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Conformed Copy
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TEVA PHARMACEUTICAL INDUSTRIES LIMITED,
GENCO MERGER CORPORATION
AND
BIOCRAFT LABORATORIES, INC.
Dated as of January 29, 1996
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TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
1.01 The Merger...............................................................................................2
1.02 Effective Time of Merger.................................................................................2
1.03 Effects of the Merger....................................................................................2
1.04 Certificate of Incorporation of the Surviving Corporation................................................2
1.05 By-Laws of the Surviving Corporation.....................................................................3
1.06 Directors of the Surviving Corporation...................................................................3
1.07 Officers of the Surviving Corporation....................................................................3
ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Shares.....................................................................................3
2.02 Surrender of Certificates................................................................................4
2.03 Fractional ADSs..........................................................................................6
2.04 Closing..................................................................................................7
2.05 Stock Option Plans.......................................................................................7
2.06 Restricted Stock Purchase Plan...........................................................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Company............................................................8
3.02 Representations and Warranties of Parent and Sub.........................................................27
ARTICLE IV
CONDUCT OF BUSINESS; TRANSACTIONS PRIOR
TO CLOSING DATE; ADDITIONAL AGREEMENTS
4.01 Conduct of Business of the Company.......................................................................35
4.02 Access to Information Concerning Business and Records....................................................36
4.03 Confidentiality..........................................................................................37
4.04 Registration Statement/Proxy Statement; Listing on Tel Aviv Stock Exchange...............................37
4.05 Employee Benefits........................................................................................39
4.06 Company Stockholder Approval; Recommendation.............................................................40
4.07 Stock Options............................................................................................40
4.08 Letters of the Company's Accountants.....................................................................40
4.09 Letters of Parent's Accountants..........................................................................41
4.10 Notices of Certain Events................................................................................41
4.11 Tel Aviv Stock Exchange Listing..........................................................................42
4.12 NASDAQ/NMS Admission.....................................................................................42
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4.13 HSR Act 42
4.14 Indemnification; Officers' and Directors' Insurance......................................................42
4.15 Best Efforts.............................................................................................43
4.16 Rule 145.................................................................................................43
4.17 No Solicitation..........................................................................................43
4.18 Post Merger Restructurings...............................................................................45
4.19 Voting of Shares Subject to Proxy........................................................................45
4.20 Parent Shareholder Meeting...............................................................................46
4.21 Dispositions Contrary to Pooling.........................................................................46
4.22 Dividend Reinvestment Plan...............................................................................47
ARTICLE V
CONDITIONS PRECEDENT TO MERGER
5.01 Conditions Precedent to Obligations of Parent, Sub and the Company.......................................47
5.02 Conditions Precedent to Obligations of Parent and Sub....................................................49
5.03 Conditions Precedent to Obligation of the Company........................................................50
ARTICLE VI
TERMINATION AND ABANDONMENT
6.01 Termination...............................................................................................51
6.02 Effect of Termination....................................................................................52
ARTICLE VII
MISCELLANEOUS
7.01 Fees and Expenses........................................................................................53
7.02 Representations, Warranties and Agreements...............................................................54
7.03 Extension; Waiver........................................................................................54
7.04 Public Announcements.....................................................................................55
7.05 Notices .................................................................................................55
7.06 Entire Agreement.........................................................................................56
7.07 Binding Effect; Benefit; Assignment......................................................................56
7.08 Amendment and Modification...............................................................................56
7.09 Further Actions..........................................................................................57
7.10 Headings.................................................................................................57
7.11 Counterparts.............................................................................................57
7.12 Applicable Law...........................................................................................57
7.13 Severability.............................................................................................57
7.14 "Person" Defined.........................................................................................57
7.15 Submission to Jurisdiction...............................................................................57
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Schedules
Schedule I Designated Directors
Schedule I Designated Officers
Exhibits
Exhibit A Form of Basic Affiliate Agreement
Exhibit A-1 Form of Affiliate Agreement for ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Exhibit B-1 List of Employment Agreement Employees
Exhibit B-2 Form of Employment Agreement
Exhibit C Form of Opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇-▇ Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Exhibit D-2 Form of Opinion of ▇. ▇▇▇▇▇▇▇▇ & Co.
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 29, 1996 (the
"Agreement"), by and among TEVA PHARMACEUTICAL INDUSTRIES LIMITED, a
corporation organized under the laws of the State of Israel ("Parent"),
GENCO MERGER CORPORATION, a Delaware corporation and a wholly owned
subsidiary of Parent ("Sub"), and BIOCRAFT LABORATORIES, INC., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Company and Parent
have each determined unanimously that it is in the best interests of their
respective companies and stockholders that Parent acquire the business of the
Company pursuant to the terms and conditions set forth in this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company, and Parent acting as the sole stockholder of Sub, have approved the
merger of Sub into the Company (the "Merger"), pursuant and subject to the
terms and conditions of this Agreement, whereby each issued and outstanding
share of common stock, par value $.01 per share, of the Company ("Company
Common Stock") will be converted into the right to receive 4.61 Ordinary
Shares, par value NIS 0.01 each, of Parent ("Ordinary Shares") which will
trade in the United States in the form of American Depositary Shares
("ADSs"), evidenced by American Depositary Receipts (the "ADRs");
WHEREAS, the respective Boards of Directors of the Company and Parent
have each determined unanimously that the Merger is fair to, and in the best
interests of, their respective companies and stockholders and have approved the
Merger, and the Board of Directors of the Company has recommended the
approval and adoption of this Agreement by the Company's stockholders;
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger shall qualify as a reorganization within the meaning of Section
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder (the "Code"); and
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a pooling of interests under United States generally
accepted accounting principles ("US GAAP");
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
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ARTICLE I
THE MERGER
1.01 The Merger. Subject to the terms and conditions of
this Agreement, at the time of the Closing (as defined in Section 2.04 hereof),
a certificate of merger (the "Certificate of Merger") shall be duly executed
and acknowledged by Sub and the Company in accordance with the Delaware General
Corporation Law (the "DGCL") and shall be filed on the Closing Date (as defined
in Section 2.04 hereof). The Merger shall become effective upon the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware
or at such time thereafter as is provided in the Certificate of Merger in
accordance with the provisions and requirements of the DGCL. The date and time
when the Merger shall become effective is hereinafter referred to as the
"Effective Time."
1.02 Effective Time of Merger. At the Effective Time, Sub shall be
merged with and into the Company and the separate corporate existence of Sub
shall cease, and the Company shall continue as the surviving corporation under
the laws of the State of Delaware under the name of "Biocraft Laboratories,
Inc." (the "Surviving Corporation").
1.03 Effects of the Merger. From and after the Effective Time, the
Merger shall have the effects set forth in Section 259(a) of the DGCL.
1.04 Certificate of Incorporation of the Surviving Corporation.
Effective as of the Effective Time, the Certificate of Incorporation of the
Company shall be amended and restated in its entirety so that upon such
amendment it shall in all respects be equivalent in its content to the
Certificate of Incorporation of Sub, as in effect immediately prior to the
Effective Time, except that Paragraph 1 thereof read as follows:
"The name of the corporation (the "Corporation") is Biocraft
Laboratories, Inc."
1.05 By-Laws of the Surviving Corporation. The By-Laws of Sub, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation.
1.06 Directors of the Surviving Corporation. At the Effective Time,
the Persons listed on Schedule I hereto shall, subject to the applicable
provisions of the Certificate of Incorporation and By-Laws of the Surviving
Corporation, be the directors of the Surviving Corporation until their
respective successors shall be duly elected or appointed and qualified.
1.07 Officers of the Surviving Corporation. At the Effective Time,
the Persons listed on Schedule II hereto shall, subject to the applicable
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provisions of the Certificate of Incorporation and By-Laws of the Surviving
Corporation, be the officers of the Surviving Corporation until their
respective successors shall be duly elected or appointed and qualified.
ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of
Company Common Stock or any holder of capital stock of Sub:
(a) Capital Stock of Sub. Each share of capital stock of
Sub then issued and outstanding shall become one fully paid
and nonassessable share of common stock, $0.01 par value, of the
Surviving Corporation which shares shall be issued to Parent and shall
constitute the only outstanding shares of capital stock of
the Surviving Corporation.
(b) Cancellation of Treasury Stock. All shares of
Company Common Stock that are owned by the Company as treasury stock
shall be canceled and retired and shall cease to exist and no share
capital of Parent or other consideration shall be delivered in
exchange therefor.
(c) Exchange Ratio for Company Common Stock. Each issued
and outstanding share of Company Common Stock (other than shares
to be canceled in accordance with Section 2.01(b)) shall be
converted into and shall be canceled in exchange for the right
to receive 4.61 Ordinary Shares (the "Exchange Ratio") duly
issued and credited as fully paid (which will be represented by
ADSs in accordance with Section 2.02) (the "Merger Consideration").
If between the date of this Agreement and the Effective Time the
outstanding Ordinary Shares of Parent shall be changed into a
different number of shares by reason of any stock dividend,
subdivision, reclassification, split-up, combination or the
like, the Exchange Ratio shall be appropriately adjusted.
(d) Cancellation of Company Common Stock. All shares
of Company Common Stock converted into Ordinary Shares pursuant to
this Section 2.01 shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist,
and each holder of a certificate representing any such shares shall
cease to have any rights with respect thereto, except the right to
receive Ordinary Shares to be issued in consideration therefor upon
the surrender of such certificate in accordance with Section 2.02,
without interest.
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(e) Allotment of Ordinary Shares. In consideration of
the issue to Parent by the Surviving Corporation of shares of common
stock of the Surviving Corporation and the cancellation of shares of
Company Common Stock, Parent shall allot, in exchange for the issue
to Parent of all the unissued shares of common stock of the
Surviving Corporation, Ordinary Shares to be issued to the Exchange
Agent (as defined in Section 2.02) on behalf of such Persons as the
Company shall nominate for the purpose of giving effect to the
conversion and exchange referred to in Section 2.01(c) of this
Agreement.
2.02 Surrender of Certificates. (a) Concurrently with or prior to
the Effective Time, the parties hereto shall designate The Bank of New York to
act as agent (the "Exchange Agent") for purposes of exchanging certificates
representing shares of Company Common Stock as provided in Section 2.01. The
Exchange Agent currently acts as the Depositary for the ADSs (in such capacity,
the "Depositary"). Each ADS represents a unit consisting of ten (10) Ordinary
Shares. As soon as practicable after the Effective Time, Parent shall cause
the Exchange Agent to mail or make available to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock whose shares were
converted into the right to receive Ordinary Shares pursuant to Section 2.01 a
notice and letter of transmittal advising such holder of the effectiveness of
the Merger and the procedure for surrendering to the Exchange Agent such
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock in exchange for the
Merger Consideration deliverable in respect thereof pursuant to this Article
II. To the extent required, the Exchange Agent will requisition from the
Depositary, from time to time, such number of ADRs evidencing ADSs as are
issuable in respect of shares of Company Common Stock properly delivered to the
Exchange Agent. At the Effective Time, the Surviving Corporation shall issue
to Parent the shares of common stock of the Surviving Corporation referred to
in Section 2.01(a). The Parent shall, prior to the Effective Time,
conditionally allot Ordinary Shares referred to in Sections 2.01(c) and 2.01(e)
subject to the terms and conditions of this Agreement.
(b) Each holder of shares of Company Common Stock that has been
converted into a right to receive the Merger Consideration, upon surrender to
the Exchange Agent of a certificate or certificates representing such Company
Common Stock, together with a properly completed letter of transmittal
covering such shares of Company Common Stock, will be entitled to
receive ADRs representing 0.461 ADSs in respect of each share of Company
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Common Stock surrendered. Until so surrendered, each share of Company
Common Stock shall, after the Effective Time, represent for all purposes, only
the right to receive ADRs evidencing 0.461 ADSs, each ADS representing ten (10)
Ordinary Shares.
(c) If any ADSs are to be issued to a Person other than the
registered holder of the Company Common Stock represented by the certificate
or certificates surrendered with respect thereto, it shall be a condition to
such issuance that the certificate or certificates so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such issuance shall pay to the Exchange Agent any
transfer or other taxes required as a result of such issuance to a
Person other than the registered holder of such Company Common Stock or
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not payable.
(d) As of the Effective Time, there shall be no further
registration of transfers of shares of Company Common Stock that
were outstanding prior to the Merger. After the Effective Time,
certificates representing shares of Company Common Stock presented to
the Surviving Corporation for transfer shall be canceled and exchanged for
the consideration provided for, and in accordance with the procedures set
forth, in this Article II.
(e) At the close of business on the Effective Time, the stock ledger
of the Company with respect to the issuance of Company Common Stock shall be
closed. Six months after the Effective Time, any Ordinary Shares made
available to the Exchange Agent pursuant to Section 2.01(e) and any portion
of the Common Stock Trust (as defined in Section 2.03) that remains
unclaimed by the holders of shares of Company Common Stock shall be returned
to Parent upon demand. Any such holder who has not delivered his shares of
Company Common Stock to the Exchange Agent in accordance with Section 2.02
prior to that time shall thereafter look only to Parent and the Surviving
Corporation for issuance of ADSs in respect of shares of Company Common
Stock. Notwithstanding the foregoing, neither Parent nor the Surviving
Corporation shall be liable to any holder of shares of Company Common Stock
for any securities delivered or any amount paid to a public official pursuant
to applicable abandoned property laws. Any Ordinary Shares remaining
unclaimed by holders of shares of Company Common Stock three years after the
Effective Time (or such earlier date immediately prior to such time as such
securities would otherwise escheat to or become property of any
governmental entity or as is otherwise provided by applicable law) shall, to
the extent permitted by applicable law, be free and clear of any claims or
interest of any Person previously entitled thereto.
(f) No dividends, interest or other distributions with respect to
securities of Parent or the Surviving Corporation issuable with respect to
Company Common Stock shall be paid to the holder of any
unsurrendered certificates representing Company Common Stock until such
certificates are surrendered as provided in this Section. Upon such
surrender, there shall be paid, without interest, to the Person in whose
name the ADSs representing such securities are registered, all dividends and
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other distributions payable in respect of such securities on a date
subsequent to, and in respect of a record date after, the Effective Time.
2.03 Fractional ADSs. No fraction of an ADS will be issued and no
dividend or other distribution, stock split or interest with respect to
Ordinary Shares shall relate to any fractional ADS, and such fractional
interest shall not entitle the owner thereof to vote or to any rights as a
security holder of Parent. In lieu of any such fractional security, each holder
of shares of Company Common Stock otherwise entitled to a fraction of an
ADS will be entitled to receive at the time such holder receives ADRs
pursuant to Section 2.02(b) hereof and in accordance with the provisions of
this Section 2.03 from the Exchange Agent a cash payment representing such
holder's proportionate interest in the net proceeds from the sale by the
Exchange Agent on behalf of all such holders of the aggregate of the fractions
of ADSs which would otherwise be issued (the "Excess ADSs"). The sale of the
Excess ADSs by the Exchange Agent shall be executed on the National
Association of Securities Dealers Automated Quotations National Market
System ("NASDAQ/NMS") through one or more market makers in the ADSs and
shall be executed in round lots to the extent practicable. Until the
net proceeds of such sale or sales have been distributed to the holders of
shares of the Company Common Stock, the Exchange Agent will, subject to
Section 2.02(e), hold such proceeds in trust for the holders of shares of
Company Common Stock (the "Common Stock Trust"). The Parent shall pay all
commissions, transfer taxes and other out-of-pocket transaction costs,
including the expenses and compensation, of the Exchange Agent incurred
in connection with such sale of the Excess ADSs. The Exchange Agent shall
determine the portion of the Common Stock Trust to which each holder of shares
of Company Common Stock shall be entitled, if any, by multiplying the
amount of the aggregate net proceeds comprising the Common Stock Trust by
a fraction the numerator of which is the amount of the fractional ADS
interest to which such holder of shares of Company Common Stock is entitled
and the denominator of which is the aggregate amount of fractional ADS
interests to which all holders of shares of Company Common Stock are entitled.
As soon as practicable after the determination of the amount of cash, if any,
to be paid to holders of shares of Company Common Stock in lieu of any
fractional ADS interests, the Exchange Agent shall make available such
amounts to such holders of shares of the Company Common Stock without
interest.
2.04 Closing. The closing of the Merger (the "Closing") shall take
place at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, One Citicorp Center, ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as soon as practicable after the last of
the conditions set forth in Article V hereof is fulfilled or waived (subject to
applicable law) but in no event later than the fifth business day thereafter,
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or at such other time and place and on such other date as Parent and the
Company shall mutually agree (the "Closing Date").
2.05 Stock Option Plan. Prior to the Effective Time, but subject to
the consummation of the Merger, the Board of Directors of the Company and the
committee appointed by the Board to administer the Company's stock option plans
shall take all action reasonably necessary or appropriate to (i) terminate the
Company's Incentive Stock Option Plan and all options then outstanding
thereunder, (ii) terminate the Company's 1987 Directors' Stock Option Plan, and
all options outstanding thereunder, each such termination to be effective as of
the Effective Time, (iii) terminate all other Company plans, or agreements
providing for the grant of stock options or other rights to acquire Company
Common Stock to any person (the plans identified in clauses (i) and (ii) and
such other plans or agreements being collectively referred to herein as the
"Stock Option Plans"), (iv) give written notice of such action to the holder of
each option outstanding under the Stock Option Plans, (v) offer the holder of
each option outstanding under the Stock Option Plans the right, by written
notice delivered to the Company at least ten business days prior to the
Effective Time, to exercise all such options, whether or not then exercisable
by the terms of the applicable option agreements, and (vi) provide that each
option outstanding under the Stock Option Plans as to which no such notice of
exercise shall have been so delivered (other than options held by executive
officers or directors subject to Section 16 of the Exchange Act) shall
represent the right to receive promptly after the Effective Time, as to each
share of Company Common Stock covered thereby (without regard to any then
applicable restrictions on the exercise of such options), the number of ADSs of
Parent determined by (i) multiplying the Exchange Ratio by the fair market
value of an ADS on the Effective Date, (ii) subtracting from the product of
such multiplication the sum of the applicable per share exercise price plus
applicable per share withholding for taxes (which will be appropriately
remitted to the applicable tax authority on behalf of such optionee) and (iii)
dividing the amount obtained in clause (ii) by the fair market value of an ADS
on the Effective Date. For purposes of this Section 2.05, the fair market
value of an ADS on the Effective Date shall mean the average of the last sale
prices of an ADS on the NASDAQ/NMS on each of the ten trading days ending two
trading days prior to the Effective Date.
2.06 Restricted Stock Purchase Plan. Prior to the Effective Time,
but subject to the consummation of the Merger, the Board of Directors of the
Company and the committee appointed by the Board to administer the Company's
Restricted Stock Purchase Plan shall cause such Plan to be amended to (a)
provide that no further restricted stock grants be made after the Effective
Time of the Merger and (b) provide that the terms and conditions of such Plan
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shall apply to the ADSs and Ordinary Shares issued upon the Merger to the
holders of restricted stock under such Plan, and such holders shall thereafter
hold such ADSs and Ordinary Shares subject to the terms and conditions of such
Plan, including without limitation any requirement for the legending of
certificates evidencing such securities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Company. The Company
hereby represents and warrants to Parent and Sub as follows:
(a) Due Organization, Good Standing and Power. Each of
the Company and the Subsidiaries (as that term is defined in
Section 3.01(c)(ii) hereof) is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation and each such corporation has
all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
Each of the Company and the Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary,
except in such jurisdictions where the failure to be so qualified or
licensed and in good standing would not have a material adverse
effect on the business, properties, assets, liabilities,
operations, results of operations or condition (financial or
otherwise) (the "Condition") of the Company and the Subsidiaries
taken as a whole.
(b) Authorization and Validity of Agreement. The Company
has full corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and,
subject to obtaining any necessary stockholder approval of the
Merger, to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by the
Company, and the consummation by it of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action
on the part of the Company, subject to the approval of the
Merger by the Company's stockholders in accordance with the DGCL.
The Board of Directors of the Company has taken all action necessary
to render inapplicable, as it relates to Parent, the provisions of
Section 203 of the DGCL. No other corporate action on the part of the
Company is necessary to authorize the execution, delivery and
performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby (other than the approval
of the Merger by the holders of at least 66 2/3% of the Company Common
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Stock). To the Company's knowledge, other than the Insurance
Holding Company Systems law of the State of Hawaii, no other state
takeover statute or similar statute or regulation applies or
purports to apply to the Merger, this Agreement and the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and is a valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
(c) Capitalization. (i) The authorized capital stock of
the Company consists of 30,000,000 shares of Company Common Stock,
$0.01 par value, and 2,000,000 shares of preferred stock, $1.00
par value (the "Preferred Stock"). As of January 5, 1996, (1)
14,182,691 shares of Company Common Stock were issued and outstanding,
(2) 169,200 shares of Company Common Stock were reserved for issuance
upon the exercise of outstanding options granted under stock option
plans, (3) no shares of Preferred Stock were issued and outstanding,
and (4) 59,331 shares of Company Common Stock were held in the
Company's treasury. All issued and outstanding shares of
Company Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable, and none of such shares are
subject to, nor were they issued in violation of, any preemptive
rights. Except as set forth in this Section 3.01(c) or on Schedule
3.01(c)(i) delivered to Parent by the Company, and except for
changes since January 5, 1996 resulting from the exercise of employee
or director stock options outstanding on such date, or the
issuance or repurchase of shares of Common Stock pursuant to
the Company's Stockholder Dividend Reinvestment and Stock Purchase
Plan, (i) there are no shares of capital stock of the Company
authorized, issued or outstanding and (ii) there are not as of the
date hereof, and at the Effective Time there will not be, any
outstanding options, warrants, rights, subscriptions, claims of any
character, agreements, obligations, convertible or exchangeable
securities or other commitments, contingent or otherwise, relating
to Company Common Stock or any other shares of capital stock of the
Company, pursuant to which the Company is or may become obligated
to issue or purchase or otherwise acquire shares of Company
Common Stock, any other shares of its capital stock or any securities
convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of the capital stock of the Company.
(ii) Schedule 3.01(c)(ii) delivered to Parent by the
Company lists all of the Company's subsidiaries (except for
subsidiaries with no material assets or liabilities) (such
subsidiaries listed on Schedule 3.01(c)(ii) being herein referred
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to as the "Subsidiaries"). Except as set forth on Schedule
3.01(c)(ii), all issued and outstanding shares of capital stock of the
Subsidiaries have been validly issued, are fully paid and
nonassessable, are not subject to, nor were they issued in
violation of, any preemptive rights, and are owned, of record and
beneficially, directly or indirectly, by the Company, free and
clear of all liens, encumbrances, options or claims whatsoever.
No shares of capital stock of any of the Subsidiaries are reserved
for issuance and there are no outstanding or authorized options,
warrants, rights, subscriptions, claims of any character,
agreements, obligations, convertible or exchangeable
securities, or other commitments, contingent or otherwise,
relating to the capital stock of any Subsidiary, pursuant to which
such Subsidiary is or may become obligated to issue or purchase
or otherwise acquire any shares of capital stock of such
Subsidiary or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of capital stock of
such Subsidiary. Except as set forth in Schedule 3.01(c)(ii), there
are no restrictions of any kind which prevent the payment of
dividends by any of the Subsidiaries. Except (A) for the
Subsidiaries, (B) as otherwise listed on Schedule 3.01(c)(ii),
(C) ordinary course portfolio investments in marketable securities and
cash equivalents and (D) subsidiaries of the Company with no material
assets or liabilities, the Company does not own, directly or
indirectly, any capital stock or other equity interest in any
Person (as defined in Section 7.14) or have any direct or indirect
equity or ownership interest in any Person and neither the
Company nor any of the Subsidiaries is subject to any obligation
or requirement to make any material loan, capital contribution,
investment or similar expenditure to or in any Person, except
for loans, capital contributions, investments or similar
expenditures by the Company or any of the Subsidiaries to any
Subsidiary of the Company or to the Company.
(d) Consents and Approvals; No Violations. Assuming that
(i) the filings required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), are made
and the waiting period thereunder has been terminated or has
expired; (ii) the filing with the Securities and Exchange Commission
(the "Commission") of a definitive proxy statement (the "Proxy
Statement") relating to the meeting of the Company's stockholders to
be held in connection with the Merger is made; (iii) the Registration
Statement of Parent to be filed with the Commission on Form F-4 in
connection with the issuance of Ordinary Shares (which will be
represented by the ADSs) (the "Registration Statement") is
declared effective and a Registration Statement on Form F-6 (the
"F-6 Registration Statement") is declared effective; (iv) the
filing of the Certificate of Merger and other appropriate merger
documents, if any, as required by the laws of the State of Delaware,
15
is made; (v) approval of the Merger by 66 2/3% of the holders of
Company Common Stock is obtained; (vi) approval of the insurance
regulatory authorities in the State of Hawaii is obtained; and (vii)
for each real property owned or operated by the Company or any
Subsidiary located in the State of New Jersey, either a Letter of
Non-Applicability, approval by the New Jersey Department
of Environmental Protection and Energy ("DEP") of a Negative
Declaration submitted by the Company, a no further action letter
from DEP, the filing by the Company of a De Minimis Quantity Exemption
Affidavit, a letter of authorization for the transfer of
ownership from DEP or approval by DEP of a Remediation Agreement (any
of the foregoing, "ISRA Clearance") is obtained pursuant to the New
Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq.
and the regulations of DEP promulgated thereunder (collectively,
"ISRA"), the execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby will not: (1) violate any provision of the
Certificate of Incorporation, as amended, or By-Laws of the
Company or any of the Subsidiaries; (2) to the knowledge of the
Company, violate any statute, ordinance, rule, regulation, order or
decree of any court or of any governmental or regulatory body,
agency or authority applicable to the Company or any of
the Subsidiaries or by which any of their respective properties or
assets may be bound, including without limitation, any consent
decrees, court orders or judgments; (3) require any filing with, or
permit, consent or approval of, or the giving of any notice to
any governmental or regulatory body, agency or authority, domestic
or foreign, including without limitation, any such bodies, agencies
or authorities regulating the pharmaceutical business of the Company
(a "Governmental Entity"); or (4) except as set forth on Schedule
3.01(d)(4) delivered to Parent by the Company, result in a
violation or breach of, conflict with, constitute (with or
without due notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets
of the Company or any of the Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture, license, franchise, permit, agreement, lease or other
instrument or obligation to which the Company or any of the
Subsidiaries is a party, or by which it or any of their respective
properties or assets may be bound, excluding from the foregoing
clauses (2), (3) and (4) filings, permits, consents, approvals and
notices the absence of which, and violations, breaches, conflicts,
defaults and liens which, in the aggregate, would not have a
material adverse effect on the Condition of the Company and the
Subsidiaries taken as a whole.
16
(e) Company Reports and Financial Statements;
Accounting Records. (i) Since March 31, 1991, the Company has
filed all forms, reports and documents with the Commission required
to be filed by it pursuant to the U.S. federal securities laws
and the rules and regulations promulgated thereunder, and all
forms, reports and documents filed with the Commission have
complied in all material respects with all applicable
requirements of the U.S. federal securities laws and the
Commission rules and regulations promulgated thereunder. The
Company has heretofore delivered to Parent true and complete
copies of all forms, reports, registration statements and other
filings filed by the Company with the Commission since March 31, 1991
(such forms, reports, registration statements and other filings,
together with any amendments thereto, are sometimes
collectively referred to as the "Company Commission Filings").
As of their respective dates, the Company Commission Filings did
not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading.
(ii) The audited consolidated financial statements and
the unaudited interim financial statements of the Company included
in the Company Commission Filings comply as to form in all material
respects with applicable accounting requirements and with the
rules and regulations of the Commission with respect thereto, were
prepared in accordance with US GAAP (as in effect from time to time)
applied on a consistent basis (except as may be indicated therein or
in the notes or schedules thereto) and fairly present in all
material respects the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates
thereof and the results of their operations and changes in
cash flows, as the case may be, for the periods then ended
subject, in the case of the unaudited interim financial
statements, to normal and recurring year-end audit
adjustments, any other adjustments described therein and the fact
that certain information and notes have been condensed or
omitted in accordance with the Securities Exchange Act of 1934
(the "Exchange Act"), and the rules promulgated thereunder.
(iii) The Company and the Subsidiaries keep proper
accounting records in which all material assets and liabilities, and
all material transactions, of the Company and its subsidiaries
are recorded in conformity with applicable accounting principles.
Except as described on Schedule 3.01(e)(iii) delivered by the Company
to Parent, no part of the Company's or any Subsidiary's accounting
system or records, or access thereto, is under the control of a
Person who is not an employee of the Company or such Subsidiary.
17
(f) Absence of Certain Changes. Except as disclosed in
Company Commission Filings filed prior to the date hereof, or on
Schedule 3.01(f) delivered to Parent by the Company, since
September 30, 1995 (i) there has not been any material adverse change
in the Condition of the Company and the Subsidiaries taken as a
whole; (ii) the businesses of the Company and the Subsidiaries have
been conducted in all material respects only in the ordinary
course; (iii) the Company and the Subsidiaries have not, other
than in the ordinary course of business, increased the compensation
of any officer or granted any general salary or benefits increase to
their employees; and (iv) neither the Company nor any of the
Subsidiaries has taken any action referred to in Section 4.01 hereof
except as permitted or required thereby.
(g) Regulatory Compliance. (i) Schedule 3.01(g) delivered by
the Company to Parent sets forth a list of each product manufactured,
marketed, sold or licensed by the Company or any Subsidiary (the
"Pharmaceutical Products") as of January 1, 1996.
(ii) Schedule 3.01(g) delivered by the Company
to Parent sets forth a list of all (A) Pharmaceutical Products which
have been recalled, withdrawn, suspended or discontinued by the
Company in the United States and outside the United States (whether
voluntarily or otherwise) during the period commencing April 1, 1991
and ending on the date hereof and (B) proceedings in the United States
and outside of the United States of which the Company has knowledge
(whether completed or pending) seeking the recall, withdrawal,
suspension or seizure of any Pharmaceutical Product pending against
the Company at any time during the period commencing April 1, 1991 and
ending on the date hereof.
(iii) Schedule 3.01(g) delivered by the Company
to Parent sets forth a list of each of the Company's pending and
approved New Drug Applications ("NDAs"), Investigational New Drug
applications ("INDs"), Abbreviated New Drug Applications ("ANDAs"),
New Animal Drug Applications ("NADAs"), Abbreviated New Animal
Drug Applications ("ANADAs") or Investigational New Animal Drug
applications ("INADs") as of the date hereof. True and complete copies
of such NDAs, INDs, ANDAs, NADAs, ANADAs and INADs, including all
supplements, amendments, and annual reports, have heretofore been
made available to Parent. Copies of correspondence from the FDA
and the Company's response have heretofore been made available
to Parent. As to each drug for which such an application has been
approved, the Company is in substantial compliance with 21 U.S.C.
▇▇.▇▇. 355, 357 or 360b, 21 C.F.R. Parts 312, 314 or 430 et. seq.,
512, or 514 et seq., respectively, and all terms and conditions of
18
such applications. As to each such drug, the Company and any relevant
Subsidiary, and the officers, employees or agents of the Company or
such Subsidiary have included in the application for such drug,
where required, the certification described in 21 U.S.C. ss.
335a(k)(1) and the list described in 21 U.S.C. ss.335a(k)(2), and
such certification and such list was in each case true and accurate
when made and remained true and accurate thereafter. In
addition, the Company is in substantial compliance with all
applicable registration and listing requirements set forth in 21
U.S.C. ss. 360 and 21. C.F.R. Part 207.
(iv) Each article of drug manufactured and/or
distributed by the Company or any Subsidiary is not adulterated within
the meaning of 21 U.S.C. ss.351 or misbranded within the meaning of 21
U.S.C. ss.352, and is not a product that is in violation of 21 U.S.C.
ss.355.
(v) Schedule 3.01(g) delivered by the Company
to Parent sets forth a list of (A) Form 483s, (B) Notices of
Adverse Findings and (C) warning letters or other correspondence
from the FDA in which the FDA asserted that the operations of the
Company or any Subsidiary may not be in compliance with applicable
law, in each case received by the Company or such Subsidiary from the
FDA since April 1, 1991 to the date hereof and the response of
the Company or such Subsidiary to the FDA to such notices from the
FDA. True and complete copies of such Form 483s, Notices of Adverse
Findings, letters and other correspondence and the Company's or
Subsidiary's responses have heretofore been made available to
Parent. Except as disclosed in the Company Commission Filings or
otherwise set forth in Schedule 3.01(g), all manufacturing
operations of the Company and the Subsidiaries have been and are being
conducted in substantial compliance with the good manufacturing
practice regulations set forth in 21 C.F.R. Parts 210 and 211.
(vi) Schedule 3.01(g) delivered by the Company
to Parent sets forth Adverse Reaction Reports filed by the Company
with the FDA during the period commencing April 1, 1991 and ending
on the date hereof.
(vii) Neither the Company, nor any Subsidiary,
nor any officer, employee or agent of either the Company or any
Subsidiary has made an untrue statement of a material fact or
fraudulent statement to the FDA, failed to disclose a material fact
required to be disclosed to the FDA, or committed an act, made a
statement, or failed to make a statement that, at the time such
disclosure was made, could reasonably be expected to provide a
basis for the FDA to invoke its policy respecting "Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities",
set forth in 56 Fed. Reg. 46191 (September 10, 1991). Neither the
19
Company nor any of the Subsidiary, nor any officer, employee or
agent of either the Company or any Subsidiary has been convicted
of any crime or engaged in any conduct for which debarment is mandated
by 21 U.S.C. ss. 335a(a) or authorized by 21 U.S.C.
ss.335a(b).
(viii) Except as disclosed in the Company
Commission Filings, neither the Company nor any Subsidiary has
received any written notice that the FDA has commenced, or
threatened to initiate, any action to withdraw its approval or
request the recall of any product of the Company or any Subsidiary,
or commenced, or overtly threatened to initiate, any action to
enjoin production at any facility of the Company or any Subsidiary.
(ix) All Drug Master Files ("DMFs") submitted to
the FDA by the Company or any Subsidiary for bulk drug
ingredients manufactured by the Company or such Subsidiary are
up-to-date and accurately represent the Company's current
manufacturing operations to the extent required by law; and all
persons authorized to reference the DMFs and FDA have been notified
of any changes of information in the DMFs in accordance with 21
C.F.R. ss. 314.420(c).
(x) The Company is in substantial compliance with
the Medicare Anti-kickback Statute, 42 U.S.C. ss. 1320a-7b(b), and
implementing regulations codified at 42 C.F.R. ss. 1001.
(h) Compliance with Laws. (i) General. Except with respect
to regulatory matters (which are covered exclusively by Section
3.01(g) hereof) and environmental matters (which are covered
exclusively by Section 3.01(h)(ii) below), the Company and the
Subsidiaries are in compliance with all applicable laws, regulations,
orders, judgments and decrees, except where the failure to so
comply would not have a material adverse effect on the Condition
of the Company and the Subsidiaries taken as a whole.
(ii) Environmental Matters. Except to the extent
that the inaccuracy of any of the following (or the circumstances
giving rise to such inaccuracy), individually or in the aggregate,
would not reasonably be expected to have a material adverse
effect on the Condition of the Company and the Subsidiaries taken
as a whole (after taking into account any reserves therefor reflected
in the most recent financial statements included in the Company
Commission Filings filed prior to the date hereof) ("Material
Adverse Effect") or as set forth on Schedule 3.01(h)(ii), none
of which scheduled items would reasonably, individually or in
the aggregate, be expected to have a Material Adverse Effect:
(A) The Company and the Subsidiaries hold, or
have made timely application to renew, and are in compliance
20
with, all Environmental Permits, and the Company
and the Subsidiaries are in compliance with all
applicable Environmental Laws;
(B) There currently are no circumstances known to
the Company which would reasonably be expected to
prevent or interfere with compliance in the future with
Environmental Permits and applicable Environmental Laws;
(C) None of the Company or the Subsidiaries
has received notice of, nor to the knowledge of the
Company is there threatened or pending against the Company
or any of the Subsidiaries, any Environmental Claim, nor are
there currently any circumstances, conditions or events,
including, without limitation, any treatment, storage,
disposal or release of Hazardous Materials, that would
reasonably be expected to give rise to an Environmental
Claim against the Company or any of the Subsidiaries;
(D) None of the Company or the Subsidiaries
has entered into or agreed to any consent decree or order
under any applicable Environmental Law that is
currently outstanding, pending or unresolved, and none of the
Company or the Subsidiaries is the subject of any pending
or, to the knowledge of the Company, threatened judgment,
decree, or order of any environmental governmental
authority relating to compliance with any applicable
Environmental Law or to investigation, cleanup,
remediation or removal of Hazardous Materials under any
applicable Environmental Law;
(E) There are no (i) underground storage tanks,
(ii) polychlorinated biphenyls, (iii) friable asbestos or
friable asbestos-containing materials or (iv) Hazardous
Materials present on, at, beneath or near any facility
currently or formerly owned, leased or operated by the
Company or any of the Subsidiaries, except for any
Hazardous Materials maintained and stored in
compliance with applicable Environmental Laws for use
in the ordinary course of the business of the Company
or the Subsidiaries, any of which would reasonably be
expected to give rise to an Environmental Claim against the
Company or any of the Subsidiaries under any Environmental
Laws;
(F) There are no past or present conditions
or circumstances at any real property presently or
formerly owned, leased or operated by the Company or
any of the Subsidiaries, including without limitation
the release, threatened release, emission, discharge,
generation, treatment, storage or disposal of Hazardous
Materials, that would reasonably be expected to give rise
to an Environmental Claim against the Company or any of the
Subsidiaries;
21
(G) Neither the Company nor any Subsidiary
has assumed any liability relating to Environmental
Claims pursuant to any written contracts or agreements
between the Company or any of the Subsidiaries and any third
party;
(H) No liens have been placed upon any assets of
the Company or the Subsidiaries in connection with any
actual or alleged liability under any Environmental Law; and
(I) To the knowledge of the Company, other than
the filings required to secure the ISRA Clearance,
neither the Company nor any of the Subsidiaries is required
to give notice of or record or deliver to any
governmental authority an environmental disclosure
document or statement under applicable Environmental
Laws by virtue of the transactions contemplated by this
Agreement, or as a condition to the recording of any
mortgage or to ensure the effectiveness of any of the
transactions contemplated hereby.
For purposes of this Agreement, the following terms shall have
the following meanings:
"Environmental Claim" means any written or oral notice,
claim, demand, action, suit, complaint, proceeding or other
communication by any Person, including, without limitation, any
federal, state or local governmental authority, alleging liability
or potential liability of the Company or any of the Subsidiaries
(including without limitation liability or potential liability for
emergency actions, investigatory costs, cleanup costs, governmental
response costs, natural resource damages, property damage, personal
injury, fines or penalties) arising out of, relating to, based on
or resulting from (i) the presence, discharge, emission, release
or threatened release of any Hazardous Materials at any location,
whether or not owned, leased or operated by the Company or any of the
Subsidiaries, or (ii) circumstances forming the basis of any
violation or alleged violation of any Environmental Law or
Environmental Permit.
"Environmental Laws" means all applicable federal,
state, local and foreign statutes, rules, regulations, ordinances,
orders, decrees and the common law relating in any manner to the
contamination, pollution or protection of human health and safety or
the environment including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act, the Solid
Waste Disposal Act, the Resource Conservation and Recovery Act,
the Clean Air Act, the Clean Water Act, the Toxic Substance Control
Act, the Occupational Safety and Health Act, the Emergency Planning
and Community-Right-to-Know Act, the Safe Drinking Water Act, the New
22
Jersey Industrial Site Recovery Act, the New Jersey Air
Pollution Control Act, the New Jersey Water Pollution Control
Act, the New Jersey Solid Waste Management Act, the New Jersey
Pollution Prevention Act, the Missouri Solid Waste Law, the Missouri
Hazardous Waste Management Law, the Missouri Underground Storage
Tank Law, the Missouri Clean Water Act, the Missouri Air
Conservation Law, all as amended, and similar state laws.
"Environmental Permits" means all permits,
consents, approvals, variances, licenses, registrations and other
governmental authorizations issued by an environmental regulatory
agency, authority or entity and required for the Company and the
operations of the Company's and the Subsidiaries' facilities, and
otherwise to conduct their respective businesses under Environmental
Laws.
"Hazardous Materials" means all hazardous or toxic
substances, wastes, materials or chemicals, petroleum (including
crude oil or any fraction thereof) and petroleum products,
asbestos and asbestos-containing materials, pollutants,
contaminants, which are regulated pursuant to any applicable
Environmental Law and such other materials and substances as are
regulated pursuant to any applicable Environmental Laws.
(i) Litigation. Except as disclosed in the Company
Commission Filings or as set forth on Schedule 3.01(i) delivered to
Parent by the Company, and except with respect to environmental
matters (which are covered exclusively in Section 3.01(h)(ii) hereof),
there is no action, suit, proceeding at law or in equity, or any
arbitration or any administrative or other proceeding by or before
(or to the knowledge of the Company any investigation by) any
governmental or other instrumentality or agency, pending, or,
to the knowledge of the Company, threatened, against or affecting
the Company or any of the Subsidiaries, or any of their properties or
rights which if adversely determined would be reasonably likely to
have a material adverse effect on the Condition of the Company and the
Subsidiaries taken as a whole. Except as disclosed in the Company
Commission Filings and except with respect to environmental matters
(which are covered exclusively in Section 3.01(h)(ii) hereof),
neither the Company nor any of the Subsidiaries is subject to any
judgment, order or decree entered in any lawsuit or proceeding which
is reasonably likely to have a material adverse effect on the
Condition of the Company and the Subsidiaries taken as a whole or on
the ability of the Company or any Subsidiary to conduct its business
as presently conducted.
(j) Employee Benefit Plans. (i) Schedule 3.01(j) delivered
23
by the Company to Parent sets forth: (x) all "employee benefit
plans," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and all other
employee benefit arrangements, policies or payroll practices,
including, without limitation, severance pay, sick leave,
vacation pay, salary continuation for disability, retirement,
deferred or other executive compensation, bonus, stock purchase,
hospitalization, medical insurance, life insurance and scholarship
programs, maintained by the Company or any of the Subsidiaries or to
which the Company or any such Subsidiary has contributed in the past
three years or is obligated to contribute thereunder for current or
former employees of the Company or any such Subsidiary in each case,
excluding plans disclosed under the immediately following clause (y)
(the "Employee Benefit Plans"), and (y) all "employee pension
plans," as defined in Section 3(2) of ERISA, subject either to
Section 412 of the Code or to Title IV of ERISA maintained by the
Company, any of the Subsidiaries or any trade or business (whether
or not incorporated) which are or have at any time within the last
six years been under common control, or which are or have at any
time within the last six years been treated as a single employer
with the Company under Section 414(b), (c), (m) or (o) of the Code
("ERISA Affiliate") or to which the Company, any of the
Subsidiaries or any ERISA Affiliate contributed or has at any
time within the last six years been obligated to contribute (the
"Pension Plans").
(ii) None of the Company, any of the Subsidiaries
or any ERISA Affiliate has withdrawn in a complete or partial
withdrawal from any Pension Plan which is a multiemployer plan,
as defined in Section 3(37) of ERISA (each such Pension Plan being
defined herein as a "Multiemployer Plan"), prior to the Effective
Time, nor has any of them received any notice from a Multiemployer
Plan that any of them has incurred any liability due to the
termination or reorganization of a Multiemployer Plan. Parent
will not have (i) except as set forth in Schedule 3.01(j) any
obligation to make any contribution to any Multiemployer Plan or
(ii) any withdrawal liability from any such Multiemployer Plan
under Section 4201 of ERISA which it would not have had had it not
consummated the Merger in accordance with the provisions of this
Agreement.
(iii) Each Employee Benefit Plan and Pension
Plan intended to qualify under Section 401 of the Code, other
than Multiemployer Plans, has received a determination letter
from the Internal Revenue Service ("IRS") that each such Employee
Benefit Plan or Pension Plan is so qualified and the trust
maintained pursuant thereto is exempt from federal income taxation
under Section 501 of the Code, and, to the best knowledge of the
Company, nothing has occurred with respect to the operation of such
Plans which could cause the loss of such qualification or exemption
or the imposition of any liability, penalty or tax under ERISA or the
Code.
24
(iv) All contributions (including all
employer contributions and employee salary reduction contributions)
required to have been made by the Company or the Subsidiaries
under any of the Employee Benefit Plans or Pension Plans or by law
(without regard to any waivers granted under Section 412 of the
Code) to any funds or trusts established thereunder or in connection
therewith have been made by the due date thereof (including any
valid extension), and all contributions for any period ending on
or before the Effective Time which are not yet due will have been
paid or accrued on or prior to the Effective Time. No accumulated
funding deficiencies exist in any of the Pension Plans subject to
Section 412 of the Code, other than any Multiemployer Plan.
(v) There is no "amount of unfunded
benefit liabilities" as defined in Section 4001(a)(18) of ERISA in
any of the Pension Plans, other than Multiemployer Plans, as
determined in accordance with the actuarial assumptions used by the
Pension Benefit Guaranty Corporation, or any successor thereof
("PBGC"), to determine the level of funding required in the event of
the termination of the Pension Plan.
(vi) There has been no "reportable event," as
that term is defined in Section 4043 of ERISA and the
regulations thereunder, with respect to any Pension Plan which would
require the giving of notice of an event requiring disclosure
under Section 4041(c)(3)(C) or 4063(a) of ERISA.
(vii) There is no material violation of ERISA
with respect to the filing of applicable reports, documents and
notices regarding the Employee Benefit Plans or Pension Plans;
other than Multiemployer Plans, with the Secretary of Labor or the
Secretary of the Treasury or the furnishing of such documents to the
participants or beneficiaries of the Employee Benefit Plans or Pension
Plans.
(viii) True, correct and complete copies of
the following documents (where applicable), with respect to each
of the Employee Benefit Plans and Pension Plans, other than, as to
clauses (iii) through (vi) below, Multiemployer Plans, have been
delivered or made available to Parent by the Company: (i) all
plans and related trust documents, and amendments thereto; (ii)
the most recent Forms 5500; (iii) the last IRS determination
letter; (iv) summary plan descriptions; (v) all other material
written communications addressed to employees as a group from the
Company or any Subsidiary to employees relating to the Employee
Benefit Plans and Pension Plans distributed within the last 12
months; and (vi) written descriptions of all unwritten agreements
relating to the Employee Benefit Plans and Pension Plans.
25
(ix) There are no pending actions, claims or
lawsuits which have been asserted or instituted against the
Employee Benefit Plans or Pension Plans (other than any Multiemployer
Plan, unless such action, claim or lawsuit relates to action or
inaction on the part of the Company or any Subsidiary), the assets
of any of the trusts under such plans or the plan sponsor or the plan
administrator, or against any fiduciary of any such Employee
Benefit Plan or Pension Plan with respect to the operation of such
plans (other than routine benefit claims), nor does the Company,
or any Subsidiary have knowledge of facts which could reasonably be
expected to form the basis for any such claim or lawsuit.
(x) All amendments and actions required to bring
the Employee Benefit Plans and Pension Plans, other than any
Multiemployer Plan, into conformity in all material respects
with all of the applicable provisions of ERISA and other applicable
laws have been made or taken except to the extent that such
amendments or actions are not required by law to be made or taken
until a date after the Closing Date.
(xi) Any bonding required with respect to
the Employee Benefit Plans and Pension Plans, other than any
Multiemployer Plan, in accordance with applicable provisions of
ERISA has been obtained and is in full force and effect.
(xii) The Employee Benefit Plans and Pension
Plans, other than any Multiemployer Plan, have been maintained in all
material respects in accordance with their terms and with all
applicable provisions of ERISA (including rules and regulations
thereunder) and other applicable federal and state laws and
regulations, and neither the Company nor any of the Subsidiaries
or "party in interest" or "disqualified person" with respect to any
such Employee Benefit Plan or Pension Plan has engaged in a
"prohibited transaction" within the meaning of Section 4975 of
the Code or Section 406 of ERISA. No fiduciary who is a Company
or Subsidiary employee has any liability for breach of fiduciary
duty or any other failure to act or comply in connection with the
administration or investment of the assets of any Employee Benefit
Plan or Pension Plan.
(xiii) Neither the Company, nor any of
the Subsidiaries or any ERISA Affiliate has within the last six
years terminated any Pension Plan subject to Title IV, or
incurred any outstanding liability under Section 4062 of ERISA to
the PBGC, or to a trustee appointed under Section 4042 of ERISA.
All premiums due the PBGC from the Company or any Subsidiary prior
to the date hereof with respect to the Employee Benefit Plans have
been paid.
(xiv) Neither the Company nor any of the
Subsidiaries maintains retiree life or retiree health insurance
26
plans which are Employee Benefit Plans which provide for
continuing benefits or coverage for any participant or any
beneficiary of a participant except as may be required under Section
4980B of the Code and Section 601 of ERISA and the regulations
thereunder. The Company, each Subsidiary and each ERISA Affiliate
which maintains a "group health plan" within the meaning of Section
4980B of the Code has complied in all material respects with the
notice and health care continuation requirements of Section 4980B of
the Code and Section 601 of ERISA and the regulations thereunder.
(xv) Neither the Company, nor any of
the Subsidiaries, any ERISA Affiliate or any organization to
which the Company or any such Subsidiary or ERISA Affiliate is a
successor or parent corporation, within the meaning of Section 4069(b)
of ERISA, has engaged in any transaction to evade liability within
the meaning of Section 4069 of ERISA.
(xvi) No liability under any Employee Benefit Plan
or Pension Plan other than a Multiemployer Plan has been funded nor
has any such obligation been satisfied with the purchase of a contract
from an insurance company that is not rated AA by Standard &
Poor's Corporation or the equivalent by at least one nationally
recognized rating agency.
(xvii) Except as otherwise contemplated by
this Agreement, neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (i)
result in any payment becoming due to any employee (current, former
or retired) of the Company or any of the Subsidiaries, (ii) increase
any benefits otherwise payable under any Employee Benefit Plan or
Pension Plan or (iii) result in the acceleration of the time of
payment or vesting of any such benefits. Any amount that could be
received as a result of any of the transactions contemplated by
this Agreement by any employee, officer or director of the
Company or any Subsidiary who is a "disqualified individual" (as
such term is defined in proposed Treasury Regulation ss. 1.280G-1)
under any employment, severance or termination agreement, other
compensation plan or Employee Benefit Plan currently in effect would
not be characterized as an "excess parachute payment" (as such term
is defined in (beta) 280G(b)(1) of the Code.)
(xviii) None of the Company or any of
the Subsidiaries has any contract, plan or commitment, whether
legally binding or not, to create any additional Employee Benefit
Plan or Pension Plan or to modify any existing Employee Benefit Plan
or Pension Plan, except as may be required by law or under the
terms of a collective bargaining agreement.
(xix) Except as set forth on Schedule
3.01(j)(xix) delivered by the Company to Parent, no stock or other
27
security issued by the Company or any of the Subsidiaries forms or
has formed a part of the assets of any Employee Benefit Plan or
Pension Plan.
(xx) Except as set forth on Schedule
3.01(j)(xx) delivered by the Company to Parent, neither the Company
nor any of the Subsidiaries has any liability or obligation,
accrued or unaccrued, contingent or otherwise, to any former
employee of the Company or any Subsidiary.
(xxi) There has been no "mass layoff" or
"plant closing" as defined by the Worker Adjustment and
Retraining Notification Act and any similar state or local "plant
closing" law with respect to the employees of the Company or any
Subsidiary.
(k) Employment Agreements. Except as set forth on
Schedule 3.01(k) delivered to Parent by the Company, there exists (i)
no union, guild or collective bargaining agreement to which the
Company or any Subsidiary is a party, (ii) no employment,
consulting or severance agreement between the Company and any
director, officer or employee of the Company which agreement is not
stated to be terminable upon twelve or less months' notice except for
agreements pursuant to which the per annum salary (excluding any
bonuses or performance based compensation) of the employee party to
such agreement does not exceed $100,000 and the remaining term
thereof does not exceed two years or (iii) no employment,
consulting, severance or indemnification agreement to which the
Company or any Subsidiary is a party that would be altered as a
result of the Merger or the other transactions contemplated hereby.
(l) Taxes. Except as set forth in Schedule 3.01(l)
delivered to Parent by the Company: (i) the Company has filed or
caused to be filed, within the times (including authorized
extensions) and in the manner prescribed by law, all federal,
state, local and foreign tax returns and tax reports which are
required to be filed by, or with respect to, the Company or any of
the Subsidiaries; (ii) all federal, state, local and foreign
income, profits, franchise, sales, use, occupancy, excise and
other taxes and assessments (including interest and penalties)
payable by, or due from, the Company or any of the Subsidiaries
have been, in all material respects, fully paid or adequately
disclosed and fully provided for in the books and financial statements
of the Company and the Subsidiaries; (iii) the federal income tax
liability of the Company and the Subsidiaries has been finally
determined for all fiscal years to and including the fiscal year
ended March 31, 1990; (iv) the Company has received no notice of any
examination of any tax return of the Company or any of the
Subsidiaries that is currently in progress; and (v) there are
28
no outstanding agreements or waivers extending the statutory
period of limitation applicable to any tax return of the Company or
any of the Subsidiaries.
(m) Absence of Undisclosed Liabilities. Except with respect
to environmental matters (which are covered exclusively in
Section 3.01(h)(ii) hereof) and regulatory matters (which are
covered exclusively in Section 3.01(g) hereof), neither the Company
nor any of the Subsidiaries has any material indebtedness or material
liability, absolute or contingent, direct or indirect, which is
required in accordance with US GAAP to be reflected on the
consolidated balance sheet of the Company and its subsidiaries as
of September 30, 1995 contained in the Company Commission Filings
or otherwise disclosed in the Company Commission Filings other than
liabilities so reflected or disclosed or incurred or accrued in the
ordinary course of business (including liens of current taxes and
assessments not in default) since that date. Except as shown in such
balance sheet or in the notes to the financial statements contained
in such Company Commission Filings, neither the Company nor any
of the Subsidiaries is directly or indirectly liable upon or
with respect to (by discount, repurchase agreements or
otherwise), or obligated in any other way to provide funds in
respect of, or to guarantee or assume, any material debt,
obligation or dividend of any Person, except endorsements in
the ordinary course of business in connection with the deposit of
items for collection.
(n) Transactions with Directors, Officers and
Affiliates. Except as disclosed in Schedule 3.01(n) delivered by
the Company to Parent or in the Company Commission Filings, since
March 31, 1991, there have been no transactions between the
Company or any of the Subsidiaries and any director, officer,
employee, stockholder or other "Affiliate" (as defined in Rule 405
under the Securities Act of 1933, as amended (the "Securities
Act")) of the Company or any of the Subsidiaries, including,
without limitation, loans, guarantees or pledges to, by or for
the Company from, to, by or for any of such Persons. Except as
disclosed in such Schedule 3.01(n) or in the Company Commission
Filings, since March 31, 1991, none of the officers or directors
of the Company or any of the Subsidiaries, or any spouse or relative
of any of such Persons, has been a director or officer of, or has
had any material direct or indirect interest in, any firm,
corporation, association or business enterprise which during
such period has been a supplier, customer or sales agent of the
Company or any of its subsidiaries or has competed with or been
engaged in any business of the kind being conducted by the
Company or any of the Subsidiaries.
29
(o) Broker's or Finder's Fee. Except for ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
Co. (whose fees and expenses as financial advisors to the Company
will be paid by the Company in accordance with the Company's
agreement with such firm, a true and correct copy of which has
been previously delivered to Parent by the Company), no agent,
broker, Person or firm acting on behalf of the Company or ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇
▇. ▇▇▇▇▇▇ is, or will be, entitled to any fee, commission or
broker's or finder's fees from any of the parties hereto, or from any
Person controlling, controlled by, or under common control with any
of the parties hereto, in connection with this Agreement or any of
the transactions contemplated hereby.
(p) Opinion of Financial Advisor. The Company has received
the opinion of ▇▇▇▇▇▇▇, Sachs & Co., dated the date hereof, to the
effect that, as of such date, the Exchange Ratio is fair to the
Company's stockholders.
(q) Vote Required. The approval of the Merger by
the affirmative vote of two-thirds of the votes that holders
of the outstanding shares of Company Common Stock are entitled to
cast is the only vote of the holders of any class or series of
the Company's capital stock necessary to approve the
transactions contemplated hereby.
(r) Material Contracts. Schedule 3.01(r) lists all
material contracts and agreements to which, as of the date hereof,
the Company or any Subsidiary is a party which were not filed as
exhibits to the Company Commission Filings, which are not cancelable
by the Company or its Subsidiary on less than 60 days' notice and
which involve or relate to (i) obligations of the Company or any
Subsidiary for borrowed money where the amount of such obligations
exceeds $50,000 individually, (ii) the lease by the Company or any
Subsidiary, as lessee or lessor, of real property for rent of more
than $10,000 per annum, (iii) the purchase or sale of goods
(other than raw material to be purchased by the Company in amounts
and at prices substantially consistent with past practices of the
Company) or services with an aggregate minimum purchase price
of more than $100,000 per annum, (iv) rights to manufacture
and/or distribute any Pharmaceutical Product which accounted
for more than $50,000 of the consolidated revenues of the Company
and the Subsidiaries during the fiscal year ended March 31, 1995 or
under which the Company or any Subsidiary received or paid
license or other fees in excess of $50,000 during the said fiscal
year, (v) the purchase or sale of assets or properties not in the
ordinary course of business having a purchase price in excess of
$100,000 or (vi) individual capital expenditures or commitments
in excess of $100,000. All such contracts and agreements are
duly and validly executed by the Company or such Subsidiary, and
30
are in full force and effect. No event has occurred which, after
notice or the passage of time or both, would constitute a material
default under any such contract or agreement. Except as disclosed
on Schedule 3.01(r), all such contracts and agreements will
continue, after the Effective Time, to be binding in accordance
with their respective terms until their respective expiration dates.
(s) Accounting Matters. The Company knows of no
reasons, within its control, why the Merger will not be capable of
being treated as a pooling of interest transaction under APB 16. The
Company has not taken any action that will prevent the Merger from
being recorded as a pooling of interest transaction under APB 16.
(t) Tax Matters. The Company knows of no fact or
circumstance which is reasonably likely to cause the Merger to be
treated other than as a tax-free reorganization under Section
368(a)(1)(A) of the Code by virtue of Section 368(a)(2)(E) of the
Code.
3.02 Representations and Warranties of Parent and Sub. Parent and Sub
represent and warrant to the Company as follows:
(a) Due Organization, Good Standing and Power. Each of
Parent and its subsidiaries is a corporation duly organized and
validly existing and in good standing (where applicable) under the
laws of its jurisdiction of organization and each such
corporation has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted. Each of Parent and its subsidiaries is duly qualified or
licensed to do business and is in good standing (where applicable)
in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it make
such qualification necessary, except in such jurisdictions where
the failure to be so qualified or licensed and in good standing
(where applicable) would not have a material adverse effect on the
Condition of Parent and its subsidiaries taken as a whole.
(b) Authorization and Validity of Agreement. Each of
Parent and Sub has full power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by each of Parent and
Sub, and the consummation by it of the transactions contemplated
hereby, have been duly authorized by the Board of Directors of each of
Parent and Sub and no other corporate action on the part of either
of Parent or Sub is necessary to authorize the execution, delivery
and performance of this Agreement by each of Parent and Sub and
31
the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by each of Parent
and Sub and is a valid and binding obligation of each of Parent
and Sub, enforceable against each of Parent and Sub in
accordance with its terms, except that such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights
generally, and general equitable principles.
(c) Capitalization. (i) The authorized share capital of
Parent consists of 992,930,000 Ordinary Shares. As of December 31,
1995, (i) there were 554,228,366 Ordinary Shares issued and
outstanding and (ii) employee share options to subscribe for an
aggregate of 6,219,966 Ordinary Shares were outstanding. All such
issued Ordinary Shares and all Ordinary Shares issued in connection
with the Merger have been, or will be, as the case may be, duly
authorized and validly issued as fully paid or credited as fully
paid and were not and, in the case of Ordinary Shares issued in
connection with the Merger, will not have been, issued in violation
of any preemptive right. Except as set forth in this Section 3.02(c)
or on Schedule 3.02(c) delivered to the Company by Parent and except
for changes since December 31, 1994 resulting from the exercise of
employee share options outstanding on such date, (i) there is no
share capital of Parent authorized, issued or outstanding and (ii)
there are not as of the date hereof, and at the Effective Time there
will not be, any outstanding options, warrants, rights,
subscriptions, claims of any character, agreements,
obligations, convertible or exchangeable securities, or other
commitments, contingent or otherwise, relating to Ordinary Shares or
any other share capital of Parent, pursuant to which Parent is or may
become obligated to issue or purchase or otherwise acquire Ordinary
Shares or any other share capital or securities convertible into,
exchangeable for, or evidencing the right to subscribe for, any share
capital of Parent.
(ii) All of the outstanding shares of capital stock of each
of Parent's subsidiaries (other than directors' qualifying shares)
except for subsidiaries with no material assets or liabilities
have been validly issued as fully paid or credited as fully paid, were
not issued in violation of any preemptive rights and are
beneficially owned, directly or indirectly, by Parent, free and
clear of all liens, encumbrances, options or claims whatsoever.
(d) Consents and Approvals; No Violations. Assuming that
(i) the filings required under the HSR Act are made and the waiting
period thereunder has been terminated or has expired; (ii) the
filing of the Proxy Statement is made and the Registration
Statement and the F-6 Registration Statement are declared effective;
32
(iii) the filing of the Certificate of Merger and other appropriate
merger documents, if any, as required by the laws of the State of
Delaware is made; (iv) any applicable state securities or Blue Sky
laws are complied with; and (v) the Controller of Foreign Currency
of the Bank of Israel has approved the Merger, the issuance of the
Ordinary Shares in connection therewith and the other transactions
contemplated by this Agreement, the Israeli Securities Authority has
issued the required permit to publish the Proxy Statement or
granted an exemption from such requirement, and the Tel Aviv Stock
Exchange ("TASE") has delivered an agreement in principle to
list the Ordinary Shares to be issued in connection with the
transactions contemplated hereby, the execution and delivery of
this Agreement by Parent and Sub and the consummation by Parent and
Sub of the transactions contemplated hereby will not: (1)
violate any provision of the Memorandum of Association or Articles
of Association of Parent or the Certificate of Incorporation or
By-Laws of Sub; (2) violate any statute, ordinance, rule,
regulation, order or decree of any court or of any governmental
or regulatory body, agency or authority applicable to Parent or
any of its subsidiaries or by which their respective properties or
assets may be bound, including, without limitation, any consent
decrees, court orders or judgments; (3) require any filing with, or
permit, consent or approval of, or the giving of any notice to any
Governmental Entity; or (4) result in a violation or breach of,
conflict with, constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in
the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Parent or any of its
subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, franchise, permit,
agreement, lease or other instrument or obligation to which Parent
or any of its subsidiaries is a party, or by which it or any of their
respective properties or assets may be bound, excluding from the
foregoing clauses (3) and (4) filings, permits, consents, approvals
and notices, the absence of which, and violations, breaches,
defaults, conflicts and liens which, in the aggregate, would not
have a material adverse effect on the Condition of Parent and its
subsidiaries taken as a whole.
(e) Parent Reports and Financial Statements;
Accounting Records. (i) Since December 31, 1991, Parent has
filed all forms, reports and documents with the Commission required
to be filed by it pursuant to the U.S. federal securities laws
and the rules and regulations promulgated thereunder, and all
forms, reports and documents filed with the Commission have
complied in all material respects with all applicable
requirements of the U.S. federal securities laws and the
Commission rules and regulations promulgated thereunder. Parent
has heretofore delivered to the Company true and complete copies
33
of all forms, reports, registration statements and other filings
filed by the Company with the Commission since December 31, 1991
(such forms, reports, registration statements and other filings,
together with any amendments thereto, are sometimes
collectively referred to as the "Parent Commission Filings"). As
of their respective dates, the Parent Commission Filings did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(ii) The audited consolidated financial statements included
in the Parent Commission Filings comply as to form in all
material respects with applicable accounting requirements and with the
rules and regulations of the Commission with respect thereto, were
prepared in accordance with accounting principles generally
accepted in Israel ("Israel GAAP") (as in effect from time to time),
which as applicable to Parent are substantially the same as US
GAAP, applied on a consistent basis (except as may be indicated
therein or in the notes or schedules thereto) and fairly present in
all material respects the consolidated financial position of
Parent and its consolidated subsidiaries as of the dates
thereof and the results of their operations and changes in
cash flows, as the case may be, for the periods then ended. The
unaudited interim financial statements included in the Parent
Commission Filings were prepared in accordance with Israel GAAP
(as in effect from time to time) applied on a consistent basis
(except as may be indicated therein or in the notes or schedules
thereto) and fairly present the consolidated financial position
of Parent and its consolidated subsidiaries as of the dates thereof
and the results of their operations and changes in cash flows, as the
case may be, for the periods then ended subject to normal and
recurring year-end audit adjustments and any other adjustments
described therein.
(iii) Parent and its subsidiaries keep proper
accounting records in which all material assets and liabilities, and
all material transactions, of Parent and its subsidiaries are recorded
in conformity with applicable accounting principles. No part of
Parent's or any subsidiary's accounting system or records, or access
thereto, is under the control of a Person who is not an employee
of Parent or such subsidiary.
(f) Absence of Certain Changes. Except as disclosed in
Parent Commission Filings distributed to stockholders prior to the
date hereof and except as set forth on Schedule 3.02(f) delivered to
the Company by Parent, since December 31, 1994, (i) there has not
been any material adverse change in the Condition of Parent and its
34
subsidiaries taken as a whole; (ii) the businesses of Parent and its
subsidiaries have been conducted only in the ordinary course;
and (iii) Parent and its subsidiaries have not increased the
compensation of any officer or granted any general salary or
benefits increase to their employees other than in the ordinary
course of business.
(g) Compliance with Laws. (i) General. Except with respect
to regulatory matters (which are covered exclusively by Section
3.02(o) hereof) and environmental matters (which are covered
exclusively by Section 3.02(g)(ii) below), Parent and its
subsidiaries are in compliance with all applicable laws,
regulations, orders, judgments and decrees, except where the
failure to so comply would not have a material adverse effect on
the Condition of Parent and its subsidiaries taken as a whole.
(ii) Environmental Matters. Except to the extent
that the inaccuracy of any of the following (or the circumstances
giving rise to such inaccuracy), individually or in the aggregate,
would not reasonably be expected to have a material adverse
effect on the Condition of Parent (after taking into account any
reserves therefor included in the Parent Commission Filings
filed prior to the date hereof) or as set forth on Schedule
3.02(g)(ii) (none of which scheduled items are expected to have a
material adverse effect):
(A) Parent is in compliance with
all applicable Environmental Laws and any
permits, authorizations, licenses and certificates
issued by any governmental regulatory authority
or entity pursuant to Environmental Laws;
(B) Parent has obtained, or made
timely application for, all permits required
for its operations under Environmental Laws;
(C) there are no uncontrolled
Hazardous Materials present in the environment or,
to Parent's knowledge, imminent threatened releases
of Hazardous Substances into the environment at
any of Parent's facilities; and
(D) Parent has received no written
notice that it is or may be liable for cleanup
or other costs relating to environmental matters
as a result of (1) any Hazardous Materials in the
environment at any facility owned or operated by
Parent or (2) the off-site disposal of Hazardous
Materials generated by Parent at any of its
facilities.
(h) Litigation. Except as disclosed in Parent
Commission Filings or as set forth on Schedule 3.02(h) delivered to
25
the Company by Parent, there is no action, suit, proceeding at law
or in equity, or any arbitration or any administrative or other
proceeding by or before (or to the knowledge of Parent any
investigation by) any governmental or other instrumentality or
agency, pending, or, to the knowledge of Parent, threatened,
against or affecting Parent or any of its subsidiaries, or any
of their properties or rights which if adversely determined would be
reasonably likely to have a material adverse effect on the Condition
of Parent and its subsidiaries taken as a whole. Except as
disclosed in Parent Commission Filings, neither Parent nor any of
its subsidiaries is subject to any judgment, order or decree
entered in any lawsuit or proceeding which is reasonably likely to
have a material adverse effect on the Condition of Parent
and its subsidiaries taken as a whole or on the ability of
Parent or any subsidiary to conduct its business as presently
conducted.
(i) Taxes. Parent has filed or caused to be filed, within
the times and in the manner prescribed by law, all tax returns
(including authorized extensions) and tax reports which are
required by Israel, the United States and any other country, state and
locality to be filed by, or with respect to, Parent or any of its
subsidiaries. All income, profits, franchise, sales, use,
occupancy, excise and other taxes and assessments (including interest
and penalties) payable by, or due from, Parent or any of its
subsidiaries under the laws of Israel, the United States and any
other country, state and locality have been fully paid or
adequately disclosed and fully provided for in the books and
financial statements of Parent and its subsidiaries.
(j) Broker's or Finder's Fee. Except for ▇▇▇▇▇▇
Brothers (whose fees and expenses as financial advisor to Parent and
Sub will be paid by Parent in accordance with Parent's agreement with
such firm, a true and correct copy of which has been previously
delivered to the Company by Parent), no agent, broker, Person or
firm acting on behalf of Parent or Sub is, or will be, entitled to
any fee, commission or broker's or finder's fees from any of the
parties hereto, or from any Person controlling, controlled by, or
under common control with any of the parties hereto, in connection
with this Agreement or any of the transactions contemplated hereby.
(k) Accounting Matters. Parent knows of no reason, within
its control, why the Merger will not be capable of being treated
as a pooling of interest transaction under APB 16. Parent has not
taken any action that will prevent the Merger from being recorded as a
pooling of interest transaction under APB 16.
36
(l) Tax Matters. Parent knows of no fact or circumstance
which is reasonably likely to cause the Merger to be treated other
than as a tax-free reorganization under Section 368(a)(1)(A) of
the Code by virtue of Section 368(a)(2)(E) of the Code.
(m) Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its
operations only as contemplated hereby.
(n) Absence of Undisclosed Liabilities. Parent does not
have any material indebtedness or material liability which is
required in accordance with Israel GAAP to be reflected on the
consolidated balance sheet of Parent as of December 31, 1994
contained in the Parent Commission Filings or otherwise disclosed
in the Parent Commission Filings other than liabilities so reflected
or disclosed or incurred or accrued in the ordinary course of business
(including liens of current taxes and assessments not in the
default) since that date. Except as shown in such balance sheet or in
the notes to the financial statements contained in such Parent
Commission Filings, neither Parent nor Sub is directly or indirectly
liable upon or with respect to (by discount, repurchase agreements
or otherwise), or obligated in any other way to provide funds in
respect of, or to guarantee or assume, any material debt,
obligation or dividend of any Person, except endorsements in the
ordinary course of business in connection with the deposit of items
for collection.
(o) Regulatory Compliance. (i) As to each drug
manufactured, marketed, sold or licensed by Parent in the United
States for which an NDA or ANDA has been approved or an IND has been
submitted to the FDA and become effective, Parent and its
subsidiaries are in substantial compliance with 21 U.S.C. ▇▇.▇▇. 355
or 357 or 21 C.F.R. Parts 312, 314 or 430 et. seq., respectively,
and all terms and conditions of such applications. As to each such
drug, Parent and any relevant subsidiary, and the officers, employees
or agents of Parent or such subsidiary have included in the
application for such drug, where required, the certification
described in 21 U.S.C. ss. 335a(k)(1) and the list described in
21 U.S.C. ss.335a(k)(2), and such certification and such list was in
each case true and accurate when made and remained true and accurate
thereafter. In addition, Parent is in substantial compliance with
all applicable registration and listing requirements set forth in 21
U.S.C. ss. 360 and 21 C.F.R. Part 207.
(ii) Each article of drug manufactured and/or
distributed by Parent or any of its subsidiaries in the United States
is not adulterated within the meaning of 21 U.S.C. ss.351 or
37
misbranded within the meaning of 21 U.S.C. ss.352, and is not a
product that is in violation of 21 U.S.C. ss.355.
(iii) Except as disclosed in the Parent
Commission Filings or otherwise set forth in Schedule 3.02(o), all
manufacturing operations of Parent and its subsidiaries in the
United States have been and are being conducted in substantial
compliance with the good manufacturing practice regulations set forth
in 21 C.F.R. Parts 210 and 211.
(iv) Except as disclosed in the Parent
Commission Filings, neither Parent nor any of its subsidiaries has
received any written notice that the FDA has commenced, or
threatened to initiate, any action to withdraw its approval or
request the recall of any product of Parent or any of its
subsidiaries, or commenced, or overtly threatened to initiate, any
action to enjoin production at any facility of Parent or any of its
subsidiaries.
(v) Each drug manufactured outside the United
States by Parent or any of its subsidiaries is manufactured in
accordance with applicable rules and regulations of the jurisdiction
in which such drug is manufactured. Each drug manufactured by
Parent or any of its subsidiaries and exported into another
jurisdiction for distribution is imported into such jurisdiction in
accordance with applicable rules and regulations of the jurisdiction
into which such drug is imported.
(vi) Neither Parent, nor any of its subsidiaries,
nor any officer, employee or agent of either Parent or any
of its subsidiaries has made an untrue statement of a material
fact or fraudulent statement to the FDA, failed to disclose a
material fact required to be disclosed to the FDA, or committed
an act, made a statement, or failed to make a statement that,
at the time such disclosure was made, could reasonably be
expected to provide a basis for the FDA to invoke its policy
respecting "Fraud, Untrue Statements of Material Facts, Bribery,
and Illegal Gratuities", set forth in 56 Fed. Reg. 46191
(September 10, 1991). Neither Parent nor any of its subsidiaries,
nor any officer, employee or agent of either Parent or any of its
subsidiaries has been convicted of any crime or engaged in any
conduct for which debarment is mandated by 21 U.S.C. ss. 335a(a) or
authorized by 21 U.S.C. ss.335a(b).
38
ARTICLE IV
CONDUCT OF BUSINESS; TRANSACTIONS PRIOR TO CLOSING DATE;
ADDITIONAL AGREEMENTS
4.01 Conduct of Business of the Company. The Company agrees that,
except as expressly permitted, required or contemplated
by, or otherwise described in, this Agreement, or required by law or
governmental agency or otherwise consented to or approved in writing by Parent,
during the period commencing on the date hereof and ending on the Closing Date:
(a) The Company and each of its subsidiaries will
conduct their respective operations in all material respects only
according to their ordinary and usual course of business and
will use their reasonable efforts to preserve intact their
respective business organizations, keep available the services of
their directors, officers and employees, preserve in full force and
effect all material licenses and approvals held by them and
maintain satisfactory relationships with, suppliers, distributors,
clients and others having material business relationships with
them;
(b) Neither the Company nor any of its subsidiaries will
(i) make any change in or amendment to its Certificate of
Incorporation or By-Laws; (ii) issue or sell any shares of its
capital stock or share capital (other than in connection with (A)
the Company's Stockholder Dividend Reinvestment and Stock Purchase
Plan or (B) the exercise of options granted under employee and
directors' stock option plans outstanding on the date hereof) or
any of its other securities, or issue any securities convertible
into, or options, warrants or rights to purchase or subscribe to, or
enter into any arrangement or contract with respect to the issuance
or sale of, any shares of its capital stock or any of its other
securities, or make any other changes in its capital structure;
(iii) declare, pay or make any dividend or other distribution or
payment with respect to, or split, combine, redeem or reclassify,
any shares of its capital stock or share capital other than in
accordance with the Company's Restricted Stock Purchase Plan or
Shareholder Dividend Reinvestment and Stock Purchase Plan; (iv)
enter into any contract or commitment with respect to capital
expenditures in excess of those set forth in Schedule 4.01(b)
delivered to Parent by the Company or in excess of $100,000,
individually, or $200,000, in the aggregate, or enter into any other
material contracts or commitments except contracts in the ordinary
course of business; (v) acquire assets (other than as contemplated
by clause (iv) above), other than in the ordinary course of
business, in an amount in excess of $100,000, individually, or
$200,000, in the aggregate, or dispose of (including by way of sale,
39
lease or encumbrance), other than in the ordinary course of
business, a material amount of assets or release or relinquish
any material rights under any material contract; (vi) except as
contemplated by this Agreement, amend any employee or non-employee
benefit plan or program, employment agreement, license agreement
or retirement agreement, or pay any bonus or contingent
compensation, except in each case in the ordinary course of business
consistent with past practice prior to the date of this Agreement;
(vii) incur any indebtedness for borrowed money (other than by
drawing under current revolving credit agreements (as such
agreements are in effect on the date hereof and without giving
effect to any waivers of any of the provisions of such agreements))
or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities of the
Company or any of its subsidiaries or guarantee any debt securities
of others; (viii) agree, in writing or otherwise, to take any of the
foregoing actions; (ix) make any material change in its method of
accounting or record keeping not otherwise required by US GAAP; or (x)
agree to the settlement of any material litigation for any amounts in
excess of those reserved on the Company's books and records;
(c) The Company will not, nor will the Company permit any
of its subsidiaries to, purchase or acquire, or offer to
purchase or acquire, any shares of its capital stock, other than in
connection with the Company's Restricted Stock Purchase Plan and
Stockholder Dividend Reinvestment and Stock Purchase Plan; and
(d) The Company will deliver to Parent all of
Company's monthly and quarterly, if any, financial statements for
periods and dates subsequent to March 31, 1995, as soon as
practicable after the same are available to the Company.
Any action consented to under this Section 4.01 shall not be deemed
to constitute a breach of any representation or warranty contained in
this Agreement.
4.02 Access to Information Concerning Business and Records. (a)
During the period commencing on the date hereof and ending on the Closing Date,
the Company shall, upon reasonable notice, afford to Parent and Parent's
counsel, accountants and other authorized representatives, reasonable access
during normal business hours to the properties, books and records of the
Company and its subsidiaries in order that they may have the opportunity to
make such investigations as they shall desire of the affairs of the Company and
its subsidiaries; such investigation shall not, however, affect the
representations and warranties made in this Agreement. The Company agrees to
cause its officers and employees to furnish such additional financial and
operating data and other information and respond to such inquiries as Parent
shall from time to time request.
40
(b) During the period commencing on the date hereof and ending on the
Closing Date, Parent shall, upon reasonable notice, afford to the Company and
the Company's counsel, accountants and other authorized representatives,
reasonable access during normal business hours to the properties, books
and records of Parent and its subsidiaries in order that they may
have the opportunity to make such investigations as they shall desire of the
affairs of Parent and its subsidiaries; such investigation shall not, however,
affect the representations and warranties made in this Agreement. Parent
agrees to cause its officers and employees to furnish such additional
financial and operating data and other information and respond to such
inquiries as the Company shall from time to time request.
4.03 Confidentiality. Information obtained by Parent and the Company
pursuant to this Agreement shall be subject to the provisions of the
Confidentiality Agreement between the Company and Parent.
4.04 Registration Statement/Proxy Statement; Listing on Tel Aviv
Stock Exchange. (a) As promptly as practicable after the execution of this
Agreement, the Company and Parent shall prepare and file with the Commission
preliminary proxy materials which shall constitute the preliminary Proxy
Statement and a preliminary prospectus with respect to the Ordinary Shares and
ADSs to be issued in connection with the Merger. As promptly as practicable
after comments are received from the Commission with respect to the preliminary
proxy materials and after the furnishing by the Company and Parent of all
information required to be contained therein (including, without limitation,
financial statements and supporting schedules and certificates and reports of
independent public accountants), the Company shall file with the Commission the
definitive Proxy Statement and Parent shall file with the Commission the
definitive Proxy Statement and the Registration Statement, which Proxy
Statement and Registration Statement shall each comply in all material respects
with the applicable requirements of the Exchange Act and Securities Act,
respectively, and the applicable rules and regulations of the Commission
thereunder. Parent and the Company shall use their best efforts to cause the
Registration Statement to become effective as soon thereafter as practicable.
The definitive Proxy Statement shall contain the opinion of ▇▇▇▇▇▇▇, Sachs &
Co. referred to in Section 3.01(p) of this Agreement, provided that such
opinion shall be brought down to and dated, a date not more than two business
days prior to the date of the Proxy Statement.
(b) The Company shall cause the Proxy Statement to be mailed to the
stockholders of the Company and, if necessary, after the Proxy Statement shall
have been so mailed, promptly circulate amended, supplemental or
supplemented proxy material and, if required in connection therewith,
resolicit proxies.
41
(c) Each of Parent and Sub, on the one hand, and the Company, on the
other hand, warrants to the other that the information provided and to be
provided by Parent and Sub and the Company, respectively, for use in each of
the Registration Statement, on the date the Registration Statement
becomes effective, and the Proxy Statement, on the date the Proxy Statement
is filed with the Commission, on the date it is first mailed to the
Company's stockholders and on the date of the Special Meeting (as defined in
Section 4.06 below) shall not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Each of Parent and Sub, on the one hand, and the
Company, on the other, shall notify the other parties promptly of the receipt
of any comments by the Commission and of any request by the Commission for
amendments or supplements to the preliminary Proxy Statement, the Proxy
Statement or the Registration Statement or for additional information,
and shall supply one another with copies of all correspondence with the
Commission with respect to any of the foregoing. If at any time prior to the
Special Meeting, any event should occur relating to Parent or Sub (or any of
their respective affiliates, directors or officers) which should be
described in an amendment or supplement to the Proxy Statement or the
Registration Statement, Parent shall promptly inform the Company. If at any
time prior to the Special Meeting, any event should occur relating to the
Company, its subsidiaries or any of their respective affiliates, directors
or officers which should be described in an amendment or supplement to the
Proxy Statement or the Registration Statement, the Company shall
promptly inform Parent. Whenever any event occurs which should be
described in an amendment or supplement to the Proxy Statement or the
Registration Statement, Parent and the Company shall, upon learning of such
event, cooperate with each other promptly to file and clear with the
Commission and, if applicable, mail such amendment or supplement to the
stockholders of the Company.
(d) Each of Parent and Sub, on the one hand, and the Company, on the
other hand, warrants to the other that all information concerning the
Parent, Sub and Parent's other subsidiaries, and the Company and
its subsidiaries, respectively, to be supplied expressly for inclusion
in the listing application to be prepared for and filed with the TASE with
respect to Ordinary Shares to be issued in connection with the transactions
contemplated hereby and any supplements thereto and any other materials or
documents issued to stockholders or employees of Parent on or after the
date hereof will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(e) Parent and the Company shall make all necessary filings with
respect to the Merger under the Securities Act and the Exchange Act and the
42
rules and regulations thereunder and under applicable blue sky or similar
laws and shall use their best efforts to obtain required approvals and
clearances with respect thereto.
4.05 Employee Benefits. (a) Parent shall cause the Surviving
Corporation to adopt a severance plan providing for payment to each employee of
the Company, whose tenure and conditions of employment are not covered by a
collective bargaining agreement, and whose employment is terminated within one
year after the Effective Time a severance benefit in cash in an amount equal
to: (i) in the case of Vice Presidents and Assistant Vice Presidents of the
Company, twelve (12) months base salary, payable in equal monthly installments,
and (ii) in the case of other non-union employees, such employee's regular
weekly base pay multiplied by the number of years of employment such employee
has had with the Company up to ten (10) years of employment, plus two times
such weekly salary multiplied by the number of years of such employment beyond
the tenth year (such payment to be paid on a weekly basis in an amount not
exceeding such regular weekly base pay, and reduced by any applicable
withholding and payroll taxes); provided, however, that the Surviving
Corporation shall be free to include customary provisions in such severance
plan including, without limitation, provisions which preclude payment in the
event of a termination for cause and payment as a result of inter-plant
transfers among the Company's New Jersey facilities. Any such employee whose
employment is terminated after the first anniversary of the Effective Time
shall be entitled to the same severance benefits as are payable to other
non-union employees of Parent's U.S. generic drug subsidiary.
(b) At the Effective Time, subject to applicable law, all of the
Employee Benefit Plans as of the Closing Date, other than those involving
stock of the Company ("Current Benefits") and all employment agreements
between the Company and any of its employees in effect as of the Closing
Date shall continue, and for not less than one year from and after the Closing
Date, Parent shall provide for the employees of the Surviving Corporation
to continue to participate in the Current Benefits and to be provided
43
aggregate benefits thereunder that are not less than those provided thereunder
during the Company's fiscal year ended March 31, 1995. Nothing herein shall
preclude any change effected after such one-year period on a prospective
basis in any Employee Benefit Plan or Pension Plan or prohibit Parent or the
Surviving Corporation from terminating any particular Employee Benefit Plan
following such one-year period, provided that to the extent Parent or
the Surviving Corporation terminates any Employee Benefit Plan after the
Effective Time, and any U.S. generic drug subsidiary of Parent has in place
a benefit plan providing benefits of the same general type as the
terminated Employee Benefit Plan to its similarly situated subsidiaries'
employees, Parent shall thereafter permit the employees of the Surviving
Corporation to participate in such employee benefit plan of its U.S.
subsidiary or a similar plan.
4.06 Company Stockholder Approval; Recommendation. Subject to
Section 4.17, the Company, acting through its Board of Directors, shall (i)
call a special meeting of the holders of Company Common Stock for the purpose
of voting upon this Agreement and the Merger (the "Special Meeting") and (ii)
include in the Proxy Statement the recommendation of its Board of Directors
that holders of Company Common Stock approve and adopt this Agreement and
approve the Merger.
4.07 Stock Options. The Company shall take such action as may be
permitted under the Stock Option Plans to effect the actions described in
Section 2.05 and shall comply with all requirements regarding income tax
withholding in connection therewith. In addition to the foregoing, the Company
will take all steps necessary to obtain and deliver to Parent, at or prior to
the Effective Time, the written consent of each optionee under the Stock Option
Plans to the actions described in Section 2.05 hereof and shall take whatever
action is reasonably required to satisfy Parent that no holder of options or
rights under the Stock Option Plans will have any right to acquire any interest
in the Company or Parent as a result of the exercise of options on or after the
Effective Time. The Company shall not make any further grants of options or
rights of any nature under the Stock Option Plans after the date of this
Agreement, nor shall the Company's Board of Directors, Compensation Committee
or Stock Option Committee take any action that is inconsistent with Section
2.05 or this Section 4.07 of this Agreement.
4.08 Letters of the Company's Accountants. The Company shall use its
best efforts to cause to be delivered to Parent a letter of Ernst & Young, the
Company's independent auditors, dated a date within two business days before
the date of the Proxy Statement and a second bring-down letter, dated a date
within two business days before the Effective Time, in each case addressed to
Parent, in form and substance reasonably satisfactory to Parent and customary
in scope and substance for letters delivered by independent public accountants
in connection with registration statements similar to the Registration
Statement. The accountants' letters shall not consider any changes arising
from the announcement or consummation of the Merger or the other transactions
contemplated by this Agreement.
4.09 Letters of Parent's Accountants. Parent shall use its best
efforts to cause to be delivered to the Company a letter of ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, Parent's independent auditors, dated a day within two business days
before the date on which the Registration Statement shall become effective and
a second bring-down letter, dated a date within two business days before the
Effective Time, in each case addressed to the Company, in form and substance
reasonably satisfactory to the Company and customary in scope and substance for
44
letters delivered by independent public accountants in connection with
registration statements similar to the Registration Statement. The
accountants' letters shall not consider any changes arising from the
announcement or consummation of the Merger or the other transactions
contemplated by this Agreement.
4.10 Notices of Certain Events. Each party hereto shall promptly
notify the other parties of: -------------------------
(a) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental
Entity in connection with the transactions contemplated by this
Agreement;
(c) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened
against, relating to or involving or otherwise affecting any of
Parent, Sub or the Company, as the case may be, or any of their
respective subsidiaries which relate to the consummation of the
transactions contemplated by this Agreement; and
(d) such party's obtaining knowledge of the occurrence,
or failure to occur, of any event which occurrence or failure to
occur will be likely to cause (A) any representation or warranty
contained in this Agreement to be untrue and inaccurate in any
material respect, or (B) any material failure of any party to
comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided,
however, that no such notification shall affect the
representations, warranties or obligations of the parties or the
conditions to the obligations of the parties hereunder.
4.11 Tel Aviv Stock Exchange Listing. Parent shall make application
to the TASE for, and use its best efforts to obtain, the listing of
the additional Ordinary Shares to be issued pursuant to this Agreement on the
TASE.
4.12 NASDAQ/NMS Admission. Parent shall use its best efforts to
cause the ADSs issued pursuant to the Merger to be admitted for trading on the
NASDAQ/NMS, subject to official notice of issuance.
4.13 HSR Act. The Company and Parent shall, as soon as practicable
after the date of this Agreement, file Notification and Report Forms under the
HSR Act with the Federal Trade Commission (the "FTC") and the Antitrust
45
Division of the Department of Justice (the "Antitrust Division") and shall use
their best efforts to respond as promptly as practicable to all inquiries
received from the FTC or the Antitrust Division for additional information or
documentation.
4.14 Indemnification; Officers' and Directors' Insurance. (a) From
and after the Effective Time, Parent and the Surviving Corporation shall
indemnify, defend and hold harmless each person who was, is now, or who
becomes prior to the Effective Time, an officer, director or employee of
the Company (the "Indemnified Parties") against all losses, expenses,
claims, damages, liabilities, costs, expenses, judgments or amounts that are
paid in settlement with the approval of the indemnifying party (which
approval will not be unreasonably withheld) arising out of the
transactions contemplated by this Agreement to the fullest extent provided
for under the Company's Certificate of Incorporation and By Laws as in effect
as of the date hereof or permitted or required by applicable law,
including without limitation the advancement of expenses. Parent agrees
that all rights to indemnification existing in favor of the directors, officers
or employees of the Company as provided in the Company's Certificate of
Incorporation or By-Laws, as in effect as of the date hereof, with respect to
matters occurring through the Effective Time, shall survive the Merger and
shall continue in full force and effect for a period of not less than six years
from the Effective Time, and Parent hereby guarantees the due and prompt
performance in full of such indemnification obligations of the Surviving
Corporation. Parent agrees to use its best efforts to cause the
Surviving Corporation to maintain in effect for not less than three years
after the Effective Time the current policies of directors' and officers'
liability insurance maintained by the Company with respect to matters
occurring prior to the Effective Time; provided, however, that (i) the
Surviving Corporation may substitute therefor policies of at least the
same coverage (with carriers comparable to the Company's existing carriers)
containing terms and conditions which are no less advantageous to the
Indemnified Parties and (ii) the Surviving Corporation shall not be required
to pay a premium at a rate for such insurance in excess of 150% of the annual
premium rate represented by the last premium paid prior to the date hereof,
but in such case shall purchase as much coverage as possible for such amount
and (iii) any or all of the Indemnified Parties shall have the right to
provide funds to the Surviving Corporation to fund premiums to the extent
they exceed such 150% level.
(b) In the event that any action, suit, proceeding or
investigation relating hereto or to the transactions contemplated by
this Agreement is commenced, whether before or after the Effective Time, the
parties hereto agree to cooperate and use their respective best efforts to
vigorously defend against and respond thereto.
46
(c) The provisions of this Section 4.14 are intended for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
4.15 Best Efforts. Each of the Company, Parent and Sub shall, and
shall cause each of their respective subsidiaries to, cooperate and use their
respective best efforts to take, or cause to be taken, all appropriate action,
and to make, or cause to be made, all filings necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
their respective best efforts to obtain, prior to the Closing Date, all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities (including, without limitation, ISRA
Clearance) and parties to contracts with the Company and its subsidiaries and
Parent and its subsidiaries as are necessary for consummation of the
transactions contemplated by this Agreement and to fulfill the conditions to
the Merger.
4.16 Rule 145. Schedule 4.16 delivered by the Company to Parent
identifies "Affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall cause each such Person to deliver to Parent
prior to the Closing Date a written agreement substantially in the form of
Exhibit A hereto, or in the case of ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and
certain trusts which they have established a written agreement substantially in
the form of Exhibit A-1 hereto (each an "Affiliate Agreement").
4.17 No Solicitation. (a) The Company shall not, nor shall
it permit any of its subsidiaries to, nor shall it authorize or permit any
officer or director of, or any investment banker, attorney or other
advisor or representative of, the Company or any of its subsidiaries to,
directly or indirectly, (i) solicit, initiate or encourage the submission
of any Takeover Proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any Person any information with
respect to, or take any other action to facilitate any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to,
any Takeover Proposal; provided, however, that, to the extent required by
the fiduciary obligations of the Board of Directors of the Company, as
determined in good faith by the Board of Directors after reviewing the advice
of outside counsel, the Company may, (A) in response to an unsolicited
request therefor, furnish information with respect to the Company to any
Person pursuant to a customary confidentiality agreement (as determined by
the Company's outside counsel) and discuss (1) such information (but not the
terms of any possible Takeover Proposal) and (2) the terms of this Section
4.17 with such Person and (B) upon receipt by the Company of a Takeover
Proposal, following delivery to Parent of the notice required pursuant
to Section 4.17(c), participate in discussions or negotiations regarding
such Takeover Proposal. Without limiting the foregoing, it is understood
47
that any violation of the restrictions set forth in the preceding sentence by
any officer or director of the Company or any of its subsidiaries or any
investment banker, attorney or other advisor or representative of the
Company or any of its subsidiaries, whether or not such Person is purporting
to act on behalf of the Company or any of its subsidiaries or otherwise, shall
be deemed to be a breach of this Section 4.17(a) by the Company. For
purposes of this Agreement, "Takeover Proposal" means any proposal for
a merger or other business combination involving the Company or any
proposal or offer to acquire in any manner, directly or indirectly, an equity
interest in, not less than 20% of the outstanding voting securities of, or
assets representing not less than 20% of the annual revenues of the Company,
other than the transactions contemplated by this Agreement.
(b) Neither the Board of Directors of the Company nor
any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Sub, the approval or
recommendation by such Board of Directors or any such committee of this
Agreement or the Merger, (ii) approve or recommend, or propose to approve or
recommend, any Takeover Proposal or (iii) enter into any agreement with
respect to any Takeover Proposal. Notwithstanding the foregoing, in the
event the Board of Directors of the Company receives a Takeover Proposal that,
in the exercise of its fiduciary obligations (as determined in good faith
by the Board of Directors after reviewing the advice of outside
counsel), it determines to be a Superior Proposal, the Board of Directors
may (subject to the following sentences) withdraw or modify its approval
or recommendation of this Agreement or the Merger, approve or recommend any
such Superior Proposal, enter into an agreement with respect to such Superior
Proposal or terminate this Agreement, in each case at any time after the second
business day following Parent's receipt of written notice (a "Notice of
Superior Proposal") advising Parent that the Board of Directors has
received a Superior Proposal, specifying the material terms and conditions
of such Superior Proposal and identifying the Person making such Superior
Proposal. In addition, if the Company proposes to enter into an
agreement with respect to any Takeover Proposal, it shall concurrently
with taking any of the foregoing actions pay, or cause to be paid, to
Parent the Termination Fee (as defined in Section 7.01(c)). For purposes of
this Agreement, a "Superior Proposal" means any bona fide Takeover Proposal
on terms which the Board of Directors of the Company determines in its
good faith reasonable judgment (after reviewing the advice of a financial
advisor of nationally recognized reputation) to be more favorable to the
Company's stockholders than the Merger.
(c) In addition to the obligations of the Company set forth
in paragraph (b) above, the Company shall promptly advise Parent orally
and in writing of any request for information or of any Takeover Proposal,
48
or any inquiry with respect to or which could reasonably be expected to
lead to any Takeover Proposal, the material terms and conditions of such
request, Takeover Proposal or inquiry, and the identity of the Person
making any such Takeover Proposal or inquiry. The Company shall use its best
efforts to keep Parent fully informed of the status and details of any such
request, Takeover Proposal or inquiry.
4.18 Post Merger Restructurings. Parent shall indemnify
the former shareholders of the Company who held Company Common Stock
immediately prior to the Effective Time from, and hold them harmless against,
any federal, state, local and foreign tax liability that they may incur if
Parent or any of its affiliates effects any merger, consolidation,
reorganization, issuance, transfer, assignment, conveyance, disposition or
other transaction with respect to the Surviving Corporation, its capital
stock or its assets after the Effective Time, which, without regard to
Section 367 of the Code, results in the Merger being treated other than as a
tax-free reorganization under the Code.
4.19 Voting of Shares Subject to Proxy. Parent shall
exercise its rights under the Irrevocable Proxy and Termination Rights
Agreement dated the date hereof (the "Proxy") to vote the Shares (as defined
in the Proxy) at any meeting or in connection with any written consent
of the Company's stockholders (i) in favor of the Merger, and (ii) in favor
of this Agreement.
4.20 Parent Shareholder Meeting. Parent shall hold the
annual meeting of its shareholders as soon as practicable after the Effective
Time, but in no event no later than October 30, 1996, at which meeting the
▇▇▇▇▇▇ family shall be entitled under the terms of Parent's Articles of
Association to appoint ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as a director of Parent by virtue of
their holding in excess of 4% of Parent's outstanding share capital as of the
record date of such meeting. The Board of Directors of Parent has adopted a
resolution (a) nominating ▇▇▇▇▇▇ ▇▇▇▇▇▇ for election at such annual meeting
as an Additional Director of Parent for a term of three years, (b)
recommending that upon his election to the Board, ▇▇▇▇▇▇ ▇▇▇▇▇▇ shall be
designated as a member of the Executive Committee of Parent's Board of
Directors and (c) recommending to the Board of Directors as reconstituted
after each of the following two annual meetings of shareholders to continue to
designate ▇▇. ▇▇▇▇▇▇ as a member of the Executive Committee while he continues
to serve on the Board.
4.21 Dispositions Contrary to Pooling. Parent shall not
(A) after the Effective Time make any disposition of the assets of the
Surviving Corporation or any equity interest in the Surviving Corporation
which would prevent the Merger from being recorded as a pooling of interest
transaction under APB 16 or (B) prior to the third anniversary of the
Effective Time, make any disposition of the assets of the Surviving
Corporation or any equity interests in the Surviving Corporation that would
cause any recognition of gain under a gain recognition agreement entered
into with the Internal Revenue Service under Section 367(a) of the Code
49
and Section 1.367(a)-3T of the U.S. Temporary Treasury Income Tax
Regulations by any former shareholder of the Company who is a "five percent
transferee shareholder" (as defined in Section 1.367(a)-3T(c)(6)(ii)),
except a disposition described in Section 1.367(a)-3T(g)(7) as to
which Parent provides the five percent transferee shareholders, on a
timely basis, with notice of the disposition and all information they
require in order to comply with the requirements of subdivision (i) of that
section. Parent shall (i) cause the Company to comply with the reporting
requirements of Section 1.367(a)-3T(c)(4) and (ii) provide the
five-percent transferee shareholders with all information they require in
order to comply with the provisions of paragraphs (5), (6) and (7)(ii) and
(iii) of Section 1.367(a)-3T(g).
If prior to the third anniversary of the Effective Time, the U.S. Treasury
or the Internal Revenue Service has not officially (in a published statement
upon which taxpayers may rely) eliminated the retroactive imposition of
interest charges on tax recognized with respect to shares which were covered
by a gain recognition agreement to the extent sold prior to the date of a
disposition of the type described in clause (B) above or otherwise caused the
gain recognition agreement in respect of shares so sold to become null and
void as to such sold shares, and if prior to such third anniversary, all such
five percent transferee shareholders shall together have diligently sought
to obtain a private letter ruling from the Internal Revenue Service
providing relief from such retroactively imposed interest charges,
permitting Parent's counsel to participate fully in the preparation and
prosecution of such letter ruling, and they shall have failed to obtain
such a ruling, then the three year period described in clause (B) above
shall be extended to the earlier to occur of (x) the fifth anniversary of the
Effective Time or (y) the date on which relief of the type described in this
sentence shall have been obtained.
4.22 Dividend Reinvestment Plan. As soon as practicable
after the date hereof (but in no event later than March 1, 1996), the Company
shall amend the Stockholder Dividend Reinvestment and Stock Purchase Plan to
terminate the supplemental payment investment option offered thereunder.
ARTICLE V
CONDITIONS PRECEDENT TO MERGER
5.01 Conditions Precedent to Obligations of Parent, Sub
and the Company. The respective obligations of Parent and Sub, on the one
hand, and the Company, on the other hand, to effect the Merger are
subject to the satisfaction or waiver (subject to applicable law) at or prior
to the Effective Time of each of the following conditions:
(a) Approval of Stockholders. This Agreement, the Merger
and related transactions shall have been approved and adopted
50
by the requisite vote or consent of the stockholders of the
Company in accordance with applicable law and the Company's
Certificate of Incorporation and By-Laws.
(b) HSR Act. Any waiting period (and any extension
thereof) under the HSR Act applicable to the Merger shall have
expired or been terminated.
(c) Litigation. No preliminary or permanent injunction
or other order shall have been issued by any court or by any
governmental or regulatory agency, body or authority which enjoins,
restrains or prohibits the transactions contemplated hereby,
including the consummation of the Merger or has the effect of
making the Merger illegal and which is in effect at the
Effective Time (each party agreeing to use its best efforts to have
any such injunction or order lifted).
(d) Statutes. No statute, rule, regulation, executive
order, decree or order of any kind shall have been enacted,
entered, promulgated or enforced by any court or governmental
authority which prohibits the consummation of the Merger or has
the effect of making the Merger illegal.
(e) Tel Aviv Stock Exchange Listing. The TASE shall have
granted Parent's application for the listing of the additional
Ordinary Shares to be issued in connection with the Merger.
(f) NASDAQ/NMS Listing. The ADSs issuable to
Company stockholders pursuant to this Agreement shall have been
admitted for trading on the NASDAQ/NMS upon official notice of
issuance.
(g) Effectiveness of Registration Statement. The
Registration Statement shall have become effective in accordance with
the provisions of the Securities Act and shall not be the subject of
any stop order or proceedings seeking a stop order.
(h) Consent of Controller of Foreign Currency. The
Controller of Foreign Currency of the Bank of Israel shall have
consented to the Merger, the issuance of the Ordinary Shares in
connection therewith and the other transactions contemplated by this
Agreement.
(i) Consents. Consents from government bodies and
authorities which are required in order to consummate the Merger
and the other transactions contemplated hereby and the failure to
obtain which would have a material adverse effect on the Condition
of Parent and its subsidiaries taken as a whole after giving
effect to the Merger (including, without limitation, consent
under the Insurance Holding Company Systems law of the State of
Hawaii) shall have been obtained.
51
(j) Tax Opinion. The Company shall have received the
opinion of Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP, counsel to the
Company, and each of Parent and the Company shall have received
the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel to Parent, each
to the effect that the Merger will be treated for United States
federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code, and that the Company, Parent and Sub
will each be a party to that reorganization within the meaning of
Section 368(b) of the Code, dated on or about the date that is two
business days prior to the date the Proxy Statement is first mailed
to stockholders of the Company, which opinion shall have not have
been withdrawn or modified in any material respect.
(k) Market Events. There shall not have occurred and
be continuing any general suspension or limitation of trading in
the Ordinary Shares or the ADSs (exclusive, however, of any
temporary suspension pending and ensuing public announcement) or in
securities generally on the NASDAQ/NMS.
(l) Employment Agreements. Each of the Persons named on
Exhibit B-1 shall have signed an Employment Agreement substantially in
the form of Exhibit B-2 hereto.
5.02 Conditions Precedent to Obligations of Parent and
Sub. The obligations of Parent and Sub to effect the Merger are also subject
to the satisfaction or waiver, at or prior to the Effective Time, of
each of the following conditions.
(a) Accuracy of Representations and Warranties.
All representations and warranties of the Company contained herein
shall be true and correct in all material respects as of the date
hereof and at and as of the Closing, with the same force and effect as
though made on and as of the Closing Date unless the failure of such
representations and warranties to be true and correct in all
material respects does not, individually or in the aggregate,
materially and adversely affect the value of the Company and the
Subsidiaries taken as a whole, and Parent and Sub shall have
received a certificate to this effect from the chief executive
officer and a senior financial officer of the Company.
(b) Performance by Company. Except as otherwise agreed
in writing, the Company shall have performed in all material respects
52
all obligations and agreements, and complied in all material respects
with all covenants and conditions, contained in this Agreement
to be performed or complied with by it on or prior to the Closing
Date, and Parent and Sub shall have received a certificate to this
effect from the chief executive officer and a senior financial
officer of the Company.
(c) Affiliate Agreements. Each Person named in Schedule
4.16 shall have executed and delivered to the Company an Affiliate
Agreement.
(d) Legal Opinion. Parent shall have received an
opinion, dated the Closing Date, of Proskauer ▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇ LLP, substantially to the effect set forth in Exhibit C
hereto.
(e) Accountants' Letters. Parent shall have received from
Ernst & Young the letters referred to in Section 4.08.
(f) Accounting Treatment. Parent shall have received
an opinion in form and substance satisfactory to it from
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ dated the Closing Date, stating that, in its
opinion, there is no fact or circumstance concerning Parent or Sub
which would cause the Merger not to be recorded for accounting
purposes as a pooling of interests under both Israel GAAP and US GAAP.
(g) ISRA. The Company shall have obtained ISRA Clearance.
(h) Israeli Securities Compliance. Parent shall have
received the required permit from the Israeli Securities Authority
to publish the Proxy Statement or shall have obtained an
exemption from the requirement to obtain such a permit.
5.03 Conditions Precedent to Obligation of the Company.
The obligation of the Company to effect the Merger is also subject
to the satisfaction or waiver, at or prior to the Effective Time, of
each of the following conditions.
(a) Accuracy of Representations and Warranties.
All representations and warranties of Parent and Sub contained herein
shall be true and correct in all material respects as of the date
hereof and at and as of the Closing, with the same force and effect as
though made on and as of the Closing Date unless the
failure of such representations and warranties to be true and
correct in all material respects does not, individually or in the
aggregate, materially and adversely affect the value of Parent and
its subsidiaries taken as a whole, and the Company shall have
received a certificate to this effect from the chief executive officer
and chief financial officer of Parent.
(b) Performance by Parent and Sub. Except as otherwise
agreed in writing, each of Parent and Sub shall have performed in all
material respects all obligations and agreements, and complied in
53
all material respects with all covenants and conditions, contained in
this Agreement to be performed or complied with by it on or prior to
the Closing Date, and the Company shall have received a certificate
to this effect from the chief executive officer and chief financial
officer of Parent.
(c) Legal Opinion. The Company shall have received
opinions, dated the Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ and ▇.
▇▇▇▇▇▇▇▇ & Co., substantially to the effect set forth in Exhibit D-1
and Exhibit D-2, respectively, hereto.
(d) Accountants' Letters. The Company shall have received
from ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ the letters referred to in Section 4.09.
(e) Accounting Treatment. The Company shall have received
an opinion in form and substance satisfactory to it from Ernst &
Young dated the Closing Date, stating that, in its opinion, there is
no fact or circumstance concerning the Company or its subsidiaries
which would cause the Merger not to be recorded for accounting
purposes as a pooling of interests under US GAAP.
(f) Affiliate Agreement. Parent shall have executed and
delivered to each Person named in Schedule 4.16 an Affiliate
Agreement.
(g) Undertakings. Parent shall have delivered
undertakings executed by each of its officers and directors to
refrain from effecting sales of Ordinary Shares or ADSs after the
publication of financial statements reflecting the combined
operating results of the Company and Parent for a period of not less
than 30 days from and after the Effective Time.
ARTICLE VI
TERMINATION AND ABANDONMENT
6.01 Termination. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned, at any time prior
to the Effective Time, whether before or after approval of the Merger
by the stockholders of the Company:
(a) by mutual consent of the Company, on the one hand, and
of Parent and Sub, on the other hand;
(b) by either Parent or the Company, if the Effective Time
shall not have occurred by August 31, 1996;
54
(c) by Parent, if the required approval of the
Company's stockholders shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of
stockholders or at any adjournment thereof;
(d) by either Parent or the Company, if there shall be any
law or regulation of any competent authority that makes consummation
of the Merger illegal or otherwise prohibited or if any judgment,
injunction, order or decree of any competent authority prohibiting
such transaction is entered and such judgment, injunction, order or
decree shall have become final and nonappealable;
(e) by either Parent or the Company, if there has been
a material breach of any covenant or a breach of any representation
or warranty on the part of the other, which breach of representation
or warranty individually or, together with all other such
breaches, materially and adversely affects the value of the
breaching party, provided that any such breach of a covenant or
representation or warranty has not been cured within 15 business days
following receipt by the breaching party of notice hereunder of such
breach;
(f) by the Company in accordance with Section 4.17;
provided, however, that such termination under this clause (f)
shall not be effective until the Company has made payment of the
full fee required by Section 7.01(c) hereof;
(g) by Parent, if the Special Meeting is canceled or
is otherwise not held prior to August 15, 1996 except as a result
of a judgment, injunction, order or decree of any competent
authority or events or circumstances beyond the reasonable control
of the Company; or
(h) by Parent, if (i) the Board of Directors of the
Company shall have withdrawn or modified in a manner adverse to
Parent its approval or recommendation to the Company's
stockholders of this Agreement or the Merger or shall have approved
or recommended to the Company's stockholders that they accept
the terms of any Takeover Proposal or shall have resolved to take
any of the foregoing actions or (ii) a Third Party Acquisition shall
have occurred; provided, however, that such termination under this
clause (h) shall not relieve the Company of its fee obligations
under Section 7.01(c) hereof. "Third Party Acquisition" means the
occurrence of any of the following events: (x) the acquisition of the
Company by merger, tender offer or otherwise by any Person other than
Parent, Sub or any affiliate thereof (a "Third Party"); (y) the
acquisition by a Third Party of 20% or more of the total assets of
the Company and its subsidiaries, taken as a whole; or (z) the
acquisition by a Third Party of 20% or more of the outstanding Company
Common Stock.
55
6.02 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 6.01 hereof by Parent or Sub, on the
one hand, or the Company, on the other hand, written notice thereof shall
forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
become void and have no effect, and there shall be no liability hereunder on
the part of Parent, Sub or the Company, except that Sections 3.01(o),
3.02(j), 4.03, this Section 6.02 and Article VII hereof shall survive any
termination of this Agreement. Nothing in this Section 6.02 shall relieve any
party to this Agreement of liability for breach of this Agreement or for
representations which were incorrect when made.
ARTICLE VII
MISCELLANEOUS
7.01 Fees and Expenses. (a) Except as provided below in
this Section 7.01, all fees and expenses incurred in connection with the
Merger, this Agreement and the transactions contemplated by this Agreement
shall be paid by the party (the Company, on the one hand, or Parent and Sub,
on the other hand) incurring such fees or expenses, whether or not the Merger
is consummated.
(b) If this Agreement is terminated by Parent pursuant
to Sections 6.01(c), 6.01(e), 6.01(g) or 6.01(h) or by the Company
pursuant to Section 6.01(f), the Company shall pay, or cause to be paid, in
same day funds to Parent upon demand, all actual out-of-pocket costs and
expenses of Parent and Sub incurred in connection with this Agreement and the
transactions contemplated hereby, including, without limitation, legal,
professional and service fees and expenses. If this Agreement is terminated
by the Company pursuant to Section 6.01(e), Parent shall pay, or cause to be
paid, in same day funds to the Company upon demand, all actual out-of-pocket
costs and expenses of the Company incurred in connection with this Agreement
and the transactions contemplated hereby, including, without limitation,
legal, professional and service fees and expenses.
(c) The Company shall pay, or cause to be paid, in same
day funds to Parent upon demand a fee of $6,000,000 (the "Termination Fee") if:
(i) this Agreement is terminated by the Company pursuant
to Section 6.01(f);
(ii) this Agreement is terminated by Parent pursuant to
Section 6.01(h)(i) or (ii); or
56
(iii) this Agreement is terminated by Parent pursuant
to Sections 6.01(e) and (g) and within 12 months thereafter, the
Company enters into an agreement with respect to a Third Party
Acquisition, or a Third Party Acquisition occurs, involving any
Person (or any affiliate or associate thereof) (x) with whom the
Company (or its agents) had any discussions with respect to a Third
Party Acquisition, (y) to whom the Company (or its agents)
furnished information with respect to or with a view to a Third
Party Acquisition or (z) who had submitted a Takeover Proposal or
expressed any interest publicly or to the Company in a Third Party
Acquisition, in the case of each of clauses (x), (y) and (z) prior
to such termination.
(d) Parent shall pay, or cause to be paid, in same day
funds to the Company upon demand a fee of $6,000,000 if this Agreement is
terminated by the Company pursuant to Section 6.01(e) and within 12 months
thereafter, (i) Parent is acquired by merger, tender offer or otherwise by
any Person, (ii) a Person acquires 20% or more of the total assets of Parent
and its subsidiaries, taken as a whole, (iii) a Person acquires 20% or more
of the outstanding Parent Ordinary Shares, or (iv) Parent enters into an
agreement with respect to a transaction described in (i), (ii) or (iii)
hereof.
7.02 Representations, Warranties and Agreements.
The respective representations and warranties of the Company, on the one
hand, and Parent and Sub, on the other hand, contained herein or in any
certificates or other documents delivered prior to or at the Closing shall not
be deemed waived or otherwise affected by any investigation made by any
party. Each and every such representation and warranty and all agreements
contained herein shall expire with, and be terminated and extinguished by,
the Closing and thereafter none of the Company, Parent or Sub shall be under
any liability whatsoever with respect to any such representation or
warranty or agreement except those contained in Sections 2.02, 2.03, 2.05,
3.01(o), 3.02(c), 3.02(j), 4.03, 4.05, 4.14, 4.15, 4.18, 4.20, 4.21 and
Article VII. This Section 7.02 shall have no effect upon any other obligation
of the parties hereto, whether to be performed before or after the Effective
Time.
7.03 Extension; Waiver. At any time prior to the
Effective Time, the parties hereto, by action taken by or on behalf of the
respective Boards of Directors of the Company, Parent or Sub, may (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations
and warranties contained herein by any other applicable party or in any
document, certificate or writing delivered pursuant hereto by any other
applicable party or (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of any party to any
57
such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
7.04 Public Announcements. The Company, on the one hand,
and Parent and Sub, on the other hand, agree to consult promptly with each
other prior to issuing any press release or otherwise making any public
statement with respect to the transactions contemplated hereby and shall
not issue any such press release or make any such public statement prior to
such consultation and review by the other party of a copy of such release or
statement (the comments of such party to be given reasonable consideration),
unless advised by counsel that such disclosure is required by applicable law
or the rules or regulations of any applicable securities exchange.
7.05 Notices. All notices, requests, demands, waivers
and other communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered in Person or mailed, certified or registered mail with postage
prepaid, or sent by telex, telegram or telecopier, as follows:
if to the Company, to it at:
Biocraft Laboratories, Inc.
▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopier #: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier #: (▇▇▇) ▇▇▇-▇▇▇▇
if to either Parent or Sub, to it at:
Teva Pharmaceutical Industries Limited
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇
Attention: President
Telecopier #: (▇▇▇) ▇-▇▇▇-▇▇▇▇
58
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
One Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier #: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy to:
▇. ▇▇▇▇▇▇▇▇ & Co.
31 Ahad ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Attention: Asgad ▇▇▇▇▇, Esq.
Telecopier #: (▇▇▇) ▇-▇▇▇-▇▇▇▇
or to such other Person or address as any party shall specify by notice
in writing to each of the other parties. All such notices, requests,
demands, waivers and communications shall be deemed to have been received on
the date of delivery unless if mailed, in which case on the third business
day (fifth business day, if mailed outside the country of the recipient)
after the mailing thereof except for a notice of a change of address, which
shall be effective only upon receipt thereof.
7.06 Entire Agreement. This Agreement, the schedules and
the exhibits and other documents referred to herein or delivered pursuant
thereto collectively contain the entire understanding of the parties hereto
with respect to the subject matter contained herein and supersede all prior
agreements and understandings, oral and written, with respect thereto.
7.07 Binding Effect; Benefit; Assignment. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interest or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties. Except as otherwise expressly provided in Section 4.14 hereof,
nothing in this Agreement, expressed or implied, is intended to confer on
any Persons other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
7.08 Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified and supplemented, or provisions
hereof waived, in writing by the parties hereto in any and all respects
before the Effective Time (notwithstanding any stockholder approval), by
59
action taken by the respective Boards of Directors of Parent, Sub and the
Company or by the respective officers authorized by such Boards of Directors,
provided, however, that after any such stockholder approval, no amendment,
modification, supplement or waiver shall be made which by law requires
further approval by such stockholders without such further approval.
7.09 Further Actions. Each of the parties hereto agrees
that, subject to its legal obligations, it will use its best efforts to
fulfill all conditions precedent specified herein, to the extent that such
conditions are within its control, and to do all things reasonably necessary
to consummate the transactions contemplated hereby.
7.10 Headings. The descriptive headings of the
several Articles and Sections of this Agreement are inserted for convenience
only, do not constitute a part of this Agreement and shall not affect in
any way the meaning or interpretation of this Agreement.
7.11 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an original, and all
of which together shall be deemed to be one and the same instrument.
7.12 Applicable Law. This Agreement and the legal
relations between the parties hereto shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of laws rules thereof, except to the extent the matters provided for
herein are required to be governed by the laws of Israel or the General
Corporation Law of the State of Delaware.
7.13 Severability. If any term, provision, covenant
or restriction contained in this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void, unenforceable
or against its regulatory policy, the remainder of the terms, provisions,
covenants and restrictions contained in this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
7.14 "Person" Defined. "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, a group and a government or other department or
agency thereof.
7.15 Submission to Jurisdiction. With respect to any
suit, action or proceeding initiated by a party to this Agreement arising
out of, under or in connection with this Agreement, the Company, Parent and
Sub each hereby submit to the non-exclusive jurisdiction of any state or
federal court sitting in the State of New York and irrevocably waive, to the
fullest extent permitted by law, any objection that they may now have or
hereafter obtain to the laying of venue in any such court in any such suit,
action or proceeding. Parent agrees that, within 14 days of the date of
60
this Agreement, it will appoint and designate CT Corporation System in the
City of New York, New York located at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
or such other Person as may be satisfactory to the Company, as its agent to
receive process in any such suit, action or proceeding and agrees that
service of process on such agent shall be deemed to be in every respect
effective service of process on it in any such suit, action or proceeding
and waives all claim of error by reason of such service.
61
IN WITNESS WHEREOF, each of Parent, Sub and the Company
has caused this Agreement to be executed by their respective officers or
directors thereunto duly authorized, all as of the date first above written.
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
Attest:
By: /s/ Uzi Karniel
Name: Uzi Karniel
Title: Secretary and
In-House Counsel
GENCO MERGER CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
Attest:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Secretary
BIOCRAFT LABORATORIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman of the Board,
President and Chief
Executive Officer
Attest:
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
and Secretary
62
SCHEDULE I
Designated Directors
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
One Additional Teva Designee
63
SCHEDULE II
Designated Officers
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ President and Chief Executive Officer
▇▇▇▇▇▇ ▇▇▇▇▇▇ Senior Vice President
▇▇▇▇▇ ▇▇▇▇▇▇▇ Vice President and Chief
Financial Officer, Treasurer
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Vice President -- Cost Accounting and
Inventory, Secretary
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice President, General Counsel
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice President, Controller
▇▇▇ ▇. ▇▇▇▇▇▇ Vice President - Research & Product
Development
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Vice President -- Quality Management
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Vice President -- Operations
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Vice President -- Sales
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Vice President -- Finance
▇▇▇ ▇▇▇▇▇▇▇▇ Associate Vice President -- Purchasing
▇▇▇▇▇ ▇▇▇▇▇ Associate Vice President -- Sales
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Associate Vice President -- Regulatory
Affairs
▇▇▇▇▇▇ ▇▇▇▇▇▇ Associate Vice President -- Missouri
Operations
64
INDEX OF DEFINED TERMS
Page
ADRs..........................................................................................................1
ADSs..........................................................................................................1
Affiliate.....................................................................................................24
Affiliate Agreement...........................................................................................42
Agreement.....................................................................................................1
ANADAs........................................................................................................13
ANDAs.........................................................................................................13
Antitrust Division............................................................................................40
Certificate of Merger.........................................................................................2
Closing.......................................................................................................6
Closing Date..................................................................................................7
Code..........................................................................................................1
Commission....................................................................................................10
Common Stock Trust............................................................................................6
Company.......................................................................................................1
Company Commission Filings....................................................................................12
Company Common Stock..........................................................................................1
Condition.....................................................................................................8
Current Benefits..............................................................................................38
DEP...........................................................................................................11
Depositary....................................................................................................4
DGCL..........................................................................................................2
DMFs..........................................................................................................15
Effective Time................................................................................................2
Employee Benefit Plans........................................................................................19
Environmental Claim...........................................................................................17
Environmental Laws............................................................................................17
Environmental Permits.........................................................................................18
ERISA.........................................................................................................19
ERISA Affiliate...............................................................................................19
Excess ADSs...................................................................................................6
Exchange Act..................................................................................................12
Exchange Agent................................................................................................4
Exchange Ratio................................................................................................3
F-6 Registration Statement....................................................................................10
FTC...........................................................................................................40
Governmental Entity...........................................................................................11
Hazardous Materials...........................................................................................18
HSR Act.......................................................................................................10
INADs.........................................................................................................13
Indemnified Parties...........................................................................................41
INDs..........................................................................................................13
ISRA..........................................................................................................11
ISRA Clearance................................................................................................11
Israel GAAP...................................................................................................29
Material Adverse Effect.......................................................................................15
Merger........................................................................................................1
Merger Consideration..........................................................................................3
Multiemployer Plan............................................................................................19
NADAs.........................................................................................................13
65
Page
NASDAQ/NMS....................................................................................................6
NDAs..........................................................................................................13
Notice of Superior Proposal...................................................................................43
Ordinary Shares...............................................................................................1
Parent........................................................................................................1
Parent Commission Filings.....................................................................................29
PBGC..........................................................................................................20
Pension Plans.................................................................................................19
Person........................................................................................................55
Pharmaceutical Products.......................................................................................13
Preferred Stock...............................................................................................9
Proxy Statement...............................................................................................10
Registration Statement........................................................................................10
Securities Act................................................................................................24
Special Meeting...............................................................................................39
Stock Option Plans............................................................................................7
Sub...........................................................................................................1
Subsidiaries..................................................................................................10
Superior Proposal.............................................................................................43
Surviving Corporation.........................................................................................2
Takeover Proposal.............................................................................................43
TASE..........................................................................................................37
Termination Fee...............................................................................................51
Third Party...................................................................................................50
Third Party Acquisition.......................................................................................50
US GAAP.......................................................................................................1
66
EXHIBIT A
AFFILIATE AGREEMENT
THIS AGREEMENT, dated as of ___________, 1996 (the
"Agreement"), between Teva Pharmaceutical Industries Limited, a corporation
organized under the laws of the State of Israel (the "Company"), and the
undersigned stockholder (the "Affiliate") of Biocraft Laboratories, Inc., a
Delaware corporation ("Biocraft").
W I T N E S S E T H:
WHEREAS, in order to induce the Company to consummate that
certain Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), by and among the Company, Genco Merger Corporation, a Delaware
corporation and a wholly owned subsidiary of the Company, and Biocraft, and in
consideration of the agreements contained herein and in the Merger Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Act" shall mean the Securities Act of 1933, as amended.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Person" shall mean an individual or a corporation,
partnership or trust or any other entity or organization.
"Transfer" shall mean to transfer, sell, assign, pledge,
hypothecate, convey or otherwise dispose of.
2. Rule 145. The Affiliate shall hold the Ordinary Shares
(as such term is defined in the Merger Agreement, and, for purposes of
this Agreement, such term shall include the American Depositary Shares
("ADSs") representing such Ordinary Shares) that he or she receives
pursuant to the Merger Agreement subject to all applicable provisions of the
Act and the rules and regulations promulgated by the Commission thereunder
and shall not make an illegal "distribution" (within the meaning of the Act
and Rule 145 promulgated thereunder) of such Ordinary Shares. Without
limiting the generality of the foregoing, the Affiliate:
(a) shall not sell any Ordinary Shares until after
the publication of financial statements reflecting the combined
operating results of the Company and Biocraft for a period of not
less than 30 days from and after the Effective Time (as such term is
defined in the Merger Agreement);
(b) shall not effect a proposed disposition of any
Ordinary Shares unless (i) the transfer is being made in accordance
with the provisions of Rule 145 (as it may be amended from time to
time) and such Affiliate shall have delivered written notice to
the Company substantially in the forms annexed hereto and made a
part hereof as Annex A and Annex B, respectively (subject to any
applicable amendments to Rule 145), (ii) the Company shall have
been furnished with an opinion of counsel, in form and substance
reasonably satisfactory to the Company's counsel, that registration
under the Act is not required in respect of such disposition or
(iii) a registration statement covering the shares proposed to
be distributed and the proposed distribution thereof has been
filed by the Company with the Commission and has become effective
under the Act; and
(c) shall consent to the imposition of a legend on
the American Depositary Receipts ("ADRs") evidencing the ADSs
to be received by such Affiliate in connection with the merger
contemplated by the Merger Agreement to the effect that such ADSs
may not be sold except in compliance with the Act.
3. Successors and Assigns; Assignment. This Agreement
shall inure to the benefit of and be binding upon the parties and their
respective heirs, personal representatives, successors and permitted
assigns. Except as otherwise herein provided, no party shall assign such
party's rights or obligations hereunder without the other party's prior
written consent.
4. Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered in
person or mailed, certified or registered mail with postage prepaid, or
sent by telex, telegram or telecopier, as follows:
67
If to the Company:
Teva Pharmaceutical Industries Limited ▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇
Attention: President Telecopier #: (972)
▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ One Citicorp
Center ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier #: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Affiliate:
c/o Biocraft Laboratories, Inc. ▇▇-▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier #: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier #: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as any party shall specify by notice
in writing to each of the other parties. All such notices, requests,
demands, waivers and communications shall be deemed to have been received on
the date of delivery unless if mailed, in which case on the third business
day (fifth business day, if mailed outside the country of the recipient)
after the mailing thereof except for a notice of a change of address, which
shall be effective only upon receipt thereof.
5. Injunctive Relief; Remedies Cumulative. (a) The Company,
on the one hand, and the Affiliate, on the other hand, acknowledge that the
other party will be irreparably harmed and that there will be no adequate
remedy at law for a violation of any of the covenants or agreements of such
party that are contained in this Agreement. It is accordingly agreed that, in
addition to any other remedies that may be available to the non-breaching
68
party upon the breach by any other party of such covenants and agreements, the
non-breaching party shall have the right to obtain injunctive relief to
restrain any breach or threatened breach of such covenants or agreements
or otherwise to obtain specific performance of any of such covenants or
agreements.
(b) No remedy conferred upon or reserved to any party
herein is intended to be exclusive of any other remedy, and every remedy
shall be cumulative and in addition to every other remedy herein or now or
hereafter existing at law, in equity or by statute.
6. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to the principles of conflicts of laws thereof.
7. Counterparts. This Agreement may be executed in two
or more counterparts, all of which together shall constitute a single
agreement.
8. Effect of Partial Invalidity. Whenever possible, each
provision of this Agreement shall be construed in such a manner as to
be effective and valid under applicable law. If any provision of this
Agreement or the application thereof to any party or circumstance shall be
prohibited by or invalid under applicable law, such provisions shall be
ineffective to the extent of such prohibition without invalidating the
remainder of such provision or any other provisions of this Agreement or the
application of such provision to the other party or other circumstances.
69
IN WITNESS WHEREOF, this Agreement has been executed by
the parties as of the date first above written.
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
By:________________________________
Name:
Title:
AFFILIATE:
___________________________________
___________________________________
[Please Print Name]
70
ANNEX A
Teva Pharmaceutical Industries Limited
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇
Attention: President
Ladies and Gentlemen:
I propose to sell ______ American Depositary Shares ("ADSs")
representing Ordinary Shares of Tiger (the "Company") that I received in
connection with the business combination of the Company with Biocraft. I propose
to effect such sale through _____________, my broker, in accordance with the
requirements relating to sales by "affiliates" under Rule 145 under the
Securities Act of 1933, as amended.
To induce you to remove the restrictive legend from the
American Depositary Receipts ("ADRs") evidencing such ADSs, I hereby represent
and warrant as follows:
1. It is my bona fide intention to sell the ADSs within 90
days from the date hereof. If for some reason all of the ADSs have not been sold
within such 90 day period, I will send to the Company the ADR evidencing the
balance of the ADSs which were not sold in order that a restrictive legend may
be placed thereon. The ADSs are presently evidenced by ADR No.(s) ____ which
ADR(s) represent(s) an aggregate of _____ ADSs. I understand that to the extent
such certificate(s) represents a greater number of ADSs than those proposed to
be sold, a new ADR for the balance of such shares will be sent to me with the
same restrictive legend as is presently affixed to my certificate(s).
2. As of the date of this letter and as of the time of any
sale of the ADSs for my account, the aggregate number of ADSs and Ordinary
Shares sold during the preceding three months for my account and for the account
of any person whose sales are required by Rule 144 under the Securities Act of
1933, as amended, to be aggregated with my sales have not and will not exceed
the greater of: (a) 1% of the outstanding Ordinary Shares of the Company, or (b)
the average weekly reported volume of trading in the Company's Ordinary Shares
or ADSson all securities exchanges during the four calendar weeks preceding the
date of sale of such ADSs.
3. During the past three months I have not and during the next
three months I will not, alone or in conjunction with others, sell any ADSs or
Ordinary Shares under circumstances which will jeopardize the exemption from
registration available under Rule 145 and Rule 144.
4. I have not solicited or arranged for the solicitation of,
and I will not solicit or arrange for the solicitation of, orders to buy the
ADSs in anticipation of or in connection with such proposed sale.
5. I have not made, and will not make, any payment in
connection with the offering or sale of the ADSs to any person other than the
payment of the usual and customary broker's commission to ____________.
Very truly yours,
71
ANNEX B
Teva Pharmaceutical Industries Limited
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇
Attention: President
Ladies and Gentlemen:
We have been asked to sell _______ American Depositary Shares
("ADSs") representing Ordinary Shares of Tiger (the "Company") owned by
__________ ("Seller"). We understand that the Seller is an "affiliate" within
the meaning of Rule 145 promulgated under the Securities Act of 1933, as
amended, and that sales by him or her of the Company's ADSs must comply with
certain provisions of Rule 144 under such Act.
To induce you to remove the restrictive legend from the ADR
evidencing such ADSs so that they may be transferred pursuant to Rules 144 and
145, we hereby represent and warrant as follows:
1. We have made reasonable inquiry as required by paragraph
(g)(3) of Rule 144 and, based upon such inquiry, we are not aware of
circumstances indicating that the Seller is an underwriter with respect to the
ADSs or that the transaction is part of a distribution of the ADSs.
2. The ADSs for which we are acting as broker will be sold
by us in "brokers' transactions" as defined in paragraph (g) of Rule 144.
3. Neither the Seller nor we have solicited or arranged nor
will we solicit or arrange for the solicitation of orders to buy the ADSs
(except as permited by Rule 144) nor have we received nor will we receive any
payment in connection with the sale of the ADSs other than usual and customary
brokerage commissions.
Very truly yours,
72
Exhibit A-1
AFFILIATE AGREEMENT
THIS AGREEMENT, dated as of ___________, 1996
(the "Agreement"), between Teva Pharmaceutical Industries Limited, a
corporation organized under the laws of the State of Israel (the
"Company"), and the undersigned stockholders (the "Affiliates" and each an
"Affiliate") of Biocraft Laboratories, Inc., a Delaware corporation
("Biocraft").
W I T N E S S E T H:
WHEREAS, in order to induce the Company to consummate that
certain Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"), by and among the Company, Genco Merger Corporation, a
Delaware corporation and a wholly owned subsidiary of the Company, and
Biocraft, and in consideration of the agreements contained herein and in the
Merger Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Act" shall mean the Securities Act of 1933, as amended.
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Act.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Holder" shall mean any holder of Registrable Securities.
"Initiating Holder" shall mean any Holder or Holders who in
the aggregate are Holders of more than 50% of the then outstanding Registrable
Securities.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
73
"Person" shall mean an individual or a corporation,
partnership or trust or any other entity or organization.
"register," "registered" and "registration" shall refer to
a registration effected by preparing and filing a registration statement
in compliance with the Act (and any post-effective amendments filed or
required to be filed) and the declaration or ordering of effectiveness of such
registration statement.
"Registrable Securities" shall mean (A) ADSs representing
Ordinary Shares issued to the Affiliates pursuant to the Merger Agreement (or,
if the Company elects to cause its Ordinary Shares to be directly traded in
the United States, the Ordinary Shares underlying such ADSs) and (B) any
capital stock of the Company or any successor entity issued as a dividend
or other distribution with respect to, or in exchange for or in replacement
of, the ADSs representing Ordinary Shares referred to in clause (A) above.
"Registration Expenses" shall mean all expenses incurred
by the Company in compliance with Sections 3(a) and (b) hereof, including,
without limitation, all registration and filing fees, printing expenses,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
any NASD filing fees, the expense of any special audits incident to or
required by any such registration and any other out-of pocket expenses
incurred by the Company in connection with the registration or offering of
the Registrable Securities (including, without limitation, so called "road
show" expenses, but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company).
"Selling Expenses" shall mean all underwriting discounts
and selling commissions applicable to the sale of Registrable Securities
and all fees and disbursements of counsel for each of the Holders.
2. Rule 145. Each Affiliate shall hold the Ordinary Shares
(as such term is defined in the Merger Agreement, and, for purposes of
this Agreement, such term shall include the American Depositary Shares
("ADSs") representing such Ordinary Shares) that he or she receives
pursuant to the Merger Agreement subject to all applicable provisions of the
Act and the rules and regulations promulgated by the Commission thereunder
and shall not make an illegal "distribution" (within the meaning of the Act
and Rule 145 promulgated thereunder) of such Ordinary Shares. Without
limiting the generality of the foregoing, an Affiliate:
(a) shall not sell any Ordinary Shares until after the
publication of financial statements reflecting the combined
operating results of the Company and Biocraft for a period of not
74
less than 30 days from and after the Effective Time (as such term is
defined in the Merger Agreement);
(b) shall not effect a proposed disposition of any Ordinary
Shares unless (i) the transfer is being made in accordance with the
provisions of Rule 145 (as it may be amended from time to time)
and such Affiliate shall have delivered written notice to the
Company substantially in the forms annexed hereto and made a part
hereof as Annex A and Annex B, respectively, (subject to applicable
amendments to Rule 145) (ii) the Company shall have been furnished
with an opinion of counsel, in form and substance reasonably
satisfactory to the Company's counsel, that registration under the
Act is not required in respect of such disposition or (iii) a
registration statement covering the shares proposed to be distributed
and the proposed distribution thereof has been filed by the Company
with the Commission and has become effective under the Act; and
(c) shall consent to the imposition of a legend on
the American Depositary Receipts ("ADRs") evidencing the ADSs to
be received by such Affiliate in connection with the merger
contemplated by the Merger Agreement to the effect that such ADSs
may not be sold except in compliance with the Act.
3. Registration Rights.
(a) Requested Registration. (i) Request for Registration.
If the Company shall receive from an Initiating Holder, at any time, a written
request that the Company effect any registration with respect to all or a part
of the Registrable Securities, the Company will:
(A) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders
of Registrable Securities; and
(B) promptly, use its diligent best efforts to effect
such registration (including, without limitation, the execution
of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations
issued under the Act and such laws) as may be so requested and as
would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such
request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are
specified in a written request received by the Company within 10
business days after written notice from the Company is given under
75
Section 3(a)(i)(A) above, in such jurisdictions as the
participating Holders may reasonably request in light of their
intended plan of distribution; provided, that the declaration or
ordering of effectiveness of such registration shall not occur prior
to the publication of the financial statements referred to in Section
2(a) above; and provided further that the Company shall not be
obligated to effect, or take any action to effect, any such
registration pursuant to this Section 3(a):
(w) In any particular jurisdiction in which the
Company would be required to execute a general consent to
service of process in effecting such registration,
qualification or compliance, unless the Company is already
subject to service in such jurisdiction and except as may be
required by the Act or applicable rules or regulations
thereunder;
(x) After the Company has effected three (3)
such registrations pursuant to this 3(a) and such
registrations have been declared or ordered effective and
the sales of such Registrable Securities shall have closed;
(y) Within 180 days of the effective date of the
most recent registration pursuant to this Section 3 in
which securities held by the Requesting Holder could have
been included for sale or distribution; or
(z) If the Registrable Securities requested by
all Holders to be registered pursuant to such request
represent less than 1,000,000 ADSs or, if applicable,
10,000,000 Ordinary Shares.
The registration statement filed pursuant to the request
of the Initiating Holders may, subject to the provisions of Section 3(a)(ii)
below, include other securities of the Company which are either newly issued or
held by other Persons owning Ordinary Shares or ADSs, but the Company
shall have no absolute right to include any of its securities in any such
registration.
The registration rights set forth in this Section 3 shall
be assignable, in whole or in part, to any transferee of Registrable
Securities (who shall be bound by all obligations of this Section 3).
(ii) Underwriting. If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of
an underwriting, they shall so advise the Company as a part of their request
76
made pursuant to Section 3(a). Such request shall identify the
underwriter or underwriters who the Initiating Holders would seek to have
as the managing underwriter(s) of such offering, provided that no
underwriter shall be designated to manage such offering who shall not be
acceptable to the Company (such consent not to be withheld unreasonably).
If holders of securities of the Company other than
Registrable Securities who are entitled by contract with the Company to
have securities included in such a registration (the "Other
Stockholders") request such inclusion, the Holders shall offer to include
the securities of such Other Stockholders in the underwriting and may
condition such offer on their acceptance of the further applicable
provisions of this Section 3. The Holders whose shares are to be included in
such registration and the Company shall (together with all Other
Stockholders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement consistent with the terms
of this Agreement in customary form with the representative of the
underwriter or underwriters selected for such underwriting, provided that if
the offering covered by such underwriting does not include any shares sold
for the account of the Company, the obligation of the Company to
provide any indemnification or contribution under such underwriting
agreement shall be limited to the extent then permitted under Israeli law.
Notwithstanding any other provision of this Section 3(a), if the
representative advises the Holders in writing that marketing factors require
a limitation on the number of shares to be underwritten, the securities held
by Other Stockholders shall be excluded from such registration to the extent
so required by such limitation. If, after the exclusion of such shares,
further reductions are still required, the number of shares included in the
registration by each Holder shall be reduced on a pro rata basis (based on the
number of shares held by such Holder) or on such other basis as the Holders may
agree, by such minimum number of shares as is necessary to comply with such
request. No Registrable Securities or any other securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. If any Other Stockholder who has requested
inclusion in such registration as provided above disapproves of the terms of
the underwriting, such Person may elect to withdraw therefrom by written
notice to the Company, the underwriter and the Initiating Holders. The
securities so withdrawn shall also be withdrawn from registration. If
77
the underwriter has not limited the number of Registrable Securities or
other securities to be underwritten, the Company may include its securities
for its own account in such registration if the representative so agrees
and if the number of Registrable Securities and other securities which would
otherwise have been included in such registration and underwriting will not
thereby be limited.
In the case of a registration on Form F-3 or other applicable
short-form, the Company shall provide such information with respect to
the Company, its operations and its financial condition as may be
reasonably requested by the underwriters. The Company shall also
cooperate with the underwriters and the Holders in the marketing of any
underwritten offering, including, without limitation, participation in "road
shows."
(iii) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting the filing of a registration statement pursuant
to Section 3(a)(i), a certificate signed by the Chief Executive Officer of
the Company stating that in the good faith judgment of the Board of Directors
of the Company, such filing would materially and adversely interfere with any
material financing, acquisition, corporate reorganization or other material
corporate transaction involving the Company that is pending or imminent at
the time and described in such certificate, then the Company shall have the
right to defer such filing for a period of not more than 120 days after
receipt of the request of the Initiating Holders; provided, however, that
the Company shall use all reasonable efforts to minimize the period of such
deferral and may not utilize this right more than once in any twelve (12) month
period.
(b) Company Registration. (i) Company Determination. If
the Company shall determine to register any of its equity securities either for
its own account or for the account of a security holder or holders exercising
their respective demand registration rights, other than a registration relating
solely to employee benefit plans, or a registration relating solely to a
Commission Rule 145 transaction in which no stockholders who were not
affiliates of a party to the Rule 145 transaction are included, or a
registration on any registration form which does not permit secondary sales or
does not include substantially the same information (other than with respect to
selling shareholders and their plan of distribution) as would be required to be
included in a registration statement covering the sale of Registrable
Securities, the Company will:
(A) promptly give to each of the Holders a written notice
thereof (which shall include a list of the jurisdictions in which
the Company intends to attempt to qualify such securities under
the applicable blue sky or other state securities laws); and
(B) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
78
underwriting involved therein, all the Registrable Securities
specified in a written request or requests, made by the Holders
within fifteen (15) days after receipt of the written notice
from the Company described in clause (i) above, except as set forth
in Section 3(b)(ii) below. Such written request may specify all or a
part of the Holders' Registrable Securities.
(ii) Underwriting. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise each of the Holders as a part of
the written notice given pursuant to Section 3(b)(i)(A). In such event, the
right of each of the Holders to registration pursuant to this Section 3(b)
shall be conditioned upon such Holders' participation in such underwriting
and the inclusion of such Holders' Registrable Securities in the
underwriting to the extent provided herein. The Holders whose shares are to
be included in such registration shall (together with the Company and the
Other Stockholders distributing their securities through such
underwriting) enter into an underwriting agreement consistent with the terms
of this Agreement and otherwise in customary form with the representative of
the underwriter or underwriters selected for underwriting by the Company.
Notwithstanding any other provision of this Section 3(b), if the representative
determines that marketing factors require a limitation on the number of
shares to be underwritten, the representative may (subject to the
allocation priority set forth below) limit the number of Registrable Securities
to be included in the registration and underwriting to the extent so required
by such limitation. The Company shall so advise all holders of
securities requesting registration, and the number of shares of
securities that are entitled to be included in the registration and
underwriting shall be allocated in the following manner: (A) If the
registration was initiated by the Company: The securities of the Company held
by stockholders of the Company (other than Registrable Securities and other
than securities held by Other Stockholders) shall be excluded from such
registration and underwriting to the extent required by such limitation, and,
if a limitation on the number of shares is still required, the number of
shares that may be included in the registration and underwriting by each of
the Holders and Other Stockholders shall be reduced, on a pro rata basis
(based on the number of shares held by such Holder or such Other
Stockholder), by such minimum number of shares as is necessary to comply with
such limitation; and (B) If the registration was initiated by a holder or
holders who by contractual right demanded such registration ("Demanding
Holders"): The securities of the Company held by stockholders of the Company
(other than Registrable Securities and other than securities held by Other
79
Stockholders or Demanding Holders) shall be excluded from such registration
and underwriting to the extent required by such limitation, and, if a
limitation on the number of shares is still required, the number of
shares that may be included in the registration and underwriting by each of
the Holders and Other Stockholders (other than Demanding Holders) shall be
reduced, on a pro rata basis (based on the number of shares held by such
Holder or such Other Stockholder), by such minimum number of shares as is
necessary to comply with such limitation; provided, however, that in no
event, under either of clauses (A) or (B) above, shall the number of shares of
the Holders included in such underwriting be less than 10% of the total
number of securities included in such offering without the prior consent of the
Holders. If any of the Holders or any Other Stockholder disapproves of the
terms of any such underwriting, he or she may elect to withdraw therefrom
by written notice to the Company and the underwriter. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
(iii) Number and Transferability. Each of the Holders shall
be entitled to have its shares included in three (3) registrations pursuant to
this Section 3(b). The registration rights granted pursuant to this
Section 3(b) shall be assignable, in whole or in part, to any transferee of
Registrable Securities (who shall be bound by all obligations of this Section
3).
(c) Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Section 3 shall be borne by the Company, to the fullest
extent permitted under Israeli law. Any Registration Expenses that the
Company is not permitted to bear under Israeli law and all Selling Expenses
shall be borne by the Holders of the securities being registered and, if
applicable, the Company, pro rata on the basis of the number of their shares
so registered.
(d) Registration Procedures. In the case of each
registration effected by the Company pursuant to Section 3, the Company will
keep the Holders, as applicable, advised in writing as to the initiation of
each registration and as to the completion thereof. The Company will:
(i) notify the Holders and such other Persons as the
Holders designate (A) when the registration statement becomes
effective, (B) when any post-effective amendment to the registration
statement becomes effective and (C) of any request by the Commission
for any amendment or supplement to the registration statement or any
80
prospectus relating to the registration statement or for additional
information;
(ii) notify each seller of Registrable Securities covered
by such registration statement and each underwriter, if any, at any
time when a prospectus relating thereto is required to be delivered
under the Act, upon discovery that, or upon the happening of any
event as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading, and at the request of any such seller,
promptly prepare and file with the Commission and furnish to such
seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(iii) make available for inspection by any underwriters
participating in any planned distribution of Registrable Securities
and any attorney, accountant or other agent retained by the Holders
or the underwriters, all financial and other records reasonably
necessary to permit them to demonstrate that they have conducted
reasonable investigation of matters described in the registration
statement and cause the appropriate Company officers to supply all
such information reasonably requested by the Holders, the underwriters
or their agents;
(iv) keep such registration effective for a period of
ninety (90) days or until the Holders, as applicable, have
completed the distribution described in the registration statement
relating thereto, whichever first occurs; provided, however, that (A)
such 90-day period shall be extended for a period of time equal to the
period during which the Holders, as applicable, refrain from
selling any securities included in such registration in accordance
with provisions in Section 3(g) hereof; and (B) in the case of any
registration of Registrable Securities on Form F-3 or any successor
form which are intended to be offered on a continuous or delayed
basis, such 90-day period shall be extended until all such
Registrable Securities are sold, provided that Rule 415, or any
successor rule under the Act, permits an offering on a continuous or
delayed basis, and provided further that applicable rules under the
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Act governing the obligation to file a post-effective amendment
permit, in lieu of filing a post-effective amendment which (y)
includes any prospectus required by Section 10(a) of the Act or (z)
reflects facts or events representing a material or fundamental
change in the information set forth in the registration
statement, the incorporation by reference of information required
to be included in (y) and (z) above to be contained in periodic
reports filed pursuant to Section 13 or 15(d) of the Exchange Act in
the registration statement. If at any time, the Commission
institutes or threatens to institute any proceedings for the purpose
of issuing a stop order suspending the effectiveness of any such
registration statement, the Company shall promptly notify the
Holders and use all reasonable efforts to prevent the issuance of any
such stop order or to obtain its withdrawal as soon as possible. The
Company shall promptly advise the Holders of any order or
communication of any public board or body addressed to the Company
suspending or threatening to suspend the qualification of any of
the Registrable Securities for sale in any jurisdiction;
(v) furnish such number of prospectuses and other
documents incident thereto as each of the Holders, as applicable, from
time to time may reasonably request;
(vi) furnish to each Holder and to each underwriter, if any,
a signed counterpart, addressed to such Holder or underwriter, of (A)
an opinion or opinions of counsel to the Company and (B) a comfort
letter or comfort letters from the Company's independent public
accountants, each in customary form and covering such matters
of the type customarily covered by opinions or comfort letters, as
the case may be, as a majority of the Holders of Registrable
Securities included in such offering or the managing underwriter
therefor reasonably request;
(vii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
available to its securityholders, as soon as reasonably practicable,
an earnings statement covering a period of 12 months, beginning within
three months after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section 11(a)
of the Act;
(viii) list (A) all Registrable Securities covered by such
registration statement on any securities exchange on which similar
securities issued by the Company are then listed or (B) in the
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event such securities are not so listed, use its best efforts to
have such Registrable Securities qualified for inclusion on such
exchange or automated quotation system as the Company shall determine;
and
(ix) in addition to, and not in limitation of, its obligations
under Section 3(a)(ii), the Company shall, to the extent permitted
by Israeli law, indemnify each Holder who participates in an
underwriting pursuant to Section 3 hereof from and against any
and all loss, liability, claim, damage and expense (including
reasonable attorneys' fees, all reasonable expenses incurred in
investigating, preparing or defending against any litigation,
commenced or threatened, and amounts paid in settlement) as and when
incurred arising out of, based upon, or in connection with any untrue
statement or alleged untrue statement of a material fact, or any
omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, contained in any registration statement or
prospectus, or any amendment or supplement thereto, prepared
pursuant to this Section 3, or in any document or filing prepared
or made in connection therewith, except for information provided
in writing by a Holder expressly for inclusion therein.
(e) Information by the Holders. Each of the Holders and
each Other Stockholder holding securities included in any registration, shall
furnish to the Company such information regarding such Holder or Other
Stockholder and the distribution proposed by such Holder or Other Stockholder
as the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Section 3.
(f) Rule 144 Reporting. With a view to making available
the benefits of certain rules and regulations of the Commission which may
permit the sale of restricted securities to the public without registration,
the Company agrees to:
(i) make and keep public information available as those
terms are understood and defined in Rule 144;
(ii) use its best efforts to file with the Commission in
a timely manner all reports and other documents required of the
Company under the Act and the Exchange Act so long as it remains
subject to such reporting requirements; and
83
(iii) so long as the Holder owns any Registrable Securities,
furnish to the Holder upon request, a written statement by the
Company as to its compliance with the reporting requirements of Rule
144 and of the Act and the Exchange Act (so long as it remains
subject to such reporting requirements), a copy of the most recent
annual report of the Company, and such other reports and documents
so filed as the Holder may reasonably request in availing itself of
any rule or regulation of the Commission allowing the Holder to sell
any such securities without registration.
(g) "Market Stand-off" Agreement. (i) Each of the Holders
agrees, if requested by the Company and an underwriter of ADSs (or other
securities) of the Company, not to sell or otherwise transfer or dispose of
any ADSs (or Ordinary Shares underlying ADSs) of the Company held by such
Holder during the 90-day period following the effective date of a
registration statement of the Company filed under the Act, provided that
all other stockholders of the Company having registration rights, the
Company and each officer or director of the Company enter into the same
agreement. If requested by the underwriters, the Holders shall execute a
separate agreement to the foregoing effect. The Company may impose
stop-transfer instructions with respect to the ADSs (or Ordinary Shares)
subject to the foregoing restriction until the end of said 90-day period. The
provisions of this Section 3(g) shall be binding upon any transferee who
acquires Registrable Securities other than pursuant to a public offering or
pursuant to sales under Rules 144 or 145 under the Act, whether or not such
transferee is entitled to the registration rights provided hereunder.
(ii) The Company agrees, if requested by the Holders and the
underwriters, not to offer, sell, contract to sell or otherwise dispose of,
any ADSs (or Ordinary Shares underlying ADSs) (other than pursuant to employee
stock option or stock incentive plans or dividend reinvestment plans or
upon the conversion of then outstanding convertible or exchange of
exchangeable securities) during the 90-day period following the effective
date of a registration statement filed under the Act pursuant to a request by
such Holders under Section 3(a) hereof.
(h) Termination. The registration rights set forth in
this Section 3 shall not be available to any Holder if, in the opinion of
counsel to the Company addressed to such Holder and reasonably satisfactory to
counsel for such Holder, all of the Registrable Securities then owned by
such Holder, together with all of the ADSs or Ordinary Shares then owned by
a Holder whose sales are required under Rule 144 under the Act to be
aggregated with sales of such Holder, could be sold in any 90-day period
pursuant to Rule 144 under the Act (without giving effect to the provisions of
Rule 144(k)).
84
(i) Outstanding Registration Rights. The Company represents
and warrants to the Affiliates that as of the date hereof there are no
Persons (other than the Affiliates) having the right to require the Company
either to register any Ordinary Shares, or ADSs representing such Ordinary
Shares, held by such Person under the Act or to include any such shares held
by such Person in any registration of the Company of its equity securities.
During the period between the date hereof and the fifth anniversary of the
date hereof, the Company shall provide the Affiliates prompt notice of the
grant by the Company of any such registration rights to any Person.
4. Successors and Assigns; Assignment. This Agreement
shall inure to the benefit of and be binding upon the parties and their
respective heirs, personal representatives, successors and permitted
assigns. Except as otherwise herein provided, no party shall assign such
party's rights or obligations hereunder without the other party's prior
written consent.
5. Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if delivered in
person or mailed, certified or registered mail with postage prepaid, or
sent by telex, telegram or telecopier, as follows:
If to the Company:
Teva Pharmaceutical Industries Limited ▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇
Attention: President Telecopier #: (972)
▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ One Citicorp
Center ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier #: (▇▇▇) ▇▇▇-▇▇▇▇
85
If to the Affiliate:
c/o Biocraft Laboratories, Inc. ▇▇-▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier #: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier #: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as any party shall specify by notice
in writing to each of the other parties. All such notices, requests,
demands, waivers and communications shall be deemed to have been received on
the date of delivery unless if mailed, in which case on the third business
day (fifth business day, if mailed outside the country of the recipient) after
the mailing thereof except for a notice of a change of address, which shall
be effective only upon receipt thereof.
6. Injunctive Relief; Remedies Cumulative. (a) The Company,
on the one hand, and Affiliates, on the other hand, acknowledge that the
other party will be irreparably harmed and that there will be no adequate
remedy at law for a violation of any of the covenants or agreements of such
party that are contained in this Agreement. It is accordingly agreed that, in
addition to any other remedies that may be available to the non-breaching party
upon the breach by any other party of such covenants and agreements, the
non-breaching party shall have the right to obtain injunctive relief to
restrain any breach or threatened breach of such covenants or agreements
or otherwise to obtain specific performance of any of such covenants or
agreements.
(b) No remedy conferred upon or reserved to any party
herein is intended to be exclusive of any other remedy, and every remedy
shall be cumulative and in addition to every other remedy herein or now or
hereafter existing at law, in equity or by statute.
7. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to the principles of conflicts of laws thereof.
8. Counterparts. This Agreement may be executed in two
or more counterparts, all of which together shall constitute a single
agreement.
86
9. Effect of Partial Invalidity. Whenever possible, each
provision of this Agreement shall be construed in such a manner as to
be effective and valid under applicable law. If any provision of this
Agreement or the application thereof to any party or circumstance shall be
prohibited by or invalid under applicable law, such provisions shall be
ineffective to the extent of such prohibition without invalidating the
remainder of such provision or any other provisions of this Agreement or the
application of such provision to the other party or other circumstances.
87
IN WITNESS WHEREOF, this Agreement has been executed by
the parties as of the date first above written.
TEVA PHARMACEUTICAL AFFILIATES:
INDUSTRIES LIMITED
By:_______________________ ______________________________
Name: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
______________________________
▇▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
TRUST UNDER AGREEMENT DATED TRUST UNDER AGREEMENT DATED
FEBRUARY 14, 1995 BETWEEN FEBRUARY 14, 1995 BETWEEN
▇▇▇▇▇▇ ▇▇▇▇▇▇, AS SETTLOR, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, AS SETTLOR,
AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇▇ AND ▇▇▇ ▇. ▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇ AND ▇▇▇ ▇. ▇▇▇▇▇▇,
AS TRUSTEES AS TRUSTEES
By:________________________ By:__________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
By:_________________________ By:__________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
By:________________________ By:__________________________
▇▇▇ ▇. ▇▇▇▇▇▇, Trustee ▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
88
ANNEX A
Teva Pharmaceutical Industries Limited
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇
Attention: President
Ladies and Gentlemen:
I propose to sell ______ American Depositary Shares ("ADSs")
representing Ordinary Shares of Tiger (the "Company") that I received in
connection with the business combination of the Company with Biocraft. I propose
to effect such sale through _____________, my broker, in accordance with the
requirements relating to sales by "affiliates" under Rule 145 under the
Securities Act of 1933, as amended.
To induce you to remove the restrictive legend from the
American Depositary Receipts ("ADRs") evidencing such ADSs, I hereby represent
and warrant as follows:
1. It is my bona fide intention to sell the ADSs within 90
days from the date hereof. If for some reason all of the ADSs have not been sold
within such 90 day period, I will send to the Company the ADR evidencing the
balance of the ADSs which were not sold in order that a restrictive legend may
be placed thereon. The ADSs are presently evidenced by ADR No.(s) ____ which
ADR(s) represent(s) an aggregate of _____ ADSs. I understand that to the extent
such certificate(s) represents a greater number of ADSs than those proposed to
be sold, a new ADR for the balance of such shares will be sent to me with the
same restrictive legend as is presently affixed to my certificate(s).
2. As of the date of this letter and as of the time of any
sale of the ADSs for my account, the aggregate number of ADSs and Ordinary
Shares sold during the preceding three months for my account and for the account
of any person whose sales are required by Rule 144 under the Securities Act of
1933, as amended, to be aggregated with my sales have not and will not exceed
the greater of: (a) 1% of the outstanding Ordinary Shares of the Company, or (b)
the average weekly reported volume of trading in the Company's Ordinary Shares
or ADSs on all securities exchanges during the four calendar weeks preceding the
date of sale of such ADSs.
3. During the past three months I have not and during the next
three months I will not, alone or in conjunction with others, sell any ADSs or
89
Ordinary Shares under circumstances which will jeopardize the exemption from
registration available under Rule 145 and Rule 144.
4. I have not solicited or arranged for the solicitation of,
and I will not solicit or arrange for the solicitation of, orders to buy the
ADSs in anticipation of or in connection with such proposed sale.
5. I have not made, and will not make, any payment in
connection with the offering or sale of the ADSs to any person other than the
payment of the usual and customary broker's commission to ____________.
Very truly yours,
90
ANNEX B
Teva Pharmaceutical Industries Limited
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇
Attention: President
Ladies and Gentlemen:
We have been asked to sell _______ American Depositary Shares
("ADSs") representing Ordinary Shares of Tiger (the "Company") owned by
__________ ("Seller"). We understand that the Seller is an "affiliate" within
the meaning of Rule 145 promulgated under the Securities Act of 1933, as
amended, and that sales by him or her of the Company's ADSs must comply with
certain provisions of Rule 144 under such Act.
To induce you to remove the restrictive legend from the ADR
evidencing such ADSs so that they may be transferred pursuant to Rules 144 and
145, we hereby represent and warrant as follows:
1. We have made reasonable inquiry as required by paragraph
(g)(3) of Rule 144 and, based upon such inquiry, we are not aware of
circumstances indicating that the Seller is an underwriter with respect to the
ADSs or that the transaction is part of a distribution of the ADSs.
2. The ADSs for which we are acting as broker will be sold
by us in "brokers' transactions" as defined in paragraph (g) of Rule 144.
3. Neither the Seller nor we have solicited or arranged
nor will we solicit or arrange for the solicitation of orders to buy the
ADSs (except as permitted by Rule 144) nor have we received nor will we
receive any payment in connection with the sale of the ADSs other than usual
and customary brokerage commissions.
Very truly yours,
91
Exhibit B-1
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
92
EXHIBIT B-2
EMPLOYMENT AGREEMENT
AGREEMENT made as of the _____ day of _____________, 1996, by and
between BIOCRAFT LABORATORIES, INC., a Delaware corporation with its principal
place of business at ▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (hereinaf-
ter called the "Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇, residing at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter called the
"Employee").
W I T N E S S E T H :
WHEREAS, the Employee has served the Company as its President and
Chief Executive Officer;
WHEREAS, the Company desires to continue to employ the Employee as
its Senior Vice President and the Employee is willing to continue to serve the
Company in such capacity;
WHEREAS, the Company and the Employee desire to set forth the terms
and conditions of such employment.
NOW, THEREFORE, in consideration of the foregoing premises and of
the mutual covenants and agreements herein contained, the Company and the
Employee agree as follows:
1. Employment. The Company hereby agrees to continue to employ
the Employee, and the Employee agrees to be employed by the Company, on the
terms and conditions herein contained.
2. Term. Except as otherwise provided in this Agreement, the
Employee shall be employed under this Agreement for a three year period
commencing on the date hereof (the "Employment Term"). Notwithstanding
anything herein to the contrary, the Employee may at any time terminate the
Employment Term by giving the Company 60 days prior written notice of the
effective date of such termination. If requested by the Company in writing
within 30 days after such notice is given to the Company, the Employee shall
continue his employment for 30 days after the date his employment would have
otherwise terminated pursuant to the preceding sentence.
93
3. Duties. The Employee shall serve as the Company's Senior Vice
President, and as such, will assist the Company's chief executive officer [WF]
with respect to the Company's operations and bulk technologies. Except as
permitted in clause (b) of Section 9 hereof, the Employee shall perform his
duties hereunder at the Company's offices located at ▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ (the "Employment Site"). In no event will the Employee be
required to undertake any duties or perform any tasks which are inconsistent
with his status as Senior Vice President of the Company. During the
Employment Term, the Employee shall devote the majority of his business time,
attention, skill and efforts to the performance of his duties hereunder;
provided, however, that the Employee may serve as an officer and director of
other for profit corporations, if such service does not conflict in any
material respect with his duties hereunder or his fiduciary duty to the
Company, and nothing herein shall prevent the Employee from managing his
personal investments and participating in charitable and civic endeavors, so
long as such activities do not materially interfere with the Employee's
performance of his duties hereunder; and, provided, further that nothing
herein shall prevent the Employee from devoting such time and attention as he
reasonably deems appropriate to his duties as a director of [Tiger].
4. Base Salary. During the Employment Term, the Company shall pay
the Employee, in accordance with its normal payroll practices and subject to
required withholding, a salary at a rate per annum of $500,000. The salary
payable to the Employee hereunder may be increased, from time to time, as
determined by the chief executive officer or Board of Directors of the
Company, in the sole discretion of such chief executive officer or Board of
Directors, and once increased, may not be reduced (the "Base Salary").
5. Other Compensation and Benefits. During the Employment Term,
the Employee shall be entitled to:
(a) continued participation in all benefit, pension, retirement,
savings, welfare and other employee benefit plans and policies in which
members of the Company's senior management generally are entitled to
participate (collectively, the "Benefit Plans"), in accordance with their
respective terms as in effect from time to time;
(b) receipt of all fringe benefits and perquisites generally
maintained by the Company from time to time for members of senior management,
in accordance with the respective terms and
2
94
normal policies of the Company with regard to such benefits and perquisites as
in effect from time to time;
(c) vacation each year in accordance with the Company's policies
for members of senior management in effect from time to time, but in no event
less than five weeks paid vacation for each calendar year;
(d) such other bonuses and compensation, if any, as the Company in
its sole discretion may award to the Employee.
6. Death Prior to Termination of Employment. If the Employee
shall die during the Employment Term, the Company shall have no liability or
further obligation except as follows:
(a) The Company shall pay the Employee's estate, when otherwise
due, any unpaid Base Salary for the period prior to the Employee's death, any
declared or awarded but unpaid bonuses, whether pursuant to any bonus plan or
otherwise, any unpaid amounts due under any incentive plan in accordance with
its terms and any other unpaid amounts due the Employee under any other
Benefit Plans (collectively, the "Entitlements").
(b) The Employee shall have such rights, if any, under employee
benefit, fringe benefit or incentive plans as may be provided in such plans
and any grants thereunder in accordance with their respective terms
(collectively, the "Rights").
7. Disability. If the Employee shall become physically or
mentally incapable of performing his duties as provided in Section 3 of this
Agreement and such incapacity shall last for a period of at least one hundred
eighty (180) consecutive days, the Company may, at its election at any time
thereafter while the Employee remains incapable of performing his duties
hereunder, terminate the Employee's employment hereunder, effective immedi-
ately, by giving the Employee written notice of such termination. In such
event, the Company shall have no other obligation to the Employee or his
dependents hereunder other than the obligation to pay or provide the
Entitlements and the Rights.
8. Cause. The Company may terminate the Employee's employment
hereunder for Cause by giving the Employee ten days' written notice of such
termination. For purposes of this Agreement, Cause shall mean (a) the
Employee's embezzlement, willful breach of fiduciary duty or fraud with regard
to the Company or any of its assets or businesses, (b) the Employee's
conviction of or the pleading of nolo contendere with regard to a felony
(other than a traffic violation) or any other crime
3
95
involving moral turpitude, or (c) any other breach by the Employee of a
material provision of this Agreement that remains uncured for thirty (30) days
after written notice thereof is given to the Employee.
9. Good Reason. The Employee may terminate his employment
hereunder for Good Reason upon written notice thereof to the Company. For
purposes of this Agreement, "Good Reason" shall mean the occurrence or failure
to cause the occurrence of any of the following events without the Employee's
express prior written consent: (a) any material demotion of the Employee, any
material reduction in the Employee's authority or responsibility or any other
change in the terms of the Employee's employment which is inconsistent with
Section 3 hereof; (b) the Company requiring the Employee to perform services
hereunder at any location outside a 15-mile radius from the Employment Site or
the Company requiring the Employee to work in an office of substantially
different characteristics or without the personnel assistance and support
reasonably comparable to those currently provided the Employee; (c) a failure
of any successor entity to assume the obligations of the Company hereunder in
accordance with Section 15 of this Agreement; (d) any breach by the Company of
any material provision of this Agreement which is not cured by the Company
within 10 days after notice thereof from the Employee; or (e) the closure of
substantially all of the operations of the Company currently located at its
Fairlawn, New Jersey facility or their removal or relocation to a site outside
a 15-mile radius from the Employment Site.
10. Termination of Employment by the Employee for Good Reason or by
the Company Without Cause. In the event the Employee terminates his
employment for Good Reason pursuant to Section 9 hereof or the Company
terminates the Employee's employment other than for Cause or Disability, then
the Company shall be deemed to have breached this Agreement, and the Employee
shall be entitled to exercise all rights and remedies that he may have
hereunder and under applicable law. The Employee is hereby expressly not
required to mitigate damages or seek any other employment, and any amounts
that the Employee may receive from any other employment during the Employment
Term shall not reduce the amounts that the Company otherwise may be obligated
to pay to him in connection with any such breach.
11. Termination of Employment by the Employee without Good Reason
or by the Company for Cause or Retirement. Subject to the succeeding sentence
of this Section 11, if Employee's employment hereunder is terminated by the
Company for Cause or by the Employee without Good Reason, the Company shall
have no other
4
96
obligation to the Employee hereunder other than the obligation to pay or
provide the Entitlements and the Rights.
12. Garnishment. The benefits payable under this Agreement shall
not be subject to garnishment, execution or levy of any kind, and any attempt
to cause any benefits to be so subjected shall not be recognized.
13. Notice. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally, or
sent by certified mail, return receipt requested, by Federal Express, Express
Mail or similar overnight delivery or courier service, or by telecopy. Notice
to the Employee shall be delivered to his address set forth at the head of
this Agreement, and notice to the Company shall be sent as follows:
_____________________________
_____________________________
_____________________________
_____________________________
Any notice given by certified mail shall be deemed given five days
after the time of certification thereof. Any notice given by other means
permitted by this Section 13 will be deemed given at the time of receipt
thereof.
Any party may by notice given in accordance with this Section to the
other parties, designate another address or person for receipt of notices
hereunder.
14. Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey
without reference to its conflict of law provisions.
15. Successors; Binding Agreement. The Company shall require any
successor (whether direct or indirect, by purchase of stock or assets, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, to expressly assume and agree, in a written instrument
in form and substance satisfactory to the Employee and his counsel, to perform
this Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession had taken place.
Notwithstanding anything herein to the contrary, this Agreement may not be
assigned by the Company without the prior written consent of the Employee.
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97
This Agreement shall inure to the benefit of and be enforceable by the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. This Agreement is
personal to the Employee and neither this Agreement nor any rights hereunder
may be assigned by the Employee.
16. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the Employee and such officer of the
Company as may be specifically designated by the Board of Directors of the
Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. This Agreement constitutes the entire
Agreement between the parties hereto pertaining to the subject matter hereof.
No agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement.
17. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. Separability. If any provisions of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity
or unenforceability shall not affect the remaining provisions hereof which
shall remain in full force and effect.
19. Non-Exclusivity of Rights. Nothing in this Agreement shall
prejudice, prevent or limit the Employee's previously vested rights under, or
continuing or future participation in, any benefit, bonus, incentive, equity
or other plan or program provided by the Company and for which the Employee
may qualify, nor shall anything herein limit or otherwise prejudice such
rights as the Employee may have under any other currently existing plan or
agreement regarding severance from employment with the Company or statutory
entitlements.
20. Beneficiary. The Employee shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation
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98
or benefit payable under this Employment Agreement following his death by
giving the Company written notice thereof in accordance with applicable
Company policies. In the event of the Employee's death or a judicial
determination of his incompetence, reference in this Agreement to the Employee
shall be deemed, where appropriate, to refer to his beneficiary, estate or
other legal representative.
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99
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and the Employee has hereunto set his hand as of the date first set
forth above.
BIOCRAFT LABORATORIES, INC.
By:_________________________
Name:
Title:
____________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
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100
EXHIBIT B-2
EMPLOYMENT AGREEMENT
AGREEMENT made as of the _____ day of _____________, 1996, by and
between BIOCRAFT LABORATORIES, INC., a Delaware corporation with its principal
place of business at ▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (hereinaf-
ter called the "Company"), and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, residing at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter called the
"Employee").
W I T N E S S E T H :
WHEREAS, the Employee has served the Company as its Senior Vice
President and Secretary;
WHEREAS, the Company desires to continue to employ the Employee as
its Vice President, Cost Accounting and Inventory for New Jersey and Missouri
facilities and the Employee is willing to continue to serve the Company in
such capacity;
WHEREAS, the Company and the Employee desire to set forth the terms
and conditions of such employment.
NOW, THEREFORE, in consideration of the foregoing premises and of
the mutual covenants and agreements herein contained, the Company and the
Employee agree as follows:
1. Employment. The Company hereby agrees to continue to employ
the Employee, and the Employee agrees to be employed by the Company, on the
terms and conditions herein contained.
2. Term. Except as otherwise provided in this Agreement, the
Employee shall be employed under this Agreement for a three year period
commencing on the date hereof (the "Employment Term"). Notwithstanding
anything herein to the contrary, the Employee may at any time terminate the
Employment Term by giving the Company 60 days prior written notice of the
effective date of such termination. If requested by the Company in writing
within 30 days after such notice is given to the Company, the Employee shall
continue her employment for 30 days
101
after the date her employment would have otherwise terminated pursuant to the
preceding sentence.
3. Duties. The Employee shall serve as the Company's Vice
President, Cost Accounting and Inventory for New Jersey and Missouri
facilities, and in connection therewith shall manage the cost accounting and
inventory functions at the Company's New Jersey and Missouri facilities in
substantially the same manner as the Employee heretofore performed her duties,
subject only to the supervision and control of the Company's Chief Executive
Officer [WF] and Chief Financial Officer [PT]. Except as permitted in clause
(b) of Section 9 hereof, the Employee shall perform her duties hereunder at
the Company's offices located at ▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ (the
"Employment Site"). In no event will the Employee be required to undertake
any duties or perform any tasks which are inconsistent with the duties
undertaken, or the tasks performed, by the Employee prior to the date hereof
or which are inconsistent with her status as a Vice President of the Company.
During the Employment Term, the Employee shall devote the majority of her
business time, attention, skill and efforts to the performance of her duties
hereunder; provided, however, that the Employee may serve as an officer and
director of other for profit corporations, if such service does not conflict
in any material respect with her duties hereunder or her fiduciary duty to the
Company, and nothing herein shall prevent the Employee from managing her
personal investments and participating in charitable and civic endeavors, so
long as such activities do not materially interfere with the Employee's
performance of her duties hereunder; and provided, further, that nothing
herein shall prevent the Employee from devoting such time and attention as she
reasonably deems appropriate to her duties as a director of [Tiger].
4. Base Salary. During the Employment Term, the Company shall pay
the Employee, in accordance with its normal payroll practices and subject to
required withholding, a salary at a rate per annum of $173,414. The salary
payable to the Employee hereunder may be increased, from time to time, as
determined by the chief executive officer or Board of Directors of the
Company, in the sole discretion of such chief executive officer or Board of
Directors, and once increased, may not be reduced (the "Base Salary").
5. Other Compensation and Benefits. During the Employment Term,
the Employee shall be entitled to:
(a) continued participation in all benefit, pension, retirement,
savings, welfare and other employee benefit plans and
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102
policies in which members of the Company's senior management generally are
entitled to participate (collectively, the "Benefit Plans"), in accordance
with their respective terms as in effect from time to time;
(b) receipt of all fringe benefits and perquisites generally
maintained by the Company from time to time for members of senior management,
in accordance with the respective terms and normal policies of the Company
with regard to such benefits and perquisites as in effect from time to time;
(c) vacation each year in accordance with the Company's policies
for members of senior management in effect from time to time, but in no event
less than five weeks paid vacation for each calendar year;
(d) such other bonuses and compensation, if any, as the Company in
its sole discretion may award to the Employee.
6. Death Prior to Termination of Employment. If the Employee
shall die during the Employment Term, the Company shall have no liability or
further obligation except as follows:
(a) The Company shall pay the Employee's estate, when otherwise
due, any unpaid Base Salary for the period prior to the Employee's death, any
declared or awarded but unpaid bonuses, whether pursuant to any bonus plan or
otherwise, any unpaid amounts due under any incentive plan in accordance with
its terms and any other unpaid amounts due the Employee under any other
Benefit Plans (collectively, the "Entitlements").
(b) The Employee shall have such rights, if any, under employee
benefit, fringe benefit or incentive plans as may be provided in such plans
and any grants thereunder in accordance with their respective terms
(collectively, the "Rights").
7. Disability. If the Employee shall become physically or
mentally incapable of performing her duties as provided in Section 3 of this
Agreement and such incapacity shall last for a period of at least one hundred
eighty (180) consecutive days, the Company may, at its election at any time
thereafter while the Employee remains incapable of performing her duties
hereunder, terminate the Employee's employment hereunder, effective immedi-
ately, by giving the Employee written notice of such termination. In such
event, the Company shall have no other obligation to the Employee or her
dependents hereunder other than the obligation to pay or provide the
Entitlements and the Rights.
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103
8. Cause. The Company may terminate the Employee's employment
hereunder for Cause by giving the Employee ten days' written notice of such
termination. For purposes of this Agreement, Cause shall mean (a) the
Employee's embezzlement, willful breach of fiduciary duty or fraud with regard
to the Company or any of its assets or businesses, (b) the Employee's
conviction of or the pleading of nolo contendere with regard to a felony
(other than a traffic violation) or any other crime involving moral turpitude,
or (c) any other breach by the Employee of a material provision of this
Agreement that remains uncured for thirty (30) days after written notice
thereof is given to the Employee.
9. Good Reason. The Employee may terminate her employment
hereunder for Good Reason upon written notice thereof to the Company. For
purposes of this Agreement, "Good Reason" shall mean the occurrence or failure
to cause the occurrence of any of the following events without the Employee's
express prior written consent: (a) any material demotion of the Employee, any
material reduction in the Employee's authority or responsibility or any other
change in the terms of the Employee's employment which is inconsistent with
Section 3 hereof; (b) the Company requiring the Employee to perform services
hereunder at any location outside a 15-mile radius from the Employment Site or
the Company requiring the Employee to work in an office of substantially
different characteristics or without the personnel assistance and support
reasonably comparable to those currently provided the Employee; (c) a failure
of any successor entity to assume the obligations of the Company hereunder in
accordance with Section 15 of this Agreement; (d) any breach by the Company of
any material provision of this Agreement which is not cured by the Company
within 10 days after notice thereof from the Employee; or (e) the closure of
substantially all of the operations of the Company currently located at its
Fairlawn, New Jersey facility or their removal or relocation to a site outside
a 15-mile radius from the Employment Site.
10. Termination of Employment by the Employee for Good Reason or by
the Company Without Cause. In the event the Employee terminates her
employment for Good Reason pursuant to Section 9 hereof or the Company
terminates the Employee's employment other than for Cause or Disability, then
the Company shall be deemed to have breached this Agreement, and the Employee
shall be entitled to exercise all rights and remedies that she may have
hereunder and under applicable law. The Employee is hereby expressly not
required to mitigate damages or seek any other employment, and any amounts
that the Employee may receive from any other employment during the Employment
Term shall not
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104
reduce the amounts that the Company otherwise may be obligated to pay to her
in connection with any such breach.
11. Termination of Employment by the Employee without Good Reason
or by the Company for Cause or Retirement. Subject to the succeeding sentence
of this Section 11, if Employee's employment hereunder is terminated by the
Company for Cause or by the Employee without Good Reason, the Company shall
have no other obligation to the Employee hereunder other than the obligation
to pay or provide the Entitlements and the Rights.
12. Garnishment. The benefits payable under this Agreement shall
not be subject to garnishment, execution or levy of any kind, and any attempt
to cause any benefits to be so subjected shall not be recognized.
13. Notice. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally, or
sent by certified mail, return receipt requested, by Federal Express, Express
Mail or similar overnight delivery or courier service, or by telecopy. Notice
to the Employee shall be delivered to her address set forth at the head of
this Agreement, and notice to the Company shall be sent as follows:
_____________________________
_____________________________
_____________________________
_____________________________
Any notice given by certified mail shall be deemed given five days
after the time of certification thereof. Any notice given by other means
permitted by this Section 13 will be deemed given at the time of receipt
thereof.
Any party may by notice given in accordance with this Section to the
other parties, designate another address or person for receipt of notices
hereunder.
14. Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey
without reference to its conflict of law provisions.
15. Successors; Binding Agreement. The Company shall require any
successor (whether direct or indirect, by purchase of stock or assets, merger,
consolidation or otherwise) to all or
5
105
substantially all of the business and/or assets of the Company, to expressly
assume and agree, in a written instrument in form and substance satisfactory
to the Employee and her counsel, to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession had taken place. Notwithstanding anything herein to the
contrary, this Agreement may not be assigned by the Company without the prior
written consent of the Employee. This Agreement shall inure to the benefit of
and be enforceable by the Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. This Agreement is personal to the Employee and neither this
Agreement nor any rights hereunder may be assigned by the Employee.
16. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the Employee and such officer of the
Company as may be specifically designated by the Board of Directors of the
Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. This Agreement constitutes the entire
Agreement between the parties hereto pertaining to the subject matter hereof.
No agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement.
17. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. Separability. If any provisions of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity
or unenforceability shall not affect the remaining provisions hereof which
shall remain in full force and effect.
19. Non-Exclusivity of Rights. Nothing in this Agreement shall
prejudice, prevent or limit the Employee's previously vested rights under, or
continuing or future participation in, any benefit, bonus, incentive, equity
or other plan or program provided by the Company and for which the Employee
may qualify, nor shall anything herein limit or
6
106
otherwise prejudice such rights as the Employee may have under any other
currently existing plan or agreement regarding severance from employment with
the Company or statutory entitlements.
20. Beneficiary. The Employee shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable under this
Employment Agreement following her death by giving the Company written notice
thereof in accordance with applicable Company policies. In the event of the
Employee's death or a judicial determination of her incompetence, reference in
this Agreement to the Employee shall be deemed, where appropriate, to refer to
her beneficiary, estate or other legal representative.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and the Employee has hereunto set her hand as of the date first set
forth above.
BIOCRAFT LABORATORIES, INC.
By:_________________________
Name:
Title:
____________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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107
EXHIBIT C
[Opinion of Proskauer ▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP]
____________, 1996
[Tiger]
[Tiger Subsidiary]
[address]
Ladies and Gentlemen:
We have acted as special counsel to [Bobcat], a Delaware corporation
(the "Company"), in connection with the merger of [Tiger Sub] ("Sub"), a
Delaware corporation and a wholly owned subsidiary of [Tiger], with and into
the Company pursuant to an Agreement and Plan of Merger dated as of
__________, 1996 (the "Agreement"). This opinion is being delivered to you
pursuant to Section 5.02(d) of the Agreement. Unless otherwise defined
herein, capitalized terms used herein which are defined in the Agreement shall
have the respective meanings set forth in the Agreement.
In connection with the opinions hereinafter set forth, we have
examined originals or certified, conformed or reproduction copies of such
documents, corporate records, instruments and certificates of public officials
and officers and representatives of the Company, and have made such inquiries
of officers and representatives of the Company, as we deemed necessary as the
basis for such opinions.
In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity to original documents of documents submitted to us as
certified, conformed or reproduction copies. As to factual matters underlying
the opinions hereinafter set forth, we
108
have relied upon, and assumed without independent investigation the accuracy
of, the representations and warranties made in the Agreement and upon
certificates of officers and representatives of the Company.
We express no opinion herein as to the laws of any jurisdiction
other than the federal laws of the United States and the laws of the State of
New York, excluding federal and New York laws relating to taxes, the
manufacture, advertising, sale or licensing of pharmaceutical products, and
intellectual property (including patent, trademark and copyright laws), as to
which no opinion is expressed, and the General Corporation Law of the State of
Delaware. We express no opinion as to any provision of the Agreement which
provides for submission to the jurisdiction of any court or to the extent that
such provision is determined to constitute a penalty.
In rendering the opinions set forth in paragraph 3 below relating to
corporate existence, good standing and qualification as a foreign corporation,
we have relied solely on the certificates, telegrams and other documents
relating thereto delivered to you at the Closing, and we have assumed that any
such certificate, telegram or other document which dated earlier than the date
of this letter has remained accurate from such earlier date through and
including the date of this opinion letter.
Based on the foregoing, we are the opinion that:
1. The Company is a corporation validly existing and in good
standing under the laws of the State of Delaware.
2. The Company has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted.
3. The Company is duly qualified or licensed to do business and is
in good standing as a foreign corporation in the States of New Jersey and
Missouri.
4. The Company has all necessary corporate power and authority to
execute and deliver the Agreement, to perform its obligations thereunder, and
to consummate the transactions contemplated thereby. The execution, delivery
and performance of the Agreement and the consummation by the Company of the
transactions contemplated thereby have been authorized by all necessary
corporate action on the part of the Company. Upon the filing of the
Certificate of Merger
109
with the Secretary of State of Delaware, all steps required to be taken by the
Company under the laws of the State of Delaware to effect the Merger of Sub
with and into the Company shall have been duly and properly taken.
5. The Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company
enforceable in accordance with its terms, except to the extent that
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws presently or hereafter in effect
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether enforcement is sought in a
proceeding in law or in equity).
6. The execution, delivery and performance of the Agreement by the
Company and the consummation by the Company of the transactions contemplated
thereby will not result in a violation by the Company of any provision of the
Company's certificate of incorporation, as amended, or by-laws.
7. Except for the filing of the Certificate of Merger in Delaware,
we have no actual knowledge of any consent or approvals by Delaware or Federal
governmental authorities which are required in connection with the
consummation by the Company of the transactions contemplated by the Agreement
which have not been obtained.
8. We have no actual knowledge of any action, suit, proceeding or
investigation which is pending or threatened which questions the validity of
the Agreement or any action taken or to be taken by the Company in connection
with the Agreement.
We have participated in the preparation of the Proxy Statement and
the Registration Statement and meetings with members of management of the
Company and its independent certified public accountants relating to the
disclosure contained in the Proxy Statement and the Registration Statement as
it pertains to the Company. Although we are not passing upon and do not
assume any responsibility for the accuracy, completeness or fullness of the
information relating to the Company contained in the Proxy Statement the
Registration Statement, nothing has come to our attention which has caused us
to believe that at the date such materials were mailed to the stockholders of
the Company and/or filed with the Commission, as applicable, and at the
Closing Date, the information relating to the Company
110
in the Proxy Statement or the Registration Statement contained any
misstatement of a material fact or omission of a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading (except that no statement is made with respect to
any financial statements or schedules, or other financial or statistical data
contained therein).
This letter and the opinions set forth herein are being furnished by
us to you solely for your benefit in connection with the transactions
contemplated by the Agreement and may not be relied upon by any other person
or for any other purpose without our prior written consent.
The opinions set forth herein are limited to the matters set forth
in this letter, and no other opinion should be inferred beyond the opinions
expressly stated.
Very truly yours,
Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
By:
A Member of the Firm
111
EXHIBIT D-1
Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇. Parent and Sub shall
deliver to the Company an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, dated the
Closing Date, to the effect that:
(1) Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(2) The authorized capital stock of Sub is 1,000 shares
of Common Stock, par value $1.00 per share, all of which shares have been
duly authorized and validly issued and are held beneficially and of record by
Tiger as set forth in Section 3.02(c) of the Agreement.
(3) The Ordinary Shares to be issued upon the Merger, and
the ADSs representing such Ordinary Shares, will be registered under the
Securities Act of 1933, as amended, and either registered or exempt from
registration under all applicable state securities or Blue Sky laws.
(4) The Deposit Agreement among Parent, The Bank of New
York and all holders of ADRs has been duly authorized, executed and
delivered by Parent and, to the best knowledge of such counsel, by The Bank
of New York, and constitutes a valid and legally binding obligation of
Parent enforceable in accordance with its terms, except to the extent that
its enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and general equitable principles; and upon the due issuance by The
Bank of New York of ADRs evidencing the Ordinary Shares to be issued pursuant
to the Merger against deposit of such Ordinary Shares in accordance with the
provisions of the Deposit Agreement, such ADRs will be legally issued and will
entitle the holders thereof to the rights specified therein and in the Deposit
Agreement.
(5) All regulatory consents, authorizations, approvals
and filings required to be obtained or made by Sub or Parent under
federal or Delaware law for the merger of Sub with and into the Company or
the issuance of the Ordinary Shares and ADSs pursuant to the Merger have been
obtained and made.
(6) All corporate and other proceedings required to be
taken by or on the part of Sub and Parent to authorize the execution,
delivery and performance of the Agreement have been duly and properly taken
and, upon the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware, all actions required to be taken by Sub and Parent
112
under the laws of the State of Delaware to effect the merger of Sub with
and into the Company shall have been duly and properly taken. The Agreement
has been duly executed and delivered by Sub and Parent and constitutes a valid
and binding obligation of Sub and Parent, and the Affiliate Agreements have
been duly executed and delivered by Parent and constitute the valid and
binding obligations of Parent, in each case such agreements are
enforceable against Parent and Sub in accordance with their terms, except
to the extent that enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equitable principles and except with
regard to the Affiliate Agreements to the extent rights to indemnification
may be limited by law.
(7) The execution and delivery of the Agreement and
the consummation of the transactions contemplated thereby shall not
violate any provisions of the Certificate of Incorporation or By-Laws of Sub.
(8) In the course of participating in the preparation of
the Proxy Statement and the Registration Statement and meetings with
members of management of Parent and its independent certified public
accountants relating to the disclosure contained in the Proxy Statement
and the Registration Statement as it pertains to Parent, nothing has come
to the attention of such counsel which has caused them to believe that at the
date such materials were mailed to the stockholders of the Company and/or
filed with the Commission, as applicable, and at the Closing Date, the
information relating to Parent in the Proxy Statement or the Registration
Statement contained any misstatement of a material fact or omission of a
material fact necessary to make the statement therein, in light of the
circumstances under which they were made, not misleading (except that
no opinion need be expressed with respect to any financial statements, or
other financial or statistical data contained therein).
In rendering such opinion, such counsel may rely on
the opinion of ▇. ▇▇▇▇▇▇▇▇ & Co. to be delivered to the Company with
respect to issues of Israeli law upon which opinion such counsel shall
state they are justified in relying, and upon certificates of officers of
Parent and Sub as to factual matters, provided copies thereof are furnished
to the Company and the extent of such reliance is specified in such opinion.
It is understood that the opinion of such counsel, insofar
as such opinion relates to compliance with the Blue Sky or securities
laws of jurisdictions other than New York, shall be subject to the
qualifications that (I) such counsel are nor admitted to practice law in such
jurisdictions and have not obtained opinions of local counsel on such
113
jurisdictions, (ii) such opinion is based soley on an examination of the
statutes and regulations, if any, of such jurisdictions as reported in
standard compilations, or interpretative advice obtained from
representatives of certain securities commissions, on information contained
in the Registration Statement, and on the fact that the ADSs representing
Ordinary Shares to be delivered upon the merger will be admitted to
trading on the NASDAQ National Market System, (iii) such opinion is subject to
the broad discretionary powers of securities commissioners or other
authorized officials to withdraw or deny the exempt status accorded by
statute to particular classes of securities, to require additional
information and to issue stop orders or to revoke or to suspend permits
where such have been granted, and (iv) such opinion is limited to those
jurisdictions which are residences of shareholders of record of the Company
as of the record date for the meeting of shareholders of the Company to
consider the Agreement, as reflected in documents furnished to such counsel
by the Company.
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EXHIBIT D-2
Opinion of ▇. ▇▇▇▇▇▇▇▇ & Co. Parent shall deliver to the
Company an opinion of ▇. ▇▇▇▇▇▇▇▇ & Co., dated the Closing Date, to the effect
that:
(1) Parent is a duly organized and validly existing corporation in
good standing under the laws of the State of Israel and has the corporate
power and authority to own, lease and operate its properties and conduct its
business as presently conducted.
(2) The authorized capital stock of Parent is as set forth in
section 3.02 (c) of the Agreement.
(3) The Ordinary Shares to be issued upon the Merger and the
ADSs representing such Ordinary Shares, have been duly authorized and validly
issued and when issued and delivered in accordance with the Agreement, will
be fully paid, non-assessable and free of any pre-emptive rights of
shareholders of Parent.
(4) All corporate and other proceedings required to be taken by or
on the part of Parent to authorize the execution, delivery and performance of
the Agreement and the Affiliate Agreements have been duly and properly taken.
The Agreement and the Affiliate Agreements have been duly executed and
delivered by Parent and constitute valid and binding obligations of
Parent, enforceable against Parent in accordance with their terms,
except to the extent that enforceability may by limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and general equitable
principles and except with regard to the Affiliate Agreements to the
extent rights to indemnification may be limited by law.
(5) The execution and delivery of the Agreement and the
Affiliate Agreements and the consummation of the transactions contemplated
thereby shall not violate any provisions of the Memorandum of Association
or Articles of Association of Parent nor result in a violation or breach of,
conflict with, constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, franchise, permit, agreement, lease or
other instrument or obligation, of which such counsel has knowledge after
due inquiry, to which Parent is a party, or by which it or any of its
respective properties or assets may be bound, other than violations,
breaches, defaults and conflicts which, in the aggregate, would not have a
material adverse effect on the Condition of Parent and its subsidiaries taken
as a whole.
(6) Such Counsel know of no material litigation, proceedings
or investigation pending or threatened with respect to or involving Parent or
its subsidiaries which is not disclosed in the public filings of Parent
or in Schedule 3.02 (h) of the Agreement.
(7) All approvals, consents or permits of any Israeli
Governmental Entity required to be obtained by Parent of Sub as a prerequisite
for the merger of Sub into the Company and the issuance of Ordinary
Shares and Adds, as contemplated by the Agreement have been obtained and
complied with and are in full force and effect.