Exhibit 99.2
AGREEMENT AND PLAN OF MERGER
among
ELAN CORPORATION, PLC
LITHIUM ACQUISITION CORP.
and
THE LIPOSOME COMPANY, INC.
Dated as of March 6, 2000
TABLE OF CONTENTS
Page No.
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ARTICLE 1 The Merger.................................................................. 1
1.1 The Merger................................................................. 1
1.2 The Closing................................................................ 2
1.3 Effective Time............................................................. 2
1.4 The Charter and Bylaws..................................................... 2
1.5 Directors of the Surviving Corporation..................................... 2
1.6 Officers of the Surviving Corporation...................................... 3
ARTICLE 2 Conversion and Exchange of Securities....................................... 3
2.1 Merger Sub Stock........................................................... 3
2.2 Company Stock.............................................................. 3
2.3 Exchange of Certificates Representing Company Common Stock................. 6
2.4 Adjustment of Exchange Ratio............................................... 8
2.5 Dissenters Rights.......................................................... 8
ARTICLE 3 Representations and Warranties of the Company............................... 8
3.1 Existence; Good Standing; Corporate Authority; Compliance with Law......... 9
3.2 Authorization, Validity and Effect of Agreements........................... 9
3.3 Capitalization............................................................. 9
3.4 Subsidiaries............................................................... 10
3.5 No Violation............................................................... 10
3.6 SEC Documents.............................................................. 11
3.7 Litigation................................................................. 12
3.8 No Violation of Law........................................................ 12
3.9 Absence of Certain Changes................................................. 13
3.10 Taxes and Tax Returns...................................................... 13
3.11 Employee Benefit Plans..................................................... 15
3.12 Intellectual Property...................................................... 16
3.13 Parent Stock Ownership..................................................... 17
3.14 Tax Reorganization......................................................... 17
3.15 State Takeover Statutes.................................................... 17
3.16 No Brokers................................................................. 17
3.17 Opinion of Financial Advisor............................................... 18
3.18 Rights Agreement........................................................... 18
3.19 Environmental Matters...................................................... 18
ARTICLE 4 Representations and Warranties of Parent and Merger Sub..................... 20
4.1 Existence; Good Standing; Corporate Authority; Compliance with Law......... 20
4.2 Authorization, Validity and Effect of Agreements........................... 21
4.3 Capitalization............................................................ 21
4.4 Subsidiaries.............................................................. 22
4.5 No Violation.............................................................. 22
4.6 SEC Documents............................................................. 23
4.7 Litigation................................................................ 24
4.8 No Violation of Law....................................................... 24
4.9 Absence of Certain Changes................................................ 25
4.10 Taxes and Tax Returns..................................................... 25
4.11 Employee Benefit Plans.................................................... 25
4.12 Intellectual Property..................................................... 27
4.13 Company Stock Ownership................................................... 27
4.14 Tax Reorganization........................................................ 27
ARTICLE 5 Covenants.................................................................. 28
5.1 Alternative Proposals..................................................... 28
5.2 Interim Operations........................................................ 30
5.3 Meetings of Stockholders.................................................. 33
5.4 Reasonable Efforts; Further Assurances.................................... 34
5.5 Inspection of Records..................................................... 34
5.6 Publicity................................................................. 35
5.7 Registration Statement.................................................... 35
5.8 Listing Application....................................................... 36
5.9 Affiliate Letters......................................................... 36
5.10 Expenses.................................................................. 36
5.11 Directors' and Officers' Indemnification and Insurance.................... 37
5.12 Conveyance Taxes.......................................................... 38
5.13 Benefit Arrangements...................................................... 38
5.14 Takeover Statutes, Etc.................................................... 38
5.15 Tax-Free Merger........................................................... 39
5.16 CVR Agreement............................................................. 40
ARTICLE 6 Conditions................................................................. 40
6.1 Conditions to Each Party's Obligation to Effect the Merger................ 40
6.2 Conditions to Obligation of the Company to Effect the Merger.............. 41
6.3 Conditions to Obligation of Parent and Merger Sub to Effect the Merger.... 42
ARTICLE 7 Termination................................................................ 43
7.1 Termination by Mutual Consent............................................. 43
7.2 Termination by Either Parent or the Company............................... 43
7.3 Termination by the Company................................................ 43
7.4 Termination by Parent..................................................... 44
7.5 Effect of Termination and Abandonment..................................... 45
7.6 Extension; Waiver......................................................... 46
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ARTICLE 8 General Provisions......................................................... 46
8.1 Nonsurvival of Representations and Warranties; Survival of Tax Covenants.. 46
8.2 Notices................................................................... 46
8.3 Assignment; Binding Effect................................................ 47
8.4 Entire Agreement.......................................................... 48
8.5 Amendment................................................................. 48
8.6 Governing Law; Submission to Jurisdiction................................. 48
8.7 Counterparts.............................................................. 49
8.8 Headings.................................................................. 49
8.9 Interpretation............................................................ 49
8.10 Waivers................................................................... 49
8.11 Incorporation of Exhibits................................................. 49
8.12 Severability.............................................................. 49
8.13 Enforcement of Agreement.................................................. 49
8.14 Definitions............................................................... 50
EXHIBIT A Form of Contingent Value Rights Agreement
EXHIBIT B Company Affiliate Letter
SCHEDULES
Company Disclosure Schedule
Parent Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of March 6,
2000, among Elan Corporation, plc, a public limited company organized under the
laws of Ireland ("Parent"), Lithium Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of Parent ("Merger Sub"), and The Liposome
Company, Inc., a Delaware corporation (the "Company").
RECITALS
A. Parent and the Company each have determined that a business
combination between Parent and the Company is in the best interests of their
respective companies and stockholders, and accordingly have agreed to effect the
merger provided for herein upon the terms and subject to the conditions set
forth herein.
B. The respective Boards of Directors of Parent, Merger Sub and the
Company, and Parent, acting as the sole stockholder of Merger Sub, have approved
the merger of Merger Sub with and into the Company (the "Merger"), upon the
terms and subject to the conditions set forth in this Agreement.
C. It is intended that, for federal income tax purposes, the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Code (as defined in Section 3.10) with respect to which gain recognition is not
required under Section 367(a) of the Code and that this Agreement shall be, and
hereby is, adopted as a plan of reorganization for purposes of Section 368 of
the Code.
D. Merger Sub is a wholly-owned subsidiary of Parent and has been
formed solely to facilitate the Merger and has conducted and will conduct no
business or activity other than in connection with the Merger.
E. Concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to the willingness of Parent and Merger Sub to
enter into this Agreement, a holder of shares of the outstanding Company Common
Stock has entered into a Stockholder Agreement, dated as of the date hereof (the
"Stockholder Agreement"), pursuant to which such holder has agreed, among other
things, to vote in favor of the Merger. The Stockholder Agreement terminates
upon the termination of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
The Merger
1.1 The Merger.
Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 1.3), Merger Sub shall be merged with and
into the Company in accordance with this Agreement, and the separate corporate
existence of Merger Sub shall thereupon cease and the Company shall be the
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation") and will be a wholly- owned subsidiary of Parent,
provided, however, that in the event that either tax counsel determines that it
is unable to issue its opinion as described in Section 6.2(b) or 6.3(b), as the
case may be, the parties shall restructure the transaction such that the Company
shall be merged with and into Merger Sub, with Merger Sub being the Surviving
Corporation, if that restructuring would enable such tax counsel to render its
opinion. The Merger shall have the effects specified in the Delaware General
Corporation Law ("DGCL").
1.2 The Closing.
Subject to the terms and conditions of this Agreement, the closing of
the Merger (the "Closing") shall take place (a) at the offices of Xxxxx
Xxxxxxxxxx LLP, 1301 Avenue of the Americas, New York, New York as promptly as
practicable, but no later than one business day, following the satisfaction or
waiver of the conditions set forth in Article 6 (other than conditions which by
their nature are to be satisfied at Closing, but subject to those conditions) or
(b) at such other time, date or place as Parent and the Company may agree. The
date on which the Closing occurs is hereinafter referred to as the "Closing
Date."
1.3 Effective Time.
If all the conditions set forth in Article 6 shall have been fulfilled
or waived in accordance herewith and this Agreement shall not have been
terminated as provided in Article 7, the parties hereto shall cause a
Certificate of Merger meeting the requirements of Section 251 of the DGCL (the
"Certificate of Merger") to be properly executed and filed in accordance with
such Section on the Closing Date. The Merger shall become effective at the time
of filing of the Certificate of Merger with the Secretary of State of the State
of Delaware in accordance with the DGCL or at such later time which the parties
hereto shall have agreed upon and designated in such filings as the effective
time of the Merger (the "Effective Time").
1.4 The Charter and Bylaws.
(a) The Certificate of Incorporation of the Company as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until duly amended as provided
therein or by applicable law.
(b) The Bylaws of Merger Sub in effect at the Effective Time shall be
the Bylaws of the Surviving Corporation, until thereafter amended as provided
therein or by applicable law.
1.5 Directors of the Surviving Corporation.
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The directors of Merger Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation as of the Effective Time and
until their successors are duly appointed or elected in accordance with
applicable law.
1.6 Officers of the Surviving Corporation.
The officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation as of the Effective Time and
until their successors are duly appointed or elected in accordance with
applicable law.
ARTICLE 2
Conversion and Exchange of Securities
2.1 Merger Sub Stock.
At the Effective Time, each share of common stock of Merger Sub
outstanding immediately prior to the Effective Time shall be converted into and
exchanged for one validly issued, fully paid and non-assessable share of common
stock of the Surviving Corporation.
2.2 Company Stock.
(a) (x) Subject to Section 2.3(e), at the Effective Time, each
outstanding share of common stock, par value $.01 per share (the "Company Common
Stock"), of the Company shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into (1) a number of American
Depositary Shares ("Parent ADSs"), evidenced by American Depositary Receipts
("ADRs"), each Parent ADS representing one Ordinary Share ("Parent Ordinary
Shares"), par value 5 Euro cents, of Parent equal to the Exchange Ratio and (2)
one Contingent Value Right (a "CVR") to be issued pursuant to the Contingent
Value Rights Agreement (the "CVR Agreement") in the form of Exhibit A hereto to
be entered into between Parent and a bank or financial institution mutually
acceptable to Parent and the Company (the "CVR Agent"). The consideration
referred to in (subparagraphs (1) and (2) of this Section 2.2(a)(x) is
hereinafter referred to as the "Merger Consideration").
(y) The "Exchange Ratio" shall equal 0.3850. The Exchange Ratio
shall be rounded to the nearest 1/10,000th of an ADS. "Parent Average Price"
shall be the average of the closing prices of the Parent ADSs on the New York
Stock Exchange ("NYSE") for the 10 consecutive trading days ending on the second
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trading day prior to the date of Company Stockholders Meeting (as defined
herein) (such date being the "Determination Date"), as reported by The Wall
Street Journal (or, if not reported thereby, any other authoritative source).
(z) If the Parent Average Price (as defined herein) shall be
less than $31.74 and if the Parent Price Decline (as defined herein) shall be
more than twenty percentage points greater than the Index Decline (as defined
herein), the Company may,
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at any time prior to the Effective Time, deliver a notice (the "Top-Up Request")
to Parent requesting that the Exchange Ratio be increased to the Topped-Up
Exchange Ratio (rounded to the nearest 1/10,000th of an ADS). Parent may, in its
sole discretion, agree to increase the Exchange Ratio to the Topped-Up Exchange
Ratio. No later than 10:00 a.m., New York City time on the third trading day
following Parent's receipt of the Top-Up Request (the "Parent Response Time"),
Parent shall deliver notice to the Company of its determination with respect
thereto. If Parent agrees to increase the Exchange Ratio, the Exchange Ratio
shall equal the Topped-Up Exchange Ratio. If the Company does not receive such
notice by the Parent Response Time, the Company may at, at any time prior to the
Effective Time, deliver a notice to Parent to the effect that the Company is
terminating this Agreement pursuant to Section 2.2(a)(z). Notwithstanding
anything herein to the contrary, unless Parent agrees to so increase the
Exchange Ratio, the Company shall not be obligated to effect the Merger
following the delivery of a Top-Up Request until 10:00 a.m. on the third trading
day following the Parent Response Time.
(aa) Parent Price Decline shall mean the percentage determined by
dividing (a) $39 11/16 minus the Parent Average Price by (b) $39 11/16. Index
Decline shall mean the percentage determined by dividing (c) the closing price
of the S&P Pharmaceuticals Index (ticker symbol SPPRMC) on March 3, 2000 minus
the average closing prices for the 10 consecutive trading days ending on the
Determination Date of such Index by (d) the closing price of such Index on March
3, 2000, each as reported by the Wall Street Journal (or, if not reported there,
any other authoritative source); provided, however, if such average is greater
than the closing price of such Index on March 3, 2000, the percentage shall be
0%.
(bb) If there has been an Index Decline, the Topped-Up Exchange Ratio
shall be the lowest exchange ratio that would not have given the Company the
right to send a Top-Up Request; otherwise the Topped-Up Exchange Ratio shall be
$12.21 divided by the Parent Average Price.
(b) As a result of the Merger and without any action on the part of
the holder thereof, at the Effective Time, all shares of Company Common Stock
outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall cease to exist, and each holder of shares of Company
Common Stock shall thereafter cease to have any rights with respect to such
shares of Company Common Stock, except the right to receive, without interest,
the consideration contemplated by Section 2.2(a) and cash in accordance with
Sections 2.3(c) and 2.3(e) upon the surrender of a certificate (a "Certificate")
representing such shares of Company Common Stock.
(c) Each share of Company Common Stock held in the Company's treasury
at the Effective Time, and each share of Company Common Stock that is owned by
Parent or any Parent Subsidiary (as defined in Section 4.1) at the Effective
Time, shall, by virtue of the Merger, cease to be outstanding and shall be
canceled and retired and shall cease to exist without payment of any
consideration therefor.
(d) As of the Effective Time, each outstanding option to purchase
capital stock of the Company (the "Company Options"), whether or not exercisable
and
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whether or not vested, under any plan or arrangement of the Company providing
for the grant of options to purchase shares of Company Common Stock
(collectively, the "Company Stock Option Plans"), shall be converted into an
option to purchase Parent ADSs and CVRs. Each Company Option so converted shall
be exercisable upon the same terms and conditions as under the applicable
Company Stock Option Plan and the applicable option agreement issued thereunder
(including continuing any Company policy or procedure regarding cashless
exercises), except that (A) each such Company Option shall be exercisable for
(x) that whole number of Parent ADSs (rounded to the nearest whole share) equal
to the number of shares of Company Common Stock subject to such Company Option
immediately prior to the Effective Time multiplied by the Exchange Ratio and (y)
that number of CVR's equal to the number of shares of Company Common Stock
subject to such Company Option immediately prior to the Effective Time, and (B)
the option price per Parent ADS and CVRs shall be an amount equal to the option
price per share of Company Common Stock subject to such Company Option in effect
immediately prior to the Effective Time divided by the Exchange Ratio (the
option price, as so determined, being rounded to the nearest whole cent). If any
cash payments are made with respect to the CVRs prior to the exercise of a
Company Option, the exercise price of the option shall be reduced by the amount
of cash which would have been payable to the option holder had such holder
exercised the option immediately prior to the record date for such payment.
Notwithstanding the foregoing, the foregoing conversions with respect to any
Company Options that are incentive stock options as defined in Section 422 of
the Code shall be effected in a manner consistent with Section 424(a) of the
Code, except as otherwise elected by the option holder.
(e) Parent shall (i) on or prior to the Effective Time, reserve for
issuance the number of Parent ADSs and CVRs that will become subject to options
to purchase Parent ADSs and CVRs ("Parent Options") pursuant to Section 2.2(d),
(ii) from and after the Effective Time, upon exercise of the Parent Options in
accordance with the terms thereof, make available for issuance all Parent ADSs
and CVRs covered thereby, (iii) at the Effective Time, assume the Company Stock
Plans, with the result that all obligations of the Company under the Company
Stock Plans, including with respect to Company Options outstanding at the
Effective Time, shall be obligations of Parent following the Effective Time and
(iv) as promptly as practicable after the Effective Time, issue to each holder
of an outstanding Company Option a document evidencing the foregoing assumption
by Parent.
(f) The parties shall take all actions necessary to ensure that the
Company Options converted by Parent qualify following the Effective Time as
incentive stock options as defined in Section 422 of the Code to the extent
permitted under Section 422 of the Code and to the extent the Company Options
qualified as incentive stock options prior to the Effective Time, except as
otherwise elected by the option holder.
(g) Parent shall, on the Closing Date, file a registration statement
on Form S-8 under the Securities Act of 1933 (the "Securities Act"), covering
the Parent ADSs and CVRs issuable upon the exercise of Parent Options created
upon the assumption by Parent of Company Options under Section 2.2(d), and will
maintain the
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effectiveness of such registration, and the current status of the prospectus
contained therein, until the exercise or expiration of such Parent Options.
2.3 Exchange of Certificates Representing Company Common Stock.
(a) As of the Effective Time, Parent shall deposit, or shall cause to be
deposited, with a banking or other financial institution mutually acceptable to
Parent and the Company (the "Exchange Agent"), for the benefit of the holders of
shares of Company Common Stock, for exchange in accordance with this Article 2,
certificates representing a number of Parent Ordinary Shares and CVRs sufficient
to permit the Exchange Agent to issue the number of Parent ADSs and CVRs to be
issued in connection with the Merger and cash in an amount equal to Parent's
good faith estimate of the cash required to be paid to holders of shares of
Company Common Stock in lieu of fractional shares expected to be payable in
connection with the Merger (such cash and certificates for Parent ADSs and CVRs,
together with any dividends or distributions with respect thereto (relating to
record dates for such dividends or distributions after the Effective Time),
being hereinafter referred to as the "Exchange Fund") to be issued pursuant to
Section 2.2 and paid pursuant to this Section 2.3 in exchange for outstanding
shares of Company Common Stock.
(b) Promptly after the Effective Time, Parent shall cause the Exchange
Agent to mail to each holder of record of shares of Company Common Stock (i) a
letter of transmittal specifying that delivery shall be effected, and risk of
loss and title to such shares of Company Common Stock shall pass, only upon
delivery of the Certificates representing such shares to the Exchange Agent and
which letter shall be in such form and have such other provisions as Parent may
reasonably specify and (ii) instructions for use in effecting the surrender of
Certificates in exchange for the consideration contemplated by Section 2.2 and
this Section 2.3, including cash in lieu of fractional shares. Upon surrender
of a Certificate for cancellation to the Exchange Agent together with such
letter of transmittal, duly executed and completed in accordance with the
instructions thereto, the holder of the shares represented by such Certificate
shall be entitled to receive in exchange therefor (x) a certificate representing
that number of whole Parent ADSs, (y) a CVR certificate issued pursuant to the
CVR Agreement evidencing CVRs (a "CVR Certificate") and (z) a check representing
the amount of cash in lieu of fractional shares, if any, and unpaid dividends
and distributions, if any, that such holder has the right to receive in respect
of the Certificate surrendered pursuant to the provisions of this Article 2,
after giving effect to any required withholding tax, and the shares represented
by the Certificate so surrendered shall forthwith be canceled. No interest will
be paid or accrued on the cash payable to holders of shares of Company Common
Stock. In the event of a transfer of ownership of Company Common Stock that is
not registered in the transfer records of the Company, a certificate
representing the proper number of Parent ADSs, CVR Certificates, together with a
check for the cash to be paid pursuant to Section 2.3(b)(y) may be issued to
such a transferee if the Certificate representing such Company Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
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(c) Notwithstanding any other provisions of this Agreement, no dividends
or other distributions declared after the Effective Time on Parent ADSs and CVRs
shall be paid with respect to any shares of Company Common Stock represented by
a Certificate until such Certificate is surrendered for exchange as provided
herein. Following surrender of any such Certificate, there shall be paid to the
holder of the certificates representing whole Parent ADSs and CVRs issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore payable with respect to such whole Parent ADSs and
CVRs and not paid, less the amount of any withholding taxes which may be
required thereon, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole Parent ADSs and CVRs, less the amount of any withholding
taxes which may be required thereon.
(d) At or after the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Company Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be canceled and exchanged for certificates for Parent ADSs and CVRs and
cash deliverable in respect thereof pursuant to this Agreement in accordance
with the procedures set forth in this Article 2. Certificates surrendered for
exchange by any Affiliate (as defined in Section 5.9 hereof), shall not be
exchanged until Parent has received a written agreement from such person as
provided in Section 5.9.
(e) No fractional Parent ADSs shall be issued pursuant hereto. In lieu of
the issuance of any fractional Parent ADS, cash adjustments will be paid to
holders in respect of any fractional Parent ADS that would otherwise be
issuable, and the amount of such cash adjustment shall be equal to the product
obtained by multiplying such stockholder's fractional Parent ADS that would
otherwise be issuable by the closing price per Parent ADS on the Closing Date as
reported by The Wall Street Journal (or, if not reported thereby, any other
authoritative source).
(f) Any portion of the Exchange Fund (including the proceeds of any
investments thereof and any Parent ADSs and CVRs) that remains unclaimed by the
former stockholders of the Company one year after the Effective Time shall be
delivered to Parent. Any former stockholders of the Company who have not
theretofore complied with this Article 2 shall thereafter look only to Parent,
and Parent shall comply with such requests, made in accordance with the terms of
this Agreement, for payment of their Parent ADSs and CVRs, cash and unpaid
dividends and distributions on Parent ADSs and CVRs deliverable in respect of
each share of Company Common Stock such stockholder holds as determined pursuant
to this Agreement, in each case, without any interest thereon.
(g) None of Parent, the Company, the Surviving Corporation, the Exchange
Agent or any other person shall be liable (except to the extent provided by
applicable law) to any former holder of shares of Company Common Stock for any
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amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(h) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and the posting by such person
of a bond in such amount as the Surviving Corporation may reasonably request as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Parent ADSs and CVRs and cash deliverable in respect
thereof pursuant to this Agreement.
2.4 Adjustment of Exchange Ratio.
In the event that, subsequent to the date of this Agreement but prior
to the Effective Time, the outstanding Parent ADSs or Company Common Stock,
respectively, shall have been changed into a different number of shares or a
different class as a result of a stock split, reverse stock split, stock
dividend, subdivision, reclassification, combination, exchange, recapitalization
or other similar transaction (or a record date shall have been set for such
purpose), amounts payable hereunder shall be appropriately adjusted.
2.5 Dissenters Rights.
Notwithstanding anything in this Agreement to the contrary, shares of
Company Common Stock outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger or consented thereto
in writing and who has delivered a written demand for appraisal of such shares
in accordance with Section 262 of the DGCL, if such Section 262 provides for
appraisal rights for such shares in the Merger ("Dissenting Shares"), shall not
be converted into the right to receive the Merger Consideration, as provided in
Section 2.1(b) hereof, unless and until such holder fails to perfect or
effectively withdraws or otherwise loses his right to appraisal and payment
under Section 262 of the DGCL. If, after the Effective Time, any such holder
fails to perfect or effectively withdraws or loses his right to appraisal, such
Dissenting Shares shall thereupon be treated as if they had been converted as of
the Effective Time into the right to receive the Merger Consideration to which
such holder is entitled, without interest or dividends thereon.
ARTICLE 3
Representations and Warranties of the Company
Except as set forth in the corresponding section or subsection of the
disclosure schedule delivered at or prior to the execution hereof to Parent (the
"Company Disclosure Schedule") or in the Company Reports (as defined in Section
3.6) filed on or prior to the date hereof, the Company represents and warrants
to Parent as of the date of this Agreement as follows (it being understood that
disclosure of an item is not to be construed as an admission of any fact):
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3.1 Existence; Good Standing; Corporate Authority; Compliance with
Law.
The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of Delaware. The Company is duly licensed or
qualified to do business as a foreign corporation and is in good standing under
the laws of any other state of the United States in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such qualification necessary, except where the failure to be so qualified
or to be in good standing, individually and in the aggregate, is not reasonably
likely to result in a Company Material Adverse Effect (as defined in Section
8.14 hereof). The Company has all requisite corporate power and authority to
own, operate and lease its properties and carry on its business as now conducted
or as reasonably contemplated in the future. The Company has no Subsidiaries
(as defined in Section 8.14) other than those Subsidiaries set forth in Section
3.1 of the Company Disclosure Schedule (the "Company Subsidiaries"). Each of
the Company Subsidiaries is a corporation duly organized, validly existing and
in good standing, under the laws of the jurisdictions in which such companies
are incorporated. Neither the Company nor any of the Company Subsidiaries is in
violation of any order of any court, governmental authority or arbitration board
or tribunal, or any law, ordinance, governmental rule or regulation to which the
Company or any of the Company Subsidiaries or any of their respective properties
or assets is subject, other than any violations that are not reasonably likely
to result in a Company Material Adverse Effect. The Company and each of the
Company Subsidiaries have obtained all licenses, permits and other
authorizations and have taken all actions required by applicable law or
governmental regulations in connection with their business as now conducted,
except where the failure to obtain any such item or to take any such action,
individually and in the aggregate, is not reasonably likely to result in a
Company Material Adverse Effect.
3.2 Authorization, Validity and Effect of Agreements.
The Company has the requisite corporate power and authority to execute
and deliver this Agreement and all other agreements and documents contemplated
hereby and to perform its obligations hereunder. Subject only to the approval
of this Agreement and the Merger by the holders of a majority of the outstanding
shares of Company Common Stock, the consummation by the Company of the
transactions contemplated hereby has been unanimously approved by the Board of
Directors of the Company (the "Company Board") and duly authorized by all
requisite corporate action. This Agreement constitutes the valid and legally
binding obligation of the Company, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
3.3 Capitalization.
The authorized capital stock of the Company consists of 120,000,000
shares of Company Common Stock and 2,400,000 shares of preferred stock of the
Company (the "Company Preferred Stock"). As of March 2, 2000, there were
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39,478,293 shares of Company Common Stock and no shares of Company Preferred
Stock issued and outstanding. Since such date, no shares of capital stock of
Company have been issued, except shares of Company Common Stock issued pursuant
to the exercise of options outstanding under the Company Stock Option Plans. The
Company is party to a Shareholder Rights Agreement, dated as of July 11, 1996
(the "Company Rights Agreement"), with American Stock Transfer, as Rights Agent.
As of March 2, 2000, options to acquire 4,836,411 shares of Company Common Stock
were outstanding pursuant to the terms of the Company Stock Option Plans and
100,000 shares of Series B Participating Preferred Stock were reserved for
issuance in connection with the Rights issued pursuant to the Company Rights
Agreement. The Company has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) on any
matter with respect to such securities. All issued and outstanding shares of
Company Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights, and were issued in compliance with
all applicable federal and state securities laws, rules and regulations. Other
than as set forth above, there are not at the date of this Agreement any
existing options, warrants, calls, subscriptions, convertible securities, or
other rights, agreements or commitments that obligate the Company or any of the
Company Subsidiaries to issue, transfer or sell any shares of capital stock of
the Company or any of the Company Subsidiaries.
3.4 Subsidiaries.
The Company owns directly or indirectly each of the outstanding shares
of capital stock of each of the Company Subsidiaries. Each of the outstanding
shares of capital stock of each of the Company Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable, and is owned, directly or
indirectly, by the Company free and clear of all liens, pledges, security
interests, claims or other encumbrances.
3.5 No Violation.
Neither the execution and delivery by the Company of this Agreement
nor the consummation by the Company of the transactions contemplated hereby in
accordance with the terms hereof, will: (i) conflict with or result in a breach
of any provisions of the Certificate of Incorporation or the Bylaws of the
Company; (ii) result in a breach or violation of, or a default under, any
existing Company Employee Plans, or any grant or award made under any of the
foregoing or violate, conflict with, result in a breach of any provision of,
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, result in the termination or in a right of
termination or cancellation of, accelerate the performance required by, result
in the triggering of any payment or other material obligations pursuant to,
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties of the Company or any of the Company Subsidiaries
under, or result in being declared void, voidable, or without further binding
effect, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust or any license, franchise, permit, lease, contract,
agreement or other instrument, binding commitment or obligation to which the
Company or any of the Company Subsidiaries is a party, or by which the Company
or
10
any of the Company Subsidiaries or any of their respective properties is bound
or affected, except for any of the foregoing matters in this clause (ii),
individually and in the aggregate, which are not reasonably likely to (a) result
in a Company Material Adverse Effect or (b) impair in any material respect the
ability of the Company to perform its obligations under this Agreement, or (c)
prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement; or (iii) other than (a) filings by the Company
required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx
"XXX Xxx"), (x) the filing with the Securities and Exchange Commission (the
"SEC") of a proxy statement relating to the approval by the Company's
stockholders of this Agreement and such reports under the Securities Exchange
Act of 1934 (the "Exchange Act"), as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (c) any filings
with and written authorization of the transaction by the New Jersey Department
of Environmental Protection that may be required pursuant to the New Jersey
Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq. or under Indiana law, as
-- ---
described in Section 6.3(d) hereof, (d) the filing of the Certificate of Merger
with the Delaware Secretary of State, (e) the filings and notifications required
by the rules of the Nasdaq National Market, (f) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under the corporation, takeover or blue sky laws of various states, and
(g) such authorizations, orders, consents, licenses, confirmations, clearances,
permissions and approvals as may be required in any foreign jurisdiction for the
purposes of applicable anti-trust, competition, takeover or similar legislation
require, by or with respect to the Company or any of the Company Subsidiaries in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the Merger, any consent, approval or
authorization of, or declaration, filing or registration with, any domestic or
foreign governmental or regulatory authority ("Governmental Entity"), other than
consents, approvals, authorizations, declarations or filings or registration
which, if not obtained or made, individually and in the aggregate, are not
reasonably likely to result in a Company Material Adverse Effect.
3.6 SEC Documents.
(a) As of their respective dates, or, if amended, as of the date of
the last such amendment, each registration statement, report, proxy statement or
information statement (as defined in Regulation 14C under the Exchange Act) of
the Company prepared by the Company since January 1, 1998, in the form
(including exhibits and any amendments thereto) filed with the SEC,
(collectively, the "Company Reports") (i) complied as to form in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act, and the rules and regulations thereunder applicable to such Company Reports
and (ii) at the time they were filed did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each of the consolidated balance
sheets included in or incorporated by reference into the Company Reports
(including the related notes and schedules) fairly presents in all material
respects the consolidated financial position of the Company and each of the
Company Subsidiaries as of its date, and each of the consolidated statements of
operations, stockholders' equity and cash flows included in or
11
incorporated by reference into the Company Reports (including any related notes
and schedules) fairly presents in all material respects the financial position,
results of operations and cash flows, as the case may be, of the Company and
each of the Company Subsidiaries for the periods set forth therein (subject, in
the case of unaudited statements, to normal year-end audit adjustments which are
not reasonably likely to be material in amount or effect, and the absence of
footnotes), in each case in accordance with U.S. generally accepted accounted
principles ("GAAP") consistently applied during the periods involved, except as
may be noted therein.
(b) Except as and to the extent set forth on the balance sheet of the
Company as of September 30, 1999, including the notes thereto (the "Company
-------
Balance Sheet"), the Company has no material liability or obligation of any
-------------
nature (whether accrued, absolute, contingent or otherwise) except for
liabilities and obligations (i) disclosed in any Company Report and Mailings (as
defined hereafter) filed since September 30, 1999 and prior to the date of this
Agreement, (ii) incurred since September 30, 1999 in the ordinary course of
business, (iii) incurred pursuant to this Agreement or (iv) liabilities or
obligations which individually and in the aggregate, would not have a Company
Material Adverse Effect.
(c) The Company will deliver to Parent as soon as they become
available true and complete copies of any report, registration statement or
statement mailed by it to its securityholders generally (the "Mailings")
--------
subsequent to the date hereof and prior to the Effective Time. As of their
respective dates, such Mailings (excluding any information therein provided by
Parent or Merger Sub, as to which the Company makes no representation) 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 and will
comply in all material respects with all applicable requirements of law.
3.7 Litigation.
There are no actions, suits or proceedings pending against the Company
or any of the Company Subsidiaries or, to the knowledge of the Company,
threatened against the Company or any of the Company Subsidiaries that,
individually and in the aggregate, are reasonably likely to have a Company
Material Adverse Effect.
3.8 No Violation of Law.
(a) The Company and each of the Company Subsidiaries is not in
violation of any statute, law, ordinance, regulation, rule or order of any
foreign, federal, state or local government or any other governmental department
or agency, or any judgment, decree or order of any court, applicable to its
business or operations, except where any such violations or failures to comply
would not, individually and in the aggregate, have a Company Material Adverse
Effect. The Company and each of the Company Subsidiaries has all permits,
licenses and franchises from governmental agencies required to conduct its
business as now being conducted, except for such
12
permits, licenses and franchises the absence of which would not, individually
and in the aggregate, have a Company Material Adverse Effect.
(b) To the best of the Company's knowledge, as to each product
subject to FDA's jurisdiction under the Federal Food, Drug and Cosmetic Act
("FDCA") and the jurisdiction of the Drug Enforcement Agency under the
----
Comprehensive Drug Abuse Prevention and Control Act of 1970 ("CSA") which is
---
manufactured, tested, distributed, held, and/or marketed by the Company, such
product is being manufactured, held and distributed in substantial compliance
with all applicable requirements under the FDCA and the CSA including, but not
limited to, those relating to investigational use, premarket clearance, good
manufacturing practices, labeling, advertising, record keeping, filing of
reports, and security.
(c) The Company will promptly provide Parent with copies of any
document that is issued, prepared, or otherwise becomes available from the date
of this Agreement until the Effective Time which bears on the regulatory status
under the FDCA or the CSA of the Company and each of the Company Subsidiaries,
or any product of the Company and each of the Company Subsidiaries, including,
but not limited to, any deficiency letter, warning letter, non-approvable
letter/order, and withdrawal letter/order, except for documents reflecting such
matters which, individually and in the aggregate, would not have a Material
Adverse Effect.
3.9 Absence of Certain Changes.
Since September 30, 1999, other than as set forth in the Company
Reports, the Company has conducted its business only in the ordinary course of
such business, and there has not been (i) any Company Material Adverse Effect or
any event which is reasonably likely to result in a Company Material Adverse
Effect; or (ii) any material change in its accounting principles, practices or
methods, except as required under GAAP or applicable law.
3.10 Taxes and Tax Returns.
(a) As used in this Agreement:
"Code" means the Internal Revenue Code of 1986, as amended. All
citations to provisions of the Code, or to the Treasury Regulations promulgated
thereunder, shall include any amendments thereto and any substitute or successor
provisions thereto.
"Taxes" means any and all federal, state, local and foreign taxes,
assessments and other governmental charges, including, without limitation, taxes
based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, gains, franchise,
withholding, payroll, employment, excise, unemployment, premium, social
security, occupation, stamp, and property taxes, together with all interest,
penalties and additions to tax imposed with respect to such amounts.
13
"Tax Return" means any report, return, declaration or other form or
document filed or required to be filed with a taxing authority in connection
with any Taxes.
(b) All material Tax Returns required to be filed by or with respect
to the Company and each of the Company Subsidiaries have been timely filed and
all such Tax Returns are true, correct and complete in all material respects.
The Company and each of the Company Subsidiaries have (i) timely paid or caused
to be timely paid, or made adequate provisions in accordance with GAAP, all
Taxes due, whether or not shown (or required to be shown) on a Tax Return (other
than Taxes that are being contested in good faith and for which adequate
reserves have been made) and (ii) provided a sufficient reserve (without regard
to deferred Tax assets and liabilities) for the payment of all Taxes not yet due
and payable on the financial statements included in the Company Reports.
(c) The Company and each of the Company Subsidiaries have complied in
all material respects with the provisions of the Code relating to the
withholding and payment of Taxes, including, without limitation, the withholding
and reporting requirements under Code sections 1441 through 1464, 3401 through
3406, and 6041 through 6049, as well as similar provisions under any other laws,
and have, within the time and in the manner prescribed by law, withheld from
employee wages and paid over to the proper governmental authorities all amounts
required to be withheld and paid over except where the failure to withhold and
pay over, individually and in the aggregate, are not reasonably likely to have a
Material Adverse Effect.
(d) To the Company's knowledge, none of the Tax Returns of the
Company or any of the Company Subsidiaries is currently being examined by the
Internal Revenue Service ("IRS") or relevant state, local or foreign taxing
authorities and there are no administrative or court proceedings relating to any
Taxes in progress or, to the Company's knowledge, pending.
(e) Except for liens for Taxes that are not yet due and payable,
there are no liens for any Tax upon any asset of the Company or any of the
Company Subsidiaries.
(f) Neither the Company nor any of the Company Subsidiaries is, or
has been, a party to any agreement (other than this Agreement) relating to
allocating or sharing the payment of, or liability for, Taxes.
(g) Neither the Company nor any of the Company Subsidiaries is a
party to any contract, agreement, plan or arrangement that, individually or in
the aggregate, or when taken together with any payment that may be made under
this Agreement or any agreements contemplated hereby, would give rise to the
payment of any "excess parachute payment" within the meaning of Section 280G of
the Code.
14
(h) True and complete copies of all federal, state, local and foreign
Tax Returns of the Company and each of the Company Subsidiaries have been made
available to Parent prior to the date hereof to the extent reasonably requested
by Parent.
(i) No extension of time with respect to any date on which a Tax
Return was or is to be filed by the Company or any of the Company Subsidiaries
is in force, and no waiver or agreement by the Company or any of the Company
Subsidiaries is in force for the extension of time for the assessment or payment
of any Taxes.
(j) Neither the Company nor any of the Company Subsidiaries has been
a member of an (i) affiliated group (within the meaning of Section 1504 of the
Code) or (ii) affiliated, combined, consolidated, unitary, or similar group for
state, local or foreign Tax purposes, other than the group of which the Company
is the common parent.
3.11 Employee Benefit Plans.
(a) Schedule 3.11 of the Company Disclosure Schedule contains a list
of each material plan, program, arrangement and contract which is maintained by
the Company or any Company Subsidiaries or under which the Company or any of the
Company Subsidiaries is obligated to make contributions and which provides
benefits or compensation to or on behalf of employees or former employees,
including but not limited to executive arrangements and "employee benefit plans"
as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). All such material plans, programs, arrangements,
practices or contracts are referred to herein as "Company Employee Plans." The
Company has made available to Parent the plan documents or other writing
constituting each Company Employee Plan that has been reduced to writing and, if
applicable, the trust, insurance contract or other funding arrangement, the
ERISA summary plan description and the most recent Forms 5500 and actuarial
report for each such Plan. The Company has made available to Parent accurate
copies of the most recent favorable determination letters for all Company
Employee Plans qualified under Section 401(a) of the Code.
(b) With respect to each Company Employee Plan that is subject to
Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code: (i) there
does not exist any accumulated funding deficiency within the meaning of Section
412 of the Code or Section 302 of ERISA, whether or not waived; (ii) no
reportable events within the meaning of Section 4043(c) of ERISA with respect to
which the 30-day notice period have not been waived have occurred which,
individually and in the aggregate, are reasonably likely to result in a Company
Material Adverse Effect, (iii) all premiums required to be paid to the Pension
Benefit Guaranty Corporation have been timely paid in full; and (iv) all
contributions to the Company Employee Plans required to be made by the Company
or any Company Subsidiary have been timely made in all material respects. There
does not now exist, nor do any circumstances exist as are reasonably likely to
result in, any Company Controlled Group Liability (as defined below) that is
reasonably likely to be a liability of the Company or any Company Subsidiary
following the Effective Time. "Company Controlled Group Liability" means any and
all liabilities
15
under (i) Title IV of ERISA, (ii) Section 302 of ERISA, (iii) Sections 412 and
4971 of the Code and (iv) the continuation coverage requirements of Section 601
et seq. of ERISA and Section 4980B of the Code, other than, in each case, such
liabilities that arise solely out of, or relate solely to, the Company Employee
Plans. There are no investigations by any governmental agency (including the
Pension Benefit Guaranty Corporation), termination proceedings or other claims
(except claims for benefits payable in the normal operation of the Company
Employee Plans), suits or proceedings against or involving any Company Employee
Plans or asserting any rights to or claims for benefits under any Company
Employee Plan that are reasonably likely to have a Company Material Adverse
Effect.
(c) Neither the Company nor any Company Subsidiary is, or has been, a
participant in a multiemployer plan (within the meaning of ERISA Section 3(37)).
Neither the Company nor any of the Company Subsidiaries is obligated to provide
post-employment or retirement medical benefits or any other unfunded welfare
benefits to or on behalf of any Person who is no longer an employee of Company
or any of the Company Subsidiaries, except for health continuation coverage as
required by Section 4980B of the Code or Part 6 of Title I of ERISA.
(d) Each Company Employee Plan has at all times been maintained, by
its terms and in operation, in accordance with all applicable laws, and each of
those Company Employee Plans which are intended to be qualified under Section
401(a) of the Code has at all times been maintained, by its terms and in
operation, in accordance with Section 401(a) of the Code, in each case except
where a failure to be so maintained, individually and in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect.
(e) No prohibited transaction has occurred with respect to any
Company Employee Plan maintained by the Company or any of the Company
Subsidiaries that would result, directly or indirectly, in the imposition of an
excise tax or other liability under the Code or ERISA, except for such a tax or
other liability that, individually and in the aggregate, are not reasonably
likely to have a Company Material Adverse Effect.
(f) No employee of the Company or any of the Company Subsidiaries
will be entitled to any additional payment or benefits or acceleration of the
time of payment or vesting of any benefit under any Company Employee Plan or
other agreement or arrangement as a result of the transactions contemplated by
this Agreement.
3.12 Intellectual Property.
Each of the Company and its Subsidiaries owns, or is validly licensed
or otherwise has the right to use all patents, patent applications, trademarks,
trademark rights, trade names, trade name rights, service marks, service xxxx
rights, copyrights and other proprietary intellectual property rights and
computer programs (collectively, "Intellectual Property Rights") which if the
Company or its Subsidiaries did not own or validly license or otherwise have the
right to use would, individually and in the
16
aggregate, have a Material Adverse Effect on the Company. Section 3.12 of the
Company Disclosure Schedule sets forth, as of the date hereof, a list of all
material granted patents, pending patent applications, trademarks and
applications therefor owned by or licensed to the Company or any of its
Subsidiaries. No claims are pending or, to the knowledge of the Company,
threatened that the Company or any of its Subsidiaries is infringing the rights
of any Person with regard to any Intellectual Property Right which, individually
and in the aggregate, have or would have a Material Adverse Effect on the
Company. To the knowledge of the Company, no person is infringing the rights of
the Company or any of its Subsidiaries with respect to any Intellectual Property
Right which would have a Material Adverse Effect on the Company. As of the date
hereof, the Company has no knowledge that the business of the Company and its
Subsidiaries as presently conducted or as presently contemplated does or will
infringe (i) any granted patent or existing trademark or (ii) any patent granted
from a pending patent application. No claims are pending or, to the knowledge of
the Company, are threatened challenging the ownership of or license to the
Intellectual Property Rights owned by or licensed to the Company and its
Subsidiaries which would, individually and in the aggregate, have a Material
Adverse Effect on the Company.
3.13 Parent Stock Ownership.
Neither the Company nor any of the Company Subsidiaries beneficially
owns any Parent ADSs or other securities convertible into or exercisable for
Parent ADSs.
3.14 Tax Reorganization.
Neither the Company nor any of the Company Subsidiaries has taken or
agreed to take any action or knows of any fact or circumstance that is
reasonably likely to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code with respect to which gain
recognition is not required under Section 367(a) of the Code.
3.15 State Takeover Statutes.
The Company Board has approved this Agreement, the Stockholder
Agreement and the Merger, and such approval is sufficient to render inapplicable
to this Agreement, the Stockholder Agreement and the Merger, the provisions of
Section 203 of the DGCL to the extent, if any, such Section is applicable to
this Agreement, the Stockholder Agreement and the Merger. To the Company's
knowledge, no other state antitakeover statute or similar statute or regulation
is applicable to the Merger or the other transactions contemplated hereby.
3.16 No Brokers.
The Company has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of the
Company or Parent to pay any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the
17
consummation of the transactions contemplated hereby, except that the Company
has retained Warburg Dillon Read LLC ("WDR") as its financial advisors. A copy
of WDR's engagement letter has been previously delivered to Parent.
3.17 Opinion of Financial Advisor.
The Board of Directors of the Company has received the opinion of WDR
to the effect that, as of the date hereof, the consideration to be received in
the Merger is fair to the holders of Company Common Stock from a financial point
of view.
3.18 Rights Agreement.
The Company has taken all actions necessary to irrevocably (i) render
the Company Rights Agreement inapplicable to this Agreement, the Stockholder
Agreement, the Merger and the other transactions contemplated hereby and thereby
and (ii) ensure that the Rights will not become separable, distributable,
unredeemable or exercisable as a result of the approval, execution and delivery
of this Agreement and the Stockholder Agreement or the consummation of the
Merger and the other transactions contemplated hereby and thereby. A correct and
complete copy of the Company Rights Agreement, as amended to date, has been
furnished to Parent.
3.19 Environmental Matters.
(a) The Company and its Subsidiaries possess all Environmental
Permits under applicable Environmental Laws to conduct its current business, and
is in compliance with the terms and conditions of such Environmental Permits,
except where such failures to possess or comply, individually and in the
aggregate, would not have a Company Material Adverse Effect, nor has the Company
reason to believe that any Environmental Permits possessed by the Company and
its Subsidiaries will be revoked, suspended, or will not be renewed.
(b) To the best of the Company's knowledge, the execution and
delivery of this Agreement and the consummation by the Company of the Merger and
other transactions contemplated hereby and the exercise by the Parent and the
Merger Sub or rights to own and operate the businesses of the Company
substantially as presently conducted will not affect the validity of any
Environmental Permits held by the Company and its Subsidiaries.
(c) The Company and its Subsidiaries are in compliance, and within
the period of all applicable statutes of limitation, has complied, with all
applicable Environmental Laws including, without limitation, the transport,
storage, treatment and disposal of Hazardous Materials, except where the failure
to comply, individually and in the aggregate, would not have a Company Material
Adverse Effect; and has not received notice of any liability under any
Environmental Law.
(d) (i) There is no civil, criminal, or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, notice or demand
letter, or
18
request for information pending or, to the knowledge of the Company threatened,
under any Environmental Law against the Company or any of its Subsidiaries, and
(ii) to the knowledge of the Company, there is no civil, criminal or
administrative action, suit, demand , claim, hearing, notice of violation,
investigation, notice or demand letter, or request for information pending or
threatened against any person or entity, including but not limited to any
Contractor (as hereinafter defined), in connection with which liability could
reasonably be imputed or attributed by law or contract to the Company or any of
its Subsidiaries.
(e) To the best of the Company's knowledge, no property or facility
presently or formerly owned, operated, or leased by the Company or any of its
Subsidiaries, or by any of their respective predecessors in interest, is listed
or proposed for listing on the National Priorities List or the Comprehensive
Environmental Response, Compensation and Liability Information System, both
promulgated under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), or on any comparable list
------
established under any Environmental Law, nor has the Company nor any of its
Subsidiaries received any notification of potential or actual liability or any
request for information under CERCLA or any comparable Environmental Law.
(f) To the best of the Company's knowledge, (i) there has been no
disposal, spill, discharge, or release of any Hazardous Material by the Company
or any of its Subsidiaries or of their respective predecessors in interest, on,
at, or under any property presently or formerly owned, leased, or operated by
the Company or any of its Subsidiaries, any of their predecessors in interest,
or by any Contractor, and (ii) there are no Hazardous Materials located in, at,
on, or under any such facility or property, or at any other location, in each
case that could reasonably be expected to result in liability under or costs
pursuant to any Environmental Laws to the Company or any of its Subsidiaries in
excess of $100,000, either individually or in the aggregate.
(g) To the best of the Company's knowledge, there has not been any
underground storage tank or other underground storage receptacle or related
piping, or any surface impoundment or other disposal area containing Hazardous
Materials located on any facility or property owned, leased or operated by the
Company or any of its Subsidiaries, or any of their respective predecessors in
interest, during the period of such ownership, lease or operation.
(h) To the best of the Company's knowledge, no lien has been recorded
against any properties, assets or facilities owned, leased or operated by the
Company or any of its Subsidiaries under any Environmental Law.
(i) To the best of the Company's knowledge, the Company has made
available to Parent, Merger Sub and their authorized representatives all records
and files, including, but not limited to, all assessments, reports, studies,
audits, analyses, tests and data in possession of the Company or any of its
Subsidiaries concerning the existence of Hazardous Materials at facilities or
properties currently or formerly owned, operated, or leased by the Company, any
of its Subsidiaries or any former subsidiary or any of their
19
respective predecessors in interest, or concerning compliance by the Company or
any of its Subsidiaries with, or liability under, any Environmental Law.
For purposes of this Agreement:
(i) "Contractor" shall mean any person or entity, including but not
----------
limited to partners, licensors, and licensees, with which the Company formerly
or presently has any agreement or arrangement under which such person or entity
has or had physical possession of, and was or is obligated to develop, test,
process, manufacture, produce or package any component ingredients owned by the
Company.
(ii) "Environmental Law" shall mean CERCLA, the Resource Conservation
-----------------
and Recovery Act of 1976, as amended, and any other applicable federal, state,
local, or foreign statute, rule, regulation, order, judgment, directive, decree
or common law as now or previously in effect relating to, pollution or the
protection of the outdoor or indoor environment, including without limitation
ambient air, groundwater, surface water, subsurface strata, land and natural
resources such as wetlands, flora and fauna, employee health or safety, the
experimental use of animals, or the disposal of animal carcasses, including
without limitation those relating to the release or threatened release or
discharge of any Hazardous Material into the environment, the generation,
handling, treatment, storage, transport or disposal of any Hazardous Material.
(iii) "Environmental Permit" shall mean any permit, license, approval,
--------------------
consent, or other authorization by a federal, state, local, or foreign
government or regulatory entity issued pursuant to any Environmental Law.
(iv) "Hazardous Material" shall mean any pollutant, contaminant, or
------------------
hazardous, toxic, medical, biohazardous, infectious or dangerous waste, or any
other chemical, substance, constituent or material, including, without
limitation, any asbestos, any petroleum, oil (including crude oil or any
fraction thereof), any radioactive substance, any animal carcass, any toxin,
chemical, virus, infectious disease or disease-causing agent, that is subject to
regulation or can give rise to liability under any Environmental Law.
ARTICLE 4
Representations and Warranties of Parent and Merger Sub
Except as set forth in the corresponding section or subsection of the
disclosure schedule delivered at or prior to the execution hereof to the Company
(the "Parent Disclosure Schedule") or in the Parent Reports (as defined in
Section 4.6) filed on or prior to the date hereof, Parent and Merger Sub
represent and warrant to the Company as of the date of this Agreement as follows
(it being understood that disclosure of an item is not to be construed as an
admission of any fact):
4.1 Existence; Good Standing; Corporate Authority; Compliance with
Law.
20
Each of Parent and Merger Sub is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation. Parent is duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of any other state of the
United States in which the character of the properties owned or leased by it or
in which the transaction of its business makes such qualification necessary,
except where the failure to be so qualified or to be in good standing,
individually and in the aggregate, is not reasonably likely to result in a
Parent Material Adverse Effect (as defined in Section 8.14 hereof). Parent has
all requisite corporate power and authority to own, operate and lease its
properties and carry on its business as now conducted or as reasonably
contemplated in the future. Each of the Subsidiaries of Parent (the "Parent
Subsidiaries") is a corporation duly organized, validly existing and in good
standing, under the laws of the respective jurisdictions in which they are
incorporated. None of Parent, any of the Parent Subsidiaries or Merger Sub is
in violation of any order of any court, governmental authority or arbitration
board or tribunal, or any law, ordinance, governmental rule or regulation to
which Parent, the Parent Subsidiaries or Merger Sub or any of their respective
properties or assets is subject, other than any violations which are not
reasonably likely to result in a Parent Material Adverse Effect. Parent, any of
the Parent Subsidiaries and Merger Sub have obtained all licenses, permits and
other authorizations and have taken all actions required by applicable law or
governmental regulations in connection with their business as now conducted,
except where the failure to obtain any such item or to take any such action,
individually and in the aggregate, is not reasonably likely to result in a
Parent Material Adverse Effect.
4.2 Authorization, Validity and Effect of Agreements.
Each of Parent and Merger Sub, respectively, has the requisite
corporate power and authority to execute and deliver this Agreement and all
other agreements and documents contemplated hereby (including the CVR
Agreement), and perform its obligations hereunder and thereunder. The
consummation by Parent and Merger Sub, as applicable, of the transactions
contemplated hereby have been unanimously approved by the Board of Directors of
Parent and Merger Sub, as applicable, and duly authorized by all requisite
corporate action. This Agreement constitutes, and the CVR Agreement when
executed will constitute, the valid and legally binding obligation of Parent and
Merger Sub, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
4.3 Capitalization.
The authorized capital stock of Parent consists of 600,000,000 Parent
Ordinary Shares, 1,000 executive shares, par value Euro 1.25 each ("Parent
------
Executive Shares"), and 25,000 'B' executive shares, par value 5 Euro cents each
----------------
("Parent 'B' Executive Shares"). As of December 31, 1999, there were
---------------------------
269,128,803 Parent Ordinary Shares issued and outstanding, no Parent Ordinary
Shares held in Parent's treasury, 1,000 Parent Executive Shares outstanding and
21,375 Parent 'B' Executive Shares outstanding. As of such date there were (i)
35,112,331 Parent Ordinary Shares reserved
21
for issuance upon the exercise of outstanding options ("Outstanding Options"),
-------------------
(ii) 14,753,520 Parent Ordinary Shares reserved for issuance upon the exercise
of outstanding warrants (the "Warrants"), (iii) 4,574,635 Parent Ordinary Shares
reserved for issuance upon the exchange of the Exchangeable Notes due 2005
issued by Athena Neurosciences, Inc., a wholly-owned subsidiary of Parent
("Athena Notes"), guaranteed by Parent, and (iv) 22,598,758 Parent Ordinary
------------
Shares reserved for issuance upon the exchange of the Liquid Yield Option Notes
Due 2018 issued by Elan Finance Corporation Ltd., a wholly-owned subsidiary of
Parent ("XXXXX"), guaranteed by Parent. Except for the Outstanding Options, the
-----
Warrants, the Athena Notes and the XXXXX, there were not as of December 31, 1999
any existing options, warrants, calls, subscriptions, or other rights or other
agreements or commitments obligating Parent to issue, transfer or sell any share
of its capital stock or any other securities convertible into or evidencing the
right to subscribe for any such shares. All issued and outstanding Parent
Ordinary Shares are duly authorized, validly issued and fully paid, and
nonassessable. The issuance of the Parent ADSs, each representing one Parent
Ordinary Share, pursuant to the Merger will be duly authorized, validly issued,
fully paid and nonassessable, and free of preemptive rights. The issuance of
CVRs pursuant to the Merger has been duly authorized and the CVRs will be valid
and binding obligations of Parent, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
All of the issued and outstanding shares of capital stock of Merger
Sub are owned by Parent. Merger Sub has not engaged in any activities other
than in connection with its formation and the transactions contemplated by this
Agreement.
4.4 Subsidiaries.
Parent owns directly or indirectly each of the outstanding shares of
each of the Parent Subsidiaries. Each of the outstanding shares of capital
stock of each of the Parent Subsidiaries is duly authorized, validly issued,
fully paid and nonassessable, and is owned, directly or indirectly, by Parent
free and clear of all liens, pledges, security interests, claims or other
encumbrances.
4.5 No Violation.
Neither the execution and delivery by Parent and Merger Sub of this
Agreement or the CVR Agreement nor the consummation by Parent and Merger Sub of
the transactions contemplated hereby and thereby in accordance with the terms
hereof or thereof, will: (i) conflict with or result in a breach of any
provisions of the respective Certificate of Incorporation or Bylaws of Parent or
Merger Sub; (ii) result in a breach or violation of, a default under, or the
triggering of any payment or other material obligations pursuant to, or
accelerate vesting under, any of the Parent Stock Option Plans, or any grant or
award under any of the foregoing, or violate, conflict with, result in a breach
of any provision of, constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, result in the
termination or in a right of termination or cancellation of, accelerate the
performance required by, result in the
22
triggering of any payment or other material obligations pursuant to, result in
the creation of any lien, security interest, charge or encumbrance upon any of
the material properties of Parent, any of the Parent Subsidiaries or Merger Sub
under, or result in being declared void, voidable, or without further binding
effect, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust or any material license, franchise, permit, lease,
contract, agreement or other instrument, binding commitment or obligation to
which Parent, any of the Parent Subsidiaries or Merger Sub is a party, or by
which Parent, any of the Parent Subsidiaries or Merger Sub or any of their
respective properties is bound or affected, except for any of the foregoing
matters which is not reasonably likely to (a) result in a Parent Material
Adverse Effect, (b) impair in any material respects the ability of Parent to
perform its obligations under this Agreement, or (c) prevent or materially delay
the consummation of any of the transactions contemplated by this Agreement; or
(iii) other than (a) filings by Parent required under the HSR Act, (b) the
filing with the SEC of a Registration Statement on Form F-4, (c) the filing of
the Certificate of Merger with the Delaware Secretary of State, (d) filings
required by the Mergers, Take-overs and Monopolies (Control) Act, 1978 (as
amended) of Ireland (the "Irish Mergers Act"), (e) the listing on the NYSE of
-----------------
the Parent ADSs to be issued in connection with the Merger, (f) the listing on
the respective official lists of the Irish Stock Exchange and the London Stock
Exchange of Parent Ordinary Shares to be represented by Parent ADSs constituting
the Merger Consideration, (g) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the
corporation, takeover or blue sky laws of various states, and (h) such
authorizations, orders, consents, licenses, confirmations, clearances,
permissions and approvals as may be required in any foreign jurisdiction for the
purposes of applicable anti-trust, competition, takeover or similar legislation,
require, by or with respect to Parent, any of the Parent Subsidiaries or Merger
Sub in connection with the execution and delivery of this Agreement by Parent
and Merger Sub or the CVR Agreement by Parent or the consummation by Merger Sub
of the Merger, any consent, approval or authorization of, or declaration, filing
or registration with, any domestic governmental or regulatory authority, other
than consents, approvals, authorizations, declarations or filings or
registrations which, if not obtained or made, are not reasonably likely to
result in a Parent Material Adverse Effect or materially impair Parent's ability
to perform its obligations under the CVR Agreement.
4.6 SEC Documents.
(a) As of their respective dates, or, if amended, as of the date of
the last such amendment, each registration statement, report, proxy statement or
information statement (as defined in Regulation 14C under the Exchange Act) of
Parent prepared by Parent since January 1, 1998, in the form (including exhibits
and any amendments thereto) filed with the SEC, (collectively, the "Parent
Reports") (i) complied as to form in all material respects with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations thereunder applicable to such Parent Reports and (ii) at the time
they were filed did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Each of the consolidated balance sheets included in or
incorporated by
23
reference into the Parent Reports (including the related notes and schedules)
fairly presents in all material respects the consolidated financial position of
Parent and each of the Parent Subsidiaries as of its date, and each of the
consolidated statements of operations, stockholders' equity and cash flows
included in or incorporated by reference into the Parent Reports (including any
related notes and schedules) fairly presents in all material respects the
financial position, results of operations and cash flows, as the case may be, of
Parent and each of the Parent Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments which are not reasonably likely to be material in amount or effect,
and the absence of footnotes), in each case in accordance with GAAP consistently
applied during the periods involved, except as may be noted therein.
(b) Except as and to the extent set forth on the balance sheet of
Parent as of September 30, 1999, including the notes thereto (the "Parent
------
Balance Sheet"), Parent has no material liability or obligation of any nature
-------------
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on a balance sheet, or in the notes thereto, prepared in accordance
with GAAP, except for liabilities and obligations (i) disclosed in any Parent
Report and Parent Mailing (as defined hereafter) filed since September 30, 1999
and prior to the date of this Agreement, (ii) incurred since September 30, 1999
in the ordinary course of business, (iii) incurred pursuant to this Agreement or
(iv) liabilities or obligations which individually and in the aggregate, would
not have a Parent Material Adverse Effect.
(c) Parent will deliver to the Company as soon as they become
available true and complete copies of any report, registration statement or
statement mailed by it to its securityholders generally (the "Parent Mailings")
---------------
subsequent to the date hereof and prior to the Effective Time. As of their
respective dates, such Parent Mailings (excluding any information therein
provided by the Company, as to which Parent makes no representation) 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 and will
comply in all material respects with all applicable requirements of law.
4.7 Litigation.
There are no actions, suits or proceedings pending against Parent, any
of the Parent Subsidiaries or Merger Sub or, to the knowledge of Parent,
threatened against Parent, any of the Parent Subsidiaries or Merger Sub, that,
individually or in the aggregate, are reasonably likely to have a Parent
Material Adverse Effect.
4.8 No Violation of Law.
The business and operations of Parent and the Parent Subsidiaries have
been conducted in compliance with all other applicable laws, ordinances,
regulations and orders of all governmental entities and other regulatory bodies,
except where such
24
noncompliance, individually or in the aggregate, is not reasonably likely to
have a Parent Material Adverse Effect.
4.9 Absence of Certain Changes.
Since September 30, 1999, other than as set forth in the Parent
Reports, Parent has conducted its business only in the ordinary course of such
business, and there has not been (i) any Parent Material Adverse Effect or any
event which is reasonably likely to result in a Parent Material Adverse Effect;
or (ii) any material change in its accounting principles, practices or methods,
except as required under GAAP or applicable law.
4.10 Taxes and Tax Returns.
(a) All material Tax Returns required to be filed by or with respect
to Parent and each of Parent Subsidiaries have been timely filed and all such
Tax Returns are true, correct and complete in all material respects. The Parent
and each of Parent Subsidiaries have (i) timely paid or caused to be timely
paid, or made adequate provisions in accordance with GAAP, all Taxes due,
whether or not shown (or required to be shown) on a Tax Return (other than Taxes
that are being contested in good faith and for which adequate reserves have been
made) and (ii) provided a sufficient reserve (without regard to deferred Tax
assets and liabilities) for the payment of all Taxes not yet due and payable on
the financial statements included in Parent Reports.
(b) The Parent and each of Parent Subsidiaries have complied in all
material respects with the provisions of the Code relating to the withholding
and payment of Taxes, including, without limitation, the withholding and
reporting requirements under Code sections 1441 through 1464, 3401 through 3406,
and 6041 through 6049, as well as similar provisions under any other laws, and
have, within the time and in the manner prescribed by law, withheld from
employee wages and paid over to the proper governmental authorities all amounts
required to be withheld and paid over except where the failure to withhold and
pay over, individually and in the aggregate, are not reasonably likely to have a
Material Adverse Effect.
(c) Except for liens for Taxes that are not yet due and payable,
there are no liens for any material Tax upon any asset of Parent or any of
Parent Subsidiaries.
(d) As of December 31, 1999, Parent was not a passive foreign
investment company as defined in Section 1297(a) of the Code and, to the best of
the Parent's knowledge, there is no reasonable basis to believe that it may
become one in the foreseeable future.
4.11 Employee Benefit Plans.
(a) All material plans, programs, arrangements and contracts which
are maintained by Parent or any Parent Subsidiaries or under which Parent or any
of Parent Subsidiaries is obligated to make contributions and which provides
benefits or compensation to or on behalf of employees or former employees,
including but not
25
limited to executive arrangements and "employee benefit plans" as defined in
Section 3(3) of ERISA, are referred to herein as "Parent Employee Plans." Parent
has made available to the Company the plan documents or other writing
constituting each Parent Employee Plan that has been reduced to writing and, if
applicable, the trust, insurance contract or other funding arrangement, the
ERISA summary plan description and the most recent Forms 5500 and actuarial
report for each such Plan. Parent has made available to the Company accurate
copies of the most recent favorable determination letters for all Parent
Employee Plans qualified under Section 401(a) of the Code.
(b) With respect to each Parent Employee Plan that is subject to
Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code: (i) there
does not exist any accumulated funding deficiency within the meaning of Section
412 of the Code or Section 302 of ERISA, whether or not waived; (ii) no
reportable events within the meaning of Section 4043(c) of ERISA with respect to
which the 30-day notice period have not been waived have occurred which is
reasonably likely to result in a Parent Material Adverse Effect, (iii) all
premiums required to be paid to the Pension Benefit Guaranty Corporation have
been timely paid in full, and (iv) all contributions to the Parent Employee
Plans required to be made by Parent or any Parent Subsidiary have been timely
made in all material respects. There does not now exist, nor do any
circumstances exist as are reasonably likely to result in, any Parent Controlled
Group Liability (as defined below) that is reasonably likely to be a liability
of Parent or any Parent Subsidiary following the Effective Time. "Parent
Controlled Group Liability" means any and all liabilities under (i) Title IV of
ERISA, (ii) Section 302 of ERISA, (iii) Sections 412 and 4971 of the Code and
(iv) the continuation coverage requirements of Section 601 et seq. of ERISA and
Section 4980B of the Code, other than, in each case, such liabilities that arise
solely out of, or relate solely to, Parent Employee Plans. There are no
investigations by any governmental agency (including the Pension Benefit
Guaranty Corporation), termination proceedings or other claims (except claims
for benefits payable in the normal operation of the Parent Employee Plans),
suits or proceedings against or involving any Parent Employee Plans or asserting
any rights to or claims for benefits under any Parent Employee Plan that are
reasonably likely to have a Parent Material Adverse Effect.
(c) Neither Parent nor any Parent Subsidiary is, or has been, a
participant in a multiemployer plan (within the meaning of ERISA Section 3(37)).
Neither Parent nor any of Parent Subsidiaries is obligated to provide post-
employment or retirement medical benefits or any other unfunded welfare benefits
to or on behalf of any Person who is no longer an employee of Parent or any of
Parent Subsidiaries, except for health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of ERISA.
(d) Each Parent Employee Plan has at all times been maintained, by
its terms and in operation, in accordance with all applicable laws, and each of
those Parent Employee Plans which are intended to be qualified under Section
401(a) of the Code has at all times been maintained, by its terms and in
operation, in accordance with Section 401(a) of the Code, in each case except
where a failure to be so maintained is not reasonably likely to have a Parent
Material Adverse Effect.
26
(e) No prohibited transaction has occurred with respect to any Parent
Employee Plan maintained by Parent or any of Parent Subsidiaries that would
result, directly or indirectly, in the imposition of an excise tax or other
liability under the Code or ERISA, except for such a tax or other liability that
is not reasonably likely to have a Parent Material Adverse Effect.
(f) No employee of Parent or any of the Parent Subsidiaries will be
entitled to any additional payment or benefits or acceleration of the time of
payment or vesting of any benefit under any Parent Employee Plan or other
agreement or arrangement as a result of the transactions contemplated by this
Agreement.
4.12 Intellectual Property.
Each of Parent and its Subsidiaries owns, or is validly licensed or
otherwise has the right to use all Intellectual Property Rights which if Parent
or its Subsidiaries did not own or validly license or otherwise have the right
to use would, individually and in the aggregate, have a Parent Material Adverse
Effect. No claims are pending or, to the knowledge of Parent, threatened that
Parent or any of its Subsidiaries is infringing the rights of any Person with
regard to any Intellectual Property Right which have or would, individually and
in the aggregate, have a Parent Material Adverse Effect. To the knowledge of
Parent, no person is infringing the rights of Parent or any of its Subsidiaries
with respect to any Intellectual Property Right which would have a Parent
Material Adverse Effect. As of the date hereof, Parent has no knowledge that
the business of Parent and its Subsidiaries as presently conducted or as
presently contemplated does or will infringe (i) any granted patent or existing
trademark or (ii) any patent granted from a pending patent application. No
claims are pending or, to the knowledge of Parent, are threatened challenging
the ownership of or license to the Intellectual Property Rights owned by or
licensed to Parent and its Subsidiaries which would, individually and in the
aggregate, have a Parent Material Adverse Effect.
4.13 Company Stock Ownership.
Neither Parent nor any of the Parent Subsidiaries beneficially owns
any shares of Company Common Stock or other securities convertible into or
exercisable for Company Common Stock.
4.14 Tax Reorganization.
Neither Parent nor any of the Parent Subsidiaries has taken or agreed
to take any action or knows of any fact or circumstance that is reasonably
likely to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code with respect to which gain recognition is
not required under Section 367(a) of the Code.
27
ARTICLE 5
Covenants
5.1 Alternative Proposals.
(a) The Company, its affiliates and their respective officers,
directors, employees, representatives and agents shall immediately cease any
existing discussions or negotiations, if any, with any parties other than Parent
or Merger Sub conducted heretofore with respect to a Transaction and, pursuant
to the confidentiality agreements with such parties, the Company shall direct
such parties to return to the Company all confidential information provided by
or on behalf of the Company to such parties, shall direct such parties to
destroy any documents or other materials they created containing confidential
information provided by or on behalf of the Company, and shall use its
reasonable best efforts to see that such information is returned or destroyed.
Neither the Company nor any of its Subsidiaries shall, and the Company shall use
its reasonable best efforts to cause its and its Subsidiaries respective
officers, directors, employees, accountants, counsel, investment bankers,
financial advisors and other representatives ("Representatives") not to, (i)
---------------
directly or indirectly, initiate, solicit or encourage, or take any action to
facilitate the making of, any Takeover Proposal (as defined below), or (ii)
directly or indirectly, engage in negotiations or discussions with, or provide
any confidential information or data to, any person relating to any Takeover
Proposal; provided, however, that at any time prior to the date of the
Stockholders' meeting contemplated by Section 5.3 (the "Applicable Period"), the
-----------------
Company may, in response to a Superior Proposal (as defined below) which was not
solicited by it or any Representative of the Company and which did not otherwise
result from a breach of this Section 5.1(a), and subject to providing written
notice of its decision to take such action to the Parent (the "Notice") and
------
compliance with Section 5.1(c), but only after the third business day following
delivery of the Notice to Parent (x) furnish information with respect to the
Company and/or its Subsidiaries to any person making a Superior Proposal
pursuant to a customary confidentiality agreement (as determined by the Company
after consultation with its outside counsel) and (y) participate in discussions
or negotiations regarding such Superior Proposal.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (x) unless such Board or committee shall have determined in good
faith that such action is required by its fiduciary duties under applicable law,
withdraw or modify, or propose to withdraw or modify, in a manner adverse to the
Parent, such Board's or committee's approval or recommendation of the Merger or
this Agreement, (y) approve any letter of intent, agreement in principle,
acquisition agreement or similar agreement (other than a confidentiality
agreement in connection with a Superior Proposal which is entered into by the
Company in accordance with Section 5.1(a) relating to any Takeover Proposal
(each, an "Acquisition Agreement"), or (z) approve or recommend, or propose to
---------------------
approve or recommend, any Takeover Proposal. Notwithstanding the foregoing, in
response to a Superior Proposal which was not solicited by the Company, and
which did not otherwise result from a breach of Section 5.1(a), the Board of
Directors of the Company may (subject to this sentence) terminate this Agreement
and concurrently with
28
or after such termination, if it so chooses, cause the Company to enter into any
Acquisition Agreement with respect to any Superior Proposal, but only at a time
that is during the Applicable Period and is after the fifth business day
following the Company's delivery of written notice advising the Parent that the
Board of Directors of the Company has resolved to accept a Superior Proposal
(subject to such termination), specifying the material terms and conditions of
such Superior Proposal and identifying the person making such Superior Proposal.
(c) The Company promptly shall advise the Parent orally and in
writing of any Takeover Proposal or any inquiry with respect to any Takeover
Proposal, the identity of the person making any such Takeover Proposal or
inquiry and the material terms and conditions of any such Takeover Proposal or
inquiry. The Company shall keep the Parent reasonably informed of the status and
material terms and conditions of any such Takeover Proposal or inquiry.
(d) Nothing contained in this Agreement shall prohibit the Company or
its Board of Directors from taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act
provided that the Company and its Board of Directors complies with Section
5.1(b) hereof.
For purposes of this Agreement, a "Takeover Proposal" means any
-----------------
proposal or offer from any person relating to (i) any direct or indirect
acquisition or purchase of a business that constitutes 15% or more of the net
revenues, net income or assets of the Company and its Subsidiaries, taken as a
whole, or 15% or more of the common stock or voting power (or of securities or
rights convertible into or exercisable for such common stock or voting power) of
the Company, (ii) any tender offer or exchange offer that if consummated would
result in any person beneficially owning 15% or more of the common stock or
voting power (or of securities or rights convertible into or exercisable for
such common stock or voting power) of the Company, or (iii) any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its Subsidiaries that
constitutes 15% or more of the net revenues, net income or assets of the Company
and its Subsidiaries taken as a whole, in each case other than the transactions
contemplated by this Agreement or transactions permitted under Section 5.2.
Each of the transactions referred to in clauses (i)-(iii) of the foregoing
definition of Takeover Proposal, other than the transactions contemplated by
this Agreement and transactions permitted under Section 5.2 is referred to
herein as an "Acquisition Transaction."
-----------------------
For purposes of this Agreement, a "Superior Proposal" with respect to
-----------------
the Company means any proposal (x) made by a third party to acquire, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction, for consideration consisting of cash and/or securities,
more than 50% of the combined voting power of the shares of Company Common Stock
then outstanding or at least 50% of the assets of the Company and its
Subsidiaries, taken together, (y) which is otherwise on terms which the Board of
Directors of the Company determines in its good faith
29
judgment (after consultation with a financial advisor and based on such other
matters as the Board of Directors of the Company deems relevant) to be more
favorable to the Company's stockholders than the Merger and for which financing,
to the extent required, is then committed or which, in the good faith judgment
of the Board of Directors of the Company, is reasonably capable of being
obtained by such third party and (z) which such Board, after considering such
matters as such Board deems relevant (including the advice of outside counsel),
determines in good faith that the Company furnishing information to the third
party, participating in discussions or negotiations with respect to the Superior
Proposal or withdrawing or modifying its recommendation with respect to the
Merger or recommending a Takeover Proposal, or terminating this Agreement, is
required for the Board of Directors of the Company to comply with its fiduciary
duties to the Company and its stockholders under applicable law.
5.2 Interim Operations.
(a) Prior to the Effective Time, except as set forth in Section 5.2
of the Company Disclosure Schedule or as expressly provided for in this
Agreement, unless Parent has consented in writing thereto (such consent not to
be unreasonably withheld or delayed), the Company:
(i) shall, and shall cause each of the Company Subsidiaries to,
conduct its operations in the ordinary course consistent with the manner as
heretofore conducted;
(ii) shall use commercially reasonable efforts, and shall cause each
of the Company Subsidiaries to use commercially reasonable efforts, to preserve
intact their business organizations and goodwill, keep available the services of
their respective officers and employees and maintain satisfactory relationships
with those persons having business relationships with them;
(iii) shall not, and shall cause each of the Company Subsidiaries not
to, amend their respective Certificates of Incorporation or Bylaws or comparable
governing instruments;
(iv) shall give prompt notice to Parent of any representation or
warranty made by it contained in this Agreement becoming untrue or inaccurate in
any material respect such that the condition set forth in Section 6.3(a)(ii)
would not be satisfied; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement;
(v) shall not, and shall not permit any of the Company Subsidiaries
to, (A) acquire or agree to acquire by merging or consolidating with, or by
acquiring any capital stock of or purchasing a substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof, or (B)
acquire or agree to acquire assets other
30
than in the ordinary course of business or (C) release or relinquish or agree to
release or relinquish any material contract rights;
(vi) shall not, and shall not permit any of the Company Subsidiaries
to, effect any stock split or otherwise change its capitalization or issue any
shares of its capital stock or securities convertible into or exchangeable or
exercisable for shares of its capital stock, except upon exercise of options
outstanding as of the date hereof to purchase shares of Company Common Stock
under the Company Stock Option Plans;
(vii) shall not, and shall not permit any of the Company Subsidiaries
to, grant, confer or award any options, warrants, conversion rights or other
rights, not existing on the date hereof, to acquire any shares of its capital
stock or other securities of the Company or any of the Company Subsidiaries or
amend or otherwise modify any outstanding options or warrants;
(viii) shall not, and shall not permit any of the Company Subsidiaries
to, set aside, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital stock, or to
redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(ix) shall not, and shall not permit any of the Company Subsidiaries
to, take or fail to take any actions which would be reasonably likely to prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code with respect to which gain recognition is not required under
Section 367(a) of the Code;
(x) shall not, and shall not permit any of the Company Subsidiaries
to, amend in any material respect, except as required by applicable law or in
response to changes in applicable law, the terms of any Company Employee Plans,
including, without limitation, any employment, severance or similar agreements
or arrangements in existence on the date hereof, or adopt any new employee
benefit plans, programs or arrangements or any employment, severance or similar
agreements or arrangements, or grant any award thereunder (except in the case of
awards not involving the acquisition of securities, in the ordinary course of
business consistent with past practice), or grant any salary increases to any
employee of the Company or any of the Company Subsidiaries except in the
ordinary course of business consistent with past practice except that (A) the
Company may hire, and enter into compensation arrangements with, employees in
the ordinary course of business consistent with past practice and (B) this
subsection (x) shall not preclude the Company from making payments required
under Company Employee Plans in effect on the date hereof;
(xi) shall not, and shall not permit any of the Company Subsidiaries
to, except in the ordinary course of business consistent with past practice, (x)
incur, create, assume or otherwise become liable for borrowed money or assume,
guarantee, endorse or otherwise become responsible or liable for the obligations
of any other individual, corporation or other entity or (y) make any loans or
advances to any other person;
31
(xii) shall not, and shall not permit any of the Company
Subsidiaries to, (x) make, revoke or change any material election with respect
to Taxes unless required by applicable law or (y) settle or compromise any
material Tax liability;
(xiii) shall not, and shall not permit any of the Company
Subsidiaries to, authorize capital expenditures which are, in the aggregate, in
excess of $1 million for the Company and the Company Subsidiaries taken as a
whole;
(xiv) shall not, and shall not permit any of the Company
Subsidiaries to, except for the payment of reasonable professional fees relating
to the Merger or otherwise and reasonable fees to financial advisors (which
financial advisory fees have heretofore been disclosed or are otherwise
acceptable, to Parent), pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)
in an amount in excess of $1 million in the aggregate, other than the payments,
discharges or satisfactions, in the ordinary course of business and consistent
with past practice, of liabilities reflected or reserved against in the
Company's most recent audited balance sheet as of a date prior to the date
hereof or subsequently incurred in the ordinary course of business and
consistent with past practice or collect, or accelerate the collection of, any
amounts owed (including accounts receivable) other than collection in the
ordinary course;
(xv) shall not, and shall not permit any of the Company
Subsidiaries to, except in the ordinary course of business or as otherwise
expressly contemplated hereby, grant or acquire any material licenses to use any
Intellectual Property Rights or unpatented inventions set forth in the Company
Disclosure Schedule; provided that the Company shall not grant any material
--------
licenses to use any material Intellectual Property Rights or unpatented
inventions so set forth without the prior written consent of Parent, which
consent shall not be unreasonably withheld;
(xvi) shall not, and shall not permit of the Company Subsidiaries
to, allow any insurance policy naming it as a beneficiary or a loss payee to be
cancelled, terminated or materially altered, except in the ordinary course of
business and consistent with past practice and following written notice to
Parent (provided that an insurer refusing to renew a policy shall not be deemed
a breach of this covenant);
(xvii) shall not, and shall not permit any of the Company
Subsidiaries to, enter into any hedging, option, derivative or other similar
transaction;
(xviii) shall notify Parent a reasonable time in advance of, and shall
permit a representative of Parent to review or participate in, any
communications, meetings, or correspondence between the Company or any Company
Subsidiary and the FDA, the European Agency for the Evaluation of Medical
Products or similar regulatory agency and in any of the Company's internal
planning meetings that cover substantive issues relating to Evacet(TM), except,
in each case, as may be inconsistent with applicable law or regulation; and
32
(xix) shall not, and shall not permit any of the Company Subsidiaries
to, agree, in writing or otherwise, to take any of the foregoing actions.
(b) Prior to the Effective Time, except as set forth in Section 5.2
of the Parent Disclosure Schedule or as expressly provided in this Agreement,
unless the Company has consented in writing thereto (such consent not to be
unreasonably withheld or delayed), Parent:
(i) shall, and shall cause each of the Parent Subsidiaries to,
conduct its operations in the ordinary course consistent with the manner as
heretofore conducted;
(ii) shall use commercially reasonable efforts, and shall cause each
of Parent Subsidiaries to use commercially reasonable efforts, to preserve
intact their business organizations and goodwill, keep available the services of
their respective officers and employees and maintain satisfactory relationships
with those persons having business relationships with them;
(iii) shall not, and shall cause each of Parent Subsidiaries not to,
amend their respective Certificates of Incorporation or Bylaws or comparable
governing instruments;
(iv) shall give prompt notice to the Company of any representation or
warranty made by it contained in this Agreement becoming untrue or inaccurate in
any material respect such that the condition set forth in Section 6.2(a)(ii)
would not be satisfied; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement;
(v) shall not, and shall not permit any of Parent Subsidiaries to,
take or fail to take any actions which would be reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code with respect to which gain recognition is not required under Section
367(a) of the Code; and
(vi) shall not, and shall not permit any of Parent Subsidiaries to,
agree, in writing or otherwise, to take any of the foregoing actions.
5.3 Meetings of Stockholders.
The Company will, as soon as reasonably practicable following the date
of this Agreement, take all action necessary to establish a record date for,
duly call, give notice of, convene and hold a meeting of its stockholders (the
"Company Stockholders Meeting") as promptly as practicable for the purpose of
obtaining the approval of its stockholders of this Agreement and the Merger.
The Company Board shall recommend such approval and shall use its reasonable
best efforts to solicit such approval, including, without limitation, timely
mailing the Proxy Statement/Prospectus (as defined in Section 5.7); provided,
however, that such recommendation or solicitation shall not be required and the
Company Board may withdraw or modify such recommendation or solicitation, if
previously made, if and to the extent that the Company Board determines
33
after the date hereof, in its good faith judgment, after consulting with
counsel, that such actions may be required by its fiduciary duties. The Company
shall take all lawful action necessary or advisable to hold the Company
Stockholders Meeting and collect the votes of its stockholders, including,
without limitation, timely mailing to its stockholders the Proxy
Statement/Prospectus as promptly as practicable after the Form F-4 (as defined
in Section 6.7) shall be declared effective. Whether or not the Board of
Directors of the Company, or any committee thereof, shall have (a) withdrawn or
modified in a manner adverse to the Parent such Board's or Committee's approval
or recommendation of the Merger and this Agreement or otherwise determined that
the Merger and/or Agreement are no longer advisable, or (b) approved,
recommended and determined advisable a Superior Proposal, the Merger and the
Agreement shall be submitted to the stockholders of the Company for the purpose
of acting thereupon at the Company Stockholders Meeting.
5.4 Reasonable Efforts; Further Assurances.
Subject to the terms and conditions herein provided, each of the
parties hereto will promptly file and prosecute diligently the applications and
related documents required to be filed by such party with the applicable
regulatory authorities in order to effect the transactions contemplated hereby,
including filings under the HSR Act and other Regulatory Laws requesting early
termination of the applicable waiting period. The parties shall make the
filings contemplated by the HSR Act and the Irish Mergers Act within ten
business days of the date hereof. Each party hereto agrees to use all
commercially reasonable efforts to, and shall take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations, to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable. 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 of each corporation which is a party to this Agreement shall take all
such necessary action. Each of the parties hereto agrees to defend vigorously
against any actions, suits or proceedings in which such party is named as
defendant which seeks to enjoin, restrain or prohibit the transactions
contemplated hereby or seeks damages with respect to such transactions. For
purposes of this Agreement, "Regulatory Law" means the Xxxxxxx Act, as amended,
--------------
the Xxxxxxx Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other federal, state and foreign, if any, statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade or
lessening of the competition, in each case applicable to the transactions
contemplated by this Agreement.
5.5 Inspection of Records.
From the date hereof to the Effective Time, the Company and Parent
shall (i) allow all designated officers, attorneys, accountants and other
representatives of their respective companies reasonable access at all
reasonable times 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
34
business and affairs, of the other party and their Subsidiaries, (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 and its Subsidiaries. Except as
required by law, Parent and the Company 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 the Company or from Parent, as the case may be, directly or indirectly, in
confidence, in accordance with the Confidentiality Agreement dated as of
November 22, 1999 between Parent and the Company (as it may be amended from time
to time, the "Confidentiality Agreement").
5.6 Publicity.
The initial press release relating to this Agreement shall be a joint
press release in the form heretofore agreed to by the parties and thereafter the
Company and Parent shall, subject to their respective legal obligations
(including requirements of stock exchanges and other similar regulatory bodies),
consult with each other, and use reasonable efforts to agree upon the text of
any press release, before issuing any such press release or otherwise making
public statements with respect to the transactions contemplated hereby and in
making any filing with any federal or state governmental or regulatory agency or
with any national securities exchange with respect thereto.
5.7 Registration Statement.
Parent and the Company shall cooperate and promptly prepare and Parent
shall file with the SEC as soon as practicable a Registration Statement on Form
F-4 (the "Form F-4") under the Securities Act, with respect to the Parent ADSs
and CVRs issuable in the Merger, which Registration Statement shall contain the
proxy statement with respect to the meeting of the stockholders of the Company
in connection with the Merger (the "Proxy Statement/Prospectus"). The parties
shall cause the Form F-4 to be filed or confidentially submitted within 20 days
of the date hereof. The respective parties will cause the Proxy
Statement/Prospectus and the Form F-4 to comply in all material respects with
the applicable provisions of the Securities Act, the Exchange Act and the rules
and regulations thereunder. Parent shall use reasonable efforts, and the
Company will cooperate with Parent, to have the Form F-4 declared effective by
the SEC as promptly as practicable. Parent shall take all action required to
obtain, prior to the effective date of the Form F-4, all necessary state
securities law or "Blue Sky" permits or approvals required to carry out the
transactions contemplated by this Agreement. The information supplied by the
Company for inclusion or incorporation by reference in the Proxy
Statement/Prospectus and the Form F-4, shall not (i) at the time the Form F-4 is
declared effective, (ii) at the time the Proxy Statement/Prospectus (or any
amendment thereof or supplement thereto) is first mailed to holders of Parent
and Company Common Stock, (iii) at the time of the Company Stockholders Meeting
and (iv) at the Effective Time, 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 the light of
35
the circumstances under which they are made, not misleading. The information
supplied by Parent for inclusion or incorporation by reference in the Proxy
Statement/Prospectus and the Form F-4, shall not (i) at the time the Form F-4 is
declared effective, (ii) at the time the Proxy Statement/Prospectus (or any
amendment thereof or supplement thereto) is first mailed to holders of Parent
and Company Common Stock, (iii) at the time of the Company Stockholders Meeting
and (iv) at the Effective Time, 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 the light of the circumstances under which they
are made, not misleading. No amendment or supplement to the Proxy
Statement/Prospectus will be made by the Company without the approval of Parent
and no amendment of the Form F-4 will be made by Parent without the approval of
the Company (such consent not to be unreasonable withheld or delayed). Parent
will advise the Company, promptly after it receives notice thereof, of the time
when the Form F-4 has become effective or any supplement or amendment has been
filed, the issuance of any stop order, the suspension of the qualification of
the Parent ADSs issuable in connection with the Merger for offering or sale in
any jurisdiction, or any request by the SEC for amendment of the Proxy
Statement/Prospectus or the Form F-4 or comments thereon and responses thereto
or requests by the SEC for additional information.
5.8 Listing Application.
Parent shall promptly prepare and submit to the NYSE a listing
application covering the Parent ADSs issuable in the Merger and upon exercise of
the Parent Options, and shall use all reasonable efforts to obtain, prior to the
Effective Time, approval for the listing of such Parent ADSs, subject to
official notice of issuance. Parent shall promptly prepare and submit to the
Irish Stock Exchange and the London Stock Exchange a listing application
covering the Parent Ordinary Shares to be represented by Parent ADSs issuable in
the Merger and upon exercise of the Parent Options, and shall use all reasonable
efforts to obtain, prior to the Effective Time, approval for the listing of such
shares, subject to official notice of issuance.
5.9 Affiliate Letters.
No later than 30 days prior to the date of the Company Stockholders
Meeting, the Company shall deliver to Parent a letter identifying all Persons
who are at the time this Agreement is submitted for adoption by the
stockholders of the Company, "affiliates" of the Company for purposes of Rule
145 under the Securities Act. The Company shall use its reasonable best efforts
to deliver or cause to be delivered to Parent, prior to the Closing Date, from
each such person an Affiliate Letter in the form attached hereto as Exhibit B.
5.10 Expenses.
Whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses except as expressly
provided herein and except that (a) the filing fee in connection with the filing
of the Form F-4 or Proxy
36
Statement/Prospectus with the SEC, (b) the filing fees in respect of filings
made pursuant to the HSR Act and other Regulatory Laws, (c) all filing fees in
connection with any filings, permits or approvals made or obtained under
applicable state securities and "blue sky" laws, (d) all printing, mailing and
related expenses incurred in connection with the printing and mailing of the
Proxy Statement/Prospectus and (e) all other expenses not directly attributable
to any one of the parties, shall be paid one-half by Parent and one-half by the
Company.
5.11 Directors' and Officers' Indemnification and Insurance.
(a) From and after the Effective Time for a period of six years,
Parent agrees that it will indemnify and hold harmless each present and former
director and officer of the Company or any Company Subsidiary (when acting in
such capacity), determined as of the Effective Time (each, an "Indemnified
Party" and, collectively, the "Indemnified Parties"), against any costs or
expenses (including attorneys' fees and expenses), judgments, fines, losses,
amounts paid in settlement claims, damages or liabilities incurred in connection
with any claim, action, suit, proceeding or investigation, actual or threatened,
whether civil, criminal, administrative or investigative, in whole or in part
based on or arising in whole or in part out of matters existing or occurring at
or prior to the Effective Time, to the fullest extent that the Company would
have been permitted under Delaware law and its Certificate of Incorporation, as
amended, or Amended and Restated Bylaws in effect on the date hereof to
indemnify such Indemnified Party. Parent shall also advance expenses as incurred
to the fullest extent permitted under applicable law provided the Indemnified
Party to whom expenses are advanced provides (i) a written affirmation of his or
her good faith belief that the standard of conduct necessary for indemnification
has been met, and (ii) an undertaking to repay such advances if it is ultimately
determined that such Indemnified Party is not entitled to indemnification).
(b) Parent shall cause to be maintained, for a period of not less
than six years from the Effective Time, the Company's current directors' and
officers' liability insurance policy to the extent that it provides coverage for
events occurring prior to the Effective Time (the "D&O Insurance") for all
present and former directors and officers of the Company or any Company
Subsidiary, so long as the annual premium therefor would not be in excess of
200% of the last annual premium paid for the D&O Insurance prior to the date of
this Agreement (200% of such premium, the "Maximum Premium"); provided that
Parent may, in lieu of maintaining such existing D&O Insurance as provided
above, cause no less favorable coverage to be provided under any policy
maintained for the benefit of the directors and officers of Parent or a separate
policy provided by the same insurer. If the existing D&O Insurance expires, is
terminated or canceled by the insurer or if the annual premium would exceed the
Maximum Premium during such period, Parent shall obtain, in lieu of such D&O
Insurance, such comparable directors' and officers' liability insurance as can
be obtained for the remainder of such period for an annualized premium not in
excess of the Maximum Premium and on terms and conditions no less advantageous
to the directors and officers of the Company and its subsidiaries than the
existing D&O Insurance.
37
(c) The provisions of this Section are in addition to the rights that
an Indemnified Party may have under the Certificate of Incorporation, as
amended, Amended and Restated Bylaws or agreements of or with the Company or any
of the Company Subsidiaries or under applicable law. Parent agrees to pay all
costs and expenses (including fees and expenses of counsel) that may be incurred
by any Indemnified Party in successfully enforcing the indemnity or other
obligations under this Section. The provisions of this Section shall survive the
Merger and are intended to be for the benefit of, and shall be enforceable by,
each of the Indemnified Parties, their heirs and their representatives.
5.12 Conveyance Taxes.
The Company and Parent shall cooperate in the preparation, execution
and filing of all returns, questionnaires, applications or other documents
regarding any real property transfer or gains, sales, use, transfer, value
added, stock transfer and stamp Taxes, any transfer, recording and other fees or
any similar Taxes ("Conveyance Taxes") which become payable in connection with
the transactions contemplated by this Agreement that are required or permitted
to be filed on or before the Effective Time. The Company shall pay all such
Conveyance Taxes that become payable in connection with the transactions
contemplated by this Agreement.
5.13 Benefit Arrangements.
For a period of one year following the Effective Time, Parent will
provide or cause to be provided benefits to the Company employees and officers
who are employed by Parent or any Parent Subsidiary (including the Company or
any Company Subsidiary) immediately after the Effective Time ("Company
Employees"), not substantially less favorable on an overall basis to the
benefits currently provided to the Company Employees, and thereafter will
provide Company Employees with benefits comparable to those provided to
similarly-situated employees of Parent. From and after the Effective Time,
Parent shall grant all Company Employees for purposes of all such benefit
rights, credit for all service with the Company prior to the Effective Time (to
the same extent that such service would be taken into account if it had been
service with the Parent) except to the extent that this would result in
duplication of accrual. Parent and the Company agree that where applicable with
respect to any medical or dental benefit plan of Parent, (i) Parent shall waive,
with respect to any Company Employee, any pre-existing condition exclusion and
actively-at-work requirements (to the extent such exclusion or requirement would
not have applied under the applicable Company Employee Plan) and (ii) that any
covered expenses incurred on or before the Effective Time by a Company Employee
or a Company Employee's covered dependents shall be taken into account for
purposes of satisfying applicable deductible, coinsurance and maximum out-of-
pocket provisions after the Effective Time to the same extent as such expenses
will be taken into account if incurred by similarly situated employees of
Parent.
5.14 Takeover Statutes, Etc.
38
(a) If any "fair price," "moratorium," "control share acquisition" or
other similar anti-takeover statute or regulation is or may become applicable to
the transactions contemplated hereby, the Company and its Board of Directors
shall grant such approvals and take all such actions as are legally permissible
so that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of any such statute or regulation on the transactions
contemplated hereby.
(b) The Company shall not waive, amend or otherwise make inapplicable
to any third party (i) the terms of any confidentiality agreement the Company
may have with any such third party, (ii) the Company Rights Agreement, or (iii)
Section 203 of the DGCL or any other anti-takeover statute or regulation which
is or may become applicable to any transaction with the Company contemplated by
such third party.
5.15 Tax-Free Merger.
(a) Each of the parties will use its best efforts to cause the Merger
to qualify as a "reorganization" under Section 368(a) of the Code. None of
Parent, Merger Sub, the Company or any of their respective Subsidiaries over
which they exercise control, shall take any action, or fail to take any action,
that would reasonably be expected to cause (i) the Merger not to qualify as a
"reorganization" under Section 368(a) of the Code with respect to which gain
recognition is not required under Section 367(a) of the Code or (ii) gain or
loss to be recognized by any stockholder of the Company on the conversion of
Company Common Stock into Parent ADSs and CVRs pursuant to the Merger, except
with respect to the CVRs and cash received in lieu of a fractional share.
(b) To avoid the application of Section 367(a)(1) of the Code, Parent
covenants that, after the Closing, Parent will ensure that the Company complies
with the reporting requirements in Treasury Regulation Section 1.367(a)-3(c)(6).
(c) Parent shall provide to the Company stockholders who receive
Parent ADSs in the Merger any information concerning Parent necessary to comply
with the requirements of Section 6038B of the Code and Treasury Regulation
Section 1.6038B-1 (or any successor Regulation).
(d) At or prior to the filing of the Form F-4 Registration Statement,
the Company and Parent shall execute and deliver to Xxxxx Xxxxxxxxxx LLP,
special tax counsel to the Company, and Xxxxxx Xxxxxx & Xxxxxxx, special tax
counsel to Parent, tax representation letters in form and substance satisfactory
to such counsel. Parent, Merger Sub and the Company shall each confirm to Xxxxx
Xxxxxxxxxx LLP and Xxxxxx Xxxxxx & Xxxxxxx the accuracy and completeness as of
the Effective Time of the tax representation letters delivered pursuant to the
immediately preceding sentence. Following delivery of the tax representation
letters contemplated pursuant to the first sentence of this Section 5.15(d),
each of Parent and the Company shall use its best efforts to cause Xxxxx
Xxxxxxxxxx LLP to deliver to the Company, and Xxxxxx Xxxxxx & Xxxxxxx to deliver
to Parent, a tax opinion (i) to the effect that the Merger will qualify as a
reorganization as
39
described in Section 368(a) of the Code and that no gain or loss will be
recognized by a stockholder of the Company on the conversion of Company Common
Stock into Parent ADSs and CVRs pursuant to the Merger, except with respect to
the CVRs and any cash received in lieu of a fractional share; provided, however,
that (a) the Company complies with the reporting requirements contained in
Treasury Regulation Section 1.367(a)-3(c)(6), and (b) the Company stockholder
owns (including beneficial, indirect and constructive ownership) less than five
percent of the total voting power and total value of Parent's outstanding stock
immediately after the Merger, and (ii) with respect to such other federal income
tax matters as the SEC requires in connection with the F-4 Registration
Statement and the Proxy Statement/Prospectus, such opinions to be substantially
identical in substance. In rendering such opinions, each of such counsel shall
be entitled to rely on the tax representation letters referred to in this
Section 5.15(d).
5.16 CVR Agreement.
Parent shall, at or prior to the Effective Time, duly execute and
deliver the CVR Agreement and shall cause the Rights Agent to duly execute and
deliver the CVR Agreement and the CVR Agreement shall be a valid and binding
agreement of Parent, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
ARTICLE 6
Conditions
6.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) This Agreement and the Merger shall have been approved by the
holders of the issued and outstanding shares of capital stock of the Company in
accordance with the DGCL and Company's Certificate of Incorporation.
(b) The waiting period applicable to, or approvals of, the Merger
under the HSR Act, the Irish Mergers Act and all other material Regulatory Laws,
shall have expired or been terminated.
(c) No judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any court or
governmental regulatory or administrative agency or commission of competent
jurisdiction which restrains, enjoins or otherwise prohibits the Merger shall be
in effect. In the event any such order, decree, ruling or other action shall
have been issued, each party agrees to use commercially reasonable best efforts
to have any such order, decree, ruling or other action reversed and any such
restraint or injunction lifted.
40
(d) The Form F-4 shall have become effective and shall be effective
at the Effective Time, and no stop order suspending effectiveness of the Form F-
4 shall have been issued, no action, suit, proceeding, or investigation by the
SEC to suspend the effectiveness thereof shall have been initiated and be
continuing.
(e) The Parent ADSs to be issued to the Company stockholders in
connection with the Merger shall have been approved for listing on the NYSE,
subject only to official notice of issuance. The Parent Ordinary Shares to be
represented by Parent ADSs issuable in the Merger shall have been approved for
listing on the Irish Stock Exchange and the London Stock Exchange, subject to
official notice of issuance.
(f) All required third party consents, the absence of which would
have a Material Adverse Effect on Parent or the Company, as the case may be,
shall have been obtained.
6.2 Conditions to Obligation of the Company to Effect the Merger.
The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) (i) Parent and Merger Sub shall have performed in all material
respects all obligations contained in this Agreement required to be performed by
them on or prior to the Closing Date, (ii) the representations and warranties of
Parent and Merger Sub contained in this Agreement shall be true and correct
(without regard to any materiality qualifiers therein) as of the Closing Date
(except for changes contemplated by this Agreement and except that those
representations and warranties which address matters only as of a particular
date shall have been true and correct as of such date), except where the failure
to be true and correct would not, in the aggregate, have a Parent Material
Adverse Effect, and (iii) the Company shall have received certificates of the
President or a Vice President of Parent and Merger Sub dated the Closing Date,
certifying to such effect with respect to Parent and Merger Sub, respectively.
(b) The Company shall have received an opinion of Xxxxx Xxxxxxxxxx
LLP, special tax counsel to the Company, dated as of the Closing Date, to the
effect that the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code and that no gain or loss will be recognized by a
stockholder of the Company on the conversion of Company Common Stock into Parent
ADSs and CVRs pursuant to the Merger, except with respect to the CVRs and cash
received in lieu of a fractional share, provided that (i) the Company complies
with the reporting requirements contained in Treasury Regulation Section
1.367(a)-3(c)(6) and (ii) the Company stockholder owns (including beneficial,
indirect and constructive ownership) less than five percent of the total voting
power and total value of Parent's outstanding stock immediately after the
Merger. The issuance of such opinion shall be conditioned upon the receipt by
such special tax counsel of customary representation letters from each of
Parent, Merger Sub, and the Company, in each case in form and substance
satisfactory to such special tax
41
counsel. Each such representation letter shall be dated on the date of such
opinion and shall not have been withdrawn or modified in any respect.
(c) Since September 30, 1999, other than as set forth in the Parent
Reports or Section 4.9 of the Parent Disclosure Schedule, through the Effective
Time, there shall not have occurred a Parent Material Adverse Effect (or, if a
Parent Material Adverse Effect shall have occurred, it shall have been cured).
6.3 Conditions to Obligation of Parent and Merger Sub to Effect the
Merger.
The obligations of Parent and Merger Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) (i) The Company shall have performed in all material respects all
obligations contained in this Agreement required to be performed on or prior to
the Closing Date, (ii) the representations and warranties of the Company
contained in this Agreement shall be true and correct (without regard to any
materiality qualifiers therein) as of the Closing Date (except for changes
contemplated by this Agreement and except that those representations and
warranties which address matters only as of a particular date shall have been
true and correct as of such date), except where the failure to be true and
correct would not, in the aggregate, have a Company Material Adverse Effect, and
(iii) Parent shall have received a certificate of the President or a Vice
President of the Company, dated the Closing Date, certifying to such effect with
respect to the Company.
(b) Parent shall have received an opinion of Xxxxxx Xxxxxx & Xxxxxxx,
special tax counsel to Parent, dated as of the Closing Date, to the effect that
the Merger will qualify as a reorganization within the meaning of Section 368(a)
of the Code and that no gain or loss will be recognized by a stockholder of the
Company on the conversion of Company Common Stock into Parent ADSs and CVRs
pursuant to the Merger, except with respect to the CVRs and any cash received in
lieu of a fractional share, provided that (i) the Company complies with the
reporting requirements contained in Treasury Regulation Section 1.367(a)-3(c)(6)
and (ii) the Company stockholder owns (including beneficial, indirect and
constructive ownership) less than five percent of the total voting power and
total value of Parent's outstanding stock immediately after the Merger. The
issuance of such opinion shall be conditioned upon the receipt by such special
tax counsel of customary representation letters from each of Parent, Merger Sub,
and the Company, in each case in form and substance satisfactory to such special
tax counsel. Each such representation letter shall be dated on the date of such
opinion and shall not have been withdrawn or modified in any respect.
(c) Since September 30, 1999, other than as set forth in the Company
Reports or Section 3.9 of the Company Disclosure Schedule, through the Effective
Time, there shall not have occurred a Company Material Adverse Effect (or, if a
Company Material Adverse Effect shall have occurred, it shall have been cured).
42
(d) The Company shall have obtained from the New Jersey Department of
Environmental Protection either (i) a declaration of non-applicability of the
New Jersey Industrial Site Recovery Act ("ISRA") to the Merger or any other
----
transactions contemplated thereby, or (ii) approval of a negative declaration or
other action required to comply with ISRA, in each case which is reasonably
acceptable to Parent. The Company shall also have provided any environmental
disclosure document required by the Indiana Responsible Property Transfer Law,
Ind. Code Section 13-25-3-1 et seq., in a form reasonably acceptable to Parent.
-- ---
(e) Less than 10% of the outstanding shares of Company Common Stock
shall be Dissenting Shares.
ARTICLE 7
Termination
7.1 Termination by Mutual Consent.
This Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, before or after the approval of this
Agreement by the stockholders of the Company, by the mutual written consent of
Parent, Merger Sub and the Company.
7.2 Termination by Either Parent or the Company.
This Agreement may be terminated and the Merger may be abandoned by
action of the Board of Directors of either Parent or the Company if
(a) the Merger shall not have been consummated by September 30, 2000,
provided, that the terminating party shall not have breached in any material
respect its obligations under this Agreement in any manner that shall have
proximately contributed to the failure to consummate the Merger by such date.
(b) the approval of the Company's stockholders required by Section
6.1(a) shall not have been obtained at a meeting called and duly held for the
purpose of obtaining such approval, including any postponement or adjournment
thereof, or
(c) a United States federal, state, local or foreign court of
competent jurisdiction or United States federal or state, local or foreign
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become
final and nonappealable; provided, that the party seeking to terminate this
Agreement pursuant to clause (d) shall have used all reasonable best efforts to
remove such injunction, order or decree, in accordance with Section 5.4.
7.3 Termination by the Company.
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This Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, by action of the Company Board,
(a) in accordance with Section 5.1(b), provided, however, in order
for the termination of this Agreement pursuant to this clause of this Section
7.3 to be deemed effective, the Company shall have complied with all provisions
contained in Sections 5.1(a), (b) and (c), including the notice provisions
therein, and with applicable requirements of Section 7.5 including the payment
of the Company Termination Fee (as defined hereafter),
(b) if there has been a breach by Parent or Merger Sub of any
representation or warranty contained in this Agreement that would cause the
condition set forth in Section 6.2(a)(ii) to not be satisfied, which breach is
not curable or, if curable, is not cured within 30 days after written notice of
such breach is given by the Company to Parent,
(c) if there has been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of Parent which breach would
cause the condition set forth in Section 6.2(a)(i) to not be satisfied, which
breach is not curable or, if curable, is not cured within 30 days after written
notice of such breach is given by the Company to Parent, or
(d) in accordance with Section 2.2(a)(z) unless Parent shall have
agreed to increase the Exchange Ratio to the Topped-Up Exchange Ratio as
contemplated by such Section.
7.4 Termination by Parent.
This Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, by action of the Board of Directors of
Parent, if
(a) the Board of Directors of the Company or any committee of the
Board of Directors of the Company, whether or not permitted pursuant to the
terms hereof, (w) shall withdraw or modify in any manner adverse to Parent its
approval or recommendation of this Agreement or the Merger, (x) shall recommend
or shall approve an Acquisition Transaction, or shall state that it is not
recommending against or that it is unable to make a recommendation regarding an
Acquisition Transaction, (y) shall furnish or disclose non-public information to
or negotiate, discuss or explore with a third party with respect to any
Acquisition Transaction or (z) shall resolve to take any of the actions
specified in clauses (w), (x) or (y) above, or
(b) there has been a breach by the Company of any representation or
warranty contained in this Agreement that would cause the condition set forth in
Section 6.3(a)(ii) to not be satisfied, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such breach is
given by Parent to the Company, or
44
(c) there has been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of the Company, which breach
would cause the condition set forth in Section 6.3(a)(i) to not be satisfied,
which breach is not curable or, if curable, is not cured within 30 days after
written notice of such breach is given by Parent to the Company.
7.5 Effect of Termination and Abandonment.
(a) In the event that
(w) any Person shall have made a Takeover Proposal to the
Company or to its stockholders after the date hereof and thereafter this
Agreement is terminated (1) by either party pursuant to Section 7.2(b) or
Section 7.2(a) and (2) within 12 months after the termination of this Agreement
any Acquisition Transaction involving the Company shall have been consummated or
any Acquisition Agreement with respect to an Acquisition Transaction involving
the Company shall have been entered into,
(x) any Person shall have made a Takeover Proposal to the
Company or its stockholders after the date hereof and thereafter this Agreement
is terminated by Parent pursuant to Section 7.4(a), or
(y) this Agreement is terminated by the Company pursuant to
Section 7.3(a)
then, in any such case, the Company shall in no event later than
(i) the date an Acquisition Agreement is entered into with respect to an
Acquisition Transaction involving the Company, or if no such agreement is
entered into, upon the date of consummation of such Acquisition Transaction
involving the Company, in the case of a termination described in clauses (w),
(ii) two days after such termination, in the case of a termination described in
clause (x), or (iii) concurrently with such termination, in the case of a
termination described in clause (y), pay Parent a fee of $22 million (the
"Company Termination Fee"), which amount shall be payable by wire transfer of
-----------------------
same day funds to a bank account designated by Parent. The Company Termination
Fee shall be reduced by any amount paid or payable under Section 7.5(b).
(b) In the event that this Agreement is terminated by either party
pursuant to Section 7.2(b) or by Parent pursuant to Section 7.4(b) or Section
7.4(c) and no fee is payable under Section 7.5(a), after such termination, the
Company shall reimburse Parent, promptly after being requested to do so by
Parent, for all reasonable out-of-pocket documented costs and expenses incurred
by Parent in connection with this Agreement and the transactions contemplated
hereby, including, without limitation, reasonable fees and expenses of
accountants, attorneys and financial advisors and reasonable fees and expenses,
up to an aggregate of $3 million.
(c) The Company acknowledges that the agreements contained in this
Section 7.5 are an integral part of the transactions contemplated in this
Agreement and that, without these agreements, the Parent would not enter into
this Agreement;
45
accordingly, if the Company fails to promptly pay the amount due from it
pursuant to this Section 7.5 and in order to obtain such payment the Parent
commences a suit which results in a judgment for the fees and expenses set forth
in this Section 7.5, the Company shall pay to the Parent its costs and expenses
(including reasonable attorneys' fees) in connection with such suit.
(d) In the event of termination of this Agreement and the abandonment
of the Merger pursuant to this Article 7, all obligations of the parties hereto
shall terminate, except the obligations of the parties set forth in this Section
7.5 and Section 5.10 and except for the Confidentiality Agreement, provided that
nothing in this Section 7.5(d) shall relieve any party from liability for
willful breach, including, without limitation, attorneys' fees and the right to
pursue any remedy at law or in equity.
7.6 Extension; Waiver.
At any time prior to the Effective Time, any party hereto, by action
taken by its Board of Directors, may, to the extent legally allowed, (a) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
ARTICLE 8
General Provisions
8.1 Nonsurvival of Representations and Warranties; Survival of Tax
Covenants.
All representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall not survive the Effective
Time. All covenants shall survive in accordance with their terms.
Notwithstanding any other provisions of this Agreement, the covenants contained
in Section 5.15 shall survive indefinitely.
8.2 Notices.
Any notice required to be given hereunder shall be sufficient if in
writing, and sent by facsimile transmission, by courier or other national
overnight express mail service (with proof of service), hand delivery or
certified or registered mail (return receipt requested and first-class postage
prepaid), addressed as follows.
if to Parent or Merger Sub
Elan Corporation, plc
00
Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxxx 0, Xxxxxxx
Telecopy: 011-353-1-662-4963
Attention: Xxxxxx X. Xxxxx
with copies to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
If to the Company:
The Lipsome Company, Inc.
Xxx Xxxxxxxx Xxx
Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
copy to: General Counsel
with copies to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxxx
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date of
receipt.
8.3 Assignment; Binding Effect.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties,
except that Merger Sub may assign its rights hereunder to any Subsidiary of
Parent, but no such assignment shall relieve Merger Sub of any of its
obligations hereunder. Subject to the preceding sentence, this Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Notwithstanding anything contained in this
Agreement to the contrary, except for the provisions of Article 2
47
(Conversion and Exchange of Securities) and Section 5.11 (Directors' and
Officers' Indemnification and Insurance), nothing in this Agreement, expressed
or implied, is intended to confer on any person other than the parties hereto or
their respective heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. Parent shall cause Merger Sub to comply with its obligations
hereunder.
8.4 Entire Agreement.
This Agreement, the Exhibits hereto, the Company Disclosure Schedule,
the Parent Disclosure Schedule, the Confidentiality Agreement and any documents
delivered by the parties in connection herewith or therewith constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto. No addition to or modification of any provision of this Agreement
shall be binding upon any party hereto unless made in writing and signed by all
parties hereto.
8.5 Amendment.
This Agreement may be amended by the parties hereto, by action taken
by their respective Boards of Directors, at any time before or after approval of
matters presented in connection with the Merger by the stockholders of the
Company; provided, however, after such stockholder approval, no amendment shall
be made which by law requires the further approval of stockholders without
obtaining such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.6 Governing Law; Submission to Jurisdiction.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to its rules of conflict of
laws.
The parties hereto agree that any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of, this
Agreement may be brought in the United States District Court for the Southern
District of New York or any other New York State court sitting in New York
County, and each of the parties hereby consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such suit, action or
proceeding and irrevocably waives any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding which is brought in any
such court has been brought in an inconvenient forum. Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court. Without limiting the
foregoing, each party agrees that service of process on such party in the manner
provided for notices in Section 8.2 shall be deemed effective service of process
on such party.
48
8.7 Counterparts.
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
Each counterpart may consist of a number of copies hereof each signed by less
than all, but together signed by all, of the parties hereto.
8.8 Headings.
Headings of the Articles and Sections of this Agreement are for the
convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
8.9 Interpretation.
In this Agreement, unless the context otherwise requires, words
describing the singular number shall include the plural and vice versa, and
words denoting each gender shall include the other gender and words denoting
natural persons shall include corporations and partnerships and vice versa.
8.10 Waivers.
Except as provided in this Agreement, no action taken pursuant to this
Agreement, including, without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
8.11 Incorporation of Exhibits.
The Company Disclosure Schedule, the Parent Disclosure Schedule and
all Exhibits attached hereto and referred to herein are hereby incorporated
herein and made a part hereof for all purposes as if fully set forth herein.
8.12 Severability.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
8.13 Enforcement of Agreement.
49
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with its specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.
8.14 Definitions.
(a) As used in this Agreement, the word "Subsidiary" when used with
respect to any party means any corporation or other organization, whether
incorporated or unincorporated, of which such party directly or indirectly owns
or controls at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the board of directors
or others performing similar functions with respect to such corporation or other
organization, or any organization of which such party is a general partner.
(b) As used in this Agreement, "Company Material Adverse Effect"
means a change in or effect on the Company or its Subsidiaries that is, or would
reasonably be expected in the future to be, materially adverse to the business,
results of operation or financial condition of the Company and the Company
Subsidiaries taken as a whole; provided, however, that there shall not be taken
into account (i) any adverse change or effect that is caused by or that arises
out of conditions affecting the economy or securities markets generally or (ii)
any adverse change or effect that is caused by or that arises out of conditions
generally affecting the biotech or specialty pharmaceuticals industry.
(c) As used in this Agreement, "Parent Material Adverse Effect" means
a change in or effect on Parent or its Subsidiaries that is, or would reasonably
be expected in the future to be, materially adverse to the business, results of
operation or financial condition of Parent and the Parent Subsidiaries, taken as
a whole; provided, however, that that there shall not be taken into account (i)
any adverse change or effect that is caused by or that arises out of conditions
affecting the economy or securities markets generally or (ii) any adverse change
or effect that is caused by or that arises out of conditions generally affecting
the pharmaceutical industry.
(d) As used in this Agreement the "Company's knowledge," or words of
similar import means the actual knowledge, without independent investigation, of
any of the directors or executive officers of the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year first
written above.
ELAN CORPORATION, PLC
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President and Chief
Financial Officer
LITHIUM ACQUISITION CORP.
By: /s/ Xxx Xxxxx
-------------------------------------------
Name: Xxx Xxxxx
Title: President
THE LIPOSOME COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board, Chief Executive
Officer and President
51
