DIRECTORS AND MANAGEMENT. 5.1 Subject to the following sentence, the Board is hereby granted full and complete authority to supervise and manage the business, property and affairs of the Company and its Subsidiaries. Subject to Applicable Law, the Board is hereby empowered to take, and to cause the Company and its Subsidiaries to take, any and all actions the Board deems necessary or appropriate in its discretion, subject only to the prior written approval of each Shareholder (which approval shall not be unreasonably withheld) before taking any action in relation to: (a) any amalgamation or merger of the Company with any other company or business undertaking (whether by scheme of arrangement or otherwise), or any sale or other disposition of all or substantially all the assets of the Company and its Subsidiaries, taken as a whole; (b) any termination of the Collaboration Agreement pursuant to Section 13.5 (Failure to Reach Certain Net Sales Levels) thereof (it being agreed that the Company shall consult with Lucky Parent in connection with any termination of the Collaboration Agreement by the Company but that the consent of Shareholders shall not be required for any terminations of the Collaboration Agreement other than pursuant to Section 13.5); (c) without limiting clause 19.1, any amendment or modification of, or waiver to, the terms of the Collaboration Agreement, which amendment, modification or waiver by its terms (i) reduces the Company’s share of Pre-tax Profits (as defined in the Collaboration Agreement) or (ii) affects the economic interests of a Jupiter Shareholder in this Agreement differently than the economic interests of a Lucky Shareholder in this Agreement; (d) any sale or assignment of the Company’s interest in the Collaboration Agreement; (e) any sale or assignment of any asset of the Company or any of its Subsidiaries that would adversely affect in any material respect the Company’s ability to perform under the Collaboration Agreement (other than compulsory sales or assignments required by Applicable Law); (f) without limiting clause 16.2, any amendment to the Company’s memorandum of association or articles of association (for clarity, any increase to the authorized Class C Shares of the Company shall not be regarded as an amendment to the Company’s memorandum of association or articles of association); (g) at any time during the Capital Call Period (other than following a Funding Default by Lucky Sub-1), the incurrence of Indebtedness by the Company or any of its Subsidiaries (it being agreed that the consent of Shareholders shall not be required for the actions referred to in this subclause (g) at any time following the Capital Call Period), except Indebtedness owing to the Company or a Subsidiary of the Company; provided that no Person other than the Company or a Subsidiary of the Company holds any interest in such Indebtedness; (h) at any time during the Capital Call Period and other than the issuance of Class C Shares pursuant to clause 6, the creation, allotment or issuance of any share or other equity interest in the Company (or any Derivative Interest in respect thereof), unless such creation, allotment or issuance is made pro rata to the Shareholders in accordance with their respective Sharing Percentage (it being agreed that, subject to clauses 6.9 and 6.10, the consent of Shareholders shall not be required for the actions referred to in this subclause (h) at any time following the Capital Call Period); (i) other than the redemption of Class C Shares pursuant to clause 7, the repurchase or redemption of any other share or other equity interest in the Company (or any Derivative Interest in respect thereof), unless such repurchase or redemption is made pro rata to the Shareholders in accordance with their respective Sharing Percentage; (j) any transaction, by the Company or any of its Subsidiaries, with any Affiliate of the Company, except (i) transactions on terms and conditions that are consistent in all material respects with the results that would have been realized if the Company or such Subsidiary had engaged in such transaction under the same circumstances with an unaffiliated third party (such determination to be made in good faith by the Company applying the guidelines and methodologies of Affiliated entities of the Company), (ii) transactions between or among the Company and its Subsidiaries and (iii) transactions expressly contemplated by this Agreement; (k) the incurrence, by the Company or any of its Subsidiaries, of any expense not relating to the Business; (l) the registration of any Shares of the Company in connection with a proposed initial public offering or any listing of any Shares on an exchange or other quotation system; (m) the performance, by the Company or any of its Subsidiaries, of any manufacturing activities (it being agreed that, subject to subclause (j) above, the consent of Shareholders shall not be required for manufacturing activities performed by any Affiliate of Jupiter Parent (other than the Company and its Subsidiaries) on the Company’s behalf or at its request, whether through subcontracting or other arrangements); (n) other than amendments expressly contemplated by clause 6.2, the amendment, waiver or termination of the Loan Agreement at any time prior to the repayment in full of the Loan (it being agreed that demands for payment of principal in respect of the Loan shall not require the consent of Shareholders); (o) at any time prior to the termination of the Collaboration Agreement, the winding up of the Company; or (p) without limiting subclause (h) above, the variation of rights attaching to any of the Shares. Except as otherwise provided in the preceding sentence, neither Lucky Parent nor any of its Affiliates shall have any right to approve of or consent to any actions of the Board, the Company or any of its Subsidiaries (other than any right arising by virtue of Lucky Parent’s right to appoint the Lucky Sub Directors). Each party acknowledges and agrees that, except as otherwise provided in this clause 5.1, the Board will manage the affairs of the Company and its Subsidiaries in accordance with its own business judgment and the exercise of such judgment will materially affect the economic returns realized by the Shareholders hereunder and by Lucky Sub-2 under the Royalty Agreement. Each party understands the significant risks and uncertainties relating to the research, development and commercialization of pharmaceutical products, including the possibility that there may be no First Commercial Sale of any product under the Collaboration Agreement, and each party agrees not to challenge any decision or action taken by the Board in good faith in the exercise of its own business judgment, except to the extent any such action or decision violates any provision of this Agreement and without prejudice to any party’s rights under Applicable Law. For clarity, no party shall be required to take any action on the Company’s behalf or in furtherance of its business other than actions pursuant to the express obligations of such party under this Agreement. 5.2 The Board shall be comprised of seven directors, five of whom shall be appointed by the Jupiter Shareholders (each, a “Jupiter Sub Director”) and two of whom shall be appointed by the Lucky Shareholders (each, a “Lucky Sub Director”). At least one Lucky Sub Director and at least three Jupiter Sub Directors shall be residents of the Republic of Ireland. The Lucky Sub Directors shall not, and neither is authorized to, take any actions on behalf of the Company or any of its Subsidiaries, other than actions expressly authorized by this Agreement and actions contemplated by this clause 5 that are incidental to the office of a director. In the event any Subsidiary of the Company shall form a board of directors (or other similar governing body), or if the Board or any such board of directors or governing body of a Subsidiary shall form any committee or sub-committee, the rights of the Jupiter Shareholders and the Lucky Shareholders to appoint directors to the Board shall apply mutatis mutandis to any such board of directors (or other governing body) or to any such committee or sub-committee, and any such representation shall be in direct proportion to the Jupiter Shareholders’ and the Lucky Shareholders’ representation on the Board. 5.3 Each director shall serve until the earlier of such director’s death, resignation or replacement in accordance with this Agreement. 5.4 The post of chairman shall be held by a Jupiter Sub Director, as designated by Jupiter Parent. The chairman shall not have a casting vote. If the chairman for the time being is unable to attend any meeting of the Board, Jupiter Parent shall be entitled to appoint another Jupiter Sub Director to act as chairman at such meeting. 5.5 Each of Jupiter Parent and Lucky Parent shall have the sole right to replace its appointees to the Board (or fill any vacancy on the Board due to the death or resignation of any of its appointees to the Board) at any time and from time to time in its discretion upon written notice to the other Shareholders and to the Company. Any such replacement (or appointment) shall take effect on the date on which notice of the same is received by the other Shareholders and the Company or, if a later date is given in the notice, on such later date. For clarity, no director may be removed from the Board by any person other than the party that appointed such director. 5.6 The party replacing a director shall indemnify and keep indemnified the Company against any claim connected with the director’s removal from office. 5.7 Any director may resign at any time by giving written notice to the Shareholders and to the Company. Any such resignation shall take effect on the date on which notice of the same is received by the Shareholders and the Company or, if a later date is given in the notice, on such later date. 5.8 A director may, and at the request of a director the secretary shall, call a meeting of the Board; provided that (i) there shall be at least four meetings of the Board in each Calendar Year and (ii) not more than one meeting of the Board may be called (or requested) by the Lucky Sub Directors (taken together) during any three-month period. 5.9 Meetings of the Board may be held in person at such location in the Republic of Ireland as may be agreed by the Shareholders (it being agreed that all meetings of the Board shall be held with a majority of directors participating in the meeting physically present in the Republic of Ireland). Subject to the prior sentence, any director may attend any meeting of the Board by way of teleconference, videoconference or other similar communications equipment so long as all directors participating in such meeting can hear one another at the time of such meeting. Participation in a meeting of the Board via teleconference, videoconference or other similar communications equipment in accordance with the preceding sentence shall constitute presence in person at such meeting. 5.10 The parties shall ensure that at least seven days’ notice of a meeting of the Board is given to all directors then constituting the Board, accompanied by an agenda specifying in reasonable detail the matters to be raised at the meeting. Matters absent from such agenda may not be raised at a meeting of the Board unless at least one Jupiter Sub Director and one Lucky Sub Director consent (it being agreed that the failure of any director to raise an objection shall be deemed consent of such director for purposes of this sentence). 5.11 A shorter period of notice of a meeting of the Board may be given if at least one Jupiter Sub Director and one Lucky Sub Director so agree in writing; provided that the prior consent of a Lucky Sub Director shall not be required if (a) the urgency of the matter giving rise to the meeting in question requires the Board to promptly take action (as reasonably determined by the Jupiter Sub Directors) and (b) at least 24 hours has elapsed from the time a notice of such meeting was given to the Lucky Sub Directors. 5.12 The quorum at any meeting of the Board (including adjourned meetings) for which notice was provided is a majority of the directors then constituting the Board. For clarity, neither Lucky Sub Director shall be required to be present for quorum purposes if the requirements of the preceding sentence are otherwise satisfied. A majority of the directors present at a meeting of the Board may adjourn the meeting, whether or not a quorum is present. 5.13 No business shall be conducted at any meeting of the Board unless a quorum is present at the beginning of the meeting and at the time when there is to be voting on any business. 5.14 If a quorum is not present within 30 minutes after the time specified for the meeting of the Board in the notice of meeting, then the meeting shall be adjourned. 5.15 The parties shall use their respective reasonable endeavours to ensure that every meeting of the Board and every general meeting of the Company has the requisite quorum. 5.16 The vote of a majority of the directors present at a meeting of the Board at which a quorum is present shall be the act of the Board. For clarity, no vote of either Lucky Sub Director shall be required if the requirements of the preceding sentence are otherwise satisfied. 5.17 The Board may take action in the absence of a meeting upon the written consent of each director then constituting the Board. 5.18 If any Jupiter Sub Director or any Lucky Sub Director is absent from a meeting of the Board, the absent director may appoint any person to act as his alternate at such meeting. For the purposes of such meeting the alternate director: (a) shall be deemed to be the Jupiter Sub Director or Lucky Sub Director that shall have appointed him for all purposes of this Agreement, and such alternate director may vote in place of the absent Jupiter Sub Director or Lucky Sub Director; and (b) where the person appointed as an alternate is already a director of the Company in his own right, such person shall also be a director (and may vote) in his own right. 5.19 The Shareholders and the Board shall regularly monitor and review the tax residency status of the Company and, where necessary, take such action as may be required or considered necessary or appropriate to ensure that the Company shall at all times remain resident for tax purposes in the Republic of Ireland. 5.20 The Shareholders and the Board shall procure that all key strategic decisions relating to the Business shall be discussed, resolved and made in the Republic of Ireland. 5.21 The parties hereby acknowledge that the provisions of this Agreement have been structured with a view to permitting the financial results of the Company to be consolidated with the consolidated financial statements of Jupiter PubliCo, subject to any accounting for minority interest (the “Consolidation Objective”). In the event that, as a result of a change in GAAP, IFRS or other Applicable Law after the date of this Agreement, Jupiter PubliCo is advised by its independent auditors that the foregoing provisions of this clause 5 conflict with the Consolidation Objective, the parties shall cooperate in good faith to prepare, execute and deliver an amendment to this Agreement to revise such of the foregoing provisions of this clause 5 as are necessary (based on the advice of such independent auditors) to give effect to the Consolidation Objective; provided that nothing in this clause 5.21 shall require Lucky Parent or any of its Affiliates to prepare, execute or deliver any such amendment in the event the terms of such amendment could reasonably be expected to adversely affect, in any material respect, the economic interests of the Lucky Shareholders in this Agreement.
Appears in 2 contracts
Sources: Shareholders' Agreement (Elan Corp PLC), Shareholders' Agreement (Elan Corp PLC)