Exhibit 2.1
AGREEMENT AND PLAN
OF MERGER
DATED AS OF
JUNE 30, 2010
AMONG
CELGENE CORPORATION,
ARTISTRY ACQUISITION CORP.
AND
ABRAXIS BIOSCIENCE, INC.
TABLE OF CONTENTS
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Page
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ARTICLE I THE MERGER
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1
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Section 1.1 The Merger
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1
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Section 1.2 Effective Time of the Merger
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1
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Section 1.3 Certificate of Incorporation
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1
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Section 1.4 By-laws
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2
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Section 1.5 Board of Directors and Officers
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2
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Section 1.6 Effects of Merger
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2
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ARTICLE II CONVERSION OF SHARES
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2
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Section 2.1 Conversion of Shares
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2
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Section 2.2 Payment and Exchange of Certificates
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3
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Section 2.3 Dissenting Company Shares
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5
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Section 2.4 No Further Ownership Rights in the Shares
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5
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Section 2.5 Closing of Company Transfer Books
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6
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Section 2.6 Adjustments
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6
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Section 2.7 Stock Options, RSUs, SARs
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6
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Section 2.8 Withholding of Tax
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7
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Section 2.9 Closing
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8
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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8
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Section 3.1 Organization, Standing and Power
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8
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Section 3.2 Capital Structure
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9
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Section 3.3 Authority; Non-Contravention
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10
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Section 3.4 SEC Documents
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12
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Section 3.5 Proxy Statement/Prospectus and Registration Statement
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13
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Section 3.6 Absence of Certain Events
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13
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Section 3.7 Litigation
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14
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Section 3.8 No Violation of Law
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14
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Section 3.9 Taxes
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14
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Section 3.10 Employee Benefit Plans; ERISA
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16
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Section 3.11 Employment Matters
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18
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Section 3.12 Environmental Matters
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19
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Section 3.13 Affiliate Transactions
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20
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Section 3.14 Intellectual Property
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20
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Section 3.15 Takeover Statutes
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22
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Section 3.16 Title to Properties; Assets/Services
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22
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Section 3.17 Material Contracts
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23
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Section 3.18 Opinion of Financial Advisors
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24
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Section 3.19 Pharmaceutical Matters
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24
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Section 3.20 Brokers and Finders
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26
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Section 3.21 Insurance
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26
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Section 3.22 Anti-Corruption and Anti-Bribery
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27
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Section 3.23 No Other Representations or Warranties
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27
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-i-
TABLE OF CONTENTS
(continued)
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Page
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
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28
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Section 4.1 Organization, Standing and Power
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28
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Section 4.2 Capital Structure
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28
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Section 4.3 Operations of Sub
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28
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Section 4.4 Authority; Non-Contravention
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29
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Section 4.5 SEC Documents
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30
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Section 4.6 Absence of Certain Events
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31
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Section 4.7 Proxy Statement/Prospectus and Registration Statement
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32
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Section 4.8 Availability of Funds; Parent Common Stock
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32
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Section 4.9 Litigation
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32
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Section 4.10 No Violation of Law
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32
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Section 4.11 Brokers and Finders
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33
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Section 4.12 Ownership of Shares
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33
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Section 4.13 Solvency
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33
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Section 4.14 No Other Representations or Warranties
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33
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ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS
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34
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Section 5.1 Conduct of Business by the Company Pending the Merger
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34
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Section 5.2 Control of the Companys Operations
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36
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ARTICLE VI ADDITIONAL AGREEMENTS
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36
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Section 6.1 Company Stockholder Approval; Proxy Statement
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36
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Section 6.2 Directors and Officers Indemnification
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37
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Section 6.3 No Solicitation
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39
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Section 6.4 Access to Information; Confidentiality
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41
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Section 6.5 Reasonable Best Efforts; Notification
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41
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Section 6.6 Benefit Plans
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43
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Section 6.7 Fees and Expenses
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44
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Section 6.8 Public Announcements
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45
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Section 6.9 Sub
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45
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Section 6.10 CVR Agreement
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46
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Section 6.11 Transfer Taxes
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46
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Section 6.12 Listing
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46
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Section 6.13 Certain Notices
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46
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Section 6.14 Section 16 Matters
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46
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Section 6.15 State Takeover Laws
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47
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Section 6.16 FIRPTA Statement
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47
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Section 6.17 Further Actions
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47
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ARTICLE VII CONDITIONS PRECEDENT
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47
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Section 7.1 Conditions to Each Partys Obligation to Effect the Merger
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47
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Section 7.2 Additional Conditions to Obligations of Parent and Sub
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47
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Section 7.3 Additional Conditions to Obligations of the Company
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48
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Section 7.4 Frustration of Closing Conditions
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48
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Section 7.5 Invoking Certain Provisions
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49
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-ii-
TABLE OF CONTENTS
(continued)
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Page
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ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
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49
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Section 8.1 Termination
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49
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Section 8.2 Effect of Termination
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50
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Section 8.3 Amendment
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50
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Section 8.4 Extension; Waiver
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50
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Section 8.5 Procedure for Termination, Amendment, Extension or Waiver
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50
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ARTICLE IX MISCELLANEOUS
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51
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Section 9.1 Non-Survival of Representations, Warranties and Agreements
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51
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Section 9.2 Notices
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51
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Section 9.3 Specific Performance
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53
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Section 9.4 Assignment; Binding Effect
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53
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Section 9.5 Entire Agreement
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53
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Section 9.6 Governing Law
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53
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Section 9.7 Counterparts
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54
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Section 9.8 Headings and Table of Contents; Interpretation
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54
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Section 9.9 No Third Party Beneficiaries
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54
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Section 9.10 Incorporation of Exhibits
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54
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Section 9.11 Severability
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54
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Section 9.12 Subsidiaries
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54
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Section 9.13 Person
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54
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Section 9.14 Applicable Jurisdictions
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55
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Section 9.15 Knowledge of the Company; Knowledge of Parent
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55
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Section 9.16 Mutual Drafting
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55
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Section 9.17 Tax Reporting
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55
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-iii-
TABLE OF DEFINED TERMS
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Page
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2007 Separation and Distribution Agreement
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Section 3.9(f)
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2007 Spin-Off
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Section 3.9(f)
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2007 Tax Allocation Agreement
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Section 3.9(f)
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Acquisition Proposal
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Section 6.3(a)
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Affiliate
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Section 3.13
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Agreement
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Preamble
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Anti-Corruption and Anti-Bribery Laws
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Section 3.22(a)
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Antitrust Approval
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Section 7.1(c)
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Antitrust Division
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Section 6.5(b)
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Applicable Exercise Price
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Section 2.7(a)(i)
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Applicable Jurisdiction
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Section 9.14
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Applicable SAR Base Amount
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Section 2.7(b)(i)
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Board of Directors
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Section 2.7(e)
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Book Entry Shares
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Section 2.1(a)(ii)
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Business Day
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Section 2.2(a)
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Cash Consideration
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Section 2.1(a)(ii)
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Certificate of Incorporation
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Section 1.3
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Certificate of Merger
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Section 1.2
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Certificates
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Section 2.1(a)(ii)
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Closing
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Section 2.9
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Closing Date
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Section 2.9
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Code
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Section 2.8
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Company
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Preamble
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Company Common Stock
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Section 2.1(a)(i)
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Company Contract
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Section 3.3(b)
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Company Financial Advisors
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Section 3.18
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Company Financial Statements
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Section 3.4(a)
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Company Intellectual Property
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Section 3.14(b)
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Company Material Adverse Effect
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Section 3.1
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Company Patents
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Section 3.14(e)
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Company Permits
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Section 3.8
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Company SEC Documents
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Section 3.4(a)
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Company Stock Plan
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Section 2.7(a)(i)
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Company Stockholder Meeting
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Section 6.1(a)
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Confidentiality Agreement
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Section 6.4
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Consent
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Section 3.3(c)
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Contract
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Section 3.3(b)
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control
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Section 3.13
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Copyrights
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Section 3.14
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CVR
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Section 2.1(a)(ii)
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CVR Agreement
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Recitals
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CVR Certificate
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Section 2.1(a)(ii)
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DGCL
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Section 1.1
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Disclosure Schedule
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Article III
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Dissenting Company Shares
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Section 2.3
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Effective Time
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Section 1.2
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Effects
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Section 3.1
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-iv-
TABLE OF DEFINED TERMS
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Page
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Employee
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Section 6.6(a)
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Employee Benefit Plans
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Section 3.10(a)
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Employment Practices
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Section 3.11(b)
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Environmental Laws
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Section 3.12(c)
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Environmental Liabilities
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Section 3.12(c)
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ERISA
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Section 3.10(a)
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ERISA Affiliate
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Section 3.10(a)
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Exchange Act
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Article III
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Exchange Fund
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Section 2.2(b)
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Exchange Ratio
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Section 2.1(a)(ii)
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Excluded Company Shares
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Section 2.1(a)(i)
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Exercise Period
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Section 2.7(a)(i)
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FDA
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Section 3.19(a)
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FDCA
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Section 3.19(a)
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Foreign Plan
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Section 3.10(h)
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FTC
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Section 6.5(b)
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Governmental Entity
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Section 3.3(c)
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Hazardous Materials
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Section 3.12(c)
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HSR Act
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Section 3.3(c)
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Indemnified Parties
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Section 6.2(b)
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Indemnified Party
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Section 6.2(b)
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Insurance Policies
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Section 3.21
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Intellectual Property
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Section 3.14
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IRS
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Section 3.10(b)
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Knowledge of Parent
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Section 9.15
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Knowledge of the Company
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Section 9.15
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Law
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Section 3.3(b)
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Leased Real Property
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Section 3.16(a)
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Liens
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Section 3.2(d)
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Material Contract
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Section 3.17(a)
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Material Employment Agreement
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Section 3.10(a)
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Merger
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Recitals
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Merger Consideration
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Section 2.1(a)(ii)
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Nab
®
Technology
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Section 3.14
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NASDAQ
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Section 3.1
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Non-Competition and Confidentiality Agreement
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Recitals
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Option
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Section 2.7(a)(i)
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Options
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Section 2.7(a)(i)
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Parent
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Preamble
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Parent Common Stock
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Section 2.1(a)(ii)
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Parent Financial Statements
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Section 4.5(a)
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Parent Material Adverse Effect
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Section 4.6
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Parent Permits
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Section 4.10
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Parent Plans
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Section 6.6(b)
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Parent Review Period
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Section 6.3(c)
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Parent SEC Documents
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Section 4.5(a)
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Parent Share Cash Value
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Section 2.2(e)
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-v-
TABLE OF DEFINED TERMS
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Page
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Patents
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Section 3.14
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Paying Agent
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Section 2.2(a)
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Per Share Amount
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Section 2.7(a)(i)
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Person
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Section 9.13
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Pharmaceutical Products
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Section 3.14
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Pipeline Products
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Section 3.14
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Proceeding
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Section 3.7
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Product
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Section 3.14
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Programs
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Section 3.19(c)
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Proxy Statement/Prospectus
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Section 2.2(a)
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Real Property
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Section 3.16(a)
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Registration
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Section 3.3(c)
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Registration Statement
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Section 2.2(a)
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Regulatory Authorities
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Section 3.19(a)
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Regulatory Registrations
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Section 3.19(f)
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Related Agreements
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Recitals
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Representatives
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Section 6.3(a)
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RSU
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Section 2.7(c))
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RSUs
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Section 2.7(c)
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SAR
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Section 2.7(b)(i)
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Sarbanes Oxley Act
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Section 3.4(c)
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SARs
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Section 2.7(b)(i)
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Screening Test
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Section 3.19(a)
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SEC
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Section 3.4(a)
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Section 16
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Section 6.14
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Securityholders
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Section 2.2(b)
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Solvent
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Section 4.13
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Stock Consideration
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Section 2.1(a)(ii)
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Stockholder Approval
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Section 7.1(a)
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Sub
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Preamble
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Subsidiary
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Section 9.12
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Superior Proposal
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Section 6.3(b)
|
Surviving Corporation
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Section 1.1
|
Tax
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Section 3.9(f)
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Tax Return
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Section 3.9(f)
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Termination Date
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Section 8.1(b)(i)
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Trade Secrets
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Section 3.14
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Trademarks
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Section 3.14
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Transfer Taxes
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Section 6.11
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Transition Period
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Section 6.6(a)
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Trust Indenture Act
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Section 4.4(c)
|
Trustee
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Recitals
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U.S. GAAP
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Section 3.1
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Voting Agreement
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Recitals
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WARN Act
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Section 3.11(e)(i)
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willful and material breach
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Section 8.2
|
Worker
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Section 3.11(c)
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Workers
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Section 3.11(c)
|
-vi-
THIS AGREEMENT AND PLAN OF MERGER (this
Agreement
), dated as of June 30, 2010, is
entered into by and among Celgene Corporation, a Delaware corporation (
Parent
); Artistry
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Parent (
Sub
);
and Abraxis BioScience Inc., a Delaware corporation (the
Company
).
W I T N E S S E T H
:
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company have approved the
acquisition of the Company by Parent on the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company have approved a
merger of Sub with and into the Company (the
Merger
), upon the terms and subject to the
conditions set forth in this Agreement, and have declared the Merger advisable;
WHEREAS, the Company, Parent and Sub desire to make certain representations, warranties,
covenants and agreements in connection with this Agreement;
WHEREAS, concurrently with the execution of this Agreement, Parent, Sub and certain
stockholders of the Company are entering into a voting agreement of even date herewith (the
Voting Agreement
) pursuant to which such stockholders have agreed, subject to the terms
thereof, to vote their shares of Company Common Stock (as defined below) in favor of adoption of
this Agreement; and
WHEREAS, (i) concurrently with the execution of this Agreement, Parent, Dr. Patrick
Soon-Shiong will execute and deliver a Noncompetition and Confidentiality Agreement in
substantially the form attached hereto as
Exhibit A
(the
Noncompetition and
Confidentiality Agreement
), which will become effective at the Effective Time (as hereinafter
defined), and (ii) as of or prior to the Closing, Parent and a trustee mutually agreeable to Parent
and the Company (the
Trustee
) will enter into a Contingent Value Rights Agreement in
substantially the form attached hereto as
Exhibit B
(the
CVR Agreement
and,
together with the Noncompetition and Confidentiality Agreement and the Voting Agreement, the
Related Agreements
); and
NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1
The Merger
. Upon the terms and subject to the conditions hereof, and in
accordance with the General Corporation Law of the State of Delaware (the
DGCL
), at the
Effective Time, Sub shall be merged with and into the Company and the separate existence of Sub
shall thereupon cease, and the Company, as the corporation surviving the Merger (the
Surviving
Corporation
), shall by virtue of the Merger continue its corporate existence under the laws of
the State of Delaware.
Section 1.2
Effective Time of the Merger
. The Merger shall become effective at the
date and time (the
Effective Time
) when the certificate of merger (the
Certificate
of Merger
) shall have been duly executed and filed with the Secretary of State of the State of
Delaware in accordance with the DGCL, or
at such other time as is specified in the Certificate of Merger in accordance with the DGCL,
which Certificate of Merger shall be filed on the Closing Date as soon as practicable following the
Closing.
Section 1.3
Certificate of Incorporation
. Subject to
Section 6.2(a)
, at the
Effective Time, the amended and restated certificate of incorporation of the Company (the
Certificate of Incorporation
) shall, by virtue of the Merger, be amended and restated in
a form mutually agreed and, as so amended, shall be the certificate of incorporation of the
Surviving Corporation, until thereafter changed or amended in accordance with its terms and as
provided by Law and this Agreement.
Section 1.4
By-laws
. Subject to
Section 6.2(a)
, at the Effective Time, the
by-laws of Sub in effect immediately prior to the Effective Time shall be the by-laws of the
Surviving Corporation, except that all references to Sub therein shall be automatically amended and
replaced with references to the Surviving Corporation, until thereafter changed or amended in
accordance with their terms and as provided by Law and this Agreement.
Section 1.5
Board of Directors and Officers
. The directors of Sub and the officers of
the Company in office immediately prior to the Effective Time shall, from and after the Effective
Time, be the directors and officers, respectively, of the Surviving Corporation, in each case until
their respective successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal, in accordance with the Surviving Corporations Certificate
of Incorporation and by-laws.
Section 1.6
Effects of Merger
. The Merger shall have the effects set forth in the
DGCL.
ARTICLE II
CONVERSION OF SHARES
Section 2.1
Conversion of Shares
.
(a)
Conversion of Shares
. As of the Effective Time, by virtue of the Merger and
without any action on the part of Parent, Sub, the Company or any holders of shares of capital
stock of the Company:
(i) Each outstanding share of common stock, par value $0.001 per share, of the Company (the
Company Common Stock
) that is held in the treasury of the Company and any shares of
Company Common Stock owned by Parent, Sub or any wholly owned subsidiary of Parent or the Company
shall be canceled and no consideration shall be delivered in exchange therefor (such shares, the
Excluded Company Shares
).
(ii) Subject to
Section 2.3
, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than Excluded Company Shares) shall be converted
into the right to receive from Parent (1) an amount in cash, without interest, equal to $58.00 (the
Cash Consideration
), (2) 0. 2617 (the
Exchange Ratio
) of a share of common
stock, par value $.01 per share (the
Parent Common Stock
), of Parent (the
Stock
Consideration
), and (3) one contingent value right (a
CVR
) issued by Parent subject
to and in accordance with the CVR Agreement (the consideration contemplated by subclauses (1), (2)
and (3) together, the
Merger
Consideration
). Each CVR issued as Merger Consideration hereunder will be
substantially in the form attached as Annex A to the CVR Agreement (the
CVR Certificate
).
All such shares of Company Common Stock, when so converted, shall no longer be outstanding and
shall automatically be canceled and retired, and each holder of a certificate or certificates (the
Certificates
) representing any such shares of Company Common Stock, and each holder of
non-certificated shares of Company Common Stock represented by book-entry on the records of the
Company or the Companys transfer agent (
Book-Entry Shares
), shall cease to have any
rights with respect thereto, except the right to receive the Merger Consideration, any cash in lieu
of fractional shares payable pursuant to
Section 2.2(e)
and any dividends or other
distributions to which such holder is entitled pursuant to
Section 2.2(d)
, without
interest.
-2-
(b) Each share of common stock of Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and become at the Effective Time one validly issued, fully paid and
nonassessable share of common stock, par value $0.001 per share, of the Surviving Corporation.
Section 2.2
Payment and Exchange of Certificates
.
(a) Prior to the mailing of the proxy statement/prospectus to be included in the registration
statement on Form S-4 to be filed by Parent with the SEC (as defined in
Section 3.4(a)
) to
register the shares of Parent Common Stock and CVRs to be issued in connection with the Merger
(such proxy statement/prospectus, together with any amendments or supplements thereto, the
Proxy Statement/Prospectus
, and such registration statement, together with any
amendments, supplements and exhibits thereto, the
Registration Statement
), Parent shall
appoint a commercial bank or trust company reasonably acceptable to the Company to act as paying
agent hereunder (the
Paying Agent
) for the purpose of payment of the aggregate Merger
Consideration to be paid and delivered to Securityholders (as defined in
Section 2.2(b)
)
under this
ARTICLE II
. Parent will enter into a paying agent agreement in form and
substance reasonably acceptable to the Company at least two Business Days prior to the mailing of
the Proxy Statement/Prospectus to the stockholders of the Company. As used herein,
Business
Day
means any day of the year on which national banking institutions in New York are open to
the public for conducting business and are not required or authorized to close.
(b) At the Closing, Parent shall deposit, or cause to be deposited, with the Paying Agent (i)
cash in an amount sufficient to pay the aggregate Cash Consideration (ii) certificates representing
a number of shares of Parent Common Stock equal to the Exchange Ratio multiplied by the number of
outstanding shares of Company Common Stock held by holders (collectively, the
Securityholders
) of all shares of Company Common Stock (other than Excluded Company
Shares and Dissenting Company Shares), and (iii) CVR Certificates representing the aggregate number
of CVRs issuable pursuant to the CVR Agreement in accordance with
Section 2.1(a)(ii)
to
which the Securityholders will become entitled under this ARTICLE II at the Effective Time. Parent
further agrees to deposit, or cause to be deposited, with the Paying Agent, from time to time as
needed, immediately available funds sufficient to pay cash in lieu of fractional shares pursuant to
Section 2.2(e)
and any dividends and other distributions pursuant to
Section
2.2(d)
. The aggregate amount of such Cash Consideration and other cash amounts, certificates
representing shares of Parent Common Stock and CVRs deposited with the Paying Agent is referred to
herein as the
Exchange Fund
. The Paying Agent shall cause the Exchange Fund to
be (1) held for the benefit of the Securityholders and (2) promptly applied to making the
payments and deliveries provided for in this
ARTICLE II
. The Exchange Fund shall not be
used for any purpose that is not provided for herein. The Paying Agent shall invest any cash
included in the Exchange Fund as directed by Parent, in direct obligations of the United States of
America or obligations for which the full faith and credit of the United States of America is
pledged to provide for the payment of all principal and interest, or a combination thereof. Any
interest and other income resulting from such investments shall be kept in the Exchange Fund. To
the extent that there are losses with respect to such investments, or the Exchange Fund diminishes
for other reasons below the level required to make prompt payments of the aggregate cash
consideration to be paid to Securityholders as contemplated hereby, Parent shall promptly replace
or restore the portion of the Exchange Fund lost through investments or other events so as to
ensure that the Exchange Fund is, at all times, maintained at a level sufficient to make such
payments. Any portion of the Exchange Fund (including the proceeds of any interest and other
income received by the Paying Agent in respect of such funds) that remains undistributed to the
Securityholders one year after the Effective Time of the Merger shall be delivered to Parent at
such time. Thereafter, Securityholders shall look only to Parent (subject to the terms of this
Agreement and to abandoned property, escheat or other similar Laws) as a general creditor for
payment of the consideration payable to them under this
ARTICLE II
, without interest, upon
the surrender of any Certificates held by them. Notwithstanding any provision of this Agreement to
the contrary, none of the Paying Agent, Parent, the Surviving Corporation or any other party hereto
shall be liable to any Person for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or other similar Law.
-3-
(c) As soon as practicable (but in any event within two Business Days) after the Effective
Time, Parent shall cause the Paying Agent to mail to each holder of record of shares of Company
Common Stock represented by Certificates and to each holder of Book-Entry Shares, other than
Excluded Company Shares and Dissenting Company Shares: (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the Certificates or
Book-Entry Shares shall pass, only upon actual delivery of the Certificates or transfer of
Book-Entry Shares, as the case may be, to the Paying Agent and shall be in a form reasonably agreed
upon by Parent and the Company prior to the Closing); and (ii) instructions for use in effecting
the surrender of the Certificates or transfer of Book-Entry Shares, as the case may be, in exchange
for the Merger Consideration. Upon surrender of a Certificate (or delivery of such customary
affidavits and indemnities with respect to a lost Certificate which the Paying Agent and/or the
Companys transfer agent may reasonably require) or transfer of Book-Entry Shares for cancellation
to the Paying Agent, together with such letter of transmittal duly executed and in proper form, and
such other documents as may reasonably be required by the Paying Agent, the holder of such
Certificate or Book-Entry Shares shall be entitled to receive in exchange therefor the Merger
Consideration into which the shares of Company Common Stock theretofore represented by such
Certificate or Book-Entry Shares shall have been converted pursuant to
Section 2.1
, any
cash in lieu of fractional shares payable pursuant to
Section 2.2(e)
and any dividends or
other distributions to which such holder is entitled pursuant to
Section 2.2(d)
, and the
Certificates so surrendered or Book-Entry Shares so transferred shall forthwith be canceled. No
interest will be paid or will accrue on the Merger Consideration, cash in lieu of fractional shares
payable pursuant to
Section 2.2(e)
or dividends or other distributions to which such holder
is entitled pursuant to
Section 2.2(d)
, payable upon the surrender of any Certificate or
transfer of Book-Entry Shares. In the event of a transfer of ownership of Company Common Stock
that is not registered in the transfer records of the Company, payment may be made to a Person
other than the Person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for transfer and the Person
requesting such payment shall pay any transfer or other Taxes required by reason of such
Certificate and establish to the satisfaction of Parent that such Tax has been paid or is not
applicable. Until surrendered or transferred as contemplated by this
Section 2.2
, each
Certificate or Book-Entry Share (other than Certificates or Book-Entry Shares representing any
Dissenting Company Shares or Excluded Company Shares) shall be deemed at any time after the
Effective Time to represent only the right to
receive upon such surrender or transfer the amount of Merger Consideration, without interest,
into which the shares of Company Common Stock theretofore represented by such Certificate or
Book-Entry Shares shall have been converted pursuant to
Section 2.1
.
(d) No dividends or other distributions declared or made after the Effective Time with respect
to Parent Common Stock, with a record date after the Effective Time, shall be paid to the holder of
any unsurrendered Certificate, and no cash payment in lieu of fractional shares shall be paid to
any such holder pursuant to
Section 2.2(e)
, unless and until the holder of such Certificate
shall surrender such Certificate in accordance with
Section 2.2(c)
. Subject to the effect
of escheat, Tax or other applicable Laws, following surrender of any such Certificate, there shall
be paid to the holder of the certificates representing whole shares of Parent Common Stock issued
in exchange therefor, without interest, (i) the amount of any cash payable with respect to a
fractional share of Parent Common Stock to which such holder is entitled pursuant to
Section
2.2(e)
and the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent Common Stock 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 occurring after surrender,
payable with respect to such whole shares of Parent Common Stock.
-4-
(e) No certificates or scrip representing fractional shares of Parent Common Stock, or
book-entry credit of the same, shall be issued upon the surrender for exchange of Certificates, no
dividend or distribution with respect to Parent Common Stock shall be payable on or with respect to
any fractional share and such fractional share interests shall not entitle the owner thereof to any
rights of a stockholder of Parent. For purposes of this
Section 2.2(e)
, all fractional
shares to which a single holder of shares of Company Common Stock would be entitled shall be
aggregated and calculations shall be rounded to the fourth decimal point. In lieu of any such
fractional share of Parent Common Stock, each holder of Company Common Stock otherwise entitled to
a fraction of a share of Parent Common Stock will be entitled to receive from the Paying Agent a
cash payment in an amount, rounded up to the nearest cent, equal to the product of (i) such
fractional part of a share of Parent Common Stock multiplied by (ii) an amount equal to the average
of the closing sale prices for Parent Common Stock on NASDAQ, as reported in The Wall Street
Journal, for each of the ten consecutive trading days ending with the seventh complete trading day
prior to the Effective Time (the
Parent Share Cash Value
).
Section 2.3
Dissenting Company Shares
. Notwithstanding any provision of this
Agreement to the contrary, shares of Company Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by holders who have properly exercised
appraisal rights with respect thereto in accordance with Section 262 of the DGCL (the
Dissenting Company Shares
) will not be converted as described in
Section
2.1(a)(ii)
, and holders of such shares will be entitled to receive payment of the value of such
shares determined in accordance with the applicable provisions of the DGCL. Notwithstanding the
foregoing, if, after the Effective Time, any such holder fails to perfect or effectively withdraws
or loses its right to appraisal and payment under the DGCL, the shares of Company Common Stock held
by such holder that were Dissenting Company Shares will thereupon be treated as if they had been
converted into, at the Effective Time, the right to receive the Merger Consideration, any cash in
lieu of fractional shares payable pursuant to
Section 2.2(e)
and any dividends or other
distributions to which such holder is entitled pursuant to
Section 2.2(d)
, without any
interest thereon. Upon the Companys receipt of any notice of intent to demand payment in
accordance with the provisions of the DGCL, or any withdrawal of such notice, and any other
instruments served pursuant to Section 262 of the DGCL and received by the Company, the Company
shall as promptly as reasonably practicable provide Parent with a copy of such notice or
instrument. The Company shall give Parent the opportunity to participate in and control all
negotiations and proceedings with respect to the exercise of dissenters rights under Section 262
of the
DGCL. The Company, on the one hand, and Parent, prior to the Closing, on the other hand,
shall not, except with the prior written consent of the other party hereto or pursuant to a court
order, make any payment with respect to any such election to dissent or offer to settle or settle
any such election to dissent.
Section 2.4
No Further Ownership Rights in the Shares
. From and after the Effective
Time, the holders of shares of Company Common Stock which were outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares except as otherwise
provided in this Agreement or by applicable Law. All cash paid (including pursuant to
Section
2.2(d)
or
Section 2.2(e)
) and all shares of Parent Common Stock and CVR Certificates
issued upon the surrender of Certificates and Book-Entry Shares, in each case in accordance with
the terms hereof, shall be deemed to have been paid and issued in full satisfaction of all rights
pertaining to the shares of Company Common Stock represented by such Certificates and/or such
Book-Entry Shares, as applicable.
-5-
Section 2.5
Closing of Company Transfer Books
. At the Effective Time, the stock
transfer books of the Company shall be closed and no transfer of shares of Company Common Stock
outstanding immediately prior to the Effective Time shall thereafter be made. If, after the
Effective Time, Certificates representing shares of Company Common Stock outstanding immediately
prior to the Effective Time are presented to the Surviving Corporation or the Paying Agent for any
reason, they shall be canceled and exchanged as provided in this
ARTICLE II
.
Section 2.6
Adjustments
. If prior to the Effective Time there is an increase in the
number of shares of outstanding Company Common Stock or Company Common Stock subject to outstanding
Options or SARs (as each such term is defined in
Section 2.7
) as a result of a
distribution, reclassification, stock split (including a reverse split), stock dividend or
distribution, recapitalization, reorganization, merger, subdivision, spin-off, issuer tender or
exchange offer, or other similar transaction, the Cash Merger Consideration, the Exchange Ratio,
and any other payments to Securityholders based upon the Merger Consideration will be equitably
adjusted to eliminate the effects of such event on the Merger Consideration and such other
payments.
Section 2.7
Stock Options, RSUs, SARs
.
(a)
Options
.
(i) At least five Business Days prior to the Closing Date, each holder of an outstanding
option, whether vested or unvested (individually, an
Option
and collectively, the
Options
), that was granted under any Company stock option or equity incentive plan
(
Company Stock Plan
) and that has an exercise price per share of Company Common Stock
underlying such Option (the
Applicable Exercise Price
) that is greater than the Per Share
Amount shall be provided with written notice that such holder shall, during the period beginning on
the date of such notice and ending on the Business Day preceding the Closing Date (the
Exercise Period
), have the right to exercise such Option by providing the Company with a
notice of exercise and a cash amount equal to (A) the Applicable Exercise Price, less (B) the Per
Share Amount, with such exercise conditioned on the occurrence of the Effective Time. Each Option
that is exercised pursuant to this
Section 2.7(a)(i)
shall be settled at the Effective Time
in exchange for, in respect of each share of Company Common Stock subject to such Option, one CVR.
Any Option described in this
Section 2.7(a)(i)
that is not exercised during the Exercise
Period shall be cancelled at the Effective Time for no consideration therefor. For purposes of
this Agreement,
Per Share Amount
means the sum of (x) the amount obtained by multiplying
(1) the Exchange Ratio and (2) the
Parent Share Cash Value, with such amount rounded up to the nearest cent, and (y) the Cash
Consideration.
(ii) Each Option that remains outstanding immediately prior to the Effective Time and that has
an Applicable Exercise Price that is equal to or less than the Per Share Amount shall be cancelled
at the Effective Time in exchange for the right of the holder of such Option to receive, for each
share of Company Common Stock subject to such Option, (A) an amount in cash, without interest,
equal to the excess, if any, of the Per Share Amount over the Applicable Exercise Price, with the
aggregate amount of such payment rounded down to the nearest cent, and (B) one CVR.
(b)
SARs
.
(i) At least five Business Days prior to the Closing Date, each holder of an outstanding stock
appreciation right, whether vested or unvested (individually, a
SAR
and collectively, the
SARs
), that was granted under any Company Stock Plan and that has a base appreciation
amount (the
Applicable SAR Base Amount
) that is greater than the Per Share Amount shall
be provided with written notice that such holder shall have the right to exercise such SAR during
the Exercise Period by providing the Company with a notice of exercise and a cash amount equal to
(A) the Applicable SAR Base Amount, less (B) the Per Share Amount, with such exercise conditioned
on the occurrence of the Effective Time. Each SAR that is exercised pursuant to this
Section
2.7(b)(i)
shall be settled at the Effective Time in exchange for one CVR. Any SAR described in
this
Section 2.7(b)(i)
that is not exercised during the Exercise Period shall be cancelled
at the Effective Time for no consideration therefor.
-6-
(ii) Each SAR that remains outstanding immediately prior to the Effective Time and that has an
Applicable SAR Base Amount that is equal to or less than the Per Share Amount shall be cancelled at
the Effective Time in exchange for the right of the holder of such SAR to receive (A) an amount in
cash, without interest, equal to the excess, if any, of the Per Share Amount over the Applicable
SAR Base Amount, with the aggregate amount of such payment rounded up to the nearest cent, and (B)
one CVR.
(c)
RSUs
. Each restricted stock unit (individually, an
RSU
and
collectively, the
RSUs
) granted by the Company under any Company Stock Plan which is
outstanding immediately prior to the Effective Time shall vest as of the Effective Time and shall
be cancelled and converted at the Effective Time into the right to receive, and the holder thereof
shall be entitled to receive, (i) cash, without interest, equal to the Per Share Amount, with the
aggregate amount of such payment rounded up to the nearest cent, and (ii) one CVR.
(d)
Payment for Awards
. Parent shall pay, or cause the Surviving Corporation to pay
through its payroll system, to each holder of Options, SARs and RSUs the cash payments and CVRs
subject to and in accordance with this
Section 2.7
.
(e)
Termination of Plans; Determinations by the Board
. Each Company Stock Plan shall
terminate as of the Effective Time, and any other plan, program or arrangement providing for the
issuance or grant of any interest in respect of the capital stock (or any interest convertible into
or exchangeable for such capital stock) of the Company or any Subsidiary thereof shall be canceled
as of the Effective Time. At or prior to the Effective Time, the Companys board of directors (the
Board of Directors
) (or a committee thereof) will (i) adopt amendments to, or make
determinations with respect to, the Employee Benefit Plans (as defined in
Section 3.10(a)
),
the Company Stock Plans, and the individual agreements evidencing the grant of
Options, SARs and RSUs, as necessary, to implement the provisions of this
Section 2.7
and (ii) take such other actions as may be reasonably requested by Parent to implement the
provisions of this
Section 2.7
.
Section 2.8
Withholding of Tax
. Notwithstanding anything to the contrary in this
Agreement, Parent, the Company, any Affiliate thereof (including the Surviving Corporation, as
applicable), Trustee or the Paying Agent shall be entitled to deduct and withhold, or cause to be
deducted and withheld, from amounts (including shares of Parent Common Stock and CVRs) otherwise
payable pursuant to this Agreement or the Related Agreements to any holder of shares of Company
Common Stock, Options, SARs or RSUs, such amounts as Parent, the Company, any Affiliate thereof,
Trustee or the Paying Agent is required to deduct and withhold with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended (the
Code
), or any provision
of state, local or foreign Tax Law. To the extent that amounts are so withheld by Parent, the
Company, any Affiliate thereof, Trustee or the Paying Agent, such withheld amounts shall be (a)
paid over to the applicable Governmental Entity (as defined in
Section 3.3(c)
) in
accordance with applicable Law and (b) treated for all purposes of this Agreement as having been
paid to such holder in respect of which such deduction and withholding was made by Parent, the
Company, any Affiliate thereof, Trustee or the Paying Agent, as the case may be.
-7-
Section 2.9
Closing.
The closing of the transactions contemplated by this Agreement
(the
Closing
) shall take place at the offices of Fried, Frank, Harris, Shriver & Jacobson
LLP, One New York Plaza, New York, New York 10004, at 9:00 A.M. local time on the day which is no
later than two Business Days after the day on which the last of the conditions set forth in
ARTICLE VII
(other than those that can only be fulfilled at the Closing, but subject to the
fulfillment or waiver of such conditions) is fulfilled or waived, or at such other time and place
as Parent and the Company shall agree in writing. The date on which the Closing is required to
occur pursuant to the foregoing is referred to herein as the
Closing Date
.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (i) as disclosed in the Companys Annual Report on Form 10-K for the year ended December 31,
2009, as amended, the Companys Quarterly Report on Form 10-Q for the quarter ended March 31, 2010
or any of the Companys Current Reports on Form 8K dated after December 31, 2009 filed by the
Company with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the
Exchange
Act
) prior to the date of this Agreement but excluding any disclosures contained or referenced
therein under the captions Risk Factors, Forward-Looking Statements, and Quantitative and
Qualitative Disclosures About Market Risk and any other disclosures contained or referenced
therein of information, factors or risks that are predictive, cautionary or forward-looking in
nature, and provided that any matters required to be disclosed for purposes of
Section
3.2(a)
(Capital Structure),
Section 3.14
(Intellectual Property) and
Section
3.17
(Material Contracts) of this Agreement shall be specifically disclosed in sections of the
Disclosure Schedule pertaining thereto, or (ii) as set forth in the Disclosure Schedule of the
Company delivered concurrent with the execution of this Agreement (the
Disclosure
Schedule
) (it being understood that any information set forth in one section or subsection of
the Disclosure Schedule shall be deemed to apply to and qualify the Section or subsection of this
Agreement to which it corresponds in number and each other Section or subsection of this Agreement
to the extent that it is reasonably apparent that such information is relevant to such other
Section or subsection), the Company represents and warrants to Parent and Sub as follows:
Section 3.1
Organization, Standing and Power
. Each of the Company and its
Subsidiaries (as defined in
Section 9.12
) is a legal entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization and has all
requisite corporate or similar power and authority to own, lease and operate its properties and
assets and to carry on its business as presently conducted and is qualified to do business and is
in good standing as a foreign legal entity in each jurisdiction where the ownership, leasing or
operation of its assets or properties or conduct of its business requires this qualification,
except where the failure to be so organized, qualified or in good standing, or to have such power
or authority, would not reasonably be expected to have a Company Material Adverse Effect. For
purposes of this Agreement,
Company Material Adverse Effect
means any change, effect,
event, development, occurrence, condition or state of facts (collectively,
Effects
),
that, in the aggregate with all other Effects, is, or would reasonably be expected to be, (1)
materially adverse to the business, assets, financial condition or results of operations of the
Company and its Subsidiaries taken as a whole, or (2) prevent the consummation of the Merger;
provided that in no event shall any of the following, alone or in combination, be deemed to
constitute, nor shall any of the following be taken into account in determining whether there has
been, or there would reasonably be expected to be, a Company Material Adverse Effect: (a) any
Effect relating to, or resulting from, any change or developments in or to local, regional,
national or foreign political, economic or financial conditions or in or to local, regional,
national or foreign credit, financial, banking or securities markets (including any disruption
thereof), including any Effect caused by acts of terrorism or war or armed hostilities (whether or
not declared), (b) any Effect affecting generally any of the industries, geographic areas or
business segments in which the Company or any of its Subsidiaries operates, (c) any Effect relating
to, or resulting from, any hurricane, earthquake or other natural disasters, (d) any change in the
share price or trading volume (as opposed to the facts underlying such change) of the Company
Common Stock on the Nasdaq Global Select Market of The NASDAQ Stock Market LLC (
NASDAQ
)
(provided, however, that the facts and circumstances giving rise to such Effect that are not
otherwise excluded from the definition of Company Material Adverse Effect may be considered for
purposes of determining whether there has been, or would reasonably be expected to be, a Company
Material Adverse Effect), (e) any Effect
-8-
relating to, or resulting from, the adoption, implementation, promulgation, repeal, modification or proposal of any Law (as defined in
Section 3.3(b)
) or U.S. generally accepted accounting principles (
U.S. GAAP
),
after the date of this Agreement, (f) any failure, in and of itself (as opposed to the facts
underlying such failure), to meet any budgets, plans, projections or forecasts of the Companys or
its Subsidiaries revenue, earnings or other financial performance or results of operations, or any
published financial forecasts or analyst estimates with respect to the revenue, earnings or other
financial performance or results of operations of the Company or its Subsidiaries or any change in
analyst recommendations, for any period (provided, however, that the facts and circumstances giving
rise to such failures that are not otherwise excluded from the definition of Company Material
Adverse Effect may be considered for purposes of determining whether there has been, or there would
reasonably be expected to be, a Company Material Adverse Effect may be considered for purposes of
determining whether there has been, or would reasonably be expected to be, a Company Material
Adverse Effect) or (g) any Effect directly relating to, or resulting from, the execution,
performance or announcement of this Agreement or the Related Agreements (including the impact
thereof on relationships, contractual or otherwise, with customers, suppliers, licensors,
licensees, distributors, partners or employees, the loss or departure of officers or other
employees of the Company or its Subsidiaries and any pending or threatened Proceeding (as defined
in
Section 3.7
) challenging this Agreement, any of the Related Agreements or the
transactions contemplated hereby or thereby, or otherwise resulting from the pursuit of the
consummation of the transactions contemplated hereby or thereby; except that clauses (a), (b), (c)
and (e), shall not be applicable with respect to Effects to the extent, but only to the extent,
that any such Effects have had, or would reasonably be expected to have, a disproportionate impact
on the Company and its Subsidiaries, taken as a whole, relative to other participants in the
industry in which the Company and its Subsidiaries operate.
Section 3.2
Capital Structure
.
(a) The authorized capital stock of the Company consists of 100,000,000 shares of Company
Common Stock and 6,000,000 shares of preferred stock, par value $0.001 per share. As of the close
of business on June 25, 2010, (i) 40,403,163 shares of Company Common Stock were issued and
outstanding, (ii) no shares of preferred stock were outstanding, (iii) an aggregate of 1,810,167
shares of Company Common Stock were issuable upon exercise of then outstanding Options and SARs
(whether or not exercisable as of such date), and (iv) 939,570 RSUs were outstanding. In addition
to the shares of Company Common Stock referred to in clauses (i), (iii) and (iv), as of the close
of business on June 25, 2010, 3,472,973 shares of Company Common Stock were available for
additional grants under the Company Stock Plans. All of the outstanding shares of Company Common
Stock are validly issued and outstanding, fully paid and non assessable and free of preemptive
rights. All shares of Company Common Stock subject to issuance under the Company Stock Plans,
including outstanding Options, SARs and RSUs, will upon issuance be validly issued and outstanding,
fully paid and non-assessable and free of preemptive rights.
Section 3.2(a)
of the
Disclosure Schedule sets forth an accurate and complete list of the Options and SARs outstanding as
of June 25, 2010 and the exercise or base prices thereof.
(b) Each Option and SAR was validly and properly approved by the Board of Directors (or a duly
authorized committee or subcommittee thereof), was granted in compliance in all material respects
with all applicable legal requirements and was recorded on the Companys financial statements in
accordance with GAAP consistently applied, and no such grants involved any back dating, forward
dating or similar practices with respect to the effective date of grant. All Options, SARs and
RSUs are in compliance in all material respects with the terms of the applicable Company Stock Plan
under which such Options, SARs and RSUs were granted. The Company has not granted any Options or
SARs at an exercise or base price that represents a discount from the fair market value of the
Company Common Stock underlying such Option or SAR on the date of grant and the Company has
disclosed any re-pricing of Options or SARs in the Company Financial Statements.
-9-
(c) Except as otherwise set forth in this
Section 3.2
, as of the date of this
Agreement, the Company has no (i) outstanding stock or securities convertible into or exchangeable
for any shares of its equity securities, or any outstanding rights to subscribe for or to purchase
any shares of its equity securities, or any outstanding options for the purchase thereof, (ii) any
agreements providing for the issuance of any equity securities or any stock or securities
convertible into or exchangeable for any equity securities of the Company or (iii) outstanding
bonds, debentures, notes or other indebtedness having the right to vote (or convertible into or
exchangeable for securities having the right to vote) on any matters on which stockholders of the
Company may vote. The Company is not subject to any obligation to repurchase or otherwise acquire
any shares of its equity securities or any convertible securities, rights or options of the type
described in the preceding sentence (other than the acquisition of Company Common Stock, Options,
SARs or RSUs upon the exercise, settlement or forfeiture thereof). From June 25, 2010 to the date
of this Agreement, the Company has not (i) issued any shares of Company Common Stock except in
connection with the conversion, exercise or settlement of any Options or RSUs or (ii) issued or
granted any options, warrants or securities convertible into or exercisable for shares of its
Company Common Stock.
(d) All of the outstanding shares of capital stock or other equity securities of each
Subsidiary of the Company are validly issued, fully paid, nonassessable and free of preemptive
rights and are owned directly or indirectly by the Company free and clear of any pledges, liens,
charges, mortgages, encumbrances and securities interests (
Liens
) (other than Liens
arising by operation of Law, under securities Laws or under the organizational documents applicable
to such Subsidiary of the Company). There are no subscriptions, options, warrants, rights, calls,
contracts, voting trusts, proxies or other arrangements to which the Company or any of its
Subsidiaries is a party
(other than with the Company or any of its Subsidiaries) relating to the issuance, sale,
voting, transfer, ownership or other rights with respect to any shares of capital stock or other
equity securities of any Subsidiary of the Company, including any right of conversion or exchange
under any outstanding securities, instrument or agreement.
Section 3.2(d)
of the
Disclosure Schedule sets forth, as of the date of this Agreement, (i) for each Subsidiary of the
Company, the name of such Subsidiary, together with the jurisdiction of organization or
incorporation, as the case may be, of such Subsidiary and (ii) for each Subsidiary of the Company
that is not wholly-owned by the Company, the percentage of equity of such Subsidiary owned by the
Company or any of its Subsidiaries. No Subsidiary of the Company owns any share of capital stock
or other equity security of the Company.
Section 3.3
Authority; Non-Contravention
.
(a) The Company has the requisite corporate power and authority to enter into this Agreement
and, subject to approval of this Agreement by the stockholders of the Company, to consummate the
Merger and the transactions contemplated by this Agreement. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the Merger and the transactions
contemplated by this Agreement have been duly authorized by all necessary corporate action on the
part of the Company, subject only to the receipt of the Stockholder Approval. The only vote of the
stockholders of the Company necessary to approve this Agreement, the Related Agreements, and the
transactions contemplated by this Agreement and the Related Agreements is the Stockholder Approval.
The Company has duly executed and delivered this Agreement and (assuming the valid authorization,
execution and delivery of this Agreement by Parent and Sub, as applicable) this Agreement
constitutes a valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar Laws of general applicability relating to or affecting creditors rights and
general equity principles. The Board of Directors has unanimously determined that the transactions
contemplated by this Agreement, including the Merger, and the Related Agreements, are advisable and
fair to, and in the best interest of, the Company and its stockholders, adopted this Agreement,
approved the execution of this Agreement, approved and declared advisable the Merger, and resolved
to recommend adoption of this Agreement by the holders of shares of Company Common Stock (subject
to its right to change its recommendation in accordance with this Agreement).
-10-
(b) The execution and delivery of this Agreement and/or any of the Related Agreements does
not, and the consummation of the Merger and compliance with the provisions hereof and thereof will
not, (i) conflict with, or result in any violation of, the certificate of incorporation or by-laws
of the Company, (ii) conflict with, or result in any violation of organizational documents of any
of the Subsidiaries of the Company, (iii) result in any violation or breach of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation, or result in the creation of any Lien upon any of
the properties or assets of the Company or any of its Subsidiaries under, or impair the Companys
or any of its Subsidiaries rights under, or alter the rights of a third party under, any provision
of any agreement, note, bond, mortgage, indenture, lease or other contractual obligation (each, a
Contract
) binding on the Company or any of its Subsidiaries or any of their properties or
assets (each, a
Company Contract
), except for any such violation, breach, default or
right of termination, cancellation or acceleration or Lien as to which requisite waivers or
consents have been obtained or (iv) assuming that the Registrations and Consents set forth in
Section 3.3(c)
are duly and timely made or obtained and that Stockholder Approval (as
defined in
Section 7.1(a)
) has been duly obtained, violate any foreign, federal, state,
local or municipal laws, rules, judgments orders, regulations, statutes, ordinances, codes,
decisions, injunctions, orders, decrees or requirements of any Governmental Entity (each a
Law
) applicable to the Company or any of its Subsidiaries or their properties or assets,
other than, in the case of clauses (iii) or (iv), any such conflict,
violation, default, termination, cancellation, acceleration or Lien that would not reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(c) No registration or filing with (each, a
Registration
) or clearance,
authorization, consent or approval (each, a
Consent
) of any domestic (federal or state),
or foreign court, commission, governmental body, regulatory or administrative agency or other
political subdivision thereof (each, a
Governmental Entity
) is required on the part of
the Company or any of its Subsidiaries in connection with the execution and delivery of this
Agreement, the Related Agreements by the Company or the consummation by the Company of the Merger
or by the Company of the other transactions contemplated hereby or thereby, except for (i)
compliance with and filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the
HSR Act
), (ii) compliance with the provisions of the Exchange Act and the
rules of any national securities exchange, (iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with the relevant authorities
of other states in which the Company or any of its Subsidiaries is qualified to do business, (iv)
such as may be required in connection with the Taxes described in
Section 6.11
and (v) such
other Consents or Registrations the failure of which to be obtained or made would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect.
-11-
Section 3.4
SEC Documents
.
(a) Since January 1, 2008, the Company has filed with, or furnished to, the Securities and
Exchange Commission (the
SEC
) all documents required to be filed or furnished by the
Company under the Securities Act or the Exchange Act (collectively, the
Company SEC
Documents
). None of the Subsidiaries of the Company is, or has at any time been, subject to
the reporting requirements of Sections 13(a) and 15(d) of the Exchange Act. As of their respective
dates, the Company SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and as of their respective dates and except
as amended or supplemented prior to the date hereof (or with respect to Company SEC Documents filed
or furnished after the date hereof, except as amended or supplemented prior to the Closing Date),
none of the Company SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by Parent, Sub or their
respective Subsidiaries in writing for inclusion in the Proxy Statement/Prospectus. Each of the
consolidated financial statements of the Company (including, in each case, any notes thereto)
included in the Company SEC Documents (collectively, the
Company Financial Statements
)
have been prepared in accordance with U.S. GAAP applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and fairly present in all
material respects the financial position of the Company and its consolidated Subsidiaries as at the
dates thereof and the results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit adjustments and to any
other adjustments set forth therein). As of the date of this Agreement, neither the Company nor
any of its Subsidiaries has any pending or unresolved comments from the SEC or any other
Governmental Entity with respect to any of the Company SEC Documents.
(b) To the Knowledge of the Company, neither the Company nor any of its Subsidiaries has any
liability or obligation of any nature (whether accrued, absolute, contingent or otherwise), except
for liabilities, obligations or contingencies which (i) are reflected, or for which reserves are
established, on the consolidated balance sheet of the Company as of March 31, 2010, (ii)
were incurred in the ordinary course of business since March 31, 2010, (iii) would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect
or (iv) have been incurred in connection with the performance by the Company of its obligations
under this Agreement or the transactions contemplated hereby. As of the date of this Agreement,
neither the Company nor any of its Subsidiaries has any indebtedness for borrowed money or has
guaranteed indebtedness for borrowed money of another Person (other than the Company or a wholly
owned Subsidiary of the Company).
(c) Each of the principal executive officer and the principal financial officer of the Company
(or each former principal executive officer and each former principal financial officer of the
Company, as applicable) has made the certifications required by Rules 13a-14 and 15d-14 promulgated
under the Exchange Act or Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 and the related
rules and regulations promulgated thereunder (the
Sarbanes-Oxley Act
) with respect to the
Company SEC Documents. For purposes of the preceding sentence, principal executive officer and
principal financial officer have the meanings ascribed to those terms under the Sarbanes-Oxley
Act.
(d) To the Knowledge of the Company, since January 1, 2008 and prior to the date of this
Agreement, none of the Company, any of its Subsidiaries or any director, officer, auditor,
accountant or representative of the Company or any of its Subsidiaries has received any substantive
complaint, allegation, assertion or claim, whether written or oral, that the Company or any of its
Subsidiaries has engaged in questionable accounting or auditing practices. No current or former
attorney representing the Company or any of its Subsidiaries has reported evidence of a material
violation of securities Laws, breach of fiduciary duty or similar violation by the Company or any
of its Subsidiaries, or any of their respective officers, directors, employees or agents, to the
current Board of Directors or any committee thereof or to any current director or executive officer
of the Company.
-12-
(e) The Company and its Subsidiaries have designed and maintain internal controls over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange
Act) to provide reasonable assurances (i) regarding the reliability of the Companys financial
reporting and the preparation of financial statements for external purposes in accordance with U.S.
GAAP (ii) that receipts and expenditures of the Company and its Subsidiaries are being made only in
accordance with the authorization of management and directors of the Company and such Subsidiaries
and (iii) regarding prevention or timely detection of the unauthorized acquisition, use or
disposition of the Companys or its Subsidiaries assets that could have a material effect on the
Companys financial statements. The Company has designed and maintains disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) to
ensure that material information required to be disclosed by the Company in the reports that the
Company files or submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SECs rules and forms and is accumulated and communicated
to the Companys management as appropriate to allow timely decisions regarding required disclosure
and to make the certifications of the principal executive officer and principal financial officer
of the Company required under the Exchange Act with respect to such reports.
(f) Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to
become a party to, any joint venture, off balance sheet partnership or any similar Company Contract
(including any Company Contract or arrangement relating to any transaction or relationship between
or among the Company and any of its Subsidiaries, on the one hand, and any unconsolidated
affiliate, including any structured finance, special purpose or limited purpose entity or person,
on the other hand, or any off balance sheet arrangements (as defined in Item 303(a) of Regulation
S-K under the Exchange Act)), where the result, purpose or intended effect of such Company Contract
is to avoid disclosure of any material transaction involving, or material liabilities of, the
Company or any of its Subsidiaries in the Companys or such Subsidiarys published financial
statements or other Company SEC Documents.
(g) Since January 1, 2009, the Company has not received any oral or written notification of
any material weakness in the Companys internal control over financial reporting. There is no
outstanding significant deficiency or material weakness that the Companys independent
accountants certify has not been appropriately and adequately remedied by the Company. For
purposes of this Agreement, the terms significant deficiency and material weakness shall have
the meanings assigned to them in Release No. 2007-005 of the Public Company Accounting Oversight
Board, as in effect on the date hereof.
Section 3.5
Proxy Statement/Prospectus and Registration Statement
. None of the
information supplied or to be supplied by the Company for inclusion or incorporation by reference
in the Registration Statement or the Proxy Statement/Prospectus, at the time the Registration
Statement becomes effective under the Securities Act, at the time the Proxy Statement/Prospectus is
mailed to stockholders of the Company and at the time of the Company Stockholders Meeting, will
contain any untrue statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, except that no representation is made by the Company
with respect to information supplied by Parent or Sub in writing expressly for inclusion in any of
such documents. The Proxy Statement/Prospectus and the Registration Statement shall each comply in
all material respects with the requirements of the Securities Act and the Exchange Act.
Section 3.6
Absence of Certain Events
. From March 31, 2010 to the date of this
Agreement, (i) the Company and its Subsidiaries have conducted their operations in all material
respects in the ordinary course of business, (ii) there has not occurred any Effect that,
individually or in the aggregate with all other Effects, has had, or would reasonably be expected
to have, a Company Material Adverse Effect, and (iii) there has not been any action taken by the
Company or any of its Subsidiaries that, if taken after the date of this Agreement, would
constitute a breach of
Section 5.1(a)
,
(c
),
(d
),
(e
),
(f
),
(g
),
(h
),
(k
),
(l
),
(o
),
(p
),
(q)
or
(r
).
-13-
Section 3.7
Litigation
. There is no material suit, action, arbitration, proceeding,
claim, charge, regulatory or accrediting agency investigation or other proceeding (each, a
Proceeding
) pending or, to the Knowledge of the Company (as defined in
Section
9.14
), threatened against the Company or any of its Subsidiaries or any property or asset of
the Company or any of its Subsidiaries. None of the Company or any of its Subsidiaries is subject
to any writ, judgment, settlement agreement, injunction or decree that would reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.8
No Violation of Law
. Neither the Company nor any of its Subsidiaries is
or since January 1, 2008 has been in material violation of any Law. To the Knowledge of the
Company, no material investigation or review by any Governmental Entity is pending or threatened
against the Company or any of its Subsidiaries. The Company and its Subsidiaries have all material
permits, licenses, franchises, variances, exemptions, orders and other governmental authorizations,
consents and approvals necessary to conduct its businesses in all material respects as presently
conducted (collectively, the
Company Permits
). None of the Company or any of its
Subsidiaries is in violation of the terms of any Company Permit, except for delays in filing
reports or violations which would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. This
Section 3.8
does not relate to matters
which are the subject of
Section 3.10
or
Section 3.12
.
Section 3.9
Taxes
.
(a) Except as would not be material to the Company, (i) the Company and its Subsidiaries have
timely filed or have had timely filed on their behalf (taking into account extensions of time to
file) all Tax Returns required to be filed by them, and such Tax Returns are correct and complete
in all respects, (ii) the Company and its Subsidiaries have paid (or have had paid on their behalf)
all Taxes due and payable with respect to such Tax Returns, except with respect to Taxes for which
adequate reserves have been established in accordance with U.S. GAAP on the most recent financial
statements of the Company or its Subsidiaries, (iii) the Company and its Subsidiaries have withheld
or collected, and have paid over to the appropriate Governmental Entities (or are properly holding
for such payment), all Taxes required to be withheld or collected, (iv) neither the Company nor any
of its Subsidiaries has received any written notice of any pending or ongoing audit, investigation,
assessment, deficiency, or claim with respect to Taxes (including any Taxes described in clause
(viii)(B) of this
Section 3.9(a)
) which remains unresolved, (v) there are no Liens on any
of the assets of the Company or any of its Subsidiaries that arose in connection with any failure
or alleged failure to pay Taxes (other than Taxes not yet due and payable, or Taxes for which
adequate reserves have been established in accordance with U.S. GAAP on the most recent financial
statements of the Company or its Subsidiaries), (vi) neither the Company nor any of its
Subsidiaries has incurred any liability for Taxes subsequent to the date of its most recent
respective financial statements other than in the ordinary course of business, (vii) no written
claim has been received by the Company or its Subsidiaries from any Governmental Entity in a
jurisdiction where the Company or any of its Subsidiaries does not file Tax Returns that the
Company or any of its Subsidiaries is or may be subject to taxation in that jurisdiction, (viii)
with the exception of the affiliated group of which the Company is the parent within the meaning of
Section 1504 of the Code, neither the Company nor any of its Subsidiaries (A) is or has ever been a
member of an affiliated group filing a consolidated federal income Tax Return or (B) has any
liability for the Taxes of any Person (other than the Company and its Subsidiaries) under Section
1.1502-6 of the Treasury Regulations (or any similar provision of Law), as a transferee or
successor, by contract, or otherwise, (ix) neither the Company nor any of its Subsidiaries is a
party to, has participated in, or is currently participating in, a tax shelter or listed
transaction as defined in Section 6111 of the Code or a reportable transaction within the
meaning of Section 1.6011-4(b) of the Treasury Regulations or any transaction requiring disclosure
under a corresponding or similar provision of state, local or foreign Law, (x) neither the Company
nor any of its Subsidiaries will be required to include any item of income in, or exclude any item
of deduction from, taxable income for any taxable period (or portion thereof) ending after the
Effective Time as a result of any (A) change in the method of accounting for a taxable period
ending on or prior to the Effective Time, (B) closing agreement as described in Section 7121 of
the Code (or any corresponding or similar provision of state, local or foreign Tax Law) executed
prior to the Effective Time, (C) installment sale or open transaction disposition made prior to the
Effective Time, or (D) prepaid amount received prior to the Effective Time, and (xi) the Company is
not now, nor has it ever been, a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
-14-
(b) Neither the Company nor any of its Subsidiaries is a party to any agreement providing for
the allocation or sharing of Taxes with any entity (other than the Company or any of its
Subsidiaries).
(c) Without regard to the execution of this Agreement and the consummation of the transactions
contemplated by this Agreement and the Related Agreements, the 2007 Spin-Off qualified for
nonrecognition treatment under Sections 355(a) and 361(c) of the Code. The Company has not
constituted either a distributing corporation or a controlled corporation (within the meaning
of Section 355 or Section 361 of the Code) in a distribution of stock purported to or intended to
be governed by Section 355 or Section 361 of the Code in any transaction other than the 2007
Spin-Off. Neither the
Company or its Subsidiaries, nor any of their respective stockholders, has received, as a
result of its rights under Section 3.01 of the 2007 Tax Allocation Agreement or otherwise, any
notice of, or is otherwise aware of, any pending or ongoing audit, investigation, review,
assessment, deficiency, or claim with respect to Taxes related to the qualification of the 2007
Spin-Off for nonrecognition treatment under Sections 355(a) and 361(c) of the Code.
(d) Neither the Company nor any of its Subsidiaries has any deferred intercompany gain, excess
loss account or gain recognition agreement in effect under any applicable U.S., state, local or
foreign Tax Law.
(e) None of the Tax Returns of the Company or any of its Subsidiaries contains any position
that is, or would be, subject to material penalties under Section 6662 of the Code (or any
corresponding provisions of state, local, or foreign Tax Law).
(f) For purposes of this Agreement:
Tax
means any federal, state, local or foreign
income, profits, gross receipts, license, payroll, employment, severance, stamp, occupation,
premium, windfall profits, environmental, customs duty, capital stock, franchise, sales, social
security, unemployment, disability, use, property, withholding, excise, transfer, registration,
production, value added, alternative minimum, occupancy, estimated or any other tax of any kind
whatsoever, together with any interest, penalty or addition thereto, imposed by any Governmental
Entity responsible for the imposition of any such tax, whether disputed or not;
Tax
Return
means any return, report, declaration, claim or other statement (including attached
schedules) relating to Taxes;
2007 Tax Allocation Agreement
means that certain Tax
Allocation Agreement entered into by the Company, APP Pharmaceuticals, Inc., APP Pharmaceuticals,
LLC and Abraxis BioScience, LLC and dated November 13, 2007;
2007 Separation and Distribution
Agreement
means that certain Separation and Distribution Agreement entered into by the
Company, APP Pharmaceuticals, Inc., APP Pharmaceuticals, LLC and Abraxis BioScience, LLC and dated
November 13, 2007; and
2007 Spin-Off
means the distribution by APP Pharmaceuticals, Inc.
to its stockholders, on November 13, 2007, of all of the then-issued and outstanding shares of
common stock of the Company pursuant to the 2007 Separation and Distribution Agreement, and the
transactions entered into therewith.
-15-
Section 3.10
Employee Benefit Plans; ERISA
.
(a)
Section 3.10(a)
of the Disclosure Schedule includes a complete list as of the
date of this Agreement of (i) each material employee benefit plan, program or policy providing
benefits to any current or former employee, officer, director, independent contractor or consultant
of the Company or its Subsidiaries, or any beneficiary or dependent thereof, that is sponsored or
maintained by the Company or any of its Subsidiaries or any trade or business (whether or not
incorporated) under common control with the Company or any of its Subsidiaries and which, together
with the Company or any of its Subsidiaries, is treated as a single employer within the meaning of
Section 414(b), (c), (m) or (o) of the Code (an
ERISA Affiliate
) or with respect to which
the Company or any of its Subsidiaries or ERISA Affiliates has any current or potential material
liability, including any employee welfare benefit plan within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended (
ERISA
), any employee pension
benefit plan within the meaning of Section 3(2) of ERISA (whether or not such plan is subject to
ERISA) and any material bonus, incentive, deferred compensation, vacation, stock purchase, stock
option, severance, employment, change of control or fringe benefit plan, program or policy
(collectively, the
Employee Benefit Plans
) (but excluding, for all purposes of this
Agreement other than
Section 6.6
and
Section 3.10(h)
hereof, any Employee Benefit
Plan
that is primarily subject to the Laws of any jurisdiction outside of the United States), (ii)
each employment and severance agreement pursuant to which the Company or any of its Subsidiaries
has or would have any obligation to provide compensation and/or benefits in an amount or having a
value reasonably likely to be in excess of $200,000 per year or $500,000 in the aggregate; and
(iii) any agreement which prohibits the Company or any of its Subsidiaries from terminating the
employment of any employee on an at-will basis (which means that their employment cannot be
terminated at any time, with or without notice, for any reason or no reason at all and/or they have
been granted the right to continued employment by the Company, its Subsidiaries, or any successor)
(each agreement referenced in (ii) and (iii), a
Material Employment Agreement
). As of
the date of this Agreement, neither the Company nor any of its Subsidiaries has agreed or committed
to institute any material plan, program, arrangement or agreement for the benefit of employees or
former employees of the Company or its Subsidiaries other than the Employee Benefit Plans or
Material Employment Agreements or to make any amendments to any of the Employee Benefit Plans or
Material Employment Agreements, and the Company and/or its Subsidiaries, as applicable, have
reserved all rights necessary to amend or terminate each Employee Benefit Plan with regard to their
respective service providers without the consent of any other person.
(b) With respect to each Employee Benefit Plan, the Company has delivered or made available to
Parent a true, correct and complete copy of: (i) all plan documents and trust agreements; (ii) the
most recent Annual Report (Form 5500 Series) and accompanying schedule, if any; (iii) the current
summary plan description, if any; (iv) the most recent annual financial report, if any; (v) the
most recent actuarial report, if any; and (vi) the most recent determination letter from the
Internal Revenue Service (
IRS
), if any. The Company has delivered or made available to
Parent a true, correct and complete copy of each Material Employment Agreement.
(c) The Company has an IRS determination letter or opinion letter with respect to each
Employee Benefit Plan that is intended to be a qualified plan within the meaning of Section
401(a) of the Code, and the trust maintained pursuant thereto has been determined to be so
qualified and exempt from federal income taxation under Section 501 of the Code by the IRS, and to
the Knowledge of the Company, nothing has occurred with respect to the operation of any such
Employee Benefit Plan that would reasonably be expected to cause the loss of such qualification or
exemption from Tax that cannot be corrected without material liability.
-16-
(d) Except as would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect (i) each Employee Benefit Plan and each Material Employment
Agreement has been administered in accordance with its terms and the applicable provisions of
ERISA, the Code and other applicable Laws and (ii) neither the Company nor any of its Subsidiaries
has engaged in any prohibited transaction (as defined in Section 4975 of the Code or Section 406
of ERISA) with respect to any Employee Benefit Plan which could subject the Company or any of its
Subsidiaries to any tax or penalty imposed under Section 4975 of the Code or Section 502 of ERISA,
and no Proceeding has been brought, or to the Knowledge of the Company is threatened, against or
with respect to any such Employee Benefit Plan, including any audit or inquiry by the IRS or United
States Department of Labor (other than routine benefits claims).
(e) Except as set forth in
Section 3.10(e)
of the Disclosure Schedule, neither the
execution and delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (either alone or in conjunction with any other event) (i) constitute an event under an
Employee Benefit Plan or a Material Employment Agreement that will result in, cause the accelerated
vesting, funding or delivery of, or increase the amount or value of, any material payment or
benefit to any employee, officer or director of the Company or any of its Subsidiaries or (ii)
could reasonably be expected to cause any material amount to fail to be deductible under Section
280G of the Code.
(f) Neither the Company nor any Subsidiary or ERISA Affiliate has ever (i) maintained an
Employee Benefit Plan or any other plan, program or arrangement that (A) was subject to Section 412
of the Code or Title IV of ERISA, (B) is a multiple employer plan (as defined in Section 210(a)
of ERISA), or had any liability with respect to such a plan, program or arrangement or (C) is
funded through or maintained by a voluntary employees beneficiary association within the meaning
of Section 501(c)(9) of the Code, or a welfare benefit fund as defined in Section 419(e) of the
Code or a supplemental unemployment benefit plan within the meaning of Section 501(c)(17) of the
Code or (ii) been obligated to contribute to a multiemployer plan (as defined in Section
4001(a)(3) of ERISA).
(g) Except as required by Law or as provided in a Material Employment Agreement, upon a
severance event, no Employee Benefit Plan provides any retiree or post-employment health,
disability, life insurance or other welfare benefits (whether or not insured) to any Person.
(h) The term
Foreign Plan
shall mean any Employee Benefit Plan or Material
Employment Contract that is maintained pursuant to the laws of any country other than the United
States. Each Foreign Plan complies with all applicable Law (including applicable Law regarding the
form, funding and operation of the Foreign Plan) in all material respects. The Company Financial
Statements accurately reflect the material Foreign Plan liabilities and accruals for contributions
required to be paid to the Foreign Plans, in accordance with applicable generally accepted
accounting principles consistently applied. All material contributions required to have been made
to all Foreign Plans as of the Closing will have been made as of the Closing. There are no
material actions, suits or claims pending or, to the Knowledge of the Company, threatened with
respect to the Foreign Plans (other than routine claims for benefits). There have not occurred,
nor are there continuing any transactions or breaches of fiduciary duty under applicable Law with
respect to any Foreign Plan which would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. With respect to each Foreign Plan, there are (A) no
pending material investigations by any Governmental Entity, (B) no material claims pending or, to
the Knowledge of the Company, threatened in writing (except for claims for benefits payable in the
normal operation of such plan) and (C) no material suits or proceedings against such plan or
asserting any rights or claims to benefits under such plan.
-17-
Section 3.11
Employment Matters
.
(a) Neither the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or any other labor-related agreement with any labor union, labor organization or works
council. As of the date of this Agreement, (i) no such agreement is presently being negotiated by
the Company or any of its Subsidiaries, (ii) no labor union, labor organization or works council
has made a pending demand of the Company or any of its Subsidiaries for recognition or
certification, (iii) there are no representation or certification proceedings or petitions seeking
a representation proceeding with respect to the Company or any of its Subsidiaries presently
pending or, to the Knowledge of the Company, threatened in writing to be brought or filed with the
National Labor Relations Board or any other labor relations tribunal or authority, (iv) to the
Knowledge of Company, there are no labor union organizing activities with respect to any employees
of the Company or its Subsidiaries and (v) there are no threatened, labor strikes, slowdowns, work
stoppages, lockouts, or any similar activity, by employees of the Company or its Subsidiaries.
None of the Company or any of its Subsidiaries has experienced any strike, lockout or work stoppage
or other material labor difficulty involving its employees since January 1, 2008.
(b) The Company and its Subsidiaries are in compliance in all material respects with all Laws
respecting employment and employment practices, harassment, discrimination, retaliation, terms and
conditions of employment, immigration, workers compensation, long term disability, occupational
safety, plant closings, compensation and benefits, wages and hours, proper classification of
employees
and independent contractors, and the payment of social security and other Taxes
(
Employment Practices
).
(c) Except as indicated in
Section 3.11(c)
of the Disclosure Schedule, (i) there are
no material Proceedings pending or, to the Knowledge of the Company, threatened involving any
individuals providing services as an employee or independent contractor to the Company and/or any
of its Subsidiaries (collectively
Worker
or
Workers
), group of Workers, or
individual and (ii) there are no material Proceedings relating to any Employment Practices pending,
or to the Knowledge of the Company, threatened, before the Equal Employment Opportunity Commission,
the National Labor Relations Board, the U.S. Department of Labor, the U.S. Occupational Health and
Safety Administration, the Workers Compensation Appeals Board, or any other Governmental Authority
against the Company or any of its Subsidiaries pertaining to any Worker, nor, to the Knowledge of
the Company, are there any facts or circumstances which would reasonably be expected to give rise
to such a claim being made.
(d) To the Knowledge of the Company, neither the Company nor any of its Subsidiaries are
delinquent in any material payments to any current or former Worker for any wages, salaries,
commissions, bonuses, or other compensation for any services performed by any current or former
Worker or for any other amounts required to be reimbursed by the Company or any of its Subsidiaries
to any current or former Worker (including vacation, sick leave, other paid time off or severance
pay).
(e) (i) The Company and its Subsidiaries are in compliance in all material respects with the
Worker Readjustment and Notification Act (the
WARN Act
) (29 USC §2101) and any applicable
state laws or other Laws regarding redundancies, reductions in force, mass layoffs, and plant
closings, including all obligations to promptly and correctly furnish all notices required to be
given thereunder in connection with any redundancy, reduction in force, mass layoff, or plant
closing to affected employees, representatives, any state dislocated worker unit and local
government officials, or any other governmental authority, (ii) neither the Company nor any of its
Subsidiaries have taken any action that would constitute a mass layoff or plant closing within
the meaning of the WARN Act or would otherwise trigger notice requirements or liability under any
other comparable state or local law in the United States and (iii) neither the Company nor any of
its Subsidiaries have taken any action that resulted in the termination of employment of 50 or more
employees or more than 10% of the employees in any country outside of the United States during any
90 day period.
-18-
(f) As of the date of this Agreement, to the Knowledge of the Company, no employee of the
Company or any of its Subsidiaries is in violation in any material respect of any term of any
employment agreement, non-disclosure or confidentiality agreement with the Company or any of its
Subsidiaries or non-competition agreement, non-solicitation agreement or any restrictive covenant
with a former employer relating to the right of any such employee to be employed by or provide
services to the Company or any of its Subsidiaries because of the nature of the business conducted
or presently proposed to be conducted by it or to the use of trade secrets or proprietary
information of others.
Section 3.12
Environmental Matters
.
(a) Except as otherwise set forth in
Section 3.12
of the Disclosure Schedule, (i) to
the Knowledge of the Company, the Company and its Subsidiaries are and have been since January 1,
2008 in material compliance with all applicable Environmental Laws (as defined in
Section
3.12(c)
), (ii) there are no pending or, to the Knowledge of the Company, threatened, material
Proceedings under or pursuant to Environmental Laws against the Company or any of its Subsidiaries
or, to the Knowledge of the
Company, any other Person whose Environmental Liabilities the Company or any of its
Subsidiaries has or may have retained or assumed by contract or operation of Law, or involving any
real property currently or, to the Knowledge of the Company, formerly owned, operated or leased by
the Company or its Subsidiaries; (iii) the Company and its Subsidiaries and, to the Knowledge of
the Company, Persons whose Environmental Liabilities the Company or its Subsidiaries has or may
have retained or assumed by contract or operation of Law are not subject to any material
Environmental Liabilities; and (iv) to the Knowledge of the Company, there are no actions,
activities, circumstances, conditions, events or incidents, including the release, threatened
release or presence of any Hazardous Material (as defined in
Section 3.12(c)
), which could
reasonably be expected to form the basis of any such material Environmental Liability.
(b) The Company has delivered to or otherwise made available for inspection by Parent true,
correct and complete copies and results of any reports, studies, analyses, tests or monitoring
initiated by the Company or its Subsidiaries since January 1, 2008 pertaining to Hazardous
Materials in, on, beneath or adjacent to any property currently or formerly owned, operated or
leased by the Company or any of its Subsidiaries, or regarding the Companys or its Subsidiaries
compliance with applicable Environmental Laws.
(c) As used herein,
Environmental Laws
means any and all Laws concerning pollution,
Hazardous Materials (as defined below) or the protection of human health or safety, or the
environment, and includes the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. Section 9601
et seq
., the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801
et seq
., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901
et seq
., the Clean
Water Act, 33 U.S.C. Section 1251
et seq
., the Clean Air Act, 33 U.S.C. Section 2601
et seq
., the
Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq
., the Occupational Safety and Health
Act, 29 U.S.C. Section 651
et seq
. (but solely as it relates to the exposure of Hazardous
Materials) and the Oil Pollution Act of 1990, 33 U.S.C. Section 2701
et seq
., as such laws have
been amended or supplemented, and the regulations promulgated pursuant thereto, and all analogous
state or local statutes. As used in this Agreement,
Environmental Liabilities
with
respect to any Person means any and all liabilities of or relating to such Person (including any
entity which is, in whole or in part, a predecessor of such Person), whether vested or unvested,
contingent or fixed, actual or potential, known or unknown, which arise under or relate to the
presence, release or threatened release of any Hazardous Materials at any location or which
otherwise arise under or relate to matters covered or regulated by, or for which liability is
imposed under, Environmental Laws, including the alleged violation of any Environmental Law. As
used in this Agreement,
Hazardous Materials
means all substances defined in, regulated
under or for which liability is imposed by Environmental Laws, including hazardous substances,
oils, pollutants or contaminants, asbestos, mold, polychlorinated biphenyls and radioactive
materials.
-19-
(d) The representations and warranties in this
Section 3.12
constitute the sole
representations and warranties of the Company in this Agreement concerning Environmental Laws and
Hazardous Materials.
Section 3.13
Affiliate Transactions
. As of the date of this Agreement, there are no
transactions, agreements, arrangements or understandings between the Company or its Subsidiaries,
on the one hand, and the Companys Affiliates (other than wholly-owned Subsidiaries of the Company)
or other Persons on the other hand, that would be required to be disclosed under Item 404 of
Regulation S-K under the Securities Act. For purposes of this Agreement, the term
Affiliate
when used with respect to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with such Person. As used in the
definition of Affiliate the term
control
means possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
Section 3.14
Intellectual Property
. For purposes of this Agreement,
Intellectual
Property
means any or all of the following in any jurisdiction throughout the world: (i)
patents, patent applications, provisional patent applications and similar instruments (including
any and all substitutions, divisions, continuations, continuations-in-part, reissues, renewals,
extensions, reexaminations, patents of addition, supplementary protection certificates, inventors
certificates, pediatric data package exclusivity extensions, or the like) (collectively,
Patents
); (ii) trademarks, service marks, trade dress, trade names and Internet domain
names (including all registrations or applications for any of the foregoing), together with all
goodwill associated with each of the foregoing (collectively,
Trademarks
); (iii)
copyrights, copyright registrations, and copyright applications (collectively,
Copyrights
); (iv) trade secrets, know-how and other confidential and proprietary
information, including product specifications, manufacturing processes, batch records and other
documentation outlining manufacturing processes, design of and modifications to machinery necessary
for use in the manufacturing process, compounds, formulae, and inventions (
Trade
Secrets
); and (v) all other intellectual property or proprietary rights (in each case whether
or not subject to statutory registration or protection). For purposes of this Agreement,
Nab
®
Technology
means (A) any and all methods, techniques, know-how, trade secrets, and other
technologies (including manufacturing methods, techniques, know-how, trade secrets, and other
technologies) for the noncovalent association of, or related to the association of, any agent (such
as a therapeutic or diagnostic agent) with one or more polymers such as carbohydrates or
polypeptides (including albumin), (B) any product resulting therefrom, including any intermediate
or the Product (as defined in the CVR Agreement), and (C) any methods of using such product;
Product
means the Pharmaceutical Product comprising the chemical compound having a
chemical name of 5ß,20-Epoxy-1,2a,4,7ß,10ß,13a-hexahydroxytax-11-en-9-one 4,10-diacetate 2-benzoate
13-ester with (2R,3S)-N-benzoyl-3-phenylisoserine known by the generic name paclitaxel and bound
to albumin that is in the subject of the New Drug Application No. 21-660 filed with the FDA and
subject of the European Medicines Agency Marketing Authorization granted on January 11, 2008,
together with all amendments and supplements to such FDA and European Medicines Agency approvals
(identified by the Company as ABRAXANE);
Pharmaceutical Products
means all biological and
drug candidates, compounds or products being researched, developed, labeled, manufactured, tested,
stored, used, sold, offered for sale, imported, and otherwise distributed or commercially exploited
by the Company or any of its Subsidiaries; and
Pipeline Products
means COROXANE,
nab-docetaxel (ABI-008), nab-rapamycin (ABI-009), nab-17AAG (ABI-010), nab-thiocolchicine dimer
(ABI-011), and nab-novel taxane (ABI 013).
-20-
(a)
Section 3.14(a)
of the Disclosure Schedule sets forth a true, correct, and
complete list (with owner(s), country(ies) or region, registration and application numbers and
dates indicated, as applicable) of all U.S. and foreign (i) Patents, (ii) Trademarks that are
registered or for which an application for registration is pending, and (iii) Copyrights that are
registered or for which an application for registration is pending, in each case that is owned (in
whole or in part) by, or licensed to, the Company or its Subsidiaries, in each case as directed to
the Product, the Pipeline Products or the Nab
®
Technology.
(b) The Company or its Subsidiaries owns or has a valid and enforceable right to use or
practice the Intellectual Property required to be listed on
Section 3.14(a)
of the
Disclosure Schedule and the Trade Secrets used in connection with the Nab
®
Technology or necessary
for the manufacturing
of the Product and the Pipeline Products (collectively, the
Company Intellectual
Property
) in all material respects. As of the date hereof, and to the Knowledge of the
Company, no Proceedings are pending or threatened against the Company or its Subsidiaries
challenging in any material respect the validity, enforceability, use, inventorship, or ownership,
or seeking to deny or restrict the use by the Company or its Subsidiaries of, the Company
Intellectual Property.
(c) As of the date hereof, and to the Knowledge of the Company, (i) neither the Company nor
any Subsidiary nor the operation of their respective businesses (including the use and practice of
the Company Intellectual Property, the products and services of the Company and its Subsidiaries,
and the research, development, labeling, manufacture, use, sale, offer for sale, importation, and
other distribution or commercial exploitation of the Product, the Pipeline Products or the
Nab
®
Technology) infringes, dilutes, misappropriates or otherwise violates in any material respect
the Intellectual Property of any other Person; and (ii) no Proceeding is pending or threatened, and
no third party is asserting or threatening to assert, a claim of such infringement, dilution,
misappropriation or violation against the Company.
(d) To the Knowledge of the Company, no third party is infringing, diluting, misappropriating,
or otherwise violating in any material respect any Company Intellectual Property, and the Company
has not asserted or threatened to assert a claim of such infringement, dilution, misappropriation
or violation against any third party.
(e) To the Knowledge of the Company, as of the date hereof, (i) none of the Company
Intellectual Property that consists of Patents (the
Company Patents
) is the subject of
any litigation, reissue, interference, reexamination, or opposition, (ii) the Company and its
Subsidiaries have not received any written notice that any such proceeding will hereafter be
commenced, (iii) the issued Company Patents are subsisting and have not been declared invalid
and/or unenforceable, and (iv) the Company Patents have been prosecuted in compliance in all
material respects with all applicable Laws. The Company Patents listed in the FDAs Orange Book
with respect to New Drug Application No. 21-660 for the Product cover the Product; and U.S. Patent
Application No. 11/553,339, when issued, will be listed and is properly listable in the FDAs
Orange Book with respect to such New Drug Application.
(f) All current and former employees of, and all consultants and independent contractors to,
the Company and its Subsidiaries who have contributed in any material respect to the creation or
development of any Company Intellectual Property owned by the Company or any of its Subsidiaries
have executed and delivered to the Company or its Subsidiaries an agreement regarding the
assignment to the Company or its Subsidiaries of any Intellectual Property rights arising from
services performed for the Company or its Subsidiaries by such Persons, the current forms of which
agreements have been made available to Parent. All current and former employees of, and all
consultants and independent contractors to, the Company and its Subsidiaries, and all other
Persons, with access to the Companys and its Subsidiaries Trade Secrets included in the Company
Intellectual Property owned by the Company or any of its Subsidiaries are parties to written
agreements under which each is obligated to maintain the confidentiality of such Trade Secrets of
the Company and its Subsidiaries and not to use such Trade Secrets except as authorized by the
Company or its Subsidiaries. To the Knowledge of the Company, none of such employees, consultants,
contractors or other Persons is in violation in any material respect of such inventions or
confidentiality agreements. To the Knowledge of the Company, no current or former employee,
stockholder, consultant, contractor, or independent contractor of the Company or its Subsidiaries
owns or claims any rights in (nor has any of them made application for) any Company Intellectual
Property.
-21-
(g) The Company and its Subsidiaries have taken commercially reasonable actions to maintain
and preserve the Company Intellectual Property, including such measures to protect the secrecy and
confidentiality of the Companys and its Subsidiaries Trade Secrets included in the Company
Intellectual Property.
(h) All manufacturing operations conducted by, or, to the Knowledge of the Company, for the
benefit of, the Company and its Subsidiaries with respect to any Product or Pipeline Product and
all manufacturing facilities of the Company or its Subsidiaries have since January 1, 2008 been and
are being conducted in all material respects in accordance with the FDAs current Good
Manufacturing Practice Regulations at 21 C.F.R. Parts 210 and 211 for products sold in the United
States and the respective counterparts thereof promulgated by Governmental Entities in countries
outside the United States. The Company has sufficient capacity and capability and all Regulatory
Registrations and Company Permits necessary as of the date of this Agreement to manufacture the
Product in sufficient quantities, taking into account safety stock, to meet the current and the
Companys expected demand for the Product for the next 12 months in all countries where it is sold.
Section 3.15
Takeover Statutes
. No fair price, moratorium, control share
acquisition, business combination or other similar antitakeover statute or regulation enacted
under state or federal laws in the United States (with the exception of Section 203 of the DGCL) is
applicable to the transactions contemplated by this Agreement. The Company has taken all action
necessary such that the restrictions contained in Section 203 of the DGCL do not apply to the
Merger, this Agreement and the transactions contemplated hereby; provided, however, that, for
purposes hereof, Parent and Sub hereby specifically represent and warrant to the Company that
neither of them is an interested stockholder in the Company, as such term is defined in Section
203 of the DGCL.
Section 3.16
Title to Properties; Assets/Services
.
(a) The Company and its Subsidiaries have valid and legal title to, a leasehold interest in,
license or easement in the real and personal properties as reflected in the Companys consolidated
balance sheet as of March 31, 2010, except for properties and assets that have been disposed of in
the ordinary course of business since March 31, 2010, free and clear of all Liens of any nature
whatsoever, except (i) Liens for current Taxes, payments of which are not yet delinquent and for
which adequate reserves have been established in accordance with GAAP on the books and records of
the Company; (ii) mechanics, carriers, workmens, warehousemans, repairmens, materialmens or
other Liens or security interests arising in the ordinary course of business securing obligations
that are not yet due and payable or are being contested in good faith; (iii) Liens imposed by
applicable Law (other than Tax Law) arising in the ordinary course of business securing obligations
for sums that are not yet due and payable or are being contested in good faith; (iv) pledges or
deposits to secure obligations under workers compensation Laws or similar legislation or to secure
public or statutory obligations; (v) pledges and deposits to secure the performance of bids, trade
contracts, leases, surety and appeal bonds, performance bonds and other obligations of a similar
nature; or (vi) such imperfections in title and easements and encumbrances as are not substantial
in character, amount or extent and do not materially detract from the business subject thereto or
affected thereby, or materially interfere with or materially adversely affect or impair the present
and continued use of the property subject thereto or affected thereby, or otherwise materially
impair the operations of the Company or any of its Subsidiaries (in the manner presently carried on
by the Company and its Subsidiaries).
Section 3.16(a)
of the Disclosure Schedule sets
forth a true, complete and correct list of all real property owned, leased, subleased or licensed
by the Company and each of its Subsidiaries and the location of such properties (collectively, the
Real Property
). All Real Property leased or subleased by the Company or its Subsidiaries
is referred to herein as the
Leased Real Property
.
-22-
(b) As of the date of this Agreement, there are no material leases, subleases, licenses,
concessions or other agreements, written or oral, granting to any party or parties the right of use
or occupancy of any portion of any Real Property and Leased Real Property. Except as would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect, the Company or its Subsidiaries have a valid and subsisting leasehold estate in and the
right to quiet enjoyment of each Leased Real Property for the full term of the lease or sublease
creating such interest. As of the date of this Agreement, to the Knowledge of the Company there
are no eminent domain, condemnation or other similar actions or proceedings pending or threatened
with respect to any of the Real Property by any Governmental Entity having jurisdiction over any
such Real Property. As currently operated and maintained, each of the Real Properties is in
compliance in all material respects with all federal, state and local Law applicable to each such
Real Property.
Section 3.17
Material Contracts
.
(a)
Section 3.17(a)
of the Disclosure Schedule sets forth a true and complete list as
of the date of this Agreement of each of the following Company Contracts, together with all
amendments thereto: (i) each Company Contract that restricts in any material respect the ability
of the Company or any of its Subsidiaries or any of the Companys current or future Affiliates to
sell products in or otherwise compete in any geographic area or line of business; (ii) any Company
Contract pursuant to which any Person provides manufacturing services involving the Product, any
Pipeline Product or any product using Nab
®
Technology for the Company or any of its Subsidiaries,
(iii) each Company Contract pursuant to which the Company or any of its Subsidiaries grants or is
granted any license to use or exploit, covenant not to sue, immunity from suit or similar rights
under any Intellectual Property of a third party that, in each case, is related to the Product, any
Pipeline Product, or the Nab
®
Technology; (iv) each Company Contract pursuant to which raw
materials are supplied, or equipment is supplied or leased, to the Company or any of its
Subsidiaries (excluding purchase orders given or received in the ordinary course of business), in
each case relating to any key component or manufacturing involved in the compounding or formulation
of the Product or any products using Nab
®
Technology; (v) each Company Contract that grants any
right of first refusal or right of first offer or similar right or that limits or purports to limit
the ability of the Company or any of its Subsidiaries to own, operate, sell, transfer, pledge or
otherwise dispose of any material amount of assets or businesses relating to the Product, any
Pipeline Product, or the Nab
®
Technology; (vi) each Company Contract providing for future
performance by the Company or any of its Subsidiaries in consideration of amounts previously paid,
the balance of which exceeds $5,000,000 as of the date of this Agreement; and (vii) any other
material contract (as such term is defined in Item 601(b)(10) of Regulation S-K of the Securities
Act) that were required to be filed with or furnished to the SEC prior to the date of this
Agreement. Each Company Contract (A) of the type described in
Section 3.17(a)
of the
Disclosure Schedule, whether or not disclosed in response to this
Section 3.17(a)
, or
referred to in
Section 3.17(b)
, whether or not provided or publicly filed, and (B) entered
into after the date of this Agreement and of the type required to be described in
Section
3.17(a)
or referred to in
Section 3.17(b)
, whether or not provided or publicly filed of
the Disclosure Schedule if such Company Contract were in effect as of the date of this Agreement,
is referred to herein as a
Material Contract
.
-23-
(b) The Company has provided to Parent or publicly filed with the SEC true and complete copies
of each Company Contact referred to in
Section 3.17(a)
and each of the following Company
Contacts, in each case that are in effect as of the date of this Agreement: (i) each Company
Contract with customers (excluding purchase orders given or received in the ordinary course of
business) under which the Company or any of its Subsidiaries received in excess of $10,000,000 in
2009 or is expected to receive in excess of $10,000,000 in 2010 or any year thereafter; (ii) each
Company Contract pursuant to which the Company or any of its Subsidiaries occupies Leased Real
Property and under which the Company or any of its Subsidiaries is required to pay an annual rental
in excess of $5,000,000 in 2010
or any year thereafter; and (iii) each Company Contract for any joint venture (whether in
partnership, limited liability company or other organizational form), co-promote agreements or
co-branding agreements (other than distribution agreements) or agreements pursuant to which the
Company or any of its Subsidiaries permitted distribution of the Product or the Pipeline Products
under another partys name or trademarks.
(c) All Material Contracts are valid and in full force and effect and enforceable in
accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar Laws of general applicability relating to or affecting
creditors rights and general equity principles, except to the extent that (i) such Material
Contracts have previously expired or otherwise terminated in accordance with their terms or (ii)
the failure to be in full force and effect would not reasonably be expected to have a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries, nor, to the Knowledge of
the Company, any counterparty to any such Material Contract, has violated any provision of, or
committed or failed to perform any act which, with or without notice, lapse of time or both, would
constitute a default under, or give rise to a right of termination, modification, cancellation,
foreclosure, imposition of a Lien, prepayment or acceleration under the provisions of any Material
Contract, except in each case for those violations or defaults which would not reasonably be
expected to have a Company Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received written notice that it has breached, violated or defaulted under any
Material Contract. Prior to the date of this Agreement, the Company and its Subsidiaries have not
received any written claims for indemnification pursuant to the 2007 Separation and Distribution
Agreement.
Section 3.18
Opinion of Financial Advisors
. The Companys financial advisors,
Goldman, Sachs & Co., Lazard, Freres & Co. LLC and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the
Company Financial Advisors
), have each delivered to the Board of
Directors an opinion, to the effect that, as of the date of this Agreement and subject to the
matters and assumptions set forth in their respective opinions, the Merger Consideration to be paid
to the holders (other than Parent, Patrick Soon-Shiong, M.D. and any of their respective
Affiliates) of shares of Company Common Stock pursuant to the Merger Agreement is fair to such
holders from a financial point of view. The Company will provide, solely for informational
purposes, a true, complete and correct copy of such opinions to Parent after receipt thereof in
writing by the Company.
Section 3.19
Pharmaceutical Matters
.
(a) The Company and its Subsidiaries and to the Knowledge of the Company its respective
directors, officers, employees, and agents (while acting in such capacity) are, and at all times
have been, in compliance, and the Companys business (including the research, development,
labeling, manufacture, testing, storage, use, sale, offer for sale, importation, and other
distribution or commercial exploitation of the Product, the Pipeline Products, and the cervical
cancer screening test marketed by the Companys Subsidiary Neodiagnostix, Inc. (the
Screening
Test
) and all preclinical studies, clinical trials, and other studies and tests conducted
thereon) has been operated in accordance, in all material respects with (i) all applicable Laws of
the United States Drug Enforcement Administration, the United States Department of Health and Human
Services and its constituent agencies, the Centers for Medicare & Medicaid Services, the Office of
Inspector General and the United States Food and Drug Administration (the
FDA
and,
collectively with other applicable U.S. or foreign drug regulatory authorities,
Regulatory
Authorities
), (including the federal Food, Drug, and Cosmetic Act (21 U.S.C. § 321 et seq.)
(the
FDCA
), the Controlled Substances Act (21
-24-
U.S.C. § 801 et seq.), the federal
Anti-kickback Statute (42 U.S.C. § 1320a-7b(b)), the Anti-Inducement Law (42 U.S.C. § 1320a-7a(a)(5)), the Stark Law (42 U.S.C. § 1395nn), the
Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et seq.), the
exclusion laws (42 U.S.C. § 1320a-7), the regulations promulgated pursuant to the foregoing laws,
and the Federal Acquisition Regulations (48 C.F.R. Parts 1-53)), (ii) the drug price reporting
requirements of titles XVIII and XIX of the Social Security Act, (iii) the applicable laws
precluding off-label marketing of drugs, (iv) all other United States laws and regulations with
respect to the marketing, sale, pricing, price reporting, and reimbursement of prescription drug
products, including the provisions of the Federal False Claims Act, 31 U.S.C. §3729 et seq., the
Medicare Program (Title XVIII of the Social Security Act), the Medicaid Program (Title XIX of the
Social Security Act), the regulations promulgated pursuant to such Laws, requirements of the
Medicaid Drug Rebate Program (42 U.S.C. § 1396r-8) and any state supplemental rebate program,
requirements of Medicare average sales price reporting (42 U.S.C. § 1395w-3a), the Public Health
Service Act (42 U.S.C. § 256b), the VA Federal Supply Schedule (38 U.S.C. § 8126) state
pharmaceutical assistance programs and regulations under such Laws, and (v) comparable state and
foreign laws. The Company and its Subsidiaries have complied with any and all obligations
pertaining to listing any relevant Patents included in the Company Intellectual Property in the FDA
Orange Book and have also complied with any and all obligations under the Bayh-Dole Act.
(b) Neither the Company nor any of its Subsidiaries is excluded or debarred under the Generic
Drug Enforcement Act of 1992 or any government health care program, including Medicare and
Medicaid; and no employee of the Company or any of its Subsidiaries or to the Knowledge of the
Company no consultants or subcontractors of the Company or any of its Subsidiaries is excluded or
debarred. No claims, actions, proceedings or investigations that would reasonably be expected to
result in such a material debarment are pending, and the Company has not received written notice
that any such claims, actions, proceedings or investigations are threatened against the Company,
the Companys Subsidiaries, or any of their respective officers or key employees.
(c) (i) Except as would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect, the Company and its Subsidiaries meet all of the requirements of
participation and payment of Medicare, Medicaid, any other state or federal government health care
programs, and any other public or private third party payor programs (collectively,
Programs
) that the Company or any of its Subsidiaries participates in or receives payment
from, and (ii) there is no investigation, audit, claim review, or other action pending, or, to the
Knowledge of the Company, threatened, against the Company or any of its Subsidiaries which could
reasonably be expected to result in the exclusion of the Companys business from any Program.
(d) Except as set forth on
Section 3.19(d)
of the Disclosure Schedule, (i) to the
Knowledge of the Company, there is no pending action, investigation or inquiry of any type by any
Regulatory Authority (other than non-material routine or periodic inspections or reviews) against
the Company or its Subsidiaries relating to the Product, the Pipeline Products, or the Screening
Test; (ii) since January 1, 2008, no Product, Pipeline Product, or Screening Test has been
recalled, suspended or discontinued; and (iii) since January 1, 2008, none of the Company or any of
its Subsidiaries has received any written notification, correspondence or any other written
communication from any Governmental Entity, including the FDA, the Centers for Medicare and
Medicaid Services, and the Department of Health and Human Services Office of Inspector General, of
potential or actual material non-compliance by, or liability of, the Company or any of its
Subsidiaries, under any of the Laws referenced in
Section 3.19(a)
.
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(e) To the Knowledge of the Company, there are no facts or circumstances that could reasonably
be construed as indicating that marketing approval for the Product will be withdrawn. Neither the
Company nor its Subsidiaries has received any written notification, correspondence or any other
written communication from the FDA or the European Medicines Agency requesting that the
Company or its Subsidiaries make any material change in the labeling of the Product or any Pipeline
Product, or indicating that such a request may be made.
(f) Neither the Company nor its Subsidiaries have marketed, sold, offered for sale, or
distributed any Pharmaceutical Products other than the Product and the Screening Test. For
purposes of this Agreement,
Regulatory Registrations
means all investigational new drug
applications, new drug applications, product license application, or biologics license application
or similar regulatory applications of the Company and its Subsidiaries that have been submitted to
or approved by the FDA or any applicable Governmental Entity. All applications, notifications,
submissions, information, claims, reports and statistics and other data, utilized as the basis for
or submitted in connection with any and all Regulatory Registrations from the FDA or other
Regulatory Authority relating to the Company and its Subsidiaries or their respective business
operations and Pharmaceutical Products, when submitted to the FDA or other Regulatory Authority
were true, complete and correct in all material respects as of the date of submission and any
necessary or required updates, changes, corrections or modification to such applications,
submissions, information and data have been submitted to the FDA or such other Regulatory
Authority.
(g) None of the Company or any of its Subsidiaries is a party to any corporate integrity
agreements, monitoring agreements, consent decrees, settlement orders, or other similar written
agreements, in each case, entered into with or imposed by any Regulatory Authority.
Section 3.20
Brokers and Finders
. The Company has not entered into any Contract,
arrangement or understanding with any Person which may result in the obligation of the Company to
pay any investment banking fees, finders fees, brokerage or agent commissions or other like
payments in connection with the Merger, other than fees payable to the Company Financial Advisors.
Section 3.21
Insurance
. Each of the material insurance policies and material self
insurance programs and arrangements relating to the business, assets and operations of the Company
and its Subsidiaries (the
Insurance Policies
) is in full force and effect, all premiums
due thereon have been paid in full and the Company and its Subsidiaries are in compliance in all
material respects with the terms and conditions of such Insurance Policies. Since January 1, 2009,
and prior to the date of this Agreement, none of the Company or any of its Subsidiaries has
received any written notice regarding any actual or possible (a) cancellation of any Insurance
Policy that has not been renewed in the ordinary course without any lapse in coverage, (b)
invalidation of any Insurance Policy, (c) refusal of any coverage, limitation in coverage or
rejection of any material claim under any Insurance Policy, or (d) material adjustment in the
amount of the premiums payable with respect to any Insurance Policy. As of the date of this
Agreement, there is no material claim by the Company or any of its Subsidiaries pending under any
of the Insurance Policies and no material claim made since January 1, 2009 that is still pending
has been questioned or disputed by the underwriters of such Insurance Policies.
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Section 3.22
Anti-Corruption and Anti-Bribery
.
(a) For the purposes of this Agreement, the term
Anti-Corruption and Anti-Bribery
Laws
shall mean all applicable Laws governing corrupt or illicit business practices, including
laws dealing with improper or illegal payments, gifts or gratuities and/or the payment or receipt
of money or anything of value directly or indirectly to or from any Person (whether a government
official or private individual) for the purpose of illegally inducing any Person or government
official, or political party or official thereof, or any candidate for any such position, in making
any decision or illegally assisting any Person in obtaining or retaining
business or taking any other action favorable to such Person, and/or dealing with business
practices in relation to investments outside of the United States (including, by way of example, if
applicable, the United States Foreign Corrupt Practices Act of 1977, as amended, any rules or
regulations thereunder).
(b) Neither the Company nor its directors, officers, agents, employees, Subsidiaries or
Affiliates has, directly or indirectly, (i) used any corporate funds in a manner which would cause
it to be in violation of any Anti-Corruption or Anti-Bribery Laws, (ii) established or maintained
any unrecorded fund or asset for any purpose or made any false entries on the books and records of
the Company or any of its Subsidiaries for any reason, (iii) paid, delivered or received any fee,
commission or any other sum or money or item of property, however characterized, to or from any
finder, principal, agent, governmental official or other party in the United States or any other
country, which in any manner relates to the assets, business or operations of the Company or any of
its Subsidiaries in violation of any Laws or (iv) made or received any other unlawful payment.
(c) There are no pending or, to the Knowledge of the Company, threatened claims against the
Company with respect to such Anti-Corruption or Anti-Bribery laws.
(d) The Company has established and maintains a compliance program and internal controls and
procedures appropriate to the requirements of the Anti-Corruption and Anti-Bribery Laws.
Section 3.23
No Other Representations or Warranties
. Except for the representations
and warranties expressly contained in this Agreement, each of Parent and Sub acknowledges that
neither the Company nor any other Person on behalf of the Company makes any other express or
implied representation or warranty with respect to the Company, any of its Subsidiaries or their
respective businesses or any other matter or with respect to any other information provided or made
available to Parent or Sub, and that all such representations and warranties, other than the
representations and warranties of the Company expressly contained in this Agreement, are expressly
disclaimed. Neither the Company nor any other Person makes any representation or warranty with
respect to any such information, including any information, projections, forecasts or other
material made available to Parent and Sub in a data room or virtual data room, confidential
information memoranda or management presentations in expectation of the transactions contemplated
by this Agreement, except that the foregoing limitations shall not (i) apply to the Company to the
extent the Company makes the specific representations and warranties set forth in this Agreement,
but always subject to the limitations and restrictions contained herein, or (ii) preclude Parent or
Sub from seeking any remedy for fraud.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Except as disclosed in Parents Annual Report on Form 10-K for the year ended December 31, 2009,
Parents Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 or any of Parents
Current Reports on Form 8K dated after December 31, 2009 filed by Parent with the SEC pursuant to
the Exchange Act prior to the date of this Agreement but excluding (i) any disclosures contained or
referenced therein under the captions Risk Factors, Forward-Looking Statements, and
Quantitative and Qualitative Disclosures About Market Risk and any other disclosures contained or
referenced therein of information, factors or risks that are predictive, cautionary or
forward-looking in nature, and (ii) with respect to
Section 4.2(a)
, any disclosures
contained or referenced therein, Parent and Sub, jointly and severally, represent and warrant to
the Company as follows:
Section 4.1
Organization, Standing and Power
. Each of Parent and Sub is a legal
entity duly organized, validly existing and in good standing under the Laws of its jurisdiction of
organization and has all requisite corporate or similar power and authority to own, lease and
operate its
properties and assets and to carry on its business as presently conducted and is qualified to
do business and is in good standing as a foreign legal entity in each jurisdiction where the
ownership, leasing or operation of its assets or properties or conduct of its business requires
such qualification, except where the failure to be so organized, qualified or in good standing, or
to have such power or authority, would not reasonably be expected to have a Parent Material Adverse
Effect.
Section 4.2
Capital Structure
.
(a) The authorized capital stock of Parent consists of 575,000,000 shares of Parent Common
Stock and 5,000,000 shares of preferred stock, par value $0.01 per share. As of the close of
business on May 31, 2010, (i) 459,949,694 shares of Parent Common Stock were issued and
outstanding, (ii) no shares of preferred stock were outstanding, (iii) an aggregate of 40,736,541
shares of Parent Common Stock were issuable upon exercise of then outstanding stock options
(whether or not exercisable as of such date) and the vesting of restricted stock units, and (iv)
35,000 shares of Parent Common Stock were issuable upon the exercise of then outstanding warrants.
In addition to the shares of Parent Common Stock referred to in clauses (i) and (iii), as of the
close of business on May 31, 2010, 20,935,840 shares of Parent Common Stock were available for
additional grants under Parents stock option or equity incentive plans. All of the outstanding
shares of Parent Common Stock are validly issued and outstanding, fully paid and non assessable and
free of preemptive rights.
(b) Except as otherwise set forth in this
Section 4.2
, as of the date of this
Agreement, Parent has no (i) outstanding stock or securities convertible into or exchangeable for
any shares of its equity securities, or any outstanding rights to subscribe for or to purchase any
shares of its equity securities, or any outstanding options for the purchase thereof, (ii) any
agreements providing for the issuance of any equity securities or any stock or securities
convertible into or exchangeable for any equity securities of Parent or (iii) outstanding bonds,
debentures, notes or other indebtedness having the right to vote (or convertible into or
exchangeable for securities having the right to vote) on any matters on which stockholders of
Parent may vote. From June 25, 2010 to the date of this Agreement, Parent has not (i) issued any
shares of Parent Common Stock except in connection with the conversion, exercise or settlement of
any stock options or (ii) issued or granted any options, warrants or securities convertible into or
exercisable for shares of its Parent Common Stock other than in the ordinary course of business.
(c) The shares of Parent Common Stock to be issued in the Merger have been duly authorized
and, when issued and delivered in accordance with the terms of this Agreement, will have been
validly issued and will be fully paid and nonassessable and the issuance thereof is not subject to
any preemptive or other similar right.
Section 4.3
Operations of Sub
. All of the issued and outstanding capital stock of Sub
is, and at the Effective Time will be, owned by Parent or a direct or indirect wholly-owned
Subsidiary of Parent. Sub was formed solely for the purpose of effecting the Merger. Sub has not
conducted any business prior to the date hereof and has no, and prior to the Effective Time will
have no, assets, liabilities or obligations of any nature other than those incident to its
formation and pursuant to this Agreement and the Merger and the other transactions contemplated by
this Agreement.
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Section 4.4
Authority; Non-Contravention
.
(a) Each of Parent and Sub has the requisite power and authority to enter into this Agreement
and to consummate the Merger and the transactions contemplated by this Agreement. The execution
and delivery of this Agreement by each of Parent and Sub and the consummation by Parent and Sub of
the Merger and the transactions contemplated by this Agreement have been duly authorized by all
necessary action on the part of each of Parent and Sub. This Agreement has been duly executed and
delivered by each of Parent and Sub and (assuming the valid authorization, execution and
delivery of this Agreement by the Company) constitutes a valid and binding obligation of Parent and
Sub, enforceable against Parent and Sub in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general
applicability relating to or affecting creditors rights and general equity principles. No vote or
approval of the stockholders of Parent is required in connection with the execution, delivery or
performance by Parent and Sub of their obligations hereunder or for the consummation of the Merger.
(b) The execution and delivery of this Agreement does not, and the consummation of the Merger
and compliance with the provisions hereof will not, (i) conflict with, or result in any violation
of, the organizational documents of Parent, (ii) conflict with, or result in any violation of the
organizational documents of any of Parents Subsidiaries, (iii) result in any violation or breach
of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation, or result in the creation of any Lien
upon any of the properties or assets of Parent or any of its Subsidiaries under, any provision of
any Contract to which Parent or any of its Subsidiaries is a party or by which their respective
properties and assets are bound, except for any such violation, breach, default or right of
termination, cancellation or acceleration or Lien as to which requisite waivers or consents have
been obtained or (iv) assuming that the Registrations and Consents set forth in this
Section
4.3(b)
are duly and timely made or obtained, violate any Law applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, other than, in the case of clauses
(iii) or (iv), any such conflict, violation, default, termination, cancellation, acceleration or
Lien that would not, individually or in the aggregate, reasonably be expected to materially impair
the ability of Parent and/or Sub to perform their obligations hereunder or prevent or materially
delay the consummation of the Merger or any of the other transactions contemplated hereby.
(c) No Consents of, or Registrations with, any Governmental Entity is required on the part of
Parent or any of its Subsidiaries in connection with the execution and delivery of this Agreement
by Parent or Sub or is necessary for the consummation by Parent and Sub of the Merger and the other
transactions contemplated hereby, except for (i) compliance with and filings under the HSR Act,
(ii) compliance with the provisions of Exchange Act and the Securities Act or the rules of any
national securities exchange, (iii) the qualification of the CVR Agreement under the Trust
Indenture Act of 1939, as amended (the
Trust Indenture Act
), if required by Law, (iv) the
filing of the Certificate of Merger with the Secretary of State of Delaware and appropriate
documents with the relevant authorities of other states in which the Company is qualified to do
business, (v) such as may be required in connection with the Taxes described in
Section
6.11
, and (vi) such other Consents or Registrations the failure of which to be obtained or made
would not, individually or in the aggregate, materially impair the ability of Parent and Sub to
perform their obligations hereunder or prevent or materially delay the consummation of the Merger
or any of the transactions contemplated hereby.
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Section 4.5
SEC Documents
.
(a) Since January 1, 2008, Parent has filed with, or furnished to, the SEC all documents
required to be filed or furnished by Parent under the Securities Act or the Exchange Act
(collectively, the
Parent SEC Documents
). As of their respective dates, Parent SEC
Documents complied in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and as of their respective dates and except as amended or
supplemented prior to the date hereof (or with respect to Parent SEC Documents filed or furnished
after the date hereof, except as amended or supplemented prior to the Closing Date), none of Parent
SEC Documents contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no representation is
made by Parent with respect to information supplied by the Company or its Subsidiaries in writing
for inclusion in the Registration Statement. Each of the consolidated financial statements of
Parent (including, in each case, any notes thereto) included in Parent SEC Documents (collectively,
the
Parent Financial Statements
) have been prepared in accordance with U.S. GAAP applied
on a consistent basis during the periods involved (except as may be indicated therein or in the
notes thereto) and fairly present in all material respects the financial position of Parent and its
consolidated Subsidiaries as at the dates thereof and the results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments and to any other adjustments set forth therein). As of the date of this
Agreement, neither Parent nor any of its Subsidiaries has any pending or unresolved comments from
the SEC or any other Governmental Entity with respect to any of Parent SEC Documents.
(b) To the Knowledge of Parent, neither Parent nor any of its Subsidiaries has any liability
or obligation of any nature (whether accrued, absolute, contingent or otherwise), except for
liabilities, obligations or contingencies which (i) are reflected, or for which reserves are
established, on the consolidated balance sheet of Parent as of March 31, 2010, (ii) were incurred
in the ordinary course of business since March 31, 2010, (iii) would not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect or (iv) have been incurred
in connection with the performance by Parent of its obligations under this Agreement or the
transactions contemplated hereby.
(c) Each of the principal executive officer and the principal financial officer of Parent (or
each former principal executive officer and each former principal financial officer of Parent, as
applicable) has made the certifications required by Rules 13a-14 and 15d-14 promulgated under the
Exchange Act or Sections 302 and 906 of the Sarbanes-Oxley Act with respect to Parent SEC
Documents. For purposes of the preceding sentence, principal executive officer and principal
financial officer have the meanings ascribed to those terms under the Sarbanes-Oxley Act.
(d) To the Knowledge of Parent, since January 1, 2008 and prior to the date of this Agreement,
none of Parent, any of its Subsidiaries or any director, officer, auditor, accountant or
representative of Parent or any of its Subsidiaries has received any substantive complaint,
allegation, assertion or claim, whether written or oral, that Parent or any of its Subsidiaries has
engaged in questionable accounting or auditing practices. No current or former attorney
representing Parent or any of its Subsidiaries has reported evidence of a material violation of
securities Laws, breach of fiduciary duty or similar violation by Parent or any of its
Subsidiaries, or any of their respective officers, directors, employees or agents, to Parents
current board of directors or any committee thereof or to any current director or executive officer
of Parent.
(e) Parent and its Subsidiaries have designed and maintain internal controls over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) to
provide reasonable assurances (i) regarding the reliability of Parents financial reporting and the
preparation of financial statements for external purposes in accordance with U.S. GAAP (ii) that
receipts and expenditures of Parent and its Subsidiaries are being made only in accordance with the
authorization of management and directors of Parent and such Subsidiaries and (iii) regarding
prevention or timely detection of the unauthorized acquisition, use or disposition of Parents or
its Subsidiaries assets that could have a material effect on Parents financial statements.
Parent has designed and maintains disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) promulgated under the Exchange Act) to ensure that material information required to
be disclosed by Parent in the reports that Parent files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the SECs rules
and forms and is accumulated and communicated to Parents management as appropriate to allow timely
decisions regarding required disclosure and to make the
certifications of the principal executive officer and principal financial officer of Parent
required under the Exchange Act with respect to such reports.
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(f) Neither Parent nor any of its Subsidiaries is a party to, or has any commitment to become
a party to, any joint venture, off balance sheet partnership or any similar Contract binding on
Parent or any of its Subsidiaries or any of their properties or assets (including any Contract
binding on Parent or any of its Subsidiaries or any of their properties or assets or arrangement
relating to any transaction or relationship between or among Parent and any of its Subsidiaries, on
the one hand, and any unconsolidated affiliate, including any structured finance, special purpose
or limited purpose entity or person, on the other hand, or any off balance sheet arrangements (as
defined in Item 303(a) of Regulation S-K under the Exchange Act)), where the result, purpose or
intended effect of such Contract is to avoid disclosure of any material transaction involving, or
material liabilities of, Parent or any of its Subsidiaries in Parents or such Subsidiarys
published financial statements or other documents required to be filed or furnished by Parent under
the Securities Act or the Exchange Act.
(g) Since January 1, 2009, Parent has not received any oral or written notification of any
material weakness in Parents internal control over financial reporting. There is no outstanding
significant deficiency or material weakness that Parents independent accountants certify has
not been appropriately and adequately remedied by Parent. For purposes of this Agreement, the
terms significant deficiency and material weakness shall have the meanings assigned to them in
Release No. 2007-005 of the Public Company Accounting Oversight Board, as in effect on the date
hereof.
Section 4.6
Absence of Certain Events
. From March 31, 2010 to the date of this
Agreement, there has not occurred any Effect that, individually or in the aggregate with all other
Effects, has had, or would reasonably be expected to have, a Parent Material Adverse Effect. For
purposes of this Agreement,
Parent Material Adverse Effect
means any Effects, that, in
the aggregate with all other Effects, is, or would reasonably be expected to be, (1) materially
adverse to the business, assets, financial condition or results of operations of Parent and its
Subsidiaries taken as a whole, or (2) prevent the consummation of the Merger; provided that in no
event shall any of the following, alone or in combination, be deemed to constitute, nor shall any
of the following be taken into account in determining whether there has been, or there would
reasonably be expected to be, a Parent Material Adverse Effect: (a) any Effect relating to, or
resulting from, any change or developments in or to local, regional, national or foreign political,
economic or financial conditions or in or to local, regional, national or foreign credit,
financial, banking or securities markets (including any disruption thereof), including any Effect
caused by acts of terrorism or war or armed hostilities (whether or not declared), (b) any Effect
affecting generally any of the industries, geographic areas or business segments in which Parent or
any of its Subsidiaries operates, (c) any Effect relating to, or resulting from, any hurricane,
earthquake or other natural disasters, (d) any change in the share price or trading volume (as
opposed to the facts underlying such change) of Parent Common Stock on NASDAQ (provided, however,
that the facts and circumstances giving rise to such Effect that are not otherwise excluded from
the definition of Parent Material Adverse Effect may be considered for purposes of determining
whether there has been, or would reasonably be expected to be, a Parent Material Adverse Effect),
(e) any Effect relating to, or resulting from, the adoption, implementation, promulgation, repeal,
modification or proposal of any Law or U.S. GAAP, after the date of this Agreement, (f) any
failure, in and of itself (as opposed to the facts underlying such failure), to meet any budgets,
plans, projections or forecasts of Parents or its Subsidiaries revenue, earnings or other
financial performance or results of operations, or any published financial forecasts or analyst
estimates with respect to the revenue, earnings or other financial performance or results of
operations of Parent or its Subsidiaries or any change in analyst recommendations, for any period
(provided, however, that the facts and circumstances giving rise to such failures that are not
otherwise excluded from the definition of Parent Material Adverse Effect may be considered for
purposes of determining whether there has been, or there
-31-
would reasonably be expected to be, a Parent Material Adverse Effect may be considered for purposes of determining whether
there has been, or would reasonably be expected to be, a Parent Material Adverse Effect), or (g)
any Effect directly relating to, or resulting from, the execution, performance or announcement of
this Agreement or the Related Agreements (including the impact thereof on relationships,
contractual or otherwise, with customers, suppliers, licensors, licensees, distributors, partners
or employees, the loss or departure of officers or other employees of Parent or its Subsidiaries
and any pending or threatened Proceeding challenging this Agreement, any of the Related Agreements
or the transactions contemplated hereby or thereby, or otherwise resulting from the pursuit of the
consummation of the transactions contemplated hereby or thereby; except that clauses (a), (b), (c)
and (e), shall not be applicable with respect to Effects to the extent, but only to the extent,
that any such Effects have had, or would reasonably be expected to have, a disproportionate impact
on Parent and its Subsidiaries, taken as a whole, relative to other participants in the industry in
which Parent and its Subsidiaries operate.
Section 4.7
Proxy Statement/Prospectus and Registration Statement
. None of the
information supplied or to be supplied by Parent or any of its Subsidiaries for inclusion or
incorporation by reference in the Registration Statement or the Proxy Statement/Prospectus at the
time the Registration Statement becomes effective under the Securities Act or at the time the Proxy
Statement/Prospectus is mailed to stockholders of the Company and at the time of the Company
Stockholders Meeting will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not misleading, except that no
representation is made by Parent or Sub with respect to information supplied by the Company for
inclusion or incorporation by reference in any of such documents.
Section 4.8
Availability of Funds; Parent Common Stock
. Parent shall have available
at the Closing (i) sufficient funds to pay the Cash Consideration and all amounts payable in lieu
of fractional shares pursuant to Section 2.2(e) in respect of all of the then outstanding shares of
Company Common Stock, pay all cash amounts payable in respect of then outstanding Options, SARs and
RSUs, and pay all fees, expenses and other amounts payable by the Company and its Subsidiaries in
connection with the Merger, and (ii) sufficient authorized but unissued shares of Parent Common
Stock to issue the shares of Parent Common Stock to be issued pursuant to
Section
2.1(a)(ii)
. Parent and Sub expressly acknowledge and agree that their obligations hereunder,
including their obligations to consummate the Merger, are not subject to, or conditioned on,
receipt of financing.
Section 4.9
Litigation
. There is no Proceeding pending or, to the Knowledge of Parent
(as defined in
Section 9.15
), threatened against Parent or Sub or any of their Subsidiaries
or any property or asset of the Parent or Sub or any of their respective Subsidiaries which, if
adversely determined, would reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect. As of the date of this Agreement, neither Parent nor Sub is
subject to any writ, judgment, injunction or decree that would reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.10
No Violation of Law
. Except for which would not reasonably be expected
to have, individually or in the aggregate, a Parent Material Adverse Effect: (i) neither Parent nor
any of its Subsidiaries is or since January 1, 2008, has been in violation of any Law; (ii) to the
Knowledge of Parent, no investigation or review by any Governmental Entity is pending or threatened
against Parent or any of its Subsidiaries; (iii) Parent and its Subsidiaries have all permits,
licenses, franchises, variances, exemptions, orders and other governmental authorizations, consents
and approvals necessary to conduct its businesses in all material respects as presently conducted
(collectively, the
Parent Permits
); and (iv) none of Parent or any of its Subsidiaries is
in violation of the terms of any Parent Permit.
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Section 4.11
Brokers and Finders
. No broker, investment banker or other Person, other
than Morgan Stanley & Co. Incorporated, the fees and expenses of which will be paid by Parent, is
entitled to any brokers, finders or other similar fee or commission in connection with the Merger
and the transactions contemplated by this Agreement based upon arrangements made by or on behalf of
the Parent or Sub.
Section 4.12
Ownership of Shares
. As of the date of this Agreement, none of Parent,
Sub or their respective Affiliates owns (beneficially or of record) any shares of Company Common
Stock, and none of Parent, Sub or their respective Affiliates is a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any
shares of Company Common Stock.
Section 4.13
Solvency
. Assuming satisfaction of the conditions to Parents obligation
to consummate the Merger, and after giving effect to the transactions contemplated by this
Agreement, and the payment of the aggregate cash consideration payable to the Securityholders
pursuant to
ARTICLE II
, payment of all amounts required to be paid in connection with the
consummation of the Merger and the other transactions contemplated hereby, and payment of all
related fees and expenses, each of Parent and the Surviving Corporation will be Solvent as of the
Effective Time and immediately after the consummation of the transactions contemplated hereby. For
the purposes of this Agreement, the term
Solvent
when used with respect to any Person,
means that, as of any date of determination (a) the amount of the fair saleable value of the
assets of such Person will, as of such date, exceed (i) the value of all liabilities of such
Person, including contingent and other liabilities, as of such date, as such quoted terms are
generally determined in accordance with applicable Laws governing determinations of the insolvency
of debtors, and (ii) the amount that will be required to pay the probable liabilities of such
Person on its existing debts (including contingent and other liabilities) as such debts become
absolute and mature, and (b) such Person will be able to pay its liabilities, including contingent
and other liabilities, as they mature. For purposes of this definition, able to pay its
liabilities, including contingent and other liabilities, as they mature means that such Person
will be able to generate enough cash from operations, asset dispositions or refinancing, or a
combination thereof, to meet its obligations as they become due.
Section 4.14
No Other Representations or Warranties
. Except for the representations
and warranties expressly contained in this Agreement, the Company acknowledges that neither Parent,
Sub or any other Person on behalf of Parent or Sub makes any other express or implied
representation or warranty with respect to Parent, any of its Subsidiaries or their respective
businesses or any other matter or with respect to any other information provided or made available
to the Company, and that all such representations and warranties, other than the representations
and warranties of Parent and Sub expressly contained in this Agreement, are expressly disclaimed.
Neither Parent, Sub nor any other Person makes any representation or warranty with respect to any
such information, including any information, projections, forecasts, confidential information
memoranda or management presentations in expectation of the transactions contemplated by this
Agreement, except that the foregoing limitations shall not (i) apply to Parent or Sub to the extent
Parent or Sub makes the specific representations and warranties set forth in this Agreement, but
always subject to the limitations and restrictions contained herein, or (ii) preclude the Company
from seeking any remedy for fraud.
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ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.1
Conduct of Business by the Company Pending the Merger
. Except as
otherwise expressly contemplated by this Agreement, as consented in writing by Parent, as set forth
in the
Disclosure Schedule or as required by applicable Law, during the period from the date of this
Agreement to the earlier to occur of (x) the date of the termination of this Agreement or (y) the
Effective Time, the Company shall, and shall cause each of its Subsidiaries to, in all material
respects carry on their respective businesses in the ordinary course and, to the extent consistent
therewith, use its reasonable best efforts to preserve intact its current business organizations,
keep available the services of its current officers and employees and preserve its relationships
with customers, suppliers and others having significant business dealings with the Company or any
of its Subsidiaries. Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated by this Agreement or as set forth in
Section 5.1
of the Disclosure
Schedule or as required by applicable Law, and subject to the provisions of
ARTICLE VIII
,
the Company shall not, and shall cause each of its Subsidiaries not to, without the prior written
consent of Parent (which consent shall not be unreasonably withheld or delayed):
(a) (i) split, combine, reclassify, subdivide or amend the terms of any of its capital stock,
(ii) declare, set aside or pay any dividends on, or make any other distributions (whether in cash,
stock or property) in respect of, any shares of its capital stock or enter into any agreement with
respect to the voting or registration of any shares of its capital stock, or (iii) repurchase,
redeem or otherwise acquire any shares of its capital stock or any securities convertible into or
exchangeable or exercisable for shares of its capital stock; provided that (A) the Company may
acquire Options, RSUs and SARs upon their exercise, settlement or forfeiture and (B) each
wholly-owned Subsidiary of the Company may repurchase, redeem or otherwise acquire shares of its
capital stock or other equity interests or securities convertible into or exchangeable or
exercisable for any shares of its capital stock or other equity interests;
(b) issue, deliver, sell, pledge, transfer, convey, dispose of or encumber any shares of its
capital stock, other equity securities or any securities convertible into, or any rights, warrants
or options to acquire, any such shares of its capital stock, such other equity securities or such
convertible securities (provided that the Company may issue shares of Company Common Stock upon
exercise of Options and/or vesting of RSUs);
(c) amend the Companys certificate of incorporation or by-laws or other organizational
documents of the Company or its Subsidiaries;
(d) merge or consolidate with any other Person, except for any such transactions between
wholly-owned Subsidiaries of the Company or between the Company and any of its wholly-owned
Subsidiaries;
(e) make any acquisition or agree to make any acquisition of any business, by merger or
otherwise;
(f) transfer, sell, lease, license, dispose of or encumber, or agree to transfer, sell, lease,
license, dispose of or encumber, any of assets of the Company or any of its Subsidiaries that have
a value in excess of $1,000,000 individually and $5,000,000 in the aggregate, except sales of
inventory or obsolete assets in the ordinary course of business;
(g) except for trade payables of the Company or any of its Subsidiaries incurred in the
ordinary course of business, (i) incur any additional indebtedness; (ii) issue any debt securities
or assume, guarantee or endorse, or otherwise become responsible for (whether directly,
contingently or otherwise), the obligations of any Person for borrowed money; or (iii) make any
loans, advances or capital contributions to, or investments in, any other Person (other than any
wholly-owned Subsidiary of the Company);
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(h) except as may be required as a result of a change in regulatory accounting standards and
practice or in U.S. GAAP (or any interpretation), change any of the accounting principles or
practices used by it materially affecting the reported consolidated assets, liabilities or results
of operations of the Company and its Subsidiaries;
(i) waive, settle or compromise any Proceeding, other than waivers, settlements or compromises
that involve only the payment of monetary damages by the Company or any of its Subsidiaries of no
more than $2,000,000 individually and $6,000,000 in the aggregate, in any case without the
imposition of equitable relief on, or the admission of wrongdoing by, the Company or any of its
Subsidiaries;
(j) (i) terminate, establish, adopt, enter into, make any new grants or awards of stock based
compensation or other benefits under, amend or otherwise modify, any Company Stock Plans, Employee
Benefit Plans or employment agreements (or any plan or arrangement that would be a Company Stock
Plan, Employee Benefit Plan or employment agreement if in existence on the date hereof) or increase
the salary, wage, bonus or other compensation of any directors or employee of the Company or any of
its Subsidiaries except (A) with respect to employees with a designation or title that is below the
level of Vice President, or the equivalent, increases in compensation in connection with annual
performance and salary reviews or upon promotion, payment of annual bonuses or non-material
increases in benefits, in each case, in the ordinary course of business, (B) for grants of RSUs as
permitted under
Section 5.1(b)
or (C) to the extent required by any of the Employee Benefit
Plans, Company Stock Plans or employment agreements existing as of the date of this Agreement; (ii)
enter into any severance, change of control, termination or retention arrangements with, or
accelerate the compensation or benefits of, any employee or director; (iii) hire any Person or
promote any Person (A) to be an officer or an employee with a designation of Vice President or
above, except to fill a vacancy in the ordinary course of business or (B) with an annual base
salary in excess of $200,000, other than Persons hired (x) to replace employees who are no longer
with the Company or its Subsidiaries, or (y) to fill vacancies created by employee promotions; or
(iv) make or forgive any loan to employees or directors (other than making advances of reasonable
travel and other business expenses in the ordinary course of business);
(k) except as required by applicable Law, make or change any material Tax election, change any
Tax accounting period, adopt or change any Tax accounting method, amend any material Tax Return,
enter into any material closing agreement, settle any material Tax claim or assessment relating to
the Company or any of its Subsidiaries, surrender any right to claim a refund of material Taxes, or
consent to any extension or waiver of the limitation period applicable to any material Tax claim or
assessment relating to the Company or any of its Subsidiaries;
(l) authorize, recommend, adopt, propose or announce an intention to adopt a plan of complete
or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries;
(m) make or commit to any capital expenditures in excess of the capital expenditures budget
set forth in
Section 5.1(m)
of the Disclosure Schedule, except to the extent that such
excess is not greater than $10,000,000 in the aggregate;
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(n) (i) except for Material Contracts of the type described in
Section 3.17(b)(i)
and
entered into in the ordinary course of business with respect to customers and suppliers, enter
into, terminate (except at the end of its term) or modify in any material respect any Material
Contract (or any contract or agreement that if in existence on the date hereof would be a Material
Contract) or waive, release or assign any material rights or claims thereunder, (ii) grant or
acquire, agree to grant or to acquire from any third party, or dispose of or permit to lapse any
right, title or interest to, any Intellectual
Property, or encumber, impair, abandon, fail to diligently maintain, transfer or otherwise
dispose of any right, title or interest of the Company or any of its Subsidiaries in any Company
Intellectual Property (other than, in each case, pursuant to any Company Contract that is (A) a
material transfer or sponsored research agreement, (B) a clinical trial agreement, or (C) a
clinical research agreement entered into with a clinical research organization, in each case, that
solely grants non-exclusive rights in the ordinary course of business consistent with past
practices), or (iii) divulge, furnish to or make accessible any trade secrets within the Company
Intellectual Property to any Person who is not subject to an enforceable written agreement to
maintain the confidentiality of such trade secrets;
(o) announce, implement or effect any reduction in force, lay-off, early retirement program,
severance program or other program or effort concerning the termination of employment of employees
of the Company or any of its Subsidiaries;
(p) enter into, amend or cancel any insurance policies other than in ordinary course of
business;
(q) adopt or enter into stockholder rights agreement or poison pill;
(r) acquire or dispose of any manufacturing facilities; or
(s) agree in writing or otherwise to take any of the foregoing actions.
Section 5.2
Control of the Companys Operations
. Nothing contained in this Agreement
shall give to Parent, directly or indirectly, rights to control or direct the Companys or its
Subsidiaries operations prior to the Effective Time. Prior to the Effective Time, the Company and
its Subsidiaries shall exercise, consistent with the terms of this Agreement, complete control of
its business and operations.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1
Company Stockholder Approval; Proxy Statement
.
(a) The Company shall take all lawful action reasonably necessary in accordance with the DGCL
and its certificate of incorporation and by-laws to call a meeting of its stockholders (the
Company Stockholder Meeting
) for the purpose of voting upon the adoption of this
Agreement and the approval of the Merger, as soon as reasonably practicable after the Registration
Statement is declared effective by the SEC, the Proxy Statement/Prospectus is cleared by the SEC
and, if required by Law, the CVR Agreement has been qualified under the Trust Indenture Act.
Without limiting the generality of the foregoing, the Company, in consultation with Parent, shall
establish a record date for, call, give notice of, convene and shall use its reasonable best
efforts to hold the Company Stockholder Meeting within the shortest time period allowed under Law
and the rules and regulations of the NASDAQ after the date that the Registration Statement has been
declared effective by the SEC. The Board of Directors shall, subject to the provisions of
Section 6.3
and their fiduciary duties under applicable Law as determined by the Board of
Directors in good faith after consultation with the Companys outside counsel, recommend to the
Companys stockholders the adoption of this Agreement and approval of the Merger.
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(b) As soon as is reasonably practicable (A) Parent, the Company and Sub shall prepare the
Registration Statement, which shall include the Proxy Statement/Prospectus, (B) Parent shall
file the Registration Statement, and the Company shall file the Proxy Statement/Prospectus, in
each case with the SEC, and (C) each party shall cooperate with the other party in the preparation
of, and will provide the other party with all information within such partys control that is
required to be included in, the foregoing documents. Each of the parties shall use its reasonable
best efforts to respond to any comments of the SEC or its staff and to cause the Registration
Statement to be declared effective by the SEC, to have the Proxy Statement/Prospectus cleared by
the SEC and, if required by Law, to have the CVR Agreement become qualified under the Trust
Indenture Act, in each case as soon as reasonably practicable after the date of this Agreement.
The parties shall use their respective reasonable best efforts to keep the Registration Statement
effective as long as is necessary to consummate the Merger and the transactions contemplated by
this Agreement. Each of the Company, Sub and Parent agrees to use its reasonable best efforts,
after consultation with the other parties hereto, to respond promptly to all such comments of and
requests by the SEC. Each of the Company, Sub and Parent agrees to notify the other parties
promptly of the receipt of any written or oral comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Registration Statement or the
Proxy Statement/Prospectus or for additional information and shall supply the other parties with
copies of all correspondence between such party or any of its representatives, on the one hand, and
the SEC or its staff, on the other hand, with respect to the Registration Statement or the Proxy
Statement/Prospectus. Notwithstanding the foregoing, prior to filing the Registration Statement or
Proxy Statement/Prospectus (or any respective amendment or supplement thereto) or responding to any
comments of the SEC with respect thereto, each party (i) shall provide the other parties with a
reasonable opportunity to review and comment on such document or response and (ii) shall reasonably
consider all comments reasonably proposed by the other party. As soon as practicable and in any
event within 10 Business Days after the date that the Registration Statement has been declared
effective by the SEC, the Company shall mail the Proxy Statement/Prospectus (including, with the
cooperation of Parent, all Company SEC Documents and Company SEC Documents incorporated therein by
reference) to the holders of shares of Company Common Stock, soliciting each of the Companys
stockholders to vote in favor of adopting this Agreement and approving the Merger.
(c) Each of the Company, Sub, and Parent shall advise the other party, promptly after it
receives notice, after the time when the Registration Statement has become effective, of the
issuance of any stop order or the suspension of the qualification of the CVRs issuable in
connection with the Merger. If, at any time prior to the Effective Time, any information relating
to Sub or the Company or any of their respective Affiliates is discovered by the Company, Sub or
Parent that should be set forth in an amendment or supplement to any of the Registration Statement
or the Proxy Statement/Prospectus so that any of such documents would not include any misstatement
of a material fact or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party discovering this
information shall promptly notify the other parties and, to the extent required by Law, the parties
shall cause an appropriate amendment or supplement describing this information to be promptly filed
with the SEC and, to the extent required by Law, disseminated to the stockholders of the Company.
Section 6.2
Directors and Officers Indemnification
.
(a) Parent shall cause the Surviving Corporation and its Subsidiaries (and their successors)
to establish and maintain for a period of not less than six years from and after the Effective Time
provisions in their certificates of incorporation, by-laws and other organizational documents
concerning the indemnification and exoneration (including provisions relating to expense
advancement) of the Companys and its Subsidiaries former and current officers, directors and
employees that are no less favorable to those persons than the provisions of the certificate of
incorporation, by-laws and other organizational documents of the Company and its Subsidiaries as in
effect as of the date hereof, and such provisions shall not be amended, repealed or otherwise
modified in any manner adverse to such officer,
director or employee, except as required by applicable Law. Parent shall assume, be jointly
and severally liable for, and honor, guaranty and stand surety for, and shall cause the Surviving
Corporation to honor, in accordance with their respective terms each of the covenants contained in
this
Section 6.2
.
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(b) In addition to and not in limitation of the terms of
Section 6.2(a)
, during the
period ending on the sixth anniversary of the Effective Time, each of Parent and the Surviving
Corporation shall indemnify and hold harmless, and provide advancement of expenses to, to the
fullest extent permitted under applicable Law, each present and former director, officer and
employee of the Company or any of its Subsidiaries (each such director, officer or employee,
together with such persons heirs, executors or administrators, an
Indemnified Party
and
collectively, the
Indemnified Parties
) against any costs or expenses (including
attorneys fees), judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any actual or threatened claim, action, suit, Proceeding or
investigation, whether civil, criminal, administrative or investigative, arising out of, relating
to or in connection with (i) any acts or omissions occurring or alleged to occur prior to, or as
of, the Effective Time in their capacities as officers, directors, employees or controlling
stockholders of the Company or any of its Subsidiaries or taken by them at the request of the
Company or any of its Subsidiaries (including acts or omissions in connection with such persons
serving as an officer or director or in their capacity as a controlling stockholder in any entity
if such service was at the request or for the benefit of the Company) or (ii) the negotiation,
execution, adoption and approval of this Agreement, the Merger or the other transactions
contemplated by this Agreement or arising out of or pertaining to the transactions contemplated by
this Agreement.
(c) For a period of six years after the Effective Time, Parent shall cause to be maintained in
effect, without any lapse in coverage, the current policies of directors and officers liability
insurance and fiduciary liability insurance maintained by the Company and its Subsidiaries
(provided that Parent may substitute therefor policies of at least the same coverage and amounts
containing terms and conditions that are no less advantageous to the directors and officers than
the current policies) for a claims-reporting or discovery period of at least such six year period
with respect to matters arising on or before the Effective Time; provided, however, that (i) in
lieu of the purchase of such insurance by Parent, the Company or the Surviving Corporation may
purchase a six-year extended reporting period endorsement under the Companys existing directors
and officers liability insurance coverage effective for claims asserted for the full six year
period referred to above, and (ii) during this period, Parent shall not be required to procure any
coverage in excess of the amount that can be obtained for the remainder of the period for an annual
premium of 250% of the current annual premium paid by the Company for its existing coverage.
(d) The Surviving Corporation and Parent shall pay all reasonable expenses, including
reasonable attorneys fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided in this
Section 6.2
as such fees are incurred upon
the written request of any Indemnified Party.
(e) Each Indemnified Party shall, at the cost and expense of Parent, reasonably cooperate with
Parent and the Surviving Corporation in the defense of any Proceeding for which indemnification may
be sought pursuant to this
Section 6.2
and shall furnish, at the cost and expense of
Parent, or cause to be furnished records, documents, information and testimony, as may be
reasonably requested by Parent in connection therewith.
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(f) In the event of any Proceeding for which indemnification may be sought pursuant to this
Section 6.2
, at the Effective Time, Parent will have the right to control the defense
thereof;
provided, that any Indemnified Party may participate in such defense with counsel retained by
such Indemnified Party reasonably satisfactory to Parent.
(g) The rights of each Indemnified Party hereunder shall be in addition to, and not in
limitation of, any other rights such Indemnified Party may have under the certificate of
incorporation or by-laws or any other organizational documents of the Company or any of its
Subsidiaries, any other indemnification arrangement in existence as of the date of this Agreement,
the DGCL or otherwise. The provisions of this
Section 6.2
shall survive the consummation
of the Merger and are expressly intended to be for the benefit of, and shall be enforceable by,
each of the Indemnified Parties and shall be binding on the Parent, the Surviving Corporation and
their respective successors and assigns.
(h) If Parent or the Surviving Corporation or any of their respective successors or assigns
(i) consolidates with or merges into any other corporation or entity and is not the continuing or
surviving corporation or entity of the consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any individual, corporation or other entity, then
and in each case, proper provisions will be made so that the successors and assigns of Parent or
the Surviving Corporation, as applicable, assume all of the obligations set forth in this
Section 6.2
.
Section 6.3
No Solicitation
.
(a) Subject to the provisions of this
Section 6.3
, after the date hereof and prior to
the Effective Time, the Company agrees that the Company and its Subsidiaries shall not, and that it
shall use its reasonably best efforts to cause the officers, directors, employees, investment
bankers, attorneys and other advisors or representatives (collectively,
Representatives
)
of the Company or its Subsidiaries to not, (i) solicit, initiate, or knowingly encourage the
making, submission or announcement of any inquiry regarding, or any proposal or offer which would
reasonably be expected to lead to, a merger, acquisition, consolidation, tender offer, exchange
offer or other transaction involving, or any proposal or offer to purchase or acquire in any
manner, directly or indirectly, (A) assets (including equity interests of a Company Subsidiary)
representing 15% or more of the assets or revenues of the Company and its Subsidiaries taken as a
whole, or (B) 15% or more of the voting securities of the Company, other than, in each case,
transactions with Parent (any such proposal or offer being hereinafter referred to as an
Acquisition Proposal
), (ii) enter into, participate, continue or otherwise engage in
discussions or negotiations with, or provide any non-public information to any Person (other than
Parent, Sub and their Representatives) with respect to any inquiries regarding, or the making,
submission or announcement of, an Acquisition Proposal, (iii) enter into or approve any letter of
intent, agreement in principle, option agreement, share purchase agreement, acquisition agreement
or similar agreement for an Acquisition Proposal, or (iv) terminate, waive, amend or modify any
provision of, or grant permission under, any standstill, confidentiality agreement or similar
contract to which the Company or any Company Subsidiary is a party; provided, that the foregoing
shall not prohibit the Board of Directors from terminating, waiving, amending or modifying any
provision of, or granting permission under, any standstill, confidentiality agreement or similar
contract if the Board of Directors determines in good faith that the failure to take such action,
would be reasonably likely to constitute a breach of the Board of Directors fiduciary duties to
the Companys stockholders under applicable Law. The Company shall (i) immediately cease and cause
to be terminated any existing solicitation, discussion or negotiation with any Person (other than
Parent, Sub or their Representatives) conducted prior to the date of this Agreement by the Company,
its Subsidiaries or any of their respective Representatives with respect to any actual or potential
Acquisition Proposal and (ii) as promptly as reasonably practicable request that all confidential
information provided by or on behalf of the Company or any of its Subsidiaries to such third party
be returned or destroyed.
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(b) Subject to the provisions of this
Section 6.3
, the Company may, and may authorize
any of its Representatives to, prior to the date on which the Stockholder Approval is obtained, (A)
in response to a request by a Person who has made a bona fide written Acquisition Proposal that was
not initiated or solicited in violation of
Section 6.3(a)
, provide information to such
Person (including to potential financing sources of such Person), if the Company receives from such
Person so requesting the information an executed confidentiality agreement no more favorable in any
material respect to such Person than the Confidentiality Agreement (as defined in
Section
6.4
) is to Parent (it being agreed that the Company shall promptly provide to Parent, in
accordance with the terms of the Confidentiality Agreement, any information concerning the Company
or its Subsidiaries provided to such other Person which was not previously provided to Parent);
and/or (B) engage in discussions or negotiations with any Person (and such Persons potential
financing sources) who has made a bona fide written Acquisition Proposal that was not initiated or
solicited in violation of
Section 6.3(a)
, if, in each case, the Board of Directors
determines in good faith after consultation with the Companys financial advisor and outside legal
counsel that (1) failure to take this action would be reasonably likely to constitute a breach of
its fiduciary duties to the Companys stockholders under applicable Law and (2) the Acquisition
Proposal either constitutes a Superior Proposal or is reasonably likely to lead to a Superior
Proposal. As used in this Agreement,
Superior Proposal
means an unsolicited, bona fide
written Acquisition Proposal made after the date hereof (for this purpose substituting 60% for
each reference to 15% in the definition of Acquisition Proposal) and that the Board of Directors
determines in good faith (after consultation with the Companys financial advisor and outside legal
counsel) is reasonably expected to be consummated on the terms proposed, taking into account all
legal, financial and regulatory aspects of the proposal, including the financing terms thereof and
the Person making such proposal, and if consummated would result in a transaction that is more
favorable to the stockholders of the Company from a financial point of view than the transactions
contemplated by this Agreement (after taking into account any revisions to the terms of the
transactions contemplated by this Agreement agreed to by Parent pursuant to
Section
6.3(c)
).
(c) The Company shall notify Parent orally and in writing promptly (and in any event within 24
hours) after receipt of any Acquisition Proposal or any request for information or inquiry which
could reasonably be expected to lead to an Acquisition Proposal. The written notice shall include
the identity of the Person making such Acquisition Proposal, request or inquiry, the material terms
of the Acquisition Proposal, request or inquiry (including any material written amendments or
modifications, or any proposed material written amendments or modifications, thereto), and the
Company shall keep Parent reasonably informed on a current basis of any material changes with
respect to such Acquisition Proposal, request or inquiry. The Company shall provide Parent with at
least 36 hours prior notice (or such shorter notice as may be provided to the Board of Directors)
of any meeting of the Board of Directors at which the Board of Directors is reasonably expected to
determine that an Acquisition Proposal is a Superior Proposal. The Company shall not exercise its
right to terminate this Agreement pursuant to
Section 8.1(e)
hereof, and any purported
termination pursuant thereto shall be void of no force or effect, until after the fifth Business
Day following Parents receipt from the Company of written notice (i) advising Parent that the
Board of Directors has received a Superior Proposal, specifying the material terms and conditions
of the Superior Proposal (and attaching a copy of the definitive agreement related thereto, if
available) and stating that the Board of Directors intends to exercise its right to terminate this
Agreement pursuant to
Section 8.1(e)
. The Company agrees that after notifying Parent that
an Acquisition Proposal is a Superior Proposal, including during the five-Business Day period
specified in the preceding sentence (such period, the
Parent Review Period
), Parent will
be permitted to propose to the Company revisions to the terms of the transactions contemplated by
this Agreement, and the Company and its Representatives will, if requested by Parent, consider in
good faith any revisions to the terms of the transactions contemplated by this Agreement proposed
by Parent. The Company shall not be entitled to terminate this Agreement pursuant to
Section
8.1(e)
if Parent has, during the Parent Review Period, made a binding offer that, after
consideration of such offer by the Board of Directors in
good faith and after consultation with the Companys financial advisor and outside legal
counsel, results in the Board of Directors concluding that such Superior Proposal no longer
constitutes a Superior Proposal. In the event of any amendment to the consideration or any other
material revisions to the Superior Proposal, the Company shall be required to deliver a new written
notice to Parent and to comply with the requirements of this
Section 6.3(c)
with respect to
such new written notice (including a new Parent Review Period except that the new Parent Review
Period shall be three Business Days).
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(d) The Company agrees that any action taken by any of its Subsidiaries or a Representative of
the Company or any of its Subsidiaries that, if taken by the Company, would constitute a breach of
the restrictions set forth in this
Section 6.3
, shall be deemed to be a breach of this
Agreement (including this
Section 6.3
) by the Company.
(e) Nothing contained in this
Section 6.3
shall prohibit the Company or its Board of
Directors from taking and disclosing to the Companys stockholders a position with respect to a
tender offer by a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange
Act or from making such disclosure to the Companys stockholders which, in the judgment of the
Board of Directors after receiving advice of outside legal counsel, is reasonably likely to be
required under applicable Law.
Section 6.4
Access to Information; Confidentiality
. The Company shall, and shall
cause each of its Subsidiaries to, (i) afford to Parent and its Representatives, upon reasonable
notice, reasonable access during normal business hours during the period prior to the Effective
Time to all their respective employees, agents, properties, books, Contracts, commitments and
records; provided, however
,
that such access shall not unreasonably disrupt the Companys
operations, and (ii) furnish promptly such information concerning the business, properties,
Contracts, assets, liabilities, personnel and other aspects of the Company and its Subsidiaries as
Parent or its Representatives may reasonably request. Notwithstanding anything to the contrary in
this
Section 6.4
, (x) the Company shall not be required to provide any information which it
reasonably believes it may not provide Parent or Sub by reason of applicable Law (including
antitrust Laws), which constitutes information protected by attorney/client privilege, or which the
Company or any Subsidiary is required to keep confidential by reason of Contracts with third
parties and (y) with respect to the Trade Secrets included in the Company Intellectual Property,
prior to the Effective Time the Company will provide during normal business hours, to not more than
three Representatives of Parent selected by Parent, reasonable access to documentation related to
Trade Secrets, provided that such individuals execute a separate confidentiality agreement with the
Company covering chemistry, manufacturing and controls and related matters in a form
substantially identical to the form previously executed by Parents employees. The parties will
use reasonable best efforts to make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply. All information exchanged
pursuant to this
Section 6.4
shall be subject to the confidentiality agreement, dated
October 16, 2009 (the
Confidentiality Agreement
), between the Company and Parent.
Section 6.5
Reasonable Best Efforts; Notification
.
(a) Upon the terms and subject to the conditions set forth in this Agreement, each of the
parties shall use its reasonable best efforts to take, or cause to be taken, all reasonable
actions, and to do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things reasonably necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger, including (i) the obtaining of all Consents
and the making of all Registrations specified in
Section 3.3(c)
and
Section 4.4
and
the taking of all reasonable steps as may be necessary to obtain such Consents and to make such
Registrations, (ii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other Proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the Merger, including,
seeking to have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the Merger and to fully carry out the purposes of this
Agreement;
provided, however
, that the obligations set forth in this sentence shall not be deemed
to have been breached as a result of actions taken by the Company that are permitted under
Section 6.3
. Notwithstanding the foregoing, neither Parent or Sub, on the one hand, and
the Company, on the other hand, shall be obligated to amend or waive the provisions of any
Contract, or obligated to pay any consent or similar fees or payments, unless such action is
conditioned upon the consummation of the Merger. Without limiting the foregoing, none of the
parties shall take or agree to take any action that could reasonably be expected to result in any
of the conditions set forth in
Article VII
not being satisfied or to prevent or materially
delay the consummation of the Merger or the transactions contemplated by this Agreement.
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(b) Without limiting the foregoing, each of Parent and the Company undertakes and agrees to
file as soon as practicable, and in any event prior to 10 Business Days after the date hereof, a
Notification and Report Form under the HSR Act with the United States Federal Trade Commission (the
FTC
) and the Antitrust Division of the United States Department of Justice (the
Antitrust Division
). Each of Parent and the Company shall (i) respond as promptly as
practicable to any inquiries received from the FTC or the Antitrust Division for additional
information or documentation and to all inquiries and requests received from any state attorney
general or other Governmental Entity in connection with antitrust matters, and (ii) not extend any
waiting period under the HSR Act or enter into any agreement with the FTC or the Antitrust Division
not to consummate the transactions contemplated by this Agreement, except with the prior written
consent of the other parties hereto (which consent shall not be unreasonably withheld or delayed).
Parent shall use its reasonable best efforts to avoid or eliminate impediments under any antitrust,
competition, or trade regulation law that may be asserted by the FTC, the Antitrust Division, any
state attorney general or any other Governmental Entity with respect to the Merger so as to enable
the consummation thereof as promptly as reasonably practicable and shall defend through litigation
on the merits any claim asserted in any court by any party, including appeals. Without limiting
the foregoing and subject to this
Section 6.5(b)
, Parent shall propose, negotiate, commit
to and effect, by consent decree, hold separate order, or otherwise, the sale, divestiture or
disposition of such assets or businesses of Parent or, effective as of the Effective Time, the
Surviving Corporation, or their respective Subsidiaries or otherwise commit to take any action
which it is capable of taking, take or commit to take such action that limits its freedom of action
with respect to, or its ability to retain, any of the businesses, services or assets of Parent, the
Surviving Corporation or their respective Subsidiaries, in order to avoid the entry of, or to
effect the dissolution of, any injunction, temporary restraining order or other order in any suit
or Proceeding, or any impediment under any antitrust Law, competition, or trade regulation Law,
which would otherwise have the effect of preventing the consummation of the Merger.
Notwithstanding any of the foregoing, nor anything else contained in this Agreement, Parent shall
not be required to sell, divest or otherwise dispose of, hold separate, enter into any license or
similar agreement with respect to, restrict the ownership or operation of, or agree to sell, divest
or otherwise dispose of, hold separate, enter into any license or similar agreement with respect
to, or restrict the ownership or operation of (i)(A) any assets or businesses of the Company or any
of its Subsidiaries or (B) any assets or businesses of Parent or any of its Affiliates or
Subsidiaries, in the case of either clause (A) or (B), to the extent that such sale, divestiture,
disposition, or agreement would have a material adverse effect on the business, operations,
financial condition or results of operations of the combined business of Parent and the Company
after giving effect to the consummation of the transactions contemplated by this Agreement, or (ii)
the Product to the extent such sale, divestiture, disposition, agreement or restriction would have
a material adverse effect on the ability of the Company to exploit the Product in the Applicable
Jurisdictions. The Company shall agree if, and solely if, requested by Parent, to divest, hold
separate or otherwise take or commit to take any action that limits its freedom of action with
respect to, or its ability to retain, any of the businesses, services, or assets of the Company or
any of its Subsidiaries, provided
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that any such action shall be conditioned upon the consummation of the Merger and the transactions contemplated
hereby. Each party shall (i) promptly notify the other party of any material communication to that
party from the FTC, the Antitrust Division, any state attorney general or any other Governmental
Entity and, subject to applicable Law, permit the other party to review in advance any proposed
written communication to any of the foregoing; (ii) to the extent practicable not agree to
participate in any substantive meeting or discussion with any Governmental Entity in respect of any
filings, investigation or inquiry concerning this Agreement or the Merger unless it consults with
the other party in advance and, to the extent permitted by such Governmental Entity, gives the
other party the opportunity to attend and participate thereat; and (iii) furnish the other party
with copies of all correspondence, filings, and communications (and memoranda setting forth the
substance thereof) between them and their Affiliates and their respective Representatives on the
one hand, and any Governmental Entity or members of their respective staffs on the other hand, with
respect to this Agreement and the Merger. Subject to its obligations in
Section 6.5(a)
,
Parent shall have the right to determine and direct the strategy and process by which the parties
will seek required approvals under antitrust, competition or trade regulation Laws; provided that
Parent will consult with and consider in good faith the views of the Company in connection with
proceedings under or relating to any such Laws.
Section 6.6
Benefit Plans
.
(a) During the period beginning on the Effective Time and ending no earlier than December 31,
2011 (the
Transition Period
), Parent shall provide, or shall cause the Surviving
Corporation to provide, each active employee of the Company or its Subsidiaries as of the Effective
Time (each, an
Employee
) with salary, cash bonus opportunities and employee benefits
(including equity-based benefits) that are not materially less favorable in the aggregate than (i)
the salary, cash bonus opportunities and employee benefits in effect with respect to such Employee
on the date of this Agreement or as increased after the date of this Agreement consistent with the
provisions of
Section 5.1(j)
; (ii) the salary, cash bonus opportunities and employee
benefits generally provided by Parent and its Subsidiaries (other than the Surviving Corporation
and its Subsidiaries) from time to time to employees of Parent and its Subsidiaries (other than the
Surviving Corporation and its Subsidiaries) in the country that is such Employees principal place
of employment who are similarly situated to such Employee in title, rank, tenure (counting tenure
with the Company and its Subsidiaries prior to the Effective Time to the extent recognized by the
Company or its Subsidiaries prior to the Effective Time and reflected on the books and records of
the Company) and job duties; or (iii) any combination of the foregoing (e.g., during the Transition
Period, Parent may transition an Employee into one or more of its employee benefit programs while
maintaining the Employees salary and cash bonus opportunities as in effect immediately prior to
the Effective Time); provided, that, (x) for purposes of and subject to this
Section
6.6(a)
, Parent shall determine in its sole discretion the combination of compensation and
benefits described in clauses (i) through (iii) to be provided to any Employee during the
Transition Period and (y) nothing in this
Section 6.6(a)
shall be deemed to prohibit Parent
from changing the title, rank or job duties of any Employee at any time after the Effective Time.
(b) To the extent that Employees become eligible to participate in any employee benefit
plan, as defined in Section 3(3) of ERISA, maintained by Parent or any of its Subsidiaries
(collectively, the
Parent Plans
), then for purposes of determining eligibility to
participate and vesting and, with respect to any Parent Plan that provides severance, vacation or
paid-time off benefits, for purposes of benefit accrual, service with the Company or any of its
Subsidiaries prior to the Effective Time shall be treated as service with Parent or any of its
Subsidiaries, in each case except as prohibited by an insurer or service provider under a Parent
Plan or by applicable Law;
provided, however,
that such service shall not be recognized to the
extent that such recognition would result in any duplication of benefits. In addition, subject to
the terms of the applicable
Parent Plan and applicable Law, Parent shall use reasonable best efforts to (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Employees under any Parent Plan that is a
welfare benefit plan in which such Employees may be eligible to participate after the Effective
Time and (ii) provide each Employee with credit for any co-payments and deductibles paid prior to
the Effective Time in satisfying any applicable deductible or out-of-pocket requirements under any
Parent Plans that are welfare plans in which such Employees are eligible to participate after the
Effective Time.
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(c) Unless Parent directs the Company otherwise in writing no later than five Business Days
prior to the Effective Time, the Board of Directors shall adopt resolutions terminating, effective
at least one day prior to the Effective Time, the Companys 401(k) Retirement Plan. Prior to the
Effective Time, the Company shall provide Parent with executed resolutions of the Board of
Directors authorizing such termination in a form reasonably acceptable to Parent. The Company
shall also take such other actions in furtherance of the termination of the Companys 401(k)
Retirement Plan as Parent may reasonably require.
(d) Nothing contained in this
Section 6.6
shall (i) be treated as an amendment of any
particular Parent Plan, (ii) give any third party any right to enforce or confer upon the
applicability of the provisions of this
Section 6.6
or (iii) obligate Parent or any of its
Subsidiaries to (A) maintain any particular Employee Benefit Plan or Parent Plan or (B) retain the
employment of any particular Employee.
(e) Parent shall, or shall cause the Surviving Corporation to, comply with the provisions set
forth on
Section 6.6(e)
of the Disclosure Schedule.
Section 6.7
Fees and Expenses
.
(a) Except as otherwise provided by this Agreement, all fees and expenses incurred in
connection with the Merger and the other transactions contemplated by this Agreement shall be paid
by the party incurring such fees or expenses, whether or not the Merger is consummated.
(b) Subject to
Section 6.7(d)
, the Company agrees to pay Parent a fee equal to
$145,000,000 if:
(i) this Agreement is terminated by (A) the Company pursuant to
Section 8.1(e)
(in
which case, the fee shall be payable at the time of termination) or (B) Parent pursuant to
Section 8.1(c)(ii)
or
Section 8.1(d)
(in which case, the fee shall be payable
within two Business Days after such termination);
(ii) (x) this Agreement is terminated by Parent pursuant to
Section 8.1(c)(i)
, (y)
prior to the date upon which the breach giving rise to Parents right to terminate this Agreement
pursuant to
Section 8.1(c)(i)
occurs but after the date hereof, a bona fide Acquisition
Proposal (which, for purposes of this
Section 6.7(b)
, shall have the meaning set forth in
the definition of Acquisition Proposal contained in
Section 6.3(a)
, except that all
references to 15% shall be deemed references to 60%) for the Company shall have been publicly
announced (other than by Parent or its Affiliates) and (z) within 12 months after such termination
either the Company shall have entered into a definitive agreement relating to an Acquisition
Proposal or a transaction contemplated by an Acquisition Proposal for the Company shall have been
consummated (in which case, the fee shall be payable within two Business Days thereafter);
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(iii) (x) this Agreement is terminated by Parent or the Company pursuant to
Section
8.1(b)(iii),
(y) prior to the date of the Company Stockholder Meeting but after the date
hereof, a bona fide Acquisition Proposal for the Company shall have been publicly announced (other
than by Parent or its Affiliates) and (z) within 12 months after such termination either the
Company shall have entered into a definitive agreement relating to an Acquisition Proposal or a
transaction contemplated by an Acquisition Proposal for the Company shall have been consummated (in
which case, the fee shall be payable within two Business Days thereafter); or
(iv) (w) this Agreement is terminated by Parent or the Company pursuant to
Section
8.1(b)(i)
, (x) prior to such termination, the Antitrust Approval shall have been obtained, (y)
prior to such termination but after the date hereof, a bona fide Acquisition Proposal for the
Company shall have been publicly announced (other than by Parent or its Affiliates) and (z) within
12 months after such termination either the Company shall have entered into a definitive agreement
relating to an Acquisition Proposal or a transaction contemplated by an Acquisition Proposal for
the Company shall have been consummated (in which case, the fee shall be payable within two
Business Days thereafter).
(c) The fee payable pursuant to
Section 6.7(b)
shall be made by wire transfer of same
day funds to an account designated in writing by Parent. The Company acknowledges that the
agreements contained in
Section 6.7(b)
are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent and Sub would not enter
into this Agreement; accordingly, if the Company fails to promptly pay the amount due pursuant to
Section 6.7(b)
, and, in order to obtain such payment, Parent or Sub commences a suit which
results in a binding nonappealable judgment rendered by a court of competent jurisdiction against
the Company for the fee set forth in
Section 6.7(b)
, the Company shall pay to Parent or Sub
its reasonable documented costs and expenses (including reasonable attorneys fees) in connection
with such suit together with interest on the amount due at the prime rate of Bank of America N.A.
in effect on the date such payment was required to be made hereunder plus 2% per annum.
(d) Parent agrees that, except in the case of fraud or a willful and material breach hereof
(as defined in
Section 8.2
), the payment provided for in
Section 6.7(b)
shall be
the sole and exclusive remedy of Parent upon termination of this Agreement under circumstances
giving rise to an obligation (or potential obligation) of the Company to pay the amounts set forth
in
Section 6.7(b)
and such remedy shall be limited to the aggregate of the sums stipulated
in such
Section 6.7(b)
. In no event shall the Company be required to pay to Parent more
than one termination fee pursuant to
Section 6.7(b)
.
Section 6.8
Public Announcements
. The initial press release with respect to this
Agreement, the Merger and the other transactions contemplated hereby shall be a joint release
mutually agreed upon by the Company and Parent. Thereafter, Parent and Sub, on the one hand, and
the Company, on the other hand, shall use reasonable efforts to consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any press release or
other public statements with respect to the Merger and the other transactions contemplated by this
Agreement and, unless it has made reasonable efforts to do the foregoing, shall not issue any such
press release or make any such public statement prior to such consultation, except as may be
required by applicable Law, court process or by obligations pursuant to any listing agreement with
any national securities exchange. Notwithstanding the foregoing provisions of this
Section
6.8
, Parent and the Company and their respective Representatives may make public releases or
announcements concerning the transactions contemplated hereby that are not inconsistent with
previous press releases or other public statements made by Parent and/or the Company in compliance
with this
Section 6.8
.
Section 6.9
Sub
. Parent will take all action necessary (a) to cause Sub to perform
its obligations under this Agreement to consummate the Merger in accordance with the terms and
subject to
the conditions set forth in this Agreement and (b) to ensure that, prior to the Effective
Time, Sub shall not conduct any business or make any investments other than as specifically
contemplated by this Agreement.
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Section 6.10
CVR Agreement
. At or prior to the Closing, Parent will duly adopt,
execute and deliver, and shall ensure that a duly qualified Trustee executes and delivers, the CVR
Agreement, subject to any reasonable revisions to the CVR Agreement that are requested by such
Trustee.
Section 6.11
Transfer Taxes
. Parent shall assume liability for and pay all sales,
use, transfer, real property transfer, documentary, recording, gains, stock transfer and similar
Taxes and fees, and any deficiency, interest or penalty asserted with respect thereof
(collectively,
Transfer Taxes
) resulting from the transactions effected pursuant to this
Agreement. The Company shall cooperate with Parent as to the filing of all necessary documentation
and Tax Returns with respect to such Transfer Taxes.
Section 6.12
Listing
. As promptly as practicable after the date hereof, Parent shall
prepare and submit to the NASDAQ (or such other exchange(s), electronic trading networks or other
suitable trading platforms as are mutually agreed by Parent and the Company) an application
covering the CVRs and the shares of Parent Common Stock being issued in the Merger and shall use
its reasonable best efforts to cause the CVRs and the shares of Parent Common Stock being issued in
the Merger (including any CVRs which may be issued pursuant to
Section 2.7(a)(i)
and
Section 2.7(b)(i)
)
to be approved for listing (subject to notice of issuance)
for trading on the NASDAQ (or such other exchange(s), electronic trading networks or other suitable
trading platforms as are mutually agreed by Parent and the Company) at or prior to the Effective
Time.
Section 6.13
Certain Notices
. Subject to compliance with all applicable Laws, the
Company and Parent, as the case may be, shall confer on a regular basis with each other, report on
operational matters and shall promptly advise each other orally and in writing upon becoming aware
of any Event having, or which would be reasonably likely to have, individually or in the aggregate,
a Company Material Adverse Effect. Parent and the Company shall give prompt notice to the other of
any Event of which it obtains Knowledge that would be reasonably expected to materially delay or
prevent the consummation of the Merger. Furthermore, the Company shall give prompt notice to
Parent, and Parent or Sub shall give prompt notice to the Company, upon, to the Knowledge of the
Company or the Knowledge of Parent, as applicable (i) any representation or warranty made by it in
this Agreement becoming untrue or inaccurate in any material respect, (ii) the occurrence of any
condition, event or circumstance that would be reasonably expected to result in any of the
conditions in
Section 7.2(a)
or
Section 7.3(a)
not being met, or (iii) the failure
by it to comply with or satisfy in any material respect any covenant or agreement to be complied
with or satisfied by it under this Agreement; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of, or the conditions to the
obligations of, the parties hereto under this Agreement.
Section 6.14
Section 16 Matters
. Prior to the Effective Time, the Board of Directors,
or an appropriate committee of non-employee directors thereof, shall adopt a resolution consistent
with the interpretive guidance of the SEC so that the disposition by any officer or director of the
Company who is a covered Person of the Company for purposes of Section 16 of the Exchange Act and
the rules and regulations thereunder (
Section 16
) of Company Common Stock, Options, RSUs
and SARs pursuant to this Agreement and the Merger shall be an exempt transaction for purposes of
Section 16. Prior to the Effective Time, Parents board of directors, or an appropriate committee
of non-employee directors thereof, shall adopt a resolution consistent with the interpretive
guidance of the SEC so that the acquisition by any officer or director of the Company who is a
covered Person of the Company for purposes of Section 16 of Parent Common Stock pursuant to this
Agreement and the Merger shall be an exempt transaction for purposes of Section 16.
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Section 6.15
State Takeover Laws
. If any fair price, moratorium, control share
acquisition, business combination or other similar anti-takeover statute or regulation enacted
under state or federal laws in the United States becomes or is deemed to be applicable to the
Company, Parent, Sub, the Merger or the Voting Agreement or any other transaction contemplated by
this Agreement, the Board of Directors shall take all action necessary to render such Law
inapplicable to the foregoing.
Section 6.16
FIRPTA Statement
. The Company shall use reasonable best efforts to
deliver to Parent on or prior to the Closing Date a statement conforming to the requirements of
Section 1.1445-2(c)(3) of the Treasury Regulations.
Section 6.17
Further Actions
. The Company shall use reasonable best efforts to take
the actions listed on
Section 6.17
of the Disclosure Schedule prior to the Effective Time.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1
Conditions to Each Partys Obligation to Effect the Merger
. The
respective obligation of each party to effect the Merger is subject to the satisfaction or waiver
on or prior to the Closing Date of the following conditions:
(a)
Stockholder Approval
. This Agreement and the Merger shall have been duly adopted
by the holders of a majority of the outstanding shares of Company Common Stock in accordance with
the DGCL (the
Stockholder Approval
).
(b)
No Injunctions or Restraints
. No Governmental Entity in an Applicable
Jurisdiction shall have issued or entered a temporary restraining order, preliminary or permanent
injunction or other order that is in effect and that prohibits the consummation of the Merger.
(c)
HSR Act
. The waiting period (and any extension thereof) under the HSR Act
applicable to the Merger shall have expired or been terminated (the
Antitrust Approval
).
(d)
Registration Statement
. The Registration Statement shall have been declared
effective and no stop order suspending the effectiveness of the Registration Statement shall be in
effect.
Section 7.2
Additional Conditions to Obligations of Parent and Sub
. The obligation of
Parent and Sub to effect the Merger is subject to the satisfaction or waiver by Parent on or prior
to the Closing Date of the following additional conditions:
(a)
Representations and Warranties
. (i) The representations and warranties of the
Company set forth in
Section 3.2(a)
shall be true and correct in all but de minimis
respects (which for purposes of this
Section 7.2
shall mean 2% or less of the aggregate
outstanding shares of Company Common Stock on a fully diluted basis) on the date of this Agreement
and at the Closing as though made on and as of the Closing Date (except to the extent that such
representation and warranty speaks as of a particular date, in which case such representation and
warranty shall be true and correct as of that date), and (ii) the other representations and
warranties of the Company set forth in this Agreement shall be true and correct (without giving
effect to any limitation as to materiality or Company Material Adverse Effect set forth
therein) on the date of this Agreement and at the Closing as though made on and as of the Closing
Date (except to the extent that such representation and warranty speaks as of a particular date, in
which case such representation and warranty shall be true and correct as of that date), except
where the
failure of the representations and warranties to so be true and correct has not had and would
not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect. Parent shall have received a certificate to such effect signed on behalf of the Company by
an executive officer of the Company.
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(b)
Performance of Obligations
. The Company shall have performed or complied with, in
all material respects, its obligations and covenants required to be performed or complied with by
it under this Agreement at or prior to the Closing, and Parent shall have received a certificate
signed on behalf of the Company by an executive officer of the Company to such effect.
(c)
Absence of Material Adverse Effect
. Since the date of this Agreement, there shall
not have occurred any Company Material Adverse Effect, and Parent shall have received a certificate
signed on behalf of the Company by an executive officer of the Company to such effect.
(d)
Related Agreements
. The Related Agreements shall be in full force and effect in
accordance with their terms.
Section 7.3
Additional Conditions to Obligations of the Company
. The obligation of
the Company to effect the Merger is subject to the satisfaction or waiver by the Company on or
prior to the Closing Date of the following additional conditions:
(a)
Representations and Warranties
. The representations and warranties of Parent set
forth in this Agreement shall be true and correct (without giving effect to any limitation as to
materiality or Parent Material Adverse Effect set forth therein) on the date of this Agreement
and at the Closing as though made on and as of the Closing Date (except to the extent that such
representation and warranty speaks as of a particular date, in which case such representation and
warranty shall be true and correct as of that date), except where the failure of the
representations and warranties to so be true and correct has not had and would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse Effect. The Company
shall have received a certificate to such effect signed on behalf of Parent by an executive officer
of Parent.
(b)
Performance of Obligations
. Parent and Sub shall have performed or complied with,
in all material respects, its obligations and covenants required to be performed or complied with
by them under this Agreement at or prior to Closing, and the Company shall have received a
certificate signed on behalf of Parent and Sub by an executive officer of each of Parent and Sub to
such effect.
(c)
Absence of Material Adverse Effect
. Since the date of this Agreement, there shall
not have occurred any Parent Material Adverse Effect, and the Company shall have received a
certificate signed on behalf of Parent by an executive officer of Parent to such effect.
(d)
CVR Agreement
. The CVR Agreement shall have been duly executed and delivered by
Parent and the Trustee and be in full force and effect.
(e)
Listing
. The shares of Parent Common Stock being issued in the Merger shall have
been approved for listing (subject to notice of issuance) for trading on NASDAQ.
Section 7.4
Frustration of Closing Conditions
. None of the Company, Parent or Sub may
rely on the failure of any condition precedent set forth in this
ARTICLE VII
to be
satisfied if such failure was caused by such partys failure to comply with its obligations set
forth in this Agreement to consummate and make effective the transactions provided for herein, as
required by and subject to
Section 6.5
.
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Section 7.5
Invoking Certain Provisions
. If Parent and Sub wish to invoke any of the
conditions set forth in
Section 7.2
as a basis not to consummate the Merger, Parent or Sub,
as applicable, will have the burden of proof to establish that such condition has not been
satisfied; provided, that if Parent and Sub satisfy the burden of proof that a Company Material
Adverse Effect has occurred (without regard to the exclusions applicable thereto), the Company will
have the burden of proof to establish that any exclusion in the definition of Company Material
Adverse Effect is applicable. If the Company wishes to invoke any of the conditions set forth in
Section 7.3
as a basis not to consummate the Merger, the Company will have the burden of
proof to establish that such condition has not been satisfied; provided, that if the Company
satisfies the burden of proof that a Parent Material Adverse Effect has occurred (without regard to
the exclusions applicable thereto), Parent will have the burden of proof to establish that any
exclusion in the definition of Parent Material Adverse Effect is applicable.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1
Termination
. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after receipt of the Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Closing shall not have occurred on or before March 31, 2011 (the
Termination
Date
); provided, however
,
that the right to terminate this Agreement under this
Section
8.1(b)(i)
shall not be available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or
before the Termination Date; or
(ii) if any Governmental Entity in an Applicable Jurisdiction shall have issued or entered a
permanent injunction or other order that is in effect preventing or prohibiting the consummation of
the Merger and such injunction or order shall have become final and nonappealable; provided that
the right to terminate this Agreement pursuant to this
Section 8.1(b)(ii)
shall not be
available to any party whose failure to fulfill any obligation under this Agreement (including such
partys obligations set forth in
Section 6.5
) has been the cause of, or resulted in, such
action; or
(iii) if, upon a vote at a duly held Company Stockholder Meeting (including any postponement
or adjournment thereof) to obtain the Stockholder Approval in accordance with this Agreement, the
Stockholder Approval is not obtained;
(c) by Parent, if (i) the Company breaches or fails to perform any of its representations,
warranties, covenants or obligations contained in this Agreement, in any case, as a result of which
a condition set forth in
Section 7.2(a)
or
Section 7.2(b)
will not be able to be
satisfied prior to or as of the Termination Date (provided that Parent or Sub is not then in breach
of any representation, warranty or covenant contained in this Agreement such that the conditions
set forth in
Section 7.3(a)
or
Section 7.3(b)
would not then be satisfied), or (ii)
the Company breaches or fails to perform in any material respect its obligations under
Section
6.3
;
(d) by Parent, prior to the Company Stockholder Meeting, if (i) the Board of Directors shall
have publicly withdrawn its approval or recommendation of this Agreement or the Merger or shall
have publicly recommended to the stockholders of the Company any Acquisition Proposal, or (ii) a
tender
or exchange offer, that if successful, would result in any Person or group becoming the
beneficial owner of 15% or more of the outstanding Company Stock, has been commenced (other than by
Parent or any Affiliate of Parent) and the Board of Directors fails to recommend that the
stockholders of the Company not tender their shares in such tender or exchange offer within 10
Business Days of such commencement;
-49-
(e) by the Company, prior to the date on which the Stockholder Approval is obtained, in order
to concurrently enter into a definitive agreement with respect to a Superior Proposal, provided
that the Company shall have complied in all material respects with the terms of
Section 6.3
and concurrently pays to Parent all amounts payable pursuant to
Section 6.7(b)
; or
(f) by the Company, if Parent or Sub breaches or fails to perform any of its representations,
warranties, covenants or obligations contained in this Agreement, in any case, as a result of which
a condition set forth in
Section 7.3(a)
or
Section 7.3(b)
will not be able to be
satisfied prior to or as of the Termination Date (provided that the Company is not then in material
breach of any representation, warranty or covenant contained in this Agreement).
Section 8.2
Effect of Termination
. In the event of termination of this Agreement by
either the Company or Parent as provided in
Section 8.1
, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the part of Parent, Sub or
the Company, other than the last sentence of
Section 6.4
,
Section 6.7
, this
Section 8.2
and
Article IX
, which provisions shall survive such termination, and
provided that nothing herein shall relieve any party from liability for any fraud or willful and
material breach hereof. For purposes hereof, a
willful and material breach
shall mean a
material breach that is a consequence of an act undertaken by a breaching party with the knowledge
(actual or constructive) that the taking of such action would, or would reasonably be expected to,
give rise to a breach hereof.
Section 8.3
Amendment
. Subject to applicable Law, this Agreement may be amended,
modified or supplemented by the parties at any time before or after receipt of the Stockholder
Approval. This Agreement may not be amended, modified or supplemented except by an instrument in
writing signed on behalf of each of the parties.
Section 8.4
Extension; Waiver
. At any time prior to the Effective Time, the parties
may (a) extend the time for the performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this Agreement or (c) subject
to the proviso of
Section 8.3
, waive compliance with any of the agreements of the other
parties or conditions in favor of such party contained in this Agreement (provided, that a waiver
must be in writing and signed by the party against whom the waiver is to be effective). Any
agreement on the part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a
waiver of such rights.
Section 8.5
Procedure for Termination, Amendment, Extension or Waiver
. A termination
of this Agreement pursuant to
Section 8.1
, an amendment of this Agreement pursuant to
Section 8.3
or an extension or waiver pursuant to
Section 8.4
shall, in order to be
effective, require in the case of Parent, Sub or the Company, action by its board of directors or
the duly authorized designee of its board of directors.
-50-
ARTICLE IX
MISCELLANEOUS
Section 9.1
Non-Survival of Representations, Warranties and Agreements
. All
representations and warranties set forth in this Agreement or in any instrument delivered pursuant
to this Agreement shall terminate at the Effective Time. None of the covenants or agreements of
the parties in this Agreement shall survive the Effective Time, other than (a) the covenants and
agreements of the parties contained in this
ARTICLE IX
, in
ARTICLE II
and in
Section 6.2
and
Section 6.6
, and (b) those other covenants and agreements contained
herein that by their terms apply, or that are to be performed in whole or in part, after the
Effective Time, which shall survive the consummation of the Merger until fully performed.
Section 9.2
Notices
. Except for notices that are specifically required to be
delivered orally, all notices, requests, claims, demands and other communications hereunder shall
be in writing and shall be deemed given (a) on the date of delivery, if delivered in person or by
facsimile or e-mail (upon confirmation of receipt) prior to 5:00 p.m. in the time zone of the
receiving party or on the next Business Day, if delivered after 5:00 p.m. in the time zone of the
receiving party, (b) on the first Business Day following the date of dispatch, if delivered by a
recognized overnight courier service (upon proof of delivery) or (c) on the fifth Business Day
following the date of mailing, if delivered by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to the Company:
Abraxis BioScience Inc.
11755 Wilshire Blvd., 20th Floor
Los Angeles, CA 90025
Tel: 310.883.1300
Fax: 310.998.8553
Attention: Dr. Patrick Soon-Shiong, Executive Chairman
pss@abraxisbio.com
with copies to:
Abraxis BioScience Inc.
11755 Wilshire Blvd., 20th Floor
Los Angeles, CA 90025
Tel: 310.883.1300
Fax: 310.998.8553
Attention: Charles Kim, General Counsel
CKim@abraxisbio.com
and
-51-
Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza
New York, New York 10004
Tel: 212.859.8000
Fax: 212.859.4000
Attention: Philip Richter, Esq.
philip.richter@friedfrank.com
Brian Mangino, Esq.
brian.mangino@friedfrank.com
If to Parent or Sub:
Celgene Corporation
86 Morris Avenue
Summit, New Jersey 07901
Tel: 908.673.9000
Fax: 908.673.2769
Attention: George Golumbeski, Senior Vice President Business Development
ggolumbeski@celgene.com
with copies to:
Celgene Corporation
86 Morris Avenue
Summit, New Jersey 07901
Tel: 908.673.9000
Fax: 908.673.2771
Attention: Thomas Perone, Corporate Counsel
tperone@celgene.com
and
Jones Day
3161 Michelson Drive
Suite 800
Irvine, CA 92612
Tel: 949.851.3939
Fax: 949.553.7539
Attention: Jonn R. Beeson, Esq.
jbeeson@jonesday.com
Kevin Espinola, Esq.
kbespinola@jonesday.com
or to such other address as any party may have furnished to the other parties in writing in
accordance with this
Section 9.2
.
-52-
Section 9.3
Specific Performance
. The parties hereby acknowledge and agree that the
failure of any party to perform its agreements and covenants hereunder in accordance with their
specific terms, including its failure to take all actions as are necessary on its part to
consummate the
transactions contemplated hereby, will cause irreparable injury to the other party, for which
damages, even if available, will not be an adequate remedy. Accordingly, each party hereby
consents to the issuance of temporary, preliminary and permanent injunctive relief in any court of
the United States or any state having jurisdiction to compel performance of such partys
obligations, or to prevent breaches or threatened breaches of this Agreement, and to the granting
by any such court of the remedy of specific performance of its obligations hereunder, without, in
any such case, the requirement to post any bond or other undertaking, in addition to any other
rights or remedies available hereunder or at law or in equity. Each of the parties further agrees
that it will not oppose, and hereby waives any defense to, the granting of an injunction, specific
performance and other equitable relief on the basis that the other parties have an adequate remedy
at law or an award of specific performance is not an appropriate remedy for any reason at law or
equity. Each of the parties further waives any requirement under any Law to post security as a
prerequisite to obtaining equitable relief.
Section 9.4
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. 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 permitted assigns.
Section 9.5
Entire Agreement
. This Agreement, the Disclosure Schedule, the
Confidentiality Agreement, the Related Agreements 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.
Section 9.6 Governing Law.
(a) 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. Each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of any court of the United States located in
the State of Delaware or of the Court of Chancery in the State of Delaware in the event any dispute
arises out of this Agreement or the transactions contemplated by this Agreement, (ii) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court and (iii) agrees that, except as permitted by
Section 9.3
, it
will not bring any action relating to this Agreement or the transactions contemplated by this
Agreement in any court other than a court of the United States located in the State of Delaware or
the Court of Chancery in the State of Delaware.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii)
EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
-53-
Section 9.7
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.
Section 9.8
Headings and Table of Contents; Interpretation
. Headings of the Articles
and Sections of this Agreement, the Table of Contents, and the Index of Defined Terms are for the
convenience of the parties only, and shall be given no substantive or interpretive effect
whatsoever. If a term is defined as one part of speech (such as a noun), it shall have a
corresponding meaning when used as another part of speech (such as a verb). Whenever the context
so requires, the singular shall include the plural, the plural shall include the singular, and the
use of a gender shall include all genders. The terms hereof, herein and hereunder and terms
of like import used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. Whenever the terms include, includes or including
are used in this Agreement, they shall be deemed to be followed by the words without limitation,
whether or not they are in fact followed by those words or words of like import. The terms
writing and written and terms of like import used in this Agreement shall refer to printing,
typing and other means of reproducing words (including electronic media) in a visible form.
Section 9.9
No Third Party Beneficiaries
. Except as provided in
Section
2.2(c)
(Exchange of Certificates) and
Section 6.2
(Directors and Officers
Indemnification) and except for the right of the Company, on behalf of its stockholders, to pursue
damages in the event of Parents or Subs breach of this Agreement, this Agreement is not intended
to, and does not, confer upon any Person other than the parties hereto any rights or remedies
hereunder.
Section 9.10
Incorporation of Exhibits
. The Disclosure Schedule and the 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.
Section 9.11
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.
Section 9.12
Subsidiaries
. As used in this Agreement,
Subsidiary
of any
Person means another Person, an amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a majority of its board of directors
or other governing body (or, if there are no such voting interests, 50% or more of the equity
interests of which) is owned directly or indirectly by such Person.
Section 9.13
Person
. As used in this Agreement,
Person
means an individual,
corporation, partnership, joint venture, limited liability company, association, trust,
unincorporated organization, entity (including Governmental Entity) or group (as defined in the
Exchange Act).
-54-
Section 9.14
Applicable Jurisdictions
. As used in this Agreement,
Applicable
Jurisdiction
means any of the United States, the European Union, Canada or Switzerland.
Section 9.15
Knowledge of the Company; Knowledge of Parent
. As used in this
Agreement,
Knowledge of the Company
means the actual knowledge of the individuals listed
in
Section 9.14
of the Disclosure Schedule. As used in this Agreement,
Knowledge of
Parent
means the actual knowledge of Parents Chief Executive Officer, Chief Financial
Officer, Chief Operating Officer and General Counsel.
Section 9.16
Mutual Drafting
. This Agreement shall be deemed to be the joint work
product of Parent, Sub, and Company, and any rule of construction that a document shall be
interpreted or construed against a drafter of such document shall not be applicable.
Section 9.17
Tax Reporting
. Except to the extent any portion of any CVR Payment (as
that term is defined in the CVR Agreement) is required to be treated as imputed interest pursuant
to applicable Law, the parties hereto agree to treat the Cash Consideration, the Stock
Consideration, the CVRs and all CVR Payments for all Tax purposes as consideration for the shares
of Common Stock, the Options, the SARs and the RSUs, and none of the parties hereto shall take any
position to the contrary on any Tax Return or for other Tax purposes except as required by
applicable Law.
-55-
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement to be signed by
their respective officers thereunder duly authorized all as of the date first written above.
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CELGENE CORPORATION
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By:
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/s/ Robert J. Hugin
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Name:
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Robert J. Hugin
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Title:
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Chief Executive Officer
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ARTISTRY ACQUISITION CORP.
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By:
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/s/ Sandesh Mahatme
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Name:
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Sandesh Mahatme
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Title:
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Secretary and Treasurer
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ABRAXIS BIOSCIENCE, INC.
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By:
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/s/ Dr. Patrick Soon-Shiong
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Name:
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Dr. Patrick Soon-Shiong
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Title:
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Executive Chairman
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Exhibit 10.1
FORM OF
CONTINGENT VALUE RIGHTS AGREEMENT
by and between
CELGENE CORPORATION
and
[TRUSTEE]
Dated as of [
], 2010
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
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2
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Section 1.1 Definitions
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2
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Section 1.2 Compliance and Opinions
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13
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Section 1.3 Form of Documents Delivered to Trustee
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14
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Section 1.4 Acts of Holders
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14
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Section 1.5 Notices, etc., to Trustee and Company
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15
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Section 1.6 Notice to Holders; Waiver
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16
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Section 1.7 Conflict with Trust Indenture Act
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16
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Section 1.8 Effect of Headings and Table of Contents
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16
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Section 1.9 Benefits of Agreement
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16
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Section 1.10 Governing Law
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16
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Section 1.11 Legal Holidays
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17
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Section 1.12 Separability Clause
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17
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Section 1.13 No Recourse Against Others
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17
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Section 1.14 Counterparts
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17
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Section 1.15 Acceptance of Trust
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17
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ARTICLE 2
SECURITY FORMS
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17
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Section 2.1 Forms Generally
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17
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ARTICLE 3
THE SECURITIES
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18
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Section 3.1 Title and Terms
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18
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Section 3.2 Registrable Form
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20
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Section 3.3 Execution, Authentication, Delivery and Dating
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20
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Section 3.4 Temporary Securities
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20
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Section 3.5 Registration, Registration of Transfer and Exchange
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21
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Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities
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22
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Section 3.7 Payments with respect to CVR Certificates
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22
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Section 3.8 Persons Deemed Owners
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22
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Section 3.9 Cancellation
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22
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i
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ARTICLE 4
THE TRUSTEE
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23
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Section 4.1 Certain Duties and Responsibilities
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23
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Section 4.2 Certain Rights of Trustee
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23
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Section 4.3 Notice of Default
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24
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Section 4.4 Not Responsible for Recitals or Issuance of Securities
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25
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Section 4.5 May Hold Securities
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25
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Section 4.6 Money Held in Trust
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25
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Section 4.7 Compensation and Reimbursement
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25
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Section 4.8 Disqualification; Conflicting Interests
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26
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Section 4.9 Corporate Trustee Required; Eligibility
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26
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Section 4.10 Resignation and Removal; Appointment of Successor
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26
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Section 4.11 Acceptance of Appointment of Successor
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27
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Section 4.12 Merger, Conversion, Consolidation or Succession to Business
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28
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Section 4.13 Preferential Collection of Claims Against Company
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28
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ARTICLE 5
HOLDERS LISTS AND REPORTS BY THE TRUSTEE AND COMPANY
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28
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Section 5.1 Company to Furnish Trustee Names and Addresses of Holders
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28
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Section 5.2 Preservation of Information; Communications to Holders
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29
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Section 5.3 Reports by Trustee
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29
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Section 5.4 Reports by Company
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29
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ARTICLE 6
AMENDMENTS
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30
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Section 6.1 Amendments Without Consent of Holders
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30
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Section 6.2 Amendments with Consent of Holders
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31
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Section 6.3 Execution of Amendments
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31
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Section 6.4 Effect of Amendments; Notice to Holders
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32
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Section 6.5 Conformity with Trust Indenture Act
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32
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Section 6.6 Reference in Securities to Amendments
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32
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ARTICLE 7
COVENANTS
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32
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Section 7.1 Payment of Amounts, if any, to Holders
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32
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Section 7.2 Maintenance of Office or Agency
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33
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Section 7.3 Money for Security Payments to Be Held in Trust
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33
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Section 7.4 Certain Purchases and Sales
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34
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ii
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Section 7.5 Books and Records
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34
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Section 7.6 Audits
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34
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Section 7.7 Listing of CVRs
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35
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Section 7.8 Conflicting Arrangements
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36
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Section 7.9 Product Transfer
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36
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Section 7.10 Milestones
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36
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Section 7.11 Product Sale and Development
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36
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Section 7.12 Notice of Default
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37
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Section 7.13 Confidentiality
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37
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Section 7.14 Non-Use of Name
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37
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ARTICLE 8
REMEDIES OF THE TRUSTEE AND HOLDERS ON EVENT OF DEFAULT
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38
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Section 8.1 Event of Default Defined; Waiver of Default
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38
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Section 8.2 Collection by the Trustee; the Trustee May Prove Payment Obligations
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39
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Section 8.3 Application of Proceeds
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41
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Section 8.4 Suits for Enforcement
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41
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Section 8.5 Restoration of Rights on Abandonment of Proceedings
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41
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Section 8.6 Limitations on Suits by Holders
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42
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Section 8.7 Unconditional Right of Holders to Institute Certain Suits
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42
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Section 8.8 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default
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42
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Section 8.9 Control by Holders
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42
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Section 8.10 Waiver of Past Defaults
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43
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Section 8.11 The Trustee to Give Notice of Default, But May Withhold in Certain
Circumstances
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43
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Section 8.12 Right of Court to Require Filing of Undertaking to Pay Costs
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43
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ARTICLE 9
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
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44
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Section 9.1 Company May Consolidate, etc., on Certain Terms
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44
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Section 9.2 Successor Person Substituted
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44
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Section 9.3 Opinion of Counsel to the Trustee
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45
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Section 9.4 Successors
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45
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iii
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ARTICLE 10
SUBORDINATION
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45
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Section 10.1 Agreement to Subordinate
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45
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Section 10.2 Liquidation; Dissolution; Bankruptcy
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45
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Section 10.3 Default on Senior Obligations
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46
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Section 10.4 When Distribution Must Be Paid Over
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46
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Section 10.5 Notice by Company
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47
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Section 10.6 Subordination Effective Notwithstanding
Deficiencies with Respect to Senior
Obligations; Waiver of Right to Contest
Senior Obligation; Reinstatement of Subordination
Provisions
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47
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Section 10.7 Subrogation
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48
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Section 10.8 Relative Rights
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48
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Section 10.9 Subordination May Not Be Impaired by Company
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48
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Section 10.10 Distribution or Notice to Representative
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48
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Section 10.11 Rights of the Trustee
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49
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Section 10.12 Authorization to Effect Subordination
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49
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Section 10.13 Amendments
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49
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ARTICLE 11
REDEMPTION OF SECURITIES
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49
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|
|
|
|
Section 11.1 Notice to Trustee
|
|
|
49
|
|
Section 11.2 Selection of Securities to be Redeemed
|
|
|
49
|
|
Section 11.3 Notice of Redemption
|
|
|
50
|
|
Section 11.4 Effect of Notice of Redemption
|
|
|
50
|
|
Section 11.5 Deposit of Redemption Price
|
|
|
51
|
|
Section 11.6 Optional Redemption by the Company
|
|
|
51
|
|
|
|
|
Annex A
Form of CVR Certificate
|
|
Note:
|
|
This table of contents shall not, for any purpose, be deemed to
be a part of this CVR Agreement.
|
iv
Reconciliation and tie between Trust Indenture Act of 1939 and Contingent Value Rights Agreement,
dated as of [
], 2010. [
to be updated
]
|
|
|
|
Trust Indenture Act Section
|
|
Agreement Section
|
|
Section 310 (a)(1)
|
|
|
4.9
|
(a)(2)
|
|
|
4.9
|
(a)(3)
|
|
Not Applicable
|
(a)(4)
|
|
Not Applicable
|
(a)(5)
|
|
|
4.9
|
(b)
|
|
|
4.8, 4.10
|
|
|
|
|
Section 311 (a)
|
|
|
4.13(a)
|
(b)
|
|
|
4.13(a)
|
|
|
|
|
Section 312 (a)
|
|
|
5.1, 5.2(a)
|
(b)
|
|
|
5.2(b)
|
(c)
|
|
|
5.2(c)
|
|
|
|
|
Section 313 (a)
|
|
|
5.3(a)
|
(b)
|
|
|
5.3(a)
|
(c)
|
|
|
5.3(a)
|
(d)
|
|
|
5.3(b)
|
|
|
|
|
Section 314 (a)
|
|
|
5.4
|
(b)
|
|
Not Applicable
|
(c)(1)
|
|
|
1.2(a)
|
(c)(2)
|
|
|
1.2(a)
|
(c)(3)
|
|
Not Applicable
|
(d)
|
|
Not Applicable
|
(e)
|
|
|
1.2(b)
|
|
|
|
|
Section 315 (a)
|
|
|
4.1(a), 4.1(b)
|
(b)
|
|
|
8.11
|
(c)
|
|
|
4.1(a)
|
(d)
|
|
|
4.1(c)
|
(d)(1)
|
|
|
4.1(a), 4.1(b)
|
(d)(2)
|
|
4.1(c)(ii)
|
(d)(3)
|
|
4.1(c)(iii)
|
(e)
|
|
|
8.12
|
v
|
|
|
|
Trust Indenture Act Section
|
|
Agreement Section
|
|
Section 316 (a)(last sentence)
|
|
|
1.15
|
(a)(1)(A)
|
|
|
8.9
|
(a)(1)(B)
|
|
|
8.10
|
(a)(2)
|
|
Not Applicable
|
(b)
|
|
|
8.7
|
Section 317 (a)(1)
|
|
|
8.2
|
(a)(2)
|
|
|
8.2
|
(b)
|
|
|
7.3
|
Section 318 (a)
|
|
|
1.7
|
|
|
|
Note:
|
|
This reconciliation and tie shall not, for any purpose, be deemed to be a part of this
CVR Agreement.
|
vi
THIS CONTINGENT VALUE RIGHTS AGREEMENT, dated as of [
], 2010 (this
CVR Agreement
),
by and between Celgene Corporation, a Delaware corporation (the
Company
), and [
], a
national banking association, as trustee (the
Trustee
), in favor of each person who from
time to time holds one or more Contingent Value Rights (the
Securities
or
CVRs
)
to receive cash payments in the amounts and subject to the terms and conditions set forth herein.
W I T N E S S E T H
:
WHEREAS, this CVR Agreement is entered into pursuant to the Agreement and Plan of Merger,
dated as of June 30, 2010 (as amended prior to the effective time thereof, the
Merger
Agreement
), by and among the Company, Artistry Acquisition Corp., a Delaware corporation and
wholly owned Subsidiary of the Company (
Sub
), and Abraxis BioScience, Inc., a Delaware
corporation (
Abraxis
);
WHEREAS, pursuant to the Merger Agreement, Sub will merge with and into Abraxis (the
Merger
), with Abraxis being the surviving corporation in the Merger and becoming a
wholly-owned Subsidiary of the Company;
WHEREAS, in the Merger, one (1) CVR will be issued in respect of (a) each share of common
stock, par value $0.001 per share, of Abraxis (
Common Stock
) (other than shares of Common
Stock that are Excluded Company Shares or Dissenting Company Shares) (all as defined in the Merger
Agreement), (b) each share of Common Stock underlying each Option (as defined in the Merger
Agreement) having an exercise price that is less than or equal to the Per Share Amount (as defined
in the Merger Agreement), (c) each share of Common Stock underlying each Option having an exercise
price that is greater than the Per Share Amount, if such Option is exercised and settled in
accordance with the Merger Agreement, (d) each SAR (as defined in the Merger Agreement) having a
base appreciation amount that is less than or equal to the Per Share Amount, (e) each SAR having a
base appreciation amount that is greater than the Per Share Amount, if such SAR is exercised and
settled in accordance with the Merger Agreement, and (f) each RSU (as defined in the Merger
Agreement), in each case, outstanding immediately prior to the Effective Time (as defined in the
Merger Agreement); and
WHEREAS, a registration statement on Form S-4 (No. 333-[
]) (the
Registration
Statement
) with respect to the CVRs has been prepared and filed by the Company with the
Commission (as defined below) and has become effective in accordance with the Securities Act of
1933, as amended (the
Securities Act
).
NOW, THEREFORE, in consideration of the foregoing premises and the consummation of the
transactions contemplated by the Merger Agreement, it is covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
1
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions. For all purposes of this CVR Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them in this Article, and
include the plural as well as the singular;
(b) all accounting terms used herein and not expressly defined herein shall, except as
otherwise noted, have the meanings assigned to such terms in accordance with applicable Accounting
Standards, where
Accounting Standards
means (A) GAAP (United States Generally Accepted
Accounting Principles); or (B) to the extent that the Company adopts International Financial
Reporting Standards (IFRS), then
Accounting Standards
means International Financial
Reporting Standards (IFRS), in either case consistently applied;
(c) all capitalized terms used in this CVR Agreement without definition shall have the
respective meanings ascribed to them in the Merger Agreement;
(d) all other terms used herein which are defined in the Trust Indenture Act (as defined
herein), either directly or by reference therein, have the respective meanings assigned to them
therein; and
(e) the words
herein
,
hereof
and
hereunder
and other words of
similar import refer to this CVR Agreement as a whole and not to any particular Article, Section or
other subdivision.
Affiliate
of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with such specified Person.
For the purposes of this definition, control when used with respect to any specified Person
means the power to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise; and the terms
controlling and controlled have meanings correlative to the foregoing.
Board of Directors
means the board of directors of the Company or any other body
performing similar functions, or any duly authorized committee of that board.
Board Resolution
means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Company, to have been duly adopted by the Board of Directors and to be
in full force and effect on the date of such certification, and delivered to the Trustee.
Business Day
means any day (other than a Saturday or a Sunday) on which banking
institutions in The City of New York, New York are not authorized or obligated by Law or executive
order to close and, if the CVRs are listed on a national securities exchange, electronic trading
network or other suitable trading platform, such exchange, electronic network or other trading
platform is open for trading.
Call Notice
shall have the meaning set forth in Section 11.3 of this CVR Agreement.
Combination Product
means any product that comprises a Product sold in conjunction
with another active component (whether packaged together or in the same therapeutic formulation or
otherwise) or service.
2
Commission
means the Securities and Exchange Commission, as from time to time
constituted, created under the Exchange Act (as defined herein), or if at any time after the
execution of this instrument such Commission is not existing and performing the duties now assigned
to it under the Trust Indenture Act, then the body performing such duties at such time.
Common Stock
shall have the meaning set forth in the Recitals of this CVR Agreement.
Company
means the Person (as defined herein) named as the Company in the first
paragraph of this CVR Agreement, until a successor Person shall have become such pursuant to the
applicable provisions of this CVR Agreement, and thereafter Company shall mean such successor
Person. To the extent necessary to comply with the requirements of the provisions of Trust
Indenture Act Sections 310 through 317, inclusive, to the extent that they are applicable to the
Company, the term Company shall include any other obligor with respect to the Securities for the
purposes of complying with such provisions.
Company Request
or
Company Order
means a written request or order signed
in the name of the Company by the chairman of the Board of Directors or the president or any vice
president, the controller or assistant controller and the treasurer or assistant treasurer or the
secretary or any assistant secretary, and delivered to the Trustee.
Confidential Information
shall have the meaning set forth in Section 7.13 of this
CVR Agreement.
Consent and Purchase Offer
shall have the meaning set forth in Section 11.1 of this
CVR Agreement.
Corporate Trust Office
means the office of the Trustee at which at any particular
time its corporate trust business shall be principally administered, which office at the date of
execution of this CVR Agreement is located at [
].
CVRs
shall have the meaning set forth in the Preamble of this CVR Agreement.
CVR Agreement
means this instrument as originally executed and as it may from time
to time be supplemented or amended pursuant to the applicable provisions hereof.
CVR Certificate
means a certificate representing any of the CVRs.
CVR Payment
means any Net Sales Payment and any Milestone Payment.
CVR Shortfall
shall have the meaning set forth in Section 7.6(b) of this CVR
Agreement.
Default Interest Rate
means a rate equal to the sum of three percent (3%) plus the
prime rate of interest quoted in the Money Rates section of
The Wall Street Journal
(New York
Edition), or similar reputable data source, calculated daily on the basis of a three hundred
sixty-five (365) day year or, if lower, the highest rate permitted under applicable Law.
3
Diligent Efforts
means, with respect to any Product, efforts of a Person to carry
out its obligations in a diligent manner using such effort and employing such resources normally
used by such Person in the exercise of its reasonable business discretion relating to the research,
development or commercialization of a product, that is of similar market potential at a similar
stage in its development or product life, taking into account issues of market exclusivity
(including patent coverage, regulatory and other exclusivity), safety and efficacy, product
profile, the competitiveness of alternate products in the marketplace or under development, the
launch or sales of a generic or biosimilar product, the regulatory structure involved, and the
profitability of the applicable product (including pricing and reimbursement status achieved), and
other relevant factors, including technical, commercial, legal, scientific, and/or medical factors.
Existing Licenses
means those licenses and related agreements (for so long as they
are in effect) with respect to the Products granted by the Company or its Affiliates to third
parties (other than the Company or its Affiliates) as in effect immediately prior to the
consummation of the Merger (with such modifications thereto after the consummation of the Merger
that do not reduce the amounts of royalties, milestone payments or profit split payments
thereunder).
Event of Default
shall have the meaning set forth in Section 8.1 of this CVR
Agreement.
Exchange Act
means the Securities Exchange Act of 1934, as amended.
Exchange Act Documents
shall have the meaning set forth in Section 5.4 of this CVR
Agreement.
FDA
means the United States Food and Drug Administration or any successor agency.
Governmental Entity
means any domestic (federal or state), or foreign court,
commission, governmental body, regulatory or administrative agency or other political subdivision
thereof.
Holder
means a Person in whose name a Security is registered in the Security
Register.
Independent Accountant
shall have the meaning set forth in Section 7.6(a) of this
CVR Agreement.
Indications
means U.S. Regulatory Approval of the Product described in clause (a) of
the definition of Product for use in the treatment of: (i) melanoma; (ii) ovarian cancer; (iii)
bladder cancer; and (iv) first-line metastatic breast cancer.
Junior Obligations
has the meaning set forth in Section 10.1.
Law
means any foreign, federal, state, local or municipal laws, rules, judgments
orders, regulations, statutes, ordinances, codes, decisions, injunctions, orders, decrees or
requirements of any Governmental Entity.
4
Majority Holders
means, at the time of determination, Holders of at least a majority
of the Outstanding CVRs.
Merger
shall have the meaning set forth in the Recitals of this CVR Agreement.
Merger Agreement
shall have the meaning set forth in the Recitals of this CVR
Agreement.
Milestone
means each of (i) Milestone #1, and (ii) Milestone #2.
Milestone #1
means U.S. Regulatory Approval of the Product described in clause (a)
of the definition of Product for use in the treatment of non-small cell lung cancer (NSCLC),
which U.S. Regulatory Approval permits the Company to market such Product under a label that
includes a progression free survival claim, but only if the foregoing milestone is achieved no
later than the Milestone Target Date. For the avoidance of doubt, an approvable letter or
similar communication published by the FDA shall not constitute approval for purposes of the
foregoing.
Milestone #2
means U.S. Regulatory Approval of the Product described in clause (a)
of the definition of Product for use in the treatment of pancreatic cancer, which U.S. Regulatory
Approval permits the Company to market such Product under a label that includes an overall survival
claim, but only if the foregoing milestone is achieved no later than the Milestone Target Date.
For the avoidance of doubt, an approvable letter or similar communication published by the FDA
shall not constitute approval for purposes of the foregoing.
Milestone Payment
means, as applicable, (i) two hundred fifty million dollars
($250,000,000), with respect to the achievement of Milestone #1; and (ii) (a) four hundred million
dollars ($400,000,000), with respect to the achievement of Milestone #2 if Milestone #2 is achieved
no later than April 1, 2013, and (b) three hundred million dollars ($300,000,000), with respect to
the achievement of Milestone #2 if Milestone #2 is achieved after April 1, 2013 but no later than
the Milestone Target Date.
Milestone Payment Date
means, with respect to each Milestone, the date that is
twenty (20) Business Days following the date of the achievement of such Milestone.
Milestone Target Date
means the fifth anniversary of the date of this CVR Agreement.
Net Sales
means, for each Net Sales Measuring Period, the sum of, without any
duplication: (i) the gross amounts invoiced for the Products sold by the Company, its Affiliates
or its licensees (other than licensees under Existing Licenses) to third parties (other than the
Company, its Affiliates or its licensees) during such Net Sales Measuring Period, including
wholesale distributors, less deductions from such amounts calculated in accordance with Accounting
Standards so as to arrive at net sales under Accounting Standards as reported by the Company, its
Affiliate or its licensee, as applicable, in such Persons financial statements, and further
reduced by write-offs of accounts receivables or increased for collection of accounts that were
previously written off; plus (ii) (A) the amount of royalties and profit split payments received by
the Company or its Affiliates from their respective licensees under Existing Licenses
for sales (but not the supply) of Products sold by such licensees to third parties (other than
the Company or its Affiliates) during such Net Sales Measuring Period, and (B) the amount of any
milestone payments received during such Net Sales Measuring Period by the Company or its Affiliates
from their licensees under Existing Licenses with respect to the Products.
5
Any and all set-offs against gross invoice prices shall be calculated in accordance with
Accounting Standards. Sales or other commercial dispositions of a Product between the Company and
its Affiliates and its licensees shall be excluded from the computation of Net Sales; Product
provided to third parties without charge, in connection with research and development, clinical
trials, compassionate use, humanitarian and charitable donations, or indigent programs or for use
as samples shall be excluded from the computation of Net Sales; and no payments will be payable on
such sales or such other commercial dispositions, except where such an Affiliate or licensee is an
end user of the Product.
Notwithstanding the foregoing, if a Product is sold or otherwise commercially disposed of for
consideration other than cash or in a transaction that is not at arms length between the buyer and
the seller, then the gross amount to be included in the calculation of Net Sales shall be the
amount that would have been invoiced had the transaction been conducted at arms length and for
cash. Such amount that would have been invoiced shall be determined, wherever possible, by
reference to the average selling price of such Product in arms length transactions in the relevant
country.
Notwithstanding the foregoing, in the event a Product is sold as a Combination Product in a
particular country, Net Sales shall be calculated by multiplying the Net Sales of the Combination
Product by the fraction A/(A+B), where A is the gross invoice price of the Product if sold
separately in a country and B is the gross invoice price of the other product(s) included in the
Combination Product if sold separately in such country. If no such separate sales are made by the
Company, its Affiliates or licensees in a country, Net Sales of the Combination Product shall be
calculated in a manner determined by the Company in good faith based upon the relative value of the
active components of such Combination Product.
Net Sales Measuring Period
means the one-year period beginning January
1
st
of each year during the term of this CVR Agreement and ending December
31
st
of each year during the term of this CVR Agreement; provided that the first Net
Sales Measuring Period will begin on January 1, 2011 and end on December 31, 2011.
Net Sales Payment
means, with respect to any Net Sales Measuring Period, an amount
equal to (i) two and one-half percent (2.5%) of that portion of Net Sales of the Products that
exceeds one billion dollars ($1,000,000,000) but is less than or equal to two billion dollars
($2,000,000,000) for such period, plus (ii) an additional amount equal to five percent (5.0%) of
that portion of Net Sales of the Products that exceeds two billion dollars ($2,000,000,000) but is
less than or equal to three billion dollars ($3,000,000,000) for such period, plus (iii) an
additional amount equal to ten percent (10.0%) of that portion of Net Sales of the Products that
exceeds three billion dollars ($3,000,000,000) for such period; provided that no Net Sales Payments
will be due following a Net Sales Payment Termination Date.
6
Net Sales Payment Dates
means the fifteenth (15
th
) day after the date the
Company is required to provide the Net Sales Statement pursuant to Section 5.4 for the Net Sales
Measuring Period in respect of which a Net Sales Payment is due.
Net Sales Payment Termination Date
means the last day of the Net Sales Measuring
Period ending on December 31, 2025; provided that, if Net Sales of the Products for the Net Sales
Measuring Period ending on December 31, 2025 are equal to or greater than one billion dollars
($1,000,000,000), then the Net Sales Payment Termination Date shall be extended until the earlier
of (a) the last day of the first Net Sales Measuring Period subsequent to December 31, 2025 during
which Net Sales of the Products are less than one billion dollars ($1,000,000,000) and (b) December
31, 2030.
Net Sales Statement
means, with respect to each Net Sales Measuring Period, the
written statement of the Company, certified by the Chief Financial Officer of the Company and
setting forth with reasonable detail (i)(a), for the Products for all countries in the aggregate,
(X) the total of the gross invoice price charged by the Company, its Affiliates and its licensees
(other than licensees under Existing Licenses) for sales of the Products by the Company, its
Affiliates and their respective licensees (other than licensees under Existing Licenses) to third
parties (other than the Company or its Affiliates) during the applicable period, (Y) an itemized
calculation of Net Sales for the Products showing deductions for such Net Sales Measuring Period
provided for in accordance with the definition of Net Sales, and (Z)(1) the total of all royalties
and profit split payments received by the Company and its Affiliates from their respective
licensees under Existing Licenses for sales of the Products by their respective licensees during
the applicable period, and (2) the amount of any milestone payments received during such Net Sales
Measuring Period by the Company or its Affiliates from their licensees under Existing Licenses with
respect to the Products, (b) to the extent that Net Sales for the Products for an applicable period
is determined based on Net Sales of a Combination Product for such period, the method of
determining the Net Sales of the Combination Product attributable to the Products in accordance
with the definition of Net Sales, and (c) to the extent that sales for the Products for an
applicable period is recorded in currencies other than United States dollars, the exchange rates
used for conversion of such foreign currency into United States dollars and (ii) the calculation of
the Net Sales Payment due, if any, in respect of the applicable Net Sales Measuring Period in
accordance with this CVR Agreement.
Officers Certificate
when used with respect to the Company means a certificate
signed by the chairman of the Board of Directors or the president or any vice president, the
controller or assistant controller and the treasurer or assistant treasurer or the secretary or any
assistant secretary of the Company delivered to the Trustee or any other person authorized to act
on behalf of the Company.
Opinion of Counsel
means a written opinion of counsel, who may be counsel for the
Company.
Outstanding
when used with respect to Securities means, as of the date of
determination, all Securities theretofore authenticated and delivered under this CVR Agreement,
except: (i) Securities theretofore cancelled by the Trustee or delivered to the Trustee for
cancellation and (ii) Securities in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this CVR Agreement, other than any such Securities in
respect of which there shall have been presented to the Trustee proof satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands the Securities are valid obligations of
the Company; provided, however, that in determining whether the Holders of the requisite
Outstanding Securities have given any request, demand, direction, consent or waiver hereunder,
Securities owned by the Company or any Affiliate of the Company, whether held as treasury
securities or otherwise, shall be disregarded and deemed not to be Outstanding.
7
Party
shall mean the Trustee, the Company and/or Holder(s), as applicable.
Paying Agent
means any Person authorized by the Company to pay the amount determined
pursuant to Section 3.1, if any, on any Securities on behalf of the Company.
Payment Date
means any Net Sales Payment Date, any Milestone Payment Date, and any
such date as shall be required for any CVR Shortfall payment pursuant to the review procedure set
forth in Section 7.6.
Person
means any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, limited liability company, unincorporated organization or government or
any agency or political subdivision thereof.
Products
means each of:
(a) the pharmaceutical product comprising the chemical compound having the chemical name of
5ß,20-Epoxy-1,2a,4,7ß,10ß,13a-hexahydroxytax-11-en-9-one 4,10-diacetate 2-benzoate 13-ester with
(2R,3S)-N-benzoyl-3-phenylisoserine (with the structure below), known by the generic name
paclitaxel and bound to albumin that is the subject of the New Drug Application No. 21-660 filed
with the FDA and subject of the European Medicines Agency Marketing Authorization granted on
January 11, 2008, together with all amendments and supplements to such FDA and European Medicines
Agency approvals (identified by the Company as ABRAXANE); provided that in all cases such Product
is an injectable formulation.
8
(b) the pharmaceutical product comprising the chemical compound having the chemical name of
(2R,3S)-N-carboxy-3-phenylisoserine,N-
tert
-butyl ester, 13-ester with 5ß-20-epoxy-1,2 ,4,7ß,10ß,13
-hexahydroxytax-11-en-9-one 4-acetate 2-benzoate, anhydrous(with the structure below) bound to
albumin that is the subject of the Investigational New Drug Application No. 73,527 filed with the
FDA together with all amendments (identified by the Company as nab-docetaxel (ABI-008)); provided
that in all cases such Product is an injectable formulation.
(c) the pharmaceutical product comprising the chemical compound having the chemical name of
(3
S
, 6
R
, 7
E
, 9
R
, 10
R
, 12
R
, 14
S
, 15
E
, 17
E
, 19
E
, 21
S
, 23
S
, 26
R
, 27
R
, 34a
S
)-9, 10, 12, 13, 14, 21, 22,
23, 24, 25, 26, 27, 32, 33, 34, 34a-hexadecahydro-9,27-dihydroxy-3-[(1
R
)-2-[(1
S
, 3
R
,
4
R
)-4-hydroxy-3-methoxycyclohexyl]-1-methylethyl]-10,21-dimethoxy-6, 8, 12, 14, 20,
26-hexamethyl-23, 27-epoxy-3
H
-pyrido[2, 1-c][1,4] oxaazacyclohentriacontine -1, 5, 11, 28,
29 (4H,6H,31H)-pentone (with the structure below) bound to albumin that is the subject of the
Investigational New Drug Application No. 74.610 filed with the FDA together with all amendments
(identified by the Company as nab-rapamycin (ABI-009)); provided that in all cases such Product
is an injectable formulation.
(d) the pharmaceutical product comprising the chemical compound having the chemical name of
17-allylamino-17-demethoxygeldanamycin, 17-allylamino geldanamycin (with the structure below) bound
to albumin that is the subject of the Investigational New Drug Application No. 78,298 filed with
the FDA together with all amendments (identified by the Company as nab-17AAG (ABI-010)); provided
that in all cases such Product is an injectable formulation.
9
(e) the pharmaceutical product comprising the chemical compound having the chemical name of
N-(1,2,3-trimethoxy-10-methylsulfanyl-9-oxo-5,6,7,9-tetrahydro-benzo[a]heptalen-7-yl)-3-[3-(1,2,3-trimethoxy-10-methylsulfanyl-9-oxo-5,6,7,9-tetrahydro-benzo[a]heptalen-7-yl)-ureido]-propionamide(with the structure below) bound to albumin that is the
subject of the Investigational New Drug Application No. 103,698 filed with the FDA together with
all amendments (identified by the Company as nab-thiocolchicine dimer (ABI-011)); provided that
in all cases the Product is an injectable formulation.
(f) the pharmaceutical product comprising the chemical compound having the chemical name of
(
αR, ßS
)-
ß
-[[(1,1-Dimethylethoxy)carbonyl]amino]-
α
-(hexanoyloxy)benzenepropanoic acid
(2a
R
,4
S
,4a
S
,6
R
,9
S
,11
S
,12
S
,12a
R
,12b
S
)-12b-(acetyloxy)-12-(benzoyloxy)-2a,3,4,4a,5,6,9,10,11,12,12a,12b-dodecahydro-4,6,11-trihydroxy-4a,8,13,13-tetramethyl-5-oxo-7,11-methano-1
H
-cyclodecal[3,4]benz[1, 2-b]oxet-9-yl ester (with the structure below) bound to albumin (identified by the Company as
nab-novel taxane (ABI-013)) provided that in all cases the Product is an injectable formulation.
10
(g) the pharmaceutical product comprising the chemical compound having the chemical name of
Benzenepropanoic acid,
ß-(benzoylamino)-α-hydroxy-,6,12bbis(acetyloxy)-12-(benzoyloxy)-2a,3,4,4a,5,6,9,10,11,12,12a,12bdodecahydro-4,11-dihydroxy-4a,8,13,13-tetramethyl-5-oxo-7,11-methano-1
H
-cyclodeca[3,4]benz[1,2-b]-oxet-9-yl
ester,[2a
R
-[2aα,4ß,4aß,6ß,9α(αR*,ßS*),11α,12α,12aα, 12bα]] bound to albumin that is the subject of
the Investigational New Drug Application No. 63,082 filed with the FDA together
with all amendments (identified by the Company as COROXANE); provided that in all cases the
Product is an injectable formulation.
Redemption Eligibility Date
means the date that fifty percent (50%) of the
Securities issued pursuant to the terms of the Merger Agreement either are (i) no longer
Outstanding, and/or (ii) repurchased, acquired, redeemed or retired by the Company.
Registration Statement
shall have the meaning set forth in the Recitals of this CVR
Agreement.
Regulatory Approval
means all approvals from the FDA or other non-U.S. regulatory
authority necessary for the commercial manufacture, marketing and sale of a product in the United
States or other jurisdiction in accordance with applicable Law.
Representatives
shall have the meaning set forth in Section 7.13 of this CVR
Agreement.
Responsible Officer
when used with respect to the Trustee means any officer assigned
to the Corporate Trust Office and also means, with respect to any particular corporate trust
matter, any other officer of the Trustee to whom such matter is referred because of his knowledge
of and familiarity with the particular subject.
Securities
shall have the meaning set forth in the Preamble of this CVR Agreement.
Securities Act
shall have the meaning set forth in the Recitals of this CVR
Agreement.
11
Security Register
shall have the meaning set forth in Section 3.5(a) of this CVR
Agreement.
Senior Obligations
means any existing or future obligations of the Company,
including the principal of, premium (if any), interest (including, without limitation, any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the
documentation with respect thereto, whether or not such interest is an allowed claim under
applicable Law) on, and all other amounts owing thereon, (i) with respect to borrowed money, (ii)
evidenced by notes, debentures, bonds or other similar debt instruments, (iii) with respect to the
net obligations owed under interest rate swaps or similar agreements or currency exchange
transactions, (iv) reimbursement obligations in respect of letters of credit and similar
obligations, (v) in respect of capital leases, or (vi) guarantees in respect of obligations
referred to in clauses (i) through (v) above; unless, in any case, the instrument creating or
evidencing the same or pursuant to which the same is outstanding provides that such obligations are
pari passu to or subordinate in right of payment to the Securities.
Notwithstanding the foregoing, Senior Obligations shall not include:
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(a)
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Junior Obligations;
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(b)
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trade debt incurred in the ordinary course of business;
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(c)
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any intercompany indebtedness between the Company and any of
its Subsidiaries or Affiliates;
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(d)
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indebtedness of the Company that is subordinated in right of
payment to Senior Obligations;
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(e)
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indebtedness or other obligations of the Company that by its
terms ranks equal or junior in right of payment to the Junior Obligations;
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(f)
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indebtedness of the Company that, by operation of Law, is
subordinate to any general unsecured obligations of the Company; and
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(g)
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indebtedness evidenced by any guarantee of indebtedness ranking
equal or junior in right of payment to the Junior Obligations.
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Shortfall Interest Rate
means a rate equal to the sum of two percent (2%) plus the
prime rate of interest quoted in the Money Rates section of
The Wall Street Journal
(New York
Edition), or similar reputable data source, calculated daily on the basis of a three hundred
sixty-five (365) day year or, if lower, the highest rate permitted under applicable Law.
Shortfall Report
shall have the meaning set forth in Section 7.6(b) of this CVR
Agreement.
Sub
shall have the meaning set forth in the Recitals of this CVR Agreement.
12
Subsidiary
means, with respect to any Person, any corporation, limited liability
company, association, partnership or other business entity of which more than fifty percent (50%)
of the total voting power of shares of Voting Securities is at the time owned or controlled,
directly or indirectly, by: (i) such Person; (ii) such Person and one or more Subsidiaries of such
Person; or (iii) one or more Subsidiaries of such Person.
Tax
means any federal, state, local or foreign income, profits, gross receipts,
license, payroll, employment, severance, stamp, occupation, premium, windfall profits,
environmental, customs duty, capital stock, franchise, sales, social security, unemployment,
disability, use, property, withholding, excise, transfer, registration, production, value added,
alternative minimum, occupancy, estimated or any other tax of any kind whatsoever, together with
any interest, penalty or addition thereto, imposed by any Governmental Entity responsible for the
imposition of any such tax, whether disputed or not.
Tax Return
means any return, report, declaration, claim or other statement
(including attached schedules) relating to Taxes.
Trust Indenture Act
means the Trust Indenture Act of 1939, as amended from time to
time.
Trustee
means the Person named as the Trustee in the first paragraph of this CVR
Agreement, until a successor Trustee shall have become such pursuant to the applicable provisions
of this CVR Agreement, and thereafter Trustee shall mean such successor Trustee.
Vice President
when used with respect to the Company or the Trustee, means any vice
president, whether or not designated by a number or a word or words added before or after the title
of vice president.
Voting Securities
means securities or other interests having voting power, or the
right, to elect or appoint a majority of the directors, or any Persons performing similar
functions, irrespective of whether or not stock or other interests of any other class or classes
shall have or might have voting power or any right by reason of the happening of any contingency.
Section 1.2
Compliance and Opinions
.
(a) Upon any application or request by the Company to the Trustee to take any action under any
provision of this CVR Agreement, the Company shall furnish to the Trustee an Officers Certificate
stating that, in the opinion of the signor, all conditions precedent, if any, provided for in this
CVR Agreement relating to the proposed action have been complied with and an Opinion of Counsel
stating, subject to customary exceptions, that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that, in the case of any such application or
request as to which the furnishing of such documents is specifically required by any provision of
this CVR Agreement relating to such particular application or request, no additional certificate or
opinion need be furnished.
13
(b) Every certificate or opinion with respect to compliance with a condition or covenant
provided for in this CVR Agreement shall include: (i) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the definitions herein relating
thereto; (ii) a brief statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are based; (iii) a
statement that, in the opinion of each such individual, he or she has made such examination or
investigation as is necessary to enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with; and (iv) a statement as to whether, in the
opinion of each such individual, such condition or covenant has been complied with.
Section 1.3
Form of Documents Delivered to Trustee
.
(a) In any case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be so certified or covered by only
one document, but one such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an officer of the Company may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations by, counsel. Any
such certificate or Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or officers of
the Company stating that the information with respect to such factual matters is in the possession
of the Company.
(c) Any certificate, statement or opinion of an officer of the Company or of counsel may be
based, insofar as it relates to accounting matters, upon a certificate or opinion of or
representations by an accountant or firm of accountants in the employ of the Company. Any
certificate or opinion of any independent firm of public accountants filed with the Trustee shall
contain a statement that such firm is independent.
(d) Where any Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this CVR Agreement, they
may, but need not, be consolidated and form one instrument.
Section 1.4
Acts of Holders
.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action
provided by this CVR Agreement to be given or taken by Holders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such Holders in person or by an
agent duly appointed in writing; and, except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments are delivered to the Trustee and, where
it is hereby expressly required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the Act of the
Holders signing such instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this CVR Agreement and
(subject to Section 4.1) conclusive in favor of the Trustee and the Company, if made in the manner
provided in
14
this Section. The Company may set a record date for purposes of determining the
identity of Holders entitled to vote or consent to any action by vote or consent authorized or
permitted under this CVR Agreement. If not previously set by the Company, (i) the record date for
determining the Holders entitled to vote at a meeting of the Holders shall be the date preceding
the date notice of such meeting is mailed to the Holders, or if notice is not given, on the day
next preceding the day such meeting is held, and (ii) the record date for determining the Holders
entitled to consent to any action in writing without a meeting shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is delivered to the
Company. If a record date is fixed, those Persons who were Holders of Securities at such record
date (or their duly designated proxies), and only those Persons, shall be entitled to take such
action by vote or consent or, except with respect to clause (d) below, to revoke any vote or
consent previously given, whether or not such Persons continue to be Holders after such record
date. No such vote or consent shall be valid or effective for more than one hundred twenty (120)
days after such record date.
(b) The fact and date of the execution by any Person of any such instrument or writing may be
proved in any reasonable manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the Security Register. Neither the Company
nor the Trustee nor any Agent of the Company or the Trustee shall be affected by any notice to the
contrary.
(d) At any time prior to (but not after) the evidencing to the Trustee, as provided in this
Section 1.4, of the taking of any action by the Holders of the Securities specified in this CVR
Agreement in connection with such action, any Holder of a Security the serial number of which is
shown by the evidence to be included among the serial numbers of the Securities the Holders of
which have consented to such action may, by filing written notice at the Corporate Trust Office and
upon proof of holding as provided in this Section 1.4, revoke such action so far as concerns such
Security. Any request, demand, authorization, direction, notice, consent, waiver or other action
by the Holder of any Security shall bind every future Holder of the same Security or the Holder of
every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done, suffered or omitted to be done by the Trustee, any Paying
Agent or the Company in reliance thereon, whether or not notation of such action is made upon such
Security.
Section 1.5
Notices, etc., to Trustee and Company
. Any request, demand,
authorization, direction, notice, consent, waiver or Act of Holders or other document provided or
permitted by this CVR Agreement to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company shall be sufficient for every purpose
hereunder if made, given, furnished or filed, in writing, to or with the Trustee at its Corporate
Trust Office; or
(b) the Company by the Trustee or by any Holder shall be sufficient for every purpose
hereunder if in writing and mailed, first-class postage prepaid, to the Company addressed to it at
Celgene Corporation, 86 Morris Avenue, Summit, New Jersey 07901, Legal Department, Attention:
Senior Vice President and Chief Counsel, or at any other address previously furnished in writing to
the Trustee by the Company.
15
Section 1.6
Notice to Holders; Waiver
.
(a) Where this CVR Agreement provides for notice to Holders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his address as it appears in
the Security Register, not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to other Holders. Where this CVR
Agreement provides for notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in reliance upon such
waiver.
(b) In case by reason of the suspension of regular mail service or by reason of any other
cause, it shall be impracticable to mail notice of any event as required by any provision of this
CVR Agreement, then any method of giving such notice as shall be satisfactory to the Trustee shall
be deemed to be a sufficient giving of such notice.
Section 1.7
Conflict with Trust Indenture Act
. If any provision hereof limits,
qualifies or conflicts with another provision hereof which is required to be included in this CVR
Agreement by any of the provisions of the Trust Indenture Act, such required provision shall
control.
Section 1.8
Effect of Headings and Table of Contents
. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not affect the
construction hereof.
Section 1.9
Benefits of Agreement
. Nothing in this CVR Agreement or in the
Securities, express or implied, shall give to any Person (other than the Parties hereto and their
successors hereunder, any Paying Agent and the Holders) any benefit or any legal or equitable
right, remedy or claim under this CVR Agreement or under any covenant or provision herein
contained, all such covenants and provisions being for sole benefit of the Parties hereto and their
successors, any Paying Agent and of the Holders.
Section 1.10
Governing Law
. THIS CVR AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401
AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF. EACH OF THE COMPANY, THE TRUSTEE AND EACH OF THE HOLDERS BY THEIR ACCEPTANCE
OF THE SECURITIES, HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS CVR AGREEMENT AND
16
THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. EACH OF THE COMPANY AND THE TRUSTEE AGREES THAT PROCESS MAY BE SERVED UPON THEM IN ANY
MANNER AUTHORIZED BY THE LAWS OF THE STATE OF NEW YORK FOR SUCH PERSONS AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE TO SUCH SERVICE OF PROCESS, THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
Section 1.11
Legal Holidays
. In the event that a Payment Date shall not be a Business
Day, then (notwithstanding any provision of this CVR Agreement or the Securities to the contrary)
payment on the Securities need not be made on such date, but may be made, without the accrual of
any interest thereon, on the next succeeding Business Day with the same force and effect as if made
on such Payment Date.
Section 1.12
Separability Clause
. In case any provision in this CVR Agreement or in
the CVRs shall be invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.13
No Recourse Against Others
. A director, officer or employee, as such, of
the Company or the Trustee shall not have any liability for any obligations of the Company or the
Trustee under the Securities or this CVR Agreement or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security each Holder waives and
releases all such liability. The waiver and release are part of the consideration for the issue of
the Securities.
Section 1.14
Counterparts
. This CVR Agreement shall be signed in any number of
counterparts with the same effect as if the signatures to each counterpart were upon a single
instrument, and all such counterparts together shall be deemed an original of this CVR Agreement.
Section 1.15
Acceptance of Trust
. [
], the Trustee named herein, hereby accepts the
trusts in this CVR Agreement declared and provided, upon the terms and conditions set forth herein.
ARTICLE 2
SECURITY FORMS
Section 2.1
Forms Generally
.
(a) The Securities and the Trustees certificate of authentication shall be in substantially
the forms set forth in Annex A, attached hereto and incorporated herein by this reference, with
such appropriate insertions, omissions, substitutions and other variations as are required or
permitted by this CVR Agreement and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may be required by Law or any rule or regulation pursuant thereto, all as
may be determined by the officers executing such Securities, as evidenced by their execution of the
Securities. Any portion of the text of any Security may be set forth on the reverse thereof, with
an appropriate reference thereto on the face of the Security.
17
(b) The definitive Securities shall be typewritten, printed, lithographed or engraved on steel
engraved borders or produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the Securities may be listed, all
as determined by the officers executing such Securities, as evidenced by their execution of such
Securities.
ARTICLE 3
THE SECURITIES
Section 3.1
Title and Terms
.
(a) The aggregate number of CVRs in respect of which CVR Certificates may be authenticated and
delivered under this CVR Agreement is limited to a number equal to [
]1, except for Securities
authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Securities pursuant to Section 3.4, 3.5, 3.6 or 6.6. From and after the Effective Time, the
Company shall not be permitted to issue any CVRs that have the right to receive any portion of the
Milestone Payments or the Net Sales Payments, except as provided and in accordance with the terms
and conditions of the Merger Agreement.
(b) The Securities shall be known and designated as the Series A Contingent Value Rights of
the Company.
(c) On each Net Sales Payment Date, the Company shall pay to the Trustee, by wire transfer to
the account designated by the Trustee, the Net Sales Payment due, if any, in respect of the Net
Sales Measuring Period ended immediately preceding such Net Sales Payment Date, and the Trustee
shall pay the Holders of the Securities as of such Net Sales Payment Date, a pro rata portion of
such Net Sales Payment based on the number of CVRs held by each Holder as of such date.
Notwithstanding the foregoing, the Companys obligations to pay any Net Sales Payment shall
terminate in its entirety on the Net Sales Payment Termination Date.
(d) On each Milestone Payment Date, the Company shall pay to the Trustee, by wire transfer to
the account designated by the Trustee, the applicable Milestone Payment, and the Trustee shall pay
to the Holders of the Securities as of such Milestone Payment Date, a pro rata portion of such
Milestone Payment based on the number of CVRs held by each Holder as of such date. Notwithstanding
the foregoing, the Companys obligations to pay any Milestone Payment shall terminate in its
entirety if the corresponding Milestone for such Milestone Payment has not been achieved by the
Milestone Target Date.
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1 Insert total, as of the closing of the Merger, of all CVRs to be
issued pursuant to the Merger Agreement.
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18
(e) The Holders of the CVR Certificates, by acceptance thereof, agree that no joint venture,
partnership or other fiduciary relationship is created hereby or by the Securities.
(f) Other than in the case of interest on amounts due and payable after the occurrence of an
Event of Default or with respect to any CVR Shortfall, no interest or dividends shall accrue on any
amounts payable in respect of the CVRs.
(g) Except to the extent any portion of any CVR Payment is required to be treated as imputed
interest pursuant to applicable Law, the Parties hereto agree to treat the CVRs and all CVR
Payments for all Tax purposes as additional consideration for the shares of Common Stock, the
Options, the SARs and the RSUs pursuant to the Merger Agreement, and none of the Parties hereto
will take any position to the contrary on any Tax Return or for other
Tax purposes except as required by applicable Law. The Company shall report imputed interest
on the CVRs pursuant to Section 483 of the Code.
(h) The CVRs and any interest thereon may be sold, assigned, pledged encumbered or in any
manner transferred or disposed of, in whole or in part, only in compliance with applicable United
States federal and state securities Laws and, to the extent applicable, in accordance with Section
3.5 hereof.
(i) The Holder of any CVR or CVR Certificate is not, and shall not, by virtue thereof, be
entitled to any rights of a holder of any Voting Securities or other equity security or other
ownership interest of the Company or in any constituent company to the Merger, either at Law or in
equity, and the rights of the Holders are limited to those contractual rights expressed in this CVR
Agreement.
(j) Except as provided in this CVR Agreement (including, without limitation, Section 7.6),
none of the Company or any of its Affiliates shall have any right to set-off any amounts owed or
claimed to be owed by any Holder to any of them against such Holders Securities or any CVR Payment
or other amount payable to such Holder in respect of such Securities.
(k) In the event that all of the CVR Certificates not previously cancelled shall have become
due and payable pursuant to the terms hereof, all disputes with respect to amounts payable to the
Holders brought pursuant to the terms and conditions of this CVR Agreement have been resolved, and
the Company has paid or caused to be paid or deposited with the Trustee all amounts payable to the
Holders under this CVR Agreement (including any amounts determined in accordance with Section 7.6
herein), then this CVR Agreement shall cease to be of further effect and shall be deemed satisfied
and discharged. Notwithstanding the satisfaction and discharge of this CVR Agreement, the
obligations of the Company under Section 4.7(c) shall survive.
19
Section 3.2
Registrable Form
. The Securities shall be issuable only in registered
form.
Section 3.3
Execution, Authentication, Delivery and Dating
.
(a) The Securities shall be executed on behalf of the Company by its chairman of the Board of
Directors or its president or any vice president or its treasurer, but need not be attested. The
signature of any of these officers on the Securities may be manual or facsimile.
(b) Securities bearing the manual or facsimile signatures of individuals who were, at the time
of execution, the proper officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the authentication and
delivery of such Securities or did not hold such offices at the date of such Securities.
(c) At any time and from time to time after the execution and delivery of this CVR Agreement,
the Company may deliver Securities executed by the Company to the Trustee for authentication,
together with a Company Order for the authentication and delivery of such
Securities; and the Trustee, in accordance with such Company Order, shall authenticate and
deliver such Securities as provided in this CVR Agreement and not otherwise.
(d) Each Security shall be dated the date of its authentication.
(e) No Security shall be entitled to any benefit under this CVR Agreement or be valid or
obligatory for any purpose unless there appears on such Security a certificate of authentication
substantially in the form provided for herein duly executed by the Trustee, by manual or facsimile
signature of an authorized officer, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated and delivered
hereunder and that the Holder is entitled to the benefits of this CVR Agreement.
Section 3.4
Temporary Securities
.
(a) Pending the preparation of definitive Securities, the Company may execute, and upon
Company Order, the Trustee shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such Securities may
determine with the concurrence of the Trustee. Temporary Securities may contain such reference to
any provisions of this CVR Agreement as may be appropriate. Every temporary Security shall be
executed by the Company and be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with like effect, as the definitive Securities.
(b) If temporary Securities are issued, the Company will cause definitive Securities to be
prepared without unreasonable delay. After the preparation of definitive Securities, the temporary
Securities shall be exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose pursuant to Section
7.2, without charge to the Holder. Upon surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like amount of definitive Securities. Until so exchanged, the Temporary Securities
shall in all respects be entitled to the same benefits under this CVR Agreement as definitive
Securities.
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Section 3.5
Registration, Registration of Transfer and Exchange
.
(a) The Company shall cause to be kept at the office of the Trustee a register (the register
maintained in such office and in any other office or agency designated pursuant to Section 7.2
being herein sometimes referred to as the
Security Register
) in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the registration of
Securities and of transfers of Securities. The Trustee is hereby initially appointed Security
Registrar for the purpose of registering Securities and transfers of Securities as herein
provided.
(b) Upon surrender for registration of transfer of any Security at the office or agency of the
Company designated pursuant to Section 7.2, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or transferees, one
or more new CVR Certificates representing the same aggregate number of CVRs represented by the
CVR Certificate so surrendered that are to be transferred and the Company shall execute and the
Trustee shall authenticate and deliver, in the name of the transferor, one or more new CVR
Certificates representing the aggregate number of CVRs represented by such CVR Certificate that are
not to be transferred.
(c) At the option of the Holder, CVR Certificates may be exchanged for other CVR Certificates
that represent in the aggregate the same number of CVRs as the CVR Certificates surrendered at such
office or agency. Whenever any CVR Certificates are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the CVR Certificates which the Holder
making the exchange is entitled to receive.
(d) All Securities issued upon any registration of transfer or exchange of Securities shall be
the valid obligations of the Company, evidencing the same rights, and entitled to the same benefits
under this CVR Agreement, as the Securities surrendered upon such registration of transfer or
exchange.
(e) Every Security presented or surrendered for registration of transfer or for exchange shall
(if so required by the Company or the Security Registrar) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing.
(f) No service charge shall be made for any registration of transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of transfer or exchange
of Securities, other than exchanges pursuant to Section 3.4 or 6.6 not involving any transfer.
21
Section 3.6
Mutilated, Destroyed, Lost and Stolen Securities
.
(a) If (i) any mutilated Security is surrendered to the Trustee, or (ii) the Company and the
Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security,
and there is delivered to the Company and the Trustee such security or indemnity as may be required
by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee
that such Security has been acquired by a bona fide purchaser, the Company shall execute and, upon
delivery of a Company Order, the Trustee shall authenticate and deliver, in exchange for any such
mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new CVR Certificate
of like tenor and amount of CVRs, bearing a number not contemporaneously outstanding.
(b) In case any such mutilated, destroyed, lost or stolen Security has become or is to become
finally due and payable within fifteen (15) days, the Company in its discretion may, instead of
issuing a new CVR Certificate, pay to the Holder of such Security on the applicable Payment Date,
as the case may be, all amounts due and payable with respect thereto.
(c) Every new Security issued pursuant to this Section 3.6 in lieu of any destroyed, lost or
stolen Security shall constitute an original additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all benefits of this CVR Agreement equally and
proportionately with any and all other Securities duly issued hereunder.
(d) The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost
or stolen Securities.
Section 3.7
Payments with respect to CVR Certificates
. Payment of any amounts
pursuant to the CVRs shall be made in such coin or currency of the United States of America as at
the time is legal tender for the payment of public and private debts. The Company may, at its
option, pay such amounts by wire transfer or check payable in such money.
Section 3.8
Persons Deemed Owners
. Prior to the time of due presentment for
registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name any Security is registered as the owner of such Security for the
purpose of receiving payment on such Security and for all other purposes whatsoever, whether or not
such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the
Trustee shall be affected by notice to the contrary.
Section 3.9
Cancellation
. All Securities surrendered for payment, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to
the Trustee and shall be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered hereunder which the
Company may have acquired in any manner whatsoever, and all Securities so delivered shall be
promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange
for any Securities canceled as provided in this Section, except as expressly permitted by this CVR
Agreement. All cancelled Securities held by the Trustee shall be destroyed and a certificate of
destruction shall be issued by the Trustee to the Company, unless otherwise directed by a Company
Order.
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ARTICLE 4
THE TRUSTEE
Section 4.1
Certain Duties and Responsibilities
. (a) With respect to the Holders, the
Trustee, prior to the occurrence of an Event of Default (as defined in Section 8.1) with respect to
the Securities and after the curing or waiving of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set forth in this CVR
Agreement and no implied covenants shall be read into this CVR Agreement against the Trustee. In
case an Event of Default with respect to the Securities has occurred (which has not been cured or
waived), the Trustee shall exercise such of the rights and powers vested in it by this CVR
Agreement, and use the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
(b) In the absence of bad faith on its part, prior to the occurrence of an Event of Default
and after the curing or waiving of all such Events of Default which may have
occurred, the Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions furnished to the
Trustee which conform to the requirements of this CVR Agreement; but in the case of any such
certificates or opinions which by any provision hereof are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they
conform to the requirements of this CVR Agreement.
(c) No provision of this CVR Agreement shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that (i) this Subsection (c) shall not be construed to limit the effect of
Subsections (a) and (b) of this Section; (ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders pursuant to Section 8.9 relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this CVR Agreement.
(d) Whether or not therein expressly so provided, every provision of this CVR Agreement
relating to the conduct or affecting the liability of or affording protection to the Trustee shall
be subject to the provisions of this Section.
Section 4.2
Certain Rights of Trustee
. Subject to the provisions of Section 4.1,
including without limitation, the duty of care that the Trustee is required to exercise upon the
occurrence of an Event of Default:
(a) the Trustee may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper party or parties
and the Trustee need not investigate any fact or matter stated in the document;
23
(b) any request or direction or order of the Company mentioned herein shall be sufficiently
evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution and the Trustee shall not be liable for any action it
takes or omits to take in good faith reliance thereon;
(c) whenever in the administration of this CVR Agreement the Trustee shall deem it desirable
that a matter be proved or established prior to taking, suffering or omitting any action hereunder,
the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers Certificate and the Trustee shall not be liable for any
action it takes or omits to take in good faith reliance thereon or an Opinion of Counsel;
(d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in
it by this CVR Agreement at the request or direction of any of the Holders pursuant to this CVR
Agreement, unless such Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document,
but the Trustee in its discretion may make such further inquiry or investigation into such facts or
matters as it may see fit, and if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder; and
(h) the Trustee shall not be liable for any action taken, suffered or omitted to be taken by
it in good faith and believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this CVR Agreement.
Section 4.3
Notice of Default
. If a default occurs hereunder with respect to the
Securities, the Trustee shall give the Holders notice of any such default actually known to it as
and to the extent applicable and provided by the Trust Indenture Act; provided, however, that in
the case of any default of the character specified in Section 8.1(b) with respect to the
Securities, no notice to Holders shall be given until at least thirty (30) days after the
occurrence thereof. For the purpose of this Section 4.3, the term default means any event that
is, or after notice or lapse of time or both would become, an Event of Default with respect to the
Securities.
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Section 4.4
Not Responsible for Recitals or Issuance of Securities
. The Trustee shall
not be accountable for the Companys use of the Securities or the proceeds from the Securities.
The recitals contained herein and in the Securities, except the Trustees certificates of
authentication, shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to the validity or
sufficiency of this CVR Agreement or of the Securities.
Section 4.5
May Hold Securities
. The Trustee, any Paying Agent, Security Registrar or
any other agent of the Company, in its individual or any other capacity, may become the owner or
pledgee of Securities, and, subject to Sections 4.8 and 4.13, may otherwise deal with the Company
with the same rights it would have if it were not Trustee, Paying Agent, Security Registrar or such
other agent.
Section 4.6
Money Held in Trust
. Money held by the Trustee in trust hereunder need
not be segregated from other funds except to the extent required by Law. The Trustee shall be
under no liability for interest on any money received by it hereunder.
Section 4.7
Compensation and Reimbursement
. The Company agrees:
(a) to pay to the Trustee from time to time reasonable compensation for all services rendered
by it hereunder in such amount as the Company and the Trustee shall agree from time to time (which
compensation shall not be limited by any provision of Law in regard to the compensation of a
trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the Trustee upon its request
for all reasonable expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this CVR Agreement (including the reasonable compensation and the
reasonable expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to the Trustees negligence or willful misconduct;
and
(c) to indemnify the Trustee and each of its agents, officers, directors and employees (each
an indemnitee) for, and to hold it harmless against, any loss, liability or expense (including
attorneys fees and expenses) incurred without negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of this trust and the performance of its
duties hereunder, including the reasonable costs and expenses of defending itself against any claim
or liability in connection with the exercise or performance of any of its powers or duties
hereunder. The Companys payment obligations pursuant to this Section shall survive the
termination of this CVR Agreement. When the Trustee incurs expenses after the occurrence of an
Event of Default specified in Section 8.1(c) or 8.1(d) with respect to the Company, the expenses
are intended to constitute expenses of administration under bankruptcy Laws.
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Section 4.8
Disqualification; Conflicting Interests
.
(a) If applicable, to the extent that the Trustee or the Company determines that the Trustee
has a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall, within
ninety (90) days after ascertaining that it has such conflicting interest, either eliminate such
conflicting interest or resign to the extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this CVR Agreement. The Company shall take prompt steps
to have a successor appointed in the manner provided in this CVR Agreement.
(b) In the event the Trustee shall fail to comply with the foregoing subsection 4.8(a), the
Trustee shall, within ten (10) days of the expiration of such ninety (90) day period, transmit a
notice of such failure to the Holders in the manner and to the extent provided in the Trust
Indenture Act and this CVR Agreement.
(c) If the Trustee fails to comply with Section 4.8(a) after written request therefore by the
Company or any Holder, any Holder of any Security who has been a bona fide Holder for at least six
(6) months may on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of such Trustee and the
appointment of a successor Trustee.
Section 4.9
Corporate Trustee Required; Eligibility
. There shall at all times be a
Trustee hereunder which satisfies the applicable requirements of Sections 310(a)(1) and (5) of the
Trust Indenture Act and has a combined capital and surplus of at least one hundred fifty million
dollars ($150,000,000). If such corporation publishes reports of condition at least annually,
pursuant to Law or to the requirements of a supervising or examining authority, then for the
purposes of this Section 4.9, the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance with the provisions
of this Section, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article.
Section 4.10
Resignation and Removal; Appointment of Successor
.
(a) No resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of appointment by the
successor Trustee under Section 4.11.
(b) The Trustee, or any trustee or trustees hereafter appointed, may resign at any time by
giving written notice thereof to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within thirty (30) days after the giving of
such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by an act of the Majority Holders, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 4.8 after written request therefor by
the Company or by any Holder who has been a bona fide Holder of a Security for at least six
months, or
26
(2) the Trustee shall cease to be eligible under Section 4.9 and shall fail to resign
after written request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then, in any case, (i) the Company,
by a Board Resolution, may remove the Trustee, or (ii) the Holder of any Security who has
been a bona fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy
shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee. If, within one year after any removal by Holders of a
majority of the Outstanding Securities, a successor Trustee shall be appointed by act of the
Holders of a majority of the Outstanding Securities delivered to the Company and the retiring
Trustee the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment
in accordance with Section 4.11, become the successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have been so appointed by the Company or
the Holders of the Securities and accepted appointment within sixty (60) days after the retiring
Trustee tenders its resignation or is removed, the retiring Trustee may, or, the Holder of any
Security who has been a bona fide Holder for at least six (6) months may on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for the appointment of
a successor Trustee.
(f) The Company shall give notice of each resignation and each removal of the Trustee and each
appointment of a successor Trustee by mailing written notice of such event by first-class mail,
postage prepaid, to the Holders of Securities as their names and addresses appear in the Security
Register. Each notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office. If the Company fails to send such notice within ten (10) days after
acceptance of appointment by a successor Trustee, it shall not be a default hereunder but the
successor Trustee shall cause the notice to be mailed at the expense of the Company.
Section 4.11
Acceptance of Appointment of Successor
.
(a) Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the
Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee; but, upon request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring
Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts.
27
(b) No successor Trustee shall accept its appointment unless at the time of such acceptance
such successor Trustee shall be qualified and eligible under this Article.
Section 4.12
Merger, Conversion, Consolidation or Succession to Business
. Any
corporation into which the Trustee may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, by sale or otherwise shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the Parties
hereto. In case any Securities shall have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion, sale or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities so authenticated
with the same effect as if such successor Trustee had itself authenticated such Securities; and
such certificate shall have the full force which it is anywhere in the Securities or in this CVR
Agreement provided that the certificate of the Trustee shall have; provided that the right to adopt
the certificate of authentication of any predecessor Trustee shall apply only to its successor or
successors by merger, conversion or consolidation.
Section 4.13
Preferential Collection of Claims Against Company
. If and when the
Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the
Company (or any other obligor upon the Securities), excluding any creditor relationship set forth
in Section 311(b) of the Trust Indenture Act, if applicable, the Trustee shall be subject to the
applicable provisions of the Trust Indenture Act regarding the collection of claims against the
Company (or any such other obligor).
ARTICLE 5
HOLDERS LISTS AND REPORTS BY THE TRUSTEE AND COMPANY
Section 5.1
Company to Furnish Trustee Names and Addresses of Holders
. The Company
will furnish or cause to be furnished to the Trustee (i) promptly after the issuance of the
Securities, and semi-annually thereafter, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of a recent date, and (ii) at such times as
the Trustee may request in writing, within thirty (30) days after receipt by the Company of any
such request, a list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders as of a date not more than fifteen (15) days prior to the time such list
is furnished; provided, however, that if and so long as the Trustee shall be the Security
Registrar, no such list need be furnished.
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Section 5.2
Preservation of Information; Communications to Holders
.
(a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names
and addresses of Holders contained in the most recent list furnished to the Trustee as provided in
Section 5.1 and the names and addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 5.1
upon receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other Holders with respect to their rights
under this CVR Agreement and the corresponding rights and privileges of the Trustee shall be as
provided by Section 312(b)(2) of the Trust Indenture Act, if applicable.
(c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and
the Trustee that neither the Company nor the Trustee shall be deemed to be in violation of Law or
held accountable by reason of the disclosure of any such information as to the names and addresses
of the Holders made pursuant to the Trust Indenture Act (if applicable) regardless of the source
from which such information was derived.
Section 5.3
Reports by Trustee
.
(a) Within sixty (60) days after December 31 of each year commencing with the December 31
following the date of this CVR Agreement, the Trustee shall transmit to all Holders such reports
concerning the Trustee and its actions under this CVR Agreement as may be required pursuant to the
Trust Indenture Act to the extent and in the manner provided pursuant thereto. The Trustee shall
also comply with Section 313(b)(2) of the Trust Indenture Act, if applicable. The Trustee shall
also transmit by mail all reports as required by Section 313(c) of the Trust Indenture Act, if
applicable.
(b) A copy of each such report shall, at the time of such transmission to the Holders, be
filed by the Trustee with each stock exchange, if any, upon which the Securities are listed, with
the Commission and also with the Company. The Company will promptly notify the Trustee when the
Securities are listed on any stock exchange.
Section 5.4
Reports by Company
. The Company shall: (a) file with the Trustee, (i)
within fifteen (15) days after the Company is required to file the same with the Commission, copies
of the annual and quarterly reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Company is required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act (such required information, documents and other
reports, together the
Exchange Act Documents
); and (ii) if the Company is not required to
file Exchange Act Documents under Section 13 or 15(d) of the Exchange Act, within forty-five (45)
days after each calendar quarter of the Company (other than the last quarter of each calendar
year), quarterly financial information and, within ninety (90) days after each calendar year of the
Company, annual financial information that would be required pursuant to Section 13 of the Exchange
Act in respect of a security listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations (provided that the Company also delivers
with,
29
or includes within, the annual reports referred to in (i) and (ii) a calculation of Net Sales
for the Products for the annual period to date), (iii) within ten (10) days after the Company files
its annual report with the Commission for any year if the Company is required to file Exchange Act
Documents under Section 13 or 15(d) of the Exchange Act, or if the Company is not required to file
Exchange Act Documents under Section 13 or 15(d) of the Exchange Act within ninety (90) days after
each calendar year, a Net Sales Statement with respect to the last completed calendar year, and
(iv) within four (4) Business Days after the occurrence of any Milestone, a notice setting forth
the Milestone that occurred, the amount of the Milestone Payment payable in connection therewith
and the applicable Milestone Payment Date; (b) file with the Trustee such additional information,
documents and reports with respect to compliance by the Company with the conditions and covenants
of this CVR Agreement as may be required from time to time by the rules and regulations of the
Commission, and (c) make available to the Holders on the Companys website as of an even date with
the filing of such materials with the Trustee, the information, documents and reports required to
be filed by the Company pursuant to subsections (a) or (b) of this Section 5.4.
ARTICLE 6
AMENDMENTS
Section 6.1
Amendments Without Consent of Holders
. Without the consent of any
Holders, the Company and the Trustee, at any time and from time to time, may enter into one or more
amendments hereto or to the Securities, for any of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the Trustee as security for the
Securities any property or assets; or
(b) to evidence the succession of another Person to the Company, and the assumption by any
such successor of the covenants of the Company herein and in the Securities; or
(c) to add to the covenants of the Company such further covenants, restrictions, conditions or
provisions as its Board of Directors and the Trustee shall consider to be for the protection of the
Holders of Securities, and to make the occurrence, or the occurrence and continuance, of a default
in any such additional covenants, restrictions, conditions or provisions an Event of Default
permitting the enforcement of all or any of the several remedies provided in this CVR Agreement as
herein set forth; provided, that in respect of any such additional covenant, restriction, condition
or provision, such amendment may provide for a particular period of grace after default (which
period may be shorter or longer than that allowed in the case of other defaults) or may provide for
an immediate enforcement upon such an Event of Default or may limit the remedies available to the
Trustee upon such an Event of Default or may limit the right of the Majority Holders to waive such
an Event of Default; or
(d) to cure any ambiguity, or to correct or supplement any provision herein or in the
Securities which may be defective or inconsistent with any other provision herein; provided, that
such provisions shall not materially reduce the benefits of this CVR Agreement or the Securities to
the Holders; or
30
(e) to make any other provisions with respect to matters or questions arising under this CVR
Agreement; provided, that such provisions shall not adversely affect the interests of the Holders;
(f) to make any amendments or changes necessary to comply or maintain compliance with the
Trust Indenture Act, if applicable; or
(g) make any change that does not adversely affect the interests of the Holders.
(h) Promptly following any amendment of this CVR Agreement or the Securities in accordance
with this Section 6.1, the Trustee shall notify the Holders of the Securities of such amendment;
provided that any failure so to notify the Holders shall not affect the validity of such amendment.
Section 6.2
Amendments with Consent of Holders
. With the consent of the Majority
Holders, by Act of said Holders delivered to the Company and the Trustee, the
Company (when authorized by a Board Resolution) and the Trustee may enter into one or more
amendments hereto or to the Securities for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this CVR Agreement or to the Securities or of
modifying in any manner the rights of the Holders under this CVR Agreement or to the Securities;
provided, however, that no such amendment shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(a) modify in a manner adverse to the Holders (i) any provision contained herein with respect
to the termination of this CVR Agreement or the Securities, (ii) the time for payment and amount of
any Net Sales Payment or any Milestone Payment, or otherwise extend the time for payment of the
Securities or reduce the amounts payable in respect of the Securities or modify any other payment
term or payment date. Notwithstanding the foregoing, each Holder of a Security, by acceptance
thereof, consents to the optional redemption provisions set forth in Article 11 hereof;
(b) reduce the number of CVRs, the consent of whose Holders is required for any such
amendment; or
(c) modify any of the provisions of this Section, except to increase any such percentage or to
provide that certain other provisions of this CVR Agreement cannot be modified or waived without
the consent of the Holder of each Security affected thereby.
It shall not be necessary for any Act of Holders under this Section to approve the particular
form of any proposed amendment, but it shall be sufficient if such Act shall approve the substance
thereof.
Section 6.3
Execution of Amendments
. In executing any amendment permitted by this
Article, the Trustee (subject to Section 4.1) shall be fully protected in relying upon an Opinion
of Counsel stating that the execution of such amendment is authorized or permitted by this CVR
Agreement. The Trustee shall execute any amendment authorized pursuant to this Article if the
amendment does not adversely affect the Trustees own rights, duties or immunities under this CVR
Agreement or otherwise. Otherwise, the Trustee may, but need not, execute such amendment.
31
Section 6.4
Effect of Amendments; Notice to Holders
.
(a) Upon the execution of any amendment under this Article, this CVR Agreement and the
Securities shall be modified in accordance therewith, and such amendment shall form a part of this
CVR Agreement and the Securities for all purposes; and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
(b) Promptly after the execution by the Company and the Trustee of any amendment pursuant to
the provisions of this Article, the Company shall mail a notice thereof by first class mail to the
Holders of Securities at their addresses as they shall appear on the Security Register, setting
forth in general terms the substance of such amendment. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way impair or affect the validity of any
such amendment.
Section 6.5
Conformity with Trust Indenture Act
. Every amendment executed pursuant to
this Article shall conform to the applicable requirements of the Trust Indenture Act, if any.
Section 6.6
Reference in Securities to Amendments
. If an amendment changes the terms
of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee.
Securities authenticated and delivered after the execution of any amendment pursuant to this
Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee
as to any matter provided for in such amendment. If the Company shall so determine, new Securities
so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such
amendment may be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities. Failure to make the appropriate notation or to
issue a new Security shall not affect the validity of such amendment.
ARTICLE 7
COVENANTS
Section 7.1
Payment of Amounts, if any, to Holders
. The Company will duly and
punctually pay the amounts, if any, on the Securities in accordance with the terms of the
Securities and this CVR Agreement. Such amounts shall be considered paid on the applicable Payment
Date if on such date the Trustee or the Paying Agent holds in accordance with this CVR Agreement
money sufficient to pay all such amounts then due. Notwithstanding any other provision of this CVR
Agreement, the Company or any of its Affiliates (including the Surviving Corporation, as
applicable), the Trustee or the Paying Agent, shall be entitled to deduct and withhold, or cause to
be deducted and withheld, from amounts (including CVRs) otherwise payable pursuant to this CVR
Agreement or the Merger Agreement to any holder of shares of Common Stock, Options, SARs, RSUs or
CVRs, such amounts as the Company or any of its Affiliates, the Trustee or the Paying Agent is
required to deduct and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended, or any provision of state, local or foreign Tax Law. To the
extent that amounts are so withheld by the Company or any of its Affiliates, the Trustee or the
Paying Agent, such withheld amounts shall be (a) paid over to the applicable Governmental Entity in
accordance with applicable Law and (b) treated for all purposes of this CVR Agreement as having
been paid to such Holder in respect of which such deduction and withholding was made by the Company
or any of its Affiliates, the Trustee or the Paying Agent, as the case may be. The consent of
Holder shall not be required for any such withholding.
32
Section 7.2
Maintenance of Office or Agency
.
(a) As long as any of the Securities remain Outstanding, the Company will maintain in the
Borough of Manhattan, The City of New York, an office or agency (i) where Securities may be
presented or surrendered for payment, (ii) where Securities may be surrendered for registration of
transfer or exchange and (iii) where notices and demands to or upon the Company in respect of the
Securities and this CVR Agreement may be served. The office or agency of the Trustee at [
] shall
be such office or agency of the Company, unless the Company shall designate and maintain some other
office or agency for one or more of such
purposes. The Company or any of its Subsidiaries may act as Paying Agent, registrar or
transfer agent; provided that such Person shall take appropriate actions to avoid the commingling
of funds. The Company will give prompt written notice to the Trustee of any change in the location
of any such office or agency. If at any time the Company shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
(b) The Company may from time to time designate one or more other offices or agencies (in or
outside of The City of New York) where the Securities may be presented or surrendered for any or
all such purposes, and may from time to time rescind such designation; provided, however, that no
such designation or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes.
The Company will give prompt written notice to the Trustee of any such designation or rescission
and any change in the location of any such office or agency.
Section 7.3
Money for Security Payments to Be Held in Trust
.
(a) If the Company or any of its Subsidiaries shall at any time act as the Paying Agent, it
will, on or before the Payment Date, as the case may be, segregate and hold in trust for the
benefit of the Holders all sums held by such Paying Agent for payment on the Securities until such
sums shall be paid to the Holders as herein provided, and will promptly notify the Trustee of any
default by the Company in making payment on the Securities.
(b) Whenever the Company shall have one or more Paying Agents for the Securities, it will, on
or before a Payment Date deposit with a Paying Agent a sum in same day funds sufficient to pay the
amount, if any, so becoming due; such sum to be held in trust for the benefit of the Persons
entitled to such amount, and (unless such Paying Agent is the Trustee) the Company will promptly
notify the Trustee of such action or any failure so to act.
33
(c) The Company will cause each Paying Agent other than the Trustee to execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that (i) such Paying Agent will hold all sums held by it for the
payment of any amount payable on Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided
and will notify the Trustee of the sums so held and (ii) that it will give the Trustee notice of
any failure by the Company (or by any other obligor on the Securities) to make any payment on the
Securities when the same shall be due and payable.
(d) Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment on any Security and remaining unclaimed for one year after the Payment Date
shall be paid to the Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money shall thereupon cease.
Section 7.4
Certain Purchases and Sales
. Nothing contained herein shall prohibit the
Company or any of its Subsidiaries or Affiliates from acquiring in open market transactions,
private transactions or otherwise, the Securities.
Section 7.5
Books and Records
. The Company shall keep, and shall cause its
Subsidiaries to keep, true, complete and accurate records in sufficient detail to enable the
amounts payable under this CVR Agreement to be determined by the Holders and their consultants or
professional advisors, for a period of three (3) years following the end of any Net Sales Measuring
Period.
Section 7.6
Audits
.
(a) Upon the written request of the Majority Holders and no more than once during any calendar
year, and upon reasonable notice, the Company shall provide an independent certified public
accounting firm of nationally recognized standing selected by the Majority Holders and the Company
(the
Independent Accountant
) with access during normal business hours to such of the
records of the Company as may be reasonably necessary to verify the accuracy of the Net Sales
Statements and the figures underlying the calculations set forth therein for any period within the
preceding three (3) years that has not previously been audited in accordance with this Section 7.6.
The Company shall pay for the fees charged by the Independent Accountant in the event that the
Independent Accountant determines that the amount paid by the Company is more than ten percent
(10%) below the amount due; provided, however, that the Majority Holders shall pay for the fees
charged by such Independent Accountant in the event that the Independent Accountant determines that
the amount paid by the Company is equal to or less than ten percent (10%) below the amount due,
which amount the Company may deduct from any future CVR Payments payable pursuant to this CVR
Agreement. The Independent Accountant shall disclose to the Majority Holders only the amounts that
the Independent Accountant believes to be due and payable by the Company, details concerning any
discrepancy from the amount paid and the amount due, and shall disclose no other information
revealed in such audit. The Independent Accountant shall provide the Company with a copy of all
disclosures made to the Majority Holders. This covenant shall survive the termination of this CVR
Agreement for a period of three (3) years; provided that the Holders shall only be entitled to one
audit following termination of this CVR Agreement.
34
(b) If the Independent Accountant concludes that any Net Sales Payment amount should have been
greater than the Net Sales Payment set forth in an applicable Net Sales Statement (the difference
being the
CVR Shortfall
), the Company shall pay the CVR Shortfall, within six (6) months
of the date the Majority Holders deliver to the Company the Independent Accountants written report
(the
Shortfall Report
); provided that the CVR Shortfall amount shall bear interest at the
Shortfall Interest Rate beginning from thirty (30) days after the date the Majority Holders deliver
to the Company the Shortfall Report until payment is made to the Trustee. The decision of such
Independent Accountant shall be final, conclusive and binding on the Company and the Holders, shall
be non-appealable and shall not be subject to further review.
(c) Upon the expiration of three (3) years following the end of any Net Sales Measuring
Period, the calculation of the Net Sales Payment payable with respect to such Net Sales Measuring
Period shall be conclusive and binding on each Holder, and the Company shall
be released from any liability or accountability with respect to payments in respect of such
Net Sales Measuring Period in excess of such Net Sales Payment.
(d) Each person seeking to receive information from the Company in connection with a review or
audit shall enter into, and shall cause its accounting firm to enter into, a reasonable and
mutually satisfactory confidentiality agreement with the Company obligating such party to retain
all such financial information disclosed to such party in confidence pursuant to such
confidentiality agreement.
(e) The Company shall not, and shall cause its Affiliates not to, enter into any license or
distribution agreement with any third party (other than the Company or its Affiliates) with respect
to any Product unless such agreement contains provisions that would allow any Independent
Accountant appointed pursuant to this Section 7.6 such access to the records of the other party to
such license or distribution agreement as may be reasonably necessary to perform its duties
pursuant to this Section 7.6; provided that the Company and its Affiliates shall not be required to
amend any Existing Licenses. The Parties agree that, if the Company or its Affiliates have
exercised audit rights under any license or distribution agreement prior to the Majority Holders
request for an audit under this Section 7.6 and under such license or distribution agreement the
Company and its Affiliates cannot request another audit, the results of the Companys prior audit
of such licensee or distributor will be used for purposes of the audit requested by the Majority
Holders under this Section 7.6 and that the Company shall not have any further obligation to
provide access to an Independent Accountant with respect to such licensee until such time as the
Company may again exercise its rights of audit under the license agreement with such licensee.
Section 7.7
Listing of CVRs
. The Company hereby covenants and agrees to use
reasonable best efforts to cause the Securities to be approved for listing (subject to notice of
issuance) for trading on the Nasdaq Capital Market and will use its reasonable best efforts to
maintain such listing for so long as any CVRs remain Outstanding.
35
Section 7.8
Conflicting Arrangements
. So long as any of the Securities remain
Outstanding, the Company shall not enter into any binding agreement, arrangement or understanding,
or take or permit to be taken any action, which would, or would reasonably be expected to, delay or
prevent the Companys ability to timely make any CVR Payment that becomes due under this CVR
Agreement.
Section 7.9
Product Transfer
. Subject to Article 9, so long as the Securities remain
Outstanding, the Company and its Affiliates may not, directly or indirectly, by a sale or swap of
assets, merger, reorganization, joint venture, lease, license or any other transaction or
arrangement, sell, transfer, convey or otherwise dispose of their respective rights in and to any
Product to a third party (other than the Company or its Affiliates), unless at all times after any
such sale, transfer, conveyance or other disposition, the gross amounts invoiced for the Products
by the applicable transferee (or the amounts of royalties, profit split payments and milestone
payments, as described in clause (ii) of the definition of Net Sales, with respect to Existing
Licenses, as applicable) will be reflected in Net Sales in accordance with the terms hereunder
(with the transferee substituted for the Company for purposes of the definition of Net Sales) as
if such transferee was the Company, and the contract for such sale, transfer, conveyance or other
disposition (which the Company shall take all reasonable actions necessary to enforce in all
material respects) shall provide for such treatment and shall require the transferee to comply with
the covenants in this Section 7.9 and Sections 7.6, 7.10 and 7.11 hereof to the same extent as the
Company. For purposes of clarification, this Section 7.9 shall not apply to sales of Products made
by the Company or its Affiliates or ordinary course licensing arrangements between the Company and
its Affiliates, on the one hand, and third party licensees, distributors and contract
manufacturers, on the other hand, entered into in the ordinary course of business for purposes of
developing, manufacturing, distributing and selling Products and for which the gross amounts
invoiced for sales of Products by the applicable third party licensee, distributor or contract
manufacturer (or the amounts of royalties, profit split payments and milestone payments, as
described in clause (ii) of the definition of Net Sales, with respect to Existing Licenses, as
applicable) will be reflected in Net Sales of such Products in accordance with the terms of this
Agreement.
Section 7.10
Milestones
. The Company shall use Diligent Efforts to achieve each of
the Milestones; provided, however, that such obligation to use Diligent Efforts to achieve each of
the Milestones shall terminate upon the Milestone Target Date.
Section 7.11
Product Sale and Development
. The Company shall use Diligent Efforts to
obtain Regulatory Approval for the Indications; provided, however, that such obligation to use
Diligent Efforts to obtain such Regulatory Approval shall terminate upon the earlier of (a) the Net
Sales Payment Termination Date and (b) on an Indication-by-Indication basis, such time as the data
generated in an appropriate clinical trial does not support further development of the Product
described in clause (a) of the definition of Product. The Company shall use Diligent Efforts to
sell the Products for which the Company has obtained Regulatory Approval; provided, however, that
such obligation to use Diligent Efforts to sell the Products shall terminate upon the Net Sales
Payment Termination Date.
36
Section 7.12
Notice of Default
. The Company shall file with the Trustee written
notice of the occurrence of any Event of Default or other default under this CVR Agreement within
five (5) business days of its becoming aware of any such Default or Event of Default.
Section 7.13
Confidentiality
. The Trustee and the Holders hereby agree that any
confidential or non-public information (including Net Sales Statements) they receive from or on
behalf of the Company or any Affiliate of the Company, which receipt arises out of the transactions
contemplated by this CVR Agreement (the
Confidential Information
), shall: (a) not be used
for any purpose other than for purposes permitted under this CVR Agreement; (b) not be used
directly or indirectly in any way that is for competitive purposes; and (c) not be disclosed by,
and be kept confidential by, such Trustee and the Holders and its directors, officers, members,
managers, employees, affiliates, and agents (collectively,
Representatives
); provided,
however, that any such Confidential Information may be disclosed only to their Representatives
(including the Independent Accountant) who (i) need to know such Confidential Information and (ii)
are bound in writing to a non-disclosure agreement no less restrictive than this Section 7.13. It
is understood that such Representatives shall be informed by the Trustee or the applicable Holder
of the confidential nature of such Confidential Information, and that the Trustee or such Holder,
as applicable, shall be responsible for any disclosure or use made by its Representatives in breach
of obligations under this CVR Agreement to the same extent as if such
disclosure or use had been made directly by the Trustee or such Holder, as applicable. Each
of the Trustee and the Holders will as soon as practicable notify the Company of any breach of this
CVR Agreement of which they become aware, and will use commercially reasonable efforts to assist
and cooperate with the Company in minimizing the consequences of such breach. Confidential
Information shall not include any information that is (i) publicly available other than because of
disclosure by the Trustee or the Holders or any of their respective Representatives or (ii) is
lawfully disclosed to the Trustee or Holders by sources (other than the Company or its Affiliates)
rightfully in possession of the Confidential Information. If the Trustee, Holders or their
respective Representatives are legally required or requested to disclose any Confidential
Information, they will in advance of such disclosure, unless otherwise prohibited by Law, promptly
notify the Company of such request or requirement so that the Company may seek to avoid or minimize
the required disclosure and/or obtain an appropriate protective order or other appropriate relief
to ensure that any Confidential Information so disclosed is maintained in confidence to the maximum
extent possible by the person receiving the disclosure, or, in the Companys discretion, to waive
compliance with the provisions of this CVR Agreement. In any such case, the Trustee and the
Holders agree to cooperate and use reasonable efforts to avoid or minimize the required disclosure
and/or obtain such protective order or other relief. If, in the absence of a protective order or
the receipt of a waiver hereunder, the Trustee, Holders or their respective Representatives are
legally obligated to disclose any Confidential Information, they will disclose only so much thereof
to the party compelling disclosure as they believe in good faith, on the basis of advice of
counsel, is required by Law. The Trustee and Holders shall give the Company prior written notice
of the specific Confidential Information that they believe they are required to disclose under such
circumstances. All Confidential Information disclosed by or on behalf of the Company or any of its
Affiliates shall be, and shall remain, the property of the Company or such Affiliate.
Section 7.14
Non-Use of Name
. Neither the Trustee nor the Holders shall use the name,
trademark, trade name, or logo of the Company, its Affiliates, or their respective employees in any
publicity or news release relating to this CVR Agreement or its subject matter, without the prior
express written permission of the Company.
37
ARTICLE 8
REMEDIES OF THE TRUSTEE AND HOLDERS
ON EVENT OF DEFAULT
Section 8.1
Event of Default Defined; Waiver of Default
.
Event of Default
with respect to the Securities, means each one of the following events which shall have occurred
and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of Law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of all or any part of any CVR Payment after a period of ten (10)
Business Days after such CVR Payment shall become due and payable on a Payment Date or otherwise;
or
(b) material default in the performance, or breach in any material respect, of any covenant or
warranty of the Company in respect of the Securities (other than a covenant or warranty in respect
of the Securities, a default in whose performance or whose breach is elsewhere in this Section
specifically dealt with), and continuance of such default or breach for a period of ninety (90)
days after there has been given, by registered or certified mail, to the Company by the Trustee or
to the Company and the Trustee by the Majority Holders, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a Notice of Default
hereunder; or
(c) a court having jurisdiction in the premises shall enter a decree or order for relief in
respect of the Company in an involuntary case under any applicable bankruptcy, insolvency or other
similar Law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee or sequestrator (or similar official) of the Company or for any substantial part of its
property or ordering the winding up or liquidation of its affairs, and such decree or order shall
remain unstayed and in effect for a period of ninety (90) consecutive days; or
(d) the Company shall commence a voluntary case under any applicable bankruptcy, insolvency or
other similar Law now or hereafter in effect, or consent to the entry of an order for relief in an
involuntary case under any such Law, or consent to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the
Company or for any substantial part of its property, or make any general assignment for the benefit
of creditors.
If an Event of Default described above occurs and is continuing, then, and in each and every
such case, either the Trustee or the Trustee upon the written request of the Majority Holders by
notice in writing to the Company (and to the Trustee if given by the Majority Holders), shall bring
suit to protect the rights of the Holders, including to obtain payment for any amounts then due and
payable, which amounts shall bear interest at the Default Interest Rate until payment is made to
the Trustee.
38
The foregoing provisions, however, are subject to the condition that if, at any time after the
Trustee shall have begun such suit, and before any judgment or decree for the payment of the moneys
due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all amounts which shall have become due (with
interest upon such overdue amount at the Default Interest Rate to the date of such payment or
deposit) and such amount as shall be sufficient to cover reasonable compensation to the Trustee,
its agents, attorneys and counsel, and all other expenses and liabilities incurred and all advances
made, by the Trustee, and if any and all Events of Default under this CVR Agreement shall have been
cured, waived or otherwise remedied as provided herein, then and in every such case the Majority
Holders, by written notice to the Company and to the Trustee, may waive all defaults with respect
to the Securities, but no such waiver or rescission and annulment shall extend to or shall affect
any subsequent default or shall impair any right consequent thereof.
Section 8.2
Collection by the Trustee; the Trustee May Prove Payment Obligations
. The
Company covenants that in case default shall be made in the payment of all or
any part of the Securities when the same shall have become due and payable, whether at a
Payment Date or otherwise, then upon demand of the Trustee, the Company will pay to the Trustee for
the benefit of the Holders of the Securities the whole amount that then shall have become due and
payable on all Securities (with interest from the date due and payable to the date of such payment
upon the overdue amount at the Default Interest Rate); and in addition thereto, such further amount
as shall be sufficient to cover the costs and expenses of collection, including reasonable
compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and
counsel, and any expenses and liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee, except as a result of its negligence or bad faith.
The Trustee may in its discretion proceed to protect and enforce its rights and the rights of
the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this CVR Agreement or in aid of the exercise of any power granted herein, or to
enforce any other remedy.
In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in
its own name and as trustee of an express trust, shall be entitled and empowered to institute any
action or proceedings at Law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or final decree, and may enforce any such
judgment or final decree against the Company or other obligor upon such Securities and collect in
the manner provided by Law out of the property of the Company or other obligor upon such
Securities, wherever situated, the moneys adjudged or decreed to be payable.
39
In any judicial proceedings relative to the Company or other obligor upon the Securities,
irrespective of whether any amount is then due and payable with respect to the Securities, the
Trustee is authorized:
(a) to file and prove a claim or claims for the whole amount owing and unpaid in respect of
the Securities, and to file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for reasonable compensation to the
Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and
each predecessor Trustee, except as a result of negligence or bad faith) and of the Holders allowed
in any judicial proceedings relative to the Company or other obligor upon the Securities, or to
their respective property;
(b) unless prohibited by and only to the extent required by applicable Law, to vote on behalf
of the Holders in any election of a trustee or a standby trustee in arrangement, reorganization,
liquidation or other bankruptcy or insolvency proceedings or person performing similar functions in
comparable proceedings; and
(c) to collect and receive any moneys or other property payable or deliverable on any such
claims, and to distribute all amounts received with respect to the claims of the Holders and of the
Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar
official is hereby authorized by each of the Holders to make payments to the
Trustee, and, in the event that the Trustee shall consent to the making of payments directly
to the Holders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and
each predecessor Trustee, except as a result of its negligence or bad faith, and all other amounts
due to the Trustee or any predecessor Trustee pursuant to Section 4.6. To the extent that such
payment of reasonable compensation, expenses, disbursements, advances and other amounts out of the
estate in any such proceedings shall be denied for any reason, payment of the same shall be secured
by a lien on, and shall be paid out of, any and all distributions, dividends, moneys, securities
and other property which the Holders may be entitled to receive in such proceedings, whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to
or vote for or accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities, or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding except,
as aforesaid, to vote for the election of a trustee in bankruptcy or similar person.
All rights of action and of asserting claims under this CVR Agreement, or under any of the
Securities, may be enforced by the Trustee without the possession of any of the Securities or the
production thereof and any trial or other proceedings instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment, subject to the payment
of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their
respective agents and attorneys, shall be for the ratable benefit of the Holders.
40
In any proceedings brought by the Trustee (and also any proceedings involving the
interpretation of any provision of this CVR Agreement to which the Trustee shall be a party) the
Trustee shall be held to represent all the Holders, and it shall not be necessary to make any
Holders of such Securities parties to any such proceedings.
Section 8.3
Application of Proceeds
. Any monies collected by the Trustee pursuant to
this Article in respect of any Securities shall be applied in the following order at the date or
dates fixed by the Trustee upon presentation of the several Securities in respect of which monies
have been collected and stamping (or otherwise noting) thereon the payment in exchange for the
presented Securities if only partially paid or upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses in respect of which monies have been
collected, including reasonable compensation to the Trustee and each predecessor Trustee and
their respective agents and attorneys and of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee, except as a result of its
negligence or willful misconduct, and all other amounts due to the Trustee or any
predecessor Trustee pursuant to Section 4.6;
SECOND: To the payment of the whole amount then owing and unpaid upon all the
Securities, with interest at the Default Interest Rate on all such amounts, and in case such
monies shall be insufficient to pay in full the whole amount so due and unpaid upon the
Securities, then to the payment of such amounts without preference or priority of any
security over any other Security, ratably to the aggregate of such amounts due and payable;
and
THIRD: To the payment of the remainder, if any, to the Company or any other person
lawfully entitled thereto.
Section 8.4
Suits for Enforcement
. In case an Event of Default has occurred, has not
been waived and is continuing, the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this CVR Agreement by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any of such rights, either at Law or in equity or
in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement
contained in this CVR Agreement or in aid of the exercise of any power granted in this CVR
Agreement or to enforce any other legal or equitable right vested in the Trustee by this CVR
Agreement or by Law.
Section 8.5
Restoration of Rights on Abandonment of Proceedings
. In case the Trustee
or any Holder shall have proceeded to enforce any right under this CVR Agreement and such
proceedings shall have been discontinued or abandoned for any reason, or shall have been determined
adversely to the Trustee or to such Holder, then and in every such case the Company and the Trustee
and the Holders shall be restored respectively to their former positions and rights hereunder, and
all rights, remedies and powers of the Company, the Trustee and the Holders shall continue as
though no such proceedings had been taken.
41
Section 8.6
Limitations on Suits by Holders
. Subject to the right of the Majority
Holders under Section 7.6, no Holder of any Security shall have any right by virtue or by availing
of any provision of this CVR Agreement to institute any action or proceeding at Law or in equity or
in bankruptcy or otherwise upon or under or with respect to this CVR Agreement, or for the
appointment of a trustee, receiver, liquidator, custodian or other similar official or for any
other remedy hereunder, unless such Holder previously shall have given to the Trustee written
notice of default and of the continuance thereof, as hereinbefore provided, and unless also the
Majority Holders shall have made written request upon the Trustee to institute such action or
proceedings in its own name as trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred
therein or thereby and the Trustee for fifteen (15) days after its receipt of such notice, request
and offer of indemnity shall have failed to institute any such action or proceeding and no
direction inconsistent with such written request shall have been given to the Trustee pursuant to
Section 8.9. For the protection and enforcement of the provisions of this Section, each and every
Holder and the Trustee shall be entitled to such relief as can be given either at Law or in equity.
Section 8.7
Unconditional Right of Holders to Institute Certain Suits
.
Notwithstanding any other provision in this CVR Agreement and any provision of any Security, the
right of any Holder of any Security to receive payment of the amounts payable in respect of such
Security on or after the respective due dates expressed in such Security, or to institute suit
for the enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
Section 8.8
Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default
.
(a) Except as provided in Section 8.6, no right or remedy herein conferred upon or reserved to
the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by Law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at Law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not
prevent the concurrent assertion or employment of any other appropriate right or remedy.
(b) No delay or omission of the Trustee or of any Holder to exercise any right or power
accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such
right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence
therein; and, subject to Section 8.6, every power and remedy given by this CVR Agreement or by Law
to the Trustee or to the Holders may be exercised from time to time, and as often as shall be
deemed expedient, by the Trustee or by the Holders.
Section 8.9
Control by Holders
.
(a) The Majority Holders shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising any power
conferred on the Trustee with respect to the Securities by this CVR Agreement; provided that such
direction shall not be otherwise than in accordance with Law and the provisions of this CVR
Agreement; and provided further that (subject to the provisions of Section 4.1) the Trustee shall
have the right to decline to follow any such direction if the Trustee, being advised by counsel,
shall determine that the action or proceeding so directed may not lawfully be taken or if the
Trustee in good faith by its board of directors, the executive committee, or a committee of
directors or responsible officers of the Trustee shall determine that the action or proceedings so
directed would involve the Trustee in personal liability or if the Trustee in good faith shall so
determine that the actions or forbearances specified in or pursuant to such direction would be
unduly prejudicial to the interests of Holders of the Securities not joining in the giving of said
direction.
42
(b) Nothing in this CVR Agreement shall impair the right of the Trustee in its discretion to
take any action deemed proper by the Trustee and which is not inconsistent with such direction or
directions by Holders.
Section 8.10
Waiver of Past Defaults
.
(a) In the case of a default or an Event of Default specified in clause (b), (c) or (d) of
Section 8.1, the Majority Holders may waive any such default or Event of Default, and its
consequences except a default in respect of a covenant or provisions hereof which cannot be
modified or amended without the consent of the Holder of each Security affected. In the case of
any such waiver, the Company, the Trustee and the Holders of the Securities shall be restored to
their former positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other default or impair any right consequent thereon.
(b) Upon any such waiver, such default shall cease to exist and be deemed to have been cured
and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been
cured, and not to have occurred for every purpose of this CVR Agreement; but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any right consequent
thereon.
Section 8.11
The Trustee to Give Notice of Default, But May Withhold in Certain
Circumstances
. The Trustee shall transmit to the Holders, as the names and addresses of such
Holders appear on the Security Register (as provided under Section 313(c) of the Trust Indenture
Act, if applicable), notice by mail of all defaults which have occurred and are known to the
Trustee, such notice to be transmitted within ninety (90) days after the occurrence thereof, unless
such defaults shall have been cured before the giving of such notice (the term default for the
purposes of this Section being hereby defined to mean any event or condition which is, or with
notice or lapse of time or both would become, an Event of Default); provided that, except in the
case of default in the payment of the amounts payable in respect of any of the Securities, the
Trustee shall be protected in withholding such notice if and so long as the board of directors, the
executive committee, or a trust committee of directors or trustees and/or Responsible Officers of
the Trustee in good faith determines that the withholding of such notice is in the interests of the
Holders.
Section 8.12
Right of Court to Require Filing of Undertaking to Pay Costs
. All
Parties to this CVR Agreement agree, and each Holder of any Security by his acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this CVR Agreement or in any suit against the Trustee for
any action taken, suffered or omitted by it as the Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including attorneys fees, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section 8.12 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder or group of Holders holding in the aggregate more
than ten percent (10%) of the Securities Outstanding or to any suit instituted by any Holder for
the enforcement of the payment of any Security on or after the due date expressed in such Security.
43
ARTICLE 9
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 9.1
Company May Consolidate, etc., on Certain Terms
. The Company covenants
that it will not merge or consolidate with or into any other Person or sell or convey all or
substantially all of its assets to any Person, unless, (i) the Company shall be the continuing
Person, or the successor Person or the Person which acquires by sale or conveyance substantially
all the assets of the Company (including the shares of Abraxis) shall be a Person organized under
the Laws of the United States of America or any State thereof and shall expressly assume by an
instrument supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the Securities, according to their tenor, and the due and
punctual performance and observance of all of the covenants and conditions of this CVR
Agreement to be performed or observed by the Company and (ii) the Company, or such successor
Person, as the case may be, shall not, immediately after such merger or consolidation, or such sale
or conveyance, be in default in the performance of any such covenant or condition.
Section 9.2
Successor Person Substituted
.
(a) In case of any such consolidation, merger, sale or conveyance, and following such an
assumption by the successor Person, such successor Person shall succeed to and be substituted for
the Company with the same effect as if it had been named herein. Such successor Person may cause
to be signed, and may issue either in its own name or in the name of the Company prior to such
succession any or all of the Securities issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee; and, upon the order of such successor
corporation instead of the Company and subject to all the terms, conditions and limitations in this
CVR Agreement prescribed, the Trustee shall authenticate and shall deliver any Securities which
previously shall have been signed and delivered to the Trustee for authentication, and any
Securities which such successor corporation thereafter shall cause to be signed and delivered to
the Trustee for that purpose. All of the Securities so issued shall in all respects have the same
legal rank and benefit under this CVR Agreement as the Securities theretofore or thereafter issued
in accordance with the terms of this CVR Agreement as though all of such Securities had been issued
at the date of the execution hereof.
(b) In case of any such consolidation, merger, sale or conveyance, such changes in phraseology
and form (but not in substance) may be made in the Securities thereafter to be issued as may be
appropriate. The successor entity to such consolidation, merger, sale or conveyance may satisfy
the obligations of Section 5.4(a)(i) and (ii) of this CVR Agreement by providing copies of such
successor entitys Exchange Act Documents in the case of Section 5.4(a)(i) or such successor
entitys financial information in the case of Section 5.4(a)(ii).
44
(c) In the event of any such sale, transfer or conveyance (other than a conveyance by way of
lease) the Company or any Person which shall theretofore have become such in the manner described
in this Article shall be discharged from all obligations and covenants under this CVR Agreement and
the Securities and may be liquidated and dissolved.
Section 9.3
Opinion of Counsel to the Trustee
. The Trustee, subject to the provisions
of Sections 4.1 and 4.2, shall receive an Officers Certificate and Opinion of Counsel, prepared in
accordance with Sections 1.3 and 1.4, as conclusive evidence that any such consolidation, merger,
sale or conveyance, and any such assumption, and any such liquidation or dissolution, complies with
the applicable provisions of this CVR Agreement, and if a supplemental agreement is required in
connection with such transaction, such supplemental agreement complies with this Article and that
there has been compliance with all conditions precedent herein provided for or relating to such
transaction.
Section 9.4
Successors
. All covenants, provisions and agreements in this CVR
Agreement by or for the benefit of the Company, the Trustee or the Holders shall bind and inure to
the benefit of their respective successors, assigns, heirs and personal representatives, whether so
expressed or not. The Company may assign this CVR Agreement without the prior written
consent of the other Parties to this CVR Agreement to one or more of its direct or indirect
Subsidiaries, provided, however, that in the event of any such assignment the Company shall remain
subject to its obligations and covenants hereunder, including but not limited to its obligation to
make any Net Sales Payments and any Milestone Payments.
ARTICLE 10
SUBORDINATION
Section 10.1
Agreement to Subordinate
. The Company agrees, and each Holder by
accepting a Security hereunder agrees, that the CVR Payments, all other obligations under this CVR
Agreement and the Securities and any rights or claims relating thereto (collectively, the
Junior Obligations
) are subordinated in right of payment, to the extent and in the manner
provided in this Article 10, to the prior payment in full in cash or cash equivalents of all Senior
Obligations of the Company (whether outstanding on the date hereof or hereafter created, incurred,
assumed or guaranteed), and that the subordination is for the benefit of the holders of such Senior
Obligations.
Section 10.2
Liquidation; Dissolution; Bankruptcy
. Upon any distribution to creditors
of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its property, in an
assignment for the benefit of creditors or any marshaling of the Companys assets and liabilities:
(a) holders of Senior Obligations will be entitled to receive payment in full in cash or cash
equivalents of all Senior Obligations of the Company (including interest after the commencement of
any bankruptcy proceeding at the rate specified in the applicable Senior Obligation, whether or not
permitted under such bankruptcy proceedings) before the Holders will be entitled to receive any
payment of any kind with respect to the Junior Obligations; and
45
(b) until all Senior Obligations of the Company (as provided in clause (a) above) are paid in
full in cash or cash equivalents, any distribution to which Holders would be entitled but for this
Article 10 will be made to holders of Senior Obligations of the Company, as their interests may
appear.
Section 10.3
Default on Senior Obligations
. The Company may not make any payment or
distribution to any Holder in respect of Junior Obligations or acquire from any Holder for cash or
property any Junior Obligations:
(a) if any default on any Senior Obligations exceeding twenty-five million dollars
($25,000,000) in aggregate principal amount would occur as a result of such payment, distribution
or acquisition;
(b) during the continuance of any payment default in respect of any Senior Obligations (after
expiration of any applicable grace period) exceeding twenty-five million dollars ($25,000,000) in
aggregate principal amount;
(c) if the maturity of any Senior Obligations representing more than twenty-five million
dollars ($25,000,000) in aggregate principal amount is accelerated in accordance with its terms and
such acceleration has not been rescinded; or
(d) following the occurrence of any default (other than a payment default, and after the
expiration of any applicable grace period) with respect to any Senior Obligations with an aggregate
principal amount of more than twenty-five million dollars ($25,000,000), the effect of which is to
permit the holders of such Senior Obligations (or a trustee or agent acting on their behalf) to
cause, with the giving of notice if required, the maturity of such Senior Obligations to be
accelerated, for a period commencing upon the receipt by the Trustee (with a copy to the Company)
of a written notice of such default from the representative of the holders of such Senior
Obligations and ending when such Senior Obligations are paid in full in cash or cash equivalents
or, if earlier, when such default is cured or waived.
Section 10.4
When Distribution Must Be Paid Over
.
(a) In the event that the Trustee or any Holder receives any payment of any Junior Obligations
at a time when such payment is prohibited by this Article 10, such payment will be held by the
Trustee or such Holder, in trust for the benefit of, and will be paid forthwith over and delivered,
upon written request, to, the holders of Senior Obligations of the Company as their interests may
appear or their representative under the agreement, indenture or other document (if any) pursuant
to which such Senior Obligations may have been issued, as their respective interests may appear,
for application to the payment of all such Senior Obligations remaining unpaid to the extent
necessary to pay such Senior Obligations in full in accordance with their terms, after giving
effect to any concurrent payment or distribution to or for the holders of Senior Obligations.
(b) Any amount received by any Holder as a result of direct or indirect credit support for the
Junior Obligations from any Affiliate of the Company shall be treated as payments received by such
Holder from the Company that are subject to the provisions of this Article 10.
46
(c) With respect to the holders of Senior Obligations, the Trustee undertakes to perform only
those obligations on the part of the Trustee as are specifically set forth in this Article 10, and
no implied covenants or obligations with respect to the holders of Senior Obligations will be read
into this CVR Agreement against the Trustee. The Trustee will not be deemed to owe any fiduciary
duty to the holders of Senior Obligations, and will not be liable to any such holders if the
Trustee pays over or distributes to or on behalf of Holders or the Company or any other Person
money or assets to which any holders of Senior Obligations are then entitled by virtue of this
Article 10, except if such payment is made as a result of the willful misconduct or gross
negligence of the Trustee.
Section 10.5
Notice by Company
. The Company will promptly notify the Trustee of any
facts known to the Company that would cause a payment of any Junior Obligations to violate this
Article 10, but failure to give such notice will not affect the subordination of the Junior
Obligations to the Senior Obligations as provided in this Article 10.
Section 10.6
Subordination Effective Notwithstanding Deficiencies with Respect to Senior
Obligations; Waiver of Right to Contest Senior Obligation; Reinstatement of Subordination
Provisions
.
(a) The Holders hereby agree that subordination provisions contained in this Article 10 are
unconditional, irrespective of the validity, regularity or enforceability of the Senior
Obligations, the absence of any action to enforce the same, any waiver or consent by any holder of
Senior Obligations with respect to any provisions thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might otherwise constitute
a legal or equitable discharge or defense. Without limiting the foregoing, and notwithstanding
anything to the contrary contained elsewhere in this CVR Agreement, in the event that the amount of
Senior Obligations are reduced or diminished for any reason (other than as a result of the payment
in cash or cash equivalents thereof), whether because of the applicability of fraudulent conveyance
or other applicable Laws, or any other invalidity or limitation on the amount of Senior
Obligations, the subordination provisions thereof shall apply to the full amount of Senior
Obligations (without giving effect to any reduction, invalidity or diminution thereof), and the
turnover provisions hereunder shall be fully enforceable with respect to the full amount of Senior
Obligations (without giving effect to any such reduction, invalidity or diminution thereof), even
if the effect thereof is that there will be no (or a limited amount of) Senior Obligations to which
the Junior Obligations are subrogated after the payment in full in cash of any of then remaining
Senior Obligations (without giving effect to any reductions, invalidity or diminution thereof,
except for reductions as a result of payments thereof in cash or cash equivalents).
(b) The Trustee and the Holders agree that they shall not (and hereby waive any right to) take
any action to contest or challenge (or assist or support any other Person in contesting or
challenging), directly or indirectly, whether or not in any proceeding (including in any proceeding
commenced by or against any Person under any provision of Title 11 of the United States Code, as
now and hereinafter in effect, or any successor statute or under any other state or federal
bankruptcy or insolvency Law, assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings seeking
reorganization, arrangement, or other similar relief), the validity or enforceability of the Senior
Obligations.
47
(c) If any payment made or in respect to the Senior Obligations must be disgorged or returned
for any reason, the Senior Obligations shall be reinstated hereunder and for all purposes of this
Article 10 (including, without limitation, the turnover provisions hereof) such payment shall be
deemed to have never been made with respect to the Senior Obligations.
Section 10.7
Subrogation
. After all Senior Obligations are paid in full in cash or
cash equivalents and until the Junior Obligations are paid in full, Holders will be subrogated to
the rights of holders of Senior Obligations to receive distributions applicable to Senior
Obligations to the extent that distributions otherwise payable to the Holders have been applied to
the payment of Senior Obligations. The Holders by accepting the Securities acknowledge that to the
extent that the Senior Obligations are determined to be unenforceable, or the Senior Obligations
are subordinated to other obligations of the Company, such subrogation rights may be impaired.
Section 10.8
Relative Rights
. This Article 10 defines the relative rights of Holders
and holders of Senior Obligations. Nothing in this CVR Agreement will:
(a) impair, as between the Company and Holders, the obligations of the Company under this CVR
Agreement and the Securities; or
(b) affect the relative rights of Holders and creditors of the Company other than their rights
in relation to holders of Senior Obligations.
(c) If the Company fails because of this Article 10 to pay any amounts due in respect of the
Securities on a due date in violation of Section 8.1, the failure is still an Event of Default.
Section 10.9
Subordination May Not Be Impaired by Company
. No right of any holder of
Senior Obligations to enforce the subordination of the Junior Obligations may be impaired by any
act or failure to act by the Company or any Holder or by the failure of the Company or any Holder
to comply with this CVR Agreement.
Section 10.10
Distribution or Notice to Representative
. Whenever a distribution is to
be made or a notice given to holders of Senior Obligations, the distribution may be made and the
notice given to their representative in accordance with the terms of the instrument or other
agreement governing such Senior Obligations. Upon any payment or distribution of assets of the
Company referred to in this Article 10, the Trustee and the Holders will be entitled to rely upon
any order or decree made by any court of competent jurisdiction or upon any certificate of such
representative or of the liquidating trustee or agent or other Person making any distribution to
the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Obligations and other obligations of the Company,
the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article 10.
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Section 10.11
Rights of the Trustee
. Notwithstanding the provisions of this Article
10 or any other provision of this CVR Agreement, the Trustee will not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or distribution by the
Trustee, and the Trustee may continue to make payments on the Securities, unless the Trustee has
received at its address for notice specified in Section 1.5 at least five (5) Business Days prior
to the date of such payment written notice of facts that would cause the payment of any Junior
Obligations to violate this Article 10. Only the Company or a representative of Senior Obligations
may give the notice. Nothing in this Article 10 will impair the claims of, or payments to, the
Trustee under or pursuant to Section 4.7 hereof. The Trustee in its individual or any other
capacity may hold Senior Obligations with the same rights it would have if it were not the Trustee.
Section 10.12
Authorization to Effect Subordination
. Each Holder, by the Holders
acceptance of the Securities, authorizes and directs the Trustee on such Holders behalf to take
such action as may be necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holders attorney-in-fact for any and all such
purposes. If the Trustee (or any other Person acting on behalf of and at the
direction of the Majority Holders) does not file a proper proof of claim or proof of debt in
the form required in any proceeding referred to in Section 8.2 hereof at least thirty (30) days
before the expiration of the time to file such claim, the representatives of the Senior Obligations
are hereby authorized to file an appropriate claim for and on behalf of the Holders of the
Securities.
Section 10.13
Amendments
. The provisions of this Article 10 are expressly made for
the benefit of the holders from time to time of the Senior Obligations, and may not be amended or
modified without the written consent of the representatives of the holders of all Senior
Obligations.
ARTICLE 11
REDEMPTION OF SECURITIES
Section 11.1
Notice to Trustee
. If the Company elects to redeem Securities pursuant
to the optional redemption provisions of Section 11.6 hereof, it shall furnish to the Trustee, at
least forty five (45) days (unless a shorter period shall be agreed to by the Trustee) but not more
than sixty (60) days before a redemption date (but in any event prior to the notice provided
pursuant to Section 11.3 hereof), an Officers Certificate (a
Consent and Purchase Offer
)
setting forth (i) the clause of this CVR Agreement pursuant to which the redemption shall occur,
(ii) the redemption date, (iii) the amount of CVRs to be redeemed and (iv) the redemption price.
Section 11.2
Selection of Securities to be Redeemed
. If less than all of the
Securities are to be redeemed or purchased in a Consent and Purchase Offer at any time, the Trustee
shall select the Securities to be redeemed or purchased among the Holders in compliance with the
requirements of the principal national securities exchange, if any, on which the Securities are
listed or, if the Securities are not so listed, on a pro rata basis, by lot or in accordance with
any other method the Trustee considers fair and appropriate. In the event of partial redemption by
lot, the particular Securities to be redeemed shall be selected, unless otherwise provided herein,
not less than thirty (30) nor more than sixty (60) days prior to the redemption date by the Trustee
from the outstanding Securities not previously called for redemption. The Trustee shall promptly
notify the Company in writing of the Securities selected for redemption or purchase.
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Section 11.3
Notice of Redemption
. At least thirty (30) days but not more than sixty
(60) days before a redemption date, the Company shall mail or cause to be mailed, by first class
mail, a notice of redemption to each Holder whose Securities are to be redeemed at its registered
address. The notice (the
Call Notice
) shall identify the amount of Securities to be
redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) the name and address of the paying agent;
(d) that Securities called for redemption must be surrendered to the Paying Agent to collect
the redemption price;
(e) that, unless the Company defaults in making such redemption payment, all right title and
interest in and to the Securities and any Net Sales Payment, Milestone Payment or any other amounts
due under this CVR Agreement, if any, on Securities called for redemption ceases to accrue on and
after the redemption date;
(f) the clause of this CVR Agreement pursuant to which the Securities called for redemption
are being redeemed; and
(g) that no representation is made as to the correctness or accuracy of the CUSIP and ISIN
number, if any, listed in such notice or printed on the Securities.
At the Companys request, the Trustee shall give the notice of redemption in the Companys name and
at its expense; provided, however, that the Company shall have delivered to the Trustee at least
forty five (45) days (unless a shorter period shall be agreed to by the Trustee) but not more than
sixty (60) days prior to the redemption date, an Officers Certificate requesting that the Trustee
give such notice and setting forth the information to be stated in such notice as provided in the
preceding paragraph.
Section 11.4
Effect of Notice of Redemption
. Once notice of redemption is mailed in
accordance with Section 11.3 hereof, Securities called for redemption shall become irrevocably due
and payable on the redemption date at the redemption price. A notice of redemption shall be deemed
to be given when mailed, whether or not the Holder receives the notice. In any event, failure to
give such notice, or any defect in such notice, shall not affect the validity of the proceedings
for the redemption of the Securities held by Holders to whom such notice was properly given.
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Section 11.5
Deposit of Redemption Price
. On or one (1) Business Day prior to the
redemption date, the Company shall deposit with the Trustee or with the paying agent (if different
from the Trustee) money sufficient to pay the redemption price of all Securities to be redeemed on
that date. The Trustee or the paying agent shall promptly return to the Company any money
deposited with the Trustee or the paying agent by the Company in excess of the amounts necessary to
pay the redemption price of all Securities to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on and after the redemption
or purchase date, as applicable, all right title and interest of a Holder to any Net Sales Payment
or Milestone Payment, if any, shall cease to accrue on the Securities called for redemption or
subject to purchase. If any Security called for redemption or subject to purchase shall not be so
paid upon surrender for redemption or purchase because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid redemption price from the redemption
date or Purchase Date, as applicable, until such redemption price is paid at the Shortfall Interest
Rate.
Section 11.6
Optional Redemption by the Company
. The Company may, at any time on and
after the Redemption Eligibility Date, redeem all (but not less than all) of the outstanding
Securities at a cash redemption price equal to the average price paid per Security for
all Securities previously purchased by the Company calculated as of the Business Day
immediately prior to the date of the Call Notice mailed by the Company in accordance with Section
11.3 hereof.
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IN WITNESS WHEREOF, the Parties hereto have caused this CVR Agreement to be duly executed, all
as of the day and year first above written.
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CELGENE CORPORATION
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By:
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Name:
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Title:
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[
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as the Trustee
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By:
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Name:
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Title:
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ANNEX A
CELGENE CORPORATION
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No.
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Certificate for
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Contingent Value Rights
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This certifies that
_____, or registered assigns (the
Holder
), is the
registered holder of the number of Contingent Value Rights (
CVRs
or
Securities
)
set forth above. Each CVR entitles the Holder, subject to the provisions contained herein and in
the CVR Agreement referred to on the reverse hereof, to payments from Celgene Corporation, a
Delaware corporation (the
Company
), in an amounts and in the forms determined pursuant to
the provisions set forth on the reverse hereof and as more fully described in the CVR Agreement
referred to on the reverse hereof. Such payments shall be made on a Payment Date, as defined in
the CVR Agreement referred to on the reverse hereof.
Payment of any amounts pursuant to this CVR Certificate shall be made only to the registered
Holder (as defined in the CVR Agreement) of this CVR Certificate. Such payment shall be made in
the Borough of Manhattan, The City of New York, or at any other office or agency maintained by the
Company for such purpose, in such coin or currency of the United States of America as at the time
is legal tender for the payment of public and private debts; provided, however, the Company may pay
such amounts by wire transfer or check payable in such money. [TRUSTEE] has been initially
appointed as Paying Agent at its office or agency in the Borough of Manhattan, The City of New
York.
Reference is hereby made to the further provisions of this CVR Certificate set forth on the
reverse hereof, which further provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has been duly executed by the Trustee referred
to on the reverse hereof by manual signature, this CVR Certificate shall not be entitled to any
benefit under the CVR Agreement, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
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Dated:
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[
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By:
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Name:
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Title:
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Attest:
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A-1
[Form of Reverse of CVR Certificate]
1. This CVR Certificate is issued under and in accordance with the Contingent Value Rights
Agreement, dated as of [
], 2010 (the
CVR Agreement
), between the Company and [
], a
national banking association, as trustee (the
Trustee
, which term includes any successor
Trustee under the CVR Agreement), and is subject to the terms and provisions contained in the CVR
Agreement, to all of which terms and provisions the Holder of this CVR Certificate consents by
acceptance hereof. The CVR Agreement is hereby incorporated herein by reference and made a part
hereof. Reference is hereby made to the CVR Agreement for a full statement of the respective
rights, limitations of rights, duties, obligations and immunities thereunder of the Company, the
Trustee and the Holders of the CVRs. All capitalized terms used in this CVR Certificate without
definition shall have the respective meanings ascribed to them in the CVR Agreement. Copies of the
CVR Agreement can be obtained by contacting the Trustee.
2. On each Net Sales Payment Date, the Company shall pay to the Holder hereof, for each CVR
represented hereby, a pro rata portion of the Net Sales Payment, if any, with respect to the Net
Sales Measuring Period ended immediately prior to such Net Sales Payment Date.
3. In the event of any conflict between this CVR Certificate and the CVR Agreement, the CVR
Agreement shall govern and prevail.
4. Subject to the terms and conditions of the CVR Agreement, on each Milestone Payment Date
(or, in any such case, if such day is not a Business Day, without accruing any interest, on the
next succeeding Business Day), the Company shall pay to the Holder hereof, for each CVR represented
hereby, a pro rata portion of the applicable Milestone Payment with respect to the occurrence of a
Milestone.
5. Each CVR Payment, if any, and interest thereon, if any, shall be payable by the Company in
such coin or currency of the United States of America as at the time is legal tender for the
payment of public and private debts; provided, however, the Company may pay such amounts by its
check or wire transfer payable in such money. [TRUSTEE] has been initially appointed as Paying
Agent at its office or agency in the Borough of Manhattan, The City of New York.
6. If an Event of Default occurs and is continuing, either the Trustee may or the Majority
Holders, by notice to the Company and to the Trustee shall bring suit in accordance with the terms
and conditions of the CVR Agreement to protect the rights of the Holders, including to obtain
payment of all amounts then due and payable, with interest at the Default Interest Rate from the
date of the Event of Default through the date payment is made or duly provided for.
7. No reference herein to the CVR Agreement and no provision of this CVR Certificate or of the
CVR Agreement shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay any amounts determined pursuant to the terms hereof and of the CVR Agreement
at the times, place and amount, and in the manner, herein prescribed.
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8. Each CVR Payment or any other right, claim or payment of any kind under this CVR
Certificate, if any, shall be subordinated in right of payment, as set forth in Article 10 of the
CVR Agreement, to the prior payment in full in cash or cash equivalents of all Senior Obligations
whether outstanding on the date of the CVR Agreement or thereafter incurred.
9. As provided in the CVR Agreement and subject to certain limitations therein set forth, the
transfer of the CVRs represented by this CVR Certificate is registrable on the Security Register,
upon surrender of this CVR Certificate for registration of transfer at the office or agency of the
Company maintained for such purpose in the Borough of Manhattan, The City of New York, duly
endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company
and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new CVR Certificates, for the same amount of CVRs, will be
issued to the designated transferee or transferees. The Company hereby initially designates the
office of [TRUSTEE] at [
] as the office for registration of transfer of this CVR Certificate.
10. As provided in the CVR Agreement and subject to certain limitations therein set forth,
this CVR Certificate is exchangeable for one or more CVR Certificates representing the same number
of CVRs as represented by this CVR Certificate as requested by the Holder surrendering the same.
11. No service charge will be made for any registration of transfer or exchange of CVRs, but
the Company may require payment of a sum sufficient to cover all documentary, stamp or similar
issue or transfer taxes or other governmental charges payable in connection with any registration
of transfer or exchange.
12. Prior to the time of due presentment of this CVR Certificate for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose
name this CVR Certificate is registered as the owner hereof for all purposes, and neither the
Company, the Trustee nor any agent shall be affected by notice to the contrary.
13. Neither the Company nor the Trustee has any duty or obligation to the holder of this CVR
Certificate, except as expressly set forth herein or in the CVR Agreement.
14.
Redemption
.
(a)
Notice to Trustee
. If the Company elects to redeem Securities pursuant to the
optional redemption provisions of Section 11.6 of the CVR Agreement, it shall furnish to the
Trustee, at least forty five (45) days (unless a shorter period shall be agreed to by the Trustee)
but not more than sixty (60) days before a redemption date (but in any event prior to the notice
provided pursuant to Section 11.3 of the CVR Agreement), an Officers Certificate (a
Consent
and Purchase Offer
) setting forth (i) the clause of the CVR Agreement pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the amount of CVRs to be redeemed and (iv)
the redemption price.
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(b)
Selection of Securities to be Redeemed
. If less than all of the Securities are to
be redeemed or purchased in a Consent and Purchase Offer at any time, the Trustee shall select the
Securities to be redeemed or purchased among the Holders in compliance with the requirements of the
principal national securities exchange, if any, on which the Securities are listed or, if the
Securities are not so listed, on a pro rata basis, by lot or in accordance with any other method
the Trustee considers fair and appropriate. In the event of partial redemption by lot, the
particular Securities to be redeemed shall be selected, unless otherwise provided herein, not less
than thirty (30) nor more than sixty (60) days prior to the redemption date by the Trustee from the
outstanding Securities not previously called for redemption. The Trustee shall promptly notify the
Company in writing of the Securities selected for redemption or purchase.
(c)
Notice of Redemption
. At least thirty (30) days but not more than sixty (60) days
before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a
notice of redemption to each Holder whose Securities are to be redeemed at its registered address.
The notice shall identify the amount of Securities to be redeemed and shall state:
(i) the redemption date;
(ii) the redemption price;
(iii) the name and address of the paying agent;
(iv) that Securities called for redemption must be surrendered to the Paying Agent to
collect the redemption price;
(v) that, unless the Company defaults in making such redemption payment, all right
title and interest in and to the Securities and any Net Sales Payment, Milestone Payment or
any other amounts due under the CVR Agreement, if any, on Securities called for redemption
ceases to accrue on and after the redemption date;
(vi) the clause of the CVR Agreement pursuant to which the Securities called for
redemption are being redeemed; and
(vii) that no representation is made as to the correctness or accuracy of the CUSIP and
ISIN number, if any, listed in such notice or printed on the Securities.
At the Companys request, the Trustee shall give the notice of redemption in the Companys name and
at its expense; provided, however, that the Company shall have delivered to the Trustee at least
forty five (45) days (unless a shorter period shall be agreed to by the Trustee) but not more than
sixty (60) days prior to the redemption date, an Officers Certificate requesting that the Trustee
give such notice and setting forth the information to be stated in such notice as provided in the
preceding paragraph.
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(d)
Effect of Notice of Redemption
. Once notice of redemption is mailed in accordance
with Section 11.3 of the CVR Agreement, Securities called for redemption shall become irrevocably
due and payable on the redemption date at the redemption price. A notice of redemption shall be
deemed to be given when mailed, whether or not the Holder receives the notice. In any event,
failure to give such notice, or any defect in such notice, shall not affect the validity of the
proceedings for the redemption of the Securities held by Holders to whom such notice was properly
given.
(e)
Deposit of Redemption Price
. On or one (1) Business Day prior to the redemption
date, the Company shall deposit with the Trustee or with the paying agent (if different from the
Trustee) money sufficient to pay the redemption price of all Securities to be redeemed on that
date. The Trustee or the paying agent shall promptly return to the Company any money deposited
with the Trustee or the paying agent by the Company in excess of the amounts necessary to pay the
redemption price of all Securities to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on and after the redemption
or purchase date, as applicable, all right title and interest of a Holder to any Net Sales Payment
or Milestone Payment, if any, shall cease to accrue on the Securities called for redemption or
subject to purchase. If any Security called for redemption or subject to purchase shall not be so
paid upon surrender for redemption or purchase because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid redemption price from the redemption
date or Purchase Date, as applicable, until such redemption price is paid at the Shortfall Interest
Rate.
(f)
Optional Redemption by the Company
. The Company may, at any time on and after the
Redemption Eligibility Date, redeem all (but not less than all) of the outstanding Securities at a
cash redemption price equal to the average price paid per Security for all Securities previously
purchased by the Company calculated as of the Business Day immediately prior to the date of the
Call Notice mailed by the Company in accordance with Section 11.3 of the CVR Agreement.
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TRUSTEES CERTIFICATE OF AUTHENTICATION
This is one of the CVR Certificates referred to in the within-mentioned CVR Agreement.
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[
],
as the Trustee
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Dated:
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By:
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Authorized Signatory
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