ENDO PHARMACEUTICALS HOLDINGS INC.
Exhibit
99.1
April
29, 2008
D. E. Shaw Valence Portfolios,
L.L.C.
x/x X. X. Xxxx & Xx.,
X.X.
00xx Xxxxx, Xxxxx 45
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Ladies
and Gentlemen:
This
letter sets forth the agreement between Endo Pharmaceuticals Holdings Inc. (the
“Company”), on the one hand, and D. E. Shaw Valence Portfolios, L.L.C., on
behalf of itself and its respective affiliates that are or become members of a
Section 13(d) group with respect to the shares of Common Stock of the Company
(collectively the “X. X. Xxxx Entities”), on the other hand, with respect to the
matters set forth below.
1. The X. X. Xxxx Entities have identified
an individual whom they
have suggested be appointed
as a new, “independent” director (the “New Director”) to the Company’s Board of Directors (the “Board”) and who is not employed by or affiliated
with any of the X. X. Xxxx Entities and who is “independent” under current NASDAQ Stock Market
Rules. The Nominating and Governance Committee
of the Board (the
“Committee”) shall, in accordance with the
Committee’s regular procedures and guidelines,
meet to review the qualifications of the New Director to serve as a member of
the Board. If the Committee determines that the New Director meets
the qualifications to serve
as a member of the Board, it shall recommend the New Director to the Board for
appointment or for election at the 2008 annual meeting of stockholders (the
“2008 Annual Meeting”). The Board shall meet to
consider the appointment or election of the New Director as promptly
as practicable (but not
later than the next regularly-scheduled Board Meeting) after such candidate’s qualifications have been reviewed and
favorably
recommended by the
Committee. The Company shall notify the X. X. Xxxx Entities as promptly as practicable
if the Committee determines that the New Director does not meet the
qualifications of the Board, and the X. X. Xxxx Entities shall have the right to propose
additional persons so qualified to be considered and appointed or elected as a New Director in accordance with
the provisions hereof. In the event that the New Director is
recommended by the
Committee and approved by the Board prior to the mailing of the
Company’s definitive proxy statement for the
2008 Annual Meeting, such
New Director shall be included in the Board’s slate of directors for election at the
2008 Annual Meeting. In the event that the New Director is
recommended by the
Committee and approved by
the Board following the
mailing of the definitive proxy statement for the 2008 Annual
Meeting, such New Director shall be appointed to the Board at the first regular
meeting of the Board following the 2008 Annual Meeting. The Company
agrees that it will take all necessary action to increase the size of
the Board, if necessary, in order to permit
the election or appointment of the New Director.
2. The X.X. Xxxx Entities agree not to
nominate directors for election or present new business at the 2008 Annual Meeting,
including by providing any notice of such action under Article II, Section 3 or Article
II, Section 10 of the Company’s By-laws.
3. If the New Director leaves the Board
(whether by resignation or otherwise) before the 2009 Annual Meeting, the
X. X. Xxxx Entities
will be entitled to
suggest to the
Committee a replacement director who meets the Committee’s qualifications for serving as a member
of the Board. In the event the Committee does not favorably recommend to the
Board a replacement
director
suggested by the
X. X. Xxxx
Entities, the X. X. Xxxx Entities will have the right to
suggest an additional replacement director(s) for consideration by the Committee.
After a favorable
recommendation by the Committee and approval by the Board, the Board will appoint such replacement
director to the Board as
soon as practicable, but not later than the next regularly-scheduled meeting of the Board.
4. The X.X. Xxxx Entities further agree
that they will not engage or in any way participate, directly or indirectly, in
any solicitation of proxies with respect to the election of directors or any other
matter to be voted on at the 2008 Annual Meeting. The X.X. Xxxx
Entities further agree that they will not solicit, or in any way participate
directly or indirectly in the solicitation of consents of, stockholders on
any matter, including the removal or
election of directors, prior to the 2009 Annual Meeting of Stockholders
(the “2009 Annual Meeting”) and will not take any action, directly
or indirectly, to convene, or participate with or encourage any other
stockholder to convene a
special meeting of the Company’s stockholders prior to the 2009 Annual
Meeting or seek to advise, encourage or influence any person with respect to the
voting of shares of the Company’s Common Stock. In the event that the New
Director is renominated to
the Board in connection with the 2009 Annual Meeting (or in the event that no replacement director with similar
qualifications as the New Director is suggested by the X.X. Xxxx Entities after the New
Director ceases to serve on
the Board), the
X.X. Xxxx Entities agree
(i) to withdraw any previously submitted notice of intention to nominate
directors for election or notice of intention to present new business at the
2009 Annual Meeting, and (ii) not to engage or in any way participate,
directly or indirectly, in any solicitation of
proxies with respect to the election of directors or any other matter to be
voted on at the 2009 Annual Meeting or seek to advise, encourage or influence
any person with respect to the voting of shares of the Company’s Common Stock.
5. The X. X. Xxxx Entities agree to cause
all shares of the Company’s Common Stock which they are entitled
to vote at the 2008 Annual Meeting to be present, in person or by proxy, at the
2008 Annual Meeting and to vote all such shares of the Company’s Common Stock in favor of (i) the election of each of the nominees of
the Board and (ii) the
proposal to amend the
Company’s Amended and Restated Certificate of
Incorporation to increase the number of shares of common stock authorized for
issuance by 175 million shares (the “2008 Proposal”). In the event that the New Director is
renominated to the Board in connection with the 2009 Annual Meeting, the X. X.
Xxxx Entities agree to cause all shares of the Company’s Common Stock which they are
entitled to vote at the
2009 Annual Meeting to be present, in person or by proxy, at the 2009 Annual
Meeting and to vote all such shares of the Company’s Common Stock in favor of the election
of each of the nominees of the Board; provided, however, that
nothing herein shall limit
the ability of the X. X. Xxxx Entities to vote their voting securities on any
matter submitted to a vote of the stockholders of the Company or announce its
opposition to any Board-approved proposals, other than (i) the election of
directors at the 2008 Annual Meeting, (ii)
the election of directors at the 2009 Annual Meeting, if applicable, and (iii)
the 2008 Proposal.
6. Notwithstanding the last sentence of paragraph 4 hereof or the last sentence of paragraph
5 hereof, the restrictions or proscriptions set forth in such sentences relating to
the 2009 Annual Meeting shall not be applicable if either of the following
events occur: (i) Xxxxx Xxxxxxx shall cease to be the Chief Executive Officer of
the Company or (ii) the Company receives an unsolicited bona fide offer (which offer is
accompanied by evidence of fully committed financing from a nationally
recognized financing source
or is not subject to any
financing condition) to acquire all of the outstanding shares of the
Company’s Common Stock from a third party (the
“Third Party”), which Third Party is not affiliated
with any of the X. X. Xxxx Entities and is not in any way acting as a
“group” within the meaning of Rule 13d-5
or in concert with or
participating with any of the X.X. Xxxx Entities in connection with such offer,
and the Third Party is soliciting proxies to elect one or more candidates to the Board at the 2009 Annual
Meeting. In addition, the
restrictions or proscriptions set forth in the last
sentence of paragraph 4 and the last sentence of paragraph 5 shall not
be applicable if the
volume weighted average closing price per share
of the Company’s Common Stock as reported on NASDAQ does not
equal or exceed the Minimum Trading Price (as defined below) (the “Minimum Trading Price”) during any consecutive 15 day trading
period beginning January 1, 2009 and ending on the later of March 31, 2009 and the
day that is three days
before the deadline for timely notice (the “2009 Nomination Deadline”) provided in Article II, Section 10 of the Company’s By-laws (the “Trading Period”). The Minimum Trading Price
shall be $30 per share or such other price per share as may reflect appropriate
adjustments in connection with stock splits, reverse stock splits, stock dividends or similar share adjustments for which the record dates
occur at any time prior to the end of the Trading Period. In the
event that the X.X. Xxxx Entities are not subject to the restrictions of the
last sentence of paragraph 4 or the last sentence of paragraph 5, before making a determination to solicit proxies
in connection with the 2009 Annual Meeting, the X.X. Xxxx Entities agree to take into consideration the effect
that negative general
economic conditions beyond the Company’s control affecting the trading markets
generally or the specialty
pharmaceutical industry
generally (including the effect of governmental
regulation applicable to the pharmaceutical industry, such as the adoption of price controls) have
had on the trading price of the Company’s Common
Stock. Notwithstanding the provisions of this
paragraph, the X.X. Xxxx Entities agree that they will
not be entitled to solicit proxies in
connection with the 2009 Annual Meeting if (i) the AMEX Pharmaceutical Index is down more than 10% based on the consecutive 10
day trading period
beginning the date hereof and the consecutive 10 day trading period ending on
the later of March 31, 2009 and the day that is three days before the 2009
Nomination Deadline and (ii) the share price of the Company’s Common Stock has outperformed such index by at least 15% based on the volume weighted average closing price per share of the
Company’s Common Stock as reported on NASDAQ for
the consecutive 10 day trading period beginning on the date hereof and the consecutive 10 day
trading period ending on
the later of March 31, 2009 and the day that is three days before the 2009
Nomination Deadline.
7. For so long as the X.X. Xxxx Entities
beneficially own more that 5% of the Company’s outstanding common stock, but in no event later than
December 31, 2010,
the X. X. Xxxx Entities
agree that, notwithstanding any contrary provisions in the Company’s By-laws, if the X.X. Xxxx Entities seek to undertake a consent solicitation
or call a special meeting for purposes of soliciting proxies in connection with removing one or more directors from the Company’s Board of Directors without cause or proposing directors for election to
the Company’s Board of Directors, then the X.X. Xxxx Entities will
provide the Company with notice of such intent not less than 45 days before any special meeting at
which such matter is to
be considered and no less
than 45 days before written
consents are solicited in connection with any such proposal. To be
valid, any such notice proposing directors for election to the
Company’s Board of Directors shall include all
information required to be included in an advance notice given pursuant to
Article II, Section 10 of the Company’s By-laws. The Company agrees that,
during the period commencing on the date notice is received by the
Company pursuant to this Section and ending on the date the consent
solicitation is completed or the special meeting is held, whichever the case may
be, it shall not amend its
Amended and Restated Certificate of Incorporation or its By-laws, if such
amendment would have the effect of enjoining,
prohibiting or restricting in any material way the X.X. Xxxx Entities from
proceeding with its solicitation.
8. Promptly following the execution of this
letter agreement, the Company and the X. X. Xxxx Entities shall jointly issue a mutually
agreeable press release announcing the terms of
this agreement, substantially in the form of Exhibit A hereto. Except
for such press release and
the Company’s earnings press release, the relevant
sections of which have been previously provided to the X.X. Xxxx
Entities, neither the
Company nor the X. X. Xxxx Entities shall issue any press release or otherwise
make any other public announcement with respect to this letter agreement or the
matters contemplated hereby, except as required by law.
9. The Company and the X. X. Xxxx Entities
each acknowledge and agree that money damages would not be a sufficient remedy
for any breach (or threatened breach) of this letter agreement by it and that,
in the event of any breach or threatened breach hereof, the non-breaching
party shall be entitled to seek injunctive and other equitable relief, without
proof of actual damages, that the breaching party shall not plead in defense
thereto that there would be an adequate remedy at law, and that the breaching party agrees to waive any
applicable right or requirement that a bond be posted by the non-breaching
party. Such remedies shall not be the exclusive remedies for a breach
of this letter agreement, but will be in addition to all other
remedies available at law or in
equity.
10. This letter agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware, without
regard to the principles of the conflicts of laws thereof. The
parties hereby irrevocably submit to the exclusive jurisdiction of the
courts of the State of Delaware and irrevocably and unconditionally waive any
objection to the laying of venue of any action, suit, or proceeding arising out
of this letter agreement in the courts of the State of Delaware or the United States of America
located in Delaware, and further irrevocably and unconditionally waive and agree
not to plead or claim in any such court that any such action, suit, or
proceeding brought in any such court has been brought in an inconvenient forum. This letter agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof. This letter agreement shall inure to the benefit of
the parties hereto and their respective successors and
assigns.
11. This letter agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute the same agreement. One or more counterparts of this
letter agreement may be delivered by telecopier or PDF electronic transmission, with the intention that
they shall have the same effect as an original counterpart
hereof.
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Very
truly yours,
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By:
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/s/
Xxxxx X. Xxxxxx
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Name:
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Xxxxx
X. Xxxxxx
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Title:
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Chairman
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Confirmed
and Agreed to:
D.
E. SHAW VALENCE PORTFOLIOS, L.L.C. (on behalf of itself and its affiliates that
are members of the Section 13(d) Group with respect to the Common
Stock of the Company)
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By:
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/s/
Xxxxx Xxxxxx
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Name:
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Xxxxx
Xxxxxx
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Title:
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Authorized
Signatory
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Dated: April
29, 2008
