Exhibit 99.5
Algos Pharmaceutical Corporation
0000 Xxxxxx Xxxxxxx
Xxxxxxx, Xxx Xxxxxx 00000-0000
November 26, 1999
KIA V, L.P. and KEP V, L.P.
c/o Kelso & Co.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx xxxx, Xxx Xxxx 00000
Endo Pharmaceuticals Holdings Inc.
000 Xxxxxxxxxx Xxxx Xxxxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxxxxxx 00000
Ladies and Gentlemen:
This letter agreement (the "Letter Agreement") will confirm the
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understanding and agreement among Algos Pharmaceutical Corporation, a Delaware
corporation (the "Company"), Endo Pharmaceuticals Holdings Inc., a Delaware
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corporation ("Parent"), and KIA V, L.P. and KEP V, L.P. (collectively, the
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"Majority Stockholders"), in connection with the proposed merger of the Company
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with and into Endo Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), pursuant to the Merger Agreement, dated as of November 26, 1999,
by and among Parent, Sub and the Company (the "Merger Agreement"). Capitalized
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terms used in this Letter Agreement but not otherwise defined herein shall have
the meanings ascribed to them in the Merger Agreement.
In order to induce the Company to enter into the Merger Agreement,
each Majority Stockholder hereby agrees that for a period of two years from the
Effective Time, such Majority Stockholder will not, and will cause any of its
Affiliates to which it has transferred any of its shares of Parent Common Stock
(other than Parent and any of Parent's Subsidiaries) (each, a "Subsequent
Transferee") not to, (a) sell any shares of the Parent Common Stock owned by
such Majority Stockholder or transferred by such Majority Stockholder to a
Subsequent Transferee (the "Shares") other than pursuant to (i) Rule 144 under
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the Securities Act of 1933, as amended (the "Act"), or any successor rule
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promulgated under the Act, (ii) an effective registration statement filed under
the Act, (iii) privately negotiated sales to any one Person or group of
affiliated Persons that do not aggregate more than 5.0% of the issued and
outstanding Parent Common Stock at the time of any such sale, (iv) a transaction
in which all of the stockholders of Parent are permitted to participate on equal
economic terms and on a pro rata basis in accordance with their ownership or (v)
any transfer, sale or distribution
to any Affiliates or partners of such Majority Stockholder or (b) engage in any
transaction that would be a "going private" transaction within the meaning of
Rule 13e-3 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor rule promulgated under the Exchange Act;
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provided, however, that a Majority Stockholder can engage in such a transaction
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if such a transaction has been approved by a vote of, or other action by, the
majority of the then stockholders of Parent not Affiliated with a Majority
Stockholder; provided further that nothing contained in this Letter Agreement
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shall prevent Parent or a Majority Stockholder from purchasing Algos Warrants
from the holders thereof on negotiated terms. In addition, each Majority
Stockholder hereby agrees that for a period of three years from the Effective
Date, it will vote, and will cause each Subsequent Transferee to vote, in any
election of the Board of Directors of Parent, the Shares of Parent in favor of
the Company Designees.
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This Letter Agreement shall inure to the benefit of the stockholders
of Parent other than the Majority Stockholders. Please confirm that the
foregoing is in accordance with your understanding by signing and returning to
the Company the enclosed copy of this Letter Agreement, whereupon this Letter
Agreement will become a binding agreement among us.
Very truly yours,
ALGOS PHARMACEUTICAL CORPORATION
By:_____________________________
Name:
Title:
Confirmed as of the date above:
KIA V, L.P.
By:_______________________________
Name:
Title:
KEP V, L.P.
By:_______________________________
Name:
Title:
ENDO PHARMACEUTICALS HOLDINGS INC.
By:_______________________________
Name: Xxxxx X. Xxxxx
Title: President & Chief Executive Officer
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