Exhibit 99.2
SETTLEMENT AGREEMENT
This Settlement Agreement dated May 1, 2000 by and among
Schein Pharmaceutical, Inc., a Delaware corporation (the "Company"), Xxxxxx X.
Xxxxxx, individually and as trustee ("Xxxxxx") of multiple trusts created by Xx.
Xxxxxx ("Marvin's Trusts"), Xxxxxx X. Xxxxxxx, as trustee ("Irving") of multiple
trusts created by and for the benefit of Xxxxxx X. Xxxxxx ("Pamela's Trusts").
WHEREAS, Xxxxxx and Irving, individually and in their capacity
as trustees of Marvin's Trusts and Pamela's Trusts, respectively, commenced an
action in the Court of Chancery of the State of Delaware in and for the County
of New Castle on April 24, 2000 against Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxx
Xxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxxxxxx and the Company
seeking, inter alia, injunctive and other relief in civil action # 18010 (the
"Action") and the parties have reached agreement for the settlement of the
Action upon the terms and conditions set forth herein.
WHEREAS, the Board of Directors of the Company has adopted
and, as of the signing hereof, not amended or revoked, the resolutions set forth
in the Certificate of Resolutions of the Company annexed hereto as Exhibit A
(the "Resolutions").
NOW, THEREFORE, the parties hereby agree as follows:
1. The Company agrees, to the extent permitted by law, that it
shall not take any action of any kind, directly or indirectly, that conflicts,
interferes or is inconsistent with any of the Resolutions, any provision of this
Agreement or the full exercise by Marvin, Irving, Marvin's Trusts and Pamela's
Trusts of any of the rights or benefits conferred upon them hereunder or under
the Resolutions.
2. The Company shall take all steps necessary, promptly upon
the request of any of the plaintiffs in the Action ("Plaintiffs"), to comply
with the Delaware General Corporation Law and the proxy rules of the Securities
and Exchange Commission in connection with any of the matters described in the
Resolutions and this Agreement.
3. Xxxxxx and Irving and each of their attorneys and advisors
have been participating to a limited extent in the Company's exploration of
strategic alternatives. The Company agrees that Xxxxxx and Xxxxxx and each of
their attorneys and advisors shall now hereby have the right fully to
participate in the Company's exploration of strategic alternatives, including
reviewing documents and attending meetings. Xxxxxx and Irving acknowledge that
certain of the information they will receive will be confidential and material,
non-public information and they agree to, and will cause their attorneys and
advisors to, keep such information confidential. Xxxxxx and Xxxxxx agree to
support the Company's exploration of strategic alternatives, without any
obligation to support any specific transaction.
4. Subject to the Company's performance of its obligations
hereunder and under the Resolutions, Xxxxxx and Irving agree to attend, or to
grant proxies to individuals who will attend, the Company's Annual Meeting of
Stockholders to be held May 16, 2000 and will vote and cause such proxies to
vote all shares of the Company's Common Stock beneficially owned by them solely
in favor of adjourning such meeting on one or more occasions, as and to the
extent set forth in the Resolutions.
5. Xxxxxx and Xxxxxx each hereby designates and appoints
Xxxxxx Xxxxxx as their representative (the "Representative") to act on their
behalf for all purposes pursuant to the provisions of this Agreement. Xxxxxx and
Xxxxxx may designate a successor Representative by delivering written notice
identifying such successor Representative to the Company, which notice shall be
signed by (i) the then current Representative or (ii) Xxxxxx and Irving. The
Company shall be entitled to rely on such designation and appointment of the
Representative.
6. Immediately following the execution and delivery of this
Agreement and the adoption of the Resolutions, counsel to the plaintiffs and
defendants in the Action shall jointly report to the Vice Chancellor before whom
the Action is pending that the parties have agreed to the settlement of the
Action upon the terms set forth in this Agreement and in the Resolutions and
shall describe to the Vice Chancellor the Resolutions and the terms of this
Agreement. Such report shall be made before a court reporter who shall be
requested not to transcribe the record of the proceedings before the Vice
Chancellor unless and until requested to do so by the plaintiffs following any
default by any non-plaintiff party hereto. Upon the conclusion of the
proceedings before the Vice Chancellor, counsel to the plaintiffs and defendants
shall execute, deliver and file with the Clerk of the Court a request for
dismissal, with prejudice, of the Action. Xxxxxx and Xxxxxx further agree not to
assert, directly or indirectly, in any forum against the Company or any of the
other defendants in the Action, any of the claims asserted in the Action.
7. The Company hereby agrees, promptly upon the request of any
other party hereto, to do all such further acts and things and to execute,
deliver, acknowledge and file all such further documents and instruments as may
be reasonably necessary or desirable to effectuate the purposes and intent of
this Agreement and the Resolutions.
8. This Agreement shall be specifically enforceable in the
Court of Chancery of the State Delaware in and for the County of New Castle, and
the parties hereto agree that any breach of this Agreement will cause
irreparable injury to the non-breaching parties.
IN WITNESS WHEREOF, the parties have executed this Settlement
Agreement as of the date set forth above.
SCHEIN PHARMACEUTICAL, INC.
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx, Chairman and
Chief Executive Officer
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx (by Xxxxxx X. Xxxxxx)
Each of the undersigned, by their signatures below, agrees
that the changes in the composition of the Board of Directors as contemplated by
the Resolutions will not by themselves, upon their occurrence, constitute a
change in control under any employment agreement to which he is a party.
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
/s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
/s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
EXHIBIT A
CERTIFICATE OF RESOLUTIONS
OF
SCHEIN PHARMACEUTICAL, INC.
The undersigned Secretary of Schein Pharmaceutical, Inc. (the
"Company") hereby certifies that the following resolutions were duly adopted at
a meeting of the Board of Directors of the Company held on May 1, 2000 at which
a quorum was present and acting throughout:
RESOLVED, that the following resolutions shall become
effective without further action of this Board of Directors upon the execution
and delivery by all parties thereto of the Agreement (as hereinafter defined);
AND IT WAS FURTHER
RESOLVED, that the first sentence of Article III, Section 1 of
the By-Laws of the Company is hereby amended to read in its entirety as follows:
"Except as may otherwise be provided in the Certificate of
Incorporation, the business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors."
AND IT WAS FURTHER
RESOLVED, that the number of directors is hereby fixed at
nine, except as required pursuant to Section 1.1 of the General Shareholders
Agreement dated September 30, 1994 (the "GSA"); AND IT WAS FURTHER
RESOLVED, that the following persons are hereby elected as
directors to fill the two vacancies created by the increase in the number of
directors, each to be in the class whose term expires at the annual meeting of
stockholders held in the year set opposite his name:
Xxxxxx X. Xxxxxx - 2000
Xxxxxx Xxxxxxx - 2002
AND IT WAS FURTHER
RESOLVED, that the annual meeting of stockholders currently
scheduled for May 16, 2000 shall be commenced as scheduled and once commenced
the meeting shall be adjourned to June 12, 2000, provided that if prior to June
12, 2000 a definitive agreement for the sale of the Company (whether by merger,
tender offer or otherwise) is executed by all parties thereto and the beneficial
owners of at least 40% of the Company's outstanding common stock have agreed in
writing to support the transaction, the annual meeting shall be commenced as
scheduled and once commenced the meeting shall be further adjourned to July 7,
2000, but not beyond such date without the written
consent of such beneficial owners to the extent such consent requirement is
permitted by law; AND IT WAS FURTHER
RESOLVED, that the record date for any such adjourned meeting
shall remain unchanged from the close of business on March 20, 2000; AND IT WAS
FURTHER
RESOLVED, that the following persons (or, if any of them is
not available or fails to stand for election, substitute nominees reasonably
acceptable to the Company designated by the beneficial owners of at least 40% of
the Company's outstanding common stock) shall be the Company's nominees for
election at such meeting and any adjournment thereof, each to be in the class
whose term expires at the annual meeting of stockholders held in 2003, and the
Company shall distribute proxy material prepared in accordance with Regulation
14A under the Securities Exchange Act of 1934, as amended, in connection with
such meeting and any adjournment thereof identifying such individuals as the
Company's nominees for director:
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
AND IT WAS FURTHER
RESOLVED, that the New Shareholder shall have the right,
notwithstanding Section 5.2A of the GSA, to discuss any matters whatsoever with
the Continuing Shareholders referred to in the GSA; AND IT WAS FURTHER
RESOLVED, that the officers of the Company, and each of them
acting individually, are hereby authorized to execute and deliver in the name
and on behalf of the Company the agreement in the form annexed to the minutes of
this meeting, with such changes therein as the officer or officers executing
such agreement shall approve, the execution of such agreement by him or them to
be conclusive evidence of such approval (the "Agreement"), and that the
Agreement as so executed is hereby ratified and approved.
The undersigned Secretary of the Company hereby further
certifies that the agreement annexed hereto is the Agreement referred to in the
foregoing resolutions.
May 1, 2000 /s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx, Secretary
