deem necessary or
------------------------
appropriate to effect such transactions.
7.2. Delivery of Other Agreements. Prior to or as of the Distribution
----------------------------
Date, the Parties shall execute and deliver, or shall cause to be executed and
delivered, each of the Implementation Agreements, the Operating Agreements and
the Tax Sharing Agreement.
7.3. Non-Assignable Contracts. In the event and to the extent that
------------------------
Baxter and its Subsidiaries are unable to obtain any consent, approval or
amendment to any Contract, lease, license or other rights relating to the
▇▇▇▇▇▇▇ Business that otherwise would be transferred or assigned to ▇▇▇▇▇▇▇ or
one of its Subsidiaries as contemplated by this Agreement or any other agreement
or document contemplated hereby, (i) Baxter and its Subsidiaries shall continue
to be bound thereby and the purported transfer or assignment to ▇▇▇▇▇▇▇ or one
of its Subsidiaries
-40-
shall automatically be deemed deferred until such time as all legal impediments
are removed and/or all necessary consents have been obtained, and (ii) unless
not permitted by the terms thereof or by law, ▇▇▇▇▇▇▇ or one of its Subsidiaries
shall pay, perform and discharge fully all the obligations of Baxter or its
Subsidiaries thereunder from and after the Distribution Date, or such earlier
date as such transfer or assignment otherwise would have taken place. ▇▇▇▇▇▇▇
shall indemnify Baxter and its Subsidiaries for all indemnifiable Losses arising
out of the performance by ▇▇▇▇▇▇▇ or its Subsidiaries referred to in the
preceding sentence or any actions of Baxter or any of its Subsidiaries taken in
accordance with this Section 7.3 or at the direction or request of ▇▇▇▇▇▇▇ as
provided in this Section 7.3. Baxter and its Subsidiaries shall, without further
consideration therefor, pay and remit to ▇▇▇▇▇▇▇ or its Subsidiaries promptly
all monies, rights and other considerations received in respect of such
performance. Baxter and its Subsidiaries shall exercise or exploit its rights
and options under all such Contracts, leases, licenses and other rights and
commitments referred to in this Section 7.3, including instituting or joining
-----------
as a party legal proceedings, as reasonably directed by ▇▇▇▇▇▇▇ and at ▇▇▇▇▇▇▇'
expense. If and when any such consent shall be obtained or such Contract, lease,
license or other right shall otherwise become assignable or be able to be
novated, Baxter or its Subsidiaries shall promptly assign and novate (to the
extent permissible) all of its rights and obligations thereunder to ▇▇▇▇▇▇▇ or
its Subsidiaries without payment of further consideration, and ▇▇▇▇▇▇▇ or its
Subsidiaries shall, without the payment of any further consideration therefor,
assume such rights and obligations. To the extent that the assignment of any
Contract, lease, license or other right (or the proceeds thereof) pursuant to
this Section 7.3 is prohibited by law, the assignment provisions of this
-----------
Section 7.3 shall operate to create a subcontract with ▇▇▇▇▇▇▇ or its
-----------
Subsidiaries to perform each relevant unassignable Contract of Baxter at a
subcontract price equal to the monies, rights and other considerations received
by Baxter or its Subsidiaries with respect to the performance by ▇▇▇▇▇▇▇ or its
Subsidiaries under such subcontract.
7.4. Further Assurances. (a) In addition to the actions specifically
------------------
provided for elsewhere in this Agreement, each of the Parties shall use
commercially reasonable efforts 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, in the most expeditious manner practicable, the transactions
contemplated by this Agreement and the other agreements and documents
contemplated hereby. Without limiting the generality of the foregoing, each
Party shall cooperate with the other Party to execute and deliver, or use
commercially 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, Contract or other instrument, and to take all such other
actions as such Party may reasonably be requested to take by the other Party
from time to time, consistent with the terms of this Agreement, in order to
confirm the title of ▇▇▇▇▇▇▇ and its Subsidiaries to all of the ▇▇▇▇▇▇▇
Business, to put ▇▇▇▇▇▇▇ or its Subsidiaries in actual possession and operating
control of the Transferred Assets and to permit ▇▇▇▇▇▇▇ or its Subsidiaries to
exercise all rights with respect thereto and to effectuate the provisions and
purposes of this Agreement, the Conveyancing Instruments, the Implementation
Agreements, the Operating Agreements, the Tax Sharing Agreement and the other
agreements and documents contemplated hereby or thereby; provided, however, that
-------- -------
neither Party shall be obligated to pay any consideration to any third-party in
connection with the foregoing.
-41-
(b) If, as a result of mistake, oversight or otherwise, any asset
reasonably necessary to the conduct of the ▇▇▇▇▇▇▇ Business is not transferred
to ▇▇▇▇▇▇▇ or one of its Subsidiaries, or any asset reasonably necessary to the
conduct of the Retained Business is transferred to ▇▇▇▇▇▇▇ or one of its
Subsidiaries, Baxter and ▇▇▇▇▇▇▇ shall negotiate in good faith after the
Distribution Date to determine whether such asset should be transferred to
▇▇▇▇▇▇▇ or one of its Subsidiaries or to Baxter or one of its Subsidiaries, as
the case may be, and/or the terms and conditions upon which such asset shall be
made available to ▇▇▇▇▇▇▇ or one of its Subsidiaries or to Baxter or one of its
Subsidiaries, as the case may be. Unless expressly provided to the contrary in
this Agreement, the Conveyancing Instruments, the Implementation Agreements, the
Operating Agreements or the Tax Sharing Agreement, if as a result of mistake,
oversight or otherwise, any Liability arising out of or relating to the ▇▇▇▇▇▇▇
Business is retained by Baxter or its Subsidiaries, or any Liability arising out
of or relating to the Retained Business is assumed by ▇▇▇▇▇▇▇ or its
Subsidiaries, Baxter and ▇▇▇▇▇▇▇ shall negotiate in good faith after the
Distribution Date to determine whether such Liability should be transferred to
▇▇▇▇▇▇▇ or one of its Subsidiaries or Baxter or one of its Subsidiaries, as the
case may be, and/or the terms and conditions upon which any such Liability shall
be transferred. The Parties agree that the terms and conditions upon which any
assets or Liabilities are made available or assumed as provided in this Section
7.4(b) shall be consistent with the terms of this Agreement, the Implementation
Agreements, the Operating Agreements and the Tax Sharing Agreement.
(c) If, after the Distribution Date, either Party identifies any
commercial or other service, product or component that can be provided by the
other Party, 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,
the Operating Agreements or the Tax Sharing Agreement, the Parties will
cooperate in determining whether there is a mutually acceptable arm's-length
basis, consistent with the terms of the this Agreement, the Implementation
Agreements, the Operating Agreements and the Tax Sharing Agreement, on which one
Party will provide such service to the other Party.
7.5. Novation of Assumed Liabilities. (a) ▇▇▇▇▇▇▇ or its
-------------------------------
Subsidiaries, at the request of Baxter or its Subsidiaries, shall use
commercially reasonable efforts to obtain, or cause to be obtained, any consent,
approval, release, substitution or amendment required to novate (including with
respect to any federal government contract) or assign all obligations under the
Assumed Liabilities, or to obtain in writing the unconditional release of all
parties to such arrangements other than ▇▇▇▇▇▇▇ or its Subsidiaries; provided,
--------
however, that ▇▇▇▇▇▇▇ and its Subsidiaries shall not be obligated to pay any
-------
consideration therefor to any third-party from whom such consents, approvals,
releases, substitutions or amendments are requested.
(b) ▇▇▇▇▇▇▇ agrees to provide Baxter, upon written request, with a
list of Contracts included in the Transferred Assets under which Baxter or one
of its Subsidiaries remains liable and which has a base term that is subject to
automatic renewal or renewal in the absence of notice at the option of ▇▇▇▇▇▇▇
or one of its Subsidiaries. ▇▇▇▇▇▇▇ agrees that if so requested by Baxter with
respect to any individual Contract or Contracts included on such list, it will
not exercise any option to renew such Contract and, to the extent such Contract
provides for automatic renewal, ▇▇▇▇▇▇▇ agrees that it will not permit such
Contract to enter an auto-renewal period.
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7.6. Nominee Shares. Baxter agrees to use commercially reasonable
--------------
efforts to cause to be transferred to, or as directed by, ▇▇▇▇▇▇▇ all director's
qualifying or other shares of capital stock of any of the Transferred
Subsidiaries held as of the Distribution Date by persons who are not ▇▇▇▇▇▇▇
Employees. ▇▇▇▇▇▇▇ agrees to use commercially reasonable efforts to cause to be
transferred to, or as directed by, Baxter all director's qualifying or other
shares of capital stock of any Baxter Subsidiary other than ▇▇▇▇▇▇▇ and the
Transferred Subsidiaries held as of the Distribution Date by ▇▇▇▇▇▇▇ Employees.
7.7. Provision of Corporate Records. Prior to or as promptly as
------------------------------
practicable after the Distribution Date, Baxter shall deliver to ▇▇▇▇▇▇▇ all
corporate books and records of ▇▇▇▇▇▇▇ and copies of all corporate books and
records of Baxter relating to the ▇▇▇▇▇▇▇ Business, including in each case all
active agreements, litigation files and government filings. From and after the
Distribution Date, all books, records and copies so delivered shall be the
property of ▇▇▇▇▇▇▇.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
------------------------------
8.1. Organization, Good Standing and Authority of ▇▇▇▇▇▇. ▇▇▇▇▇▇
---------------------------------------------------
hereby represents and warrants to ▇▇▇▇▇▇▇ as follows: Baxter is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Baxter has full power and authority to execute, deliver and
perform this Agreement. The execution, delivery and performance of this
Agreement by Baxter have been duly authorized and approved by ▇▇▇▇▇▇'▇ board of
directors and do not require any further authorization or consent of Baxter or
its stockholders. This Agreement has been duly authorized, executed and
delivered by Baxter.
8.2. Organization, Good Standing and Authority of ▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇
----------------------------------------------------
represents and warrants to Baxter as follows: ▇▇▇▇▇▇▇ is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. ▇▇▇▇▇▇▇ has full power and authority to execute, deliver and perform
this Agreement. The execution, delivery and performance of this Agreement by
▇▇▇▇▇▇▇ has been duly authorized and approved by ▇▇▇▇▇▇▇' board of directors and
do not require any further authorization or consent of ▇▇▇▇▇▇▇ or its
stockholder. This Agreement has been duly authorized, executed and delivered by
▇▇▇▇▇▇▇.
8.3. No Other Representations and Warranties. Except as expressly set
---------------------------------------
forth herein or in any Operating Agreement, and notwithstanding anything
contained in any Implementation Agreement, neither Baxter nor any of its
Subsidiaries represents or warrants in any way (i) as to the value or freedom
from encumbrance of, or any other matter concerning, any of the Transferred
Assets or Transferred Subsidiaries or (ii) as to the legal sufficiency to convey
title to any of the Transferred Assets or Transferred Subsidiaries on the
execution, delivery and filing of the Conveyancing Instruments. SUBJECT TO
SECTION 9.10 AND THE OPERATING AGREEMENTS, ALL SUCH ASSETS AND SUBSIDIARIES ARE
------------
BEING TRANSFERRED ON AN "AS IS, WHERE IS" BASIS WITHOUT ANY REPRESENTATION OR
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
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MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR ANY OTHER
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, and ▇▇▇▇▇▇▇ and its Subsidiaries
shall bear the economic and legal risks that any conveyances of such assets and
Subsidiaries shall prove to be insufficient or that ▇▇▇▇▇▇▇' and its
Subsidiaries' title to any such assets and Subsidiaries shall be other than good
and marketable and free of encumbrances. Except as expressly set forth in this
Agreement or in any Operating Agreement, and notwithstanding anything contained
in any Implementation Agreement, neither Baxter nor any of its Subsidiaries
represents or warrants that the obtaining of the consents or approvals, the
execution and delivery of any amendatory agreements and the making of the
filings and applications contemplated by this Agreement shall satisfy the
provisions of all applicable agreements or the requirements of all applicable
laws or judgments, and, subject to Section 7.3, ▇▇▇▇▇▇▇ and its Subsidiaries
-----------
shall bear the economic and legal risk that any necessary consents or approvals
are not obtained or that any requirements of law or judgments are not complied
with.
ARTICLE IX
CERTAIN COVENANTS
-----------------
9.1. Conduct of ▇▇▇▇▇▇▇ Business Pending the Distribution Date. Each
---------------------------------------------------------
of the Parties agrees that, from the date hereof until the Distribution Date,
except as otherwise expressly contemplated by this Agreement, it will take, or
cause to be taken, all reasonable efforts to carry on the ▇▇▇▇▇▇▇ Business
diligently in the ordinary course and substantially in the same manner as
heretofore conducted and to preserve intact the business organization and
goodwill of the ▇▇▇▇▇▇▇ Business.
9.2. Registration and Listing. Prior to the Distribution Date:
------------------------
(a) Baxter and ▇▇▇▇▇▇▇ shall prepare a registration statement on Form
10, including such amendments or supplements thereto as may be necessary
(together, the "Registration Statement") to effect the registration of the
----------------------
▇▇▇▇▇▇▇ Common Stock under the Exchange Act, which Registration Statement shall
include an information statement to be sent by Baxter to its stockholders in
connection with the Distribution (the "Information Statement"). ▇▇▇▇▇▇▇ shall
---------------------
file the Registration Statement with the SEC and shall use commercially
reasonable efforts to cause the Registration Statement to become and remain
effective under the Exchange Act as soon as reasonably practicable. After the
Registration Statement becomes effective, Baxter shall mail the Information
Statement to the holders of Baxter Common Stock as of the Record Date.
(b) The Parties shall use commercially reasonable efforts to take all
such action as may be necessary or appropriate under state and foreign
securities and "Blue Sky" laws in connection with the transactions contemplated
by this Agreement.
(c) ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ shall prepare, and ▇▇▇▇▇▇▇ shall file and seek
to make effective, an application for the listing of the ▇▇▇▇▇▇▇ Common Stock on
the NYSE, subject to official notice of issuance.
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(d) The Parties shall cooperate in preparing, filing with the SEC and
causing to become effective any registration statements or amendments thereto
that are necessary or appropriate in order to effect the transactions
contemplated hereby or to reflect the establishment of, or amendments to, any
employee benefit plans contemplated hereby.
9.3. [Funds Distributed to Baxter. On or prior to the Distribution
----------------------------
Date, ▇▇▇▇▇▇▇ shall enter into a new credit facility or facilities with
commercial lenders (the "▇▇▇▇▇▇▇ Credit Facility") and use the proceeds of the
-----------------------
indebtedness incurred under the ▇▇▇▇▇▇▇ Credit Facility to ___________. The
calculation of the amounts set forth in this Section 9.3 is set forth on
-----------
Schedule 9.3.][▇▇▇ ▇▇▇▇▇▇▇]
------------
9.4. Post-Distribution Tax-Related Restrictions. (a) In order to
------------------------------------------
avoid potentially adverse tax consequences relating to the Distribution, for a
period of two years after the Distribution Date ▇▇▇▇▇▇▇ shall not:
(i) cease to engage in the active conduct of a trade or
business within the meaning of Section 355 of the Code;
(ii) issue or redeem any share of stock of ▇▇▇▇▇▇▇, except for
issuances and redemptions
(A) for the benefit of ▇▇▇▇▇▇▇' employees, or
(B) to effect acquisitions by ▇▇▇▇▇▇▇ in the ordinary
course of business, or
(C) in connection with the issuance of any convertible debt
by ▇▇▇▇▇▇▇, or
(D) in accordance with the requirements for permitted
purchases of ▇▇▇▇▇▇▇ stock as set forth in Section 4.05(1)(b) of
Revenue Procedure 96-30 issued by the IRS; or
(iii) liquidate or merge with any other corporation;
unless, with respect to (i), (ii) or (iii) above, either (x) an opinion is
obtained from counsel to Baxter reasonably acceptable to ▇▇▇▇▇▇▇, or (y) a
ruling is obtained from the IRS, in either case to the effect that such act or
event will not adversely affect the federal income tax consequences of the
Distribution to Baxter, its stockholders who receive ▇▇▇▇▇▇▇ Shares or ▇▇▇▇▇▇▇.
(b) If, as a result of any transaction occurring after the
Distribution Date involving either the stock or assets of either ▇▇▇▇▇▇▇ or any
of its Subsidiaries, or any combination thereof, the Distribution fails to
qualify as tax-free under the provisions of Section 355 of the Code, ▇▇▇▇▇▇▇
shall indemnify Baxter for all Taxes, Liabilities and associated expenses,
including penalties and interest, incurred as a result of such failure of the
Distribution to qualify under Section 355 of the Code. If the Distribution fails
to qualify as tax-free under the provisions of Section 355 of the Code other
than as a result of a transaction occurring after the
-45-
Distribution Date involving either the stock or assets of ▇▇▇▇▇▇▇ or any of its
Subsidiaries, or any combination thereof, then ▇▇▇▇▇▇▇ shall not be liable for
such Taxes, Liabilities or expenses.
(c) Notwithstanding Paragraph 9.4(a) above, Baxter and ▇▇▇▇▇▇▇ agree as
follows. As of the Distribution Date, neither Baxter nor ▇▇▇▇▇▇▇ has entered
into, and within the first six months following the Distribution Date, neither
Baxter nor ▇▇▇▇▇▇▇ will enter into any agreements, understandings, arrangements
or substantial negotiations that would result, individually or collectively, in
a change of ownership of 50% or more of either within the meaning of Section
355(e) of the Code. Further, should ▇▇▇▇▇▇▇ enter into or continue any
negotiations during the first six months following the Distribution Date that
could result in the acquisition of its stock by a third-party, it will notify
the Baxter tax department immediately.
9.5. Intercompany Receivables and Payables, Cash Management and True-Up
------------------------------------------------------------------
[▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ AND ▇▇▇ ▇▇▇▇▇▇▇]. (a) All Intercompany Receivables and
Payables between any Subsidiary of Baxter, on the one hand, and any Subsidiary
of ▇▇▇▇▇▇▇, on the other hand, shall be settled (i) as of 3:00 p.m., Chicago
time, on [Date] if such Intercompany Receivables and Payables are subject to
----
▇▇▇▇▇▇'▇ netting process and (ii) as of [Date] if such Intercompany Receivables
----
and Payables are not subject to ▇▇▇▇▇▇'▇ netting process, in each case, in cash
with such cash settlement occurring on [Date]. Commencing from the opening of
----
business on [Date], in the case of transactions subject to the netting process,
----
and [Date], in the case of transactions not subject to the netting process,
----
Intercompany Receivables and Payables between any Subsidiary of Baxter, on the
one hand, and any Subsidiary of ▇▇▇▇▇▇▇, on the other hand, shall be recorded
for accounting purposes as third-party trade account receivables and payables.
(b) As provided in Section 6.1(a), Baxter shall be entitled to all cash
--------------
bank balances [(other than cash and cash equivalents of the Transferred
Subsidiaries)][IS THIS CORRECT?] existing immediately prior to the Distribution
Date relating to the ▇▇▇▇▇▇▇ Business, or otherwise utilized or maintained in
connection with the ▇▇▇▇▇▇▇ Business, including cash balances representing
deposited checks or drafts for which only a provisional credit has been allowed
in depository accounts, which are to be transferred to ▇▇▇▇▇▇▇ or any of its
Subsidiaries on or prior to the Distribution Date. Any such cash balances as of
the Distribution Date which have not been transferred to Baxter shall be paid to
Baxter.
(c) All Loans owing by ▇▇▇▇▇▇▇ or any of its Subsidiaries to Baxter or
any of its Subsidiaries after giving effect to the transactions contemplated by
Articles III, IV and V shall be repaid no later than the Distribution Date.
------------ -- -
(d) ▇▇▇▇▇▇▇ or an appropriate Subsidiary thereof shall be responsible for
payment of all checks or drafts issued up to the Distribution Date against
disbursement accounts transferred to ▇▇▇▇▇▇▇ or such Subsidiary, which checks or
drafts have not been charged against such disbursement accounts on or prior to
the Distribution Date (other than with respect to payroll accounts, which will
be assumed by Baxter or its Subsidiaries).
(e) Baxter shall assist ▇▇▇▇▇▇▇ and each of its Subsidiaries in
establishing a separate cash management system effective as of and immediately
after the Distribution Date.
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9.6. Collection of Accounts Receivable. (a) Baxter and its Subsidiaries
---------------------------------
shall be entitled to control all collection actions related to the Retained
Assets, including the determination of what actions are necessary or appropriate
and when and how to take any such action.
(b) Subject to Section 9.6(d), ▇▇▇▇▇▇▇ and its Subsidiaries shall be
entitled to control all collection actions related to the Transferred Assets,
including the determination of what actions are necessary or appropriate and
when and how to take any such action.
(c) If, after the Distribution Date, ▇▇▇▇▇▇▇ or any of its Subsidiaries
shall receive any remittance from any account debtors with respect to the
accounts receivable arising out of the Retained Assets or other amounts due
Baxter or its Subsidiaries in respect of services rendered or products sold by
Baxter or its Subsidiaries after the Distribution Date, or Baxter or any of its
Subsidiaries shall receive any remittance from any account debtors with respect
to the accounts receivable arising out of the Transferred Assets or other
amounts due ▇▇▇▇▇▇▇ or its Subsidiaries in respect of services rendered or
products sold by ▇▇▇▇▇▇▇ or its Subsidiaries after the Distribution Date, such
Party shall receive and deposit such remittance and deliver cash in an amount
equal thereto to the other Party as soon as practicable. In the absence of any
designation of the specific invoice being paid by a customer thereby, payments
from account debtors shall be applied to the earliest invoice outstanding with
respect to indebtedness of such account debtor owing to either Baxter or
▇▇▇▇▇▇▇.
(d) The Parties acknowledge that certain accounts receivable and accounts
payable are not capable of being specifically separated between Baxter and its
Subsidiaries, on the one hand, and ▇▇▇▇▇▇▇ and its Subsidiaries, on the other
hand. Accordingly, the Parties agree that, notwithstanding the foregoing,
Baxter shall cause one or more of its Subsidiaries to administer the collection
of such accounts receivable and the payment of such accounts payable. Baxter
shall pay or cause to be paid to ▇▇▇▇▇▇▇ or its appropriate Subsidiary an
allocable portion of the amounts collected with respect to such accounts
receivable determined by Baxter in accordance with ▇▇▇▇▇▇'▇ past practices.
▇▇▇▇▇▇▇ shall pay or cause to be paid to Baxter or its appropriate Subsidiary an
allocable portion of the amounts paid with respect to such accounts payable
determined by Baxter in accordance with ▇▇▇▇▇▇'▇ past practices.
(e) Each Party shall deliver to the other such schedules and other
information with respect to the accounts receivable included in the Transferred
Assets and those not included therein as each shall reasonably request from time
to time in order to permit such Parties to reconcile their respective records
and to monitor the collection of all accounts receivable (whether or not
Transferred Assets). Each Party shall afford the other reasonable access to its
books and records relating to any accounts receivable.
9.7. Agreements Relating to Baxter and ▇▇▇▇▇▇▇. (a) Each of Baxter
-----------------------------------------
and ▇▇▇▇▇▇▇ shall use commercially reasonable efforts 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, make effective and perform its or its Subsidiaries' allocable
portion of all purchase, distribution and other obligations under all Contracts
with customers, suppliers, vendors or other third parties relating to both the
▇▇▇▇▇▇▇ Business and the Retained Business (the "Shared Agreements"), including
-----------------
those Shared
-47-
Agreements set forth on Schedule 9.7 hereto. Each of Baxter and its Subsidiaries
------------
and ▇▇▇▇▇▇▇ and its Subsidiaries shall be entitled to the rights and privileges
of its allocable portion of the Shared Agreements.
(b) Each of Baxter and ▇▇▇▇▇▇▇ shall use commercially reasonable efforts
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 afford the rights and privileges of the allocable
portion of the Shared Agreements to the other.
(c) Liabilities pursuant to, arising under or relating to a Shared
Agreement shall be allocated between Baxter and its Subsidiaries, on the one
hand, and ▇▇▇▇▇▇▇ and its Subsidiaries, on the other hand, as follows:
(i) First, if a Liability is incurred exclusively in respect of a
benefit received by one Party, the Party receiving such benefit shall be
responsible for such Liability;
(ii) Second, if a Liability cannot be so allocated under clause (i),
such Liability shall be allocated between the Parties based on the relative
proportions of total benefit received (based upon the performance under
such Shared Agreement during the twelve-month period immediately prior to
the Distribution Date) under the relevant Shared Agreement. Notwithstanding
the foregoing, each Party shall be responsible for any and all Liabilities
arising out of or resulting from its breach of the relevant Shared
Agreement.
(d) If either Baxter or its Subsidiaries, on the one hand, or ▇▇▇▇▇▇▇ or
its Subsidiaries, on the other hand, improperly receives any benefit or payment
under any Shared Agreement that was intended for the other, the Party receiving
such benefit or payment will use commercially reasonable efforts to deliver,
transfer or otherwise afford such benefit or payment to the other Party.
9.8. Certain Releases. Baxter or one or more of its Subsidiaries is a
----------------
guarantor of certain obligations of the ▇▇▇▇▇▇▇ Business, including those
obligations set forth on Schedule 1.1(l). ▇▇▇▇▇▇▇ shall use commercially
---------------
reasonable efforts to release Baxter and its Subsidiaries from such guarantees
prior to the Distribution Date and shall indemnify and hold harmless Baxter and
its Subsidiaries from and against any Liabilities relating to such guarantees.
[▇▇▇ ▇▇▇▇▇▇▇: ARE THERE ANY?]
9.9. Litigation. (a) On or as of the Distribution Date, ▇▇▇▇▇▇▇ or its
----------
Subsidiaries, as appropriate, shall assume and pay all Liabilities that may
result from the Assumed Actions (as hereinafter defined) and all fees and costs
relating to the defense of the Assumed Actions, including attorneys' fees and
costs incurred after the Distribution Date. "Assumed Actions" shall mean those
---------------
cases, claims and investigations (on which Baxter or its Subsidiaries, other
than ▇▇▇▇▇▇▇ and its Subsidiaries, is a defendant or the party against whom the
claim or investigation is directed) relating [primarily] to the ▇▇▇▇▇▇▇
Business, including those listed on Schedule 9.9(a).
---------------
-48-
(b) Baxter and its Subsidiaries shall transfer the Transferred Actions
(as hereinafter defined) to ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ shall receive and have the
benefit of all of the proceeds of such Transferred Actions. "Transferred
-----------
Actions" shall mean those cases and claims (on which Baxter or its Subsidiaries
-------
is a plaintiff or claimant) relating [primarily] to the ▇▇▇▇▇▇▇ Business,
including those listed on Schedule 9.9(b).
---------------
9.10. Liability for Previously Delivered Products. The following
-------------------------------------------
provisions shall apply to all Baxter Products sold or transferred prior to the
Distribution Date to the ▇▇▇▇▇▇▇ Business for distribution and to all ▇▇▇▇▇▇▇
Products sold or transferred prior to the Distribution Date to the Retained
Business for distribution (in each case, the "Products"):
--------
(a) Each Party that supplied Products either directly or through its
Subsidiaries warrants to the other Party that, at the time of delivery to the
other Party (or such other Party's designee): (i) the Products were not (A)
adulterated or misbranded within the meaning of the Federal Food, Drug and
Cosmetic Act (as amended) (the "Act") or the regulations issued thereunder,
(B) products that may not, under the provisions of Sections 404, 505, 514 or
515 of the Act, be introduced into interstate commerce, or (C) banned devices
under Section 516 of said Act; (ii) the Products shall not violate any other
medical or health law, statute, regulation or directive applicable to the
Products or their distribution; and (iii) the Products shall not violate any
applicable customs, trade or environmental law, statute, regulation or
directive. THE FOREGOING WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHER
WARRANTIES OF ANY KIND WITH RESPECT TO THE PRODUCTS, WHETHER STATUTORY,
WRITTEN, ORAL, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTIES OF FITNESS FOR A
PARTICULAR PURPOSE AND MERCHANTABILITY. ANY LIABILITY OF A PARTY AND ITS
SUBSIDIARIES TO THE OTHER PARTY AND ITS SUBSIDIARIES UNDER THE FOREGOING
WARRANTY SHALL BE LIMITED TO THE TOTAL PRICE PAID BY SUCH PARTY AND ITS
SUBSIDIARIES FOR THE PRODUCTS THAT ARE THE SUBJECT OF SUCH LIABILITY PLUS ALL
COSTS FOR TRANSPORTATION AND OTHER DIRECT EXPENSES INCURRED BY ▇▇▇▇▇▇▇ AND ITS
SUBSIDIARIES WITH RESPECT TO SUCH PRODUCTS. A receiving Party's and its
Subsidiaries' exclusive remedy against the supplying Party and its
Subsidiaries for any breach of the foregoing warranty shall be the right to
require the other Party or its Subsidiaries to repair or replace (at the other
Party's option and expense) any Product that proves not to be in conformity
with applicable labeling or specifications. The receiving Party or its
Subsidiaries shall pay the transportation and other costs incurred by a Party
or its Subsidiaries with respect to any Products returned to the supplying
Party or its Subsidiaries for repair or replacement under this Section, or, at
the receiving Party's option, reimburse the supplying Party or its
Subsidiaries for any such costs. The foregoing right to require repair or
replacement shall commence on the date of receipt by a Party or its
Subsidiaries of each Product from the supplying Party or its Subsidiaries and
expire six months after receipt by the end-user customer (the "Repair or
---------
Replacement Period"), except that the Repair or Replacement Period for each
------------------
Product the use of which is subject to an expiration date shall expire on the
applicable expiration date, if sooner.
-49-
(b) Each Party that supplied Products either directly or through its
Subsidiaries warrants to the receiving Party and its Subsidiaries that, at the
time of delivery to the receiving Party or its designee, the receiving Party
or its Subsidiaries shall have good and marketable title to all such Products
free and clear of all liens or encumbrances (other than any created by the
receiving Party or its Subsidiaries).
(c) Each Party that supplied Products either directly or through its
Subsidiaries shall indemnify and hold harmless the receiving Party and its
Subsidiaries, from and against, and in respect of, any and all Expenses and
Losses, that result from a third-party claim and that arise out of or relate
to: (i) any actual or alleged Patent, Copyright or Trademark infringement, or
violation of any other proprietary right, arising out of the purchase, sale or
use of the Products; (ii) defects in the Products; (iii) any actual or alleged
breach of warranty or obligation, if any, accompanying the Product or
Products, subject to the limitations in Section 9.10(a) to the extent provided
---------------
therein; and (iv) any claim for personal injury, wrongful death or property
damage arising out of the use of a Product; provided, however, that this
-------- -------
Section 9.10(c) shall not apply to any Expense or Loss: (A) to the extent that
---------------
the Parties agree; (B) to any tort claim, including claims for personal
injury, wrongful death or property damage, to the extent such claims are based
upon any wrongful or negligent act or omission by the receiving Party or its
Subsidiaries or business units (but excluding Subsidiaries or business units
that become Subsidiaries or business units of the Party claiming
indemnification as a result of the Distribution), or their employees or other
agents, including any Expenses or Losses caused by any such wrongful or
negligent act or omission constituting a representation concerning the
characteristics or method of usage of Products, or relating to the storage,
handling or delivery of Products or selection of Products for use in Kits; or
(C) to any actual or alleged Patent, Copyright or Trademark infringement, or
violation of any other proprietary right, arising out of any act or omission
of the receiving Party, its Subsidiaries or any of their Affiliates or
business units (but excluding Subsidiaries of business units that become
Subsidiaries or business units of the Party claiming indemnification as a
result of the Distribution), in connection with the sale of Kits or relating
to any intellectual property owned by a Party, its Subsidiaries or any of
their Affiliates and used in connection with the sale of Kits.
9.11. ▇▇▇▇▇▇▇ Bank Accounts. On or prior to the Distribution Date, Baxter
---------------------
and its Subsidiaries shall transfer the bank accounts set forth on Schedule 9.11
-------------
hereto to ▇▇▇▇▇▇▇ or one of its Subsidiaries. ▇▇▇▇▇▇▇ shall cause any amounts
received, by mistake or otherwise, in such accounts after the Distribution Date
on account of the Retained Business to be transferred promptly to Baxter and its
Subsidiaries, as appropriate. Baxter shall cause any amounts received, by
mistake or otherwise, after the Distribution Date on account of the ▇▇▇▇▇▇▇
Business to be transferred promptly to ▇▇▇▇▇▇▇ and its Subsidiaries, as
appropriate.
9.12. Informal, Nondocumented Real Estate Leases. Each Party and its
------------------------------------------
Subsidiaries may continue to occupy, from and after the Distribution Date, such
space in the facilities of the other Party and its Subsidiaries as is occupied
immediately prior to the Distribution Date, or such other space therein as may
be mutually agreed to from time to time by Baxter and ▇▇▇▇▇▇▇, and which
occupancy is otherwise not documented by written leasing agreements, on the
following terms and conditions:
-50-
(a) The occupying Party shall pay to the other Party rent with
respect to such occupied space for the period from and after the
Distribution Date during which such space is so occupied, which rent shall
be determined by the other Party on the same basis on which the other Party
allocates rent with respect to the occupancy of space by business units of
the other Party or as the occupying Party presently is paying, whichever is
lower. Such rent shall be payable from time to time by the occupying Party
(but not more frequently than monthly) promptly following delivery by the
other Party to the occupying Party of a statement therefor.
(b) The occupying Party may, at any time, upon not less than 15
days' prior written notice to ▇▇▇▇▇▇'▇ Director of Corporate Real Estate,
with a copy to ▇▇▇▇▇▇▇, terminate its occupancy of any or all of such
space.
(c) The other Party may, at any time, upon not less than 30 days'
prior written notice to the occupying Party, require the occupying Party to
cease occupancy of any or all of such space as designated in such notice.
9.13. Third Party Consents. To the extent that the transactions
--------------------
contemplated by this Agreement require any material consents, approvals or
waivers from third parties (the "Third Party Consents"), the Parties will use
--------------------
commercially reasonable efforts to obtain any such material Third Party
Consents.
9.14. Material Governmental Approvals and Consents. To the extent
--------------------------------------------
that the transactions contemplated by this Agreement require any approvals or
consents of any Governmental Authority, the Parties will use commercially
reasonable efforts to obtain any Material Governmental Approvals and Consents.
9.15. Late Payments. Any amount not paid when due pursuant to this
-------------
Agreement or any Implementation Agreement (and any amounts billed or otherwise
invoiced or demanded and properly payable that are not paid within thirty (30)
days of such ▇▇▇▇, invoice or other demand) shall accrue interest at a rate per
annum equal to the Prime Rate plus 2%.
9.16. Nextran Heart. It is the intent of Baxter and ▇▇▇▇▇▇▇ that in
-------------
the event that [Nextran] shall develop a xenotransplant heart product suitable
for commercialization, ▇▇▇▇▇▇▇ or a Subsidiary of ▇▇▇▇▇▇▇ shall be entitled to
distribute such product on terms to be agreed between _______ and ▇▇▇▇▇▇▇ in
good faith.
ARTICLE X
INTELLECTUAL PROPERTY LICENSES
------------------------------
10.1. License to Baxter of Transferred Intellectual Property.
------------------------------------------------------
(a) Grant of License. ▇▇▇▇▇▇▇ and its Subsidiaries hereby grant,
----------------
and Baxter and its Subsidiaries hereby accept, a perpetual, nonexclusive, fully
paid-up, worldwide right and
-51-
license to use and otherwise practice under the Transferred Intellectual
Property (except for the business and non-technical information that is part of
the Transferred Intellectual Property) in order to make, have made, import,
offer for sale, sell and distribute (i) any Baxter products Actually Using the
Transferred Intellectual Property as of the Distribution Date, and (ii) any New
Products developed and manufactured by Baxter or its Subsidiaries during the
three-year period commencing on the Distribution Date. A Party will be deemed to
be "Actually Using" certain Intellectual Property if: (I) such Party or its
--------------
Subsidiaries is manufacturing (or has a third party manufacturing for it) a
product incorporating such Intellectual Property; or (II) a New Product
incorporating such Intellectual Property was Under Development by such Party or
its Subsidiaries prior to the Distribution Date; provided, however, that a Party
-------- -------
will not be deemed to be Actually Using any Intellectual Property the sole use
of which is to manufacture a product for the other Party. "Under Development" by
-----------------
a Party shall mean, with respect to a New Product, that it (1) is the subject of
a funded research and development project by such Party or its Subsidiaries as
of the Distribution Date; (2) is described by such Party or its Subsidiaries in
a pending patent application filed by such Party or its Subsidiaries prior to
the Distribution Date; (3) is described by such Party or its Subsidiaries in an
invention record that satisfies the enablement requirement of 35 U.S.C. ?112 and
which is submitted no less than three months prior to the Distribution Date; or
(4) is (A) described by such Party or its Subsidiaries in an invention record
that satisfies the enablement requirement of 35 U.S.C. ?112 and which is
submitted no less than three months after the Distribution Date, and (B)
subsequently commercialized by such Party or its Subsidiaries. The license
granted pursuant to this Section 10.1(a) shall not include any rights to the
---------------
Transferred Intellectual Property related to (w) the Duraflo treatment and other
biocompatible coatings developed by the ▇▇▇▇▇▇▇ Business; (x) ▇▇▇▇▇▇▇' laser
technology including the laser technology utilized in ▇▇▇▇▇▇▇' Transmyocardial
Laser Revascularization program; (y) the continuous renal replacement therapy
business; and (z) ▇▇▇▇▇▇▇' angiogenesis technology including VEGF-B protein and
zinc finger DNA binding proteins and genes. Any Transferred Intellectual
Property actually licensed pursuant to this Section 10.1(a) shall be deemed to
---------------
be "Licensed ▇▇▇▇▇▇▇ Intellectual Property."
--------------------------------------
(b) Ownership of the Licensed ▇▇▇▇▇▇▇ Intellectual Property. Baxter and
-------------------------------------------------------
its Subsidiaries acknowledge that, subject to the foregoing license, ▇▇▇▇▇▇▇ and
its Subsidiaries, as the case may be, are the sole and exclusive owners of all
right, title and interest in and to the Transferred Intellectual Property.
Baxter and its Subsidiaries agree that they will do nothing inconsistent with
▇▇▇▇▇▇▇' or its Subsidiaries' ownership of, or rights in, the Transferred
Intellectual Property. Notwithstanding the foregoing or Section 17.2, Baxter
------------
and its Subsidiaries shall have the right to disclose the Licensed ▇▇▇▇▇▇▇
Intellectual Property to a third-party contract manufacturer in connection with
Baxter or its Subsidiaries exercising their right pursuant to Section 10.1(a) to
--------------
have products made, provided that such third-party contract manufacturer agrees
to be bound by obligations of confidentiality consistent with Section 17.2, and
------------
Baxter and its Subsidiaries remain liable for any breach of such obligations by
such third-party contract manufacturer. ▇▇▇▇▇▇▇ and its Subsidiaries shall not
allow any registration or other protection for any Licensed ▇▇▇▇▇▇▇ Intellectual
Property to lapse without notifying Baxter thereof at least one month prior
thereto. Upon ▇▇▇▇▇▇'▇ receipt of such notice, (i) Baxter and its Subsidiaries
shall have the right, but not the obligation, to take steps (at ▇▇▇▇▇▇'▇ expense
and in ▇▇▇▇▇▇▇' and its Subsidiaries' names, if necessary) to prevent such a
lapse, and (ii) ▇▇▇▇▇▇▇ and its Subsidiaries shall cooperate with Baxter and its
Subsidiaries (at ▇▇▇▇▇▇'▇ or its Subsidiaries'
-52-
reasonable request and at ▇▇▇▇▇▇'▇ expense) to assign to Baxter or its
Subsidiaries such Licensed ▇▇▇▇▇▇▇ Intellectual Property.
(c) Marking and Notices. Baxter and its Subsidiaries shall ensure that
-------------------
any products that are made (by them or by third-party manufacturers), imported,
offered for sale, sold or distributed by them pursuant to the license granted by
▇▇▇▇▇▇▇ and its Subsidiaries in this Section 10.1 shall bear a legal or
------------
proprietary rights notice in such form as may be reasonably requested by, and to
the extent directed by, ▇▇▇▇▇▇▇ from time to time.
(d) Termination of Licenses. The license granted pursuant to this Section
----------------------- -------
10.1 may be terminated by ▇▇▇▇▇▇▇ only under the following conditions:
----
(i) Breach. If Baxter or its Subsidiaries are in breach or default
------
of a material term of this Section 10.1 which breach or default continues
------------
for sixty (60) days after written notice thereof from ▇▇▇▇▇▇▇ to ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ may terminate the license granted pursuant to this Section 10.1,
------------
provided that such termination shall be solely with respect to the Licensed
▇▇▇▇▇▇▇ Intellectual Property that is the subject of such uncured breach.
(ii) Divestiture. If Baxter or its Subsidiaries sell, assign,
-----------
transfer or otherwise divest themselves of ownership of any business unit
that uses, or product line that uses or is manufactured under, the Licensed
▇▇▇▇▇▇▇ Intellectual Property, the license granted in this Section 10.1 may
------------
be assigned, but only with respect to such business unit or product line
and with the written consent of ▇▇▇▇▇▇▇, which consent shall not be
unreasonably withheld.
10.2. License to ▇▇▇▇▇▇▇ of Retained Baxter Intellectual Property.
-----------------------------------------------------------
(a) Grant of License. Baxter and its Subsidiaries hereby grant, and
----------------
▇▇▇▇▇▇▇ and its Subsidiaries hereby accept, a perpetual, nonexclusive, fully
paid-up, worldwide right and license to use and otherwise practice under the
Retained Baxter Intellectual Property (except for the business and non-technical
information and the Trademarks that are part of the Retained Baxter Intellectual
Property) in order to make, have made, import, offer for sale, sell and
distribute (i) any ▇▇▇▇▇▇▇ Products Actually Using the Retained Baxter
Intellectual Property as of the Distribution Date, and (ii) any New Products
developed and manufactured by ▇▇▇▇▇▇▇ or its Subsidiaries during the three-year
period commencing on the Distribution Date. Any Baxter Retained Intellectual
Property actually licensed pursuant to this Section 10.2(a) shall be deemed to
---------------
be "Licensed Baxter Intellectual Property." Schedule 10.2(a) contains a listing
------------------------------------- ----------------
of (I) the Patents licensed by Baxter and its Subsidiaries to ▇▇▇▇▇▇▇ hereunder;
and (II) certain ▇▇▇▇▇▇▇ Products Under Development as of the Distribution Date
which may incorporate Licensed Baxter Intellectual Property. The parties
acknowledge that Schedule 10.2(a) may be incomplete, and, accordingly, shall be
----------------
amended, as necessary, to include any additional Retained Baxter Intellectual
Property that ▇▇▇▇▇▇▇ is deemed to be Actually Using as of the Distribution
Date. Without limiting the terms of Section 7.4, the parties shall cooperate
-----------
and act reasonably in amending Schedule 10.2(a). The license granted pursuant
----------------
to this Section 10.2(a) shall not include any rights to the Retained Baxter
---------------
Intellectual Property related to the following:
-53-
i) Fibrin sealant biopharmaceuticals and the associated delivery devices
which shall be the subject of a separate supply agreement;
ii) The spinning membrane separation technology acquired by Baxter
through the HemaScience acquisition which shall be the subject of a
separate supply agreement;
iii) Continuous renal replacement therapy which shall be the subject of
separate distribution agreements;
iv) Hemoglobin Therapeutics technology, including human, bovine and
recombinant hemoglobin based biopharmaceuticals and perfluorocarbon-
based pharmaceuticals; and
v) Non-polyvinylchloride based film, tubing, containers and compositions
developed as an alternative/replacement for PVC (whether acquired
from Bieffe and/or developed under the IV Systems Marc project) which
shall be the subject of a separate supply agreement.
(b) Ownership of the Licensed Baxter Intellectual Property. ▇▇▇▇▇▇▇
------------------------------------------------------
and its Subsidiaries acknowledge that, subject to the foregoing license, Baxter
and its Subsidiaries, as the case may be, are the sole and exclusive owner of
all right, title and interest in and to the Retained Baxter Intellectual
Property. ▇▇▇▇▇▇▇ and its Subsidiaries agree that they will do nothing
inconsistent with ▇▇▇▇▇▇'▇ or its Subsidiaries' ownership of, or rights in, the
Retained Baxter Intellectual Property. Notwithstanding the foregoing or
Section 17.2, ▇▇▇▇▇▇▇ and its Subsidiaries shall have the right to disclose the
------------
Licensed Baxter Intellectual Property to a third-party contract manufacturer in
connection with ▇▇▇▇▇▇▇ or its Subsidiaries exercising their right pursuant to
Section 10.2(a) to have products made, provided that such third-party contract
---------------
manufacturer agrees to be bound by obligations of confidentiality consistent
with Section 17.2, and ▇▇▇▇▇▇▇ and its Subsidiaries remain liable for any breach
------------
of such obligations by such third-party contract manufacturer. Baxter and its
Subsidiaries shall not allow any registration or other protection for any
Licensed Baxter Intellectual Property to lapse without notifying ▇▇▇▇▇▇▇ thereof
at least one month prior thereto. Upon ▇▇▇▇▇▇▇' receipt of such notice, (i)
▇▇▇▇▇▇▇ and its Subsidiaries shall have the right, but not the obligation, to
take steps (at ▇▇▇▇▇▇▇' expense and in ▇▇▇▇▇▇'▇ and its Subsidiaries' names, if
necessary) to prevent such a lapse, and (ii) Baxter and its Subsidiaries shall
cooperate with ▇▇▇▇▇▇▇ and its Subsidiaries (at ▇▇▇▇▇▇▇' or its Subsidiaries'
reasonable request and at ▇▇▇▇▇▇▇' expense) to assign to ▇▇▇▇▇▇▇ or its
Subsidiaries such Licensed Baxter Intellectual Property.
(c) Marking and Notices. ▇▇▇▇▇▇▇ and its Subsidiaries shall ensure
-------------------
that any products that are made (by them or by a third-party manufacturer),
imported, offered for sale, sold or distributed by them pursuant to the license
granted by Baxter and its Subsidiaries in this Section 10.2 shall bear a legal
------------
or proprietary rights notice in such form as may be reasonably requested by and
to the extent directed by Baxter from time to time.
(d) Termination of Licenses. The Licenses granted pursuant to this
-----------------------
Section 10.2 may be terminated by Baxter only under the following conditions:
------------
(i) Breach. If ▇▇▇▇▇▇▇ or its Subsidiaries are in breach or
------
default of a material term of this Section 10.2 which breach or
------------
default continues for sixty (60) days after written notice from
Baxter to ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ may terminate the
-54-
license granted pursuant to this Section 10.2, provided that such
------------
termination shall be solely with respect to the Licensed Baxter
Intellectual Property that is the subject of such uncured breach.
(ii) Divestiture. If ▇▇▇▇▇▇▇ or its Subsidiaries sell, assign,
-----------
transfer or otherwise divest themselves of ownership of any business
unit that uses or product line that uses or is manufactured under the
Licensed Baxter Intellectual Property, the licenses granted in this
Section 10.2 may be assigned, but only with respect to such business
------------
unit or product line and the written consent of Baxter, which consent
shall not be unreasonably withheld.
(iii) Limitations on Requirements to Supply. Nothing in this
-------------------------------------
Agreement shall require either Party to supply any composition,
formulation or product that was not commercially available or was not
being manufactured as of the Distribution Date or that is not
commercially available or is not being manufactured at the time the
above-referenced supply agreements are executed.
10.3. Licenses Related to Interlink?. Notwithstanding Section 10.1 or
------------------------------ ------------
10.2, the following shall apply with respect to the Intellectual Property in the
----
needleless access technology known as Interlink?:
(a) The license granted by ▇▇▇▇▇▇▇ in Section 10.1 shall apply to
------------
any Baxter products incorporating such technology to the extent claimed in
any United States or foreign patent filed by ▇▇▇▇▇▇▇ as a continuation or
divisional of a patent application filed prior to the Distribution Date,
and any such licensed Transferred Intellectual Property shall be deemed
Licensed ▇▇▇▇▇▇▇ Intellectual Property.
(b) The license granted by Baxter in Section 10.1 shall apply to any
------------
▇▇▇▇▇▇▇ products incorporating such technology to the extent claimed in any
United States or foreign patent filed by ▇▇▇▇▇▇ as a continuation or
divisional of a patent application filed prior to the Distribution Date,
and any such licensed Retained Baxter Intellectual Property shall be deemed
Licensed Baxter Intellectual Property.
10.4. Use by ▇▇▇▇▇▇▇ of ▇▇▇▇▇▇'▇ Trademarks. ▇▇▇▇▇▇▇ and its
-------------------------------------
Subsidiaries shall discontinue use of the names BAXTER, BAXTER HEALTHCARE,
BAXTER INTERNATIONAL INC. and all other trademarks, service marks and trade
names owned by or licensed to Baxter (the "Baxter Marks") as follows:
------------
(a) Baxter hereby grants to Edwards and its Subsidiaries a
nonexclusive, royalty-free, fully paid-up right and license to use the
Baxter Marks on Edwards Products in all appropriate jurisdictions for only
so long as is reasonably necessary to transfer product registrations,
deplete existing inventory and complete labeling and reimbursement
qualifications. Edwards and its Subsidiaries shall use their commercially
reasonable efforts to cease using the Baxter Marks as soon as possible
after the Distribution Date, but in no event shall Edwards or its
Subsidiaries use the Baxter Marks on Edwards Products after December 31,
2001.
-55-
(b) Edwards and its Subsidiaries will use their commercially
reasonable efforts to cease the use of the Baxter Marks on or in connection
with materials other than labels of Edwards Products including signs,
stationery, trucks and customer brochures, as soon as reasonably practical,
but in no event later than December 31, 2001.
(c) If delays in obtaining regulatory approval require Edwards or
its Subsidiaries to use the Baxter Marks beyond the time limits set forth
above, Baxter shall be reasonable in granting extensions of the time limits
as necessary.
(d) Any use of the Baxter Marks by Edwards or its Subsidiaries
pursuant to the above terms and conditions shall inure to the benefit of
Baxter and shall be in the same form as existed prior to the Distribution
Date. Any products or processes offered by Edwards or its Subsidiaries for
sale under the Baxter Marks shall meet the same product specifications and
quality assurance standards as existed prior to the Distribution Date.
Baxter shall have the right to inspect any and all materials and products
offered in connection with the Baxter Marks including label copy and
marketing and sales materials.
(e) Any use of the Baxter Marks by Edwards or its Subsidiaries shall
indicate that Baxter is the owner of the Baxter Marks and that such use is
pursuant to a license from Baxter.
(f) Edwards and its Subsidiaries shall do nothing to impair Baxter's
rights in the Baxter Marks. Edwards and its Subsidiaries shall inform
Baxter promptly of any infringement of the Baxter Marks.
ARTICLE XI
CONDITIONS TO THE DISTRIBUTION
------------------------------
The obligation of Baxter to effect the Distribution is subject to the
satisfaction or the waiver by Baxter, at or prior to the Distribution Date, of
each of the following conditions:
11.1. Approval by Baxter Board of Directors. This Agreement and the
-------------------------------------
transactions contemplated hereby, including the declaration of the Distribution,
shall have been duly approved by the Board of Directors of Baxter in accordance
with applicable law and the Amended and Restated Certificate of Incorporation
and Amended and Restated By-laws of Baxter.
11.2. Receipt of IRS Private Letter Tax Ruling. Baxter shall have
----------------------------------------
received a ruling from the IRS or, at Baxter's sole discretion, an opinion of
its tax counsel Skadden, Arps, Slate, Meagher & Flom, substantially to the
effect that the Distribution will qualify as a tax-free distribution for federal
income tax purposes under Section 355 of the Code and that no income, gain or
loss will be recognized by Baxter, Edwards or their respective stockholders
(other than
-56-
with respect to cash received in lieu of fractional shares) upon the
distribution to Baxter's stockholders of Edwards Shares.
11.3. Compliance with State and Foreign Securities and "Blue Sky" Laws.
----------------------------------------------------------------
The Parties shall have taken all such action as may be necessary or appropriate
under state and foreign securities and "Blue Sky" laws in connection with the
Distribution.
11.4. SEC Filings and Approvals. The Parties shall have prepared and
-------------------------
Edwards shall, to the extent required under applicable law, have filed with the
SEC any such documentation and any requisite no action letters that Baxter
determines are necessary or desirable to effectuate the Distribution, and each
Party shall use commercially reasonable efforts to obtain all necessary
approvals from the SEC with respect thereto as soon as practicable.
11.5. Filing and Effectiveness of Registration Statement; No Stop Order.
-----------------------------------------------------------------
The Registration Statement shall have been filed and declared effective by the
SEC, and no stop order suspending the effectiveness of the Registration
Statement shall have been initiated or, to the knowledge of either of the
Parties, threatened by the SEC.
11.6. Approval of NYSE Listing Application. The Edwards Common Stock and
------------------------------------
the accompanying rights granted pursuant to the Rights Plan shall have been
approved for listing on the NYSE, subject to official notice of distribution.
11.7. Receipt of Fairness Opinions of Financial Advisors. The Baxter
--------------------------------------------------
Board of Directors shall have received written opinions of Credit Suisse First
Boston and J.P. Morgan & Co. Incorporated, in form acceptable to Baxter, to the
effect that the Distribution is fair to Baxter's stockholders from a financial
point of view, which opinions shall not have been withdrawn or modified.
11.8. Ancillary Agreements. The Tax Sharing Agreement and each of the
--------------------
Conveyancing Instruments, Implementation Agreements and Operating Agreements
intended to be executed prior to the Distribution shall have been executed and
delivered, and each of such agreements shall be in full force and effect.
11.9. Resignations. On or prior to the Distribution Date, Baxter shall
------------
cause all of its designees to resign or to be removed as officers and from all
Boards of Directors or similar governing bodies of Edwards and its Affiliates
and any Transferred Subsidiary on which they serve.
11.10. Election of Edwards Board. The Board of Directors of Edwards as set
-------------------------
forth on Exhibit H shall have been duly elected.
---------
11.11. Consents. (a) All Material Governmental Approvals and Consents
--------
required to permit the valid consummation of the Distribution shall have been
obtained without any conditions being imposed that would have a material adverse
effect on Baxter or Edwards.
(b) Baxter shall have obtained all Third Party Consents required in
connection with the Distribution, except those for which the failure to obtain
such Third Party Consents
-57-
would not, in the reasonable opinion of Baxter, individually or in the aggregate
have a material adverse effect on Baxter, Edwards or the consummation of the
Distribution.
11.12. No Actions. No action, suit or proceeding shall have been
----------
instituted or threatened by or before any court or quasi-judicial or
administrative agency of any federal, state, local or foreign jurisdiction or
before any arbitrator to restrain, enjoin or otherwise prevent the Distribution
or the other transactions contemplated by this Agreement (including, a stop
order with respect to the effectiveness of the Registration Statement), and no
order, injunction, judgment, ruling or decree issued by any court of competent
jurisdiction shall be in effect restraining the Distribution or such other
transactions.
11.13. New Credit Facility. The definitive agreements governing the
-------------------
Edwards Credit Facility shall have been executed.
11.14. Consummation of Pre-Distribution Transactions. The pre-
---------------------------------------------
Distribution transactions contemplated by Articles III, IV and V of this
------------ -- -
Agreement shall have been consummated in all material respects.
11.15. No Other Events. No other events or developments shall have
---------------
occurred that, in the judgment of the Baxter Board of Directors, would result in
the Distribution having a material adverse effect on Baxter or its stockholders.
11.16. Satisfaction of Conditions. The satisfaction of the foregoing
--------------------------
conditions are for the sole benefit of Baxter and shall not give rise to or
create any duty on the part of Baxter or the Baxter Board of Directors to waive
or not waive any such condition, to effect the Distribution or in any way limit
Baxter's power of termination set forth in Section 18.13.
-------------
ARTICLE XII
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
--------------------------------------
12.1. Edwards Employees. Schedule 12.1 describes or otherwise
----------------- -------------
identifies all employees of the Edwards Business (the "Edwards Employees").
-----------------
12.2. Employment of Edwards Employees. On the Distribution Date,
-------------------------------
Edwards shall, or shall cause its Subsidiaries to, employ or continue to employ
each Edwards Employee. Edwards and Baxter (and their respective Subsidiaries)
shall use commercially reasonable efforts to accomplish any transfers of
employment required by this Section 12.2 in a timely manner. Active Edwards
------------
Employees shall be paid by Edwards or one of its Subsidiaries at the same salary
and wage rate levels (including bonus programs) paid by Baxter or its
Subsidiaries as in effect on the Distribution Date; provided, however, that
-------- -------
Edwards (or the applicable Edwards Subsidiary) retains the right to determine
the compensation of Edwards Employees after the Distribution Date.
12.3. Terminations/Layoff/Severance. (a) Edwards Employees shall not
-----------------------------
be eligible for any severance benefits from Baxter or its Subsidiaries or
Affiliates as a result of
-58-
either their employment by Edwards or its Subsidiaries or Affiliates or their
subsequent termination of employment with Edwards or its Subsidiaries or
Affiliates.
(b) Any Edwards Employee who receives a written notice prior to the
Distribution Date regarding such employee's termination of employment on a fixed
date between the Distribution Date and one year after the Distribution Date from
Edwards or any of its Subsidiaries shall be eligible to receive from Edwards (or
the applicable Edwards Subsidiary) severance pay that is calculated pursuant to
the formula used under the Baxter Severance Pay Plan as in effect on the
Distribution Date. The manner in which this Section 12.3(b) is implemented
---------------
shall be governed by the terms of the Edwards Severance Pay Plan.
(c) Effective as of the Distribution Date, Edwards (or the applicable
Edwards Subsidiary) shall have the obligation to reimburse Baxter for the
severance benefits paid by Baxter under the Baxter Severance Pay Plan on or
after the Distribution Date to any employee who was terminated by Baxter prior
to the Distribution Date while employed in any Edwards Business unit. Edwards
(or the applicable Edwards Subsidiary) shall have the obligation to pay
severance benefits to any employee terminated by Edwards after the Distribution
Date who is eligible to receive severance benefits under the Edwards Severance
Pay Plan.
12.4. International Edwards Employees. All issues, other than those
-------------------------------
addressed in Sections 12.1, 12.2 and 12.3, relating to any person who,
------------- ---- ----
immediately prior to the Distribution Date, is employed by an Edwards Subsidiary
in a foreign jurisdiction (the "Edwards Foreign Employees") shall be addressed
-------------------------
in connection with the Implementation Agreement applicable to such Edwards
Subsidiary and are outside the scope of this Agreement. Notwithstanding the
foregoing, the amount of pension benefits earned by any Edwards Foreign Employee
under any pension plan maintained by Baxter, or its Subsidiaries or Affiliates,
in a foreign jurisdiction that are transferred to a pension plan maintained by
Edwards shall be determined by the actuaries for the respective plans by the
Distribution Date in accordance with the methodology described in Schedule 12.4
-------------
and shall be the amount which is equal to the benefits of such Edwards Foreign
Employee as of the date of the transfer determined on a plan termination basis.
12.5. Employment Solicitation. During the period beginning on the
-----------------------
Distribution Date and ending one year after the Distribution Date, neither
Baxter nor Edwards shall, nor shall they permit any of their respective
Subsidiaries, Affiliates or agents to, directly or indirectly, except as
provided in the following sentence, actively solicit or recruit for employment
any then current employee of the other or of any of the other's Subsidiaries.
Nothing contained in this Article XII shall (i) prohibit the hiring of any
-----------
employee who in good faith is believed to be actively seeking employment on his
or her own initiative without prior contact initiated by any employee or agent
of the company where employment is sought, or any of such company's Affiliates;
provided, however, that such employee has obtained authorization from the Senior
-------- -------
Vice President of Human Resources or the Corporate Vice President of Human
Resources, as the case may be, of his or her current employer; or (ii) prohibit
Baxter or Edwards or any of their respective Subsidiaries from hiring any person
who has terminated employment with the other company. The foregoing restriction
shall cease to apply one year after the Distribution Date.
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12.6. WARN Act. Edwards and its Subsidiaries agree that they shall not,
--------
at any time during the 90-day period following the Distribution Date, (i)
effectuate a "plant closing" as defined in the Worker Adjustment and Retraining
Notification Act of 1988 (the "WARN Act") affecting any site of employment or
--------
operating units within any site of employment of the Edwards Business, or (ii)
take any action to precipitate a "mass layoff" as defined in the WARN Act
affecting any site of employment of the Edwards Business, except, in either
case, after complying fully with the notice and other requirements of the WARN
Act. Edwards agrees to indemnify Baxter and its Subsidiaries and to defend and
hold harmless Baxter and its Subsidiaries from and against any and all claims,
losses, damages, expenses, obligations and liabilities (including attorney's
fees and other costs of defense) that Baxter and its Subsidiaries may incur in
connection with any suit or claim of violation brought against Baxter under the
WARN Act, which relates in whole or in part to actions taken by Edwards or its
Subsidiaries with regard to any site of employment of Edwards or operating units
within any site of employment of the Edwards Business.
12.7. Leave of Absence Policies. (a) Through the Distribution Date,
-------------------------
Baxter and its Subsidiaries shall be responsible for administering compliance
with the Baxter leave of absence policies with respect to Edwards Employees.
(b) No later than the Distribution Date: (i) Edwards shall adopt, and
shall cause each of its Subsidiaries to adopt, its own leave of absence
policies; (ii) Edwards shall honor, and shall cause each of its Subsidiaries to
honor, all the terms and conditions of leaves of absence that have been granted
to any Edwards Employee under a Baxter leave of absence policy before the
Distribution Date by Baxter or any of its Subsidiaries, including such leaves
that are to commence after the Distribution Date where Baxter or any of its
Subsidiaries has approved such leave or where an employee has submitted
appropriate paperwork to Baxter or any of its Subsidiaries for such leave prior
to the Distribution Date; (iii) Edwards and its Subsidiaries shall be solely
responsible for administering leaves of absence policies and compliance with all
applicable laws with respect to the Edwards Employees; and (iv) Edwards and its
Subsidiaries shall recognize all periods of service of Edwards Employees with
Baxter or any of its Subsidiaries, as applicable, to the extent such service is
recognized by Baxter or its Subsidiaries for the purpose of eligibility for
leave entitlement under the Baxter leave of absence policies; provided, however,
-------- -------
that no duplication of benefits shall be required by the foregoing.
(c) As soon as administratively possible after the Distribution Date and
upon request to Baxter's Senior Vice President of Human Resources, Baxter shall
provide to Edwards copies of all records pertaining to the Baxter leave of
absence policies with respect to all Edwards Employees to the extent such
records have not been provided previously to Edwards or one of its Subsidiaries.
12.8. Withdrawal from Participation in Baxter Plans and Establishment
---------------------------------------------------------------
of Edwards Plans. (a) Except as otherwise specifically provided in this
----------------
Article XI, no later than the Distribution Date, Edwards Employees shall cease
----------
to participate in the Baxter employee benefit plans and programs (the "Baxter
------
Plans").
-----
(b) No later than the Distribution Date, Edwards or any Edwards
Subsidiary shall establish its own employee benefit plans and programs for the
benefit of eligible employees
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of Edwards and its Subsidiaries, including, a 401(k) savings plan (the "Edwards
-------
Savings Plan"), a nonqualified executive deferred compensation plan (the
------------
"Edwards Deferred Compensation Plan"), a medical and dental plan, a group vision
----------------------------------
care plan, a cafeteria plan, a group term life and accidental death and
dismemberment plan, a long-term disability plan and a group legal expense plan
(collectively, the "Edwards Welfare Plans"), a severance plan (the "Edwards
--------------------- -------
Severance Plan") and the Edwards 2000 Incentive Compensation Program, all as
--------------
described in the Registration Statement. Notwithstanding the foregoing, Edwards
shall not establish a plan similar to the Baxter Pension Plan (as hereinafter
defined).
12.9. Transfer of Account Balances and Accrued Benefits.
-------------------------------------------------
(a) Baxter Savings Plan. Subject to applicable law and the provisions
-------------------
of the Baxter International Inc. and Subsidiaries Incentive Investment Plan (the
"Baxter Savings Plan"), as soon as administratively practicable following the
-------------------
establishment of the Edwards Savings Plan, or effective as of any other date as
agreed to in writing by the plan administrator for the Baxter Savings Plan and
the plan administrator for the Edwards Savings Plan, the account balances
(including outstanding loans) of all Baxter Savings Plan participants who are
Edwards Employees shall be transferred from the Baxter Savings Plan to the
Edwards Savings Plan (the "Transferred Accounts"). Each Edwards Employee shall
--------------------
receive credit for all purposes under the Edwards Savings Plan for periods of
service with Baxter or any of its Subsidiaries or Affiliates. The plan
administrator for the Edwards Savings Plan shall distribute any amounts from
such Transferred Accounts that may be necessary in order for the Baxter Savings
Plan to satisfy any requirements of applicable law (including, nondiscrimination
rules) as instructed by the plan administrator for the Baxter Savings Plan. The
plan administrator for the Edwards Savings Plan shall take any other action
reasonably requested by the plan administrator for the Baxter Savings Plan that
is necessary or advisable, in the opinion of the plan administrator for the
Baxter Savings Plan, to maintain the tax-qualified status of the Baxter Savings
Plan or to avoid the imposition of any penalties with respect to such plan.
(b) Puerto Rico Savings Plan. Subject to applicable law and the
------------------------
provisions of the Baxter Healthcare Corporation of Puerto Rico Savings and
Investment Plan (the "Baxter PR Savings Plan"), as soon as administratively
----------------------
practicable following the establishment of the Edwards Puerto Rico Savings Plan,
or effective as of any other date as agreed to in writing by the plan
administrator for the Baxter PR Savings Plan and the plan administrator for the
Edwards Puerto Rico Savings Plan, the account balances (including outstanding
loans) of all Baxter PR Savings Plan participants who are employees of [Edwards
Puerto Rico] ("Edwards PR Employees") shall be transferred from the Baxter PR
--------------------
Savings Plan to the Edwards Puerto Rico Savings Plan (the "PR Transferred
--------------
Accounts"). Each Edwards PR Employee shall receive credit for all purposes under
--------
the Edwards Puerto Rico Savings Plan for the periods of service with Baxter
Healthcare Corporation of Puerto Rico or any of its Subsidiaries or Affiliates.
The plan administrator for the Edwards Puerto Rico Savings Plan shall distribute
any amounts from such Transferred Accounts that may be necessary in order for
the Baxter PR Savings Plan to satisfy any requirements of applicable law
(including, nondiscrimination rules) as instructed by the plan administrator for
the Baxter PR Savings Plan. The plan administrator for the Edwards Puerto Rico
Savings Plan shall take any other action reasonably requested by the plan
administrator for the Baxter PR Savings Plan that is necessary or advisable, in
the opinion of the plan
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administrator for the Baxter PR Savings Plan, to maintain the tax-qualified
status of the Baxter PR Savings Plan or to avoid the imposition of any penalties
with respect to such plan.
(c) Puerto Rico Pension Plan. Subject to applicable law and the
------------------------
provisions of the Baxter Healthcare Corporation of Puerto Rico Pension Plan
(the "Baxter PR Pension Plan"), as soon as administratively practicable
----------------------
following the establishment of the Edwards Puerto Rico Pension Plan, or
effective as of any other date as agreed to in writing by the plan administrator
for the Baxter PR Pension Plan and the plan administrator for the Edwards Puerto
Rico Pension Plan, the accrued benefits of all Baxter PR Pension Plan
participants who are Edwards PR Employees shall be transferred from the Baxter
PR Pension Plan to the Edwards Puerto Rico Pension Plan (the "PR Transferred
--------------
Accrued Benefits"). The amount of Transferred Accrued Benefits shall be
----------------
determined by the actuaries for the respective plans by the Distribution Date in
accordance with the methodology described in Schedule 12.9 and shall be the
-------------
amount which is equal to the benefits of the Edwards PR Employees as of the date
of the transfer determined on a plan termination basis. Each Edwards PR Employee
shall receive credit for all purposes under the Edwards Puerto Rico Pension Plan
for the periods of service with Baxter Healthcare Corporation of Puerto Rico or
any of its Subsidiaries or Affiliates. The plan administrator for the Edwards PR
Pension Plan shall take any other action reasonably requested by the plan
administrator for the Baxter PR Pension Plan that is necessary or advisable, in
the opinion of the plan administrator for the Baxter PR Pension Plan, to
maintain the tax-qualified status of the Baxter PR Pension Plan or to avoid the
imposition of any penalties with respect to such plan.
12.10. Entitlement to Distributions Under Pension Plan. Each Edwards
-----------------------------------------------
Employee shall be treated as having terminated employment with an "Employer" as
defined in the Baxter International Inc. and Subsidiaries Pension Plan (the
"Baxter Pension Plan") effective as of the Distribution Date and shall be fully
-------------------
vested in his or her accrued benefit under the Baxter Pension Plan as of such
date.
12.11. Welfare Benefits Provided Under Edwards Plans. (a) Each Edwards
---------------------------------------------
Employee who becomes eligible to participate in the Edwards Welfare Plans shall
be credited under such plan with periods of service with any Baxter Group Member
for all purposes under such plan.
(b) Baxter (or the applicable Baxter Subsidiary) shall pay all costs
associated with the provision of disability benefits to any employee or former
employee of the Edwards Business who as of the Distribution Date is totally and
permanently disabled. Edwards (or the applicable Edwards Subsidiary) shall pay
all costs associated with the provision of disability benefits to any employee
or former employee of the Edwards Business other than the persons described in
the first sentence of this Section 12.11(b) in an amount equal to the benefits
----------------
such persons would have received if they had remained covered under the Baxter
Plans during the period of such disability leave. Notwithstanding the
foregoing, any Edwards Employee receiving benefits under the Baxter Long-Term
Disability Plan on the Distribution Date shall continue to receive benefits
under the terms of such plan and the insurance contract used to fund such plan,
and neither Edwards nor any Edwards Subsidiary shall be charged for the payment
of such benefits. As of the Distribution Date, Edwards (or the applicable
Edwards Subsidiary) shall assume all Liabilities determined under FAS 112
relating to all Edwards Employees.
-62-
(c) Baxter (or the applicable Baxter Subsidiary) shall pay all claims
under the Baxter Medical Plan (including dental benefits) relating to Edwards
Employees that as of the Distribution Date have been incurred but not paid, but
only if claims for such costs are submitted in written form to the authorized
agents of Baxter (or the applicable Baxter Subsidiary) during the six-month
period beginning on the Distribution Date.
(d) Baxter (or the applicable Baxter Subsidiary) shall pay all costs
associated with the provision of benefits under the terms of the Baxter Retiree
Welfare Plan for all persons who as of the Distribution Date have satisfied the
age and service eligibility requirements for receiving benefits under such plan.
Edwards (or the applicable Edwards Subsidiary) shall assume and pay all costs,
if any, associated with the provision of retiree welfare benefits for all
Edwards Employees who after the Distribution Date satisfy the age and service
eligibility requirements under the corresponding Edwards plan, if any, for
receiving such benefits.
12.12. Stock Purchase Plans. Except as otherwise provided in the plan,
--------------------
on the Distribution Date, Edwards Employees shall cease to be eligible to
purchase Baxter Common Stock under the terms of the Baxter Stock Purchase Plan,
and as of the record date of the Distribution, Edwards Employees shall become
eligible to participate in the Edwards Stock Purchase Plan.
12.13. Workers' Compensation. As soon as administratively practicable
---------------------
following the Distribution Date but in no event later than June 30, 2000, a Risk
Management Representative for each of the Parties shall agree upon the
allocation between the Parties of responsibility and liability for workers'
compensation claims and expenses relating to current and former employees of the
Parties and their respective Subsidiaries.
12.14. Vacation Pay Policy. After the Distribution Date, it is expected
-------------------
that Edwards shall maintain for its employees and employees of its Subsidiaries
a vacation pay policy, and Edwards (or the applicable Edwards Subsidiary) shall
be responsible for costs incurred to provide vacation pay to Edwards Employees
following such date. Edwards (or the applicable Edwards Subsidiary) shall
assume any and all Baxter Liabilities to provide to Edwards Employees vacation
that such persons accrued under the Baxter vacation pay policy as of the
Distribution Date, and no payment of such accrued vacation pay shall be made by
Baxter (or the applicable subsidiary) on the Distribution Date.
12.15. Non-Qualified Deferred Compensation Plans. Baxter (or the
-----------------------------------------
applicable Baxter Subsidiary) shall assume the Liability to provide benefits
accrued as of the Distribution Date under the Baxter International Inc. and
Subsidiaries Supplemental Pension Plan with respect to all Edwards Employees.
Edwards (or the applicable Edwards Subsidiary) shall assume the Liability to
provide benefits accrued under the Baxter International Inc. and Subsidiaries
Deferred Compensation Plan with respect to Edwards Employees. No assets shall
be transferred between the Parties with respect to the plans listed in this
Section 12.15.
-------------
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12.16. Split-Dollar Life Insurance. As of the Distribution Date, Baxter
---------------------------
(or the applicable Baxter Subsidiary) shall retain all Liabilities associated
with the provision of all split-dollar life insurance policies relating to any
Edwards Employee.
12.17. Restricted Stock. All shares of Baxter Common Stock issued in the
----------------
form of restricted stock that were earned for 1999 performance and are held by
an Edwards Employee as of the Distribution Date will vest on December 31, 2000
as long as such Edwards Employee continues employment with either Edwards or
Baxter (or any of their respective Subsidiaries or Affiliates) through such
date.
12.18. Information to be Provided to Baxter. Edwards (or the applicable
------------------------------------
Edwards Subsidiary) shall provide any information that Baxter (or any Baxter
Subsidiary) may reasonably request, including information relating to dates of
termination of employment, in order to provide benefits to any eligible Edwards
Employee under the terms and conditions described herein or under the applicable
Baxter Plans. Any information relating to an employee's termination of
employment shall be provided by Edwards (or the applicable Edwards Subsidiary)
to Baxter as soon as available to Edwards or any of its Subsidiaries, but in any
event no later than 30 days after such information is made available to Edwards
or any such Subsidiaries.
12.19. Corporate Action; Delegation of Authority. Any action taken by
-----------------------------------------
the Senior Vice President of Human Resources for Baxter or the Corporate Vice
President of Human Resources for Edwards shall be considered to be action taken
by either Baxter or Edwards or their respective Subsidiaries for purposes of
this Article XII. Without limiting the generality of the foregoing, the Chief
-----------
Executive Officer of Baxter or Edwards or their respective Subsidiaries may
delegate in writing to any other person the authority to act on behalf of Baxter
of Edwards, respectively, or their respective Subsidiaries, with respect to
actions required under the terms of this Article XII.
-----------
12.20. Transfer of Employee Files. By a specified date as agreed upon by
--------------------------
Edwards and Baxter following the Distribution Date, Baxter shall transfer to
Edwards the personnel files relating to all Edwards Employees.
ARTICLE XIII
INSURANCE MATTERS
-----------------
13.1. Insurance Prior to the Distribution Date. Edwards does hereby
----------------------------------------
agree that Baxter and its Subsidiaries shall not have any Liability whatsoever
as a result of the insurance policies and practices of Baxter and its
Subsidiaries in effect at any time prior to the Distribution Date, including any
assistance rendered to Edwards by Baxter in the placement of their insurance
program, including as a result of the level or scope of any such insurance, the
creditworthiness of any insurance carrier, the terms and conditions of any
policy and the adequacy or timeliness of any notice to any insurance carrier
with respect to any claim or potential claim or otherwise.
-64-
13.2. Ownership of Existing Policies and Programs. Baxter or one or
-------------------------------------------
more of its Subsidiaries shall continue to own all property, casualty and
liability insurance policies and programs, including primary and excess general
liability, errors and omissions, automobile, workers' compensation, property,
fire, crime, surety and other similar insurance policies, in effect on or before
the Distribution Date (collectively, the "Baxter Policies" and individually, a
---------------
"Baxter Policy"). Baxter shall use commercially reasonable efforts to maintain
--------------
the Baxter Policies in full force and effect up to and including the
Distribution Date, and, subject to the provisions of this Agreement, Baxter and
its Subsidiaries shall retain all of their respective rights, benefits and
privileges, if any, under the Baxter Policies. Nothing contained herein shall
be construed to be an attempted assignment of or to change the ownership of the
Baxter Policies.
13.3. Procurement of Insurance for Edwards. To the extent not already
------------------------------------
provided for by the terms of a Baxter Policy, Baxter shall use commercially
reasonable efforts to cause Edwards and the appropriate Edwards Subsidiaries to
be named as additional insureds under Baxter Policies whose effective policy
periods include the Distribution Date, in respect of claims for which coverage
is available under the terms and conditions of Baxter's policies, arising out of
or relating to periods prior to the Distribution Date; provided, however, that
-------- -------
nothing contained herein shall be construed to require Baxter or any of its
Subsidiaries to pay any additional premium or other charges in respect to, or
waive or otherwise limit any of its rights, benefits or privileges under, any
Baxter Policy in order to effect the naming of Edwards and its Subsidiaries as
such additional insureds.
13.4. Acquisition and Maintenance of Post-Distribution Edwards Insurance
------------------------------------------------------------------
Policies and Programs. Commencing on and as of the Distribution Date, Edwards
---------------------
shall be responsible for establishing and maintaining separate property,
casualty and liability insurance policies and programs (including primary and
excess general liability, errors and omissions, automobile, workers'
compensation, property, fire, crime, surety and other similar insurance
policies) for activities and claims involving Edwards or any of its Subsidiaries
or Affiliates. Edwards will exercise commercially reasonable efforts to secure
liability insurance to avoid potential gaps in coverage for claims arising from
events prior to the Distribution Date, which gap would not exist had the Edwards
Business continued to be covered with the same retroactive dates existing in the
Baxter Policies in effect on the Distribution Date. Edwards and each of its
Subsidiaries and Affiliates, as appropriate, shall be responsible for all
administrative and financial matters relating to insurance policies established
and maintained by Edwards and its Subsidiaries or Affiliates for claims relating
to any period on or after the Distribution Date involving Edwards or any of its
Subsidiaries or Affiliates. Notwithstanding any other agreement or understanding
to the contrary, except as set forth in this Section 13.4 with respect to claims
------------
administration and financial administration of the Baxter Policies, neither
Baxter nor any of its Subsidiaries or Affiliates shall have any responsibility
for or obligation to Edwards or any of its Subsidiaries or Affiliates relating
to property and casualty insurance matters for any period, whether prior to, on
or after the Distribution Date.
13.5. Edwards Directors' and Officers' Insurance. Baxter shall use
------------------------------------------
commercially reasonable efforts to cause the persons currently serving as
officers and/or directors of Baxter or any of its Subsidiaries to be covered for
a period of [six (6)] years from the Distribution Date by the directors' and
officers' liability insurance policy maintained by Baxter (including corporate
reimbursement) (provided that Baxter may substitute therefor policies of at
--------
-65-
least the same coverage and amounts containing terms and conditions that are not
less advantageous than such policy) with respect to matters covered under the
existing policy occurring prior to the Distribution Date that were committed by
such officers and/or directors in their capacity as such; provided, however,
-------- -------
that in no event shall Baxter be required to expend with respect to any year
more than 200% of the current annual premium expended by Baxter (the "Insurance
---------
Amount") to maintain or procure insurance coverage pursuant hereto; and
------
provided, further, that if Baxter is unable to maintain or obtain the insurance
-------- -------
called for by this Section 13.5, Baxter shall use commercially reasonable
------------
efforts to obtain as much comparable insurance as available for the Insurance
Amount. In the event Baxter or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Baxter
assume the obligations set forth in this Section 13.5. The provisions of this
------------
Section 13.5 are intended to be for the benefit of, and shall be enforceable by,
------------
each such officer and director and his or her heirs and representatives. As
provided in Section 15.5, any amount Edwards or any of its Subsidiaries is
------------
required to pay to Baxter as an indemnity under this Agreement is reduced to the
extent Baxter receives insurance proceeds from the above coverage, but only to
the extent such proceeds are actually received by Baxter.
13.6. Pre-Distribution Insurance Claims Administration. Edwards and its
------------------------------------------------
Subsidiaries and Affiliates acknowledge that Baxter has previously experienced
losses and received claims that were, or might have been, covered by one or more
Baxter Policies, and prior to the Distribution Date will have made decisions and
commitments regarding administration of such claims, including reaching
agreements and stipulations regarding such claims (collectively, "Pre-
---
Distribution Claims Administration"). Edwards and its Subsidiaries and
----------------------------------
Affiliates covenant not to contest or challenge in any manner any action taken
by Baxter prior to the Distribution Date in connection with or relating to Pre-
Distribution Claims Administration, or to interfere with the performance of any
agreement, commitment or stipulation so made by Baxter in connection with or
relating to Pre-Distribution Claims Administration.
13.7. Post-Distribution Insurance Claims Administration. Baxter and its
-------------------------------------------------
Subsidiaries shall have the primary right, responsibility and authority for
claims administration and financial administration of claims that relate to or
affect the Baxter Policies. Upon notification by Edwards or one of its
Subsidiaries or Affiliates of a claim relating to Edwards or a Subsidiary or
Affiliate thereof under one or more of the Baxter Policies, Baxter shall
cooperate with Edwards in asserting and pursuing coverage and payment for such
claim by the appropriate insurance carrier(s). In asserting and pursuing such
coverage and payment, Baxter shall have sole power and authority to make binding
decisions, determinations, commitments and stipulations on its own behalf and on
behalf of Edwards and its Subsidiaries and Affiliates, which decisions,
determinations, commitments and stipulations shall be final and conclusive if
made to maximize the overall economic benefit of the Baxter Policies. Edwards
and its Subsidiaries and Affiliates assume responsibility for, and shall pay to
the appropriate insurance carriers or otherwise, any premiums, retrospectively-
rated premiums, defense costs, indemnity payments, deductibles, retentions or
other charges (collectively, "Insurance Charges") whenever arising, which shall
-----------------
become due and payable under the terms and conditions of any applicable Baxter
-66-
Policy in respect of any liabilities, losses, claims, actions or occurrences,
whenever arising or becoming known, involving or relating to any of the assets,
businesses, operations or liabilities of Edwards or any of its Subsidiaries or
Affiliates, whether the same relate to the period prior to, on or after the
Distribution Date. To the extent that the terms of any applicable Baxter Policy
provide that Baxter or any of its Subsidiaries shall have an obligation to pay
or guarantee the payment of any Insurance Charges relating to Edwards or any of
its Subsidiaries, Baxter shall be entitled to demand that Edwards make such
payment directly to the Person or entity entitled thereto. In connection with
any such demand, Baxter shall submit to Edwards a copy of any invoice received
by Baxter pertaining to such Insurance Charges together with appropriate
supporting documentation, to the extent available. In the event that Edwards
fails to pay any such Insurance Charges when due and payable, whether at the
request of the party entitled to payment or upon demand by Baxter, Baxter and
its Subsidiaries may (but shall not be required to) pay such insurance charges
for and on behalf of Edwards and, thereafter, Edwards shall forthwith reimburse
Baxter for such payment. Subject to the other provisions of this Article XIII,
------------
the retention by Baxter of the Baxter Policies and the responsibility for claims
administration and financial administration of such policies are in no way
intended to limit, inhibit or preclude any right of Edwards, Baxter or any other
insured to insurance coverage for any Insured Claims under the Baxter Policies.
13.8. Non-Waiver of Rights to Coverage. An insurance carrier that
--------------------------------
otherwise would be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto, or, solely by virtue of the provisions of
this Article XIII, have any subrogation rights with respect thereto, it being
------------
expressly understood and agreed that no insurance carrier or any third-party
shall be entitled to a windfall (i.e., a benefit they would not be entitled to
----
receive had no Distribution occurred or in the absence of the provisions of this
Article XIII) by virtue of the provisions hereof.
------------
13.9. Scope of Affected Policies of Insurance. The provisions of this
---------------------------------------
Article XIII relate solely to matters involving liability, casualty and workers'
------------
compensation insurance, and shall not be construed to affect any obligation of
or impose any obligation on the Parties with respect to any life, health and
accident, dental or medical insurance policies applicable to any of the
officers, directors, employees or other representatives of the Parties or their
Affiliates.
ARTICLE XIV
EXPENSE AND TAX MATTERS
-----------------------
14.1. Allocation of Expenses. (a) Except as otherwise provided in
----------------------
this Agreement or any other agreement contemplated hereby, or as otherwise
agreed to in writing by the Parties, all fees and expenses incurred in
connection with the transactions contemplated hereby or thereby shall be paid by
Baxter. Specifically, (i) Baxter shall absorb all the costs associated with the
dedication of internal resources and personnel to such transaction at all times
prior to the Distribution Date, and (ii) Baxter shall pay all fees and expenses
that are related directly to the implementation of the Distribution transactions
incurred on or prior to the Distribution Date.
-67-
(b) Notwithstanding Section 14.1(a) above, Baxter shall be solely
---------------
responsible for the following costs incurred in connection with the transactions
contemplated hereby: (i) the reasonable fees and expenses of Sidley & Austin in
connection with its representation of Baxter; (ii) the reasonable fees and
expenses of Skadden, Arps, Slate, Meagher & Flom in connection with its
representation of Baxter relating to the tax ruling and the opinion of counsel
on tax matters; (iii) the reasonable fees and expenses of foreign counsel to
Baxter or Edwards in connection with the transactions contemplated by this
Agreement; (iv) the reasonable fees and expenses of Credit Suisse First Boston
and J.P. Morgan & Co. Incorporated relating to their financial advisory services
rendered to Baxter; (v) the reasonable fees and expenses of
PricewaterhouseCoopers LLP in connection with its audit and tax services
rendered to Baxter; (vi) the reasonable fees and expenses of Ernst & Young in
connection with their consulting services relating to the Commissionaire
structure; (vii) the reasonable fees and expenses of Towers, Perrin and Hewitt
Associates in connection with their consulting services relating to benefits
plans rendered to Baxter; (viii) all SEC registration and "blue sky" filing fees
associated with the Registration Statement; (ix) the printing, mailing and
distribution of the Information Statement to Baxter's stockholders; (x) the
reasonable fees and expenses of Edwards' transfer agent and registrar relating
to the initial issuance of Edwards Shares as a dividend to Baxter's
stockholders; (xi) the NYSE listing fees for the Edwards Shares; (xii) the
design and initial printing of certificates of the Edwards Shares; (xiii) the
initial distribution of the certificates of Edwards Common Stock as a dividend
to Baxter stockholders; (xiv) the development, search and registration of the
name "Edwards"; and (xv) various other international professional services
related directly to the Distribution, such as valuation services, legal services
and tax services.
(c) Notwithstanding Section 14.1(a) (i) above, Edwards shall be solely
-------------------
responsible for all fees, expenses and other costs incurred in connection with
the transactions contemplated hereby related to: (i) the reasonable fees and
expenses of [banks] relating to their syndication and arrangement of the Edwards
Credit Facility; (ii) the reasonable fees and expenses of any financial advisors
retained by Edwards in connection with any "road shows" or presentations to
investors; (iii) recruiting fees, signing bonuses and relocation expenses for
new and existing Edwards Employees; (iv) severance payments to Edwards Employees
terminated as a result of the Distribution; (v) Founder's Grant payments to
Edwards Employees; (vi) fees and expenses related to execution of new company
identity and media launch activities; and (vii) costs and expenses related to
product re-registration and product re-labeling.
14.2. Allocation of Taxes. Sales, transfer, V.A.T. or other similar taxes
-------------------
or fees payable in connection with the transactions contemplated by this
Agreement shall be determined and paid as provided in the Tax Sharing Agreement.
ARTICLE XV
RELEASE AND INDEMNIFICATION
---------------------------
15.1. Release of Pre-Distribution Claims. (a) Except as provided in
----------------------------------
Section 15.1(b), effective as of the Distribution Date, each of Baxter and
---------------
Edwards does hereby, on behalf of itself and its respective Subsidiaries,
Affiliates, successors and assigns and all Persons who at any time prior to the
Distribution Date have been shareholders, directors, officers, agents or
employees of either Party (in each case, in their respective capacities as
such), remise, release
-68-
and forever discharge the other Party, its Subsidiaries, Affiliates, successors
and assigns and all Persons who at any time prior to the Distribution Date have
been shareholders, directors, officers, agents or employees of such Party (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 Distribution.
(b) Notwithstanding the foregoing, nothing contained in
Section 15.1(a) shall release any Party from:
---------------
(i) any Liability transferred, assigned or allocated to, or
assumed or retained by, a Party in accordance with this Agreement, any
Conveyancing Instrument, any Implementation Agreement, any Operating
Agreement or the Tax Sharing Agreement;
(ii) any Liability provided in or resulting from this Agreement,
any Conveyancing Instrument, any Implementation Agreement, any
Operating Agreement, the Tax Sharing Agreement or any agreement
between any of Baxter and its Subsidiaries, on the one hand, and
Edwards and its Subsidiaries, on the other hand, as not to terminate
pursuant to the Distribution or any other agreement between any of the
Parties entered into in contemplation that such agreement would remain
in effect after the Distribution;
(iii) any Liability for unpaid amounts for the sale, lease,
construction or receipt of goods, property or services purchased,
obtained or used in the ordinary course of business by one Party from
the other Party prior to the Distribution Date;
(iv) 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 one Party at the request or on behalf of the other
Party;
(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 XV and, if applicable, the
----------
appropriate provisions of any Conveyancing Instrument, any
Implementation Agreement, any Operating Agreement or the Tax Sharing
Agreement; or
(vi) any Liability the release of which would result in the
release of any party other than a Person released pursuant to this
Section 15.1; provided, however, that the Parties agree not to bring
------------ -------- -------
suit or permit any of their Subsidiaries or Affiliates to bring suit
against any Person with respect to any Liability to the
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extent that such Person would be released with respect to such
Liability by this Section 15.1 but for the provisions of this clause
------------
(vi).
(c) Neither Party shall make, nor permit any of its Subsidiaries or
Affiliates to make, any claim or demand, or commence any Action asserting any
claim or demand, including any claim of contribution or indemnification, against
the other Party, or any other Person released pursuant to Section 15.1(a), with
---------------
respect to any Liability released pursuant to Section 15.1(a).
----------------
(d) It is the intent of each of the Parties by virtue of the
provisions of this Section 15.1 to provide for a full and complete release and
------------
discharge of all 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 the Parties (including any contractual agreements or
arrangements existing or alleged to have existed between the Parties on or
before the Distribution Date), except as expressly set forth in Section 15.1(b).
---------------
At any time, at the request of either Party, the other Party shall execute and
deliver releases reflecting the provisions hereof.
15.2. Indemnification by Edwards. Except as provided in Section 15.5,
-------------------------- ------------
Edwards shall indemnify and hold harmless Baxter and each of its Subsidiaries,
Affiliates, directors, officers, employees and agents, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Baxter Indemnified Parties"), from and against any and all Expenses or Losses
--------------------------
incurred or suffered by Baxter (and/or one or more of the Baxter Indemnified
Parties), in connection with, relating to, arising out of or due to, directly or
indirectly, any of the following items:
(a) any claim that the information included in the Registration
Statement or the Information Statement that relates to the Edwards
Business, or any other information relating to the Edwards Business
provided to Baxter or distributed to third parties by employees of Edwards
or individuals who were employees of the Edwards Business prior to the
Distribution Date, is or was false or misleading with respect to any
material fact or omits or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
regardless of whether the occurrence, action or other event giving rise to
the applicable matter took place prior or subsequent to the Distribution
Date;
(b) the Edwards Business as conducted by Baxter or its Subsidiaries,
Affiliates or predecessors on or at any time prior to the Distribution
Date;
(c) the Transferred Assets;
(d) the Assumed Liabilities;
(e) the Transferred Subsidiaries;
(f) the breach by Edwards or any of its Subsidiaries of any covenant
or agreement set forth in this Agreement, any Conveyancing Instrument, any
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Implementation Agreement, any Operating Agreement or the Tax Sharing
Agreement (subject, in the case of the Operating Agreements, to any
limitations of liability contained therein), regardless of when or where
the loss, claim, accident, occurrence, event or happening giving rise to
the Expense or Loss took place, or whether any such loss, claim, accident,
occurrence, event or happening is known or unknown, or reported or
unreported;
(g) the employee benefits provided or the actions taken or omitted
to be taken with respect thereto in connection with this Agreement or
otherwise relating to the provision of employee benefits to employees or
former employees of Edwards (or its Subsidiaries), their beneficiaries,
alternate payees or any other person claiming benefits through them (except
to the extent such Expenses or Losses are specifically allocated to Baxter
pursuant to Section 15.3(f)), including Expenses or Losses arising in
----------------
connection with (i) Edwards' reduction, elimination or failure to provide
any benefit accrued by its employees or employees of any of its
Subsidiaries (including benefits accrued prior to the Distribution Date)
and (ii) the transfer of account balances and accrued benefits as described
in Section 12.9 where such Expenses or Losses are incurred as a result of
------------
(A) any act or omission by Edwards (or Edwards' representative) or (B) a
determination by the IRS that the transferee plan is not a tax-qualified
plan;
(h) the Indemnifiable matters set forth in Sections 7.3, 9.5(b) and
------------ ------
9.10(c) and Article XII; or
------- ------------
(i) any use of, access to or reliance upon the technical information
or data made available to Edwards or its Subsidiaries pursuant to Section
-------
17.2.
----
15.3. Indemnification by Baxter. Except as provided in Section 15.5,
------------------------- ------------
Baxter shall indemnify and hold harmless Edwards and each of its Subsidiaries,
Affiliates, directors, officers, employees and agents, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Edwards Indemnified Parties"), from and against any and all Expenses or Losses
---------------------------
incurred or suffered by Edwards (and/or one or more of the Edwards Indemnified
Parties) in connection with, relating to, arising out of or due to, directly or
indirectly, any of the following items:
(a) any claim that the information included in the Registration
Statement or the Information Statement that relates to Baxter or the
Retained Business is false or misleading with respect to any material fact
or omits to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, regardless of
whether the occurrence, action or other event giving rise to the applicable
matter took place prior or subsequent to the Distribution;
(b) the business (other than the Edwards Business) conducted by
Baxter or its Subsidiaries, Affiliates or predecessors on or at any time
prior to the Distribution Date;
(c) the assets owned by Baxter or its Subsidiaries other than the
Transferred Assets and the Shared Agreements;
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(d) the Liabilities (including the Retained Liabilities) of Baxter
or its Subsidiaries other than the Assumed Liabilities;
(e) the breach by Baxter or any of its Subsidiaries of any covenant
or agreement set forth in this Agreement, any Conveyancing Instrument, any
Implementation Agreement or the Tax Sharing Agreement , regardless of when
or where the loss, claim, accident, occurrence, event or happening giving
rise to the Expense or Loss took place, or whether any such loss, claim,
accident, occurrence, event or happening is known or unknown, or reported
or unreported;
(f) Baxter's reduction, elimination or failure to provide any
benefit previously provided to its employees (or employees of its
Subsidiaries), other than a benefit assumed by Edwards pursuant to Article
-------
XII, or any act or omission by Baxter in connection with the transfer of
---
assets and liabilities as described in Section 12.9; and
------------
(g) the Indemnifiable matters set forth in Section 9.10(c).
---------------
15.4. Applicability of and Limitation on Indemnification. (a) EXCEPT
--------------------------------------------------
AS EXPRESSLY PROVIDED HEREIN, THE INDEMNITY OBLIGATION UNDER THIS ARTICLE XV
----------
SHALL APPLY NOTWITHSTANDING ANY INVESTIGATION MADE BY OR ON BEHALF OF ANY
INDEMNIFIED PARTY AND SHALL APPLY WITHOUT REGARD TO WHETHER THE LOSS, LIABILITY,
CLAIM, DAMAGE, COST OR EXPENSE FOR WHICH INDEMNITY IS CLAIMED HEREUNDER IS BASED
ON STRICT LIABILITY, ABSOLUTE LIABILITY OR ARISES AS AN OBLIGATION FOR
CONTRIBUTION.
(b) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN
NO EVENT SHALL BAXTER BE LIABLE TO EDWARDS (OR ANY EDWARDS INDEMNIFIED PARTY),
OR EDWARDS BE LIABLE TO BAXTER (OR ANY BAXTER INDEMNIFIED PARTY), UNDER THIS
AGREEMENT FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
DAMAGES, INCLUDING LOSS OF ANTICIPATED PROFITS OR LOSS OR DIMINUTION OF
REVENUES, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT OR
OTHERWISE, EXCEPT TO THE EXTENT THAT SUCH LIABILITY HAS BEEN ASSERTED BY A THIRD
PARTY AGAINST A PARTY ENTITLED TO INDEMNIFICATION HEREUNDER.
15.5. Adjustment of Indemnifiable Losses. (a) The amount that any
----------------------------------
Party (an "Indemnifying Party") is required to pay to any Person entitled to
------------------
indemnification hereunder (an "Indemnified Party") shall be reduced (including
-----------------
retroactively) by any Insurance Proceeds and other amounts actually recovered by
or on behalf of such Indemnified Party in reduction of the related Expense or
Loss. If an Indemnified Party receives a payment (an "Indemnity Payment")
-----------------
required by this Agreement from an Indemnifying Party in respect of any Expense
or Loss and subsequently actually receives Insurance Proceeds or other amounts
in respect of such Expense or Loss, then such Indemnified Party shall pay to the
Indemnifying Party a sum equal to the lesser of (i) the amount of such Insurance
Proceeds or other amounts actually received or (ii) the net amount of Indemnity
Payments actually received previously. The Indemnified Party agrees
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that the Indemnifying Party shall be subrogated to such Indemnified Party under
any insurance policy.
(b) An insurer who otherwise would 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 "windfall" (i.e., a benefit he or she would
----
not be entitled to receive in the absence of the indemnification provisions) by
virtue of the indemnification provisions hereof.
(c) If any Indemnified Party realizes a Tax benefit or detriment in one or
more Tax periods by reason of having incurred a Claim or Loss for which such
Indemnified Party receives an Indemnity Payment from an Indemnifying Party (or
by reason of the receipt of any Indemnity Payment), then such Indemnified Party
shall pay to such Indemnifying Party an amount equal to the Tax benefit or such
Indemnifying Party shall pay to such Indemnified Party an additional amount
equal to the Tax detriment (taking into account, without limitation, any Tax
detriment resulting from the receipt of such additional amounts), as the case
may be. The amount of any Tax benefit or any Tax detriment for a Tax period
realized by an Indemnified Party by reason of having incurred a Claim or Loss
(or by reason of the receipt of any Indemnity Payment) shall be deemed to equal
the product obtained by multiplying (i) the amount of any deduction or loss or
inclusion in income for such period resulting from such Claim or Loss (or the
receipt of any Indemnity Payment or additional amount), as the case may be
(without regard to whether such deduction or loss or such inclusion in income
results in any actual decrease or increase in Tax liability for such period), by
(ii) the highest applicable marginal Tax rate for such period (provided,
--------
however, that the amount of any Tax benefit attributable to an amount that is
-------
creditable shall be deemed to equal the amount of such creditable item). Any
payment due under this Section 15.5(c) with respect to a Tax benefit or Tax
---------------
detriment realized by an Indemnified Party in a Tax period shall be due and
payable within 30 days from the time the return for such Tax period is due,
without taking into account any extension of time granted to the Party filing
such return.
(d) In the event that an Indemnity Payment shall be denominated in a
currency other than United States dollars, the amount of such payment shall be
translated into United States dollars using the Foreign Exchange Rate for such
currency determined in accordance with the following rules:
(i) with respect to an Expense or a Loss arising from payment by a
financial institution under a guarantee, comfort letter, letter of credit,
foreign exchange contract or similar instrument, the Foreign Exchange Rate
for such currency shall be determined as of the date on which such
financial institution shall have been reimbursed;
(ii) with respect to an Expense or a Loss covered by insurance, the
Foreign Exchange Rate for such currency shall be the Foreign Exchange Rate
employed by the insurance company providing such insurance in settling such
Expense or Loss with the Indemnifying Party; and
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(iii) with respect to an Expense or a Loss not covered by clause
(i) or (ii) above, the Foreign Exchange Rate for such currency shall
be determined as of the date that notice of the claim with respect to
such Expense or Loss shall be given to the Indemnified Party.
15.6. Procedures for Indemnification of Third Party Claims. (a) If
----------------------------------------------------
any third-party shall make any claim or commence any arbitration proceeding or
suit (collectively, a "Third Party Claim") against any one or more of the
-----------------
Indemnified Parties with respect to which an Indemnified Party intends to make
any claim for indemnification against Edwards under Section 15.2 or against
------------
Baxter under Section 15.3, such Indemnified Party shall promptly give written
------------
notice to the Indemnifying Party describing such Third Party Claim in reasonable
detail, and the following provisions shall apply. Notwithstanding the
foregoing, the failure of any Indemnified Party to provide notice in accordance
with this Section 15.6(a) shall not relieve the related Indemnifying Party of
---------------
its obligations under this Article XV, except to the extent that such
----------
Indemnifying Party is actually prejudiced by such failure to provide notice.
(b) The Indemnifying Party shall have 20 business days after receipt
of the notice referred to in Section 15.6(a) to notify the Indemnified Party
---------------
that it elects to conduct and control the defense of such Third Party Claim. If
the Indemnifying Party does not give the foregoing notice, the Indemnified Party
shall have the right to defend, contest, settle or compromise such Third Party
Claim in the exercise of its exclusive discretion subject to the provisions of
Section 15.6(c), and the Indemnifying Party shall, upon request from any of the
---------------
Indemnified Parties, promptly pay to such Indemnified Parties in accordance with
the other terms of this Section 15.6(b) the amount of any Expense or Loss
---------------
resulting from their liability to the third-party claimant. If the Indemnifying
Party gives the foregoing notice, the Indemnifying Party shall have the right to
undertake, conduct and control, through counsel reasonably acceptable to the
Indemnified Party, and at its sole expense, the conduct and settlement of such
Third Party Claim, and the Indemnified Party shall cooperate with the
Indemnifying Party in connection therewith, provided that (i) the Indemnifying
--------
Party shall not thereby permit any lien, encumbrance or other adverse charge to
thereafter attach to any asset of any Indemnified Party; (ii) the Indemnifying
Party shall not thereby permit any injunction against any Indemnified Party;
(iii) the Indemnifying Party shall permit the Indemnified Party and counsel
chosen by the Indemnified Party and reasonably acceptable to the Indemnifying
Party to monitor such conduct or settlement and shall provide the Indemnified
Party and such counsel with such information regarding such Third Party Claim as
either of them may reasonably request (which request may be general or
specific), but the fees and expenses of such counsel (including allocated costs
of in-house counsel and other personnel) shall be borne by the Indemnified Party
unless (A) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (B) the named parties to any such
Third Party Claim include the Indemnified Party and the Indemnifying Party and
in the reasonable opinion of counsel to the Indemnified Party representation of
both parties by the same counsel would be inappropriate due to actual or likely
conflicts of interest between them, in either of which cases the reasonable fees
and disbursements of counsel for such Indemnified Party (including allocated
costs of in-house counsel and other personnel) shall be reimbursed by the
Indemnifying Party to the Indemnified Party; and (iv) the Indemnifying Party
shall agree promptly to reimburse to the extent required under this Article XV
----------
the Indemnified Party for the full amount of any Expense or Loss resulting
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from such Third Party Claim and all related expenses incurred by the Indemnified
Party. In no event shall the Indemnifying Party, without the prior written
consent of the Indemnified Party, settle or compromise any claim or consent to
the entry of any judgment that does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the Indemnified Party a release
from all Liability in respect of such claim.
If the Indemnifying Party shall not have undertaken the conduct and
control of the defense of any Third Party Claim as provided above, the
Indemnifying Party shall nevertheless be entitled through counsel chosen by the
Indemnifying Party and reasonably acceptable to the Indemnified Party to monitor
the conduct or settlement of such claim by the Indemnified Party, and the
Indemnified Party shall provide the Indemnifying Party and such counsel with
such information regarding such Third Party Claim as either of them may
reasonably request (which request may be general or specific), but all costs and
expenses incurred in connection with such monitoring shall be borne by the
Indemnifying Party.
(c) So long as the Indemnifying Party is contesting any such Third
Party Claim in good faith, the Indemnified Party shall not pay or settle any
such Third Party Claim. Notwithstanding the foregoing, the Indemnified Party
shall have the right to pay or settle any such Third Party Claim, provided that
--------
in such event the Indemnified Party shall waive any right to indemnity therefor
by the Indemnifying Party, and no amount in respect thereof shall be claimed as
an Expense or a Loss under this Section 15.6(c).
---------------
If the Indemnifying Party shall have undertaken the conduct and
control of the defense of any Third Party Claim as provided above, the
Indemnified Party, on not less than 30 days prior written notice to the
Indemnifying Party, may make settlement (including payment in full) of such
Third Party Claim, and such settlement shall be binding upon the Parties for the
purposes hereof, unless within said 30-day period the Indemnifying Party shall
have requested the Indemnified Party to contest such Third Party Claim at the
expense of the Indemnifying Party. In such event, the Indemnified Party shall
promptly comply with such request and the Indemnifying Party shall have the
right to direct the defense of such claim or any litigation based thereon
subject to all the conditions of Section 15.6(b). Notwithstanding anything in
---------------
this Section 15.6(c) to the contrary, if the Indemnified Party, in the belief
---------------
that a claim may materially and adversely affect it other than as a result of
money damages or other money payments, advises the Indemnifying Party that it
has determined to settle a claim, the Indemnified Party shall have the right to
do so at its own cost and expense, without any requirement to contest such claim
at the request of the Indemnifying Party, but without any right under the
provisions of this Section 15.6(c) for indemnification by the Indemnifying
---------------
Party.
(d) The provisions of this Section 15.6 and Section 15.7 shall not
------------ ------------
apply to Taxes (which are covered by the Tax Sharing Agreement).
15.7. Procedures for Indemnification of Direct Claims. Any claim for
-----------------------------------------------
indemnification on account of an Expense or a Loss made directly by the
Indemnified Party against the Indemnifying Party and that does not result from a
Third Party Claim shall be asserted by written notice from the Indemnified Party
to the Indemnifying Party specifically claiming indemnification hereunder. Such
Indemnifying Party shall have a period of 30 business days after the receipt of
such notice within which to respond thereto. If such Indemnifying Party
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does not respond within such 30 business-day period, such Indemnifying Party
shall be deemed to have accepted responsibility to make payment and shall have
no further right to contest the validity of such claim. If such Indemnifying
Party does respond within such 30 business-day period and rejects such claim in
whole or in part, such Indemnified Party shall be free to pursue resolution as
provided in Article XVI.
-----------
15.8. Contribution. If the indemnification provided for in this
------------
Article XV is unavailable to an Indemnified Party in respect of any Expense or
----------
Loss arising out of or related to information contained in the Registration
Statement or the Information Statement, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Expense or Loss in such
proportion as is appropriate to reflect the relative fault of the Edwards
Indemnified Parties, on the one hand, or the Baxter Indemnified Parties, on the
other hand, in connection with the statements or omissions that resulted in such
Expense or Loss. The relative fault of any Edwards Indemnified Party, on the
one hand, and of any Baxter Indemnified Party, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission of a
material fact relates to information about or supplied by the Edwards Business
or an Edwards Indemnified Party, on the one hand, or about or by the Retained
Business or a Baxter Indemnified Party, on the other hand.
15.9. No Third-Party Beneficiaries. Except to the extent expressly
----------------------------
provided otherwise in this Article XV, the indemnification provided for in this
----------
Agreement, the Tax Sharing Agreement, any Implementation Agreement or any
Operating Agreement shall not inure to the benefit of any third-party or parties
and shall not relieve any insurer or other third-party who otherwise would be
obligated to pay any claim or assume the responsibility with respect thereto,
or, solely by virtue of the indemnification provisions hereof, provide any
subrogation rights with respect thereto, and each Party agrees to waive such
rights against the other to the fullest extent permitted.
15.10. Remedies Cumulative. The remedies provided in this Article XV
------------------- ----------
shall be cumulative and, subject to the provisions of Article XVI below, shall
-----------
not preclude assertion by an Indemnified Party of any other rights or the
seeking of any and all other remedies against any Indemnifying Party.
15.11. Survival. All covenants and agreements of the Parties contained
--------
in this Agreement relating to indemnification shall survive the Distribution
Date indefinitely, unless a specific survival or other applicable period is
expressly set forth herein.
ARTICLE XVI
DISPUTE RESOLUTION
------------------
16.1. General. Any dispute arising out of or relating to this Agreement
-------
or any of the Implementation Agreements shall be resolved in accordance with the
procedures specified in this Article XVI, which shall be the sole and
-----------
exclusive procedures for the resolution of any such disputes.
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16.2. Escalation. The Parties will attempt in good faith to resolve
----------
expeditiously any dispute, claim or controversy arising out of or relating to
the execution, interpretation and performance of this Agreement (including the
validity, scope and enforceability of this mediation and arbitration provision)
promptly by negotiations between executives who have authority to settle the
controversy and who are at a higher level of management than the persons with
direct responsibility for the administration of this Agreement. Any Party may
give the other Party written notice (an "Escalation Notice") of any dispute not
-----------------
resolved in the normal course of business. Within fifteen days after delivery
of the Escalation Notice, the receiving Party shall submit to the other a
written response. The Escalation Notice and the response thereto shall include
(a) a statement of each Party's position and a summary of arguments supporting
that position, and (b) the name and title of the executive who will represent
that Party and of any other person who will accompany the executive. Within 30
days after delivery of the Escalation Notice, the executives of both Parties
shall meet at a mutually acceptable time and place, and thereafter as often as
they reasonably deem necessary, to attempt to resolve the dispute. All
reasonable requests for information made by one Party to the other will be
honored. All negotiations pursuant to this clause are confidential and shall be
treated as compromise and settlement negotiations for purposes of applicable
rules of evidence..
16.3. Arbitration. Any dispute, claim or controversy arising out of or
-----------
relating to this Agreement or its breach, termination or validity which has not
been resolved by the specified non-binding procedure set forth in Section 16.2
------------
within 90 days of the date of delivery of the Escalation Notice shall be settled
by binding arbitration in accordance with the CPR Non-Administered Arbitration
Rules in effect on the date of this Agreement, by three independent and
impartial arbitrators, none of whom shall be appointed by either Party. The
arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.
(S)(S) 1-16, as the same may be amended from time to time, and judgment upon the
award rendered by the arbitrators may be entered by any court having
jurisdiction thereof. The place of the arbitration shall be Lake County,
Illinois or Orange County, California, and shall be determined by the Party that
initiated the dispute resolution process. The arbitrators may award attorneys'
fees in their discretion. Otherwise, the arbitrators are not empowered to award
damages in excess of compensatory damages, and each Party hereby irrevocably
waives any right to recover such damages.
16.4. Procedures. The Parties may request limited discovery in accordance
----------
with the Federal Rules of Civil Procedure of the United States (the "F.R.C.P.")
--------
for a period of 120 days after the initiation of the arbitration process. All
issues regarding compliance with discovery requests shall be decided by the
arbitrators pursuant to the F.R.C.P. The Parties agree that the recipient of a
discovery request shall have 10 business days after the receipt of such request
to object to any or all portions of such request and shall respond to any
portions of such request not so objected within 30 business days of the receipt
of such request. All objections shall be in writing and shall indicate the
reasons for such objections. The objecting Party shall ensure that all
objections and responses are received by the other Party within the above time
periods; failure to comply with the specified time period shall be addressed as
set forth in F.R.C.P. 37 Any Party seeking to compel discovery following receipt
of an objection shall file with the other Party and the arbitrators a motion to
compel, including a copy of the initial request and the objection. The
arbitrators shall allow 10 business days for the responses to the motion to
compel before ruling. Claims of privilege and other objections shall be
determined as they
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would be in United States federal court in a case applying Illinois law. The
arbitrators may grant or deny the motion to compel, in whole or in part,
concluding that the discovery request is or is not appropriate under the
circumstances, taking into account the needs of the Parties and the desirability
of making discovery expeditious and cost-effective. The statute of limitations
of the State of Illinois applicable to the commencement of a lawsuit shall apply
to the date of initial written notification of a dispute and shall be extended
until commencement of arbitration if all interim deadlines have been complied
with by the notifying Party.
16.5. Injunctive Relief. Nothing contained in this Article XVI shall
----------------- -----------
prevent either Party from resorting to judicial process if injunctive or other
equitable relief from a court is necessary to prevent serious and irreparable
injury to one Party or to others. The use of arbitration procedures will not be
construed under the doctrine of laches, waiver or estoppel to affect adversely
either Party's right to assert any claim or defense.
ARTICLE XVII
ACCESS TO INFORMATION AND SERVICES
----------------------------------
17.1. Access to Financial Information. (a) At all times from and after
-------------------------------
the Distribution Date for a period of ten (10) years, as soon as reasonably
practicable after written request: (i) Baxter shall afford to Edwards, its
Subsidiaries and their authorized accountants, counsel and other designated
representatives reasonable access during normal business hours to, or, at
Edwards' expense, provide copies of, all records, books, contracts, instruments,
data, documents and other information (collectively, "Information") in the
-----------
possession or under the control of Baxter immediately following the Distribution
Date that relates to Edwards, the Edwards Business or the Edwards Employees; and
(ii) Edwards shall afford to Baxter, its Subsidiaries and their authorized
accountants, counsel and other designated representatives reasonable access
during normal business hours to, or, at Baxter's expense, provide copies of, all
Information in the possession or under the control of Edwards immediately
following the Distribution Date that relates to Baxter, the Retained Business or
the employees of Baxter; provided, however, that in the event that either Party
-------- -------
determines that any such provision of or access to 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.
(b) Either Party may request Information under Section 17.1(a) (i) to
---------------
comply with reporting, disclosure, filing or other requirements imposed on the
requesting party (including under applicable securities or tax laws) by a
Governmental Authority having jurisdiction over the requesting party, (ii) for
use in any other judicial, regulatory, administrative, Tax or other proceeding
or in order to satisfy audit, accounting, claims defense, regulatory filings,
litigation, Tax or other similar requirements, (iii) for use in compensation,
benefit or welfare plan administration or other bona fide business purposes or
(iv) to comply with its obligations under this Agreement, any Conveyancing
Instrument, any Implementation Agreement, any Operating Agreement or the Tax
Sharing Agreement.
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(c) After the Distribution Date, (i) Edwards shall maintain in effect at
its own cost and expense adequate systems and controls to the extent necessary
to enable Baxter and its Subsidiaries to satisfy their respective reporting,
accounting, audit and other obligations, and (ii) Edwards shall provide, or
cause to be provided, to Baxter in such form as Baxter shall request, at no
charge to Baxter, all financial and other data and information as Baxter
determines necessary or advisable in order to prepare Baxter financial
statements and reports or filings with any Governmental Authority.
17.2. Ownership of Information. Any Information owned by one Party that
------------------------
is provided to a requesting Party pursuant to Section 17.1 shall be deemed to
------------
remain the property of the providing Party. Unless specifically set forth
herein, nothing contained in this Agreement shall be construed to grant or
confer rights of license or otherwise in any such Information.
17.3. Compensation for Providing Information. The Party requesting
--------------------------------------
Information agrees to reimburse the providing 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
otherwise specifically provided in this Agreement, such costs shall be computed
in accordance with the providing Party's standard methodology and procedures.
17.4. Retention of Records. To facilitate the possible exchange of
--------------------
Information pursuant to this Article XVII after the Distribution Date, the
------------
Parties agree to use commercially reasonable efforts to retain all Information
in their respective possession or control on the Distribution Date in accordance
with the policies and procedures of Baxter as in effect on the Distribution
Date. No party will destroy, or permit any of its Subsidiaries or Affiliates to
destroy, any Information that the other Party may have the right to obtain
pursuant to this Agreement prior to the tenth anniversary of the date hereof,
and thereafter without first using commercially 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 Taxes, such
-------- -------
period shall be extended to the expiration of the applicable statute of
limitations (giving effect to any extensions thereof).
17.5. Limitations. (a) Baxter and Edwards make no representations or
-----------
warranties, express or implied, about the accuracy, completeness, adequacy or
sufficiency of the financial and technical information and data compilations and
EXPRESSLY DISCLAIM ALL WARRANTIES WHATSOEVER, WHETHER STATUTORY, WRITTEN, ORAL,
EXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIM EACH SUCH WARRANTY, INCLUDING ANY
WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. Except as
provided in Article X hereof, the rights of access pursuant to Section 17.1
--------- ------------
shall not include, however, such information of either Party and its
Subsidiaries relating to (i) products, materials and components under
development; (ii) information pertaining to potential acquisitions, divestitures
and other business arrangements; (iii) studies and investigations being
undertaken by either Party and its Subsidiaries for its or their own benefit or
for the benefit of a third party; and (iv) information and data either Party and
its Subsidiaries are obligated to a third party to maintain in confidence.
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(b) No Party shall have any liability to the other Party (i) if any
Information exchanged or provided pursuant to this Agreement that is an estimate
or forecast, or that is based on an estimate or forecast, is found to be
inaccurate, in the absence of willful misconduct by the Party providing such
Information, or (ii) if any Information is destroyed after commercially
reasonable efforts to comply with the provisions of Section 17.4.
------------
17.6. Production of Witnesses. At all times from and after the Distribution
-----------------------
Date, each Party shall use commercially reasonable efforts to make available to
the other Party (without cost (other than reimbursement of actual out-of-pocket
expenses) to, and upon prior written request of, the other Party) its directors,
officers, employees and agents as witnesses to the extent that the same may
reasonably be required by the other Party in connection with any legal,
administrative or other proceeding in which the requesting Party may from time
to time be involved with respect to the Edwards Business, the Retained Business
or any transactions contemplated hereby.
17.7. Confidentiality. (a) From and after the Distribution Date, each
---------------
of Baxter and Edwards shall hold, and shall cause their respective Subsidiaries,
directors, officers, employees, agents, consultants, advisors and other
representatives to hold, in strict confidence, with at least the same degree of
care that applies to Baxter's confidential and proprietary information pursuant
to policies in effect as of the Distribution Date, all non-public information
concerning the other Party or any of its Subsidiaries or Affiliates obtained by
it prior to the Distribution Date, accessed by it pursuant to Section 17.1
------------
hereof, or furnished to it by the other Party or any of its Subsidiaries or
Affiliates pursuant to this Agreement or any agreement or document contemplated
hereby, including any trade secrets, technology, know-how and other non-public,
proprietary intellectual property rights licensed pursuant to Sections 10.1 and
-------------
10.2 hereof, and shall not release or disclose such information to any other
----
Person, except its representatives, who shall be bound by the provisions of this
Section 17.7; provided, however, that Baxter and Edwards and their respective
------------ -------- -------
Subsidiaries, directors, officers, employees, agents, consultants, advisors and
other representatives may disclose such information if, and only to the extent
that, (i) a disclosure of such information is compelled by judicial or
administrative process or, in the opinion of such Party's counsel, by other
requirements of law (in which case the disclosing Party will provide, to the
extent practicable under the circumstances, advance written notice to the other
Party of its intent to make such disclosure), or (ii) such Party can show that
such information (A) is published or is or otherwise becomes available to the
general public as part of the public domain without breach of this Agreement;
(B) has been furnished or made known to the recipient without any obligation to
keep it confidential by a third party under circumstances that are not known to
the recipient to involve a breach of the third party's obligations to a Party
hereto; (C) was developed independently of information furnished to the
recipient under this Agreement; or (D) in the case of information furnished
after the Distribution Date, was known to the recipient at the time of receipt
thereof from the other Party.
(b) Each Party acknowledges that the other Party would not have an
adequate remedy at law for the breach by the acknowledging Party of any one or
more of the covenants contained in this Section 17.7 and agrees that, in the
------------
event of such breach, the other Party may, in addition to the other remedies
that may be available to it, apply to a court for an injunction to prevent
breaches of this Section 17.7 and to enforce specifically the terms and
------------
provisions of this
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Section. Notwithstanding any other Section hereof, the provisions of this
Section 17.7 shall survive the Distribution Date indefinitely.
------------
17.8. Privileged Matters. (a) Each of Baxter and Edwards agrees to
------------------
maintain, preserve and assert all privileges, including privileges arising under
or relating to the attorney-client relationship (which shall include without
limitation the attorney-client and work product privileges), not heretofore
waived, that relate to the Edwards Business and the Transferred Assets for any
period prior to the Distribution Date ("Privilege" or "Privileges"). Each Party
--------- ----------
agrees that it shall not waive any Privilege that could be asserted under
applicable law without the prior written consent of the other Party. The
rights and obligations created by this Section 17.8 shall apply to all
------------
information relating to the Edwards Business as to which, but for the
Distribution, either Party would have been entitled to assert or did assert the
protection of a Privilege ("Privileged Information"), including (i) any and all
----------------------
information generated prior to the Distribution Date but which, after the
Distribution, is in the possession of either Party; and (ii) all information
generated, received or arising after the Distribution Date that refers to or
relates to Privileged Information generated, received or arising prior to the
Distribution Date.
(b) Upon receipt by either Party of any subpoena, discovery or other
request that may call for the production or disclosure of Privileged Information
or if either Party obtains knowledge that any current or former employee of
Baxter or Edwards has received any subpoena, discovery or other request that may
call for the production or disclosure of Privileged Information, such Party
shall notify promptly the other Party of the existence of the request and shall
provide the other Party a reasonable opportunity to review the information and
to assert any rights it may have under this Section 17.8 or otherwise to prevent
------------
the production or disclosure of Privileged Information. Each Party agrees that
it will not produce or disclose any information that may be covered by a
Privilege under this Section 17.8 unless (i) the other Party has provided its
------------
written consent to such production or disclosure (which consent will not be
unreasonably withheld), or (ii) a court of competent jurisdiction has entered a
final, nonappealable order finding that the information is not entitled to
protection under any applicable Privilege.
(c) Baxter's transfer of books and records and other information to
Edwards, and Baxter's agreement to permit Edwards to possess Privileged
Information existing or generated prior to the Distribution Date, are made in
reliance on Edwards' agreement, as set forth in Sections 17.7 and 17.8, to
------------- ----
maintain the confidentiality of Privileged Information and to assert and
maintain all applicable Privileges. The access to information being granted
pursuant to Section 17.1, the agreement to provide witnesses and individuals
------------
pursuant to Section 17.6 and the transfer of Privileged Information to Edwards
------------
pursuant to this Agreement shall not be deemed a waiver of any Privilege that
has been or may be asserted under this Section 17.8 or otherwise. Nothing in
------------
this Agreement shall operate to reduce, minimize or condition the rights granted
to Baxter in, or the obligations imposed upon Edwards by, this Section 17.8.
------------
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ARTICLE XVIII
MISCELLANEOUS
-------------
18.1. Entire Agreement. This Agreement, the Conveyancing Instruments,
----------------
the Implementation Agreements, the Operating Agreements and the Tax Sharing
Agreement, including the Schedules and Exhibits referred to herein and therein
and the documents delivered pursuant hereto and thereto, constitute the only
agreements between the Parties with respect to the subject matter contained
herein or therein, and supersede all prior agreements, negotiations,
discussions, understandings, writings and commitments between the Parties with
respect to such subject matter.
18.2. Choice of Law and Forum. This Agreement shall be governed by and
-----------------------
construed and enforced in accordance with the substantive laws (except for any
otherwise applicable conflicts of law provisions) of the State of Illinois and
the federal laws of the United States of America applicable therein, as though
all acts and omissions related hereto occurred in Illinois. Subject to Article
-------
XVI, any lawsuit arising from or related to this Agreement, any of the
---
Conveyancing Instruments, Implementation Agreements or Operating Agreements, or
the Tax Sharing Agreement shall be brought only in the United States District
Court for the Northern District of Illinois, the Circuit Court of Lake County,
Illinois, the United States District Court for the Central District of
California or the Superior Court of Orange County, California, and the specific
choice from among the foregoing shall be determined by the Party initiating such
lawsuit. To the extent permissible by law, the Parties hereby consent to the
jurisdiction and venue of such courts. Each Party hereby waives, releases and
agrees not to assert, and agrees to cause its Affiliates to waive, release and
not to assert, any rights such Party or its Affiliates may have under any
foreign law or regulation that would be inconsistent with the terms of this
Agreement as governed by Illinois law.
18.3. Amendment. This Agreement shall not be amended, modified or
---------
supplemented except by a written instrument signed by an authorized
representative of each of the Parties.
18.4. Waiver. Any term or provision of this Agreement may be waived,
------
or the time for its performance may be extended, by the Party or Parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently given for the purposes of this Agreement if, as to any Party, it is
in writing signed by an authorized representative of such Party. The failure of
any Party to enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, or in any way to affect the validity
of this Agreement or any part hereof or the right of any Party thereafter to
enforce each and every such provision. No waiver of any breach of this
Agreement shall be held to constitute a waiver of any other or subsequent
breach.
18.5. Partial Invalidity. Wherever possible, each provision hereof
------------------
shall be interpreted in such a manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision or provisions shall be ineffective to the extent, but
only to the extent, of such invalidity, illegality or unenforceability without
invalidating the
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remainder of such provision or provisions or any other provisions hereof, unless
such a construction would be unreasonable.
18.6. Execution in Counterparts. This Agreement may be executed in one
-------------------------
or more counterparts, each of which shall be deemed an original instrument, but
all of which shall be considered one and the same agreement, and shall become
binding when one or more counterparts have been signed by and delivered to each
of the Parties.
18.7. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the Parties and their respective successors and
permitted assigns; provided, however, that the rights of either Party under this
-------- -------
Agreement shall not be assignable by such Party without the prior written
consent of the other Party. The successors and permitted assigns hereunder
shall include, without limitation, any permitted assignee as well as the
successors in interest to such permitted assignee (whether by merger,
liquidation (including successive mergers or liquidations) or otherwise).
18.8. Third Party Beneficiaries. Except to the extent otherwise
-------------------------
provided in Section 13.5 or Article XV hereof the provisions of this Agreement
------------ ----------
are solely for the benefit of the Parties and their respective Affiliates,
successors and permitted assigns and shall not confer upon any third Person any
remedy, claim, liability, reimbursement or other right in excess of those
existing without reference to this Agreement. Nothing in this Agreement, the
Tax Sharing Agreement or any Operating Agreement shall obligate Baxter or
Edwards to assist any Edwards Employee to enforce any rights such employee may
have with respect to any of the employee benefits described in this Agreement.
18.9. Notices. All notices, requests, claims, demands and other
-------
communications required or permitted hereunder shall be in writing and shall be
deemed given or delivered (i) when delivered personally, (ii) if transmitted by
facsimile when confirmation of transmission is received, (iii) if transmitted by
electronic mail when confirmation of such transmission is received, (iv) if sent
by registered or certified mail, postage prepaid, return receipt requested, on
the third business day after mailing or (v) if sent by private courier when
received; and shall be addressed as follows:
If to Baxter, to:
Baxter International Inc.
One Baxter Parkway
Deerfield, IL 60015-4633
Attention: General Counsel
Facsimile: (847) 948-2450
If to Edwards, to:
Edwards Lifesciences Corporation
17221 Red Hill Avenue
Irvine, CA 92614
Attention: General Counsel
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Facsimile: (949) ______________
or to such other address as such Party may indicate by a notice delivered to the
other Party.
18.10. Performance. Each Party shall cause to be performed, and hereby
-----------
guarantees the performance of, all actions, agreements and obligations set forth
herein to be performed by any Subsidiary or Affiliate of such Party.
18.11. Force Majeure. No Party shall be deemed in fault of this
-------------
Agreement, any Conveyancing Instrument, any Implementation Agreement, any
Operating Agreement or the Tax Sharing Agreement to the extent that any delay or
failure in the performance of its obligations under this Agreement, any
Conveyancing Instrument, any Implementation Agreement, any Operating Agreement
or the Tax Sharing Agreement results from any cause beyond its reasonable
control and without its fault or negligence, including 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.
18.12. No Public Announcement. Neither Baxter nor Edwards shall,
----------------------
without the approval of the other, make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as and to the extent that any such Party shall be so obligated by law or the
rules of any stock exchange or quotation system, in which case the other Party
shall be advised and the Parties shall use commercially reasonable efforts to
cause a mutually agreeable release or announcement to be issued; provided,
--------
however, that the foregoing shall not preclude communications or disclosures
-------
necessary to implement the provisions of this Agreement or to comply with the
accounting and SEC disclosure obligations or the rules of any stock exchange.
18.13. Termination. Notwithstanding any provision hereof, this
-----------
Agreement may be terminated and the Distribution abandoned at any time prior to
the Distribution Date by and in the sole discretion of the Board of Directors of
Baxter without the approval of any Person. In the event of such termination,
this Agreement shall forthwith become void and no Party shall have any liability
to any Person by reason of this Agreement, except that Baxter shall be liable
for any costs and expenses, including attorneys' fees, incurred by Edwards or
its Subsidiaries prior to or arising out of such termination.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their authorized representatives as of the date first above written.
BAXTER INTERNATIONAL INC.
By: __________________________
Harry M. Jansen Kraemer, Jr.
Chairman and Chief Executive Officer
EDWARDS LIFESCIENCES CORPORATION
By: __________________________
Michael A. Mussallem
Chairman and Chief Executive Officer