AGREEMENT AND PLAN OF MERGER
AMONG
SHIRE PHARMACEUTICALS GROUP plc,
RUBY ACQUISITION SUB INC.
AND
XXXXXXX PHARMACEUTICAL CORPORATION
DATED AS OF JULY 26, 1999
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1. Definitions..............................................................2
ARTICLE II
THE MERGER; CONVERSION AND EXCHANGE OF STOCK
2.1. Merger..................................................................10
2.2. Effective Time..........................................................10
2.3. Effects of the Merger...................................................11
2.4. Further Assurances......................................................11
2.5. Merger Consideration....................................................11
2.6. Exchange Provisions.....................................................13
2.7. Consideration for Ordinary Shares.......................................15
2.8. Tax-Free Reorganization.................................................15
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of Xxxxxxx...............................15
(a) Organization; Standing and Power..............................16
(b) Subsidiaries and Investments..................................16
(c) Capitalization................................................17
(d) Authority.....................................................18
(e) Noncontravention..............................................18
(f) Government Approval; Consents.................................19
(g) SEC Documents.................................................19
(h) Information Supplied..........................................19
(i) Absence of Certain Changes or Events..........................20
(j) Compliance with Law...........................................21
(k) Affiliate Arrangements........................................21
(l) Transaction Fees..............................................21
(m) Litigation....................................................22
(n) Taxes and Tax Returns.........................................22
(o) Real Property.................................................23
(p) Licenses, Permits and Authorizations..........................24
(q) ERISA and Employee Matters....................................24
(r) Labor Relations...............................................26
(s) Intellectual Property Rights..................................27
(t) Insurance.....................................................28
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(u) Books and Records.............................................28
(v) Undisclosed Liabilities.......................................29
(w) FDA, DEA Matters..............................................29
(x) Environmental Matters.........................................31
(y) Products......................................................33
(z) Marketing Practices...........................................34
(aa) Affiliates....................................................34
(bb) Pooling.......................................................34
(cc) Business Combination..........................................34
3.2. Representations and Warranties of Shire.................................34
(a) Organization; Standing and Power..............................35
(b) Subsidiaries and Investments..................................35
(c) Capitalization................................................36
(d) Authority.....................................................36
(e) Noncontravention..............................................37
(f) Government Approval; Consents.................................37
(g) Reports and Financial Statements..............................38
(h) Information Supplied..........................................38
(i) Absence of Certain Changes or Events..........................39
(j) Compliance with Law...........................................40
(k) Affiliate Arrangements........................................40
(l) Transaction Fees..............................................40
(m) Litigation....................................................41
(n) Taxes and Tax Returns.........................................41
(o) Real Property.................................................42
(p) Licenses, Permits and Authorizations..........................42
(q) ERISA and Employee Matters....................................43
(r) Labor Relations...............................................45
(s) Intellectual Property Rights..................................45
(t) Insurance.....................................................46
(u) Books and Records.............................................46
(v) Undisclosed Liabilities.......................................47
(w) FDA, DEA Matters..............................................47
(x) Environmental Matters.........................................49
(y) Products......................................................51
(z) Marketing Practices...........................................52
(aa) Ordinary Shares...............................................52
(bb) Pooling.......................................................52
(cc) Merger Consideration..........................................52
(dd) Active Trade or Business......................................53
(ee) Asset Acquisitions............................................53
(ff) Ownership of Xxxxxxx Shares...................................53
ARTICLE IV
COVENANTS OF XXXXXXX
4.1. Regular Course of Business..............................................54
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4.2. Certain Prohibited Activities...........................................54
4.3. Notice of Certain Events................................................55
4.4. Access..................................................................56
4.5. Approvals...............................................................56
4.6. No Solicitation.........................................................56
4.7. Pooling of Interests....................................................57
4.8. ISRA....................................................................58
ARTICLE V
COVENANTS OF SHIRE AND ACQUISITION SUB
5.1. Regular Course of Business..............................................58
5.2. Certain Prohibited Activities...........................................58
5.3. Notice of Certain Events................................................59
5.4. Access..................................................................60
5.5. Approvals...............................................................60
5.6. No Solicitation.........................................................60
5.7. Pooling of Interests....................................................61
5.8. Indemnification.........................................................62
ARTICLE VI
AGREEMENTS REGARDING OPTIONS
AND OTHER BENEFITS
6.1. Stock Option Plans......................................................63
6.2. Continuation of Benefits................................................64
6.3. Severance Policy and Other Agreements...................................64
6.4. 1999 Bonus..............................................................64
6.5. Waiver of Preexisting Conditions; Credit for Deductibles; Service
Credit................................................................65
ARTICLE VII
CONDITIONS PRECEDENT
7.1. Conditions to the Obligations of Each Party to Effect the Merger.......65
(a) Shareholder Approvals........................................65
(b) Certain Approvals............................................65
(c) No Proceeding or Litigation..................................65
(d) Securities Laws..............................................66
7.2. Additional Conditions to the Obligations of Xxxxxxx....................66
(a) Agreements...................................................66
(b) Representations and Warranties...............................66
(c) Officer's Certificate........................................66
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(d) Consents from Third Parties..................................66
(e) Listing......................................................66
(f) Tax Opinions.................................................67
(g) Pooling Letter...............................................67
(h) Nasdaq.......................................................67
7.3. Additional Conditions to the Obligations of Shire and Acquisition Sub..67
(a) Agreements...................................................68
(b) Representations and Warranties...............................68
(c) Xxxxxxx Officer's Certificate................................68
(d) Pooling Letter...............................................68
ARTICLE VIII
OTHER AGREEMENTS
8.1. Preparation of Form F-4, Form F-6, the Proxy Statement and the UK
Disclosure Document.......... ......................................68
8.2. Xxxxxxx Shareholders Meeting...........................................69
8.3. Shire Shareholders Meeting.............................................69
8.4. Acquisition Sub Actions................................................70
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1. Termination............................................................70
9.2. Effect of Termination..................................................72
9.3. Amendment..............................................................74
9.4. Waiver.................................................................74
ARTICLE X
GENERAL PROVISIONS
10.1. Public Statements......................................................75
10.2. Notices................................................................75
10.3. Interpretation.........................................................76
10.4. Counterparts...........................................................76
10.5. Entire Agreement.......................................................76
10.6. Governing Law..........................................................77
10.7. Validity...............................................................77
10.8. Assignment.............................................................77
10.9. Expenses...............................................................77
10.10. Enforcement............................................................77
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EXHIBITS
Exhibit 1 Option Agreement
Exhibit 2-A Shareholder Agreement - Xxxxxxx Shareholders
Exhibit 2-B Shareholder Agreement - Shire Shareholders
Exhibit 3 Section 145 Letter
SCHEDULES
Schedule 1 Entities Required to Execute the Shareholder Agreement
Schedule 2 Knowledge Officers
Schedule 3 Officers and Directors of Surviving Corporation
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July 26, 1999,
among Shire Pharmaceuticals Group plc, a public limited company organized under
the laws of England and Wales ("Shire"), Ruby Acquisition Sub Inc., a New Jersey
corporation ("Acquisition Sub") and a direct wholly owned Subsidiary of Shire,
and Xxxxxxx Pharmaceutical Corporation, a New Jersey corporation ("Xxxxxxx").
WHEREAS, the parties hereto desire to consummate a merger (the "Merger")
whereby Acquisition Sub will be merged with and into Xxxxxxx and Xxxxxxx will be
the surviving corporation in the Merger, all upon the terms and conditions set
forth herein and in accordance with the New Jersey Business Corporation Act
("New Jersey Law");
WHEREAS, the respective Boards of Directors (or a duly authorized committee
thereof) of each of Shire, Acquisition Sub and Xxxxxxx have approved this
Agreement, the Merger and the other transactions contemplated hereby;
WHEREAS, the Merger is intended to be treated as a tax-free reorganization
pursuant to the provisions of Section 368(a)(1)(A) and Section 368(a)(2)(E) of
the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, concurrently with the execution of this Agreement and as a
condition and inducement to Shire and Acquisition Sub to enter into this
Agreement Xxxxxxx has granted to Shire an irrevocable option to acquire
authorized but unissued shares of common stock, par value $.01 per share of
Xxxxxxx (the "Common Stock") representing 19.9% of the outstanding shares of
Common Stock as provided in an Option Agreement in the form attached hereto as
Exhibit 1; and
WHEREAS, concurrently with the execution of this Agreement and as a
condition and inducement to the parties to enter into this Agreement, the
persons listed on Schedule 1-A hereto have committed to vote in favor of
approving this Agreement as provided in a Shareholder Agreement in the form
attached hereto as Exhibit 2-A and the entity listed on Schedule 1-B hereto has
committed to vote in favor of approving this Agreement as provided in a
Shareholder Agreement in the form attached hereto as Exhibit 2-B.
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NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, the terms defined
in this Article have the meanings assigned to them in this Article:
"Acquisition Sub" has the meaning set forth in the preamble hereto.
"Agreement" has the meaning set forth in the preamble hereto.
"Business Day" means a day other than a Saturday, a Sunday or a day on
which banks in New York, New York or London, England are permitted or required
by law to close.
"Cash Equivalents" means (a) cash, (b) marketable direct obligations issued
by the United States government or any agency thereof and backed by the full
faith and credit of the United States, in each case maturing within three months
from the date of acquisition thereof, and (c) investments in money market funds
which invest substantially all of their assets in assets of the types described
in clauses (a) and (b) of this definition.
"CERCLA" has the meaning set forth in Section 3.1(x)(v).
"Certificate of Merger" has the meaning set forth in Section 2.2.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"Code" has the meaning set forth in the preamble hereto.
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"Common Stock" has the meaning set forth in the preamble hereto.
"Constituent Corporations" has the meaning set forth in Section 2.1.
"DEA" has the meaning set forth in Section 3.1(w).
"Depositary" has the meaning set forth in Section 2.5(f).
"DOJ" has the meaning set forth in Section 3.1(w)
"Effective Time" has the meaning set forth in Section 2.2.
"Employment Obligations" has the meaning set forth in Section 3.1(q).
"Environmental Law" means CERCLA, the Resource Conservation and Recovery
Act of 1976, as amended, the New Jersey Industrial Site Recovery Act ("ISRA"),
the Illinois Responsible Property Transfer Act ("RPTA"), the Toxic Substances
Control Act, as amended, and any other applicable federal, state, local or
foreign statute, rule, regulation, order, judgment, directive, decree or the
common law regulating, relating to, or imposing liability or standards of
conduct concerning air emissions, water discharges, noise emissions, or exposure
to or the release or threatened release or discharge of any Hazardous Material
into the environment, the generation, handling, use, treatment, storage,
transport, disposal or remediation of any Hazardous Material, or otherwise
concerning pollution or the protection of the outdoor or indoor environment,
(including, without limitation, ambient or indoor air, surface water,
groundwater, soil, subsurface strata and natural resources, including, without
limitation, wetlands, flora and fauna, or public or employee health or safety,
or the experimental use of animals or disposal of animal carcasses).
"Environmental Permit" means any permit, license, approval, consent or
other authorization by a federal, state, local or non-U.S. government or
regulatory entity pursuant to any Environmental Law.
"Equity Equivalent" has the meaning set forth in Section 3.1(c).
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"ERISA" has the meaning set forth in Section 3.1(q).
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended.
"Exchange Agent" has the meaning set forth in Section 2.6(b).
"Exchange Ratio" has the meaning set forth in Section 2.5(a).
"FDA" has the meaning set forth in Section 3.1(w).
"Filed SEC Documents" has the meaning set forth in Section 3.1(i).
"Form F-4" has the meaning set forth in Section 3.1(h).
"Form F-6" has the meaning set forth in Section 8.1.
"FSA" means The Financial Services Xxx 0000 of the United Kingdom.
"Hazardous Material" means any pollutant, contaminant, or hazardous, toxic,
medical, biohazardous, infectious or dangerous waste, substance, constituent or
material, any asbestos, any petroleum, oil (including crude oil or any fraction
thereof), any radioactive substance, animal carcass, any toxin, chemical, virus,
infectious disease or disease-causing agent, or any other substance, waste,
constituent, chemical or material that can give rise to liability under any
Environmental Law.
"Holders" means the holders of record of certificates of Common Stock as of
the Effective Time.
"Indebtedness" means with respect to any entity (a) all obligations for
borrowed money, (b) all obligations evidenced by bonds, debentures, notes or
other similar instruments, (c) all obligations for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction, (d) all obligations secured by a Lien on property or assets of such
entity, (e) financing leases which would be treated as debt under either US GAAP
or UK GAAP and (f) guarantees and other contingent obligations in respect of
Indebtedness referred to in clauses (a) through (e) above.
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"Intellectual Property" has the meaning set forth in Section 3.1(s)(i).
"knowledge" will be deemed to be present as to Xxxxxxx when the matter in
question was actually known by an officer of Xxxxxxx identified on Schedule 2-A
attached hereto and will be deemed to be present as to Shire when the matter in
question was actually known by an officer of Shire identified on Schedule 2-B
attached hereto.
"Lien" means any lien, claim, pledge, assignment, hypothecation,
conditional sale, retention of title, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind other than a mechanic's,
warehousemen's or similar statutory lien or any agreement to provide any of the
foregoing.
"LSE" means The London Stock Exchange.
"MCA" has the meaning set forth in Section 3.1(w).
"Merger" has the meaning set forth in the preamble hereto.
"Merger Consideration" has the meaning set forth in Section 2.5(a).
"New Jersey Law" has the meaning set forth in the preamble hereto.
"Option" means a right and option to purchase one share of Common Stock
which was granted pursuant to either of the Xxxxxxx Option Plans.
"Optionee" has the meaning set forth in Section 6.1.
"Ordinary Shares" means validly issued, fully paid and nonassessable
ordinary shares, with a nominal value of U.K. five xxxxx each, of Shire.
"Permits" means all approvals, authorizations, qualifications, consents,
licenses, franchises, orders and other permits of all governmental or regulatory
agencies or bodies, whether federal, state, local or non-U.S.
"Permitted Lien" means (i) any Lien for Taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings for which adequate
reserves have
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been established in accordance with US GAAP or UK GAAP, as the case may be, (ii)
any statutory Lien arising in the ordinary course of business by operation of
law with respect to a liability that is not yet due or delinquent and (iii) any
minor imperfection of title or similar Lien which individually or in the
aggregate with other such Liens does not materially impair the value of the
property subject to such Lien or the use of such property in the conduct of the
business of Xxxxxxx or Shire, as the case may be, or any of its Subsidiaries.
"Proxy Statement" means a proxy statement relating to the approval by the
shareholders of Xxxxxxx of this Agreement (as amended or supplemented from time
to time).
"Public UK Documents" has the meaning set forth in Section 3.2(i).
"Rights" means the Rights issued pursuant to the Rights Agreement.
"Rights Agreement" means the Rights Agreement, dated as of December 16,
1996, between Xxxxxxx and Continental Stock Transfer and Trust Company, as
amended through the date hereof.
"Xxxxxxx" has the meaning set forth in the preamble hereto.
"Xxxxxxx Acquisition Transaction" has the meaning set forth in Section
4.6(a).
"Xxxxxxx Disclosure Schedule" has the meaning set forth in Section 3.1.
"Xxxxxxx Governmental Approvals" has the meaning set forth in Section
3.1(f).
"Xxxxxxx Insurance Policies" has the meaning set forth in Section 3.1(t).
"Xxxxxxx Intellectual Property" has the meaning set forth in Section
3.1(s)(i).
"Xxxxxxx Material Adverse Effect" means any condition, change or effect
that is materially adverse to the business, results of operations or financial
condition of Xxxxxxx and its Subsidiaries taken as a whole, but exclud-
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ing conditions, changes or effects that (a) are caused by general economic
conditions or conditions affecting the pharmaceutical industry as a whole,
whether in the United States or internationally, which conditions do not affect
Xxxxxxx and its Subsidiaries in a disproportional manner or (b) are related to
or result from any action or inaction on the part of Shire or any of its
affiliates.
"Xxxxxxx Option Plans" means Xxxxxxx' Incentive Stock Option Plan, Equity
Incentive Plan, Restricted Stock Option Plan and Employee Stock Purchase Plan.
"Xxxxxxx Product Sites" has the meaning set forth in Section 3.1(x)(v).
"Xxxxxxx Shareholder Approval" has the meaning set forth in Section 3.1(d).
"Xxxxxxx Shareholders Meeting" has the meaning set forth in Section 8.2.
"Xxxxxxx Superior Proposal" has the meaning set forth in Section 4.6(b).
"Xxxxxxx Third Party Approvals" has the meaning set forth in Section
3.1(f).
"Xxxxxxx Third Party Site" has the meaning set forth in Section
3.1(x)(vi)."SARs" has the meaning set forth in Section 3.1(c).
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 3.1(g).
"Securities Act" means the U.S. Securities Act of 1933, as amended.
"Shareholder Protection Act" means Chapter 10A of the New Jersey Law.
"Shire" has the meaning set forth in the preamble hereto.
"Shire Acquisition Transaction" has meaning set forth in Section 5.6.
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"Shire ADRs" means the American Depositary Receipts representing the Shire
ADSs issued pursuant to a Deposit Agreement, dated as of April 1, 1998, between
Shire and the Depositary.
"Shire ADSs" means American Depositary Shares, each representing three
Ordinary Shares, of Shire.
"Shire Disclosure Schedule" has the meaning set forth in Section 3.2.
"Shire Governmental Approvals" has the meaning set forth in Section 3.2(f).
"Shire Insurance Policies" has the meaning set forth in Section 3.2(t).
"Shire Intellectual Property" has the meaning set forth in Section
3.2(s)(i).
"Shire Material Adverse Effect" means any condition, change or effect that
is materially adverse to the business, results of operations or financial
condition of Shire and its Subsidiaries taken as a whole, but excluding
conditions, changes or effects that (a) are caused by general economic
conditions or conditions affecting the pharmaceutical industry as a whole,
whether in the United Kingdom or internationally, which conditions do not affect
Shire and its Subsidiaries in a disproportionate manner or (b) are related to or
result from any action or inaction on the part of Xxxxxxx or any of its
affiliates.
"Shire Option Plans" means Shire's SHL Scheme, SPC Scheme, Executive Scheme
(Part A and Part B), Sharesave Scheme, Employee Stock Purchase Plan, Pharmavene
Stock Option Plan and Richwood Stock Option Plan, collectively.
"Shire Product Sites" has the meaning set forth in Section 3.2(x)(v).
"Shire Share Value" means one-third of the average of the last reported
sale price per Shire ADR on the Nasdaq National Market over the fifteen
consecutive trading days ending on the third trading day immediately preceding
the Closing Date.
"Shire Shareholder Approval" has the meaning set forth in Section 3.2(d).
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"Shire Shareholders Meeting" has the meaning set forth in Section 8.3.
"Shire Superior Proposal" has the meaning set forth in Section 5.6(b).
"Shire Third Party Approvals" has the meaning set forth in Section 3.2(f).
"Shire Third Party Site" has the meaning set forth in Section 3.2(x)(vi).
"Subsidiary" of any person means (i) any corporation of which the
outstanding capital stock having at least a majority of the votes entitled to be
cast in the election of directors under ordinary circumstances shall at the time
be owned, directly or indirectly, by such person or (ii) any other person of
which at least a majority of the voting interest under ordinary circumstances is
at the time, directly or indirectly, owned by such person.
"Surviving Corporation" has the meaning set forth in Section 2.1.
"Tax" or "Taxes" means (i) all federal, state, local or non-U.S. taxes,
charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, alternative minimum, gross receipts, capital, sales,
use, ad valorem, value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, (ii) all interest,
penalties, fines, additions to tax or other additional amounts imposed by any
taxing authority in connection with any item described in clause (i) and (iii)
all transferee, successor, several or contractual liability in respect of any
items described in clause (i) or (ii).
"Tax Returns" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
"UK Disclosure Documents" means the documentation necessary for the
implementation of this Agreement including a circular to Shire's shareholders
containing (i) a notice convening an extraordinary general meeting of Shire
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at which a resolution will be proposed to approve the allotment of share capital
necessary to give effect to this Agreement, and (ii) such other information as
required by applicable law, together with a U.K. prospectus and forms of proxy.
"UK GAAP" has the meaning set forth in Section 3.2(g).
"UK Prospectus" means a prospectus prepared in accordance with the FSA with
respect to the Ordinary Shares.
"US GAAP" has the meaning set forth in Section 3.1(g).
ARTICLE II
THE MERGER; CONVERSION AND EXCHANGE OF STOCK
2.1. Merger. At the Effective Time, in accordance with and subject to the
terms and conditions of this Agreement and New Jersey Law, Acquisition Sub shall
be merged with and into Xxxxxxx and Xxxxxxx shall continue its corporate
existence under New Jersey Law as the surviving corporation (Acquisition Sub and
Xxxxxxx are sometimes referred to herein collectively as the "Constituent
Corporations," and Xxxxxxx, as the surviving corporation in the Merger, is
sometimes referred to herein as the "Surviving Corporation").
2.2. Effective Time. Subject to the provisions of this Agreement, the
parties agree to cause to be duly executed a Certificate of Merger (the
"Certificate of Merger"), which shall be duly delivered to the Secretary of
State for the State of New Jersey for filing as provided by New Jersey Law. The
Merger shall become effective upon the filing of the Certificate of Merger with
the Secretary of State for the State of New Jersey (the "Effective Time"). Prior
to such filings of the Certificate of Merger, a closing (the "Closing") will be
held at the offices of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, which shall be on the second Business Day after the satisfaction or
waiver of the conditions set forth in Article VII hereof, unless another time,
date or place is agreed by the parties hereto or unless this Agreement has been
terminated in accordance with its terms. The date of the Closing shall be
referred to herein as the "Closing Date." The
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parties agree that the Effective Time shall occur on the Closing Date.
2.3. Effects of the Merger. At the Effective Time, (a) the effects of the
Merger shall be as provided under all applicable provisions of New Jersey Law,
(b) the Certificate of Incorporation of Xxxxxxx as in effect immediately prior
to the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided therein and in accordance with
New Jersey Law, (c) the By-Laws of Xxxxxxx as in effect immediately prior to the
Effective Time shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided therein and in accordance with New Jersey Law,
(d) the individuals listed on Schedule 3-A shall be the officers of the
Surviving Corporation until the earlier of their resignation or removal or until
their successors have been duly elected and qualified in accordance with the
Certificate of Incorporation and By-Laws of the Surviving Corporation, and (e)
the individuals listed on Schedule 3-B shall be the directors of the Surviving
Corporation until the earlier of their resignation or removal or until their
successors have been duly elected and qualified in accordance with the
Certificate of Incorporation and By-Laws of the Surviving Corporation.
2.4. Further Assurances. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, obligation, title or interest in, to or under any of the
rights, properties or assets of either of the Constituent Corporations as a
result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of each of the
Constituent Corporations or otherwise, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of the Constituent Corporations or otherwise, all such other actions and things
as may be necessary or desirable to vest, perfect or confirm any and all right,
obligation, title and interest in, to and under such rights, properties or
assets in the Surviving Corporation or otherwise to carry out this Agreement so
long as such actions and things are consistent with the terms of this Agreement
and the Certificate of Merger.
2.5. Merger Consideration. (a) At the Effective Time, by virtue of the
Merger and without any action on the
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part of the Holders, each issued and outstanding share of Common Stock (other
than shares canceled in accordance with Section 2.5(d)) together with the
associated Right shall be converted into the right to receive from Shire a
number of Ordinary Shares (the "Merger Consideration") determined as set forth
below (the "Exchange Ratio"):
(i) If the Shire Share Value is equal to or greater than $7.91 and
equal to or less than $9.67, the Exchange Ratio shall be 3.4122;
(ii) If the Shire Share Value is equal to or greater than $7.03 and
less than $7.91, the Exchange Ratio shall be determined by dividing $27.00
by the Shire Share Value;
(iii) If the Shire Share Value is less than $7.03, the Exchange Ratio
shall be 3.8407;
(iv) If the Shire Share Value is greater than $9.67 and less than or
equal to $10.55, the Exchange Ratio shall be determined by dividing $33.00
by the Shire Share Value; and
(v) If the Shire Share Value is greater than $10.55, the Exchange
Ratio shall be 3.1280.
(b) Each issued and outstanding share of capital stock of Acquisition Sub
shall be canceled.
(c) In consideration of the cancellation of shares of capital stock of
Acquisition Sub pursuant to Section 2.5(b) and the issuance of Ordinary Shares
pursuant to Section 2.5(a), the Surviving Corporation shall issue one fully paid
and nonassessable share of its common stock, par value $.01 per share, to Shire
for each share canceled pursuant to Section 2.5(b).
(d) Each share of Common Stock (and associated Rights) that is owned by
Xxxxxxx or any Subsidiary of Xxxxxxx, or Shire or any Subsidiary of Shire, shall
automatically be canceled and retired and shall cease to exist, and no Ordinary
Shares or other consideration shall be delivered in exchange therefor.
(e) The parties acknowledge that listing of the Ordinary Shares comprising
the Merger Consideration on the London Stock Exchange will not be permitted
unless and until this Agreement is unconditional in all respects, including the
filings of the Certificate of Merger having taken place as pro-
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vided for in Section 2.2. The parties therefore agree that, without prejudice to
Articles VII, VIII and IX of this Agreement, once the Ordinary Shares have been
allotted, they shall use their respective best efforts to procure that filings
of the Certificate of Merger takes place immediately before 9:30 a.m. (New York
time) on the Closing Date, and that the Ordinary Shares to be issued pursuant to
this Agreement are admitted to the Official List of the London Stock Exchange at
2:30 p.m. (London time).
(f) Notwithstanding Section 2.5(a), unless the Holders otherwise elect,
Shire will provide Holders with one-third of a Shire ADS (represented by Shire
ADRs) for each Ordinary Share such Holder would be entitled to receive pursuant
to Section 2.5(a). Holders must irrevocably elect to receive all or any portion
of their Ordinary Shares as Ordinary Shares in lieu of such Shire ADSs at the
time they surrender their certificates representing shares of Common Stock in
accordance with the provisions described in Section 2.6. The receipt of Shire
ADSs will be deemed for all purposes of this Agreement as the receipt of the
underlying Ordinary Shares and such Shire ADSs will be deemed for all purposes
of this Agreement to constitute Merger Consideration. Shire will pay all fees
and expenses associated with the issuance of the Ordinary Shares constituting
Shire ADSs to Xxxxxx Guaranty Trust Company of New York, as depositary (the
"Depositary"), for the issuance by the Depositary of the associated Shire ADRs.
(g) Shire shall not be required to pay any fractional Ordinary Shares or
Shire ADSs pursuant to this Section 2.5. In lieu of receiving a fractional
Ordinary Share or Shire ADS, each Holder otherwise entitled to (i) a fractional
Ordinary Share shall receive cash (without interest) in an amount equal to (a)
the latest closing mid-market price of the Ordinary Shares on the London Stock
Exchange on the day immediately following the Closing Date divided by (b) the
fractional interest of an Ordinary Share that would otherwise be payable and
(ii) a fractional Shire ADS shall receive cash (without interest) in an amount
equal to (a) the last reported sale price of Shire ADRs on the Nasdaq National
Market for the day immediately following the Closing Date divided by (b) the
fractional interest of a Shire ADS that would otherwise be payable.
2.6. Exchange Provisions. (a) At the Effective Time, all shares of Common
Stock (and associated Rights), by virtue of the Merger and without any action on
the part of the Holders, shall no longer be outstanding and shall be canceled
and retired and shall cease to exist, and each Holder of a cer-
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tificate representing any such share of Common Stock shall thereafter cease to
have any rights with respect to such share of Common Stock (and associated
Right) except the right to receive the Merger Consideration for such share of
Common Stock (and associated Right) specified in Section 2.5.
(b) Prior to the Effective Time, Shire shall designate a bank or trust
company reasonably satisfactory to Xxxxxxx to act as Exchange Agent hereunder
(the "Exchange Agent"). At the Effective Time, Shire shall (i) issue to and
deposit with the Depositary, for the benefit of the holders of shares of Common
Stock converted into Shire ADSs in accordance with Sections 2.5(a) and (f),
Ordinary Shares in an amount sufficient to permit the Depositary to issue Shire
ADSs representing the number of Shire ADSs issuable pursuant to Sections 2.5(a)
and (f) and (ii) deposit, in trust, with the Exchange Agent for the benefit of
the Holders, Ordinary Shares constituting the Merger Consideration. As soon as
practicable after the Effective Time, the Surviving Corporation shall cause the
Exchange Agent to mail to each Holder (i) a form of letter of transmittal
specifying that delivery shall be effected, and risk of loss and title to
certificates of Common Stock shall pass, only upon proper delivery of such
certificates to the Exchange Agent and (ii) instructions for use in surrendering
such certificates in exchange for the Merger Consideration set forth in Section
2.5. Such letter of transmittal shall also indicate that Holders have an
irrevocable right to elect to receive all or any portion of their Ordinary
Shares as Ordinary Shares in lieu of Shire ADSs as set forth in Section 2.5(f).
Upon surrender of any such certificate for cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, the holder of such
certificate shall be entitled to receive in exchange therefor the Merger
Consideration. Shire shall cause the Depositary to issue Shire ADRs through and
upon the instructions of the Exchange Agent, for the benefit of the holders of
shares of Common Stock who have not elected to receive Ordinary Shares pursuant
to Section 2.5(f). Neither the Exchange Agent nor any party hereto shall be
liable to any Holder for any amount paid to a public official pursuant to any
applicable abandoned property, escheat or similar law. Shire and the Exchange
Agent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any Holder such amounts as the Surviving
Corporation or the Exchange Agent is required to deduct and withhold under the
Code or any provision of national, state or local law, with respect to the
making of such payment. To the extent such amounts are so withheld, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid
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to the Holder in respect of whom such deduction and withholding was made. Any
Merger Consideration payable to Holders pursuant to Section 2.5 which remains
undistributed to the Holders for a period of six months after the Closing Date
shall be delivered to the Surviving Corporation upon its request, and any
Holders who have not surrendered to the Exchange Agent certificates for Common
Stock or complied with the instructions in the letter of transmittal, as the
case may be, shall thereafter look only to the Surviving Corporation for payment
of such Merger Consideration. The Surviving Corporation shall instruct the
Exchange Agent to invest all cash held by it in Cash Equivalents. Interest
earned on such Cash Equivalents shall be paid to the Surviving Corporation.
(c) Until so surrendered, each certificate representing Common Stock shall
represent, after the Effective Time, solely the right to receive the Merger
Consideration specified in Section 2.5. The Merger Consideration issued upon the
surrender of Common Stock in accordance with the terms hereof shall be deemed to
have been issued in full satisfaction of all rights pertaining to such Common
Stock (and associated Rights).
2.7. Consideration for Ordinary Shares. The consideration for the allotment
by Shire of Ordinary Shares constituting the Merger Consideration shall be the
cancellation of all shares of Common Stock pursuant to Section 2.6(a).
2.8. Tax-Free Reorganization. For U.S. income tax purposes, the parties
intend that the Merger be treated as a tax-free reorganization pursuant to the
provisions of Section 368(a)(1)(A) and Section 368(a)(2)(E) of the Code. Each
party hereto agrees not to take any position inconsistent with the foregoing on
any Tax Return, unless required by law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of Xxxxxxx. Xxxxxxx represents and
warrants to Shire and Acquisition Sub that, except (A) as set forth in the
Xxxxxxx Disclosure Schedule delivered by Xxxxxxx to Shire at or prior to the
execution of this Agreement (the "Xxxxxxx Disclosure Schedule") (each section of
which qualifies the correspondingly numbered representation and warranty) and
(B) with respect to paragraphs (j), (m), (o), (p), (q), (r), (t), (w), (x) and
(y) of this Section
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3.1, as does not have, or could not reasonably be expected to have, individually
or in the aggregate, a Xxxxxxx Material Adverse Effect, the following is true
and correct:
(a) Organization; Standing and Power. Xxxxxxx is a corporation duly
organized, validly existing and in good standing under the laws of the
State of New Jersey. Xxxxxxx has all requisite corporate power and
authority to own, lease and operate its assets and to carry on its business
as now being conducted. Xxxxxxx is duly qualified as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of its assets owned or leased or the nature of its activities
makes such qualification necessary (such jurisdictions being specified in
Section 3.1(a) of the Xxxxxxx Disclosure Schedule) except where the failure
to be so qualified would not have a Xxxxxxx Material Adverse Effect. Copies
of the Certificate of Incorporation and By-Laws of Xxxxxxx as in effect on
the date hereof have been previously delivered to Shire.
(b) Subsidiaries and Investments. Section 3.1(b) of the Xxxxxxx
Disclosure Schedule lists each Subsidiary of Xxxxxxx. Each such Subsidiary
is a corporation duly organized, validly existing and (in applicable
jurisdictions) in good standing under the laws of its jurisdiction of
incorporation. Each such Subsidiary has all requisite corporate power and
authority to own, lease and operate its assets and to carry on its business
as now being conducted. All such Subsidiaries are duly qualified as foreign
corporations to do business, and (in applicable jurisdictions) are in good
standing, in each jurisdiction where the character of their respective
assets owned or leased or the nature of their respective activities makes
such qualification necessary, except where the failure to be so qualified
or in good standing would not have a Xxxxxxx Material Adverse Effect. All
the outstanding shares of capital stock of each such Subsidiary have been
validly issued and are fully paid (and in applicable jurisdictions,
nonassessable) and are owned by Xxxxxxx, by another Subsidiary of Xxxxxxx
or by Xxxxxxx and another such Subsidiary, free and clear of all Liens,
other than Liens which (individually or in the aggregate) would not have a
Xxxxxxx Material Adverse Effect. Except for the capital stock of its
Subsidiaries, Xxxxxxx does not own any stock, partnership or other equity
interest in, or any debt or equity securities of, any person or entity.
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(c) Capitalization. The authorized capital stock of Xxxxxxx consists
of 110,000,000 shares of capital stock, including 10,000,000 shares of
Class B Preferred Stock par value $.10 per share (of which 5,500,000 shares
have been designated as Series B 5% Convertible Preferred Stock, all of
which have been converted into Common Stock), 500,000 shares of Series A
Junior Participating Preferred Stock par value $.10 per share and
100,000,000 shares of Common Stock. At the close of business on July 21,
1999 (i) 31,889,077 shares of Common Stock were issued and outstanding,
(ii) 387,594 shares of Common Stock were held by Xxxxxxx in its treasury,
(iii) 3,353,188 shares of Common Stock were reserved for issuance on
exercise of outstanding options under the Xxxxxxx Option Plans, (iv) 150
shares of Common Stock were reserved for issuance upon the exercise of the
warrant issued to X.X. Xxxxxx, V.A. Canto & Associates and (v) 500,000
shares of Series A Junior Participating Preferred Stock were reserved for
issuance under the Rights Agreement and no other shares of capital stock
were issued, reserved for issuance or outstanding. All outstanding shares
of capital stock of Xxxxxxx are, and all shares which are reserved for
issuance will be, when issued in accordance with the Xxxxxxx Option Plans,
duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. Except as set forth above, as of the date of
this Agreement, there are not any securities convertible into or
exchangeable or exercisable for capital stock ("Equity Equivalent") of any
of Xxxxxxx or any of its Subsidiaries (including, without limitation, any
option, warrant, right to subscribe, call or commitment of any kind or
character whatsoever requiring the issuance, sale or transfer by Xxxxxxx or
any of its Subsidiaries of any shares of their capital stock or any
securities convertible into or exchangeable or exercisable for such capital
stock). As of the date of this Agreement, there are not any outstanding
contractual obligations of Xxxxxxx or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of
Xxxxxxx or any of its Subsidiaries. Xxxxxxx has delivered to Shire a
complete and correct copy of the Rights Agreement as amended and
supplemented to the date of this Agreement. There are no outstanding stock
appreciation, phantom stock, profit participation or similar rights
(collectively, "SARs") with respect to Xxxxxxx. Xxxxxxx has delivered to
Shire a complete list of all outstanding Indebtedness of Xxxxxxx and its
Subsidiaries.
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(d) Authority. Xxxxxxx has the requisite corporate power and authority
to execute and deliver this Agreement and, subject to Xxxxxxx Shareholder
Approval (as defined below) and the receipt of the consents and waivers set
forth in Section 3.1(d) of the Xxxxxxx Disclosure Schedule, to consummate
the transactions contemplated by this Agreement to be consummated by
Xxxxxxx. The execution and delivery of this Agreement by Xxxxxxx and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Xxxxxxx,
subject to the approval of this Agreement and the transactions contemplated
hereby by the affirmative vote of holders of at least two-thirds of the
shares of Common Stock voted at a meeting (the "Xxxxxxx Shareholder
Approval"). This Agreement has been duly executed and delivered by Xxxxxxx
and constitutes a valid and binding obligation of Xxxxxxx, enforceable
against Xxxxxxx in accordance with its terms, subject to applicable
bankruptcy, insolvency moratorium or other similar laws relating to
creditors' rights and general principles of equity.
(e) Noncontravention. Neither the execution and delivery of this
Agreement by Xxxxxxx nor the consummation of the transactions contemplated
hereby nor compliance by Xxxxxxx with any of the provisions hereof will (i)
violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or
both, could constitute a default) under, or result in the termination,
modification or suspension of, or accelerate the performance required by,
or result in a right of termination or acceleration under, or result in the
creation of any Lien upon, right to acquire or obligation to dispose of any
of the properties, assets or rights of Xxxxxxx or any of its Subsidiaries
under, any of the terms, conditions or provisions of (x) the Certificate of
Incorporation or By-Laws of Xxxxxxx or any of its Subsidiaries or (y) any
note, bond, mortgage, credit agreement, indenture, deed of trust, license,
Permit, authorization, lease, agreement or instrument or obligation to
which Xxxxxxx or any of its Subsidiaries is party or by which they are
bound or to which they or any of their assets may be subject, or (ii)
violate any judgment, ruling, order, writ, injunction, decree, statute,
rule or regulation applicable to Xxxxxxx or any of its Subsidiaries, their
operations or any of their assets, except for such violations, conflicts or
breaches referred to in clauses (i)(y) and (ii) which would not,
individually or in the aggregate, have a Xxxxxxx Material Adverse Effect.
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(f) Government Approval; Consents. No consents and approvals are
required to be obtained by Xxxxxxx from non-governmental third parties
("Xxxxxxx Third Party Approvals") in order to lawfully and contractually
permit it to perform its obligations under this Agreement and consummate
the transactions contemplated hereby. No notice to, filing with, or
authorization, consent or approval of, any federal, state, local or
non-U.S. public body or authority is necessary for the execution, delivery
or performance of this Agreement by Xxxxxxx or the consummation of the
transactions contemplated hereby ("Xxxxxxx Governmental Approvals").
(g) SEC Documents. (i) Xxxxxxx has filed all required reports,
schedules, forms, statements and other documents with the SEC since January
1, 1998 (the "SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The
financial statements of Xxxxxxx included in the SEC Documents comply as to
form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with accounting principles generally accepted
in the United States ("US GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position of Xxxxxxx
and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(ii) Xxxxxxx is eligible to use Form S-3 for the filing of a
registration statement with the SEC under the Securities Act.
(h) Information Supplied. None of the information supplied or to be
supplied by Xxxxxxx for inclusion or in-
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corporation by reference in (i) the registration statement on Form F-4 to
be filed with the SEC by Shire in connection with the issuance of Ordinary
Shares and Shire ADSs in the Merger (the "Form F-4") will, at the time the
Form F-4 is filed with the SEC, at any time it is amended or supplemented
or at the time it becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, (ii) the UK Disclosure Documents will, on the date the UK
Disclosure Documents are first mailed to the shareholders of Shire or at
the time of the Shire shareholders meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they are made, not misleading or (iii) the
Proxy Statement will, at the date it is first mailed to Xxxxxxx
shareholders or at the time of the Xxxxxxx Shareholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation is made by Xxxxxxx
with respect to statements made or incorporated by reference therein based
on information supplied by Shire.
(i) Absence of Certain Changes or Events. Except as disclosed in the
SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed SEC Documents"), since December 31, 1998 there has
not been (i) any material adverse change in the business, financial
condition or results of operations of Xxxxxxx and its Subsidiaries, taken
as a whole, (ii) any destruction or loss of (whether or not covered by
insurance) any property, asset or right that has had or is likely to have a
Xxxxxxx Material Adverse Effect, (iii) any authorization or issuance by
Xxxxxxx of any of its capital stock or the issuance of any debt security or
other evidence of Indebtedness of Xxxxxxx or any of its Subsidiaries, (iv)
any redemption or other acquisition by Xxxxxxx of any of its capital stock
or by Xxxxxxx or any of its Subsidiaries of any of their debt securities or
other evidences of Indebtedness, or any payment made with respect to any of
the foregoing (other than any regular, periodic payment of in-
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terest made with respect to a debt security or other evidence of
Indebtedness), (v) any declaration, setting aside or payment of any
dividend or other distribution or payment (whether in cash, capital stock
or otherwise) in respect of any capital stock of Xxxxxxx, (vi) any disposal
or lapse of any Xxxxxxx Intellectual Property, (vii) any Lien (other than a
Permitted Lien) incurred on any material property, assets or rights of
Xxxxxxx or any of its Subsidiaries, (viii) any incurrence by Xxxxxxx or any
of its Subsidiaries of any liability which has had or is likely to have a
Xxxxxxx Material Adverse Effect, (ix) any incurrence of Indebtedness or any
guarantee by Xxxxxxx or any of its Subsidiaries of any liability of any
other person or entity outside of the ordinary course of business, (x) to
the knowledge of Xxxxxxx, any development with respect to regulatory
approval of any products of Xxxxxxx or any of its Subsidiaries which has
had or is likely to have a Xxxxxxx Material Adverse Effect, (xi) to the
knowledge of Xxxxxxx, any development with respect to relationships with
any contract manufacturer or contract research organization with which
Xxxxxxx or any of its Subsidiaries has a business relationship which has
had or is likely to have a Xxxxxxx Material Adverse Effect or (xii) any
change in Xxxxxxx' Tax accounting methods, any new election made with
respect to Taxes, any modification or revocation of any existing election
made with respect to Taxes, or any settlement or other disposition of any
Tax matter.
(j) Compliance with Law. Neither Xxxxxxx nor any of its Subsidiaries
is in violation or noncompliance in any material respect with any statute,
law, ordinance, regulation, rule, order or other legal requirement of any
government, authority or any other governmental department or agency
applicable to its business or operations, or any judgment, decree or order
of any court to which it is a party.
(k) Affiliate Arrangements. Neither Xxxxxxx nor any of its
Subsidiaries is a party to any contract, agreement, arrangement,
understanding or other commitment with any director, officer or
securityholder of Xxxxxxx or any of its Subsidiaries or, to the knowledge
of Xxxxxxx, any person or entity controlled by any such person.
(l) Transaction Fees. Xxxxxxx has not retained any broker, finder,
financial adviser, investment banker or other person or entity which is
entitled to any brokerage,
-22-
finder's or similar fee or commission in connection with this Agreement or
the transactions contemplated hereby.
(m) Litigation. There is no claim, action, suit or proceeding pending
or, to the knowledge of Xxxxxxx, threatened against Xxxxxxx or any of its
Subsidiaries or any of their respective properties, assets or rights before
any court or governmental or regulatory authority or body.
(n) Taxes and Tax Returns. (i) Xxxxxxx has duly and timely filed all
federal, state, local and non-U.S. Tax Returns required to be filed by it
and its Subsidiaries, and each such Tax Return is complete and accurate in
all material respects, (ii) Xxxxxxx has timely paid all Taxes due and
payable by it and its Subsidiaries and has made adequate provision (through
a current accrual on its most recent financial statements) for any Taxes
that are not yet due and payable and (iii) Xxxxxxx has withheld and paid in
a timely manner all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party, including amounts
of or the value of awards and prizes paid to Xxxxxxx' employees. Any
deficiencies or assessments asserted in writing by any taxing authority
have been paid or fully settled and no issue raised by any such taxing
authority reasonably could be expected to result in a proposed deficiency
for any prior, parallel or subsequent period (including periods subsequent
to the Effective Time). There are no claims or assessments pending (or, to
the best knowledge of Xxxxxxx, threatened) against Xxxxxxx or any of its
Subsidiaries for any alleged federal, state, local or non-U.S. Tax
deficiency and no issue has been raised in writing by any federal, state,
local or non-U.S. taxing authority or representative thereof. No consent
has been filed relating to Xxxxxxx pursuant to Section 341 of the Code. No
claim has ever been made by an authority in a jurisdiction where Xxxxxxx
does not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. Section 3.1(n) of the Xxxxxxx Disclosure Schedule lists all
federal, state, local and non-U.S. jurisdictions in which Xxxxxxx files Tax
Returns, and indicates those Tax Returns that have been audited and those
that currently are the subject of audit. Xxxxxxx has not consented to an
extension of the statute of limitations with respect to any Tax period.
Xxxxxxx is not a party to any Tax allocation or sharing agreement. Xxxxxxx
(i) has never been a member of an
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"affiliated group" (within the meaning of Section 1504 of the Code) and has
never been a member of any combined, consolidated, affiliated or unitary
group for any state, local or non-U.S. Tax purposes and (ii) has no
liability for the Taxes of any person under Treas. Reg. ss. 1.1502-6 (or
any similar provision of state, local or non-U.S. law), as a transferee or
successor, by contract, or otherwise. Xxxxxxx has never had any
"undistributed personal holding company income" (as defined in Section 545
of the Code). Xxxxxxx is not required to make any adjustment pursuant to
Section 481 of the Code (or any comparable provision of state, local or
non-U.S. law) by reason of a change in accounting method or otherwise.
Xxxxxxx has never requested a ruling from, or entered into a closing
agreement with, the Internal Revenue Service or any other taxing authority.
None of Xxxxxxx' assets is "tax-exempt use property" (as defined in Section
168(h)(1) of the Code) or may be treated as owned by any other person
pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954 (as in
effect immediately prior to the enactment of the Tax Reform Act of 1986).
Xxxxxxx is not a party to any agreement or arrangement that provides for
the payment of any amount that could constitute a "parachute payment"
within the meaning of Section 280G of the Code. Xxxxxxx is not, and has
never been, a "United States real property holding corporation" within the
meaning of Section 897 of the Code. Xxxxxxx has not made any elections
under Section 108, 168, 338, 441, 472, 1017, 1033 or 4977 of the Code (or
any predecessor provisions thereof). Xxxxxxx has previously delivered to
Shire true and complete copies of (i) all federal, state, local and
non-U.S. income or franchise Tax Returns for each of the last three taxable
years ending prior to the date of this Agreement (except for those Tax
Returns that have not yet been filed) and (ii) any audit reports issued
within the last three years by the Internal Revenue Service or any other
taxing authority.
(o) Real Property. Section 3.1(o) of the Xxxxxxx Disclosure Schedule
sets forth a complete and accurate list of all material real property owned
or leased by Xxxxxxx or any of its Subsidiaries, including (i) with respect
to owned real property, the date of its acquisition, any Liens on or with
respect to such real property (other than Permitted Liens), the name of the
holder of any such Lien and the amount and nature of any obligation secured
by any such Lien and (ii) with respect to leased real property, the name of
the lessor of such real property, a
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list of all instruments and documents governing the terms of such leasehold
interest, any Lien on or with respect to such leasehold interest (other
than Permitted Liens), the name of the holder of any such Lien and the
amount and nature of any obligation secured by any such Lien. Xxxxxxx is
not a lessor with respect to any material real property owned by it or any
of its Subsidiaries and has not granted any sublease of any leasehold
interest in any material real property leased by it or any of its
Subsidiaries. With respect to such material real property, (i) there are no
eminent domain proceedings pending or threatened against it, (ii) such
properties and the improvements thereon (including the roof and structural
portions of each building) are in good operating order and condition,
subject to ordinary wear and tear, and (iii) the use thereof does not
violate any zoning or similar land use laws or other government regulations
other than such violations which, individually or in the aggregate, would
not adversely affect the ability of the Surviving Corporation to use,
operate or occupy any of such properties following the Effective Time. The
real property owned or leased by Xxxxxxx and its Subsidiaries is sufficient
for the conduct of its business.
(p) Licenses, Permits and Authorizations. Section 3.1(p) of the
Xxxxxxx Disclosure Schedule sets forth a complete and accurate list of all
material Permits held by or on behalf of Xxxxxxx and its Subsidiaries,
including (i) the agency or body issuing such Permit, (ii) the person or
entity to whom such Permit was issued and (iii) the date such Permit
expires or is required to be renewed. Each such Permit is, to the knowledge
of Xxxxxxx, in full force and effect and Xxxxxxx, or the person or entity
who holds such Permit on Xxxxxxx' behalf, is in compliance in all material
respects with all of its obligations with respect thereto, and, to the
knowledge of Xxxxxxx, no event has occurred or condition exists which
permits or, upon the giving of notice or lapse of time or both, would
permit revocation, nonrenewal, modification, suspension or termination of
any such Permit.
(q) ERISA and Employee Matters. Section 3.1(q) of the Xxxxxxx
Disclosure Schedule sets forth a complete and accurate list of all
employment and consultancy agreements, all employee benefit plans (within
the meaning of Section 3(3) of ERISA) or retirement benefits scheme (within
the meaning of Section 611 of the Income and Corporation Taxes Act 1988)
and all other written plans, ar-
-25-
rangements or policies relating to stock options, stock purchases,
compensation, deferred compensation, supplemental retirement arrangements,
other incentive programs, severance, fringe benefits or other employee
benefits (collectively "Employment Obligations") covering all present and
former officers, directors, employees, consultants and agents of Xxxxxxx
and its Subsidiaries and any of their spouses or dependents. Xxxxxxx has
made available to Shire true, complete and correct copies of (i) each such
Employment Obligation, (ii) the most recent annual report on Form 5500 as
filed with the Internal Revenue Service with respect to each applicable
Employment Obligation, (iii) the most recent summary plan description (or
similar document) with respect to each applicable Employment Obligation,
(iv) each trust agreement and insurance or annuity contract relating to any
Employment Obligation and (v) the most recent actuarial valuation report
for each applicable Employment Obligation. (i) Xxxxxxx and its Subsidiaries
are in compliance in all material respects with all applicable provisions
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Code with respect to each Employment Obligation, (ii)
except for PBGC premiums, all of which that are due have been paid, neither
Xxxxxxx nor any of its Subsidiaries has material liability under Title IV
of ERISA, (iii) neither Xxxxxxx nor any of its Subsidiaries has engaged in
a prohibited transaction or breach of fiduciary duty that would subject it
to a material tax imposed under Section 4975 of the Code or material
liability pursuant to Section 409 or 502 of ERISA, (iv) neither Xxxxxxx nor
any of its Subsidiaries has been a party to or contributed to any
"multiemployer plan" as defined in Section 4001(a) of ERISA, (v) no pension
plan covering any present or former officers, directors or employees of
Xxxxxxx or any of its Subsidiaries is or has been subject to Title IV of
ERISA, (vi) except for liability for contributions and benefits pursuant to
the Employment Obligations, neither Xxxxxxx nor any of its Subsidiaries has
incurred any material liability under or pursuant to Title I or IV of ERISA
or the penalty, excise tax or joint and several liability provisions of the
Code relating to employee benefit plans and (vii) except claims for
benefits payable in the normal operation of such Employment Obligations,
there are no investigations by any governmental agency, termination
proceedings or other claims, suits or proceedings against or involving any
such Employment Obligation or asserting any rights to or claims for
benefits under any such Employment Obligation. In respect of any Employment
Obligations
-26-
benefiting Xxxxxxx UK employees, (i) the only benefits provided are defined
contribution benefits and no promise, assurance or undertaking has been
given to any of the employees (whether legally binding or not) as to the
provision of retirement, death or disability benefits at a particular
level, (ii) there are not in respect of any retirement benefits scheme or
the benefits under it any actions, suits or claims pending or threatened
(other than routine claims or benefits) against the trustees or
administrators of that scheme or against Shire. Each Employment Obligation
of Xxxxxxx and its Subsidiaries (if any) that is intended to be a
tax-qualified plan has been the subject of a determination letter from the
Internal Revenue Service to the effect that such Employment Obligation and
each related trust is qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), as applicable, respectively, of the Code, no
such determination letter has been revoked, and revocation has not been
threatened and no event has occurred and no circumstances exist that would
reasonably be expected to adversely affect the tax qualification of such
Employment Obligation. Each of the Employment Obligations with respect to
employees or former employees employed by Xxxxxxx or any of its
Subsidiaries outside of the United States are in compliance in all material
respects with all applicable law (including, where applicable, Article 141
of the Treaty of Rome) and, to the extent not mandated by the laws of the
applicable jurisdiction, copies of the applicable written plan document
have been made available to Shire.
(r) Labor Relations. (i) There is no unfair labor practice complaint
pending against Xxxxxxx or any of its Subsidiaries or, to the knowledge of
Xxxxxxx, threatened against them, before the National Labor Relations Board
or any other U.S. or non-U.S. governmental or regulatory authority, and, to
the knowledge of Xxxxxxx, no grievance or arbitration proceeding arising
out of or under any of their Employment Obligations is so pending against
Xxxxxxx or any of its Subsidiaries or threatened against them; (ii) to the
knowledge of Xxxxxxx, there is no basis for an unfair labor practice
finding against Xxxxxxx or any of its Subsidiaries; (iii) no strike, labor
dispute, slowdown or stoppage is pending or, to the knowledge of Xxxxxxx,
threatened against Xxxxxxx or any of its Subsidiaries; and (iv) no union
has ever represented any employee of Xxxxxxx or any of its Subsidiaries.
-27-
(s) Intellectual Property Rights. (i) Section 3.1(s) of the Xxxxxxx
Disclosure Schedule sets forth a complete and accurate list (including
registration numbers and dates of filing, renewal and termination, where
applicable, for each jurisdiction where filed) of all patents, patent
applications, trademarks, trademark registrations and applications,
copyrights, copyright applications, service marks, service xxxx
registrations and applications and trade names (whether or not registered
or registrable) ("Intellectual Property") owned by Xxxxxxx or any of its
Subsidiaries which is material to Xxxxxxx and its Subsidiaries, taken as a
whole ("Xxxxxxx Intellectual Property"), including any Liens thereon, the
name of the holder of any such Lien and the amount and nature of any
obligation secured by any such Lien. All Xxxxxxx Intellectual Property is
owned by Xxxxxxx or its Subsidiaries free and clear of all Liens, no
Xxxxxxx Intellectual Property has been canceled, abandoned or otherwise
terminated and all patent applications, trademark applications and
copyright applications included in Xxxxxxx Intellectual Property have been
duly filed and are recorded on the public record in the name of Xxxxxxx or
one of its Subsidiaries and all renewal fees have been duly paid other than
where such action would not have a Xxxxxxx Material Adverse Effect. Neither
Xxxxxxx nor any of its Subsidiaries has granted any license or other rights
with respect to any Xxxxxxx Intellectual Property to any other person or
entity.
(ii) Xxxxxxx has no knowledge that any of its or its Subsidiaries'
granted patents are invalid; to the knowledge of Xxxxxxx, no Xxxxxxx
Intellectual Property is being infringed by any third party in any material
respect; and, to the knowledge of Xxxxxxx, its current operations do not
infringe a granted patent of a third party in any material respect.
(iii) Neither Xxxxxxx nor any of its Subsidiaries has any license or
other rights with respect to any Intellectual Property owned by any other
person or entity.
(iv) All technology, processes, techniques and methods of manufacture
used in or necessary to the manufacturing or research operations of Xxxxxxx
and its Subsidiaries, except to the extent the same are in the public
domain, are subject to valid and effective confidentiality agreements
between Xxxxxxx and its employees, have been memorialized to the extent
required by good manufacturing practice and, to the knowledge of Xxxxxxx,
are the subject
-28-
of no claim, whether or not asserted, that their use or employment by
Xxxxxxx or any of its Subsidiaries violates the rights of any person.
(t) Insurance. Section 3.1(t) of the Xxxxxxx Disclosure Schedule sets
forth (i) a complete and accurate list of all policies of insurance of
Xxxxxxx and its Subsidiaries currently in force, including surety bonds or
other credit support therefor (the "Xxxxxxx Insurance Policies"), the
current annual premiums for each Xxxxxxx Insurance Policy, the types of
risk covered and limits of coverage and (ii) a description of claims
experience of Xxxxxxx (x) in the twelve months immediately preceding the
date hereof with respect to all matters and (y) since its incorporation
with respect to product liability matters, matters arising by reason of
clinical trials, environmental matters and workmen's compensation. All
Xxxxxxx Insurance Policies are in full force and effect and all premiums
due thereon have been paid. Xxxxxxx has complied in all material respects
with the terms and provisions of the Xxxxxxx Insurance Policies. Xxxxxxx
has never applied for and been refused or denied any policy of insurance
with respect to product liability matters, matters arising by reason of
clinical trials, environmental matters and workmen's compensation. Xxxxxxx'
insurance coverage is adequate in kind and amount based on current industry
practice.
(u) Books and Records. (i) The books of account and other financial
records of Xxxxxxx and its Subsidiaries that have been made available to
Shire prior to the date hereof or are made available thereafter are or will
be true, complete and correct in all material respects and do not and will
not contain any omissions which, in light of the circumstances in which
they are made, are materially misleading.
(ii) The minute books and other records of Xxxxxxx and its
Subsidiaries that have been made available to Shire prior to the date
hereof or are made available thereafter contain records of all meetings of
Xxxxxxx and its Subsidiaries prior to the date hereof and prior to the
Effective Time, respectively, are or will be accurate in all material
respects and reflect accurately in all material respects all other
corporate action of the shareholders and directors and any committees of
the Board of Directors of Xxxxxxx and its Subsidiaries.
-29-
(v) Undisclosed Liabilities. Except as set forth in the Filed SEC
Documents and except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice and U.S. GAAP,
neither Xxxxxxx nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by US GAAP to be set forth on a consolidated balance
sheet of Xxxxxxx and its consolidated Subsidiaries or in the notes thereto
and which, individually or in the aggregate, could reasonably be expected
to have a Xxxxxxx Material Adverse Effect.
(w) FDA, DEA Matters. Section 3.1(w) of the Xxxxxxx Disclosure
Schedule sets forth a complete and accurate list of (i) each
investigational new drug filing made by Xxxxxxx or any of its Subsidiaries
with the U.S. Food and Drug Administration (the "FDA") or any non-U.S.
equivalent (including, without limitation, the U.K. Medicines Control
Agency (the "MCA") and Health Protection Branch of the Ministry of Health
of Canada), (ii) each clinical trial protocol submitted by Xxxxxxx or any
of its Subsidiaries to the FDA or any non-U.S. equivalents, (iii) each new
drug application and abbreviated or supplemental new drug application filed
by Xxxxxxx or any of its Subsidiaries pursuant to the Federal Food, Drug
and Cosmetic Act, as amended, or any non-U.S. equivalents, (iv) each
product license application filed by Xxxxxxx or any of its Subsidiaries
pursuant to the Public Health Service Act, as amended, or any non-U.S.
equivalents and (v) each establishment license application filed with
respect to any product of Xxxxxxx or any of its Subsidiaries under the
Public Health Service Act, as amended, or any non-U.S. equivalents. (i)
There are no lawsuits, arbitrations, legal or administrative or regulatory
proceedings, charges, complaints or investigations by the FDA, the U.S.
Drug Enforcement Agency (the "DEA"), the U.S. Department of Justice (the
"DOJ") or any state or non-U.S. regulatory agency pending or, to the best
knowledge of Xxxxxxx, threatened against or relating to Xxxxxxx, any of its
Subsidiaries or any of their products, (ii) there have been no product
recalls or similar actions by Xxxxxxx or any of its Subsidiaries, (iii)
each clinical trial with respect to products of Xxxxxxx and its
Subsidiaries has been conducted in accordance with its clinical trial
protocol and applicable regulations and Xxxxxxx or one of its Subsidiaries
has filed all required notices (and made available to Shire copies thereof)
of adverse drug experiences, injuries or deaths relating to clinical trials
of such prod-
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ucts, and Xxxxxxx or one of its Subsidiaries has filed all required notices
of any such occurrence, (iv) to the best knowledge of Xxxxxxx, all clinical
trials have been and are being conducted in substantial compliance with all
applicable good clinical practice regulations, (v) neither Xxxxxxx nor any
of its Subsidiaries nor, to the best knowledge of Xxxxxxx, any of their
respective officers, employees or agents has made an untrue statement of
material fact or fraudulent statement to the FDA, the MCA, the DEA or other
regulatory agencies, failed to disclose a material fact required to be
disclosed to any of them or committed an act, made a statement or failed to
make a statement that could reasonably be expected to provide a basis for
any of them to invoke the policy respecting "Fraud, Untrue Statements of
Material Facts, Bribery and Illegal Gratuities" set forth in 56 Fed. Reg.
46191 (September 10, 1991) or equivalent regulations, (vi) there are no
unresolved reports, warning letters or other documents received from or
issued by the FDA, the MCA, the DEA or other regulating agencies that
indicate or suggest material lack of compliance with applicable regulatory
requirements by Xxxxxxx, any of its Subsidiaries or persons providing
services for the benefit of any of them, (vii) to the best knowledge of
Xxxxxxx, no person has filed a claim for loss or potential loss under any
indemnity covering participants in clinical trials of products of Xxxxxxx
and its Subsidiaries, (viii) to Xxxxxxx' knowledge, no material
modifications to the process by which products of Xxxxxxx or any of its
Subsidiaries that have been or are being used in clinical trials are
manufactured will be necessary in order to manufacture commercial
quantities of such products, (ix) as to each drug of Xxxxxxx or any of its
Subsidiaries for which a new drug application or abbreviated new drug
application has been approved by the FDA or other regulating agencies, the
applicant and all persons performing operations covered by the application
are in substantial compliance with 21 U.S.C. Section 355 or 357, 21 C.F.R.
Part 314 or 430 et seq. (or non-U.S. equivalents), respectively, and all
terms and conditions of the application, (x) Xxxxxxx and its Subsidiaries
are in compliance with all applicable registration and listing requirements
set forth in 21 U.S.C. Section 360 and 21 C.F.R. Part 207 and, to the
extent required, Xxxxxxx or one of its Subsidiaries has obtained licenses
from the DEA and is in compliance with all such licenses and all applicable
regulations promulgated by the DEA, (xi) all manufacturing operations
conducted by or, to the knowledge of Xxxxxxx, for the benefit of Xxxxxxx
and its Subsidiaries
-31-
have been and are being conducted in compliance with applicable good
manufacturing practice regulations including those set forth in 21 C.F.R.
Parts 210 and 211, (xii) neither Xxxxxxx nor any of its Subsidiaries has
received any written notice that the FDA, the MCA, the DEA or other
regulating agencies has commenced, or threatened to initiate, any action to
withdraw its approval or request the recall of any product of Xxxxxxx or
its Subsidiaries or withdraw advertising or sales promotion materials or
commenced, or threatened to initiate, any action to enjoin production at
any facility owned or used by Xxxxxxx or any of its Subsidiaries or any of
their manufacturing locations, (xiii) as to each article of drug or
consumer product currently manufactured and/or distributed by or on behalf
of Xxxxxxx or its Subsidiaries, such article is not adulterated or
misbranded within the meaning of the FDCA, 21 U.S.C. Sections 301 et seq.,
and all advertising and sales promotional materials of Xxxxxxx or its
Subsidiaries are otherwise in conformance with applicable regulations and
(xiv) neither Xxxxxxx nor any of its Subsidiaries nor, to the knowledge of
Xxxxxxx, any of their respective officers, employees, agents or affiliates
has been convicted of any crime or engaged in any conduct for which
debarment is mandated by 21 U.S.C. Section 335(a) or authorized by 21
U.S.C. Section 335a(b). To the knowledge of Xxxxxxx, Xxxxxxx' contractors
are in compliance with all applicable law and regulations and in respect of
the FDA and DEA have secured all licenses, renewals and quotas necessary to
their operation.
Xxxxxxx has made available to Shire copies of all written
communications to or from the FDA and the DEA relating specifically to
Xxxxxxx, its Subsidiaries and their respective operations or business.
(x) Environmental Matters. (i) Each of Xxxxxxx and its Subsidiaries
possesses all Environmental Permits required under applicable Environmental
Laws to conduct its business as currently conducted and to own and operate
its assets, and is in compliance in all material respects with the terms
and conditions of such Environmental Permits.
(ii) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not affect the
validity or require the transfer of any Environmental Permits held by
Xxxxxxx or its Subsidiaries, and will not require any notification,
-32-
disclosure, registration, reporting, filing, investigation or remediation
under any Environmental Law.
(iii) Each of Xxxxxxx and its Subsidiaries is in compliance in all
material respects with all applicable Environmental Laws and has no
material liability under any Environmental Law.
(iv) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, proceeding, notice or demand
letter, or request for information pending or, to the knowledge of Xxxxxxx
threatened, under any Environmental Law (x) against Xxxxxxx or its
Subsidiaries or (y) to the knowledge of Xxxxxxx against any person or
entity in connection with which liability could reasonably be expected to
be imputed or attributed by law or contract to Xxxxxxx or its Subsidiaries.
(v) No property or facility presently or formerly owned, leased or
operated by Xxxxxxx or its Subsidiaries, and no property or facility at
which Hazardous Materials of Xxxxxxx or its Subsidiaries have been stored,
treated or disposed of or at which any Hazardous Materials have been
manufactured, handled, tested, formulated, prepared, encapsulated,
packaged, bottled or stored for Xxxxxxx or its Subsidiaries ("Xxxxxxx
Product Sites") is listed or proposed for listing on the National
Priorities List or the Comprehensive Environmental Response, Compensation
and Liability Information System, both promulgated under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or on any comparable list established under any Environmental
Law.
(vi) There has been no disposal, spill, discharge, emission or release
of any Hazardous Material by Xxxxxxx or its Subsidiaries on, at, under or
from any property presently or formerly owned, leased or operated by
Xxxxxxx or its Subsidiaries and there are no Hazardous Materials located
in, at, on or under any such facility or property, or, to the knowledge of
Xxxxxxx, at any Xxxxxxx Product Site or other location where Hazardous
Materials of Xxxxxxx or any of its Subsidiaries have been stored, treated
or disposed of (a "Xxxxxxx Third Party Site"), in each case that could
reasonably be expected to result in the incurrence of any material
liability, by Xxxxxxx or its Subsidiaries under any Environmental Law.
-33-
(vii) There are no underground storage tanks or other underground
storage receptacles or related piping, or any impoundments containing
Hazardous Materials located on any facility or property owned, leased or
operated by Xxxxxxx or any of its Subsidiaries.
(viii) No Lien has been recorded against any properties, assets or
facilities owned, leased or operated by Xxxxxxx or any of its Subsidiaries
under any Environmental Law.
(ix) Neither Xxxxxxx nor any of its Subsidiaries is obligated to
perform any investigation or other action under any Environmental Law
pursuant to any order, decree, judgment or agreement by which it is bound,
or has assumed by contract or agreement any obligation or liability under
any Environmental Law.
Xxxxxxx has made available to Shire all material records and files,
including, but not limited to, all assessments, reports, studies, audits,
analyses, tests and data, in possession, custody or control of Xxxxxxx or
its Subsidiaries concerning compliance by Xxxxxxx and its Subsidiaries
with, or liability under, any Environmental Law, including, without
limitation, those concerning the existence of Hazardous Materials at
facilities or properties currently or formerly owned, operated or leased by
Xxxxxxx or its Subsidiaries or at any Xxxxxxx Product Site or Xxxxxxx Third
Party Site.
(y) Products. Each of the products produced or sold by Xxxxxxx and its
Subsidiaries: (i) is, and at all times up to and including the date hereof
has been, in compliance in all material respects with all applicable
federal, state, local and non-U.S. laws and regulations; (ii) is, and at
all relevant times has been, fit for the ordinary purposes for which it is
intended to be used and conforms in all material respects to any promises
or affirmations of fact made on the container, label or promotional
materials for such product or in connection with its sale; and (iii)
contains no design or manufacturing defect. Neither Xxxxxxx nor any of its
Subsidiaries has received notice of any product warranty claims. Neither
Xxxxxxx nor any of its Subsidiaries is aware of any facts which are
reasonably likely to cause (i) the withdrawal or recall of any product sold
or intended to be sold by Xxxxxxx or its Subsidiaries, (ii) a change in the
marketing classification, labeling or promotional materials of any such
products, or
-34-
(iii) a termination or suspension of marketing of any such products. There
are no material claims pending or, to the knowledge of Xxxxxxx, threatened
against Xxxxxxx or its Subsidiaries with respect to the quality of or
absence of defects in such products nor are there any facts known to
Xxxxxxx relating to the quality of or absence of defects in such products
which, if known by a potential claimant or governmental authority, could
reasonably be expected to give rise to a claim or proceeding. To the
knowledge of Xxxxxxx, no supplier of a raw material required for the
manufacture of a material product of Xxxxxxx and its Subsidiaries for which
there is not a permissible replacement obtainable under commercially
reasonable terms has indicated that it will not continue to supply such raw
material on terms consistent with those on the date hereof.
(z) Marketing Practices. Xxxxxxx' operations and commercial conduct
and those of its Subsidiaries have at all times conformed in all material
respects to the Code of Marketing Practices of the Pharmaceutical Research
Industry Association.
(aa) Affiliates. Xxxxxxx has delivered to Shire a letter identifying
all persons who, as of the date hereof, may be deemed to be affiliates of
Xxxxxxx for purposes of Rule 145 under the Securities Act ("Affiliates")
and the written agreement of each such person in the form of Exhibit 3
hereto.
(bb) Pooling. Neither Xxxxxxx nor any of its Affiliates has taken or
agreed to take any action or failed to take any action that would prevent
the Merger from being treated for financial accounting purposes as a
"pooling of interests" in accordance with US GAAP and the regulations and
interpretations of the SEC.
(cc) Business Combination. Neither the execution and delivery of this
Agreement, the Option Agreement, the Shareholder Agreements nor the
consummation of the transactions contemplated hereby or thereby, as the
case may be, will (i) violate the Shareholder Protection Act or (ii) cause,
directly or indirectly, a Triggering Event, as that term is defined in the
Rights Agreement.
3.2. Representations and Warranties of Shire. Shire represents and warrants
to Xxxxxxx that, except (A) as set forth in the Shire Disclosure Schedule
delivered by Shire to Xxxxxxx at or prior to the execution of this Agreement
(the
-35-
"Shire Disclosure Schedule") (each section of which qualifies the
correspondingly numbered representation and warranty), and (B) with respect to
paragraphs (j), (m), (o), (p), (q), (r), (t), (w), (x) and (y) of this Section
3.2, as does not have, or could not reasonably be expected to have, individually
or in the aggregate, a Shire Material Adverse Effect, the following is true and
correct:
(a) Organization; Standing and Power. Shire is a corporation duly
organized and validly existing under the laws of the United Kingdom. Shire
has all requisite corporate power and authority to own, lease and operate
its assets and to carry on its business as now being conducted. Shire is
duly qualified as a foreign corporation to do business in each jurisdiction
where the character of its assets owned or leased or the nature of its
activities makes such qualification necessary (such jurisdictions being
specified in Section 3.2(a) of the Shire Disclosure Schedule) except where
the failure to be so qualified would not have a Shire Material Adverse
Effect. Copies of the Memorandum and Articles of Association of Shire as in
effect on the date hereof have been previously delivered to Xxxxxxx.
Acquisition Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of New Jersey. Acquisition Sub
has not conducted any activities other than in connection with its
organization, the negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby.
(b) Subsidiaries and Investments. Section 3.2(b) of the Shire
Disclosure Schedule lists each Subsidiary of Shire. Each such Subsidiary is
a corporation duly organized, validly existing and (in applicable
jurisdictions) in good standing under the laws of its jurisdiction of
incorporation. Each such Subsidiary has all requisite corporate power and
authority to own, lease and operate its assets and to carry on its business
as now being conducted. All such Subsidiaries are duly qualified as foreign
corporations to do business, and (in applicable jurisdictions) are in good
standing, in each jurisdiction where the character of their respective
assets owned or leased or the nature of their respective activities makes
such qualification necessary, except where the failure to be so qualified
or in good standing would not have a Shire Material Adverse Effect. All the
outstanding shares of capital stock of each such Subsidiary have been
validly issued and are fully paid (and in applicable jurisdic-
-36-
tions, nonassessable) and are owned by Shire, by another Subsidiary of
Shire or by Shire and another such Subsidiary, free and clear of all Liens,
other than Liens which (individually or in the aggregate) would not have a
Shire Material Adverse Effect. Except for the capital stock of its
Subsidiaries, Shire does not own any stock, partnership or other equity
interest in, or any debt or equity securities of, any person or entity.
(c) Capitalization. The authorized share capital of Shire as of the
date of this Agreement is (pound)10,000,000 divided into 200,000,000
Ordinary Shares. At the close of business on July 20, 1999 (i) 143,509,230
Ordinary Shares were issued and (ii) the board of directors of Shire were
generally and unconditionally authorized to allot relevant securities up to
a nominal amount of (pound)2,361,070 and no other share capital was issued
or reserved for issuance. All such Ordinary Shares of Shire are, and all
Ordinary Shares reserved for issuance will be, when issued, duly
authorized, validly issued and fully paid and not subject to preemptive
rights other than as required by law or the LSE rules. The Ordinary Shares
to be issued in the Merger will not be subject to preemption from existing
shareholders of Shire. Except as set forth above, as of the date of this
Agreement, there are not any Equity Equivalents of any of Shire or any of
its Subsidiaries (including, without limitation, any option, warrant, right
to subscribe, call or commitment of any kind or character whatsoever
requiring the issuance, sale or transfer by Shire or any of its
Subsidiaries of any shares of their capital stock or any securities
convertible into or exchangeable or exercisable for such capital stock). As
of the date of this Agreement, there are not any outstanding contractual
obligations of Shire or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of Shire or any of its
Subsidiaries. There are no outstanding SARs with respect to Shire. Shire
has delivered to Xxxxxxx a complete list of all outstanding indebtedness of
Shire and its Subsidiaries.
(d) Authority. Each of Shire and Acquisition Sub has the requisite
corporate power and authority to execute and deliver this Agreement and,
subject to Shire Shareholder Approval (as defined below), to perform its
respective obligations hereunder. The execution and delivery of this
Agreement by each of Shire and Acquisition Sub and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors, or a
-37-
duly authorized committee thereof, of each of Shire and Acquisition Sub. No
other corporate proceedings on the part of Shire (other than the approval
of this Agreement and the transactions contemplated hereby by the holders
of not less than a majority of the Ordinary Shares present and voting or on
a poll (the "Shire Shareholder Approval")) or Acquisition Sub are necessary
to authorize the performance of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Shire and Acquisition Sub, and constitutes a valid and
binding obligation of each of Shire and Acquisition Sub, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
(e) Noncontravention. Neither the execution and delivery of this
Agreement by Shire or Acquisition Sub nor the consummation of the
transactions contemplated hereby nor compliance by Shire or Acquisition Sub
with any of the provisions hereof will (i) violate, conflict with or result
in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, could constitute a default)
under, or result in the termination, modification or suspension of, or
accelerate the performance required by, or result in a right of termination
or acceleration under, or result in the creation of any Lien upon, right to
acquire or obligation to dispose of any of the properties, assets or rights
of Shire or any of its Subsidiaries under, any of the terms, conditions or
provisions of (x) the Memorandum and Articles of Association of Shire or
equivalent charter documents of any of its Subsidiaries or (y) any note,
bond, mortgage, credit agreement, indenture, deed of trust, license,
Permit, authorization, lease, agreement or instrument or obligation to
which Shire or any of its Subsidiaries is party or by which they are bound
or to which they or any of their assets may be subject, or (ii) violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to Shire or any of its Subsidiaries, their operations
or any of their assets, except for such violations, conflicts or breaches
referred to in clauses (i)(y) and (ii) which would not, individually or in
the aggregate, have a Shire Material Adverse Effect.
(f) Government Approval; Consents. No consents and approvals are
required to be obtained by Shire or Acquisi-
-38-
tion Sub from non-governmental third parties ("Shire Third Party
Approvals") in order to lawfully and contractually permit it to perform its
obligations under this Agreement and consummate the transactions
contemplated hereby. No notice to, filing with, or authorization, consent
or approval of, any U.K. or non-U.K. public body or authority is necessary
for the execution, delivery or performance of this Agreement by Shire or
Acquisition Sub or the consummation of the transactions contemplated hereby
("Shire Governmental Approvals").
(g) Reports and Financial Statements. (i) Shire has delivered to
Xxxxxxx (A) its annual report for its fiscal year ended December 31, 1998,
(B) all documents distributed to Shire's shareholders relating to meetings
of the shareholders of Shire since January 1, 1998, and (C) all of its
other reports and statements distributed to Shire shareholders together
with copies of all prospectuses and listing particulars issued by Shire or
any of its Subsidiaries since January 1, 1998 (the "Shire Documents"). As
of the date of its distribution to shareholders, each such report or
statement distributed to shareholders did not contain any untrue statement
of material fact or omit a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The audited consolidated
financial statements of Shire included in the Shire Documents were prepared
in accordance with accounting principles generally accepted in the United
Kingdom ("UK GAAP") (except in the case of unaudited statements) applied on
a consistent basis during the periods involved (except as may be indicated
in the notes thereto), and present a true and fair view of the consolidated
financial position of Shire and its consolidated Subsidiaries as of the
dates of approval of such financial statements by the board of directors of
Shire and the consolidated results of their operations and cash flows for
the periods set forth therein.
(h) Information Supplied. None of the information supplied or to be
supplied by Shire for inclusion or incorporation by reference in (i) the
Form F-4 will, at the time the Form F-4 is filed with the SEC, at any time
it is amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) the UK Disclosure
-39-
Documents will, on the date the UK Disclosure Documents are first mailed to
the shareholders of Shire, or at the time of the Shire shareholders meeting
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
are made, not misleading or (iii) the Proxy Statement will, at the date it
is first mailed to Xxxxxxx shareholders or at the time of the Xxxxxxx
Shareholders Meeting contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they are made, not misleading. The UK Disclosure Documents will
contain all particulars relating to Shire and Xxxxxxx required to comply in
all material respects with all United Kingdom statutory and other legal
provisions (including, without limitation, the Companies Act, the FSA and
the rules and regulations made thereunder and the rules and requirements of
the LSE) and all such information contained in such documents will be
substantially in accordance with the facts and will not omit anything
material likely to affect the import of such information. The Form F-4 will
comply as to form in all material respects with the requirements of the
Securities Act and the rules and regulations thereunder, except that no
representation is made by Shire with respect to statements made or
incorporated by reference therein based on information supplied by Xxxxxxx.
(i) Absence of Certain Changes or Events. Except as disclosed in the
Shire Documents filed and publicly available, or as disclosed in
announcements made by Shire in compliance with the continuing obligations
of the LSE prior to the date of this Agreement (the "Public UK Documents"),
since December 31, 1998 there has not been (i) any material adverse change
in the business, assets, financial condition or results of operations of
Shire and its Subsidiaries, taken as a whole, (ii) any destruction or loss
of (whether or not covered by insurance) any property, asset or right that
has had or is likely to have a Shire Material Adverse Effect, (iii) any
authorization or issuance by Shire of any of its capital stock or the
issuance of any debt security or other evidence of Indebtedness of Shire or
any of its Subsidiaries, (iv) any redemption or other acquisition by Shire
of any of its capital stock or by Shire or any of its Subsidiaries of any
debt securities or other evidences of Indebtedness, or any pay-
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ment made with respect to any of the foregoing (other than any regular,
periodic payment of interest made with respect to a debt security or other
evidence of Indebtedness), (v) any declaration, setting aside or payment of
any dividend or other distribution or payment (whether in cash, capital
stock or otherwise) in respect of any capital stock of Shire, (vi) any
disposal or lapse of any Shire Intellectual Property or Shire Intellectual
Property License, (vii) any Lien (other than a Permitted Lien) incurred on
any material property, assets or rights of Shire or any of its
Subsidiaries, (viii) any incurrence by Shire or any of its Subsidiaries of
any liability which has had or is likely to have a Shire Material Adverse
Effect, (ix) any incurrence of Indebtedness or any guarantee by Shire or
any of its Subsidiaries of any liability of any other person or entity
outside of the ordinary course of business, (x) to the knowledge of Shire,
any development with respect to regulatory approval of any products of
Shire or any of its Subsidiaries which has had or is likely to have a Shire
Material Adverse Effect, (xi) to the knowledge of Shire, any development
with respect to relationships with any contract manufacturer or contract
research organization with which Shire or any of its Subsidiaries has a
business relationship which has had or is likely to have a Shire Material
Adverse Effect or (xii) any change in Shire's Tax accounting methods, any
new election made with respect to Taxes, any modification or revocation of
any existing election made with respect to Taxes, or any settlement or
other disposition of any Tax matter.
(j) Compliance with Law. Neither Shire nor any of its Subsidiaries is
in violation or non-compliance in any material respect with any statute,
law, ordinance, regulation, rule, order or other legal requirement of any
government, authority or any other governmental department or agency
applicable to its business or operations, or any judgment, decree or order
of any court to which it is a party.
(k) Affiliate Arrangements. Neither Shire nor any of its Subsidiaries
is a party to any contract, agreement, arrangement, understanding or other
commitment with any director, officer or securityholder of Shire or any of
its Subsidiaries or, to the knowledge of Shire, any person or entity
controlled by any such person.
(l) Transaction Fees. Shire has not retained any broker, finder,
financial adviser, investment banker or
-41-
other person or entity which is entitled to any brokerage, finder's or
similar fee or commission in connection with this Agreement or the
transactions contemplated hereby.
(m) Litigation. There is no claim, action, suit or proceeding pending
or, to the knowledge of Shire, threatened against Shire or any of its
Subsidiaries or any of their respective properties, assets or rights before
any court or governmental or regulatory authority or body.
(n) Taxes and Tax Returns. (i) Shire has duly and timely filed all
U.K. and non-U.K. Tax Returns required to be filed by it and its
Subsidiaries, and each such Tax Return is complete and accurate in all
material respects, (ii) Shire has timely paid all Taxes due and payable by
it and its Subsidiaries and has made adequate provision (through a current
accrual on its most recent financial statements) for any Taxes that are not
yet due and payable and (iii) Shire has withheld and paid in a timely
manner all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party, including amounts of or the value of
awards and prizes paid to Shire's employees. Any deficiencies or
assessments asserted in writing by any taxing authority have been paid or
fully settled and no issue raised by any such taxing authority reasonably
could be expected to result in a proposed deficiency for any prior,
parallel or subsequent period (including periods subsequent to the
Effective Time). There are no claims or assessments pending (or, to the
best knowledge of Shire, threatened) against Shire or any of its
Subsidiaries for any alleged U.K. or non-U.K. Tax deficiency and no issue
has been raised in writing by any U.K. or non-U.K. taxing authority or
representative thereof. No claim has ever been made by an authority in a
jurisdiction where Shire does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. Section 3.2(n) of the Shire
Disclosure Schedule lists all U.K. and non-U.K. jurisdictions in which
Shire files Tax Returns, and indicates those Tax Returns that have been
audited and those that currently are the subject of audit. Shire has not
consented to an extension of the statute of limitations with respect to any
Tax period. Shire is not a party to any Tax allocation or sharing
agreement. Shire (i) has never been a member of any combined, consolidated,
affiliated or unitary group for any U.K. or non-U.K. Tax purposes and (ii)
has no liability for the Taxes of any person as a transferee or
-42-
successor, by contract, or otherwise. Shire has never requested a ruling
from, or entered into a closing agreement with any taxing authority. Shire
has previously delivered to Xxxxxxx true and complete copies of (i) all
U.K. and non-U.K. income or franchise Tax Returns for each of the last
three taxable years ending prior to the date of this Agreement (except for
those Tax Returns that have not yet been filed) and (ii) any audit reports
issued within the last three years by any taxing authority.
(o) Real Property. Section 3.2(o) of the Shire Disclosure Schedule
sets forth a complete and accurate list of all material real property owned
or leased by Shire or any of its Subsidiaries, including (i) with respect
to owned real property, the date of its acquisition, any Liens on or with
respect to such real property (other than Permitted Liens), the name of the
holder of any such Lien and the amount and nature of any obligation secured
by any such Lien and (ii) with respect to leased real property, the name of
the lessor of such real property, a list of all instruments and documents
governing the terms of such leasehold interest, any Lien on or with respect
to such leasehold interest (other than Permitted Liens), the name of the
holder of any such Lien and the amount and nature of any obligation secured
by any such Lien. Shire is not a lessor with respect to any material real
property owned by it or any of its Subsidiaries and has not granted any
sublease of any leasehold interest in any material real property leased by
it or any of its Subsidiaries. With respect to such material real property,
(i) there are no eminent domain proceedings pending or threatened against
it, (ii) such properties and the improvements thereon (including the roof
and structural portions of each building) are in good operating order and
condition, subject to ordinary wear and tear, and (iii) the use thereof
does not violate any zoning or similar land use laws or other government
regulations other than such violations which, individually or in the
aggregate, would not adversely affect the ability of Shire and its
Subsidiaries to use, operate or occupy any of such properties following the
Effective Time. The real property owned or leased by Shire and its
Subsidiaries is sufficient for the conduct of their business.
(p) Licenses, Permits and Authorizations. Section 3.2(p) of the Shire
Disclosure Schedule sets forth a complete and accurate list of all material
Permits held by or on behalf of Shire and its Subsidiaries, including (i)
the
-43-
agency or body issuing such Permit, (ii) the person or entity to whom such
Permit was issued and (iii) the date such Permit expires or is required to
be renewed. Each such Permit is, to the knowledge of Shire, in full force
and effect and Shire, or the person or entity who holds such Permit on
Shire's behalf, is in compliance in all material respects with all of its
obligations with respect thereto, and, to the knowledge of Shire, no event
has occurred or condition exists which permits or, upon the giving of
notice or lapse of time or both, would permit revocation, nonrenewal,
modification, suspension or termination of any such Permit.
(q) ERISA and Employee Matters. Section 3.2(q) of the Shire Disclosure
Schedule sets forth a complete and accurate list of all employment and
consultancy agreements, all employee benefit plans (within the meaning of
Section 3(3) of ERISA) or retirement benefits scheme (within the meaning of
Section 611 of the Income and Corporation Taxes Act 1988) and all other
written plans, arrangements or policies relating to stock options, stock
purchases, compensation, deferred compensation, supplemental retirement
arrangements, other incentive programs, severance, fringe benefits or other
employee benefits (collectively "Shire Employment Obligations") covering
all present and former officers, directors, employees, consultants and
agents of Shire and its Subsidiaries and any of their spouses or
dependents. Shire has made available to Xxxxxxx true, complete and correct
copies of (i) each Shire Employment Obligation, (ii) the most recent annual
report on Form 5500 as filed with the Internal Revenue Service with respect
to each applicable Shire Employment Obligation, (iii) the most recent
summary plan description (or similar document) with respect to each
applicable Shire Employment Obligation, (iv) each trust agreement and
insurance or annuity contract relating to any Shire Employment Obligation
and (v) the most recent actuarial valuation report for each applicable
Shire Employment Obligation. With respect to all Shire Employment
Obligations benefiting Shire's U.S. employees, (i) Shire and its
Subsidiaries are in compliance in all material respects with all applicable
provisions of ERISA and the Code with respect to each Shire Employment
Obligation, (ii) except for PBGC premiums, all of which that are due have
been paid, neither Shire nor any of its Subsidiaries has any material
liability under Title IV of ERISA, (iii) neither Shire nor any of its
Subsidiaries has engaged in a prohibited transaction or breach of fiduciary
duty that would
-44-
subject it to a material tax imposed under Section 4975 of the Code or
material liability pursuant to Section 409 or 502 of ERISA, (iv) neither
Shire nor any of its Subsidiaries has been a party to or contributed to any
"multiemployer plan" as defined in Section 4001(a) of ERISA, (v) no pension
plan covering any present or former officers, directors or employees of
Shire or any of its Subsidiaries is or has been subject to Title IV of
ERISA, (vi) except for liability for contributions and benefits pursuant to
such Shire Employment Obligations, neither Shire nor any of its
Subsidiaries has incurred any material liability under or pursuant to Title
I or IV of ERISA or the penalty, excise tax or joint and several liability
provisions of the Code relating to employee benefit plans and (vii) except
claims for benefits payable in the normal operation of such Shire
Employment Obligations, there are no investigations by any governmental
agency, termination proceedings or other claims, suits or proceedings
against or involving any such Shire Employment Obligation or asserting any
rights to or claims for benefits under any such Shire Employment
Obligation. In respect of any Shire Employment Obligations benefiting Shire
UK employees, (i) the only benefits provided are defined contribution
benefits and no promise, assurance or undertaking has been given to any of
the employees (whether legally binding or not) as to the provision of
retirement, death or disability benefits at a particular level and (ii)
there are not in respect of any retirement benefits scheme or the benefits
under it any actions, suits or claims pending or threatened (other than
routine claims or benefits) against the trustees or administrators of that
scheme or against Shire. Each Shire Employment Obligation of Shire and its
Subsidiaries (if any) that is intended to be a tax-qualified plan has been
the subject of a determination letter from the Internal Revenue Service to
the effect that such Shire Employment Obligation and each related trust is
qualified and exempt from Federal income taxes under Sections 401(a) and
501(a), as applicable, respectively, of the Code, no such determination
letter has been revoked, and revocation has not been threatened and no
event has occurred and no circumstances exist that would reasonably be
expected to adversely affect the tax qualification of such Shire Employment
Obligation. Each of the Shire Employment Obligations with respect to
employees or former employees employed by Shire or any of its Subsidiaries
outside of the United States are in compliance in all material respects
with all applicable law (including, where applicable, Article 141 of the
Treaty of Rome) and,
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to the extent the benefits provided thereunder are not mandated by the laws
of the applicable jurisdiction, copies of the applicable written plan
document have been made available to Xxxxxxx.
(r) Labor Relations. (i) There is no unfair labor practice complaint
pending against Shire or any of its Subsidiaries or, to the knowledge of
Shire, threatened against them before the National Labor Relations Board or
any other U.S. or non-U.S. governmental or regulatory authority, and, to
the knowledge of Shire, no grievance or arbitration proceeding arising out
of or under any of their Shire Employment Obligations is so pending against
Shire or any of its Subsidiaries or threatened against them; (ii) to the
knowledge of Shire, there is no basis for an unfair labor practice finding
against Shire or any of its Subsidiaries; (iii) no strike, labor dispute,
slowdown or stoppage is pending or, to the knowledge of Shire, threatened
against Shire or any of its Subsidiaries; and (iv) no union has ever
represented any employee of Shire or any of its Subsidiaries.
(s) Intellectual Property Rights. (i) Section 3.2(s)(i) of the Shire
Disclosure Schedule sets forth a complete and accurate list (including
registration numbers and dates of filing, renewal and termination, where
applicable, for each jurisdiction where filed) of all Intellectual Property
owned by Shire and its Subsidiaries which is material to Shire and its
Subsidiaries, taken as a whole ("Shire Intellectual Property"), including
any Liens thereon, the name of the holder of any such Lien and the amount
and nature of any obligation secured by any such Lien. All Shire
Intellectual Property is owned by Shire or its Subsidiaries free and clear
of all Liens, no Shire Intellectual Property has been canceled, abandoned
or otherwise terminated and all patent applications, trademark applications
and copyright applications included in Shire Intellectual Property have
been duly filed and are recorded on the public record in the name of Shire
or one of its Subsidiaries and all renewal fees have been duly paid other
than where such action would not have a Shire Material Adverse Effect.
Neither Shire nor any of its Subsidiaries has granted any license or other
rights with respect to any Shire Intellectual Property to any other person
or entity.
(ii) Shire has no knowledge that any of its or its Subsidiaries'
granted patents are invalid; to the knowl-
-46-
edge of Shire, no Shire Intellectual Property is being infringed by any
third party in any material respect; and, to the knowledge of Shire, its
current operations do not infringe a granted patent of a third party in any
material respect.
(iii) Neither Shire nor any of its Subsidiaries has any license or
other rights with respect to any Intellectual Property owned by any other
person or entity.
(iv) All technology, processes, techniques and methods of manufacture
used in or necessary to the manufacturing or research operations of Shire
and its Subsidiaries, except to the extent the same are in the public
domain, are subject to valid and effective confidentiality agreements
between Shire and its employees, have been memorialized to the extent
required by good manufacturing practice and, to the knowledge of Shire, are
the subject of no claim, whether or not asserted, that their use or
employment by Shire or any of its Subsidiaries violates the rights of any
person.
(t) Insurance. Section 3.2(t) of the Shire Disclosure Schedule sets
forth (i) a complete and accurate list of all policies of insurance of
Shire and its Subsidiaries currently in force, including surety bonds or
other credit support therefor (the "Shire Insurance Policies"), the current
annual premiums for each Shire Insurance Policy, the types of risk covered
and limits of coverage and (ii) a description of claims experience of Shire
(x) in the twelve months immediately preceding the date hereof with respect
to all matters and (y) since its incorporation with respect to product
liability matters, matters arising by reason of clinical trials,
environmental matters and workmen's compensation. All Shire Insurance
Policies are in full force and effect and all premiums due thereon have
been paid. Shire has complied in all material respects with the terms and
provisions of the Shire Insurance Policies. Shire has never applied for and
been refused or denied any policy of insurance with respect to product
liability matters, matters arising by reason of clinical trials,
environmental matters and workmen's compensation. Shire's insurance
coverage is adequate in kind and amount based on current industry practice.
(u) Books and Records. (i) The books of account and other financial
records of Shire and its Subsidiaries that have been made available to
Xxxxxxx prior to the date
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hereof or are made available thereafter are or will be true, complete and
correct in all material respects and do not, and will not, contain any
omissions which, in light of the circumstances in which they are made, are
materially misleading.
(ii) The minute books and other records of Shire and its Subsidiaries
that have been or will be made available to Xxxxxxx contain records of all
meetings of Shire and its Subsidiaries prior to the date hereof and prior
to the Effective Time, respectively, are or will be accurate in all
material respects and reflect accurately in all material respects all other
corporate action of the shareholders and directors and any committees of
the Board of Directors of Shire and its Subsidiaries.
(v) Undisclosed Liabilities. Except as set forth in the Public UK
Documents and except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice and UK GAAP
neither Shire nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by UK GAAP to be set forth on a consolidated balance
sheet of Shire and its consolidated Subsidiaries or in the notes thereto
and which, individually or in the aggregate, could reasonably be expected
to have a Shire Material Adverse Effect.
(w) FDA, DEA Matters. Section 3.2(w) of the Shire Disclosure Schedule
sets forth a complete and accurate list of (i) each investigational new
drug filing made by Shire or any of its Subsidiaries with the FDA or any
non-U.S. equivalents (including, without limitation, the MCA), (ii) each
clinical trial protocol submitted by Shire or any of its Subsidiaries to
the FDA or any non-U.S. equivalents, (iii) each new drug application and
abbreviated or supplemental new drug application filed by Shire or any of
its Subsidiaries pursuant to the Federal Food, Drug and Cosmetic Act, as
amended, or any non-U.S. equivalents (iv) each product license application
filed by Shire or any of its Subsidiaries pursuant to the Public Health
Service Act, as amended, or any non-U.S. equivalents and (v) each
establishment license application filed with respect to any product of
Shire or any of its Subsidiaries under the Public Health Service Act, as
amended or any non-U.S. equivalents. (i) There are no lawsuits,
arbitrations, legal or administrative or regulatory proceedings, charges,
complaints or investigations by the FDA, the DEA, the DOJ
-48-
or any state or non-U.S. regulatory agency pending or, to the best
knowledge of Shire, threatened against or relating to Shire, any of its
Subsidiaries or any of their respective products, (ii) there have been no
product recalls or similar actions by Shire or any of its Subsidiaries,
(iii) each clinical trial with respect to products of Shire and its
Subsidiaries has been conducted in accordance with its clinical trial
protocol and applicable regulations and Shire or one of its Subsidiaries
has filed all required notices (and made available to Xxxxxxx copies
thereof) of adverse drug experiences, injuries or deaths relating to
clinical trials of such products, and Shire or one of its Subsidiaries has
filed all required notices of any such occurrence, (iv) to the best
knowledge of Shire, all clinical trials have been and are being conducted
in substantial compliance with all applicable good clinical practice
regulations, (v) neither Shire nor any of its Subsidiaries nor, to the best
knowledge of Shire, any of their respective officers, employees or agents
has made an untrue statement of material fact or fraudulent statement to
the FDA, the MCA, the DEA or other regulatory agencies, failed to disclose
a material fact required to be disclosed to any of them or committed an
act, made a statement or failed to make a statement that could reasonably
be expected to provide a basis for any of them to invoke the policy
respecting "Fraud, Untrue Statements of Material Facts, Bribery and Illegal
Gratuities" set forth in 56 Fed. Reg. 46191 (September 10, 1991) or
equivalent regulations, (vi) there are no unresolved reports, warning
letters or other documents received from or issued by the FDA, the MCA, the
DEA or other regulatory agencies that indicate or suggest material lack of
compliance with FDA or DEA regulatory requirements by Shire, any of its
Subsidiaries or persons providing services for the benefit of any of them,
(vii) to the best knowledge of Shire, no person has filed a claim for loss
or potential loss under any indemnity covering participants in clinical
trials of products of Shire and its Subsidiaries, (viii) to Shire's
knowledge, no material modifications to the process by which products of
Shire or any of its Subsidiaries that have been or are being used in
clinical trials are manufactured will be necessary in order to manufacture
commercial quantities of such products, (ix) as to each drug of Shire or
one of its Subsidiaries for which a new drug application or abbreviated new
drug application has been approved by the FDA or other regulatory agencies,
the applicant and all persons performing operations covered by the
application are in substantial compliance with 21 U.S.C.
-49-
Section 355 or 357, 21 C.F.R. Part 314 or 430 et seq. (or any non-U.S.
equivalents), respectively, and all terms and conditions of the
application, (x) Shire and its Subsidiaries are in compliance with all
applicable registration and listing requirements set forth in 21 U.S.C.
Section 360 and 21 C.F.R. Part 207 and, to the extent required, Shire and
its Subsidiaries have obtained licenses from the DEA and are in compliance
with all such licenses and all applicable regulations promulgated by the
DEA, (xi) all manufacturing operations conducted by or, to the knowledge of
Shire, for the benefit of Shire and its Subsidiaries have been and are
being conducted in compliance with applicable good manufacturing practice
regulations including those set forth in 21 C.F.R. Parts 210 and 211, (xii)
neither Shire nor any of its Subsidiaries has received any written notice
that the FDA, the MCA, the DEA or other regulatory agencies has commenced,
or threatened to initiate, any action to withdraw its approval or request
the recall of any product of Shire or its Subsidiaries or withdraw
advertising or sales promotion materials or commenced, or threatened to
initiate, any action to enjoin production at any facility owned or used by
Shire or any of its Subsidiaries or any of their manufacturing locations,
(xiii) as to each article of drug or consumer product currently
manufactured and/or distributed by or on behalf of Shire or its
Subsidiaries, such article is not adulterated or misbranded within the
meaning of the FDCA, 21 U.S.C. Sections 301 et seq., and all advertising
and sales promotional materials of Shire or its Subsidiaries are otherwise
in conformance with applicable regulations and (iv) neither Shire nor any
of its Subsidiaries nor, to the knowledge of Shire, any of their respective
officers, employees, agents or affiliates has been convicted of any crime
or engaged in any conduct for which debarment is mandated by 21 U.S.C.
Section 335(a) or authorized by 21 U.S.C. Section 335a(b). To the knowledge
of Shire, Shire's contractors are in compliance with all applicable law and
regulations and in respect of the FDA and DEA have secured all licenses,
renewals and quotas necessary to their operation.
Shire has made available to Xxxxxxx copies of all written
communications to or from the FDA and the DEA relating specifically to
Shire, its Subsidiaries and their respective operations or business.
(x) Environmental Matters. (i) Each of Shire and its Subsidiaries
possesses all Environmental Permits re-
-50-
quired under applicable Environmental Laws to conduct its business as
currently conducted and to own and operate its assets, and is in compliance
in all material respects with the terms and conditions of such
Environmental Permits.
(ii) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not affect the
validity or require the transfer of any Environmental Permits held by Shire
or its Subsidiaries, and will not require any notification, disclosure,
registration, reporting, filing, investigation or redemption under any
Environmental Law.
(iii) Each of Shire and its Subsidiaries is in compliance in all
material respects with all applicable Environmental Laws and has no
material liability under any Environmental Law.
(iv) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, proceeding, notice or demand
letter, or request for information pending or, to the knowledge of Shire
threatened, under any Environmental Law (x) against Shire or its
Subsidiaries or (y) to the knowledge of Shire against any person or entity
in connection with which liability could reasonably be expected to be
imputed or attributed by law or contract to Shire or its Subsidiaries.
(v) No property or facility presently or formerly owned, leased or
operated by Shire or its Subsidiaries, and no property or facility at which
Hazardous Materials of Shire or its Subsidiaries have been stored, treated
or disposed of or at which any Hazardous Materials have been manufactured,
handled, tested, formulated, prepared, encapsulated, packaged, bottled, or
stored for Shire or its Subsidiaries ("Shire Product Sites") is listed or
proposed for listing on the National Priorities List or the Comprehensive
Environmental Response, Compensation and Liability Information System, both
promulgated under CERCLA, or on any comparable list established under any
Environmental Law.
(vi) There has been no disposal, spill, discharge, emission or release
of any Hazardous Material by Shire or its Subsidiaries on, at, under or
from any property presently or formerly owned, leased or operated by Shire
or its Subsidiaries and there are no Hazardous Materials located in, at, on
or under any such facility or property,
-51-
or, to the knowledge of Xxxxxxx, at any Shire Product Site or other
location where Hazardous Materials of Shire or any of its Subsidiaries have
been stored, treated or disposed of (a "Shire Third Party Site"), in each
case that could reasonably be expected to result in the incurrence of any
material liability, by Shire or its Subsidiaries under any Environmental
Law.
(vii) There are no underground storage tank or other underground
storage receptacles or related piping, or any impoundments containing
Hazardous Materials located on any facility or property owned, leased or
operated by Shire or any of its Subsidiaries.
(viii) No Lien has been recorded against any properties, assets or
facilities owned, leased or operated by Shire or any of its Subsidiaries
under any Environmental Law.
(ix) Neither Shire nor any of its Subsidiaries is obligated to perform
any investigation or other action under any Environmental Law pursuant to
any order, decree, judgment or agreement by which it is bound, or has
assumed by contract or agreement any obligation or liability under any
Environmental Law.
Shire has made available to Xxxxxxx all material records and files,
including, but not limited to, all assessments, reports, studies, audits,
analyses, tests and data, in possession, custody or control of Shire or its
Subsidiaries concerning compliance by Shire and its Subsidiaries with, or
liability under, any Environmental Law, including, without limitation,
those concerning the existence of Hazardous Materials at facilities or
properties currently or formerly owned, operated or leased by Shire or its
Subsidiaries or at any Shire Product Site or Shire Third Party Site.
(y) Products. Each of the products produced or sold by Shire and its
Subsidiaries: (i) is, and at all times up to and including the date hereof
has been, in compliance in all material respects with all applicable U.K.
and non-U.K. laws and regulations; (ii) is, and at all relevant times has
been, fit for the ordinary purposes for which it is intended to be used and
conforms in all material respects to any promises or affirmations of fact
made on the container, label or promotional materials for such product or
in connection with its sale; and (iii) contains
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no design or manufacturing defect. Neither Shire nor any of its
Subsidiaries has received notice of any product warranty claims. Neither
Shire nor any of its Subsidiaries is aware of any facts which are
reasonably likely to cause (i) the withdrawal or recall of any product sold
or intended to be sold by Shire or its Subsidiaries, (ii) a change in the
marketing classification, labeling or promotional materials of any such
products, or (iii) a termination or suspension of marketing of any such
products. There are no material claims pending or, to the knowledge of
Shire, threatened against Shire or its Subsidiaries with respect to the
quality of or absence of defects in such products nor are there any facts
known to Shire relating to the quality of or absence of defects in such
products which, if known by a potential claimant or governmental authority,
could reasonably be expected to give rise to a claim or proceeding. To the
knowledge of Shire, no supplier of a raw material required for a material
product of Shire and the Subsidiaries for which there is not a permissible
replacement obtainable under commercially reasonable terms, has indicated
that it will not continue to supply such raw materials on terms consistent
with those on the date hereof.
(z) Marketing Practices. Shire's operations and commercial conduct and
those of its Subsidiaries have at all times conformed in all material
respects to the Code of Marketing Practices of the Pharmaceutical Research
Industry Association.
(aa) Ordinary Shares. As of the Effective Time, the Ordinary Shares
comprising the Merger Consideration (including Ordinary Shares delivered to
the Depositary underlying the Shire ADSs constituting Merger Consideration)
will have been duly authorized for issuance and, when issued and delivered
in accordance with the terms of this Agreement, will be validly issued and
fully paid.
(bb) Pooling. Neither Shire nor any of its Affiliates has taken or
agreed to take any action or failed to take any action that would prevent
the Merger from being treated for financial accounting purposes as a
"pooling of interests" in accordance with US GAAP and the regulations and
interpretations of the SEC.
(cc) Merger Consideration. As of the Effective Time, the Shire ADSs
and Ordinary Shares received by the Holders as Merger Consideration will
represent less than
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fifty percent of both the total voting power and the total value of the
outstanding stock of Shire within the contemplation of Treas. Reg. ss.
1.367(a)-3(c)(1)(i).
(dd) Active Trade or Business. Shire, a "qualified subsidiary" (as
defined in Treas. Reg. ss. 1.367(a)-3(c)(5)(vii)) of Shire or a "qualified
partnership" (as defined in Treas. Reg. ss. 1.367(a)-3(c)(5)(viii)) of
which Shire is a partner will, as of the Effective Time, have been engaged
in an active trade or business outside the United States for the entire
36-month period immediately before the Effective Time, within the meaning
of and as contemplated by Treas. Reg. ss. 1.367(a)-3(c)(3). None of Shire,
any qualified subsidiary of Shire or any qualified partnership of which
Shire is a partner has, nor will have as of the Effective Time, any
intention to dispose of or discontinue any trade or business referred to in
the previous sentence if doing so would cause the active trade or business
test of Treas. Reg. ss. 1.367(a)-3(c)(3) not to be satisfied.
(ee) Asset Acquisitions. As of the Effective Time, none of Shire, any
qualified subsidiary of Shire or any qualified partnership of which Shire
is a partner (each as defined above in Section 3.2(dd)) will own any assets
acquired outside the ordinary course of business within the preceding
36-month period that would cause Shire to fail to satisfy the
"substantiality test" set forth in Treas. Reg. ss. 1.367(a)-3(c)(3)(iii).
(ff) Ownership of Xxxxxxx Shares. Except as contemplated in this
Agreement and the Option Agreement as of the date hereof and the Effective
Time, none of Shire, any of its Subsidiaries or, to Shire's knowledge, any
of its "affiliates" or "associates" (as such terms are defined in the
Shareholder Protection Act), (i) owns, or during the five-year period prior
to the date hereof owned, or has any rights to acquire or vote any shares
of Common Stock or (ii) has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of Common Stock with
any other person that beneficially owns, or whose affiliates or associates
beneficially own, Common Stock.
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ARTICLE IV
COVENANTS OF XXXXXXX
4.1. Regular Course of Business. Except in connection with the performance
by Xxxxxxx of its obligations under the Agreement, until the Effective Time,
Xxxxxxx shall conduct its and its Subsidiaries' business only in the ordinary
course and shall use reasonable efforts to maintain and preserve its business
organization, assets, employees and business relationships and to maintain all
of its material properties and assets in useful and good condition, ordinary
wear and tear excepted.
4.2. Certain Prohibited Activities. Until the Effective Time, except as
contemplated by this Agreement or as set forth on Section 4.2 of the Xxxxxxx
Disclosure Schedule, Xxxxxxx shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Shire: (a) cease to be a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, or in good standing as a foreign
corporation in any jurisdiction where the character of its assets or nature of
its business makes such qualification necessary; (b) authorize or issue any
additional shares of its capital stock, any Equity Equivalents, any debt
securities or other evidence of its indebtedness or any SARs; (c) repay any of
its Indebtedness prior to scheduled maturity (other than in the ordinary course
of business) or redeem or otherwise acquire any of its capital stock or any
Equity Equivalents or make any payment with respect to any of the foregoing
(other than regular, periodic payments of interest made with respect to any
Indebtedness); (d) split, combine or reclassify any of its capital stock or
declare, set aside or pay any dividend or other distribution in respect of any
of its capital stock; (e) acquire any stock, partnership or other equity
interest in or any equity or debt security of any other person or entity; (f)
amend its Certificate of Incorporation or By-Laws (or equivalent charter
documents); (g) violate or fail to comply in any material respect with any
statute, law, ordinance, regulation, rule, order or other legal requirement of
any government, authority or any other governmental department or agency, or any
judgment, decree or order of any court or governmental body or agency applicable
to its business or operations (other than any violations or failures to comply
which could not reasonably be expected, individually or in the aggregate, to
have a Xxxxxxx Material Adverse Effect); (h) enter into any contract, agreement
or other commitment with any
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present or former director, officer or securityholder of Xxxxxxx or any person
or entity controlled by any such person other than in the ordinary course of
business and where the amount involved is not in excess of $500,000; (i) acquire
or dispose of any material real property or any material leasehold interest in
real property, or create or suffer to exist any Lien on any material assets
owned or leased by it; (j) fail to comply in all material respects with all of
its obligations with respect to all material Permits or voluntarily take or omit
to take any action which could reasonably be expected to result in the
revocation, nonrenewal, modification, suspension or termination of any such
Permit (other than any violations or failures to comply which could not
reasonably be expected, individually or in the aggregate, to have a Xxxxxxx
Material Adverse Effect); (k) (i) grant to any officer of Xxxxxxx or any of its
Subsidiaries any increase in compensation, (ii) grant to any employee of Xxxxxxx
or any of its Subsidiaries any increase in severance or termination pay, (iii)
enter into any employment, severance or termination agreement with any employee
of Xxxxxxx or any of its Subsidiaries or (iv) enter into any Employment
Obligation, or permit the modification or termination of any existing Employment
Obligation; (l) dispose of, permit to lapse, modify, terminate, grant any
interest to any person or entity in, or create or suffer to exist any Lien on or
with respect to, any Xxxxxxx Intellectual Property; (m) take any action that
would cause it to fail to maintain in full force and effect, comply in all
material respects with all of the terms and provisions of or pay all premiums
due on any Insurance Policy; (n) enter into any material agreement or permit the
modification or termination of any material agreement outside the ordinary
course of business; (o) merge or consolidate with any other person or entity or
acquire control of or purchase all or substantially all of the assets of any
other person or entity; (p) voluntarily incur or permit the incurrence of any
liability not in the ordinary course of business and in excess of $1,000,000;
(q) adopt a plan of complete or partial liquidation; or (r) undertake any action
which would jeopardize accounting for the Merger as a pooling of interests.
4.3. Notice of Certain Events. Xxxxxxx will give notice to Shire, promptly
after obtaining knowledge thereof, of (i) any representation or warranty made by
it contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty that
is not so qualified becoming untrue or inaccurate in any material respect or
(ii) the failure by it to comply with or satisfy in any material respect any
covenant, condition or
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agreement to be complied with or satisfied by it under this Agreement.
4.4. Access. Xxxxxxx shall afford the officers, employees and
representatives of Shire, and its counsel and auditors, reasonable access during
normal business hours prior to the Effective Time to its facilities, properties,
equipment, files, accounts, books and records so that Shire may have full
opportunity to make such investigations as it may desire to make of the affairs
of Xxxxxxx. Shire will hold, and will cause its respective officers, employees,
accountants, counsel, financial advisers and other representatives and
affiliates to hold, any confidential information in accordance with the terms of
that certain Confidentiality Agreement dated as of June 1, 1999, between Shire
and Xxxxxxx.
4.5. Approvals. Xxxxxxx shall use all reasonable efforts to take or cause
to be taken all action, and to do or cause to be done all things reasonably
necessary, proper or advisable in order to fulfill and perform its obligations
under this Agreement or otherwise consummate and make effective the transactions
contemplated hereby. Xxxxxxx shall use all commercially reasonable efforts to
obtain or cause to be obtained all Xxxxxxx Governmental Approvals and Xxxxxxx
Third Party Approvals.
4.6. No Solicitation. (a) Prior to the Effective Time, Xxxxxxx agrees that
neither it, any of its Subsidiaries, nor any of their respective directors,
officers, employees, agents or representatives of the foregoing, will, directly
or indirectly, (i) solicit or initiate (including by way of furnishing or
disclosing non-public information) any inquiries or the making of any proposal
with respect to any merger, consolidation or other business combination
involving Xxxxxxx or the acquisition of all or any significant part of the
assets or capital stock of Xxxxxxx (a "Xxxxxxx Acquisition Transaction") or (ii)
negotiate, explore or otherwise engage in discussions with any person (other
than Shire and its representatives) with respect to any Xxxxxxx Acquisition
Transaction, or which may reasonably be expected to lead to a proposal for a
Xxxxxxx Acquisition Transaction or enter into any agreement, arrangement or
understanding with respect to any such Xxxxxxx Acquisition Transaction or which
would require it to abandon, terminate or fail to consummate the Merger or any
other transaction contemplated by this Agreement; provided, however, that
Xxxxxxx may, in response to an unsolicited written proposal from a third party
regarding a Xxxxxxx Superior Proposal (as hereinafter defined), furnish
information to, negotiate or otherwise engage
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in discussions with such third party, if the Board of Directors of Xxxxxxx
determines in good faith, after consultation with its financial advisors and
based upon advice of outside counsel that such action is required for the Board
of Directors to comply with its fiduciary duties under applicable law.
(b) Except as may be required pursuant to the fiduciary duties of Xxxxxxx'
Board of Directors under applicable law, Xxxxxxx agrees that, as of the date
hereof, it and its Subsidiaries, and the respective directors, officers,
employees, agents and representatives of the foregoing, shall immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any person (other than Shire and its representatives) conducted heretofore
with respect to any Xxxxxxx Acquisition Transaction. Xxxxxxx agrees to promptly
advise Shire of any inquiries or proposals received by, any such information
requested from, or any negotiations or discussions sought to be initiated or
continued with, Xxxxxxx or its Subsidiaries, or any of the respective directors,
officers, employees, agents or representatives of the foregoing, in each case
from a person (other than Shire and its representatives) with respect to a
Xxxxxxx Acquisition Transaction, and the terms hereof, including the identity of
such third party and the general terms of any financing arrangement or
commitment in connection with such Xxxxxxx Acquisition Transaction, and, except
as may otherwise be required pursuant to the fiduciary duties of Xxxxxxx' Board
of Directors under applicable law, to update on an ongoing basis or upon Shire's
reasonable request, the status thereof, as well as any actions taken or other
developments pursuant to this Section 4.6. As used herein, "Xxxxxxx Superior
Proposal" means a bona fide, written and unsolicited proposal or offer made by
any persons (or group) (other than Shire or any of its Subsidiaries) with
respect to a Xxxxxxx Acquisition Transaction (i) on terms which the Board of
Directors of Xxxxxxx determines in good faith, and in the exercise of reasonable
judgment (based on the advice of independent financial advisors and legal
counsel), to be more favorable to Xxxxxxx and its shareholders than the
transactions contemplated hereby (including taking into account the financing
thereof.)
4.7. Pooling of Interests. Xxxxxxx shall use all reasonable efforts to
cause the Merger to be accounted for as a "pooling of interests" in accordance
with US GAAP, Accounting Principles Board Opinion 16 and applicable SEC rules,
regulations and policies and shall take no action that would cause such
accounting treatment not to be obtained.
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4.8. ISRA. Xxxxxxx shall obtain from the New Jersey Department of
Environmental Protection either (i) a declaration of non-applicability of the
New Jersey Industrial Site Recovery Act ("ISRA") to the Merger or any other
transactions contemplated thereby, or (ii) approval of a negative declaration or
other action required to comply with ISRA, in each case which is reasonably
acceptable to Shire.
ARTICLE V
COVENANTS OF SHIRE AND ACQUISITION SUB
5.1. Regular Course of Business. Except in connection with the performance
by Shire and Acquisition Sub of their respective obligations under this
Agreement, until the Effective Time, Shire shall conduct its and its
Subsidiaries' business only in the ordinary course and shall use reasonable
efforts to maintain and preserve its business organization, assets, employees
and business relationships and to maintain all of its material properties and
assets in useful and good condition, ordinary wear and tear excepted.
5.2. Certain Prohibited Activities. Until the Effective Time, except as
contemplated by this Agreement or as set forth on Section 5.2 of the Shire
Disclosure Schedule, Shire shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Xxxxxxx: (a) cease to be a
corporation duly organized, validly existing and, where applicable, in good
standing under its jurisdiction of incorporation, or in good standing as a
foreign corporation in any applicable jurisdiction where the character of its
assets or nature of its business makes such qualification necessary; (b)
authorize or issue any additional shares of its capital stock, any Equity
Equivalents, any debt securities or other evidence of its indebtedness or any
SARs; (c) repay any of its Indebtedness prior to scheduled maturity (other than
in the ordinary course of business) or redeem or otherwise acquire any of its
capital stock or any Equity Equivalents or make any payment with respect to any
of the foregoing (other than regular, periodic payments of interest made with
respect to any Indebtedness); (d) split, combine or reclassify any of its
capital stock or declare, set aside or pay any dividend or other distribution in
respect of any of its capital stock; (e) acquire any stock, partnership or other
equity interest in or any equity or debt security of any other person or entity;
(f) amend its Memorandum and Articles of Association (or equivalent char-
-59-
ter documents); (g) violate or fail to comply in any material respect with any
statute, law, ordinance, regulation, rule, order or other legal requirement of
any government, authority or any other governmental department or agency, or any
judgment, decree or order of any court or governmental body or agency applicable
to its business or operations (other than any violations or failures to comply
which could not reasonably be expected, individually or in the aggregate, to
have a Shire Material Adverse Effect); (h) enter into any contract, agreement or
other commitment with any present or former director, officer or securityholder
of Shire or any person or entity controlled by any such person other than in the
ordinary course of business and where the amount involved is not in excess of
$500,000; (i) fail to comply in all material respects with all of its
obligations with respect to all material Permits or voluntarily take or omit to
take any action which could reasonably be expected to result in the revocation,
nonrenewal, modification, suspension or termination of any such Permit (other
than any violations or failures to comply which could not reasonably be
expected, individually or in the aggregate, to have a Shire Material Adverse
Effect); (j) (i) grant to any officer of Shire or any of its Subsidiaries any
increase in compensation, (ii) grant to any employee of Shire or any of its
Subsidiaries any increase in severance or termination pay, (iii) enter into any
employment, severance or termination agreement with any employee of Shire or any
of its Subsidiaries or (iv) enter into any Employment Obligation or permit the
modification or termination of any existing Employment Obligation; (k) dispose
of, permit to lapse, modify, terminate, grant any interest to any person or
entity in, or create or suffer to exist any Lien with respect to, any Shire
Intellectual Property; (l) take any action that would cause it to fail to
maintain in full force and effect, comply in all material respects with all of
the terms and provisions of or pay all premiums due on any Insurance Policy; (m)
enter into any material agreement or permit the modification of any material
agreement outside the ordinary course of business; (n) merge or consolidate with
any other person or entity or acquire control of or purchase all or
substantially all of the assets of any other person or entity; (o) voluntarily
incur or permit the incurrence of any liability not in the ordinary course of
business and in excess of $1,000,000; (p) adopt a plan of complete or partial
liquidation; or (q) undertake any actions which would jeopardize accounting for
the Merger as a pooling of interests.
5.3. Notice of Certain Events. Each of Shire and Acquisition Sub will give
notice to Xxxxxxx promptly after obtaining knowledge thereof, of (i) any
representation or war-
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ranty made by it contained in this Agreement that is qualified as to materiality
becoming untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified becoming untrue or inaccurate in any material
respect or (ii) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement.
5.4. Access. Shire and Acquisition Sub shall afford the officers, employees
and representatives of Xxxxxxx, and its counsel and auditors, reasonable access
during normal business hours during the period prior to the Effective Time to
their respective facilities, properties, equipment, files, accounts, books and
records so that Xxxxxxx may have full opportunity to make such investigations as
it may desire to make of the affairs of Shire and Acquisition Sub. Xxxxxxx will
hold, and will cause its respective officers, employees, accountants, counsel,
financial advisers, and other representatives and affiliates to hold, any
confidential information in accordance with the terms of that certain
Confidentiality Agreement dated as of June 1, 1999, between Shire and Xxxxxxx.
5.5. Approvals. Each of Shire and Acquisition Sub shall use all reasonable
efforts to take or cause to be taken all actions, and to do or cause to be done
all things, reasonably necessary, proper or advisable in order to fulfill and
perform its obligations under this Agreement or otherwise consummate or make
effective the transactions contemplated hereby. Each of Shire and Acquisition
Sub shall use all commercially reasonable efforts to obtain all Shire
Governmental Approvals and Shire Third Party Approvals.
5.6. No Solicitation. (a) Prior to the Effective Time, Shire agrees that
neither it, any of its Subsidiaries, nor any of their respective directors,
officers, employees, agents or representatives of the foregoing, will, directly
or indirectly, (i) solicit or initiate (including by way of furnishing or
disclosing non-public information) any inquiries or the making of any proposal
with respect to any merger, consolidation or other business combination
involving Shire or the acquisition of all or any significant part of the assets
or capital stock of Shire (a "Shire Acquisition Transaction") or (ii) negotiate,
explore or otherwise engage in discussions with any person (other than Xxxxxxx
and its representatives) with respect to any Shire Acquisition Transaction, or
which may reasonably be expected to lead to a proposal for a Shire Acquisition
Transaction or enter into any agreement, arrangement or understanding with
respect to any such Shire Acquisition Trans-
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action or which would require it to abandon, terminate or fail to consummate the
Merger or any other transaction contemplated by this Agreement; provided,
however, that Shire may, in response to an unsolicited written proposal from a
third party regarding a Shire Superior Proposal (as hereinafter defined),
furnish information to, negotiate or otherwise engage in discussions with such
third party, if the Board of Directors of Shire determines in good faith, after
consultation with its financial advisors and based upon advice of outside
counsel that such action is required for the Board of Directors to comply with
its fiduciary duties under applicable law.
(b) Except as may be required pursuant to the fiduciary duties of Shire's
Board of Directors under applicable law, Shire agrees that, as of the date
hereof, it and its Subsidiaries, and the respective directors, officers,
employees, agents and representatives of the foregoing, shall immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any person (other than Xxxxxxx and its representatives) conducted
heretofore with respect to any Shire Acquisition Transaction. Shire agrees to
promptly advise Xxxxxxx of any inquiries or proposals received by, any such
information requested from, or any negotiations or discussions sought to be
initiated or continued with, Shire or its Subsidiaries, or any of the respective
directors, officers, employees, agents or representatives of the foregoing, in
each case from a person (other than Shire and its representatives) with respect
to a Shire Acquisition Transaction, and the terms hereof, including the identity
of such third party and the general terms of any financing arrangement or
commitment in connection with such Shire Acquisition Transaction, and, except as
may otherwise be required pursuant to the fiduciary duties of Shire's Board of
Directors under applicable law, to update on an ongoing basis or upon Xxxxxxx'
reasonable request, the status thereof, as well as any actions taken or other
developments pursuant to this Section 5.6. As used herein, "Shire Superior
Proposal" means a bona fide, written and unsolicited proposal or offer made by
any persons (or group) (other than Xxxxxxx or any of its Subsidiaries) with
respect to a Shire Acquisition Transaction (i) on terms which the Board of
Directors of Shire determines in good faith, and in the exercise of reasonable
judgment (based on the advice of independent financial advisors and legal
counsel), to be more favorable to Shire and its shareholders than the
transactions contemplated hereby (including taking into account the financing
thereof.)
5.7. Pooling of Interests. Shire shall use all reasonable efforts to cause
the Merger to be accounted for as a
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"pooling of interests" in accordance with US GAAP, Accounting Principles Board
Opinion 16 and applicable SEC rules, regulations and policies and shall take no
action that would cause such accounting treatment not to be obtained.
5.8. Indemnification. (a) From and after the Effective Time and until the
sixth anniversary of the Effective Time and for so long thereafter as any claim
for indemnification asserted on or prior to such date has not been fully
adjudicated, Shire and the Surviving Corporation shall indemnify, defend and
hold harmless each individual who is now, or has been at any time prior to the
date hereof or who becomes prior to the Effective Time, a director or officer of
Xxxxxxx or any of its Subsidiaries against all losses, claims, damages, costs,
expenses (including attorneys' fees) or liabilities (including attorneys' fees)
arising out of actions or omissions or alleged actions or omissions occurred at
or prior to the Effective Time to the same extent and on the same terms and
conditions (including with respect to advancement of expenses) permitted or
required under applicable law and Xxxxxxx' Certificate of Incorporation and
By-Laws in effect at the date hereof.
(b) For a period of six years after the Effective Time, Shire and the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by Xxxxxxx
(provided that the Surviving Corporation may substitute therefor policies of at
least the same coverage and amounts containing terms and conditions which are no
less advantageous to the insured parties) with respect to claims arising from
facts or events which occurred on or before the Effective Time; provided,
however, that if the premiums with respect to such insurance exceed 150% of the
annual premiums paid as of the date hereof by Xxxxxxx for such insurance, Shire
and the Surviving Corporation shall be obligated to purchase directors' and
officers' liability insurance with the maximum coverage as can be obtained at an
annual premium equal to 150% of the annual premiums paid by Xxxxxxx as of the
date hereof.
(c) The provisions of this Section are intended to be for the benefit of,
and shall be enforceable by, each indemnified party and each party entitled to
insurance coverage under paragraph (b) above, respectively, and his or her heirs
and legal representatives, and shall be in addition to any other rights an
indemnified party may have under the certificates or articles of incorporation
or by-laws of the Surviving Corporation or any of its Subsidiaries, under the
New Jersey Law or otherwise.
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ARTICLE VI
AGREEMENTS REGARDING OPTIONS
and other benefits
6.1. Stock Option Plans. (a) At the Effective Time, Xxxxxxx shall, if
necessary, have amended (and Shire and the Surviving Corporation shall have
approved and adopted, respectively) each of the Xxxxxxx Option Plans to provide
that each of the Options shall be assumed by Shire (or the Surviving
Corporation) and made applicable to the purchase of Ordinary Shares as provided
in this Section 6.1. Shire shall assume or replace such Options (or fraction
thereof) so that each holder of an Option (an "Optionee") shall have such
Optionee's Option apply to that number of Ordinary Shares (adjusted to the
nearest whole share) equal to the product of (i) the number of all Options of
such Optionee immediately prior to the Effective Time and (ii) the Exchange
Ratio. The exercise price per share for each Optionee's Options (adjusted to the
nearest xxxxx) assumed or replaced will equal the old exercise price per share
of Common Stock divided by the Exchange Ratio; provided, however, that in the
case of any Option to which Section 421 of the Code continues to apply by reason
of its qualification under Section 422 of the Code ("incentive stock options"),
the option price, the number of shares purchasable pursuant to such option and
the terms and conditions of exercise of such option shall be determined in order
to comply with Section 424(a) of the Code and the regulations promulgated
thereunder. Without limiting the foregoing, the duration and other terms of each
assumed or replaced Option immediately after the Effective Time (unless
otherwise agreed in writing by the Optionee with respect to a particular Option)
shall be the same as the corresponding Options that were in effect immediately
before the Effective Time, except that all references to Xxxxxxx in the Xxxxxxx
Option Plans (and the corresponding references in each option agreement
documenting each such Option) shall be deemed to be references to Shire or the
Surviving Corporation, as applicable; provided, however, that the exercise price
with respect to each Ordinary Share shall not be less than the nominal value of
(pound)0.05 thereof. Xxxxxxx will terminate its Employee Stock Purchase Plan
prior to the closing and extinguish all rights thereunder.
(b) As soon as practicable after the Effective Time, Shire shall deliver to
each Optionee appropriate notices setting forth such Optionee's rights pursuant
to the Shire Option
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Plans and the agreements evidencing the grants of such Options shall continue in
effect on the same terms and conditions.
(c) Shire shall take all corporate action necessary to reserve for issuance
a sufficient number of Ordinary shares for delivery upon exercise of Options. As
soon as practicable after the Effective Time, Shire shall file a registration
statement on Form X-0, Xxxx X-0, or another appropriate form, as the case may be
(or any successor form), with respect to the Ordinary Shares subject to such
options and shall use its reasonable best efforts to maintain the effectiveness
of such registration statement or registration statements (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such options remain outstanding.
6.2. Continuation of Benefits. During the period from the Effective Time
until December 31, 2001, Shire shall maintain or cause to be maintained wages,
compensation levels, employee pension and welfare plans for the benefit of
employees and former employees of Xxxxxxx and its Subsidiaries, which are, in
the aggregate, equal or greater in value than those wages, compensation levels
and other benefits provided under Xxxxxxx' Employment Obligations that are in
effect on the date hereof. Nothing in this Agreement shall be construed as
limiting in any way the right of Shire after the Effective Time to terminate the
employment of or lay-off any employee of Xxxxxxx.
6.3. Severance Policy and Other Agreements. Shire shall honor or cause to
be honored all severance agreements and employment agreements with Xxxxxxx'
directors, officers and employees.
6.4. 1999 Bonus. Shire will pay, or cause to be paid, bonuses for calendar
year 1999 to Xxxxxxx' employees participating in Xxxxxxx' RPC Incentive
Compensation Program in amounts equal to each such Xxxxxxx employee's bonus for
the year, on a basis consistent with past practice, within the target range
established for each employee (but, in the aggregate, not in excess of
U.S.$1,500,000) as determined by the chief executive of Xxxxxxx immediately
prior to the Closing Date (all in accordance with the RPC Incentive Compensation
Program set forth in Schedule 6.4 of the Xxxxxxx Disclosure Schedule). Annual
bonus for 1999 for the four senior officers of Xxxxxxx who do not participate in
the RPC Incentive Compensation Program shall be as determined by the
Compensation Committee of Xxxxxxx' Board of Directors immediately prior to the
Closing Date in a manner which is consistent with past practice based upon
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performance, and shall be in an aggregate amount not greater than
U.S.$1,000,000.
6.5. Waiver of Preexisting Conditions; Credit for Deductibles; Service
Credit. Shire will, or will cause the Surviving Corporation to, (i) waive all
limitations as to preexisting conditions with respect to participation and
coverage requirements applicable to the employees and former employees of
Xxxxxxx and its Subsidiaries under any welfare plan that such employees or
former employees may be eligible to participate in after the Effective Time,
(ii) provide each employee of Xxxxxxx and its Subsidiaries with credit for any
co-payments and deductibles paid during the applicable plan year prior to the
Effective Time in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such employees are eligible to
participate in after the Effective Time, and (iii) provide each employee of
Xxxxxxx and its Subsidiaries with credit for all service with Xxxxxxx and its
affiliates for purposes of vesting and eligibility to participate under each
employee benefit plan, program, or arrangement of the Purchaser or its
affiliates in which such employees are eligible to participate.
ARTICLE VII
CONDITIONS PRECEDENT
7.1. Conditions to the Obligations of Each Party to Effect the Merger. The
respective obligations of each of the parties to effect the Merger shall be
subject to the satisfaction or waiver of each of the following conditions at or
prior to the Closing:
(a) Shareholder Approvals. The Xxxxxxx Shareholder Approval and Shire
Shareholder Approval shall have been obtained.
(b) Certain Approvals. All Xxxxxxx Governmental Approvals and Shire
Governmental Approvals shall have been obtained, satisfied, waived or
expired, as applicable.
(c) No Proceeding or Litigation. No order, injunction, decree or
judgment of any court or governmental body or agency shall be in effect
which materially restrains or prohibits the transactions contemplated
hereby, and no suit, action, investigation, inquiry or proceeding by any
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governmental body or agency or legal or administrative proceeding by any
governmental body or agency shall have been instituted, or threatened in
writing, which questions the validity or legality of the transactions
contemplated hereby.
(d) Securities Laws. The Form F-4 filed by Shire and the Form F-6
filed by the Depositary shall have become effective under the Securities
Act and Exchange Act, as applicable, and shall not be the subject of any
stop order or proceedings seeking a stop order, and Shire shall have
received all state securities or "blue sky" authorizations necessary to
issue Shire ADRs and Ordinary Shares pursuant to this Agreement.
7.2. Additional Conditions to the Obligations of Xxxxxxx. The obligation of
Xxxxxxx to effect the Merger is also subject to the satisfaction or waiver of
each of the following conditions at or prior to Closing:
(a) Agreements. Each of Shire and Acquisition Sub shall have performed
or complied in all material respects with each covenant, agreement and
obligation to be performed or complied with by it hereunder on or prior to
the Closing Date.
(b) Representations and Warranties. The representations and warranties
of Shire and Acquisition Sub set forth in this Agreement shall be true and
correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of materiality,
such statement shall be true and correct in all respects giving effect to
such standard) at and as of the Closing Date as if made at and as of such
time or, if made as of a specified date, as of such date.
(c) Officer's Certificate. Xxxxxxx shall have received a certificate,
dated the Closing Date, of the President or a Vice President of Acquisition
Sub and of a director of Shire to the effect that the conditions specified
in paragraphs (a) and (b) above have been fulfilled.
(d) Consents from Third Parties. All Shire Third Party Approvals shall
have been obtained.
(e) Listing. The London Stock Exchange shall have granted admission of
the Ordinary Shares comprising the Merger Consideration to the Official
List, subject only to
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allotment; and the allotment of the Ordinary Shares comprising the Merger
Consideration shall have occurred, subject only to admission becoming
effective in accordance with paragraph 7.1 of the Listing Rules of LSE.
(f) Tax Opinions. Xxxxxxx shall have received an opinion, relying on
appropriate representations, of either Milbank, Tweed, Xxxxxx & XxXxxx LLP,
counsel to Xxxxxxx, or Xxxxxx Xxxxxx & Xxxxxxx, counsel to Shire to the
effect that the Merger will constitute a reorganization described in Code
Section 368(a)(1)(A) and Code Section 368(a)(2)(E) and no gain or loss will
be recognized by Xxxxxxx or any Holder except that (i) a Holder who
receives cash in lieu of fractional Ordinary Shares or Shire ADSs will
recognize capital gain or capital loss equal to the difference between the
cash received and the basis of the Holder's shares of Common Stock
allocated to the fractional interest and (ii) any Holder required to enter
into a "gain recognition agreement" within the meaning of Treas. Reg. ss.
1.367(a)-3(c)(1)(iii)(B) must do so in order to avoid immediate gain
recognition and may be required to recognize gain at the time and in the
amount specified in the gain recognition agreement, which opinion shall be
dated on or about the date that is two business days prior to the date the
Proxy Statement is first mailed to stockholders of Xxxxxxx, shall not have
been withdrawn or modified in any material respect.
(g) Pooling Letter. There shall have been delivered to Xxxxxxx a
letter from its independent auditors, dated as of the Closing Date and
addressed to Xxxxxxx, reasonably satisfactory in form and substance to
Xxxxxxx, setting forth the concurrence of Xxxxxxx' independent auditors
with the conclusion of Xxxxxxx' management that it will be appropriate to
account for the Merger as a "pooling of interests" under US GAAP,
Accounting Principles Board Opinion No. 16 and all rules, regulations and
policies of the SEC, if the Merger is consummated in accordance with this
Agreement.
(h) Nasdaq. The Shire ADSs to be issued in the Merger and under the
Xxxxxxx Option Plans after the Merger in accordance with this Agreement
shall have been approved for listing on the Nasdaq National Market.
7.3. Additional Conditions to the Obligations of Shire and Acquisition Sub.
The obligations of Shire and Acquisition Sub to effect the Merger are also
subject to the satis-
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faction or waiver of each of the following conditions at or prior to the
Closing:
(a) Agreements. Xxxxxxx shall have performed each covenant, agreement
and obligation to be performed or complied with by it hereunder on or prior
to the Closing Date.
(b) Representations and Warranties. The representations and warranties
of Xxxxxxx set forth in this Agreement shall be true and correct in all
material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall
be true and correct in all respects giving effect to such standard) at and
as of the Closing Date as if made at and as of such time or, if made as of
a specified date, as of such date.
(c) Xxxxxxx Officer's Certificate. Shire shall have received a
certificate, dated the date of the Closing, of the President or Vice
President of Xxxxxxx to the effect that the conditions specified in
paragraphs (a) and (b) above have been fulfilled.
(d) Pooling Letter. There shall have been delivered to Shire a letter
from its independent auditors, dated as of the Closing Date and addressed
to Shire, reasonably satisfactory in form and substance to Shire, setting
forth the concurrence of Shire's independent auditors with the conclusion
of Shire's management that it will be appropriate to account for the Merger
as a "pooling of interests" under US GAAP, Accounting Principles Board
Opinion No. 16 and all rules, regulations and policies of the SEC, if the
Merger is consummated in accordance with this Agreement.
ARTICLE VIII
Other Agreements
8.1. Preparation of Form F-4, Form F-6, the Proxy Statement and the UK
Disclosure Document. As soon as practicable following the date of this
Agreement, Xxxxxxx shall, in cooperation with Shire, prepare and file with the
SEC the Proxy Statement and Shire shall, in cooperation with Xxxxxxx, prepare
and file with the SEC the Form F-4, in which the Proxy Statement will be
included as a prospectus. Each of Xxxxxxx and
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Shire shall use its best efforts to have the Form F-4 declared effective under
the Securities Act as promptly as practicable after such filing. Shire shall
also, as promptly as practicable, use its best efforts to cause the Depositary
to file with the SEC a registration statement on Form F-6 (the "Form F-6") with
respect to Shire ADRs under the Securities Act and use its best efforts to have
the Form F-6 declared effective as soon as practicable. Shire shall also take
any action (other than qualifying to do business in any jurisdiction in which it
is not now so qualified) required to be taken under any applicable United States
state securities laws in connection with the issuance of Shire ADRs and Ordinary
Shares in the Merger and Shire Ordinary Shares under the Xxxxxxx Stock Plans and
Xxxxxxx shall furnish all information concerning Xxxxxxx and the holders of
Common Stock as may be reasonably requested in connection with any such action.
8.2. Xxxxxxx Shareholders Meeting. Xxxxxxx shall, as soon as practicable
following the date of this Agreement, duly call, give notice of, convene and
hold a meeting of its shareholders (the "Xxxxxxx Shareholders Meeting") for the
purpose of obtaining the Xxxxxxx Shareholder Approval. Except as required to
comply with the fiduciary duties of the Board of Directors as advised by outside
counsel, Xxxxxxx will, through its Board of Directors, recommend to its
shareholders approval of all matters required to be so approved. Xxxxxxx shall
use its best efforts to cause the Proxy Statement to be mailed to Xxxxxxx'
shareholders as promptly as practicable after the Form F-4 is declared effective
under the Securities Act and, if necessary, after the Proxy Statement shall have
been so mailed, promptly circulate amended, supplemental or supplemented proxy
materials and, if required in connection therewith, resolicit proxies, it being
understood that Xxxxxxx shall not be required to hold more than one meeting of
shareholders.
8.3. Shire Shareholders Meeting. Shire will, as soon as practicable
following the date of this Agreement, duly call, give notice of, convene and
hold an extraordinary general meeting of its ordinary shareholders (the "Shire
Shareholders Meeting") for the purpose of obtaining the Shire Shareholder
Approval. Except as required to comply with the fiduciary duties of the Board of
Directors as advised by outside counsel, Shire will, through its Board of
Directors, recommend to its shareholders approval of all such matters required
to be so approved. In connection with the Shire Shareholders Meeting (i) Shire
will, as soon as practicable after the date of this Agreement, prepare and file
with the LSE, and will use its best efforts to have cleared by the LSE and will
thereafter mail to
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its shareholders the UK Disclosure Documents, which will comply with all legal
requirements applicable to the Shire Shareholders Meeting and (ii) if necessary,
after the UK Disclosure Documents have been so posted, promptly circulate
amended, supplemental or supplemented materials and, if required in connection
therewith, resolicit votes, it being understood that Shire shall not be
obligated to hold more than one meeting of shareholders.
8.4. Acquisition Sub Actions. Shire will take all action within its control
which is necessary or appropriate to cause Acquisition Sub to perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1. Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after the Xxxxxxx Shareholder Approval or the
Shire Shareholder Approval:
(a) by mutual written consent of Shire and Xxxxxxx;
(b) by either Shire or Xxxxxxx upon notice thereof given in writing to
the other party if (i) any governmental entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the consummation of the Merger and
such order, decree or ruling or other action shall have become final and
nonappealable (a "Final Order") or (ii) the Effective Time has not occurred
on or before December 31, 1999 unless a later date is established by mutual
written consent of Shire and Xxxxxxx or unless the failure to consummate
the Merger is the result of a breach of a covenant set forth in this
Agreement or a misrepresentation or breach of any warranty set forth in
this Agreement by the party seeking to terminate this Agreement;
(c) by the Board of Directors of Shire or Xxxxxxx, if (x) the Shire
Shareholder Approval shall fail
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to be obtained upon a vote therefor taken at the Shire Shareholders Meeting
or (y) Xxxxxxx Shareholder Approval shall fail to be obtained upon a vote
therefor taken at the Xxxxxxx Shareholders Meeting, unless due to delay or
default on the part of Xxxxxxx, in the case of the Xxxxxxx Shareholder
Approval, or due to delay or default on the part of Shire or Acquisition
Sub, in the case of the Shire Shareholder Approval;
(d) by action of the Board of Directors of Shire and notice thereof
given in writing to Xxxxxxx if (i) there has been a breach in any material
respect (except that where any statement in a representation or warranty
includes a standard of materiality, such statement shall be true and
correct in all respects giving effect to such standard) of any
representation, warranty, covenant or agreement on the part of Xxxxxxx set
forth in this Agreement which breach is not curable on or prior to December
31, 1999 or (ii) the Board of Directors of Xxxxxxx (x) fails to recommend
the approval of this Agreement and the Merger to Xxxxxxx' shareholders in
accordance with Section 8.2 hereof, or (y) withdraws or amends or modifies
in a manner adverse to Shire its recommendation or approval in respect of
this Agreement or the Merger or fails to reconfirm such recommendation
within 5 business days of a reasonable written request for such
confirmation by Shire;
(e) by the Board of Directors of Shire if they shall reasonably
determine that a proposal for a Shire Acquisition Transaction constitutes a
Shire Superior Proposal; provided, however, that Shire may not terminate
this Agreement pursuant to this clause (e) unless (i) 5 business days shall
have elapsed after delivery to Xxxxxxx of a written notice of such
determination by such Board of Directors and, during such 5-business-day
period, Shire shall have informed Xxxxxxx of the material terms and
conditions and financing arrangements of such proposal for a Shire
Acquisition Transaction and the identity of the person or group making such
proposal for a Shire Acquisition Transaction and (ii) at the end of such
5-business-day period, such Board of Directors shall continue reasonably to
believe that such proposal for a Shire Acquisition Transaction constitutes
a Shire Superior Proposal and promptly thereafter Shire shall enter into a
definitive acquisition, merger or similar agreement to effect such Shire
Superior Proposal;
(f) by action of the Board of Directors of Xxxxxxx and notice thereof
given in writing to Shire if (i) there is a breach in any material respect
(except that where any
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statement in a representation or warranty includes a standard of
materiality, such statement shall be true and correct in all respects
giving effect to such standard) of any representation, warranty, covenant
or agreement on the part of Shire or Acquisition Sub set forth in this
Agreement which breach is not curable on or prior to December 31, 1999 or
(ii) the Board of Directors of Shire (x) fails to recommend the approval of
this Agreement and the Merger to Shire's shareholders in accordance with
Section 8.3 hereof, or (y) withdraws or amends or modifies in a manner
adverse to Xxxxxxx its recommendation or approval in respect of this
Agreement or the Merger or fails to reconfirm such recommendation within 5
business days of a reasonable written request for such confirmation by
Xxxxxxx; or
(g) by the Board of Directors of Xxxxxxx if they shall reasonably
determine that a proposal for a Xxxxxxx Acquisition Transaction constitutes
a Xxxxxxx Superior Proposal; provided, however, that Xxxxxxx may not
terminate this Agreement pursuant to this clause (g) unless (i) 5 business
days shall have elapsed after delivery to Shire of a written notice of such
determination by such Board of Directors and, during such 5-business-day
period, Xxxxxxx shall have informed Shire of the material terms and
conditions and financing arrangements of such proposal for a Xxxxxxx
Acquisition Transaction and the identity of the person or group making such
proposal for a Xxxxxxx Acquisition Transaction and (ii) at the end of such
5-day-business period, such Board of Directors shall continue reasonably to
believe that such proposal for a Xxxxxxx Acquisition Transaction
constitutes a Xxxxxxx Superior Proposal and promptly thereafter Xxxxxxx
shall enter into a definitive acquisition, merger or similar agreement to
effect such Xxxxxxx Superior Proposal.
9.2. Effect of Termination. In the event of termination of this Agreement
as provided in Section 9.1, this Agreement shall forthwith become void and have
no effect and there shall be no liability or obligation on the part of Shire,
Roberts, Acquisition Sub or any their respective officers or directors other
than provisions of the last sentence of Section 4.4, the last sentence of
Section 5.4, Section 10.9, Section 10.10 and this Section 9.2, which will
survive termination and except to the extent that such termination results from
the willful and material breach by a party of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
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(b) If (x) Shire shall have terminated this Agreement pursuant to Section
9.1(d)(ii) or (y) Xxxxxxx shall have terminated this Agreement pursuant to
Section 9.1(g), or (z) Shire or Xxxxxxx shall have terminated this Agreement
pursuant to Sections 9.1(b)(ii) or (c)(y) following the public announcement
(other than by Shire or any of its affiliates) of a proposal for a Xxxxxxx
Acquisition Transaction by any person (other than the transactions contemplated
by this Agreement) and such termination was not solely the result of any action
or inaction by Shire which resulted in the failure of the conditions in Section
7.1(a), (b) or (c) or Section 7.2, and, prior to or within six months after any
termination described in this clause (z), Xxxxxxx (or any of its Subsidiaries)
shall have entered into a definitive agreement for, or shall have consummated, a
Xxxxxxx Acquisition Transaction, in which the consideration received by Xxxxxxx
or its shareholders is equal to or greater than the value of the Merger
Consideration on the date of this Agreement then, in any of such cases, Xxxxxxx
shall pay Shire a termination fee of $30.0 million, provided, however, no fee
shall be payable pursuant to this Section 9.2(b) if at the time of termination
of this Agreement pursuant to Section 7.1(a) either (aa) the waiting period
under the HSR Act (including any voluntary extension or such period) shall not
have expired or (bb) any governmental entity is asserting an objection under
applicable antitrust laws to the transactions contemplated by this Agreement or
(cc) a Final Order has been issued and remains outstanding. Any fee payable
under this Section 9.2(b) shall be paid in same day funds (A) contemporaneous
with a termination described in either clause (x) or (y) of this Section 9.2(b),
and no notice of termination pursuant to such sections shall be effective and
this Agreement shall not terminate, until such termination fee is received by
Shire, or (B) concurrently with or prior to the entering into of the definitive
agreement for, or the consummation of, such Xxxxxxx Acquisition Transaction, in
the case of a termination described in clause (z) of this Section 9.2(b).
(c) If (x) Xxxxxxx shall have terminated this Agreement pursuant to Section
9.1(f)(ii) or (y) Shire shall have terminated this Agreement pursuant to Section
9.1(e), or (z) Shire or Xxxxxxx shall have terminated this Agreement pursuant to
Sections 9.1(b)(ii) or (c)(x) following the public announcement (other than by
Xxxxxxx or any of its affiliates) of a proposal for a Shire Acquisition
Transaction by any person (other than the transactions contemplated by this
Agreement) and such termination was not solely the result of any action or
inaction by Xxxxxxx which resulted in the failure of the conditions in Section
7.1(a), (b) or (c) or Section 7.3, and, prior to or
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within six months after any termination described in this clause (z), Shire (or
any of its Subsidiaries) shall have entered into a definitive agreement for, or
shall have consummated, a Shire Acquisition Transaction, then, in any of such
cases, Shire shall pay Xxxxxxx a termination fee of $30.0 million, provided,
however, no fee shall be payable pursuant to this Section 9.2(c) if at the time
of termination of this Agreement pursuant to Section 7.1(a) either (aa) the
waiting period under the HSR Act (including any voluntary extension or such
period) shall not have expired or (bb) any governmental entity is asserting an
objection under applicable antitrust laws to the transactions contemplated by
this Agreement or (cc) a Final Order has been issued and remains outstanding.
Any fee payable under this Section 9.2(c) shall be paid in same day funds (A)
contemporaneous with a termination described in either clause (x) or (y) of this
Section 9.2(c), and no notice of termination pursuant to such sections shall be
effective and this Agreement shall not terminate, until such termination fee is
received by Xxxxxxx, or (B) concurrently with or prior to the entering into of
the definitive agreement for, or the consummation of, such Shire Acquisition
Transaction, in the case of a termination described in clause (z) of this
Section 9.2(c).
9.3. Amendment. This Agreement may be amended by the parties hereto at any
time before or after any required approval of matters presented in connection
with the Merger by the shareholders of Xxxxxxx or the shareholders of Shire;
provided, however, that after any such approval, there shall be made no
amendment that by law requires further approval by such shareholders without the
further approval of such shareholders. This Agreement may be amended by an
instrument in writing signed on behalf of each of the parties hereto.
9.4. Waiver. At any time prior to the Closing, any party may (a) extend the
time for the performance of any of the obligations or other acts of any other
party hereto, (b) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 9.3, waive compliance with
any of the agreements of any other party or with any conditions to its own
obligations. Except as otherwise required by law, (x) any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by or on behalf of such party by a duly
authorized signatory and (y) the failure of any party to this Agreement to
assert any of its
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rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
ARTICLE X
GENERAL PROVISIONS
10.1. Public Statements. Each of Shire and Acquisition Sub, on the one
hand, and Xxxxxxx, on the other hand, agree that neither they nor their
respective directors, officers, employees or agents shall disclose to any third
party (other than to their professional advisers) or publicly issue any press
release or other statement to the press or any third party with respect to this
Agreement or transactions contemplated hereby, except as may be required by law
or the rules of the American Stock Exchange or LSE rule, without the consent of
the other parties hereto.
10.2. Notices. All notices and other communications hereunder shall be in
writing (including telex or similar writing) and shall be deemed given if
delivered in person or by messenger, cable, telegram or telex or facsimile
transmission or by a reputable overnight delivery service which provides for
evidence of receipt to the parties at the following addresses or telecopier
numbers (or at such other address or telecopy number for a party as shall be
specified by like notice):
(a) if to Shire or Acquisition Sub, to:
Shire Pharmaceuticals Group plc
Xxxx Xxxxx
Xxxxxxx, Xxxxx XX00 0XX
Xxxxxx Xxxxxxx
Telecopy: 011 44 1 264 334 658
Attention: Xxxx Xxxxxx, Chief Executive
with a copy to:
Xxxx X. Xxxxxxxx, Esq.
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXX
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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(b) if to Xxxxxxx, to:
Xxxxxxx Pharmaceutical Corporation
Meridian Center II
0 Xxxxxxxxxx Xxx Xxxx
Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxxxx Xxxxxxxx, Esq.
Milbank, Tweed, Xxxxxx & XxXxxx LLP
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXX
Telecopy: (000) 000-0000
10.3. Interpretation. When reference is made in this Agreement to a
Subsection, Section, Exhibit or Schedule, such reference is to a Subsection or
Section of or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" and
"including" are used in this Agreement, they are deemed to be followed by the
words "without limitation". For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, (i) the
terms defined include the plural as well as the singular, (ii) all accounting
terms not otherwise defined herein have the meanings assigned under United
States generally accepted accounting principles, and (ii) the words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section, Subsection or
other subdivision.
10.4. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
10.5. Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the
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subject matter hereof; provided that the Confidentiality Agreements referred to
in Sections 4.4 and 5.4 hereof shall survive the termination of this Agreement
in accordance with their terms.
10.6. Governing Law. Except where by its terms New Jersey Law is governing,
this Agreement shall be governed by and construed in accordance with the laws of
the State of New York, without regard to the principles of conflicts of law of
such state.
10.7. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, each of which shall remain in full force and effect.
10.8. Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any party hereto, whether by
operation of law or otherwise, without the express prior written consent of each
of the other parties hereto. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors.
10.9. Expenses. Except as otherwise expressly provided herein, each party
shall bear its own expenses incurred in connection with the transactions
contemplated by this Agreement.
10.10. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. The parties
accordingly agree that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of New York, Borough of Manhattan, or in New York state
court located in the Borough of Manhattan, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto (i) consents to submit itself to the personal jurisdiction of any
Federal court located in the State of New York, Borough of Manhattan, or any New
York state court located in the Borough of Manhattan if any dispute arises out
of the Agreement or any of the transactions contemplated by this Agreement, (ii)
agrees that it will not attempt to deny or defeat such personal jurisdic-
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tion by motion or other request for leave from any such court and (iii) agrees
that it will not bring any action relating to this Agreement in any court other
than such a Federal or state court sitting in the State of New York located in
the Borough of Manhattan.
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IN WITNESS WHEREOF, Shire, Acquisition Sub and Xxxxxxx have caused this
Agreement to be executed and delivered by their respective duly authorized
officers, all as of the date first above written.
SHIRE PHARMACEUTICALS GROUP PLC
By: /s/ Xxxx Xxxxxx
-----------------------------------------
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
RUBY ACQUISITION SUB INC.
By: /s/ Xxxx Xxxxxx
------------------------------------------
Name: Xxxx Xxxxxx
Title: President
XXXXXXX PHARMACEUTICAL CORPORATION
By: /s/ Xxxx X. Xxxxxxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: President-Chief Executive Officer
Schedule 1
Entities Required to Execute the Shareholder Agreement
1A
Yamanouchi Holdings Corp.
Xxxxxx Xxxxxxxx
1B
HealthCare Ventures II, L.P.
HealthCare Ventures III, L.P.
HealthCare Ventures IV, L.P.
HealthCare Ventures V, L.P.
Schedule 2-A
Knowledge Officers of Xxxxxxx
Xxxx X. Xxxxxxxxxx
Xxxxxx X. Xxx
Pert Xxxxxxx
Xxxxxxx Xxxxxx
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Schedule 2-B
Knowledge Officers of Shire
Xxxx Xxxxxx
Xxxxxxx Xxxxx
Xxxxxxx Xxxxxx
Xxxx Xxxxxxx
Xxxx Xxxxxx
Schedule 3-A
Officers of Surviving Corporation
Officers of Xxxxxxx unless otherwise agreed
Schedule 3-B
Directors of Surviving Corporation
Directors of Acquisition Sub unless otherwise agreed
