1
Conformed Copy
IRREVOCABLE PROXY AND
TERMINATION RIGHTS AGREEMENT
THIS AGREEMENT, dated as of January 29, 1996
(the "Agreement"), between Teva Pharmaceutical Industries Limited, a
corporation organized under the laws of the State of Israel ("Teva"), and
Xxxxxx Xxxxxx, Xxxxxxxx Xxxxxx, Trust under Agreement dated February 14,
1995 between Xxxxxx Xxxxxx, as Settlor, and Xxxxx X. Xxxxxx, Xxxxx X. Xxxxxx
and Xxx X. Xxxxxx, as Trustees and Trust under Agreement dated February 14,
1995 between Xxxxxxxx Xxxxxx, as Settlor, and Xxxxx X. Xxxxxx, Xxxxx X.
Xxxxxx and Xxx X. Xxxxxx, as Trustees (collectively, the "Stockholders" and
each a "Stockholder"), major stockholders of Biocraft Laboratories,
Inc., a Delaware corporation ("Biocraft").
W I T N E S S E T H:
WHEREAS, contemporaneously with the execution of
this Agreement, Biocraft, Teva and Genco Merger Corporation ("Sub"), a wholly
owned subsidiary of Teva, are entering into an Agreement and Plan of
Merger (the "Merger Agreement") pursuant to which Sub will be merged into
Biocraft (the "Merger") and the holders of Biocraft's common stock, par value
$0.01 per share ("Biocraft Common Stock"), will receive Ordinary Shares,
par value NIS 0.01 each, of Teva which will trade in the United States in
the form of American Depositary Shares ("ADSs"), evidenced by American
Depositary Receipts ("ADRs"), for shares of Biocraft Common Stock;
WHEREAS, Teva may be required to incur substantial expenses
in connection with the performance of the Merger Agreement, including the
related registration of Teva's ADSs issuable in the Merger; and
WHEREAS, Teva, as a condition to its willingness to enter
into the Merger Agreement, has required the Stockholders to grant Teva an
irrevocable proxy with respect to an aggregate of 8,560,370 shares of Biocraft
Common Stock owned by the Stockholders (the number of Shares owned by each
Stockholder set forth beside such Stockholder's name on Schedule I attached
hereto), together with any additional shares of Biocraft Common Stock
hereafter acquired by the Stockholders (pursuant to Section 4, by purchase or
otherwise) (such specified number of shares, and any additional shares when
and if they are acquired, being referred to as the "Shares" and
individually as a "Share") on the terms and conditions hereinafter set forth;
2
NOW, THEREFORE, the parties hereto agree as follows:
1. Irrevocable Proxy. Each Stockholder hereby
irrevocably constitutes and appoints Teva or any designee of Teva the lawful
agent, attorney and proxy of such Stockholder, during the term of this
Agreement, to vote all of his, her or its Shares at any meeting or in
connection with any written consent of the Biocraft stockholders (i) in
favor of the Merger, (ii) in favor of the Merger Agreement, as such may be
modified or amended from time to time, (iii) against any Takeover Proposal
(as defined in the Merger Agreement) (other than the Merger) or other proposal
which provides for any merger, sale of assets or other business combination
between Biocraft and any other person or entity or which would make it
impractical for Teva to effect a merger or other business combination of
Biocraft with Teva or a wholly owned subsidiary of Teva, and (iv) against any
other action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of Biocraft
under the Merger Agreement or which could result in any of Biocraft's
obligations under the Merger Agreement not being fulfilled. This proxy shall
not authorize Teva to vote the Shares on any matters other than those
specified above which may be presented to Biocraft's stockholders at any
meeting or in connection with any written consent of the stockholders. This
power of attorney is irrevocable, is granted in consideration of Teva
entering into the Merger Agreement and is coupled with an interest
sufficient in law to support an irrevocable power. This appointment shall
revoke all prior attorneys and proxies appointed by any Stockholder at any
time with respect to the Shares and no subsequent attorneys or proxies will
be appointed by such Stockholder, or be effective, with respect thereto.
2. Legending of Certificates; Nominee Shares. Each
Stockholder agrees to submit to Teva contemporaneously with or promptly
following execution of this Agreement (or promptly following receipt of any
additional certificates representing any additional Shares) all certificates
representing the Shares so that Teva may note thereon a legend referring to the
proxy granted to it by this Agreement. If any of the Shares beneficially owned
by a Stockholder are held of record by a brokerage firm in "street name" or in
the name of any other nominee (a "Nominee," and, as to such Shares, "Nominee
Shares"), the Stockholder agrees that, upon written notice by Teva requesting
it, such Stockholder will within five days of the giving of such notice
execute and deliver to Teva a limited power of attorney in such form as
shall be reasonably satisfactory to Teva enabling Teva to require the
Nominee to grant to Teva an irrevocable proxy to the same effect as Section 1
3
hereof with respect to the Nominee Shares held by such Nominee and to submit
to Teva the certificates representing such Nominee Shares for notation of
the above-referenced legend thereon.
3. Termination Rights. If (a) the Merger Agreement
is terminated by (i) Biocraft pursuant to Section 6.01(f) thereof; (ii) by
Teva pursuant to Section 6.01(g) thereof; (iii) by Teva pursuant to Section
6.01(h) thereof; or (iv) by Teva pursuant to Section 6.01(e) thereof, provided
that the breach of covenant or breach of representation or warranty referred
to therein shall be knowing and intentional, and (b) any Stockholder shall
have sold or otherwise disposed of any of his, her or its Shares pursuant to
a Third Party Acquisition (such term as defined in the Merger
Agreement), then, such Stockholder shall pay, or cause to be paid, in same
day funds (to the extent of cash received and otherwise payable in kind) to
Teva upon demand an amount equal to (x) such Stockholder's Profit per Share
multiplied by (y) the aggregate number of Shares sold or otherwise
disposed of by such Stockholder. As used herein, "Profit per Share" in
connection with a sale or other disposition of Shares by a Stockholder
shall mean on a per Share basis the amount by which (A) the sum of (1) if such
sale or other disposition is for or made in cash, the cash received by the
Stockholder in respect of each Share, (2) if such sale or other disposition is
for or made in marketable securities, the fair market value at the time such
securities are received by the Stockholder of the securities received in
respect of each Share, (3) if such sale or other disposition is for or made in
property other than cash or marketable securities, the fair market value at
the time such property is received by the Stockholder of the property
received in respect of each Share (or any combination of the
consideration referred to in clauses (1), (2) and (3)), and (4) without
duplication, any dividends or interest received by the Stockholder in
respect of each Share exceeds (B) the higher of the fair market value of 0.461
ADSs on the date hereof and on the date that the Merger Agreement is
terminated. As used herein, the term "fair market value" shall mean, in the
case of marketable securities, the closing sale price of the security on the
principal securities exchange on which such security is listed, if such
security is listed on any such exchange, or the closing bid quotation with
respect to the security on the National Association of Securities Dealers,
Inc. automated quotations system or any similar system then in general use, if
such quotations are available, and, in the case of other property, the fair
market value thereof as agreed to by the parties, or, if they are unable to
agree, as determined by a third party appraiser selected by the parties.
4
4. Adjustments to Prevent Dilution, Etc. In the event of
a stock dividend or distribution, or any change in Biocraft Common Stock by
reason of any stock dividend, split-up, recapitalization, combination,
exchange of shares or the like, the term "Shares" shall be deemed to refer
to and include the Shares as well as all such stock dividends and
distributions and any shares into which or for which any or all of the Shares
may be changed or exchanged.
5. Representations and Warranties of the Stockholders. Each
Stockholder represents and warrants to Teva that:
(a) such Stockholder is the sole beneficial owner of
the Shares; the Shares are all of the shares of the capital stock of Biocraft
owned beneficially or of record by such Stockholder; the Shares are validly
issued, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof; and such Stockholder has good title to
the Shares, free and clear of any agreements, liens, adverse claims or
encumbrances whatsoever with respect to the ownership of or the right to vote
the Shares;
(b) such Stockholder has the full right, power and
authority to enter into this Agreement, and this Agreement has been duly
and validly executed and delivered by such Stockholder and is a valid and
binding obligation of such Stockholder enforceable against such Stockholder in
accordance with its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles; and
(c) the execution, delivery and performance of this
Agreement will not, with or without the giving of notice or the passage of
time, (i) violate any judgment, injunction or order of any court,
arbitrator or governmental agency applicable to such Stockholder, or (ii)
conflict with, result in the breach of any provision of, constitute a default
under, or require the consent of any third party under, any agreement,
instrument, judgment, order or decree to which such Stockholder is a party or
by which such Stockholder may be bound.
6. Additional Covenants of the Stockholders. Each
Stockholder hereby covenants and agrees that:
(a) the Stockholder will not enter into any transaction,
take any action, or by inaction permit any event to occur that would result in
any of the representations or warranties of such Stockholder herein contained
5
not being true and correct at and as of the time immediately after the
occurrence of such transaction, action or event;
(b) until the termination of this Agreement, such
Stockholder will at all times use his, her or its best efforts in his, her or
its capacity as a stockholder to prevent Biocraft from taking any action in
violation of the Merger Agreement;
(c) from and after the date hereof until the termination
of this Agreement, other than under the circumstances contemplated by
Section 3 hereof, the Shares will not be sold, transferred, pledged,
hypothecated, transferred by gift, or otherwise disposed of in any manner
whatsoever without notifying Teva in advance and obtaining and delivering to
Teva any evidence that Teva may reasonably request to evidence the
transferee's agreement to be bound by this Agreement; provided, however,
that in the event of such Stockholder's death during the term of this
Agreement, the Shares may be transferred in accordance with the
Stockholder's last will and testament, or, if none, in accordance with the
applicable laws of intestate succession, in either of which cases, the Shares
shall remain subject in all respects to the terms of this Agreement; and
(d) the Stockholder will execute and deliver any
additional documents reasonably necessary or desirable, in the opinion
of Teva's or Biocraft's counsel, to evidence the irrevocable proxy granted in
Section 1 with respect to the Shares or otherwise implement and effect the
provisions of this Agreement.
7. Representations and Warranties of Teva. Teva represents
and warrants to each Stockholder that:
(a) Teva has all requisite corporate power and authority
to enter into and perform all of its obligations under this Agreement.
The execution, delivery and performance of this Agreement and all of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Teva. This Agreement has been duly
executed and delivered by Teva and is a valid and binding obligation of
Teva enforceable against Teva in accordance with its terms, except to
the extent that its enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles; and
(b) Neither the execution, delivery or performance of
this Agreement by Teva nor the consummation of the transactions contemplated
herein will violate the Memorandum of Association or Articles of Association of
6
Teva or will conflict with or result in the breach of any material term,
condition or provision of any instrument, indenture, contract, lease or
other document or understanding, oral or written, to which Teva is a party or
is otherwise bound or affected in such a manner as to materially and adversely
affect the business or properties of Teva.
8. Termination. This Agreement shall terminate on the
earlier of (i) the Effective Time (as defined in the Merger Agreement) of the
Merger or (ii) 24 months following the date of termination of the Merger
Agreement; provided, however, that the appointment of Teva or any designee
of Teva as agent, attorney and proxy pursuant to Section 1 hereof, and any
proxy or other instrument executed pursuant thereto, shall in any event
automatically terminate upon the termination of the Merger Agreement.
9. Binding Effect; Assignment. All rights and
authority granted herein by any Stockholder shall survive the death or
incapacity of such Stockholder. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective heirs, personal
representatives, successors and permitted assigns. Teva may not assign its
rights and obligations hereunder without the prior written consent of the
Stockholders unless the assignee is an entity controlled by or under common
control with Teva. No Stockholder shall assign his, her or its rights or
obligations hereunder without Teva's consent except pursuant to the
Stockholder's last will and testament or applicable laws of intestate
succession.
10. Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered in
person or mailed, certified or registered mail with postage prepaid, or
sent by telex, telegram or telecopier, as follows:
If to Teva:
Teva Pharmaceutical Industries Limited
0 Xxxxx Xxxxxx
Xxxxxx Xxxxx, 00000, Xxxxxx
Attention: President
Telecopier #: (000) 0-000-0000
7
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier #: (000) 000-0000
If to a Stockholder:
c/o Biocraft Laboratories, Inc.
00-00 Xxxxx Xxxx
Xxxx Xxxx, Xxx Xxxxxx 00000
Telecopier #: (000) 000-0000
with a copy to:
Proskauer Xxxx Xxxxx & Xxxxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier #: (000) 000-0000
or to such other person or address as any party shall specify by notice
in writing to each of the other parties. All such notices, requests,
demands, waivers and communications shall be deemed to have been received on
the date of delivery unless if mailed, in which case on the third business
day (fifth business day, if mailed outside the country of the recipient)
after the mailing thereof except for a notice of a change of address, which
shall be effective only upon receipt thereof.
11. Injunctive Relief; Remedies Cumulative.
(a) Teva, on the one hand, and the Stockholders, on the
other hand, acknowledge that the other party will be irreparably harmed and
that there will be no adequate remedy at law for a violation of any of the
covenants or agreements of such party that are contained in this Agreement. It
is accordingly agreed that, in addition to any other remedies that may be
available to the non-breaching party upon the breach by any other party of
such covenants and agreements, the non-breaching party shall have the
right to obtain injunctive relief to restrain any breach or threatened
breach of such covenants or agreements or otherwise to obtain specific
performance of any of such covenants or agreements.
(b) No remedy conferred upon or reserved to any party
herein is intended to be exclusive of any other remedy, and every remedy
shall be cumulative and in addition to every other remedy herein or now or
8
hereafter existing at law, in equity or by statute.
12. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of laws thereof.
13. Counterparts. This Agreement may be executed in two or
more counterparts, all of which together shall constitute a single agreement.
14. Effect of Partial Invalidity. Whenever possible, each
provision of this Agreement shall be construed in such a manner as to
be effective and valid under applicable law. If any provision of this
Agreement or the application thereof to any party or circumstance shall be
prohibited by or invalid under applicable law, such provisions shall be
ineffective to the extent of such prohibition without invalidating the
remainder of such provision or any other provisions of this Agreement or the
application of such provision to the other party or other circumstances.
9
IN WITNESS WHEREOF, this Agreement has been executed by the
parties as of the date first above written.
TEVA PHARMACEUTICAL THE STOCKHOLDERS
INDUSTRIES LIMITED
By: /s/ Xxx Xxxxxxx /s/ Xxxxxx Xxxxxx
Name: Xx. Xxxxxx Xxxxxx
Title:
/s/ Xxxxxxxx Xxxxxx
Xxx. Xxxxxxxx Xxxxxx
TRUST UNDER AGREEMENT DATED FEBRUARY 14, 1995
BETWEEN XXXXXX XXXXXX, AS SETTLOR, AND XXXXX
X. XXXXXX, XXXXX X. XXXXXX AND XXX X. XXXXXX,
AS TRUSTEES
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, Trustee
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, Trustee
By: /s/ Xxx X. Xxxxxx
Xxx X. Xxxxxx, Trustee
TRUST UNDER AGREEMENT DATED FEBRUARY 14, 1995
BETWEEN XXXXXXXX XXXXXX, AS SETTLOR, AND XXXXX
X. XXXXXX, XXXXX X. XXXXXX AND XXX X. XXXXXX,
AS TRUSTEES
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, Trustee
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, Trustee
By: /s/ Xxx X. Xxxxxx
Xxx X. Xxxxxx, Trustee
10
SCHEDULE I
Number of
Stockholder Shares
Xxxxxx Xxxxxx 3,780,184
Xxxxxxxx Xxxxxx 3,780,186
Trust under Agreement dated
February 14, 1995, between
Xxxxxx Xxxxxx, as Settlor and
Xxxxx X. Xxxxxx, Xxxxx X. Xxxxxx
and Xxx X. Xxxxxx, as Trustees 500,000
Trust under Agreement dated
February 14, 1995, between
Xxxxxxxx Xxxxxx, as Settlor and
Xxxxx X. Xxxxxx, Xxxxx X. Xxxxxx
and Xxx X. Xxxxxx, as Trustees 500,000
-------
Total 8,560,370
----------
----------
