EXHIBIT 99.3
FORM OF
CONTINGENT VALUE RIGHTS AGREEMENT
CONTINGENT VALUE RIGHTS AGREEMENT, dated [ ], 2000, between
ELAN CORPORATION, PLC, a public limited company organized under the laws of
Ireland ("Elan"), and [ ], as Rights Agent (the
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"Rights Agent"), in favor of each person (a "Holder") who from time to time
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holds one or more Contingent Value Rights (the "CVRs") to receive cash payments
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in the amounts and subject to the terms and conditions set forth herein. A
registration statement on Form F-4 (No. 333- ) (the "Registration
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Statement") with respect to, among other securities, the CVRs, has been prepared
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and filed by Elan with the Securities and Exchange Commission (the "Commission")
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and has become effective in accordance with the Securities Act of 1933 (the
"Act"). This Agreement is entered into in connection with the Agreement and
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Plan of Merger (the "Merger Agreement") dated as of March [ ], 2000, by and
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among Elan, Lithium Acquisition Corp. and The Liposome Company, Inc.
("Liposome"), which sets forth the initial allocation of one CVR to each
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outstanding share of Company Common Stock (as defined in the Merger Agreement)
and each share of Company Common Stock subject to issuance under the Company
Options (as defined in the Merger Agreement).
Section 1. Appointment of Rights Agent. Elan hereby appoints the
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Rights Agent to act as agent for the Holders in accordance with the instructions
set forth herein, and the Rights Agent hereby accepts such appointment, upon the
terms and conditions hereinafter set forth.
Section 2. Certain Definitions. For purposes of this Agreement,
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"Deposit Account" means a trust deposit account established by the
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Rights Agent for the purpose of holding the Milestone Payments prior to payment
by the Rights Agent to the Holders in accordance with the terms hereof.
"EU Approval" means final approval of a marketing authorization in the
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European Union of Evacet(TM) by the European Commission, the European Agency for
the Evaluation of Medicinal Products or any successor agency (the "EMEA") and
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the Committee for Proprietary Medicinal Products, so long as such approval:
(i) is for a period of at least five years from the date of such approval;
(ii) is for the treatment of metastatic breast cancer together with
cyclophosphamide;
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(iii) does not contain any condition, limitation or qualification that,
individually or in the aggregate, in the reasonable judgment of Elan
consistent with pharmaceutical industry practice, would materially
and adversely affect the marketing, sale or licensing of Evacet(TM);
(iv) does not impose any material limitation on use or contain any
labeling or marketing requirement that, individually or in the
aggregate, in the reasonable judgment of Elan consistent with
pharmaceutical industry practice, would materially and adversely
affect the marketing, sale or licensing of Evacet(TM); and
(v) does not require any further Development Data (as defined in Section
5.1), the results of which, in the reasonable judgment of Elan
consistent with pharmaceutical industry practice, could reasonably
likely result in Evacet(TM) not continuing to be approved for
marketing in the European Union (or, if any further Development Data
has been requested, all such requests shall have been satisfied).
"EU Countries" means Austria, Belgium, Denmark, Finland, France,
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Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain,
Sweden and the United Kingdom.
"GAAP" means generally accepted accounting principles as in effect in
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Ireland from time to time.
"In-Market Sales" means sales by Elan or any of its affiliates,
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licensees or other transferees of Evacet(TM) in the EU Countries and Canada to
unaffiliated third parties measured in accordance with GAAP, excluding in any
event the transfer pricing of Evacet(TM) by Elan to any of its affiliates or
licensees.
"Majority Holders" means, at any time, the Holders of at least a
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majority of the then outstanding CVRs.
"Milestone Date" means any of the Approval Milestone Date, the Revenue
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Milestone Date and the Sale Milestone Date and any License Milestone Date.
"Milestone Payment" means any of the Approval Payment, the Revenue
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Payment and the Sale Payment and any License Payment.
"Net Sales" means the sum determined by deducting the following
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amounts from the aggregate gross In-Market Sales billed with respect to
Evacet(TM) by Elan or any of its affiliates or licensees:
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(i) trade, quantity or cash discounts, broker's or agent's commissions, if
any, allowed or paid; and
(ii) credits or allowances, if any, given or made on account of price
adjustments, returns, bad debts, promotional discounts, rebates and
any and all federal, state or local government rebates whether now in
existence or subsequently enacted.
"Required Pricing Licenses" means customary licenses from or
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agreements with each Specified EU Country with respect to the pricing, labelling
and marketing of and reimbursement levels (consistent with customary
pharmaceutical margins) applicable to Evacet(TM) in such country, each for a
period of at least five years from the date of such approval and otherwise
satisfactory to Elan in its reasonable judgment consistent with pharmaceutical
industry practice.
"Specified EU Countries" means the following member states of the
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European Union: Germany and the United Kingdom.
Section 3. Form of CVR Certificate.
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3.1 The CVRs shall be evidenced by certificates (the "CVR
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Certificates"), including the form of assignment to be printed on the reverse
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thereof, substantially in the form attached hereto as Exhibit A. The CVR
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Certificates may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements printed, lithographed or
engraved thereon as Elan may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply with
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of the National Association of Securities Dealers, Inc, or
the Nasdaq National Market or such stock exchange on which the CVRs may from
time to time be listed, as the case may be.
3.2 The CVR Certificates shall be executed on behalf of Elan by the
manual or facsimile signature of the present or any future President or Vice
President of Elan, under its corporate seal, affixed or in facsimile, attested
by the manual or facsimile signature of the present or any future Secretary or
Assistant Secretary of Elan. CVR Certificates shall be dated as of the date of
the initial issuance thereof or the date of any subsequent transfer, exchange or
assignment, as the case may be.
Section 4. Registration and Countersignature.
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4.1 The Rights Agent shall maintain books for the registration and
registration of transfer of the CVR Certificates. The CVR Certificates shall be
countersigned by the Rights Agent and shall not be valid for any purpose unless
so countersigned. The CVR Certificates shall be so countersigned and delivered
by the Rights Agent, regardless of whether
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the persons whose manual or facsimile signatures appear thereon as proper
officers of Elan shall have ceased to be such officers at the time of such
countersignature or delivery.
4.2 Prior to due presentment for registration of transfer of the CVR
Certificates, Elan and the Rights Agent may deem and treat the registered Holder
thereof as the absolute owner of the CVR Certificates (notwithstanding any
notation of ownership or other writing thereon made by anyone other than Elan or
the Rights Agent), for the purpose of any Milestone Payment and for all other
purposes, and neither Elan nor the Rights Agent shall be affected by any notice
to the contrary.
Section 5. Payment of CVRs.
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5.1 Unless this Agreement and the CVRs shall have been earlier
terminated as provided herein, the Holders shall be entitled to the following
payments, to be paid by the Rights Agent in accordance with the procedures set
forth in Section 6.
(a) On and after the date (the "Approval Milestone Date") of receipt
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on or before March 31, 2001 (the "Approval Milestone") by Elan or one of its
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subsidiaries of the latest to occur of the following:
(i) official notification by the applicable authority of EU Approval; and
(ii) official notification by the applicable authorities of the issuances
of the Required Pricing Licenses,
the Holders will be entitled to a total payment (the "Approval Payment") of
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US$54.0 million, less all costs of Elan and its subsidiaries incurred (i) in
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order to comply with any request by the European Commission, the EMEA or other
governing agency on or prior to the date of the EU Approval that it be provided
with additional studies, tests, research, procedures or other data ("Development
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Data") prior to the issuance of the EU Approval, and (ii) in obtaining the
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Required Pricing Licenses. Notwithstanding the foregoing, if the Approval
Milestone has not occurred on or before March 31, 2001 solely because of the
operation of clause (v) of the definition of "EU Approval", then the Approval
Milestone shall occur on the date on or before December 31, 2001, on which such
condition is satisfied. Elan shall retain the right to make a determination not
to proceed with the EU application or with any application for the Required
Pricing Licenses with respect to Evacet(TM) based on the reasonable judgment of
Elan consistent with pharmaceutical industry practice (based in part upon
information received from relevant government authorities) that the cost of
pursuing such applications, including the cost of providing any additional
Development Data, would exceed US$7.5 million.
In addition, if (i) the Approval Milestone is not achieved solely
because of clause (iii), (iv) or (v) of the definition of the definition of "EU
Approval", and (ii) the Reve-
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nue Milestone (as defined below) is achieved, then the Approval Milestone
Payment shall also be due and payable on the Revenue Milestone Date.
(b) Elan shall provide to the Rights Agent, as soon as is reasonably
practicable after the end of each fiscal quarter of Elan prior to the fiscal
quarter ended December 31, 2002, a certificate signed by an officer of Elan
setting forth the Net Sales for such fiscal quarter. On and after the date (the
"Revenue Milestone Date") on which Elan certifies to the Rights Agent that Net
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Sales in any fiscal quarter of Elan ended not later than December 31, 2002, were
US$10.5 million or more (calculated on a basis customarily used by Elan in
preparing its financial statements for sales other than those denominated in US
dollars) (the "Revenue Milestone"), and so long as the Sale Milestone has not
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occurred, the Holders will be entitled to a total payment of US$44.0 million,
less the amount of all License Payments (the "Revenue Payment").
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(c) If at any time (a "License Milestone Date") prior to the Revenue
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Milestone Date and prior to the date after which the Revenue Milestone Date is
incapable of being achieved, Elan licenses its right to market Evacet(TM) in any
of France, Germany, Italy, Spain or the United Kingdom, the Holders will be
entitled to a payment (a "License Payment") equal to 50% of any up-front or
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deferred fees (to the extent not based on revenue or other contingencies)
actually received by Elan in connection with such license.
(d) If at any time (the "Sale Milestone Date") prior to any License
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Milestone Date and the Revenue Milestone Date and prior to the date after which
the Revenue Milestone Date is incapable of being achieved, Elan sells for up-
front cash, in a single transaction or series of related transactions, all or
substantially all of its rights to Evacet(TM) in the EU Countries and Canada
(whether achieved by a sale of assets or a sale of all or substantially all of
the marketing rights in such countries) (the "Sale Milestone"), the Holders will
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be entitled to a payment (the "Sale Payment") equal to (i) if the Approval
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Milestone has occurred, 50% of all amounts greater than US$54.0 million actually
received by Elan, or (ii) if the Approval Milestone has not occurred, 50% of all
amounts actually received by Elan, in each case up to a maximum amount payable
to the Holders of US$44.0 million.
(e) The Holders of not less than 20% of the CVRs then outstanding may
direct the Rights Agent on behalf of the Holders to submit any determination
made by Elan pursuant to clause (iii), (iv) or (v) of the definition of "EU
Approval" or pursuant to clause (ii) of Section 18 to arbitration in accordance
with Section 25.
(f) The Holders of not less than 20% of the CVRs then outstanding may
direct the Rights Agent on behalf of the Holders to challenge the accuracy of
any Net Sales certificate provided by Elan pursuant to paragraph (b) of this
Section 5.1, with all costs and expenses (including the reasonable fees and
expenses of counsel) of Elan, the Rights Agent and
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the Holders to be paid by the losing party (i.e., Elan or the Rights Agent on
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behalf of the Holders) in any such proceeding.
5.2 On or as soon as is reasonably practicable after a Milestone
Date, but in no event later than ten business days after such Milestone Date,
Elan shall deliver a notice to the Rights Agent setting forth the amount of the
applicable Milestone Payment or Milestone Payments payable pursuant to this
Agreement, and shall also deliver funds equal to such amount to the Rights Agent
in accordance with Section 6. In no event shall the total Milestone Payments
exceed US$98.0 million. If the Revenue Milestone Date has not occurred for any
fiscal quarter ended on or prior to December 31, 2002, Elan shall deliver a
certificate signed by an officer of Elan to the Rights Agent to that effect.
All amounts to be paid to the Holders shall be in cash from Elan not derived
from Liposome or any of Liposome's subsidiaries. No Holder has any interest in
Evacet(TM), and the Holders' sole right to receive property hereunder is the
right to receive cash from Elan in accordance with the terms hereof.
Section 6. Establishment of Deposit Account; Distribution of
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Milestone Payments.
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(a) On or as soon as is reasonably practicable after a Milestone
Date, but in any event no later than ten business days after a Milestone Date
(such date, the "Payment Due Date"), Elan shall deliver the applicable Milestone
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Payment or Milestone Payments in cash to the Deposit Agent against the Deposit
Agent's written acknowledgment and receipt thereof in the form attached hereto
as Exhibit B. If Elan does not deliver any Milestone Payment to the Deposit
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Agent on or prior to the Payment Due Date, such Milestone Payment will bear
interest at the LIBO Rate for the period that most closely approximates the
number of days after the Payment Date such Milestone Payment was delivered, and
the interest will be added to the related Milestone Payment and distributed to
the Holders in the same manner. The Deposit Agent will deposit the applicable
Milestone Payment amount into the Deposit Account and hold it until it is paid
to the Holders pursuant to the terms of this Agreement.
(b) As soon as practicable after receipt of a notice by Elan
described in Section 5.2 hereof, the Rights Agent shall cause to be delivered to
each Holder of record as of the date that is 15 days after the applicable
Milestone Date (the "Record Date") cash in an amount equal to the pro rata share
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of the applicable Milestone Payment to which such Holder is entitled under this
Agreement. The amount to which any Holder is entitled shall be calculated by
dividing the total Milestone Payment by [the number of fully diluted shares at
closing], multiplied by the number of CVRs held by such Holder. The sole source
of funds for each Milestone Payment shall be the Deposit Account, and the Rights
Agent shall have no liability in respect of any deficiency thereof (subject to
Section 15).
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(c) The Rights Agent will advise Elan of the number of CVRs
outstanding as of the Record Date. Following distribution of any Milestone
Payment to the Holders, the Rights Agent shall return to Elan as soon as is
practicable the portion of such Milestone Payment remaining, together with a
notice that the balance in the Deposit Account has been reduced to zero.
Section 7. Application to European Union; Application for Required
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Pricing Licenses.
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(a) Unless this Agreement and the CVRs shall have earlier terminated
as provided herein, and subject to the provisions of Section 5 hereof, from and
after the Effective Time (as defined in the Merger Agreement), Elan shall use
its reasonable efforts consistent with pharmaceutical industry practice to
achieve the Approval Milestone and the Revenue Milestone. In the event of any
sale, license or other transfer of any rights to Evacet(TM) in the EU Countries
and Canada, Elan agrees to use its reasonable best efforts to obtain the
applicable agreement an undertaking by the buyer, licensee or other transferee
with respect to the Approval Milestone and/or the Revenue Milestone, as
applicable, similar to that set forth in the preceding sentence. All
determinations relating to such applications and all actions taken in connection
with seeking such approvals shall be in the sole discretion of Elan. The
failure to obtain any of such approvals, either at all or on or before a certain
date, shall not be deemed a breach by Elan of the provisions hereof.
(b) Elan agrees not to sell, in a single transaction or series of
related transactions, all of its rights to Evacet(TM) in the EU Countries and
Canada (whether achieved by a sale of assets or a sale of all or substantially
all of the marketing rights in such countries) at any time prior to the Approval
Milestone Date and prior to the date after which the Approval Milestone Date is
incapable of being achieved.
Section 8. Payment of Taxes. Elan will pay all documentary stamp
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taxes attributable to the original issuance of the CVRs; provided, however, that
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Elan shall not be required to pay any tax which may be payable in respect of any
transfer and delivery of CVR Certificates.
Section 9. Mutilated or Missing Certificates. In case any CVR
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Certificate shall be mutilated, lost, stolen or destroyed, Elan may in its sole
discretion issue, and the Rights Agent may countersign and deliver in exchange
and substitution for and upon cancellation of the mutilated CVR Certificate, or
in lieu of a substitution for the lost, stolen or destroyed CVR Certificate, a
new CVR Certificate of like tenor and evidencing the number of CVRs evidenced by
the CVR Certificate so mutilated, lost, stolen or destroyed, but only upon
receipt of evidence satisfactory to the Rights Agent of such mutilation, loss,
theft or destruction of such CVR Certificate and indemnity, if requested, also
satisfactory to it. Applicants
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for such substitute CVR Certificate shall also comply with such other reasonable
regulations and pay such other reasonable charges as Elan or the Rights Agent
may prescribe. Any such new CVR Certificate shall constitute an original
contractual obligation of Elan, whether or not the allegedly mutilated, lost,
stolen or destroyed CVR Certificate shall be at any time enforceable by anyone.
Section 10. Transfer and Registration of CVRs; Listing on Securities
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Exchange.
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10.1 The CVRs and any interest therein may be sold, assigned,
pledged, encumbered or in any other manner transferred or disposed of, in whole
or in part, only in accordance with Section 11 hereof and in compliance with
applicable United States federal and state securities laws and the terms and
conditions hereof.
10.2 The CVRs have been registered pursuant to the Registration
Statement under the Act. Elan covenants and agrees:
(a) to prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective
through the final Milestone Date or until such time as the CVRs terminate in
accordance with the terms hereof and to use its reasonable best efforts to keep
such Registration Statement effective during such period;
(b) to use its reasonable best efforts to register or qualify the
CVRs under the securities or Blue Sky laws of each jurisdiction in which such
registration or qualification is necessary; and
(c) to pay all expenses incurred by it in complying with this Section
10.2, including, without limitation, (i) all registration and filing fees, (ii)
all printing expenses, (iii) all fees and disbursements of counsel and
independent public accountants for Elan, (iv) all Blue Sky fees and expenses
(including fees and expenses of counsel in connection with any Blue Sky
surveys), and (v) the entire expense of any special audits incident to or
required by any such registration.
10.3 Elan will use its reasonable best efforts to obtain approval for
quotation of the CVRs on the Nasdaq National Market or for listing on the
American Stock Exchange and will use its reasonable best efforts to maintain
such approval for so long as any CVRs remain outstanding. Any such quotation
will be at Elan's expense.
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Section 11. Exchange, Transfer or Assignment of CVRs.
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11.1 CVRs may be exchanged or transferred, at the option of the
Holder, upon surrender of CVR Certificates to the Rights Agent for other CVR
Certificates of different denominations, entitling the Holder or Holders thereof
to receive in the aggregate the same total Milestone Payments. Subject to the
preceding sentence, a CVR Certificate may be divided or combined with other CVR
Certificates that carry the same rights upon presentation thereof at the office
of the Rights Agent, together with written notice specifying the names and
denominations in which new CVR Certificates are to be issued and signed by the
holder thereof.
11.2 CVRs may be assigned or transferred, at the option of the
Holder, upon surrender of CVR Certificates to the Rights Agent, accompanied (if
so required by Elan or the Rights Agent) by a written instrument or instruments
of transfer in form satisfactory to Elan and the Rights Agent, duly executed by
the registered holder or by a duly authorized representative or attorney, such
signature to be guaranteed by a commercial bank or trust company having an
office in the United States, by a broker or dealer that is a member of the
National Association of Securities Dealers, Inc. or by a member of a national
securities exchange. Upon any such registration of transfer, a new CVR
Certificate shall be issued to the transferee and the surrendered CVR
Certificate shall be canceled by the Rights Agent. CVR Certificates so canceled
shall be delivered by the Rights Agent to Elan from time to time or otherwise
disposed of by the Rights Agent in a manner satisfactory to Elan.
11.3 Any transfer, exchange or assignment of CVRs shall be without
charge (other than the cost of any transfer tax) to the holder and any new CVR
Certificates issued pursuant to this Section 11 shall be dated the date of such
transfer, exchange or assignment.
Section 12. Rights of CVR Certificate Holder. The Holder of any CVR
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Certificate or CVR, shall not, by virtue thereof, be entitled to any rights of a
stockholder of Elan, either at law or in equity, and the rights of the Holders
are limited to those expressed in this Agreement.
Section 13. Availability of Information. Elan will comply with all
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applicable periodic public information reporting requirements of the Commission
to which it may from time to time be subject. Elan will provide to the Rights
Agent all information in connection with this Agreement and the CVRs that the
Rights Agent may reasonably request.
Section 14. Merger, Consolidation or Change or Name of Rights Agent.
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Any corporation into which the Rights Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Rights Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent, shall be the successor to the
Rights Agent hereunder without the execution or
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filing of any paper or any further act on the part of any of the parties hereto,
so long as such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 16 hereof. If at the time such
successor to the Rights Agent shall succeed to the agency created by this
Agreement, and if at that time any of the Certificates shall have been
countersigned but not delivered, any such successor to the Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Certificates so countersigned; and in case at that time any of the CVR
Certificate shall not have been countersigned, any successor to the Rights Agent
may countersign such CVR either in the name of the predecessor Rights Agent or
in the name of the successor Rights Agent; and in all such cases such CVR
Certificates shall have the full force and effect provided in the CVR
Certificate and in this Agreement.
If at any time the name of the Rights Agent shall be changed and at
such time any of the CVR Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver CVR Certificates so countersigned; and in case at that time any of
the CVR Certificates shall not have been countersigned, the Rights Agent may
countersign such CVR Certificates either in its prior name or in its changed
name; and in all such cases such CVR Certificates shall have the full force and
effect provided in the CVR Certificates and in this Agreement.
Section 15. Duties of Rights Agent. The Rights Agent undertakes the
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duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which Elan and the Holders, by their acceptance hereof,
shall be bound:
(a) The statements contained herein and in the CVR Certificates shall
be taken as statements of Elan, and the Rights Agent assumes no responsibility
for the correctness of any of the same except such as describe the Rights Agent
or actions taken or to be taken by it. The Rights Agent assumes no
responsibility with respect to the delivery of CVRs and the Milestone Payments
except as herein otherwise provided.
(b) The Rights Agent shall not be responsible for any failure of Elan
to comply with any of the covenants contained in this Agreement or in the CVR
Certificates to be complied with by Elan.
(c) The Rights Agent may consult at any time with counsel
satisfactory to it (who may be counsel for Elan), and the Rights Agent shall
incur no liability or responsibility to Elan or to any Holder in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with the opinion or the advice of such counsel, provided that the
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Rights Agent shall have exercised reasonable care in the selection and continued
employment of such counsel.
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(d) The Rights Agent shall incur no liability or responsibility to
Elan or to any Holder for any action taken in reliance on any notice,
resolution, waiver, consent, order, certificate or other paper, document or
instrument believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(e) Elan agrees (i) to pay to the Rights Agent reasonable
compensation for all services rendered by the Rights Agent in the execution of
this Agreement, and (ii) to reimburse the Rights Agent for all taxes and
governmental charges, reasonable expenses and other charges of any kind and
nature incurred by the Rights Agent in the execution of this Agreement (other
than taxes measured by the Rights Agent's net income). Elan shall reimburse the
Rights Agent for the reasonable costs of any counsel engaged by the Rights Agent
for the purposes contemplated by Section 15(c), provided that (x) such
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engagement is reasonably necessary in the discharge of the Rights Agent's
functions hereunder and relates to matters outside the ordinary course, and (y)
the Rights Agent first consults with Elan a reasonable amount of time prior to
incurring any such liability. The Rights Agent shall be paid any compensation
or reimbursement owed to it directly and shall not disburse from the Deposit
Account any such amounts.
(f) The Majority Holders may direct the Rights Agent to act on behalf
of the Holders in enforcing any of their rights hereunder and pursuant to the
CVRs. The Rights Agent shall be under no obligation to institute any action,
suit or legal proceeding or to take any other action likely to involve material
expense unless the Holders shall furnish the Rights Agent with reasonable
security and indemnity for any costs and expenses which may be incurred,
including without limitation any legal costs and expenses for which the Holders
may be found liable pursuant to Section 5.1(c). All rights of action under this
Agreement or under any of the CVR Certificates may be enforced by the Rights
Agent without the possession of any of the CVR Certificates or the production
thereof at any trial or other proceeding relative thereto, and any such action,
suit or proceeding instituted by the Rights Agent shall be brought in its name
as Rights Agent, and any recovery of judgment shall be for the ratable benefit
of the registered Holders, as their respective rights or interests may appear.
(g) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the CVRs or other
securities of Elan or maintain interest in any transaction in which Elan may be
interested, or contract with or lend money to or otherwise act as fully and
freely as though it were not the Rights Agent under this Agreement. Nothing
herein shall preclude the Rights Agent from acting in any capacity for Elan or
for any other legal entity.
(h) The Rights Agent shall act hereunder solely as agent, and its
duties shall be determined solely by the provisions hereof. The Rights Agent
shall not be liable for anything
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which it may do or refrain from doing in connection with this Agreement except
for its own gross negligence or bad faith.
Section 16. Change of Rights Agent.
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(a) The Rights Agent may resign and be discharged from its duties
under this Agreement by giving to Elan notice in writing, and to the Holders
notice in writing and sent by the first-class mail, postage prepaid, to each
registered Holder at the address appearing in the register maintained by the
Rights Agent with respect to the CVRs, specifying a date when such resignation
shall take effect, which notice shall be sent at least 30 days prior to the date
so specified. If the Rights Agent shall resign or otherwise become incapable of
acting, Elan shall appoint a successor to the Rights Agent. If Elan shall fail
to make such appointment within a period of 30 days after it has been notified
in writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent, then any registered Holder (who shall, with such notice, submit
his CVR for inspection by Elan) may apply to any court of competent jurisdiction
for the appointment of a successor to the Rights Agent. After appointment the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the former Rights Agent shall deliver and transfer to
the successor Rights Agent any funds in the Deposit Account and copies of all
books, records, plans and other documents in the former Rights Agent's
possession relating to such funds or this Agreement and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Failure
to give any notice provided for in this paragraph (a) or paragraph (b) below of
this Section 16 or any defect therein, shall not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
(b) The Majority Holders shall have the right to cause the Rights
Agent to be relieved of its duties hereunder and to select a successor Rights
Agent, upon the expiration of 30 days following delivery of written notice of
substitution to the Rights Agent. Upon selection of such successor Rights
Agent, such successor Rights Agent and Elan shall enter into an agreement
substantially identical to this Agreement and, thereafter, the former Rights
Agent shall be relieved of its duties and obligations to perform hereunder,
except that the former Rights Agent shall transfer to the successor Rights Agent
upon request therefor any funds in the Deposit Account and copies of all books,
records, plans and other documents in the former Rights Agent's possession
relating to such funds or this Agreement and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose.
Section 17. Successors. All covenants and provisions of this
----------
Agreement by or for the benefit of Elan, the Rights Agent or the Holders shall
bind and inure to the benefit of their respective successors, assigns, heirs and
personal representatives.
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Section 18. Termination. This Agreement shall terminate on the
-----------
earliest to occur of the following events (each, a "Termination Event"):
-----------------
(i) a determination by the Committee for Proprietary Medicinal Products
(or any successor body) or by the EMEA not to consider, recommend for
approval or approve Evacet(TM) for a marketing authorization in the
European Community, unless Elan in its sole discretion determines not
to appeal, which determination shall be conclusive and not subject to
challenge by the Rights Agent or any Holder, or the occurrence of any
other event which would make the EU Approval incapable of being
granted;
(ii) issuance by the European Commission, the EMEA, the CPMP or any other
multinational or national regulatory body of any adverse findings
resulting from ongoing pharmacovigilance or other regulatory
monitoring of Evacet(TM) that, individually or in the aggregate, in
the reasonable judgment of Elan consistent with pharmaceutical
industry practice, would materially and adversely affect the
marketing, sale or licensing of Evacet(TM) such that Elan withdraws
Evacet(TM) from the market; or
(iii) March 31, 2003.
Section 19. Counterparts. This Agreement may be executed in any
------------
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
one and the same agreement.
Section 20. Headings. The headings of sections of this Agreement
--------
have been inserted for convenience of reference only, are not to be considered a
part hereof and shall in no way modify or restrict any of the terms or
provisions hereof.
Section 21. Amendments. This Agreement may be amended by the written
----------
consent of Elan and the affirmative vote or the written consent of holders
holding not less than two-thirds in interest of the then outstanding CVRs;
provided, however, that no such modification or amendment to this Agreement may,
-------- -------
without the consent of each Holder affected thereby, change in a manner adverse
to the Holders, (a) any provision contained herein with respect to termination
of this Agreement or the CVRs, (b) the amount of CVR Consideration to be issued
according to the terms of this Agreement to the Holders of the CVRs, or (c) the
provisions of this Section 21.
Notwithstanding the foregoing, Elan and the Rights Agent may from
time to time supplement or amend this Agreement, without the approval of any
Holder, in order to cure any ambiguity or to correct or supplement any provision
contained in this Agreement
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which may be defective or inconsistent with any other provision in this
Agreement, or to make any other provisions in regard to matters or questions
arising under this Agreement which Elan and the Rights Agent may deem necessary
or desirable and which shall not be inconsistent with the provisions of the CVRs
and which shall not adversely affect the interests of the Holders.
Section 22. Notices. Any notice required to be given hereunder shall
-------
be sufficient if in writing and sent by facsimile transmission, by courier or
other national overnight express mail service (with proof of service), hand
delivery or certified or registered mail (return receipt requested and first-
class postage prepaid), addressed as follows:
if to Elan:
Elan Corporation, plc
Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxxx 0, Xxxxxxx
Telecopy: 011-353-1-662-4963
Attention: Xxxxxx X. Xxxxx
if to the Rights Agent:
[ ]
[ ]
[ ]
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date of
receipt.
Section 23. Benefits of This Agreement. Nothing in this Agreement
--------------------------
shall be construed to give to any person or corporation, other than Elan, the
Rights Agent and the registered Holders, any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of Elan, the Rights Agent and the registered Holders.
Section 24. Governing Law; Submission to Jurisdiction. This
-----------------------------------------
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware without regard to its rules of conflict of laws.
The parties hereto agree that any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of, this
Agreement may be brought in the United States District Court for the Southern
District of New York or any other New York
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State court sitting in New York County, and each of the parties hereby consents
to the jurisdiction of such courts (and of the appropriate appellate courts) in
any such suit, action or proceeding and irrevocably waives any objection which
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding
which is brought in any such court has been brought in an inconvenient forum.
Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service of process
on such party in the manner provided for notices in Section 22 shall be deemed
effective service of process on such party.
Section 25. Binding Arbitration.
-------------------
(a) The arbitration shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (the "AAA")
---
in effect at the time of the arbitration, except as they may be modified herein
or by mutual agreement of Elan and the Rights Agent acting on behalf of the
Holders. The arbitration shall be conducted in the County of New York, State of
New York, and administered by the AAA's New York office. Notwithstanding any
other language contained in this Section 25, the arbitration and this Section 25
shall be governed by the Federal Arbitration Act, 9 U.S.C. (S)(S) 1 et seq. (the
"Federal Arbitration Act"). All reasonable costs and expenses (including the
-----------------------
reasonable fees and expenses of counsel) of Elan, the Rights Agent and the
Holders shall be paid by the losing party (i.e., Elan or the Rights Agent on
---
behalf of the Holders) in any such arbitration. The parties expressly waive all
rights whatsoever to file an appeal against or otherwise to challenge any
decision by the arbitrators hereunder.
(b) The arbitration shall be conducted before a Commercial
Arbitration Tribunal (the "Tribunal") consisting of three (3) neutral
--------
arbitrators selected from the AAA's National Panel of Commercial Arbitrators in
accordance with the AAA's Commercial Arbitration Rules, except that no
arbitrator shall be appointed to the Tribunal unless, prior to such appointment,
his or her name has appeared on a list of potential arbitrators disseminated to
the parties by the AAA.
(c) Notwithstanding the AAA's Commercial Arbitration Rules, the
Tribunal shall provide the parties with not less than thirty (30) days' written
notice of the commencement of the arbitration hearing. Any adjourned hearing
sessions shall be held as soon as practicable on dates agreed to by the Tribunal
and the parties; if the parties are unable to agree upon subsequent hearing
dates, the Tribunal shall, upon not less than thirty (30) days' written notice
to the parties, select such dates. The parties hereby agree to use their best
efforts to conduct the arbitration expeditiously.
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(d) The parties agree that irreparable damage would occur in the
event of a breach of the terms of this Agreement. Accordingly, it is agreed
that, without limiting the rights of the parties to seek any other relief, the
parties shall be entitled to seek injunctive or similar equitable relief from
the Tribunal, which Tribunal is expressly authorized by this clause to grant
such injunctive or similar equitable relief. The parties may seek injunctive or
similar equitable relief (and any other relief) in connection with this
Agreement only from the Tribunal.
(e) In addition to the authority conferred on the Tribunal by the
rules specified above, the Tribunal shall have the authority to order reasonable
discovery, including the deposition of party witnesses and production of
documents. The arbitral award shall be in writing, state the reasons for the
award, and be final and binding on the parties. All statutes of limitations
that would otherwise be applicable shall apply to any arbitration proceeding.
Any attorney-client privilege and other protection against disclosure of
confidential information, including without limitation any protection afforded
the work-product of any attorney, that could otherwise be claimed by any party
shall be available to and may be claimed by any such party in any arbitration
proceeding. No party waives any attorney-client privilege or any other
protection against disclosure of confidential information by reason of anything
contained in or done pursuant to or in connection with this Agreement. Each
party agrees to keep all arbitration proceedings strictly confidential, except
for disclosure of information to the parties' legal counsel, financial advisors
or auditors or those required by applicable law. The Tribunal shall determine
the matters in dispute in accordance with law specified in Section 24.
(f) The obligation to arbitrate any dispute arising pursuant to
Section 5.1(c) shall be binding upon the successors and assigns of all of the
parties.
S-1
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
and caused the same to be duly delivered on their behalf on the day and year
first written above.
ELAN CORPORATION, PLC
By:____________________________________
Name:
Title:
[ ], as Rights Agent
By:____________________________________
Name:
Title:
