EXHIBIT 2.1
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AGREEMENT AND
PLAN OF MERGER
AMONG
ALKERMES, INC.
NEW ALKERMES, INC.
XXXXX ACQUISITION SUB, INC.
REVERE ACQUISITION SUB, LLC
and
RELIANT PHARMACEUTICALS, LLC
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March 20, 2002
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TABLE OF CONTENTS
PAGE
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ARTICLE I
THE MERGERS
1.1 The Mergers................................................................ 2
1.2 Effective Time............................................................. 3
1.3 Organizational Documents, Directors and Officers of Alkermes Surviving
Corporation................................................................ 3
1.4 Certificate of Formation; Operating Agreement; Managers and Officers of
Reliant Surviving LLC...................................................... 4
1.5 Effect of the Merger....................................................... 4
1.6 Change of Parent Name...................................................... 4
1.7 Further Assurances......................................................... 4
ARTICLE II
EFFECT OF THE MERGERS ON THE EQUITY SECURITIES OF THE
CONSTITUENT ENTITIES; EXCHANGE OF CERTIFICATES
2.1 Effect of Alkermes Merger.................................................. 5
2.2 Effect of Reliant Merger................................................... 7
2.3 Exchange of Alkermes Certificates and Reliant Units........................ 8
2.4 Escrow Indemnity Agreement................................................. 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF RELIANT
3.1 Organization and Qualification............................................. 13
3.2 Subsidiaries and Other Affiliates.......................................... 13
3.3 Authority to Execute and Perform Agreements................................ 13
3.4 Capitalization............................................................. 14
3.5 No Conflicts............................................................... 15
3.6 Reliant Financial Statements............................................... 15
3.7 Information Supplied....................................................... 15
3.8 Absence of Undisclosed Liabilities......................................... 16
3.9 No Material Adverse Change................................................. 16
3.10 Tax Matters................................................................ 17
3.11 Compliance with Laws....................................................... 18
3.12 Actions and Proceedings.................................................... 18
3.13 Contracts and Other Agreements............................................. 19
3.14 Properties................................................................. 19
3.15 Intellectual Property...................................................... 19
3.16 Employee Benefit Plans..................................................... 21
3.17 Employee Relations......................................................... 22
3.18 Insurance.................................................................. 23
3.19 Brokerage.................................................................. 23
3.20 Environmental Matters...................................................... 23
3.21 Takeover Statutes.......................................................... 24
3.22 Regulatory Compliance...................................................... 24
3.23 Customers and Suppliers.................................................... 26
3.24 Required Reliant Member Approval........................................... 26
3.25 Disclosure................................................................. 26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ALKERMES, PARENT, XXXXX
ACQUISITION SUB AND REVERE ACQUISITION SUB
4.1 Organization and Qualification............................................. 27
4.2 Subsidiaries and Other Affiliates.......................................... 28
4.3 Authority to Execute and Perform Agreements................................ 28
4.4 Capitalization............................................................. 29
4.5 No Conflicts............................................................... 30
4.6 SEC Filings; Alkermes Financial Statements................................. 31
4.7 Information Supplied....................................................... 31
4.8 Absence of Undisclosed Liabilities......................................... 32
4.9 No Material Adverse Change................................................. 32
4.10 Tax Matters................................................................ 32
4.11 Compliance with Laws....................................................... 33
4.12 Actions and Proceedings.................................................... 33
4.13 Contracts and Other Agreements............................................. 34
4.14 Properties................................................................. 34
4.15 Intellectual Property...................................................... 35
4.16 Employee Benefit Plans..................................................... 36
4.17 Employee Relations......................................................... 37
4.18 Insurance.................................................................. 38
4.19 Brokerage.................................................................. 38
4.20 Environmental Matters...................................................... 38
4.21 Takeover Statutes.......................................................... 38
4.22 Regulatory Compliance...................................................... 39
4.23 Required Alkermes Shareholder Approval..................................... 40
4.24 Opinion of Financial Advisor............................................... 40
4.25 Disclosure................................................................. 41
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ARTICLE V
COVENANTS AND AGREEMENTS
5.1 Covenants of Reliant Pending Closing....................................... 41
5.2 Covenants of Alkermes Pending Closing...................................... 44
5.3 Expenses................................................................... 46
5.4 Approvals and Consents..................................................... 47
5.5 Consummation of Agreement.................................................. 47
5.6 Further Assurances......................................................... 47
5.7 Public Announcements and Confidentiality................................... 48
5.8 No Solicitation by Reliant................................................. 48
5.9 No Solicitation by Alkermes................................................ 49
5.10 Alkermes SEC Filings....................................................... 50
5.11 Proxy Statement; Form S-4.................................................. 50
5.12 Reliant Member Approval; Mailing to Reliant Members........................ 51
5.13 Alkermes Shareholders Meeting.............................................. 51
5.14 Agreement Regarding Directors; Committees.................................. 51
5.15 Employee Benefits Matters.................................................. 52
5.16 Lock-up Agreements......................................................... 53
5.17 Indemnification and Insurance.............................................. 54
5.18 Notice of Developments..................................................... 54
5.19 Tax-free Transaction....................................................... 55
5.20 Preparation of Tax Returns and Filings..................................... 55
5.21 Tax Claims................................................................. 56
5.22 Nasdaq..................................................................... 56
5.23 Affiliate Agreements....................................................... 57
5.24 Inspection of Records; Access.............................................. 57
5.25 Parent Covenant Regarding Certain Credit Matters........................... 58
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY TO
CONSUMMATE THE MERGER
6.1 Consent and Approvals...................................................... 58
6.2 Absence of Order........................................................... 58
6.3 HSR Act Notification....................................................... 58
6.4 Effectiveness of Form S-4.................................................. 59
6.5 Nasdaq Listing............................................................. 59
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ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
ALKERMES, PARENT, XXXXX ACQUISITION SUB AND
REVERE ACQUISITION SUB TO CONSUMMATE THE MERGER
7.2 Merger Documents........................................................... 59
7.3 Certificates............................................................... 59
7.4 Escrow Indemnity and Tax Indemnity Agreements.............................. 59
7.5 Warrants................................................................... 59
7.6 No Material Adverse Change................................................. 60
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATION OF RELIANT TO CONSUMMATE
THE MERGER
8.1 Representations, Warranties and Covenants.................................. 60
8.2 Merger Documents........................................................... 60
8.3 Certificates............................................................... 60
8.4 Escrow Indemnity and Tax Indemnity Agreements.............................. 60
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination................................................................ 61
9.2 Effect of Termination...................................................... 62
9.3 Amendment.................................................................. 63
9.4 Waiver..................................................................... 63
ARTICLE X
INDEMNIFICATION
10.1 Indemnification by the Investors........................................... 63
10.2 Indemnification Procedures................................................. 64
10.3 Limitations on Indemnification............................................. 65
10.4 Survival................................................................... 65
10.5 Sole Remedy................................................................ 66
ARTICLE XI
GLOSSARY OF DEFINED TERMS
11.1 Glossary................................................................... 66
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ARTICLE XII
MISCELLANEOUS
12.1 Notices.................................................................... 74
12.2 Reliant Member Representatives............................................. 75
12.3 Reliance Upon Representations and Warranties............................... 77
12.4 Third Party Beneficiaries.................................................. 77
12.5 Entire Agreement........................................................... 77
12.6 Governing Law.............................................................. 77
12.7 CONSENT TO JURISDICTION.................................................... 77
12.8 WAIVER OF JURY TRIAL....................................................... 77
12.9 Enforcement of Agreement................................................... 78
12.10 Binding Effect; No Assignment.............................................. 78
12.11 Counterparts............................................................... 78
12.12 No Strict Construction..................................................... 78
12.13 Additional Rules of Construction........................................... 78
12.14 Reproduction of Documents.................................................. 79
12.15 Severability............................................................... 79
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of March
20, 2002, is by and among Alkermes, Inc., a Pennsylvania corporation
("Alkermes"), New Alkermes, Inc., a Pennsylvania corporation ("Parent"), Xxxxx
Acquisition Sub, Inc., a Pennsylvania corporation and a wholly owned subsidiary
of Parent ("Xxxxx Acquisition Sub"), Revere Acquisition Sub, LLC, a Delaware
limited liability company and a wholly owned subsidiary of Parent ("Revere
Acquisition Sub"), and Reliant Pharmaceuticals, LLC, a Delaware limited
liability company ("Reliant"). A glossary of defined terms appears in Article XI
of this Agreement and reference is made to that Article for the definitions of
capitalized terms used herein.
W I T N E S S E T H :
WHEREAS, each of the Board of Directors of Alkermes and the Board of
Managers of Reliant have determined it is in the best interests of Alkermes and
Reliant, respectively, to combine their respective businesses in a transaction
consummated in accordance with the terms and conditions set forth in this
Agreement.
WHEREAS, upon the terms and subject to the conditions of this Agreement,
Reliant and Revere Acquisition Sub will enter into a business combination
transaction pursuant to which Revere Acquisition Sub will merge with and into
Reliant (the "Reliant Merger"), whereby each outstanding Reliant Unit, other
than Reliant Units held by Alkermes, will be converted into the right to receive
shares of Parent Common Stock as specified in Section 2.2(c) below.
WHEREAS, upon the terms and subject to the conditions of this Agreement,
Alkermes and Xxxxx Acquisition Sub will enter into a business combination
transaction pursuant to which Xxxxx Acquisition Sub will merge with and into
Alkermes (the "Alkermes Merger" and, collectively with the Reliant Merger, the
"Mergers"), whereby each issued and outstanding share of Alkermes Capital Stock
will be converted into one (1) share of Parent Capital Stock as specified in
Section 2.1(c) below.
WHEREAS, in furtherance of the Alkermes Merger: (i) the Boards of
Directors of each of Parent, Alkermes and Xxxxx Acquisition Sub have approved
the Alkermes Merger upon the terms and conditions set forth in this Agreement,
(ii) the sole shareholders of each of Parent and Xxxxx Acquisition Sub have
approved the Alkermes Merger upon the terms and conditions set forth in this
Agreement, and (iii) in the case of Alkermes, the Board of Directors of Alkermes
has directed that this Agreement be submitted to its shareholders for approval.
WHEREAS, in furtherance of the Reliant Merger: (i) the Boards of Directors
of each of Parent and Alkermes, and the Boards of Managers of each of Revere
Acquisition Sub and Reliant have approved the Reliant Merger upon the terms and
conditions set forth in this Agreement; (ii) the sole shareholder of Parent and
the sole member of Revere Acquisition Sub have approved the Reliant Merger upon
the terms and conditions set forth in this Agreement, (iii) in the case of
Alkermes, the Board of Directors of Alkermes has directed that this Agreement be
submitted to its shareholders for their approval, and (iv) in the case of
Reliant, the Board of
Managers of Reliant has directed that this Agreement be submitted to its members
for their approval.
WHEREAS, for Federal income tax purposes, it is intended that the Alkermes
Merger shall qualify as a tax-free transaction under Section 368 of the Code and
that the Alkermes Merger and the Reliant Merger together shall qualify as a
tax-free transaction under Section 351 of the Code.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties made herein and of the mutual benefits to be
derived therefrom, and intending to be legally bound, the Parties hereto agree
as follows:
ARTICLE I
THE MERGERS
1.1 The Mergers.
(a) Alkermes Merger. In accordance with and subject to the terms and
provisions of this Agreement and the PBCL, at the Alkermes Merger Effective
Time: (i) Xxxxx Acquisition Sub shall be merged with and into Alkermes, the
separate existence of Xxxxx Acquisition Sub shall cease, Alkermes shall be the
surviving corporation (the "Alkermes Surviving Corporation") and shall continue
its corporate existence under the laws of the Commonwealth of Pennsylvania, and
each outstanding share of Alkermes capital stock shall be converted into Parent
Capital Stock in the manner set forth in Section 2.1 hereof; (ii) all rights,
privileges, immunities, powers, purposes, franchises, properties and assets of
Alkermes and Xxxxx Acquisition Sub shall vest in the Alkermes Surviving
Corporation; and (iii) all debts, liabilities, obligations, restrictions,
disabilities and duties of Alkermes and Xxxxx Acquisition Sub shall become the
debts, liabilities, obligations, restrictions, disabilities and duties of the
Alkermes Surviving Corporation.
(b) Reliant Merger. In accordance with and subject to the terms and
provisions of this Agreement and the DLLCA, at the Reliant Merger Effective
Time: (i) Revere Acquisition Sub shall be merged with and into Reliant, the
separate existence of Revere Acquisition Sub shall cease, Reliant shall be the
surviving limited liability company (the "Reliant Surviving LLC" and, together
with the Alkermes Surviving Corporation, the "Surviving Entities") and shall
continue its limited liability company existence under the laws of the State of
Delaware and each outstanding Reliant Unit (other than those held by Alkermes)
shall be converted into Parent Common Stock in the manner set forth in Section
2.2 hereof; (ii) all rights, privileges, immunities, powers, purposes,
franchises, properties and assets of Reliant and Revere Acquisition Sub shall
vest in the Reliant Surviving LLC; and (iii) all debts, liabilities,
obligations, restrictions, disabilities and duties of Reliant and Revere
Acquisition Sub shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Reliant Surviving LLC.
(c) Tax-Free Treatment. The Parties intend that the Alkermes Merger
will meet the requirements of Section 368 of the Code and the rules and
regulations promulgated
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thereunder, and that the Alkermes Merger and the Reliant Merger together shall
meet the requirements of Section 351 of the Code and the rules and regulations
promulgated thereunder.
1.2 Effective Time. As soon as practicable after satisfaction or waiver of
all conditions to the Mergers, the Parties shall: (a) cause a certificate of
merger (the "Reliant Merger Certificate") in the form attached hereto as Exhibit
A to be filed in accordance with Section 18-209 of the DLLCA and shall take all
such further actions as may be required by law to make the Reliant Merger
effective; and (b) cause articles of merger (the "Alkermes Articles of Merger")
in the form attached hereto as Exhibit B to be filed in accordance with Section
1926 of the PBCL and shall take all such further actions as may be required by
law to make the Alkermes Merger effective. The (i) Reliant Merger shall be
effective at such time as the Reliant Merger Certificate is filed with the
Secretary of State of Delaware in accordance with the DLLCA or at such later
time as is specified in the Reliant Merger Certificate (the "Reliant Merger
Effective Time"); and (ii) Alkermes Merger shall be effective at such time as
the Alkermes Articles of Merger are filed with the Department of State of the
Commonwealth of Pennsylvania in accordance with the PBCL or at such later time
as is specified in the Alkermes Articles of Merger (the "Alkermes Merger
Effective Time"). The Mergers shall be consummated as concurrently as possible
and the time at which both Mergers are fully effective is referred to herein as
the "Effective Time". Immediately prior to the filing of the Reliant Merger
Certificate and the Alkermes Articles of Merger, a closing (the "Closing") will
be held at the offices of Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP (or such other
place as the Parties may agree) at 10:00 a.m., local time, for the purpose of
confirming satisfaction or waiver of all conditions to the Mergers. The date on
which the Closing occurs is referred to herein as the "Closing Date."
1.3 Organizational Documents, Directors and Officers of Alkermes Surviving
Corporation.
(a) Articles of Incorporation. At the Alkermes Merger Effective
Time, the Articles of Incorporation of Alkermes Inc., as in effect immediately
prior to the Alkermes Merger Effective Time, shall be the Articles of
Incorporation of Alkermes Surviving Corporation until thereafter amended,
altered or repealed as provided therein or by applicable law, except that the
Articles of Incorporation shall be amended as set forth on "Exhibit A" to
Exhibit B of this Agreement.
(b) Bylaws. At the Alkermes Merger Effective Time, the Bylaws of
Xxxxx Acquisition Sub, as in effect immediately prior to the Alkermes Merger
Effective Time, shall be the Bylaws of Alkermes Surviving Corporation until
thereafter amended, altered or repealed as provided therein.
(c) Directors and Officers. The directors and officers of Xxxxx
Acquisition Sub immediately prior to the Alkermes Merger Effective Time shall be
the directors and officers of Alkermes Surviving Corporation immediately after
the Alkermes Merger Effective Time, each to hold office in accordance with the
Articles of Incorporation and Bylaws of Alkermes Surviving Corporation. The
Board of Directors of Alkermes Surviving Corporation may designate such other
officers as it determines. If, at the Alkermes Merger Effective Time, a vacancy
shall exist in the Board of Directors or in any of the offices of Alkermes
Surviving
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Corporation by reason of death or inability to act, or for any other reason,
such vacancy may be filled in the manner provided in the Bylaws of Alkermes
Surviving Corporation.
1.4 Certificate of Formation; Operating Agreement; Managers and Officers
of Reliant Surviving LLC.
(a) Certificate of Formation. At the Reliant Merger Effective Time,
the Certificate of Formation of Reliant, as in effect immediately prior to the
Reliant Merger Effective Time, shall be the Certificate of Formation of Reliant
Surviving LLC, until thereafter amended, altered or repealed as provided therein
or by applicable law.
(b) Operating Agreement. At the Reliant Merger Effective Time, the
Reliant LLC Agreement, as in effect immediately prior to the Reliant Merger
Effective Time, shall be the operating agreement of Reliant Surviving LLC, until
thereafter amended, altered or repealed as provided therein or by applicable
law, except that such operating agreement shall be amended as of the Reliant
Merger Effective Time to reflect membership of each of Alkermes and Parent in
Reliant Surviving LLC immediately following the Reliant Merger Effective Time.
(c) Managers and Officers. The managers and officers of Reliant
Surviving LLC immediately after the Reliant Merger Effective Time shall be those
individuals designated on Exhibit C, each to hold office in accordance with the
operating agreement of Reliant Surviving LLC. The members and managers of
Reliant Surviving LLC shall take such actions at the Reliant Merger Effective
Time to cause each of such individuals to be appointed as a manager and/or
officer, as the case may be, of Reliant Surviving LLC. If, at the Reliant Merger
Effective Time, a vacancy shall exist in the board of managers or in any of the
offices of Reliant Surviving LLC by reason of death or inability to act, or for
any other reason, such vacancy may be filled in the manner provided in the
operating agreement of Reliant Surviving LLC.
1.5 Effect of the Merger. The Alkermes Merger shall have the effect set
forth in Section 1929 of the PBCL. The Reliant Merger shall have the effect set
forth in Section 18-209 of the DLLCA.
1.6 Change of Parent Name. At the Effective Time, the Articles of
Incorporation of Parent shall be amended to change the name of Parent to
"Alkermes, Inc."
1.7 Further Assurances. If, at any time after the Effective Time, the
Surviving Entities shall determine or be advised that any deeds, bills of sale,
assignments or assurances or any other acts or things are necessary, desirable
or proper, consistent with the terms of this Agreement (a) to vest, perfect or
confirm, of record or otherwise, in the Surviving Entities their respective
right, title or interest in, to or under any of the rights, privileges,
immunities, powers, purposes, franchises, properties or assets of Reliant or
Revere Acquisition Sub, or Alkermes or Xxxxx Acquisition Sub, as the case may
be, or (b) to otherwise carry out the purposes of this Agreement, the Surviving
Entities and their respective proper officers, directors or managers, or their
designees, shall be authorized to solicit in the name of Reliant or Revere
Acquisition Sub, or Alkermes or Xxxxx Acquisition Sub, as the case may be, any
third party consents or other documents required to be delivered by any third
party, to execute and deliver, in the name and on behalf of Reliant or Revere
Acquisition Sub, or Alkermes or Xxxxx Acquisition Sub, as the case may be, all
such deeds, bills of sale, assignments and assurances and do, in the name and on
behalf of Reliant or Revere Acquisition Sub, or Alkermes or Xxxxx Acquisition
Sub, as the case
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may be, all such other acts and things necessary, desirable or proper to vest,
perfect or confirm its right, title or interest in, to or under any of the
rights, privileges, immunities, powers, purposes, franchises, properties or
assets of Reliant or Revere Acquisition Sub, or Alkermes or Xxxxx Acquisition
Sub, as the case may be, and otherwise to carry out the purposes of this
Agreement.
ARTICLE II
EFFECT OF THE MERGERS ON THE EQUITY SECURITIES OF THE
CONSTITUENT ENTITIES; EXCHANGE OF CERTIFICATES
2.1 Effect of Alkermes Merger. At the Alkermes Merger Effective Time, by
virtue of the Alkermes Merger and without any further action on the part of
Parent, Alkermes, Xxxxx Acquisition Sub or the holder of any shares of Alkermes
Capital Stock or any shares of the capital stock of Xxxxx Acquisition Sub:
(a) Conversion of Capital Stock of Xxxxx Acquisition Sub. Each
issued and outstanding share of capital stock of Xxxxx Acquisition Sub shall be
converted into and become one (1) validly issued, fully paid and nonassessable
share of common stock, par value $0.01 per share, of the Alkermes Surviving
Corporation.
(b) Cancellation of Treasury Stock. Each share of Alkermes Common
Stock that is owned by Alkermes shall automatically be canceled and retired and
shall cease to exist, and no shares of Parent Common Stock or other
consideration shall be delivered in exchange therefor.
(c) Conversion of Alkermes Capital Stock. Subject to Section 2.3(e),
each issued and outstanding share of Alkermes Capital Stock (other than shares
of Alkermes Common Stock to be canceled in accordance with Section 2.1(b)) shall
be converted into one (1) (the "Alkermes Exchange Ratio") validly issued, fully
paid and nonassessable share of Parent Capital Stock (the "Alkermes Merger
Consideration"), with each share of Alkermes Common Stock being converted into
one share of Parent Common Stock and each share of Alkermes Non-Voting Common
Stock being converted into one share of Parent Non-Voting Common Stock. As of
the Alkermes Merger Effective Time, all such shares of Alkermes Capital Stock
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each certificate which immediately prior to the
Alkermes Merger Effective Time represented any such shares of Alkermes Capital
Stock (each, an "Alkermes Certificate") shall, after the Alkermes Merger
Effective Time, cease to have any rights with respect thereto, and shall
automatically, without any further action on the part of Alkermes, Parent or the
holder thereof, represent the Alkermes Merger Consideration. All shares of
Parent Capital Stock constituting the Alkermes Merger Consideration shall be
deemed to have been issued as of the Alkermes Merger Effective Time except, as
applicable, any Dissenting Shares.
(d) Options to Purchase Alkermes Common Stock. Each stock option
granted pursuant to the Alkermes Stock Option Plans which is outstanding and
unexercised immediately
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prior to the Alkermes Merger Effective Time shall cease to represent the right
to acquire shares of Alkermes Common Stock and shall automatically convert into
the right to acquire an equal number of shares of Parent Common Stock and Parent
will assume the Alkermes Stock Option Plans and each option shall remain subject
to the same vesting schedule, exercise price and other restrictions as set forth
in the applicable Alkermes' Stock Option Plan and any option agreement issued in
connection therewith between Alkermes and any holder of such stock option.
(e) Conversion of Alkermes Restricted Common Stock. (i) Each issued
and outstanding share of Alkermes Common Stock subject to repurchase and vesting
restrictions pursuant to the Alkermes 1991 Restricted Common Stock Award Plan,
restricted stock purchase agreements and/or award certificates (the "Alkermes
Restricted Stock") immediately prior to the Alkermes Merger Effective Time shall
automatically convert into one (1) share of Parent Common Stock; (ii) the shares
of Parent Common Stock into which the shares of Alkermes Restricted Stock are
converted shall remain subject to the repurchase and vesting restrictions
applicable to the Alkermes Restricted Stock in effect immediately prior to the
Alkermes Merger Effective Time in accordance with the provisions of the Alkermes
1991 Restricted Common Stock Award Plan, restricted stock purchase agreements
and/or award certificates; and (iii) Parent will assume the Alkermes 1991
Restricted Common Stock Award Plan, the restricted stock purchase agreements
and/or award certificates.
(f) Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, with respect to each share of Alkermes Non-Voting Common Stock as
to which the holder thereof shall have properly complied with the provisions of
Subchapter D of the PBCL as to dissenters' rights (each, a "Dissenting Share"),
if any, such holder shall be entitled to payment, solely from the Alkermes
Surviving Corporation, of the appraisal value of the Dissenting Shares to the
extent permitted by and in accordance with the provisions of Subchapter D of the
PBCL; provided, however, that (i) if any holder of Dissenting Shares, under the
circumstances permitted by and in accordance with the PBCL, affirmatively
withdraws such holders' demand for appraisal of such Dissenting Shares, (ii) if
any holder of Dissenting Shares fails to establish such holder's entitlement to
dissenters' rights as provided in the PBCL, or (iii) if any holder of Dissenting
Shares takes or fails to take any action the consequence of which is that such
holder is not entitled to payment for such holder's shares under the PBCL, such
holder shall forfeit the right to appraisal of such shares of Alkermes
Non-Voting Common Stock and such shares of Alkermes Non-Voting Common Stock
shall thereupon be deemed to have been converted, as of the Alkermes Merger
Effective Time, into the Alkermes Merger Consideration payable in respect of
such shares of Alkermes Non-Voting Common Stock. Following the Alkermes Merger,
the Alkermes Surviving Corporation shall, and the Parent shall cause the
Alkermes Surviving Corporation to, comply with the PBCL to satisfy the
obligations of the Xxxxx Acquisition Sub and Alkermes with respect to any
holders of Alkermes Non-Voting Common Stock and to the Dissenting Shares.
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2.2 Effect of Reliant Merger. At the Reliant Merger Effective Time, by
virtue of the Reliant Merger and without any further action on the part of
Parent, Revere Acquisition Sub, Reliant or the holder of any Reliant Units or
any units of Revere Acquisition Sub:
(a) Conversion of Units of Revere Acquisition Sub. Each issued and
outstanding unit of Revere Acquisition Sub shall be converted into and become
233,000 validly issued, fully paid and nonassessable common units of Reliant
Surviving LLC.
(b) Alkermes-Owned Reliant Units. All Reliant Units owned by
Alkermes immediately prior to the Reliant Merger Effective Time (the
"Alkermes-Owned Reliant Units") shall, together with all other Preferred Units,
be converted into Common Units immediately prior to the Reliant Merger Effective
Time, but the Common Units into which such Alkermes-owned Reliant Units are
converted shall be otherwise unaffected and shall continue to exist and remain
outstanding as common units of Reliant Surviving LLC after the Reliant Merger
Effective Time. No Parent Common Stock or other consideration shall be delivered
to Alkermes in respect of the Alkermes-Owned Reliant Units.
(c) Conversion of Reliant Units. Subject to Section 2.3(e), each
issued and outstanding Reliant Unit (other than the Alkermes-Owned Reliant
Units), including Reliant Restricted Units, shall be converted into the right to
receive 1.3297 (the "Reliant Exchange Ratio") validly issued, fully paid and
nonassessable shares of Parent Common Stock (the "Reliant Merger Consideration"
and, together with the Alkermes Merger Consideration, the "Merger
Consideration"). As of the Reliant Merger Effective Time, all Reliant Units
(other than the Alkermes-Owned Reliant Units) shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder (other than Alkermes) of a Reliant Unit immediately prior to the Reliant
Merger Effective Time shall cease to have any rights with respect thereto,
except the right to receive the Reliant Merger Consideration, and any dividends
or other distributions to which such holder is entitled pursuant to Section
2.3(d) and cash in lieu of fractional shares of Parent Common Stock to which a
holder of such Reliant Units is entitled pursuant to Section 2.3(f), in each
case to be issued or paid in accordance with Section 2.3(c), without interest.
All shares of Parent Common Stock constituting the Reliant Merger Consideration
shall be deemed to have been issued as of the Reliant Merger Effective Time.
(d) Conversion of Reliant Restricted Units. (i) Each issued and
outstanding Reliant Unit subject to repurchase and vesting restrictions pursuant
to the Reliant Equity Plan and/or restricted unit agreements (the "Reliant
Restricted Units") immediately prior to the Reliant Merger Effective Time shall
automatically convert into Reliant Merger Consideration pursuant to Section
2.2(c); (ii) the shares of Parent Common Stock into which the Reliant Restricted
Units are converted (the "Parent Restricted Stock") shall remain subject to the
repurchase and vesting restrictions applicable to the Reliant Restricted Units
in effect immediately prior to the Reliant Merger Effective Time; and (iii)
Parent will assume the Reliant Equity Plan and the restricted unit agreements
issued thereunder. Parent will enter into an Escrow Agreement in the form
attached hereto as Exhibit D (the "Restricted Stock Escrow Agreement") with all
holders of Parent Restricted Stock that desire to enter into such Restricted
Stock Escrow Agreement to provide for the release to the applicable holder of
the certificates representing the applicable shares of the Parent Restricted
Stock upon the applicable Vesting Date; provided, however, that nothing herein
shall limit or otherwise restrict any rights or
7
privileges any holder of Reliant Restricted Units may have under any change of
control or similar type agreements.
(e) Conversion of Options to Purchase Reliant Units. Each option to
purchase Reliant Units (the "Reliant Options") outstanding immediately prior to
the Reliant Merger Effective Time under the Reliant Option Plans, whether or not
then exercisable, and each of the Reliant Option Plans will be assumed by
Parent. Each such Reliant Option so assumed by Parent under this Agreement will
continue to have, and be subject to, the same terms and conditions as set forth
in the Reliant Equity Plan or the Reliant 2002 Option Plan, as applicable, and
any option agreements thereunder immediately prior to the Reliant Merger
Effective Time, except that (i) each such Reliant Option shall automatically be
exercisable (or will become exercisable in accordance with its terms) for that
number of whole shares of Parent Common Stock (rounded up to the nearest whole
share in the event of a fraction equal to or greater than 0.5 or rounded down to
the nearest whole share in the event of a fraction less than 0.5) equal to the
product of the number of Reliant Units that were issuable upon exercise of such
Reliant Option immediately prior to the Reliant Merger Effective Time multiplied
by the Reliant Exchange Ratio, (ii) the per share exercise price for the shares
of Parent Common Stock issuable upon exercise of such Reliant Option assumed
will be equal to the quotient determined by dividing the exercise price per
Reliant Unit for which such Reliant Option was exercisable immediately prior to
the Reliant Merger Effective Time by the Reliant Exchange Ratio, rounded to the
nearest whole cent, and (iii) the Reliant Option Plans shall be modified to the
extent necessary only to reflect assumption thereof by Parent and that such
Reliant Options will be exercisable for shares of Parent Common Stock and not
Reliant Units.
2.3 Exchange of Alkermes Certificates and Reliant Units.
(a) Exchange Agent. As of the Effective Time, Parent shall deposit
with EquiServe Trust Company or such other bank or trust company of similar size
as may be designated by Parent (the "Exchange Agent"), for the benefit of the
holders of shares of Alkermes Capital Stock and Reliant Units, for exchange in
accordance with this Article II, through the Exchange Agent, certificates
representing the shares of Parent Capital Stock issuable pursuant to Sections
2.1 and 2.2 in exchange for outstanding shares of Alkermes Capital Stock and
Reliant Units (such shares of Parent Capital Stock, together with any dividends
or other distributions payable with respect thereto to holders on a record date
after the Effective Time and any cash payments in lieu of any fractional shares
of Parent Capital Stock, being hereinafter referred to as the "Exchange Fund").
(b) Exchange Procedures - Alkermes Certificates. As soon as
reasonably practicable after the Alkermes Merger Effective Time, Parent shall
cause the Exchange Agent to mail to each holder of record at the Alkermes Merger
Effective Time of an Alkermes Certificate whose shares of Alkermes Capital Stock
automatically represent the Alkermes Merger Consideration pursuant to Section
2.1(c): (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to such Alkermes Certificate shall pass,
only upon delivery of such Alkermes Certificate to the Exchange Agent and shall
be in such form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in surrendering the Alkermes Certificates, if such
holder desires, in exchange for certificates of Parent representing the Alkermes
Merger Consideration. Upon surrender of an Alkermes
8
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Alkermes Certificate shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of Parent Capital Stock into which the Alkermes Capital Stock
represented thereby was converted pursuant to the provisions of this Article II
after taking into account all the shares of Alkermes Capital Stock then held by
such holder under all such Alkermes Certificates so surrendered, and such
Alkermes Certificate so surrendered shall forthwith be canceled. A certificate
representing the proper number of shares of Parent Capital Stock into which the
Alkermes Capital Stock was automatically converted may be issued to a Person
other than the Person in whose name the Alkermes Certificate so surrendered is
registered, if, upon presentation to the Exchange Agent, such Alkermes
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the Person requesting such issuance shall pay any transfer or other
taxes required by reason of the issuance of shares of Parent Capital Stock to a
Person other than the registered holder of such Alkermes Certificate or
establish to the reasonable satisfaction of Parent that such tax has been paid
or is not applicable.
(c) Exchange Procedures - Reliant Units. After the Reliant Merger
Effective Time and within ten (10) business days of the Exchange Agent's receipt
of a letter of instruction from a record holder of Reliant Units immediately
prior to the Reliant Merger Effective Time whose Reliant Units were converted
into the right to receive the Reliant Merger Consideration pursuant to Section
2.2(c), Parent shall cause the Exchange Agent to deliver to such record holder
of Reliant Units the following: (i) one or more certificates representing that
number of shares of Parent Common Stock into which such holder's Reliant Units
were converted into the right to receive pursuant to the provisions of this
Article II; provided, however, that to the extent such record holder is required
to deliver Escrow Shares pursuant to Section 2.4, Parent shall cause the
Exchange Agent to prepare and deliver separate certificates representing the
Escrow Shares registered in such record holder's name (or in the name of another
Person as contemplated by this Section 2.3(c)), which shares shall be delivered
to the Escrow Agent at Closing as contemplated by Section 2.4; (ii) any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.3(d); and (iii) cash in lieu of fractional shares of Parent Capital
Stock to which such holder is entitled pursuant to Section 2.3(f).
Notwithstanding the foregoing, certificates for shares of Parent Restricted
Stock into which the Reliant Restricted Units were converted shall be separately
certificated (by holder) and held by Parent or if applicable, in escrow for the
benefit of Parent, until the applicable Vesting Date; provided, however, that
certificates for all shares of Parent Common Stock subject to the provisions of
any Collateral Assignment Agreement executed by such holder related to loans
shall be separately certificated (by holder) and held either by Parent (in the
case of collateral assignments in favor of Reliant) or by the applicable third
party lender (in the case of collateral assignments in favor of third party
lenders) until the applicable loan repayment has occurred, and none of any such
certificates shall be delivered to the record holder thereof until such Vesting
Date or loan repayment date; provided, further, that, with respect to any such
shares held by Parent, Parent shall, upon request by the applicable holder, (x)
deliver to such holder certificates representing vested shares of Parent Common
Stock to permit dispositions thereof in connection with repayment of any such
loans, and (y) release its lien on such shares to the extent necessary to permit
such holder to sell such shares; provided, that the net proceeds of such sale
shall be remitted to Parent in payment of all or a portion of such loan). Except
for the Reliant Restricted Units and the Reliant Units subject to the Collateral
Assignment Agreements as described in the
9
prior sentence, a certificate representing the proper number of shares of Parent
Common Stock into which the Reliant Units were converted into pursuant to this
Article II may be issued to a Person other than the Person in whose name such
Reliant Units were registered, if the holder of such Reliant Unit shall have
provided instructions and evidence, each in proper form, of the transfer of such
Reliant Units and the Person requesting such issuance shall pay any transfer or
other taxes required by reason of the issuance of shares of Parent Common Stock
to a Person other than the registered holder of the Reliant Units or establish
to the reasonable satisfaction of Parent that such tax has been paid or is not
applicable. Until all shares of Parent Common Stock are delivered in accordance
with this Section 2.3(c), each Reliant Unit (other than the Alkermes-Owned
Reliant Units) shall be deemed at any time after the Reliant Merger Effective
Time to represent only the right to receive the Reliant Merger Consideration
into which such Reliant Units were converted pursuant to this Article II and any
dividends or other distributions to which the holder thereof is entitled
pursuant to Section 2.3(d) and cash in lieu of fractional shares of Parent
Common Stock to which such holders are entitled pursuant to Section 2.3(f). No
interest will be paid or will accrue on any cash payable to holders of Reliant
Units pursuant to Section 2.3(d).
(d) Distributions with Respect to Unexchanged Securities. No
dividends or other distributions declared or made after the Reliant Merger
Effective Time with respect to Parent Common Stock with a record date after the
Reliant Merger Effective Time shall be paid to the holder of any unsurrendered
Reliant Units with respect to the shares of Parent Common Stock that the holder
thereof has the right to receive upon the surrender thereof, and no cash payment
in lieu of fractional shares of Parent Common Stock shall be paid to any such
holder pursuant to Section 2.3(f), in each case until the holder of such Reliant
Units shall surrender such Reliant Units in accordance with this Article II.
Following surrender of any Reliant Units, there shall be paid to the record
holder of the certificate representing whole shares of Parent Common Stock
issued in exchange therefor, without interest (i) at the time of such surrender,
the amount of any cash payable in lieu of fractional shares of Parent Common
Stock to which such holder is entitled pursuant to Section 2.3(f) and the amount
of dividends or other distributions paid with respect to such whole shares of
Parent Common Stock with a record date after the Reliant Merger Effective Time
and paid prior to such surrender and (ii) at the appropriate payment date, the
amount of dividends or other distributions payable with respect to such whole
shares of Parent Common Stock with a record date after the Reliant Merger
Effective Time but prior to such surrender and a payment date after such
surrender.
(e) No Further Ownership Rights in Alkermes Capital Stock and
Reliant Units. All shares of Parent Capital Stock issued in exchange for
Alkermes Certificates that are surrendered, if any, and Reliant Units in
accordance with the terms of this Article II (including any dividends or other
distributions paid pursuant to Section 2.3(d) and cash in lieu of fractional
shares pursuant to Section 2.3(f)) shall be deemed to have been issued (and
paid) in full satisfaction of all rights pertaining to (i) the shares of
Alkermes Capital Stock previously represented by Alkermes Certificates and (ii)
the Reliant Units. After the Alkermes Merger Effective Time there shall be no
further registration of transfers on the transfer books of Alkermes Surviving
Corporation of the shares of Alkermes Capital Stock that were outstanding
immediately prior to the Alkermes Merger Effective Time, and after the Reliant
Merger Effective Time, there shall be no further registration of transfers on
the transfer books of Reliant Surviving LLC of the Reliant Units (other than
with respect to the Alkermes-Owned Reliant
10
Units) that were outstanding immediately prior to the Reliant Merger Effective
Time. Subject to the last sentence of Section 2.3(g) and other than as
contemplated in Section 2.2(b), if, at any time after the Effective Time,
Alkermes Certificates or Reliant Units are presented to either of the Surviving
Entities or the Exchange Agent for any reason, they shall be canceled and
exchanged as provided in this Article II.
(f) No Fractional Shares. No certificates or scrip representing
fractional shares of Parent Capital Stock shall be issued in exchange for
Reliant Units, no dividends or other distributions of Parent shall relate to
such fractional share interests and such fractional share interests will not
entitle the owner thereof to vote or to any rights as a shareholder of Parent.
In lieu of fractional share interests, Parent shall pay to each former holder of
Reliant Units an amount in cash equal to the product obtained by multiplying (i)
the fractional share interest to which such former holder (after taking into
account all Reliant Units held at the Reliant Merger Effective Time by such
holder) would otherwise be entitled by (ii) the per share average last sales
prices of the Alkermes Common Stock on the ten (10) trading days immediately
preceding the Closing Date as such price is reported on Nasdaq or, if not quoted
thereby, as reported by another authoritative source.
(g) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of the Alkermes Certificates or
Reliant Units for one hundred eighty (180) days after the Effective Time shall
be delivered to Parent, upon demand, and any holders of the Alkermes
Certificates or Reliant Units who have not theretofore complied with this
Article II shall thereafter look only to Parent for, and Parent shall remain
liable for, payment of their claim for the applicable Merger Consideration, any
dividends or other distributions with respect to shares of Parent Capital Stock
and cash in lieu of fractional shares pursuant to Section 2.3(f). If any Reliant
Units shall not have been surrendered prior to five (5) years after the Reliant
Merger Effective Time (or immediately prior to such earlier date on which any
Reliant Merger Consideration (and all dividends or other distributions payable
pursuant to Section 2.3(d) and all cash payable in lieu of fractional shares
pursuant to Section 2.3(f)) would otherwise escheat to or become the property of
any Governmental Entity), any such Reliant Merger Consideration in respect
thereof shall, to the extent permitted by applicable law, become the property of
the Parent, free and clear of all claims or interest of any Person previously
entitled thereto.
(h) No Liability. None of Alkermes, Parent, Xxxxx Acquisition Sub,
Revere Acquisition Sub, Reliant, Alkermes Surviving Corporation, Reliant
Surviving LLC or the Exchange Agent shall be liable to any Person in respect of
any shares of Parent Capital Stock (or dividends or other distributions with
respect thereto) or cash in lieu of fractional shares of Parent Common Stock or
cash from the Exchange Fund, in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(i) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be the property
of, and shall be paid to, Parent.
(j) Lost Alkermes Certificates. If any Alkermes Certificates shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such
11
Alkermes Certificate to be lost, stolen or destroyed and, if required by Parent,
the posting by such person of a bond in such reasonable amount as Parent may
direct as indemnity against any claim that may be made against it with respect
to such Alkermes Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Alkermes Certificate the Alkermes Merger Consideration
into which the shares of Alkermes Capital Stock represented by such Alkermes
Certificate was converted pursuant to this Article II pursuant to this
Agreement.
(k) Withholding Rights. The Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable to any holder of
shares of Alkermes Capital Stock or Reliant Units pursuant to this Agreement
such amounts as may be required to be deducted and withheld with respect to the
making of such payment under the Code, or under any provision of foreign tax
law. To the extent that amounts are so withheld and paid over to the appropriate
taxing authority, the amount of consideration otherwise payable pursuant to this
Agreement to any holder of shares of Alkermes Capital Stock or Reliant Units
shall be reduced by the appropriate amount. If withholding is required from
Parent Capital Stock, the Exchange Agent shall be treated as having sold such
consideration for an amount of cash equal to the fair market value of such
consideration at the time of such deemed sale and paid such cash proceeds to the
appropriate taxing authority. The Exchange Agent will be treated as though it
withheld from the type consideration from which withholding is required, an
appropriate amount otherwise payable pursuant to this Agreement to any holder of
shares of Alkermes Capital Stock or Reliant Units in order to provide for such
withholding obligation.
2.4 Escrow Indemnity Agreement. The Reliant Member Representatives shall
cause the Exchange Agent (by written instruction and such other actions
reasonably requested by the Exchange Agent and the Escrow Agent) to deposit, at
the Reliant Merger Effective Time, with an escrow agent reasonably acceptable to
Parent and the Reliant Member Representatives (the "Escrow Agent"), on behalf of
certain members of Reliant, a number of shares of Parent Common Stock equal to
ten percent (10%) of the aggregate number of shares of Parent Common Stock
issued to holders of the Reliant Units pursuant to Section 2.2 hereof (the
"Escrow Shares"), which Escrow Shares shall be held in an escrow account in
accordance with the terms of an escrow indemnity agreement to be entered into
among each of the holders of Reliant Units identified in Section 2.4 of the
Reliant Disclosure Schedule), Parent and the Escrow Agent, substantially in the
form attached as Exhibit E hereto (the "Escrow Indemnity Agreement"). The Escrow
Shares will secure the obligations of all of the holders of Reliant Units
pursuant to the indemnification provisions set forth in Article X hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF RELIANT
Except as set forth in the disclosure schedule of Reliant accompanying
this Agreement (the "Reliant Disclosure Schedule"), the section numbers of which
are numbered to correspond to the section numbers of this Agreement to which
they refer, Reliant represents and warrants to Alkermes, Parent, Xxxxx
Acquisition Sub and Revere Acquisition Sub that the statements contained in this
Article III are, when read in conjunction with the Reliant Disclosure Schedule,
true, correct and complete as of the date of this Agreement and will be true,
correct and complete in all material respects on the Closing Date as though made
at and as of the Closing Date (with
12
such exceptions as may be permitted under or contemplated by this Agreement, and
except for representations and warranties that relate to a specific date, which
shall speak only as of such date); provided, however, the reference to
"complete" in the foregoing sentence shall not in any way expand the
representation made by Reliant in Section 3.25. For the purposes of this Article
III, the phrase "to the knowledge of Reliant" or similar expressions mean the
actual knowledge of Xxxxxx Xxxxxxxx, Xxxxxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxx
Xxxxxxxx, A. Xxxxxx Xxxxxxxx, Xxxx Xxxxxxxx, Xxxxxx Xxxxxxx and Xxxxx Xxxxxxxxx,
in each case after reasonable inquiry regarding the matters in question.
3.1 Organization and Qualification.
(a) Reliant is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware with full
limited liability company or other power and authority to own, lease and operate
its assets and properties and to carry on its business as now being and as
heretofore conducted. Reliant is qualified or otherwise authorized to transact
business as a foreign corporation in all jurisdictions in which such
qualification or authorization is required by law, except for jurisdictions in
which the failure to be so qualified or authorized would not have a Material
Adverse Effect with respect to Reliant.
(b) Reliant has previously provided to Alkermes true and complete
copies of its Certificate of Formation and the Reliant LLC Agreement, and
Reliant is neither in default in the performance, observation or fulfillment of
such charter documents nor subject to any other charter documents. The minute
books of Reliant provided or made available to Alkermes contain reasonably
accurate records of the actions taken (i) at meetings of the Board of Managers
(and any committees thereof) or by written consent in lieu thereof, and (ii) by
consent of at least the Requisite Holders (as such term is defined in the
Reliant LLC Agreement or as such term was, at the applicable time, defined in
prior versions thereof) of Reliant Units, in each case, since the time of
Reliant's formation and such records accurately reflect in all material respects
all material actions taken by the Board of Managers (or committees thereof) or
the Members, as the case may be.
3.2 Subsidiaries and Other Affiliates. Reliant has no Subsidiaries.
Reliant does not directly or indirectly own or have an investment in any of the
capital stock of (or hold an equity or membership interest in), and is not a
party to a partnership or joint venture with, any other Person.
3.3 Authority to Execute and Perform Agreements. Reliant has the limited
liability company power and authority to enter into, execute and deliver this
Agreement and to perform fully its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all requisite limited liability company
action of Reliant, including approval by the Board of Managers of Reliant
(except for approval by holders of the requisite percentages of outstanding
Reliant Units) required under the Reliant LLC Agreement and the DLLCA. This
Agreement has been duly executed and delivered by Reliant and, when duly
executed and delivered by the other Parties hereto, will constitute a valid and
binding obligation of Reliant, enforceable against Reliant in accordance with
its terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the
13
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
3.4 Capitalization.
(a) Section 3.4(a) of the Reliant Disclosure Schedule sets forth the
equity capitalization of Reliant as of the date hereof.
(b) Section 3.4(b) of the Reliant Disclosure Schedule sets forth a
true and complete list of (i) the name of each record holder of the issued and
outstanding Reliant Units, and the number and type of Reliant Units owned by
each such record holder, and (ii) the name of each holder, and the current
exercise or conversion price of, all outstanding (A) rights and options to
purchase or otherwise receive from Reliant any Reliant Units or any other
security of Reliant, and (B) securities of any kind convertible into or
exchangeable or exercisable for such securities (it being agreed that Reliant
shall have the right to amend and update Section 3.4(b) of the Reliant
Disclosure Schedule, without liability hereunder, at any time and from time to
time prior to the Reliant Merger Effective Time, to reflect any transfer,
exchange, exercise, conversion and/or issuance of Reliant securities, which
occurs following the date hereof and prior to the Reliant Merger Effective Time,
and no such amendment or update of Section 3.4(b) of the Reliant Disclosure
Schedule shall constitute a breach or default by Reliant hereunder or give rise
to any right of Alkermes to terminate this Agreement under Section 9.1(c));
provided, that such transfer, conversion and/or issuance is permitted under
Section 5.1 hereof. No other security of Reliant is authorized or outstanding.
(c) Except as indicated in Section 3.4(c) of the Reliant Disclosure
Schedule, there are no outstanding rights, subscriptions, warrants, calls,
preemptive rights, options, or other agreements of any kind to purchase or
otherwise receive from Reliant any Reliant Units or any other security of
Reliant, and there is no outstanding security of any kind pursuant to which
there is a contractual right under which Reliant is obligated to convert into or
exchange for such Reliant Units. Reliant has no equity appreciation rights,
phantom unit plan or similar rights outstanding. Except as set forth in Section
3.4(c) of the Reliant Disclosure Schedule, there are not any outstanding
obligations of Reliant to repurchase, redeem or otherwise acquire any Reliant
Units, voting securities or securities convertible into or exchangeable or
exercisable for Reliant Units or voting securities of Reliant, or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such securities.
All outstanding Reliant Units are, and all Reliant Units which may be issued
pursuant to the Reliant Option Plan, the Reliant 2002 Option Plan and
outstanding warrants to purchase Common Units will be, if and when issued in
accordance with the terms thereof, duly authorized and validly issued, fully
paid, non-assessable and free of any preemptive rights. All outstanding Common
Units and Preferred Units and all options and warrants to purchase Common Units
have been issued in compliance with all applicable federal and state securities
laws. Except as set forth in Section 3.4(c) of the Reliant Disclosure Schedule,
all options to acquire Common Units and all Restricted Units are subject to the
provisions of the Reliant Option Plan or the Reliant 2002 Option Plan. Except as
set forth in Section 3.4(c) of the Reliant Disclosure Schedule there are no
registration rights agreements, voting trusts, proxies or other similar
agreements, instruments or understandings to which Reliant is a party with
respect to the outstanding Reliant Units.
14
3.5 No Conflicts. The execution, delivery and performance of this
Agreement by Reliant and the consummation by Reliant of the transactions
contemplated hereby will not: (a) violate any provision of the Reliant
Certificate of Formation or Reliant LLC Agreement; (b) except as set forth in
Section 3.5 of the Reliant Disclosure Schedule, violate, conflict with or result
in the breach of any of the terms or conditions of, result in modification of
the effect of, or otherwise give any other contracting party the right to
terminate or accelerate all payments owed by Reliant under, or constitute (or
with notice or lapse of time or both constitute) a default under, any note,
bond, mortgage, deed of trust, security interest, indenture, lease, license,
contract, agreement, plan or other instrument to which Reliant is a party or to
which it or any of its assets, properties or securities are bound or subject
(the "Reliant Agreements"); (c) except as set forth in Section 3.5 of the
Reliant Disclosure Schedule, require Reliant to obtain any consent or approval
from, or provide notice to, any third party required under any Reliant Agreement
prior to Closing (the "Required Reliant Third Party Consents"); (d) violate any
law, ordinance or regulation or any order, judgment, injunction, decree or other
requirement of any Governmental Entity applicable to Reliant or by which any of
Reliant's assets, properties or securities is bound; (e) violate any Permits; or
(f) except provided in Section 3.5 of the Reliant Disclosure Schedule, result in
the creation of any Lien on the assets, properties or securities of Reliant,
excluding from the foregoing clauses (b) (except with respect to any
acceleration of any material payment), (c), (d), (e) and (f) any exceptions to
the foregoing that, in the aggregate, would not reasonably be expected to have a
Material Adverse Effect with respect to Reliant or on the ability of Reliant to
consummate the transactions contemplated hereby. No filing or registration with,
or authorization, consent or approval of, any Governmental Entity is required by
or with respect to Reliant in connection with the execution and delivery of this
Agreement by Reliant, or the consummation of the transactions contemplated
hereby, except: (i) in connection, or in compliance, with the provisions of the
HSR Act; (ii) for the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware by Revere Acquisition Sub and Reliant and the
filing of Articles of Merger with the Department of State of the Commonwealth of
Pennsylvania by Xxxxx Acquisition Sub and Alkermes; (iii) the SEC's declaration
of the effectiveness of the Form S-4; and (iv) for such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
obtain or make would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect with respect to Reliant or on the
ability of Reliant to consummate the transactions contemplated hereby.
3.6 Reliant Financial Statements. Reliant has previously delivered to
Alkermes the audited financial statements (including, in each case, any related
notes thereto) as of and for the years ended December 31, 1999, 2000 and 2001
(the "Financial Statements"). The Financial Statements (a) were prepared in
accordance with generally accepted accounting principles of the United States
applied on a consistent basis throughout the periods involved ("GAAP"); (b)
comply as to form in all material respects with the applicable published rules
and regulations of the SEC; and (c) fairly present in all material respects, the
financial position of Reliant as at the respective dates thereof and the results
of its operations and cash flows for the periods indicated. The audited balance
sheet of Reliant dated as of December 31, 2001 is hereinafter referred to as the
"Reliant Balance Sheet."
3.7 Information Supplied. None of the information supplied or to be
supplied by Reliant specifically for inclusion in (a) the Form S-4 to be filed
with the SEC by Parent in
15
connection with the issuance of shares of Parent Common Stock in the Mergers
will, at the time the Form S-4 is filed with the SEC, at any time it is amended
or supplemented and at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading, (b) any
filing pursuant to Rule 165 and Rule 425 under the Securities Act (each a
"Regulation M-A Filing") will at the time of any Regulation M-A Filing, or at
any time such filing is amended or supplemented, 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 are made, not misleading and (c) the Proxy Statement will, at the
date it is first mailed to the shareholders of Alkermes and at the time of the
Shareholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading.
3.8 Absence of Undisclosed Liabilities. As of December 31, 2001, Reliant
had no liabilities of any nature, whether accrued, absolute, contingent or
otherwise (including, without limitation, liabilities as guarantor or otherwise
with respect to obligations of others or liabilities for Taxes due or then
accrued or to become due), required to be reflected or reserved against in the
Reliant Balance Sheet that were not adequately reflected or reserved against on
the Reliant Balance Sheet. Except as disclosed on the Reliant Balance Sheet or
in Section 3.8 of the Reliant Disclosure Schedule, Reliant is not subject to any
obligation or liability, whether absolute, accrued, contingent or otherwise and
there is no existing condition, situation or set of circumstances which would
reasonably be expected to result in such an obligation or liability, other than
liabilities (a) incurred since December 31, 2001 in the ordinary course of
business, (b) specifically incurred by Reliant under this Agreement, (c)
permitted to be incurred under the provisions of Section 5.1(b) hereof, or (d)
that would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect with respect to Reliant.
3.9 No Material Adverse Change. Except as set forth in Section 3.9 of the
Reliant Disclosure Schedule, since December 31, 2001 and through the date
hereof, there has not been:
(a) any Material Adverse Change in Reliant;
(b) except for purchases of inventory or equipment acquired in the
ordinary course of business, any transaction, commitment, contract or agreement
entered into by Reliant or any relinquishment by Reliant, which exceeds $400,000
in the aggregate, of any contract or other right having a value of or involving
aggregate payments in excess of $400,000;
(c) any issuance of Reliant Units or other securities of Reliant or
any option, warrant or other right to purchase or otherwise acquire any Reliant
Units or other securities of Reliant;
(d) any redemption, restricted unit repurchase or other acquisition
of any Reliant Units or other securities of Reliant or any declaration, setting
aside, or payment of any dividend or distribution of any kind with respect to
any Reliant Units or other securities of Reliant;
16
(e) any increase in the compensation or benefits or establishment of
any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, option (including, the granting or modification of options or
performance awards), or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any managers, officers,
employees or consultants of Reliant;
(f) any change in any accounting method or practice followed by
Reliant;
(g) any loan or advance by Reliant to any member, officer, employee,
manager or consultant (other than expense advances made in the ordinary course
of business), or any other loan or advance otherwise than in the ordinary course
of business;
(h) except for inventory or equipment acquired in the ordinary
course of business, any acquisition by Reliant of all or any part of the assets,
properties, capital stock or business of any other Person which exceeds $400,000
in the aggregate;
(i) except in the ordinary course of business, any sale, abandonment
or any other disposition of any of Reliant's assets or properties with an
aggregate value in excess of $400,000; or
(j) any commitment on the part of Reliant to do any of the
foregoing.
3.10 Tax Matters. Except as set forth in Section 3.10 of the Reliant
Disclosure Schedule or as otherwise permitted by Section 5.1(b)(viii):
(a) Reliant has filed all Tax Returns required to be filed by it.
All such Tax Returns were correct and complete in all material respects. All
taxes owed by Reliant (whether or not shown on any Tax Return) have been timely
paid. Any provision for Taxes reflected in the Reliant Balance Sheet is adequate
for payment of any and all Tax liabilities for periods ending on or before
December 31, 2001. There are no Liens for Taxes of Reliant on any assets of
Reliant except Liens for current Taxes not yet due or which are being contested
in good faith by appropriate proceedings and for which appropriate reserves have
been made.
(b) There has not been any audit of any Tax Return filed by Reliant
and to the knowledge of Reliant, no audit of any such Tax Return is in progress
and Reliant has not been notified by any Tax authority that any such audit is
contemplated or pending. To the knowledge of Reliant, there is no Tax deficiency
or claim for additional Taxes asserted or threatened to be asserted against
Reliant by any Taxing authority. No extension of time with respect to any date
on which a Tax Return was or is to be filed by Reliant is in force, and no
waiver or agreement by Reliant is in force for the extension of time for the
assessment or payment of any Tax.
(c) Reliant (i) has not been a member of an "affiliated group"
filing a consolidated federal income tax return (other than a group the common
parent of which was Reliant), and (ii) does not have any liability for the Taxes
of any Person (other than the Taxes of Reliant) under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise. Since the inception of
Reliant Pharmaceuticals, LLC, it has been a partnership for purposes of federal,
state and local taxes measured by income.
17
(d) Reliant does not hold any United States real property interests
within the meaning of Section 897(c) of the Code. Alkermes shall have received a
certification from Reliant, dated no more than thirty (30) days prior to the
Closing Date and signed by a responsible officer of Reliant, that Reliant does
not hold an amount of United States real property interests such that Treas.
Reg. Section 1.1445-11T(d)(1) is applicable to the disposition of an interest in
Reliant.
(e) Reliant has not agreed, nor is it required, to make any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise.
(f) There is no person who should be treated as an employee of
Reliant for any employment or withholding tax purpose who was not treated as an
employee by Reliant. Reliant has not entered into any compensatory agreements
with respect to the performance of services that could (without taking into
account any compensation agreements entered into after the Closing) require
Parent (or any Subsidiary of Parent) to make an "excess parachute payment"
within the meaning of Sections 280G and 4999 of the Code.
3.11 Compliance with Laws. Except as set forth in Section 3.11 of the
Reliant Disclosure Schedule or with respect to compliance with environmental,
intellectual property, tax, regulatory laws, employment or ERISA matters, which
are covered elsewhere in this Article III (which matters are not covered by the
representations and warranties in this Section 3.11):
(a) With respect to licenses, certifications, approvals,
qualifications, variances, permissive uses, consents and other authorizations
(collectively, "Permits"): (i) Reliant has obtained all Permits material to the
conduct of the business of Reliant as currently conducted or has applied for, or
intends, as reasonably necessary, to apply, for all additional Permits material
to any new business that Reliant currently intends to conduct; (ii) such Permits
are in full force and effect; (iii) any applications for renewal necessary to
maintain any Permit in effect have been filed; (iv) and no proceeding is
pending, or to the knowledge of Reliant, threatened to revoke or limit any
Permit, except, in each case, in such instances as would not reasonably be
expected to have a Material Adverse Effect with respect to Reliant.
(b) Reliant is not in violation of any applicable law, ordinance or
regulation or any order, judgment, injunction, decree or other requirement of
any court, arbitrator or Governmental Entity, except for violations that would
not, in the aggregate, be reasonably expected to have a Material Adverse Effect
with respect to Reliant. Since its formation, Reliant has not received notice
of, and there has not been any citation, fine or penalty imposed against Reliant
for, any violation or alleged violation that has had or that would reasonably be
expected to have a Material Adverse Effect with respect to Reliant.
3.12 Actions and Proceedings. There are no outstanding orders, awards,
judgments, injunctions or decrees of any court, arbitrator or Governmental
Entity against Reliant or any of its securities, assets or properties. There are
no (a) judicial or administrative actions, suits, or claims or legal,
administrative or arbitration proceedings or, to the knowledge of Reliant,
investigations or reviews pending, or (b) to the knowledge of Reliant, judicial
or administrative actions, suits, or claims or legal, administrative or
arbitration proceedings, investigations or reviews threatened against Reliant
that, in the case of clauses (a) or (b), individually or in the aggregate, would
have a Material Adverse Effect with respect to Reliant or which question the
18
validity of this Agreement or of any action taken by Reliant in connection with
this Agreement or the transactions contemplated hereby.
3.13 Contracts and Other Agreements.
(a) Section 3.13(a) of the Reliant Disclosure Schedule sets forth
the material contracts of Reliant, other than those contracts entered into after
the date hereof as permitted by Section 5.1(b). Reliant has previously delivered
or made available to Alkermes true, complete and correct copies of such
contracts.
(b) Except as set forth in Section 3.13(b) of the Reliant Disclosure
Schedule, each contract described in Section 3.13(a) is valid, subsisting, in
full force and effect and binding upon Reliant and, to the knowledge of Reliant,
binding upon the other parties thereto in accordance with its terms. Reliant is
not in breach or default under any of such contracts, nor, to the knowledge of
Reliant, is any other party to any such contract or other agreement in breach or
default thereunder, and no condition exists that with notice or lapse of time or
both would constitute a breach or default thereunder, except, in each case, such
breaches or defaults as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect with respect to Reliant. Except as
set forth in Section 3.13(b) of the Reliant Disclosure Schedule, Reliant has no
knowledge of any intent of any third party to any of the contracts and
agreements identified in Section 3.13(a) of the Reliant Disclosure Schedule to
terminate, suspend or modify (except for any (i) modification in the ordinary
course of business or that is not material, or (ii) termination as a result of
expiration or non-renewal) any such contract or agreement with Reliant at any
time prior to, after or in connection with the Closing, which termination,
suspension or modification would reasonably be expected to have a Material
Adverse Effect with respect to Reliant.
3.14 Properties. Section 3.14 of the Reliant Disclosure Schedule sets
forth a complete and correct list, as of the date hereof, of all real property
owned or leased by Reliant, including the names of each of the parties to such
lease or financing arrangement, if applicable, and the location of the
applicable property. Reliant owns valid and marketable title to all real and
material personal property owned by it, and valid leasehold interests in all
real and material personal property leased by it, in each case free and clear of
all Liens, except (a) Liens specified in Section 3.14 of the Reliant Disclosure
Schedule, reflected in the Financial Statements or otherwise permitted under
Section 5.1(b)(i) hereof, (b) Liens for Taxes not yet delinquent or which are
being contested in good faith by appropriate proceedings if adequate reserves
with respect thereto are maintained on its books in accordance with GAAP, (c)
statutory Liens incurred in the ordinary course of business consistent with past
practices that have not had and could not reasonably be expected to have a
Material Adverse Effect with respect to Reliant, and (d) Liens which do not
materially detract from the value or materially interfere with the use of the
properties affected thereby (the exceptions described in the foregoing clauses
(a), (b), (c) and (d) being referred to collectively as the "Reliant Permitted
Encumbrances").
3.15 Intellectual Property.
(a) To Reliant's knowledge, Reliant owns, licenses, or otherwise has
the right to use any and all patents, trademarks, trademark rights, service
marks, service xxxx rights, trade
19
names, trade name rights, logos, domain names, franchises and copyrights, and
any and all applications for the foregoing, and any and all technology,
inventions, trade secrets, know-how, computer software, customer lists and
processes used in or necessary for the conduct of Reliant's business as
currently conducted (collectively "Reliant IP Rights"). To Reliant's knowledge,
the Reliant IP Rights are free and clear of all material Liens other than
Reliant Permitted Encumbrances.
(b) Section 3.15(b) of the Reliant Disclosure Schedule sets forth a
list of all patents, trademarks and applications therefor that are owned or
licensed by Reliant, which list, to Reliant's knowledge, is complete and
accurate except to the extent that any omissions therefrom or inaccuracies
therein, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Reliant. To Reliant's knowledge, all patents,
trademarks and applications therefor owned by or licensed to Reliant have been
duly registered, filed with or issued by each Governmental Entity in the
relevant jurisdiction, all necessary affidavits of continuing use have been
filed and all necessary maintenance fees have been timely paid to continue all
such rights in effect, except for failures to register, file or pay that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect with respect to Reliant. To Reliant's
knowledge, none of the patents owned or licensed by Reliant have been declared
invalid or unenforceable, in whole or in part, by any Governmental Entity. To
Reliant's knowledge, no such patents or applications are the subject of an
interference claim by a third party.
(c) Section 3.15(c) of the Reliant Disclosure Schedule sets forth
all agreements under which Reliant is obligated to make payments to third
parties for use of any Reliant IP Rights for the commercialization of any
products that are, as of the date hereof, sold, manufactured, or under
development by or on behalf of Reliant, other than agreements entered into after
the date hereof as permitted by Section 5.1(b). To Reliant's knowledge, Reliant
is not in material breach of any license, sublicense or other agreement to which
Reliant is a party relating to any of Reliant's IP Rights. Reliant has not been
notified of any claim by any third party that Reliant is in breach of any such
agreement.
(d) To Reliant's knowledge, Reliant has not, is not and is not
planning to engage in activities, material to its business, including
commercializing, importing, having imported, manufacturing, having manufactured,
using, having used, offering for sale, having offered for sale, selling or
having sold, its current products and its products under development as they
currently exist, which under the relevant laws of any relevant jurisdiction,
interfere with, infringe upon, misappropriate, or otherwise violate any valid
proprietary rights of any third party.
(e) Except as set forth in Section 3.15(e) of the Reliant Disclosure
Schedule, to Reliant's knowledge, there do not exist any claims by any third
parties against Reliant that the manner in which Reliant currently conducts its
business, including commercializing, importing, having imported, manufacturing,
having manufactured, using, having used, offering for sale, having offered for
sale, selling or having sold, Reliant's current commercial products, infringes
on any of such third parties' valid proprietary rights, which claim, if
determined adversely to Reliant by a final non-appealable judgment of a court of
competent jurisdiction, would reasonably be expected to have a Material Adverse
Effect on Reliant.
20
(f) Except as set forth in Section 3.15(f) of the Reliant Disclosure
Schedule, Reliant has not received any notice from a third party that offers
Reliant a license to a patent under circumstances where if Reliant refused to
accept such an offer, Reliant's refusal would reasonably be expected to have a
Material Adverse Effect on Reliant.
(g) Except as set forth in Section 3.15(g) of the Reliant Disclosure
Schedule, Reliant has not granted licenses or options for licenses to any
material Reliant IP Rights.
(h) Except as set forth in Section 3.15(h), to Reliant's knowledge,
there is no infringement by a third party of any Reliant IP Rights or
infringement of any Reliant IP Rights resulting from the marketing of a
competing product that would have a Material Adverse Effect with respect to
Reliant.
(i) To Reliant's knowledge none of the activities of the employees
or consultants of Reliant on behalf of Reliant violates any agreements or
arrangements which any such employees or consultants have with former employers.
(j) Reliant uses, and has used, commercially reasonable efforts to
maintain the confidentiality of its trade secrets.
3.16 Employee Benefit Plans.
(a) Section 3.16 of the Reliant Disclosure Schedule sets forth a
true, correct and complete list of all Plans of Reliant (the "Reliant Plans").
Except as set forth in Section 3.16 of the Reliant Disclosure Schedule, a true,
correct and complete copy of each Reliant Plan or a description thereof if such
Plan is unwritten, has been delivered to Alkermes. Each Reliant Plan that
contains any provision that provides additional benefits upon the occurrence of
a change of control of Reliant is referred to herein as a "Severance
Arrangement" and is specifically identified as such in Section 3.16 of the
Reliant Disclosure Schedule.
(b) No Reliant Plan provides post-retirement medical, vision,
dental, prescription drug, health and/or life insurance benefits (other than as
required by Section 601 of ERISA (COBRA coverage)).
(c) Each Reliant Plan has been maintained, operated and administered
in material compliance with its terms and with all applicable provisions of
ERISA, the Code, and all regulations, rulings and other authority issued
thereunder (including, without limitation, the nondiscrimination requirements
under Sections 401(k) and 401(m) of the Code, as applicable), and all other
applicable laws and administrative or governmental rules and regulations. All
contributions required to have been made to any Reliant Plan by Reliant or any
ERISA Affiliate have been made within the time required by such Reliant Plan and
applicable law.
(d) No Reliant Plan is or has been subject to Title IV of ERISA or
Section 412 of the Code. Reliant does not currently have, and has never had, any
ERISA Affiliates. No Reliant Plan is maintained in connection with any trust
described in Section 501(c)(9) of the Code.
21
(e) There are no actions, suits, negotiations, demands, proposals,
investigations, proceedings or claims pending, or to the knowledge of Reliant,
threatened (other than routine claims for benefits) with respect to any Reliant
Plan which would have, individually or in the aggregate, a Material Adverse
Effect with respect to Reliant.
(f) No prohibited transactions described in Section 406 of ERISA or
Section 4975 of the Code have occurred with respect to any Reliant Plan which
would result in any material liability to Reliant. Reliant has not participated
in a violation of Part 4 of Title I, Subtitle B of ERISA by any plan fiduciary
of any Reliant Plan or has any unpaid civil liability under Section 502(1) of
ERISA, except for any such violation or liability that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect
with respect to Reliant.
(g) All Reliant Plans that are intended to be qualified under
Section 401(a) of the Code have either (i) received a current, favorable
determination letter as to such qualification from the Internal Revenue Service,
(ii) been submitted to the Internal Revenue Service for such determination
letter within the applicable remedial amendment period under Section 401(b) of
the Code, or (iii) the remedial period for such Reliant Plans amendment has not
expired. Reliant knows of no event that has occurred, either by reason of any
action or failure to act, which would cause any such Reliant Plans not to be so
qualified under Section 401(a) of the Code.
(h) Reliant does not currently and has not at any time had, any
obligation to contribute to or any liability in connection with any
Multiemployer Plan.
(i) To Reliant's knowledge, no liability exists which could
reasonably be expected to have a Material Adverse Effect on Reliant, for any
failure to cover or provide benefits under a Reliant Plan to any individual
classified as an independent contractor by Reliant.
3.17 Employee Relations.
(a) As of the date hereof, Reliant has approximately 189 full-time
and 5 part-time employees and to the knowledge of Reliant generally enjoys good
employer-employee relations. Reliant is not delinquent in payments to any of its
employees or consultants for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed by them or amounts required to be
reimbursed to such employees. Except as provided in the Severance Arrangements
upon termination of the employment of any employees, neither Reliant nor
Alkermes, Parent or the Reliant Surviving LLC will solely by reason of the
Reliant Merger or anything done prior to the Effective Time be liable to any of
such employees for severance pay or any other payments (other than accrued
salary, vacation or sick pay in accordance with Reliant's normal policies).
Except as may be permitted by Section 5.1(b)(ix) and (x) hereof, true and
complete information as to all current managers, officers or employees of
Reliant including, in each case, name, current job title, base salary, bonus
potential and commissions has been furnished to Alkermes. Section 3.17(a) of the
Reliant Disclosure Schedule lists all employment contracts between Reliant and
its managers, officers and employees (other than as may be entered into after
the date hereof as permitted by Section 5.1(b)(ix)(D) and (x) hereof).
22
(b) Reliant is not a party to any collective bargaining agreement,
memorandum, of understanding, settlement or other labor agreement with any union
or labor organization and no union or labor organization has been recognized by
Reliant as an exclusive bargaining representative for employees of Reliant. As
of the date hereof, to the knowledge of Reliant: (i) there is no current union
representation matter involving employees of Reliant, nor does Reliant have
knowledge of any significant activity or proceeding of any labor organization
(or representative thereof) or employee group to organize any such employees;
(ii) there is no labor dispute, strike, picketing or work stoppage, or any
lockout, involving employees of Reliant pending or, to the knowledge of Reliant,
threatened against it or involving Reliant; and (iii) there is no arbitration,
unfair labor practice, investigation, employment discrimination or other labor
or employment related charge, complaint or claim against Reliant pending or, to
the knowledge of Reliant, threatened before any court, arbitrator, mediator or
Governmental Entity or tribunal that, has or could have a Material Adverse
Effect with respect to Reliant.
(c) Except as set forth in Section 3.17(c) of the Reliant Disclosure
Schedule, Reliant does not employ or use any independent contractors, temporary
employees, leased employees or any other servants or agents compensated other
than through reportable wages paid by Reliant (collectively "Contingent
Workers"). To the extent that Reliant employs or uses Contingent Workers, it has
properly classified and treated them in accordance with applicable laws and for
purposes of all benefits plans and perquisites, except for any such violations
that individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect with respect to Reliant.
3.18 Insurance. Section 3.18 of the Reliant Disclosure Schedule sets forth
a list of all policies or binders of fire, liability, product liability,
workers' compensation, managers' and officers' and other insurance policies: (a)
of such types and in such coverage and deductible amounts as are reasonably
believed to be adequate for the business engaged in by Reliant; (b) that are in
conformity with the requirements of all leases or other agreements to which
Reliant is a party; and (c) that, to the knowledge of Reliant, are valid and
enforceable in accordance with their terms. Reliant is not in default with
respect to any provision contained in any such policy that would reasonably be
expected to result in denial of coverage nor has Reliant failed to give any
notice or present any claim under any such policy in due and timely fashion,
except in each instance as would not reasonably be expected to have a Material
Adverse Effect with respect to Reliant. There are no outstanding unpaid claims
under any such policy. Reliant has not received notice of cancellation or
non-renewal of any such policy.
3.19 Brokerage. Except as described in Section 3.19 of the Reliant
Disclosure Schedule, no broker, finder, agent or similar intermediary has acted
on behalf of Reliant in connection with this Agreement or the transactions
contemplated hereby, and there are no brokerage commissions, finders' fees or
similar fees or commissions payable in connection herewith based on any
agreement, arrangement or understanding with Reliant.
3.20 Environmental Matters. Except as set forth in Section 3.20 of the
Reliant Disclosure Schedule:
(a) no notice, notification, demand, request for information,
citation, summons, complaint or order has been received by, and no
investigation, action, claim, suit,
23
proceeding or review is pending or, to the knowledge of Reliant, threatened by
any Person against Reliant, and no penalty has been assessed against Reliant, in
each case, with respect to any matters relating to or arising out of any
Environmental Laws;
(b) to the knowledge of Reliant, no underground tank or other
underground storage receptacle for Hazardous Substances is currently located at
any property owned or operated by Reliant, and there have been no reportable
releases of any Hazardous Substances from any such underground tank or related
piping;
(c) except as, individually or in the aggregate, have not had, and
would not reasonably be expected to have, a Material Adverse Effect with respect
to Reliant, there are no PCBs or asbestos-containing materials located at or on
any property owned or operated by Reliant;
(d) except as, individually or in the aggregate, have not had, and
would not reasonably be expected to have, a Material Adverse Effect with respect
to Reliant, Reliant is and has been in compliance with all Environmental Laws;
(e) except as, individually or in the aggregate, have not had, and
would not reasonably be expected to have, a Material Adverse Effect with respect
to Reliant, there are no liabilities of or relating to Reliant relating to or
arising out of any Environmental Law or the release or threatened release of any
Hazardous Substance, and there is no existing condition, situation or set of
circumstances which could reasonably be expected to result in such a liability;
and
(f) Reliant has provided or made available to Alkermes with true and
correct copies of any and all written reports, audits and assessments, in the
possession or control of Reliant, of (i) any environmental conditions in, on or
about the properties owned and/or operated by Reliant, or (ii) compliance by
Reliant with applicable Environmental Laws.
3.21 Takeover Statutes. Reliant does not have in effect any rights plan or
similar device or arrangement, commonly or colloquially known as a "poison pill"
or "anti-takeover" plan or any similar plan, device or arrangement and Reliant
has not adopted or authorized the adoption of such plan, device or arrangement.
To the knowledge of Reliant, other than the applicable provisions of the PBCL,
no state takeover or "fair price" or "interested party" statute or similar
statute or regulation applies or purports to apply to the Reliant Merger, this
Agreement or any of the transactions contemplated hereby.
3.22 Regulatory Compliance.
(a) As to all products subject to the FDCA and the FDA regulations
and Good Clinical Practices guidance thereunder that are manufactured, tested,
distributed and/or marketed by or for Reliant (each such product, a
"Pharmaceutical Product"), Reliant is, or to the knowledge of Reliant, third
parties acting on behalf of Reliant are, manufacturing, testing, distributing or
marketing, as the case may be, each such Pharmaceutical Product in substantial
compliance with all applicable requirements under the FDCA and any applicable
similar state laws and regulations, including those relating to investigational
use, good manufacturing practices, labeling, advertising, record keeping,
adverse event reporting, filing of reports and
24
security, except for failures to be in compliance that, individually or in the
aggregate, have not had or would not reasonably be expected to have a Material
Adverse Effect with respect to Reliant. Reliant and, to the knowledge of
Reliant, third parties acting on behalf of Reliant, have not, as of the date
hereof, received any adverse written notice (including but not limited to 483
notices) within the past two years from the FDA or any other similar foreign
Governmental Entity (i) regarding the approvability or approval of a
Pharmaceutical Product or the labeling of any Pharmaceutical Product or (ii)
alleging any violation of any Legal Provision, which in the case of either
clause (i) or (ii), individually or in the aggregate has had or would reasonably
be expected to have a Material Adverse Effect with respect to Reliant.
(b) As of the date hereof, no Pharmaceutical Product has been
recalled, withdrawn, suspended or discontinued as a result of any action by the
FDA or any other similar foreign Governmental Entity by Reliant or, to the
knowledge of Reliant, any licensor of any Pharmaceutical Product, in the United
States or outside the United States (whether voluntarily or otherwise), in each
case since Reliant's inception. No proceedings in the United States or outside
of the United States (whether completed or pending) seeking the material change
in product labeling or recall, withdrawal, suspension or seizure of any
Pharmaceutical Product are pending against (i) Reliant or (ii) to Reliant's
knowledge, any third parties acting on behalf of Reliant or any licensee of any
Pharmaceutical Product, nor have any such proceedings been pending at any prior
time against Reliant or, to Reliant's knowledge, against any such third parties
or licensee, in each case which, individually or in the aggregate have had or
would reasonably be expected to have a Material Adverse Effect with respect to
Reliant.
(c) To the knowledge of Reliant, as to each biological or drug of
Reliant for which a biological license application, new drug application,
investigational new drug application or similar state or foreign regulatory
application has been approved, Reliant is in substantial compliance with the
applicable provisions of 21 U.S.C. Sections 331, 355, 356a and 356b, or 21
C.F.R. Parts 202, 203, 312 and 314, respectively, or any successor statute
thereto, as applicable and all terms and conditions of such applications, except
for failures to be in compliance that, individually or in the aggregate have not
had or would not reasonably be expected to have a Material Adverse Effect with
respect to Reliant. As to each such biological or drug, Reliant has included in
the application for such drug, where required, the certification described in 21
U.S.C. Section 335a (k)(1) or any successor statute thereto, as applicable and
the list described in 21 U.S.C. Section 335a (k)(2) or any successor statute
thereto, as applicable, and each such certification and list was true and
accurate when made and remains true and accurate, except for such inaccuracies
that, individually or in the aggregate have not had or would not reasonably be
expected to have a Material Adverse Effect with respect to Reliant. In addition,
Reliant is in substantial compliance with all applicable registration and
listing requirements set forth in 21 U.S.C. Section 360 and 21 C.F.R. Part 207
or any successor statute thereto, as applicable.
(d) Reliant has not, and, to its knowledge, no officer or employee
of Reliant has, made an untrue statement of a material fact or fraudulent
statement to the FDA or any other Governmental Entity, failed to disclose a
material fact required to be disclosed to the FDA or any other Governmental
Entity, or committed an act, made a statement, or failed to make a statement
that, at the time such disclosure was made, could reasonably be expected to
provide a basis for the FDA or any other Governmental Entity to invoke with
respect to Reliant its policy respecting "Fraud, Untrue Statements of Material
Facts, Bribery, and Illegal Gratuities", set forth in 56 Fed.
25
Reg. 46191 (September 10, 1991) or any supplement or amendment thereto. Reliant
has not, and, to the knowledge of Reliant, no officer or employee of Reliant
has, been convicted of any crime or, to Reliant's knowledge, engaged in any
conduct for which debarment is mandated by 21 U.S.C. Section 335a(a) or
authorized by 21 U.S.C. Section 335a(b).
(e) As of the date hereof, Reliant has not received any written
notice that the FDA or any other Governmental Entity has commenced, or
threatened to initiate, any action to withdraw its approval or request the
material change in product labeling or the recall of any Pharmaceutical Product,
or commenced, or threatened to initiate, any action to enjoin production of any
Pharmaceutical Product.
3.23 Customers and Suppliers. Except as set forth in Section 3.23 of the
Reliant Disclosure Schedule, no customer or supplier that was material and
significant to Reliant during the last twelve (12) months has terminated,
materially reduced, or, to the knowledge of Reliant, threatened in writing to
terminate or materially reduce its purchases from, or provisions of products or
services to, Reliant.
3.24 Required Reliant Member Approval. The affirmative vote of the members
of Reliant holding not less than sixty percent (60%) of the Preferred Units
voting together as a single class on an as converted basis, and the affirmative
vote of the members holding a majority of the Common Units and the Preferred
Units, on an as converted basis, voting together as a single class or if no
Preferred Units are then outstanding, Reliant members holding a majority of the
Common Units then outstanding, is required to approve and adopt this Agreement
and approve the Reliant Merger (the "Reliant Member Approval"). No other vote of
the holders of any Reliant Units is required by law, including the DLLCA, the
Certificate of Formation of Reliant, the Reliant LLC Agreement, or otherwise, in
order for Reliant to consummate the transactions contemplated hereby, including
the Reliant Merger.
3.25 Disclosure. The representations and warranties of Reliant contained
in this Agreement, including the Reliant Disclosure Schedule, do not contain any
untrue statement of a material fact, and do not omit to state any material fact
necessary to make such representations, warranties and statements, in light of
the circumstances under which they are made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ALKERMES, PARENT, XXXXX
ACQUISITION SUB AND REVERE ACQUISITION SUB
Except as set forth in the disclosure schedule of Alkermes
accompanying this Agreement (the "Alkermes Disclosure Schedule"), the section
numbers of which are numbered to correspond to the section numbers of this
Agreement to which they refer, Alkermes, Parent, Xxxxx Acquisition Sub and
Revere Acquisition Sub represent and warrant to Reliant that the statements
contained in this Article IV, when read in conjunction with the Alkermes
Disclosure Schedule, are true, correct and complete as of the date of this
Agreement and will be true, correct and complete in all material respects on the
Closing Date as though made at and as of the Closing Date (with such exceptions
as may be permitted under or contemplated by this
26
Agreement, and except for representations and warranties that relate to a
specific date that speak only as of such date); provided, however, the reference
to "complete" in the foregoing sentence shall not in any way expand the
representation made by Alkermes in Section 4.25. For purposes of this Article
IV, the phrase "to the knowledge of Alkermes" or similar expressions mean the
actual knowledge of Xxxxxxx X. Pops, Xxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxx, Xxxxxxx
X. Xxxxxx, X. Xxxxxx Xxxxxxx, Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxx, Xxx Xxxxxxx,
Xxxxxx Xxxxxx and Xxxxxxxx X. Xxxxx, in each case after reasonable inquiry
regarding the matters in question.
4.1 Organization and Qualification.
(a) Alkermes, Parent and Xxxxx Acquisition Sub are each a
corporation duly organized and validly subsisting under the laws of the
Commonwealth of Pennsylvania with full corporate or other power and authority to
own, lease and operate their respective assets and properties and to carry on
their respective businesses as now being and as heretofore conducted. Revere
Acquisition Sub is a limited liability company duly formed, validly existing and
in good standing under the laws of the State of Delaware with full limited
liability company or other power and authority to own, lease and operate its
assets and properties and to carry on its business as now being and as
heretofore conducted. Alkermes, Parent, Xxxxx Acquisition Sub and Revere
Acquisition Sub are each qualified or otherwise authorized to transact business
as a foreign entity in all jurisdictions in which such qualification or
authorization is required by law, except for jurisdictions in which the failure
to be so qualified or authorized would not have a Material Adverse Effect with
respect to Alkermes or such entity.
(b) Alkermes has previously provided to Reliant true and complete
copies of the articles of incorporation and bylaws, certificate of formation and
operating agreement or other charter documents of Alkermes, Parent, Xxxxx
Acquisition Sub and Revere Acquisition Sub as presently in effect, and none of
Alkermes, Parent, Xxxxx Acquisition Sub and Revere Acquisition Sub is in default
in the performance, observation or fulfillment of its respective articles of
incorporation or bylaws or certificate of formation and operating agreement, as
the case may be, or other charter documents. The minute books of each of
Alkermes, Parent, Xxxxx Acquisition Sub and Revere Acquisition Sub provided to
Reliant contain reasonably accurate records of the actions taken (i) at meetings
of the board of directors or board of managers (and any committees thereof) or
by written consent in lieu thereof, and (ii) by consent of shareholders or
members, in each case, since the time of each of their respective formation and
such records accurately reflect in all material respects all material actions
taken by the board (or committee thereof) or the shareholders or members, as the
case may be.
(c) Attached hereto as Exhibit F and Exhibit G is a true and
complete copy of the articles of incorporation and bylaws, respectively, of
Parent (the "Parent Charter Documents"), in each case as currently in effect
and, except as for amendments thereto as permitted in Section 5.2(b)(vi), as
shall be in effect immediately following the Effective Time.
(d) Parent, Xxxxx Acquisition Sub and Revere Acquisition Sub each
are entities formed solely for the purpose of carrying out the transactions
contemplated by this Agreement, and have no other assets or activities.
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4.2 Subsidiaries and Other Affiliates.
(a) Alkermes' only Subsidiaries are Alkermes Controlled
Therapeutics, Inc., Alkermes Controlled Therapeutics, Inc. II, Advanced
Inhalation Research, Inc., Alkermes Development Corporation II, Parent, Xxxxx
Acquisition Sub, Alkermes Acquisition Sub, Inc. Revere Acquisition Sub, Alkermes
Europe, Ltd. and Alkermes Investments, Inc. Each Alkermes Subsidiary has been
duly incorporated or formed under the laws of its respective jurisdiction of
incorporation or formation. Each Subsidiary of Alkermes has full corporate or
limited liability company power and authority to own or lease its properties and
to carry on its business as now being and as heretofore conducted, and is duly
qualified to transact business in all jurisdictions in which the character of
the property owned or leased or the nature of the business transacted by it
requires such qualification (except where the failure to be so qualified would
not reasonably be expected to have a Material Adverse Effect with respect to
Alkermes or such entity). Alkermes owns 100% of the shares or interests of each
of its Subsidiaries, free and clear of any Liens, and there are no outstanding
rights, subscriptions, warrants, calls, preemptive rights, options, or other
agreements of any kind to purchase or otherwise receive from any Alkermes
Subsidiary any shares of capital stock or any other security of any Alkermes
Subsidiary, and there is no outstanding security of any kind convertible into or
exchangeable for such shares of capital stock or other securities (other than
the provisions of this Agreement with respect to shares of Parent Capital
Stock).
(b) Except for its Subsidiaries and as set forth in the Alkermes
Financials and Section 4.2(b) of the Alkermes Disclosure Schedule, neither
Alkermes nor any of its Subsidiaries, directly or indirectly, owns or has any
investment in any of the capital stock of, and is not a party to a partnership
or joint venture with, any other Person.
4.3 Authority to Execute and Perform Agreements. Alkermes, Parent, Xxxxx
Acquisition Sub and Revere Acquisition Sub each have the corporate or limited
liability company power and authority to enter into, execute and deliver this
Agreement and to perform fully their respective obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
corporate or limited liability company action of Alkermes, Parent, Xxxxx
Acquisition Sub and Revere Acquisition Sub, including approval by the boards of
directors and board of managers of such entities and approval by the
shareholders or members (except for the approval of the shareholders of
Alkermes) required under the charter documents of such entities and the DLLCA
and PBCL. This Agreement has been duly executed and delivered by each of
Alkermes, Parent, Xxxxx Acquisition Sub and Revere Acquisition Sub and, when
duly executed and delivered by the other Parties hereto, will constitute a valid
and binding obligation of each of Alkermes, Parent, Xxxxx Acquisition Sub and
Revere Acquisition Sub, enforceable against each of such entities in accordance
with its terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
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4.4 Capitalization.
(a) Alkermes is authorized to issue 165,000,000 shares of capital
stock as follows: (i) 160,000,000 shares of common stock, $0.01 par value per
share ("Alkermes Common Stock"), 64,206,712 shares of which were issued and
outstanding as of March 18, 2002; (ii) 450,000 shares of Alkermes Non-Voting
Common Stock, $0.01 par value per share ("Alkermes Non-Voting Common Stock"),
382,632 shares of which are issued and outstanding on the date hereof; (iii)
1,550,000 shares of capital stock, $0.01 par value, issuable in series, none of
which are issued or outstanding; and (iv) 3,000,000 shares of preferred stock,
$0.01 par value, issuable in series, none of which are issued or outstanding. As
of March 18, 2002, except for an aggregate of 14,328,084 shares of Alkermes
Common Stock reserved for issuance (but unissued) under the Alkermes Stock
Option Plans, restricted stock awards and restricted stock agreements, 382,632
shares of Alkermes Common Stock reserved for issuance upon conversion of the
Alkermes Non-Voting Common Stock and 2,952,030 shares of Alkermes Common Stock
that have been reserved for issuance upon conversion of the Alkermes 3 3/4%
Convertible Subordinated Notes due 2007 there are no outstanding rights,
subscriptions, warrants, calls, preemptive rights, options, or other agreement
of any kind to purchase or otherwise receive from Alkermes any shares of capital
stock or any other security of Alkermes, and there is no outstanding security of
any kind pursuant to which there is a contractual right to convert into or
exchange for such shares of capital stock or other securities.
(b) There are no shareholder agreements, voting trusts, proxies or
other agreements, instruments or understandings with respect to the outstanding
shares of capital stock of Alkermes or any of its Subsidiaries to which Alkermes
or any of its Subsidiaries is a party.
(c) Parent is authorized to issue 255,000,000 shares of capital
stock as follows: (i) 250,000,000 shares of common stock, $0.01 par value per
share ("Parent Common Stock"), one (1) share of which is issued and outstanding;
(ii) 450,000 shares of Parent Non-Voting Common Stock, $0.01 par value per share
("Parent Non-Voting Common Stock"), none of which are issued and outstanding,
(iii) 1,550,000 shares of capital stock, $0.01 par value, issuable in series,
none of which are issued or outstanding, and (iv) 3,000,000 shares of preferred
stock, $0.01 par value, issuable in series, none of which are issued or
outstanding. When issued in accordance with the terms of this Agreement, the
Parent Common Stock to be issued to the Alkermes shareholders and the holders of
the Reliant Units pursuant to the Mergers will be duly authorized, validly
issued, fully paid, nonassessable and free of any preemptive rights, and will
not be subject to any restriction on transfer except, as applicable,
restrictions imposed on Reliant's and Alkermes' affiliates by Rule 145(c) and
Rule 145(d) promulgated under the Securities Act and applicable state securities
laws and pursuant to any Lock-up Agreements, the Escrow Indemnity Agreement and
the Restricted Stock Escrow Agreement.
(d) Xxxxx Acquisition Sub is authorized to issue 100 shares of
common stock, $0.01 par value, all of which are issued and outstanding. All the
issued and outstanding shares of capital stock of Xxxxx Acquisition Sub have
been duly authorized and are validly issued, fully paid and nonassessable, have
not been issued in violation of any preemptive rights and are owned by Parent.
29
(e) Revere Acquisition Sub has issued 100 units. Such units have
been duly authorized and are validly issued, fully paid and nonassessable, have
not been issued in violation of any preemptive rights and are owned by Parent.
(f) Section 4.4(f) of the Alkermes Disclosure Schedule describes all
existing registration rights, agreements, understandings and similar commitments
of Alkermes or any of its Subsidiaries to register any shares of Alkermes Common
Stock (whether currently outstanding or to be issued hereafter) or, following
the Alkermes Merger Effective Time, shares of Parent Common Stock.
4.5 No Conflicts. The execution, delivery and performance of this
Agreement by Alkermes, Parent, Xxxxx Acquisition Sub and Revere Acquisition Sub
and the consummation by Alkermes, Parent, Xxxxx Acquisition Sub and Revere
Acquisition Sub of the transactions contemplated hereby will not: (a) violate
any provision of the Third Amended and Restated Articles of Incorporation or
Bylaws, as amended, of Alkermes or any of the charter documents of Parent, Xxxxx
Acquisition Sub, Revere Acquisition Sub or any other Subsidiaries of Alkermes;
(b) except as provided in Section 4.5 of the Alkermes Disclosure Schedule,
violate, conflict with or result in the breach of any of the terms or conditions
of, result in modification of the effect of, or otherwise give any other
contracting party the right to terminate or accelerate all payments owed by
Alkermes or any of its Subsidiaries under, or constitute (or with notice or
lapse of time or both constitute) a default under, any note, bond, mortgage,
deed of trust, security interest, indenture, lease, license, contract,
agreement, plan or other instrument to which Alkermes or any of its Subsidiaries
is a party or to which any of them or any of their assets or properties is bound
or subject (the "Alkermes Agreements"); (c) except as set forth on Section 4.5
of the Alkermes Disclosure Schedule, require Alkermes or any of its Subsidiaries
to obtain any consent or approval from, or provide notice to, any third party
required under any Alkermes Agreement prior to Closing (the "Required Alkermes
Third Party Consents"); (d) violate any law, ordinance or regulation or any
order, judgment, injunction, decree or other requirement of any court,
arbitrator or Governmental Entity applicable to Alkermes or any of it
Subsidiaries or by which any of the assets, properties or securities of Alkermes
or any of its Subsidiaries are bound; (e) violate any Permits; or (f) except as
provided in Section 4.5 of the Alkermes Disclosure Schedule, result in the
creation of any Lien on the assets, properties or securities of Alkermes or any
of its Subsidiaries, excluding from the foregoing clauses (b) (except with
respect to any acceleration of any material payment), (c), (d), (e) and (f) any
exceptions to the foregoing that, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect with respect to Alkermes, or on the
ability of any of Alkermes, Parent, Xxxxx Acquisition Sub or Revere Acquisition
Sub to consummate the transactions contemplated hereby. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to Alkermes or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by Alkermes,
Parent, Xxxxx Acquisition Sub and Revere Acquisition Sub, or the consummation of
the transactions contemplated hereby, except: (i) in connection, or in
compliance, with the provisions of the HSR Act, the Securities Act and the
Exchange Act; (ii) for the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware by Revere Acquisition Sub and
Reliant and the filing of Articles of Merger with the Department of State of the
Commonwealth of Pennsylvania by Xxxxx Acquisition Sub and Alkermes; (iii) the
SEC's declaration of the effectiveness of the Form S-4; and (iv) for such other
consents, orders, authorizations, registrations, declarations and filings the
failure of which to obtain or make
30
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect with respect to Alkermes or on the ability of Alkermes,
Parent, Xxxxx Acquisition Sub and Revere Acquisition Sub to consummate the
transactions contemplated hereby.
4.6 SEC Filings; Alkermes Financial Statements.
(a) Alkermes has filed all forms, reports and documents (including
exhibits and other information incorporated therein) required to be filed with
the SEC since April 1, 2001 on a timely basis. All such required forms, reports
and documents (including those that Alkermes may file after the date hereof
until the Closing) together with any documents filed since April 1, 2001 by
Alkermes with the SEC on a voluntary basis on current reports on Form 8-K, and
all amendments, supplements, exhibits and schedules thereto, are referred to
herein as the "Alkermes SEC Reports." As of their respective dates, the Alkermes
SEC Reports (i) were prepared in compliance in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such Alkermes SEC
Reports, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
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. None of the Subsidiaries of Alkermes is required to file any
forms, reports, or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Alkermes SEC Reports (the
"Alkermes Financials"), including any Alkermes SEC Reports filed after the date
hereof until the Closing, (i) comply as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with GAAP (except in the case of unaudited interim
financial statements, as may be permitted by the SEC on Form 10-Q under the
Exchange Act) and (iii) fairly present, in all material respects, the
consolidated financial position of Alkermes and its Subsidiaries as at the
respective dates thereof and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements do not include all of the information and footnotes generally
required by GAAP for complete financial statements. The balance sheet of
Alkermes as of December 31, 2001 contained in the Alkermes SEC Reports is
hereinafter referred to as the "Alkermes Balance Sheet."
4.7 Information Supplied. None of the information supplied or to be
supplied by Alkermes or any of its Subsidiaries specifically for inclusion in
(a) the Form S-4 to be filed with the SEC by Parent in connection with the
issuance of shares of Parent Common Stock in the Mergers will, at the time the
Form S-4 is filed with the SEC, at any time it is amended or supplemented and at
the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, (b) any Regulation M-A
Filing will at the time of such filing, or at any time such filing is amended or
supplemented, 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 are made, not
misleading and (c) the
31
Proxy Statement will, at the date it is first mailed to the shareholders of
Alkermes and at the time of the Shareholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
4.8 Absence of Undisclosed Liabilities. As of December 31, 2001, Alkermes
and its Subsidiaries had no liabilities of any nature, whether accrued,
absolute, contingent or otherwise (including, without limitation, liabilities as
guarantor or otherwise with respect to obligations of others or liabilities for
Taxes due or then accrued or to become due), required to be reflected or
reserved against in the Alkermes Balance Sheet that were not adequately
reflected or reserved against on the Alkermes Balance Sheet. Except as disclosed
in the Alkermes Financials or in Section 4.8 of the Alkermes Disclosure
Schedule, neither Alkermes nor any of its Subsidiaries is subject to any
obligation or liability, whether absolute, accrued, contingent or otherwise and
there is no existing condition, situation or set of circumstances which would
reasonably be expected to result in such an obligation or liability other than
liabilities (a) incurred since December 31, 2001 in the ordinary course of
business, (b) specifically incurred by Alkermes under this Agreement, (c)
permitted to be incurred under the provisions of Section 5.2(b) hereof, or (d)
that would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect with respect to Alkermes.
4.9 No Material Adverse Change. Since December 31, 2001 and through the
date hereof, Alkermes and its Subsidiaries have conducted their respective
business in the ordinary course and in a manner consistent with past practice
and, since December 31, 2001 and through the date hereof there has not been any
Material Adverse Change in Alkermes.
4.10 Tax Matters. Except as set forth in Section 4.10 of the Alkermes
Disclosure Schedule:
(a) Alkermes and each of its Subsidiaries has filed all material Tax
Returns required to be filed by it. All such Tax Returns were correct and
complete in all material respects. All Taxes owed by Alkermes (whether or not
shown on any such Tax Return) have been timely paid. Any provision for Taxes
reflected in the Alkermes Balance Sheet is adequate for payment of any and all
Tax liabilities for periods ending on or before December 31, 2001. There are no
Liens for Taxes on any assets of Alkermes or any of its Subsidiaries except
Liens for current Taxes not yet due or which are being contested in good faith
by appropriate proceedings and for which appropriate reserves have been made.
(b) There has not been any audit of any Tax Return filed by Alkermes
or any of its Subsidiaries and to the knowledge of Alkermes, no audit of any
such Tax Return is in progress and neither Alkermes nor any of its Subsidiaries
has been notified by any Tax authority that any such audit is contemplated or
pending. To the knowledge of Alkermes, there is no Tax deficiency or claim for
additional Taxes asserted or threatened to be asserted against Alkermes or any
of its Subsidiaries by any Taxing authority. No extension of time with respect
to any date on which a Tax Return was or is to be filed by Alkermes or any of
its Subsidiaries is in force, and no waiver or agreement by Alkermes or any of
its Subsidiaries is in force for the extension of time for the assessment or
payment of any Tax.
32
(c) Neither Alkermes (including any predecessor entity) nor any of
its Subsidiaries (i) has been a member of an "affiliated group" filing a
consolidated federal income tax return (other than a group the common parent of
which was Alkermes), and (ii) has any liability for the Taxes of any Person
(other than the Taxes of Alkermes and the Subsidiaries listed in Section 4.2(a))
under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract, or otherwise.
(d) Neither Alkermes nor any of its Subsidiaries is or has been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(e) Neither Alkermes nor any of its Subsidiaries has agreed, nor is
it required to make any adjustment under Section 481(a) of the Code by reason of
a change in accounting method or otherwise.
(f) There is no person who should be treated as an employee of
Alkermes for any employment or withholding tax purpose who has not been treated
as an employee by Alkermes. Alkermes has not entered into any compensatory
agreements with respect to the performance of services that could require Parent
(or any Subsidiary of Parent) to make, as a result of the transactions
contemplated by this Agreement, an "excess parachute payment" within the meaning
of Sections 280G and 4999 of the Code.
4.11 Compliance with Laws. Except with respect to compliance with
environmental, intellectual property, tax, regulatory laws, employment or ERISA
matters, which are covered elsewhere in this Article IV (which matters are not
covered by the representations and warranties in this Section 4.11):
(a) Alkermes or its Subsidiaries have all Permits material to the
conduct of their respective business as currently conducted or as reasonably
expected to be conducted. Such Permits are in full force and effect; any
applications for renewal necessary to maintain any Permit in effect have been
filed; and no proceeding is pending, or to the knowledge of Alkermes, threatened
to revoke or limit any Permit, except, in each case, in such instances as would
not reasonably be expected to have a Material Adverse Effect with respect to
Alkermes.
(b) Alkermes and its Subsidiaries are not in violation of any
applicable law, ordinance or regulation or any order, judgment, injunction,
decree or other requirement of any court, arbitrator or Governmental Entity
except for violations that would not, in the aggregate, be reasonably expected
to have a Material Adverse Effect with respect to Alkermes.
(c) The representations and warranties in this Section 4.11 do not
address issues with respect to compliance with environmental, tax, regulatory
laws or ERISA, which are covered elsewhere in this Article IV.
4.12 Actions and Proceedings. There are no outstanding orders, awards,
judgments, injunctions or decrees of any court, arbitrator or Governmental
Entity against Alkermes, any of its Subsidiaries or Alkermes Clinical Partners,
L.P., or any of their respective securities, assets or properties. There are no
(a) judicial or administrative actions, suits, or claims or legal,
administrative or arbitration proceedings or, to the knowledge of Alkermes,
investigations or
33
reviews pending, or (b) to the knowledge of Alkermes, judicial or administrative
actions, suits, or claims or legal, administrative or arbitration proceedings,
investigations or reviews threatened against Alkermes, any of its Subsidiaries
or Alkermes Clinical Partners, L.P. that, in the case of clauses (a) or (b),
individually or in the aggregate, would have a Material Adverse Effect with
respect to Alkermes or which question the validity of this Agreement or of any
action taken by Alkermes or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby.
4.13 Contracts and Other Agreements.
(a) Section 4.13(a) of the Alkermes Disclosure Schedule sets forth
the material contracts of Alkermes and its Subsidiaries, other than those
contracts entered into after the date hereof as permitted by Section 5.2(b).
Alkermes has previously delivered or made available to Reliant true, complete
and correct copies of such contracts.
(b) Each such contract described in Section 4.13(a) is valid,
subsisting, in full force and effect and binding upon Alkermes and/or any of its
Subsidiaries party thereto and, to the knowledge of Alkermes, binding upon the
other parties thereto in accordance with its terms. Neither Alkermes nor any of
its Subsidiaries is in breach or default under any such contracts to which it is
a party, nor, to the knowledge of Alkermes, is any other party to any such
contract or other agreement in breach or default thereunder, and no condition
exists that with notice or lapse of time or both would constitute a breach or
default thereunder, except, in each case, such breaches or defaults as would
not, individually or in the aggregate, have or would reasonably be expected to
have, a Material Adverse Effect with respect to Alkermes. Alkermes has no
knowledge of any intent of any third party to any of the contracts and
agreements identified in Section 4.13(a) of the Alkermes Disclosure Schedule to
terminate, suspend or modify (except for any (i) modification in the ordinary
course of business or that is not material, or (ii) termination as a result of
expiration or non-renewal) any such contract or agreement with Alkermes and/or
any Subsidiary of Alkermes party thereto at any time prior to, after or in
connection with the Closing, which termination, suspension or modification would
reasonably be expected to have a Material Adverse Effect with respect to
Alkermes.
4.14 Properties. Alkermes and each of its Subsidiaries owns valid and
marketable title to all real and material personal property owned by it, and
valid leasehold interests in all real and material personal property leased by
it, in each case free and clear of all Liens, except (i) Liens disclosed in the
Alkermes SEC Reports, (ii) Liens for Taxes not yet delinquent or which are being
contested in good faith by appropriate proceedings if adequate reserves with
respect thereto are maintained on its books in accordance with GAAP, (iii)
statutory Liens incurred in the ordinary course of business consistent with past
practices that have not had and could not reasonably be expected to have a
Material Adverse Effect with respect to Alkermes and (iv) Liens which do not
materially detract from the value or materially interfere with the use of the
properties affected thereby (the exceptions described in the foregoing clauses
(i), (ii), (iii) and (iv) being referred to collectively as the "Alkermes
Permitted Encumbrances").
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4.15 Intellectual Property.
(a) To Alkermes' knowledge, Alkermes and its Subsidiaries own,
license, or otherwise have the right to use any and all patents, trademarks,
trademark rights, service marks, service xxxx rights, trade names, trade name
rights, logos, domain names, franchises and copyrights, and any and all
applications for the foregoing, and any and all technology, inventions, trade
secrets, know-how, computer software, customer lists and processes used in or
necessary for the conduct of Alkermes' business as currently conducted
(collectively "Alkermes IP Rights"). To Alkermes' knowledge, the Alkermes IP
Rights are free and clear of all material Liens other than Alkermes Permitted
Encumbrances.
(b) To Alkermes' knowledge, all patents, trademarks and applications
therefor owned by or licensed to Alkermes or any of its Subsidiaries have been
duly registered, filed with or issued by each Governmental Entity in the
relevant jurisdiction, all necessary affidavits of continuing use have been
filed and all necessary maintenance fees have been timely paid to continue all
such rights in effect, except for failures to register, file or pay that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect with respect to Alkermes. To
Alkermes' knowledge, none of the patents owned or licensed by Alkermes or any of
its Subsidiaries have been declared invalid or unenforceable, in whole or in
part, by any Governmental Entity. Except as set forth in Section 4.15(b) of the
Alkermes Disclosures Schedule, to Alkermes' knowledge, no such patents are the
subject of an interference claim by a third party.
(c) To Alkermes' knowledge, neither Alkermes nor any of its
Subsidiaries is in material breach of any license, sublicense or other agreement
to which Alkermes or any such Subsidiary is a party relating to any of Alkermes'
IP Rights. Neither Alkermes nor any of its Subsidiaries has been notified of any
claim by any third party that Alkermes or any such Subsidiary is in breach of
any such agreement.
(d) To Alkermes' knowledge, neither Alkermes nor any of its
Subsidiaries has, or is planning to engage in activities, material to its
business, including commercializing, importing, having imported, manufacturing,
having manufactured, using, having used, offering for sale, having offered for
sale, selling or having sold, its current products and its products under
development as they currently exist, which, under the relevant laws of any
relevant jurisdiction, interfere with, infringe upon, misappropriate, or
otherwise violate any valid proprietary rights of any third party.
(e) Except as set forth in Section 4.15(e) of the Alkermes
Disclosure Schedule, to Alkermes' knowledge, there do not exist any claims by
any third parties that the manner in which Alkermes or any of its Subsidiaries
currently conducts its business, including commercializing, importing, having
imported, manufacturing, having manufactured, using, having used, offering for
sale, having offered for sale, selling or having sold, its current commercial
products, infringes on any of such third parties' valid proprietary rights,
which claim, if determined adversely to Alkermes or such Subsidiary by a final
non-appealable judgment of a court of competent jurisdiction, would reasonably
be expected to have a Material Adverse Effect with respect to Alkermes.
35
(f) Except as set forth in Section 4.15(f) of the Alkermes
Disclosure Schedule, neither Alkermes nor any of the Subsidiaries has received
any notice from a third party that offers Alkermes or any such Subsidiary a
license to a patent under circumstances where if Alkermes or such Subsidiary
refused to accept such an offer, such refusal would reasonably be expected to
have a Material Adverse Effect with respect to Alkermes.
(g) Except as set forth in Section 4.13(a) of the Alkermes
Disclosure Schedule, neither Alkermes nor any of its Subsidiaries have granted
any material licenses or options for licenses to any Alkermes IP Rights.
(h) Except as set forth in Section 4.15(h), there is no infringement
by a third party of any of Alkermes IP Rights, or infringement of any of
Alkermes IP Rights resulting from the marketing of a competing product that
would have a Material Adverse Effect with respect to Alkermes.
(i) To Alkermes' knowledge, none of the activities of the employees
or consultants of Alkermes and its Subsidiaries on behalf of Alkermes or such
Subsidiary violates any agreements or arrangements which any such employees or
consultants have with former employers.
(j) Alkermes and its Subsidiaries use, and have used, commercially
reasonable efforts to maintain the confidentiality of their respective trade
secrets.
4.16 Employee Benefit Plans.
(a) Except as set forth in Section 4.16 of the Alkermes Disclosure
Schedule, true, correct and complete copies of all Plans of Alkermes and its
Subsidiaries (the "Alkermes Plans") have been filed and are available as
exhibits to the Alkermes SEC Reports or have otherwise been provided to Reliant.
Each Alkermes Plan that contains any provision that provides additional benefits
upon the occurrence of a change of control of Alkermes or the consummation of
the transactions contemplated by this Agreement is referred to herein as an
"Alkermes Severance Arrangement" and is specifically identified as such in
Section 4.16 of the Alkermes Disclosure Schedule.
(b) No Alkermes Plan provides post-retirement medical, vision,
dental, prescription drug, health and/or life insurance benefits (other than as
required by Section 601 of ERISA (COBRA coverage)).
(c) Each Alkermes Plan has been maintained, operated and
administered in material compliance with its terms and with all applicable
provisions of ERISA, the Code, and all regulations, rulings and other authority
issued thereunder (including, without limitation, the nondiscrimination
requirements under Sections 401(k) and 401(m) of the Code, as applicable), and
all other applicable laws and administrative or governmental rules and
regulations. All contributions required to have been made to any Alkermes Plan
by Alkermes or any ERISA Affiliate have been made within the time required by
such Alkermes Plan and applicable law.
36
(d) No Alkermes Plan is or has been subject to Title IV of ERISA or
Section 412 of the Code. Section 4.16(d) of the Alkermes Disclosure Schedule
identifies each ERISA Affiliate of Alkermes.
(e) There are no actions, suits, negotiations, demands, proposals,
investigations, proceedings or claims pending, or to the knowledge of Alkermes,
threatened (other than routine claims for benefits) with respect to any Alkermes
Plan which would have, individually or in the aggregate, a Material Adverse
Effect with respect to Alkermes.
(f) No prohibited transactions described in Section 406 of ERISA or
Section 4975 of the Code have occurred with respect to any Alkermes Plan which
would result in any material liability to Alkermes or any of its Subsidiaries.
Neither Alkermes nor any of its Subsidiaries has participated in a violation of
Part 4 of Title I, Subtitle B of ERISA by any plan fiduciary of any Alkermes
Plan or has any unpaid civil liability under Section 502(1) of ERISA, except for
any such violation or liability that, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect with respect to
Alkermes.
(g) All Alkermes Plans that are intended to be qualified under
Section 401(a) of the Code have either (i) received a current, favorable
determination letter as to such qualification from the Internal Revenue Service,
(ii) been submitted to the Internal Revenue Service for such determination
letter within the applicable remedial amendment period under Section 401(b) of
the Code, or (iii) the remedial period for such Alkermes Plans amendment has not
expired. Alkermes knows of no event that has occurred, either by reason of any
action or failure to act, which would cause any such Alkermes Plans not to be so
qualified under Section 401(a) of the Code.
(h) Alkermes and its Subsidiaries do not currently and have not at
any time had, any obligation to contribute to or any liability in connection
with any Multiemployer Plan.
4.17 Employee Relations.
(a) Alkermes, to its knowledge, generally enjoys good
employer-employee relations. Neither Alkermes nor any of its Subsidiaries is
delinquent in payments to any of its employees or consultants for any wages,
salaries, commissions, bonuses or other direct compensation for any services
performed by them or amounts required to be reimbursed to such employees. Except
as set forth in Section 4.17 of the Alkermes Disclosure Schedule, none of
Alkermes, Parent or the Alkermes Surviving Corporation or any their Subsidiaries
will solely by reason of the Alkermes Merger or anything done prior to the
Effective Time be liable to any of such employees for severance pay or any other
payments (other than accrued salary, vacation or sick pay in accordance with
Alkermes' normal policies).
(b) To the extent that Alkermes or any Subsidiary employs or uses
any independent contractors, temporary employees, leased employees or any other
servants or agents compensated other than through reportable wages paid by
Alkermes (collectively "Alkermes Contingent Workers"), it has properly
classified and treated them in accordance with applicable laws and for purposes
of all benefits plans and perquisites, except for any such violations that
37
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect with respect to Alkermes.
4.18 Insurance. Alkermes and each of its Subsidiaries has in place
insurance policies: (a) of such types and in such coverage and deductible
amounts as are reasonably believed to be adequate for the business engaged in by
Alkermes and its Subsidiaries; (b) that are in conformity with the requirements
of all leases or other agreements to which Alkermes or such Subsidiary is a
party; and (c) that, to the knowledge of Alkermes, are valid and enforceable in
accordance with their terms. Neither Alkermes nor any of its Subsidiaries is in
default with respect to any provision contained in any such policy that would
reasonably be expected to result in denial of coverage nor has Alkermes or any
of its Subsidiaries failed to give any notice or present any claim under any
such policy in due and timely fashion, except in such instance as would not
reasonably be expected to have a Material Adverse Effect with respect to
Alkermes. There are no outstanding unpaid claims under any such policy. Neither
Alkermes nor any of its Subsidiaries has received notice of cancellation or
non-renewal of any such policy.
4.19 Brokerage. Except as described in Section 4.19 of the Alkermes
Disclosure Schedule, no broker, finder, agent or similar intermediary has acted
on behalf of Alkermes or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby, and there are no brokerage
commissions, finders' fees or similar fees or commissions payable in connection
herewith based on any agreement, arrangement or understanding with Alkermes or
any of its Subsidiaries.
4.20 Environmental Matters. No material notice, notification, demand,
request for information, citation, summons, complaint or order has been received
by, and no investigation, action, claim, suit, proceeding or review is pending
or, to the knowledge of Alkermes or any Subsidiary, threatened by any Person
against, Alkermes or any Subsidiary and no penalty over $6,000 has been assessed
against Alkermes or any Subsidiary, in each case, with respect to any matters
relating to or arising out of any Environmental Laws. Except for such exceptions
as, individually or in the aggregate, have not had, and would not reasonably be
expected to have, a Material Adverse Effect with respect to Alkermes, (a)
Alkermes and its Subsidiaries are and have been in compliance with all
Environmental Laws; and (b) there are no liabilities of or relating to Alkermes
or any Subsidiary relating to or arising out of any Environmental Law and there
is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability.
4.21 Takeover Statutes. Neither Alkermes nor any of its Subsidiaries has
in effect any rights plan or similar device or arrangement, commonly or
colloquially known as a "poison pill" or "anti-takeover" plan or any similar
plan, device or arrangement and neither Alkermes nor any of its Subsidiaries has
adopted or authorized the adoption of such plan, device or arrangement. To the
knowledge of Alkermes, except for the applicable provisions of the PBCL, no
state takeover or "fair price" or "interested party" statute or similar statute
or regulation applies or purports to apply to the Alkermes Merger, this
Agreement or any of the transactions contemplated hereby. No shares of Alkermes
Capital Stock, other than the Alkermes Non-Voting Common Stock, are entitled to
dissenters or appraisal rights in connection with the transactions contemplated
by this Agreement.
38
4.22 Regulatory Compliance.
(a) As to all products subject to the FDCA and the FDA regulations
and Good Clinical Practices guidance thereunder that are manufactured, tested,
distributed and/or marketed by or for Alkermes or any of its Subsidiaries (each
such product, an "Alkermes Pharmaceutical Product"), Alkermes and its
Subsidiaries and, to Alkermes' knowledge (without inquiry), all licensors and
licensees of any Alkermes Pharmaceutical Product, are manufacturing, testing,
distributing or marketing, as applicable, each such Alkermes Pharmaceutical
Product in substantial compliance with all applicable requirements under the
FDCA and any applicable similar state laws and regulations, including those
relating to investigational use, good manufacturing practices, labeling,
advertising (to Alkermes' knowledge (without inquiry)), record keeping, adverse
event reporting, filing of reports and security, except for failures to be in
compliance that, individually or in the aggregate, have not had or would not
reasonably be expected to have a Material Adverse Effect with respect to
Alkermes. Except as set forth in Section 4.21(a) of the Alkermes Disclosure
Schedule, Alkermes and its Subsidiaries and, to the knowledge of Alkermes
(without inquiry), licensors and licensees of Alkermes Pharmaceutical Products
and third parties acting on behalf of Alkermes and its Subsidiaries, have not,
as of the date hereof, received any adverse written notice (including but not
limited to 483 notices) within the past two (2) years from the FDA or any other
similar foreign Governmental Entity (i) regarding the approvability or approval
of an Alkermes Pharmaceutical Product or the labeling of any Alkermes
Pharmaceutical Product or (ii) alleging any violation of any Legal Provision,
which in the case of either clause (i) of (ii) has had or would reasonably be
expected to have a Material Adverse Effect with respect to Alkermes.
(b) As of the date hereof, no Alkermes Pharmaceutical Product has
been recalled, withdrawn, suspended or discontinued as a result of any action by
the FDA or any other similar foreign Governmental Entity by Alkermes or any of
its Subsidiaries or, to the knowledge of Alkermes, any licensor of any Alkermes
Pharmaceutical Product, in the United States or outside the United States
(whether voluntarily or otherwise), in each case since January 1, 2000. No
proceedings in the United States or outside of the United States (whether
completed or pending) seeking the material change in product labeling or recall,
withdrawal, suspension or seizure of any Alkermes Pharmaceutical Product are
pending against (i) Alkermes or any of its Subsidiaries, or (ii) to Alkermes'
knowledge, any third parties acting on behalf of Alkermes or any of its
Subsidiaries, or any licensee of any Alkermes Pharmaceutical Product, nor have
any such proceedings been pending at any prior time against Alkermes or any of
its Subsidiaries or, to Alkermes' knowledge, against any such third parties or
licensee, in each case which, individually or in the aggregate have had or would
reasonably be expected to have a Material Adverse Effect with respect to
Alkermes.
(c) To the knowledge of Alkermes (without inquiry) as to each
biological or drug of Alkermes or any of Alkermes Subsidiaries, or their
respective collaborative partners with respect to any Alkermes Pharmaceutical
Product, or for which a biological license application, new drug application,
investigational new drug application or similar state or foreign regulatory
application has been approved, Alkermes, its Subsidiaries and their respective
collaborative partners are in substantial compliance with the applicable
provisions of 21 U.S.C. Sections 331, 355, 356a and 356b, or 21 C.F.R. Parts
202, 203, 312 and 314, respectively, or any successor statute thereto, as
applicable and all terms and conditions of such applications, except for
failures to be
39
in compliance that, individually or in the aggregate have not had or would not
reasonably be expected to have a Material Adverse Effect with respect to
Alkermes. As to each such biological or drug, Alkermes and its Subsidiaries and,
to the knowledge of Alkermes (without inquiry), each of their respective
collaborative partners have provided for inclusion in the application of that
drug, where required, the certification described in 21 U.S.C. Section
335a(k)(1) or any successor statute thereto, as applicable and the list
described in 21 U.S.C. Section 335a(k)(2) or any successor statute thereto, as
applicable, and each such certification and list was true and accurate when made
and remains true and accurate, except for such inaccuracies that, individually
or in the aggregate have not had or would not reasonably be expected to have a
Material Adverse Effect with respect to Alkermes. In addition, Alkermes and its
Subsidiaries and, to the knowledge of Alkermes (without inquiry), each of their
respective collaborative partners are in substantial compliance with all
applicable registration and listing requirements set forth in 21 U.S.C. Section
360 and 21 C.F.R. Part 207 or any successor statute thereto, as applicable.
(d) Neither Alkermes or any of its Subsidiaries, nor, to Alkermes'
knowledge, any officer or employee of Alkermes or any of its Subsidiaries has
made an untrue statement of a material fact or fraudulent statement to the FDA
or any other Governmental Entity, failed to disclose a material fact required to
be disclosed to the FDA or any other Governmental Entity, or committed an act,
made a statement, or failed to make a statement that, at the time such
disclosure was made, could reasonably be expected to provide a basis for the FDA
or any other Governmental Entity to invoke with respect to Alkermes or any of
its Subsidiaries Alkermes' policy respecting "Fraud, Untrue Statements of
Material Facts, Bribery, and Illegal Gratuities", set forth in 56 Fed. Reg.
46191 (September 10, 1991) or any supplement or amendment thereto. Neither
Alkermes nor any of its Subsidiaries has, and, to the knowledge of Alkermes, no
officer or employee of Alkermes or any of its Subsidiaries has, been convicted
of any crime or, to Alkermes' knowledge, engaged in any conduct for which
debarment is mandated by 21 U.S.C. Section 335a(a) or authorized by 21 U.S.C.
Section 335a(b).
(e) As of the date hereof, neither Alkermes nor any of its
Subsidiaries has received any written notice that the FDA or any other
Governmental Entity has commenced, or threatened to initiate, any action to
withdraw its approval or request the material change in product labeling or the
recall of any Alkermes Pharmaceutical Product, or commenced or threatened to
initiate, any action to enjoin production of any Alkermes Pharmaceutical
Product.
4.23 Required Alkermes Shareholder Approval. The affirmative vote of the
holders of a majority of the outstanding shares of Alkermes Common Stock,
represented in person or by proxy at a meeting of the Alkermes' shareholders, is
required to approve and adopt this Agreement and approve the Mergers (the
"Alkermes Shareholder Approval"). No other vote of the holders of any shares of
capital stock of Alkermes is required by law, including the PBCL, the Third
Amended and Restated Articles of Incorporation and By-Laws, as amended, of
Alkermes, or otherwise, in order for Alkermes to consummate the transactions
contemplated hereby, including the Mergers.
4.24 Opinion of Financial Advisor. Alkermes has received an opinion from
XX Xxxxx Securities, Alkermes' financial advisor, substantially to the effect
that the Reliant Exchange Ratio to be paid by Parent is fair, from a financial
point of view, to Alkermes.
40
4.25 Disclosure. The representations and warranties of Alkermes, Parent,
Xxxxx Acquisition Sub and Revere Acquisition Sub contained in this Agreement,
including the Alkermes Disclosure Schedule, do not contain any untrue statement
of a material fact, and do not omit to state any material fact necessary to make
such representations, warranties and statements, in light of the circumstances
under which they are made, not misleading.
ARTICLE V
COVENANTS AND AGREEMENTS
5.1 Covenants of Reliant Pending Closing.
(a) Except with the prior written consent of Alkermes, as given by
the chief executive officer, chief financial officer or vice president of
corporate development of Alkermes, which consent shall not be unreasonably
withheld, delayed or conditioned, and except as otherwise contemplated or
disclosed herein, during the period from the date hereof to the earlier of (1)
the termination of this Agreement pursuant to Section 9.1 or (2) the Closing
Date, Reliant shall:
(i) Preservation of the Business; Maintenance of Properties and
Contracts. Use commercially reasonable efforts to preserve its business,
promote and market its products, keep its properties intact, preserve its
goodwill and maintain all physical properties in good operating condition,
reasonable wear and tear excepted;
(ii) Intellectual Property Rights. Use commercially reasonable
efforts to preserve and protect the Reliant IP Rights;
(iii) Preservation of Personnel. Use commercially reasonable efforts
to preserve intact its business organization and keep available the
services of its present officers, key employees and Contingent Workers, in
accordance with past practice, it being understood that termination of
employees with poor performance ratings or ordinary course attrition or
such anticipated terminations as set forth in Section 5.1(a) of the
Reliant Disclosure Schedule shall not constitute a violation of this
covenant; and
(iv) Ordinary Course of Business. Operate its business diligently
and solely in the ordinary course.
(b) Except with the prior written consent of Alkermes, as given by
the chief executive officer, chief financial officer or vice president of
corporate development of Alkermes, which consent shall not be unreasonably
withheld, delayed or conditioned, and except as otherwise contemplated or
disclosed herein, including, without limitation, as set forth in Section 5.1(b)
of the Reliant Disclosure Schedule (which shall be read in addition and not in
limitation to the exceptions identified herein), during the period from the date
hereof to the earlier of (1) the termination of this Agreement pursuant to
Section 9.1 or (2) the Closing Date, Reliant shall not:
(i) Disposition of Assets. Sell, transfer, abandon or otherwise
dispose of, or mortgage, pledge or create or permit to be created any Lien
on, any of its assets, other than (A) sales or transfers in the ordinary
course of business, (B) the Reliant Permitted
41
Encumbrances and Liens existing under arrangements disclosed in the
Reliant Disclosure Schedule, and (C) any planned dispositions identified
in Reliant's 2002 Operating Budget as approved by the Reliant Board of
Managers and provided to Alkermes by Reliant on February 1, 2002 (the
"Reliant Budget");
(ii) Mergers, Reorganizations or Restructurings. Adopt a plan or
agreement of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other material
reorganization of Reliant, it being understood that the conversion of
Preferred Units into Common Units in connection with the Reliant Merger
shall not constitute a violation of this covenant;
(iii) Liabilities. (A) Incur any obligation or liability other than
in the ordinary course of Reliant's business or specified in the Reliant
Budget, (B) incur any indebtedness for borrowed money, or (C) enter into
any contracts or commitments involving payments by Reliant in excess of
$250,000, other than purchase orders or commitments for inventory,
materials, supplies or equipment in the ordinary course of business or
specified in the Reliant Budget;
(iv) Litigation. Compromise or settle any litigation or arbitration
proceedings required to be disclosed in the Reliant Disclosure Schedule or
which would have been required to be disclosed if in existence on the date
of this Agreement; provided, however, that notice only, and no consent, is
required for employment-related or other ordinary course litigation that
can be settled for less than $250,000; provided, further, that Reliant
shall give Alkermes prior notice of the initiation of any material
litigation or arbitration proceeding by Reliant;
(v) Material Agreements. Enter into or materially modify any
material joint venture, partnership, collaboration, supply, distribution,
license, technology development or other material contract or agreement,
strategic alliance, marketing or co-promotion or other similar arrangement
or any agreement to acquire all or substantially all of the assets,
properties, capital stock or business of any other Person, other than any
such agreements or contracts in the ordinary course of business or as
contemplated in the Reliant Budget; provided, that the entering into of
any of the foregoing does not violate any other covenant in this Section
5.1(b);
(vi) Accounting. Make any change in accounting method or practice
other than as required by applicable law or GAAP;
(vii) Expenditures. Make or commit to make any capital expenditures
that in the aggregate exceed the capital budget included in the Reliant
Budget or that are not generally in accordance with the timing of such
expenditures as contemplated in the Reliant Budget;
(viii) Taxes. Make or rescind any material Tax election (other than
to continue to make Tax elections previously made by Reliant or to make
elections under Sections 754, 59(e) or 280C of the Code), settle or
compromise any material Tax liability or amend any material Tax Return in
any material respect;
42
(ix) Compensation. Except for the granting of options to purchase up
to 66,150 Common Units pursuant to the Reliant 2002 Option Plan to
employees and consultants of Reliant and the entering into the
change-of-control agreements referred to in Section 3.16 of the Reliant
Disclosure Schedule, (A) make any increase in the compensation or benefits
under, or establish any new bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, option (including, the
granting, modification or acceleration of options or performance awards),
or other employee benefit plan, or any other increase in the compensation
payable or to become payable to any manager, employee, officers or
consultants of Reliant other than may be required by applicable law, other
than compensation increases in the ordinary course of business consistent
with past practices (which, in no single instance, shall exceed 10% of the
aggregate compensation payable to any individual or $15,000, and, in the
aggregate, shall not exceed $250,000); (B) make any loan or advance to any
member, officer, employee, manager or consultant, other than in the
ordinary course of business; (C) convert the employment status of or grant
options to purchase Reliant Units to any current Contingent Worker; (D)
make an offer to or hire any new officer or key employee for compensation
in excess of $150,000; and (E) enter into or modify any Reliant Plan or
any employment, severance or other agreement with any officer, manager,
employee or consultant of Reliant in any manner which would increase
benefits or compensation payable or otherwise available thereunder, other
than compensation increases in the ordinary course of business consistent
with past practices (which, in no single instance, shall exceed 10% of the
aggregate compensation payable to any individual or $15,000, and, in the
aggregate, shall not exceed $250,000).
(x) Reliant Units. (A) Declare, set aside or pay any dividends on,
or make any other distributions (whether in cash, stock or property) in
respect of, any of Reliant Units or other securities, (B) split, combine
or reclassify any of its Reliant Units or other securities or issue or
authorize the issuance of any other securities in respect of, in lieu of
or in substitution for Reliant Units or other securities; (C) purchase,
redeem or otherwise acquire any Reliant Units or any other securities
thereof or any rights, warrants or options to acquire any such Reliant
Units or other securities; (D) issue, deliver, sell or grant any Reliant
Units or other securities, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
Reliant Units, voting securities or convertible securities, or any
"phantom" stock, "phantom" stock rights, stock appreciation rights or
equity based performance units; provided, however, that none of the
following shall constitute a violation of this covenant: (1) the issuance
of Common Units upon the exercise of options and warrants outstanding on
the date of this Agreement or following the date hereof as permitted under
Section 5.1(b)(ix); (2) the issuance of Common Units upon the conversion
of Preferred Units; or (3) repurchases of Restricted Reliant Units
pursuant to existing contractual obligations or the repurchase of Reliant
Units upon the termination of any individual's employment with Reliant up
to an aggregate of $500,000; provided, that Reliant shall provide Alkermes
with prior notice of any such repurchase;
(xi) Certificate of Formation and Operating Agreement. Amend the
Certificate of Formation or Reliant LLC Agreement;
43
(xii) Acquisition of Property. Make any acquisition of real property
or enter into any material real property lease, other than, with respect
to any real property lease, in the ordinary course of business or as
specified in the Reliant Budget;
(xiii) Indemnification Agreements. Enter into any agreement or
contract for the sole purpose of obligating Reliant to indemnify any third
party or amend any such existing indemnification-only agreement, which
amendment would have the effect of increasing Reliant's indemnification
obligations thereunder; or
(xiv) Make any commitment to do any of the foregoing.
5.2 Covenants of Alkermes Pending Closing.
(a) Except with the prior written consent of Reliant, as given by a
Reliant Member Representative, which consent shall not be unreasonably withheld,
delayed or conditioned, and except as otherwise contemplated or disclosed
herein, during the period from the date hereof to the earlier of (1) the
termination of this Agreement pursuant to Section 9.1 or (2) the Closing Date,
Alkermes shall, and shall cause each of its Subsidiaries (including Parent) to:
(i) Preservation of the Business; Maintenance of Properties and
Contracts. Use commercially reasonable efforts to preserve its business,
promote and market its products, keep its properties intact, preserve its
goodwill and maintain all physical properties in good operating condition,
reasonable wear and tear excepted;
(ii) Intellectual Property Rights. Use commercially reasonable
efforts to preserve and protect the Alkermes IP Rights;
(iii) Preservation of Personnel. Use commercially reasonable efforts
to preserve intact its business organization and keep available the
services of its present officers, key employees and Alkermes Contingent
Workers, in accordance with past practice, it being understood that
termination of employees with poor performance ratings or ordinary course
attrition shall not constitute a violation of this covenant; and
(iv) Ordinary Course of Business. Operate its business diligently
and solely in the ordinary course.
(b) Except with the prior written consent of Reliant, as given by a
Reliant Member Representative, which consent shall not be unreasonably withheld,
delayed or conditioned, and except as otherwise contemplated or disclosed
herein, including, without limitation, as set forth in Section 5.2(b) of the
Alkermes Disclosure Schedule (which shall be read in addition and not in
limitation to the exceptions identified herein), during the period from the date
hereof to the earlier of (1) the termination of this Agreement pursuant to
Section 9.1 or (2) the Closing Date, Alkermes shall not, and shall cause each of
its Subsidiaries (including Parent) not to:
(i) Disposition of Assets. Sell, transfer, abandon or otherwise
dispose of, or mortgage, pledge or create or permit to be created any Lien
on, any of its assets, other
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than (A) sales or transfers in the ordinary course of business, (B) the
Alkermes Permitted Encumbrances and Liens existing under arrangements
disclosed in the Alkermes SEC Reports, and (C) any planned dispositions
identified in the Alkermes Budget (as defined below);
(ii) Mergers, Reorganizations or Restructurings. Adopt a plan or
agreement of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other material
reorganization of Alkermes, Parent, Xxxxx Acquisition Sub or Revere
Acquisition Sub;
(iii) Liabilities. (A) Incur any obligation or liability other than
in the ordinary course of their respective businesses, (B) incur any
indebtedness for borrowed money other than (1) pursuant to existing credit
agreements disclosed in the Alkermes SEC Reports, (2) as specified in the
Alkermes' operating budget as approved by the Alkermes Board of Directors
(the "Alkermes Budget") a true and complete copy of which has been (and,
for next year, will be) delivered to a Reliant Member Representative, or
(3) for purposes of facility improvements, facility expansions or facility
acquisitions, in an aggregate amount not to exceed $20,000,000; or (C)
enter into any contracts or commitments involving payments by Alkermes or
any of its Subsidiaries in excess of $500,000, other than purchase orders
or commitments for inventory materials and supplies in the ordinary course
of business and contracts, commitments in conjunction with facility
improvements, facility expansions and facility acquisitions, including,
without limitation, related equipment, furnishings and fixture
expenditures;
(iv) Litigation. Compromise or settle any litigation or arbitration
proceedings required to be disclosed in the Alkermes Disclosure Schedule
or which would have been required to be disclosed if in existence on the
date of this Agreement; provided, however, that notice only, and no
consent, is required for employment-related or other ordinary course
litigation that can be settled for less than $500,000; provided, further,
that Alkermes shall give Reliant prior notice of the initiation of any
material litigation or arbitration proceeding by Alkermes;
(v) Material Agreements. Enter into or materially modify any
material joint venture, partnership, collaboration, supply, distribution,
license, technology development or other material contract or agreement,
strategic alliance, marketing or co-promotion or other similar arrangement
or any agreement to acquire all or substantially all of the assets,
properties, capital stock or business of any other Person, other than any
such agreements or contracts in the ordinary course of business or as
contemplated in the Alkermes Budget; provided, that the entering into of
any of the foregoing does not violate any other covenant in this Section
5.2(b);
(vi) Expenditures. Make or commit to make any capital expenditures
other than in the ordinary course of business and other than as otherwise
contemplated in this Section 5.2(b).
(vii) Alkermes Capital Stock. (A) Declare, set aside or pay any
dividends on, or make any other distributions (whether in cash, stock or
property) in respect of, any
45
shares of Alkermes Capital Stock or other securities, (B) split, combine
or reclassify any shares of Alkermes Capital Stock or other securities or
issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of Alkermes Capital Stock or other
securities, (C) purchase, redeem or otherwise acquire any shares of
Alkermes Capital Stock or any other securities thereof or any rights,
warrants or options to acquire any shares of Alkermes Capital Stock or
other securities or (D) issue, deliver, sell or grant any shares of
Alkermes Capital Stock or other securities, any other voting securities or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares of Alkermes Capital Stock, voting securities or
convertible securities, or any "phantom" stock, "phantom" stock rights,
stock appreciation rights or equity based performance units; provided,
however, that none of the following shall constitute a violation of this
covenant: (1) the issuance of shares of Alkermes Common Stock upon the
exercise of options and warrants outstanding on the date of this Agreement
or following the date hereof as permitted under Section 5.2(b)(vii)(2)
below; and (2) the grant of options to acquire shares of Alkermes Common
Stock to employees and consultants of Alkermes so long as such option
grants are consistent with the past practice of Alkermes; provided, that
Alkermes shall provide Reliant with notice of any such grants;
(viii) Charter Documents. Amend any provision of the Third Amended
and Restated Articles of Incorporation or Bylaws, as amended, of Alkermes
or any of the charter documents of Parent, Xxxxx Acquisition Sub, Revere
Acquisition Sub or any of Alkermes' Subsidiaries except to remove any
provision regarding Parent Non-Voting Common Stock in the Parent Charter
Documents;
(ix) Acquisition of Property. Make any material acquisition of real
property, including any material real property lease, other than in the
ordinary course of its business or other than property currently leased or
occupied by Alkermes or its Subsidiaries or adjacent to any existing
facility of Alkermes or its Subsidiaries, that would require aggregate
expenditures by Alkermes and its Subsidiaries in excess of $20,000,000;
(x) Indemnification Agreements. Enter into any agreement or contract
for the sole purpose of obligating Alkermes or any of its Subsidiaries to
indemnify any third party or amend any such existing indemnification-only
agreement, which amendment would have the effect of increasing the
indemnification obligations of Alkermes or any of its Subsidiaries
thereunder; or
(xi) make any commitment to do any of the foregoing.
5.3 Expenses. Whether or not the Mergers are consummated each Party shall
bear its own expenses incurred in connection with the preparation, execution and
performance of this Agreement and the transactions contemplated hereby,
including without limitation, all fees and expenses of agents, representatives,
brokers, investment bankers, financial advisors, consultants, counsel and
accountants. The expenses of Reliant and Alkermes with respect to its agents,
representatives, brokers, investment bankers, financial advisors, counsel and
accountants shall be for fees actually incurred and shall not include any
termination, premium or special fees.
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Additionally, Reliant shall make no payment to Bay City Capital Broker Dealer,
which shall only be entitled to receive Reliant Merger Consideration equal to
the Common Units issued pursuant to Section 5.2(c) hereof in full and complete
satisfaction of all fees owed to it by Reliant, with such shares of Parent
Common Stock to be issued and delivered to Bay City Capital Broker Dealer but
not yet paid as of the date hereof (or its designee) by Parent at the Closing.
5.4 Approvals and Consents. Subject to the terms and conditions herein
provided, Alkermes and Reliant shall (a) promptly make all filings necessary,
proper or advisable in connection with the transactions contemplated by this
Agreement, including any filings necessary to obtain required statutory and
regulatory approvals (including, without limitation, filing the notifications
provided for under the HSR Act)), (b) use reasonable best efforts to cooperate
with one another in (i) determining whether any filings are required to be made
with, or consents, permits, authorizations or approvals are required to be
obtained from, any third party or other Governmental Entities in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby and (ii) timely making all such
filings and timely seeking all such consents, permits, authorizations or
approvals, including the Required Alkermes Third Party Consents and the Required
Reliant Third Party Consents, and (c) use reasonable best efforts to take, or
cause to be taken, all other actions and do, or cause to be done, all other
things necessary, proper or advisable to consummate and make effective the
transactions contemplated hereby. Without limiting the foregoing, each of the
Parties: (y) will file promptly and cause its Affiliates who will be required to
file, to file promptly the Notification and Report Forms and related material
that it or they may be required to file with the Federal Trade Commission and
the Antitrust Division of the United States Department of Justice under the HSR
Act, will request an early termination of the applicable waiting period after
the date of this Agreement, and (z) will make any further filings and respond
promptly to second requests, if any, pursuant thereto that may be necessary,
proper or advisable.
5.5 Consummation of Agreement. Each Party shall use its reasonable best
efforts to perform and fulfill all conditions and obligations to be performed
and fulfilled by it under this Agreement and to ensure that to the extent within
its control or capable of influence by it, no breach of any of the respective
representations, warranties and agreements hereunder occurs or exists on or
prior to the Effective Time, all to the end that the transactions contemplated
by this Agreement shall be fully carried out in a timely fashion.
5.6 Further Assurances. Subject to the terms and conditions provided in
this Agreement and to applicable legal requirements, each of the Parties hereto
agrees to use its reasonable best efforts to take, or cause to be taken, all
action, and to do, or cause to be done, and to assist and cooperate with the
other Parties hereto in doing, as promptly as practicable, all things necessary,
proper or advisable under applicable laws to ensure that the conditions set
forth in Articles VI, VII and VIII are satisfied and to consummate and make
effective the transactions contemplated by this Agreement. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors or
managers of each of the Parties to this Agreement shall take all such necessary
action, including, without limitation, the execution and delivery of such
documents, further instruments of transfer and assignment and other papers and
taking of such further actions as
47
may be reasonably required or desirable to carry out the provisions hereof and
the transactions contemplated hereby.
5.7 Public Announcements and Confidentiality. Any press release or release
of other information to the press or any other Person with respect to the
subject matter of this Agreement (other than such information as required to
obtain the consents and approvals contemplated by Section 5.4) shall be mutually
approved by Alkermes and Reliant except to the extent Alkermes is required to
disclose information with respect to the subject matter of this Agreement
pursuant to any requirements of the SEC and Nasdaq. The disclosure of
confidential or proprietary information by Alkermes or Reliant to the other
shall be governed by the terms and conditions of the Confidential Disclosure
Agreement between Alkermes and Reliant dated November 2, 2001 (the "Confidential
Disclosure Agreement").
5.8 No Solicitation by Reliant.
(a) From the date hereof through the earlier to occur of the (i)
Closing Date and (ii) termination of this Agreement pursuant to Section 9.1,
Reliant shall not, directly or indirectly, through any officer, manager, agent
or otherwise, solicit, initiate or encourage the submission of any proposal or
offer from any Person relating to any acquisition or purchase of all or any
material portion of the assets of, or any equity or membership interest in,
Reliant or any business combination with Reliant (a "Reliant Takeover Proposal")
or participate in any negotiations regarding, or furnish to any other Person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
Person to do or seek to do any of the foregoing. Reliant shall immediately cease
and cause to be terminated all existing discussions or negotiations with any
Person conducted heretofore with respect to any Reliant Takeover Proposal and
request the prompt return or destruction of all confidential information
previously furnished. Notwithstanding the foregoing definition of Reliant
Takeover Proposal, none of the actions which may be taken following the date
hereof by Reliant under Section 5.1 (including, without limitation, the issuance
of Reliant Units as permitted thereby) shall constitute or be deemed to result
from a Reliant Takeover Proposal.
(b) In addition to the obligations set forth in Section 5.8(a) and
(c), subject to any contractual confidentiality obligations of Reliant in effect
as of the date hereof, Reliant shall notify Alkermes promptly if any Reliant
Takeover Proposal, or any inquiry or contact with any Persons with respect
thereto, is made and shall, in any such notice to Alkermes, indicate the
identity of the Person making such Reliant Takeover Proposal, offer, inquiry or
contact and the terms and conditions of such Reliant Takeover Proposal, inquiry
or contact. Reliant will keep Alkermes reasonably informed of the status and
details, including amendments or proposed amendments of any such inquiry,
contact or Reliant Takeover Proposal. Reliant agrees not to release any third
party from, or waive any provision of, any confidentiality or standstill
agreement to which Reliant is a party.
(c) Prior to the termination of this Agreement by Alkermes pursuant
to Section 9.1, the Board of Managers of Reliant shall not terminate this
Agreement as a result of any Reliant Takeover Proposal or enter into any
agreement with respect to any Reliant Takeover Proposal.
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5.9 No Solicitation by Alkermes.
(a) From the date hereof through the earlier to occur of the (i)
Closing Date and (ii) termination of this Agreement pursuant to Section 9.1,
neither Alkermes nor any of its Subsidiaries shall, directly or indirectly,
through any officer, director, manager, agent or otherwise, solicit, initiate or
encourage the submission of any proposal or offer from any Person relating to
any acquisition or purchase of all or any material portion of the assets of, or
any equity or membership interest in, Alkermes or any of its Subsidiaries, or
any business combination with Alkermes or any of its Subsidiaries (an "Alkermes
Takeover Proposal") or participate in any negotiations regarding, or furnish to
any other Person any information with respect to, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to do or seek to do any of the foregoing; provided,
however, nothing herein shall prohibit (i) Alkermes' Board of Directors from
complying with Rules 14d-9 and 14e-2 under the Exchange Act or (ii) Alkermes'
Board of Directors from considering and accepting an Alkermes Takeover Proposal
if the Alkermes' Board of Directors reasonably believes, based upon the advice
of legal counsel, that failure to take action with respect to such Alkermes
Takeover Proposal would violate the fiduciary obligations of Alkermes' Board of
Directors to Alkermes Shareholders under applicable law. Alkermes and each of
its Subsidiaries shall immediately cease and cause to be terminated all existing
discussions or negotiations with any Person conducted heretofore with respect to
any Alkermes Takeover Proposal and request the prompt return or destruction of
all confidential information previously furnished. Notwithstanding the foregoing
definition of Alkermes Takeover Proposal, none of the actions which may be taken
following the date hereof by Alkermes or any of its Subsidiaries under Section
5.2 shall constitute or be deemed to result from an Alkermes Takeover Proposal.
(b) In addition to the obligations set forth in Section 5.9(a) and
(c), subject to any contractual confidentiality obligations of Alkermes in
effect as of the date hereof, Alkermes shall notify Reliant promptly if any
Alkermes Takeover Proposal, or any inquiry or contact with any Persons with
respect thereto, is made and shall, in any such notice to Reliant, indicate the
identity of the Person making such Alkermes Takeover Proposal, offer, inquiry or
contact and the terms and conditions of such Reliant Takeover Proposal, inquiry
or contact. Alkermes will keep Reliant reasonably informed of the status and
details, including amendments or proposed amendments of any such inquiry,
contact or Alkermes Takeover Proposal. Alkermes agrees not to release, or allow
any of its Subsidiaries to release, any third party from, or waive any provision
of, any confidentiality or standstill agreement to which Alkermes or such
Subsidiary is a party.
(c) Alkermes may terminate this Agreement upon written notice to
Reliant by virtue of an Alkermes Takeover Proposal if the Board of Directors of
Alkermes reasonably believes, based upon the advice of legal counsel, that
failure to take action with respect to such Alkermes Takeover Proposal would
violate its fiduciary obligations to the Alkermes shareholders. Prior to the
earlier of (i) termination of this Agreement in accordance with the preceding
sentence and (ii) Reliant's termination of this Agreement pursuant to Section
9.1, the Board of Directors of Alkermes shall not enter into any agreement with
respect to any Alkermes Takeover Proposal.
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5.10 Alkermes SEC Filings. Prior to the Effective Time, Alkermes shall
furnish Reliant with a complete copy of each periodic or current report filed by
it after the date hereof under the Exchange Act promptly after filing the same
(together with all exhibits, schedules, supplements or amendments thereto). All
filings made by Alkermes after the date hereof pursuant to the Exchange Act will
be made in a timely fashion, will comply as to form in all material respects
with the applicable provisions of the Exchange Act and the rules and regulations
thereunder and 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 therein, in light of the circumstances under which they are made, not
misleading.
5.11 Proxy Statement; Form S-4.
(a) As promptly as practicable after the execution of this
Agreement, Alkermes shall prepare and cause to be filed with the SEC a joint
proxy statement relating to the Alkermes Shareholders' Meeting and the Reliant
member consent solicitation (together with any amendments thereof or supplements
thereof, the "Proxy Statement") and Alkermes shall cause Parent to prepare and
file with the SEC the Form S-4 (together with all amendments thereto, the "Form
S-4"; the prospectus contained in the Form S-4 together with the Proxy
Statement, the "Proxy/Prospectus"), in which the Proxy Statement shall be
included, in connection with the registration under the Securities Act of the
shares of Parent Common Stock to be issued to the members of Reliant as Reliant
Merger Consideration and to shareholders of Alkermes as Alkermes Merger
Consideration. Each of Alkermes and Parent shall use reasonable best efforts to
cause the Form S-4 to become effective as promptly as practicable, and, prior to
the Effective Time, Alkermes shall cause Parent to take all or any action
reasonably required under any applicable federal or state securities laws in
connection with the issuance of shares of Parent Common Stock in the Mergers.
Each of Alkermes, Parent and Reliant shall furnish all information concerning it
and the holders of its capital stock (or units) as the other may reasonably
request in connection with such actions and the preparation of the Form S-4 and
Proxy Statement. As promptly as reasonably practicable after the Form S-4 shall
have become effective and the Proxy Statement shall have been cleared by the
SEC, Alkermes shall mail the Proxy/Prospectus to its shareholders and members of
Reliant. No filing of, or amendment or supplement of, or amendment or supplement
to, the Form S-4 shall be made by Alkermes or Parent, in each case, without
providing Reliant a reasonable opportunity to review and comment thereon, which
comments shall be considered in good faith. Alkermes and Parent shall advise
Reliant, promptly after either receives notice thereof, of the time when the
Form S-4 has become effective or any supplement or amendment has been filed, of
the issuance of any stop order, the suspension of the qualification of the
Parent Common Stock issuable in connection with the Mergers for offering or sale
in any jurisdiction, or any request by the SEC for amendment of the Proxy
Statement or the Form S-4 or comments thereon and responses thereto or requests
by the SEC for additional information.
(b) Alkermes will indemnify and hold harmless Reliant and its
Affiliates and their respective officers, managers, members, employees, agents
and attorneys (the "Reliant Indemnitees"), from and against any and all losses,
damages, liabilities, costs and expenses (including, but not limited to,
reasonable attorneys' fees and expenses) to which any of such Reliant
Indemnitees may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages, liabilities, costs or
expenses are caused by,
50
arise out of or based upon (i) any untrue statement or alleged untrue statement
of any material fact contained in the Form S-4 (or contained in any document or
filing incorporated therein by reference), any proxy statement or prospectus
contained therein, or any amendment or supplement thereto, or (ii) the omission
or alleged omission to state therein a 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; provided, however,
that, Alkermes will not be liable in any such case to the extent that any such
loss, claim, damage, liability, cost or expense arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by or on behalf of any Reliant
Indemnitee in writing specifically for use in the preparation thereof.
(c) Reliant will indemnify and hold harmless Alkermes and its
Affiliates, and their respective officers, managers, members, employees, agents
and attorneys (the "Alkermes Indemnitees"), from and against any and all losses,
damages, liabilities, costs and expenses (including, but not limited to,
reasonable attorneys' fees and expenses) to which any of such Alkermes
Indemnitees may become subject under the Securities Act, the Exchange Act or
otherwise insofar as such losses, claims, damages, liabilities, costs or
expenses are caused by, arise out of or based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Form S-4, any
proxy statement or prospectus contained therein, or any amendment or supplement
thereto, or (ii) the omission or alleged omission to state therein a 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;
provided, however, that, Reliant will only be liable in any such case to the
extent that any such loss, claim, damage, liability, cost or expense arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission so made in conformity with information furnished by or on
behalf of Reliant in writing specifically for use in the preparation thereof.
5.12 Reliant Member Approval; Mailing to Reliant Members. Reliant shall
take all necessary action to obtain the Reliant Member Approval. As promptly as
reasonably practicable after the Form S-4 shall have been declared effective by
the SEC, Reliant shall mail to each Reliant member the Form S-4 and a consent to
approve the Reliant Merger.
5.13 Alkermes Shareholders Meeting. Alkermes will take all action
necessary to call, give notice of and hold a meeting of the holders of Alkermes
Common Stock to vote upon the Mergers and related matters (the "Alkermes
Shareholders Meeting"). The Alkermes Shareholders Meeting will be held as
promptly as practicable after the Form S-4 is declared effective under the
Securities Act. Alkermes will ensure that all proxies solicited in connection
with the Alkermes Shareholders Meeting are solicited in compliance with all
applicable laws. Alkermes shall include in the Proxy/Prospectus the unanimous
recommendation of its Board of Directors that its shareholders vote in favor of
the approval of the Mergers and the approval and adoption of this Agreement.
5.14 Agreement Regarding Directors; Committees. Subject to applicable law,
Alkermes shall take all action as may be required such that upon the Effective
Time the individuals listed in Section 5.14 of the Reliant Disclosure Schedule
(the "Reliant Board Representatives") shall be elected as directors of Parent in
accordance with the Parent Charter Documents. As soon as practicable after the
date hereof, the Parties shall agree on the
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committees of the Board of Directors of Parent (which shall include, in addition
to any presently constituted committees, an executive committee and a nominating
committee) and the membership thereof, which membership shall include at least
one (1) Reliant Board Representative on each such committee. For as long as the
Reliant Board Representatives serve as directors of Parent and for a period of
at least five (5) years thereafter, Parent shall maintain or cause to be
maintained in effect directors' and officers' liability insurance covering the
Reliant Board Representatives on terms no less favorable than those of Alkermes'
current directors' and officers' liability insurance policy or the directors'
and officers' liability insurance policy.
5.15 Employee Benefits Matters.
(a) As of the Effective Time, Parent shall make available or cause
to be made available to each individual who was an employee of Reliant
immediately before the Effective Time and who is an employee of the Reliant
Surviving LLC or Parent immediately after the Effective Time (a "Transferred
Employee") health, prescription drug, long-term disability, short-term
disability, life insurance and dental benefits not substantially less favorable
to the Transferred Employees as in effect immediately prior to the Effective
Time; provided, that nothing herein shall prevent Parent from terminating the
employment of any such employee or modifying or terminating such plans from time
to time. Such benefits may be provided by Parent, at its option, through Reliant
Plans maintained by Parent (or its ERISA Affiliates, including, without
limitation, Reliant Surviving LLC), or through Alkermes Plans providing such
benefits. Thereafter, with respect to such benefits, Parent and its ERISA
Affiliates (including without limitation the Reliant Surviving LLC) shall not
discriminate against Transferred Employees in relation to similarly situated
employees of Parent and its ERISA Affiliates by reason of their status as
Transferred Employees.
(b) To the extent that Parent elects to provide the benefits
described in Section 5.15(a) to Transferred Employees through Alkermes Plans
providing such benefits (a "Replacement Plan"), Parent shall take appropriate
action to waive any waiting period, pre-existing condition or requirement for
evidence of insurability otherwise imposed under any such Alkermes Plan with
respect to any Transferred Employee who was covered by a Reliant Plan providing
similar benefits prior to the Effective Time. To the extent the benefits
described in Section 5.15(a) for Transferred Employees are provided pursuant to
a Replacement Plan at any time other than during a general open enrollment
applicable to all employees of Alkermes, Parent and Reliant Surviving LLC,
Parent (i) shall treat Reliant employees who are not then actively at work in
the same manner as similarly-situated Alkermes employees for purposes of
applying any actively-at-work requirements, and (ii) shall give credit under
such Replacement Plan to all Transferred Employees and their covered dependents
for all deductibles, co-pays and out-of-pocket expense limitations incurred by
the Transferred Employees and their covered dependents under the Reliant Plans;
provided, that Alkermes shall give such credit only to the extent that Reliant
(through its third-party administrator or otherwise) first provides Alkermes
with evidence of the year-to-date deductibles paid and out-of-pocket expenses
incurred by such Transferred Employees and their covered dependents under the
Reliant Plans. If Reliant cannot provide such evidence in a manner that is
acceptable to Alkermes, Alkermes shall give such credit only to the extent that
a Transferred Employee submits an explanation of benefits form which clearly
indicates the year-to-date deductibles paid and out-of-pocket expenses incurred
by the Transferred Employee and his covered dependents under the Reliant Plan.
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(c) Parent shall not reduce the accrued vacation and sick or other
paid leave of each Transferred Employee under Reliant Plans as of the Effective
Time.
(d) Parent and Reliant Surviving LLC will take all steps necessary
to merge the 401(k) plan maintained by Reliant (the "Reliant 401(k) Plan") with
and into the 401(k) plan maintained by Alkermes or Parent (the "Parent 401(k)
Plan") as soon as practicable after the Effective Time. No contributions
attributable to periods after the Effective Time shall be made to the Reliant
401(k) Plan. Parent shall take appropriate steps to permit immediate
participation in the Parent 401(k) Plan immediately following the Effective Time
by Transferred Employees who, immediately prior to the Effective Time, were
participants in the Reliant 401(k) Plan. All other Transferred Employees shall
commence participation in the Parent 401(k) Plan as soon as administratively
feasible following the Effective Time.
(e) From and after the Effective Time and for eligibility and
vesting purposes under the Parent 401(k) Plan, each Transferred Employee shall
receive full credit from Parent and its ERISA Affiliates for all service
credited under the Reliant 401(k) Plan prior to the Effective Time.
(f) In the event Parent or any of its successors and assigns either
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets relating to
the Reliant Surviving LLC to any Person, then, and in each case, proper
provision shall be made so that such successors and assigns of Parent or Reliant
Surviving LLC honor the obligations of Parent set forth in this Agreement.
(g) References herein to a benefit with respect to a Transferred
Employee shall include, where applicable, benefits with respect to any eligible
dependents and beneficiaries of such Transferred Employee provided or available
under such benefit.
(h) Reliant and Parent shall provide each other with such
information as may be reasonably requested to effect the matters set forth in
this Section 5.15. All such information and notices and schedules to be provided
hereunder shall be true, correct and complete as of the date provided.
(i) As soon as practicable, but not later than fifteen (15) days
after the Effective Time, Parent shall file a registration statement on Form S-8
under the Securities Act covering the shares of Parent Common Stock issuable
pursuant to options granted to employees, managers of Reliant pursuant to the
Reliant Option Plans prior to the Effective Time.
(j) Prior to the Alkermes Merger Effective Time, the Board of
Directors of Alkermes shall amend Alkermes' 1991 Restricted Common Stock Award
Plan to amend the definition of "Shares" in such Plan to mean Alkermes Common
Stock and any equity securities distributed on or in respect of or in
substitution for the shares of Alkermes Common Stock.
5.16 Lock-up Agreements. Reliant shall cause each of its officers listed
in Section 5.16 of the Reliant Disclosure Schedule to enter into lock-up
agreements, in substantially the form of Exhibit H attached hereto (the "Lock-up
Agreements"), whereby each such Person shall agree not to sell or otherwise
dispose of shares of Parent Common Stock received as Reliant
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Merger Consideration (other than such shares identified on Schedule 5.16 of the
Reliant Disclosure Schedule which may be sold by the applicable Persons in
accordance with Rule 145(c) promulgated under the Securities Act) for such
period of time following the Reliant Merger Effective Time as is set forth in
each such Lock-up Agreement.
5.17 Indemnification and Insurance.
(a) Alkermes and Parent agree that all rights to exculpation and
indemnification for acts or omissions occurring prior to the Reliant Merger
Effective Time now existing in favor of the current or former members, managers
or officers of Reliant (the "Reliant Indemnified Parties") as provided in
Reliant's organizational documents or in any agreement shall survive the Reliant
Merger and shall continue in full force and effect in accordance with their
terms. For six (6) years from the Reliant Effective Time, Parent and Reliant
Surviving LLC shall, jointly and severally, indemnify the Reliant Indemnified
Parties to the same extent as such Reliant Indemnified Parties are entitled to
indemnification pursuant to the preceding sentence.
(b) For five (5) years from the Effective Time, Parent shall
maintain in effect directors'/managers' and officers' liability insurance
covering those persons who are currently covered by the current Reliant
directors'/managers' and officers' liability insurance policy (the "Reliant
Insured Parties") on terms no less favorable to the Insured Parties that those
of Reliant's current directors'/managers' and officers' liability insurance
policy; provided, however, that in no event shall Parent be required to expend
in any one year an amount in excess of 150% of the annual premiums currently
paid by Reliant for such insurance; provided, further, that if the annual
premiums of such insurance coverage exceed such amount, Parent shall be
obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such amount; provided, further, that Parent may meet its obligations
under this paragraph by covering the above people under Parent's or one of its
Subsidiaries' insurance policy or policies on the terms described above.
(c) The provisions of Section 5.17(a) and (b) are intended to be for
the benefit of, and shall be enforceable by, each person entitled to
indemnification and/or insurance hereunder and the heirs and representatives of
such person. Following the Closing, Parent shall not enter into, or permit any
of its Subsidiaries to enter into, any merger, consolidation or similar
transaction unless Parent shall have ensured that the surviving or resulting
entity will assume the obligations imposed by this Section 5.17(a) and (b).
(d) After the Closing, Parent will provide directors' and officers'
insurance coverage to the managers and officers of Reliant Surviving LLC, with
such coverage consistent with the coverage provided to similarly situated
directors and officers of its Subsidiaries.
5.18 Notice of Developments. Alkermes will give prompt notice to Reliant,
and Reliant will give prompt notice to Alkermes, upon becoming aware of the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be reasonably likely to cause (a) any representation or warranty of
such Party contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date of this Agreement to the Effective
Time, or (b) any failure of Alkermes, Xxxxx Acquisition Sub, Revere Acquisition
Sub or Reliant, as the case may be, or of any officer, director, manager,
employee or agent thereof, to
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comply with or satisfy in all material respects any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement.
Notwithstanding the above, the delivery of any notice pursuant to this Section
will not limit or otherwise affect the remedies available hereunder to the Party
receiving such notice of the conditions to such Party's obligations to
consummate the Mergers.
5.19 Tax-free Transaction. Neither Alkermes nor Parent will knowingly take
any action that would cause the Alkermes Merger to fail to qualify as a tax-free
transaction (a) within the meaning of Section 368 of the Code, or (b) together
with the Reliant Merger, within the meaning of Section 351 of the Code. Each of
Alkermes and Parent shall report the Alkermes Merger for income tax purposes as
a tax-free transaction within the meaning of Sections 351 and 368 of the Code
(and any comparable state or local tax statute). None of Alkermes, Parent or
Reliant will knowingly take any action that would cause the Reliant Merger,
together with the Alkermes Merger, to fail to qualify as a tax-free transaction
within the meaning of Section 351 of the Code. Each of Parent and Reliant shall
report the Reliant Merger for income tax purposes as a tax-free transaction
within the meaning of Section 351 of the Code (and any comparable state or local
tax statute). In the event either party requests a tax opinion from its counsel,
Alkermes and Reliant each shall execute and deliver certificates, in forms
reasonably satisfactory to the counsel of both Alkermes and Reliant, signed by
officers of Alkermes and Reliant, respectively, setting forth such factual
representations and other information as are customary to serve as a basis for
tax opinions.
5.20 Preparation of Tax Returns and Filings.
(a) Reliant or the Reliant tax matters partner shall timely prepare
and file, or cause the tax preparer selected by the Reliant tax matters partner
to prepare and file, with the appropriate Governmental Entity all required Tax
Returns of Reliant for any Pre-Closing Tax Period. Reliant shall provide Parent
and its Affiliates the opportunity to review and comment upon all required
Reliant Tax Returns relating to any Pre-Closing Tax Period. Reliant shall not
amend any Tax Return without the prior consent of Parent (which consent shall
not be unreasonably withheld).
(b) Parent and its Affiliates shall provide Reliant the opportunity
to review and comment upon, and Parent shall timely prepare and file with the
appropriate Governmental Entity, all required Reliant Tax Returns relating to a
Straddle Period. Parent shall timely prepare and file with the appropriate
Governmental Entity all other Post-Closing Tax Periods Tax Returns of Reliant.
(c) Parent and Reliant agree to cause Reliant to file all Tax
Returns for the period including the Reliant Merger Effective Date on the basis
that the relevant Tax Periods ended as of the Reliant Merger Effective Time.
(d) Reliant shall provide to Parent copies of Reliant members'
Schedule K-1s and information regarding tax capital accounts to allow Parent to
calculate its Tax basis in the Reliant Units acquired by Parent. This shall
include providing Parent, at its reasonable request, with all information
reasonably necessary for Parent to compute its Tax basis for the Reliant Units
that Parent will hold immediately following the Reliant Merger and any other
information
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Parent requires for any other Tax basis calculation for any asset of Reliant
acquired pursuant to the Reliant Merger. Notwithstanding the foregoing, nothing
in this Section 5.20(d) shall require Reliant to (i) calculate the Tax basis of
Parent for its Reliant Units, (ii) provide any information other than
information in Reliant's possession at the Reliant Merger Effective Time, or
(iii) to present any information in a manner other than in which it appears in
Reliant's books and records.
5.21 Tax Claims. From and after the Closing:
(a) If Parent or any of its Affiliates receive notice of a claim
with respect to Taxes of Reliant or current or former member of Reliant (other
than Alkermes) made by any Governmental Entity (a "Tax Claim") for a Pre-Closing
Tax Period or Straddle Period, Parent shall promptly, and in any event no more
than thirty (30) days following the receipt of such Tax Claim, give written
notice of such Tax Claim to a Person designated by the Reliant Member
Representatives. Notwithstanding anything to the contrary in this Section 5.21,
neither Reliant nor any predecessor entity may settle any Tax Claim without the
written consent of the Parent (which consent shall not be unreasonably withheld)
if such settlement would have an adverse effect on Parent or any of its
Affiliates.
(b) With respect to any Tax Claim relating to a Pre-Closing Tax
Period, the Reliant Member Representatives shall, upon written notification to
Parent of their desire to, control all proceedings and make all decisions in
connection with any such Tax Claim (including selection of counsel) at the
expense of the members of Reliant. The Reliant Member Representatives and Parent
shall jointly control all proceedings taken in connection with any Tax Claim
relating solely to a Straddle Period. Parent shall control at its own expense
all proceedings with respect to any Tax Claim relating to a Post-Closing Tax
Period. Each Party shall promptly notify the other Party if it decides not to
control the defense or settlement of any Tax Claim relating to a Pre-Closing Tax
Period or Straddle Period which it is entitled to control pursuant to this
Agreement, and the other party shall thereupon be permitted to defend and settle
such proceeding. Notwithstanding anything to the contrary in this Section 5.21,
Parent may not settle any Tax Claim without the written consent of the Reliant
Member Representatives (which consent shall not be unreasonably withheld) if
such settlement would have an adverse effect on the members of Reliant.
(c) Reliant, Parent and each of their respective Affiliates shall
reasonably cooperate with each other in contesting any Tax Claim. Such
cooperation shall include the retention and, upon the request of the Party or
Parties controlling proceedings relating to such Tax Claim, the provision to
such Party or Parties of necessary powers of attorney and records and
information which are reasonably relevant to such Tax Claim, and making
employees available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or to testify at
proceedings relating to such Tax Claim.
5.22 Nasdaq. Alkermes shall cause Parent to promptly prepare and submit to
Nasdaq, NASD applications covering the shares of Parent Common Stock to be
issued in connection with the Mergers and shall use reasonable best efforts to
cause such shares to be approved for listing on Nasdaq prior to the Effective
Time, subject to official notice of issuance.
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5.23 Affiliate Agreements.
(a) Upon the execution of this Agreement, Alkermes and Reliant will
provide each other with a list of those persons who are, in Alkermes' or
Reliant's respective reasonable judgment, "affiliates" of Alkermes or Reliant,
respectively, within the meaning of Rule 145 promulgated under the Securities
Act ("Rule 145"). Alkermes and Reliant shall provide each other such information
and documents as Reliant or Alkermes shall reasonably request for purposes of
reviewing such list and shall notify the other Party in writing regarding any
change in the identity of its affiliates prior to the Closing Date. Alkermes and
Reliant shall each use its reasonable best efforts to deliver or cause to be
delivered to each other by fifteen (15) days prior to the Effective Time (and in
any case prior to the Effective Time) from each of its affiliates, an executed
Affiliate Agreement, in form and substance satisfactory to Alkermes and Reliant,
by which each affiliate of Reliant agrees to comply with the applicable
requirements of Rule 145 (an "Affiliate Agreement"). The Parent shall be
entitled to place appropriate legends on the certificates evidencing any Parent
Common Stock to be received by such affiliates of Reliant and Alkermes pursuant
to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the Parent Common Stock, consistent with
the terms of the Affiliate Agreements; provided, however, that such legends or
stop transfer instructions shall be promptly removed, after the required
restricted period under Rule 145 has expired or in connection with any resale in
accordance with the Form S-4.
(b) Parent shall, at all times during the two (2) year period
beginning on the Closing Date, whether or not it is subject to the reporting
requirements of Section 13 or Section 15(d) of the Exchange Act, comply with the
current public information requirements of Rule 144(c)(1) promulgated under the
Securities Act.
5.24 Inspection of Records; Access.
(a) From the date hereof to the Effective Time, Reliant and Alkermes
shall (i) allow all designated officers, attorneys, accountants and other
representatives of their respective companies reasonable access to at reasonable
times and upon reasonable prior notice to the offices, records and files,
correspondence, audits and properties, as well as to all information relating to
commitments, contracts, titles and financial position, or otherwise pertaining
to the business and affairs, of the other Party, (ii) furnish to such other
Party and such other Party's counsel, financial advisors, auditors and other
authorized representatives such financial and operating data and other
information as such persons may reasonably request and (iii) instruct employees,
counsel and financial advisors to cooperate with such Party in such Party's
investigation of the business of the other Party. Except as required by law,
Alkermes and Reliant will hold, and will cause their respective officers,
employees, accountants, counsel, financial advisors and other representatives
and affiliates to hold, any and all information received from Reliant or from
Alkermes, as the case may be, directly or indirectly, in confidence, in
accordance with the Confidential Disclosure Agreement.
(b) Notwithstanding any provision herein to the contrary, for a
period of six (6) years following the Closing, Alkermes shall, and shall cause
Parent and each of its Subsidiaries and affiliates to (i) afford the Reliant
Member Representatives full and free access, upon reasonable notice at all
reasonable times during normal business hours, to the personnel,
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premises, properties, contracts, books and records, and other documents and data
of Reliant and its predecessor entities as the Reliant Member Representatives
shall reasonably request; (ii) furnish the Reliant Member Representatives with
copies of all such contracts, books and records, Tax Returns and Tax Claims (to
the extent such Tax Returns and Tax Claims (or any portions thereof) relate to
any Tax Period for which Reliant or any member of Reliant has any liability
under this Agreement or the Tax Indemnity Agreement), and other existing
documents and data as the Reliant Member Representatives may reasonably request;
and (iii) furnish the Reliant Member Representatives with such additional
financial, operating, and other data and information as they may reasonably
request; in each such case only in order to prepare such Tax Returns any former
members of Reliant or any of their respective affiliates are required to prepare
and/or file with Governmental Entities or as are reasonably required in
connection with any suit, proceeding against, or examination relating to any Tax
Return or in connection with Section 5.20 and 5.21.
5.25 Parent Covenant Regarding Certain Credit Matters.
(a) Within ten (10) business days following the Closing, Parent
shall replace or cause to be replaced, the outstanding letter of credit in favor
of the landlord of Reliant's corporate headquarters.
(b) With respect to the guaranty by one of Reliant's members of
certain obligations of Reliant under an employment agreement between Reliant and
one of its officers, the Parties shall use their reasonable best efforts to
arrange for a replacement or cancellation of such guaranty at Closing, and to
the extent that such guaranty is not replaced or canceled at Closing, Parent
shall agree with such guarantor to indemnify and reimburse the guarantor for any
amounts paid by such guarantor under such guaranty (plus related fees and
expenses).
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY TO
CONSUMMATE THE MERGER
The respective obligations of each Party to consummate the Merger shall be
subject to the satisfaction or waiver, at or before the Closing, of each of the
following conditions:
6.1 Consent and Approvals. The Required Reliant Third Party Consents,
Required Alkermes Third Party Consents, Reliant Member Approval, Alkermes
Shareholder Approval and all material consents and approvals of, notifications
to, and filings with Governmental Entities necessary for the consummation of the
transactions contemplated hereby shall have been obtained, given or made, as the
case may be, and shall be in full force and effect.
6.2 Absence of Order. There shall be no order or injunction pending nor
any action or proceeding instituted by or before any Governmental Entity or
court which prevents consummation or seeks to declare unlawful of either or both
of the Mergers.
6.3 HSR Act Notification. The applicable waiting periods pursuant to the
HSR Act and any extensions thereof shall have expired or been terminated.
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6.4 Effectiveness of Form S-4. The Form S-4 shall have been declared
effective under the Securities Act and no stop order suspending the
effectiveness of the Form S-4 shall be in effect and no proceedings for such
purpose shall be pending before or threatened by the SEC.
6.5 Nasdaq Listing. The Parent Common Stock to be issued in connection
with the Mergers shall have been authorized for quotation on Nasdaq subject to
official notice of issuance.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
ALKERMES, PARENT, XXXXX ACQUISITION SUB AND
REVERE ACQUISITION SUB TO CONSUMMATE THE MERGER
The obligation of Alkermes, Parent, Xxxxx Acquisition Sub and Revere
Acquisition Sub to consummate the Mergers is subject to the satisfaction or
waiver by Alkermes, at or before the Closing, of the following conditions:
(a) Representations, Warranties and Covenants. The representations
and warranties of Reliant contained in this Agreement, when read in conjunction
with the Reliant Disclosure Schedule, shall be true, correct and complete in all
material respects on and as of the Effective Time with the same force and effect
as though made on and as of the Effective Time (with such exceptions as may be
permitted under or contemplated by this Agreement and except for representations
and warranties that relate to a specific date, which shall speak only as of such
date); provided, however, that the reference to "complete" in the foregoing
sentence shall not expand the representation made by Reliant in Section 3.25.
(b) Reliant shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by Reliant on or prior to the Effective Time.
(c) Reliant shall have delivered to Alkermes a certificate, dated
the Closing Date, certifying the satisfaction of the conditions under Sections
7.1(a) and 7.1(b).
7.2 Merger Documents. Reliant shall have executed and delivered the
Reliant Merger Certificate referred to in Section 1.2.
7.3 Certificates. Reliant shall have furnished Alkermes with such other
certificates and documents and certificates of public officials as may be
reasonably requested by Alkermes.
7.4 Escrow Indemnity and Tax Indemnity Agreements. The applicable Reliant
Members shall have executed and delivered (a) to Alkermes and the Escrow Agent,
the Escrow Indemnity Agreement and the written instructions contemplated
thereby, and (b) to Alkermes, the Tax Indemnity Agreement.
7.5 Warrants. All warrants to purchase Common Units shall have been
exercised prior to the Effective Time.
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7.6 No Material Adverse Change. There shall have been no Material Adverse
Change with respect to the matters listed on Exhibit I.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATION OF RELIANT TO
CONSUMMATE THE MERGER
The obligation of Reliant to consummate the Reliant Merger is
subject to the satisfaction or waiver by Reliant at or before the Closing of the
following conditions:
8.1 Representations, Warranties and Covenants.
(a) The representations and warranties of Alkermes, Parent, Xxxxx
Acquisition Sub and Revere Acquisition Sub contained in this Agreement, when
read in conjunction with the Alkermes Disclosure Schedule, shall be true,
correct and complete in all material respects on and as of the Effective Time
with the same force and effect as though made on and as of the Effective Time
(with such exceptions as may be permitted under or contemplated by this
Agreement and except for representations and warranties that relate to a
specific date, which shall speak only as of such date); provided, however, that
the reference to "complete" in the foregoing sentence shall not expand the
representation made by Alkermes in Section 4.25.
(b) Each of Alkermes, Parent, Xxxxx Acquisition Sub and Revere
Acquisition Sub shall have performed and complied in all material respects with
all covenants and agreements required by this Agreement to be performed or
complied with by it on or prior to the Effective Time.
(c) Alkermes shall have delivered to the Reliant Member
Representatives a certificate, dated the Closing Date, certifying the
satisfaction by each of Alkermes, Parent, Xxxxx Acquisition Sub and Revere
Acquisition Sub of the conditions under Sections 8.1(a) and 8.1(b).
8.2 Merger Documents. Alkermes and Xxxxx Acquisition Sub shall have
executed and delivered the Alkermes Articles of Merger referred to in Section
1.2. Revere Acquisition Sub shall have executed and delivered the Reliant Merger
Certificate referred to in Section 1.2.
8.3 Certificates. Alkermes shall have furnished Reliant with such
certificates of public officials as may be reasonably requested by Reliant.
8.4 Escrow Indemnity and Tax Indemnity Agreements. Alkermes and Parent
shall have executed and delivered (a) to applicable Reliant Members and the
Escrow Agent, the Escrow Indemnity Agreement, and (b) to the applicable Reliant
Members, the Tax Indemnity Agreement.
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, as follows:
(a) by Reliant or Alkermes upon written notice to the other if,
without fault of the terminating Party, the Closing shall not have occurred on
or before June 30, 2002 (which date shall automatically be extended to August
31, 2002 in the event that on or prior to May 15, 2002 either the Form S-4 has
not been declared effective by the SEC or the applicable waiting periods
pursuant to the HSR Act and extensions thereof shall not have terminated or
expired), which date may be extended by mutual consent of the Parties; provided
that the right to terminate this Agreement under this Section 9.1(a) shall not
be available to any Party whose failure to fulfill any of its obligations under
this Agreement has been the proximate cause of, or resulted in, the failure to
consummate the Mergers by such date;
(b) by Reliant upon written notice to Alkermes if Parent, Alkermes,
Xxxxx Acquisition Sub or Revere Acquisition Sub has breached any representation,
warranty, covenant or agreement contained herein such that the conditions set
forth in Section 8.1 would not be satisfied, and such breach has not been cured
(if curable) within twenty (20) business days of receipt of written notice from
Reliant or by the Closing Date, if earlier;
(c) by Alkermes upon written notice to Reliant if Reliant has
breached any representation, warranty, covenant or agreement contained herein
such that the conditions set forth in Section 7.1 would not be satisfied, and
such breach (if curable) has not been cured within twenty (20) business days of
receipt of written notice from Alkermes or by the Closing Date, if earlier;
(d) by either Alkermes or Reliant if (i) a statute, rule, regulation
or other executive order shall have been enacted by any Governmental Entity
prohibiting the consummation of the Mergers substantially on the terms
contemplated herein, or (ii) any court of competent jurisdiction or Governmental
Entity shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Mergers and such order,
decree or ruling shall have become final and nonappealable; provided, that the
Party seeking to terminate this Agreement pursuant to this Section 9.1(d) shall
have used its reasonable best efforts to remove such order, decree or ruling;
(e) by Alkermes upon written notice to Reliant if Reliant breaches
the terms of this Agreement by entering into a Reliant Takeover Proposal with a
third party in which event Reliant shall pay to Alkermes by wire transfer of
immediately available funds no later than the earlier of (i) the date Reliant
enters into a definitive agreement with respect to the Reliant Takeover Proposal
and (ii) twelve months after the date of this Agreement, an amount equal to
forty-five million dollars ($45,000,000). Payment by Reliant of the payment
referred to in the foregoing sentence shall constitute conclusive evidence that
this Agreement has been validly terminated and upon delivery of such amount
Reliant shall be fully released and discharged from any liability or obligation
resulting from or under this Agreement, except its obligations under the
Confidential Disclosure Agreement;
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(f) by Alkermes as contemplated by Section 5.9(c) in which event
Alkermes shall pay to Reliant by wire transfer of immediately available funds no
later than the earlier of (i) the date Alkermes enters into a definitive
agreement with respect to the Alkermes Takeover Proposal and (ii) forty-five
(45) days after the date of termination of this Agreement under Section 5.9(c),
an amount equal to forty-five million dollars ($45,000,000). Payment by Alkermes
of the payment referred to in the foregoing sentence shall constitute conclusive
evidence that this Agreement has been validly terminated and upon delivery of
such amount Alkermes shall be fully released and discharged from any liability
or obligation resulting from or under this Agreement, except its obligations
under the Confidential Disclosure Agreement;
(g) by Reliant upon written notice to Alkermes if Alkermes breaches
the terms of this Agreement by entering into an Alkermes Takeover Proposal with
a third party in which event Alkermes shall pay to Reliant by wire transfer of
immediately available funds no later than the earlier of (i) the date Alkermes
enters into a definitive agreement with respect to such Alkermes Takeover
Proposal, and (ii) twelve months after the date of this Agreement, an amount
equal to forty-five million dollars ($45,000,000). Payment by Alkermes of the
payment referred to in the foregoing sentence shall constitute conclusive
evidence that this Agreement has been validly terminated and upon delivery of
such amount Alkermes shall be fully released and discharged from any liability
or obligation resulting from or under this Agreement, except its obligations
under the Confidential Disclosure Agreement;
(h) by Reliant upon written notice to Alkermes if Alkermes enters
into an Alkermes Takeover Proposal, which Alkermes Takeover Proposal would
result in a Tax treatment for the Reliant members that is materially less
favorable to the Reliant members than the Tax treatment pursuant to the
transaction contemplated by this Agreement (including, without limitation, a
transaction in which the holders of the Reliant Units would receive aggregate
consideration less than the then applicable amount of the accumulated
liquidation preference of the outstanding Series A, B and C Preferred Units of
Reliant);
(i) by either Reliant or Alkermes upon written notice to the other
if the average closing trading price of the Alkermes Common Stock as reported on
Nasdaq for the ten (10) consecutive trading day period ending the date prior to
the Closing Date is less than $17.70 per share;
(j) by Alkermes upon written notice to Reliant if the average
closing trading price of the Alkermes Common Stock as reported on Nasdaq for the
ten (10) consecutive trading day period ending the date prior to the Closing
Date is greater than $42.30 per share;
(k) by either Alkermes or Reliant if the Reliant Member Approval is
not obtained by the time specified herein or Alkermes Shareholder Approval is
not obtained at the Alkermes Shareholder Meeting; or
(l) at any time with the mutual written consent of Alkermes and
Reliant.
9.2 Effect of Termination. If this Agreement is terminated as provided in
Section 9.1, this Agreement shall forthwith become void and have no effect,
without liability on the part of any Party, its directors, managers, officers or
shareholders or members, other than the provisions
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of this Section 9.2, Section 5.3 relating to expenses and Section 5.7 relating
to publicity and confidentiality to the extent provided therein and Sections
9.1(e), 9.1(f) and 9.1(g) relating to the fees provided for therein. Subject to
Section 9.1(e), 9.1(f) and 9.1(g), nothing contained in this Section 9.2 shall
relieve any Party from liability for any willful and material breach of this
Agreement or the Confidential Disclosure Agreement occurring before such
termination.
9.3 Amendment. This Agreement may not be amended except by an instrument
signed by each Party hereto; provided, however, that after adoption of this
Agreement by the members of Reliant or the shareholders of Alkermes, without the
further approval of the Reliant Member Representatives or the shareholders of
Alkermes holding the number of outstanding shares of Alkermes Capital Stock
required by applicable law, as applicable, no amendment may be made that (a)
alters or changes the amount or kind of consideration to be received as provided
herein or (b) alters or changes any of the terms of this Agreement if such
alteration or change would materially adversely affect the members of Reliant or
the shareholders of Alkermes, as applicable.
9.4 Waiver. At any time prior to the Effective Time, any Party hereto may,
(a) extend the time for the performance of any of the obligations or other acts
of any other Party hereto or (b) waive compliance with any of the agreements of
any other Party or any conditions to its own obligations, in each case only to
the extent such obligations, agreements and conditions are intended for its
benefit; provided, that any such extension or waiver shall be binding upon a
Party only if such extension or waiver is set forth in a writing executed by
such Party. Notwithstanding the foregoing, no failure or delay by any party in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right hereunder.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification by the Investors. From and after the Closing, the
members of Reliant (other than Alkermes) immediately prior to the Reliant Merger
Effective Time (the "Reliant Indemnifying Parties"), jointly and severally and
subject to the limitations contained in this Agreement and the Escrow Indemnity
Agreement, agree to indemnify Alkermes, Parent and their Subsidiaries
(including, without limitation, from and after the Reliant Merger Effective
Time, Reliant Surviving LLC), and each of their officers, directors, managers,
employees, agents, successors and assigns (other than the Reliant Indemnifying
Parties) (as used in this Article X, each, an "Alkermes Indemnified Party")
against and hold them harmless, from all liabilities, losses, damages, claims,
costs and expenses (including reasonable attorney's fees) (collectively,
"Losses") actually incurred by them arising out of (i) the breach of any
representation or warranty of Reliant contained in the this Agreement, (ii) the
breach of any covenant or agreement of Reliant contained in this Agreement,
(iii) the obligations of Reliant under Section 5.11(c) and (iv) those matters
described in Section 10.1 of the Alkermes Disclosure Schedule.
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10.2 Indemnification Procedures.
(a) Notice. Except as otherwise provided in Section 5.21, each
Alkermes Indemnified Party shall deliver to the Reliant Member Representatives
prompt written notice (the "Claim Notice") of any claim, assertion, event, or
proceeding by or in respect of any third party (each, a "Third Party Claim") and
any claim, assertion, event, or proceeding not involving a Third Party Claim of
which such Alkermes Indemnified Party has knowledge concerning any Loss as to
which such Alkermes Indemnified Party may request indemnification hereunder;
provided, however, that failure to give such notice promptly shall not affect
the indemnification provided hereunder except to the extent the Reliant
Indemnifying Parties shall have been actually prejudiced as a result of such
failure (except that the Reliant Indemnifying Parties shall not be liable for
any expenses incurred during the period in which the Alkermes Indemnified Party
failed to give such notice). The Claim Notice shall describe in reasonable
detail the nature of the claim, including an estimate of the amount of Losses
that have been or may be suffered by the Alkermes Indemnified Party attributable
to such claim and the basis of the Alkermes Indemnified Party's request for
indemnification under Section 10.1 of this Agreement.
(b) Conduct of Defense. Except as otherwise provided in Section
5.21, the Reliant Indemnifying Parties shall have the right to direct (at their
own expense), through counsel of their own choosing, which counsel shall be
reasonably satisfactory to the Alkermes Indemnified Party, the defense or
settlement of any claim or proceeding the subject of indemnification hereunder.
If the Reliant Indemnifying Parties elect to assume the defense of any such
claim or proceeding, the Alkermes Indemnified Party may participate in such
defense at its own expense (unless (i) the Reliant Indemnifying Parties are also
parties against whom the Third Party Claim is made and the Alkermes Indemnified
Party determines in good faith that joint representation would be inappropriate,
or (ii) the Reliant Indemnifying Parties fails to provide reasonable assurance
to the Alkermes Indemnified Party of its financial capacity to defend such Third
Party Claim and provide indemnification with respect to such Third Party Claim).
The Alkermes Indemnified Party shall provide the Reliant Indemnifying Parties
and their representatives with access to its records and personnel relating to
any such claim, assertion, event or proceeding during normal business hours and
shall otherwise cooperate with the Reliant Indemnifying Parties and their
representatives in the defense or settlement thereof, and the Reliant
Indemnifying Parties shall reimburse the Alkermes Indemnified Party for all its
reasonable out-of-pocket expenses in connection therewith. If the Reliant
Indemnifying Parties elect to direct the defense of any such claim or
proceeding, the Alkermes Indemnified Party shall not pay, or permit to be paid,
any part of any claim or demand arising from such asserted liability unless the
Reliant Indemnifying Parties consent in writing to such payment or unless the
Reliant Indemnifying Parties withdraw from the defense of such asserted
liability or unless a final judgment from which no appeal may be taken by or on
behalf of the Reliant Indemnifying Parties is entered against the Alkermes
Indemnified Party for such liability. No settlement in respect of any Third
Party Claim may be effected by the Reliant Indemnifying Parties without the
Alkermes Indemnified Party's prior written consent unless the settlement
involves a full and unconditional release of the Alkermes Indemnified Party
without any admission of fault by the Alkermes Indemnified Party; provided,
however, that in any case in which the Alkermes Indemnified Party withholds
consent to such proposed settlement, thereafter the maximum liability of the
Reliant Indemnifying Parties under this Article X to such Alkermes Indemnified
Party with respect to the relevant Third Party Claim shall not exceed the
amounts set forth in
64
such proposed settlement. If the Reliant Indemnifying Parties shall fail to
undertake any such defense, the Alkermes Indemnified Party shall have the right
to undertake the defense or settlement thereof, at the Reliant Indemnifying
Parties' expense. If the Alkermes Indemnified Party assumes the defense of any
such claim or proceeding pursuant to this Section 10.2 and proposes to settle
such claim or proceeding prior to a final judgment thereon or to forgo any
appeal with respect thereto, then the Alkermes Indemnified Party shall give the
Reliant Indemnifying Parties prompt written notice thereof and the Reliant
Indemnifying Parties shall have the right to participate in the settlement or
assume or reassume the defense of such claim or proceeding in the event the
Reliant Indemnifying Parties agree to assume liability for any Losses arising
from such claim or proceeding.
10.3 Limitations on Indemnification.
(a) Any liabilities of the Reliant Indemnifying Parties pursuant to
this Article X, other than any Losses covered under the Tax Indemnification
Agreement attached hereto as Exhibit J (the "Tax Indemnity Agreement"), shall be
satisfied pursuant to the terms of the Escrow Indemnity Agreement, which shall
be the sole and exclusive remedy available for satisfaction of any obligations
of the Reliant Indemnifying Parties pursuant to this Article X.
(b) Except for any Losses covered under the Tax Indemnity Agreement
and any Losses arising under the Claim Notice identified on Section 10.1 of the
Alkermes Disclosure Schedule, the Reliant Indemnifying Parties shall not be
obligated to indemnify any of the Alkermes Indemnified Parties pursuant to this
Article X until the aggregate Losses suffered by the Alkermes Indemnified
Parties (excluding any Losses arising under any Claim Notice identified on
Section 10.1 of the Alkermes Disclosure Schedule) exceed $1,000,000; provided,
however, that the Reliant Indemnifying Parties shall only then be obligated to
indemnify the relevant Alkermes Indemnified Parties for Losses in excess of
$1,000,000.
(c) In the event that a Reliant Indemnifying Party can establish
that an Alkermes Indemnified Party had actual knowledge, on or before the
Closing Date, of a breach of a representation or warranty of the Company upon
which a claim for indemnification by the Alkermes Indemnified Party is based,
then the Reliant Indemnifying Party shall have no liability for any Losses
resulting from or arising out of such claim.
10.4 Survival. Other than as provided in (a) the Tax representations
contained in Section 3.10, which shall survive for the applicable statute of
limitations, and (b) the Tax Indemnity Agreement, the representations of Reliant
contained in this Agreement shall survive until February 21, 2003 (the
"Expiration Date"), and no Alkermes Indemnified Party may seek indemnification
under this Article X with respect to a breach of such a representation or
warranty after the Expiration Date. Notwithstanding anything to the contrary
contained herein, all representations and warranties of Reliant under this
Agreement, the liability with respect thereto and the indemnification
obligations hereunder, shall not terminate with respect to any claim with
respect to which an Alkermes Indemnified Party has delivered a proper Claim
Notice prior to the Expiration Date. The Parties' respective covenants and
agreements contained in this Agreement or in agreement, document or certificate
delivered in connection herewith shall survive indefinitely unless otherwise set
forth herein or therein; provided, however, that no Alkermes Indemnified Party
may seek indemnification under this Article X with respect to any breach of
65
such covenant or agreement after the Expiration Date, except with respect to any
claim with respect to which an Alkermes Indemnified Party has delivered a proper
Claim Notice prior to the Expiration Date.
10.5 Sole Remedy. Absent fraud, after the Closing the indemnification
rights provided in this Article X, including the Escrow Indemnity Agreement and
the Tax Indemnity Agreement, shall be the sole and exclusive remedy available to
a Party for any breach or alleged breach of this Agreement by the other Party.
ARTICLE XI
GLOSSARY OF DEFINED TERMS
11.1 Glossary. The capitalized terms used herein have the following
meanings:
"Affiliate" as used in this Agreement has the meaning set forth in Rule
1.02 of Regulation S-X promulgated under the Securities Act.
"Affiliate Agreement" has the meaning set forth in Section 5.23(a).
"Agreement" means this Agreement and Plan of Merger among Alkermes,
Parent, Xxxxx Acquisition Sub, Revere Acquisition Sub and Reliant.
"Alkermes" has the meaning as set forth in the preamble.
"Xxxxx Acquisition Sub" has the meaning as set forth in the preamble.
"Alkermes Agreements" has the meaning set forth in Section 4.5.
"Alkermes Articles of Merger" has the meaning set forth in Section 1.2.
"Alkermes Balance Sheet" has the meaning set forth in Section 4.6(b).
"Alkermes Budget" has the meaning set forth in Section 5.2(b)(iii).
"Alkermes Capital Stock" means Alkermes Common Stock and Alkermes
Non-Voting Common Stock.
"Alkermes Certificate" has the meaning set forth in Section 2.1(c).
"Alkermes Common Stock" has the meaning set forth in Section 4.4(a).
"Alkermes Contingent Workers" has the meaning set forth in Section
4.17(b).
"Alkermes Disclosure Schedule" has the meaning set forth in the first
paragraph of Article IV.
"Alkermes Exchange Ratio" has the meaning set forth in Section 2.1(c).
66
"Alkermes Financials" has the meaning set forth in Section 4.6(b).
"Alkermes Indemnified Parties" has the meaning set forth in Section 10.1.
"Alkermes Indemnitees" has the meaning set forth in Section 5.11(b).
"Alkermes IP Rights" has the meaning set forth in Section 4.15(a).
"Alkermes Merger" has the meaning as set forth in the recitals.
"Alkermes Merger Consideration" has the meaning set forth in Section
2.1(c).
"Alkermes Merger Effective Time" has the meaning set forth in Section 1.2.
"Alkermes Non-Voting Common Stock" has the meaning set forth in Section
4.4(a).
"Alkermes-Owned Reliant Units" has the meaning set forth in Section
2.2(b).
"Alkermes Permitted Encumbrances" has the meaning set forth in Section
4.14.
"Alkermes Pharmaceutical Product" has the meaning set forth in Section
4.21(a).
"Alkermes Plans" has the meaning set forth in Section 4.16(a).
"Alkermes Restricted Stock" has the meaning set forth in Section 2.1(e ).
"Alkermes SEC Reports" has the meaning set forth in Section 4.6(a).
"Alkermes Severance Arrangements" has the meaning set forth in Section
4.16(a).
"Alkermes Shareholder Approval" has the meaning set forth in Section 4.22.
"Alkermes Shareholder Meeting" has the meaning set forth in Section 5.13.
"Alkermes Stock Option Plans" means (i) the Amended and Restated 1989
Non-Qualified Stock Option Plan, as amended, (ii) the Amended and Restated 1990
Omnibus Stock Option Plan, as amended, (iii) the 1992 Non-Qualified Stock Option
Plan, as amended, (iv) the Stock Option Plan for Non-Employee Directors, as
amended, (v) the 1998 Equity Incentive Plan, as amended and (vi) the 1999 Stock
Option Plan, as amended.
"Alkermes Surviving Corporation" has the meaning set forth in Section
1.1(a).
"Alkermes Takeover Proposal" has the meaning set forth in Section 5.9(a).
"Claim Notice" has the meaning set forth in Section 10.2(a).
"Closing" has the meaning set forth in Section 1.2.
"Closing Date" has the meaning set forth in Section 1.2.
67
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder.
"Common Units" means the class one common units of Reliant and any other
units issued by Reliant its Board of Managers designates as common units.
"Confidential Disclosure Agreement" has the meaning set forth in Section
5.7.
"Contingent Workers" has the meaning set forth in Section 3.17(c).
"DLLCA" means the Delaware Limited Liability Company Act, as amended.
"Dissenting Share" has the meaning set forth in section 2.1(f).
"Effective Time" has the meaning set forth in Section 1.2.
"Environmental Laws" means any federal, state, local and foreign statutes,
laws (including, without limitation, common law), judicial decisions,
regulations, ordinances, rules, judgments, orders, codes, injunctions, permits,
governmental agreements or governmental restrictions relating to human health
and safety, the environment or to pollutants, contaminants, wastes or chemicals.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business, whether or not
incorporated, that together with the Person or any of its Subsidiaries would be
deemed a "single employer" within the meaning of Section 414 of the Code.
"Escrow Agent" has the meaning set forth in Section 2.4.
"Escrow Indemnity Agreement" has the meaning set forth in Section 2.4.
"Escrow Shares" has the meaning set forth in Section 2.4.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations promulgated thereunder.
"Exchange Agent" has the meaning set forth in Section 2.3(a).
"Exchange Fund" has the meaning set forth in Section 2.3(a).
"Expiration Date" has the meaning set forth in Section 10.4.
"FDA" means the U.S. Food and Drug Administration or any successor agency
performing comparable functions.
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"FDCA" means the U.S. Federal Food, Drug and Cosmetic Act of 1938, as
amended from time to time, and the rules and regulations promulgated thereunder
and any successor laws, rules and regulations.
"Financial Statements" has the meaning set forth in Section 3.6.
"Form S-3" has the meaning set forth in Section 5.24.
"Form S-4" has the meaning set forth in Section 5.11.
"FTC" means the U.S. Federal Trade Commission or any successor agency
performing comparable functions.
"GAAP" has the meaning set forth in Section 3.6.
"Governmental Entity" means any Federal, state, local or foreign
government, any court, administration, regulatory or other governmental agency,
commission or authority or any non-governmental self-regulatory agency,
commission or authority.
"Hazardous Substances" shall mean all pollutants, contaminants, chemicals,
wastes, and any other infectious, carcinogenic, ignitable, corrosive, reactive,
toxic or otherwise hazardous substances or materials (whether solids, liquids or
gases) subject to regulation, control or remediation under applicable
Environmental Laws. By way of example only, the term Hazardous Substances
includes petroleum and/or petroleum by-products, urea formaldehyde, flammable,
explosive and radioactive materials, radon gas, PCBs, pesticides, herbicides,
asbestos, acids, metals and solvents.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"Legal Provision(s)" means all statutes, laws, ordinances, rules,
regulations, judgments, orders and decrees of any Governmental Entity.
"Liens" means any and all pledges, liens, charges, encumbrances or
security interests of any kind or nature whatsoever.
"Lock-up Agreement" has the meaning set froth in Section 5.16.
"Losses" has the meaning set forth in Section 10.1.
"Material Adverse Effect" or "Material Adverse Change" means any change,
effect, circumstance, development event, occurrence or state of facts that,
individually or in the aggregate, is, or would reasonably be expected to be,
materially adverse to the business, properties, assets, liabilities (contingent
or otherwise), financial condition, results of operations of Reliant or
Alkermes, as the case may be, taken as a whole, other than any change, effect,
circumstance, development event, occurrence, state of facts or development (i)
relating to the economy in general or (ii) relating to the industry in which
Reliant or Alkermes as the case may be operates in general and not specifically
relating to Reliant or Alkermes as the case may be.
69
"Merger Consideration" has the meaning set forth in Section 2.2(c).
"Mergers" has the meaning as set forth in the recitals.
"Multiemployer Plan" means a "multiemployer plan" (as defined in Section
3(37) of ERISA) to which a Person or any of its ERISA Affiliates is or has been
obligated to contribute or otherwise may have any liability.
"NASD" means the National Association of Securities Dealers.
"Nasdaq" means The Nasdaq National Market.
"Parent" has the meaning as set forth in the preamble.
"Parent 401(k) Plan" has the meaning set forth in Section 5.15(d).
"Parent Capital Stock" means Parent Common Stock and Parent Non-Voting
Common Stock.
"Parent Charter Documents" has the meaning set forth in Section 4.1(c).
"Parent Common Stock" has the meaning set forth in Section 4.4(c).
"Parent Non-Voting Common Stock" has the meaning set forth in Section
4.4(c).
"Parent Restricted Stock" has the meaning set forth in Section 2.2(c).
"Party" shall mean any of Alkermes, Parent, Xxxxx Acquisition Sub and/or
Revere Acquisition Sub, on the one hand, and Reliant on the other hand.
"PBCL" means the Pennsylvania Business Corporation Law of 1988, as
amended.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permits" has the meaning set forth in Section 3.11(a).
"Person" means a natural person, corporation, association, trust
(including a business trust), partnership, limited liability company, joint
stock company, organization or proprietorship or other entity.
"Pharmaceutical Product" has the meaning set forth in Section 3.22(a).
"Plans" means each "employee benefit plan" within the meaning of Section
3(3) of ERISA, and each other deferred compensation, incentive compensation,
equity compensation, pension, retirement, profit-sharing, medical, vision,
dental, prescription drug, health, life insurance, disability, employment,
retention, change in control, or other employee or retiree compensation or
benefit plan, fund, program, agreement, arrangement or understanding, in each
case, that is sponsored, maintained or contributed to or required to be
contributed to by a Person or an ERISA Affiliate of such Person, or to which
such Person or an ERISA Affiliate of such
70
Person is party, whether written or oral, for the benefit of any employee or
former employee of the Person or any ERISA Affiliate of such Person other than a
Multiemployer Plan.
"Post-Closing Tax Period" shall mean any Tax Period beginning after the
Reliant Merger Effective Time.
"Pre-Closing Tax Period" shall mean any Tax Period ending on or before the
Reliant Merger Effective Time.
"Preferred Unit(s)" means any Series A Preferred Units, Series B Preferred
Units and Series C Preferred Units of Reliant and any other series of preferred
unit authorized or issued by Reliant.
"Proxy/Prospectus" has the meaning set forth in Section 5.11.
"Proxy Statement" has the meaning set forth in Section 5.11.
"Regulation M-A Filing" has the meaning set forth in Section 3.7.
"Reliant" has the meaning as set forth in the preamble and includes, in
all cases, all predecessors of Reliant.
"Reliant 2002 Option Plan" means the Reliant Pharmaceuticals, LLC 2002
Non-Qualified Option Plan.
"Reliant 401(k) Plan" has the meaning set forth in Section 5.15(a).
"Revere Acquisition Sub" has the meaning as set forth in the preamble.
"Reliant Agreements" has the meaning set forth in Section 3.5.
"Reliant Balance Sheet" has the meaning set forth in Section 3.6.
"Reliant Budget" has the meaning set forth in Section 5.1(b)(i).
"Reliant Disclosure Schedule" has the meaning set forth in the first
paragraph of Article III.
"Reliant Equity Plan" means the Reliant Pharmaceuticals, LLC Equity
Incentive Plan dated July 6, 2000, as amended.
"Reliant Exchange Ratio" has the meaning set forth in Section 2.2(c).
"Reliant Indemnified Parties" has the meaning set forth in Section
5.17(a).
"Reliant Indemnifying Parties" has the meaning set forth in Section 10.1.
"Reliant Insured Parties" has the meaning in Section 5.17(b).
71
"Reliant Indemnitees" has the meaning set forth in Section 5.11(c).
"Reliant IP Rights" has the meaning set forth in Section 3.15(a).
"Reliant LLC Agreement" means the Second Amended and Restated Limited
Liability Company Operating Agreement of Reliant, dated as of February 21, 2002,
as amended.
"Reliant Member Approval" has the meaning set forth in Section 3.24.
"Reliant Member Representative" has the meaning set forth in Section 12.2.
"Reliant Merger" has the meaning as set forth in the recitals.
"Reliant Merger Certificate" has the meaning set forth in Section 1.2.
"Reliant Merger Consideration" has the meaning set forth in Section
2.2(c).
"Reliant Merger Effective Time" has the meaning set forth in Section 1.2.
"Reliant Option Plans" means the Reliant 2002 Option Plan and the Reliant
Equity Plan.
"Reliant Options" has the meaning set forth in Section 2.2(e).
"Reliant Permitted Encumbrances" has the meaning set forth in Section
3.14.
"Reliant Plans" has the meaning set forth in Section 3.16(a).
"Reliant Restricted Units" has the meaning set forth in Section 2.2(d).
"Reliant Surviving LLC" has the meaning set forth in Section 1.1(b).
"Reliant Takeover Proposal" has the meaning set forth in Section 5.8(a).
"Reliant Units" means Common Units and Preferred Units of Reliant,
including any Reliant Restricted Units.
"Replacement Plan" has the meaning set forth in Section 5.15(a).
"Required Alkermes Third Party Consents" has the meaning set forth in
Section 4.5.
"Required Reliant Third Party Consents" has the meaning set forth in
section 3.5.
"Restricted Stock Escrow Agreement" has the meaning set forth in Section
2.2(d).
"Rule 145" has the meaning set forth in Section 5.22(a).
"SEC" means the U.S. Securities and Exchange Commission or any successor
agency performing comparable functions.
72
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and the rules and regulations promulgated thereunder.
"Selling Shareholders" has the meaning set forth in Section 5.11(b).
"Severance Arrangement" has the meaning set forth in Section 3.16(a).
"Straddle Period" shall mean any Taxable Period that includes (but does
not end on) the Closing Date.
"Subsidiary" means any corporation, limited liability company or other
legal entity of which any Person or any other subsidiary of such Person owns,
directly or indirectly, 50% or more of the stock or other equity interest
entitled to vote for the election of directors or managers or otherwise control
the management of the entity.
"Surviving Entities" has the meaning set forth in Section 1.1(b).
"Tax" means all federal, state, local and foreign taxes or assessments,
including income, sales, gross receipts, excise, use, value added, royalty,
franchise, payroll, withholding, property and import taxes and any interest or
penalties applicable thereto.
"Tax Claim" has the meaning set forth in Section 5.21(a).
"Tax Indemnity Agreement" has the meaning set forth in Section 10.3(a).
"Tax Period" or "Taxable Period" means any period prescribed by any
Governmental Entity for which a Tax Return is required to be filed or a Tax is
required to be paid.
"Tax Return" shall mean any return (including information return), report,
notice, form, declaration, claim for refund, estimate, election, information
statement or other document relating to any Tax, including any schedule or
attachment thereto, and including any amendment thereof filed or to be filed
with any Governmental Entity.
"Third Party Claim" has the meaning set forth in Section 10.2(a).
"Transferred Employee" has the meaning in Section 5.15(a).
"Vesting Date" means (i) with respect to Alkermes, the dates on which the
forfeiture and repurchase provisions applicable to the Alkermes Restricted Stock
and, after the Alkermes Merger Effective Date, the Parent Common Stock issued in
exchange therefor, lapse according to the provisions of the Alkermes 1991
Restricted Common Stock Award Plan and the restricted stock purchase agreements
or any other agreements affecting the vesting of a Alkermes Restricted Stock,
and (ii) with respect to Reliant, the dates on which the forfeiture and
repurchase provisions applicable to the Reliant Restricted Units and, after the
Reliant Merger Effective Date, the Parent Restricted Stock, lapse according to
the provisions of the Reliant Equity Plan and the restricted units agreements or
any other agreements affecting the vesting of a Reliant Restricted Unit.
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ARTICLE XII
MISCELLANEOUS
12.1 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed given when so delivered by
hand delivery, by overnight courier, by facsimile transmission (with receipt
confirmed by telephone or by automatic transmission report) or two business days
after being sent by registered or certified mail (postage prepaid, return
receipt requested), as follows:
(a) if to Alkermes, Parent, Xxxxx Acquisition Sub or Revere
Acquisition Sub, to:
Alkermes, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy sent concurrently to:
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Xx., Esquire
Facsimile: (000) 000-0000
(b) if to Reliant, to:
Reliant Pharmaceuticals, LLC
000 Xxxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
with a copy sent concurrently to:
Xxxxxx & Xxxxxxx
Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
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(c) if to the Reliant Member Representatives, to:
Xxxx Xxxxxxxxxxx
c/o The Pritzker Organization, LLC
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Xxxx Craves
c/o Bay City Capital, LLC
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy sent concurrently to:
Xxxxxx & Xxxxxxx
Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
Any Party may by notice given in accordance with this Section 12.1 to the other
Parties designate another address or person for receipt of notices hereunder.
12.2 Reliant Member Representatives.
(a) The members of Reliant, by adopting this Agreement and the
transactions contemplated hereby, hereby irrevocably appoint each of Xxxx Craves
and Xxxx Xxxxxxxxxxx (each, a "Reliant Member Representative" and, together, the
"Reliant Member Representatives") to serve as the agent, representative and
attorney-in-fact of each of the Reliant members, with the full and exclusive
power and authority to represent and bind each of them with respect to all
matters arising under and pursuant to this Agreement and the transactions
contemplated hereby (including, without limitation, under the Escrow Indemnity
Agreement), and consent to the taking by the Reliant Member Representatives of
any and all actions and the making of any decisions required or permitted to be
taken by them under this Agreement or the Escrow Indemnity Agreement and matters
arising out of or relating hereto or thereto (including, without limitation, the
exercise of the power (i) to authorize delivery to Parent of the Escrow Shares
in satisfaction of claims by Parent, (ii) to agree to, negotiate, enter into
settlements and compromises of and demand arbitration and comply with orders of
courts and awards of arbitrators with respect to such claims, (iii) to resolve
any claim made pursuant to Article X, and (iv) to take all actions necessary in
the judgment of the Reliant Member Representatives for the accomplishment of the
foregoing). By their execution below, the Reliant Member Representatives hereby
accept their appointment as the Reliant Member Representatives for purposes of
this Agreement and the Escrow Indemnity Agreement. Parent shall be entitled to
deal exclusively with the Reliant Member Representatives on all matters relating
to this Agreement, including Article X hereof, and the Escrow Indemnity
Agreement, and shall be
75
entitled to rely conclusively (without further evidence of any kind whatsoever)
on any document executed or purported to be executed on behalf of any Reliant
member by either of the Reliant Member Representatives, and on any other action
taken or purported to be taken on behalf of any Reliant member by the Reliant
Member Representatives, as fully binding upon such Reliant member.
(b) A decision, act, consent or instruction of the Reliant Member
Representatives shall constitute a decision of all Reliant members for whom
shares of Parent Common Stock otherwise issuable to them are deposited with the
Escrow Agent pursuant to the Escrow Indemnity Agreement and shall be final,
binding and conclusive upon each such Reliant member, and the Escrow Agent and
Parent may rely upon any decision, act, consent or instruction of either of the
Reliant Member Representatives as being the decision, act, consent or
instruction of each and every such Reliant member.
(c) If either of the Reliant Member Representatives shall die,
become disabled or otherwise be unable to fulfill his responsibilities as agent
of the Reliant members, then the remaining Reliant Member Representative shall,
within thirty (30) days after such death or disability, appoint a successor
representative. Any such successor shall become a "Reliant Member
Representative" for purposes of this Agreement, including Article X hereof, the
Escrow Indemnity Agreement and this Section 12.2. Any Reliant Member
Representative may be replaced prior to the Reliant Merger Effective Time by a
vote of the holders of a majority of the outstanding Reliant Units (on an as
converted basis) or after the Reliant Merger Effective Time by the beneficial
holders of a majority of the Escrow Shares.
(d) No Reliant Member Representative shall be liable to any party
hereto or to any of the Reliant members for any error of judgment, or any action
taken, suffered or omitted to be taken on behalf of the Reliant members (or any
of them), except in the case of his gross negligence, bad faith or willful
misconduct. The Reliant Member Representatives may consult with counsel of their
own choice and shall have full and complete authorization and protection for any
action taken or suffered by him hereunder in good faith and in accordance with
the opinion of such counsel.
(e) The members of Reliant, by adopting this Agreement and the
transactions contemplated hereby, hereby irrevocably agree (i) to indemnify each
Reliant Member Representative for, and hold him harmless against, any loss,
liability or expense, including, without limitation, reasonable attorneys' fees,
incurred without gross negligence, bad faith or willful conduct on the part of
such Reliant Member Representative, arising out of, or in connection with, any
action or decision taken or made on behalf of any member of Reliant by such
Reliant Member Representative, and (ii) to be bound by all actions taken by the
Reliant Member Representatives in their capacity as such.
(f) All reasonable expenses (including reasonable attorneys' fees)
incurred by the Reliant Member Representatives in connection with the
performance of their duties hereunder shall be paid by the members of Reliant in
proportion to the amount of Reliant Units held by members of Reliant immediately
prior to the Reliant Merger Effective Time. Neither Parent, Alkermes nor any
Subsidiary of Alkermes shall have any liability whatsoever for any fees, costs
or other expenses incurred by the Reliant Member Representatives.
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12.3 Reliance Upon Representations and Warranties. Subject to Section
10.3(c), notwithstanding any right of any Party to fully investigate the affairs
of the other Party and notwithstanding any knowledge of facts determined or
determinable by such Party pursuant to such investigation or right of
investigation, each Party has the right to rely fully upon the representations,
warranties, covenants and agreements of each other Party in this Agreement or in
any certificate, financial statement or other document delivered by any Party
pursuant hereto.
12.4 Third Party Beneficiaries. Except as provided in Section 5.17,
Article X and Section 12.2 hereof, this Agreement shall not confer any rights or
remedies upon any Person other than the Parties hereto and their respective
successors and permitted assigns, personal representatives, heirs and estates,
as the case may be, and the Reliant members immediately prior to the Reliant
Merger Effective Time, who shall be third party beneficiaries of the covenants
and obligations of Parent and/or Alkermes hereunder; provided, that such Reliant
members shall act in respect of such covenants and obligation of Parent and/or
Alkermes solely through the Reliant Member Representatives as contemplated by
Section 12.2 hereof.
12.5 Entire Agreement. This Agreement together with the agreements
referred to herein to be executed between or among Parties hereto contains the
entire agreement among the Parties with respect to the Mergers and related
transactions, and supersedes all prior agreements, written or oral, with respect
thereto excluding the Confidential Disclosure Agreement.
12.6 Governing Law. This Agreement is governed by the laws of the State of
Delaware without regard to its conflict of law provisions; provided, however,
that all provisions of this Agreement with respect to the Alkermes Merger shall
be governed by the laws of the Commonwealth of Pennsylvania without regard to
its conflicts of laws provisions.
12.7 CONSENT TO JURISDICTION. EACH PARTY HEREBY IRREVOCABLY AGREES THAT
ANY SUIT, ACTION, PROCEEDING OR CLAIM AGAINST SUCH PARTY ARISING OUT OF OR IN
ANY WAY RELATING TO THIS AGREEMENT OR ANY OF THE RELATED AGREEMENTS, OR ANY
JUDGMENT ENTERED BY ANY COURT IN RESPECT THEREOF, MAY BE BROUGHT OR ENFORCED IN
THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW CASTLE, CITY OF
WILMINGTON, DELAWARE, AND EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY PROCEEDING BROUGHT IN THE COUNTY OF NEW CASTLE, CITY OF WILMINGTON,
DELAWARE, AND FURTHER IRREVOCABLY WAIVES ANY CLAIMS THAT ANY SUCH PROCEEDING HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
12.8 WAIVER OF JURY TRIAL. EACH PARTY HEREBY EXPRESSLY WAIVE ANY RIGHT TO
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHT,
POWER, OR REMEDY UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
RELATED AGREEMENTS OR UNDER OR IN CONNECTION WITH ANY AMENDMENT, INSTRUMENT,
DOCUMENT, OR AGREEMENT DELIVERED OR FROM ANY RELATIONSHIP EXISTING IN CONNECTION
WITH THIS AGREEMENT OR ANY RELATED AGREEMENT, AND AGREE THAT ANY SUCH ACTION
SHALL BE TRIED BEFORE A COURT AND NOT
77
BEFORE A JURY. THE TERMS AND PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL
INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.
12.9 Enforcement of Agreement. The Parties hereto agree that money damages
or other remedy at law would not be sufficient or adequate remedy for any breach
or violation of, or default under, this Agreement by them and that in addition
to all other remedies available to them, each of them shall be entitled to the
fullest extent permitted by law to an injunction restraining such breach,
violation or default and to other equitable relief, including, without
limitation, specific performance, with bond or other security being required.
12.10 Binding Effect; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted assigns. This Agreement is not assignable without the prior written
consent of the Parties hereto.
12.11 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
12.12 No Strict Construction. The Parties agree that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting Party shall not be applied in the construction or interpretation of
this Agreement.
12.13 Additional Rules of Construction. The following provisions shall be
applied wherever appropriate herein:
(a) "herein," "hereby," "hereunder," "hereof" and other equivalent
words shall refer to this Agreement as an entirety and not solely to the
particular portion of this Agreement in which any such word is used;
(b) all definitions set forth herein shall be deemed applicable
whether the words defined are used herein in the singular or the plural;
(c) all pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require;
(d) the words "include" and "including" and variations thereof shall
not be deemed terms of limitation, but rather shall be deemed to be followed by
the words "without limitation";
(e) all accounting terms not specifically defined herein shall be
construed in accordance with GAAP;
(f) the captions and descriptive headings herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof;
(g) any references herein to a particular Section, Article, Exhibit
or Schedule means a Section or Article of, or an Exhibit or Schedule to, this
Agreement unless another agreement is specified;
78
(h) the Exhibits and Disclosure Schedules attached hereto are
incorporated herein by reference and shall be considered part of this Agreement
as if fully set forth herein; and
(i) all references to "$" or "Dollars" shall mean United States
Dollars.
12.14 Reproduction of Documents. This Agreement and all documents relating
hereto, including, but not limited to, (a) consents, waivers, amendments and
modifications which may hereafter be executed and (b) certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, optical disk, micro-card, miniature
photographic or other similar process. The Parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence;
provided, however, that any Confidential Information of any Party shall only be
disclosed in accordance with the express provisions of the Confidentiality
Agreement.
12.15 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
[Remainder of Page Intentionally Left Blank.]
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IN WITNESS WHEREOF, the Parties duly authorized representatives have
executed this Agreement and Plan of Merger as of the date first stated above.
ALKERMES, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President, Chief Financial
Officer and Treasurer
NEW ALKERMES, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
XXXXX ACQUISITION SUB, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
REVERE ACQUISITION SUB, LLC
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
RELIANT PHARMACEUTICALS, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
SOLELY FOR THE PURPOSES OF ACKNOWLEDGING THEIR APPOINTMENT UNDER SECTION 12.2(a)
HEREOF:
/s/ Xxxx Craves
--------------------------------------------------
Xxxx Craves, not individually, but solely
in his capacity as a Reliant Member Representative
/s/ Xxxx Xxxxxxxxxxx
--------------------------------------------------
Xxxx Xxxxxxxxxxx, not individually, but solely
in his capacity as a Reliant Member Representative
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