AGREEMENT AND PLAN OF MERGER
between
SKYEPHARMA PLC
and
DEPOTECH CORPORATION
Dated as of November 1, 1998
TABLE OF CONTENTS
RECITALS...................................................................... 1
ARTICLE I
The Merger; Closing; Effective Time
1.1 The Merger........................................................1
1.2 Closing...........................................................2
1.3 Effective Time....................................................2
ARTICLE II
Articles of Incorporation and By-Laws
of the Surviving Corporation
2.1 The Articles of Incorporation.....................................2
2.2 The By-Laws.......................................................2
ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1. Directors.........................................................3
3.2. Officers..........................................................3
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1. Effect on Capital Stock...........................................3
(a) Merger Consideration..........................................3
(b) Cancellation of Shares........................................4
(c) Merger Sub....................................................4
4.2. Exchange of Certificates for Shares...............................4
(a) Exchange Agent................................................4
(b) Exchange Procedures...........................................4
(c) Distributions with Respect to Unexchanged Shares; Voting......5
(d) Transfers.....................................................6
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(e) Fractional Parent ADSs........................................6
(f) Termination of Exchange Fund..................................6
(g) Lost, Stolen or Destroyed Certificates........................6
(h) Affiliates....................................................7
4.3 Dissenters' Rights................................................7
4.4. Adjustments to Prevent Dilution...................................7
4.5 Additional Contingent Consideration...............................7
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company.....................8
(a) Organization, Good Standing and Qualification.................8
(b) Capital Structure.............................................9
(c) Corporate Authority; Approval and Fairness...................10
(d) Governmental Filings; No Violations..........................10
(e) Company Reports; Financial Statements........................11
(f) Absence of Certain Changes...................................12
(g) Litigation and Liabilities...................................12
(h) Employee Benefits............................................12
(i) Compliance with Laws; Permits................................14
(j) Takeover Statutes............................................15
(k) Environmental Matters........................................15
(l) Tax Matters..................................................16
(m) Taxes........................................................16
(n) Labor Matters................................................17
(o) Insurance....................................................17
(p) Intellectual Property........................................17
(q) Brokers and Finders..........................................18
(r) FDA Matters..................................................19
(s) Material Contracts...........................................20
(t) Properties...................................................20
(u) Principal Stockholders of the Company........................20
(v) Vote Required................................................21
(w) Affiliate Transactions.......................................21
(x) Year 2000....................................................21
5.2. Representations and Warranties of Parent and Merger Sub..........22
(a) Capitalization of Merger Sub.................................22
(b) Organization, Good Standing and Qualification................22
(c) Capital Structure............................................22
(d) Corporate Authority..........................................23
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(e) Governmental Filings; No Violations..........................24
(g) Absence of Certain Changes...................................25
(h) Litigation and Liabilities...................................25
(i) Brokers and Finders..........................................25
(j) Vote Required................................................26
ARTICLE VI
Covenants
6.2. Acquisition Proposals............................................28
6.3. Information Supplied.............................................29
6.4. Stockholders Meeting.............................................29
6.5. Filings; Other Actions; Notification.............................29
6.6. Taxation.........................................................31
6.7. Access...........................................................32
6.8. Affiliates.......................................................32
6.9. Publicity........................................................33
6.11. Expenses.........................................................33
6.12. Indemnification; Directors' and Officers' Insurance..............34
6.13. Other Actions by the Company.....................................34
(a) Takeover Statute.............................................34
(b) Delivery of Sanderling Letters...............................34
6.14. Other Actions by Parent..........................................35
ARTICLE VII
Conditions
7.1. Conditions to Each Party's Obligation to Effect the Merger.......35
(a) Stockholder Approval.........................................35
(b) Regulatory Consents..........................................36
(c) Litigation...................................................36
(d) F-4..........................................................36
(e) Blue Sky Approvals...........................................36
(f) Listing Particulars..........................................36
(g) Nasdaq Listing...............................................36
7.2. Conditions to Obligations of Parent and Merger Sub...............36
(a) Representations and Warranties...............................37
(b) Performance of Obligations of the Company....................37
(c) Consents Under Agreements....................................37
(d) Stock Plans..................................................37
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(e) Resignations.................................................37
(g) Certain Consents.............................................37
(h) Bank Agreement...............................................38
(i) Chiron Agreement.............................................38
(j) Ancillary Agreements.........................................38
(k) Tax Opinion..................................................38
7.3. Conditions to Obligation of the Company..........................38
(a) Representations and Warranties...............................38
(b) Performance of Obligations of Parent and Merger Sub..........38
(c) Tax Opinion..................................................39
(d) Consents.....................................................39
ARTICLE VIII
Termination
8.2. Termination by Either Parent or the Company......................39
8.3. Termination by the Company.......................................40
8.4. Termination by Parent............................................40
8.5. Effect of Termination and Abandonment; Pre-Merger
Liquidated Damages...........................................40
ARTICLE IX
Miscellaneous and General
9.2. Modification or Amendment........................................42
9.3. Waiver of Conditions.............................................42
9.4. Counterparts.....................................................42
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL....................42
9.6. Notices..........................................................42
9.7. Entire Agreement; No Other Representations.......................43
9.8. No Third Party Beneficiaries.....................................44
9.9. Obligations of Parent............................................44
9.10. Severability.....................................................44
9.11. Interpretation...................................................44
9.12. Disclosure Schedules.............................................44
9.13. Assignment.......................................................45
EXHIBIT A LETTER AGREEMENT
EXHIBIT B ADDITIONAL CONSIDERATION
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EXHIBIT C AFFILIATES LETTER
EXHIBIT D D&O INSURANCE COVERAGE
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"),
dated as of November 1, 1998, between DepoTech Corporation, a California
corporation (the "Company") and SkyePharma plc, a public limited company
incorporated under the laws of England ("Parent").
RECITALS
WHEREAS, Parent intends to incorporate a corporation in
California which will be a wholly-owned subsidiary of Parent ("Merger Sub," the
Company and Merger Sub sometimes being hereinafter collectively referred to as
the "Constituent Corporations") and which will be the vehicle through which the
merger contemplated by this Agreement will be effected;
WHEREAS, Parent and Company intend to make the Merger Sub a party to
this Agreement upon the official confirmation of incorporation of Merger Sub;
WHEREAS, the respective boards of directors of each of Parent and the
Company have approved the merger of Merger Sub at the Effective Time (as defined
herein) with and into the Company (the "Merger") and approved the Merger upon
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, it is intended that, for federal income tax purposes, the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code");
WHEREAS, the Company and Parent desire to, and Parent desires to cause
Merger Sub to, make certain representations, warranties, covenants and
agreements in connection with this Agreement; and
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
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ARTICLE I
The Merger; Closing; Effective Time
1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, at the Effective Time (as defined in Section 1.3) Merger Sub
shall be merged with and into the Company and the separate corporate existence
of Merger Sub shall thereupon cease. The Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"), and the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger, except as set forth in Article II. The Merger shall have the
effects specified in Section 1100, et seq, of the California Corporations Code
(the "CCC").
1.2 Closing. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 000 Xxxx X Xxxxxx, Xxxxx
0000 Xxx Xxxxx, Xxxxxxxxxx 00000 at 9:00 A.M. on the second business day after
the day on which the last to be fulfilled or waived of the conditions set forth
in Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions) shall be satisfied or waived in accordance with this Agreement or
(ii) at such other place and time and/or on such other date as the Company and
Parent may agree in writing (the "Closing Date").
1.3 Effective Time. As soon as practicable following the Closing, the
Company and Parent will cause a Plan of Merger with an officers' certificate of
each of the Company and Merger Sub to be executed and filed with the Secretary
of State of California in accordance with Section 1103 of the CCC, and the
Merger shall thereupon become effective at the time of such filing (the
"Effective Time").
ARTICLE II
Articles of Incorporation and By-Laws
of the Surviving Corporation
2.1 The Articles of Incorporation. The articles of incorporation of the
Company as in effect immediately prior to the Effective Time shall be the
articles of incorporation of the Surviving Corporation (the "Charter"), until
duly amended as provided therein or by applicable law, except that Article III
of the Charter shall be amended to read in its entirety as follows: "The
corporation is authorized to issue only one class of shares without par value;
and the total number of shares which this corporation is authorized to issue is
1,000."
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2.2 The By-Laws. The by-laws of the Company in effect at the Effective
Time shall be the by-laws of the Surviving Corporation (the "By-Laws"), until
thereafter amended as provided therein or by applicable law.
ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1. Directors. The directors of Merger Sub at the Effective Time
shall, from and after the Effective Time, be the directors of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Charter and the By-Laws.
3.2. Officers. The officers of the Company at the Effective Time shall,
from and after the Effective Time, be the officers of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and the By-Laws.
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1. Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any action on the part of the holder of any capital stock of
the Company:
(a) Merger Consideration. Each share of the Common Stock, no
par value per share, of the Company, (a "Share" or, collectively, the "Shares")
issued and outstanding immediately prior to the Effective Time (other than
Shares owned by Parent, Merger Sub or any other direct or indirect subsidiary of
Parent (collectively, the "Parent Companies") or Shares that are owned by the
Company and in each case not held on behalf of third parties or Shares
("Dissenting Shares") that are owned by stockholders ("Dissenting Stockholders")
exercising dissenters' rights pursuant to Section 1300 et seq. of the CCC
(collectively, "Excluded Shares")) shall be converted into, and become
exchangeable for, 0.185676393 (the "Conversion Number") Parent American
Depositary Shares ("Parent ADSs"), each Parent ADS representing the right to
receive ten ordinary shares, nominal value 10 xxxxx each ("Parent Ordinary
Shares") (the "Merger Consideration"), subject to adjustment as set forth in
Section 4.4. At the Effective Time, all Shares shall no longer be outstanding
and shall be canceled and retired and shall cease
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to exist, and each certificate (a "Certificate") formerly representing any of
such Shares (other than Excluded Shares) shall thereafter represent only the
right to the Merger Consideration and the right, if any, to receive pursuant to
Section 4.2(e) cash in lieu of fractional shares into which such Shares have
been converted pursuant to this Section 4.1(a) and any distribution or dividend
pursuant to Section 4.2(c).
(b) Cancellation of Shares. Each Share issued and outstanding
immediately prior to the Effective Time and owned by any of the Parent Companies
or owned by the Company or any direct or indirect subsidiary of the Company
(other than Shares that are in each case owned on behalf of third parties),
shall, by virtue of the Merger and without any action on the part of the holder
thereof, cease to be outstanding, shall be canceled and retired without payment
of any consideration therefor and shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of Common Stock of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into one share of common stock of the Surviving Corporation.
4.2. Exchange of Certificates for Shares.
(a) Exchange Agent. As of the Effective Time, Parent shall deposit, or
shall cause to be deposited, with an exchange agent selected by Parent with the
Company's prior approval, which shall not be unreasonably withheld (the
"Exchange Agent"), for the benefit of the holders of Shares, certificates
representing the Parent ADSs and, after the Effective Time, if applicable, any
cash, dividends or other distributions with respect to the Parent ADSs to be
issued or paid pursuant to the last sentence of Section 4.1(a) in exchange for
Shares outstanding immediately prior to the Effective Time upon due surrender of
the Certificates (or affidavits of loss in lieu thereof) pursuant to the
provisions of this Article IV (such certificates for Parent ADSs, together with
the amount of any dividends or other distributions payable with respect thereto,
being hereinafter referred to as the "Exchange Fund").
(b) Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause the Exchange Agent to mail to each holder of
record of Shares (other than holders of Excluded Shares) (i) a letter of
transmittal specifying that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates (or
affidavits of loss in lieu thereof) to the Exchange Agent, such letter of
transmittal to be in such form and have such other provisions as Parent and the
Company may reasonably agree, and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for (A) certificates representing
Parent ADSs and (B) any unpaid dividends and other distributions and cash in
lieu of fractional shares. Subject to Section 4.2(h), upon surrender of a
Certificate for cancellation to the Exchange
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Agent together with such letter of transmittal, duly executed, the holder of
such Certificate shall be entitled to receive in exchange therefor (x) a
certificate representing that number of whole Parent ADSs that such holder is
entitled to receive pursuant to this Article IV, (y) a check in the amount
(after giving effect to any required tax withholdings) of (A) any cash in lieu
of fractional Parent ADSs plus (B) any unpaid non-stock dividends and any other
dividends or other distributions that such holder has the right to receive
pursuant to the provisions of this Article IV, and the Certificate so
surrendered shall forthwith be canceled. Such holders shall further provide, in
the space allotted on the letter of transmittal referred to above, to the
Exchange Agent (who shall enter on a register, the "Register"), the name and
address of such holder and the number of Shares held by such holder as to which
there is an entitlement to receive the Merger Consideration, and the DepoCyt
ADSs, if any, and the Development Agreement ADSs, if any (each as defined below,
and collectively, the "Contingent ADSs"). No interest will be paid or accrued on
any amount payable upon due surrender of the Certificates. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, a certificate representing the proper number of shares of Parent
ADSs, together with a check for any cash to be paid upon due surrender of the
Certificate and any other dividends or distributions in respect thereof, may be
issued and/or paid to such a transferee if the Certificate formerly representing
such Shares is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. If any certificate for Parent
ADSs is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of such
exchange that the Person (as defined below) requesting such exchange shall pay
any transfer or other taxes required by reason of the issuance of certificates
for Parent ADSs in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of Parent or the
Exchange Agent that such tax has been paid or is not applicable. Each holder of
record of Shares shall have the right to assign such holder's rights to the
Contingent ADSs but only in accordance with the mutually agreeable procedures to
be set forth in the letter of transmittal delivered by the Exchange Agent in
accordance with this Section 4.2(b).
For the purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section 5.1(d)) or
other entity of any kind or nature.
(c) Distributions with Respect to Unexchanged Shares; Voting. All
Parent Ordinary Shares underlying the Parent ADSs to be issued pursuant to the
Merger shall, for purposes of this Section 4.2(c), be deemed issued and
outstanding as of the Effective Time and whenever a dividend or other
distribution is declared by Parent in respect of Parent Ordinary Shares
underlying the Parent ADSs to be issued pursuant to
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the Merger, the record date for which is at or after the Effective Time, that
declaration shall include dividends or other distributions in respect of all
Parent Ordinary Shares underlying the Parent ADSs issuable pursuant to this
Agreement. No dividends or other distributions in respect of the Parent Ordinary
Shares underlying the Parent ADSs issuable pursuant to this Agreement shall be
paid to any holder of any unsurrendered Certificate until such Certificate is
surrendered for exchange in accordance with this Article IV. Subject to the
effect of applicable laws and the terms and provisions of the Deposit Agreement
(as defined in Section 5.2(c)), following surrender of any such Certificate,
there shall be issued and/or paid to the holder of the certificates representing
whole Parent ADSs issued in exchange therefor, without interest, (A) at the time
of such surrender, the dividends or other distributions of Parent with a record
date after the Effective Time theretofore distributable pursuant to the Deposit
Agreement with respect to such whole Parent ADSs and not paid and (B) at the
appropriate payment date, the dividends or other distributions distributable
pursuant to the Deposit Agreement with respect to such whole Parent ADSs with a
record date after the Effective Time but with a payment date subsequent to
surrender.
(d) Transfers. After the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the Shares that were
outstanding immediately prior to the Effective Time.
(e) Fractional Parent ADSs. Notwithstanding any other provision of this
Agreement, no fractional Parent ADSs will be issued and any holder of Shares
entitled to receive a fractional Parent ADS but for this Section 4.2(e) shall be
entitled to receive a cash payment in lieu thereof, equal to (a) such holder's
fractional interest in such Parent ADS, times (b) $9.425.
(f) Termination of Exchange Fund. At Parent's option and sole
discretion, any portion of the Exchange Fund (including the proceeds of any
investments thereof and any Parent ADSs) that remains unclaimed by the
stockholders of the Company for 360 days after the Effective Time shall be
transferred to Parent or its nominee. Any stockholders of the Company who have
not theretofore complied with this Article IV shall thereafter look only to
Parent for payment of their Parent ADSs and any cash, dividends and other
distributions in respect thereof payable and/or issuable pursuant to Section 4.1
and Section 4.2(c) upon due surrender of their Certificates (or affidavits of
loss in lieu thereof), in each case, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Surviving Corporation, the
Exchange Agent or any other Person shall be liable to any former holder of
Shares for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(g) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by
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the Person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such Person of a bond in customary amount as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Parent ADSs and any cash payable and any unpaid
dividends or other distributions in respect thereof pursuant to Section 4.2(c)
upon due surrender of and deliverable in respect of the Shares represented by
such Certificate pursuant to this Agreement.
(h) Affiliates. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any "affiliate" (as determined pursuant
to Section 6.8) of the Company shall be subject to the limitations of Section
6.8.
4.3 Dissenters' Rights. No Dissenting Stockholder shall be
entitled to shares of Parent Common Stock or cash in lieu of fractional shares
thereof or any dividends or other distributions pursuant to this Article IV
unless and until the holder thereof shall have failed to perfect or shall have
effectively withdrawn or lost such holder's right to dissent from the Merger
under the CCC, and any Dissenting Stockholder shall be entitled to receive only
the payment provided by Section 1300 et seq. of the CCC with respect to Shares
owned by such Dissenting Stockholder. If any Person who otherwise would be
deemed a Dissenting Stockholder shall have failed to properly perfect or shall
have effectively withdrawn or lost the right to dissent with respect to any
Shares, such Shares shall thereupon be treated as though such Shares had been
converted into Parent ADSs pursuant to Section 4.1 hereof. The Company shall
give Parent (i) prompt notice of any written demands for appraisal, attempted
withdrawals of such demands, and any other instruments served pursuant to
applicable law received by the Company relating to stockholders' rights of
appraisal and (ii) the opportunity to participate in all negotiations and
proceedings with respect to demand for appraisal under the CCC. The Company
shall not, except with the prior written consent of Parent, voluntarily make any
payment with respect to any demands for appraisals of Dissenting Shares, offer
to settle or settle any such demands or approve any withdrawal of any such
demands.
4.4. Adjustments to Prevent Dilution. In the event that the Company
changes the number of Shares or securities convertible or exchangeable into or
exercisable for Shares, subject to the limitations hereunder, or Parent changes
the number of Parent Ordinary Shares or securities convertible or exchangeable
into or exercisable for shares of Parent Ordinary Shares (or makes a similar
change with respect to the Parent ADSs), issued and outstanding prior to the
Effective Time as a result of a reclassification, stock split (including a
reverse split), stock dividend or distribution, recapitalization, merger,
subdivision, issuer tender or exchange offer, or other similar transaction, the
Merger Consideration shall be equitably and proportionately adjusted.
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4.5 Additional Contingent Consideration. (i) In addition to the Merger
Consideration, in the event on or prior to March 31, 2000 of the occurrence of
the DepoCyt Launch Date, as determined in accordance with Exhibit B hereto, each
holder of Shares (other than holders of Excluded Shares) at the Effective Time
shall be issued, promptly after the later of the Effective Time and the DepoCyt
Launch Date, an amount of Parent ADSs (the "DepoCyt ADSs") equal to (a) the
number of Shares held by such holder at the Effective Time, times (b)
0.106100796 (the "DepoCyt Conversion Price"); provided that such DepoCyt
Conversion Price shall be subject to adjustment pursuant to Section 4.4 as if it
were the Merger Consideration but using the DepoCyt Launch Date as the point of
comparison to the Effective Time for purposes of the adjustments made
thereunder. The right to receive DepoCyt ADSs shall be assignable in accordance
with Section 4.2(b).
(ii) In addition to the Merger Consideration, in the event that a
development and commercialization agreement is signed with a corporate partner
in an arms length transaction with respect to (a) DepoMorphine or (b) a
macromolecule for the delivery of drugs using DepoFoam technology, on or prior
to March 31, 2000 (such trigger date the "Development Agreement Date"), as
determined in accordance with Exhibit B hereto, each holder of Shares (other
than holders of Excluded Shares) at the Effective Time shall each be issued,
promptly after the later of the Effective Time and the Development Agreement
Date, an amount of Parent ADSs (the "Development Agreement ADSs") equal to (a)
the number of Shares held by such holder at the Effective Time, times (b)
0.079575597 (the "Development Agreement Conversion Price"); provided that such
Development Agreement Conversion Price shall be subject to adjustment pursuant
to Section 4.4 as if it were the Merger Consideration but using the Development
Agreement Date as the point of comparison to the Effective Time for purposes of
the adjustments made thereunder. The right to received Development Agreement
ADSs shall be assignable in accordance with Section 4.2(b).
With respect to holders entitled to claim the DepoCyt ADSs and/or the
Development Agreement ADSs under this Section 4.5, the provisions of Section 4.2
shall apply as if such holders were claiming the Merger Consideration, except to
the extent the letter of transmittal referred to in Section 4.2(b) above (and
related documents) specify otherwise, but substituting the later of (a) the
Effective Time and (b) DepoCyt Launch Date or the Development Agreement Date, as
the case may be, for the Effective Time throughout.
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ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company. The
Company hereby represents and warrants to Parent and Merger Sub that, as of the
date hereof and as of the Closing Date:
(a) Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of California and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation of
its properties or conduct of its business requires such qualification, except
where the failure to be so qualified or in good standing, when taken together
with all other such failures, is not reasonably likely to have a Company
Material Adverse Effect (as defined below). The Company has made available to
Parent a complete and correct copy of the Company's articles of incorporation
and by-laws, each as amended to date. Except as set forth on Schedule 5.1(a),
the Company's articles of incorporation and by-laws so delivered are in full
force and effect. The Company has no, and has not ever had any, Subsidiaries.
As used in this Agreement, the term (i) "Subsidiary" means, with
respect to the Company, Parent or Merger Sub, as the case may be, any entity,
whether incorporated or unincorporated, of which at least a majority of the
securities or ownership interests having by their terms ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions is directly or indirectly owned or controlled by such party or by one
or more of its respective Subsidiaries or by such party and any one or more of
its respective Subsidiaries, as the case may be, and (ii) "Company Material
Adverse Effect" means a material adverse effect on the condition (financial or
otherwise), business, results of operations, prospects, properties, assets or
liabilities of the Company, taken as a whole.
(b) Capital Structure. The authorized capital stock of the Company
consists of 30,000,000 Shares, of which 17,464,324 Shares are outstanding as of
the date hereof, and 5,000,000 shares of Preferred Stock, no par value per share
(the "Preferred Shares"), of which no shares are outstanding as of the date
hereof. All of the outstanding Shares have been duly authorized and are validly
issued, fully paid and nonassessable. The Company has no Shares or Preferred
Shares reserved for issuance, except that there are 732,552 Shares reserved for
issuance pursuant to the Company's plans, agreements and arrangements and
warrants ("Stock Plans"). Schedule 5.1(b) contains a correct and complete list
of each outstanding option, warrant or other right to purchase Shares under
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the Stock Plans or otherwise (each a "Company Option"), including the holder,
exercise price and number of Shares or capital stock or equity subject thereto.
All such options shall expire at the Effective Time, with no further rights or
obligations outstanding with respect thereto, except as set forth in Section
6.10 hereof. Except as set forth on Schedule 5.1(b), there are no preemptive or
other outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or sell any shares of capital stock or
other securities of the Company or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a right to subscribe
for or acquire, any securities of the Company, and no securities or obligations
evidencing such rights are authorized, issued or outstanding. The Company does
not have outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company on any
matter ("Voting Debt").
(c) Corporate Authority; Approval and Fairness. (i) The Company has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and to consummate, subject only to the adoption of this Agreement by
the holders of a majority of the outstanding Shares (the "Company Requisite
Vote"), the Merger. This Agreement is a valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles (the "Bankruptcy and Equity Exception").
(ii) The board of directors of the Company (A) has unanimously approved
this Agreement and the Merger and the other transactions contemplated hereby and
(B) has received the opinion of its financial advisors, EGS Securities, to the
effect that the consideration to be received by the holders of the Shares
pursuant to this Agreement is fair to such holders from a financial point of
view, subject to customary limitations.
(d) Governmental Filings; No Violations. (i) Other than the
filings and/or notices (A) pursuant to Section 1.3, (B) under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
the Securities Act of 1933, as amended (the "Securities Act"), (C) to comply
with state securities or "blue-sky" laws, (D) required to be made with NASDAQ,
no notices, reports or other filings are required to be made by the Company
with, nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by the Company from, any governmental or regulatory
authority, agency, commission, body or other governmental entity
-10-
("Governmental Entity"), in connection with the execution and delivery of this
Agreement by the Company and the consummation by the Company of the Merger and
the other transactions contemplated hereby, except those that the failure to
make or obtain are not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect or prevent, materially delay or
materially impair the ability of Company to consummate the transactions
contemplated by this Agreement.
(ii) Except as set forth on Schedule 5.1(d), the execution, delivery
and performance of this Agreement by the Company do not, and the consummation by
the Company of the Merger and the other transactions contemplated hereby will
not, constitute or result in (A) a breach or violation of, or a default under,
the certificate or by-laws of the Company, (B) a breach or violation of, or a
default under, the acceleration of any obligations or the creation of a lien,
pledge, charge, security interest or other encumbrance on the assets of the
Company (with or without notice, lapse of time or both) pursuant to, any
agreement, lease (including, without limitation, leases and purchase agreements
for real property), contract, note, mortgage, indenture, arrangement or other
obligation ("Contracts") binding upon the Company or any Law (as defined in
Section 5.1(i)) or governmental or non-governmental permit or license to which
the Company is subject or (C) any change in the rights or obligations of any
party under any of the Contracts, except, in the case of clause (B) or (C)
above, for any breach, violation, default, acceleration, creation or change
that, individually or in the aggregate, is not reasonably likely to have a
Company Material Adverse Effect or prevent, materially delay or materially
impair the ability of the Company to consummate the transactions contemplated
by this Agreement. Schedule 5.1(d) sets forth a correct and complete list of
material Contracts of the Company pursuant to which consents, notices, waivers
or other actions are or may be required prior to consummation of the
transactions contemplated by this Agreement (whether or not subject to the
exception set forth with respect to clauses (B) and (C) above).
(e) Company Reports; Financial Statements. The Company has
delivered to Parent each registration statement, report, proxy statement or
information statement prepared by it (including, without limitation, (i) the
Company's Annual Reports on Form 10-K, (ii) the Company's Current Reports on
Form 8-K and (iii) the Company's Quarterly Reports on Form 10-Q), each in the
form (including exhibits, annexes and any amendments thereto) filed with the
Securities and Exchange Commission since January 1, 1996 (the "SEC")
(collectively, including any such reports filed subsequent to the date hereof,
the "Company Reports"). As of their respective dates, the Company Reports did
not, and any Company Reports filed with the SEC subsequent to the date hereof
will not, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were made, not
misleading. Each of the consolidated balance sheets included in or incorporated
by reference into the
-11-
Company Reports (including the related notes and schedules) fairly presents, or
will fairly present, the consolidated financial position of the Company as of
its date and each of the consolidated statements of operations, statements of
cash flows and statements of shareholders' equity included in or incorporated by
reference into the Company Reports (including any related notes and schedules)
fairly presents, or will fairly present, the results of operations, accumulated
deficits, shareholders' equity and cash flows, as the case may be, of the
Company for the periods set forth therein (subject, in the case of unaudited
statements, to notes and normal year-end audit adjustments that will not be
material in amount or effect), in each case in accordance with generally
accepted accounting principles in the United States ("US GAAP") consistently
applied during the periods involved, except as may be noted therein.
(f) Absence of Certain Changes. Except as set forth on Schedule 5.1(f),
since December 31, 1997 (the "Audit Date") the Company has conducted its
business only in, and has not engaged in any material transaction other than
according to, the ordinary and usual course of such business and there has not
been (i) any change or development of a state of circumstances in the financial
condition, properties, prospects, business or results of operations of the
Company or otherwise any development or combination of developments that,
individually or in the aggregate, has had or may have a Company Material Adverse
Effect, excluding any adverse effects that are the result of a downturn in the
industry sector or downturn in the economy generally; (ii) any material damage,
destruction or other casualty loss with respect to any material asset or
property owned, leased or otherwise used by the Company, whether or not covered
by insurance; (iii) any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of the Company, except for
dividends or other distributions on its capital stock publicly announced prior
to the date hereof; or (iv) any change by the Company in accounting principles,
practices or methods except such changes as required by changes in US GAAP.
Since the Audit Date, except as set forth on Schedule 5.1(f), there has not been
any increase in the compensation payable or that could become payable by the
Company to officers or key employees or any amendment of any of the Compensation
and Benefit Plans (as defined in paragraph (h) below) other than increases or
amendments in the ordinary course of business.
(g) Litigation and Liabilities. Except as set forth in Schedule 5.1(g),
there are no (i) civil, criminal or administrative actions, suits, claims,
hearings, investigations or proceedings pending or, to the knowledge of the
Company, threatened against the Company or any of its Affiliates or (ii)
obligations or liabilities, whether or not accrued, contingent or otherwise and
whether or not required to be disclosed, including those relating to
environmental and occupational safety and health matters, or any other facts or
circumstances of which the Company has knowledge that could reasonably result in
any claims against, or obligations or liabilities of, the Company or
-12-
any of its Affiliates, other than those which are not reasonably likely to have
a Company Material Adverse Effect.
(h) Employee Benefits. (i) A copy of each bonus, deferred
compensation, pension, retirement, profit-sharing, thrift, savings, employee
stock ownership, stock bonus, stock purchase, restricted stock, stock option,
employment, termination, severance, compensation, medical, health or other plan,
agreement, policy or arrangement that covers employees, directors, agents,
former employees, former agents or former directors of the Company and which has
not been previously terminated with no further obligations outstanding
thereunder (the "Compensation and Benefit Plans") and any trust agreement or
insurance contract forming a part of such Compensation and Benefit Plans has
been provided or made available to Parent prior to the date hereof. The material
Compensation and Benefit Plans are listed on Schedule 5.1(h) and any "change of
control" or similar provisions or any provisions which might otherwise be
triggered by this Agreement or the transactions contemplated hereunder therein
are identified on Schedule 5.1(h).
(ii) To the Company's knowledge, all Compensation and Benefit Plans are
in substantial compliance with all applicable law, including the Code and the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Each
Compensation and Benefit Plan that is an "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA (a "Pension Plan") and that is intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service (the "IRS"), with respect
to "TRA" (as defined in Section 1 of Rev, Proc. 93-39) and the Company is not
aware of any circumstances likely to result in revocation of any such favorable
determination letter. There is no pending or, to the knowledge of the Company,
threatened litigation, claims actions or proceedings relating to the
Compensation and Benefit Plans. The Company has not engaged in a transaction
with respect to any Compensation and Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would subject the
Company to a material tax or penalty imposed by either Section 4975 of the Code
or Section 502 of ERISA.
(iii) No liability under Subtitle C or D of Title IV of ERISA has been
or is reasonably expected to be incurred by the Company with respect to any
ongoing, frozen or terminated "single-employer plan", within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them,
or the single-employer plan of any entity which is considered one employer with
the Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). The Company has not contributed, or been obligated to contribute,
to a multiemployer plan under Subtitle E of Title IV of ERISA at any time since
September 26, 1980. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan or by
-13-
any ERISA Affiliate within the 12-month period ending on the date hereof or will
be required to be filed in connection with the transactions contemplated by this
Agreement.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan as of the date hereof have been timely made or
have been reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the Company Reports prior to the date hereof.
Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has
an "accumulated funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA and no ERISA Affiliate has an
outstanding funding waiver. The Company has not provided, and is not required to
provide, security to any Pension Plan or to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(v) Under each Pension Plan which is a single-employer plan, as of the
last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Pension Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such Pension
Plan, and there has been no material change in the financial condition of such
Pension Plan since the last day of the most recent plan year.
(vi) The Company has no obligations for retiree health and life
benefits under any Compensation and Benefit Plan, except as set forth on
Schedule 5.1(h). The Company may amend or terminate any such plan under the
terms of such plan at any time without incurring any material liability
thereunder.
(vii) Except as set forth on Schedule 5.1(h) and as contemplated in
Section 6.10, including the total amounts due under any such exceptions, the
consummation of the Merger and the other transactions contemplated by this
Agreement will not (x) entitle any employees of the Company to severance pay,
(y) accelerate the time of payment or vesting or trigger any payment of
compensation or benefits or forgiveness of obligations under, increase the
amount payable or trigger any other material obligation pursuant to, any of the
Compensation and Benefit Plans or (z) result in any breach or violation of, or a
default under, any of the Compensation and Benefit Plans.
(i) Compliance with Laws; Permits. Except as Disclosed in the Company
Reports filed prior to the date hereof, the businesses of the Company have not
been, and are not being, conducted in violation of any federal, state, local or
foreign law, statute, ordinance, rule, regulation, judgment, order, injunction,
decree, arbitration award, agency requirement, license or permit of any
Governmental Entity (individually, "Law" and collectively, "Laws"). Except as
Disclosed in the Company Reports filed prior to the
-14-
date hereof, no investigation or review by any Governmental Entity with respect
to the Company or any of its Subsidiaries is pending or, to the knowledge of the
Company, threatened, nor has any Governmental Entity indicated an intention to
conduct the same. To the knowledge of the Company, no material change is
required in the Company's processes, properties or procedures in connection with
any such Laws, and the Company has not received any notice or communication of
any material noncompliance with any such Laws that has not been cured as of the
date hereof. The Company has all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
necessary to conduct its business as presently conducted, except as Disclosed in
the Company Reports filed prior to the date hereof and except those the absence
of which are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect or prevent or materially burden or materially
impair the ability of the Company to consummate the Merger and the other
transactions contemplated by this Agreement.
(j) Takeover Statutes. (i) No "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute or regulation of any
nature, each a "Takeover Statute") and (ii) no anti-takeover provision in the
Company's articles of incorporation and by-laws requiring a supermajority
approval of the Merger by the Company's shareholders, is, or at the Effective
Time will be, applicable to the Company, the Shares, the Merger or the other
transactions contemplated by this Agreement.
(k) Environmental Matters. Except as Disclosed in the Company
Reports filed prior to the date hereof or as set forth in Schedule 5.1(k): (i)
the Company has at all times complied with all applicable Environmental Laws;
(ii) the properties currently owned or operated by the Company (including soils,
groundwater, surface water, buildings or other structures) are not contaminated
with any Hazardous Substances; (iii) the properties formerly owned or operated
by the Company were not contaminated with Hazardous Substances on or prior to
the period of ownership or operation by the Company; (iv) the Company is not
subject to liability for any Hazardous Substance disposal or contamination on
any third party property; (v) the Company has not been associated with any
release or threat of release of any Hazardous Substance; (vi) the Company has
not received any notice, demand, letter, claim or request for information
indicating that the Company may be in violation of or liable under any
Environmental Law; (vii) the Company is not subject to any orders, decrees,
injunctions or other arrangements with any Governmental Entity or is subject to
any indemnity or other agreement with any third party relating to liability
under any Environmental Law or relating to Hazardous Substances; and (viii)
there are no other circumstances or conditions involving the Company that are
reasonably likely to result in any material claims, liability, investigations,
costs or restrictions on the ownership, use, or transfer of any property of the
Company pursuant to any Environmental Law.
-15-
As used herein, the term "Environmental Law" means any federal, state,
local or foreign law, statute, ordinance, regulation, judgment, common law,
order, decree, arbitration award, agency requirement, license, permit,
authorization or opinion, relating to: (A) the protection, investigation or
restoration of the environment, health and safety, or natural resources, (B) the
handling, use, presence, disposal, release or threatened release of any
Hazardous Substance or (C) noise, odor, wetlands, pollution, contamination or
any injury or threat of injury to persons or property.
As used herein, the term "Hazardous Substance" means any substance that
is: (A) listed, classified or regulated pursuant to any Environmental Law; (B)
any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (C) any other substance which may be the subject of
regulatory action by any Government Entity pursuant to any Environmental Law.
(l) Tax Matters. As of the date hereof, neither the Company nor any of
its Affiliates has taken or agreed to take any action, nor does the Company have
any knowledge of any fact or circumstance, that would prevent the Merger
contemplated by this Agreement from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code.
(m) Taxes. Except as set forth in Schedule 5.1(m), the Company
(i) has prepared in good faith and duly and timely filed (taking into account
any extension of time within which to file) all Tax Returns (as defined below)
required to be filed by any of them and all such filed Tax Returns are complete
and accurate in all material respects; (ii) has paid all Taxes (as defined
below) that are required to be paid or that the Company is obligated to withhold
from amounts owing to any employee, creditor or third party, except with respect
to matters contested in good faith; and (iii) has not waived any statute of
limitations with respect to Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency. As of the date hereof, there are not
pending or, to the knowledge of the Company threatened in writing, any audits,
examinations, investigations or other proceedings against the Company in respect
of Taxes or Tax matters. There are not any unresolved questions or claims
concerning the Company's Tax liability that may have a Company Material Adverse
Effect. The Company has made available to Purchaser true and correct copies of
the United States federal income Tax Returns filed by the Company for each of
the fiscal year commencing with the Company's initial fiscal year and including
the year ended December 31, 1997. The Company has paid, or have made adequate
provision or set up an adequate accrual or reserve for the payment of, all Taxes
owing by the Company, except for inadequately reserved Taxes that would not,
individually or in the aggregate with any other failure or misrepresentation
under this Section 5.1(m), be material
-16-
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes", and "Taxable") includes all federal,
state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severances, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts and any interest in respect of such penalties and
additions, and (ii) the term "Tax Return" includes all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes.
(n) Labor Matters. The Company is not a party to or otherwise bound by
any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor, as of the date
hereof, is the Company the subject of any material proceeding asserting that the
Company has committed an unfair labor practice or is seeking to compel it to
bargain with any labor union or labor organization nor is there pending or, to
the knowledge of the Company, threatened, nor has there been for the past five
years, any labor strike, dispute, walk-out, work stoppage, slow-down or lockout
involving the Company.
(o) Insurance. All material fire and casualty, clinical trials, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by the Company are with reputable insurance
carriers, provide full and adequate coverage for all normal risks incident to
the business of the Company and its properties and assets, and are in character
and amount at least equivalent to that carried by persons engaged in similar
businesses and subject to the same or similar perils or hazards.
(p) Intellectual Property. (i) The Company owns, or is licensed or
otherwise possesses legally enforceable rights to use all patents, trademarks,
trade names, logos, service marks, copyrights, and any applications therefor,
technology, know-how, trade secrets, technical and business proprietary
information, computer software programs or applications, and tangible or
intangible proprietary information, data, samples, or materials including,
without limitation, materials and documents used in connection or association
therewith, that are used or reasonably necessary in the business of the Company
as currently conducted, except for any such failures to own, be licensed or
possess that, individually or in the aggregate, are not reasonably likely to
have a Company Material Adverse Effect, and to the knowledge of the Company all
patents, trademarks, trade names, service marks and copyrights held by the
Company are valid and subsisting. The Company is not aware of any reasonable
basis for the denial of any pending patent application (including divisions,
continuations, continuations in part, reissuances and reexamination
applications) relating to Company Intellectual Property
-17-
Rights or Third-Party Intellectual Property Rights (as defined below) and does
not believe that anything contained in such patent applications is reasonably
likely to adversely affect any extension, modification, reissuance or
reexamination of existing patents or patent applications relating to Company
Intellectual Property Rights or Third-Party Intellectual Property Rights. The
Company Intellectual Property Rights have not been permitted to lapse or expire
except as indicated in the conduct of the business of the Company and no trade
secret information has been disclosed except pursuant to an undertaking of
confidentiality.
(ii) Except as set forth on Schedule 5.1(p) or as is not
reasonably likely to have a Company Material Adverse Effect:
(A) the Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations
hereunder, in violation of any licenses, sublicenses and other
agreements as to which the Company is a party, or result in a
termination or material change in obligations or benefits under such
licenses, sublicenses or other agreements, and pursuant to which the
Company is authorized to use any third-party patents (including
divisions, continuations, continuations in part, reissuances,
reexaminations and modifications), trademarks, service marks, software,
copyrights or know-how ("Third-Party Intellectual Property Rights");
(B) no claims or proceedings with respect to (I) the patents (including
divisions, continuations, continuations in part, reissuances, and
modifications), trademarks and service marks, and registrations
therefor, copyrights, copyright registrations, trade names, and any
applications therefor owned by or under obligation of assignment to the
Company (the "Company Intellectual Property Rights"); (II) any trade
secret material to the Company; or (III) Third-Party Intellectual
Property Rights are currently pending or, to the knowledge of the
Company, are threatened by any Person;
(C) the Company does not know of any valid grounds for any bona fide
claims (I) to the effect that the manufacture, sale, licensing or use
of any product as now used, sold or licensed or proposed for use, sale
or license by the Company infringes on or is in violation of any
copyright, patent, trademark, service xxxx or trade secret; (II)
against the use by the Company, of any trademarks, trade names, trade
secrets, copyrights, patents, technology, know-how or computer software
programs and applications used in the business of the Company as
currently conducted or as proposed to be conducted; (III) challenging
the ownership, scope,
-18-
validity or effectiveness of any of the Company Intellectual Property
Rights or other trade secret material to the Company; or (IV)
challenging the license or legally enforceable right to use of the
Third-Party Intellectual Rights by the Company; and
(D) to the knowledge of the Company, there is no unauthorized use,
infringement, conflicts with, violation or misappropriation of any of
the Company Intellectual Property Rights by any third party, including
any employee or former employee of the Company.
(q) Brokers and Finders. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders, fees in connection
with the Merger or the other transactions contemplated in this Agreement except
that the Company has employed EGS Securities as its financial advisor, the
arrangements with which have been disclosed in writing to Parent prior to the
date hereof.
(r) FDA Matters. (i) Schedule 5.1(r) contains a complete and
correct list of all products that are being researched, tested or studied on
human or animal subjects or distributed for commercial sale by the Company (the
"Products") (including, a list of all material Licenses (as defined below) for
each Product that has been obtained by the Company, or form the basis for
manufacturing, distribution, sale or human or animal research, testing or
studies of a Product by the Company).
(ii) Except as set forth on Schedules 5.1(d) and (r), (A) with respect
to each Product: (i) the Company has obtained all applicable approvals,
clearances, authorizations, licenses and registrations required by United States
or foreign governments or government agencies including, without limitation, the
United States Food and Drug Administration (the "FDA") and the Drug Enforcement
Administration of the Department of Justice to permit the manufacture,
distribution, sale, marketing, to the extent applicable, or human or animal
research, testing or studies of such Product, as the case may be (collectively,
"Licenses"); (ii) the Company is in compliance with all requirements pertaining
to the manufacture, distribution, sale (to the extent applicable) or human or
animal research of such Product; and (iii) to the extent such product is
intended for export from the United States, the Company is in compliance with
either all FDA and export requirements and is in compliance with all applicable
laws relating to research, testing, storage, handling or manufacture, sale or
marketing (to the extent applicable) of drugs or medical devices; (B) to the
extent applicable, all human and animal research performed by or for the Company
have been and are being conducted in compliance with the current good industry
practice, including for human and animal research, testing or studies but not
limited to, the good human and animal research, testing and clinical studies
regulations issued by FDA; (C) to the extent applicable, all nonclinical
laboratory
-19-
studies, as described in 21 C.F.R. 58.3(d), sponsored by the Company has been
and are being conducted in compliance with the good laboratory practice
regulations set forth in 21 C.F.R. Part 58; and (D) to the extent applicable,
the Company is in compliance with all reporting requirements for all Licensees
or plant registrations described in the preceding clause (ii)(A)(i), including,
but not limited to, the adverse event reporting requirements for drugs in 21
C.F.R. Parts 312 and 314 and for devices in 21 C.F.R. Parts 812 and 803, as
applicable; except, in the case of all of the preceding clauses in this Section
(ii), for any such failures to obtain licenses or noncompliances with
requirements which, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect. Without limiting the
generality of the foregoing definition of "Licenses", such definition shall
specifically include, with respect to the United States, new drug applications,
abbreviated new drug applications, product license applications, investigational
new drug applications, and product export applications issued by the FDA, as
well as registrations issued by the DEA.
(iii) Neither the Company nor, to the knowledge of the Company, any of
its officers, employees or agents has made any untrue statement of a material
fact or fraudulent statement to FDA, failed to disclose a fact required to be
disclosed to FDA, or committed any act, made any statement, or failed to make
any statement that would reasonably be expected to provide a basis for FDA to
invoke its policy respecting "Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities," set forth in 56 Fed. Reg. 46191 (September 10,
1991).
(iv) The Company has provided or made available to Parent all documents
in its possession concerning communications to or from FDA or other applicable
agencies regulating the research, testing, storage, handling, marketing or sale
of drugs or medical devices (as applicable) or prepared by FDA, which bear in
any material respect on compliance by the Company with FDA or other such
regulatory requirements.
(s) Material Contracts. Schedule 5.1(s) contains a list of all
Contracts by which the Company is bound and which are material to the current,
or, in the light of the Company's 1999 and 2000 Annual Operating Plan previously
provided to Parent by Company (the "Business Plan"), proposed future operation
of the business of the Company. Each such Contract is valid and in full force
and effect and there exists no default or occurrence, condition, commitment or
act (including the consummation of the Merger) which would, with the passage of
time, the giving of notice, or both, cause a default thereunder. To the best
knowledge of the Company, all of the obligations to be performed by the other
parties to each such Contract have been fully performed.
(t) Properties. Except as set forth on Schedule 5.1(t), with respect to
each item of real property which the Company owns or leases, except for such
matters
-20-
that, individually or in the aggregate, are not reasonably likely to be
material: (a) the Company has good and clear record and marketable title to such
property, insurable by a recognized national title insurance company at standard
rates, or a valid leasehold interest, as the case may be, free and clear of any
security interest, easement, covenant or other restrictions, except for recorded
easements, covenants and other restrictions which do not materially impair the
current uses or occupancy of such property; and (b) the improvements constructed
on such property are in good condition, and all mechanical and utility systems
servicing such improvements are in good condition free in each case of material
defects.
(u) Principal Stockholders of the Company. Except as set forth on
Schedule 5.1(u), to the best knowledge of the Company after reasonable
investigation, as of the date of this Agreement, no person or affiliated group
of persons beneficially owns, or would beneficially own assuming the exercise of
all options or rights to acquire Securities of the Company in favor of any such
person, five percent or more of the Shares.
(v) Vote Required. The adoption of this Agreement and the authorization
of the Merger by the affirmative vote of the holders of Shares entitling such
holders to exercise at least a majority of the total voting power of the Shares
(the "Company Stockholders' Approval") is the only vote of the holders of any
class or series of the capital stock of the Company required to approve this
Agreement, the Merger and the other transactions contemplated hereby.
(w) Affiliate Transactions. Except as set forth on Schedule 5.1(w), to
the knowledge of the Company, no officer or director of the Company is a party
to any transaction with the Company (A) providing for the rental of real or
personal property from, or (B) otherwise requiring payments to (other than for
services in their capacities as officers, directors or employees) any such
person or any corporation, partnership, trust or other entity in which any such
person has an interest as a stockholder (other than holdings of less than 1% of
the shares of such corporation), officer, director, trustee or partner (other
than holdings of less than 1% of the partnership interests in such partnership).
(x) Year 2000. The Company has reviewed its operations and any third
parties with which the Company has a material relationship to evaluate the
extent to which the business or operations of the Company will be affected by
the Year 2000 Problem. The Year 2000 Problem is not reasonably likely to have a
material adverse effect on the general affairs, management, the current or
future consolidated financial position, business prospects, stockholders' equity
or results of operations of the Company and its subsidiaries or result in any
material loss or interference with the Company's business or operations. The
"Year 2000 Problem" as used herein means any significant risk that computer
hardware or software used in the receipt, transmission, processing,
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manipulation, storage, retrieval, retransmission or other utilization of data or
in the operation of mechanical or electrical systems of any kind will not, in
the case of dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring prior to
January 1, 2000.
5.2. Representations and Warranties of Parent and Merger Sub. Parent
and Merger Sub each hereby represent and warrant to the Company that, as of the
date hereof and as of the Closing Date:
(a) Capitalization of Merger Sub. The authorized capital stock of
Merger Sub consists of 1,000 shares of Common Stock all of which are validly
issued and outstanding. All of the issued and outstanding capital stock of
Merger Sub is, and at the Effective Time will be, owned directly or indirectly
by Parent, and there are (i) no other shares of capital stock or voting
securities of Merger Sub, (ii) no securities of Merger Sub convertible into or
exchangeable for shares of capital stock or voting securities of Merger Sub and
(iii) no options or other rights to acquire from Merger Sub, and no obligations
of Merger Sub to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Merger Sub. Merger Sub has not conducted any business prior to the date hereof
and has no, and prior to the Effective Time will have no, assets, liabilities or
obligations of any nature other than those incident to its formation and
pursuant to this Agreement and the Merger and the other transactions
contemplated hereby.
(b) Organization, Good Standing and Qualification. Each of Parent and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization and has
all requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of its properties or conduct
of its business requires such qualification, except where the failure to be so
qualified or in such good standing, when taken together with all other such
failures, is not reasonably likely to have a Parent Material Adverse Effect (as
defined below). Parent has made available to the Company a complete and correct
copy of Parent's Memorandum and Articles of Association, each as amended to the
date hereof. Parent's Memorandum and Articles of Association as so delivered are
in full force and effect.
As used in this Agreement, the term "Parent Material Adverse Effect"
means a material adverse effect on the condition (financial or otherwise),
properties, prospects, business or results of operations, assets or liabilities
of the Parent and its Subsidiaries, taken as a whole.
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(c) Capital Structure. The authorized capital stock of Parent
consists of 545,000,000 Parent Ordinary Shares, nominal value 10 xxxxx each, of
which 399,959,529 shares have been issued as of September 30, 1998 and such
number has not varied more than 2% as of the date hereof. All of the issued
Parent Ordinary Shares have been duly authorized and are validly issued, fully
paid and nonassessable. Parent has no Parent Ordinary Shares reserved for
issuance except that there are Parent Ordinary Shares subject to the plans,
agreements and arrangements set forth on Schedule 5.2(c) (the "Parent Stock
Plans"). Each of the outstanding shares of capital stock of each of Parent's
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable
and owned by a direct or indirect wholly-owned subsidiary of Parent, free and
clear of any lien, pledge, security interest, claim or other encumbrance. Except
as set forth on Schedule 5.2(c) or as may be required by the Companies Act, the
rules and regulations of the London Stock Exchange, or Parent's Memorandum and
Articles of Association, there are no preemptive or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements or commitments to issue or
to sell any shares of capital stock or other securities of Parent or any
securities or obligations convertible or exchangeable into or exercisable for,
or giving any Person a right to subscribe for or acquire, any securities of
Parent and no securities or obligation evidencing such rights are authorized,
issued or outstanding. Except as set forth on Schedule 5.2(c), Parent does not
have outstanding any bonds, debentures, notes or other obligations the holders
of which have the right to vote (or convertible into or exercisable for
securities having the right to vote) with the stockholders of Parent on any
matter ("Parent Voting Debt"). The Parent ADSs are issued pursuant to the
Deposit Agreement currently in effect, among Parent and The Bank of New York, as
Depositary (and all owners and holders from time to time of ADRs issued
thereunder) (the "Deposit Agreement").
(d) Corporate Authority. (i) Each of the Parent and Merger Sub has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and to consummate the Merger. This Agreement is a valid and binding
agreement of Parent and Merger Sub, enforceable against each of Parent and
Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity
Exception.
(ii) Prior to the Effective Time, Parent will have taken all necessary
action to permit it to issue the number of Parent Ordinary Shares underlying the
Parent ADSs required to be issued pursuant to Article IV. Such Parent Ordinary
Shares, when issued, will be validly issued, fully paid and nonassessable, and
no stockholder of Parent will have any preemptive right of subscription or
purchase in respect thereof. Such Parent Ordinary Shares, when issued, will be
registered under the Securities Act and Exchange Act and registered or exempt
from registration under any applicable state securities or "blue sky" laws.
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(iii) The Board of Directors of each of Parent and Merger Sub has
unanimously approved this Agreement and the Merger and the other transactions
contemplated hereby, as necessary.
(e) Governmental Filings; No Violations. (i) Other than the filings
and/or notices (A) pursuant to Section 1.3, (B) under the HSR Act, the
Securities Act and the Exchange Act, (C) to comply with state securities or
"blue sky" laws, (D) required to be made with NASDAQ and (E) filings required by
the Companies Act and the rules and regulations of the London Stock Exchange, no
notices, reports or other filings are required to be made by Parent or Merger
Sub with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by Parent or Merger Sub from, any
Governmental Entity, in connection with the execution and delivery of this
Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub
of the Merger and the other transactions contemplated hereby, except those that
the failure to make or obtain are not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect or prevent,
materially delay or materially impair the ability of Parent or Merger Sub to
consummate the transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by
Parent and Merger Sub do not, and the consummation by Parent and Merger Sub of
the Merger and the other transactions contemplated hereby will not, constitute
or result in (A) a breach or violation of, or a default under, the certificate
or by-laws of Parent and Merger Sub or the comparable governing instruments of
any of its Subsidiaries, (B) a breach or violation of, or a default under, the
acceleration of any obligations or the creation of a lien, pledge, security
interest or other encumbrance on the assets of Parent or any of its Subsidiaries
(with or without notice, lapse of time or both) pursuant to, any Contracts
binding upon Parent or any of its Subsidiaries or any Law or governmental or
non-governmental permit or license to which Parent or any of its Subsidiaries is
subject or (C) any change in the rights or obligations of any party under any of
the Contracts, except, in the case of clause (B) or (C) above, for breach,
violation, default, acceleration, creation or change that, individually or in
the aggregate, is not reasonably likely to have a Parent Material Adverse Effect
or prevent, materially delay or materially impair the ability of Parent or
Merger Sub to consummate the transactions contemplated by this Agreement.
(f) Parent Reports; Financial Statements. Parent has delivered to the
Company each registration statement proxy statement, information statement or
report prepared by it, each in the form (including exhibits, annexes and any
amendments thereto) filed with the SEC (collectively, including any such reports
filed subsequent to the date hereof, the "Parent Reports"). As of their
respective dates, the Parent Reports did not, and any Parent Reports filed with
the SEC subsequent to the date hereof will not,
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contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading. Each of
the consolidated balance sheets included in or incorporated by reference into
the Parent Reports (including the related notes and schedules) fairly presents,
or will fairly present, the consolidated financial position of Parent and its
Subsidiaries as of its date and each of the consolidated statements of income,
cash flows and gains and losses included in or incorporated by reference into
the Parent Reports (including any related notes and schedules) fairly presents,
or will fairly present, the results of operations, retained earnings and changes
in financial position, as the case may be, of Parent and its Subsidiaries for
the periods set forth therein (subject, in the case of unaudited statements, to
notes and normal year-end audit adjustments that will not be material in amount
or effect), in each case in accordance with generally accepted accounting
principles in the United Kingdom ("UK GAAP") consistently applied during the
periods involved, except as may be noted therein.
(g) Absence of Certain Changes. Except as set forth on Schedule 5.2(g),
since December 31, 1997 Parent and its Subsidiaries have conducted their
respective businesses only in, and have not engaged in any material transaction
other than according to, the ordinary and usual course of such businesses and
there has not been (i) any change or development of a state of circumstances in
the financial condition, properties, prospects, business or results of
operations of Parent and its Subsidiaries or any development or combination of
developments of which management of Parent has knowledge that, individually or
in the aggregate, has had or is reasonably likely to result in a Parent Material
Adverse Effect; (ii) any material damage, destruction or other casualty loss
with respect to any material asset or property owned, leased or otherwise used
by Parent or any of its Subsidiaries, whether or not covered by insurance; or
(iii) any change by Parent in accounting principles, practices or methods; or
(iv) any declaration, setting aside or payment of any dividend or other
distribution in respect of the capital stock of Parent, except for dividends or
other distributions on its capital stock publicly announced prior to the date
hereof.
(h) Litigation and Liabilities. There are no (i) civil,
criminal or administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of Parent, threatened against Parent or
any of its Affiliates or (ii) obligations or liabilities, whether or not
accrued, contingent or otherwise and whether or not required to be disclosed,
including those relating to environmental and occupational safety and health
matters, or any other facts or circumstances of which Parent has knowledge that
could result in any claims against, or obligations or liabilities of, Parent or
any of its Affiliates, except for those that are not, individually or in the
aggregate, reasonably likely to have a Parent Material Adverse Effect or prevent
or
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materially burden or materially impair the ability of Parent or Merger Sub to
consummate the transactions contemplated by this Agreement.
(i) Brokers and Finders. Neither Parent nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders, fees in connection
with the Merger or the other transactions contemplated by this Agreement, except
that Parent has employed Xxxxxxx Xxxxx Xxxxxx as its financial advisors.
(j) Vote Required. Except as set forth on Schedule 5.2(j), no vote of
the holders of the Parent Ordinary Shares is required to approve this Agreement,
the Merger and the other transactions contemplated hereby.
ARTICLE VI
Covenants
6.1. Interim Operations. The Company covenants and agrees that, after
the date hereof and prior to the Effective Time (unless Parent shall otherwise
approve in writing and except as otherwise expressly contemplated by this
Agreement):
(a) its business shall be conducted in the ordinary and usual
course and, to the extent consistent therewith, it shall use its reasonable best
efforts to preserve its business organization intact and maintain its existing
relations and goodwill with customers, suppliers, distributors, creditors,
lessors, employees and business associates;
(b) it shall not (i) form or acquire (by means of transfer, purchase or
otherwise) any Subsidiaries; (ii) amend its articles of incorporation or by-laws
or amend, modify or terminate the Stock Plans, other than as expressly required
hereunder (including, without limitation, as set forth in Section 6.10); (iii)
split, combine or reclassify its outstanding shares of capital stock; (iv)
declare, set aside or pay any dividend payable in cash, stock or property in
respect of any capital stock;
(c) it shall not (i) issue, sell, pledge, dispose of or encumber any
shares of, or securities convertible into or exchangeable or exercisable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of its capital stock of any class or any Voting Debt or any other
property or assets (other than Shares issuable pursuant to options outstanding
on the date hereof under the Stock Plans); (ii) other than in the ordinary and
usual course of business, transfer, lease, license, guarantee, sell, mortgage,
pledge, dispose of or encumber any other property or assets or incur or modify
any other material liability or modify any current material indebtedness; (iii)
make or authorize or commit for any expenditures (including capital expenditures
and
-26-
expenditures relating to the use of Third-Party Intellectual Property Rights or
the development, marketing or in-licensing of any products) or, by any means,
make any acquisition of, or investment in, assets or stock of any other Person
or entity in excess of (or reasonably likely to result in expenditures in excess
of) $100,000 or (iv) authorize or enter into any agreement or other commitment
relating to the licensing of any of the Company's products or the marketing by
the Company of a third-party's products;
(d) it shall not terminate, establish, adopt, enter into, make any new
grants or awards under, amend or otherwise modify, any Compensation and Benefit
Plans or increase the salary, wage, bonus or other compensation or benefits of
any employees except, in the case of employees that are not executive officers
or directors of the Company, increases occurring in the ordinary and usual
course of business (which shall include normal periodic performance reviews and
related compensation and benefit increases);
(e) it will not (x) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, (y) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (z) purchase, redeem or otherwise acquire any
shares of capital stock of the Company or any other securities thereof (other
than the acquisition of shares surrendered in whole or partial satisfaction of
the exercise price for any stock options outstanding on the date hereof and
properly exercised in accordance with their terms) or any rights, warrants or
options to acquire any such shares or other securities;
(f) it shall not settle or compromise any material claims or litigation
or, except in the ordinary and usual course of business modify, amend or
terminate any of its material Contracts or waive, release or assign any material
rights or claims;
(g) it shall not make any Tax election or permit any insurance policy
naming it as a beneficiary or loss-payable payee to be canceled or terminated
except in the ordinary and usual course of business;
(h) it shall continue to take all actions reasonably necessary in
connection with the continued leasing or subleasing of Building One, but shall
not enter into any further agreements relating to the lease or sublease of such
property;
(i) it shall continue to take all actions reasonably necessary in
connection with the valuation of and sale of equipment in Building One, but
shall not enter into any agreements relating to the sale of any such equipment;
(j) it shall not incur additional indebtedness;
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(k) it shall not take any action or omit to take any action that would
cause any of its representations and warranties herein to become untrue in any
material respect; and
(l) it will not authorize or enter into an agreement to do any
of the foregoing.
6.2. Acquisition Proposals. The Company agrees that neither it nor any
of its officers and directors shall, and that it shall direct and use its
reasonable best efforts to cause its employees, agents and representatives
(including any investment banker, attorney or accountant retained by it) not to,
directly or indirectly, initiate, solicit, encourage or otherwise facilitate any
inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, consolidation or similar transaction involving,
or any purchase of all or any significant portion of the assets or any equity
securities of, it (any such proposal or offer being hereinafter referred to as
an "Acquisition Proposal"). The Company further agrees that neither it nor any
of its officers and directors shall, and that it shall direct and use its
reasonable best efforts to cause its employees, agents and representatives
(including any investment banker, attorney or accountant retained by it) not to,
directly or indirectly, engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any Person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal; provided, however, that
nothing contained in this Agreement shall prevent the Company or its Board of
Directors from (A) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to an Acquisition Proposal; (B) providing information in response to
a request therefor by a Person who has made an unsolicited bona fide written
Acquisition Proposal if the Board of Directors receives from the Person so
requesting such information an executed confidentiality agreement on terms
customary under the circumstances; (C) engaging in any negotiations or
discussions with any Person who has made an unsolicited bona fide written
Acquisition Proposal; or (D) recommending such an Acquisition Proposal to the
stockholders of the Company, if and only to the extent that, (i) in each such
case referred to in clause (B), (C) or (D) above, the Board of Directors of the
Company determines in good faith after consultation with outside legal counsel
that such action is necessary in order for its directors to comply with their
respective fiduciary duties under applicable law and (ii) in each case referred
to in clause (C) or (D) above, the Board of Directors of the Company determines
in good faith (after consultation with its financial advisor) that such
Acquisition Proposal, if accepted is reasonably likely to be consummated, taking
into account all legal, financial and regulatory aspects of the proposal and the
Person making the proposal and would, if consummated, result in a transaction
more favorable to the Company's stockholders than the transaction contemplated
by this Agreement (any such more favorable Acquisition Proposal being referred
to in this Agreement as a "Superior Proposal"). The Company agrees that it will
-28-
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. The Company agrees that it will take the necessary
steps to promptly inform the individuals or entities referred to in the first
sentence hereof of the obligations undertaken in this Section 6.2. The Company
agrees that it will notify Parent promptly if any such inquiries, proposals or
offers are received by, any such information is requested from, or any such
discussions or negotiations are sought to be initiated or continued with, any of
its representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any proposals or offers and
thereafter shall keep Parent informed, on a current basis, on the status and
terms of any such proposals, offers, negotiations, discussions or requests,
subject in all events to the fiduciary duties of the Company's Board of
Directors. The Company also agrees that it will promptly request each Person
that has heretofore executed a confidentiality agreement in connection with its
consideration of acquiring it or any to return all confidential information
heretofore furnished to such Person by or on behalf of it.
6.3. Information Supplied. The Company and Parent each agrees, as to
itself, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement on
Form F-4 to be filed with the SEC by Parent in connection with the issuance of
the Parent Ordinary Shares underlying the Parent ADSs required to be issued in
the Merger (including the proxy statement and prospectus (the "Prospectus/ Proxy
Statement") constituting a part thereof) (the "F-4 Registration Statement")
will, at the time the F-4 Registration Statement 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, in light of the circumstances under which they were made,
not misleading, (ii) the Prospectus/Proxy Statement and any amendment or
supplement thereto will, at the date of mailing to stockholders and at the times
of the meeting of stockholders of the Company to be held in connection with the
Merger, 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 light of the circumstances under which they were made,
not misleading.
6.4. Stockholders Meeting. Subject to requirements under applicable
law, the Company will take, in accordance with applicable law and its charter or
articles and by-laws, all action necessary to convene a meeting of holders of
Shares (the "Stockholders Meeting") as promptly as practicable after the F-4
Registration Statement is declared effective (including mailing the
Prospectus/Proxy Statement to the stockholders of the Company) to consider and
vote upon the adoption of this Agreement, Plan of Merger and the Merger. Subject
only to consideration of the factors described in Section 6.2 with respect to
evaluating a Superior Proposal, the Company's board of
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directors shall unanimously recommend such approval and shall take all lawful
action to solicit such approval.
6.5. Filings; Other Actions; Notification. (a) Parent and the
Company shall as promptly as practicable prepare and file with the SEC the
Prospectus/Proxy Statement, and Parent shall as promptly as practicable prepare
and file with, or confidentially submit, the SEC the F-4 Registration Statement
to provide that all Parent ADSs issued as part of the Merger Consideration are
covered by the F-4 Registration Statement, including the Contingent ADSs. Parent
and the Company each shall use its reasonable best efforts to have the F-4
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing or submission. Parent shall also use reasonable
best efforts to obtain prior to the effective date of the F-4 Registration
Statement all necessary state securities law or "blue sky" permits and approvals
required in connection with the Merger and will pay all expenses incident
thereto.
(b) The Company and Parent shall cooperate with each other and
use their respective reasonable best efforts to take or cause to be taken all
actions, and do or cause to be done all things, necessary, proper or advisable
on its part under this Agreement and applicable Laws to consummate and make
effective the Merger and the other transactions contemplated by this Agreement
as soon as practicable, subject, in the Company's case, to Section 6.2,
including preparing and filing as promptly as practicable all documentation to
effect all necessary notices, reports and other filings and to obtain as
promptly as practicable all consents, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity in order to consummate the Merger or any of the other
transactions contemplated by this Agreement; provided, however, that nothing in
this Section 6.5 shall require, or be construed to require, Parent to proffer
to, or agree to, sell or hold separate and agree to sell, before or after the
Effective Time, any assets, businesses, or interest in any assets or businesses
of Parent, the Company or any of their respective Affiliates (or to consent to
any sale, or agreement to sell, by the Company of any of its assets or
businesses) or to agree to any material changes or restriction in the operations
of any such assets or businesses. Subject to applicable laws relating to the
exchange of information, Parent and the Company shall have the right to review
in advance, and to the extent practicable each will consult the other on, all
the information relating to Parent or the Company, as the case may be, that
appear in any filing made with, or written materials submitted to, any third
party and/or any Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the Company and Parent shall act reasonably and as promptly as
practicable.
(c) The Company and Parent each shall, upon request by the other,
furnish the other with all information concerning itself, its directors,
officers and
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stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Prospectus/Proxy Statement, the F-4 Registration
Statement, Parent's listing particulars with the LSE or any other statement,
filing, notice or application made by or on behalf of Parent or the Company to
any third party and/or any Governmental Entity in connection with the Merger and
the transactions contemplated by this Agreement.
(d) The Company and Parent each shall keep the other apprised
of the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notice or other
communications received by Parent or the Company, as the case may be, from any
third party and/or any Governmental Entity with respect to the Merger and the
other transactions contemplated by this Agreement. The Company and Parent each
shall give prompt notice to the other of any change that is reasonably likely to
result in a Company Material Adverse Effect or Parent Material Adverse Effect,
respectively.
(e) The Company shall use reasonable best efforts to obtain or effect,
as the case may be, any consents, notices, waivers or other actions set forth on
Schedule 5.1(d), including, without limitation, any with respect to any
Contracts of the Company with Chiron Corporation, Research Development
Foundation and Pharmacia & Upjohn, necessary for the Surviving Corporation to be
entitled to enforce on the same terms any rights against such parties
enforceable by the Company thereunder and for the obligations performable by the
Company thereunder to be performable on the same terms by the Surviving
Corporation.
(f) The Company shall use reasonable best efforts to cooperate
with Parent to establish an arrangement, prior to Parent's submission to the
London Stock Exchange of the Listing Particulars relating to the Merger
Consideration (the "Listing Submission Date") between Parent and Silicon Valley
Bank with respect to any obligations owed (or to come due) by Company to Silicon
Valley Bank, mutually satisfactory to Company and Parent (taking into
consideration the Business Plan).
(g) If any or all of the $11.7 million amount owed to Chiron
Corporation under that certain Collaboration Agreement between Chiron
Corporation and the Company, dated March 31, 1994, as amended, becomes payable
under the terms of such agreement, the Company shall use reasonable best efforts
to cooperate to establish an arrangement, prior to the Listing Submission Date,
with Chiron Corporation with respect to the timing and treatment of such
payment, mutually satisfactory to Company and Parent (taking into consideration
the Business Plan).
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(h) The Company shall use reasonable best efforts to cause the parties
to the agreements attached hereto as Exhibit A to duly enter into such
agreements as soon as possible.
6.6. Taxation. Subject to Section 6.2, neither Parent nor the Company
shall take or cause to be taken any action, whether before or after the
Effective Time, that would disqualify the Merger as a "reorganization" within
the meaning of Section 368(a) of the Code.
6.7. Access. Upon reasonable notice, and except as may otherwise be
required by applicable law, the Company shall afford Parent's officers,
employees, counsel, accountants and other authorized representatives
("Representatives") access, during normal business hours throughout the period
prior to the Effective Time, to its properties, books, contracts and records
and, during such period, shall furnish promptly to Parent all information
concerning its business, properties, financial condition, results of operations
and personnel as may reasonably be requested, provided that no investigation
pursuant to this Section shall affect or be deemed to modify any representation
or warranty or covenant made by the Company, and provided, further, that the
foregoing shall not require the Company to permit any inspection, or to disclose
any information, that in the reasonable judgment of the Company, would result in
the disclosure of any trade secrets of third parties or violate any of its
obligations with respect to confidentiality if the Company shall have used
reasonable best efforts to obtain the consent of such third party to such
inspection or disclosure. All requests for information made pursuant to this
Section shall be directed to an executive officer of the Company or such Person
as may be designated by its officers. All such information shall be held
confidential, except as may be publicly available, and except that it may be
disclosed to a party's agents and advisors only in connection with the proposed
transaction.
6.8. Affiliates. (i) Not later than thirty days prior to the date of
the Stockholders Meeting, Parent shall deliver to the Company a list of names
and addresses of those Persons who are, in the opinion of the Parent, as of the
time of the Stockholders Meeting referred to in Section 6.4, "affiliates" of the
Company within the meaning of Rule 145 under the Securities Act. The Company
shall provide to Parent such information to the Company's best knowledge and
documents as Parent shall reasonably request for purposes of preparing such
list. There shall be added to such list the names and addresses of any other
Person subsequently identified by either Parent or the Company as a Person who
may be deemed to be such an affiliate of the Company; provided, however, that no
such Person identified by Parent shall be added to the list of affiliates of the
Company if Parent shall receive from the Company, on or before the date of the
Stockholders Meeting, an opinion of counsel reasonably satisfactory to Parent to
the effect that such Person is not such an affiliate. The Company shall exercise
its reasonable best efforts to deliver or cause to be delivered to Parent, prior
to the date of the
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Stockholders Meeting, from each affiliate of the Company identified in the
foregoing list (as the same may be supplemented as aforesaid), a letter dated as
of the Closing Date substantially in the form attached as Exhibit C (the
"Affiliates Letter"). Parent shall not be required to maintain the effectiveness
of the F-4 Registration Statement or any other registration statement under the
Securities Act for the purposes of resale of Parent ADSs (or the underlying
Parent Ordinary Shares) by such affiliates received in the Merger and the
certificates representing Parent ADSs received by such affiliates shall bear a
customary legend regarding applicable Securities Act restrictions and the
provisions of this Section.
6.9. Publicity. The initial press release of the Company and Parent
with regard to this Agreement and the transactions contemplated hereby shall be
a joint press release and thereafter the Company and Parent each shall consult
with each other prior to issuing any press releases or otherwise making public
announcements with respect to the Merger and the other transactions contemplated
by this Agreement and prior to making any filings with any third party and/or
any Governmental Entity (including any interdealer quotation service) with
respect thereto, except as may be required by law or by obligations pursuant to
any listing agreement with or rules of any national securities interdealer
quotation service.
6.10. Stock Options. The Company shall make all necessary arrangements,
including adopting appropriate board resolutions, obtaining any shareholder
votes or optionholder waivers or consents and otherwise take such necessary
action, to (i) cause any and all options to acquire Shares, whether vested or
unvested, held by any Person under any Stock Plans (other than the warrants set
forth on Schedule 5.1(b)) to accelerate and vest and constitute an option to
acquire Shares at the price and on the terms and conditions as are applicable to
such options under such Stock Plans, prior to the Effective Time, (ii) provide
all optionholders under such Stock Plans a reasonable opportunity (including
advance notice of the provisions of this Section) to exercise such options, and
deliver to such optionholders the Shares due thereupon, prior to the Effective
Time, (but, without limiting this Section 6.10, Company and such optionholders
shall be permitted to make arrangements for such exercise to be rescinded if the
Closing does not occur), (iii) terminate any and all Stock Plans (except for the
Company's 1995 Employee Stock Purchase Plan, as amended (the "ESPP") as set
forth in clause (iv) below) and any other plan, program or arrangement providing
for the issuance or grant of any other interest in respect of the capital stock
of the Company, and any rights or obligations thereunder, in all such cases
effective at the Effective Time, and (iv) the ESPP shall terminate prior to the
Effective Time.
6.11. Expenses. The Surviving Corporation shall pay all charges and
expenses, including those of the Exchange Agent, in connection with the
transactions contemplated in Article IV, and Parent shall reimburse the
Surviving Corporation for
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such charges and expenses. Except as otherwise provided in Section 8.5(b),
whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the Merger and the other transactions
contemplated by this Agreement shall be paid by the party incurring such
expense, except that expenses incurred in connection with the filing fee for the
F-4 Registration Statement and printing and mailing the Prospectus/Proxy
Statement and the F-4 Registration Statement shall be shared equally by Parent
and the Company.
6.12. Indemnification; Directors' and Officers' Insurance. (a) Parent's
and the Surviving Corporation's only obligations with respect to providing any
indemnities or insurance or coverage to directors or officers of Company for
actions, inactions, conditions or occurrences prior to the Effective Time with
respect to which such persons may incur losses as a result of their acting in
the capacities of directors and officers, as the case may be, shall be to cause
the Surviving Corporation to (i) pay the one time premium for the 'tail'
coverage described in Exhibit D hereto provided by the insurer currently
providing directors and officers insurance to such persons in such capacities at
Company, (ii) maintain in the charter and by-laws of the Surviving Corporation
the current charter and by-law provisions of the Company specifically relating
to the provision of indemnities to directors and officers and (iii) maintain in
accordance and for the time periods set forth in such agreements, the director
and officer indemnity agreements listed in Schedule 6.12 hereof.
(b) If the Surviving Corporation or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation or entity
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) shall transfer all or substantially all of its
properties and assets to any individual, corporation or other entity, then, and
in each such case, proper provisions shall be made so that the successors and
assigns of the Surviving Corporation shall assume all of the obligations set
forth in this Section.
(c) The provisions of this Section are intended to be for the benefit
of, and shall be enforceable by, each of the directors and officers referenced
in (a) above, their heirs and their representatives.
6.13. Other Actions by the Company.
(a) Takeover Statute. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, each of Parent and the Company and its board of directors shall grant
such approvals and take such actions as are necessary so that such transactions
may be consummated as promptly as practicable on the terms contemplated by this
Agreement or by the Merger and
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otherwise act to eliminate or minimize the effects of such statute or regulation
on such transactions.
(b) Delivery of Sanderling Letters. The Company agrees to use its
reasonable best efforts to cause within ten business days of the date hereof the
delivery to Parent of a letter in the form of Exhibit A from, and signed by or
on behalf of, each holder of Common Stock that is affiliated with either or both
of Sanderling Ventures (and its affiliated companies which are shareholders of
the Company) or Xxxx X. Xxxxxxxxx.
6.14. Other Actions by Parent. (a) Parent shall vote (or consent with
respect to) or cause to be voted (or a consent to be given with respect to) any
shares of common stock of Merger Sub beneficially owned by it or any of its
Affiliates or with respect to which it or any of its Affiliates has the power
(by agreement, proxy or otherwise) to cause to be voted (or to provide a
consent), in favor of the adoption and approval of this Agreement, and the
transactions contemplated hereby, at any meeting of stockholders of Merger Sub
at which this Agreement shall be submitted for adoption and approval and at all
adjournments or postponements thereof (or, if applicable, by any action of
stockholders of Merger Sub by consent in lieu of a meeting).
(b) Parent will use its reasonable efforts to provide
customary support to find a development partner for DepoMorphine or the
Macromolecule (as defined in Exhibit B hereto) within the timeframe of the
milestone payment, to the extent commercially reasonable.
(c) Promptly following the Effective Time, in accordance with
applicable law and applicable corporate governance documents, Parent will take
all such actions as are necessary to elect a person, who immediately prior to
the Effective Time was a director of the Company, to the Board of Directors of
Parent.
(d) Parent shall cause the Surviving Corporation to make appropriate
provisions in connection with the Merger with respect to the rights and
interests of the holders of the warrants set forth in Schedule 5.1(b), in
accordance with the terms thereof.
(e) Parent shall use its reasonable best efforts to cause that the
Parent ADSs issuable to Company shareholders pursuant to this Agreement are
authorized for listing on Nasdaq National Market, except as would otherwise be
permitted under (d) above.
(f) Parent shall cause that at the time of issuance of any Contingent
ADSs, there shall be an adequate number of authorized shares of Parent Ordinary
Shares to allow for the issuance for any such Contingent ADSs.
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ARTICLE VII
Conditions
7.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been duly adopted
by holders of Shares constituting the Company Requisite Vote and shall have been
duly approved by the sole stockholder of Merger Sub in accordance with
applicable law and the articles and by-laws of each such corporation.
(b) Regulatory Consents. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated and, other than the filing provided for in Section 1.3, all notices,
reports and other filings required to be made prior to the Effective Time by the
Company or Parent with, and all consents, registrations, approvals, permits and
authorizations required to be obtained prior to the Effective Time by the
Company or Parent from, any Governmental Entity (collectively, "Governmental
Consents") in connection with the execution and delivery of this Agreement and
the consummation of the Merger and the other transactions contemplated hereby by
the Company, Parent and Merger Sub shall have been made or obtained (as the case
may be).
(c) Litigation. No court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, statute, ordinance, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the Merger
(collectively, an "Order"), and no Governmental Entity shall have instituted any
proceeding seeking any such Order.
(d) F-4. The F-4 Registration Statement shall have become effective
under the Securities Act. No stop order suspending the effectiveness of the F-4
Registration Statement shall have been issued, and no proceedings for that
purpose shall have been initiated or be threatened by the SEC.
(e) Blue Sky Approvals. Parent shall have received all state securities
and "blue sky" permits and approvals necessary to consummate the transactions
contemplated hereby.
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(f) Listing Particulars. Parent shall have had its 'Listing
Particulars' relating to the Merger Consideration to be filed with the London
Stock Exchange, declared effective, stamped and approved by the London Stock
Exchange.
(g) Nasdaq Listing. The Parent ADSs issuable to Company shareholders
pursuant to this Agreement shall have been authorized for listing on Nasdaq
National Market, subject to official notice of issuance, except as would
otherwise be permitted under Section 6.14(d).
7.2. Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are also subject to
the satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except to the extent any such
representation or warranty expressly speaks as of an earlier date), and Parent
shall have received a certificate signed on behalf of the Company by the
President of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent shall have
received a certificate signed on behalf of the Company by the President of the
Company to such effect.
(c) Consents Under Agreements. The Company shall have obtained the
consent or approval of each Person whose consent or approval shall be required
in connection with the consummation of the transactions contemplated hereby
under any Contract to which the Company is a party, except where the failure to
obtain such consents or approvals, individually or in the aggregate, does not
have and is not reasonably likely to have a Company Material Adverse Effect or
materially impair or delay the transactions contemplated hereby.
(d) Stock Plans. Company shall have effected the actions specified in
Section 6.10.
(e) Resignations. Parent shall have received the resignations of each
director and officer of the Company.
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(f) Affiliates Letters. The Company shall have used its commercially
reasonable efforts to obtain and deliver to Parent an Affiliates Letter from
each Person identified as an affiliate of the Company pursuant to Section 6.8.
(g) Certain Consents. The Company shall have obtained or
effected, as the case may be, any consents, notices, waivers or other actions
set forth on Schedule 5.1(d) with respect to any Contracts of the Company with
Chiron Corporation and Pharmacia & Upjohn, necessary for the Surviving
Corporation to be entitled to enforce on the same terms any rights against such
parties enforceable by the Company thereunder and for the obligations
performable by the Company thereunder to be performable on the same terms by the
Surviving Corporation, and shall have provided evidence to Parent's reasonable
satisfaction, of Company's satisfaction of this condition.
(h) Bank Agreement. The Company, Parent and Silicon Valley bank, shall
have established an arrangement, prior to the Listing Submission Date between
Parent, Company and Silicon Valley Bank with respect to any obligations owed (or
to come due) by Company to Silicon Valley Bank, mutually acceptable to Company
and Parent, such acceptance not to be unreasonably withheld.
(i) Chiron Agreement. If any or all of the $11.7 million
amount owed to Chiron Corporation under that certain Collaboration Agreement
between Chiron Corporation and the Company, dated March 31, 1994, as amended,
becomes payable under the terms of such agreement, the Company and Parent shall
have established an arrangement, prior to the Listing Submission Date with
Chiron Corporation with respect to the timing and treatment of such payment,
mutually acceptable to Company and Parent, such acceptance not to be
unreasonably withheld.
(j) Ancillary Agreements. The agreements attached as Exhibits A and C,
shall have been duly executed by the parties thereto and shall constitute the
binding and enforceable obligations of such parties, to the reasonable
satisfaction of Parent.
(k) Tax Opinion. The Parent shall have received the opinion of
Xxxxxxxx & Xxxxxxxx, counsel to the Parent, dated the Closing Date, to the
effect that the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and that each
of Parent, Merger Sub and the Company will be a party to that reorganization
within the meaning of Section 368(b) of the Code. For purposes of rendering its
opinion, Counsel to the Parent shall rely on reasonable assumptions and/or
representations as to factual matters to be provided by Parent, Merger Sub and
the Company.
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7.3. Conditions to Obligation of the Company. The obligation
of the Company to effect the Merger is also subject to the satisfaction or
waiver by the Company at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub set forth in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date, (except to the
extent any such representation and warranty expressly speaks as of an earlier
date) and the Company shall have received a certificate signed on behalf of
Parent by an executive officer of Parent and an executive officer of Merger Sub
to such effect.
(b) Performance of Obligations of Parent and Merger Sub. Each of Parent
and Merger Sub shall have performed in all material respects all obligations
required to be performed by each of them under this Agreement at or prior to the
Closing Date, and the Company shall have received a certificate signed on behalf
of Parent and Merger Sub by an executive officer of Parent and an executive
officer of Merger Sub to such effect.
(c) Tax Opinion. The Company shall have received the opinion
of Xxxxxxx Phleger & Xxxxxxxx LLP, counsel to the Company, dated the Closing
Date, to the effect that the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code,
and that each of Parent, Merger Sub and the Company will be a party to that
reorganization within the meaning of Section 368(b) of the Code. For purposes of
rendering its opinion, Counsel to the Company shall rely on reasonable
assumptions and/or representations as to factual matters to be provided by
Parent, Merger Sub and the Company.
(d) Consents. Parent shall have obtained the consent or approval of
each Person whose consent or approval shall be required in connection with the
consummation of the transactions contemplated hereby under any Contract to which
Parent is a party, except where the failure to obtain such consents or
approvals, individually or in the aggregate, does not have or is not reasonably
likely to have a Parent Material Adverse Effect.
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval by stockholders of the Company
referred to in
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Section 7.1(a), by mutual written consent of the Company and Parent by action of
their respective Boards of Directors.
8.2. Termination by Either Parent or the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the Board of Directors of either Parent or the Company if (i)
the Merger shall not have been consummated by April 30, 1999, whether such date
is before or after the date of approval by the stockholders of the Company; (the
"Termination Date"), (ii) the approval of the Company's stockholders required by
Section 7.1(a) shall not have been obtained at a meeting duly convened therefor
or at any adjournment or postponement thereof (the "Company Shareholders
Meeting") or (iii) any Order permanently restraining, enjoining or otherwise
prohibiting consummation of the Merger shall become final and non-appealable
(whether before or after the approval by the stockholders of the Company);
provided, that the right to terminate this Agreement pursuant to clause (i)
above shall not be available to any party that has breached in any material
respect its obligations under this Agreement in any manner that shall have
proximately contributed to the occurrence of the failure of the Merger to be
consummated.
8.3. Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval by stockholders of the Company
referred to in Section 7.1(a), by action of the Board of Directors of the
Company (i) if the Board of Directors of Parent shall have withdrawn or
adversely modified its approval of this Agreement or (ii) if there has been a
material breach by Parent or Merger Sub of any representation, warranty,
covenant or agreement contained in this Agreement that is not curable or, if
curable, is not cured within 30 days after written notice of such breach is
given by the Company to the party committing such breach.
8.4. Termination by Parent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time by action of the
Board of Directors of Parent if (i) the Board of Directors of the Company shall
have withdrawn or adversely modified its approval or recommendation of this
Agreement or failed to reconfirm its recommendation of this Agreement within
five business days after a written request by Parent to do so, (ii) there has
been a material breach by the Company of any representation, warranty, covenant
or agreement contained in this Agreement that is not curable or, if curable, is
not cured within 30 days after written notice of such breach is given by Parent
to the party committing such breach, or (iii) if the Company or any of the other
Persons described in Section 6.2 as affiliates, representatives or agents of the
Company shall take any of the actions that would be proscribed by Section 6.2
but for the proviso therein allowing certain actions to be taken pursuant to
clause (B), (C) or (D) of the proviso under the conditions set forth therein.
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8.5. Effect of Termination and Abandonment; Pre-Merger Liquidated
Damages.
(a) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VIII, this Agreement (other
than as set forth in Section 9.1) shall become void and of no effect with no
liability on the part of any party hereto (or of any of its directors, officers,
employees, agents, legal and financial advisors or other representatives);
provided, however, except as otherwise provided herein, no such termination
shall relieve any party hereto of any liability or damages resulting from any
prior breach of this Agreement.
(b) In addition to any other remedies otherwise available in law or
equity with respect to breaches of this Agreement, in the event that Parent
terminates this Agreement in accordance with and pursuant to Section 8.2(i) or
8.4 above or in the event of the occurrence of any one of the events set forth
in the next following sentence, the Company shall pay Parent $2,000,000 by wire
transfer of same day funds; provided that the Company is not also then entitled
to or does terminate this Agreement pursuant to and in accordance with Section
8.3. The Company shall also make the $2,000,000 payment referred to in the
preceding sentence after the earliest to occur of: (i) the date on which the
Company's stockholders approve the sale of substantially all of the Company's
stock or assets to, or the consummation of a merger, consolidation,
reorganization or similar transaction with, a party other than Parent or Merger
Sub (a "Third Party Transaction") or (ii) the date on which a Third Party
Transaction is consummated; provided that in any such cases, the Company is not
otherwise entitled to, or does, terminate this Agreement pursuant to Section
8.3. In addition to any other remedies otherwise available in law or equity with
respect to breaches of this Agreement, in the event that the Company terminates
this Agreement in accordance with and pursuant to Section 8.3 above, Parent
shall pay the Company $2,000,000 by wire transfer of same day funds; provided
that Parent is not also then entitled to or does terminate this Agreement
pursuant to and in accordance with Section 8.4. The parties acknowledge that the
agreements contained in this Section 8.5(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent, Merger Sub and Company would not enter into this Agreement; accordingly,
if either party fails to promptly pay the amount due pursuant to this Section
8.5(b), and, in order to obtain such payment, the claiming party commences a
suit which results in a judgment against the paying party hereunder for the fee
set forth in this paragraph (b), the paying party shall pay to the claiming
party hereunder its costs and expenses (including attorneys' fees) in connection
with such suit, together with interest on the amount of the fee at the prime
rate of The Bank of New York in effect on the date such payment was required to
be made. This clause 8.5(b) shall be of no effect after consummation of the
Merger pursuant to the terms hereof.
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ARTICLE IX
Miscellaneous and General
9.1. Survival. This Article IX, the agreements of the Company,
Parent and Merger Sub contained in Section 6.11 (Expenses), Section 8.5 (Effect
of Termination and Abandonment) and the Stock Purchase Agreement between Company
and Parent, dated as of October 19, 1998, shall survive the termination of this
Agreement. All representations, warranties, covenants and agreements contained
in this Agreement shall not survive the consummation of the Merger, except that
the covenants and agreements contained in Sections 4.2, 4.4, 4.5, 6.6, 6.12,
6.14(b), (c), (d) and (f), and this Article IX, which shall survive and
terminate 2 years from the date hereof.
9.2. Modification or Amendment. Subject to the provisions of the
applicable law, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
9.3. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT
SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED,
CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF
CALIFORNIA WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF, EXCEPT WITH
RESPECT TO THE MERGER TO THE EXTENT OTHERWISE EXPRESSLY PROVIDED BY THE CCC.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
OR THE TRANSACTIONS CONTEMPLATED HEREIN. EACH PARTY CERTIFIES AND ACKNOWLEDGES
THAT (i) NO
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REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED
THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY,
AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.5.
9.6. Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in writing
and delivered personally or sent by overnight delivery service, postage prepaid,
or by facsimile:
if to Parent or Merger Sub
SkyePharma plc
000 Xxxxxxxxx
Xxxxxx X0X 0XX
Xxxxxx Xxxxxxx
Attention: Company Secretary
fax: 000 00 000 000 0000
with copies to:
Xxxxxxxx & Xxxxxxxx
St. Olave's House
0x Xxxxxxxxxx Xxxx
Xxxxxx XX0X 0XX Xxxxxxx
Attention: Xxxxxxx Xxxxxxxx, Esq.
fax: 000 00 000 000-0000
if to the Company
DepoTech Corporation
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
fax: (000) 000-0000
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with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx
000 Xxxx X Xxxxxx
Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
fax: (000) 000-0000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.7. Entire Agreement; No Other Representations. This Agreement
(including any exhibits hereto) and that certain Stock Purchase Agreement dated
October 19, 1998 between the Company and Parent and the Irrevocable Proxy dated
October 19, 1998 granted by Parent to the Company's Board of Directors
constitute the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties both written and oral, among the
parties, with respect to the subject matter hereof.
9.8. No Third Party Beneficiaries. This Agreement is not intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder, except as set forth in Section 6.12.
9.9. Obligations of Parent. Whenever this Agreement requires a
Subsidiary of Parent to take any action, such requirement shall be deemed to
include an undertaking on the part of Parent to cause such Subsidiary to take
such action.
9.10. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.11. Interpretation. The table of contents and headings herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in
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this Agreement is made to a Section or Exhibit, such reference shall be to a
Section of or Exhibit to this Agreement unless otherwise indicated. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
9.12. Disclosure Schedules. (a) If a disclosure is made in one of the
Schedules to this Agreement, such disclosure will not be deemed to have been
made in any other Schedule hereto, unless such disclosure is made therein as
well. The fact that any item or information has been included in any of the
Schedules to this Agreement shall not be construed to establish, in whole or in
part, any standard of materiality, including any standards of what constitutes a
Company or Parent Material Adverse Effect, for purposes of the Schedules or this
Agreement.
(b) "Disclosed in the Company Reports" shall mean, for
purposes of this Agreement, specifically described in the Company Reports which
are publicly available, such that the nature and details of the breach of the
representation or warranty to which this definition applies are reasonably
identified and including the identity of any third parties involved, as the case
may be; provided that notwithstanding any contrary disclosure in the Company
Reports, this definition shall not apply to any breach of a representation or
warranty if such breach would or would be reasonably likely to prohibit or
substantially impair the consummation of the transactions contemplated hereby.
9.13. Assignment. This Agreement shall not be assignable by operation
of law or otherwise; provided, however, that Parent may designate, by written
notice to the Company, another wholly-owned direct or indirect Subsidiary to be
a Constituent Corporation in lieu of Merger Sub, in which event all references
herein to Merger Sub shall be deemed references to such other Subsidiary, except
that all representations and warranties made herein with respect to Merger Sub
as of the date of this Agreement shall be deemed representations and warranties
made with respect to such other Subsidiary as of the date of such designation.
9.14 Merger Sub Effective Date; Incorporation and Joinder of Merger
Sub. (i) Notwithstanding anything to the contrary contained in this Agreement,
all representations, warranties, agreements and covenants by and with respect to
Merger Sub in this Agreement, except as set forth in this Section 9.14, shall be
of no effect until Merger Sub is incorporated as a California Corporation and
made party to this Agreement.
(ii) Parent shall use reasonable best efforts to incorporate Merger Sub
as promptly as possible and in any event shall effect such incorporation by
November 6, 1998. Promptly after Parent receives confirmation that Merger Sub
has been
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incorporated, Parent shall cause Merger Sub to become a party to this Agreement
in accordance with its terms and Company and Parent shall amend the cover page
and Recitals of this Agreement and attach a signature page executed by Merger
Sub accordingly; provided that references to the date hereof or the date of this
Agreement in any representations, warranties, agreements and covenants by and
with respect to Merger Sub shall be deemed to refer to the date on which Merger
Sub became a party to this Agreement.
-46-
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
written above.
SKYEPHARMA PLC
By: __________________________
Name:
Title:
DEPOTECH CORPORATION
By: __________________________
Name:
Title:
-47-
EXHIBIT A
_________ __, 1998
SkyePharma plc
Re: Agreement and Plan of Merger between
SkyePharma plc and DepoTech Corporation
The undersigned understands that DepoTech Corporation (the "Company")
and SkyePharma plc (the "Acquiror") have entered into an Agreement and Plan of
Merger (as entered into and as it may be amended, supplemented or replaced from
time to time, the "Merger Agreement"), contemplating a business combination
between the Company and the Acquiror (the "Merger"). In consideration of the
substantial direct and indirect costs and other obligations the Acquiror will
incur in connection with the transactions contemplated by the Merger, and given
the potential benefits to the undersigned under the Merger should it be effected
and in recognition that the delivery of this letter is a material condition
precedent to the consummation of such Merger, the undersigned agrees and
undertakes as follows:
1. The undersigned represents and warrants that the undersigned is the
beneficial owner, free and clear of all pledges, liens, proxies, claims,
charges, security interests, preemptive rights or any encumbrances
whatsoever, other than solely by operation of law, with respect to the
ownership, transfer or voting of such securities, of the number of shares
set forth below the undersigned's signature hereto (the "Shares") of common
stock, no par value per share (the "Common Stock"), of the Company, and is
not the beneficial owner of any other Common Stock and has no rights
(whether or not contingent, vested or accrued) to acquire any additional
Common Stock or other securities of the Company;
2. Unless the Merger Agreement shall have been terminated, the
undersigned will vote or cause to be voted for approval of the Merger and
against any competing proposals all Shares (now held or hereafter acquired)
that the undersigned has the power to vote and hereby irrevocably waives
any rights of appraisal or rights to dissent from the Merger, to the extent
such rights arise as a result of the Merger, and otherwise refrain from
taking other action, permitted by
A-1
applicable law, which would adversely affect the consummation of the
Merger, except to the extent otherwise required by the undersigned's
fiduciary duty as a director of the Company;
3. Unless the Merger Agreement shall have been terminated, the
undersigned agrees not to, directly or indirectly, sell, transfer, pledge,
assign or otherwise dispose of, or enter into any contract, option,
commitment or other arrangement or understanding with respect to the sale,
transfer, pledge, assignment or other disposition of, or the creation of
any lien or encumbrance on, any and all interests in the Shares (or any
Common Stock hereafter acquired), (including as part of a transaction
involving the sale of the Company), other than to Acquiror. In the case of
any transfer by operation of law, this letter agreement shall be binding
upon and inure to the transferee. Any transfer or other disposition in
violation of the terms of this paragraph 3 shall be null and void;
4. In the undersigned's capacity as a stockholder of the Company, the
undersigned shall use its reasonable best efforts to cooperate with the
Acquiror and the Company in (a) preparing and filing documentation, (b)
effecting applications, notices, petitions, filings and other documents and
(c) obtaining permits, consents, orders, approvals and authorizations
necessary to make effective the Merger and the other transactions
contemplated by the Merger Agreement and, except as otherwise permitted
under this letter agreement or the Merger Agreement, shall not wilfully
take, or cause to be taken, any action that could significantly impair the
prospects of completing the Merger in accordance with the Merger Agreement,
except to the extent otherwise required by the undersigned's fiduciary duty
as a director of the Company;
5. The undersigned has all requisite power and authority and has taken
all action necessary to execute, deliver and perform its obligations
hereunder and obligations hereunder are valid, binding and enforceable
against the undersigned by Acquiror, in accordance with their terms subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
6. No notices, reports or other filings are required to be made by the
undersigned with, nor are any consents, registrations, approvals, permits
or authorizations required to be obtained by the undersigned from any
Governmental Entity, in connection with the execution and delivery of this
letter agreement by the undersigned, the performance of its obligations
hereunder or the consummation of the transactions referred to herein;
A-2
7. In addition to any other requirements imposed by applicable law,
until 180 calendar days (the "Restricted Period") following the receipt by
the undersigned of the Merger Consideration, (including by reference the
Parent Ordinary Shares underlying such ADSs) pursuant to the Merger (such
aggregate amount of such Merger Consideration, the "Holder's Total Parent
Shares"; provided, however, that the Holder's Total Parent Shares shall not
include the Parent ADSs issued to the undersigned upon exercise of the
undersigned's current options under any Stock Plans to acquire Shares), the
undersigned agrees not to (i) offer, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend or otherwise transfer
(including by way of capital contribution), directly or indirectly, any and
all interests in the Holder's Total Parent Shares or any securities
convertible into or exercisable or exchangeable for the Holder's Total
Parent Shares or (ii) enter into any swap or other arrangement that relates
to any of the transactions referred to in (i) above, whether any such
transaction described in clause (i) or (ii) above is to be settled by
delivery of the Holder's Total Parent Shares or such other securities, in
cash or otherwise; and
8. The undersigned understands and acknowledges that Parent is
entering into the Merger Agreement in reliance upon the undersigned's
execution and delivery of this letter agreement.
Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Merger Agreement.
This letter agreement shall be governed by, and construed in accordance
with, the laws of the State of California applicable to agreements made and to
be performed entirely within such state. Very truly yours,
--------------------------
Name:
Number of Shares: ________
Accepted:
SKYEPHARMA PLC
By: _________________________
Name:
Title:
A-3
EXHIBIT B
Additional Consideration
Description of triggering events:
1. For purposes of this Agreement, "DepoCyt Launch Date" shall mean the
date of the receipt by the Surviving Corporation of Final FDA Approval
(as defined below) for DepoCyt such that there are no further FDA or
similar regulatory approvals which must be satisfied for the Surviving
Corporation to effect sales of DepoCyt to the public in the United
States. For purposes of this Agreement, "Final FDA Approval" shall mean
receipt from the United States Food and Drug Administration ("FDA") of
such approval as is commercially permissible and legally advisable to
permit a third party to begin the marketing, distribution in interstate
commerce and selling of DepoCyt in the United States.
2. For purposes of this Agreement, the "Development Agreement Date", with
respect to (a) DepoMorphine or (b) a macromolecule for the delivery of
drugs using DepoTech's technology (the "Macromolecule"), shall be the
date of execution of a definitive agreement (not a term sheet or other
preliminary writing) under which a third party is to provide financial
or other support (or otherwise compensates the Surviving Corporation)
reasonably required by Parent to support the development of
DepoMorphine or the Macromolecule in exchange for an exclusive license
to commercialize DepoMorphine or the Macromolecule, as the case may be,
in one or more territories ("territories" shall be any of (i) the
United States, (ii) Europe, (iii) Asia and (iv) the rest of the world).
B-1
EXHIBIT C
AFFILIATE LETTER
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of DepoTech Corporation, a California corporation
("DepoTech"), as the term affiliate is defined for purposes of paragraphs (c)
and (d) of Rule 145 of the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"). Pursuant to the terms of the
Agreement and Plan of Merger dated as of November 1, 1998 (the "Merger
Agreement"), between DepoTech and SkyePharma plc, a public limited company
organized under the laws of England ("SkyePharma"), a wholly owned subsidiary of
SkyePharma ("Merger Sub"), will be merged with and into DepoTech (the "Merger").
Unless otherwise defined herein, capitalized terms shall have the meanings
ascribed to such terms in the Merger Agreement, a copy of which I have received
and reviewed.
As a result of the Merger, I may receive Parent ADSs, each representing
the right to receive ten Parent Ordinary Shares ("Restricted Parent ADSs")
(Restricted Parent ADSs, together with the Parent Ordinary Shares such
Restricted Parent ADSs represent the right to receive, being hereinafter
referred to as "SkyePharma Securities") in exchange for shares owned by me of
Common Stock, no par value, of DepoTech.
I represent, warrant and covenant to SkyePharma that in the event I
receive any SkyePharma Securities as a result of the Merger or the other
transactions and agreements contemplated by the Merger Agreement:
A. I shall not make any sale, transfer or other disposition of
the SkyePharma Securities in violation of the Act or the Rules and
Regulations.
B. I have carefully read this letter and the Merger Agreement
and discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of
the SkyePharma Securities to the extent I felt necessary, with my
counsel.
C-1
C. I have been advised that the issuance of SkyePharma Securities
to me pursuant to the Merger has been registered with the Commission
under the Act on a Registration Statement on Form F-4. However, I have
also been advised that, since at the time the Merger was submitted for
a vote of the stockholders of DepoTech, I may be deemed to have been
an affiliate of DepoTech and the distribution by me of the SkyePharma
Securities has not been registered under the Act, I may not sell,
transfer or otherwise dispose of the SkyePharma Securities issued to
me in the Merger unless (i) such sale, transfer or other disposition
has been registered under the Act, (ii) such sale, transfer or under
other disposition is made in conformity with Rule 145 promulgated by
the Commission under the Act, or (iii) in the opinion of counsel
reasonably acceptable to SkyePharma, or a "no action" letter obtained
by the undersigned from the staff of the Commission, such sale,
transfer to other disposition is otherwise exempt from registration
under the Act.
D. I understand that SkyePharma is under no obligation to
register the sale, transfer or other disposition of the SkyePharma
Securities by me or on my behalf under the Act or to take any further
action necessary in order to make compliance with an exemption from
such registration available.
E. I also understand that stop transfer instructions will be
given to the Depositary under the Deposit Agreement pursuant to which
the Restricted Parent ADSs are issued and SkyePharma's transfer agents
with respect to the Parent Ordinary Shares such Restricted Parent ADSs
represent the right to receive and that there will be placed on the
certificates for the SkyePharma Securities issued to me, or any
substitutions therefor; a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933 APPLIES. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS
OF AN AGREEMENT DATED _________ __, 1998 BETWEEN THE REGISTERED
HOLDER HEREOF AND SKYEPHARMA. A COPY OF WHICH AGREEMENT IS ON
FILE AT THE PRINCIPAL OFFICES OF SKYEPHARMA."
F. I also understand that unless the transfer by me of my
SkyePharma Securities has been registered under the Act or is a sale
made in conformity with the provisions of Rule 145, SkyePharma reserves
the right to put the following legend on the certificates issued to my
transferee:
C-2
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED
FROM A PERSON WHO RECEIVED SUCH SECURITIES IN A TRANSACTION TO
WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SECURITIES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH
A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION
THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY
NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in paragraphs E
and F above shall be removed by delivery of substitute certificates without such
legend if such legend is not required for purposes of the Act or this Affiliate
Letter. It is understood and agreed that such legends and the stop orders
referred to above will be removed if (i) one year shall have elapsed from the
date the undersigned acquired the SkyePharma Securities received in the Merger
and the provisions of Rule 145(d)(2) are then available to the undersigned, (ii)
two years shall have elapsed from the date the undersigned acquired the
SkyePharma Securities received in the Merger and the provisions of Rule
145(d)(3) are then applicable to the undersigned, (iii) such SkyePharma
Securities are sold by the undersigned in accordance with the provisions of Rule
145(d)(i), or (iv) SkyePharma has received either an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to SkyePharma, or a "no
action" letter obtained by the undersigned from the staff of the Commission, to
the effect that the restrictions imposed by Rule 145 under the Act no longer
apply to the undersigned.
The agreements of the undersigned hereof are in addition to, and not in
limitation of, the letter agreement dated _________ __, 1998 between the
undersigned and SkyePharma.
C-3
Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of DepoTech as described in the first paragraph of
this letter or as a waiver of any rights I may have to object to any claim that
I am such an affiliate on or after the date of this letter.
Very truly yours,
-----------------------
Name:
Accepted as of the date first written
SKYEPHARMA PLC
By: ___________________________
Name:
Title:
C-4
EXHIBIT D
D&O INSURANCE COVERAGE
o Approximate indications for tail coverage under current Directors and
Officers Liability Insurance with National Union:
o Three (3) year term at 1 times the annual premium
o Six (6) year term at 1.25 times the annual premium
o 1998/1999 Policy Premium = $135,000
Parent shall choose from the foregoing policies in its reasonable discretion;
provided that the maximum, in the aggregate, that Parent or Surviving
Corporation shall be obligated to pay with respect thereto is $175,000.
D-1
