Page
\n —-<\/p>\n
12.5. Employment Solicitation…………………………………………………………. 70
\n 12.6. WARN Act………………………………………………………………………. 70
\n 12.7. Leave of Absence Policies……………………………………………………….. 70
\n 12.8. Withdrawal from Participation in Baxter Plans and Establishment of Edwards Plans………. 71
\n 12.9. Transfer of Account Balances and Accrued Benefits………………………………….. 71
\n 12.10. Entitlement to Distributions Under Pension Plan……………………………………. 73
\n 12.11. Welfare Benefits Provided Under Edwards Plans……………………………………… 73
\n 12.12. Stock Purchase Plans……………………………………………………………. 73
\n 12.13. Workers’ Compensation…………………………………………………………… 74
\n 12.14. Vacation Pay Policy…………………………………………………………….. 74
\n 12.15. Non-Qualified Deferred Compensation Plans…………………………………………. 74
\n 12.16. Split-Dollar Life Insurance……………………………………………………… 74
\n 12.17. Restricted Stock……………………………………………………………….. 74
\n 12.18. Information to be Provided to Baxter……………………………………………… 74
\n 12.19. Corporate Action; Delegation of Authority…………………………………………. 75
\n 12.20. Transfer of Employee Files………………………………………………………. 75<\/p>\n
ARTICLE XIV – EXPENSE AND TAX MATTERS……………………………………………………. 78
\n 14.1. Allocation of Expenses………………………………………………………….. 78
\n 14.2. Allocation of Taxes…………………………………………………………….. 79<\/p>\n
ARTICLE XV – RELEASE AND INDEMNIFICATION…………………………………………………. 79
\n 15.1. Release of Pre-Distribution Claims……………………………………………….. 79
\n 15.2. Indemnification by Edwards………………………………………………………. 81
\n 15.3. Indemnification by Baxter……………………………………………………….. 82
\n 15.4. Applicability of and Limitation on Indemnification…………………………………. 82
\n 15.5. Adjustment of Indemnifiable Losses……………………………………………….. 83
\n 15.6. Procedures for Indemnification of Third Party Claims……………………………….. 84
\n 15.7. Procedures for Indemnification of Direct Claims……………………………………. 86
\n<\/table>\n
\n Page
\n —-<\/p>\n
15.8. Contribution………………………………………………………………. 86
\n 15.9. No Third-Party Beneficiaries………………………………………………… 86
\n 15.10. Remedies Cumulative………………………………………………………… 87
\n 15.11. Survival………………………………………………………………….. 87 <\/p>\n
ARTICLE XVI – DISPUTE RESOLUTION…………………………………………………….. 87
\n 16.1. General…………………………………………………………………… 87
\n 16.2. Escalation………………………………………………………………… 87
\n 16.3. Arbitration……………………………………………………………….. 87
\n 16.4. Procedures………………………………………………………………… 88
\n 16.5. Injunctive Relief………………………………………………………….. 88<\/p>\n
ARTICLE XVII – ACCESS TO INFORMATION AND SERVICES……………………………………… 88
\n 17.1. Access to Financial Information……………………………………………… 88
\n 17.2. Ownership of Information……………………………………………………. 89
\n 17.3. Compensation for Providing Information……………………………………….. 89
\n 17.4. Retention of Records……………………………………………………….. 89
\n 17.5. Limitations……………………………………………………………….. 90
\n 17.6. Production of Witnesses…………………………………………………….. 90
\n 17.7. Confidentiality……………………………………………………………. 90
\n 17.8. Privileged Matters…………………………………………………………. 91 <\/p>\n
ARTICLE XVIII – MISCELLANEOUS 92
\n 18.1. Entire Agreement…………………………………………………………… 92
\n 18.2. Choice of Law and Forum…………………………………………………….. 92
\n 18.3. Amendment…………………………………………………………………. 93
\n 18.4. Waiver……………………………………………………………………. 93
\n 18.5. Partial Invalidity…………………………………………………………. 93
\n 18.6. Execution in Counterparts…………………………………………………… 93
\n 18.7. Successors and Assigns……………………………………………………… 93
\n 18.8. Third Party Beneficiaries…………………………………………………… 93
\n 18.9. Notices…………………………………………………………………… 93
\n 18.10. Performance……………………………………………………………….. 94
\n 18.11. Force Majeure……………………………………………………………… 94
\n 18.12. No Public Announcement……………………………………………………… 94
\n 18.13. Termination……………………………………………………………….. 95
\n<\/table>\n
-v-<\/p>\n
EXHIBITS
\n——–
\nExhibit A – Edwards Business
\nExhibit B – Operating Agreements
\nExhibit C – Tax Sharing Agreement
\nExhibit D – Transferred Subsidiaries
\nExhibit E – Amended and Restated Certificate of Incorporation of Edwards
\nExhibit F – Amended and Restated By-laws of Edwards
\nExhibit G – Form of Edwards Stockholder Rights Plan
\nExhibit H – Board of Directors of Edwards<\/p>\n
SCHEDULES
\n———
\nSchedule 1.1(b) – BHC Loans
\nSchedule 1.1(f) – CERCLA and OSHA Liabilities
\nSchedule 1.1(g) – Other Assumed Environmental Liabilities
\nSchedule 1.1(l) – Guarantees and Letters of Credit
\nSchedule 1.1(m) – Indemnification Agreements
\nSchedule 1.2(d) – Owned Real Property
\nSchedule 1.2(e) – Real Property Leases
\nSchedule 1.2(f) – Aircraft
\nSchedule 1.2(g)(ii) – Patents
\nSchedule 1.2(g)(iv) – Trademarks
\nSchedule 1.2(h)(i) – Contracts Related to Acquisitions or Divestitures
\nSchedule 1.2(h)(ii) – Customer Contracts
\nSchedule 1.2(h)(iv) – Government Contracts
\nSchedule 1.2(h)(v) – Supplier Contracts
\nSchedule 1.2(h)(vi) – Joint Development and Confidentiality Contracts
\nSchedule 1.2(h)(vii) – Consulting Contracts
\nSchedule 1.2(h)(viii) – Distribution Contracts
\nSchedule 1.2(h)(xi) – Personal Property Leases
\nSchedule 1.2(h)(xii) – Derivatives Contracts
\nSchedule 1.2(h)(xiii) – Other Contracts
\nSchedule 1.2(i) – Permits and Licenses
\nSchedule 1.2(j) – Claims and Indemnities
\nSchedule 1.2(k) – Subsidiaries, Joint Ventures and Minority Interests
\nSchedule 1.2(n) – Intellectual Property Licenses
\nSchedule 1.2(o) – Software and Software Contracts
\nSchedule 1.2(p) – Internet Protocol Addresses
\nSchedule 1.2(q) – Other Assets
\nSchedule 3.1 – Timing of Foreign Transfers
\nSchedule 4.3 – Foreign Subsidiaries’ Third-Party Distribution Contracts
\nSchedule 6.1(h) – Baxter Distribution Countries
\nSchedule 6.2 – Retained Liabilities
\nSchedule 6.3 – Surviving Intercompany Agreements
\nSchedule 9.3 – Use of Proceeds Summary
\nSchedule 9.6(g) – Transfers
\n -vi-<\/p>\n
Schedule 9.8 – Shared Agreements
\nSchedule 9.10(a) – Assumed Actions
\nSchedule 9.10(b) – Transferred Actions
\nSchedule 9.12 – Transferred Bank Accounts
\nSchedule 10.2(a) – Licensed Baxter Intellectual Property
\nSchedule 12.1 – Edwards Employees
\nSchedule 12.4 – Calculation of Edwards Foreign and Puerto Rico Employees’
\nPension Benefits<\/p>\n
-vii-<\/p>\n
REORGANIZATION AGREEMENT
\n ————————<\/p>\n
REORGANIZATION AGREEMENT, dated as of March 15, 2000 (this<\/p>\n
“Agreement”), by and between Baxter International Inc., a Delaware corporation
\n ———
\n(“Baxter”), and Edwards Lifesciences Corporation, a Delaware corporation
\n ——
\n(“Edwards”) which is, as of the date hereof, a wholly-owned Subsidiary (as
\n ——-
\nhereinafter defined) of Baxter.<\/p>\n
WHEREAS, Baxter, through its Subsidiaries, provides, inter alia, a
\ncomprehensive line of therapies and services to treat cardiovascular disease (as
\nmore fully described in Exhibit A hereto, the “Edwards Business”);
\n ——— —————- <\/p>\n
WHEREAS, the Board of Directors of Baxter has determined that it would
\nbe advisable and in the best interests of Baxter and its stockholders for Baxter
\nto transfer to Edwards and\/or one or more of its Subsidiaries the business,
\noperations, assets and liabilities related to the Edwards Business;<\/p>\n
WHEREAS, Baxter has agreed to transfer and assign, or cause to be
\ntransferred and assigned, to Edwards or one or more of its Subsidiaries
\nsubstantially all of the assets and properties related to the Edwards Business
\nheld by Baxter, Baxter Healthcare Corporation, a Delaware corporation (“BHC”)
\n —
\nand a wholly-owned Subsidiary of Baxter, and, subject to certain exceptions,
\ncertain other Subsidiaries of Baxter, and Edwards has agreed to assume, or cause
\nto be assumed by one or more of its Subsidiaries, certain liabilities and
\nobligations arising out of or relating to the Edwards Business;<\/p>\n
WHEREAS, the Board of Directors of Baxter has determined that it would
\nbe advisable and in the best interests of Baxter and its stockholders for Baxter
\nto distribute on a pro-rata basis to the holders of record of Baxter common
\nstock, par value $1.00 per share (the “Baxter Common Stock”), without any
\n ——————-
\nconsideration being paid by such holders, all of the outstanding shares of
\nEdwards common stock, par value $1.00 per share (the “Edwards Common Stock”),
\n ——————–
\nowned directly and indirectly by Baxter (the “Distribution”);
\n ———— <\/p>\n
WHEREAS, for United States federal income tax purposes, the
\nDistribution is intended to qualify as a tax-free spin-off within the meaning of
\nSections 355 and 368(a)(1)(D) of the United States Internal Revenue Code of
\n1986, as amended (the “Code”); and
\n —- <\/p>\n
WHEREAS, it is appropriate and desirable to set forth the principal
\ncorporate transactions required to effect the Distribution and certain other
\nagreements that will govern the relationship of Baxter and Edwards following the
\nDistribution;<\/p>\n
NOW, THEREFORE, in consideration of the mutual covenants and
\nagreements hereinafter set forth, and for other good and valuable consideration,
\nthe receipt and sufficiency of which are hereby acknowledged, Baxter and Edwards
\nagree as follows:<\/p>\n
ARTICLE I<\/p>\n
DEFINITIONS AND INTERPRETATION
\n ——————————<\/p>\n
1.1. Definitions. In this Agreement, the following terms have the
\n ———–
\nmeanings specified or referred to in this Section 1.1:
\n ———– <\/p>\n
“Accounts Payable Amount” has the meaning specified in Section 9.6(g).
\n ———————– ————– <\/p>\n
“Accounts Receivable Amount” has the meaning specified in Section
\n ————————– ——-
\n9.6(g).
\n—— <\/p>\n
“Accounts Receivable Report” has the meaning specified in Section
\n ————————– ——-
\n9.7(f).
\n—— <\/p>\n
“Act” has the meaning specified in Section 9.11(a).
\n — ————— <\/p>\n
“Action” means any action, claim, suit, arbitration, inquiry,
\n ——
\nsubpoena, discovery request, proceeding or investigation by or before any court
\nor grand jury, any governmental or other regulatory or administrative entity,
\nagency or commission or any arbitration tribunal.<\/p>\n
“Active Edwards Employees” means any regular full-time or part-time
\n ————————
\nemployee of Baxter or one of its Subsidiaries who commences employment with
\nEdwards or one of its Subsidiaries immediately following the Distribution Date.<\/p>\n
“Actual Balance Sheet” has the meaning specified in Section 9.6(g).
\n ——————– ————– <\/p>\n
“Actually Using” has the meaning specified in Section 10.1(a).
\n ————– ————— <\/p>\n
“Affiliate” means, with respect to any Person, any other Person that
\n ———
\ndirectly or indirectly controls, is controlled by or is under common control
\nwith such Person. For the purpose of this definition, the term “control” means
\nthe power to direct the management of an entity, directly or indirectly, whether
\nthrough the ownership of voting securities, by contract or otherwise; and the
\nterm “controlled” has the meaning correlative to the foregoing. After the
\nDistribution Date, Edwards and Baxter shall not be deemed to be under common
\ncontrol for purposes hereof due solely to the fact that Edwards and Baxter have
\ncommon stockholders.<\/p>\n
“Aggregate Amount Received” has the meaning specified in Section
\n ————————- ——-
\n9.6(g).
\n—— <\/p>\n
“Anasco Division” has the meaning specified in Section 3.2.
\n ————— ———– <\/p>\n
“Asset Transfer Amount” has the meaning specified in Section 9.6(g).
\n ——————— ————– <\/p>\n
“Assumed Actions” has the meaning specified in Section 9.10(a).
\n ————— ————— <\/p>\n
“Assumed Liabilities” means all contractual and other Liabilities of
\n ——————-
\nBaxter or any of its Subsidiaries (excluding the Retained Liabilities) arising
\nout of or relating to (but only to the extent relating to) the Edwards Business
\nany Divested Business and\/or any of the past or present facilities of Baxter or
\nany of its Subsidiaries used primarily in connection with the Edwards Business
\nor any Divested Business, whether due or to become due, including:<\/p>\n
-2-<\/p>\n
(a) All Liabilities (excluding, except as provided in subparagraph
\n(b) below, Loans owed to Baxter or any of its Subsidiaries) that are reflected,
\ndisclosed or reserved for on the Balance Sheet, as such Liabilities may be
\nincreased or decreased in the operation of the Edwards Business from the date of
\nthe Balance Sheet through the Distribution Date in the ordinary course of
\nbusiness consistent with past practice;<\/p>\n
(b) The Loans set forth on Schedule 1.1(b) hereto;
\n ————— <\/p>\n
(c) All Liabilities under or related to the Real Estate Leases and
\nthe Edwards Contracts, such assumption to occur as (i) assignee if such Real
\nEstate Leases and Edwards Contracts are assignable and are assigned or otherwise
\ntransferred to Edwards or one of its Subsidiaries, or (ii) subcontractor,
\nsublessee or sublicensee as provided in Section 7.3 below if assignment of such
\n ———–
\nReal Estate Leases and Edwards Contracts and\/or the proceeds thereof is
\nprohibited by law or by the terms thereof or is not permitted by the other
\ncontracting party;<\/p>\n
(d) All warranty, performance and similar obligations entered into or
\nmade prior to the Distribution Date with respect to the products or services of
\nthe Edwards Business;<\/p>\n
(e) All Liabilities related to any and all Actions asserting a
\nviolation of any law, rule or regulation related to or arising out of the
\noperations of the Edwards Business, whether before or after the Distribution
\nDate and the Liabilities relating to any Assumed Actions;<\/p>\n
(f) All Liabilities arising under (i) CERCLA and any other foreign,
\nfederal, state or local laws regarding the management, control and clean-up of
\nhazardous materials (including off-site waste disposal liabilities) or (ii) the
\nOccupational Safety and Health Act or similar state laws or regulations, in
\neither case relating to or arising out of the operations of the Edwards
\nBusiness, whether before or after the Distribution Date, including those set
\nforth on Schedule 1.1(f) hereto;
\n ————— <\/p>\n
(g) All environmental Liabilities relating to facilities transferred
\nto Edwards or one of its Subsidiaries in fee or by way of an assignment of a
\nlease or sublease from a third party, including those set forth on Schedule
\n ——–
\n1.1(g) hereto;
\n——<\/p>\n
(h) All Liabilities in connection with claims of past, current or
\nprospective employees of the Edwards Business, including claims related to any
\nBaxter Plans, except as otherwise provided in Article XII, whether incurred
\n ———–
\nprior to, on or after the Distribution Date;<\/p>\n
(i) All Liabilities under any mortgage interest subsidy program on
\nbehalf of any Edwards Employee;<\/p>\n
(j) All Liabilities associated with the transfer of assets from the
\nBaxter Savings Plan to the Edwards Savings Plan;<\/p>\n
(k) All Liabilities related to the Transferred Intellectual Property
\nincluded as part of the Transferred Assets;<\/p>\n
(l) All Liabilities under each of the guarantees and letters of
\ncredit set forth on Schedule 1.1(l) hereto;
\n ————— <\/p>\n
-3-<\/p>\n
(m) All Liabilities under the indemnification agreements set forth on
\nSchedule 1.1(m);
\n————— <\/p>\n
(n) All Liabilities for property taxes with respect to any of the
\nTransferred Assets;<\/p>\n
(o) All Liabilities for deferred taxes with respect to the Edwards
\nBusiness consistent with FAS 109;<\/p>\n
(p) All Liabilities related to Governmental Permits; and<\/p>\n
(q) All other Liabilities (other than the Retained Liabilities)
\nrelating to the Edwards Business or any Divested Business, whether existing on
\nthe date hereof or arising at any time or from time to time after the date
\nhereof, and whether based on circumstances, events or actions arising heretofore
\nor hereafter, whether or not such Liabilities shall have been disclosed herein,
\nand whether or not reflected on the books and records of Baxter or Edwards or
\nthe Balance Sheet.<\/p>\n
“Balance Sheet” has the meaning specified in paragraph (a) of the
\n ————-
\ndefinition of “Transferred Assets.”<\/p>\n
“Baxter” has the meaning specified in the first paragraph of this
\n ——
\nAgreement.<\/p>\n
“Baxter Alaska” has the meaning specified in Section 3.2.
\n ————- ———– <\/p>\n
“Baxter Austria” has the meaning specified in Section 3.19.
\n ————– ———— <\/p>\n
“Baxter Asia” has the meaning specified in Section 3.10.
\n ———– ———— <\/p>\n
“Baxter Belgium” has the meaning specified in Section 3.22.
\n ————– ———— <\/p>\n
“Baxter Canada” has the meaning specified in Section 3.7.
\n ————- ———– <\/p>\n
“Baxter Chile” has the meaning specified in Section 3.15(b).
\n ———— ————— <\/p>\n
“Baxter China” has the meaning specified in Section 3.8.
\n ———— ———– <\/p>\n
“Baxter Colombia” has the meaning specified in Section 3.15(a).
\n ————— ————— <\/p>\n
“Baxter Common Stock” has the meaning specified in the fifth paragraph
\n ——————-
\nof this Agreement.<\/p>\n
“Baxter Edwards” means Baxter Edwards AG, a company organized under
\n ————–
\nthe laws of Switzerland.<\/p>\n
“Baxter Export Corporation” means Baxter Export Corporation, a Nevada
\n ————————-
\ncorporation.<\/p>\n
“Baxter Foreign Pension Plan” has the meaning specified in Section
\n ————————— ——-
\n12.4.
\n—- <\/p>\n
-4-<\/p>\n
“Baxter France” has the meaning specified in Section 3.20.
\n ————– ———— <\/p>\n
“Baxter Germany” means Baxter Deutschland GmbH, a German limited
\n ————–
\ncompany and a wholly-owned Subsidiary of Baxter Germany Holdings.<\/p>\n
“Baxter Germany Holdings” means Baxter Deutschland Holding GmbH, a
\n ———————–
\nGerman limited company and a wholly-owned Subsidiary of Baxter World Trade.<\/p>\n
“Baxter Group Member” means Baxter and (a) any corporation that is a
\n ——————-
\nmember of the same controlled group of corporations (within the meaning of
\nSection 414(b) of the Code) as Baxter; (b) a trade or business (whether or not
\nincorporated) under common control (within the meaning of Section 414(c) of the
\nCode) with Baxter; (c) any organization (whether or not incorporated) that is a
\nmember of an affiliated service group (within the meaning of Section 414(m) of
\nthe Code) that includes Baxter, a corporation described in clause (a) of this
\ndefinition or a trade or business described in clause (b) of this definition or
\n(d) any other entity that is required to be aggregated with Baxter pursuant to
\nregulations promulgated under Section 414(o) of the Code.<\/p>\n
“Baxter Hong Kong” has the meaning specified in Section 3.8.
\n —————- ———– <\/p>\n
“Baxter Hospitalar” means Baxter Hospitalar Ltda., a company organized
\n —————–
\nunder the laws of Brazil.<\/p>\n
“Baxter Indemnified Parties” has the meaning specified in Section
\n ————————– ——-
\n9.11(b).
\n——- <\/p>\n
“Baxter Italy” has the meaning specified in Section 3.21.
\n ———— ———— <\/p>\n
“Baxter Japan” means Baxter Limited, a Japanese corporation.
\n ———— <\/p>\n
“Baxter Korea” has the meaning specified in Section 3.13.
\n ———— ———— <\/p>\n
“Baxter Marks” has the meaning specified in Section 10.4.
\n ———— ———— <\/p>\n
“Baxter Mexico” has the meaning specified in Section 3.15(e).
\n ————- ————— <\/p>\n
“Baxter Netherlands” has the meaning specified in Section 3.23.
\n —————— ———— <\/p>\n
“Baxter Panama” has the meaning specified in Section 3.4.
\n ————- ———– <\/p>\n
“Baxter Pension Plan” has the meaning specified in Section 12.10.
\n ——————- ————- <\/p>\n
“Baxter Peru” has the meaning specified in Section 3.15(d).
\n ———– ————— <\/p>\n
“Baxter Pharmacy Services” means Baxter Pharmacy Services Corporation,
\n ————————
\na Delaware corporation.<\/p>\n
“Baxter Philippines” has the meaning specified in Section 3.10.
\n —————— ———— <\/p>\n
“Baxter Plans” has the meaning specified in Section 12.8(a).
\n ———— ————— <\/p>\n
-5-<\/p>\n
“Baxter Policy” and “Baxter Policies” have the meanings specified in
\n ————- —————
\nSection 13.2.
\n———— <\/p>\n
“Baxter PR Pension Plan” has the meaning specified in Section 12.9(c).
\n ———————- ————— <\/p>\n
“Baxter PR Savings Plan” has the meaning specified in Section 12.9(b).
\n ———————- ————— <\/p>\n
“Baxter Products” means those products manufactured by Baxter or its
\n —————
\nSubsidiaries (as they would exist immediately following the Distribution Date)
\n(except for products manufactured by Baxter or its Subsidiaries for the Edwards
\nBusiness, but including those products manufactured for Baxter and its
\nSubsidiaries by Edwards or its Subsidiaries pursuant to the Manufacturing
\nContracts).<\/p>\n
“Baxter Retiree Welfare Plan” means the Baxter Retiree Medical Plan
\n —————————
\nand the post-retirement life insurance portion of the Baxter Group Term Life
\nInsurance Plan.<\/p>\n
“Baxter Sales and Distribution” shall have the meaning specified in
\n —————————–
\nSection 3.3.
\n———– <\/p>\n
“Baxter Savings Plan” has the meaning specified in Section 12.9(a).
\n ——————- ————— <\/p>\n
“Baxter Severance Pay Plan” means the Baxter International Inc. and
\n ————————-
\nSubsidiaries Severance Pay Plan.<\/p>\n
“Baxter Share” means one share of Baxter Common Stock.
\n ———— <\/p>\n
“Baxter Spain” has the meaning specified in Section 3.25.
\n ———— ———— <\/p>\n
“Baxter Stock Purchase Plans” means the Baxter International Inc.
\n —————————
\nEmployee Stock Purchase Plan for United States Employees and the Baxter
\nInternational Inc. Employee Stock Purchase Plan for International Employees.<\/p>\n
“Baxter Taiwan” has the meaning specified in Section 3.9.
\n ————- ———– <\/p>\n
“Baxter Thailand” has the meaning specified in Section 3.12.
\n ————— ———— <\/p>\n
“Baxter U.K.” has the meaning specified in Section 3.26.
\n ———– ———— <\/p>\n
“Baxter Venezuela” has the meaning specified in Section 3.15(c).
\n —————- ————— <\/p>\n
“Baxter Woodlands” means Baxter Healthcare Pte. Ltd. (Singapore), a
\n —————-
\ncompany organized under the laws of Singapore.<\/p>\n
“Baxter World Trade” has the meaning specified in Section 3.1.
\n —————— ———– <\/p>\n
“BHC” has the meaning specified in the fourth paragraph of this
\n —
\nAgreement.<\/p>\n
“BIPL” means Baxter (India) Private Limited, a company organized under
\n —-
\nthe laws of India.<\/p>\n
-6-<\/p>\n
“BPCL” means Baxter Participacoes e Commercial Ltda., a company
\n —-
\norganized under the laws of Brazil.<\/p>\n
“BRL” means Baxter Representacoes Ltda., a company organized under the
\n —
\nlaws of Brazil.<\/p>\n
“Board of Directors” means the board of directors of the referenced
\n ——————
\ncorporation or any duly authorized committee thereof.<\/p>\n
“CERCLA” means the Comprehensive Environmental Response, Compensation
\n ——
\nand Liability Act, as amended.<\/p>\n
“Code” has the meaning specified in the sixth paragraph of this
\n —-
\nAgreement.<\/p>\n
“Contracts” means contracts, agreements, arrangements, leases (other
\n ———
\nthan Real Estate Leases), manufacturers’ warranties, memoranda, understandings
\nand offers open for acceptance of any nature, whether written or oral.<\/p>\n
“Conveyancing Instruments” has the meaning specified in Section 7.1.
\n ———————— ———– <\/p>\n
“Copyrights” means United States and foreign copyrights, both
\n ———-
\nregistered and unregistered, along with the registrations and applications to
\nregister any such copyrights.<\/p>\n
“CPR” means the Center for Public Resources Institute for Dispute
\n —
\nResolution.<\/p>\n
“Debt True-Up Amount” has the meaning specified in Section 9.6(g).
\n ——————- ————– <\/p>\n
“Debt True-Up Notice” has the meaning specified in Section 9.6(g).
\n ——————- ————– <\/p>\n
“Dispute” has the meaning specified in Section 16.2.
\n ——- ———— <\/p>\n
“Distribution” has the meaning specified in the fifth paragraph of
\n ————
\nthis Agreement.<\/p>\n
“Distribution Date” means the date and time determined by the Board of
\n —————–
\nDirectors of Baxter, or a duly authorized committee thereof, as the date on
\nwhich the Edwards Shares are distributable to holders of record of Baxter Common
\nStock as of the Record Date.<\/p>\n
“Divested Business” means any business primarily related to the
\n —————–
\nEdwards Business that was divested by Baxter or any of its Subsidiaries at any
\ntime prior to the Distribution Date, including any business divested pursuant to
\nany of the agreements listed on Schedule 1.2(h)(i) as “Divestitures.”
\n —————— <\/p>\n
“Edwards” has the meaning specified in the first paragraph of this
\n ——-
\nAgreement.<\/p>\n
“Edwards Austria” has the meaning specified in Section 3.19(a).
\n ————— ————— <\/p>\n
“Edwards Belgium” has the meaning specified in Section 3.22(a).
\n ————— ————— <\/p>\n
-7-<\/p>\n
“Edwards Business” has the meaning specified in the second paragraph
\n —————-
\nof this Agreement.<\/p>\n
“Edwards Canada” has the meaning specified in Section 3.7(a).
\n ————– ————– <\/p>\n
“Edwards Common Stock” has the meaning specified in the fifth
\n ——————–
\nparagraph of this Agreement.<\/p>\n
“Edwards Contracts” has the meaning specified in paragraph (h) of the
\n —————–
\ndefinition of “Transferred Assets”.<\/p>\n
“Edwards Credit Facility” has the meaning specified in Section 9.3.
\n ———————– ———– <\/p>\n
“Edwards Deferred Compensation Plan” has the meaning specified in
\n ———————————-
\nSection 12.8(b).
\n————— <\/p>\n
“Edwards Distributable Share” means for each holder of record of
\n —————————
\nBaxter Common Stock as of the Record Date one (1) Edwards Share for every five
\n(5) Baxter Shares outstanding and held of record by such holder as of the Record
\nDate.<\/p>\n
“Edwards Employees” has the meaning specified in Section 12.1.
\n —————– ———— <\/p>\n
“Edwards EU Holdings” has the meaning specified in Section 3.17(a).
\n ——————- ————— <\/p>\n
“Edwards Foreign Employees” has the meaning specified in Section 12.4.
\n ————————- ———— <\/p>\n
“Edwards Foreign Entity” means any Subsidiary of Baxter that is
\n ———————-
\nlocated or incorporated in a jurisdiction outside the United States and will,
\nupon consummation of the transactions contemplated by this Agreement, become a
\nSubsidiary of Edwards.<\/p>\n
“Edwards France” has the meaning specified in Section 3.20(a).
\n ————– ————— <\/p>\n
“Edwards Germany” has the meaning specified in Section 3.18(b)(i).
\n ————— —————— <\/p>\n
“Edwards Germany Holdings” has the meaning specified in Section
\n ———————— ——-
\n3.18(a)(i).
\n———- <\/p>\n
“Edwards Holdings Switzerland” has the meaning specified in Section
\n —————————- ——-
\n3.31.
\n—- <\/p>\n
“Edwards Indemnified Parties” has the meaning specified in Section
\n ————————— ——-
\n15.3.
\n—- <\/p>\n
“Edwards Italy” has the meaning specified in Section 3.21(a).
\n ————- ————— <\/p>\n
“Edwards Korea” has the meaning specified in Section 3.13(a).
\n ————- ————— <\/p>\n
“Edwards Lifesciences AG” has the meaning specified in Section
\n ———————– ——-
\n3.16(a)(i).
\n———- <\/p>\n
“Edwards LLC” has the meaning specified in Section 4.1(a).
\n ———– ————– <\/p>\n
“Edwards Mexico” has the meaning specified in Section 3.15(e).
\n ————– ————— <\/p>\n
-8-<\/p>\n
“Edwards Netherlands” has the meaning specified in Section 3.23(a).
\n ——————- ————— <\/p>\n
“Edwards PR Employees” has the meaning specified in Section 12.9(b).
\n ——————– ————— <\/p>\n
“Edwards PR Pension Plan” has the meaning specified in Section
\n ———————– ——-
\n12.9(c).
\n——-
\n “Edwards PR Savings Plan” has the meaning specified in Section
\n ———————– ——-
\n12.9(b).
\n——-
\n “Edwards Products” means those products manufactured by Edwards or its
\n —————-
\nSubsidiaries (as they would exist immediately following the Distribution Date)
\n(excluding products manufactured by Edwards or its Subsidiaries for the Retained
\nBusiness but including those products manufactured for Edwards and its
\nSubsidiaries by Baxter or its Subsidiaries pursuant to the Manufacturing
\nContracts).<\/p>\n
“Edwards Puerto Rico (936)” has the meaning specified in Section
\n ————————- ——-
\n3.2(a).
\n—— <\/p>\n
“Edwards Puerto Rico (MS&P)” has the meaning specified in Section
\n ————————– ——-
\n3.3(a).
\n—— <\/p>\n
“Edwards Savings Plan” has the meaning specified in Section 12.8(b).
\n ——————– ————— <\/p>\n
“Edwards Severance Pay Plan” has the meaning specified in Section
\n ————————– ——-
\n12.8(b).
\n——- <\/p>\n
“Edwards Share” means one share of Edwards Common Stock.
\n ————- <\/p>\n
“Edwards Spain” has the meaning specified in Section 3.25(a).
\n ————- ————— <\/p>\n
“Edwards Stock Purchase Plans” means the Edwards Lifesciences
\n —————————-
\nCorporation Employee Stock Purchase Plan for United States Employees and the
\nEdwards Lifesciences Corporation Stock Purchase Plan for International
\nEmployees.<\/p>\n
“Edwards Swiss Commissionaire” has the meaning specified in Section
\n —————————- ——-
\n3.16(c)(i).
\n———- <\/p>\n
“Edwards Uden” has the meaning specified in Section 3.24(a).
\n ———— ————— <\/p>\n
“Edwards UK” has the meaning specified in Section 3.26(a).
\n ———- ————— <\/p>\n
“Edwards U.S.” has the meaning specified in Section 4.1(b).
\n ———— ————– <\/p>\n
“Edwards U.S. Employees” has the meaning specified in Section 12.9.
\n ———————- ———— <\/p>\n
“Edwards Welfare Plans” has the meaning specified in Section 12.9.
\n ——————— ———— <\/p>\n
“Edwards World Trade” has the meaning specified in Section 3.1.
\n ——————- ———– <\/p>\n
“ELIPL” means Edwards Lifesciences (India) Private Limited, a company
\n —–
\norganized under the laws of India.<\/p>\n
“Escalation Notice” has the meaning specified in Section 16.2.
\n —————– ———— <\/p>\n
-9-<\/p>\n
“Exchange Act” means the Securities Exchange Act of 1934, as amended
\n ————
\n(together with the rules and regulations promulgated thereunder).<\/p>\n
“Exclusively” (and, with correlative meaning, “Exclusive”) means, when
\n ———– ———
\nused in connection with the Edwards Business, used only with or relating only to
\nthe Edwards Business.<\/p>\n
“Expenses” means any and all expenses incurred in connection with
\n ——–
\ninvestigating, defending or asserting any claim, action, suit or proceeding
\nincident to any matter indemnified against hereunder (including court filing
\nfees, court costs, arbitration fees or costs, witness fees, and reasonable fees
\nand disbursements of legal counsel, investigators, expert witnesses,
\nconsultants, accountants and other professionals).<\/p>\n
“FESCO” has the meaning specified in Section 3.8(d).
\n —– ————– <\/p>\n
“F.R.C.P.” has the meaning specified in Section 16.4.
\n ——– ———— <\/p>\n
“Foreign Exchange Rate” means, with respect to any currency other than
\n ———————
\nUnited States dollars, as of any date of determination, the average of the
\nopening bid and asked rates on such date at which such currency may be exchanged
\nfor United States dollars as quoted by Bank One, NA.<\/p>\n
“Foreign Subsidiaries” has the meaning specified in Section 4.3.
\n ——————– ———– <\/p>\n
“German Accounts Payable Amount” has the meaning specified in Section
\n —————————— ——-
\n9.6(g).
\n—— <\/p>\n
“German Accounts Receivable Amount” has the meaning specified in
\n ———————————
\nSection 9.6(g).
\n————– <\/p>\n
“Governmental Authority” means any foreign, federal, state, local or
\n ———————-
\nother government, governmental, statutory or administrative authority,
\nregulatory body or commission or any court, tribunal or judicial or arbitral
\nbody.<\/p>\n
“Governmental Permits” has the meaning specified in paragraph (i) of
\n ——————–
\nthe definition of “Transferred Assets.”<\/p>\n
“Implementation Agreements” means the agreements implementing the
\n ————————-
\ntransactions referred to in Articles III, IV and V, including the agreements set
\n ———— — –
\nforth on the closing lists with respect to the transactions described in
\nArticles III, IV and V.
\n———— — – <\/p>\n
“Indemnified Party” has the meaning specified in Section 15.5(a).
\n —————– ————— <\/p>\n
“Indemnifying Party” has the meaning specified in Section 15.5(a).
\n —————— ————— <\/p>\n
“Indemnity Payment” has the meaning specified in Section 15.5(a).
\n —————– ————— <\/p>\n
“Information” has the meaning specified in Section 17.1(a).
\n ———– ————— <\/p>\n
-10-<\/p>\n
“Information Statement” has the meaning specified in Section 9.2(a).
\n ——————— ————– <\/p>\n
“Insurance Amount” has the meaning specified in Section 13.5.
\n —————- ———— <\/p>\n
“Insurance Charges” has the meaning specified in Section 13.7.
\n —————– ———— <\/p>\n
“Insurance Proceeds” means those monies (i) received by an insured
\n ——————
\nfrom an insurance carrier, (ii) paid by an insurance carrier on behalf of the
\ninsured or (iii) received from any third Person in the nature of insurance,
\ncontribution or indemnification in respect of any Liability, in each such case
\nnet of any applicable premium adjustments (including reserves and
\nretrospectively rated premium adjustments) and net of any costs or expenses
\n(including allocated costs of in-house counsel and other personnel) incurred in
\nthe collection thereof.<\/p>\n
“Insured Claims” means those liabilities that, individually or in the
\n ————–
\naggregate, are covered within the terms and conditions of any of the Baxter
\nPolicies, whether or not subject to deductibles, co-insurance, uncollectability,
\npremium adjustments (including reserves), retrospectively-rated premium
\nadjustments or retentions, but only to the extent that such liabilities are
\nwithin applicable Baxter Policy limits, including aggregates and deductibles.<\/p>\n
“Intellectual Property” means (a) Copyrights, (b) Patents, (c)
\n ———————
\nTrademarks, (d) business and non-technical information, (e) non-patented or non-
\npatentable technical information, inventions, processes and formulations and (f)
\ndiscoveries, trade secrets, know-how and technical data.<\/p>\n
“Intercompany Agreements” means any Contract between Baxter and
\n ———————–
\nEdwards entered into on or before the Distribution Date.<\/p>\n
“Intercompany Receivables and Payables” means any intercompany
\n ————————————-
\nreceivables and payables (other than Loans) arising in the ordinary course of
\nbusiness.<\/p>\n
“Inventory Amount” has the meaning specified in Section 9.6(g).
\n —————- ————– <\/p>\n
“IRS” means the Internal Revenue Service.
\n — <\/p>\n
“Liability” means any and all debts, liabilities and obligations,
\n ———
\nabsolute or contingent, matured or unmatured, liquidated or unliquidated,
\naccrued or unaccrued, known or unknown, whenever arising (unless otherwise
\nspecified in this Agreement), including all costs and expenses relating thereto,
\nand including those debts, liabilities and obligations arising under any law,
\nrule, regulation, Action, threatened Action, order or consent decree of any
\nGovernmental Authority or any award of any arbitrator of any kind, and those
\narising under any contract, commitment or undertaking.<\/p>\n
“Licensed Baxter Intellectual Property” has the meaning specified in
\n ————————————-
\nSection 10.2(a).
\n————— <\/p>\n
“Licensed Edwards Intellectual Property” has the meaning specified in
\n ————————————–
\nSection 10.1(a).
\n————— <\/p>\n
-11-<\/p>\n
“Loan” means any intercompany indebtedness for borrowed money.
\n —- <\/p>\n
“Losses” means any and all losses, costs, obligations, liabilities,
\n ——
\nsettlement payments, awards, judgments, fines, penalties, damages, fees,
\nexpenses, deficiencies, claims or other charges, absolute or contingent, matured
\nor unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown
\n(including the costs and expenses of any and all Actions, threatened Actions,
\ndemands, assessments, judgments, settlements and compromises relating thereto
\nand attorneys’ fees and any and all expenses whatsoever reasonably incurred in
\ninvestigating, preparing or defending against any such Actions or threatened
\nActions).<\/p>\n
“Macchi” has the meaning specified in Section 3.6.
\n —— ———– <\/p>\n
“Manufacturing Contracts” means the agreements set forth in Exhibit C
\n ———————– ———
\nhereto under the caption “Manufacturing Agreements.”<\/p>\n
“Material Governmental Approvals and Consents” means any material
\n ——————————————–
\nnotices, reports or other filings to be made with or to, or any consents,
\nregistrations, approvals, permits, clearances or authorizations to be obtained
\nfrom, any Governmental Authority.<\/p>\n
“New Product” means a product that is either (a) based upon the design
\n ———–
\nof a product that is manufactured and distributed prior to the Distribution
\nDate, but the design of which is modified from such pre-existing product by
\nchanging the size or other dimensions, the materials or the manufacturing
\nprocess; or (b) a replacement for a product that is manufactured and distributed
\nprior to the Distribution Date but has an improved feature or property while
\nretaining the overall functionality of such pre-existing product.<\/p>\n
“NYSE” means the New York Stock Exchange, Inc. or any successor
\n —-
\nthereto.<\/p>\n
“Operating Agreements” means the agreements set forth in Exhibit B
\n ——————– ———
\nhereto and any other agreements between Baxter and Edwards and their respective
\nAffiliates regarding their ongoing business and service relationships following
\nthe Distribution entered into in contemplation of the Distribution.<\/p>\n
“Party” means Baxter or Edwards.
\n —– <\/p>\n
“Pas Palzer KG” has the meaning specified in Section 3.18.
\n ————- ———— <\/p>\n
“Pas Palzer Verwaltungs” has the meaning specified in Section 3.18.
\n ———————- ———— <\/p>\n
“Patents” means United States and foreign patents and applications for
\n ——-
\npatents, including any continuations, continuations-in-part, re-examinations,
\npatents by addition, Supplemental Protection Certificates, patent term
\nextensions, divisions, renewals, reissues and extensions thereof.<\/p>\n
“Person” means any individual, corporation, partnership, joint
\n ——
\nventure, limited liability company, association, joint-stock company, trust,
\nunincorporated organization or Governmental Authority.<\/p>\n
-12-<\/p>\n
“Personal Property Leases” has the meaning specified in paragraph
\n ————————
\n(h)(xi) of the definition of “Transferred Assets.”<\/p>\n
“PR Transferred Accounts” has the meaning specified in Section
\n ———————– ——-
\n12.9(b).
\n——-
\n “PR Transferred Accrued Benefits” has the meaning specified in Section
\n ——————————- ——-
\n12.9(c).
\n——- <\/p>\n
“Pre-Distribution Claims Administration” has the meaning specified in
\n ————————————–
\nSection 13.6.
\n———— <\/p>\n
“Prime Rate” means the rate that Bank One, NA (or any successor
\n ———-
\nthereto or other major money center commercial bank agreed to by the Parties)
\nannounces from time to time as its prime lending rate, as in effect from time to
\ntime.<\/p>\n
“Privilege” or “Privileges” has the meaning specified in Section
\n ——— ———- ——-
\n17.8(a).
\n——- <\/p>\n
“Privileged Information” has the meaning specified in Section 17.8(a).
\n ———————- ————— <\/p>\n
“Products” has the meaning specified in Section 9.11.
\n ——– ———— <\/p>\n
“Real Estate Leases” has the meaning specified in paragraph (e) of the
\n ——————
\ndefinition of “Transferred Assets.”<\/p>\n
“Receivables” has the meaning specified in paragraph (b)(i) of the
\n ———–
\ndefinition of “Transferred Assets.”<\/p>\n
“Record Date” means the date determined by the Board of Directors of
\n ———–
\nBaxter, or a duly authorized committee thereof, as the record date for
\ndetermining stockholders of Baxter entitled to receive shares of Edwards Common
\nStock in the Distribution.<\/p>\n
“Refund Amount” has the meaning specified in Section 9.7(f).
\n ————- ————– <\/p>\n
“Refund Notice” has the meaning specified in Section 9.7(f).
\n ————- ————– <\/p>\n
“Registration Statement” has the meaning specified in Section 9.2(a).
\n ———————- ————– <\/p>\n
“Retained Assets” has the meaning specified in Section 6.1.
\n ————— ———– <\/p>\n
“Retained Baxter Intellectual Property” means all of the Intellectual
\n ————————————-
\nProperty owned by Baxter or its Subsidiaries as of the Distribution Date other
\nthan the Transferred Intellectual Property.<\/p>\n
“Retained Business” means those portions of the business of Baxter and
\n —————–
\nits current Subsidiaries that are not part of the Edwards Business.<\/p>\n
“Retained Liabilities” has the meaning specified in Section 6.2.
\n ——————– ———– <\/p>\n
“Rights Plan” means the rights plan referred to in Section 5.1.
\n ———– ———– <\/p>\n
-13-<\/p>\n
“SEC” means the United States Securities and Exchange Commission.
\n — <\/p>\n
“Shared Agreements” has the meaning specified in Section 9.8(a).
\n —————– ————– <\/p>\n
“Software” means computer software programs, in source code and object
\n ——–
\ncode form, including all related source diagrams, flow charts, specifications,
\ndocumentation and all other materials necessary to allow a reasonably skilled
\nthird-party programmer or technician to maintain, support and enhance the
\nSoftware.<\/p>\n
“Subsidiary” means, when used with reference to any Person, any
\n ———-
\ncorporation or other organization whether incorporated or unincorporated of
\nwhich at least a majority of the securities or interests having by the terms
\nthereof ordinary voting power to elect at least a majority of the board of
\ndirectors or others performing similar functions with respect to such
\ncorporation or other organization is directly or indirectly owned or controlled
\nby such Person or by any one or more of its Subsidiaries, or by such Person and
\none or more of its Subsidiaries; provided, however, that no Person that is not
\n ——– ——-
\ndirectly or indirectly wholly-owned by any other Person shall be a Subsidiary of
\nsuch other Person unless such other Person controls, or has the right, power or
\nability to control, that Person.<\/p>\n
“Swiss Sales Branch” has the meaning, specified in Section 3.16.
\n —————— ———— <\/p>\n
“Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means:
\n — —– ——- <\/p>\n
(i) any federal, state, local or foreign net income, gross income,
\n gross receipts, windfall profit, severance, property, production, sales,
\n use, license, excise, franchise, employment, payroll, withholding,
\n alternative or add-on minimum, ad valorem, value-added, transfer, stamp, or
\n environmental tax, or any other tax, custom, duty, governmental fee or
\n other like assessment or charge of any kind whatsoever, together with any
\n interest or penalty, addition to tax or additional amount imposed by any
\n Governmental Authority; and<\/p>\n
(ii) any liability of either Party for the payment of amounts with
\n respect to payments of a type described in clause (i) as a result of being
\n a member of an affiliated, consolidated, combined or unitary group, or as a
\n result of any obligation of either Party under any Tax sharing arrangement
\n or Tax indemnity arrangement.<\/p>\n
“Tax Sharing Agreement” means the tax sharing agreement in
\n ———————
\nsubstantially the form of Exhibit C hereto.
\n ——— <\/p>\n
“Third Party Claim” has the meaning specified in Section 15.6(a).
\n —————– ————— <\/p>\n
“Third Party Consents” has the meaning specified in Section 9.14.
\n ——————– ———— <\/p>\n
“Trademarks” means all United States, state and foreign trademarks,
\n ———-
\nservice marks, trade names and service names (including all assumed or
\nfictitious names under which Baxter is conducting the Edwards Business), whether
\nregistered or unregistered, including all common law rights in and all goodwill
\nassociated with the foregoing, and all registrations and pending applications to
\nregister the foregoing.<\/p>\n
-14-<\/p>\n
“Transfer Agent” means First Chicago Trust Company of New York, a
\n ————–
\ndivision of EquiServe, the distribution agent appointed by Baxter to distribute
\nshares of Edwards Common Stock pursuant to the Distribution.<\/p>\n
“Transferred Accounts” has the meaning specified in Section 12.9(a).
\n ——————– ————— <\/p>\n
“Transferred Actions” has the meaning specified in Section 9.10(b).
\n ——————- ————— <\/p>\n
“Transferred Assets” means the tangible and intangible assets,
\n ——————
\nproperties, rights and interests relating Exclusively to the Edwards Business
\n(excluding the Retained Assets), including the following:<\/p>\n
(a) Balance Sheet Assets. All assets reflected or disclosed on the
\n ——————–
\naudited balance sheet of the Edwards Business as of December 31, 1999 contained
\nin the Registration Statement (the “Balance Sheet”), including all machinery,
\n ————-
\nequipment, furniture and other tangible personal property, whether owned or
\nleased, used Exclusively in the operation of the Edwards Business, subject to
\nacquisitions, dispositions and adjustments in the ordinary course of the Edwards
\nBusiness, consistent with past practice, after such date;<\/p>\n
(b) Receivables.
\n ———–<\/p>\n
(i) All accounts receivable, notes receivable, lease receivables,
\n prepayments (other than prepaid insurance), advances and other receivables
\n arising out of or produced by the Edwards Business and owing by any Persons
\n (the “Receivables”);
\n ———– <\/p>\n
(ii) all payments received after the Distribution Date on account of
\n the Receivables ;<\/p>\n
(iii) all manufacturers’ warranties or guarantees related to the
\nTransferred Assets or related to any of the Assumed Liabilities; and<\/p>\n
(iv) any and all manufacturers’ or third-party service or replacement
\n programs relating to the Transferred Assets;<\/p>\n
(c) Inventories.
\n ———–<\/p>\n
(i) All work-in-process, finished goods and spare parts inventory of
\n Edwards Products, other than (x) finished goods inventory (including
\n inventory in transit) in the jurisdictions set forth in Schedule 6.1(h) and
\n —————
\n (y) Edwards Products manufactured by Baxter or one of its Subsidiaries and
\n with respect to which title has not yet passed to Edwards or one of its
\n Subsidiaries pursuant to the terms of the Manufacturing Contracts or
\n Baxter’s past practices;<\/p>\n
(ii) all raw materials inventory related to Edwards Products other
\n than Edwards Products manufactured by Baxter or one of its Subsidiaries
\n pursuant to the Manufacturing Contracts;<\/p>\n
-15-<\/p>\n
(iii) all supplies, packaging and other inventories related to the
\n Edwards Business but excluding any such items in the possession of Baxter
\n or one of its Subsidiaries that relate to Edwards Products manufactured by
\n Baxter or one of its Subsidiaries pursuant to the Manufacturing Contracts;
\n and<\/p>\n
(iv) rights with respect to consignment inventory of Edwards
\n Products held by others;<\/p>\n
(d) Owned Real Property. Those certain parcels of land set forth
\n ——————-
\non Schedule 1.2(d) hereto, together with any and all buildings and other
\n —————
\nstructures and improvements thereon, any and all rights and privileges
\npertaining thereto or to any of such buildings or other structures or
\nimprovements, including all ownership interests, oil and mineral interests,
\nwater rights, easements, permits, licenses, rights of way, leases, and purchase
\nand option agreements with respect to real property, and, to the extent
\nconstituting real property, any and all fixtures, machinery, equipment and other
\nproperty attached thereto or located thereon (other than equipment and furniture
\nlocated in property to be retained by Baxter or its Subsidiaries hereunder) and
\nall other rights and interests of any nature in and to any such real estate or
\nother real estate of the Edwards Business;<\/p>\n
(e) Real Property Leases. Those certain real estate leases set
\n ——————–
\nforth on Schedule 1.2(e) hereto including any amendments thereto (collectively
\nthe “Real Estate Leases”) and all rights to use the leased premises including
\n ——————
\nany and all improvements, fixtures, machinery, equipment and other property
\nlocated on the premises demised under such Real Estate Leases (other than
\nequipment and furniture located in property to be retained by Baxter or its
\nSubsidiaries hereunder);<\/p>\n
(f) Vehicles and Aircraft. All vehicles and aircraft used
\n ———————
\nExclusively in connection with the Edwards Business, whether owned or leased,
\nincluding the interests in the aircraft set forth on Schedule 1.2(f) hereto;
\n ————— <\/p>\n
(g) Intellectual Property. All of the following Intellectual
\n ———————
\nProperty (collectively, the “Transferred Intellectual Property”) along with (1)
\n ———————————
\nthe right to sue, recover and retain such recoveries for infringement of the
\nTransferred Intellectual Property occurring prior to the Distribution Date, and
\n(2) the right to continue in the name of Baxter any actions for infringement of
\nthe Transferred Intellectual Property pending as of the Distribution Date and to
\nrecover and retain such recoveries therefrom:<\/p>\n
(i) All business and non-technical information; non-patented or
\n non-patentable technical information, inventions, processes and
\n formulations; and discoveries, trade secrets, know-how and technical data
\n (A) used Exclusively in connection with the Edwards Business as of the
\n Distribution Date and made or conceived by employees, consultants or
\n contractors of Baxter or its Subsidiaries or any third-party; or (B) to be
\n used Exclusively in connection with the Edwards Business and to be made or
\n conceived by third parties pursuant to Contracts with said third parties;<\/p>\n
(ii) All Patents used Exclusively in connection with the Edwards
\n Business as of the Distribution Date (including all such Patents set forth
\n on Schedule 1.2(g)(ii)
\n ——————-<\/p>\n
-16-<\/p>\n
hereto), all other Patents set forth on Schedule 1.2(g)(ii) hereto that are
\n ——————-
\n not used Exclusively in connection with the Edwards Business (if any), and
\n all invention records set forth on Schedule 1.2(g)(ii) hereto;
\n ——————- <\/p>\n
(iii) All Copyrights used Exclusively in connection with the Edwards
\n Business as of the Distribution Date; and<\/p>\n
(iv) All Trademarks used Exclusively in connection with the Edwards
\n Business as of the Distribution Date (including all such Trademarks set
\n forth on Schedule 1.2(g)(iv)), all other Trademarks set forth on Schedule
\n ——————- ——–
\n 1.2(g)(iv) that are not used Exclusively in connection with the Edwards
\n ———-
\n Business (if any), and all common law rights in the EDWARDS, EDWARDS
\n LABORATORIES, EDLABS, EDWARDS CARDIOVASCULAR SYSTEM, EDWARDS CVS, EDWARDS
\n CARDIOVASCULAR SURGERY, EDWARDS CRITICAL CARE, EDWARDS LIS and EDWARDS LESS
\n INVASIVE SURGERY marks (whether used Exclusively in connection with the
\n Edwards Business or not);<\/p>\n
(h) Contracts. All of the following Contracts (such Contracts being
\n ———
\n referred to as the “Edwards Contracts”):
\n —————– <\/p>\n
(i) all Contracts related Exclusively to the Edwards Business
\n related to acquisitions or divestitures of assets or stock, including
\n Contracts related to the transactions set forth on Schedule 1.2(h)(i)
\n ——————
\n hereto, except to the extent any such Contracts relate to the Retained
\n Business;<\/p>\n
(ii) all Contracts with customers Exclusive to the Edwards Business,
\n including those set forth on Schedule 1.2(h)(ii) hereto but only if the
\n ——————-
\n Contracts so set forth are actually Exclusive to the Edwards Business;<\/p>\n
(iii) all customer leases under which the underlying equipment is the
\n Exclusive marketing responsibility of Edwards;<\/p>\n
(iv) all government Contracts Exclusive to the Edwards Business,
\n including those set forth on Schedule 1.2(h)(iv) hereto;
\n ——————- <\/p>\n
(v) all supplier Contracts Exclusive to the Edwards Business
\n relating either to raw materials or distributed products, including those
\n set forth on Schedule 1.2(h)(v) hereto;
\n —————— <\/p>\n
(vi) all joint development and confidentiality Contracts Exclusive
\n to the Edwards Business, including those set forth on Schedule 1.2(h)(vi)
\n ——————
\n hereto but only if the Contracts so set forth are actually Exclusive to the
\n Edwards Business;<\/p>\n
(vii) all consulting Contracts Exclusive to the Edwards Business,
\n including those set forth on Schedule 1.2(h)(vii) hereto but only if the
\n ——————–
\n Contracts so set forth are actually Exclusive to the Edwards Business;<\/p>\n
-17-<\/p>\n
(viii) all third-party distribution Contracts Exclusive to the Edwards
\nBusiness, including those set forth on Schedule 1.2(h)(viii) hereto but only if
\n ———————
\nthe Contracts so set forth are actually Exclusive to the Edwards Business;<\/p>\n
(ix) all manufacturing Contracts Exclusive to the Edwards Business;<\/p>\n
(x) the Shared Agreements, if any, set forth on Schedule 9.8 hereto
\n ————
\n that are specifically designated on such Schedule 9.8 as being assigned to
\n ————
\n Edwards;<\/p>\n
(xi) those certain machinery, equipment or other tangible personal
\n property leases Exclusive to the Edwards Business (the “Personal Property
\n —————–
\n Leases”) set forth on Schedule 1.2(h)(xi) hereto but only if the Contracts
\n —— ——————-
\n so set forth are actually Exclusive to the Edwards Business;<\/p>\n
(xii) the portion of the Contracts related to derivatives set forth
\non Schedule 1.2(h)(xii) equal to the amount set forth on such Schedule
\n ——————– ——–
\n1.2(h)(xii); and
\n———–<\/p>\n
(xiii) all other Contracts Exclusive to the Edwards Business,
\nincluding those set forth on Schedule 1.2(h)(xiii) hereto but only if the
\n ———————
\nContracts so set forth are actually Exclusive to the Edwards Business;<\/p>\n
(i) Permits and Licenses. All permits, approvals, licenses,
\n ——————–
\nfranchises, authorizations, product registrations or other rights granted by any
\nGovernmental Authority held or applied for and that are used Exclusively in the
\nEdwards Business or that relate Exclusively to the Transferred Assets or any of
\nthe Transferred Subsidiaries, and all other consents, grants and other rights
\nthat are used Exclusively for the lawful ownership of the Transferred Assets or
\nthe operation of the Edwards Business (collectively, “Governmental Permits”)
\n ——————–
\nincluding, in each case, those set forth on Schedule 1.2(i) hereto;
\n —————<\/p>\n
(j) Claims and Indemnities. All rights, claims, demands, causes of
\n ———————-
\naction, judgments, decrees, general releases, settlement agreements and rights
\nto indemnity or contribution, whether contractual or otherwise, in favor of
\nBaxter or any of its Subsidiaries relating Exclusively to the Edwards Business
\nor the Transferred Assets, including those set forth on Schedule 1.2(j) hereto,
\n —————
\nincluding the right to sue, recover and retain such recoveries and the right to
\ncontinue in the name of Baxter and its Subsidiaries any pending actions relating
\nto the foregoing, and to recover and retain any damages therefrom, but not
\nincluding any such rights, claims, demands, causes of action, judgments, decrees
\nand rights to indemnity or contribution relating to the Retained Assets,
\nincluding in particular any third-party distribution agreements that are
\nexcluded from the Transferred Assets because Baxter or one of its Subsidiaries
\nis retaining it in its capacity as distributor for Edwards after the
\nDistribution Date;<\/p>\n
(k) Subsidiaries, Joint Ventures and Minority Interests. All shares
\n —————————————————
\n of capital stock or equity or debt or other interests owned by Baxter or its
\n Subsidiaries in the Subsidiaries, joint ventures and minority investments set
\n forth on Schedule 1.2(k) hereto;
\n ————— <\/p>\n
-18-<\/p>\n
(l) Books And Records. All books and records (including all records
\n —————–
\npertaining to customers, suppliers and personnel), wherever located, that
\nrelate Exclusively to the Edwards Business;<\/p>\n
(m) Supplies. All office supplies, production supplies, spare parts,
\n ——–
\npurchase orders, forms, labels, shipping material, art work, catalogues, sales
\nbrochures, operating manuals and advertising and promotional material and all
\nother printed or written material that relate Exclusively to the Edwards
\nBusiness;<\/p>\n
(n) Intellectual Property Licenses. All permits, grants, contracts,
\nagreements and licenses running to or from Baxter or its Subsidiaries relating
\nto the Transferred Intellectual Property, including those set forth on Schedule
\n ——–
\n1.2(n) hereto;
\n—— <\/p>\n
(o) Software. All (i) Software set forth on Schedule 1.2(o) hereto,
\n ——– —————
\n(ii) shrink-wrapped Software located on hardware included in the Transferred
\nAssets and (iii) any Contracts related to the aforementioned Software
\nincluding those set forth on Schedule 1.2(o) hereto;
\n ————— <\/p>\n
(p) Internet Protocol Addresses. All Class “C” Internet Protocol
\n —————————
\n addresses set forth on Schedule 1.2(p) hereto; and
\n ————— <\/p>\n
(q) Other Assets. All other assets, tangible or intangible,
\n ————
\nincluding all goodwill, that are Exclusive to the operations of, or otherwise
\nrelate Exclusively to, the Edwards Business, including those set forth on
\nSchedule 1.2(q) hereto.
\n————— <\/p>\n
“Transferred Intellectual Property” means the Intellectual Property
\n ———————————
\ndescribed in paragraph (g) of the definition of “Transferred Assets.”<\/p>\n
“Transferred Subsidiaries” means the Subsidiaries of Baxter set forth
\n ————————
\non Exhibit D hereto, the issued and outstanding shares of which will be
\n ———
\ntransferred to Edwards or one or more of its Subsidiaries.<\/p>\n
“True-Up Balance Sheet” has the meaning specified in Section 9.6(g).
\n ——————— ————– <\/p>\n
“Uden Manufacturing Facility” has the meaning specified in Section
\n ————————— ——-
\n3.24.
\n—- <\/p>\n
“Unbudgeted Transfer Adjustment” has the meaning specified in Section
\n —————————— ——-
\n9.6(a).
\n—— <\/p>\n
“Under Development” has the meaning specified in Section 10.1(a).
\n —————– ————— <\/p>\n
“Variance Amount” has the meaning specified in Section 9.6(g).
\n ————— ————– <\/p>\n
“WARN Act” has the meaning specified in Section 12.6.
\n ——– ———— <\/p>\n
“Xenomedica” has the meaning specified in Section 3.16.
\n ———- ———— <\/p>\n
1.2. Interpretation. (a) In this Agreement, unless the context
\n ————–
\nclearly indicates otherwise:<\/p>\n
-19-<\/p>\n
(i) words used in the singular include the plural and words in the
\n plural include the singular;<\/p>\n
(ii) reference to any Person includes such Person’s successors and
\n assigns, but only if such successors and assigns are permitted by this
\n Agreement;<\/p>\n
(iii) reference to any gender includes the other gender;<\/p>\n
(iv) the word “including” (and with correlative meaning “include”)
\n means “including but not limited to”;<\/p>\n
(v) reference to any Article, Section, Exhibit or Schedule means
\n such Article or Section of, or such Exhibit or Schedule to, this Agreement,
\n as the case may be, and references in any Section or definition to any
\n clause means such clause of such Section or definition;<\/p>\n
(vi) the words “herein,” “hereunder,” “hereof,” “hereto” and words
\n of similar import shall be deemed references to this Agreement as a whole
\n and not to any particular Section or other provision hereof;<\/p>\n
(vii) reference to any agreement, instrument or other document means
\nsuch agreement, instrument or other document as amended, supplemented and
\nmodified from time to time to the extent permitted by the provisions thereof and
\nby this Agreement;<\/p>\n
(viii) reference to any law (including statutes and ordinances) means
\nsuch law (including all rules and regulations promulgated thereunder) as
\namended, modified, codified or reenacted, in whole or in part, and in effect at
\nthe time of determining compliance or applicability;<\/p>\n
(ix) relative to the determination of any period of time, “from”
\nmeans “from and including,” “to” means “to but excluding” and “through” means
\n“through and including”;<\/p>\n
(x) accounting terms used herein shall have the meanings
\nhistorically ascribed to them by Baxter and its Subsidiaries based upon Baxter’s
\ninternal financial policies and procedures in effect prior to the date of this
\nAgreement;<\/p>\n
(xi) in the event of any conflict between the provisions of the body
\nof this Agreement and the Exhibits or Schedules hereto, the provisions of the
\nbody of this Agreement shall control;<\/p>\n
(xii) the titles to Articles and headings of Sections contained in
\nthis Agreement have been inserted for convenience of reference only and shall
\nnot be deemed to be a part of or to affect the meaning or interpretation of this
\nAgreement; and<\/p>\n
(xiii) references to “dollars” or “$” shall mean United States Dollars
\nunless otherwise indicated.<\/p>\n
-20-<\/p>\n
(b) This Agreement was negotiated by the Parties with the benefit of
\nlegal representation, and no rule of construction or interpretation otherwise
\nrequiring this Agreement to be construed or interpreted against either Party
\nshall apply to any construction or interpretation hereof. Subject to Section
\n ——-
\n18.5, this Agreement shall be interpreted and construed to the maximum extent
\n—-
\npossible so as to uphold the enforceability of each of the terms and provisions
\nhereof, it being understood and acknowledged that this Agreement was entered
\ninto by the Parties after substantial negotiations and with full awareness by
\nthe Parties of the terms and provisions hereof and the consequences thereof.<\/p>\n
ARTICLE II<\/p>\n
THE DISTRIBUTION
\n —————-<\/p>\n
2.1. Issuance and Delivery of Edwards Shares. Edwards shall issue
\n —————————————
\nto Baxter the number of Edwards Shares required so that the total number of
\nEdwards Shares held by Baxter on the Distribution Date is equal to the total
\nnumber of Edwards Shares distributable pursuant to Section 2.2. Baxter shall
\n ———–
\ndeliver to the Transfer Agent one or more stock certificates representing all
\nthe Edwards Shares then issued and outstanding, together with one or more stock
\npower(s) duly endorsed in blank. The Transfer Agent will then transfer and
\ndistribute such shares in the manner described in Section 2.2 below.
\n ———– <\/p>\n
2.2. Distribution of Edwards Shares. Edwards shall provide to the
\n ——————————
\nTransfer Agent sufficient certificates in such denominations as the Transfer
\nAgent may request in order to effect the Distribution. Promptly following the
\nDistribution Date, Baxter shall instruct the Transfer Agent to distribute to all
\nholders of record of Baxter Common Stock as of the Record Date the Edwards
\nDistributable Share. All the distributed Edwards Shares shall be validly issued,
\nfully paid and nonassessable and shall be free of any preemptive rights.<\/p>\n
2.3. Treatment of Fractional Shares. No certificates or scrip
\n ——————————
\nrepresenting fractional Edwards Shares shall be issued in the Distribution. In
\nlieu of receiving fractional shares, each holder of Baxter Common Stock who
\notherwise would be entitled to receive a fractional Edwards Share pursuant to
\nthe Distribution will receive cash (rounded to the nearest cent) for such
\nfractional share. Baxter and Edwards shall instruct the Transfer Agent to
\ndetermine the number of whole Edwards Shares and fractional Edwards Shares
\n(rounded to the eighth decimal place) allocable to each holder of record of
\nBaxter Common Stock as of the Record Date, to aggregate all such fractional
\nshares into whole shares and to sell the whole shares obtained thereby in the
\nopen market at the then prevailing prices on behalf of holders who otherwise
\nwould be entitled to receive fractional share interests, and the Transfer Agent
\nshall distribute to each such holder such holder’s ratable share of the total
\nproceeds of such sale after making appropriate deductions of any amounts
\nrequired for federal tax withholding purposes and after deducting any taxes
\nattributable to the sale of such fractional share interests. Baxter shall bear
\nthe costs of commissions incurred in connection with such sales.<\/p>\n
2.4. Baxter Board Action. The Board of Directors of Baxter, or a
\n ——————-
\nduly authorized committee of the Board of Directors, shall, in its sole
\ndiscretion, determine the<\/p>\n
-21-<\/p>\n
Record Date and the Distribution Date and all appropriate procedures in
\nconnection with the Distribution. The Board of Directors of Baxter or such
\ncommittee also shall have the right to adjust at any time prior to the
\nDistribution Date the Edwards Distributable Share. The consummation of the
\ntransactions provided for in this Article II shall be effected only after the
\n ———-
\nDistribution has been declared by the Board of Directors of Baxter or such
\ncommittee and after all of the conditions set forth in Article XI hereof shall
\n ———-
\nhave been satisfied or waived by Baxter.<\/p>\n
2.5. Additional Approvals. Baxter shall cooperate with Edwards in
\n ——————–
\neffecting, and if so requested by Edwards, Baxter shall, as the sole stockholder
\nof Edwards prior to the Distribution, ratify all actions that are reasonably
\nnecessary or desirable to be taken by Edwards to effectuate, the transactions
\nreferenced in or contemplated by this Agreement in a manner consistent with the
\nterms of this Agreement.<\/p>\n
ARTICLE III<\/p>\n
FOREIGN TRANSFERS
\n —————–<\/p>\n
3.1. Edwards Lifesciences World Trade. Baxter has caused to be
\n ——————————–
\nincorporated, under the General Corporation Law of Delaware, Edwards
\nLifesciences World Trade Corporation (“Edwards World Trade”) as a wholly-owned
\n ——————-
\nSubsidiary of Baxter World Trade Corporation, a Delaware corporation and a
\nwholly-owned Subsidiary of Baxter (“Baxter World Trade”). Edwards World Trade
\n ——————
\nhas been qualified as a foreign corporation under the General Corporation Law of
\nCalifornia. Subject to the terms and conditions of this Agreement, Baxter and
\nEdwards hereby agree to take, or cause to be taken, any and all actions
\nnecessary to effect the transactions described in this Article III, with each
\n ———–
\ntransaction occurring at the approximate times and\/or in the order described in
\nSchedule 3.1 hereto.
\n———— <\/p>\n
3.2. Puerto Rico (936). Baxter and Edwards hereby agree to take any
\n —————–
\nand all actions necessary to effect the transfer to Edwards World Trade of all
\nof the right, title and interest of Baxter Healthcare Corporation of Puerto
\nRico, an Alaska corporation and a wholly-owned Subsidiary of Baxter Pharmacy
\nServices (“Baxter Alaska”), in and to the Anasco division of Baxter Alaska which
\n ————-
\nis engaged in the Edwards Business, and all of the Transferred Assets and the
\nAssumed Liabilities related thereto (the “Anasco Division”), as follows:
\n —————<\/p>\n
(a) Edwards Lifesciences Corporation of Puerto Rico (“Edwards Puerto
\n ————–
\nRico (936)”) shall be incorporated as a Delaware corporation;
\n———-<\/p>\n
(b) Edwards Puerto Rico (936) shall be qualified as a foreign
\ncorporation under the laws of Puerto Rico;<\/p>\n
(c) Baxter Alaska shall transfer to Edwards Puerto Rico (936) all of
\nits right, title and interest in and to the Anasco Division in return for 100
\nshares of capital stock of Edwards Puerto Rico (936);<\/p>\n
(d) Baxter Alaska shall transfer to Baxter Pharmacy Services all of
\nits right, title and interest in and to the capital stock of Edwards Puerto Rico
\n(936);<\/p>\n
-22-<\/p>\n
(e) Baxter Pharmacy Services shall transfer to Baxter World Trade as
\na dividend, all of its right, title and interest in and to the capital stock of
\nEdwards Puerto Rico (936) as described in Section 3.3(e) below;
\n ————–<\/p>\n
(f) Baxter World Trade shall transfer to Edwards World Trade as a
\ncontribution to capital, all of its right, title and interest in and to the
\ncapital stock of Edwards Puerto Rico (936) as described in Section 3.3(f) below;
\n ————– <\/p>\n
(g) Edwards World Trade shall transfer to Edwards Puerto Rico (MS&P)
\nas a contribution to capital, all of its right, title and interest in and to the
\ncapital stock of Edwards Puerto Rico (936) as described in Section 3.3(g)
\n ————–
\nbelow; and<\/p>\n
(h) After the Distribution Date, at the option of Edwards, Edwards
\nPuerto Rico (936) shall transfer to Edwards Lifesciences AG or its designated
\naffiliate, by novation, all of its right, title and interest in and to certain
\nTransferred Assets and the Assumed Liabilities transferred to Edwards Puerto
\nRico (936) by Baxter Alaska as part of the Anasco Division, which assets and
\nliabilities relate to the Edwards Business conducted in the Dominican Republic
\nprior to the Distribution Date, in return for cash or other consideration equal
\nto the fair market value of such Transferred Assets net of such Assumed
\nLiabilities, plus the assumption of such Assumed Liabilities.<\/p>\n
3.3. Puerto Rico (MS&P). Baxter and Edwards hereby agree to take any
\n ——————
\nand all actions necessary to effect the transfer to Edwards World Trade of all
\nof the right, title and interest in and to the Transferred Assets and the
\nAssumed Liabilities held by Baxter Pharmacy Services, Baxter Sales and
\nDistribution Corp., a Delaware corporation and a wholly-owned Subsidiary of
\nBaxter Pharmacy Services (“Baxter Sales and Distribution”), and Edwards
\n —————————–
\nLifesciences Cardiovascular Resources, Inc., a Pennsylvania corporation, as
\nfollows:<\/p>\n
(a) Edwards Lifesciences Sales Corporation (“Edwards Puerto Rico
\n ——————-
\n(MS&P)”) shall be incorporated as a Delaware corporation and a wholly-owned
\n——
\nSubsidiary of Edwards World Trade;<\/p>\n
(b) Edwards Puerto Rico (MS&P) shall be qualified as a foreign
\ncorporation under the laws of Puerto Rico;<\/p>\n
(c) Baxter Sales and Distribution shall transfer to Edwards Puerto
\nRico (MS&P) all of its right, title and interest in and to the Transferred
\nAssets and the Assumed Liabilities, including those assets and liabilities
\nrelating to the marketing and sales business conducted in Puerto Rico, in return
\nfor cash or other consideration equal to the fair market value of such
\nTransferred Assets net of such Assumed Liabilities, plus the assumption of such
\nAssumed Liabilities;<\/p>\n
(d) Baxter Pharmacy Services shall transfer to Edwards Puerto Rico
\n(MS&P) all of its right, title and interest in and to the Transferred Assets and
\nthe Assumed Liabilities, including those assets, if any, liabilities and
\nemployees relating to the perfusion business conducted in Puerto Rico in return
\nfor cash or other consideration equal to the fair market value<\/p>\n
-23-<\/p>\n
of such Transferred Assets net of such Assumed Liabilities, plus the assumption
\nof such Assumed Liabilities;<\/p>\n
(e) Baxter Pharmacy Services shall transfer to Baxter World Trade as
\na dividend, all of its right, title and interest in and to the capital stock of
\nEdwards Puerto Rico (936) as described in Section 3.2(e) above;
\n ————– <\/p>\n
(f) Baxter World Trade shall transfer to Edwards World Trade as a
\ncontribution to capital, all of its right, title and interest in and to the
\ncapital stock of Edwards Puerto Rico (936) as described in Section 3.2(f) above;
\n ————– <\/p>\n
(g) Edwards World Trade shall transfer to Edwards Puerto Rico (MS&P)
\nas a contribution to capital, all of its right, title and interest in and to the
\ncapital stock of Edwards Puerto Rico (936) as described in Section 3.2(g)
\n ————–
\nabove; and<\/p>\n
(h) Edwards Lifesciences Cardiovascular Resources, Inc., a
\nPennsylvania corporation, shall transfer to Edwards Puerto Rico (MS&P) all of
\nits right, title and interest in and to the Transferred Assets and Assumed
\nLiabilities, if any, relating to the perfusion business conducted in Puerto
\nRico, in exchange for cash or other consideration equal to the fair market value
\nof such Transferred Assets net of such Assumed Liabilities, plus the assumption
\nof such Assumed Liabilities.<\/p>\n
3.4. Dominican Republic. Baxter and Edwards hereby agree to take
\n ——————
\nany and all actions necessary to effect the transfer to Edwards Lifesciences AG
\nof all of the right, title and interest of Baxter Healthcare S. de R.L., a
\ncompany organized under the laws of Panama (“Baxter Panama”), in and to the
\n ————-
\nTransferred Assets and the Assumed Liabilities, consisting of contracts for the
\nconstruction and leasing of a manufacturing facility located in the Dominican
\nRepublic, as follows:<\/p>\n
(a) A branch office of Edwards Lifesciences AG shall be established
\nin the Dominican Republic and Edwards Lifesciences AG shall be qualified as a
\nforeign corporation under the laws of the Dominican Republic;<\/p>\n
(b) Baxter Panama shall transfer to Edwards Lifesciences AG all of
\nits right, title and interest in and to the Transferred Assets and the Assumed
\nLiabilities, consisting of contracts for the construction and leasing of a
\nmanufacturing facility located in the Dominican Republic; and<\/p>\n
(c) After the Distribution Date, at the option of Edwards, Edwards
\nPuerto Rico (936) shall transfer to Edwards Lifesciences AG or its designated
\naffiliate, by novation, all of its right, title and interest in and to certain
\nTransferred Assets and the Assumed Liabilities transferred to Edwards Puerto
\nRico (936) by Baxter Alaska as described in Section 3.2(h) above in return for
\n ————–
\ncash or other consideration equal to the fair market value of such Transferred
\nAssets net of such Assumed Liabilities, plus the assumption of such Assumed
\nLiabilities.<\/p>\n
3.5. Intentionally Omitted.
\n ——————— <\/p>\n
-24-<\/p>\n
3.6. Brazil. Baxter and Edwards hereby agree to take any and all
\n ——
\nactions necessary to effect the transfer to Edwards World Trade of all the
\nright, title and interest in Edwards Lifesciences Macchi Ltda., a Brazilian
\ncorporation (“Macchi”), held by BPCL and BRL, as follows:
\n —— <\/p>\n
(a) BRL shall transfer to BPCL all of its right, title and interest
\nin and to 6,750,947 quotas of Macchi, together with all of its right, title and
\ninterest in the Agreement for the Assignment and Transfer of Quotas of Macchi
\nand other Covenants dated December 22, 1993, in exchange for the transfer by
\nBPCL to BRL of all of BPCL’s right, title and interest in and to 17,448,432
\nquotas of Baxter Hospitalar;<\/p>\n
(b) BRL shall transfer to Edwards all of its right, title and
\ninterest in and to 1 quota of Macchi;<\/p>\n
(c) BPCL shall transfer to Baxter Export Corporation all of its
\nright, title and interest in and to 1 quota of Baxter Hospitalar;<\/p>\n
(d) Baxter World Trade shall transfer to Edwards World Trade as a
\ncontribution to capital all of its right, title and interest in and to
\n25,158,211 quotas of BPCL;<\/p>\n
(e) Baxter Export Corporation shall transfer (i) to Edwards World
\nTrade all of its right, title and interest in and to 764 quotas of BPCL and (ii)
\nto Edwards all of its right, title and interest in and to 1 quota of BPCL; and<\/p>\n
(f) Baxter World Trade, S.A., a company organized under the laws of
\nBelgium, shall transfer to Edwards Lifesciences Japan Holdings, Inc. all of
\ntheir right, title and interest in and to debt of Macchi owing to such company
\nin exchange for cash or other consideration equal to the face value of such debt
\nplus accrued interest thereon;<\/p>\n
(g) Macchi shall repay debt, together with accrued interest thereon,
\nowing to Baxter Uruguay, S.A., a company organized under the laws of Uruguay, in
\nthe amount of $5,643,000; and<\/p>\n
(h) Edwards World Trade shall pay $2,380,000 to Baxter World Trade,
\nS.A. as a reduction of the debt owing to Baxter World Trade, S.A. by Baxter
\nUruguay, S.A.<\/p>\n
3.7. Canada. Baxter and Edwards hereby agree to take any and all
\n ——
\nactions necessary to effect the transfer to Edwards World Trade of all of the
\nright, title and interest of Baxter Corporation, a company organized under the
\nlaws of Ontario (“Baxter Canada”), in and to the Transferred Assets and the
\n ————-
\nAssumed Liabilities, which constitutes the Edwards Business conducted in Canada,
\nas follows:<\/p>\n
(a) Edwards Lifesciences (Canada) Inc. (“Edwards Canada”) shall be
\n ————–
\nincorporated as a Canadian corporation and a wholly-owned Subsidiary of Edwards
\nWorld Trade; and<\/p>\n
(b) Baxter Canada shall transfer to Edwards Canada all of its right,
\ntitle and interest in and to the Transferred Assets and the Assumed Liabilities
\nfor cash equal to the fair<\/p>\n
-25-<\/p>\n
market value of the Transferred Assets net of such Assumed Liabilities, plus the
\nassumption of such Assumed Liabilities.<\/p>\n
3.8. China. Baxter and Edwards hereby agree to take any and all
\n —–
\n actions necessary to effect the transfer to Edwards World Trade and Edwards LLC
\nof all of the right, title and interest of Baxter Healthcare Limited, a company
\norganized under the laws of Hong Kong (“Baxter Hong Kong”), and Baxter (China)
\n —————-
\nInvestment Co. Ltd., a company organized under the laws of the People’s Republic
\nof China (“Baxter China”), in and to the Transferred Assets and the Assumed
\n ————
\nLiabilities, which constitutes the Edwards Business conducted in Hong Kong and
\nthe People’s Republic of China, as follows:<\/p>\n
(a) A representative office of Edwards World Trade shall be
\nestablished in Shanghai, China;<\/p>\n
(b) Baxter Hong Kong and Baxter China shall each directly or
\nindirectly transfer to Edwards World Trade all of its respective right, title
\nand interest in and to the Transferred Assets and the Assumed Liabilities
\n(except for third-party distribution agreements, inventory and accounts
\nreceivable and accounts payable relating to the purchase of products) in return
\nfor cash or other consideration equal to the fair market value of such
\nTransferred Assets net of such Assumed Liabilities, plus the assumption of such
\nAssumed Liabilities;<\/p>\n
(c) Baxter Hong Kong and Baxter China shall each directly or
\nindirectly transfer to Edwards LLC all of its respective right, title and
\ninterest in and to all third-party distribution agreements relating to the
\npurchase of products in U.S. dollars in its name but relating Exclusively to the
\nEdwards Business and all accounts receivable and accounts payable relating to
\nsuch sales activity in return for cash or other consideration equal to the fair
\nmarket of such agreements and accounts receivable net of such accounts payable
\nand the Assumed Liabilities under such agreements, plus the assumption of such
\naccounts payable and the Assumed Liabilities under such agreements; and<\/p>\n
(d) Baxter Hong Kong shall terminate the Labor Supply Contracts by
\nand between Baxter Hong Kong and Foreign Enterprise Services Corporation
\n(“FESCO”) or another government agency, relating to the contracting from FESCO
\n —–
\nor such other government agency of Baxter Hong Kong employees transferred to
\nEdwards World Trade, and Edwards World Trade shall enter into agreements with
\nFESCO or such other government agency providing for the same.<\/p>\n
3.9. Taiwan. Baxter and Edwards hereby agree to take any and all
\n ——
\nactions necessary to effect the transfer to Edwards World Trade and Edwards LLC
\nof all of the right, title and interest of Baxter Healthcare Limited, a company
\norganized under the laws of Taiwan (“Baxter Taiwan”), in and to the Transferred
\n ————-
\nAssets and the Assumed Liabilities, which constitutes the Edwards Business
\nconducted in Taiwan, as follows:<\/p>\n
(a) A branch office of Edwards World Trade shall be established in
\nTaipei, Taiwan;<\/p>\n
-26-<\/p>\n
(b) Baxter Taiwan shall transfer to Edwards World Trade all of its
\nright, title and interest in and to the product registrations relating
\nExclusively to the Edwards Business;<\/p>\n
(c) Baxter Taiwan shall transfer all third-party distribution
\nagreements relating to the purchase of products relating Exclusively to the
\nEdwards Business to Edwards LLC; and<\/p>\n
(d) Edwards World Trade Taiwan branch shall enter into an agreement
\nwith Edwards LLC whereby the Taiwan branch of Edwards World Trade shall provide,
\nfor a fee, certain sales and promotion activities on behalf of Edwards LLC in
\nconnection with the distribution of Edwards Products by third-party distributors
\nin Taiwan.<\/p>\n
3.10. Singapore and the Philippines. Baxter and Edwards hereby
\n —————————–
\nagree to take any and all actions necessary to effect the transfer to Edwards
\nWorld Trade and Edwards LLC of all of the right, title and interest of Baxter
\nHealthcare (Asia) Pte. Ltd., a company organized under the laws of Singapore
\n(“Baxter Asia”), in and to the Transferred Assets and the Assumed Liabilities,
\n ———–
\nwhich constitutes the Edwards Business conducted in Singapore, and of Baxter
\nHealthcare Philippines Inc., a company organized under the laws of the
\nPhilippines (“Baxter Philippines”), in and to the Transferred Assets and the
\n ——————
\nAssumed Liabilities, which constitutes the Edwards Business conducted in the
\nPhilippines, as follows :<\/p>\n
(a) A representative office of Edwards World Trade shall be
\nestablished in Singapore;<\/p>\n
(b) Baxter Asia shall transfer to Edwards World Trade all of its
\nright, title and interest in and to the Transferred Assets and the Assumed
\nLiabilities relating Exclusively to the Edwards Business conducted in Singapore
\n(except for public hospital contracts, third-party distribution agreements,
\ninventory and accounts receivable and accounts payable relating to the purchase
\nof products) in return for cash or other consideration equal to the fair market
\nvalue of such Transferred Assets net of such Assumed Liabilities, plus the
\nassumption of such Assumed Liabilities;<\/p>\n
(c) Baxter Asia shall transfer all of its right, title and interest
\nin and to certain public hospital contracts relating Exclusively to the Edwards
\nBusiness conducted in Singapore to a third-party distributor in return for its
\nrelease from its obligations under such contracts;<\/p>\n
(d) Baxter Philippines shall transfer to third-party distributors
\nall of its right, title and interest in and to the product registrations in its
\nname but relating Exclusively to the Edwards Business conducted in the
\nPhilippines;<\/p>\n
(e) Baxter Asia shall transfer all of its right, title and interest
\nin and to the third-party distribution agreements related to the purchase of
\nproducts relating Exclusively to the Edwards Business conducted in Singapore,
\nMalaysia, Brunei, Indonesia, Pakistan, Sri Lanka, Taiwan, Myanmar, Laos and
\nCambodia and all accounts receivable and accounts payable relating to such sales
\nactivity to Edwards LLC in return for cash or other consideration equal to the
\nfair market value of such agreements and accounts receivable net of such
\naccounts payable<\/p>\n
-27-<\/p>\n
and the Assumed Liabilities under such agreements, plus the assumption of such
\naccounts payable and the Assumed Liabilities under such agreements; and<\/p>\n
(f) Baxter Philippines shall transfer all of its right, title and
\ninterest in and to the third-party distribution agreements related to the
\npurchase of products relating Exclusively to the Edwards Business conducted in
\nthe Philippines and all accounts receivable and accounts payable relating to
\nsuch sales activity to Edwards LLC in return for cash or other consideration
\nequal to the fair market value of such agreements and accounts receivable net of
\nsuch accounts payable and the Assumed Liabilities under such agreements, plus
\nthe assumption of such accounts payable and the Assumed Liabilities under such
\nagreements.<\/p>\n
3.11. Malaysia. Baxter and Edwards hereby agree to take any and all
\n ——–
\nactions necessary to effect the transfer to Edwards LLC of all of the right,
\ntitle and interest of Baxter Asia in and to the Transferred Assets and the
\nAssumed Liabilities, which constitutes the Edwards Business conducted in
\nMalaysia, as follows:<\/p>\n
(a) A representative office of Edwards World Trade shall be
\nestablished in Malaysia;<\/p>\n
(b) Baxter Asia shall transfer all of its right, title and interest
\nin and to all accounts receivable and accounts payable relating to the purchase
\nof products relating Exclusively to the Edwards Business conducted in Malaysia
\nto Edwards LLC in return for cash or other consideration equal to the fair
\nmarket value of such accounts receivable net of such accounts payable, plus the
\nassumption of such accounts payable.<\/p>\n
3.12. Thailand. Baxter and Edwards hereby agree to take any and all
\n ——–
\nactions necessary to effect the transfer to Edwards World Trade and Edwards LLC
\nof all of the right, title and interest of Baxter Healthcare (Thailand) Co.,
\nLtd., a company formed under the laws of Thailand (“Baxter Thailand”), in and to
\n —————
\nthe Transferred Assets and the Assumed Liabilities, which constitutes the
\nEdwards Business conducted in Thailand, as follows:<\/p>\n
(a) A representative office of Edwards World Trade shall be
\nestablished in Bangkok, Thailand;<\/p>\n
(b) Baxter Thailand shall transfer to Edwards World Trade all of its
\nright, title and interest in and to the fixed assets relating Exclusively to the
\nEdwards Business conducted in Thailand and the liabilities relating thereto in
\nreturn for cash or other consideration equal to the fair market value of such
\nassets net of such liabilities, plus the assumption of such liabilities;<\/p>\n
(c) Baxter Thailand shall transfer all of its right, title and
\ninterest in and to all bank guarantee deposits, third-party distribution
\nagreements relating to the purchase of products in its name but relating
\nExclusively to the Edwards Business conducted in Thailand and Vietnam and all
\naccounts receivable relating to such sales activity to Edwards LLC in return for
\ncash or other consideration equal to the fair market value of such deposits,
\nagreements and accounts receivable net of the assumption of the Assumed
\nLiabilities under such agreements, plus the assumption of the Assumed
\nLiabilities under such agreements;<\/p>\n
-28-<\/p>\n
(d) Baxter Thailand shall permit product registrations in its name
\nbut relating Exclusively to the Edwards Business conducted in Thailand to lapse,
\nand Osotspa Co., Ltd., a third-party distributor of Edwards Products in
\nThailand, shall apply for new product registrations for such Edwards Products;
\nand<\/p>\n
(e) Edwards World Trade shall reimburse Baxter Thailand for all
\nseverance payments required to be made to Edwards Employees due to the
\ntermination of their employment by Baxter Thailand.<\/p>\n
3.13. Korea. Baxter and Edwards hereby agree to take any and all
\n —–
\nactions necessary to effect the transfer to Edwards World Trade of all of the
\nright, title and interest of Baxter Korea Co. Ltd., a company organized under
\nthe laws of Korea (“Baxter Korea”), in and to the Transferred Assets and the
\n ————
\nAssumed Liabilities, which constitutes the Edwards Business conducted in Korea,
\nas follows:<\/p>\n
(a) Edwards Lifesciences Korea Ltd. (“Edwards Korea”) shall be
\n ————-
\norganized as a Korean private limited company (chusik hwesa) and a wholly-owned
\nSubsidiary of Edwards World Trade; and<\/p>\n
(b) Baxter Korea shall transfer to Edwards Korea all of its right,
\ntitle and interest in and to the Transferred Assets and the Assumed Liabilities
\nin return for cash or other consideration equal to the fair market value of such
\nTransferred Assets net of such Assumed Liabilities, plus the assumption of such
\nAssumed Liabilities.<\/p>\n
3.14. India. Baxter and Edwards hereby agree to take any and all
\n —–
\nactions necessary to effect the transfer to Edwards World Trade of (i) all the
\nright, title and interest in ELIPL held by BIPL and Sanjiv Verma and (ii) all
\nthe remaining right, title and interest of BIPL in and to the Edwards Business
\nconducted in India, as follows:<\/p>\n
(a) BIPL shall transfer to Edwards World Trade all of its right,
\ntitle and interest in and to 2,999,980 shares of capital stock of ELIPL for
\n29,999,800 Indian Rupees (approximately $689,000 on March 7, 2000);<\/p>\n
(b) Sanjiv Verma shall transfer to Edwards all of his right, title
\nand interest in and to 20 shares of capital stock of ELIPL for 200 Indian Rupees
\n(approximately $4.60 on March 7, 2000);<\/p>\n
(c) Edwards World Trade shall subscribe for 15,216,020 additional
\nshares of capital stock of ELIPL for 152,160,200 Indian Rupees (approximately
\n$3.49 million on March 7, 2000);<\/p>\n
(d) Edwards shall subscribe for 183,980 additional shares of
\ncapital stock of ELIPL for 1,839,800 Indian Rupees (approximately $42,200 on
\nMarch 7, 2000); and<\/p>\n
(e) BIPL shall transfer to ELIPL all of its right, title and
\ninterest in and to the Transferred Assets and the Assumed Liabilities as a going
\nconcern, which constitutes the Edwards Business conducted by BIPL in return for
\ncash or other consideration equal to the fair<\/p>\n
-29-<\/p>\n
market value of such Transferred Assets net of such Assumed Liabilities, plus
\nthe assumption of such Assumed Liabilities.<\/p>\n
3.15. Latin America. Baxter will continue to serve as distributor
\n ————-
\nfor Edwards on a short-term basis in the Latin American countries set out below.
\nAccordingly, Baxter will retain the inventory, accounts receivable and accounts
\npayable relating to the sale of products related Exclusively to the Edwards
\nBusiness conducted in each such country until the termination of the
\ndistribution arrangement in such country. Upon termination of the distribution
\narrangement, (i) Edwards shall purchase (or cause to be purchased) the
\ninventory, (ii) Edwards shall pay Baxter for the cost of money to Baxter of
\ncarrying such inventory and (iii) Baxter shall continue to hold and to collect
\nor pay, as applicable, the accounts receivable and accounts payable, subject to
\nthe obligations of Edwards set forth in Section 9.7(f), all as follows:
\n ————– <\/p>\n
(a) Colombia.
\n ——– <\/p>\n
(i) Upon termination of the distribution arrangement for Colombia,
\n Edwards shall purchase, or cause another party to purchase, all of the
\n right, title and interest of Laboratorios Baxter S.A., a company formed
\n under the laws of Colombia (“Baxter Colombia”), in and to the inventory
\n —————
\n relating to the sale of products related Exclusively to the Edwards
\n Business conducted in Colombia and all other products or equipment related
\n Exclusively to the Edwards Business conducted in Colombia but in the
\n possession of third parties;<\/p>\n
(ii) Edwards shall indemnify Baxter Colombia against (A) the
\n difference, if any, between the sale price of any inventory sold pursuant
\n to Section 3.15(a)(i) that is included in the Retained Assets and the book
\n ——————
\n value of such inventory on the Distribution Date in U.S. dollars,
\n calculated using the respective Foreign Exchange Rates in effect on the
\n date of sale and the Distribution Date and (B) the difference, if any,
\n between the sale price of any replacement inventory sold pursuant to
\n Section 3.15(a)(i) and the cost of such inventory in U.S. dollars,
\n ——————
\n calculated using the respective Foreign Exchange Rates in effect on the
\n date of sale and the date of purchase of such inventory, in each case
\n accounting for the sale of inventory on a first-in, first-out basis. Any
\n payment required pursuant to this Section shall be paid simultaneously with
\n the sale of such inventory; and<\/p>\n
(iii) Edwards shall, simultaneously with the sale pursuant to Section
\n ——-
\n 3.15(a)(i), pay to Baxter Colombia as an indemnity the time value of money
\n ———-
\n to Baxter Colombia of carrying the inventory included in the Retained
\n Assets and any replacement inventory relating Exclusively to the Edwards
\n Business conducted in Colombia, from the Distribution Date through the date
\n of transfer of such inventory.<\/p>\n
(b) Chile.
\n —– <\/p>\n
(i) Upon termination of the distribution arrangement for Chile,
\n Edwards shall purchase, or cause another party to purchase, all of the
\n right, title and interest of Baxter de Chile Ltda., a company organized
\n under the laws of Chile (“Baxter Chile”), in and to the inventory relating
\n ————
\n to the sale of products related Exclusively to the Edwards Business<\/p>\n
-30-<\/p>\n
conducted in Chile and all other products or equipment related Exclusively
\n to the Edwards Business conducted in Chile but in the possession of third
\n parties;<\/p>\n
(ii) Edwards shall indemnify Baxter Chile against (A) the difference,
\n if any, between the sale price of any inventory sold pursuant to Section
\n ——-
\n 3.15(b)(i) that is included in the Retained Assets and the book value of
\n ———-
\n such inventory on the Distribution Date in U.S. dollars, calculated using
\n the respective Foreign Exchange Rates in effect on the date of sale and the
\n Distribution Date plus (B) the difference, if any, between the sale price
\n of any replacement inventory sold pursuant to Section 3.15(b)(i) and the
\n ——————
\n cost of such inventory in U.S. dollars, calculated using the respective
\n Foreign Exchange Rates in effect on the date of sale and the date of
\n purchase of such inventory, in each case accounting for the sale of
\n inventory on a first-in, first-out basis. Any payment required pursuant to
\n this Section shall be paid simultaneously with the sale of such inventory;
\n and<\/p>\n
(iii) Edwards shall, simultaneously with the sale pursuant to Section
\n ——-
\n 3.15(b)(i), pay to Baxter Chile as an indemnity the time value of money to
\n ———-
\n Baxter Chile of carrying the inventory included in the Retained Assets and
\n any replacement inventory relating Exclusively to the Edwards Business
\n conducted in Chile, from the Distribution Date through the date of transfer
\n of such inventory.<\/p>\n
(c) Venezuela.
\n ——— <\/p>\n
(i) Upon termination of the distribution arrangement for Venezuela,
\n Edwards shall purchase, or cause another party to purchase, all of the
\n right, title and interest of Baxter de Venezuela C.A., a company organized
\n under the laws of Venezuela (“Baxter Venezuela”), in and to the inventory
\n —————-
\n relating to the sale of products related Exclusively to the Edwards
\n Business conducted in Venezuela and all other products or equipment related
\n Exclusively to the Edwards Business conducted in Venezuela but in the
\n possession of third parties;<\/p>\n
(ii) Edwards shall indemnify Baxter Venezuela against (A) the
\n difference, if any, between the sale price of any inventory sold pursuant
\n to Section 3.15(c)(i) that is included in the Retained Assets and the book
\n ——————
\n value of such inventory on the Distribution Date in U.S. dollars,
\n calculated using the respective Foreign Exchange Rates in effect on the
\n date of sale and the Distribution Date and (B) the difference, if any,
\n between the sale price of any replacement inventory sold pursuant to
\n Section 3.15(c)(i) and the cost of such inventory in U.S. dollars,
\n ——————
\n calculated using the respective Foreign Exchange Rates in effect on the
\n date of sale and the date of purchase of such inventory, in each case
\n accounting for the sale of inventory on a first-in, first-out basis. Any
\n payment required pursuant to this Section shall be paid simultaneously with
\n the sale of such inventory; and<\/p>\n
(iii) Edwards shall, simultaneously with the sale pursuant to Section
\n ——-
\n 3.15(c)(i), pay to Baxter Venezuela as an indemnity the time value of money
\n ———-
\n to Baxter Venezuela of carrying the inventory included in the Retained
\n Assets and any replacement inventory relating Exclusively to the Edwards
\n Business conducted in Venezuela, from the Distribution Date through the
\n date of transfer of such inventory.<\/p>\n
-31-<\/p>\n
(d) Peru.
\n —- <\/p>\n
(i) Upon termination of the distribution arrangement for Peru,
\n Edwards shall purchase, or cause another party to purchase, all of the
\n right, title and interest of Laboratorios Baxter de Peru, S.A., a company
\n organized under the laws of Peru (“Baxter Peru”), in and to the inventory
\n ———–
\n relating to the sale of products related Exclusively to the Edwards
\n Business conducted in Peru and all other products or equipment related
\n Exclusively to the Edwards Business conducted in Peru but in the possession
\n of third parties;<\/p>\n
(ii) Edwards shall indemnify Baxter Peru against (A) the difference,
\n if any, between the sale price of any inventory sold pursuant to Section
\n ——-
\n 3.15(d)(i) that is included in the Retained Assets and the book value of
\n ———-
\n such inventory on the Distribution Date in U.S. dollars, calculated using
\n the respective Foreign Exchange Rates in effect on the date of sale and the
\n Distribution Date and (B) the difference, if any, between the sale price of
\n any replacement inventory sold pursuant to Section 3.15(d)(i) and the cost
\n ——————
\n of such inventory in U.S. dollars, calculated using the respective Foreign
\n Exchange Rates in effect on the date of sale and the date of purchase of
\n such inventory, in each case accounting for the sale of inventory on a
\n first-in, first-out basis. Any payment required pursuant to this Section
\n shall be paid simultaneously with the sale of such inventory; and<\/p>\n
(iii) Edwards shall, simultaneously with the sale pursuant to Section
\n ——-
\n 3.15(d)(i), pay to Baxter Peru as an indemnity the time value of money to
\n ———-
\n Baxter Peru of carrying the inventory included in the Retained Assets and
\n any replacement inventory relating Exclusively to the Edwards Business
\n conducted in Peru, from the Distribution Date through the date of transfer
\n of such inventory.<\/p>\n
(e) Mexico.
\n —— <\/p>\n
(i) Edwards Lifesciences Mexico, S.A. de C.V. (“Edwards Mexico”)
\n ————–
\n shall be incorporated as a Mexican corporation and a wholly-owned
\n Subsidiary of Edwards World Trade;<\/p>\n
(ii) Baxter S.A. de C.V., a company organized under the laws of
\n Mexico (“Baxter Mexico”), shall transfer to Edwards Mexico all of its
\n ————-
\n right, title and interest in and to the Transferred Assets, if any, and the
\n Assumed Liabilities, if any, relating Exclusively to the Edwards Business
\n conducted in Mexico (except for third-party distribution agreements,
\n inventory, accounts receivable and accounts payable relating to the
\n purchase of products) in return for cash or other consideration equal to
\n the fair market value of the Transferred Assets net of such Assumed
\n Liabilities, plus the assumption of such Assumed Liabilities;<\/p>\n
(iii) Upon termination of the distribution arrangement for Mexico,
\n Edwards Mexico shall purchase all of the right, title and interest of
\n Baxter Mexico in and to the inventory relating to the sale of products
\n related Exclusively to the Edwards Business conducted in Mexico and all
\n other products or equipment related Exclusively to the Edwards Business
\n conducted in Mexico but in the possession of third parties;<\/p>\n
-32-<\/p>\n
(iv) Edwards Mexico shall indemnify Baxter Mexico against (A) the
\n difference, if any, between the sale price of any inventory sold pursuant
\n to Section 3.15(e)(iii) that is included in the Retained Assets and the
\n ——————–
\n book value of such inventory on the Distribution Date in U.S. dollars,
\n calculated using the respective Foreign Exchange Rates in effect on the
\n date of sale and the Distribution Date and (B) the difference, if any,
\n between the sale price of any replacement inventory sold pursuant to
\n Section 3.15(e)(iii) and the cost of such inventory in U.S. dollars,
\n ——————–
\n calculated using the respective Foreign Exchange Rates in effect on the
\n date of sale and the date of purchase of such inventory, in each case
\n accounting for the sale of inventory on a first-in, first-out basis. Any
\n payment required pursuant to this Section shall be paid simultaneously with
\n the sale of such inventory; and<\/p>\n
(v) Edwards shall, simultaneously with the sale pursuant to Section
\n ——-
\n 3.15(e)(iii), pay to Baxter Mexico as an indemnity the time value of money
\n ————
\n to Baxter Mexico of carrying the inventory included in the Retained Assets
\n and any replacement inventory relating Exclusively to the Edwards Business
\n conducted in Mexico, from the Distribution Date through the date of
\n transfer of such inventory.<\/p>\n
3.16. Switzerland. Baxter and Edwards hereby agree to take any and
\n ———–
\nall actions necessary to effect the transfer to Edwards World Trade of (i) all
\nthe right, title and interest of Baxter Edwards in and to the Transferred Assets
\nand the Assumed Liabilities, which constitutes the Edwards Business conducted in
\nSwitzerland; (ii) all the right, title and interest in Xenomedica AG, a company
\norganized under the laws of Switzerland and a wholly-owned Subsidiary of Baxter
\nWorld Trade (“Xenomedica”), held by Baxter World Trade; and (iii) all the
\n ———-
\nright, title and interest of Baxter Woodlands in and to the Transferred Assets
\nand the Assumed Liabilities, which constitutes the Swiss sales branch (“Swiss
\n —–
\nSales Branch”) of Baxter Woodlands, all as follows :
\n———— <\/p>\n
(a) Edwards Lifesciences A.G. (Swiss Principal).
\n ——————————————- <\/p>\n
(i) Edwards Lifesciences A.G. (“Edwards Lifesciences AG”) shall be
\n ———————–
\n formed as a Swiss corporation;<\/p>\n
(ii) Baxter Edwards shall transfer to Edwards Lifesciences AG all of
\n its right, title and interest in and to the Transferred Assets and the
\n Assumed Liabilities, which constitutes the Edwards Business conducted by
\n Baxter Edwards (except for the sales employees and related assets and
\n Liabilities), in return for 248 shares of capital stock of Edwards
\n Lifesciences AG;<\/p>\n
(iii) Peter Wiget and Nicole Sidler shall each subscribe for one share
\n of capital stock of Edwards Lifesciences AG;<\/p>\n
(iv) Baxter Edwards shall transfer to Baxter World Trade as a
\n dividend, all of its right, title and interest in and to the stock of
\n Edwards Lifesciences AG;<\/p>\n
(v) Baxter Woodlands shall transfer the Swiss Sales Branch to
\n Edwards Lifesciences AG in return for 25,000 Swiss francs (approximately
\n $14,900 on March 7,<\/p>\n
-33-<\/p>\n
2000) and assumption by Edwards Lifesciences AG of the Liabilities of the
\n Swiss Sales Branch;<\/p>\n
(vi) Edwards Lifesciences AG shall apply for VAT registrations in
\n the European countries in which Edwards’ Subsidiaries will have a legal
\n presence as described in this Article III;
\n ———– <\/p>\n
(vii) The third-party distribution agreements relating to the
\n purchase of products relating Exclusively to the Edwards Business, and all
\n accounts receivable and accounts payable relating to such sales activity,
\n in Malta and Portugal shall be transferred from the applicable Baxter
\n Subsidiaries to Edwards Lifesciences AG in return for cash or other
\n consideration equal to the fair market value of such agreements and
\n accounts receivable net of such accounts payable and the Assumed
\n Liabilities under such agreements, plus the assumption of such accounts
\n payable and the Assumed Liabilities under such agreements;<\/p>\n
(viii) Baxter World Trade shall transfer to Edwards World Trade as a
\n contribution to capital all of its right, title and interest in and to the
\n capital stock of Xenomedica; and<\/p>\n
(ix) Baxter World Trade shall transfer to Edwards World Trade as a
\n contribution to capital all of its right, title and interest in and to the
\n capital stock of Edwards Lifesciences AG.<\/p>\n
(b) Baxter AG, Volketswil.
\n ——————— <\/p>\n
(i) Baxter AG, Volketswil, will transfer all of its right, title
\n and interest in all third-party distribution agreements in its name but
\n relating Exclusively to the Edwards Business conducted in Switzerland to
\n Edwards Lifesciences AG; and<\/p>\n
(ii) Baxter AG, Volketswil, will transfer to Edwards Swiss
\n Commissionaire all of its right, title and interest in certain assets and
\n the Assumed Liabilities related thereto in return for cash or other
\n consideration equal to the fair market value of such assets net of such
\n Assumed Liabilities, plus the assumption of such Assumed Liabilities.<\/p>\n
(c) Edwards Swiss Commissionaire.
\n —————————- <\/p>\n
(i) Edwards Lifesciences Marketing GmbH (“Edwards Swiss
\n ————-
\n Commissionaire”) shall be organized as a Swiss limited company (GmbH) and a
\n ————–
\n wholly-owned Subsidiary of Edwards EU Holdings; and<\/p>\n
(ii) Baxter Edwards shall transfer to Edwards Swiss Commissionaire
\n all of the sales employees relating to the Edwards Business conducted by
\n Baxter Edwards together with all of its right, title and interest in
\n certain related assets and liabilities in return for cash or other
\n consideration equal to the fair market value of such transferred assets net
\n of such assumed liabilities, plus the assumption of such assumed
\n liabilities.<\/p>\n
-34-<\/p>\n
3.17. EU Holdings (Denmark). Baxter and Edwards hereby agree to
\n ———————
\ntake any and all actions necessary to establish a holding company in Europe to
\nhold the stock of all of the Edwards European entities described in Sections
\n ——–
\n3.18 through 3.23, 3.25 and 3.26 below, as follows:
\n—- —- —- —-<\/p>\n
(a) Edwards Lifesciences Holding A\/S (“Edwards EU Holdings”) shall
\n ——————-
\nbe formed as a Danish corporation;<\/p>\n
(b) Baxter shall purchase all issued and outstanding capital stock
\n(500 shares) of Edwards EU Holdings from the organizer of Edwards EU Holdings
\nfor 500,000 Danish Krone (approximately $64,400 on March 7, 2000);<\/p>\n
(c) Baxter shall transfer to Baxter World Trade as a contribution
\nto capital all of its right, title and interest in and to the capital stock of
\nEdwards EU Holdings; and<\/p>\n
(d) Baxter World Trade shall transfer to Edwards World Trade as a
\ncontribution to capital all of its right, title and interest in and to the
\ncapital stock of Edwards EU Holdings.<\/p>\n
3.18. Germany. Baxter and Edwards hereby agree to take any and all
\n ——-
\nactions necessary to effect the transfer to Edwards World Trade of (i) all the
\nright, title and interest of Baxter Germany in and to the Transferred Assets and
\nthe Assumed Liabilities, which constitutes the Edwards Business conducted in
\nGermany; (ii) all the right, title and interest in PAS Palzer GmbH & Co. KG, a
\nGerman limited company (“Pas Palzer KG”), held by Baxter Germany; and (iii) all
\n ————-
\nthe right, title and interest in PAS Palzer Verwaltungs GmbH, a German limited
\ncompany (“Pas Palzer Verwaltungs”), held by Baxter Germany Holdings, all as
\n ———————-
\nfollows:<\/p>\n
(a) Edwards Germany Holdings.
\n ———————— <\/p>\n
(i) Edwards Lifesciences Holding Germany GmbH (“Edwards Germany
\n —————
\n Holdings”) shall be formed as a German limited company (GmbH); and
\n ——–<\/p>\n
(ii) Edwards EU Holdings shall purchase all issued and outstanding
\n capital stock (one share) of Edwards Germany Holdings from the organizer of
\n Edwards Germany Holdings for 25,000 Euro (approximately $24,000 on March 7,
\n 2000).<\/p>\n
(b) Edwards Germany.
\n ————— <\/p>\n
(i) Edwards Lifesciences Germany GmbH (“Edwards Germany”) shall be
\n —————
\n formed as a German limited company (GmbH);<\/p>\n
(ii) Edwards Germany Holdings shall purchase all issued and
\n outstanding capital stock (one share) of Edwards Germany from the organizer
\n of Edwards Germany for 25,000 Euro (approximately $24,000 on March 7,
\n 2000);<\/p>\n
(iii) Baxter Germany shall transfer to Edwards Germany all of its
\n right, title and interest in and to the Transferred Assets and the Assumed
\n Liabilities (except for inventory, which shall be transferred pursuant to
\n Sections 3.18(b)(iv) and (v), and
\n ——————– —<\/p>\n
-35-<\/p>\n
accounts receivable and accounts payable that are not capable of being
\n specifically separated between Baxter Germany and Edwards Germany, which
\n shall be Retained Assets and Retained Liabilities, respectively) as well as
\n its partnership interest in Pas Palzer KG in return for cash or other
\n consideration equal to the fair market value of such Transferred Assets and
\n partnership interest net of such Assumed Liabilities, plus the assumption
\n of such Assumed Liabilities;<\/p>\n
(iv) Baxter Germany shall transfer to Baxter Belgium all of its
\n right, title and interest in and to certain U.S. sourced inventory relating
\n Exclusively to the Edwards Business in Germany in return for cash or other
\n consideration equal to the fair market value of such inventory;<\/p>\n
(v) Baxter Germany shall transfer to Edwards Lifesciences AG all
\n other inventory relating Exclusively to the Edwards Business in Germany in
\n return for cash or other consideration equal to the fair market value of
\n such inventory;<\/p>\n
(vi) Baxter Germany Holdings shall transfer to Edwards Germany
\n Holdings all issued and outstanding capital stock (one share) of Pas Palzer
\n Verwaltungs in return for cash or other consideration equal to the fair
\n market value of such capital stock; and<\/p>\n
(vii) After the Distribution Date, Edwards Germany shall transfer to
\n Edwards Lifesciences AG all of its right, title and interest in and to the
\n accounts receivable held by Edwards Germany in return for cash or other
\n consideration equal to the fair market value of such accounts receivable.<\/p>\n
3.19. Austria. Baxter and Edwards hereby agree to take any and all
\n ——-
\nactions necessary to effect the transfer to Edwards World Trade of all of the
\nright, title and interest of Baxter Immuno Vertriebsgesellschaft GmbH, a company
\norganized under the laws of Austria (“Baxter Austria”), in and to the
\n ————–
\nTransferred Assets and the Assumed Liabilities, which constitutes the Edwards
\nBusiness conducted in Austria, as follows:<\/p>\n
(a) Edwards Lifesciences Austria GmbH (“Edwards Austria”) shall be
\n —————
\norganized as an Austrian limited company (GmbH) and a wholly-owned Subsidiary of
\nEdwards EU Holdings;<\/p>\n
(b) Baxter Austria shall transfer to Edwards Austria all of its
\nright, title and interest in and to the Transferred Assets and the Assumed
\nLiabilities (except for inventory) in return for cash or other consideration
\nequal to the fair market value of such Transferred Assets net of such Assumed
\nLiabilities, plus the assumption of such Assumed Liabilities;<\/p>\n
(c) Baxter Austria shall transfer to Edwards Lifesciences AG all of
\nits right, title and interest in and to all inventory relating Exclusively to
\nthe Edwards Business in Austria in return for cash or other consideration equal
\nto the fair market value of such inventory; and<\/p>\n
(d) After the Distribution Date, Edwards Austria shall transfer to
\nEdwards Lifesciences AG all of its right, title and interest in and to the
\naccounts receivable held by<\/p>\n
-36-<\/p>\n
Edwards Austria in return for cash or other consideration equal to the fair
\nmarket value of such accounts receivable.<\/p>\n
3.20. France. Baxter and Edwards hereby agree to take any and all
\n ——
\nactions necessary to effect the transfer to Edwards World Trade of all of the
\nright, title and interest of Baxter S.A. (France), a company organized under the
\nlaws of France (“Baxter France”), in and to the Transferred Assets and the
\n ————-
\nAssumed Liabilities, which constitutes the Edwards Business conducted in France,
\nas follows:<\/p>\n
(a) Edwards Lifesciences SAS (“Edwards France”) shall be organized
\n ————–
\nas a French SAS;<\/p>\n
(b) Baxter France shall transfer to Baxter Belgium all of its
\nright, title and interest in and to certain U.S. sourced inventory relating
\nExclusively to the Edwards Business in France in return for cash or other
\nconsideration equal to the fair market value of such inventory;<\/p>\n
(c) Baxter France shall transfer to Edwards Lifesciences AG all of
\nits right, title and interest in and to all other inventory relating Exclusively
\nto the Edwards Business in France in return for cash or other consideration
\nequal to the fair market value of such inventory;<\/p>\n
(d) Baxter France shall transfer to Edwards France all of its
\nright, title and interest in and to the Transferred Assets and the Assumed
\nLiabilities in return for 4,000 shares of capital stock of Edwards France;<\/p>\n
(e) Edwards France shall transfer to Edwards Lifesciences AG all of
\nits right, title and interest in and to all third-party distribution agreements
\nin its name but relating Exclusively to the Edwards Business conducted in
\nFrance;<\/p>\n
(f) Baxter France shall transfer to Edwards EU Holdings all of its
\nright, title and interest in and to the capital stock of Edwards France for cash
\nor other consideration equal to the fair market value of such capital stock; and<\/p>\n
(g) After the Distribution Date, Edwards France shall transfer to
\nEdwards Lifesciences AG all of its right, title and interest in and to the
\naccounts receivable held by Edwards France in return for cash or other
\nconsideration equal to the fair market value of such accounts receivable.<\/p>\n
3.21. Italy. Baxter and Edwards hereby agree to take any and all
\n —–
\nactions necessary to effect the transfer to Edwards World Trade of all of the
\nright, title and interest of Baxter S.p.A., a company organized under the laws
\nof Italy (“Baxter Italy”), in and to the Transferred Assets and the Assumed
\n ————
\nLiabilities, which constitutes the Edwards Business conducted in Italy, as
\nfollows:<\/p>\n
(a) Baxter Italy shall transfer to Edwards Lifesciences AG all of
\nits right, title and interest in and to the accounts receivable and inventory
\nrelating to the sale of products relating Exclusively to the Edwards Business
\nconducted in Italy in return for cash or other consideration equal to the fair
\nmarket value of such accounts receivable and inventory;<\/p>\n
-37-<\/p>\n
(b) Baxter World Trade and Baxter Export Corporation, as
\nshareholders of Baxter Italy, shall spin off the Transferred Assets and the
\nAssumed Liabilities, which constitutes the Edwards Business conducted in Italy,
\nthus creating a new company, under the name CVG Italia S.p.A. (“Edwards Italy”);
\n ————- <\/p>\n
(c) As a result, Baxter World Trade and Baxter Export Corporation
\nshall jointly own the entire share capital of Edwards Italy;<\/p>\n
(d) Simultaneously with the spin-off pursuant to Section 3.21(b),
\n —————
\nBaxter Italy shall transfer to Edwards Lifesciences AG all of its right, title
\nand interest in and to the accounts receivable relating to the sale of products
\nrelating Exclusively to the Edwards Business conducted in Italy created after
\nthe transfer pursuant to Section 3.21(a) in return for cash or other
\n —————
\nconsideration equal to the fair market value of such accounts receivable;<\/p>\n
(e) Edwards Italy shall transfer to Edwards Lifesciences AG all of
\nits right, title and interest in and to all third-party distribution agreements
\nin its name but relating Exclusively to the Edwards Business and the inventory
\nrelating Exclusively to the Edwards Business conducted in Italy in return for
\ncash or other consideration equal to the fair market value of such agreements
\nand inventory net of the Assumed Liabilities under such agreements, plus the
\nassumption of the Assumed Liabilities under such agreements;<\/p>\n
(f) Baxter World Trade shall transfer to Edwards World Trade as a
\ncontribution to capital all of its right, title and interest in and to the
\ncapital stock of Edwards Italy received pursuant to Sections 3.21(b) and (c);
\n —————- — <\/p>\n
(g) Edwards World Trade shall transfer to Edwards EU Holdings as a
\ncontribution to capital all of its right, title and interest in and to the
\ncapital stock of Edwards Italy received from Baxter World Trade pursuant to
\nSection 3.21(f);
\n————— <\/p>\n
(h) Baxter Export Corporation shall distribute to Baxter World
\nTrade all of its right, title and interest in and to the capital stock of
\nEdwards Italy received pursuant to Sections 3.21(b) and (c);
\n —————- — <\/p>\n
(i) Baxter World Trade shall transfer to Edwards World Trade as a
\ncontribution to capital all of its right, title and interest in and to the
\ncapital stock of Edwards Italy received from Baxter Export Corporation pursuant
\nto Section 3.21(h); and
\n ————— <\/p>\n
(j) Edwards World Trade shall transfer to Edwards Holdings
\nSwitzerland as a contribution to capital all of its right, title and interest in
\nand to the capital stock of Edwards Italy received from Baxter World Trade
\npursuant to Section 3.21(i).
\n —————<\/p>\n
3.22. Belgium\/Luxembourg. Baxter and Edwards hereby agree to take
\n ——————
\n any and all actions necessary to effect the transfer to Edwards World Trade of
\nall of the right, title and interest of Baxter S.A. (Belgium), a company
\norganized under the laws of Belgium (“Baxter Belgium”), in and to the
\n ————–
\nTransferred Assets and the Assumed Liabilities, which constitutes the Edwards
\nBusiness conducted in Belgium and Luxembourg, as follows:<\/p>\n
-38-<\/p>\n
(a) Edwards Lifesciences S.P.R.L. (“Edwards Belgium”) shall be
\n —————
\norganized as a Belgian SPRL with Raymond Lauret as a 0.08% holder and Edwards EU
\nHoldings as a 99.92% holder;<\/p>\n
(b) Baxter Belgium shall transfer to Edwards Belgium all of its
\nright, title and interest in and to the Transferred Assets and the Assumed
\nLiabilities, in return for cash or other consideration equal to the fair market
\nvalue of such Transferred Assets net of such Assumed Liabilities, plus the
\nassumption of such Assumed Liabilities;<\/p>\n
(c) Edwards Belgium shall transfer to Edwards Lifesciences AG all
\nof its right, title and interest in and to the inventory relating Exclusively to
\nthe Edwards Business in Germany, France, Belgium, Luxembourg, the Netherlands,
\nAustria and the U.K. in return for cash or other consideration equal to the fair
\nmarket value of such inventory; and<\/p>\n
(d) After the Distribution Date, Edwards Belgium shall transfer to
\nEdwards Lifesciences AG all of its right, title and interest in and to the
\naccounts receivable held by Edwards Belgium in return for cash or other
\nconsideration equal to the fair market value of such accounts receivable.<\/p>\n
3.23. Netherlands. Baxter and Edwards hereby agree to take any and
\n ———–
\nall actions necessary to effect the transfer to Edwards World Trade of all of
\nthe right, title and interest of Baxter B.V., a company organized under the laws
\nof the Netherlands ( “Baxter Netherlands”), in and to the Transferred Assets and
\n ——————
\nthe Assumed Liabilities, which constitutes the Edwards Business conducted in the
\nNetherlands, except for the Uden Manufacturing Facility, as follows:<\/p>\n
(a) Edwards Lifesciences BV (“Edwards Netherlands”) shall be
\n ——————-
\norganized as a Dutch corporation and a wholly-owned Subsidiary of Edwards EU
\nHoldings;<\/p>\n
(b) Baxter Netherlands shall transfer to Edwards Netherlands all of
\nits right, title and interest in and to the Transferred Assets and the Assumed
\nLiabilities (except for inventory, third-party distribution agreements and the
\nUden Manufacturing Facility) in return for cash or other consideration equal to
\nthe fair market value of such Transferred Assets net of such Assumed
\nLiabilities, plus the assumption of such Assumed Liabilities;<\/p>\n
(c) Baxter Netherlands shall transfer to Baxter Belgium all of its
\nright, title and interest in and to certain U.S. sourced inventory relating
\nExclusively to the Edwards Business in the Netherlands in return for cash or
\nother consideration equal to the fair market value of such inventory;<\/p>\n
(d) Baxter Netherlands shall transfer to Edwards Lifesciences AG all
\nof its right, title and interest in and to all third-party distribution
\nagreements in its name but relating Exclusively to the Edwards Business
\nconducted in the Netherlands;<\/p>\n
(e) Baxter Netherlands shall transfer to Edwards Lifesciences AG all
\nof its right, title and interest in and to all other inventory relating
\nExclusively to the Edwards Business<\/p>\n
-39-<\/p>\n
in the Netherlands in return for cash or other consideration equal to the fair
\nmarket value of such inventory; and<\/p>\n
(f) After the Distribution Date, Edwards Netherlands shall transfer
\nto Edwards Lifesciences AG all of its right, title and interest in and to the
\naccounts receivable held by Edwards Netherlands in return for cash or other
\nconsideration equal to the fair market value of such accounts receivable.<\/p>\n
3.24. Uden. Baxter and Edwards hereby agree to take any and all
\n —-
\nactions necessary to effect the transfer to Edwards World Trade of all of the
\nright, title and interest of Baxter Netherlands in the manufacturing facility in
\nUden that produces Edwards Products and all of the Transferred Assets plus the
\nassumption of such Assumed Liabilities related thereto (the “Uden Manufacturing
\n ——————
\nFacility”), as follows:
\n——– <\/p>\n
(a) Edwards Lifesciences Uden BV (“Edwards Uden”) shall be
\n ————
\norganized as a Dutch corporation and a wholly-owned Subsidiary of Edwards World
\nTrade; and<\/p>\n
(b) Baxter Netherlands shall transfer to Edwards Uden all of its
\nright, title and interest in and to the Uden Manufacturing Facility in return
\nfor cash or other consideration equal to the fair market value of the Uden
\nManufacturing Facility net of the Assumed Liabilities included therein, plus the
\nassumption of the Assumed Liabilities included therein.<\/p>\n
3.25. Spain. Baxter and Edwards hereby agree to take any and all
\n —–
\nactions necessary to effect the transfer to Edwards World Trade of all of the
\nright, title and interest of Baxter S.L. (Spain), a company organized under the
\nlaws of Spain (“Baxter Spain”), in and to the Transferred Assets and the Assumed
\n ————
\nLiabilities, which constitutes the Edwards Business conducted in Spain, as
\nfollows:<\/p>\n
(a) Edwards Lifesciences, S.L. (“Edwards Spain”) shall be
\n ————-
\norganized as a Spanish Sociedad Limitada and a wholly-owned Subsidiary of
\nEdwards EU Holdings;<\/p>\n
(b) Baxter Spain shall transfer to Edwards Spain all of its right,
\ntitle and interest in and to the Transferred Assets and the Assumed Liabilities
\n(except for inventory and third-party distribution agreements) in return for
\ncash or other consideration equal to the fair market value of such Transferred
\nAssets net of such Assumed Liabilities, plus the assumption of such Assumed
\nLiabilities;<\/p>\n
(c) Baxter Spain shall transfer to Edwards Lifesciences AG all of
\nits right, title and interest in and to the inventory relating Exclusively to
\nthe Edwards Business in Spain in return for cash or other consideration equal to
\nthe fair market value of such inventory;<\/p>\n
(d) Baxter Spain shall transfer to Edwards Lifesciences AG all of
\nits right, title and interest in and to all third-party distribution agreements
\nin its name but relating Exclusively to the Edwards Business conducted in Spain;
\nand<\/p>\n
(e) After the Distribution Date, Edwards Spain shall transfer to
\nEdwards Lifesciences AG all of its right, title and interest in and to the
\naccounts receivable held by<\/p>\n
-40-<\/p>\n
Edwards Spain in return for cash or other consideration equal to the fair market
\nvalue of such accounts receivable.<\/p>\n
3.26. United Kingdom. Baxter and Edwards hereby agree to take any
\n ————–
\nand all actions necessary to effect the transfer to Edwards World Trade of all
\nof the right, title and interest of Baxter Healthcare Ltd., a company organized
\nunder the laws of England (“Baxter U.K.”), in and to the Transferred Assets and
\n ———–
\nthe Assumed Liabilities, which constitutes the Edwards Business conducted in the
\nUnited Kingdom, as follows:<\/p>\n
(a) Edwards Lifesciences Limited (“Edwards U.K.”) shall be
\n ————
\norganized as an English limited liability company and a wholly-owned Subsidiary
\nof Edwards EU Holdings;<\/p>\n
(b) Baxter U.K. shall transfer to Edwards U.K. all of its right,
\ntitle and interest in and to the Transferred Assets and the Assumed Liabilities
\n(except for inventory and third-party distribution agreements), in return for
\ncash or other consideration equal to the fair market value of such Transferred
\nAssets net of such Assumed Liabilities, plus the assumption of such Assumed
\nLiabilities;<\/p>\n
(c) Baxter U.K. shall transfer to Edwards Lifesciences AG all of
\nits right, title and interest in and to all third-party distribution agreements
\nin its name but relating Exclusively to the Edwards Business conducted in the
\nUnited Kingdom;<\/p>\n
(d) Baxter U.K. shall transfer to Edwards Lifesciences AG all of
\nits right, title and interest in and to all inventory relating Exclusively to
\nthe Edwards Business in the United Kingdom in return for cash or other
\nconsideration equal to the fair market value of such inventory; and<\/p>\n
(e) After the Distribution Date, Edwards U.K. shall transfer to
\nEdwards Lifesciences AG all of its right, title and interest in and to the
\naccounts receivable held by Edwards U.K. in return for cash or other
\nconsideration equal to the fair market value of such accounts receivable.<\/p>\n
3.27. Restrictions on Intercompany Debt. Neither Baxter nor any
\n ———————————
\nAffiliate of Baxter shall make any Loan, other than in the ordinary course of
\nbusiness, to any Edwards Foreign Entity from March 15, 2000 through the
\nDistribution Date, except as specifically contemplated by this Agreement.<\/p>\n
3.28. Transfer of Assets. Subject to the terms and conditions of
\n ——————
\nthis Agreement, Baxter hereby agrees to convey, assign, transfer, contribute and
\nset over, or cause to be conveyed, assigned, transferred, contributed and set
\nover, to Edwards World Trade on or prior to the Distribution Date all of Baxter
\nWorld Trade’s right, title and interest in and to the Transferred Assets, if
\nany.<\/p>\n
3.29. Transfer of Liabilities. Subject to the terms and conditions
\n ———————–
\n of this Agreement, Edwards shall cause Edwards World Trade to assume, effective
\nas of the Distribution Date, and pay, comply with and discharge all Assumed
\nLiabilities of Baxter World Trade.<\/p>\n
-41-<\/p>\n
3.30. Transfer of Edwards World Trade to Baxter. Baxter and Edwards
\n —————————————–
\nhereby agree to take, or cause to be taken, any and all actions necessary to
\neffect the declaration of a dividend by Baxter World Trade to Baxter of all of
\nBaxter World Trade’s right, title and interest in and to the common stock of
\nEdwards World Trade.<\/p>\n
3.31. Edwards Holdings Switzerland. After the Distribution Date,
\n —————————-
\nEdwards Lifesciences Holding (Switzerland) AG (“Edwards Holdings Switzerland”)
\n —————————-
\nshall be formed as a Swiss corporation, and Edwards World Trade shall transfer
\nto Edwards Holdings Switzerland all of its right, title and interest in and to
\nthe capital stock of Edwards Lifesciences AG, Edwards EU Holdings and Edwards
\nUden in exchange for newly issued shares of capital stock of Edwards Holdings
\nSwitzerland.<\/p>\n
3.32. Transfer of Inventory. Prior to the Distribution Date, the
\n ———————
\ninventory, if any, relating Exclusively to the Edwards Business in the following
\ncountries and regions shall be transferred from the applicable Baxter
\nSubsidiaries to third-party distributors: Malta, Portugal, Bahrain, Kuwait,
\nQatar, Yemen, United Arab Emirates, Oman, Central America, China and Hong Kong
\n(U.S. $ sales only), Taiwan, Pakistan, Sri Lanka, Bangladesh, Nepal, Singapore,
\nBrunei, Indonesia, Malaysia, Thailand, Vietnam, Laos, Cambodia, Myanmar and the
\nPhilippines.<\/p>\n
ARTICLE IV<\/p>\n
TRANSFERS TO EDWARDS U.S. OPERATING SUBSIDIARY
\n ———————————————-<\/p>\n
4.1. Organization of Edwards U.S. Operating Subsidiary. (a) Baxter
\n ————————————————-
\nhas caused to be formed, under the Limited Liability Company Act of Delaware,
\nEdwards Lifesciences LLC (“Edwards LLC”), as a wholly-owned Subsidiary of BHC.
\n ———–
\nEdwards LLC has been qualified as a foreign limited liability company under the
\nrelevant laws of each state within the United States and in each jurisdiction
\noutside the United States where the ownership of its assets or conduct of its
\nbusiness makes such qualification necessary.<\/p>\n
(b) Baxter has caused to be formed, under the General Corporation
\nLaw of Delaware, Edwards Lifesciences (U.S.) Inc. (“Edwards U.S.”), as a wholly-
\n ————
\nowned Subsidiary of BHC. Edwards U.S. has been qualified as a foreign
\ncorporation under the relevant laws of each state within the United States and
\nin each jurisdiction outside the United States where the ownership of its assets
\nor conduct of its business makes such qualification necessary.<\/p>\n
4.2. Transfer of Assets. Subject to the terms and conditions of this
\n ——————
\nAgreement, on or prior to the Distribution Date, Baxter shall convey, assign,
\ntransfer, contribute and set over, or cause to be conveyed, assigned,
\ntransferred, contributed and set over, to Edwards LLC, and Edwards shall cause
\nEdwards LLC to accept and receive, on or prior to the Distribution Date:<\/p>\n
(a) all right, title and interest of BHC in and to the Transferred
\nAssets (other than intangible assets included in the Transferred Assets);<\/p>\n
(b) all of the right, title and interest of Baxter Export
\nCorporation in inventory relating Exclusively to the Edwards Business, accounts
\nreceivable relating to the purchase of<\/p>\n
-42-<\/p>\n
products relating Exclusively to the Edwards Business and accounts receivable
\ndue from Macchi in return for cash or other consideration equal to the fair
\nmarket value of such inventory and accounts receivable; and<\/p>\n
(c) all right, title and interest of Baxter Export Division of Baxter
\nAlaska in accounts receivable due from Macchi in return for cash or other
\nconsideration equal to the fair market value of such accounts receivable.<\/p>\n
4.3. Transfer of Third-Party Distribution Contracts. Subject to the
\n ———————————————-
\nterms and conditions of this Agreement, Baxter shall cause the foreign
\nSubsidiaries of Baxter World Trade listed on Schedule 4.3 hereto (the “Foreign
\n ———— ——-
\nSubsidiaries”) to convey, assign, transfer, contribute and set over to Edwards
\n————
\nLLC, and Edwards shall cause Edwards LLC to accept and receive, on or prior to
\nthe Distribution Date, all right, title and interest of the Foreign Subsidiaries
\nin and to the third-party distribution contracts relating to the purchase of
\nproducts relating Exclusively to the Edwards Business, all accounts receivable
\nand accounts payable relating to such sales activity, except as indicated on
\nSchedule 4.3, in return for cash or other consideration equal to the fair market
\n————
\nvalue of such contracts and accounts receivable net of such accounts payable and
\nthe Assumed Liabilities under such contracts, plus the assumption of such
\naccounts payable and the Assumed Liabilities under such contracts.<\/p>\n
4.4. Assumption of Liabilities. Except as expressly limited in this
\n ————————-
\nArticle IV, Edwards shall cause one or more of its Subsidiaries to assume,
\n———-
\neffective on or before the Distribution Date, and pay, comply with and discharge
\nthe Assumed Liabilities.<\/p>\n
4.5. Transfer of Intangibles and Operating Subsidiaries. Baxter and
\n ————————————————–
\nEdwards hereby agree to take, or cause to be taken, any and all actions
\nnecessary to cause BHC to contribute to Edwards U.S., in exchange for all of the
\ncapital stock of Edwards U.S. together with the assumption by Edwards U.S. of
\n$125 million of debt owed by BHC to Baxter World Trade, (i) all of BHC’s right,
\ntitle and interest in and to the intangible assets included in the Transferred
\nAssets, (ii) all of BHC’s right, title and interest in and to the membership
\ninterests of Edwards LLC and (iii) all of BHC’s right, title and interest in and
\nto the capital stock of Edwards Lifesciences Cardiovascular Resources, Inc., a
\nPennsylvania corporation; in each case, on or prior to the Distribution Date and
\nat the approximate time and in the order described on Schedule 3.1.
\n ———— <\/p>\n
ARTICLE V<\/p>\n
ORGANIZATION OF EDWARDS LIFESCIENCES CORPORATION
\n ————————————————<\/p>\n
5.1. Organization of Edwards. Baxter and Edwards shall take any and
\n ———————–
\nall action necessary so that, on the Distribution Date, the Certificate of
\nIncorporation and By-laws of Edwards shall be in the forms attached hereto as
\nExhibits E and F, respectively. Prior to the Distribution Date, the Board of
\n———- –
\nDirectors of Edwards shall consider the adoption of a stockholder rights plan in
\nsubstantially the form attached hereto as Exhibit G. On the Distribution Date,
\n ———
\nthe Edwards Board of Directors shall consist of, and Baxter and Edwards shall
\ntake all actions that may be required to elect or otherwise appoint as directors
\nof Edwards on or prior to the<\/p>\n
-43-<\/p>\n
Distribution Date, the persons named on Exhibit H. Edwards has taken appropriate
\naction to be qualified as a foreign corporation under the General Corporation
\nLaw of California.<\/p>\n
5.2. Transfer of Certain Subsidiaries. Baxter and Edwards hereby
\n ——————————–
\nagree to take, or cause to be taken, any and all actions necessary to effect the
\nfollowing transactions, on or prior to the Distribution Date and at the
\napproximate times described in Schedule 3.1:
\n ———— <\/p>\n
(a) BHC shall distribute as a dividend to Baxter all of BHC’s right,
\ntitle and interest in and to the capital stock of Edwards U.S.; and<\/p>\n
(b) Baxter shall contribute to Edwards, in exchange for the
\nassumption by Edwards of $65 million of debt owed by Baxter to Baxter Hemoglobin
\nTherapeutics, Inc., a Delaware corporation, all of Baxter’s right, title and
\ninterest in and to the capital stock of (i) Edwards U.S., (ii) Edwards World
\nTrade, (iii) Edwards Lifesciences Research Medical, Inc., a Utah corporation,
\nand (iv) Edwards Lifesciences Sub Inc., a Delaware corporation.<\/p>\n
5.3. Transfer of Assets. Subject to the terms and conditions of this
\n ——————
\nAgreement, Baxter hereby agrees to convey, assign, transfer, contribute and set
\nover, or cause to be conveyed, assigned, transferred, contributed and set over,
\nto Edwards on or prior to the Distribution Date, all of Baxter’s right, title
\nand interest in and to the Transferred Assets.<\/p>\n
5.4. Transfer of Liabilities. Subject to the terms and conditions of
\n ———————–
\nthis Agreement, Edwards shall assume, or cause to be assumed, effective as of
\nthe Distribution Date, and pay, comply with and discharge, or cause to be paid,
\ncomplied with or discharged, all Assumed Liabilities of Baxter.<\/p>\n
ARTICLE VI<\/p>\n
EXCLUSIONS FROM TRANSFERS
\n ————————-<\/p>\n
6.1. Retained Assets. Notwithstanding anything to the contrary
\n —————
\nherein, the following assets (the “Retained Assets”) are not, and shall not be
\n —————
\ndeemed to be, Transferred Assets:<\/p>\n
(a) Subject to Section 9.6(e), cash and cash equivalents, any cash
\n ————–
\non hand or in bank accounts, certificates of deposit, commercial paper and
\nsimilar securities, except for (i) cash and cash equivalents of the Transferred
\nSubsidiaries, (ii) deposits securing bonds, letters of credit, leases and all
\nother obligations related to the Edwards Business and (iii) petty cash and
\nimpressed funds related to the Edwards Business;<\/p>\n
(b) Except as otherwise provided in the Tax Sharing Agreement, any
\nright, title or interest of Baxter or its Subsidiaries in any foreign, federal,
\nstate or local tax refund, credit or benefit (including any income with respect
\nthereto) relating to the operations of the Edwards Business prior to the
\nDistribution Date;<\/p>\n
(c) Any amounts accrued on the books and records of Baxter or its
\nSubsidiaries or the Edwards Business with respect to any Retained Liabilities;<\/p>\n
-44-<\/p>\n
(d) All assets relating to all employee benefit plans of Baxter
\nother than the assets transferred in accordance with Section 12.9;
\n ———— <\/p>\n
(e) Any corporate allocations of non-Edwards Business-related assets
\nheretofore made by Baxter or its Subsidiaries to the Edwards Business for
\ninternal management responsibility reporting purposes, other than allocations of
\naccounts receivable and accounts payable as contemplated by Section 9.7(c);
\n ————– <\/p>\n
(f) Any proprietary rights in and to the BAXTER name and the related
\nemblem design, and any variants thereof, and the Trademarks used by Baxter or
\nits Subsidiaries in relation to the Retained Business, except as provided in
\nArticle X;
\n——— <\/p>\n
(g) All assets held by Baxter Japan;<\/p>\n
(h) Contracts with customers or third-party distributors in or with
\nrespect to the countries or regions listed on Schedule 6.1(h) hereto (which are
\n —————
\nthe countries and regions where Baxter, as principal, is serving as the
\ndistributor for Edwards Products) together with the accounts receivable and all
\nother rights, claims, demands, causes of action and rights to indemnification or
\ncontribution under such Contracts and the inventory (including inventory in
\ntransit) in such countries or regions;<\/p>\n
(i) All assets used in connection with Baxter’s Tisseal product;<\/p>\n
(j) The accounts receivable of Baxter Germany that are not capable
\nof being specifically separated between Baxter Germany and Edwards Germany; and<\/p>\n
(k) All other assets, properties and rights of Baxter and its
\nSubsidiaries not used Exclusively in the conduct of the Edwards Business and not
\nspecifically included as Transferred Assets.<\/p>\n
6.2. Retained Liabilities. Notwithstanding anything to the contrary
\n ——————–
\nin this Agreement, neither Edwards nor any of its Subsidiaries shall assume any
\nof the following Liabilities of Baxter and its Subsidiaries (the “Retained
\n ——–
\nLiabilities”):
\n———– <\/p>\n
(a) Liabilities of Baxter Japan;<\/p>\n
(b) The environmental liabilities set forth on Schedule 6.2 hereto;
\n ———— <\/p>\n
(c) The accounts payable relating to sales activity in the
\ncountries and regions listed on Schedule 6.1(h);
\n ————— <\/p>\n
(d) Any Liabilities relating to the Cessna Citation VII aircraft,
\nmanufacturer’s serial number 650-7085, listed on Schedule 1.2(f) accrued on or
\n —————
\nbefore February 3, 2000, but not including any Liabilities under any Edwards
\nContracts other than Liabilities required to be performed on or before such
\ndate;<\/p>\n
(e) Any Liabilities relating to the Cessna Citation VII aircraft,
\nmanufacturer’s serial number 650-7081, listed on Schedule 1.2(f) accrued on or
\n —————
\nbefore the Distribution Date, but <\/p>\n
-45-<\/p>\n
not including any Liabilities under any Edwards Contracts other than Liabilities
\nrequired to be performed on or before such date;<\/p>\n
(f) The accounts payable of Baxter Germany that are not capable of
\nbeing specifically separated between Baxter Germany and Edwards Germany; and<\/p>\n
(g) Liabilities or obligations in respect of the Retained Assets.<\/p>\n
Nothing contained in this Section 6.2 shall be construed as in any way limiting
\n ———–
\nthe Liabilities of Edwards or any of its Subsidiaries under any of the Operating
\nAgreements.<\/p>\n
6.3. Termination of Existing Intercompany Agreements. Except for
\n ———————————————–
\nthis Agreement, the Conveyancing Instruments, the Implementation Agreements, the
\nOperating Agreements and the agreements set forth on Schedule 6.3 (or as
\n ————
\notherwise provided in any such agreements or instruments) and except for the
\npayable from Edwards Lifesciences AG to Baxter Belgium in respect of the
\ninventory transferred pursuant to Section 3.22(c), all Intercompany Agreements
\n —————
\nand all other intercompany arrangements and course of dealings, whether or not
\nin writing and whether or not binding, in effect immediately prior to the
\nDistribution Date, shall be terminated and be of no further force and effect
\nfrom and after the Distribution Date.<\/p>\n
ARTICLE VII<\/p>\n
ASSET SEPARATION CLOSING MATTERS
\n ——————————–<\/p>\n
7.1. Delivery of Instruments of Conveyance. In order to effectuate
\n ————————————-
\nthe transactions contemplated by Articles III, IV and V, the Parties shall
\n ———— — –
\nexecute and deliver, or cause to be executed and delivered, prior to or as of
\nthe Distribution Date such deeds, bills of sale, instruments of assumption,
\ninstruments of assignment, stock powers, certificates of title and other
\ndocuments of assignment, transfer, assumption and conveyance (collectively, the
\n“Conveyancing Instruments”) as the Parties shall reasonably deem necessary or
\n ————————
\nappropriate to effect such transactions.<\/p>\n
7.2. Delivery of Other Agreements. Prior to or as of the
\n —————————-
\nDistribution Date, the Parties shall execute and deliver, or shall cause to be
\nexecuted and delivered, each of the Implementation Agreements, the Operating
\nAgreements and the Tax Sharing Agreement.<\/p>\n
7.3. Non-Assignable Contracts. In the event and to the extent that
\n ————————
\nBaxter and its Subsidiaries are unable to obtain any consent, approval or
\namendment to any Contract, lease, license, Governmental Permit or other rights
\nrelating to the Edwards Business that otherwise would be transferred or assigned
\nto Edwards or one of its Subsidiaries as contemplated by this Agreement or any
\nother agreement or document contemplated hereby, (i) Baxter and its Subsidiaries
\nshall continue to be bound thereby and the purported transfer or assignment to
\nEdwards or one of its Subsidiaries shall automatically be deemed deferred until
\nsuch time as all legal impediments are removed and\/or all necessary consents
\nhave been obtained and\/or a new Governmental Permit in the name of Edwards or
\none of its Subsidiaries or its designee have been issued and (ii) unless not
\npermitted by the terms thereof or by law, Edwards or one of its Subsidiaries
\nshall pay, perform and discharge fully all the obligations of Baxter or its<\/p>\n
-46-<\/p>\n
Subsidiaries thereunder from and after the Distribution Date, or such earlier
\ndate as such transfer or assignment otherwise would have taken place. Edwards
\nshall indemnify Baxter and its Subsidiaries for all indemnifiable Losses arising
\nout of the performance by Edwards or its Subsidiaries referred to in the
\npreceding sentence or any actions of Baxter or any of its Subsidiaries taken in
\naccordance with this Section 7.3 or at the direction or request of Edwards as
\n ———–
\nprovided in this Section 7.3. Baxter and its Subsidiaries shall, without
\n ———–
\nfurther consideration therefor, pay and remit to Edwards or its Subsidiaries
\npromptly all monies, rights and other considerations received in respect of such
\nperformance. Baxter and its Subsidiaries shall exercise or exploit its rights
\nand options under all such Contracts, leases, licenses, Governmental Permits and
\nother rights and commitments referred to in this Section 7.3, including
\n ———–
\ninstituting or joining as a party legal proceedings, as reasonably directed by
\nEdwards and at Edwards’ expense. If and when any such consent shall be obtained
\nor such Contract, lease, license, Governmental Permit or other right shall
\notherwise become assignable or be able to be novated or a new Governmental
\nPermit has been issued in the name of Edwards or one of its Subsidiaries or its
\ndesigned, Baxter or its Subsidiaries shall promptly assign and novate (to the
\nextent permissible) all of its rights and obligations thereunder to Edwards or
\nits Subsidiaries without payment of further consideration, and Edwards or its
\nSubsidiaries shall, without the payment of any further consideration therefor,
\nassume such rights and obligations. To the extent that the assignment of any
\nContract, lease, license, Governmental Permit or other right (or the proceeds
\nthereof) pursuant to this Section 7.3 is prohibited by law, the assignment
\n ———–
\nprovisions of this Section 7.3 shall operate to create a subcontract with
\n ———–
\nEdwards or its Subsidiaries to perform each relevant unassignable Contract or
\nGovernmental Permit of Baxter at a subcontract price equal to the monies, rights
\nand other considerations received by Baxter or its Subsidiaries with respect to
\nthe performance by Edwards or its Subsidiaries under such subcontract.<\/p>\n
7.4. Further Assurances. (a) In addition to the actions specifically
\n ——————
\nprovided for elsewhere in this Agreement, each of the Parties shall use
\ncommercially reasonable efforts to take, or cause to be taken, all actions and
\nto do, or cause to be done, all things reasonably necessary, proper or advisable
\nunder applicable laws, regulations and agreements to consummate and make
\neffective, in the most expeditious manner practicable, the transactions
\ncontemplated by this Agreement and the other agreements and documents
\ncontemplated hereby. Without limiting the generality of the foregoing, each
\nParty shall cooperate with the other Party to execute and deliver, or use
\ncommercially reasonable efforts to cause to be executed and delivered, all
\ninstruments, including instruments of conveyance, assignment and transfer, and
\nto make all filings with, and to obtain all consents, approvals or
\nauthorizations of, any Governmental Authority or any other Person under any
\npermit, license, product registration, Contract or other instrument, and to take
\nall such other actions as such Party may reasonably be requested to take by the
\nother Party from time to time, consistent with the terms of this Agreement, in
\norder to confirm the title of Edwards and its Subsidiaries to all of the Edwards
\nBusiness, to put Edwards or its Subsidiaries in actual possession and operating
\ncontrol of the Transferred Assets and to permit Edwards or its Subsidiaries to
\nexercise all rights with respect thereto and to effectuate the provisions and
\npurposes of this Agreement, the Conveyancing Instruments, the Implementation
\nAgreements, the Operating Agreements, the Tax Sharing Agreement and the other
\nagreements and documents contemplated hereby or thereby; provided, however, that
\n ——– ——-
\nneither Party shall be obligated to pay any consideration to any third-party in
\nconnection with the foregoing. In addition, Baxter shall use reasonable efforts
\nto remove or cause to be removed any liens for <\/p>\n
-47-<\/p>\n
borrowed money existing on the Transferred Assets immediately prior to the
\nDistribution Date other than liens securing Assumed Liabilities or liens
\nincurred in connection with the transactions contemplated by this Agreement.<\/p>\n
(b) If, as a result of mistake, oversight or otherwise, any asset
\nreasonably necessary to the conduct of the Edwards Business is not transferred
\nto Edwards or one of its Subsidiaries, or any asset reasonably necessary to the
\nconduct of the Retained Business is transferred to Edwards or one of its
\nSubsidiaries, Baxter and Edwards shall negotiate in good faith after the
\nDistribution Date to determine whether such asset should be transferred to
\nEdwards or one of its Subsidiaries or to Baxter or one of its Subsidiaries, as
\nthe case may be, and\/or the terms and conditions upon which such asset shall be
\nmade available to Edwards or one of its Subsidiaries or to Baxter or one of its
\nSubsidiaries, as the case may be. Unless expressly provided to the contrary in
\nthis Agreement, the Conveyancing Instruments, the Implementation Agreements, the
\nOperating Agreements or the Tax Sharing Agreement, if as a result of mistake,
\noversight or otherwise, any Liability arising out of or relating to the Edwards
\nBusiness is retained by Baxter or its Subsidiaries, or any Liability arising out
\nof or relating to the Retained Business is assumed by Edwards or its
\nSubsidiaries, Baxter and Edwards shall negotiate in good faith after the
\nDistribution Date to determine whether such Liability should be transferred to
\nEdwards or one of its Subsidiaries or Baxter or one of its Subsidiaries, as the
\ncase may be, and\/or the terms and conditions upon which any such Liability shall
\nbe transferred. The Parties agree that the terms and conditions upon which any
\nassets or Liabilities are made available or assumed as provided in this Section
\n ——-
\n7.4(b) shall be consistent with the terms of this Agreement, the Implementation
\n——
\nAgreements, the Operating Agreements and the Tax Sharing Agreement and that it
\nis not intended for either Party to pay or receive additional consideration for
\nany such transfer if such consideration would not have been paid or received if
\nsuch transfer had been identified and made at the time of the Distribution.<\/p>\n
(c) If, after the Distribution Date, either Party identifies any
\ncommercial or other service, product or component that can be provided by the
\nother Party, that is needed to assure a smooth and orderly transition of the
\nbusinesses in connection with the consummation of the transactions contemplated
\nhereby, and that is not otherwise governed by the provisions of this Agreement,
\nthe Implementation Agreements, the Operating Agreements or the Tax Sharing
\nAgreement, the Parties will cooperate in determining whether there is a mutually
\nacceptable arm’s-length basis, consistent with the terms of the this Agreement,
\nthe Implementation Agreements, the Operating Agreements and the Tax Sharing
\nAgreement, on which one Party will provide such service to the other Party.<\/p>\n
7.5. Novation of Assumed Liabilities. (a) Edwards or its Subsidiaries,
\n ——————————-
\nat the request of Baxter or its Subsidiaries, shall use commercially reasonable
\nefforts to obtain, or cause to be obtained, any consent, approval, release,
\nsubstitution or amendment required to novate (including with respect to any
\nfederal government contract) or assign all obligations under the Assumed
\nLiabilities, or to obtain in writing the unconditional release of all parties to
\nsuch arrangements other than Edwards or its Subsidiaries; provided, however,
\n ——– ——-
\nthat Edwards and its Subsidiaries shall not be obligated to pay any
\nconsideration therefor to any third-party from whom such consents, approvals,
\nreleases, substitutions or amendments are requested.<\/p>\n
-48-<\/p>\n
(b) Edwards agrees to promptly provide Baxter, upon written request,
\nwith a list of Contracts included in the Transferred Assets under which Baxter
\nor one of its Subsidiaries remains liable and which has a base term that is
\nsubject to automatic renewal or renewal in the absence of notice at the option
\nof Edwards or one of its Subsidiaries. Edwards agrees that if so requested by
\nBaxter with respect to any individual Contract or Contracts included on such
\nlist or which should have been included on such list, it will not exercise any
\noption to renew such Contract and, to the extent such Contract provides for
\nautomatic renewal, Edwards agrees that it will not permit such Contract to enter
\nan auto-renewal period.<\/p>\n
7.6. Nominee Shares. Baxter agrees to use commercially reasonable
\n ————–
\nefforts to cause to be transferred to, or as directed by, Edwards all director’s
\nqualifying or other shares of capital stock of any of the Transferred
\nSubsidiaries held as of the Distribution Date by persons who are not Edwards
\nEmployees. Edwards agrees to use commercially reasonable efforts to cause to be
\ntransferred to, or as directed by, Baxter all director’s qualifying or other
\nshares of capital stock of any Baxter Subsidiary other than Edwards and the
\nTransferred Subsidiaries held as of the Distribution Date by Edwards Employees.<\/p>\n
7.7. Provision of Corporate Records. Prior to or as promptly as
\n ——————————
\npracticable after the Distribution Date, Baxter shall deliver to Edwards all
\ncorporate books and records of Edwards and copies of all corporate books and
\nrecords of Baxter relating to the Edwards Business, including in each case all
\nactive agreements, litigation files and government filings. From and after the
\nDistribution Date, all books, records and copies so delivered shall be the
\nproperty of Edwards.<\/p>\n
ARTICLE VIII<\/p>\n
REPRESENTATIONS AND WARRANTIES
\n ——————————<\/p>\n
8.1. Organization, Good Standing and Authority of Baxter. Baxter
\n —————————————————
\nhereby represents and warrants to Edwards as follows: Baxter is a corporation
\nduly organized, validly existing and in good standing under the laws of the
\nState of Delaware. Baxter has full power and authority to execute, deliver and
\nperform this Agreement. The execution, delivery and performance of this
\nAgreement by Baxter have been duly authorized and approved by Baxter’s Board of
\nDirectors and do not require any further authorization or consent of Baxter or
\nits stockholders. This Agreement has been duly authorized, executed and
\ndelivered by Baxter.<\/p>\n
8.2. Organization, Good Standing and Authority of Edwards. Edwards
\n —————————————————-
\nrepresents and warrants to Baxter as follows: Edwards is a corporation duly
\norganized, validly existing and in good standing under the laws of the State of
\nDelaware. Edwards has full power and authority to execute, deliver and perform
\nthis Agreement. The execution, delivery and performance of this Agreement by
\nEdwards has been duly authorized and approved by Edwards’ Board of Directors and
\ndo not require any further authorization or consent of Edwards or its
\nstockholder. This Agreement has been duly authorized, executed and delivered by
\nEdwards.<\/p>\n
8.3. No Other Representations and Warranties. Except as expressly set
\n —————————————
\nforth herein or in any Operating Agreement, and notwithstanding anything
\ncontained in any Implementation Agreement, neither Baxter nor any of its
\nSubsidiaries represents or warrants in <\/p>\n
-49-<\/p>\n
any way (i) as to the value or freedom from encumbrance of, or any other matter
\nconcerning, any of the Transferred Assets or Transferred Subsidiaries or (ii) as
\nto the legal sufficiency to convey title to any of the Transferred Assets or
\nTransferred Subsidiaries on the execution, delivery and filing of the
\nConveyancing Instruments. SUBJECT TO SECTION 9.11 AND THE OPERATING AGREEMENTS,
\n ————
\nALL SUCH ASSETS AND SUBSIDIARIES ARE BEING TRANSFERRED ON AN “AS IS, WHERE IS”
\nBASIS WITHOUT ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, FITNESS FOR A
\nPARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR ANY
\nOTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, and Edwards and its
\nSubsidiaries shall bear the economic and legal risks that any conveyances of
\nsuch assets and Subsidiaries shall prove to be insufficient or that Edwards’ and
\nits Subsidiaries’ title to any such assets and Subsidiaries shall be other than
\ngood and marketable and free of encumbrances. Except as expressly set forth in
\nthis Agreement or in any Operating Agreement, and notwithstanding anything
\ncontained in any Implementation Agreement, neither Baxter nor any of its
\nSubsidiaries represents or warrants that the obtaining of the consents or
\napprovals, the execution and delivery of any amendatory agreements and the
\nmaking of the filings and applications contemplated by this Agreement shall
\nsatisfy the provisions of all applicable agreements or the requirements of all
\napplicable laws or judgments, and, subject to Section 7.3, Edwards and its
\n ———–
\nSubsidiaries shall bear the economic and legal risk that any necessary consents
\nor approvals are not obtained or that any requirements of law or judgments are
\nnot complied with.<\/p>\n
ARTICLE IX<\/p>\n
CERTAIN COVENANTS
\n —————–<\/p>\n
9.1. Conduct of Edwards Business Pending the Distribution Date. Each
\n ———————————————————
\nof the Parties agrees that, from the date hereof until the Distribution Date,
\nexcept as otherwise expressly contemplated by this Agreement, it will take, or
\ncause to be taken, all reasonable efforts to carry on the Edwards Business
\ndiligently in the ordinary course and substantially in the same manner as
\nheretofore conducted and to preserve intact the business organization and
\ngoodwill of the Edwards Business.<\/p>\n
9.2. Registration and Listing. Prior to the Distribution Date:
\n ———————— <\/p>\n
(a) Baxter and Edwards shall prepare a registration statement on Form
\n10, including such amendments or supplements thereto as may be necessary
\n(together, the “Registration Statement”) to effect the registration of the
\n ———————-
\nEdwards Common Stock under the Exchange Act, which Registration Statement shall
\ninclude an information statement to be sent by Baxter to its stockholders in
\nconnection with the Distribution (the “Information Statement”). Edwards shall
\n ———————
\nfile the Registration Statement with the SEC and shall use commercially
\nreasonable efforts to cause the Registration Statement to become and remain
\neffective under the Exchange Act as soon as reasonably practicable. After the
\nRegistration Statement becomes effective, Baxter shall mail the Information
\nStatement to the holders of Baxter Common Stock as of the Record Date.<\/p>\n
-50-<\/p>\n
(b) The Parties shall use commercially reasonable efforts to take all
\nsuch action as may be necessary or appropriate under state and foreign
\nsecurities and “Blue Sky” laws in connection with the transactions contemplated
\nby this Agreement.<\/p>\n
(c) Baxter and Edwards shall prepare, and Edwards shall file and seek
\nto make effective, an application for the listing of the Edwards Common Stock on
\nthe NYSE, subject to official notice of issuance.<\/p>\n
(d) The Parties shall cooperate in preparing, filing with the SEC and
\ncausing to become effective any registration statements or amendments thereto
\nthat are necessary or appropriate in order to effect the transactions
\ncontemplated hereby or to reflect the establishment of, or amendments to, any
\nemployee benefit plans contemplated hereby.<\/p>\n
9.3. Funds Distributed to Baxter. On or prior to the Distribution
\n —————————
\nDate, Edwards shall enter into a new credit facility or facilities with
\ncommercial lenders (the “Edwards Credit Facility”) and use the proceeds of the
\n ———————–
\nindebtedness incurred under the Edwards Credit Facility to execute asset
\ntransfers from Baxter and its Subsidiaries, invest in a Japanese contractual
\njoint venture (tokumei kumiai), assume debt from Baxter and its Subsidiaries,
\npay bank fees related to the credit facility and for general corporate purposes.
\nThe calculation of the amounts set forth in this Section 9.3 is set forth on
\n ———–
\nSchedule 9.3.
\n———— <\/p>\n
9.4. Post-Distribution Tax-Related Restrictions. (a) In order to avoid
\n ——————————————
\npotentially adverse tax consequences relating to the Distribution, for a period
\nof two years after the Distribution Date Edwards shall not:<\/p>\n
(i) cease to engage in the active conduct of a trade or business
\n within the meaning of Section 355 of the Code;<\/p>\n
(ii) issue or redeem any share of stock of Edwards, except for
\n issuances and redemptions<\/p>\n
(A) for the benefit of Edwards’ employees, or<\/p>\n
(B) to effect acquisitions by Edwards in the ordinary course
\n of business, or<\/p>\n
(C) in connection with the issuance of any convertible debt
\n by Edwards, or<\/p>\n
(D) in accordance with the requirements for permitted
\n purchases of Edwards stock as set forth in Section 4.05(1)(b) of
\n Revenue Procedure 96-30 issued by the IRS; or<\/p>\n
(iii) liquidate or merge with any other corporation;<\/p>\n
unless, with respect to (i), (ii) or (iii) above, either (x) an opinion is
\nobtained from counsel to Baxter reasonably acceptable to Edwards, or (y) a
\nruling is obtained from the IRS, in either case <\/p>\n
-51-<\/p>\n
to the effect that such act or event will not adversely affect the federal
\nincome tax consequences of the Distribution to Baxter, its stockholders who
\nreceive Edwards Shares or Edwards.<\/p>\n
(b) If, as a result of any transaction occurring after the
\nDistribution Date involving either the stock or assets of either Edwards or any
\nof its Subsidiaries, or any combination thereof, the Distribution fails to
\nqualify as tax-free under the provisions of Section 355 of the Code, Edwards
\nshall indemnify Baxter for all Taxes, Liabilities and associated expenses,
\nincluding penalties and interest, incurred as a result of such failure of the
\nDistribution to qualify under Section 355 of the Code. If the Distribution
\nfails to qualify as tax-free under the provisions of Section 355 of the Code
\nother than as a result of a transaction occurring after the Distribution Date
\ninvolving either the stock or assets of Edwards or any of its Subsidiaries, or
\nany combination thereof, then Edwards shall not be liable for such Taxes,
\nLiabilities or expenses.<\/p>\n
(c) Notwithstanding Section 9.4(a) above, Baxter and Edwards agree
\n ————–
\nthat as of the Distribution Date, neither Baxter nor Edwards has entered into,
\nand within the first six months following the Distribution Date, neither Baxter
\nnor Edwards will enter into any agreements, understandings, arrangements or
\nsubstantial negotiations that would result, individually or collectively, in a
\nchange of ownership of 50% or more of either within the meaning of Section
\n355(e) of the Code. Further, should Edwards enter into or continue any
\nnegotiations during the first six months following the Distribution Date that
\ncould result in the acquisition of its stock by a third-party, Edwards agrees to
\nnotify the Baxter tax department immediately.<\/p>\n
9.5. Intercompany Receivables and Payables. (a) All Intercompany
\n ————————————-
\nReceivables and Payables between any Subsidiary of Baxter, on the one hand, and
\nany Subsidiary of Edwards, on the other hand, shall be settled as of 3:00 p.m.,
\nChicago time, on March 28, 2000. Commencing from the opening of business on
\nMarch 28, 2000, Intercompany Receivables and Payables between any Subsidiary of
\nBaxter, on the one hand, and any Subsidiary of Edwards, on the other hand, shall
\nbe recorded for accounting purposes as third-party trade account receivables and
\npayables.<\/p>\n
(b) Subject to the exception contained in Section 6.1(a) and subject
\n ————–
\nto Section 9.6(e), Baxter shall be entitled to all cash bank balances existing
\n ————–
\nimmediately prior to the Distribution Date relating to the Edwards Business, or
\notherwise utilized or maintained in connection with the Edwards Business,
\nincluding cash balances representing deposited checks or drafts for which only a
\nprovisional credit has been allowed in depository accounts, which are to be
\ntransferred to Edwards or any of its Subsidiaries on or prior to the
\nDistribution Date. Any such cash balances as of the Distribution Date which
\nhave not been transferred to Baxter shall be paid to Baxter.<\/p>\n
(c) All Loans owing by Edwards or any of its Subsidiaries to Baxter
\nor any of its Subsidiaries after giving effect to the transactions contemplated<\/p>\n
by Articles III, IV and V shall be repaid no later than the Distribution Date.
\n ———— — – <\/p>\n
(d) Edwards or an appropriate Subsidiary thereof shall be responsible
\nfor payment of all checks or drafts issued up to the Distribution Date against
\ndisbursement accounts transferred to Edwards or such Subsidiary, which checks or
\ndrafts have not been charged against <\/p>\n
-52-<\/p>\n
such disbursement accounts on or prior to the Distribution Date (other than with
\nrespect to payroll accounts, which will be assumed by Baxter or its
\nSubsidiaries).<\/p>\n
(e) Baxter shall assist Edwards and each of its Subsidiaries in
\nestablishing a separate cash management system effective as of and immediately
\nafter the Distribution Date.<\/p>\n
9.6. Intercompany Debt True-Up.
\n ————————- <\/p>\n
(a) Calculation of Operational Cash Flow. As soon as practicable,
\n ————————————
\nbut in any event within 60 days after the Distribution Date, Baxter shall
\nprepare a statement of operational cash flow for the Edwards Business, for the
\nperiod January 1, 2000 through the Distribution Date. The operational cash flow
\nstatement shall be prepared from the books and records of Baxter in a manner
\nconsistent with Baxter’s historical cash flow allocation among its various
\nbusiness units. The statement of operational cash flow will be adjusted (the
\n“Unbudgeted Transfer Adjustment”) to eliminate the operational cash flow impact
\n ——————————
\nof any assets, liabilities and reserves transferred to Edwards or its
\nSubsidiaries pursuant to this Agreement but which was not taken into account in
\nthe initial internal budgeting process upon which this Section 9.6 (including
\n ———–
\nthe amount set forth in paragraph (c) against which the cash flow is trued up)
\nwas based. The Unbudgeted Transfer Adjustment shall not include the impact of
\nany expenses that Edwards is required to pay under the terms of Section 14.1 or
\n ————
\nSection 14.2. The effect of these unbudgeted transfers on operational cash flow
\n————
\nshall be included as a separate schedule accompanying the statement of
\noperational cash flow. Subject to Section 9.6(g), the statement of operational
\n ————–
\ncash flow delivered by Baxter to Edwards shall be final, binding and conclusive
\non the Parties for all purposes of this Agreement and shall provide the basis
\nfor determining the adjustments (if any) specified in Section 9.6(c).
\n ————– <\/p>\n
(b) Definition of Operational Cash Flow. Operational cash flow for
\n ———————————–
\neach Baxter operating unit consists of net income plus depreciation and
\namortization, increased or decreased, as appropriate, by cash restructuring
\nutilization and the net change in “managed capital” (as defined in Baxter
\nFinance Policy #1402) during the period, but including the effects of any cash
\nrestructuring utilization and acquisitions (excluding acquisitions for up to
\n$7.5 million in cash) and divestitures on managed capital. The operational cash
\nflow shall be computed in the same manner as reflected in the Hyperion
\nManagement Report, “Cash Flow Trends” (as defined in Baxter Finance Policy
\n#1902), but including the effects of any cash restructuring utilization and
\nacquisitions (excluding acquisitions for up to $7.5 million in cash) and
\ndivestitures.<\/p>\n
(c) Cash Flow True-Up For First Quarter 2000. In the event that the
\n —————————————-
\nfinal determination of the cash flow statement indicates that the operational
\ncash flow is less than $4.6 million plus or minus the Unbudgeted Transfer
\nAdjustment, the amount of the difference shall be paid by Edwards to Baxter, as
\nan adjustment to intercompany debt assumed by Edwards or its Subsidiaries
\npursuant to Section 9.3, within 10 days after the final determination of such
\n ———–
\nadjustment. In the event that the final determination of the cash flow statement
\nindicates that the operational cash flow is greater than $4.6 million plus or
\nminus the Unbudgeted Transfer Adjustment, the amount of the difference shall be
\npaid by Baxter to Edwards, as an adjustment to intercompany debt assumed by
\nEdwards, within 10 days after the final determination of such adjustment.<\/p>\n
-53-<\/p>\n
(d) Cash True-Up for “Lag” Entities. The financial results of
\n ——————————-
\ncertain Baxter foreign subsidiaries (lag entities) are included in the
\nconsolidated financial results of Baxter and Edwards on a one-month lag basis.
\nTherefore, for the month March, 2000, the financial results of the Edwards
\nBusiness operations will be included, for external reporting purposes, in the
\npost Distribution quarter beginning April 1 through June 30, 2000. Since the
\nmonth of March, 2000, is funded by Baxter, there shall be a cash true-up between
\nBaxter and Edwards based on the operational cash flow generated or used in March
\nby lag entities. As soon as practicable, but in any event within 60 days after
\nthe Distribution Date, Baxter shall prepare a statement of operational cash flow
\nfor the Edwards Business, for the period March 1, 2000 through the Distribution
\nDate for lag entities. This statement of operational cash flow will be prepared
\nas defined in Sections 9.6(a) and 9.6(b), except that the recognition of
\n ————— ——
\ndeferred intercompany gross profit allocations will be deleted from the earnings
\nstatement to reflect the cost of goods sold at the local subsidiary’s cost. If
\nthe operational cash flow results in a positive amount representing the
\ngeneration of cash, then Baxter will remit that amount to Edwards within 10 days
\nof the final determination of such amount. On the other hand, if the
\noperational cash flow is a negative amount representing a use of cash, then
\nEdwards will reimburse Baxter for that amount within 10 days of the final
\ndetermination of such amount. If a transfer contemplated by Article III to
\n ———–
\noccur on or prior to March 31, 2000 does not occur on March 31, 2000 for any lag
\nentity, a separate operational cash flow statement will be prepared (using the
\nprocedures described above) for the period beginning April 1, 2000 through the
\nactual transfer in the lag country. If the operational cash flow results in a
\npositive amount representing the generation of cash, then Baxter will remit that
\namount to Edwards within 10 days after the final determination of such amount.
\nOn the other hand, if the operational cash flow is a negative amount
\nrepresenting a use of cash, then Edwards will reimburse Baxter for that amount
\nwithin 10 days after the final determination of such amount.<\/p>\n
(e) “Cash Balance” True-up. As provided in Section 9.5(b) and subject
\n ———————- ————–
\nto the exceptions referred to therein, Baxter is entitled to all cash bank
\nbalances existing immediately prior to the Distribution Date, and any such cash
\nbalances as of the Distribution Date which have not been transferred to Baxter
\nshall be paid to Baxter. Within 30 days after the Distribution Date, Baxter
\nshall calculate the amount of cash held by the Transferred Subsidiaries as of
\nthe Distribution Date and shall provide Edwards prompt written notice of such
\ncalculated amount. If such amount is greater than $10 million, Edwards shall
\npay the difference between such amount and $10 million to Baxter as an
\nadjustment to intercompany debt assumed by Edwards within 10 days after the
\nfinal determination of such amount. If such amount is less than $10 million,
\nBaxter shall pay the difference between $10 million and such amount to Edwards
\nwithin 10 days after the final determination of such amount.<\/p>\n
(f) Cash True-Up for Tax Liability Generated During Funded Period.
\n ————————————————————-
\nThe Edwards Business activity during the period funded by the Baxter lag
\nentities described in Section 9.6(d) above, will increase or decrease the tax
\n ————–
\nliability of the Baxter lag entity funding the Edwards Business operations. The
\namount of the tax liability or tax benefit generated during the funded period by
\nthe Edwards Business operations will be calculated by Baxter, as soon as
\npracticable but in any event within 60 days after the Distribution Date. If the
\ntax computation results in a tax benefit, then Baxter will remit that amount to
\nEdwards within 10 days of the final determination of such amount. On the other
\nhand, if the tax computation results in a tax liability, <\/p>\n
-54-<\/p>\n
then Edwards will reimburse Baxter for that amount within 10 days of the final
\ndetermination of such amount.<\/p>\n
(g) Assumed Debt True-Up. Within 90 days of the Distribution Date,
\n ——————–
\nBaxter shall prepare (1) a balance sheet (the “True-Up Balance Sheet”) of the
\n ———————
\nEdwards Business as of the Distribution Date reflecting the transfers and
\nretentions of assets and liabilities contemplated by Articles III, IV and V and
\n ———— — –
\n(2) a balance sheet (the “Actual Balance Sheet”) of the Edwards Business as of
\n ——————–
\nthe Distribution Date reflecting the transfers and retentions of assets and
\nliabilities that actually occurred between Baxter and its Subsidiaries and
\nEdwards and its Subsidiaries in contemplation of the Distribution. Both balance
\nsheets shall be prepared using consistent accounting principles. Within 20 days
\nof the preparation of the True-Up Balance Sheet and the Actual Balance Sheet,
\nBaxter shall calculate (A) the sum of the amounts actually paid to Baxter or its
\napplicable Subsidiary (including or net of, as applicable, any adjustments in
\nthe purchase prices for such transfers that were actually paid to Baxter or one
\nof its Subsidiaries by Edwards or one of its Subsidiaries or to Edwards or one
\nof its Subsidiaries by Baxter or one of its Subsidiaries, as the case may be) in
\nrespect of the transfers set forth on Schedule 9.6(g) hereto in U.S. dollars
\n —————
\ncomputed at the Foreign Exchange Rate in effect at the Distribution Date (the
\n“Asset Transfer Amount”), (B) the book value as of March 31, 2000 of the
\n ———————
\nfinished goods inventory in the countries or regions set forth in Schedule
\n ——–
\n6.1(h) (the “Inventory Amount”), (C) the book value as of the Distribution Date
\n—— —————-
\nof the accounts receivable relating to the sales activity relating Exclusively
\nto the Edwards Business in the countries or regions set forth in Schedule 6.1(h)
\n —————
\nin U.S. dollars computed at the Foreign Exchange Rate in effect at the
\nDistribution Date (the “Accounts Receivable Amount”), (D) the book value as of
\n ————————–
\nthe Distribution Date of the accounts receivable of Baxter Germany that are not
\ncapable of being specifically separated between Baxter Germany and Edwards
\nGermany in U.S. dollars computed at the Foreign Exchange Rate in effect at the
\nDistribution Date (the “German Accounts Receivable Amount”), (E) the book value
\n ———————————
\nas of the Distribution Date of the accounts payable relating to the sales
\nactivity relating Exclusively to the Edwards Business in the countries or
\nregions set forth in Schedule 6.1(h) in U.S. dollars computed at the Foreign
\n —————
\nExchange Rate in effect at the Distribution Date (the “Accounts Payable
\n —————-
\nAmount”), (F) the book value as of the Distribution Date of the accounts payable
\n——
\nof Baxter Germany that are not capable of being specifically separated between
\nBaxter Germany and Edwards Germany in U.S. dollars computed at the Foreign
\nExchange Rate in effect at the Distribution Date (the “German Accounts Payable
\n ———————–
\nAmount”) and (G) the aggregate net differences, if any, between the assets and
\n——
\nliabilities reflected in the True-Up Balance Sheet and the Actual Balance Sheet
\nresulting from transfers or retentions of assets and liabilities that vary from
\nthe transfers and retentions contemplated by Articles III, IV and V (the
\n ———— — –
\n“Variance Amount”) and shall provide Edwards prompt written notice (the “Debt
\n ————— —-
\nTrue-Up Notice”) of such calculations.
\n————– <\/p>\n
If (I) the Asset Transfer Amount plus (II) $190 million (representing
\n —-
\nthe aggregate amount of intercompany debt assumed by Edwards and Edwards U.S.
\npursuant to Sections 4.5 and 5.2(b)) plus (III) the Inventory Amount plus (IV)
\n ———— —— —- —-
\nthe Accounts Receivable Amount plus (V) the German Accounts Receivable Amount
\n —-
\nminus (VI) the Accounts Payable Amount minus (VII) the German Accounts Payable
\n—– —–
\nAmount plus or minus, as applicable, (VIII) the Variance Amount (such sum being
\n —- —–
\nreferred to herein as the “Aggregate Amount Received”) is:
\n ————————- <\/p>\n
-55-<\/p>\n
(i) less than $292.5 million (the “Debt True-Up Amount”), Edwards shall,
\n ——————-
\n within 10 days of the delivery of the Debt True-Up Notice, pay to Baxter
\n the difference between the Aggregate Amount Received and the Debt True-Up
\n Amount by wire transfer of immediately available funds to the account
\n designated by Baxter, which payment shall be used by Baxter to repay a
\n portion of the debt owed by Baxter to third parties; or<\/p>\n
(ii) greater than the Debt True-Up Amount, Baxter shall, within 10 days
\n of the delivery of the Debt True-Up Notice, pay to Edwards the difference
\n between the Debt True-Up and the Aggregate Amount Received by wire transfer
\n of immediately available funds to the account designated by Edwards.<\/p>\n
(h) Simultaneously with or promptly after the payment to Baxter Limited
\nby Edwards Lifesciences Finance Limited for its investment in the Japanese
\ncontractual joint venture referred to in Section 9.3, if the U.S. dollar amount
\n ———–
\nof such payment plus the payment made under a related agreement, each calculated
\nusing the Foreign Exchange Rate in effect on the date of payment, is (i) less
\nthan the U.S. dollar amount of such payments calculated using a foreign exchange
\nrate equal to 107 Japanese yen per U.S. dollar, then Edwards shall pay to Baxter
\nsuch difference, or (ii) more than the U.S. dollar amount of such payments
\ncalculated using a foreign exchange rate equal to 107 Japanese yen per U.S.
\ndollar, then Baxter shall pay to Edwards such difference in U.S. dollars.<\/p>\n
(i) For purposes of this Section 9.6, the Edwards Business shall not
\n ———–
\ninclude any assets or liabilities that are Retained Assets or Retained
\nLiabilities.<\/p>\n
9.7. Collection of Accounts Receivable. (a) Baxter and its
\n ———————————
\nSubsidiaries shall be entitled to control all collection actions related to the
\nRetained Assets, including the determination of what actions are necessary or
\nappropriate and when and how to take any such action.<\/p>\n
(b) Subject to Section 9.7(d), Edwards and its Subsidiaries shall be
\n ————–
\nentitled to control all collection actions related to the Transferred Assets,
\nincluding the determination of what actions are necessary or appropriate and
\nwhen and how to take any such action.<\/p>\n
(c) If, after the Distribution Date, Edwards or any of its
\nSubsidiaries shall receive any remittance from any account debtors with respect
\nto the accounts receivable arising out of the Retained Assets or other amounts
\ndue Baxter or its Subsidiaries in respect of services rendered or products sold
\nby Baxter or its Subsidiaries after the Distribution Date, or Baxter or any of
\nits Subsidiaries shall receive any remittance from any account debtors with
\nrespect to the accounts receivable arising out of the Transferred Assets or
\nother amounts due Edwards or its Subsidiaries in respect of services rendered or
\nproducts sold by Edwards or its Subsidiaries after the Distribution Date, such
\nParty shall receive and deposit such remittance and deliver cash in an amount
\nequal thereto to the other Party as soon as practicable. In the absence of any
\ndesignation of the specific invoice being paid by a customer thereby, payments
\nfrom account debtors shall be applied to the earliest invoice outstanding with
\nrespect to indebtedness of such account debtor owing to either Baxter or
\nEdwards.<\/p>\n
-56-<\/p>\n
(d) The Parties acknowledge that certain accounts receivable and
\naccounts payable are not capable of being specifically separated between Baxter
\nand its Subsidiaries, on the one hand, and Edwards and its Subsidiaries, on the
\nother hand. Accordingly, the Parties agree that, notwithstanding the foregoing,
\nBaxter shall cause one or more of its Subsidiaries to administer the collection
\nof such accounts receivable and the payment of such accounts payable. Baxter
\nshall pay or cause to be paid to Edwards or its appropriate Subsidiary an
\nallocable portion of the amounts collected with respect to such accounts
\nreceivable determined by Baxter in accordance with Baxter’s past practices.
\nEdwards shall pay or cause to be paid to Baxter or its appropriate Subsidiary an
\nallocable portion of the amounts paid with respect to such accounts payable
\ndetermined by Baxter in accordance with Baxter’s past practices.<\/p>\n
(e) Each Party shall deliver to the other such schedules and other
\ninformation with respect to the accounts receivable included in the Transferred
\nAssets and those not included therein as each shall reasonably request from time
\nto time in order to permit such Parties to reconcile their respective records
\nand to monitor the collection of all accounts receivable (whether or not
\nTransferred Assets). Each Party shall afford the other reasonable access to its
\nbooks and records relating to any accounts receivable.<\/p>\n
(f) (i) Within a reasonable period of time after the Distribution
\nDate, Baxter shall prepare a report of the accounts receivable relating
\nExclusively to the Edwards Business included in the Retained Assets (the
\n“Accounts Receivable Report” As soon as practicable after the first anniversary
\n ————————–
\n of the Distribution Date, Baxter shall notify Edwards in writing (the “Refund
\n ——
\nNotice”) of the aggregate amount paid to and received by Baxter in respect of
\n——
\nsuch accounts receivable from the Distribution Date through the first
\nanniversary of the Distribution Date and the following amount (the “Refund
\n ——
\nAmount”): (A) the time value of money to Baxter of financing such collected
\n——
\naccounts receivable from the Distribution Date through the date of the
\nrespective payment of such accounts, plus or minus, as the case may be, (B) the
\n —- —–
\nloss or gain, if any, to Baxter on such collected accounts receivable, due to
\nfluctuations in foreign currency exchange rates, calculated by comparing the
\nForeign Exchange Rate for the relevant currency as of the date of receipt of
\npayment in respect of an account receivable to the Foreign Exchange Rate as of
\nthe Distribution Date, plus interest on such loss or gain at a rate equal to
\nBaxter’s time value of money, plus (C) the aggregate face value in U.S. dollars,
\n —-
\nusing, for accounts receivable denominated in a currency other than the U.S.
\ndollar, the Foreign Exchange Rate as of the Distribution Date, of the accounts
\nreceivable that had not been paid to and received by Baxter prior to such first
\nanniversary plus (D) the time value of money to Baxter of financing such
\n —-
\nuncollected accounts receivable. If the Refund Amount is a positive number,
\nwithin 10 days of the delivery of the Refund Notice, Edwards shall pay to Baxter
\nthe Refund Amount. If the Refund Amount is a negative number, within 10 days of
\nthe delivery of the Refund Notice, Baxter shall pay to Edwards the absolute
\nvalue of the Refund Amount.<\/p>\n
(ii) If any of the accounts receivable that were not paid to and
\n received by Baxter prior to the first anniversary of the Distribution Date
\n are in fact subsequently collected by Baxter, the amount so collected shall
\n be paid by Baxter to Edwards within 15 business days of collection.<\/p>\n
-57-<\/p>\n
(iii) Invoices to which the uncollected accounts receivable referred
\n to in Section 9.7(f)(i)(C) relate shall be assigned to Edwards or the
\n ——————–
\n appropriate Subsidiary of Edwards by Baxter or the appropriate Subsidiary
\n of Baxter.<\/p>\n
9.8. Agreements Relating to Baxter and Edwards. (a) Each of Baxter
\n —————————————–
\nand Edwards shall use commercially reasonable efforts to take, or cause to be
\ntaken, all actions, and to do, or cause to be done, all things, reasonably
\nnecessary, proper or advisable under applicable laws, regulations and agreements
\nto consummate, make effective and perform its or its Subsidiaries’ allocable
\nportion of all purchase, distribution and other obligations under all Contracts
\nwith customers, suppliers, vendors or other third parties relating to both the
\nEdwards Business and the Retained Business (the “Shared Agreements”), including
\n —————–
\nthose Shared Agreements set forth on Schedule 9.8 hereto. Each of Baxter and
\n ————
\nits Subsidiaries and Edwards and its Subsidiaries shall be entitled to the
\nrights and privileges of its allocable portion of the Shared Agreements.<\/p>\n
(b) Each of Baxter and Edwards shall use commercially reasonable
\nefforts to take, or cause to be taken, all actions, and to do, or cause to be
\ndone, all things reasonably necessary, proper or advisable under applicable
\nlaws, regulations and agreements to afford the rights and privileges of the
\nallocable portion of the Shared Agreements to the other.<\/p>\n
(c) If any of the Shared Agreements contains a minimum purchase
\nobligation or provides for the payment to Baxter and Edwards of a rebate or
\nsimilar payment or reimbursement based upon the volume of purchases, and if such
\nminimum purchase obligation or rebate or similar payment or reimbursement is not
\nallocated between Baxter and its Subsidiaries and Edwards and its Subsidiaries
\npursuant to the terms of the Shared Agreement, then such minimum purchase
\nobligation or rebate or similar payment or reimbursement shall be allocated
\nbetween the Parties based upon the relative performance of the Retained Business
\nand the Edwards Business under such Shared Agreement during the twelve-month
\nperiod immediately prior to the Distribution Date.<\/p>\n
(d) Liabilities pursuant to, arising under or relating to a Shared
\nAgreement shall be allocated between Baxter and its Subsidiaries, on the one
\nhand, and Edwards and its Subsidiaries, on the other hand, as follows:<\/p>\n
(i) First, if a Liability is incurred exclusively in respect of a
\n benefit received by one Party, the Party receiving such benefit shall be
\n responsible for such Liability;<\/p>\n
(ii) Second, if a Liability cannot be so allocated under clause (i),
\n such Liability shall be allocated between the Parties based on the relative
\n proportions of total benefit received (based upon the performance under
\n such Shared Agreement during the twelve-month period immediately prior to
\n the Distribution Date) under the relevant Shared Agreement.
\n Notwithstanding the foregoing, each Party shall be responsible for any and
\n all Liabilities arising out of or resulting from a breach of the relevant
\n Shared Agreement attributable to the Edwards Business, in the case of
\n Edwards, or the Retained Business, in the case of Baxter.<\/p>\n
-58-<\/p>\n
(e) If either Baxter or its Subsidiaries, on the one hand, or
\nEdwards or its Subsidiaries, on the other hand, improperly receives any benefit
\nor payment under any Shared Agreement that was intended for the other, the Party
\nreceiving such benefit or payment will use commercially reasonable efforts to
\ndeliver, transfer or otherwise afford such benefit or payment to the other
\nParty.<\/p>\n
9.9. Certain Releases. Baxter or one or more of its Subsidiaries is a
\n —————-
\nguarantor of certain obligations of the Edwards Business, including those
\nobligations set forth on Schedule 1.1(l). Edwards shall use commercially
\n —————
\nreasonable efforts to release Baxter and its Subsidiaries from such guarantees
\nprior to the Distribution Date and shall indemnify and hold harmless Baxter and
\nits Subsidiaries from and against any Liabilities relating to such guarantees.<\/p>\n
9.10. Litigation. (a) On or as of the Distribution Date, Edwards or
\n ———-
\nits Subsidiaries, as appropriate, shall assume and pay all Liabilities that may
\nresult from the Assumed Actions (as hereinafter defined) and all fees and costs
\nrelating to the defense of the Assumed Actions, including attorneys’ fees and
\ncosts incurred after the Distribution Date. “Assumed Actions” shall mean those
\n —————
\ncases, claims and investigations (on which Baxter or its Subsidiaries, other
\nthan Edwards and its Subsidiaries, is a defendant or the party against whom the
\nclaim or investigation is directed) relating to the Edwards Business, including
\nthose listed on Schedule 9.10(a), but only to the extent that they relate to the
\n —————-
\nEdwards Business.<\/p>\n
(b) Baxter and its Subsidiaries shall transfer the Transferred
\nActions (as hereinafter defined) to Edwards, and Edwards shall receive and have
\nthe benefit of all of the proceeds of such Transferred Actions. “Transferred
\n ———–
\nActions” shall mean those cases and claims (on which Baxter or its Subsidiaries
\n——-
\nis a plaintiff or claimant) relating to the Edwards Business, including those
\nlisted on Schedule 9.10(b), but only to the extent that they relate to the
\n —————-
\nEdwards Business.<\/p>\n
9.11. Liability for Previously Delivered Products. The following
\n ——————————————-
\nprovisions shall apply to all Edwards Products sold or transferred prior to the
\nDistribution Date to the Retained Business for distribution (the “Products”):
\n ——– <\/p>\n
(a) Edwards warrants to Baxter that, at the time of delivery to
\nBaxter (or Baxter’s designee): (i) the Products shall not be (A) adulterated or
\nmisbranded within the meaning of the Federal Food, Drug and Cosmetic Act (as
\namended) (the “Act”) or the regulations issued thereunder, (B) products that may
\n —
\nnot, under the provisions of Section 404, 505, 514 or 515 of the Act, be
\nintroduced into interstate commerce, or (C) banned devices under Section 516 of
\nthe Act; (ii) the Products shall not violate any other medical or health law,
\nstatute, regulation or directive applicable to the Products; (iii) the Products
\nshall not violate any applicable customs, trade or environmental law, statute,
\nregulation or directive; and (iv) Edwards shall have good and marketable title
\nto all Products free and clear of all liens or encumbrances (other than any
\ncreated by Baxter). THE FOREGOING WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL
\nOTHER WARRANTIES OF ANY KIND, WHETHER STATUTORY, WRITTEN, ORAL, EXPRESS OR
\nIMPLIED, INCLUDING ANY WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND
\nMERCHANTABILITY. IN NO EVENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, TORT
\nLIABILITY (INCLUDING NEGLIGENCE) OR OTHERWISE, SHALL EDWARDS BE LIABLE TO BAXTER
\nFOR <\/p>\n
-59-<\/p>\n
ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES. ANY LIABILITY OF
\nEDWARDS TO BAXTER UNDER THE FOREGOING WARRANTY SHALL BE LIMITED TO THE TOTAL
\nPRICE PAID BY BAXTER FOR THE PRODUCTS THAT ARE THE SUBJECT OF SUCH LIABILITY
\nPLUS ALL COSTS FOR FREIGHT AND OTHER DIRECT EXPENSES INCURRED BY BAXTER WITH
\nRESPECT TO SUCH PRODUCTS. The obligations of Edwards under this Section 9.11
\n ————
\nare in addition to its obligations contained elsewhere herein, and the
\nlimitations in this Section 9.11 shall in no way limit the obligations of
\n ————
\nEdwards under Article XV hereof.
\n ———- <\/p>\n
(b) Edwards shall indemnify and hold Baxter and the Baxter
\nIndemnified Parties (as hereinafter defined) harmless from and against, and in
\nrespect of, any and all Expenses and Losses that result from a third-party claim
\nasserted against or incurred by Baxter or any of the Baxter Indemnified Parties
\nthat arise out of or relate to: (i) any tort claim (including any claim for
\npersonal injury, wrongful death or property damage) to the extent such claim
\narises from any grossly negligent act or omission or willful misconduct by
\nEdwards (or its employees or other agents) in connection with the supply of
\nProducts by Edwards or one of its Affiliates to Baxter or one of its Affiliates
\nfor distribution; (ii) defects in the Products; (iii) any actual or alleged
\npatent, copyright or trademark infringement, or misappropriation or violation of
\nany other proprietary right related to a Product; (iv) any actual or alleged
\nbreach of any warranty (including written warranties included within the Product
\npackaging) or obligation, if any, accompanying the Products, subject to the
\nlimitations in Section 9.11(a) to the extent provided therein; and (v) any claim
\n —————
\nfor personal injury, wrongful death or property damage arising out of the use of
\na Product; provided, however, that this Section 9.11(b) shall not apply to any
\n ——– ——- —————
\nLosses or Expenses: (A) to the extent that the parties agree; (B) to any actual
\nor alleged Patent, Copyright or Trademark infringement, or misappropriation or
\nviolation of any other proprietary right, arising in connection with the supply
\nof Products by Edwards or one of its Affiliates to Baxter or one of its
\nAffiliates for distribution and the distribution of such Products by Baxter or
\none of its Affiliates (but not arising out of or relating to any of the
\nproprietary rights in the Products as delivered); or (C) any tort claim
\n(including any claim for personal injury, wrongful death or property damage) to
\nthe extent such claim arises from any grossly negligent act or omission or
\nwillful misconduct by Baxter (or its employees or agents) in the course of its
\nperformance pursuant to this Agreement, including any misrepresentation
\nconcerning the characteristics or method of usage of Products or relating to the
\nstorage, handling or delivery of Products. The “Baxter Indemnified Parties”
\n ————————–
\nshall mean and include (I) Baxter and Baxter’s Affiliates, (II) the respective
\ndirectors, officers, agents and employees of and counsel to Baxter and its
\nAffiliates, (III) each other person, if any, controlling Baxter or any of its
\nAffiliates, and (IV) the successors, assigns, heirs and personal representatives
\nof any of the foregoing. Expenses shall be reimbursed or advanced when and as
\nincurred promptly upon submission of statements by Baxter or any Baxter
\nIndemnified Party to Edwards.<\/p>\n
9.12. Edwards Bank Accounts. On or prior to the Distribution Date,
\n ———————
\nBaxter and its Subsidiaries shall transfer the bank accounts set forth on
\nSchedule 9.12 hereto to Edwards or one of its Subsidiaries. Edwards shall cause
\n————-
\nany amounts received, by mistake or otherwise, in such accounts after the
\nDistribution Date on account of the Retained Business to be transferred promptly
\nto Baxter and its Subsidiaries, as appropriate. Baxter shall cause any amounts<\/p>\n
-60-<\/p>\n
received, by mistake or otherwise, after the Distribution Date on account of the
\nEdwards Business to be transferred promptly to Edwards and its Subsidiaries, as
\nappropriate.<\/p>\n
9.13. Informal, Nondocumented Real Estate Leases. Each Party and its
\n ——————————————
\nSubsidiaries may continue to occupy, from and after the Distribution Date, such
\nspace in the facilities of the other Party and its Subsidiaries as is occupied
\nimmediately prior to the Distribution Date, or such other space therein as may
\nbe mutually agreed to from time to time by Baxter and Edwards, and which
\noccupancy is otherwise not documented by any written leasing agreement or
\notherwise provided for in the Operating Agreements, on the following terms and
\nconditions:<\/p>\n
(a) The occupying Party shall pay to the other Party rent with
\nrespect to such occupied space for the period from and after the Distribution
\nDate during which such space is so occupied, which rent shall be determined by
\nthe other Party on the same basis on which the other Party allocates rent with
\nrespect to the occupancy of space by business units of the other Party or as the
\noccupying Party presently is paying, whichever is lower. Such rent shall be
\npayable from time to time by the occupying Party (but not more frequently than
\nmonthly) promptly following delivery by the other Party to the occupying Party
\nof a statement therefor.<\/p>\n
(b) The occupying Party may, at any time, upon not less than 15
\ndays’ prior written notice to Baxter’s Director of Corporate Real Estate, with a
\ncopy to Edwards, terminate its occupancy of any or all of such space.<\/p>\n
(c) The other Party may, at any time, upon not less than 30 days’
\nprior written notice to the occupying Party, require the occupying Party to
\ncease occupancy of any or all of such space as designated in a notice sent to
\nthe occupying Party.<\/p>\n
9.14. Third Party Consents. To the extent that the transactions
\n ——————–
\ncontemplated by this Agreement require any material consents, approvals or
\nwaivers from third parties (the “Third Party Consents”), the Parties will use
\n ——————–
\ncommercially reasonable efforts to obtain any such material Third Party
\nConsents.<\/p>\n
9.15. Material Governmental Approvals and Consents. To the extent that
\n ——————————————–
\nthe transactions contemplated by this Agreement require any approvals or
\nconsents of any Governmental Authority, the Parties will use commercially
\nreasonable efforts to obtain any Material Governmental Approvals and Consents.<\/p>\n
9.16. Late Payments. Any amount not paid when due pursuant to this
\n ————-
\nAgreement or any Implementation Agreement (and any amounts billed or otherwise
\ninvoiced or demanded and properly payable that are not paid within thirty (30)
\ndays of such bill, invoice or other demand) shall accrue interest at a rate per
\nannum equal to the Prime Rate plus 2%.<\/p>\n
-61-<\/p>\n
ARTICLE X<\/p>\n
INTELLECTUAL PROPERTY LICENSES
\n ——————————<\/p>\n
10.1. License to Baxter of Transferred Intellectual Property.
\n —————————————————— <\/p>\n
(a) Grant of License. Edwards and its Subsidiaries hereby grant, and
\n —————-
\nBaxter and its Subsidiaries hereby accept, a perpetual, nonexclusive, fully
\npaid-up, worldwide right and license to use and otherwise practice under the
\nTransferred Intellectual Property in order to make, have made, import, offer for
\nsale, sell and distribute (i) any Baxter Products Actually Using the Transferred
\nIntellectual Property as of the Distribution Date, and (ii) any New Products
\ndeveloped and manufactured by or for Baxter or its Subsidiaries during the
\nthree-year period commencing on the Distribution Date. A Party will be deemed
\nto be “Actually Using” certain Intellectual Property if: (I) such Party or its
\n ————–
\nSubsidiaries is manufacturing (or has a third party manufacturing for it) a
\nproduct incorporating such Intellectual Property; or (II) a New Product
\nincorporating such Intellectual Property is Under Development by such Party or
\nits Subsidiaries; provided, however, that a Party will not be deemed to be
\n ——– ——-
\nActually Using any Intellectual Property the sole use of which is to manufacture
\na product for the other Party. “Under Development” by a Party shall mean, with
\n —————–
\nrespect to a New Product, that it (1) is the subject of a funded research and
\ndevelopment project by such Party or its Subsidiaries as of the Distribution
\nDate; (2) is described by such Party or its Subsidiaries in a pending patent
\napplication filed by such Party or its Subsidiaries prior to the Distribution
\nDate; (3) is described by such Party or its Subsidiaries in an invention record
\nthat satisfies the enablement requirement of 35 U.S.C. (S) 112 and which is
\nsubmitted no less than three months prior to the Distribution Date; or (4) is
\n(A) described by such Party or its Subsidiaries in an invention record that
\nsatisfies the enablement requirement of 35 U.S.C. (S) 112 and which is submitted
\nwithin the three-month period prior to the Distribution Date, and (B)
\nsubsequently commercialized by such Party or its Subsidiaries. The license
\ngranted pursuant to this Section 10.1(a) shall not include any rights to the
\n —————
\nTransferred Intellectual Property related to (w) the Duraflo treatment and other
\nbiocompatible coatings developed by the Edwards Business which shall be the
\nsubject of a separate supply agreement; (x) Edwards’ laser technology including
\nthe laser technology utilized in Edwards’ Transmyocardial Laser
\nRevascularization program; (y) the continuous renal replacement therapy
\nbusiness; and (z) Edwards’ angiogenesis technology including VEGF-B protein,
\ntargeting peptides and zinc finger DNA binding proteins and genes. Any
\nTransferred Intellectual Property actually licensed pursuant to this Section
\n ——-
\n10.1(a) shall be deemed to be “Licensed Edwards Intellectual Property.”
\n——- ————————————– <\/p>\n
(b) Ownership of the Licensed Edwards Intellectual Property. Baxter
\n ——————————————————-
\nand its Subsidiaries acknowledge that, subject to the foregoing license, Edwards
\nand its Subsidiaries, as the case may be, are the sole and exclusive owners of
\nall right, title and interest in and to the Transferred Intellectual Property.
\nBaxter and its Subsidiaries agree that they will do nothing inconsistent with
\nEdwards’ or its Subsidiaries’ ownership of, or rights in, the Transferred
\nIntellectual Property. Notwithstanding the foregoing or Section 17.7, Baxter
\n ————
\nand its Subsidiaries shall have the right to disclose the Licensed Edwards
\nIntellectual Property to a third-party contract manufacturer in connection with
\nBaxter or its Subsidiaries exercising their right pursuant to Section 10.1(a) to
\n —————
\nhave products made, provided that such third-party contract manufacturer agrees
\nto be bound by obligations of confidentiality consistent with Section 17.7,
\n ———— <\/p>\n
-62-<\/p>\n
and Baxter and its Subsidiaries remain liable for any breach of such obligations
\nby such third-party contract manufacturer. Edwards and its Subsidiaries shall
\nnot allow any registration or other protection for any Licensed Edwards
\nIntellectual Property to lapse without notifying Baxter thereof at least one
\nmonth prior thereto. Upon Baxter’s receipt of such notice, (i) Baxter and its
\nSubsidiaries shall have the right, but not the obligation, to take steps (at
\nBaxter’s expense and in Edwards’ and its Subsidiaries’ names, if necessary) to
\nprevent such a lapse, and (ii) Edwards and its Subsidiaries shall cooperate with
\nBaxter and its Subsidiaries (at Baxter’s or its Subsidiaries’ reasonable request
\nand at Baxter’s expense) to assign to Baxter or its Subsidiaries such Licensed
\nEdwards Intellectual Property.<\/p>\n
(c) Marking and Notices. Baxter and its Subsidiaries shall ensure
\n ——————-
\nthat any products that are made (by them or by third-party manufacturers),
\nimported, offered for sale, sold or distributed by them pursuant to the license
\ngranted by Edwards and its Subsidiaries in this Section 10.1 shall bear a legal
\n ————
\nor proprietary rights notice in such form as may be reasonably requested by, and
\nto the extent directed by, Edwards from time to time.<\/p>\n
(d) Termination of Licenses. The license granted pursuant to this
\n ———————–
\nSection 10.1 may be terminated by Edwards only if Baxter or its Subsidiaries are
\n————
\nin breach or default of a material term of this Section 10.1 which breach or
\n ————
\ndefault continues for sixty (60) days after written notice thereof from Edwards
\nto Baxter, Edwards may terminate the license granted pursuant to this Section
\n ——-
\n10.1, provided that such termination shall be solely with respect to the
\n—-
\nLicensed Edwards Intellectual Property that is the subject of such uncured
\nbreach.<\/p>\n
(e) Divestiture. If Baxter or its Subsidiaries sell, assign,
\n ———–
\ntransfer or otherwise divest themselves of ownership of any business unit that
\nuses, or product line that uses or is manufactured under, the Licensed Edwards
\nIntellectual Property, the license granted in this Section 10.1 may be assigned
\n ————
\nwithout payment of additional consideration, but only with respect to such
\nbusiness unit or product line and with the written consent of Edwards, which
\nconsent shall not be unreasonably withheld.<\/p>\n
10.2. License to Edwards of Retained Baxter Intellectual Property.
\n ———————————————————– <\/p>\n
(a) Grant of License. Baxter and its Subsidiaries hereby grant, and
\n —————-
\nEdwards and its Subsidiaries hereby accept, a perpetual, nonexclusive, fully
\npaid-up, worldwide right and license to use and otherwise practice under the
\nRetained Baxter Intellectual Property (except for the Trademarks that are part
\nof the Retained Baxter Intellectual Property) in order to make, have made,
\nimport, offer for sale, sell and distribute (i) any Edwards Products Actually
\nUsing the Retained Baxter Intellectual Property as of the Distribution Date, and
\n(ii) any New Products developed and manufactured by or for Edwards or its
\nSubsidiaries during the three-year period commencing on the Distribution Date.
\nAny Baxter Retained Intellectual Property actually licensed pursuant to this
\nSection 10.2(a) shall be deemed to be “Licensed Baxter Intellectual Property.”
\n————— ————————————-
\nSchedule 10.2(a) contains a listing of (I) the Patents licensed by Baxter and
\n—————-
\nits Subsidiaries to Edwards hereunder; and (II) certain Edwards Products Under
\nDevelopment as of the Distribution Date which may incorporate Licensed Baxter
\nIntellectual Property. The parties acknowledge that Schedule 10.2(a) may be
\n —————-
\nover- or underinclusive, and, accordingly, shall be amended, as necessary, to
\ninclude any additional Retained Baxter Intellectual Property that Edwards is
\ndeemed to be Actually Using as of the Distribution Date or to exclude any
\nRetained <\/p>\n
-63-<\/p>\n
Baxter Intellectual Property that Edwards is not deemed to be Actually Using as
\nof the Distribution Date. Without limiting the terms of Section 7.4, the parties
\n ———–
\nshall cooperate and act reasonably in amending Schedule 10.2(a). The license
\n —————-
\ngranted pursuant to this Section 10.2(a) shall not include any rights to the
\n —————
\nRetained Baxter Intellectual Property related to the following:<\/p>\n
(i) Fibrin sealant biopharmaceuticals and the associated delivery
\n devices which shall be the subject of a separate supply agreement;<\/p>\n
(ii) The spinning membrane separation technology acquired by Baxter
\n through the HemaScience acquisition which shall be the subject of a
\n separate supply agreement;<\/p>\n
(iii) Continuous renal replacement therapy which shall be the subject
\n of separate distribution agreements;<\/p>\n
(iv) Hemoglobin Therapeutics technology, including human, bovine and
\n recombinant hemoglobin based biopharmaceuticals and perfluorocarbon-based
\n pharmaceuticals; and<\/p>\n
(v) Non-polyvinylchloride based film, tubing, containers and
\n compositions developed as an alternative\/replacement for PVC (only if
\n acquired from Bieffe and\/or developed under the IV Systems Marc project)
\n which shall be the subject of a separate supply agreement.<\/p>\n
(b) Ownership of the Licensed Baxter Intellectual Property. Edwards
\n ——————————————————
\nand its Subsidiaries acknowledge that, subject to the foregoing license, Baxter
\nand its Subsidiaries, as the case may be, are the sole and exclusive owner of
\nall right, title and interest in and to the Retained Baxter Intellectual
\nProperty. Edwards and its Subsidiaries agree that they will do nothing
\ninconsistent with Baxter’s or its Subsidiaries’ ownership of, or rights in, the
\nRetained Baxter Intellectual Property. Notwithstanding the foregoing or Section
\n ——-
\n17.7, Edwards and its Subsidiaries shall have the right to disclose the Licensed
\n—-
\nBaxter Intellectual Property to a third-party contract manufacturer in
\nconnection with Edwards or its Subsidiaries exercising their right pursuant to
\nSection 10.2(a) to have products made, provided that such third-party contract
\n—————
\nmanufacturer agrees to be bound by obligations of confidentiality consistent
\nwith Section 17.7, and Edwards and its Subsidiaries remain liable for any breach
\n ————
\nof such obligations by such third-party contract manufacturer. Baxter and its
\nSubsidiaries shall not allow any registration or other protection for any
\nLicensed Baxter Intellectual Property to lapse without notifying Edwards thereof
\nat least one month prior thereto. Upon Edwards’ receipt of such notice, (i)
\nEdwards and its Subsidiaries shall have the right, but not the obligation, to
\ntake steps (at Edwards’ expense and in Baxter’s and its Subsidiaries’ names, if
\nnecessary) to prevent such a lapse, and (ii) Baxter and its Subsidiaries shall
\ncooperate with Edwards and its Subsidiaries (at Edwards’ or its Subsidiaries’
\nreasonable request and at Edwards’ expense) to assign to Edwards or its
\nSubsidiaries such Licensed Baxter Intellectual Property.<\/p>\n
(c) Marking and Notices. Edwards and its Subsidiaries shall ensure
\n ——————-
\nthat any products that are made (by them or by a third-party manufacturer),
\nimported, offered for sale, sold or distributed by them pursuant to the license
\ngranted by Baxter and its Subsidiaries in this <\/p>\n
-64-<\/p>\n
Section 10.2 shall bear a legal or proprietary rights notice in such form as may
\n————
\nbe reasonably requested by and to the extent directed by Baxter from time to
\ntime.<\/p>\n
(d) Termination of Licenses. The Licenses granted pursuant to this
\n ———————–
\nSection 10.2 may be terminated by Baxter only if Edwards or its Subsidiaries are
\n————
\nin breach or default of a material term of this Section 10.2 which breach or
\n ————
\ndefault continues for sixty (60) days after written notice from Baxter to
\nEdwards, Baxter may terminate the license granted pursuant to this Section 10.2,
\n ————
\nprovided that such termination shall be solely with respect to the Licensed
\nBaxter Intellectual Property that is the subject of such uncured breach.<\/p>\n
(e) Divestiture. If Edwards or its Subsidiaries sell, assign,
\n ———–
\ntransfer or otherwise divest themselves of ownership of any business unit that
\nuses or product line that uses or is manufactured under the Licensed Baxter
\nIntellectual Property, the licenses granted in this Section 10.2 may be assigned
\n ————
\nwithout payment of additional consideration, but only with respect to such
\nbusiness unit or product line and the written consent of Baxter, which consent
\nshall not be unreasonably withheld.<\/p>\n
10.3. Licenses Related to Interlink(TM). In addition to the licenses
\n ———————————
\ngranted in Section 10.1 or 10.2, the following shall apply with respect to the
\n ———— —-
\nIntellectual Property in the needleless access technology known as
\nInterlink(TM):<\/p>\n
(a) The license granted by Edwards in Section 10.1 shall also apply
\n ————
\nto any Baxter Products incorporating such technology, excluding blood sampling
\nproducts, to the extent claimed in any United States or foreign patent filed by
\nEdwards which relies upon U.S. Patent Application Nos. 07\/147,414, 07\/217,004
\nand\/or 07\/325,617 for priority and such claims would be enabled under 35 U.S.C.
\n(S) 112 by the disclosure found in U.S. Patent Application No. 07\/325,617, and
\nany such licensed Transferred Intellectual Property shall be deemed Licensed
\nEdwards Intellectual Property.<\/p>\n
(b) The license granted by Baxter in Section 10.2 shall also apply
\n ————
\nto any Edwards AVA introducer, central venous catheter, pulmonary artery
\ncatheter, pulmonary artery catheter introducers and hemofiltration device that
\ncurrently exists as of the Distribution Date, and New Products thereof, that
\nhave one or more pre-slit injection sites integrally connected or permanently
\nattached thereto; provided that such pre-slit injection site(s) are covered by
\nthe claims of any United States or foreign patent filed by Baxter which relies
\nupon U.S. Patent Application Nos. 07\/147,414, 07\/217,004, and\/or 07\/325,617 for
\npriority and such claims would be enabled under 35 U.S.C. (S) 112 by the
\ndisclosure found in U.S. Patent Application No. 07\/325,617, and any such
\nlicensed Retained Baxter Intellectual Property shall be deemed Licensed Baxter
\nIntellectual Property. The license to Edwards shall exclude blunt cannula to the
\nextent that Intellectual Property for such blunt cannula has been exclusively
\nlicensed to Becton, Dickinson and Company pursuant to the 1991 License Agreement
\nbetween BHC and Becton, Dickinson and Company. Pre-slit injection sites packaged
\nwith an Edwards cardiovascular product in a kit or set will be the subject of a
\nseparate supply agreement with Baxter.<\/p>\n
10.4. Use by Edwards of Baxter’s Trademarks. Edwards and its
\n ————————————-
\nSubsidiaries shall discontinue use of the names BAXTER, BAXTER HEALTHCARE,
\nBAXTER<\/p>\n
-65-<\/p>\n
INTERNATIONAL INC. and all other trademarks, service marks and trade names owned
\nby or licensed to Baxter (the “Baxter Marks”) as follows:
\n ———— <\/p>\n
(a) Baxter hereby grants to Edwards and its Subsidiaries a
\nnonexclusive, royalty-free, fully paid-up right and license to use the Baxter
\nMarks on Edwards Products in all appropriate jurisdictions for only so long as
\nis reasonably necessary to transfer product registrations, deplete existing
\ninventory and complete labeling and reimbursement qualifications. Edwards and
\nits Subsidiaries shall use their commercially reasonable efforts to cease using
\nthe Baxter Marks as soon as possible after the Distribution Date, but in no
\nevent shall Edwards or its Subsidiaries use the Baxter Marks on Edwards Products
\nafter December 31, 2001.<\/p>\n
(b) Edwards and its Subsidiaries will use their commercially
\nreasonable efforts to cease the use of the Baxter Marks on or in connection with
\nmaterials other than labels of Edwards Products including signs, stationery,
\ntrucks and customer brochures, as soon as reasonably practical, but in no event
\nlater than December 31, 2001.<\/p>\n
(c) If delays in obtaining regulatory approval require Edwards or
\nits Subsidiaries to use the Baxter Marks beyond the time limits set forth above,
\nBaxter shall be reasonable in granting extensions of the time limits as
\nnecessary.<\/p>\n
(d) Any use of the Baxter Marks by Edwards or its Subsidiaries
\npursuant to the above terms and conditions shall inure to the benefit of Baxter
\nand shall be in the same form as existed prior to the Distribution Date. Any
\nproducts or processes offered by Edwards or its Subsidiaries for sale under the
\nBaxter Marks shall meet the same product specifications and quality assurance
\nstandards as existed prior to the Distribution Date. Baxter shall have the
\nright to inspect any and all materials and products offered in connection with
\nthe Baxter Marks including label copy and marketing and sales materials.<\/p>\n
(e) Any use of the Baxter Marks by Edwards or its Subsidiaries shall
\nindicate that Baxter is the owner of the Baxter Marks and that such use is
\npursuant to a license from Baxter.<\/p>\n
(f) Edwards and its Subsidiaries shall do nothing to impair Baxter’s
\nrights in the Baxter Marks. Edwards and its Subsidiaries shall inform Baxter
\npromptly of any infringement of the Baxter Marks.<\/p>\n
10.5. Limitations on Requirements to Supply. Nothing in this Agreement
\n ————————————-
\nshall require either Party to supply any composition, formulation or product
\nthat was not commercially available or was not being manufactured as of the
\nDistribution Date or that is not commercially available or is not being
\nmanufactured at the time the above-referenced supply agreements are executed.<\/p>\n
10.6. Fair Market Value. Baxter and Edwards agree that the reciprocal
\n —————–
\nlicenses granted under this Article X are in full and adequate fair market value
\n ———
\nconsideration for each other.<\/p>\n
-66-<\/p>\n
ARTICLE XI<\/p>\n
CONDITIONS TO THE DISTRIBUTION
\n ——————————<\/p>\n
The obligation of Baxter to effect the Distribution is subject to the
\nsatisfaction or the waiver by Baxter, at or prior to the Distribution Date, of
\neach of the following conditions:<\/p>\n
11.1. Approval by Baxter Board of Directors. This Agreement and the
\n ————————————-
\ntransactions contemplated hereby, including the declaration of the Distribution,
\nshall have been duly approved by the Board of Directors of Baxter in accordance
\nwith applicable law and the Amended and Restated Certificate of Incorporation
\nand Amended and Restated By-laws of Baxter.<\/p>\n
11.2. Receipt of IRS Private Letter Tax Ruling. Baxter shall have
\n —————————————-
\nreceived a ruling from the IRS or, at Baxter’s sole discretion, an opinion of
\nits tax counsel Skadden, Arps, Slate, Meagher & Flom, substantially to the
\neffect that the Distribution will qualify as a tax-free distribution for federal
\nincome tax purposes under Section 355 of the Code and that no income, gain or
\nloss will be recognized by Baxter, Edwards or their respective stockholders
\n(other than with respect to cash received in lieu of fractional shares) upon the
\ndistribution to Baxter’s stockholders of Edwards Shares.<\/p>\n
11.3. Compliance with State and Foreign Securities and “Blue Sky”
\n ———————————————————–
\nLaws. The Parties shall have taken all such action as may be necessary or
\n—-
\nappropriate under state and foreign securities and “Blue Sky” laws in connection
\nwith the Distribution.<\/p>\n
11.4. SEC Filings and Approvals. The Parties shall have prepared and
\n ————————-
\nEdwards shall, to the extent required under applicable law, have filed with the
\nSEC any such documentation and any requisite no action letters that Baxter
\ndetermines are necessary or desirable to effectuate the Distribution, and each
\nParty shall use commercially reasonable efforts to obtain all necessary
\napprovals from the SEC with respect thereto as soon as practicable.<\/p>\n
11.5. Filing and Effectiveness of Registration Statement; No Stop
\n ———————————————————–
\nOrder. The Registration Statement shall have been filed and declared effective
\n—–
\nby the SEC, and no stop order suspending the effectiveness of the Registration
\nStatement shall have been initiated or, to the knowledge of either of the
\nParties, threatened by the SEC.<\/p>\n
11.6. Approval of NYSE Listing Application. The Edwards Common Stock
\n ————————————
\nand the accompanying rights granted pursuant to the Rights Plan shall have been
\napproved for listing on the NYSE, subject to official notice of distribution.<\/p>\n
11.7. Receipt of Fairness Opinions of Financial Advisors. The Baxter
\n ————————————————–
\nBoard of Directors shall have received written opinions of Credit Suisse First
\nBoston and J.P. Morgan & Co. Incorporated, in form acceptable to Baxter, to the
\neffect that the Distribution is fair to Baxter’s stockholders from a financial
\npoint of view, which opinions shall not have been withdrawn or modified.<\/p>\n
-67-<\/p>\n
11.8. Ancillary Agreements. The Tax Sharing Agreement and each of the
\n ——————–
\nConveyancing Instruments, Implementation Agreements and Operating Agreements
\nintended to be executed prior to the Distribution shall have been executed and
\ndelivered, and each of such agreements shall be in full force and effect.<\/p>\n
11.9. Resignations. On or prior to the Distribution Date, Baxter
\n ————
\nshall cause all of its designees to resign or to be removed as officers and from
\nall Boards of Directors or similar governing bodies of Edwards and its
\nAffiliates and any Subsidiary of Edwards on which they serve.<\/p>\n
11.10. Election of Edwards Board. The Board of Directors of Edwards
\n ————————-
\nas set forth on Exhibit H shall have been duly elected.
\n ——— <\/p>\n
11.11. Consents. (a) All Material Governmental Approvals and Consents
\n ——–
\nrequired to permit the valid consummation of the Distribution shall have been
\nobtained without any conditions being imposed that would have a material adverse
\neffect on Baxter or Edwards.<\/p>\n
(b) Baxter shall have obtained all Third Party Consents required in
\nconnection with the Distribution, except those for which the failure to obtain
\nsuch Third Party Consents would not, in the reasonable opinion of Baxter,
\nindividually or in the aggregate have a material adverse effect on Baxter,
\nEdwards or the consummation of the Distribution.<\/p>\n
11.12. No Actions. No action, suit or proceeding shall have been
\n ———-
\ninstituted or threatened by or before any court or quasi-judicial or
\nadministrative agency of any federal, state, local or foreign jurisdiction or
\nbefore any arbitrator to restrain, enjoin or otherwise prevent the Distribution
\nor the other transactions contemplated by this Agreement (including a stop order
\nwith respect to the effectiveness of the Registration Statement), and no order,
\ninjunction, judgment, ruling or decree issued by any court of competent
\njurisdiction shall be in effect restraining the Distribution or such other
\ntransactions.<\/p>\n
11.13. New Credit Facility. The definitive agreements governing the
\n ——————-
\nEdwards Credit Facility shall have been executed.<\/p>\n
11.14. Consummation of Pre-Distribution Transactions. The
\n ———————————————
\npre-Distribution transactions contemplated by Articles III, IV and V of this
\n ———— — –
\nAgreement shall have been consummated in all material respects.<\/p>\n
11.15. No Other Events. No other events or developments shall have
\n —————
\noccurred that, in the judgment of the Baxter Board of Directors, would result in
\nthe Distribution having a material adverse effect on Baxter or its stockholders.<\/p>\n
11.16. Satisfaction of Conditions. The satisfaction of the foregoing
\n ————————–
\nconditions are for the sole benefit of Baxter and shall not give rise to or
\ncreate any duty on the part of Baxter or the Baxter Board of Directors to waive
\nor not waive any such condition, to effect the Distribution or in any way limit
\nBaxter’s power of termination set forth in Section 18.13.
\n ————- <\/p>\n
-68-<\/p>\n
ARTICLE XII<\/p>\n
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
\n ————————————–<\/p>\n
12.1. Edwards Employees. Schedule 12.1 describes or otherwise
\n —————– ————-
\nidentifies the Parties’ current estimate of all employees of the Edwards
\nBusiness as of the Distribution Date (the “Edwards Employees”). Within 60 days
\n —————–
\nafter the Distribution Date, the Parties shall amend Schedule 12.1 to include a
\n ————-
\ncorrect list of the Edwards Employees as of the Distribution Date.<\/p>\n
12.2. Employment of Edwards Employees. Immediately following the
\n ——————————-
\nDistribution Date, Edwards shall, or shall cause its Subsidiaries to, employ or
\ncontinue to employ each Edwards Employee. Edwards and Baxter (and their
\nrespective Subsidiaries) shall use commercially reasonable efforts to accomplish
\nany transfers of employment required by this Section 12.2 in a timely manner.
\n ————
\nActive Edwards Employees shall be paid by Edwards or one of its Subsidiaries at
\nthe same salary and wage rate levels (including bonus programs) paid by Baxter
\nor its Subsidiaries as in effect on the Distribution Date; provided, however,
\n ——– ——-
\nthat Edwards (or the applicable Edwards Subsidiary) retains the right to
\ndetermine the compensation of Edwards Employees after the Distribution Date.<\/p>\n
12.3. Terminations\/Layoff\/Severance. (a) Edwards Employees shall not
\n —————————–
\nbe eligible for any severance benefits from Baxter or its Subsidiaries or
\nAffiliates as a result of either their employment by Edwards or its Subsidiaries
\nor Affiliates or their subsequent termination of employment with Edwards or its
\nSubsidiaries or Affiliates.<\/p>\n
(b) Any Edwards Employee who receives a written notice prior to the
\nDistribution Date regarding such employee’s termination of employment on a fixed
\ndate between the Distribution Date and one year after the Distribution Date from
\nEdwards or any of its Subsidiaries shall be eligible to receive from Edwards (or
\nthe applicable Edwards Subsidiary) severance pay that is calculated pursuant to
\nthe formula used under the Baxter Severance Pay Plan as in effect on the
\nDistribution Date. The manner in which this Section 12.3(b) is implemented
\n —————
\nshall be governed by the terms of the Edwards Severance Pay Plan.<\/p>\n
(c) Effective as of the Distribution Date, Edwards (or the
\napplicable Edwards Subsidiary) shall have the obligation to reimburse Baxter for
\nthe severance benefits paid by Baxter under the Baxter Severance Pay Plan on or
\nafter the Distribution Date to any employee who was terminated by Baxter prior
\nto the Distribution Date while employed in any Edwards Business unit. Edwards
\n(or the applicable Edwards Subsidiary) shall have the obligation to pay
\nseverance benefits to any employee terminated by Edwards after the Distribution
\nDate who is eligible to receive severance benefits under the Edwards Severance
\nPay Plan.<\/p>\n
12.4. International Edwards Employees. Notwithstanding the remaining
\n ——————————-
\nprovisions of this Article XII, all issues, other than those addressed in
\n ———–
\nSections 12.1 through 12.3, 12.5, 12.7, 12.8, 12.12, 12.14 and 12.17 through
\n————- —- —- —- —- —– —– —–
\n12.20, relating to any Edwards Employee who, immediately prior to the
\n—–
\nDistribution Date, is employed by an Edwards Subsidiary in a foreign
\njurisdiction (the “Edwards Foreign Employees”) shall be addressed in connection
\n ————————-
\nwith the Implementation Agreement applicable to such Edwards Subsidiary and are
\noutside the scope of this Agreement. Notwithstanding the foregoing, (i) the
\namount of pension benefits earned by <\/p>\n
-69-<\/p>\n
any Edwards Foreign Employees under any pension plan maintained by Baxter, or
\nits Subsidiaries or Affiliates, in a foreign jurisdiction (a “Baxter Foreign
\n ————–
\nPension Plan”) that are transferred to a pension plan maintained by Edwards
\n————
\nshall be determined by the actuaries for the respective plans in accordance with
\nthe methodology described in Schedule 12.4 and (ii) Schedule 12.4 describes or
\n ————- ————-
\nidentifies all Baxter Foreign Pension Plans from which no pension benefits will
\nbe transferred to any Edwards plan, as agreed upon by the Vice President of
\nCompensation, Benefits and Employee Services of Edwards and the Assistant
\nTreasurer of Baxter. As of the Distribution Date, Baxter shall retain all
\nliabilities associated with the Baxter Foreign Pension Plans from which no
\npension benefits will be transferred, as identified in Schedule 12.4, with
\n ————-
\nrespect to any Edwards Foreign Employee.<\/p>\n
12.5. Employment Solicitation. During the period beginning on the
\n ———————–
\nDistribution Date and ending one year after the Distribution Date, neither
\nBaxter nor Edwards shall, nor shall they permit any of their respective
\nSubsidiaries, Affiliates or agents to, directly or indirectly, except as
\nprovided in the following sentence, actively solicit or recruit for employment
\nany then current employee of the other or of any of the other’s Subsidiaries.
\nNothing contained in this Article XII shall (i) prohibit the hiring of any
\n ———–
\nemployee who in good faith is believed to be actively seeking employment on his
\nor her own initiative without prior contact initiated by any employee or agent
\nof the company where employment is sought, or any of such company’s Affiliates;
\nprovided, however, that such employee or the hiring company has obtained
\n——– ——-
\nauthorization from the Senior Vice President of Human Resources or the Corporate
\nVice President of Human Resources, as the case may be, of his or her current
\nemployer; or (ii) prohibit Baxter or Edwards or any of their respective
\nSubsidiaries from hiring any person who has terminated employment with the other
\ncompany. The foregoing restriction shall cease to apply one year after the
\nDistribution Date.<\/p>\n
12.6. WARN Act. Edwards and its Subsidiaries agree that they shall
\n ——–
\nnot, at any time during the 90-day period following the Distribution Date, (i)
\neffectuate a “plant closing” as defined in the Worker Adjustment and Retraining
\nNotification Act of 1988 (the “WARN Act”) affecting any site of employment or
\n ——–
\noperating units within any site of employment of the Edwards Business, or (ii)
\ntake any action to precipitate a “mass layoff” as defined in the WARN Act
\naffecting any site of employment of the Edwards Business, except, in either
\ncase, after complying fully with the notice and other requirements of the WARN
\nAct. Edwards agrees to indemnify Baxter and its Subsidiaries and to defend and
\nhold harmless Baxter and its Subsidiaries from and against any and all claims,
\nlosses, damages, expenses, obligations and liabilities (including attorney’s
\nfees and other costs of defense) that Baxter and its Subsidiaries may incur in
\nconnection with any suit or claim of violation brought against Baxter under the
\nWARN Act, which relates in whole or in part to actions taken by Edwards or its
\nSubsidiaries with regard to any site of employment of Edwards or operating units
\nwithin any site of employment of the Edwards Business.<\/p>\n
12.7. Leave of Absence Policies. (a) Through the Distribution Date,
\n ————————-
\nBaxter and its Subsidiaries shall be responsible for administering compliance
\nwith the Baxter leave of absence policies with respect to Edwards Employees.<\/p>\n
(b) No later than the Distribution Date: (i) Edwards shall adopt,
\nand shall cause each of its Subsidiaries to adopt, its own leave of absence
\npolicies; (ii) Edwards shall<\/p>\n
-70-<\/p>\n
honor, and shall cause each of its Subsidiaries to honor, all the terms and
\nconditions of leaves of absence that have been granted to any Edwards Employee
\nunder a Baxter leave of absence policy before the Distribution Date by Baxter or
\nany of its Subsidiaries, including such leaves that are to commence after the
\nDistribution Date where Baxter or any of its Subsidiaries has approved such
\nleave or where an employee has submitted appropriate paperwork to Baxter or any
\nof its Subsidiaries for such leave prior to the Distribution Date; (iii) Edwards
\nand its Subsidiaries shall be solely responsible for administering leaves of
\nabsence policies and compliance with all applicable laws with respect to the
\nEdwards Employees; and (iv) Edwards and its Subsidiaries shall recognize all
\nperiods of service of Edwards Employees with Baxter or any of its Subsidiaries,
\nas applicable, to the extent such service is recognized by Baxter or its
\nSubsidiaries for the purpose of eligibility for leave entitlement under the
\nBaxter leave of absence policies; provided, however, that no duplication of
\n ——– ——-
\nbenefits shall be required by the foregoing.<\/p>\n
(c) As soon as administratively possible after the Distribution
\nDate and upon request to Baxter’s Senior Vice President of Human Resources,
\nBaxter shall provide to Edwards copies of all records pertaining to the Baxter
\nleave of absence policies with respect to all Edwards Employees to the extent
\nsuch records have not been provided previously to Edwards or one of its
\nSubsidiaries.<\/p>\n
12.8. Withdrawal from Participation in Baxter Plans and
\n ————————————————-
\nEstablishment of Edwards Plans. (a) Except as otherwise specifically provided
\n——————————
\nin this Article XII, no later than the Distribution Date, Edwards Employees
\n ———–
\nshall cease to participate in the Baxter employee benefit plans and programs
\n(the “Baxter Plans”).
\n ————<\/p>\n
(b) No later than the Distribution Date, Edwards or any Edwards
\nSubsidiary shall establish its own employee benefit plans and programs for the
\nbenefit of eligible employees of Edwards and its Subsidiaries, including, for
\nEdwards U.S. Employees, a 401(k) savings plan (the “Edwards Savings Plan”), a
\n ——————–
\nnonqualified executive deferred compensation plan (the “Edwards Deferred
\n —————-
\nCompensation Plan”), a medical and dental plan, a group vision care plan, a
\n—————–
\ncafeteria plan, a group term life and accidental death and dismemberment plan, a
\nlong-term disability plan and a group legal expense plan (collectively, the
\n“Edwards Welfare Plans”), a severance plan (the “Edwards Severance Pay Plan”)
\n ——————— ————————–
\nand the Edwards 2000 Incentive Compensation Program, all as described in the
\nRegistration Statement. Notwithstanding the foregoing, Edwards shall not
\nestablish a plan similar to the Baxter Pension Plan (as hereinafter defined).<\/p>\n
12.9. Transfer of Account Balances and Accrued Benefits.
\n ————————————————- <\/p>\n
(a) Baxter Savings Plan. Subject to applicable law and the
\n ——————-
\nprovisions of the Baxter International Inc. and Subsidiaries Incentive
\nInvestment Plan (the “Baxter Savings Plan”), as soon as administratively
\n ——————-
\npracticable following the establishment of the Edwards Savings Plan, or
\neffective as of any other date as agreed to in writing by the plan administrator
\nfor the Baxter Savings Plan and the plan administrator for the Edwards Savings
\nPlan, the account balances (including outstanding loans) of all Baxter Savings
\nPlan participants who are Edwards Employees whose place of employment is in the
\nU.S. (“Edwards U.S. Employees”) shall be transferred from the Baxter Savings
\n ———————-
\nPlan to the Edwards Savings Plan (the “Transferred Accounts”). Each Edwards U.S.
\n ——————–
\nEmployee shall receive credit for all purposes under the <\/p>\n
-71-<\/p>\n
Edwards Savings Plan for periods of service with Baxter or any of its
\nSubsidiaries or Affiliates. The plan administrator for the Edwards Savings Plan
\nshall distribute any amounts from such Transferred Accounts that may be
\nnecessary in order for the Baxter Savings Plan to satisfy any requirements of
\napplicable law (including, nondiscrimination rules) as instructed by the plan
\nadministrator for the Baxter Savings Plan. The plan administrator for the
\nEdwards Savings Plan shall take any other action reasonably requested by the
\nplan administrator for the Baxter Savings Plan that is necessary or advisable,
\nin the opinion of the plan administrator for the Baxter Savings Plan, to
\nmaintain the tax-qualified status of the Baxter Savings Plan or to avoid the
\nimposition of any penalties with respect to such plan.<\/p>\n
(b) Puerto Rico Savings Plan. Subject to applicable law and the
\n ————————
\nprovisions of the Baxter Healthcare Corporation of Puerto Rico Savings and
\nInvestment Plan (the “Baxter PR Savings Plan”), as soon as administratively
\n ———————-
\npracticable following the establishment of the Edwards Lifesciences Corporation
\nof Puerto Rico Savings and Investment Plan (the “Edwards PR Savings Plan”), or
\n ———————–
\neffective as of any other date as agreed to in writing by the plan administrator
\nfor the Baxter PR Savings Plan and the plan administrator for the Edwards PR
\nSavings Plan, the account balances (including outstanding loans) of all Baxter
\nPR Savings Plan participants who are employees of Edwards Puerto Rico (936) or
\nEdwards Puerto Rico (MS&P) (“Edwards PR Employees”) shall be transferred from
\n ——————–
\nthe Baxter PR Savings Plan to the Edwards PR Savings Plan (the “PR Transferred
\n ————–
\nAccounts”). Each Edwards PR Employee shall receive credit for all purposes
\n——–
\nunder the Edwards PR Savings Plan for the periods of service with Baxter
\nHealthcare Corporation of Puerto Rico or any of its Subsidiaries or Affiliates.
\nThe plan administrator for the Edwards PR Savings Plan shall distribute any
\namounts from such Transferred Accounts that may be necessary in order for the
\nBaxter PR Savings Plan to satisfy any requirements of applicable law (including,
\nnondiscrimination rules) as instructed by the plan administrator for the Baxter
\nPR Savings Plan. The plan administrator for the Edwards PR Savings Plan shall
\ntake any other action reasonably requested by the plan administrator for the
\nBaxter PR Savings Plan that is necessary or advisable, in the opinion of the
\nplan administrator for the Baxter PR Savings Plan, to maintain the tax-qualified
\nstatus of the Baxter PR Savings Plan or to avoid the imposition of any penalties
\nwith respect to such plan.<\/p>\n
(c) Puerto Rico Pension Plan. Subject to applicable law and the
\n ————————
\nprovisions of the Baxter Healthcare Corporation of Puerto Rico Pension Plan (the
\n“Baxter PR Pension Plan”), as soon as administratively practicable following the
\n ———————-
\nestablishment of the Edwards Lifesciences Corporation of Puerto Rico Pension
\nPlan (the “Edwards PR Pension Plan”), or effective as of any other date as
\n ———————–
\nagreed to in writing by the plan administrator for the Baxter PR Pension Plan
\nand the plan administrator for the Edwards PR Pension Plan, the accrued benefits
\nof all Baxter PR Pension Plan participants who are Edwards PR Employees shall be
\ntransferred from the Baxter PR Pension Plan to the Edwards PR Pension Plan (the
\n“PR Transferred Accrued Benefits”). The amount of PR Transferred Accrued
\n ——————————-
\nBenefits shall be determined by the actuaries for the respective plans in
\naccordance with the methodology described in Schedule 12.4. Each Edwards PR
\n ————-
\nEmployee shall receive credit for all purposes under the Edwards PR Pension Plan
\nfor the periods of service with Baxter Healthcare Corporation of Puerto Rico or
\nany of its Subsidiaries or Affiliates. The plan administrator for the Edwards
\nPR Pension Plan shall take any other action reasonably requested by the plan
\nadministrator for the Baxter PR Pension Plan that is necessary or advisable, in
\nthe opinion of the plan administrator for the Baxter PR Pension Plan, <\/p>\n
-72-<\/p>\n
to maintain the tax-qualified status of the Baxter PR Pension Plan or to avoid
\nthe imposition of any penalties with respect to such plan.<\/p>\n
12.10. Entitlement to Distributions Under Pension Plan. Each Edwards U.S.
\n ———————————————–
\nEmployee shall be treated as having terminated employment with an “Employer” as
\ndefined in the Baxter International Inc. and Subsidiaries Pension Plan (the<\/p>\n
“Baxter Pension Plan”) effective as of the Distribution Date and shall be fully
\n ——————-
\nvested in his or her accrued benefit under the Baxter Pension Plan as of such
\ndate. As of the Distribution Date, Baxter shall retain all liabilities
\nassociated with the Baxter Pension Plan relating to any Edwards U.S. Employee.<\/p>\n
12.11. Welfare Benefits Provided Under Edwards Plans. (a) Each Edwards
\n ———————————————
\nU.S. Employee who becomes eligible to participate in the Edwards Welfare Plans
\nshall be credited under such plan with periods of service with any Baxter Group
\nMember for all purposes under such plan.<\/p>\n
(b) Baxter (or the applicable Baxter Subsidiary) shall pay all costs
\nassociated with the provision of disability benefits to any employee or former
\nemployee of the Edwards Business whose place of employment is in the U.S. who as
\nof the Distribution Date is totally and permanently disabled. Edwards (or the
\napplicable Edwards Subsidiary) shall pay all costs associated with the provision
\nof disability benefits to any employee or former employee of the Edwards
\nBusiness whose place of employment is in the U.S. other than the persons
\ndescribed in the first sentence of this Section 12.11(b) in an amount equal to
\n —————-
\nthe benefits such persons would have received if they had remained covered under
\nthe Baxter Plans during the period of such disability leave. Notwithstanding the
\nforegoing, any Edwards U.S. Employee receiving benefits under the Baxter Long-
\nTerm Disability Plan on the Distribution Date shall continue to receive benefits
\nunder the terms of such plan and the insurance contract used to fund such plan,
\nand neither Edwards nor any Edwards Subsidiary shall be charged for the payment
\nof such benefits. As of the Distribution Date, Edwards (or the applicable
\nEdwards Subsidiary) shall assume all Liabilities determined under FAS 112
\nrelating to all Edwards U.S. Employees.<\/p>\n
(c) Baxter (or the applicable Baxter Subsidiary) shall pay all claims
\nunder the Baxter Medical Plan and the Baxter Dental Plan relating to Edwards
\nEmployees that as of the Distribution Date have been incurred but not paid, but
\nonly if claims for such costs are submitted in written form to the authorized
\nagents of Baxter (or the applicable Baxter Subsidiary) during the six-month
\nperiod beginning on the Distribution Date.<\/p>\n
(d) Baxter (or the applicable Baxter Subsidiary) shall pay all costs
\nassociated with the provision of benefits under the terms of the Baxter Retiree
\nWelfare Plan for all persons who as of the Distribution Date have satisfied the
\nage and service eligibility requirements for receiving benefits under such plan.
\nEdwards (or the applicable Edwards Subsidiary) shall assume and pay all costs,
\nif any, associated with the provision of retiree welfare benefits for all
\nEdwards U.S. Employees who after the Distribution Date satisfy the age and
\nservice eligibility requirements under the corresponding Edwards plan, if any,
\nfor receiving such benefits.<\/p>\n
12.12. Stock Purchase Plans. Except as otherwise provided in the plan, on
\n ——————–
\nthe Distribution Date, Edwards Employees shall cease to be eligible to purchase
\nBaxter Common Stock under the terms of the Baxter Stock Purchase Plans, and as
\nof the record date of the <\/p>\n
-73-<\/p>\n
Distribution, Edwards Employees may become eligible to participate in the
\nEdwards Stock Purchase Plans in accordance with the provisions of such plans.<\/p>\n
12.13. Workers’ Compensation. As soon as administratively practicable
\n ———————
\nfollowing the Distribution Date but in no event later than June 30, 2000, a Risk
\nManagement Representative for each of the Parties shall agree upon the
\nallocation between the Parties of responsibility and liability for workers’
\ncompensation claims and expenses relating to current and former employees of the
\nParties and their respective Subsidiaries whose place of employment is in the
\nU.S. or Puerto Rico.<\/p>\n
12.14. Vacation Pay Policy. After the Distribution Date, it is expected
\n ——————-
\nthat Edwards shall maintain for its employees and employees of its Subsidiaries
\na vacation pay policy, and Edwards (or the applicable Edwards Subsidiary) shall
\nbe responsible for costs incurred to provide vacation pay to Edwards Employees
\nfollowing such date. Edwards (or the applicable Edwards Subsidiary) shall
\nassume any and all Baxter Liabilities to provide to Edwards Employees vacation
\nthat such persons accrued under the Baxter vacation pay policy as of the
\nDistribution Date, and no payment of such accrued vacation pay shall be made by
\nBaxter (or the applicable subsidiary) on the Distribution Date.<\/p>\n
12.15. Non-Qualified Plans. As of the Distribution Date, Baxter (or the
\n ——————-
\napplicable Baxter Subsidiary) shall retain the Liability to provide benefits
\naccrued under the Baxter International Inc. and Subsidiaries Supplemental
\nPension Plan with respect to all Edwards U.S. Employees and shall retain all
\nLiabilities associated with such plans with respect to any Edwards U.S.
\nEmployee. Edwards (or the applicable Edwards Subsidiary) shall assume the
\nLiability to provide benefits accrued as of the Distribution Date under the
\nBaxter International Inc. and Subsidiaries Deferred Compensation Plan with
\nrespect to Edwards U.S. Employees. No assets shall be transferred between the
\nParties with respect to the plans listed in this Section 12.15.
\n ————- <\/p>\n
12.16. Split-Dollar Life Insurance. As of the Distribution Date, Baxter
\n —————————
\n(or the applicable Baxter Subsidiary) shall retain all Liabilities associated
\nwith the provision of all split-dollar life insurance policies relating to any
\nEdwards U.S. Employee.<\/p>\n
12.17. Restricted Stock. All shares of Baxter Common Stock issued in the
\n —————-
\nform of restricted stock that were earned for 1999 performance and are held by
\nan Edwards Employee as of the Distribution Date will vest on December 31, 2000
\nas long as such Edwards Employee continues employment with either Edwards or
\nBaxter (or any of their respective Subsidiaries or Affiliates) through such
\ndate.<\/p>\n
12.18. Information to be Provided to Baxter. Edwards (or the applicable
\n ————————————
\nEdwards Subsidiary) shall provide any information that Baxter (or any Baxter
\nSubsidiary) may reasonably request, including information relating to dates of
\ntermination of employment, in order to provide benefits to any eligible Edwards
\nEmployee under the terms and conditions described herein or under the applicable
\nBaxter Plans. Any information relating to an employee’s termination of
\nemployment shall be provided by Edwards (or the applicable Edwards Subsidiary)
\nto Baxter as soon as available to Edwards or any of its Subsidiaries, but in any
\nevent <\/p>\n
-74-<\/p>\n
no later than 30 days after such information is made available to Edwards
\nor any such Subsidiaries.<\/p>\n
12.19. Corporate Action; Delegation of Authority. Any action taken by the
\n —————————————–
\nSenior Vice President of Human Resources for Baxter or the Corporate Vice
\nPresident of Human Resources for Edwards shall be considered to be action taken
\nby either Baxter or Edwards or their respective Subsidiaries for purposes of
\nthis Article XII. Without limiting the generality of the foregoing, the Chief
\n ———–
\nExecutive Officer of Baxter or Edwards or their respective Subsidiaries may
\ndelegate in writing to any other person the authority to act on behalf of Baxter
\nor Edwards, respectively, or their respective Subsidiaries, with respect to
\nactions required under the terms of this Article XII.
\n ———– <\/p>\n
12.20. Transfer of Employee Files. By a specified date as agreed upon by
\n ————————–
\nEdwards and Baxter following the Distribution Date, Baxter shall transfer to
\nEdwards the personnel files relating to all Edwards Employees.<\/p>\n
ARTICLE XIII<\/p>\n
INSURANCE MATTERS
\n —————–<\/p>\n
13.1. Insurance Prior to the Distribution Date. Edwards does hereby agree
\n —————————————-
\nthat Baxter and its Subsidiaries shall not have any Liability whatsoever as a
\nresult of the insurance policies and practices of Baxter and its Subsidiaries in
\neffect at any time prior to the Distribution Date, including any assistance
\nrendered to Edwards by Baxter in the placement of their insurance program,
\nincluding as a result of the level or scope of any such insurance, the
\ncreditworthiness of any insurance carrier, the terms and conditions of any
\npolicy and the adequacy or timeliness of any notice to any insurance carrier
\nwith respect to any claim or potential claim or otherwise.<\/p>\n
13.2. Ownership of Existing Policies and Programs. Baxter or one or more
\n ——————————————-
\nof its Subsidiaries shall continue to own all property, casualty and liability
\ninsurance policies and programs, including primary and excess general liability,
\nerrors and omissions, automobile, workers’ compensation, property, fire, crime,
\nsurety and other similar insurance policies, in effect on or before the
\nDistribution Date (collectively, the “Baxter Policies” and individually, a
\n —————
\n“Baxter Policy”). Baxter shall use commercially reasonable efforts to maintain
\n ————-
\nthe Baxter Policies in full force and effect up to and including the
\nDistribution Date, and, subject to the provisions of this Agreement, Baxter and
\nits Subsidiaries shall retain all of their respective rights, benefits and
\nprivileges, if any, under the Baxter Policies. Nothing contained herein shall
\nbe construed to be an attempt to assign or to change the ownership of the Baxter
\nPolicies.<\/p>\n
13.3. Procurement of Insurance for Edwards. To the extent not already
\n ————————————
\nprovided for by the terms of the Baxter Policies, Baxter shall use commercially
\nreasonable efforts to cause Edwards and the appropriate Edwards Subsidiaries to
\nbe named as additional insureds under Baxter Policies whose effective policy
\nperiods include the Distribution Date, in respect of claims for which coverage
\nis available under the terms and conditions of Baxter’s policies, arising out of
\nor relating to periods prior to the Distribution Date; provided, however, that
\n ——– ——-
\nnothing contained herein shall be construed to require Baxter or any of its
\nSubsidiaries to <\/p>\n
-75-<\/p>\n
pay any additional premium or other charges in respect to, or waive or otherwise
\nlimit any of its rights, benefits or privileges under, any Baxter Policy in
\norder to effect the naming of Edwards and its Subsidiaries as such additional
\ninsureds.<\/p>\n
13.4. Acquisition and Maintenance of Post-Distribution Edwards Insurance
\n ——————————————————————
\nPolicies and Programs. Commencing on and as of the Distribution Date, Edwards
\n———————
\nshall be responsible for establishing and maintaining separate property,
\ncasualty and liability insurance policies and programs (including primary and
\nexcess general liability, errors and omissions, automobile, workers’
\ncompensation, property, fire, crime, surety and other similar insurance
\npolicies) for activities and claims involving Edwards or any of its Subsidiaries
\nor Affiliates. Edwards will exercise commercially reasonable efforts to secure
\nliability insurance to avoid potential gaps in coverage for claims arising from
\nevents prior to the Distribution Date, which gap would not exist had the Edwards
\nBusiness continued to be covered with the same retroactive dates existing in the
\nBaxter Policies in effect on the Distribution Date. Edwards and each of its
\nSubsidiaries and Affiliates, as appropriate, shall be responsible for all
\nadministrative and financial matters relating to insurance policies established
\nand maintained by Edwards and its Subsidiaries or Affiliates for claims relating
\nto any period on or after the Distribution Date involving Edwards or any of its
\nSubsidiaries or Affiliates. Notwithstanding any other agreement or
\nunderstanding to the contrary, except as set forth in Article XIII with respect
\n ————
\nto claims administration and financial administration of the Baxter Policies,
\nneither Baxter nor any of its Subsidiaries or Affiliates shall have any
\nresponsibility for or obligation to Edwards or any of its Subsidiaries or
\nAffiliates relating to property and casualty insurance matters for any period,
\nwhether prior to, on or after the Distribution Date.<\/p>\n
13.5. Edwards Directors’ and Officers’ Insurance. Baxter shall use
\n ——————————————
\ncommercially reasonable efforts to cause the persons currently serving as
\nofficers and\/or directors of Baxter or any of its Subsidiaries to be covered for
\na period of six (6) years from the Distribution Date by the directors’ and
\nofficers’ liability insurance policy maintained by Baxter (including corporate
\nreimbursement) (provided that Baxter may substitute therefor policies of at
\n ——–
\nleast the same coverage and amounts containing terms and conditions that are not
\nless advantageous than such policy) with respect to matters covered under the
\nexisting policy occurring prior to the Distribution Date that were committed by
\nsuch officers and\/or directors in their capacity as such; provided, however,
\n ——– ——-
\nthat in no event shall Baxter be required to expend with respect to any year
\nmore than 200% of the current annual premium expended by Baxter (the “Insurance
\n ———
\nAmount”) to maintain or procure insurance coverage pursuant hereto; and
\n——
\nprovided, further, that if Baxter is unable to maintain or obtain the insurance
\n——– ——-
\ncalled for by this Section 13.5, Baxter shall use commercially reasonable
\n ————
\nefforts to obtain as much comparable insurance as available for the Insurance
\nAmount. In the event Baxter or any of its successors or assigns (i) consolidates
\nwith or merges into any other Person and shall not be the continuing or
\nsurviving corporation or entity of such consolidation or merger, or (ii)
\ntransfers or conveys all or substantially all of its properties and assets to
\nany Person, then, and in each such case, to the extent necessary, proper
\nprovision shall be made so that the successors and assigns of Baxter
\nassume the obligations set forth in this Section 13.5. The provisions of this
\n ————
\nSection 13.5 are intended to be for the benefit of, and shall be enforceable by,
\n————
\neach such officer and director and his or her heirs and representatives. As
\nprovided in Section 15.5, any amount Edwards or any of its Subsidiaries is
\n ————
\nrequired to pay to Baxter as an indemnity under this Agreement is reduced to<\/p>\n
-76-<\/p>\n
the extent Baxter receives insurance proceeds from the above coverage, but only
\nto the extent such proceeds are actually received by Baxter.<\/p>\n
13.6. Pre-Distribution Insurance Claims Administration. Edwards and its
\n ————————————————
\nSubsidiaries and Affiliates acknowledge that Baxter has previously experienced
\nlosses and received claims that were, or might have been, covered by one or more
\nBaxter Policies, and prior to the Distribution Date will have made decisions and
\ncommitments regarding administration of such claims, including reaching
\nagreements and stipulations regarding such claims and proceeds of such claims
\n(collectively, “Pre-Distribution Claims Administration”). Edwards and its
\n ————————————–
\nSubsidiaries and Affiliates covenant not to contest or challenge in any manner
\nany action taken by Baxter prior to the Distribution Date in connection with or
\nrelating to Pre-Distribution Claims Administration, or to interfere with the
\nperformance of any agreement, commitment or stipulation so made by Baxter in
\nconnection with or relating to Pre-Distribution Claims Administration.<\/p>\n
13.7. Post-Distribution Insurance Claims Administration. Baxter and its
\n ————————————————-
\nSubsidiaries shall have the primary right, responsibility and authority for
\nclaims administration and financial administration of claims that relate to or
\naffect the Baxter Policies. Upon notification by Edwards or one of its
\nSubsidiaries or Affiliates of a claim relating to Edwards or a Subsidiary or
\nAffiliate thereof under one or more of the Baxter Policies, Baxter shall
\ncooperate with Edwards in asserting and pursuing coverage and payment for such
\nclaim by the appropriate insurance carrier(s). In asserting and pursuing such
\ncoverage and payment, Baxter shall have sole power and authority to make binding
\ndecisions, determinations, commitments and stipulations on its own behalf and on
\nbehalf of Edwards and its Subsidiaries and Affiliates, which decisions,
\ndeterminations, commitments and stipulations shall be final and conclusive if
\nmade to maximize the overall economic benefit for Baxter and Edwards of the
\nBaxter Policies. Edwards and its Subsidiaries and Affiliates assume
\nresponsibility for, and shall pay to the appropriate insurance carriers or
\notherwise, any premiums, retrospectively-rated premiums, defense costs,
\nindemnity payments, deductibles, retentions or other charges (collectively,
\n“Insurance Charges”) whenever arising, which shall become due and payable under
\n —————–
\nthe terms and conditions of any applicable Baxter Policy in respect of any
\nliabilities, losses, claims, actions or occurrences, whenever arising or
\nbecoming known, involving or relating to any of the assets, businesses,
\noperations or liabilities of Edwards or any of its Subsidiaries or Affiliates,
\nwhether the same relate to the period prior to, on or after the Distribution
\nDate. To the extent that the terms of any applicable Baxter Policy provide that
\nBaxter or any of its Subsidiaries shall have an obligation to pay or guarantee
\nthe payment of any Insurance Charges relating to Edwards or any of its
\nSubsidiaries, Baxter shall be entitled to demand that Edwards make such payment
\ndirectly to the Person or entity entitled thereto. In connection with any such
\ndemand, Baxter shall submit to Edwards a copy of any invoice received by Baxter
\npertaining to such Insurance Charges together with appropriate supporting
\ndocumentation, to the extent available. In the event that Edwards fails to pay
\nany such Insurance Charges when due and payable, whether at the request of the
\nparty entitled to payment or upon demand by Baxter, Baxter and its Subsidiaries
\nmay (but shall not be required to) pay such insurance charges for and on behalf
\nof Edwards and, thereafter, Edwards shall forthwith reimburse Baxter for such
\npayment. Subject to the other provisions of this Article XIII, the retention by
\n ————
\nBaxter of the Baxter Policies and the responsibility for claims administration
\nand financial administration of such policies are in no way intended to limit,<\/p>\n
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inhibit or preclude any right of Edwards, Baxter or any other insured to
\ninsurance coverage for any Insured Claims under the Baxter Policies.<\/p>\n
13.8. Non-Waiver of Rights to Coverage. An insurance carrier that
\n ——————————–
\notherwise would be obligated to pay any claim shall not be relieved of the
\nresponsibility with respect thereto, or, solely by virtue of the provisions of
\nthis Article XIII, have any subrogation rights with respect thereto, it being
\n ————
\nexpressly understood and agreed that no insurance carrier or any third-party
\nshall be entitled to a windfall (i.e., a benefit they would not be entitled to
\n —-
\nreceive had no Distribution occurred or in the absence of the provisions of this<\/p>\n
Article XIII) by virtue of the provisions hereof.
\n———— <\/p>\n
13.9. Scope of Affected Policies of Insurance. The provisions of this
\n —————————————
\nArticle XIII relate solely to matters involving liability, casualty and workers’
\n————
\ncompensation insurance, and shall not be construed to affect any obligation of
\nor impose any obligation on the Parties with respect to any life, health and
\naccident, dental or medical insurance policies applicable to any of the
\nofficers, directors, employees or other representatives of the Parties or their
\nAffiliates.<\/p>\n
ARTICLE XIV<\/p>\n
EXPENSE AND TAX MATTERS
\n ———————–<\/p>\n
14.1. Allocation of Expenses. (a) Except as otherwise provided in this
\n ———————-
\nAgreement or any other agreement contemplated hereby, or as otherwise agreed to
\nin writing by the Parties, all fees and expenses incurred in connection with the
\ntransactions contemplated hereby or thereby shall be paid by Baxter.
\nSpecifically, (i) Baxter shall absorb all the costs associated with the
\ndedication of internal resources and personnel to such transaction at all times
\nprior to the Distribution Date, and (ii) Baxter shall pay all fees and expenses
\nthat are related directly to the implementation of the Distribution transactions
\nincurred on or prior to the Distribution Date.<\/p>\n
(b) Notwithstanding Section 14.1(a) above, Baxter shall be solely
\n —————
\nresponsible for the following costs incurred in connection with the transactions
\ncontemplated hereby: (i) the reasonable fees and expenses of Sidley & Austin in
\nconnection with its representation of Baxter; (ii) the reasonable fees and
\nexpenses of Skadden, Arps, Slate, Meagher & Flom in connection with its
\nrepresentation of Baxter relating to the tax ruling and the opinion of counsel
\non tax matters; (iii) the reasonable fees and expenses of foreign counsel to
\nBaxter or Edwards in connection with the transactions contemplated by this
\nAgreement; (iv) the reasonable fees and expenses of Credit Suisse First Boston
\nand J.P. Morgan & Co. Incorporated relating to their financial advisory services
\nrendered to Baxter; (v) the reasonable fees and expenses of
\nPricewaterhouseCoopers LLP in connection with its audit and tax services
\nrendered to Baxter; (vi) the reasonable fees and expenses of Ernst & Young in
\nconnection with their consulting services relating to the Commissionaire
\nstructure; (vii) the reasonable fees and expenses of Towers, Perrin and Hewitt
\nAssociates in connection with their consulting services relating to benefits
\nplans rendered to Baxter; (viii) all SEC registration and “blue sky” filing fees
\nassociated with the Registration Statement; (ix) the printing, mailing and
\ndistribution of the Information Statement to Baxter’s stockholders; (x) the
\nreasonable fees and expenses of Edwards’ transfer <\/p>\n
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agent and registrar relating to the initial issuance of Edwards Shares as a
\ndividend to Baxter’s stockholders; (xi) the NYSE listing fees for the Edwards
\nShares; (xii) the design and initial printing of certificates of the Edwards
\nShares; (xiii) the initial distribution of the certificates of Edwards Common
\nStock as a dividend to Baxter stockholders; (xiv) the development, search and
\nregistration of the name “Edwards”; and (xv) various other international
\nprofessional services related directly to the Distribution, such as valuation
\nservices, legal services and tax services.<\/p>\n
(c) Notwithstanding Section 14.1(a)(i) above, Edwards shall be solely
\n ——————
\nresponsible for all fees, expenses and other costs incurred in connection with
\nthe transactions contemplated hereby related to: (i) the reasonable fees and
\nexpenses of the commercial lenders under the Edwards Credit Facility relating to
\ntheir syndication and arrangement of such facility; (ii) the reasonable fees and
\nexpenses of any financial advisors retained by Edwards in connection with any
\n“road shows” or presentations to investors; (iii) recruiting fees, signing
\nbonuses and relocation expenses for new and existing Edwards Employees; (iv)
\nseverance payments to Edwards Employees terminated as a result of the
\nDistribution; (v) fees and expenses related to execution of new company identity
\nand media launch activities; and (vi) product re-registration fees and product
\nre-labeling costs.<\/p>\n
14.2. Allocation of Taxes. Sales, transfer, V.A.T. or other similar Taxes
\n ——————-
\nor fees payable in connection with the transactions contemplated by this
\nAgreement shall be determined and paid as provided in the Tax Sharing Agreement.<\/p>\n
ARTICLE XV<\/p>\n
RELEASE AND INDEMNIFICATION
\n —————————<\/p>\n
15.1. Release of Pre-Distribution Claims. (a) Except as provided in
\n ———————————-
\nSection 15.1(b), effective as of the Distribution Date, each of Baxter and
\n—————
\nEdwards does hereby, on behalf of itself and its respective Subsidiaries,
\nAffiliates, successors and assigns and all Persons who at any time prior to the
\nDistribution Date have been shareholders, directors, officers, agents or
\nemployees of either Party (in each case, in their respective capacities as
\nsuch), remise, release and forever discharge the other Party, its Subsidiaries,
\nAffiliates, successors and assigns and all Persons who at any time prior to the
\nDistribution Date have been shareholders, directors, officers, agents or
\nemployees of such Party (in each case, in their respective capacities as such),
\nand their respective heirs, executors, administrators, successors and assigns,
\nfrom any and all Liabilities whatsoever, whether at law or in equity (including
\nany right of contribution), whether arising under any contract or agreement, by
\noperation of law or otherwise, existing or arising from any acts or events
\noccurring or failing to occur or alleged to have occurred or to have failed to
\noccur or any conditions existing or alleged to have existed on or before the
\nDistribution Date, including in connection with the transactions and all other
\nactivities to implement the Distribution.<\/p>\n
(b) Notwithstanding the foregoing, nothing contained in Section 15.1(a)
\n —————
\nshall release any Party from:<\/p>\n
-79-<\/p>\n
(i) any Liability transferred, assigned or allocated to, or assumed
\n or retained by, a Party in accordance with this Agreement, any Conveyancing
\n Instrument, any Implementation Agreement, any Operating Agreement or the
\n Tax Sharing Agreement;<\/p>\n
(ii) any Liability provided in or resulting from this Agreement, any
\n Conveyancing Instrument, any Implementation Agreement, any Operating
\n Agreement, the Tax Sharing Agreement or any agreement between any of Baxter
\n and its Subsidiaries, on the one hand, and Edwards and its Subsidiaries, on
\n the other hand, that is not to terminate pursuant to the Distribution or
\n any other agreement between any of the Parties entered into in
\n contemplation that such agreement would remain in effect after the
\n Distribution;<\/p>\n
(iii) any Liability for unpaid amounts for the sale, lease,
\n construction or receipt of goods, property or services purchased, obtained
\n or used in the ordinary course of business by one Party from the other
\n Party prior to the Distribution Date;<\/p>\n
(iv) any Liability for unpaid amounts for products or services or
\n refunds owing on products or services due on a value-received basis for
\n work done by one Party at the request or on behalf of the other Party;<\/p>\n
(v) any Liability that the Parties may have with respect to
\n indemnification or contribution pursuant to this Agreement for claims
\n brought against the Parties by third Persons, which Liability shall be
\n governed by the provisions of this Article XV and, if applicable, the
\n ———-
\n appropriate provisions of any Conveyancing Instrument, any Implementation
\n Agreement or the Tax Sharing Agreement;<\/p>\n
(vi) the Liability for the payable from Edwards Lifesciences AG to
\n Baxter Belgium in respect of the inventory transferred pursuant to Section
\n ——-
\n 3.22(c) or
\n ——- <\/p>\n
(vii) any Liability the release of which would result in the release
\n of any party other than a Person released pursuant to this Section 15.1;
\n ————
\n provided, however, that the Parties agree not to bring suit or permit any
\n ——– ——-
\n of their Subsidiaries or Affiliates to bring suit against any Person with
\n respect to any Liability to the extent that such Person would be released
\n with respect to such Liability by this Section 15.1 but for the provisions
\n ————
\n of this clause (vi).<\/p>\n
(c) Neither Party shall make, nor permit any of its Subsidiaries or
\nAffiliates to make, any claim or demand, or commence any Action asserting any
\nclaim or demand, including any claim of contribution or indemnification, against
\nthe other Party, or any other Person released pursuant to Section 15.1(a), with
\n —————
\nrespect to any Liability released pursuant to Section 15.1(a).
\n —————<\/p>\n
(d) It is the intent of each of the Parties by virtue of the
\nprovisions of this Section 15.1 to provide for a full and complete release and
\n ————
\ndischarge of all Liabilities existing or arising from all acts and events
\noccurring or failing to occur or alleged to have occurred or to have failed to
\noccur and all conditions existing or alleged to have existed on or before the
\nDistribution Date, between the Parties (including any contractual agreements or
\narrangements <\/p>\n
-80-<\/p>\n
existing or alleged to have existed between the Parties on or before the
\nDistribution Date), except as expressly set forth in Section 15.1(b). At any
\n —————
\ntime, at the request of either Party, the other Party shall execute and deliver
\nreleases reflecting the provisions hereof.<\/p>\n
15.2. Indemnification by Edwards. Except as provided in Section 15.5,
\n ————————– ————
\nEdwards shall indemnify and hold harmless the Baxter Indemnified Parties from
\nand against any and all Expenses or Losses incurred or suffered by Baxter
\n(and\/or one or more of the Baxter Indemnified Parties), in connection with,
\nrelating to, arising out of or due to, directly or indirectly, any of the
\nfollowing items:<\/p>\n
(a) any claim that the information included in the Registration
\nStatement or the Information Statement that relates to the Edwards Business, or
\nany other information relating to the Edwards Business provided to Baxter or
\ndistributed to third parties by employees of Edwards or individuals who were
\nemployees of the Edwards Business prior to the Distribution Date, is or was
\nfalse or misleading with respect to any material fact or omits or omitted to
\nstate any material fact required to be stated therein or necessary in order to
\nmake the statements therein, in light of the circumstances under which they were
\nmade, not misleading, regardless of whether the occurrence, action or other
\nevent giving rise to the applicable matter took place prior or subsequent to the
\nDistribution Date;<\/p>\n
(b) the Edwards Business as conducted by Baxter or its Subsidiaries,
\nAffiliates or predecessors on or at any time prior to the Distribution Date;<\/p>\n
(c) the Transferred Assets;<\/p>\n
(d) the Assumed Liabilities;<\/p>\n
(e) the Transferred Subsidiaries;<\/p>\n
(f) the breach by Edwards or any of its Subsidiaries of any covenant or
\nagreement set forth in this Agreement, any Conveyancing Instrument, any
\nImplementation Agreement or the Tax Sharing Agreement, regardless of when or
\nwhere the loss, claim, accident, occurrence, event or happening giving rise to
\nthe Expense or Loss took place, or whether any such loss, claim, accident,
\noccurrence, event or happening is known or unknown, or reported or unreported;<\/p>\n
(g) the employee benefits provided or the actions taken or omitted to be
\ntaken with respect thereto in connection with this Agreement or otherwise
\nrelating to the provision of employee benefits to employees or former employees
\nof Edwards (or its Subsidiaries), their beneficiaries, alternate payees or any
\nother person claiming benefits through them (except to the extent such Expenses
\nor Losses are specifically allocated to Baxter pursuant to Section 15.3(f)),
\n —————
\nincluding Expenses or Losses arising in connection with (i) Edwards’ reduction,
\nelimination or failure to provide any benefit accrued by its employees or
\nemployees of any of its Subsidiaries (including benefits accrued prior to the
\nDistribution Date) and (ii) the transfer of account balances and accrued
\nbenefits as described in Section 12.9 where such Expenses or Losses are incurred
\n ————
\nas a result of (A) any act or omission by Edwards (or Edwards’ representative)
\nor (B) a determination by the IRS that the transferee plan is not a tax-
\nqualified plan;<\/p>\n
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(h) the Indemnifiable matters set forth in Sections 7.3, 9.4(b) and
\n ———— ——
\n9.11(b) and Article XII; or
\n——- ———— <\/p>\n
(i) any use of, access to or reliance upon the technical information
\nor data made available to Edwards or its Subsidiaries pursuant to Section 17.1.
\n ———— <\/p>\n
15.3. Indemnification by Baxter. Except as provided in Section 15.5,
\n ————————- ————
\nBaxter shall indemnify and hold harmless Edwards and each of its Subsidiaries,
\nAffiliates, directors, officers, employees, agents and counsel, and each of the
\nheirs, executors, successors, assigns and personal representatives of any of the
\nforegoing (collectively, the “Edwards Indemnified Parties”), from and against
\n —————————
\nany and all Expenses or Losses incurred or suffered by Edwards (and\/or one or
\nmore of the Edwards Indemnified Parties) in connection with, relating to,
\narising out of or due to, directly or indirectly, any of the following items:<\/p>\n
(a) any claim that the information included in the Registration
\nStatement or the Information Statement that relates to Baxter or the Retained
\nBusiness is or was false or misleading with respect to any material fact or
\nomits or omitted to state any material fact required to be stated therein or
\nnecessary in order to make the statements therein, in light of the circumstances
\nunder which they were made, not misleading, regardless of whether the
\noccurrence, action or other event giving rise to the applicable matter took
\nplace prior or subsequent to the Distribution Date;<\/p>\n
(b) the business (other than the Edwards Business) conducted by
\nBaxter or its Subsidiaries, Affiliates or predecessors on or at any time prior
\nto the Distribution Date;<\/p>\n
(c) the assets owned by Baxter or its Subsidiaries other than the
\nTransferred Assets and the Shared Agreements;<\/p>\n
(d) the Liabilities (including the Retained Liabilities) of Baxter
\nor its Subsidiaries other than the Assumed Liabilities;<\/p>\n
(e) the breach by Baxter or any of its Subsidiaries of any covenant
\nor agreement set forth in this Agreement, any Conveyancing Instrument, any
\nImplementation Agreement or the Tax Sharing Agreement, regardless of when or
\nwhere the loss, claim, accident, occurrence, event or happening giving rise to
\nthe Expense or Loss took place, or whether any such loss, claim, accident,
\noccurrence, event or happening is known or unknown, or reported or unreported;
\nor<\/p>\n
(f) Baxter’s reduction, elimination or failure to provide any
\nbenefit previously provided to its employees (or employees of its Subsidiaries),
\nother than a benefit assumed by Edwards pursuant to Article XII or an Assumed
\n ———–
\nLiability, or any act or omission by Baxter in connection with the transfer of
\nassets and liabilities as described in Section 12.9.
\n ———— <\/p>\n
15.4. Applicability of and Limitation on Indemnification. (a) EXCEPT
\n ————————————————–
\nAS EXPRESSLY PROVIDED HEREIN, THE INDEMNITY OBLIGATIONS UNDER THIS ARTICLE XV
\n ———-
\nSHALL APPLY NOTWITHSTANDING ANY INVESTIGATION MADE BY OR ON BEHALF OF ANY
\nINDEMNIFIED PARTY AND SHALL APPLY WITHOUT<\/p>\n
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REGARD TO WHETHER THE LOSS, LIABILITY, CLAIM, DAMAGE, COST OR EXPENSE FOR WHICH
\nINDEMNITY IS CLAIMED HEREUNDER IS BASED ON STRICT LIABILITY, ABSOLUTE LIABILITY
\nOR ARISES AS AN OBLIGATION FOR CONTRIBUTION.<\/p>\n
(b) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN
\nNO EVENT SHALL BAXTER BE LIABLE TO EDWARDS (OR ANY EDWARDS INDEMNIFIED PARTY),
\nOR EDWARDS BE LIABLE TO BAXTER (OR ANY BAXTER INDEMNIFIED PARTY), UNDER THIS
\nAGREEMENT FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
\nDAMAGES, INCLUDING LOSS OF ANTICIPATED PROFITS OR LOSS OR DIMINUTION OF
\nREVENUES, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT OR
\nOTHERWISE, EXCEPT TO THE EXTENT THAT SUCH LIABILITY HAS BEEN ASSERTED BY A THIRD
\nPARTY AGAINST A PARTY ENTITLED TO INDEMNIFICATION HEREUNDER.<\/p>\n
15.5. Adjustment of Indemnifiable Losses. (a) The amount that any
\n ———————————-
\nParty (an “Indemnifying Party”) is required to pay to any Person entitled to
\n ——————
\nindemnification hereunder (an “Indemnified Party”) shall be reduced (including
\n —————–
\nretroactively) by any Insurance Proceeds and other amounts actually recovered by
\nor on behalf of such Indemnified Party in reduction of the related Expense or
\nLoss. If an Indemnified Party receives a payment (an “Indemnity Payment”)
\n —————–
\nrequired by this Agreement from an Indemnifying Party in respect of any Expense
\nor Loss and subsequently actually receives Insurance Proceeds or other amounts
\nin respect of such Expense or Loss, then such Indemnified Party shall pay to the
\nIndemnifying Party a sum equal to the lesser of (i) the amount of such Insurance
\nProceeds or other amounts actually received or (ii) the net amount of Indemnity
\nPayments actually received previously. The Indemnified Party agrees that the
\nIndemnifying Party shall be subrogated to such Indemnified Party under any
\ninsurance policy.<\/p>\n
(b) An insurer who otherwise would be obligated to pay any claim
\nshall not be relieved of the responsibility with respect thereto, or, solely by
\nvirtue of the indemnification provisions hereof, have any subrogation rights
\nwith respect thereto, it being expressly understood and agreed that no insurer
\nor any other third-party shall be entitled to a “windfall” (i.e., a benefit he
\n —-
\nor she would not be entitled to receive in the absence of the indemnification
\nprovisions) by virtue of the indemnification provisions hereof.<\/p>\n
(c) If any Indemnified Party realizes a Tax benefit or detriment in
\none or more Tax periods by reason of having incurred an Expense or a Loss for
\nwhich such Indemnified Party receives an Indemnity Payment from an Indemnifying
\nParty (or by reason of the receipt of any Indemnity Payment), then such
\nIndemnified Party shall pay to such Indemnifying Party an amount equal to the
\nTax benefit or such Indemnifying Party shall pay to such Indemnified Party an
\nadditional amount equal to the Tax detriment (taking into account, without
\nlimitation, any Tax detriment resulting from the receipt of such additional
\namounts), as the case may be. The amount of any Tax benefit or any Tax detriment
\nfor a Tax period realized by an Indemnified Party by reason of having incurred
\nan Expense or a Loss (or by reason of the receipt of any Indemnity Payment)
\nshall be deemed to equal the product obtained by multiplying (i) the amount of
\nany deduction or loss or inclusion in income for such period resulting from such
\nExpense or <\/p>\n
-83-<\/p>\n
Loss (or the receipt of any Indemnity Payment or additional amount), as the case
\nmay be (without regard to whether such deduction or loss or such inclusion in
\nincome results in any actual decrease or increase in Tax liability for such
\nperiod), by (ii) the highest applicable marginal Tax rate for such period
\n(provided, however, that the amount of any Tax benefit attributable
\n ——– ——-
\nto an amount that is creditable shall be deemed to equal the amount of such
\ncreditable item). Any payment due under this Section 15.5(c) with respect to a
\n —————
\nTax benefit or Tax detriment realized by an Indemnified Party in a Tax period
\nshall be due and payable within 30 days from the time the return for such Tax
\nperiod is due, without taking into account any extension of time granted to the
\nParty filing such return.<\/p>\n
(d) In the event that an Indemnity Payment shall be denominated in a
\ncurrency other than United States dollars, the amount of such payment shall be
\ntranslated into United States dollars using the Foreign Exchange Rate for such
\ncurrency determined in accordance with the following rules:<\/p>\n
(i) with respect to an Expense or a Loss arising from payment by a
\n financial institution under a guarantee, comfort letter, letter of credit,
\n foreign exchange contract or similar instrument, the Foreign Exchange Rate
\n for such currency shall be determined as of the date on which such
\n financial institution shall have been reimbursed;<\/p>\n
(ii) with respect to an Expense or a Loss covered by insurance, the
\n Foreign Exchange Rate for such currency shall be the Foreign Exchange Rate
\n employed by the insurance company providing such insurance in settling such
\n Expense or Loss with the Indemnifying Party; and<\/p>\n
(iii) with respect to an Expense or a Loss not covered by clause (i)
\n or (ii) above, the Foreign Exchange Rate for such currency shall be
\n determined as of the date that notice of the claim with respect to such
\n Expense or Loss shall be given to the Indemnified Party.<\/p>\n
15.6. Procedures for Indemnification of Third Party Claims. (a) If any
\n —————————————————-
\nthird-party shall make any claim or commence any arbitration proceeding or suit
\n(collectively, a “Third Party Claim”) against any one or more of the Indemnified
\n —————–
\nParties with respect to which an Indemnified Party intends to make any claim for
\nindemnification against Edwards under Section 15.2 or against Baxter under
\n ————
\nSection 15.3, such Indemnified Party shall promptly give written notice to the
\n————
\nIndemnifying Party describing such Third Party Claim in reasonable detail, and
\nthe following provisions shall apply. Notwithstanding the foregoing, the
\nfailure of any Indemnified Party to provide notice in accordance with this
\nSection 15.6(a) shall not relieve the related Indemnifying Party of its
\n—————
\nobligations under this Article XV, except to the extent that such Indemnifying
\n ———-
\nParty is actually prejudiced by such failure to provide notice.<\/p>\n
(b) The Indemnifying Party shall have 20 business days after receipt
\nof the notice referred to in Section 15.6(a) to notify the Indemnified Party
\n —————
\nthat it elects to conduct and control the defense of such Third Party Claim. If
\nthe Indemnifying Party does not give the foregoing notice, the Indemnified Party
\nshall have the right to defend, contest, settle or compromise such Third Party
\nClaim in the exercise of its exclusive discretion subject to the provisions of
\nSection 15.6(c), and the Indemnifying Party shall, upon request from any of the
\n————— <\/p>\n
-84-<\/p>\n
Indemnified Parties, promptly pay to such Indemnified Parties in accordance with
\nthe other terms of this Section 15.6(b) the amount of any Expense or Loss
\n —————
\nresulting from their liability to the third-party claimant. If the Indemnifying
\nParty gives the foregoing notice, the Indemnifying Party shall have the right to
\nundertake, conduct and control, through counsel reasonably acceptable to the
\nIndemnified Party, and at its sole expense, the conduct and settlement of such
\nThird Party Claim, and the Indemnified Party shall cooperate with the
\nIndemnifying Party in connection therewith, provided that (i) the Indemnifying
\n ——–
\nParty shall not thereby permit any lien, encumbrance or other adverse charge to
\nthereafter attach to any asset of any Indemnified Party; (ii) the Indemnifying
\nParty shall not thereby permit any injunction against any Indemnified Party;
\n(iii) the Indemnifying Party shall permit the Indemnified Party and counsel
\nchosen by the Indemnified Party and reasonably acceptable to the Indemnifying
\nParty to monitor such conduct or settlement and shall provide the Indemnified
\nParty and such counsel with such information regarding such Third Party Claim as
\neither of them may reasonably request (which request may be general or
\nspecific), but the fees and expenses of such counsel (including allocated costs
\nof in-house counsel and other personnel) shall be borne by the Indemnified Party
\nunless (A) the Indemnifying Party and the Indemnified Party shall have mutually
\nagreed to the retention of such counsel or (B) the named parties to any such
\nThird Party Claim include the Indemnified Party and the Indemnifying Party and
\nin the reasonable opinion of counsel to the Indemnified Party representation of
\nboth parties by the same counsel would be inappropriate due to actual or likely
\nconflicts of interest between them, in either of which cases the reasonable fees
\nand disbursements of counsel for such Indemnified Party (including allocated
\ncosts of in-house counsel and other personnel) shall be reimbursed by the
\nIndemnifying Party to the Indemnified Party; and (iv) the Indemnifying Party
\nshall agree promptly to reimburse to the extent required under this Article XV
\n ———-
\nthe Indemnified Party for the full amount of any Expense or Loss resulting from
\nsuch Third Party Claim and all related expenses incurred by the Indemnified
\nParty. In no event shall the Indemnifying Party, without the prior written
\nconsent of the Indemnified Party, settle or compromise any claim or consent to
\nthe entry of any judgment that does not include as an unconditional term thereof
\nthe giving by the claimant or the plaintiff to the Indemnified Party a release
\nfrom all Liability in respect of such claim.<\/p>\n
If the Indemnifying Party shall not have undertaken the conduct and
\ncontrol of the defense of any Third Party Claim as provided above, the
\nIndemnifying Party shall nevertheless be entitled through counsel chosen by the
\nIndemnifying Party and reasonably acceptable to the Indemnified Party to monitor
\nthe conduct or settlement of such claim by the Indemnified Party, and the
\nIndemnified Party shall provide the Indemnifying Party and such counsel with
\nsuch information regarding such Third Party Claim as either of them may
\nreasonably request (which request may be general or specific), but all costs and
\nexpenses incurred in connection with such monitoring shall be borne by the
\nIndemnifying Party.<\/p>\n
(c) So long as the Indemnifying Party is contesting any such Third
\nParty Claim in good faith, the Indemnified Party shall not pay or settle any
\nsuch Third Party Claim. Notwithstanding the foregoing, the Indemnified Party
\nshall have the right to pay or settle any such Third Party Claim, provided that
\n ——–
\nin such event the Indemnified Party shall waive any right to indemnity therefor
\nby the Indemnifying Party, and no amount in respect thereof shall be claimed as
\nan Expense or a Loss under this Section 15.6(c).
\n ————— <\/p>\n
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If the Indemnifying Party shall have undertaken the conduct and
\ncontrol of the defense of any Third Party Claim as provided above, the
\nIndemnified Party, on not less than 30 days prior written notice to the
\nIndemnifying Party, may make settlement (including payment in full) of such
\nThird Party Claim, and such settlement shall be binding upon the Parties for the
\npurposes hereof, unless within said 30-day period the Indemnifying Party shall
\nhave requested the Indemnified Party to contest such Third Party Claim at the
\nexpense of the Indemnifying Party. In such event, the Indemnified Party shall
\npromptly comply with such request and the Indemnifying Party shall have the
\nright to direct the defense of such claim or any litigation based thereon
\nsubject to all the conditions of Section 15.6(b). Notwithstanding anything in
\n —————
\nthis Section 15.6(c) to the contrary, if the Indemnified Party, in the belief
\n —————
\nthat a claim may materially and adversely affect it other than as a result of
\nmoney damages or other money payments, advises the Indemnifying Party that it
\nhas determined to settle a claim, the Indemnified Party shall have the right to
\ndo so at its own cost and expense, without any requirement to contest such claim
\nat the request of the Indemnifying Party, but without any right under the
\nprovisions of this Section 15.6(c) for indemnification by the Indemnifying
\n —————
\nParty.<\/p>\n
(d) The provisions of this Section 15.6 and Section 15.7 shall not
\n ———— ————
\napply to Taxes (which are covered by the Tax Sharing Agreement).<\/p>\n
15.7. Procedures for Indemnification of Direct Claims. Any claim for
\n ———————————————–
\nindemnification on account of an Expense or a Loss made directly by the
\nIndemnified Party against the Indemnifying Party and that does not result from a
\nThird Party Claim shall be asserted by written notice from the Indemnified Party
\nto the Indemnifying Party specifically claiming indemnification hereunder. Such
\nIndemnifying Party shall have a period of 30 business days after the receipt of
\nsuch notice within which to respond thereto. If such Indemnifying Party does
\nnot respond within such 30 business-day period, such Indemnifying Party shall be
\ndeemed to have accepted responsibility to make payment and shall have no further
\nright to contest the validity of such claim. If such Indemnifying Party does
\nrespond within such 30 business-day period and rejects such claim in whole or in
\npart, such Indemnified Party shall be free to pursue resolution as provided in
\nArticle XVI.
\n———– <\/p>\n
15.8. Contribution. If the indemnification provided for in this
\n ————
\nArticle XV is unavailable to an Indemnified Party in respect of any Expense or
\n———-
\nLoss arising out of or related to information contained in the Registration
\nStatement or the Information Statement, then the Indemnifying Party, in lieu of
\nindemnifying such Indemnified Party, shall contribute to the amount paid or
\npayable by such Indemnified Party as a result of such Expense or Loss in such
\nproportion as is appropriate to reflect the relative fault of the Edwards
\nIndemnified Parties, on the one hand, or the Baxter Indemnified Parties, on the
\nother hand, in connection with the statements or omissions that resulted in such
\nExpense or Loss. The relative fault of any Edwards Indemnified Party, on the one
\nhand, and of any Baxter Indemnified Party, on the other hand, shall be
\ndetermined by reference to, among other things, whether the untrue or alleged
\nuntrue statement of a material fact or the omission or alleged omission of a
\nmaterial fact relates to information about or supplied by the Edwards Business
\nor an Edwards Indemnified Party, on the one hand, or about or by the Retained
\nBusiness or a Baxter Indemnified Party, on the other hand.<\/p>\n
15.9. No Third-Party Beneficiaries. Except to the extent expressly
\n —————————-
\nprovided otherwise in this Article XV, the indemnification provided for in this
\n ———-
\nAgreement, the Tax <\/p>\n
-86-<\/p>\n
Sharing Agreement, any Implementation Agreement or any Operating Agreement shall
\nnot inure to the benefit of any third-party or parties and shall not relieve any
\ninsurer or other third-party who otherwise would be obligated to pay any claim
\nor assume the responsibility with respect thereto, or, solely by virtue of the
\nindemnification provisions hereof, provide any subrogation rights with respect
\nthereto, and each Party agrees to waive such rights against the other to the
\nfullest extent permitted.<\/p>\n
15.10. Remedies Cumulative. The remedies provided in this Article XV
\n ——————- ———-
\nshall be cumulative and, subject to the provisions of Article XVI below, shall
\n ———–
\nnot preclude assertion by an Indemnified Party of any other rights or the
\nseeking of any and all other remedies against any Indemnifying Party.<\/p>\n
15.11. Survival. All covenants and agreements of the Parties
\n ——–
\ncontained in this Agreement relating to indemnification shall survive the
\nDistribution Date indefinitely, unless a specific survival or other applicable
\nperiod is expressly set forth herein.<\/p>\n
ARTICLE XVI<\/p>\n
DISPUTE RESOLUTION
\n ——————<\/p>\n
16.1. General. Any dispute arising out of or relating to this
\n ——-
\nAgreement, any of the Implementation Agreements or any of the Conveyancing
\nInstruments shall be resolved in accordance with the procedures specified in
\nthis Article XVI, which shall be the sole and exclusive procedures for the
\n ———–
\nresolution of any such disputes.<\/p>\n
16.2. Escalation. The Parties will attempt in good faith to resolve
\n ———-
\nexpeditiously any dispute, claim or controversy arising out of or relating to
\nthe execution, interpretation and performance of this Agreement, any of the
\nImplementation Agreements or any of the Conveyancing Instruments or the breach,
\ntermination or validity (including the validity, scope and enforceability of
\nthis mediation and arbitration provision) of this Agreement, any Implementation
\nAgreement or any Conveyancing Instrument (a “Dispute”) promptly by negotiations
\n ——-
\nbetween executives who have authority to settle the controversy and who are at a
\nhigher level of management than the persons with direct responsibility for the
\nadministration of this Agreement. Either Party may give the other Party written
\nnotice (an “Escalation Notice”) of any Dispute not resolved in the normal course
\n —————–
\nof business. Within fifteen days after delivery of the Escalation Notice, the
\nreceiving Party shall submit to the other a written response. The Escalation
\nNotice and the response thereto shall include (a) a statement of each Party’s
\nposition and a summary of arguments supporting that position, and (b) the name
\nand title of the executive who will represent that Party and of any other person
\nwho will accompany the executive. Within 30 days after delivery of the
\nEscalation Notice, the executives of both Parties shall meet at a mutually
\nacceptable time and place, and thereafter as often as they reasonably deem
\nnecessary, to attempt to resolve the Dispute. All reasonable requests for
\ninformation made by one Party to the other will be honored. All negotiations
\npursuant to this clause are confidential and shall be treated as compromise and
\nsettlement negotiations for purposes of applicable rules of evidence.<\/p>\n
16.3. Arbitration. Any Dispute which has not been resolved by the
\n ———–
\nspecified non-binding procedure set forth in Section 16.2 within 90 days of the
\n ————
\ndate of delivery of the <\/p>\n
-87-<\/p>\n
Escalation Notice shall be settled by binding arbitration in accordance with the
\nCPR Non-Administered Arbitration Rules in effect on the date of this Agreement,
\nby three independent and impartial arbitrators, none of whom shall be appointed
\nby either Party. The arbitration shall be governed by the United States
\nArbitration Act, 9 U.S.C. (S)(S) 1-16, as the same may be amended from time to
\ntime, and judgment upon the award rendered by the arbitrators may be entered by
\nany court having jurisdiction thereof. The place of the arbitration shall be
\nLake County, Illinois or Orange County, California, and shall be determined by
\nthe Party that initiated the dispute resolution process. The arbitrators may
\naward attorneys’ fees in their discretion. Otherwise, the arbitrators are not
\nempowered to award damages in excess of compensatory damages, and each Party
\nhereby irrevocably waives any right to recover such damages.<\/p>\n
16.4. Procedures. The Parties may request limited discovery in
\n ———-
\naccordance with the Federal Rules of Civil Procedure of the United States (the
\n“F.R.C.P.”) for a period of 120 days after the initiation of the arbitration
\n ——–
\nprocess. All issues regarding compliance with discovery requests shall be
\ndecided by the arbitrators pursuant to the F.R.C.P. The Parties agree that the
\nrecipient of a discovery request shall have 10 business days after the receipt
\nof such request to object to any or all portions of such request and shall
\nrespond to any portions of such request not so objected within 30 business days
\nof the receipt of such request. All objections shall be in writing and shall
\nindicate the reasons for such objections. The objecting Party shall ensure that
\nall objections and responses are received by the other Party within the above
\ntime periods; failure to comply with the specified time period shall be
\naddressed as set forth in F.R.C.P. 37. Any Party seeking to compel discovery
\nfollowing receipt of an objection shall file with the other Party and the
\narbitrators a motion to compel, including a copy of the initial request and the
\nobjection. The arbitrators shall allow 10 business days for the responses to the
\nmotion to compel before ruling. Claims of privilege and other objections shall
\nbe determined as they would be in United States federal court in a case applying
\nIllinois law. The arbitrators may grant or deny the motion to compel, in whole
\nor in part, concluding that the discovery request is or is not appropriate under
\nthe circumstances, taking into account the needs of the Parties and the
\ndesirability of making discovery expeditious and cost-effective. The statute of
\nlimitations of the State of Illinois applicable to the commencement of a lawsuit
\nshall apply to the date of initial written notification of a dispute and shall
\nbe extended until commencement of arbitration if all interim deadlines have been
\ncomplied with by the notifying Party.<\/p>\n
16.5. Injunctive Relief. Nothing contained in this Article XVI shall
\n —————– ———–
\nprevent either Party from resorting to judicial process if injunctive or other
\nequitable relief from a court is necessary to prevent serious and irreparable
\ninjury to one Party or to others. The use of arbitration procedures will not be
\nconstrued under the doctrine of laches, waiver or estoppel to affect adversely
\neither Party’s right to assert any claim or defense.<\/p>\n
ARTICLE XVII<\/p>\n
ACCESS TO INFORMATION AND SERVICES
\n ———————————-<\/p>\n
17.1. Access to Financial Information. (a) At all times from and
\n ——————————-
\nafter the Distribution Date for a period of ten (10) years, as soon as
\nreasonably practicable after written request: (i) Baxter shall afford to
\nEdwards, its Subsidiaries and their authorized accountants, <\/p>\n
-88-<\/p>\n
counsel and other designated representatives reasonable access during normal
\nbusiness hours to, or, at Edwards’ expense, provide copies of, all records,
\nbooks, contracts, instruments, data, documents and other information
\n(collectively, “Information”) in the possession or under the control of Baxter
\n ———–
\nimmediately following the Distribution Date that relates to Edwards, the Edwards
\nBusiness or the Edwards Employees; and (ii) Edwards shall afford to Baxter, its
\nSubsidiaries and their authorized accountants, counsel and other designated
\nrepresentatives reasonable access during normal business hours to, or, at
\nBaxter’s expense, provide copies of, all Information in the possession or under
\nthe control of Edwards immediately following the Distribution Date that relates
\nto Baxter, the Retained Business or the employees of Baxter; provided, however,
\n ——– ——-
\nthat in the event that either Party determines that any such provision of or
\naccess to Information could be commercially detrimental, violate any law or
\nagreement or waive any attorney-client privilege, the Parties shall take all
\nreasonable measures to permit the compliance with such obligations in a manner
\nthat avoids any such harm or consequence.<\/p>\n
(b) Either Party may request Information under Section 17.1(a) (i) to
\n —————
\ncomply with reporting, disclosure, filing or other requirements imposed on the
\nrequesting party (including under applicable securities or tax laws) by a
\nGovernmental Authority having jurisdiction over the requesting party, (ii) for
\nuse in any other judicial, regulatory, administrative, Tax or other proceeding
\nor in order to satisfy audit, accounting, claims defense, regulatory filings,
\nlitigation, Tax or other similar requirements, (iii) for use in compensation,
\nbenefit or welfare plan administration or other bona fide business purposes or
\n(iv) to comply with its obligations under this Agreement, any Conveyancing
\nInstrument, any Implementation Agreement, any Operating Agreement or the Tax
\nSharing Agreement.<\/p>\n
(c) After the Distribution Date, (i) Edwards shall maintain in effect
\nat its own cost and expense adequate systems and controls to the extent
\nnecessary to enable Baxter and its Subsidiaries to satisfy their respective
\nreporting, accounting, audit and other obligations, and (ii) Edwards shall
\nprovide, or cause to be provided, to Baxter in such form as Baxter shall
\nrequest, at no charge to Baxter, all financial and other data and information as
\nBaxter determines necessary or advisable in order to prepare Baxter financial
\nstatements and reports or filings with any Governmental Authority.<\/p>\n
17.2. Ownership of Information. Any Information owned by one Party
\n ————————
\nthat is provided to a requesting Party pursuant to Section 17.1 shall be deemed
\n ————
\nto remain the property of the providing Party. Unless specifically set forth
\nherein, nothing contained in this Agreement shall be construed to grant or
\nconfer rights of license or otherwise in any such Information.<\/p>\n
17.3. Compensation for Providing Information. The Party requesting
\n ————————————–
\nInformation agrees to reimburse the providing Party for the reasonable costs, if
\nany, of creating, gathering and copying such Information, to the extent that
\nsuch costs are incurred for the benefit of the requesting Party. Except as
\notherwise specifically provided in this Agreement, such costs shall be computed
\nin accordance with the providing Party’s standard methodology and procedures.<\/p>\n
17.4. Retention of Records. To facilitate the possible exchange of
\n ——————–
\nInformation pursuant to this Article XVII after the Distribution Date, the
\n ————
\nParties agree to use commercially reasonable efforts to retain all Information
\nin their respective possession or control on the <\/p>\n
-89-<\/p>\n
Distribution Date in accordance with the policies and procedures of Baxter as in
\neffect on the Distribution Date. No party will destroy, or permit any of its
\nSubsidiaries or Affiliates to destroy, any Information that the other Party may
\nhave the right to obtain pursuant to this Agreement prior to the tenth
\nanniversary of the date hereof, and thereafter without first using commercially
\nreasonable efforts to notify the other Party of the proposed destruction and
\ngiving the other Party the opportunity to take possession of such Information
\nprior to such destruction; provided, however, that in the case of any
\n ——– ——-
\nInformation relating to Taxes, such period shall be extended to the expiration
\nof the applicable statute of limitations (giving effect to any extensions
\nthereof).<\/p>\n
17.5. Limitations. (a) Baxter and Edwards make no representations
\n ———–
\nor warranties, express or implied, about the accuracy, completeness, adequacy or
\nsufficiency of the financial and technical information and data compilations and
\nEXPRESSLY DISCLAIM ALL WARRANTIES WHATSOEVER, WHETHER STATUTORY, WRITTEN, ORAL,
\nEXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIM EACH SUCH WARRANTY, INCLUDING ANY
\nWARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. Except as
\nprovided in Article X hereof, the rights of access pursuant to Section 17.1
\n ——— ————
\nshall not include, however, such Information of either Party and its
\nSubsidiaries relating to (i) products, materials and components under
\ndevelopment; (ii) Information pertaining to potential acquisitions, divestitures
\nand other business arrangements; (iii) studies and investigations being
\nundertaken by either Party and its Subsidiaries for its or their own benefit or
\nfor the benefit of a third party; and (iv) information and data either Party and
\nits Subsidiaries are obligated to a third party to maintain in confidence.<\/p>\n
(b) No Party shall have any liability to the other Party (i) if any
\nInformation exchanged or provided pursuant to this Agreement that is an estimate
\nor forecast, or that is based on an estimate or forecast, is found to be
\ninaccurate, in the absence of willful misconduct by the Party providing such
\nInformation, or (ii) if any Information is destroyed after commercially
\nreasonable efforts to comply with the provisions of Section 17.4.
\n ———— <\/p>\n
17.6. Production of Witnesses. At all times from and after the
\n ———————–
\nDistribution Date, each Party shall use commercially reasonable efforts to make
\navailable to the other Party (without cost (other than reimbursement of actual
\nout-of-pocket expenses) to, and upon prior written request of, the other Party)
\nits directors, officers, employees and agents as witnesses to the extent that
\nthe same may reasonably be required by the other Party in connection with any
\nlegal, administrative or other proceeding in which the requesting Party may from
\ntime to time be involved with respect to the Edwards Business, the Retained
\nBusiness or any transactions contemplated hereby.<\/p>\n
17.7. Confidentiality. (a) From and after the Distribution Date,
\n —————
\neach of Baxter and Edwards shall hold, and shall cause their respective
\nSubsidiaries, directors, officers, employees, agents, consultants, advisors and
\nother representatives to hold, in strict confidence, with at least the same
\ndegree of care that applies to Baxter’s confidential and proprietary information
\npursuant to policies in effect as of the Distribution Date, all non-public
\ninformation concerning the other Party or any of its Subsidiaries or Affiliates
\nobtained by it prior to the Distribution Date, accessed by it pursuant to
\nSection 17.1 hereof, or furnished to it by the other Party or any of its
\n————
\nSubsidiaries or Affiliates pursuant to this Agreement or any agreement or<\/p>\n
-90-<\/p>\n
document contemplated hereby, including any trade secrets, technology, know-how
\nand other non-public, proprietary intellectual property rights licensed pursuant
\nto Sections 10.1 and 10.2 hereof, and shall not release or disclose such
\n ————- —-
\ninformation to any other Person, except its representatives, who shall be bound
\nby the provisions of this Section 17.7; provided, however, that Baxter and
\n ———— ——– ——-
\nEdwards and their respective Subsidiaries, directors, officers, employees,
\nagents, consultants, advisors and other representatives may disclose such
\ninformation if, and only to the extent that, (i) a disclosure of such
\ninformation is compelled by judicial or administrative process or, in the
\nopinion of such Party’s counsel, by other requirements of law (in which case the
\ndisclosing Party will provide, to the extent practicable under the
\ncircumstances, advance written notice to the other Party of its intent to make
\nsuch disclosure), or (ii) such Party can show that such information (A) is
\npublished or is or otherwise becomes available to the general public as part of
\nthe public domain without breach of this Agreement; (B) has been furnished or
\nmade known to the recipient without any obligation to keep it confidential by a
\nthird party under circumstances that are not known to the recipient to involve a
\nbreach of the third party’s obligations to a Party hereto; (C) was developed
\nindependently of information furnished to the recipient under this Agreement; or
\n(D) in the case of information furnished after the Distribution Date, was known
\nto the recipient at the time of receipt thereof from the other Party.<\/p>\n
(b) Each Party acknowledges that the other Party would not have an
\nadequate remedy at law for the breach by the acknowledging Party of any one or
\nmore of the covenants contained in this Section 17.7 and agrees that, in the
\n ————
\nevent of such breach, the other Party may, in addition to the other remedies
\nthat may be available to it, apply to a court for an injunction to prevent
\nbreaches of this Section 17.7 and to enforce specifically the terms and
\n ————
\nprovisions of this Section. Notwithstanding any other Section hereof, the
\nprovisions of this Section 17.7 shall survive the Distribution Date
\n ————
\nindefinitely.<\/p>\n
17.8. Privileged Matters. (a) Each of Baxter and Edwards agrees to
\n ——————
\nmaintain, preserve and assert all privileges, including privileges arising under
\nor relating to the attorney-client relationship (which shall include without
\nlimitation the attorney-client and work product privileges), not heretofore
\nwaived, that relate to the Edwards Business and the Transferred Assets for any
\nperiod prior to the Distribution Date (“Privilege” or “Privileges”). Each Party
\n ——— ———-
\nagrees that it shall not waive any Privilege that could be asserted under
\napplicable law without the prior written consent of the other Party. The rights
\nand obligations created by this Section 17.8 shall apply to all information
\n ————
\nrelating to the Edwards Business as to which, but for the Distribution, either
\nParty would have been entitled to assert or did assert the protection of a
\nPrivilege (“Privileged Information”), including (i) any and all information
\n ———————-
\ngenerated prior to the Distribution Date but which, after the Distribution, is
\nin the possession of either Party; and (ii) all information generated, received
\nor arising after the Distribution Date that refers to or relates to Privileged
\nInformation generated, received or arising prior to the Distribution Date.<\/p>\n
(b) Upon receipt by either Party of any subpoena, discovery or other
\nrequest that may call for the production or disclosure of Privileged Information
\nor if either Party obtains knowledge that any current or former employee of
\nBaxter or Edwards has received any subpoena, discovery or other request that may
\ncall for the production or disclosure of Privileged Information, such Party
\nshall notify promptly the other Party of the existence of the request and shall
\nprovide the other Party a reasonable opportunity to review the information and
\nto assert any rights it may have under this Section 17.8 or otherwise to prevent
\n ————
\nthe production or disclosure of <\/p>\n
-91-<\/p>\n
Privileged Information. Each Party agrees that it will not produce or disclose
\nany information that may be covered by a Privilege under this Section 17.8
\n ————
\nunless (i) the other Party has provided its written consent to such production
\nor disclosure (which consent will not be unreasonably withheld), or (ii) a court
\nof competent jurisdiction has entered a final, nonappealable order finding that
\nthe information is not entitled to protection under any applicable Privilege.<\/p>\n
(c) Baxter’s transfer of books and records and other information to
\nEdwards, and Baxter’s agreement to permit Edwards to possess Privileged
\nInformation existing or generated prior to the Distribution Date, are made in
\nreliance on Edwards’ agreement, as set forth in Sections 17.7 and 17.8, to
\n ————- —-
\nmaintain the confidentiality of Privileged Information and to assert and
\nmaintain all applicable Privileges. The access to information being granted
\npursuant to Section 17.1, the agreement to provide witnesses and individuals
\n ————
\npursuant to Section 17.6 and the transfer of Privileged Information to Edwards
\n ————
\npursuant to this Agreement shall not be deemed a waiver of any Privilege that
\nhas been or may be asserted under this Section 17.8 or otherwise. Nothing in
\n ————
\nthis Agreement shall operate to reduce, minimize or condition the rights granted
\nto Baxter in, or the obligations imposed upon Edwards by, this Section 17.8.
\n ———— <\/p>\n
ARTICLE XVIII<\/p>\n
MISCELLANEOUS
\n ————-<\/p>\n
18.1. Entire Agreement. This Agreement, the Conveyancing Instruments,
\n —————-
\nthe Implementation Agreements, the Operating Agreements and the Tax Sharing
\nAgreement, including the Schedules and Exhibits referred to herein and therein
\nand the documents delivered pursuant hereto and thereto, constitute the only
\nagreements between the Parties with respect to the subject matter contained
\nherein or therein, and supersede all prior agreements, negotiations,
\ndiscussions, understandings, writings and commitments between the Parties with
\nrespect to such subject matter.<\/p>\n
18.2. Choice of Law and Forum. This Agreement shall be governed by
\n ———————–
\nand construed and enforced in accordance with the substantive laws (except for
\nany otherwise applicable conflicts of law provisions) of the State of Illinois
\nand the federal laws of the United States of America applicable therein, as
\nthough all acts and omissions related hereto occurred in Illinois. Subject to
\nArticle XVI, any lawsuit arising from or related to this Agreement, any of the
\n———–
\nConveyancing Instruments, Implementation Agreements or Operating Agreements, or
\nthe Tax Sharing Agreement shall be brought only in the United States District
\nCourt for the Northern District of Illinois, the Circuit Court of Lake County,
\nIllinois, the United States District Court for the Central District of
\nCalifornia or the Superior Court of Orange County, California, and the specific
\nchoice from among the foregoing shall be determined by the Party initiating such
\nlawsuit. To the extent permissible by law, the Parties hereby consent to the
\njurisdiction and venue of such courts. Each Party hereby waives, releases and
\nagrees not to assert, and agrees to cause its Affiliates to waive, release and
\nnot to assert, any rights such Party or its Affiliates may have under any
\nforeign law or regulation that would be inconsistent with the terms of this
\nAgreement as governed by Illinois law.<\/p>\n
-92-<\/p>\n
18.3. Amendment. This Agreement shall not be amended, modified or
\n ———
\nsupplemented except by a written instrument signed by an authorized
\nrepresentative of each of the Parties.<\/p>\n
18.4. Waiver. Any term or provision of this Agreement may be waived,
\n ——
\nor the time for its performance may be extended, by the Party or Parties
\nentitled to the benefit thereof. Any such waiver shall be validly and
\nsufficiently given for the purposes of this Agreement if, as to any Party, it is
\nin writing signed by an authorized representative of such Party. The failure of
\nany Party to enforce at any time any provision of this Agreement shall not be
\nconstrued to be a waiver of such provision, or in any way to affect the validity
\nof this Agreement or any part hereof or the right of any Party thereafter to
\nenforce each and every such provision. No waiver of any breach of this Agreement
\nshall be held to constitute a waiver of any other or subsequent breach.<\/p>\n
18.5. Partial Invalidity. Wherever possible, each provision hereof
\n ——————
\nshall be interpreted in such a manner as to be effective and valid under
\napplicable law, but in case any one or more of the provisions contained herein
\nshall, for any reason, be held to be invalid, illegal or unenforceable in any
\nrespect, such provision or provisions shall be ineffective to the extent, but
\nonly to the extent, of such invalidity, illegality or unenforceability without
\ninvalidating the remainder of such provision or provisions or any other
\nprovisions hereof, unless such a construction would be unreasonable.<\/p>\n
18.6. Execution in Counterparts. This Agreement may be executed in
\n ————————-
\none or more counterparts, each of which shall be deemed an original instrument,
\nbut all of which shall be considered one and the same agreement, and shall
\nbecome binding when one or more counterparts have been signed by and delivered
\nto each of the Parties.<\/p>\n
18.7. Successors and Assigns. This Agreement shall be binding upon
\n ———————-
\ninure to the benefit of the Parties and their respective successors and
\npermitted assigns; provided, however, that the rights of either Party under this
\n ——– ——-
\nAgreement shall not be assignable by such Party without the prior written
\nconsent of the other Party. The successors and permitted assigns hereunder
\nshall include, without limitation, any permitted assignee as well as the
\nsuccessors in interest to such permitted assignee (whether by merger,
\nliquidation (including successive mergers or liquidations) or otherwise).<\/p>\n
18.8. Third Party Beneficiaries. Except to the extent otherwise
\n ————————-
\nprovided in Section 13.5 or Article XV hereof the provisions of this Agreement
\n ———— ———-
\nare solely for the benefit of the Parties and their respective Affiliates,
\nsuccessors and permitted assigns and shall not confer upon any third Person any
\nremedy, claim, liability, reimbursement or other right in excess of those
\nexisting without reference to this Agreement. Nothing in this Agreement, the Tax
\nSharing Agreement or any Operating Agreement shall obligate Baxter or Edwards to
\nassist any Edwards Employee to enforce any rights such employee may have with
\nrespect to any of the employee benefits described in this Agreement.<\/p>\n
18.9. Notices. All notices, requests, claims, demands and other
\n ——-
\ncommunications required or permitted hereunder shall be in writing and shall be
\ndeemed given or delivered (i) when delivered personally, (ii) if transmitted by
\nfacsimile when confirmation of <\/p>\n
-93-<\/p>\n
transmission is received, (iii) if transmitted by electronic mail when
\nconfirmation of such transmission is received, (iv) if sent by registered or
\ncertified mail, postage prepaid, return receipt requested, on the third business
\nday after mailing or (v) if sent by private courier when received; and shall be
\naddressed as follows:<\/p>\n
If to Baxter, to:<\/p>\n
Baxter International Inc.
\n One Baxter Parkway
\n Deerfield, IL 60015-4633
\n Attention: General Counsel
\n Facsimile: (847) 948-2450<\/p>\n
If to Edwards, to:<\/p>\n
Edwards Lifesciences Corporation
\n 17221 Red Hill Avenue
\n Irvine, CA 92614
\n Attention: General Counsel
\n Facsimile: (949) 250-6868 <\/p>\n
or to such other address as such Party may indicate by a notice delivered to the
\nother Party.<\/p>\n
18.10. Performance. Each Party shall cause to be performed, and
\n ———–
\nhereby guarantees the performance of, all actions, agreements and obligations
\nset forth herein to be performed by any Subsidiary or Affiliate of such Party.<\/p>\n
18.11. Force Majeure. No Party shall be deemed in fault of this
\n ————-
\nAgreement, any Conveyancing Instrument, any Implementation Agreement, any
\nOperating Agreement or the Tax Sharing Agreement to the extent that any delay or
\nfailure in the performance of its obligations under this Agreement, any
\nConveyancing Instrument, any Implementation Agreement, any Operating Agreement
\nor the Tax Sharing Agreement results from any cause beyond its reasonable
\ncontrol and without its fault or negligence, including acts of God, acts of
\ncivil or military authority, embargoes, epidemics, war, riots, insurrections,
\nfires, explosions, earthquakes, floods, unusually severe weather conditions,
\nlabor problems or unavailability of parts, or, in the case of computer systems,
\nany failure in electrical or air conditioning equipment. In the event of any
\nsuch excused delay, the time for performance shall be extended for a period
\nequal to the time lost by reason of the delay.<\/p>\n
18.12. No Public Announcement. Neither Baxter nor Edwards shall,
\n ———————-
\nwithout the approval of the other, make any press release or other public
\nannouncement concerning the transactions contemplated by this Agreement, except
\nas and to the extent that any such Party shall be so obligated by law or the
\nrules of any stock exchange or quotation system, in which case the other Party
\nshall be advised and the Parties shall use commercially reasonable efforts to
\ncause a mutually agreeable release or announcement to be issued; provided,
\n ——–
\nhowever, that the foregoing shall not preclude communications or disclosures
\n——-
\nnecessary to implement the <\/p>\n
-94-<\/p>\n
provisions of this Agreement or to comply with the accounting and SEC disclosure
\nobligations or the rules of any stock exchange.<\/p>\n
18.13. Termination. Notwithstanding any provision hereof, this
\n ———–
\nAgreement may be terminated and the Distribution abandoned at any time prior to
\nthe Distribution Date by and in the sole discretion of the Board of Directors of
\nBaxter without the approval of any Person. In the event of such termination,
\nthis Agreement shall forthwith become void and no Party shall have any liability
\nto any Person by reason of this Agreement, except that Baxter shall be liable
\nfor any costs and expenses, including attorneys’ fees, incurred by Edwards or
\nits Subsidiaries prior to or arising out of such termination.<\/p>\n
-95-<\/p>\n
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
\nexecuted by their authorized representatives as of the date first above written.<\/p>\n
BAXTER INTERNATIONAL INC.<\/p>\n
By: \/s\/ Harry M. Jansen Kraemer, Jr.
\n ——————————–
\n Harry M. Jansen Kraemer, Jr.
\n Chairman and Chief Executive Officer<\/p>\n
EDWARDS LIFESCIENCES CORPORATION<\/p>\n
By: \/s\/ Michael A. Mussallem
\n ————————
\n Michael A. Mussallem
\n Chairman and Chief Executive Officer<\/p>\n
Signature Page
\n to the
\n Reorganization Agreement<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6866,7415],"corporate_contracts_industries":[9436],"corporate_contracts_types":[9622,9628],"class_list":["post-43547","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-baxter-international-inc","corporate_contracts_companies-edwards-lifesciences-corp","corporate_contracts_industries-health__instruments","corporate_contracts_types-planning","corporate_contracts_types-planning__separation"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43547","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43547"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43547"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43547"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43547"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}