STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (this "Agreement"), dated as of November 30,
1999, between MEDCO RESEARCH, INC., a Delaware corporation (the "Company"), and
KING PHARMACEUTICALS, INC., a Tennessee corporation ("Grantee").
WHEREAS, the Company, Grantee and Merlin Acquisition I Corp., a
Delaware corporation and a newly-formed, wholly-owned, direct subsidiary of
Grantee ("Merger Sub"), have contemporaneously with the execution of this
Agreement entered into an Agreement and Plan of Merger dated as of the date
hereof (the "Merger Agreement") which provides, among other things, that Merger
Sub shall be merged with and into the Company pursuant to the terms and
conditions thereof; and
WHEREAS, as an essential condition and inducement to Grantee's entering
into the Merger Agreement and in consideration therefor, the Company has agreed
to grant Grantee the Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein and in the Merger Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereby agree as follows:
1. Grant of Option.
The Company hereby grants to Grantee an irrevocable option
(the "Option") to purchase up to Two Million Three Hundred Thirty-nine Thousand
Six Hundred Ninety-two (2,339,692) validly issued, fully paid and non-assessable
shares of Company Common Stock (such shares, as adjusted pursuant to Section 7
of this Agreement, the "Option Shares"), together with the associated rights
(the "Rights") under the Rights Agreement, dated as of April 14, 1998, between
the Company and American Stock Transfer & Trust Company, as Rights Agent
(references to the Option Shares shall be deemed to include the associated
Rights), at a purchase price of Thirty Dollars ($30.00) per share (such price,
as adjusted pursuant to Section 7 of this Agreement, the "Option Price");
provided, however, that in no event shall the number of Option Shares for which
this Option is exercisable exceed nineteen and nine-tenths percent (19.9%) of
the number of shares of Company Common Stock issued and outstanding (before
giving effect to the exercise of the Option) at the time this Option is
exercised.
2. Certain Terms of the Option.
(a) Exercise of Option. Grantee may exercise the Option, in
whole or part, and from time to time, if, but only if, a Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Option
Termination Event (as hereinafter defined); provided that Grantee shall have
sent the written notice of such exercise (as provided in Section 2(e) hereof) on
or prior to the last date of the eighteen (18) month period following such
Triggering Event (the "Option Expiration Date"). The right to exercise the
Option shall terminate upon the first to occur of the Option Expiration Date or
an Option Termination Event.
(b) Triggering Events. The term "Triggering Event" shall mean
the occurrence of the date, upon or after termination of the Merger Agreement,
on which Grantee's right, pursuant to Section 9.5(b), Section 9.5(d) or Section
9.5(e) of the Merger Agreement, to receive the Termination Fee first arises.
(c) Option Termination Events. The term "Option Termination
Event" shall mean the earlier to occur of (i) the Effective Time; (ii) the
termination of the Merger Agreement pursuant to Section 9.1(l) of the Merger
Agreement; or (iii) the termination of the Merger Agreement other than under
circumstances which constitute (or may constitute in the event of a termination
of the Merger Agreement pursuant to Section 9.1(e) or Section 9.1(f) of the
Merger Agreement) a Triggering Event under this Agreement.
(d) Notice of Triggering Event. The Company shall notify
Grantee in writing as promptly as practicable following the Company becoming
aware of the occurrence of any Triggering Event, it being understood that the
giving of such notice by the Company shall not be a condition to the right of
Grantee to exercise the Option or for a Triggering Event to have occurred.
(e) Notice of Exercise; Closing. In the event that Grantee is
entitled to and desires to exercise the Option (in whole or in part), Grantee
shall send to the Company a written notice (such notice being herein referred to
as an "Exercise Notice" and the date of issuance of an Exercise Notice being
herein referred to as the "Notice Date") specifying (i) the total number of
shares (or other Option Securities (as hereinafter defined)) Grantee will
purchase pursuant to such exercise and (ii) a place and date not earlier than
three (3) Business Days nor later than sixty (60) Business Days after the Notice
Date for the closing of such purchase (the "Option Closing Date"); provided,
that if the closing of the purchase and sale pursuant to the Option (the "Option
Closing") cannot be consummated by reason of any applicable Order, the period of
time that otherwise would run pursuant to this sentence shall run instead from
the date on which such restriction on consummation has expired or been
terminated; provided, further, without limiting the foregoing, that if, in the
reasonable opinion of Grantee, prior notification to or approval of any
Governmental Entity is required in connection with such purchase, the Company or
Grantee, as the case may be, shall promptly file the required notice or
application for approval and shall expeditiously process the same and the period
of time that otherwise would run pursuant to this sentence shall run instead
from the date on which any required notification periods have expired or been
terminated or such approvals have been obtained and any requisite waiting period
or periods shall have passed.
(f) Payment of Purchase Price. Subject to Section 2(k), at any
Option Closing, Grantee shall pay to the Company the aggregate Option Price for
the number of Option Shares and Option Securities to be issued at such Option
Closing, in immediately available funds by wire transfer to a bank account
designated by the Company; provided that failure or refusal of the Company to
designate such a bank account shall not preclude Grantee from exercising the
Option.
(g) Issuance of Company Common Stock. Subject to Section 2(k),
at any Option Closing, simultaneously with the delivery of immediately available
funds as provided in Section 2(f) hereof, the Company shall deliver to Grantee a
certificate or certificates representing the number of shares of Company Common
Stock (or other Option Securities) purchased by Grantee at such Option Closing
and, if the Option should be exercised in part only, a new Option evidencing the
rights of Grantee thereof to purchase the balance of the Option Shares (or other
Option Securities) purchasable hereunder. If at the time of issuance of any
Option Shares pursuant to an exercise of all or part of the Option hereunder,
the Company shall have issued any rights or other securities which are attached
to or otherwise associated with Company Common Stock, then each Option Share
issued pursuant to such exercise shall also represent such rights or other
securities with terms substantially the same as and at least as favorable to
Grantee as are provided under any shareholder rights agreement or similar
agreement of the Company then in effect.
(h) Legend. Certificates for Company Common Stock (or other
Option Securities) delivered at an Option Closing hereunder may be endorsed with
a restrictive legend that shall read substantially as follows:
"THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO RESALE RESTRICTIONS ARISING UNDER THE
SECURITIES ACT OF 1933, AS AMENDED."
It is understood and agreed that the reference to the resale restrictions of the
Securities Act in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if Grantee shall have delivered to the
Company a copy of a letter from the staff of the SEC, or an opinion of counsel
reasonably satisfactory to the Company, to the effect that such legend is not
required for purposes of the Securities Act.
(i) Record Grantee; Expenses. Upon the delivery by Grantee to
the Company of the Exercise Notice and the tender of the applicable Option Price
in immediately available funds, Grantee shall be deemed to be the holder of
record of the shares of Company Common Stock (or other Option Securities)
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such shares
of Company Common Stock (or other Option Securities) shall not then be actually
delivered to Grantee or that the Company shall have failed or refused to
designate the bank account described in Section 2(f). The Company shall pay all
expenses that may be payable in connection with the preparation, issuance and
delivery of stock certificates under this Section 2 in the name of Grantee.
Grantee shall pay all expenses that may be payable in connection with the
issuance and delivery of stock certificates or a substitute option agreement in
the name of any assignee, transferee or designee of Grantee.
(j) Consents. The obligation of the Company to issue Option
Shares (or other Option Securities) to Grantee hereunder is subject to the
conditions that (i) any waiting period under the HSR Act applicable to the
issuance of the Option Shares (or other Option Securities) hereunder shall have
expired or been terminated; (ii) all material consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, any
Governmental Entity, if any, required in connection with the issuance of the
Option Shares (or other Option Securities) hereunder shall have been obtained or
made, as the case may be; and (iii) no preliminary or permanent injunction or
other Order prohibiting or otherwise restraining such issuance shall be in
effect. It is understood and agreed that at any time during which the Option is
exercisable, the parties will use their respective best efforts to satisfy all
such conditions to closing, so that an Option Closing may take place as promptly
as practicable.
(k) Cancellation Amount. If at any time while this Option is
exercisable under Section 2(a), any Person or group (other than Grantee or its
Affiliates) (i) shall have made a bona fide proposal with respect to (A) a
tender offer or exchange offer for fifty percent (50%) or more of the then
outstanding shares of Company Common Stock (a "Share Proposal"), (B) a merger,
consolidation or other business combination with the Company (a "Merger
Proposal") or (C) any acquisition of a material portion of the assets of the
Company (an "Asset Proposal"), or (ii) shall have acquired fifty percent (50%)
or more of the then outstanding shares of Company Common Stock (a "Share
Acquisition"), then Grantee, in lieu of exercising the Option, shall have the
right at any time thereafter (for so long as the Option is exercisable under
Section 2(a)) to request in writing (a "Cancellation Notice") that the Company
pay, and promptly (but in any event not more than five (5) Business Days) after
the giving by Grantee of such Cancellation Notice, the Company shall pay to
Grantee, in cancellation of the Option, an amount in cash equal to the
Cancellation Amount (as defined below). Notwithstanding anything to the contrary
in this Agreement, in the event of any closing involving the payment of a
Cancellation Amount, Grantee shall deliver to the Company for cancellation the
Option, and the Company shall make payment to Grantee of the Cancellation Amount
by wire transfer of immediately available funds pursuant to Grantee's
instructions.
As used herein, the "Cancellation Amount" shall mean an amount
equal to:
(i) the excess over the Option Price of the greater
of (A) the last sale price of a share of Company Common Stock as
reported on the New York Stock Exchange on the last trading day prior
to the date of the Cancellation Notice, or (B)(x) the highest price per
share of Company Common Stock offered or proposed to be paid or paid by
any such Person or group pursuant to or in connection with a Share
Proposal, a Share Acquisition or a Merger Proposal or (y) the aggregate
consideration offered to be paid or paid in any transaction or proposed
transaction in connection with an Asset Proposal, divided by the number
of shares of Company Common Stock then outstanding, multiplied by (ii)
the number of Option Shares then covered by the Option. If all or a
portion of the price per share of Company Common Stock offered, paid or
payable or the aggregate consideration offered, paid or payable for the
assets of the Company, each as contemplated by this Section 2(k),
consists of non-cash consideration, such price or aggregate
consideration shall be the cash consideration, if any, plus the fair
market value of the non-cash consideration as determined by the mutual
agreement of the investment bankers of the Company and the investment
bankers of Grantee (or, if such investment bankers cannot agree within
ten (10) Business Days of such question being submitted for such
determination, then promptly by an independent investment banker chosen
by Grantee's investment bankers and reasonably acceptable to the
Company's investment bankers).
3. Evaluation of Investments. Grantee, by reason of its
knowledge and experience in financial and business matters, believes itself
capable of evaluating the merits and risks of an investment in the Option and
the securities to be purchased/sold pursuant to this Agreement (collectively,
the "Option Securities").
4. Investment Intent. Grantee represents and warrants that
Grantee is entering into this Agreement and is acquiring and/or will acquire the
Option Securities for Grantee's own account and not with a view to resale or
distribution of all or any part of the Option Securities in violation of
applicable law.
5. Reservation of Shares. The Company agrees (a) that the Company shall
at all times maintain, free from preemptive rights, sufficient authorized but
unissued shares of Company Common Stock (and other Option Securities) issuable
pursuant to this Agreement so that the Option may be exercised without
additional authorization of Company Common Stock (or such other Option
Securities) after giving effect to all other options, warrants, convertible
securities and other rights to purchase Company Common Stock (or such other
Option Securities); (b) that the Company shall not, by charter amendment or
through reorganization, consolidation, merger, dissolution or sale of assets, or
by any other voluntary act, avoid or seek to avoid the observance or performance
of any of the covenants to be observed or performed hereunder by the Company;
and (c) promptly to take all action as may from time to time be required in
order to permit Grantee to exercise the Option and the Company to duly and
effectively issue shares of Company Common Stock (or other Option Securities)
pursuant hereto.
6. Division of Option; Lost Options. This Agreement (and the Option
granted hereby) are exchangeable, without expense, at the option of Grantee,
upon presentation and surrender of this Agreement at the principal office of the
Company, for other agreements providing for Options of different denominations
entitling the holder(s) thereof to purchase, on the same terms and subject to
the same conditions as are set forth herein, in the aggregate the same number of
shares of Company Common Stock purchasable hereunder. Upon receipt by the
Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, the Company will execute and
deliver a new Agreement of like tenor and date.
7. Adjustment Upon Changes in Capitalization. The number of shares of
Company Common Stock purchasable upon the exercise of the Option shall be
subject to adjustment from time to time as provided in this Section 7.
(a) Transaction Adjustment. In the event of any change in
Company Common Stock by reason of stock dividends, splits, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or other similar transactions, then the Option Shares that are then purchasable
upon exercise of the Option shall be appropriately adjusted so that Grantee
shall receive upon exercise of the Option and payment of the aggregate Option
Price hereunder the number and class of shares or other securities or property
(including cash) that Grantee would have owned or been entitled to receive after
the happening of any of the events described in this Section 7(a) if the Option
had been exercised immediately prior to such event, or the record date therefor,
as applicable.
(b) Option Price Adjustment. Whenever the number of shares of
Company Common Stock subject to this Option are adjusted pursuant to Section
7(a), the Option Price shall be appropriately adjusted, if applicable, by
multiplying the Option Price by a fraction, the numerator of which shall be
equal to the aggregate number of shares of Company Common Stock purchasable
under the Option prior to the adjustment and the denominator of which shall be
equal to the aggregate number of shares of Company Common Stock purchasable
under the Option immediately after the adjustment.
8. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement, in
no event shall the Total Profit (as hereinafter defined) exceed in the aggregate
Seventeen Million Dollars ($17,000,000) (such amount, the "Maximum Profit") and,
if Grantee's Total Profit shall exceed such Maximum Profit, Grantee, at its sole
discretion, shall either (i) reduce the number of shares of Company Common Stock
subject to this Option, (ii) deliver to the Company for cancellation Option
Shares (or other securities into which such Option Shares are converted or
exchanged) previously purchased by Grantee, (iii) pay cash to the Company or
(iv) any combination thereof, so that Grantee's actually realized Total Profit
shall not exceed the Maximum Profit after taking into account the foregoing
actions.
(b) As used herein, the term "Total Profit" shall mean: (i)
the aggregate amount of (A) any excess of (x) the net cash proceeds actually
received by Grantee from the sale of Option Shares (or securities into which
such shares are converted or exchanged) to any unaffiliated third party, over
(y) the aggregate Option Price for such Option Shares (or other securities),
plus (B) the amount of the Cancellation Amount actually received by Grantee
pursuant to Section 2(k) hereof, plus (C) any Termination Fee actually received
by Grantee pursuant to the terms of the Merger Agreement, minus (ii) the sum of
amounts of any cash previously paid to the Company pursuant to this Section 8
plus the value of the Option Shares (or other securities) previously delivered
to the Company for cancellation pursuant to this Section 8.
(c) Notwithstanding any other provision of this Agreement,
nothing in this Agreement shall affect the ability of Grantee to receive, nor
relieve the Company's obligation to pay, any Termination Fee provided for in
Sections 9.5(b), 9.5(d) or 9.5(e) of the Merger Agreement; provided that if and
to the extent that the Total Profit received by Grantee would exceed the Maximum
Profit following receipt of such payment, Grantee shall be obligated to promptly
comply with the terms of Section 8(a).
9. Registration Rights.
(a) The Company shall, if requested by Grantee at any time and
from time to time within two (2) years after a Triggering Event, as promptly as
possible (but in no event later than thirty (30) days after receipt of such
request) prepare and file up to three (3) registration statements under the
Securities Act to the extent necessary in order to permit the sale or other
disposition of any or all shares of securities that have been acquired by or are
issuable to Grantee upon exercise of the Option in accordance with the intended
method of sale or other disposition stated by Grantee, including a "shelf"
registration statement under Rule 415 under the Securities Act or any successor
provision, and the Company will use its best efforts to qualify such shares or
other securities under any applicable state securities laws. The Company shall
use best efforts to cause each such registration statement to become effective,
to obtain all consents or waivers of other parties which are required therefor,
and to keep such registration statement effective for a period of at least one
hundred eighty (180) calendar days after the date such registration statement
first becomes effective (or such shorter period as may be necessary to effect
such sale or other disposition).
(b) The obligations of the Company hereunder to file a
registration statement and to maintain its effectiveness may be suspended for
one or more periods of time not exceeding sixty (60) calendar days in the
aggregate if the Board of Directors of the Company shall have determined in good
faith after having consulted with outside counsel that the filing of such
registration or the maintenance of its effectiveness would require premature
disclosure of material nonpublic information that would materially and adversely
affect the Company or the Company is required under the Securities Act to
include audited financial statements for any period in such registration
statement and such financial statements are not yet available for inclusion in
such registration statement.
(c) In addition to such demand registrations, if the Company
proposes to effect a registration of Company Common Stock (other than a
registration statement on Form S-4 or S-8 or any successor thereto) for the
Company's own account or for the account of any other stockholder of the
Company, the Company shall give prompt written notice to all holders of Options
or Option Shares of the Company's intention to do so and shall use best efforts
to include therein all Option Shares requested by Grantee to be so included. No
registration effected under this Section 9(c) shall relieve the Company of its
obligations to effect demand registrations under Section 9(a) hereof.
(d) Registrations effected under this Section 9 shall be
effected at the Company's expense, including the fees and expenses of counsel to
the holder of Options or Option Shares, but excluding underwriting discounts and
commissions to brokers or dealers. In connection with each registration under
this Section 9, the Company shall indemnify and hold each holder of Options or
Option Shares participating in such offering (a "Holder"), its underwriters and
each of their respective affiliates harmless against any and all losses, claims,
damages, liabilities and expenses (including, without limitation, investigation
expenses and fees and disbursements of counsel and accountants), joint or
several, to which such Holder, its underwriters and each of their respective
Affiliates may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any registration statement (including
any prospectus therein), or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, other than such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) which arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in written
information furnished by a Holder to the Company expressly for use in such
registration statement.
(e) In connection with any registration statement pursuant to
this Section 9, each Holder agrees to furnish the Company with such information
concerning itself and the proposed sale or distribution as shall reasonably be
required in order to ensure compliance with the requirements of the Securities
Act. In addition, each Holder shall indemnify and hold the Company, its
underwriters and each of their respective Affiliates harmless against any and
all losses, claims, damages, liabilities and expenses (including without
limitation investigation expenses and fees and disbursements of counsel and
accountants), joint or several, to which the Company, its underwriters and each
of their respective Affiliates may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in written information
furnished by such Holder to the Company expressly for use in such registration
statement. In no event shall the liability of any Holder or any Affiliate
thereof under this Section 9 be greater in amount than the dollar amount of the
proceeds (net of payment of all expenses) received by such Holder upon the sale
of the Option Shares giving rise to such indemnification obligation.
(f) Upon the issuance of Option Shares hereunder, the Company
shall promptly list such Option Shares with the New York Stock Exchange or on
such national or other exchange on which the shares of Company Common Stock are
at the time principally listed.
10. Extension of Time for Regulatory Approvals. The periods related to
exercise of the Option and the other rights of Grantee hereunder shall be
extended (a) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights, and for the expiration of all statutory waiting periods
and (b) to the extent necessary to avoid liability under Section 10(b) of the
Exchange Act by reason of such exercise.
11. Representations and Warranties of the Company. The Company hereby
represents and warrants to Grantee as follows:
(a) Authority. The Company has the necessary corporate power
and authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Grantee, constitutes a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws of general applicability relating to or affecting creditors' rights
generally and by the application of general principles of equity.
(b) Corporate Action. The Company has taken all necessary
corporate action to authorize and reserve and to permit the Company to issue,
and at all times from the date hereof through the termination of this Agreement
in accordance with its terms will have reserved for issuance upon the exercise
of the Option, that number of shares of Company Common Stock equal to the
maximum number of shares of Company Common Stock at any time and from time to
time issuable hereunder, and all such shares of Company Common Stock, upon
issuance pursuant hereto, will be duly authorized, validly issued, fully paid,
non-assessable, and will be delivered free and clear of all Encumbrances and not
subject to any preemptive rights.
(c) No Conflict. The execution and delivery of this Agreement
by the Company do not, and the performance by the Company of its obligations
under this Agreement will not (i) conflict with or violate the certificate or
articles of incorporation, bylaws or partnership agreement of the Company or any
Company Subsidiary, (ii) conflict with or violate any law, statute, ordinance,
rule, regulation, order, judgment or decree applicable to the Company or any
Company Subsidiary or by which any of their respective properties is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
which with or without notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of an Encumbrance on any of the
properties or assets of the Company or any Company Subsidiary pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any Company
Subsidiary is a party or by which the Company, any Company Subsidiary or any of
their respective properties or assets is bound or affected, except, in the case
of clauses (ii) and (iii) above, for any such conflicts, violations, breaches,
defaults or other alterations or occurrences that would not have a Material
Adverse Effect on the Company.
(d) Anti-Takeover Statutes. The provisions of Section 203 of
the General Corporation Law of the State of Delaware will not, prior to the
termination of this Agreement, apply to this Agreement or the transactions
contemplated hereby and thereby. The Company has taken, and will in the future
take, all steps necessary to irrevocably exempt the transactions contemplated by
this Agreement from any other applicable state takeover law and from any
applicable charter provision containing change of control or anti-takeover
provisions.
(e) Additional Representations and Warranties. The
representations and warranties contained in Section 3.1 of the Merger Agreement
and, to the extent they relate to this Agreement, the representations and
warranties in Section 3.3, Section 3.20, and Section 3.26 of the Merger
Agreement, are incorporated by reference herein.
12. Assignment. The Company may not assign any of the Company's rights
or obligations under this Agreement or the Option created hereunder to any other
Person, without the express written consent of Grantee.
13. Application for Regulatory Approval. Each of Grantee and the
Company will use its reasonable efforts to make all filings with, and to obtain
consents of, all third parties and Governmental Entities necessary to the
consummation of the transactions contemplated by this Agreement, including
without limitation making application to list the shares of Company Common Stock
issuable hereunder on the New York Stock Exchange upon official notice of
issuance.
14. Specific Performance. The Company acknowledges and agrees that
damages would be an inadequate remedy for a breach of this Agreement by the
Company and that the obligations of the Company shall be enforceable by Grantee
through injunctive or other equitable relief.
15. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
16. Notices. All notices, claims, demands and other communications
hereunder shall be deemed to have been duly given or made when delivered in
person, by registered or certified mail (postage prepaid, return receipt
requested), by overnight courier or by facsimile at the respective addresses of
the parties set forth in the Merger Agreement.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
18. Counterparts. This Agreement may be executed and delivered in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed and delivered shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
19. Definitions. Capitalized terms used and not defined herein shall
have the meanings set forth in the Merger Agreement.
20. Expenses. Except as otherwise expressly provided herein or in the
Merger Agreement, each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
21. Entire Agreement. This Agreement, the Merger Agreement, the
Confidentiality Agreement and any documents and instruments referred to herein
and therein constitute the entire agreement of the parties with respect to the
transactions contemplated hereunder and supersede all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties hereto, and their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein. Any provision of this Agreement
may be waived only in writing at any time by the party that is entitled to the
benefits of such provision. This Agreement may not be modified, amended, altered
or supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
22. Further Assurances. In the event of any exercise of the Option by
Grantee, the Company and Grantee shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary to
the fullest extent permitted by law in order to consummate the transactions
provided for by such exercise. Nothing contained in this Agreement shall be
deemed to authorize the Company or Grantee to breach any provision of the Merger
Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Stock Option Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
MEDCO RESEARCH, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman
KING PHARMACEUTICALS, INC.
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: Chairman of the Board &
Chief Executive Officer
