Exhibit 99.4
Elan Capital Corp., Ltd.
6.5% Guaranteed Convertible Notes due 2008
Fully and Unconditionally Guaranteed by
Elan Corporation, plc
SUBSCRIPTION AGREEMENT
October 30, 2003
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Dear Sirs and Mesdames:
Elan Capital Corp., Ltd., a Bermuda exempted company limited by shares (the
"Company"), proposes to issue and sell to you (the "Manager") $400 million
principal amount (the "Firm Securities") of its 6.5% Guaranteed Convertible
Notes due 2008 (the "Notes"). The Company also proposes to issue and sell to the
Manager not more than an additional $60 million principal amount the Notes (the
"Additional Securities") if and to the extent that the Manager shall have
determined to exercise the right to purchase such Additional Securities granted
to the Manager in Section 2 hereof. The Firm Securities and the Additional
Securities are hereinafter collectively referred to as the "Securities". The
Notes will be unconditionally guaranteed (the "Guarantee") on an unsecured basis
as to all of the obligations of the Company, including, but not limited to,
payment of the principal amount at maturity and interest, if any, in respect of
the foregoing, by Elan Corporation, plc, a public limited company incorporated
under the laws of Ireland, which owns, indirectly, all of the issued and
outstanding shares in the Company (the "Guarantor" or "Elan"). At the option of
the holders thereof, the Securities will be convertible into American Depositary
Shares representing ordinary shares of the Guarantor or ordinary shares of the
Guarantor with a par value, as of the date hereof, of 5 Euro cents each (the
"Underlying Securities"). The Securities will be issued pursuant to the
provisions of an Indenture to be dated as of the Closing Date (the "Indenture")
among the Company, the Guarantor and The Bank of New York, as Trustee (the
"Trustee").
The Securities and the Underlying Securities will be offered without being
registered under the Securities Act of 1933, as amended (the "Securities Act"),
to buyers in offshore transactions in reliance on Regulation S under the
Securities Act ("Regulation S").
In connection with the sale of the Securities, the Company will prepare an
offering circular (the "Memorandum") including or incorporating by reference a
description of the terms of the Securities and the Underlying Securities, the
terms of the offering and a description of the Company and the Guarantor. As
used herein, the term "Memorandum" shall include in each case the documents
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incorporated by reference therein. The terms "supplement", "amendment" and
"amend" as used herein with respect to the Memorandum shall include all
documents expressly incorporated by reference in the Memorandum.
1. Representations and Warranties. As a condition to the obligation of the
Manager to subscribe and pay for the Securities, the Company and Guarantor,
jointly and severally, represent and warrant to, and agree with, you that:
(a) The Company's Annual Report on Form 20-F for the fiscal year ended
December 31, 2002, when taken together as a whole with all subsequent public
filings, other publicly available reports and any other public disclosure (x)
filed with or submitted or furnished to the United States Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended,
(y) made through a Regulatory Information Service (as such term is defined in
the listing rules of the U.K. Listing Authority) or (z) otherwise filed with or
submitted or furnished to the Irish Stock Exchange as of the date hereof does
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(b) The Memorandum as of its date will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and the statements of intention, opinion, belief or
expectation contained in the Memorandum as of its date are reasonably made or
held and made in good faith. The representations and warranties set forth in
this paragraph do not apply to statements or omissions in the Memorandum based
upon information relating to the Manager furnished to the Company and the
Guarantor in writing by the Manager expressly for use therein.
(c) The Memorandum will contain all information required by section 80 of
the Financial Services and Markets Act 2000 (the "FSMA") and will otherwise
comprise listing particulars in compliance with the Listing Rules made under
section 74 of the FSMA by the U.K. Listing Authority and the listing rules of
the Irish Stock Exchange made under the European Communities (Stock Exchange)
Regulations 1984 (together, the "Listing Rules"). The Memorandum will be
approved by the UK Listing Authority and the Irish Stock Exchange (together, the
"Listing Authorities") as listing particulars.
(d) The Company has been duly organized, is validly existing under the laws
of Bermuda, has the corporate power and authority to own its property and to
conduct its business as described in the Memorandum and to enter into and
perform its obligations under this Agreement and the Indenture, and is duly
qualified to transact business in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such qualification,
except
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to the extent that the failure to be so qualified would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(e) The Guarantor has been duly organized and is validly existing as a
public limited company under the laws of Ireland, has the corporate power and
authority to own its property and to conduct its business as described in the
Memorandum and to enter into and perform its obligations under this Agreement
and the Indenture and is duly qualified to transact business in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure to
be so qualified would not have a material adverse effect on the Guarantor and
its subsidiaries, taken as a whole.
(f) Each subsidiary of the Guarantor has been duly organized, is validly
existing under the laws of the jurisdiction of its organization, has the
corporate or other power and authority to own its property and to conduct its
business as described in the Memorandum and is duly qualified to transact
business in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so organized, validly existing or qualified or to
have such power, as applicable, would not have a material adverse effect on the
Guarantor and its subsidiaries, taken as a whole; all of the capital stock of
each "material subsidiary" of the Guarantor has been duly and validly authorized
and issued, is fully paid and non-assessable and, except for directors
qualifying shares, are owned directly or indirectly by the Guarantor, free and
clear of all liens, encumbrances, equities or claims. For the purposes of this
Agreement, "material subsidiary" means any subsidiary of which (i) the
Guarantor's share (together with all its subsidiaries) of the total assets of
such subsidiary (after intercompany eliminations) exceeds five (5%) percent of
the consolidated total assets of the Guarantor and all its subsidiaries as at
the end of the most recently completed fiscal year; or (ii) the Guarantor's
(together with all its subsidiaries) equity in the income from continuing
operations of the subsidiary (before income taxes, extraordinary items and
cumulative effect of any changes in accounting principles) exceeds five (5%)
percent of the consolidated total of income of the Guarantor and all its
subsidiaries as at the end of the most recently completed fiscal year.
(g) This Agreement has been duly authorized, executed and delivered by each
of the Company and the Guarantor and constitutes valid and legally binding
obligations of each of the Company and the Guarantor, except as enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting the enforcement of creditors' rights
generally and by equitable principles of general applicability regardless of
whether such enforceability is considered in a proceeding at equity or at law.
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(h) The Indenture and the Securities when executed, authenticated (where
appropriate) and delivered as contemplated therein and herein will constitute
valid and legally binding obligations of each of the Company and the Guarantor,
except as enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the
enforcement of creditors' rights generally and by equitable principles of
general applicability regardless of whether such enforceability is considered in
a proceeding at equity or at law.
(i) The Guarantee has been duly authorized by the Guarantor and, when
executed and endorsed upon the Securities and delivered in accordance with the
terms of the Indenture, will constitute a valid and legally binding obligation
of the Guarantor enforceable against the Guarantor in accordance with its terms,
except as enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the
enforcement of creditors' rights generally and by equitable principles of
general applicability regardless of whether such enforceability is considered in
a proceeding at equity or at law.
(j) The Guarantor has available for issue and the directors of the
Guarantor have (without the need for approval by the Guarantor's Shareholders)
the authority to allot sufficient authorized but unissued ordinary shares to
enable conversion rights under the Securities and all other rights of
subscription, including conversion into the Underlying Securities to be
satisfied in full at the current conversion ratio; the Underlying Securities
issuable upon conversion of the Securities have been duly authorized and, when
issued upon conversion of the Securities in accordance with the terms of the
Securities, will be validly issued, fully paid and not subject to further calls,
and will not be subject to or issued in violation of the pre-emptive rights of
any holders of ordinary shares of the Guarantor; and the issuance of the
Underlying Securities will not be subject to any liens, charges, encumbrances,
pre-emptive rights or other third party rights.
(k) Upon issue:
(i) the Securities will constitute direct, unsecured and
unsubordinated obligations of the Company and will rank pari passu without
any preference among themselves with all other present and future unsecured
and unsubordinated obligations of the Company;
(ii) the Guarantee will constitute a direct, unsecured and, to the
extent described in the Memorandum, unsubordinated obligation of the
Guarantor and, except as set forth in the Memorandum, will rank pari passu
with all other present and
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future unsecured and unsubordinated obligations of the Guarantor; and
(iii) the Underlying Securities will rank pari passu without any
preference among themselves with the ordinary shares of the Guarantor
outstanding prior to the issuance of the Securities.
(l) The ordinary shares of the Guarantor outstanding prior to the issuance
of the Securities (i) have been duly authorized and are validly issued, fully
paid and not subject to further calls, (ii) conform in all material respects as
to legal matters to the description thereof contained in the Memorandum and
(iii) are admitted (a) to the Official List of the U.K. Listing Authority and to
trading on the London Stock Exchange's market for listed securities and (b) to
the Official List of the Irish Stock Exchange and to trading on the Irish Stock
Exchange ("Admission" and "Admit" and "Admitted" shall be construed accordingly)
(the Irish Stock Exchange and the London Stock Exchange together, the
"Exchanges").
(m) None of the Company, the Guarantor or any of the Guarantor's other
subsidiaries is in violation of its charter, memorandum and articles of
organization or other organizational documents or in default in the performance
or observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, deed of trust, loan agreement, note, lease or
other agreement or instrument to which it is a party or by which it may be bound
or to which any of its properties may be subject (collectively, "Agreement and
Instruments"), except for such defaults (or, in the case of subsidiaries of the
Guarantor (other than the Company), violations) that would not result in a
material adverse effect on the Guarantor and its subsidiaries taken as a whole;
the execution and delivery by the Company and the Guarantor of, and the
performance by the Company and the Guarantor of their obligations under, this
Agreement and the Indenture and the issue, execution, authentication, offer and
delivery of the Securities, the Guarantees and the Underlying Securities will
not contravene (x) the memorandum of association and bye-laws of the Company or
the memorandum and articles of association of the Guarantor or (y) except as
would not have a material adverse effect on the Guarantor and its subsidiaries,
taken as a whole, any provision of applicable law, the Listing Rules, the rules
of the New York Stock Exchange, or any agreement or other instrument binding
upon the Company or the Guarantor or any of its subsidiaries or any judgment,
order or decree of any governmental body, agency or court having jurisdiction
over the Company, the Guarantor or any subsidiary; and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Company or the Guarantor of its
obligations under this Agreement and the Indenture or the issue, execution,
authentication, offer and delivery of the Securities or the Underlying
Securities
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except (i) as has been obtained, remains valid at the date hereof and will
remain valid at the Closing Date or (ii) where failure to obtain such consent,
approval, authorization or order of, or qualification with, would not have a
material adverse effect on the Guarantor and its subsidiaries taken as a whole.
(n) Except as disclosed in the Memorandum, there has not occurred, since
the date of the most recent audited balance sheet included in the Memorandum,
any change or any development or event reasonably likely to involve a change in
the condition, financial or otherwise, or in the earnings, business or
operations of the Guarantor and its subsidiaries, taken as a whole.
(o) Except as disclosed in the Memorandum, all amounts payable by the
Company or the Guarantor under the terms of the Securities, the Indenture, the
Guarantee and this Agreement may, as of the date hereof and on the Closing Date,
be made free and clear of and without withholding or deduction for or on account
of any taxes, duties, levies, fees, assessments or governmental charges of
whatever nature imposed or levied by or on behalf of any Relevant Taxing
Jurisdiction (as defined in the Memorandum) or any political sub-division
thereof or authority or agency therein or thereof having power to tax ("Taxes").
(p) No event has occurred or circumstances arisen which, had the Securities
been issued on the date hereof or the Closing Date, would or would have
reasonably been expected to (whether or not with the passage of time and/or the
giving of notice and/or the fulfillment of any other requirement) constitute and
event of default under the terms and conditions of the Securities.
(q) The audited consolidated financial statements together with the related
schedules and notes of the Guarantor as of December 31 2001 and 2002 and for the
three years ended 31 December 2002 included in the Memorandum (i) present a true
and fair view of the state of affairs of the Guarantor and its consolidated
subsidiaries as of their respective dates and the profit and loss of the
Guarantor for the periods to which they relate, (ii) have been prepared in
accordance with the relevant laws of Ireland and generally accepted accounting
principles in Ireland applied on a consistent basis throughout the periods
involved (unless and to the extent stated therein), (iii) have been reconciled
to generally accepted accounting principles in the United States in accordance
with the requirements of Item 18 of Form 20-F promulgated by the United States
Securities and Exchange Commission and (iv) have been reported on by auditors
who are appropriately qualified in Ireland and independent of the Guarantor; the
unaudited consolidated interim financial statements as of and for the six-month
periods ended June 30 2002 and 2003 together with the related schedules and
notes of the Guarantor included in the Memorandum (i) present a true and fair
view of the state of affairs of the Guarantor and its consolidated subsidiaries
as of their respective dates and the profit and loss of the Guarantor for the
periods to which they relate, (ii) have been prepared in accordance with the
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relevant laws of Ireland and generally accepted accounting principles in Ireland
applied on a consistent basis throughout the periods involved (unless and to the
extent stated therein), and (iii) have been reviewed by auditors who are
appropriately qualified in Ireland and independent of the Guarantor; and the
capitalization table and other financial information and statistical data
relating to the Guarantor in the Memorandum present fairly the information shown
therein, and such other financial information has been compiled on a basis
consistent with that of the financial statements.
(r) There are no legal, regulatory or governmental proceedings pending or,
to the knowledge of the Guarantor, threatened to which the Guarantor or any of
its subsidiaries is a party or to which any of the properties of the Guarantor
or any of its subsidiaries is subject other than proceedings accurately
described in all material respects in the Memorandum and proceedings that would
not, individually or in the aggregate, have a material adverse effect on the
Guarantor and its subsidiaries, taken as a whole, or on the power or ability of
the Guarantor or the Company to perform its obligations under this Agreement and
the Indenture, the Guarantee or the Securities or to consummate the transactions
contemplated by the Memorandum.
(s) Subsequent to the respective dates as of which information is given in
the Memorandum, (i) the Guarantor and its subsidiaries have not incurred any
material liability or obligation, direct or, to the knowledge of the Guarantor,
contingent, nor entered into any material transaction not in the ordinary course
of business; (ii) the Guarantor has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock other than ordinary and customary dividends; and (iii)
there has not been any material change in the capital stock, short-term debt or
long-term debt of the Guarantor and its subsidiaries, except in each case as
described in the Memorandum; except as disclosed in the Memorandum there are no
arrangements which (contingently or otherwise) may give rise to an obligation on
the Guarantor or any of its subsidiaries to issue or allot any securities of the
Guarantor other than under employee, director or consultant stock options
disclosed in the Memorandum or issued in the ordinary course of business.
(t) The Guarantor and its subsidiaries have good and marketable title to
all real property and good and marketable title to all personal property owned
by them which is material to the business of the Guarantor and its subsidiaries,
in each case free and clear of all liens, encumbrances and defects except such
as are described in the Memorandum or such as do not materially affect the value
of such property and do not interfere with the use made and proposed to be made
of such property by the Guarantor and its subsidiaries; and any real property
and buildings held under lease by the Guarantor or any of its
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subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Guarantor and its
subsidiaries, in each case except as described in the Memorandum.
(u) The Guarantor and its subsidiaries own or possess, or can acquire on
reasonable terms, all patents, patent rights, licences, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks and trade names currently employed by them in connection with the
business now operated by them, except where the failure to so own, posses or
acquire would not have a material adverse effect on the Guarantor and its
subsidiaries, taken as a whole and, except as accurately described in all
material respects in the Memorandum, neither the Guarantor nor any of its
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse affect on the Guarantor and its subsidiaries,
taken as a whole.
(v) No material labour dispute with the employees of the Guarantor or any
of its subsidiaries exists, except as described in the Memorandum, or, to the
knowledge of the Guarantor, is imminent; and the Guarantor is not aware of any
existing, threatened or imminent labor disturbance by the employees of any of
its principal suppliers, manufacturers or contractors that could have a material
adverse effect on the Guarantor and its subsidiaries, taken as a whole.
(w) The Guarantor and its subsidiaries are insured by the insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; and neither the Guarantor nor any of its subsidiaries has been advised
by the provider of such insurance that it will not be able to renew its existing
insurance coverage as and when such coverage expires or has reason to believe
that it will be unable to so renew such coverage or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a cost
that would not have a material adverse effect on the Guarantor and its
subsidiaries, taken as a whole, except as described in the Memorandum.
(x) The Guarantor and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities material to the conduct of their respective businesses,
and neither the Guarantor nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse effect on
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the Guarantor and its subsidiaries, taken as a whole, except as described the
Memorandum.
(y) The Guarantor and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (3) access to assets is
permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(z) The Guarantor and its subsidiaries (i) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or the release of
or exposure to hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a material adverse effect on the Guarantor and its subsidiaries, taken as a
whole.
(aa) Except as disclosed in the Memorandum, there are no costs or
liabilities associated with under Environmental Laws (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate, have a
material adverse effect on the Guarantor and its subsidiaries, taken as a whole.
(bb) Neither the Company nor the Guarantor is, and after giving effect to
the offering and sale of the Securities and the application of the proceeds
thereof as described in the Memorandum neither will be, an "investment company"
as such term is defined in the Investment Company Act of 1940, as amended.
(cc) Neither the Guarantor nor any subsidiary of the Guarantor, nor, to the
knowledge of the Guarantor, any other affiliate (as defined in Rule 501(b) of
Regulation D under the Securities Act, an "Affiliate") of the Guarantor has
directly, or through any agent, sold, offered for sale, solicited offers to buy
or
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otherwise negotiated in respect of, any security (as defined in the Securities
Act) which is or will be integrated with the sale of the Securities in a manner
that would require the registration under the Securities Act of the Securities.
(dd) Neither the Guarantor nor any of its subsidiaries nor, to the
knowledge of the Guarantor, any of its Affiliates, nor any person acting on
behalf of the Guarantor or any of its subsidiaries nor, to the knowledge of the
Guarantor, any person acting on behalf of its Affiliates, has engaged or will
engage in any directed selling efforts (within the meaning of Regulation S) with
respect to the Securities, the Guarantees or the Underlying Securities, and the
Guarantor, its subsidiaries and, to the knowledge of the Guarantor, its
Affiliates and each person acting on its or their behalf have complied and will
comply with the offering restrictions requirement of Regulation S, except no
representation, warranty or agreement is made by the Guarantor in this paragraph
with respect to the Manager.
(ee) It is not necessary in connection with the offer, sale and delivery of
the Securities to the Manager in the manner contemplated by this Agreement to
register the Securities under the Securities Act or to qualify the Indenture
under the Trust Indenture Act of 1939, as amended.
(ff) The Securities, the Underlying Securities, the Guarantee and the
Indenture will conform in all material respects to the respective statements
relating thereto contained in the Memorandum.
(gg) Neither the Guarantor nor any of its subsidiaries nor, to the
knowledge of the Guarantor, any of its other Affiliates has taken or will take,
directly or indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the price of
the Securities or the Underlying Securities.
(hh) Except as described in the Memorandum, or as has already been paid or
authorized for payment, no stamp duty or similar tax or duty is payable under
applicable laws or regulations in the United Kingdom, Ireland or Bermuda in
connection with the creation, issuance, delivery or transfer of any of the
Securities to the Manager or to its order pursuant to the terms of this
agreement or the Underlying Securities or with respect to the execution and
delivery of and performance by the respective parties under this Agreement or
the Indenture.
(ii) The Guarantor is a "reporting foreign issuer" within the meaning of
Rule 903(b)(2) under the Securities Act.
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(jj) As of the date of this Agreement, the Company has no material assets
and no liabilities, contingent or otherwise, and has not traded or carried on
any business whatsoever, whether for its own account or otherwise.
(kk) On and immediately after the Closing Date, the Guarantor, on an
individual basis and on a consolidated basis (after giving effect to the
issuance of the Guarantees) will be solvent. "Solvent" means, with respect to a
particular date, that on such date, such person is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and
commitments as they mature and become due in the normal course of business and
within the meaning of section 214(c) of the Companies ▇▇▇ ▇▇▇▇ of Ireland.
(ll) No proceedings have been commenced for the purposes of, and no
judgment has been rendered for, the administration, examinership, liquidation,
bankruptcy or winding-up of the Company or the Guarantor.
(mm) All statements of fact contained in the Company's and Guarantor's
press releases announcing the sale, terms and price of the Securities (the
"Press Announcements") are true and accurate in all material respects; and all
expressions of opinion or intention or expectation contained in the Press
Announcements are made on reasonable grounds and honestly held and fairly based.
(nn) Each of the representations and warranties in this Section 1 is made
on the date of this Agreement and is deemed to be repeated as of the Closing
Date (as defined in Section 4), except that the representation in Section 1(b)
is also repeated as of the date of publication of such Memorandum.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell to the
Manager and, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, the Manager agrees
to subscribe or procure subscribers for the Company for $400 million aggregate
principal amount of Firm Securities at the issue price of 100% of the principal
amount thereof (the "Issue Price").
In consideration of the agreement by the Manager to act as Manager in
relation to the issue of the Securities and to subscribe and pay or procure
subscriptions and payment for the Securities as provided above, the Company
shall pay to the Manager a combined management, underwriting and selling
commission of 3.0% of the principal amount of the Securities, plus, at the
discretion of the Company, an additional commission of 0.25% of such principal
amounts. The Manager shall be entitled to deduct such commission from the Issue
Price to be paid to the Company pursuant to this Agreement.
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On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Manager the Additional Securities, and the Manager shall have the right
to purchase up to $60 million principal amount of Additional Securities at the
Issue Price. You may exercise this right, unless otherwise agreed, up to three
times, in whole or in part, by giving written notice (an "Exercise Notice") of
each election to exercise this option not later than 30 days after the date of
this Agreement. Any Exercise Notice shall specify the principal amount of
Additional Securities to be purchased by the Manager and the date on which such
Additional Securities are to be purchased (an "Option Closing Date"). Each
Option Closing Date must be at least one business day after the Exercise Notice
is given and may not be earlier than the closing date for the Firm Securities
nor later than ten business days after the date of such notice. Additional
Securities may be purchased as provided in Section 4 solely for the purpose of
covering overallotments made in connection with the offering of the Firm
Securities. On the Option Closing Date, if any, the Manager agrees to purchase
the principal amount of Additional Securities set forth in the Exercise Notice.
The Guarantor hereby agrees that, without the prior written consent of the
Manager, it will not, and will not permit any of its subsidiaries to, during the
period ending 90 days after the date of the Memorandum, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any ordinary shares or
any securities convertible into or exercisable or exchangeable for ordinary
shares of the Guarantor or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of such ordinary shares, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of ordinary shares or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the sale of the Securities under this Agreement or (B) the issuance by
the Guarantor of any capital stock (i) upon the exercise of an option or warrant
or the conversion of the Securities, exchange or purchase of the Liquid Yield
Option(TM) Notes due 2018 of Elan Finance Corporation, Ltd or conversion or
exchange of a security outstanding on the date hereof or (ii) the grant by the
Guarantor of employee, director or consultant stock options in the ordinary
course of business and the issuance of capital stock upon the exercise,
conversion or exchange thereof.
3. Payment and Delivery. The Company shall issue the global securities
representing the Firm Securities and Additional Securities and shall deliver the
same on the Closing Date or the applicable Option Closing Date, as the case may
be to a common depositary for Euroclear S.A./N.V., as operator of the Euroclear
System, and for Clearstream Banking, societe anonyme, to be held on terms agreed
between the Manager, the Company and the common depositary.
12
Against delivery of the global securities representing the Firm Securities,
payment for the Firm Securities shall be made to the Company in immediately
available funds at 10:00 a.m., London time, on 11 November, 2003, or at such
other time on the same or such other date, not later than 18 November, 2003, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date."
Against delivery of the global securities representing the Additional
Securities, payment for any Additional Securities shall be made to the Company
in immediately available funds at 10:00 a.m., London time, on the date specified
in the corresponding notice described in Section 2 or at such other time on the
same or on such other date, in any event not later than 18 November, 2003, as
shall be designated in writing by you.
4. Conditions to the Manager's Obligations. The obligations of the Manager to
purchase and pay for the Firm Securities on the Closing Date are subject to the
following conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior to
the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded the Guarantor or any of
the Guarantor's securities or in the rating outlook for the Guarantor
by any internationally recognized statistical rating organization;
(ii) there shall not have occurred any change or any development
or event reasonably likely to involve a change in the condition,
financial or otherwise, or in the earnings, business or operations of
the Guarantor and its subsidiaries, taken as a whole that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Securities on the terms and in the manner
contemplated; and
(iii) there shall not have occurred any event making the
representations and warranties of the Company and the Guarantor in
this Agreement in the judgment of the Manager materially untrue or
incorrect as though given and made on the Closing Date and the Company
or the Guarantor, as applicable shall each have performed all the
obligations to be performed by it under this Agreement.
13
(b) The Manager shall have received on the Closing Date (i) a certificate,
dated the Closing Date and signed by an executive officer of the Company, to the
effect that the representations and warranties of the Company contained in this
Agreement are true and correct as of the Closing Date and that the Company has
complied with all of the covenants and agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before the
Closing Date; and (ii) a certificate, dated the Closing Date and signed by an
executive officer of the Guarantor, to the effect that the representations and
warranties of the Guarantor contained in this Agreement are true and correct as
of the Closing Date and that the Guarantor has complied with all of the
covenants and agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the best
of his or her knowledge as to proceedings threatened.
(c) The Manager shall have received on the Closing Date (i) the letter and
opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, outside U.S. counsel for the Company
and Guarantor, and (ii) the opinions of (A) ▇▇▇▇ ▇▇▇▇▇, General Counsel for the
Guarantor, (B) ▇▇▇▇▇▇▇▇ Chance, outside U.K. counsel for the Guarantor and
Company, (C) A&L Goodbody Solicitors, outside Irish counsel for the Guarantor,
and (D) ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, outside special Bermuda counsel for the Company,
in each case dated the Closing Date and in form and substance satisfactory to
the Manager.
(d) The Manager shall have received on the Closing Date the opinion of
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, outside U.S. and U.K. counsel for the
Manager, dated the Closing Date and in form and substance satisfactory to the
Manager.
(e) The Manager shall have received on each of the date hereof and the
Closing Date a letter, dated the date hereof or the Closing Date, as the case
may be, in form and substance satisfactory to the Manager, from KPMG,
independent accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in or incorporated by reference into the Memorandum; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than the
date hereof.
(f) The Indenture shall have been executed and delivered on or before the
Closing Date by or on behalf of all the parties thereto.
(g) Admission of the Securities on or before the Closing Date subject only
to their issue and the receipt of formal approval of the Memorandum by the
Listing Authorities.
14
(h) The Guarantor shall have consummated the offering and sale (the "Share
Offering") of at least 30,000,000 Ordinary Shares, par value 5 Euro cents per
share (the "Ordinary Shares"), pursuant to a subscription agreement dated as of
the date hereof between the Manager and the Guarantor (the "Shares Subscription
Agreement").
(i) The Manager shall have received copies of consents of the holders of a
majority in aggregate principal amount of each of (i) the 9.56% Guaranteed Notes
due 28 June 2004 issued by the Guarantor's indirect subsidiary, Elan
Pharmaceutical Investments II, Ltd. and guaranteed by the Guarantor and (ii) the
Series B and Series C Guaranteed Notes due 15 March 2005 issued by the
Guarantor's indirect subsidiary, Elan Pharmaceutical Investments III, Ltd. and
guaranteed by the Guarantor to the issuance of the Securities.
The obligation of the Manager to purchase Additional Securities hereunder
is subject to the delivery to you on the applicable Option Closing Date of such
documents as you may reasonably request with respect to the good standing of the
Company and the Guarantor, the due authorization, execution and authentication
and issuance of the Additional Securities to be sold on such Option Closing Date
(including the related Guarantees) and other matters related to the execution,
authentication and issuance of such Additional Securities.
In the event that any of the foregoing conditions is not satisfied on or
before the Closing Date, this Agreement shall (subject as mentioned below)
terminate and the parties to this Agreement shall be under no further liability
or obligation arising out of this Agreement save that the provisions of Sections
7, 12 and 13 shall survive termination. You may at your discretion and by notice
to the Company and the Guarantor waive compliance with any of the foregoing
conditions or part of them.
5. Covenants of the Company and Guarantor. In further consideration of the
agreements of the Manager contained in this Agreement, each of the Company and
the Guarantor covenants with the Manager as follows:
(a) The Company and the Guarantor shall use its best efforts to obtain the
formal approval of the Memorandum by the Listing Authorities and in this regard
shall furnish to the Listing Authorities the Memorandum and any other documents
required by the Listing Rules or the Listing Authorities in order that such
formal approval is obtained on 6 November 2003, or, if later, the business day
succeeding the Option Closing Date. The Company and the Guarantor will furnish
the Memorandum (i) in accordance with all applicable laws, regulations and the
Listing Rules to the Registrar of Companies in England and Wales, the Registrar
of Companies in Ireland and the Listing Authorities, and (ii) to you, without
charge, no later than 10:00 a.m. London time on the business day next succeeding
the date of formal approval of the Memorandum by the Listing
15
Authorities. The Company and Guarantor will furnish as many copies of such
documents as you may reasonably request.
(b) Before amending or supplementing the Memorandum, the Company and the
Guarantor will furnish to you a copy of each such proposed amendment or
supplement, and neither will use any such proposed amendment or supplement to
which you reasonably object.
(c) If, during such period after the date hereof and prior to the date on
which all of the Securities shall have been sold by the Manager (or, if later,
the date on which dealings in the securities commence on either of the
Exchanges), any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Memorandum in order to make the statements
therein, in the light of the circumstances when the Memorandum is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the Manager, it
is necessary to amend or supplement the Memorandum to comply with applicable
laws, regulations and the Listing Rules, the Company and the Guarantor will
forthwith prepare and furnish, at their own expense, to the Manager, either
amendments or supplements to the Memorandum so that the statements in the
Memorandum as so amended or supplemented will not, in the light of the
circumstances when the Memorandum is delivered to a purchaser, be misleading or
so that the Memorandum, as amended or supplemented, will comply with applicable
laws, regulations and the Listing Rules and, if required, to furnish such to the
Listing Authorities for formal approval.
(d) The Company and the Guarantor will assist you to the extent reasonably
practicable to qualify the Securities for offer and sale under the securities
laws of such jurisdictions as you shall reasonably request, provided, that, in
connection therewith, neither the Company nor the Guarantor will be required to
qualify as a foreign corporation, to file a general consent to service of
process in any jurisdiction or do any other act that would cause either of the
Company or the Guarantor to become liable in any jurisdiction for any Taxes for
which it is not currently liable.
(e) Whether or not the transactions contemplated in this Agreement or the
Shares Subscription Agreement are consummated or this Agreement or the Shares
Subscription Agreement is terminated, the Company and the Guarantor will pay or
cause to be paid or reimburse the payment of all expenses incident to the
performance of its obligations under this Agreement and the Shares Subscription
Agreement, including: (i) the fees, disbursements and expenses of the Company's
and Guarantor's counsel and the Company's and Guarantor's accountants in
connection with the issuance and sale of the Securities and the Ordinary Shares
and all other fees or expenses in connection with the preparation of the
Memorandum and all amendments and supplements thereto, including all printing
costs associated therewith, and the delivering of copies
16
thereof to the Manager, in the quantities herein above specified, (ii) all costs
and expenses related to the issuance, transfer and delivery of the Securities
and the Ordinary Shares, including any transfer or other taxes payable thereon,
(iii) all expenses in connection with the qualification of the Securities and
the Ordinary Shares for offer and sale under such securities laws as are
described in Section 5(a) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Manager in connection with such
qualification, (iv) any fees charged by rating agencies for the rating of the
Securities, (v) the fees and expenses, if any, incurred in connection with the
Admission of the Securities and the Ordinary Shares, (vi) the costs and charges
of the Trustee and any listing agent, paying agent, transfer agent, registrar or
depositary, (vii) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the offering of the Securities, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations, travel and lodging expenses of the representatives and officers
of the Company and any such consultants, and the cost of any aircraft chartered
in connection with the road show, (viii) and all other cost and expenses
incident to the performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section. All costs and expenses to
be paid or reimbursed by the Company under this Section shall be paid or
reimbursed together with any amounts of irrecoverable VAT chargeable in respect
of the supply or supplies giving rise to such costs and expenses. It is
understood, however, that except as provided in this Section 5, Section 7 and
Section 10, the Manager will pay any advertising expenses connected with any
offers they may make. For the avoidance of doubt, the Company shall not be
responsible for payment of counsel's fees and expenses incurred by the Manager.
(f) Neither the Guarantor nor any of its Affiliates will sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the Securities Act) which could be integrated with the sale of
the Securities in a manner which would require the registration under the
Securities Act of the Securities.
(g) Neither the Company nor the Guarantor will take or permit any person
acting on their behalf to take any action that would cause the conversion of
Securities into the Underlying Securities to fail to qualify for the exemption
from the registration provisions of the Securities Act afforded by Section
3(a)(9) thereof.
(h) None of the Guarantor, its Affiliates or any person acting on its or
their behalf (other than the Manager) will engage in any directed selling
efforts (as that term is defined in Regulation S) with respect to the
Securities, the Guarantees or the Underlying Securities and the Guarantor, its
Affiliates and each
17
person acting on its or their behalf (other than the Manager) will comply with
the offering restrictions requirement of Regulation S.
(i) During the period of two years after the Closing Date, the Company and
the Guarantor will not, and will not permit any of their affiliates (as defined
in Rule 144 under the Securities Act) to, resell any of the Securities or the
Underlying Securities which constitute "restricted securities" under Rule 144
that have been reacquired by any of them.
(j) All payments by the Company or the Guarantor under this Agreement shall
be paid without set-off or counterclaim, and free and clear of and without
deduction or withholding at source for or on account of, any present or future
Taxes. If any Taxes are required by law to be deducted or withheld in connection
with any such payment, the Company or the Guarantor will increase the amount
paid so that the full amount of such payment is received by the payee as if no
such deduction or withholding had been made. The provisions of this paragraph
(j) shall not apply to any Taxes that would not have been imposed but for the
fact that the Manager was resident, engaged in business or maintained any
permanent establishment or office in Ireland or Bermuda or any political
subdivision therein.
(k) The Company and the Guarantor will bear and pay (i) any stamp,
transfer, or other duties or taxes related to the (x) issue, delivery and
transfer of the Securities to the Manager or to its order pursuant to the terms
of this Agreement, (y) issue, delivery and transfer of the Underlying Securities
related to (A) any exercise of conversion rights by any Holder (including any
stamp, transfer or other duties or taxes payable in respect of the execution or
delivery of documents required to effect the transfer of the Underlying
Securities upon such conversion) or (B) any stabilization transactions
undertaken in connection with the Offering and (z) execution and delivery of any
other agreements directly relating to the issue of the Securities which attract
any stamp transfer or other duties or taxes and (ii) any value added tax
chargeable in respect of the commissions or other amounts payable or allowed
under this Agreement and otherwise in connection with the transactions envisaged
by this Agreement.
(l) The Company and the Guarantor will deliver and furnish, or cause to be
delivered and furnished, from time-to-time, such further documents, information
and undertakings and publish all advertisements or other material as may be
required by the Listing Authorities or the Exchanges or are otherwise necessary
or advisable in order to maintain and effect such Admission of the Securities
(subject to Section 5(o)).
(m) Between the date of this Agreement and the date 90 days following the
Closing Date, (i) neither the Guarantor nor any of its subsidiaries will,
without the prior consent of the Manager (not to be unreasonably withheld or
18
delayed), issue any material public announcement expressly referring to the
Offering and (ii) except to the extent expressly provided otherwise in the
foregoing clause (i), each of the Company and the Guarantor will use its
reasonable best efforts to provide you with reasonable prior notice of any
public announcement material to the Company (including any announcement either
the Company or the Guarantor becomes aware that it is required to make by the
Listing Rules or the Exchanges).
(n) The Guarantor covenants that it shall (i) ensure the Underlying Shares
issued upon conversion are Admitted or as the case may require (ii) use its best
efforts to provide for the admission of the ADSs issued upon conversion to
trading on the New York Stock Exchange.
(o) If at any time the Company or the Guarantor shall determine that it can
no longer reasonably comply with the requirements for maintaining the Admission
of the Securities or the Underlying Securities, as applicable, the Company or
the Guarantor may cease such Admission provided that it will use its best
endeavours to obtain a listing of the Securities or the Underlying Securities,
as applicable, on such other stock exchange in a Member State of the European
Union as may be agreed between the Company or the Guarantor and you or, failing
such agreement, as you may reasonably decide.
(p) The Company and the Guarantor shall provide all information and
assistance that the Manager may reasonably require for the purposes of this
Agreement and execute each document, and do each act and thing that the Managers
may reasonably require to give effect to this Agreement or as may be required to
comply with the requirements of the UK Listing Authority or the Exchanges.
(q) The Guarantor shall use its best efforts to remain a "foreign private
issuer" as defined in Rule 405 under the Securities Act until the later of the
completion of the distribution of the Securities and the end of the distribution
compliance period (as defined in Regulation S under the Securities Act
("Regulation S").
6. Offering of Securities; Restrictions on Transfer.
(a) The Manager represents and warrants that, prior to the end of the
distribution compliance period (as defined below), it will solicit offers for
these Securities only from, and will offer such Securities only to, persons that
it reasonably believes to be persons other than U.S. persons in reliance upon
Regulation S under the Securities Act that, in each case, in purchasing such
Securities are deemed to have represented and agreed as provided in the
Memorandum under the caption "Subscription and Sale".
19
(b) The Manager represents, warrants, and agrees that:
(i) the Manager understands that no action has been or will be taken
in any jurisdiction by the Company or the Guarantor that would permit a
public offering of the Securities, or possession or distribution of the
Memorandum or any other offering or publicity material relating to the
Securities, in any country or jurisdiction where action for that purpose is
required;
(ii) the Securities have not been registered under the Securities Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S
under the Securities Act or pursuant to another exemption from the
registration requirements of the Securities Act;
(iii) the Manager has offered the Securities and will offer and sell
the Securities (A) as part of its distribution at any time and (B)
otherwise until 40 days after the later of the commencement of the offering
and the Closing Date (the "Distribution Compliance Period"), only in
accordance with Rule 903 of Regulation S; accordingly, neither the Manager,
its Affiliates nor any persons acting on its behalf have engaged or will
engage in any directed selling efforts (within the meaning of Regulation S)
with respect to the Securities, and the Manager, its Affiliates and any
such persons have complied and will comply with the offering restrictions
requirement of Regulation S;
(iv) the Manager agrees that, at or prior to confirmation of sales of
the Securities, it will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases
Securities from it during the restricted period a confirmation or notice to
substantially the following effect:
"The securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered
and sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of the
offering and the closing date, except in either case in accordance
with Regulation S under the Securities Act. Terms used above have the
meaning given to them by Regulation S."
20
Terms used above in this Section 6(b) have the meanings given to them by
Regulation S.
(v) the Manager (A) has not offered or sold and will not offer or sell
any Securities to persons in the United Kingdom prior to Admission of the
Securities to the Official List of the U.K. Listing Authority in accordance
with Part VI of FSMA except to persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to
the public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (B) has complied and will comply with all
applicable provisions of the FSMA with respect of anything done by it in
relation to the Securities in, from or otherwise involving the United
Kingdom; and (C) will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity (within the
meaning of section 21 of the FSMA) received by it in connection with the
issue or sale of the Securities in circumstances in which section 21(1) of
the FSMA does not apply to the Company or the Guarantor;
(vi) the Manager understands that the Securities have not been and
will not be registered under the Securities and Exchange Law of Japan, and
represents that it has not offered or sold, and agrees not to offer or
sell, directly or indirectly, any Securities in Japan or for the account of
any resident thereof except pursuant to any exemption from the registration
requirements of the Securities and Exchange Law of Japan and otherwise in
compliance with applicable provisions of Japanese law;
(vii) the Manager represents that it has not offered or sold, and
agrees not to offer or sell, the Securities in Belgium by means of a public
offer under Belgian law and that such offers and sales will only be made in
Belgium according to articles 1 and 2 of the Royal Decree of 7th July, 1999
or to persons who subscribe to a minimum of euro 250,000 each, or to
institutional investors acting for their own account and listed in article
3, 2 of the Royal Decree of 7th July, 1999; and
(viii) the Manager represents that it has not offered, transferred or
sold, and will not offer, transfer or sell, the Securities whether directly
or indirectly to any individual or legal entity in the Netherlands, other
than to individuals or legal entities who or which trade in or invest in
securities in the conduct of a
22
professional trade (which includes banks, brokers, dealers, insurance
companies, pension funds, other institutional investors and commercial
enterprises which regularly, as an ancillary activity, invest in
securities).
(ix) the Manager has represented and agreed that, save in
circumstances which do not constitute an offer to the public within the
meaning of the Companies ▇▇▇ ▇▇▇▇ (as amended) of Ireland, (the "1963
Act")it has not offered or sold and will not offer or sell the Securities
in Ireland by means of any document prior to application for listing of the
Securities on the Irish Stock Exchange having being made and the Irish
Stock Exchange having approved the relevant listing particulars in respect
thereof in accordance with the 1984 Regulations and thereafter no offer or
sale will be made by means of any document other than:
(A) the Offering Circular; and/or
(B) a form of application which indicates where the Offering
Circular can be obtained or inspected.
The Manager has represented that it has complied with and will comply
with all applicable provisions of the 1963 Act and the 1984
Regulations with respect to anything done by it in relation to the
Notes in, from or otherwise involving Ireland.
The Manager has also represented that in relation to anything done by
it in Ireland it will operate in accordance with the provisions of the
Investment Intermediaries Act, 1995 of Ireland (as amended) including,
without limitation, Sections 9, 23 (including any advertising
restrictions made thereunder) and Section 57 (including any codes of
conduct issued thereunder) thereof.
7. Indemnity.
(a) The Company and the Guarantor agree, jointly and severally, to
indemnify, defend and hold harmless the Manager, each person, if any, who
controls the Manager within the meaning of either Section 15 of the Securities
Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and each affiliate of the Manager within the meaning of Rule
405 under the Securities Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by or arising out of or in connection with (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Memorandum (as amended or supplemented if the Company shall have furnished any
amendments
22
or supplements thereto), or any omission or alleged omission to state therein a
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to the Manager furnished to the Company in writing by you expressly for
use therein or (ii) any breach by the Company or the Guarantor of any of their
respective representations, warranties and undertakings in this Agreement.
(b) The Manager agrees to indemnify and hold harmless the Company, the
Guarantor, their respective directors and officers and each person, if any, who
controls the Company or the Guarantor within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company and the Guarantor to the Manager, but only
with reference to information relating to the Manager furnished to the Company
and the Guarantor by you in writing expressly for use in the Memorandum or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to Section 7(a) or 7(b), such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party shall be entitled to
participate therein and, at its election, to assume the defense thereof (except
in connection with any proceeding described in the next succeeding sentence) and
shall, upon request of the indemnified party, retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding and shall pay the
reasonable fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to one local counsel in each jurisdiction) for all such indemnified parties and
that all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by you, in the case of parties indemnified
pursuant to Section 7(a), and by the Guarantor, in the case of parties
indemnified
23
pursuant to Section 7(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) The indemnity and contribution provisions contained in this Section 7
and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of the Manager, any person controlling the Manager or any
affiliate of the Manager or by or on behalf of the Company, its officers or
directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Securities.
8. Termination. The Manager may terminate this Agreement by notice to the
Company, if after the execution and delivery of this Agreement and prior to the
Closing Date (i) trading generally shall have been suspended or materially
limited on, or by, as the case may be, any of the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market, the London Stock Exchange,
the Irish Stock Exchange, (ii) trading of any securities of the Guarantor shall
have been suspended on any exchange or in any over-the-counter market, (iii) a
material disruption in securities settlement, payment or clearance services in
the United States, the United Kingdom or Ireland shall have occurred, (iv) any
moratorium on commercial banking activities shall have been declared by United
States Federal, New York State, United Kingdom or Irish authorities or (v) there
shall have occurred any outbreak or escalation of hostilities, or any change in
financial markets, currency exchange rates or controls or any calamity or crisis
that, in your judgment, is material and adverse and which, singly or together
with any other event specified in this clause (v), makes it, in your judgment,
24
impracticable or inadvisable to proceed with the offer, sale or delivery of the
Securities on the terms and in the manner contemplated in the Memorandum.
9. Stabilisation. Each of the Company and the Guarantor confirms that you may,
to the extent permitted by applicable law and regulations, over-allot and effect
transactions on any stock exchange, in any over-the-counter market, including
with respect to American Depositary Receipts representing ordinary shares of the
Guarantor, or otherwise in connection with the issue and distribution of the
Securities with a view to supporting the market price of the Securities or the
Underlying Securities at levels higher than those which might otherwise prevail
in the open market but in doing so you will be deemed to act as principal and
not as an agent of the Company or the Guarantor. Neither the Company nor the
Guarantor will as a result of any action taken by the Manager, under this
Section 9 be obliged to issue Securities in excess of the aggregate amount of
Securities to be issued under this Agreement, nor shall the Company or the
Guarantor be liable for any loss, or entitled to any profit, arising from any
excess offers or stabilisation. Each of the Company and the Guarantor confirms
that it has been informed of the existence of the informational guidance
published by the Financial Services Authority on stabilisation.
10. If this Agreement shall be terminated by the Manager because of any failure
or refusal on the part of the Company to comply with the terms or to fulfill any
of the conditions of this Agreement, or if for any reason the Company shall be
unable to perform its obligations under this Agreement, the Company will
reimburse the Manager for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by the Manager in connection
with this Agreement or the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of England and Wales.
13. Submission to Jurisdiction; Appointment of Agent for service; Waiver of
Immunity. To the fullest extent permitted by applicable law, each of the Company
and the Guarantor irrevocably submits to the non-exclusive jurisdiction of the
courts of England in any suit or proceeding based on or arising under this
Agreement, and irrevocably agree that all claims in respect of such suit or
proceeding may be determined in any such court.
Each of the Company and the Guarantor, to the fullest extent permitted by
applicable law, (i) irrevocably and fully waives the defense of an inconvenient
forum to the maintenance of such suit or proceeding and (ii) irrevocably
25
designates and appoints Elan Pharma Limited, ▇▇▇▇ ▇▇▇▇▇ House, ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, as its authorized agent (the "Authorized
Agent") upon whom process may be served in any such suit or proceeding. In the
event that such person is unable to serve as the Authorized Agent for any
reason, each of the Company and the Guarantor hereby agrees to maintain the
uninterrupted designation of an Authorized Agent upon whom process may be served
in any such suit or proceeding and agrees to notify you of the name and address
of any such future Authorized Agent. Each of the Company and the Guarantor, to
the fullest extent permitted by applicable law, hereby irrevocably authorizes
and directs the Authorized Agent to accept such service. Each of the Company and
the Guarantor further agrees that service of process upon the Authorized Agent
and written notice of said service to the Company or the Guarantor mailed by
first class mail or delivered to the Authorized Agent shall be deemed in every
respect effective service of process upon the Company or the Guarantor, as the
case may be, in any such suit or proceeding. Nothing herein shall affect the
right of any person to service process in any other manner permitted by law.
Each of the Company and Guarantor agrees that a final action in any such
suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other lawful manner.
Notwithstanding the foregoing, any action against the Company or the Guarantor
arising out of or based on this Agreement or the transactions contemplated
hereby may also be instituted by you, your officers and employees or any person
who controls you or is affiliated with you within the meaning of the Securities
Act in any competent court in Ireland and each of the Company and the Guarantor
expressly accepts the jurisdiction of any such court in any such action.
Each of the Company and the Guarantor hereby irrevocably waives, to the
extent permitted by law, any immunity to jurisdiction to which they may
otherwise be entitled (including, without limitation, immunity to pre-judgment
attachment, post-judgment attachment and execution) in any legal suit, action or
proceeding against them arising out of or based on this Agreement or the
transactions contemplated hereby.
The provisions of this Section 13 are intended to be effective upon the
execution of this Agreement without the further action by the Company, the
Guarantor or the Manager and the introduction of a true copy of this Agreement
into evidence shall be conclusive and final evidence as to such matters.
14. Currency Indemnity. To the fullest extent permitted by law, the obligations
of the Company or the Guarantor in respect of any amount due under this
Agreement will, notwithstanding any payment in any other currency (whether
pursuant to a judgment or otherwise), be discharged only to the extent of the
amount in the currency in which such obligation was originally asserted (the
26
"relevant currency") that the party entitled to receive such payment may, in
accordance with its normal procedures, purchase with any sum paid in any other
currency (after any premium and costs of exchange) on the business day
immediately following the day on which such party receives such payment. If the
amount in the relevant currency that may be so purchased for any reason falls
short of the amount originally due, the Company or the Guarantor will, to the
fullest extent permitted by law, pay such additional amounts, in the relevant
currency, as may be necessary to compensate for the shortfall. Any obligations
of the Company or the Guarantor not discharged by such payment will, to the
fullest extent permitted by law, be due as a separate and independent obligation
and, until discharged as provided herein, will continue in full force and
effect.
15. Rights of Third Parties. With the exception of the indemnified parties
identified in Section 7 hereof with respect to the rights described therein, a
person who is not a party to this Agreement has no right under the Contracts
(Rights of Third Parties) ▇▇▇ ▇▇▇▇ to enforce any term of this Agreement.
16. Severability. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, illegal, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated thereby, and the parties hereto shall use their best efforts to find
and employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or restriction, it
being intended that all of the rights and privileges of the parties shall be
enforceable to the fullest extent permitted by law.
17. Notices. All notices and other communications under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered, mailed or
transmitted by any standard form of telecommunication. Notices to the Manager
and the Company and Guarantor shall be directed to the addresses specified
below.
To the Company:
Elan Capital Corp., Ltd.
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ FL-04
Attn: President
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Eighty ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
27
And with a copy to the Guarantor as its address set forth below
To the Guarantor:
Elan Corporation, plc
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇
Attention: Chief Financial Officer
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Eighty ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
To the Manager:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: Head of Equity Capital Markets
With a copy to:
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
City Place House
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
18. Headings. The headings of the sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed a part of this
Agreement.
28
Very truly yours,
Elan Capital Corp., Ltd.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Director
ELAN CORPORATION, PLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
29
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
30
