EXECUTION COPY
--------------
=====================================================================
AGREEMENT AND PLAN OF MERGER
by and among
SICOR INC.,
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
and
SILICON acquisition SUB, INC.
Dated as of October 31, 2003
=====================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I The Merger......................................................1
1.1 The Merger......................................................1
1.2 Effective Time..................................................2
ARTICLE II The Surviving Corporation.......................................2
2.1 Effect of the Merger............................................2
2.2 Certificate of Incorporation....................................2
2.3 By-Laws.........................................................2
2.4 Directors.......................................................2
2.5 Officers........................................................2
ARTICLE III Effect of the Merger on Capital Stock; Exchange
of Certificates.................................................3
3.1 Effect on Capital Stock.........................................3
3.2 Exchange of Share Certificates..................................4
3.3 Dissenters' Rights..............................................7
3.4 Adjustments to Prevent Dilution.................................7
3.5 Affiliates......................................................7
3.6 Biomedical Frontiers Warrants...................................7
ARTICLE IV The Closing.....................................................8
4.1 Closing.........................................................8
ARTICLE V Representations and Warranties..................................8
5.1 Representations and Warranties of Sicor.........................8
5.2 Representations and Warranties of Teva and Merger Sub..........22
ARTICLE VI Conduct of Business Pending the Merger.........................32
6.1 Covenants of Sicor.............................................32
6.2 Covenants of Teva..............................................35
6.3 No Control of Other Party's Business...........................36
ARTICLE VII Additional Agreements..........................................36
7.1 Access.........................................................36
7.2 Acquisition Proposals..........................................37
7.3 Sicor Stockholders Meeting.....................................39
7.4 Filings; Other Actions; Notification...........................39
7.5 Proxy Statement/Prospectus; F-4 Registration Statement.........41
7.6 Accountants' Comfort Letters...................................42
7.7 Stock Exchange Listing.........................................42
7.8 Affiliate Letters..............................................43
7.9 Resale Registration Statement..................................43
7.10 Stock Exchange De-listing......................................43
-i-
7.11 Publicity......................................................43
7.12 Benefits and Other Employee Matters............................43
7.13 Indemnification; Directors' and Officers' Insurance............44
7.14 Expenses.......................................................46
7.15 Takeover Statute...............................................46
7.16 Teva Vote......................................................46
7.17 Section 16 Matters.............................................47
7.18 Corporate Governance...........................................47
ARTICLE VIII Conditions.....................................................47
8.1 Conditions to Each Party's Obligation to Effect the Merger.....47
8.2 Conditions to Obligations of Teva and Merger Sub...............48
8.3 Conditions to Obligation of Sicor..............................49
ARTICLE IX Termination....................................................49
9.1 Termination by Mutual Consent..................................49
9.2 Termination by Either Teva or Sicor............................49
9.3 Termination by Sicor...........................................50
9.4 Termination by Teva............................................50
9.5 Effect of Termination and Abandonment..........................51
ARTICLE X Miscellaneous and General......................................52
10.1 Survival.......................................................52
10.2 Modification or Amendment......................................52
10.3 Waiver of Conditions...........................................52
10.4 Counterparts...................................................52
10.5 GOVERNING LAW AND VENUE........................................52
10.6 Notices........................................................53
10.7 Entire Agreement; NO OTHER REPRESENTATIONS.....................54
10.8 No Third-Party Beneficiaries...................................54
10.9 Obligations of Teva and of Sicor...............................55
10.10 Severability...................................................55
10.11 Interpretation.................................................55
10.12 Assignment.....................................................55
EXHIBITS
--------
Exhibit A Form of Sicor Affiliate Letter
-ii-
INDEX OF DEFINED TERMS
Defined Term Section
------------ -------
Acquisition Proposal.........................................................7.2
Agreement...............................................................Forepart
Affected Employees.......................................................7.12(a)
Affiliate Stock..............................................................7.9
Asbestos..................................................................5.1(m)
Asbestos-Containing Material..............................................5.1(m)
Audit Date................................................................5.1(h)
Bankruptcy and Equity Exception...........................................5.1(c)
Bear ▇▇▇▇▇▇▇..............................................................5.1(x)
Business Day.................................................................4.1
By-Laws......................................................................2.3
Cash Consideration........................................................3.1(c)
Case.....................................................................7.18(c)
Certificate...............................................................3.1(c)
Certificate of Incorporation.................................................2.2
Certificate of Merger........................................................1.2
Closing......................................................................4.1
Closing Date.................................................................4.1
Code......................................................................3.1(d)
Compensation and Benefit Plans.........................................5.1(j)(i)
Confidentiality Agreement...................................................10.7
Contracts.............................................................5.1(d)(ii)
Conversion Number.........................................................3.1(c)
Costs....................................................................7.13(a)
Depository................................................................3.2(a)
DGCL....................................................................Recitals
Dissenting Shares.........................................................3.3(a)
Effective Time...............................................................1.2
Employees..............................................................5.1(j)(i)
Environmental Law.........................................................5.1(m)
ERISA..................................................................5.1(j)(i)
ERISA Affiliate......................................................5.1(j)(iii)
Exchange Act..............................................................5.1(a)
Exchange Agent............................................................3.2(a)
Exchange Fund.............................................................3.2(a)
F-4 Registration Statement............................................5.2(f)(ii)
FDA.......................................................................5.1(k)
Final Order...............................................................8.1(c)
Foreign Antitrust Filings..............................................5.1(d)(i)
Governmental Entity....................................................5.1(d)(i)
Hazardous Substance.......................................................5.1(m)
HSR Act................................................................5.1(d)(i)
Indemnified Parties......................................................7.13(a)
-i-
Defined Term Section
------------ -------
IRS...................................................................5.1(j)(ii)
ISA....................................................................5.2(d)(i)
knowledge.................................................................5.1(a)
Laws......................................................................5.1(k)
Liens.....................................................................5.1(q)
Merger..................................................................Recitals
Merger Consideration......................................................3.1(c)
Merger Sub..............................................................Forepart
NASD...................................................................5.1(d)(i)
Nasdaq....................................................................3.1(d)
Order.....................................................................8.1(d)
Pension Plan..........................................................5.1(j)(ii)
Person....................................................................3.2(b)
Proxy Statement/Prospectus.............................................5.1(f)(i)
Registration Statement................................................5.2(f)(ii)
Registration Statements...............................................5.2(f)(ii)
Representatives..............................................................7.1
Resale Registration Statement................................................7.9
Right.....................................................................5.1(b)
Rights....................................................................5.1(b)
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act........................................................5.1(e)
SEC.......................................................................5.1(e)
Securities Act.........................................................5.1(d)(i)
Series I Preferred Stock..................................................5.1(b)
Significant Subsidiary....................................................5.1(a)
Sicor...................................................................Forepart
Sicor Balance Sheet.......................................................5.1(g)
Sicor Common Stock........................................................3.1(b)
Sicor Compensation and Benefit Plans...................................5.1(j)(i)
Sicor Disclosure Schedules................................................5.1(a)
Sicor Foreign Benefit Plan..........................................5.1(j)(viii)
Sicor Intellectual Property Rights.....................................5.1(p)(i)
Sicor Material Adverse Effect.............................................5.1(a)
Sicor Option..............................................................3.1(d)
Sicor Outstanding Shares..................................................3.2(a)
Sicor Preferred Stock.....................................................5.1(b)
Sicor Reports.............................................................5.1(e)
Sicor Required Statutory Approvals.....................................5.1(d)(i)
Sicor Requisite Vote......................................................5.1(u)
Sicor Stock Plans.........................................................5.1(b)
Stockholders Agreement..................................................Forepart
Stockholders Rights Plan..................................................5.1(b)
Subsidiary................................................................5.1(a)
Superior Proposal............................................................7.2
Surviving Corporation........................................................1.1
-ii-
Defined Term Section
------------ -------
Takeover Statute............................................................7.15
TASE...................................................................5.2(d)(i)
Tax.......................................................................5.1(x)
Tax Return................................................................5.1(x)
Taxable...................................................................5.1(x)
Taxes.....................................................................5.1(x)
Termination Date..........................................................9.2(a)
Teva....................................................................Forepart
Teva ADRs.................................................................3.1(c)
Teva ADSs.................................................................3.1(c)
Teva Balance Sheet........................................................5.2(g)
Teva Compensation and Benefit Plans....................................5.2(j)(i)
Teva Disclosure Schedules................................................5.1(a)
Teva Foreign Benefit Plan...........................................5.2(j)(viii)
Teva Intellectual Property Rights......................................5.2(o)(i)
Teva Material Adverse Effect..............................................5.2(a)
Teva Ordinary Shares......................................................3.1(c)
Teva Reports..............................................................5.2(e)
Teva Required Statutory Approvals......................................5.2(d)(i)
Teva Stock Consideration..................................................3.1(c)
Teva Stock Plans..........................................................5.2(b)
U.S. GAAP.................................................................5.1(a)
Voting Debt...............................................................5.1(b)
-iii-
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated
as of October 31, 2003, by and among SICOR INC., a Delaware corporation
("Sicor"), TEVA PHARMACEUTICAL INDUSTRIES LIMITED, an Israeli corporation
("Teva"), and SILICON ACQUISITION SUB, INC., a Delaware corporation and a wholly
owned subsidiary of Teva ("Merger Sub").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Sicor, Teva and Merger Sub have agreed to enter into a business
combination transaction pursuant to which Merger Sub will merge with and into
Sicor, with Sicor continuing as the surviving corporation (the "Merger"), all
pursuant to the terms and conditions set forth in this Agreement and in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL");
WHEREAS, the respective Boards of Directors of each of Sicor, Teva and
Merger Sub have (i) determined that the Merger and other transactions
contemplated hereby are advisable and are fair to and in the best interests of
Sicor, Teva and Merger Sub and their respective stockholders and (ii) approved
this Agreement and the transactions contemplated hereby;
WHEREAS, as a condition to Teva entering into this Agreement and incurring
the obligations set forth herein, on the date hereof, Teva is entering into a
Stockholders Agreement with certain stockholders of Sicor (the "Stockholders
Agreement"), pursuant to which, among other things, each of such stockholders
has agreed, on the terms and subject to the conditions thereof, to vote all
shares of common stock, par value $0.01 per share, of Sicor (the "Sicor Common
Stock"), owned by each of them to approve this Agreement and the transactions
contemplated hereby; and
WHEREAS, Sicor, Teva and Merger Sub desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and to
prescribe certain conditions to the Merger;
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
----------
1.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the DGCL, at the Effective Time, Merger
Sub shall be merged with and into Sicor and the separate corporate existence of
Merger Sub shall thereupon cease. Sicor shall be the surviving corporation in
the Merger (sometimes hereinafter referred to as the "Surviving Corporation"),
and shall succeed to and assume all the rights and obligations of Merger Sub in
accordance with Section 259 of the DGCL.
1.2 Effective Time. As promptly as practicable after the satisfaction or,
if permissible, waiver of the conditions set forth in Article VIII, the parties
hereto shall cause the Merger to be consummated by filing this Agreement or a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware, in such form as is required by, and executed in
accordance with, the relevant provisions of the DGCL (the date and time of such
filing being the "Effective Time"). Prior to such filing, a Closing shall be
held at the offices of Pillsbury Winthrop LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other place as the parties shall agree, for the purpose
of confirming the satisfaction or waiver, as the case may be, of the conditions
set forth in Article VIII.
ARTICLE II
THE SURVIVING CORPORATION
-------------------------
2.1 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of Sicor and Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Sicor and Merger
Sub shall become the debts, liabilities and duties of the Surviving Corporation.
2.2 Certificate of Incorporation. At the Effective Time, the certificate of
incorporation of Merger Sub, as in effect immediately prior to the Effective
Time and including the provisions required by Section 7.13(d) hereof, shall be
the certificate of incorporation of the Surviving Corporation until thereafter
amended as provided therein or by Law (the "Certificate of Incorporation")
except that Article I thereof shall be amended, by the filing of the Certificate
of Merger or other appropriate documents, to read in its entirety as follows:
"The name of the corporation is Sicor Inc."
2.3 By-Laws. At the Effective Time, and without any further action on the
part of Sicor or Merger Sub, the by-laws of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the by-laws of the Surviving Corporation
(the "By-Laws"), until thereafter amended as provided therein, in the
Certificate of Incorporation or in accordance with applicable Law.
2.4 Directors. Subject to requirements of applicable Law, the directors of
Merger Sub immediately prior to the Effective Time shall, from and after the
Effective Time, be the directors of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Certificate of
Incorporation and the By-Laws.
2.5 Officers. Effective as of the Effective Time, Teva shall have caused
the appointment of each of the then executive officers of Sicor to the same
position at the Surviving Corporation, who shall serve until their successors
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation and
the By-Laws.
-2-
ARTICLE III
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
---------------------------------------------------------------
3.1 Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any further action on the part of Sicor, Teva, Merger Sub or
any holder of any capital stock of Sicor, Teva or Merger Sub:
(a) Merger Sub. Each share of common stock, par value $.001 per share, of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into one share of common stock, par value $.001 per share, of the
Surviving Corporation, which shall constitute the only outstanding shares of
capital stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Teva-Owned Stock. Each share of
Sicor Common Stock, and any other shares of capital stock of Sicor, that is
owned by Sicor directly or indirectly or by Teva, Merger Sub or any other
Subsidiary of Teva shall automatically be retired and shall cease to be
outstanding, and no cash or other consideration shall be delivered or
deliverable in exchange therefor.
(c) Conversion of Sicor Common Stock. Subject to Section 3.3, each issued
and outstanding share of Sicor Common Stock (other than shares of Sicor Common
Stock to be retired in accordance with Section 3.1(b)), including each Right
attached thereto, whether or not then vested or subject to a repurchase option
in favor of Sicor, shall be converted into the right to receive (i) 0.1906 (as
may be adjusted pursuant to Section 3.4, the "Conversion Number") ordinary
shares, par value NIS 0.10 each, of Teva, duly issued and credited as fully paid
(the "Teva Ordinary Shares") which will trade in the United States in the form
of American Depositary Shares ("Teva ADSs"), evidenced by American Depositary
Receipts ("Teva ADRs") (together with cash in lieu of fractional shares as
specified in Section 3.2, the "Teva Stock Consideration"), and (ii) $16.50 in
cash, without interest (the "Cash Consideration," and together with the Teva
Stock Consideration, the "Merger Consideration"). Each Teva ADS represents one
Teva Ordinary Share.
As of the Effective Time, all such shares of Sicor Common Stock shall no
longer be outstanding and shall automatically be retired and shall cease to be
outstanding, and each holder of a certificate representing any such shares of
Sicor Common Stock (a "Certificate") shall cease to have any rights with respect
thereto, except the right to receive upon the surrender of such certificates
(for each share of Sicor Common Stock previously represented thereby) the Merger
Consideration.
(d) Stock Options. As of the Effective Time, each outstanding option to
purchase shares of Sicor Common Stock under the Sicor Stock Plans (a "Sicor
Option"), whether or not exercisable or vested, shall be assumed by Teva and
shall automatically be converted into an option to purchase Teva Ordinary Shares
in the form of Teva ADSs, to be evidenced by Teva ADRs upon exercise, in an
amount and at an exercise price as determined in accordance with this Section
3.1(d). Teva shall assume each Sicor Stock Plan to the extent necessary to
assume the Sicor Options and, in the event Teva does not have sufficient
registered Teva ADRs to cover the
-3-
assumed Sicor Options, Teva shall, as promptly as practicable after the
execution and delivery of this Agreement, prepare and file with the SEC a
Registration Statement with respect to the Teva ADSs issuable upon the exercise
thereof and shall use its best efforts to cause the Registration Statement to
become effective under the Securities Act as soon as practicable after the date
of such filing (and in any event prior to the Effective Time) and to comply with
state securities law and "blue sky" laws with respect thereto. Each Sicor Option
so assumed will be subject to, and exercisable and vested on, the same terms and
conditions as under such Sicor Option as of the Effective Time, except that each
assumed Sicor Option shall constitute an option to acquire that number of Teva
ADSs (rounded down to the nearest number of whole Teva ADSs on a
holder-by-holder basis) equal to (a) the number of Teva ADSs that the holder of
such Sicor Option would have been entitled to receive pursuant to the Merger had
such holder exercised such Sicor Option in full immediately prior to the
Effective Time plus (b) a number of Teva ADSs determined by dividing (i) the
amount of Cash Consideration that the holder of such Sicor Option would have
been entitled to receive pursuant to the Merger had such holder exercised such
Sicor Option in full immediately prior to the Effective Time by (ii) the closing
price per ADS of Teva ADSs on the Business Day immediately prior to the
Effective Time as reported by The Nasdaq Stock Market, Inc. ("Nasdaq") National
Market System on the Business Day immediately prior to the Effective Time, at an
exercise price per Teva ADS (rounded up to the nearest whole ▇▇▇▇▇) equal to (x)
the aggregate exercise price for the shares of Sicor Common Stock which
otherwise could have been purchased pursuant to such Sicor Option immediately
prior to the Effective Time divided by (y) the aggregate number of Teva ADSs
deemed to be purchasable (the sum of the amount in clauses (a) and (b) above)
pursuant to such assumed Sicor Option pursuant to and in accordance with this
Section 3.1(d). The conversion of the Sicor Options provided for in this Section
3.1(d) with respect to any options which are intended to be "incentive stock
options" (as such term is defined in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code")) shall be effected in a manner consistent with
Section 424(a) of the Code.
3.2 Exchange of Share Certificates. (a) Exchange Agent. Prior to the
Effective Time, Teva shall designate The Bank of New York, which currently acts
as the depository for the ADSs, or another U.S. bank or trust company reasonably
acceptable to Sicor (in such capacity, the "Depository"), to act as agent (the
"Exchange Agent") for the holders of shares of Sicor Common Stock and Sicor
Options in connection with the Merger and the payment of the Merger
Consideration or other payment to which holders of shares of Sicor Common Stock
and Sicor Options shall become entitled pursuant to Section 3.1. Prior to the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware, Teva or Merger Sub shall deposit with the Exchange Agent (i) cash in
an aggregate amount equal to the product of (A) the number of shares of Sicor
Common Stock issued and outstanding (and not to be retired pursuant to Section
3.1(b)) immediately prior to the Effective Time (the "Sicor Outstanding Shares")
multiplied by (B) the Cash Consideration, (ii) certificates evidencing a
sufficient number of Teva Ordinary Shares as would permit the Exchange Agent to
issue Teva ADRs evidencing the number of Teva ADSs equal to the product of (A)
the Sicor Outstanding Shares multiplied by (B) the Teva Stock Consideration and
(iii) such additional number of Teva ADRs evidencing Teva ADSs as are required
to pay to the holders of Sicor Options the amounts contemplated by Section
3.1(d). The deposit made by Teva or Merger Sub, as the case may be, pursuant to
this Section 3.2(a) is hereinafter referred to as the "Exchange Fund." The
Exchange Agent shall
-4-
cause the Exchange Fund to be (i) held for the benefit of the holders of Sicor
Common Stock and Sicor Options and (ii) applied promptly to making the payments
provided for in Section 3.1. The Exchange Fund shall not be used for any purpose
that is not expressly provided for in this Agreement; provided, that Teva may
direct the Exchange Agent invest the Exchange Fund in obligations of or
guaranteed by the United States of America and backed by the full faith and
credit of the United States of America or in commercial paper obligations rated
A-1 or P-1 or better by ▇▇▇▇▇'▇ Investors Services, Inc. or Standard & Poor's
Corporation, respectively. Any interest or other income resulting from such
investments shall be promptly paid to Teva. Teva shall, prior to the Effective
Time, allot Teva Ordinary Shares referred to in Sections 3.1(c) and 3.1(d) as
designated by Sicor subject to the terms and conditions of this Agreement.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, but in no event later than one (1) Business Day after the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of record of shares of Sicor Common Stock at the Effective Time
(i) a letter of transmittal specifying that delivery of the Certificates shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates (or affidavits of loss in lieu thereof) to the
Exchange Agent, such letter of transmittal to be in such form and have such
other provisions as Teva and Sicor may reasonably agree and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for the
Merger Consideration (such instructions shall include instructions for the
payment of the Merger Consideration to a Person other than the Person in whose
name the surrendered Certificate is registered on the transfer books of Sicor,
subject to the receipt of appropriate documentation for such transfer). Upon
surrender to the Exchange Agent of a Certificate (or evidence of loss in lieu
thereof) for cancellation together with such letter of transmittal, duly
executed in accordance with the provisions of this Section 3.2(b), the holder of
such Certificate shall be entitled to receive in exchange therefor the Merger
Consideration that such holder is entitled to receive pursuant to this Article
III, and the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on any amount payable upon due surrender of the
Certificates. In the event of a transfer of ownership of shares of Sicor Common
Stock that is not registered in the transfer records of Sicor, payment may be
issued to such a transferee if the Certificate formerly representing such shares
of Sicor Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer, and the Person
requesting such issuance pays any transfer or other taxes required by reason of
such payment to a Person other than the registered holder of such Certificate or
establishes to the satisfaction of Teva and Sicor that such tax has been paid or
is not applicable.
No dividends or other distributions with respect to securities of Teva
constituting part of the Merger Consideration shall be paid to the holder of any
Certificates not surrendered until such Certificates are surrendered as provided
in this Section 3.2. Following such surrender, in addition to the Merger
Consideration, there shall be paid, without interest, to the Person in whose
name the securities of Teva have been registered, (i) at the time of surrender,
the amount of all dividends or other distributions with a record date after the
Effective Time previously paid or payable on the date of such surrender with
respect to such securities and (ii) at the appropriate payment date, the amount
of dividends or other distributions with a record date after the Effective Time
and prior to surrender and with a payment date subsequent to surrender payable
with respect to such securities.
-5-
For the purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including not-for-profit corporations), general or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity or other entity of any kind or
nature.
(c) Transfers. After the Effective Time, there shall be no registration of
transfers on the stock transfer books of Sicor of shares of Sicor Common Stock
that were outstanding immediately prior to the Effective Time.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund relating
to the Merger Consideration that remains unclaimed by the stockholders of Sicor
or holders of Sicor Options one (1) year after the Effective Time shall be
returned to Teva, the Surviving Corporation or another Subsidiary of Teva, as
may be designated by Teva or the Surviving Corporation. Any stockholders of
Sicor or holder of Sicor Options who have not theretofore complied with this
Article III shall thereafter look only to Teva for payment of the Merger
Consideration upon due surrender of their Certificates (or affidavits of loss in
lieu thereof), without any interest thereon. Notwithstanding the foregoing, none
of Teva, the Surviving Corporation, the Exchange Agent or any other Person shall
be liable to any former holder of shares of Sicor Common Stock or holder of
Sicor Options for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar Laws.
(e) Lost, Stolen or Destroyed Certificates. In the event that any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by Teva, the posting by such Person of a
bond in customary amount as indemnity against any claim that may be made against
it or the Surviving Corporation with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration upon due surrender of the shares of Sicor Common Stock
represented by such Certificate pursuant to this Agreement.
(f) Fractional Shares. Notwithstanding any other provision of this
Agreement to the contrary, no fractional Teva ADSs will be issued and any holder
of shares of Sicor Common Stock entitled to receive a fractional Teva ADS but
for this Section 3.2(f) shall be entitled to receive a cash payment in lieu
thereof, which payment shall represent such holder's proportionate interest in
the net proceeds for the sale by the Exchange Agent on behalf of such holder of
the aggregate fractional Teva ADS that such holder otherwise would be entitled
to receive. Any such sale shall be made by the Exchange Agent within five (5)
Business Days after the date upon which the Certificate (or affidavit(s) of loss
in lieu thereof) that would otherwise result in the issuance of such fractional
Teva ADSs has been received by the Exchange Agent.
(g) Withholding Rights. Each of Teva and the Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable to any
Person pursuant to this Article III such amounts as it is required to deduct and
withhold with respect to the making of such payment under provision of any
federal, state, local or foreign tax law. If Teva or the Surviving Corporation,
as the case may be, so withholds amounts, such amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Sicor
-6-
Common Stock in respect of which Teva or the Surviving Corporation, as the case
may be, made such deduction and withholding.
3.3 Dissenters' Rights. (a) Notwithstanding anything in this Agreement to
the contrary, shares of Sicor Common Stock outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has demanded appraisal for such shares in
accordance with Section 262 of the DGCL (the "Dissenting Shares"), shall not be
converted into, or represent the right to receive, the Merger Consideration.
Such stockholders shall be entitled to receive, subject to and net of any
applicable withholding of Taxes, payment of the appraised value of such
Dissenting Shares held by them in accordance with the provisions of Section 262
of the DGCL, except that all Dissenting Shares held by stockholders who shall
have failed to perfect or who shall have effectively withdrawn or lost their
rights to appraisal of such Dissenting Shares under Section 262 of the DGCL
shall thereupon be deemed to have been converted into, and to have become
exchangeable for, as of the Effective Time, the right to receive the Merger
Consideration, without any interest thereon, upon surrender, in the manner
provided in Section 3.2, of the Certificate or Certificates that formerly
evidenced such Dissenting Shares.
(b) Sicor shall give Teva (i) prompt notice of any demands for appraisal
received by Sicor, withdrawals of such demands, and any other instruments served
on or otherwise received by Sicor pursuant to the DGCL and (ii) the right to
direct all negotiations and proceedings with respect to demands for appraisal
under DGCL. Sicor shall not, except with the prior written consent of Teva, (x)
make any payment with respect to any demands for appraisal, (y) offer to settle
or settle any such demands or (z) waive any failure to deliver a written demand
for appraisal or other action required to perfect appraisal rights in accordance
with the DGCL.
3.4 Adjustments to Prevent Dilution. In the event that Sicor changes the
number of shares of Sicor Common Stock or securities convertible or exchangeable
into or exercisable for shares of Sicor Common Stock issued and outstanding
prior to the Effective Time as a result of a reclassification, stock split
(including a reverse stock split), stock dividend or distribution,
recapitalization, merger, subdivision, issuer tender or exchange offer, or other
similar transaction, the Merger Consideration shall be equitably adjusted to
reflect such change. If between the date of this Agreement and the Effective
Time, the outstanding Teva Ordinary Shares shall be changed into a different
number of shares by reason of stock dividend, subdivision, reclassification,
split-up, combination or the like, the Conversion Number shall be appropriately
adjusted.
3.5 Affiliates. Notwithstanding anything in this Agreement to the contrary,
no Teva Stock Consideration shall be delivered to any Person who is an Affiliate
of Sicor under Rule 145 of the Securities Act until such Person has executed and
delivered to Teva a written agreement substantially in the form of Exhibit A
hereto.
3.6 Biomedical Frontiers Warrants.
(a) At or following the Effective Time, Biomedical Frontiers Incorporated,
its successor or assigns, shall have the right to purchase and receive upon the
basis and upon the
-7-
terms and conditions specified in the Milestone 1 Warrant Agreement, dated as of
July 1, 2003, between Sicor and Biomedical Frontiers Incorporated, including
payment of the exercise price, and in lieu of each share of Sicor Common Stock
immediately theretofore purchasable and receivable upon the exercise of the
Milestone 1 Warrants (as defined in the License, Development and Marketing
Agreement, dated as of September 17, 2001, by and between Biomedical Frontiers
Incorporated and Sicor (the "License Agreement")), the Merger Consideration,
without interest.
(b) In addition, Sicor or the Surviving Corporation, as applicable, shall
issue the Milestone 4 Warrants (as defined in the License Agreement) when and as
required pursuant to the License Agreement, and such Milestone 4 Warrants shall
contain such terms and conditions, including payment of the exercise price,
pursuant to the License Agreement; provided, that the holder of such Milestone 4
Warrants shall have the right to purchase and receive upon the basis and upon
the terms and conditions to be specified in the Milestone 4 Warrant Agreement,
in lieu of each share of Sicor Common Stock theretofore purchasable and
receivable upon the exercise of the Milestone 4 Warrants, the Merger
Consideration, without interest.
ARTICLE IV
THE CLOSING
-----------
4.1 Closing. The closing of the Merger (the "Closing") shall take place (i)
at the offices of Pillsbury Winthrop LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. Eastern time on the Business Day after the last to be
satisfied or waived of the conditions set forth in Article VIII (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the satisfaction or waiver of those conditions) shall be satisfied or
waived (by the party entitled to the benefit of such condition) in accordance
with this Agreement or (ii) at such other place and time and/or on such other
date as Sicor and Teva may agree in writing (the "Closing Date"). For purposes
of this Agreement, the term "Business Day" means a day on which banks are not
required or authorized by Law to close in Tel Aviv or New York City.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
5.1 Representations and Warranties of Sicor. Sicor hereby represents and
warrants to Teva and Merger Sub that:
(a) Organization, Good Standing and Qualification. Each of Sicor and its
Significant Subsidiaries is a corporation duly organized, validly existing and
in good standing under the Laws of its respective jurisdiction of organization
and has all requisite corporate or similar power and authority to own and
operate its properties and assets and to carry on its business as currently
conducted in all material respects and is qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the ownership
or operation of its properties and assets or conduct of its business requires
such qualification, except where the failure to be so
-8-
qualified as a foreign corporation or be in good standing would not be
reasonably likely to have, either individually or in the aggregate, a Sicor
Material Adverse Effect. Sicor has heretofore made available to Teva complete
and correct copies of Sicor's and each of its Significant Subsidiaries'
certificate of incorporation and by-laws (or comparable governing instruments),
as amended through the date hereof. The certificate of incorporation and by-laws
(or comparable governing instruments) of each of Sicor and its Significant
Subsidiaries so made available are in full force and effect. Section 5.1(a) of
the disclosure schedules delivered to Teva by Sicor on or prior to the date of
this Agreement (the "Sicor Disclosure Schedules") sets forth a list, as of the
date hereof, of all of the Significant Subsidiaries of Sicor, the jurisdictions
under which such Significant Subsidiaries are incorporated, and the percent of
the equity interest therein owned by Sicor and each Subsidiary of Sicor, as
applicable. Sicor does not have any Subsidiary that is organized in Israel.
As used in this Agreement, the term "Subsidiary" means, with respect to
Sicor, Teva or Merger Sub, as the case may be, any entity, whether incorporated
or unincorporated, of which at least a majority of the securities or ownership
interests having by their terms ordinary voting power to elect a majority of the
board of directors or other Persons performing similar functions is directly or
indirectly owned or controlled by such party or by one or more of its respective
Subsidiaries or by such party and any one or more of its respective
Subsidiaries.
As used in this Agreement, the term "Significant Subsidiary" means a
"significant subsidiary" within the meaning of Rule 1.02(w) of Regulation S-X
promulgated pursuant to the Securities Exchange Act of 1934, as amended
("Exchange Act").
As used in this Agreement, the term "Sicor Material Adverse Effect" means a
material adverse effect on the financial condition, business, assets or results
of operations of Sicor and its Subsidiaries taken as a whole; provided, however,
that any such effect resulting from or arising out of (i) any change in Law or
United States generally accepted accounting principles ("U.S. GAAP") or
interpretations thereof, (ii) economic or business conditions in the United
States generally, (iii) conditions generally affecting the pharmaceutical
industry or (iv) the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby shall not be considered
when determining if a Sicor Material Adverse Effect has occurred.
As used in this Agreement, the term "knowledge" or any similar formulation
of knowledge shall mean the knowledge, after due inquiry, of, with respect to
Sicor, those persons set forth in Section 5.1(a) of Sicor Disclosure Schedules
and, with respect to Teva, those persons set forth in Section 5.2(a) of the
disclosure schedules delivered to Sicor by Teva on or prior to the date of this
Agreement (the "Teva Disclosure Schedules").
(b) Capital Structure. The authorized capital stock of Sicor consists of
(i) 250,000,000 shares of Sicor Common Stock, of which 119,050,306 shares were
outstanding as of October 27, 2003 and (ii) 5,000,000 shares of preferred stock,
par value $0.01 per share (the "Sicor Preferred Stock"), of which 125,000 shares
are designated Series I Participating Preferred Stock (the "Series I Preferred
Stock"), none of which were outstanding as of the date hereof. Pursuant to
Sicor's Stockholder Rights Plan, dated March 16, 1992, as amended (the
"Stockholder Rights Plan"), each share of Sicor Common Stock has attached
thereto a right
-9-
(each a "Right" and collectively, the "Rights") to purchase one one-thousandth
of a share of Series I Preferred Stock at a price of $200.00 per one
one-thousandth of a share, subject to adjustment. All of the issued and
outstanding shares of Sicor Common Stock have been duly authorized and are
validly issued, fully paid and nonassessable. Each of the outstanding shares of
capital stock or other securities of each of Sicor's Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and is owned by Sicor
or a direct or indirect wholly-owned Subsidiary of Sicor, free and clear of any
lien, pledge, security interest, claim or other encumbrance. Except as set forth
on Section 5.1(b) of the Sicor Disclosure Schedules and other than pursuant to
(i) Sicor's 1997 Long-Term Incentive Plan, as amended, (ii) Sicor's 1992
Employee Stock Purchase Plan, as amended, (iii) Sicor's 401(k) Employee Savings
and Retirement Plan and (iv) the Stockholder Rights Plan (collectively, the
"Sicor Stock Plans"), there are no preemptive or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements or commitments to issue or
to sell any shares of capital stock or other securities of Sicor or any of its
Significant Subsidiaries or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a right to subscribe
for or acquire, any securities of Sicor or any of its Significant Subsidiaries,
and no securities or obligations evidencing such rights are authorized, issued
or outstanding. Section 5.1(b) of the Sicor Disclosure Schedules set forth a
complete and correct list, as of the date of this Agreement, of the number of
shares of Sicor Common Stock subject to options or other rights to purchase or
receive Sicor Common Stock granted under the Sicor Stock Plans or otherwise,
together with the dates of grant and the exercise prices thereof. Except as set
forth on Section 5.1(b) of the Sicor Disclosure Schedules, Sicor does not have
outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or convertible into or exercisable for securities
having the right to vote) with the stockholders of Sicor on any matter ("Voting
Debt").
(c) Corporate Authority.
(i) Sicor has all requisite corporate power and authority and has
taken all corporate action necessary in order to execute, deliver and
perform its obligations under this Agreement and to consummate, on the
terms and subject to the conditions of this Agreement, the transactions
contemplated hereby, subject only to receipt of the Sicor Requisite Vote
and the Sicor Required Statutory Approvals. This Agreement has been duly
executed and delivered by Sicor and, assuming due authorization, execution
and delivery by each of Teva and Merger Sub, is a valid and legally binding
agreement of Sicor enforceable against Sicor in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar Laws of general applicability relating to or
affecting creditors' rights and to general equity principles (the
"Bankruptcy and Equity Exception").
(ii) As of the date hereof, the Board of Directors of Sicor has
approved and adopted this Agreement and the Merger and other transactions
contemplated hereby and, subject to Section 7.2, has resolved to recommend
that the stockholders of Sicor approve this Agreement and the transactions
contemplated hereby.
(d) Governmental Filings; No Violations.
-10-
(i) Except as set forth on Section 5.1(d)(i) of the Sicor Disclosure
Schedules, other than any reports, filings, registrations, approvals and/or
notices (A) required to be made pursuant to Section 1.2, (B) under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Securities Act of 1933, as amended (the "Securities Act"), and
the Exchange Act, (C) the filings with or approvals from Governmental
Entities required solely by virtue of the jurisdictions in which Sicor or
its Significant Subsidiaries conduct business or own any assets under (1)
Ley Federal de Competencia Economica (Mexico) and the regulations
promulgated thereunder, (2) the Lithuanian Law on Competition and (3)
Brazilian merger control Law No. 8884/1994 (collectively, the "Foreign
Antitrust Filings") and (D) to comply with the rules and regulations of the
National Association of Securities Dealers, Inc. (the "NASD") (items (B)
through (D) (inclusive)), the "Sicor Required Statutory Approvals"), no
notices, reports, registrations or other filings are required to be made by
Sicor with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by Sicor from, any United States or
foreign federal, state, or local governmental or regulatory authority,
agency, commission, body or other governmental entity including, without
limitation, the FDA (each a "Governmental Entity"), in connection with the
execution and delivery of this Agreement and the consummation by Sicor of
the transactions contemplated hereby (including pursuant to the
Stockholders Agreement), except for those that the failure to make or
obtain are not, individually or in the aggregate, reasonably likely to have
a Sicor Material Adverse Effect or prevent, materially delay or materially
impair the ability of Sicor to consummate the transactions contemplated by
this Agreement.
(ii) Except as set forth on Section 5.1(d)(ii) of the Sicor Disclosure
Schedules, the execution, delivery and performance of this Agreement and
the consummation by Sicor of the transactions contemplated hereby
(including pursuant to the Stockholders Agreement) will not constitute or
result in (A) a breach or violation of, or a default under, either the
certificate of incorporation or by-laws (or comparable governing
instruments) of Sicor or of any Significant Subsidiary of Sicor, (B) a
breach or violation of, a default under, the acceleration of any
obligations, the loss of any right or benefit, or the creation of a lien,
pledge, security interest or other encumbrance on the assets of Sicor or
any Subsidiary of Sicor (with or without notice, lapse of time or both)
pursuant to, any agreement, lease, contract, note, mortgage, indenture,
arrangement or other obligation not otherwise terminable by the other party
thereto on ninety (90) days or less notice ("Contracts") binding upon Sicor
or any Subsidiary of Sicor or any Law or governmental or non-governmental
permit or license to which Sicor or any of its Subsidiaries is subject or
(C) any change in the rights or obligations of any party under any of the
Contracts, except, in the case of clause (B) or (C) above, for any breach,
violation, default, acceleration, creation or change that would not,
individually or in the aggregate, be reasonably likely to have a Sicor
Material Adverse Effect or prevent, or materially impair the ability of
Sicor to consummate the transactions contemplated by this Agreement.
(e) Sicor Reports; Financial Statements. The filings required to be made by
Sicor since December 31, 2000 under the Securities Act and the Exchange Act have
been filed with the
-11-
Securities and Exchange Commission (the "SEC"), including all forms,
registration, proxy and information statements, reports, agreements (oral or
written) and all documents, exhibits, amendments and supplements appertaining
thereto, and complied, as of their respective dates, in all material respects
with all applicable requirements of the appropriate statutes and the rules and
regulations thereunder (collectively, including any amendments of any such
reports filed with or furnished to the SEC by Sicor prior to the date hereof,
the "Sicor Reports"). Sicor has made available to Teva (i) each Sicor Report
filed with or furnished to the SEC by Sicor pursuant to the Securities Act or
the Exchange Act since December 31, 2000 and prior to the date hereof, each in
the form (including exhibits, annexes and any amendments thereto) promulgated by
the SEC under the Securities Act or the Exchange Act, as the case may be, and
(ii) each of Sicor's press releases released to the public in 2003 which are
located at ▇▇▇▇://▇▇▇▇▇▇▇▇.▇▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇▇.▇▇▇. None of the Sicor Reports (in
the case of Sicor Reports filed pursuant to the Securities Act), as of their
effective dates, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein not misleading. None of the Sicor Reports (in the case
of Sicor Reports filed pursuant to the Exchange Act) as of the respective dates
filed with the SEC or first mailed to stockholders, as applicable, contained any
untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of the Sicor
Reports (in the case of Sicor Reports issued to the public as press releases) as
of their respective release dates, contained any untrue statement of a material
fact or omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. Except as set forth on Section 5.1(e) of the Sicor
Disclosure Schedules, the consolidated financial statements of Sicor and its
Subsidiaries included in such Sicor Reports comply as to form in all material
respects with the applicable rules and regulations of the SEC with respect
thereto. Each of the consolidated balance sheets included in or incorporated by
reference into Sicor Reports (including the related notes and schedules)
presents fairly, in all material respects, the financial position of Sicor and
its Subsidiaries as of its date, and each of the consolidated statements of
income and consolidated statements of cash flows included in or incorporated by
reference into Sicor Reports (including any related notes and schedules) fairly
presents in all material respects the results of operations, retained earnings
and changes in financial position, as the case may be, of Sicor and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to the absence of notes and normal year-end audit
adjustments), in each case in accordance with U.S. GAAP consistently applied
during the periods involved, except as may be noted therein. Any change by Sicor
in the accounting principles, practices or methods used in such financial
statements of Sicor and its Subsidiaries included in the Sicor Reports has been
appropriately disclosed in such financial statements. Sicor's disclosure
controls and procedures (as defined in sections 13a-15(e) and 15d-15(e) of the
Exchange Act) effectively enable Sicor to comply with, and the appropriate
officers of Sicor to make all certifications required under, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act of 2002 and the regulations promulgated thereunder (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act").
(f) Disclosure Documents.
(i) The proxy statement of Sicor (which will also constitute the
prospectus of Teva) to be filed with the SEC in connection with the Merger
(the "Proxy
-12-
Statement/Prospectus") and any amendments or supplements thereto will, when
filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act. At the time the Proxy
Statement/Prospectus or any amendment or supplement thereto is first mailed
to stockholders of Sicor, and at the time such stockholders vote on
adoption of this Agreement, the Proxy Statement/Prospectus, as supplemented
or amended, if applicable, will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which
they were made, not misleading. The representations and warranties
contained in this Section 5.1(f) will not apply to statements or omissions
included in the Proxy Statement/Prospectus based upon information furnished
to Sicor in writing by or on behalf of Teva specifically for use therein.
(ii) None of the information provided by Sicor for inclusion in the
Registration Statement or any amendment or supplement thereto, at the time
the Registration Statement or any amendment or supplement thereto becomes
effective, will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(g) No Undisclosed Material Liabilities. Except as set forth on Schedule
5.1(g) of the Sicor Disclosure Schedules, there are no liabilities or
obligations of Sicor or any of its Subsidiaries of any kind whatsoever in
existence on the date hereof, whether accrued, contingent, absolute, determined,
determinable or otherwise, other than: (i) liabilities or obligations disclosed
and provided for in the Sicor balance sheet as of June 30, 2003 included in the
Sicor Reports or in the notes thereto (the "Sicor Balance Sheet") or in the
Sicor Reports filed prior to the date hereof; (ii) liabilities or obligations
incurred in the ordinary course of business consistent with past practices since
June 30, 2003; (iii) liabilities and obligations not required to be disclosed on
the Sicor Balance Sheet under U.S. GAAP; and (iv) liabilities or obligations
that would not reasonably be expected to have, individually or in the aggregate,
a Sicor Material Adverse Effect.
(h) Absence of Certain Changes. Except as described in the Sicor Reports or
as set forth on Schedule 5.1(h) of the Sicor Disclosure Schedules, since
December 31, 2002 (the "Audit Date"), except as expressly contemplated by this
Agreement, Sicor and its Subsidiaries taken as a whole have conducted their
business only in, and have not engaged in any material transaction other than
according to, Sicor's ordinary and usual course of such business and there has
not been (i) any change in the financial condition, properties, assets, business
or results of operations of Sicor and its Subsidiaries that has had or would be
reasonably likely to have a Sicor Material Adverse Effect; (ii) any declaration,
setting aside or payment of any dividend or other distribution in respect of the
capital stock of Sicor or any repurchase, redemption or other acquisition by
Sicor or any Subsidiary of any securities of Sicor or (iii) any change by Sicor
in accounting principles, practices or methods which is not required or
permitted by U.S. GAAP. Since the Audit Date and through the date hereof, except
as provided for herein, there has not been any material increase in the
compensation payable or that could become payable by Sicor or any of its
Significant Subsidiaries to officers or key employees or any material amendment
of
-13-
any of the Compensation and Benefit Plans other than increases or amendments in
the ordinary course of business consistent with past practice. Except as
disclosed in the Sicor Reports, since January 1, 2003, there have not been any
changes, circumstances or events which, individually or in the aggregate, have
had, or would reasonably be expected to have, a Sicor Material Adverse Effect.
(i) Litigation. Except as described in the Sicor Reports or as set forth on
Schedule 5.1(i) of the Sicor Disclosure Schedules, there are no civil, criminal
or administrative actions, suits, claims, hearings, investigations, reviews or
proceedings pending or, to the knowledge of Sicor, threatened against Sicor or
any of its Subsidiaries, except for those that would not be reasonably likely to
have, either individually or in the aggregate, a Sicor Material Adverse Effect.
There are no material SEC inquiries or investigations, other material
governmental inquiries or investigations or material internal investigations
pending, or to the knowledge of Sicor, threatened, in each case regarding any
accounting practices of Sicor or any of its Subsidiaries or any malfeasance by
any director or executive officer of Sicor or any of its Subsidiaries.
(j) Employee Benefits.
(i) The term "Compensation and Benefit Plan" shall mean any bonus,
deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase, change in
control, retention, restricted stock, stock option, employment,
termination, severance, compensation, medical, health or other compensation
or benefit plan, including, without limitation, each "employee benefit
plan" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), that covers employees or former
employees ("Employees"), or directors or former directors of a party, or to
which contributions are made or otherwise required to be made; and any
trust agreement or insurance contract forming a part of such Compensation
and Benefit Plan. Section 5.1(j) of the Sicor Disclosure Schedules lists
all Compensation and Benefit Plans of Sicor and its Subsidiaries ("Sicor
Compensation and Benefit Plans"), and any Sicor Compensation and Benefit
Plans containing "change of control" or similar provisions therein are
specifically identified in Section 5.1(j) of the Sicor Disclosure
Schedules. Sicor has made available to Teva prior to the date hereof a copy
of all Sicor Compensation and Benefit Plans and a copy of each agreement,
policy, practice or arrangement that covers key employees or former key
employees of Sicor and its Significant Subsidiaries.
(ii) All Sicor Compensation and Benefit Plans, to the extent subject
to ERISA and the Code, are in compliance with the applicable provisions of
ERISA, the Code and any other applicable Law. Each Sicor Compensation and
Benefit Plan that is an "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA (a "Pension Plan") and that is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the U.S. Department of the Treasury, Internal
Revenue Service (the "IRS"), and nothing has occurred, whether by action or
failure to act, that would cause the loss of such qualification or that
would result in costs to Sicor or any of its Subsidiaries under the
Internal Revenue Service's Employee Plans
-14-
Compliance Resolution System. There is no pending or, to the knowledge of
Sicor, threatened litigation or other proceeding relating to the Sicor
Compensation and Benefit Plans. Neither Sicor nor any of its Subsidiaries
has engaged in a transaction with respect to any Pension Plan that,
assuming the taxable period of such transaction expired as of the date
hereof, would subject Sicor or any of its Subsidiaries to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of ERISA.
(iii) No liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by Sicor or any of its Subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan," within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which
is considered one employer with Sicor under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). Sicor and its Subsidiaries
have not incurred and do not expect to incur any withdrawal liability with
respect to a multi-employer plan under Subtitle E of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate). No
notice of a "reportable event," within the meaning of Section 4043 of ERISA
for which the thirty (30) day reporting requirement has not been waived or
extended, other than an extension pursuant to Pension Benefit Guaranty
Corporation Reg. Section 4043.66, has been required to be filed for any
Sicor Pension Plan or by any ERISA Affiliate within the twelve (12) month
period ending on the date hereof.
(iv) All contributions required to be made under the terms of any
Sicor Compensation and Benefit Plan subject to United States law have been
timely made or have been reflected on the most recent consolidated balance
sheet filed or incorporated by reference in Sicor Reports. Neither any
Pension Plan nor any single-employer plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA and no ERISA Affiliate
has an outstanding funding waiver. Neither Sicor nor any of its
Subsidiaries has provided, or is required to provide, security to any
Pension Plan subject to United States law or to any single-employer plan of
an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(v) Neither Sicor nor its Subsidiaries have any obligations for, or
liabilities with respect to, retiree health and life benefits under any
Sicor Compensation and Benefit Plan subject to United States law, except
for benefits required to be provided under Section 4980B of the Code or any
other applicable law requiring continuation of health coverage.
(vi) Neither the negotiation and execution of this Agreement nor the
consummation of the transactions contemplated hereby (including pursuant to
the Stockholders Agreement) will (either alone or upon the occurrence of
any additional or subsequent events) constitute an event under any Sicor
Compensation and Benefit Plan that will or may result in any payment
(whether of severance pay or otherwise), acceleration of payment,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any employee or former employee
of Sicor or any of its Subsidiaries. There is no contract, agreement, plan
or arrangement with an employee or former employee
-15-
of Sicor or any of its Subsidiaries to which Sicor or any of its
Subsidiaries is a party as of the date of this Agreement that, individually
or collectively and as a result of the transactions contemplated hereby
(including pursuant to the Stockholders Agreement), whether alone or upon
the occurrence of any additional or subsequent events, or otherwise, would
reasonably be likely to give rise to the payment of any amount that would
not be deductible pursuant to Sections 280G or 162(m) of the Code.
(vii) With respect to each Sicor Compensation and Benefit Plan not
subject to United States law (a "Sicor Foreign Benefit Plan"): (i) each
Sicor Foreign Benefit Plan is in compliance with applicable Law; (ii) each
Sicor Foreign Benefit Plan required to be registered with a regulatory
agency or authority has been registered and has been maintained in good
standing with such agency or authority, and (iii) as of the Effective Time,
the fair market value of the assets of each Sicor Foreign Benefit Plan is
sufficient to provide for the accrued benefit obligations with respect to
all current and former participants in such plan according to the actuarial
assumptions and valuations most recently used to determine employer
contributions to such Sicor Foreign Benefit Plan.
(viii) Notwithstanding anything to the contrary contained in this
Section 5.1(j), the representations and warranties contained in this
Section 5.1(j) shall be deemed to be true and correct unless such failures
to be true and correct are reasonably likely to have a Sicor Material
Adverse Effect.
(k) Compliance with Laws. The business of Sicor and its Subsidiaries is not
being conducted in violation of any United States or foreign, federal, state or
local law, statute, ordinance, rule, regulation, judgment, order, injunction,
decree, arbitration award, agency requirement, license or permit of any
Governmental Entity (collectively, "Laws"), including United States Food and
Drug Administration ("FDA") and other Governmental Entity rules, regulations and
policies relating to good clinical practices, good manufacturing practices, good
laboratory practices, advertising and promotion, pre- and post-marketing adverse
drug experience and adverse drug reaction reporting, and all other pre- and
post-marketing reporting requirements, as applicable, except for violations that
would not be reasonably likely to have, either individually or in the aggregate,
a Sicor Material Adverse Effect or prevent or materially impair the ability of
Sicor to consummate the transactions contemplated by this Agreement. Sicor is
not debarred under the Generic Drug Enforcement Act of 1992 and does not employ
or use the services of any individual who is debarred or, to the best of Sicor's
knowledge, has engaged in any activity that could lead to debarment. Except as
set forth on Section 5.1(k) of the Sicor Disclosure Schedules, no investigation
or review by any Governmental Entity with respect to Sicor or any of its
Subsidiaries is pending or, to the knowledge of Sicor, threatened, nor has any
Governmental Entity indicated in writing an intention to conduct the same,
except for those the outcome of which would not be reasonably likely to have,
either individually or in the aggregate, a Sicor Material Adverse Effect or
prevent or materially impair the ability of Sicor to consummate the transactions
contemplated by this Agreement. Sicor and each of its Subsidiaries has, or has
applied for, all permits, licenses, franchises, variances, exemptions, orders
and other
-16-
governmental authorizations, consents and approvals from Governmental Entities
necessary to conduct its business as currently conducted, except for those the
absence of which would not be reasonably likely to have, either individually or
in the aggregate, a Sicor Material Adverse Effect or prevent or materially
impair the ability of Sicor to consummate the transactions contemplated by this
Agreement. The provisions of this Section 5(k) shall not apply to Environmental
Laws which are covered exclusively in Section 5.1(m).
(l) Anti-takeover Statutes and Rights Agreement.
(i) Sicor has taken all action necessary to exempt the Merger, this
Agreement, the Stockholders Agreement and the transactions contemplated
hereby and thereby from the provisions of Section 203 of the DGCL. No other
state anti-takeover statute or regulation is applicable to this Agreement,
the Stockholders Agreement and the transactions contemplated hereby and
thereby.
(ii) Sicor has taken all action necessary to render the Stockholder
Rights Plan inapplicable to the Merger, the Stockholders Agreement and the
transactions contemplated hereby and thereby.
(m) Environmental Matters. Except as set forth on Section 5.1(m) of the
Sicor Disclosure Schedules and except for such matters that would not, either
individually or in the aggregate, be reasonably likely to cause a Sicor Material
Adverse Effect: (i) the operations of Sicor and its Subsidiaries are and have
been in compliance with all applicable Environmental Laws; (ii) each of Sicor
and its Subsidiaries possesses and maintains in effect all environmental
permits, licenses, authorizations and approvals required under applicable
Environmental Laws with respect to the properties and business of Sicor and its
Subsidiaries; (iii) neither Sicor nor any of its Subsidiaries have received any
written environmental claim, notice or request for information concerning any
violation or alleged violation of any applicable Environmental Law, nor, to
Sicor's knowledge, is there any existing factual or legal basis for any such
claim, notice or request for information; (iv) neither Sicor nor any of its
Subsidiaries has any knowledge of a release or threat of release of any
Hazardous Substances which could reasonably be expected to result in liability
to Sicor or any of it Subsidiaries at any of its or any of its Subsidiaries'
current or former properties or at any other property arising from its or any of
its Subsidiaries' current or former operations; (v) there are no writs,
injunctions, decrees, orders or judgments outstanding, or any actions, suits or
proceedings pending relating to compliance by Sicor or any of its Subsidiaries
with any environmental permits, licenses, authorizations and approvals required
under applicable Environmental Laws or liability of Sicor or any of its
Subsidiaries under any applicable Environmental Law; and (vi) no Lien has been
placed upon any of Sicor's or the Subsidiaries' properties (whether owned,
leased or managed) under any Environmental Law.
Notwithstanding any other provision of this Agreement to the contrary
(including, but not limited to, Section 5.1(k)), the representations and
warranties of Sicor in this Section 5.1(m) constitute the sole representations
and warranties of Sicor with respect to any Environmental Law or Hazardous
Substance.
-17-
As used herein, the term "Asbestos" includes chrysotile, amosite,
crocidolite; tremolite asbestos, anthophyllite asbestos, actinolite asbestos,
asbestos winchite, asbestos richterite, and any of these minerals that have been
chemically treated and/or altered and any asbestiform variety, type or component
thereof and any asbestos-containing material.
As used herein, the term "Asbestos-Containing Material" means any material
containing Asbestos, including, without limitation, any Asbestos-containing
products, automotive or industrial parts or components, equipment, improvements
to real property and any other material that contains Asbestos in any chemical
or physical form.
As used herein, the term "Environmental Law" means any Law (including
common law) relating to: (a) pollution; (b) the protection of the environment
(including air, water, soil, subsurface strata and natural resources) or human
health and safety; and (c) the regulation of the generation, use, storage,
handling, transportation, treatment, release, remediation or disposal of
Hazardous Substances.
As used herein, the term "Hazardous Substance" means any chemical, material
or substance that is potentially harmful to human health, the environment, or
natural resources or defined as such by any Environmental Law, including without
limitation, petroleum, petroleum products, Asbestos, and Asbestos-Containing
Materials.
(n) Tax Matters.
(i) Sicor and each of its Subsidiaries (A) have duly and timely filed
(taking into account any extension of time within which to file) all
material Tax Returns required to be filed by any of them as of the date
hereof and all such filed Tax Returns are complete and accurate in all
material respects; (B) (I) have timely paid all Taxes that are shown as due
on such filed Tax Returns or that Sicor or any of its Subsidiaries are
obligated to pay without the filing of a Tax Return, except with respect to
Taxes that are being contested in good faith, and (II) no material
penalties or charges are due with respect to the late filing of any Tax
Return required to be filed by or with respect to any of them on or before
the Effective Time; (C) with respect to all material Tax Returns filed by
or with respect to any of them, have not waived any statute of limitations
with respect to Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency; (D) except as set forth on Section 5.1(n) of
the Sicor Disclosure Schedules, as of the date hereof, do not have any
deficiency, audit, examination, investigation or other proceeding in
respect of Taxes or Tax matters pending or proposed or threatened in
writing; and (E) have provided adequate reserves in the most recent
consolidated financial statements of Sicor and its Subsidiaries, as
disclosed in the Sicor Reports, for any material Taxes of Sicor on any of
its Subsidiaries that have not been paid, whether or not shown as being due
on any Tax Returns.
(ii) None of Sicor and its Subsidiaries is party to any Tax
allocation, indemnification or sharing agreement.
(iii) None of Sicor and its Subsidiaries will be required to include
any material item of income in, or exclude any material item of deduction
from, taxable
-18-
income for any taxable period (or portion thereof) ending after the Closing
Date as a result of any: (A) change in method of accounting for a taxable
period ending on or prior to the Closing Date under Code Section 481(c) (or
any corresponding or similar provision of state, local or foreign income
Tax law); (B) "closing agreement" as described in Code Section 7121 (or any
corresponding or similar provision of state, local or foreign income Tax
law) executed on or prior to the Closing Date; or (C) installment sale or
intercompany transaction (as defined in Treasury regulations section
1502-13) made on or prior to the Closing Date.
(iv) Each of Sicor and its Subsidiaries has withheld and paid all
material Taxes required to have been withheld and paid in connection with
amounts paid or owing to any current or former employee, independent
contractor, creditor, stockholder or other third party.
(v) Neither Sicor nor any of its Subsidiaries has been a member of an
affiliated group filing a consolidated, combined or unitary U.S. federal,
state, local or foreign income Tax Return (other than a group whose common
parent was Sicor).
(vi) Neither Sicor nor any of its Subsidiaries has any material
liability for the Taxes of any person (other than Sicor and its
Subsidiaries) under Treasury regulation section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor,
by contract, or otherwise.
(vii) Neither Sicor nor any of its Subsidiaries has any requests for
material rulings in respect of Taxes pending between Sicor or any
Subsidiary and any Tax authority.
(viii) Sicor has made available to Teva true and correct copies of the
U.S. federal income Tax Returns filed by Sicor and its Subsidiaries for tax
years 2000 through 2002.
(ix) There is no contract or agreement, plan or arrangement by Sicor
or its Subsidiaries covering any Person that, individually or collectively,
would constitute compensation in excess of the deduction limitation set
forth in Section 162(m) of the Code.
(x) As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes," and "Taxable") includes all
federal, state, local and foreign income, profits, franchise, gross
receipts, environmental, customs duty, capital stock, severances, stamp,
payroll, sales, employment, unemployment, disability, use, property,
withholding, excise, production, value added, occupancy and other taxes,
duties or assessments of any nature whatsoever, together with all interest,
penalties and additions imposed with respect to such amounts and any
interest in respect of such penalties and additions, and (ii) the term "Tax
Return" includes all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns, as
well as attachments thereto and amendments thereof) required to be supplied
to a Tax authority relating to Taxes.
-19-
(o) Labor Matters. Except as set forth on Section 5.1(o) of the Sicor
Disclosure Schedules, neither Sicor nor any of its Subsidiaries is the subject
of any material proceeding asserting that Sicor or any of its Subsidiaries has
committed an unfair labor practice or any other violation of law relating to
employee matters, nor since January 1, 2003 has there been any labor strike,
dispute, walk-out, work stoppage, slow-down or lockout involving Sicor or any of
its Subsidiaries, except for those that, either individually or in the
aggregate, are not reasonably likely to have a Sicor Material Adverse Effect.
(p) Intellectual Property. Except as described in the Sicor Reports or on
Section 5.1(p) of the Sicor Disclosure Schedules,
(i) Sicor or one of its Subsidiaries owns, or is licensed or otherwise
possesses sufficient legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights, technology, know-how,
computer software programs or applications, databases and tangible or
intangible proprietary information or materials that are currently used in
its and its Subsidiaries' businesses (collectively, "Sicor Intellectual
Property Rights"), except for any such failures to own, be licensed or
possess that, individually or in the aggregate, are not reasonably likely
to have a Sicor Material Adverse Effect.
(ii) Except for such matters that, individually or in the aggregate,
are not reasonably likely to have a Sicor Material Adverse Effect, (A) the
use of Sicor Intellectual Property Rights by Sicor or its Subsidiaries does
not conflict with, infringe upon, violate or interfere with or constitute
an appropriation of any right, title, interest or goodwill, including,
without limitation, any valid patent, trademark, trade name, service ▇▇▇▇,
copyright or other valid intellectual property right of any other Person
and (B) there have been no claims made and neither Sicor nor any of its
Subsidiaries has received written notice of any claim or otherwise knows
that any Sicor Intellectual Property Right is invalid, or conflicts with
the asserted right of any other Person.
(q) Title to Properties. Except as set forth on Section 5.1(q) of the Sicor
Disclosure Schedules, Sicor and each of its Subsidiaries has good and valid
title to all of its material properties and assets, free and clear of all
mortgages, liens, pledges, charges, security interests, encumbrances or other
adverse claims of any kind in respect of such property or asset (collectively,
"Liens"), except Liens for taxes not yet due and payable and such Liens or other
imperfections of title, if any, that, individually or in the aggregate, are not
reasonably likely to have a Sicor Material Adverse Effect. All leases pursuant
to which Sicor and each of its Subsidiaries leases from others material real or
personal property are valid and effective in accordance with their respective
terms, and there is not, under any of such leases, any existing default or event
of default of Sicor or any of its Subsidiaries or, to the knowledge of Sicor,
any other party (or any event which with notice or lapse of time, or both, would
constitute a material default), that, individually or in the aggregate, are
reasonably likely to have a Sicor Material Adverse Effect.
(r) Contracts. Neither Sicor nor any of its Subsidiaries has breached, or
received in writing any claim or notice that it has breached, any of the terms
and conditions of any Contract
-20-
to which it is a party or by which it is bound in such a manner as, individually
or in the aggregate, are reasonably likely to have a Sicor Material Adverse
Effect. Each Contract to which Sicor or any of its Subsidiaries is a party or by
which it is bound that has not expired or terminated by its terms is in full
force and effect, except where the failure to be in full force and effect,
individually or in the aggregate, is not reasonably likely to have a Sicor
Material Adverse Effect.
(s) Product Liability. Except as set forth on Section 5.1(s) of the Sicor
Disclosure Schedules, no product liability claims have been asserted in writing
against Sicor or any of its Subsidiaries or, to the knowledge of Sicor,
threatened against Sicor or any of its Subsidiaries relating to any or their
products or product candidates developed, tested, manufactured, marketed,
distributed or sold by Sicor or any of its Subsidiaries, except for claims that,
individually or in the aggregate, are not reasonably likely to have a Sicor
Material Adverse Effect. There is no judgment, order or decree outstanding
against Sicor or any of its Subsidiaries relating to product liability claims or
assessments.
(t) Insurance. Sicor maintains for itself and its Subsidiaries insurance
policies covering the assets, business, equipment, properties, operations,
employees, directors and officers, and product warranty and liability claims,
and such other forms of insurance in such amounts, with such deductibles and
against such risks and losses as, in its judgment, are reasonable for the
business and assets of Sicor and its Subsidiaries. All such insurance policies
are in full force and effect, all premiums due and payable thereon have been
paid, and Sicor and its Subsidiaries are otherwise in compliance with the terms
and conditions of such policies and bonds except for failures to so comply that,
individually or in the aggregate, are not reasonably likely to have a Sicor
Material Adverse Effect.
(u) Vote Required. The approval of the majority of the shares of Sicor
Common Stock outstanding on the record date for such vote (the "Sicor Requisite
Vote") is the only vote of any class or series of the capital stock of Sicor
required to approve this Agreement, the Stockholders Agreement and the
transactions contemplated hereby and thereby.
(v) Suppliers. Sicor and its Subsidiaries has good commercial relationships
with each of its suppliers of active ingredients, bulk chemical products and
finished drug products and, to the best of its knowledge, there are no facts
concerning such suppliers that would reasonably be expected to result in any
material interruption in the timely supply by such suppliers to Sicor and its
Subsidiaries of any such materials, except as, individually or in the aggregate,
are not reasonably likely to have a Sicor Material Adverse Effect. No such
supplier has notified Sicor or its Subsidiaries in writing that it intends to
terminate or materially alter the terms of its supply relationship with Sicor
and its Subsidiaries, except as, individually or in the aggregate with all other
such notifications, is not reasonably likely to have a Sicor Material Adverse
Effect.
(w) Transactions with Affiliates. Except as disclosed on Section 5.1(w) of
the Sicor Disclosure Schedules or in the Sicor Reports, no present or former
affiliate of Sicor has, or since December 31, 2001 has had, (i) any interest in
any property (whether real, personal or mixed and whether tangible or
intangible) used in or pertaining to any of the businesses of Sicor or any of
its Subsidiaries, (ii) has had business dealings or a material financial
interest in any transaction
-21-
with Sicor or any of its Subsidiaries (other than compensation and benefits
received in the ordinary course of business as an employee or director of Sicor
or any of its Subsidiaries) or (iii) any material equity interest or any other
material financial or profit interest in any Person that has had business
dealings or a material financial interest in any transaction with Sicor or any
of its Subsidiaries.
(x) Brokers and Finders. Except for Bear, ▇▇▇▇▇▇▇ & Co. Inc. ("Bear
▇▇▇▇▇▇▇"), neither Sicor nor any of its officers, directors or employees has
retained any broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the Merger, this Agreement, the
Stockholders Agreement and the transactions contemplated hereby and thereby.
(y) Opinion of Financial Advisor. Sicor has received an opinion of Bear
▇▇▇▇▇▇▇, dated as of the date hereof, to the effect that, as of such date, the
Merger Consideration is fair from a financial point of view to holders of shares
of Sicor Common Stock.
(z) No Other Representations or Warranties. Except for the representations
and warranties contained in this Section 5.1, neither Sicor nor any other Person
makes any other express or implied representation or warranty on behalf of Sicor
or any of its Subsidiaries.
5.2 Representations and Warranties of Teva and Merger Sub. Teva and Merger
Sub each represents and warrants to Sicor that:
(a) Organization, Good Standing and Qualification. Each of Teva and Merger
Sub is a corporation and is duly organized, validly existing and in good
standing under the Laws of its respective jurisdiction of organization. Each of
Teva and Merger Sub has all requisite corporate power to own and operate its
material properties and assets and to carry on its business as currently
conducted in all material respects and is qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the ownership
or operation of its properties and assets or conduct of its business requires
such qualification, except where the failure to be so qualified as a foreign
corporation or be in good standing would not be reasonably likely to have,
either individually or in the aggregate, a Teva Material Adverse Effect. Teva
has made available to Sicor a complete and correct copy of the Memorandum of
Association and Articles of Association of Teva and the certificate of
incorporation and by-laws of Merger Sub, each as amended through the date hereof
and as in full force and effect on the date hereof.
As used in this Agreement, the term "Teva Material Adverse Effect" means a
material adverse effect on the financial condition, business, assets or results
of operations of Teva and its Subsidiaries taken as a whole; provided, however,
that any such effect resulting from or arising out of (i) any change in Law or
U.S. GAAP or interpretations thereof, (ii) economic or business conditions in
the United States generally, (iii) conditions generally affecting the
pharmaceutical industry or (iv) the execution and delivery of this Agreement, or
the contemplated consummation of the transactions contemplated hereby, shall not
be considered when determining if a Teva Material Adverse Effect has occurred.
(b) Capital Structure. The authorized share capital of Teva consists of
999,575,693 ordinary shares, 424,247 class "A" ordinary shares and 60 deferred
shares, of which 277,108,725
-22-
Teva Ordinary Shares, including 199,231,374 Teva Ordinary Shares represented by
199,231,374 outstanding Teva ADSs, were outstanding as of the close of business
on October 29, 2003. One Teva ADS represents one Teva Ordinary Share. All of the
issued and outstanding Teva Ordinary Shares and Teva ADSs have been, and all
Teva ADSs representing Teva Ordinary Shares which are to be issued pursuant to
the Merger have been duly authorized and will be, when issued in accordance with
the terms of this Agreement, validly issued, fully paid and nonassessable and
are not subject to any preemptive or similar right. Each of the outstanding
shares of capital stock, ownership interests, or other securities of each of the
Teva's Significant Subsidiaries (including without limitation the shares of
capital stock of Merger Sub) is duly authorized, validly issued, fully paid and
nonassessable and is owned by Teva or a direct or indirect wholly-owned
Subsidiary of Teva, free and clear of any lien, pledge, security interest, claim
or other encumbrance. Except pursuant to Teva's stock plans (collectively, the
"Teva Stock Plans"), as set forth on Section 5.2(b) of the Teva Disclosure
Schedules, and except as otherwise set forth on Section 5.2(b) of the Teva
Disclosure Schedules, there are no preemptive or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements or commitments to issue or
to sell any shares of capital stock, ownership interests or other securities of
Teva or any of its Significant Subsidiaries or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire, any securities of Teva or any of its
Significant Subsidiaries, and so securities or obligations evidencing such
rights authorized, issued or outstanding. Except as set forth on Section 5.2(b)
of the Teva Disclosure Schedules, Teva does not have outstanding any Voting
Debt.
(c) Corporate Authority.
(i) Each of Teva and Merger Sub has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby, subject only to receipt of the Teva
Required Statutory Approvals. This Agreement has been duly executed and
delivered by Teva and Merger Sub and, assuming due authorization, execution
and delivery by Sicor, is a valid and legally binding agreement of Teva and
Merger Sub, enforceable against each of Teva and Merger Sub in accordance
with its terms, subject to the Bankruptcy and Equity Exception.
(ii) The Boards of Directors of Teva and Merger Sub have approved and
adopted this Agreement and the Merger and the other transactions set forth
herein.
(d) Governmental Filings; No Violations.
(i) Other than any reports, filings, registrations, approvals and/or
notices (A) required to be made pursuant to Section 1.2, (B) required to be
made under the HSR Act, the Securities Act and the Exchange Act and state
securities and "blue sky" laws, (C) required to be made with the Israeli
Securities Authority ("ISA"), (D) required to be made with the Tel Aviv
Stock Exchange Ltd. ("TASE"), (E) required to be made with Nasdaq and (F)
the Foreign Antitrust Filings (items (B) through (F) (inclusive)), the
-23-
"Teva Required Statutory Approvals"), no notices, reports, registrations or
other filings are required to be made by Teva or Merger Sub with, nor are
any consents, registrations, approvals, permits or authorizations required
to be obtained by Teva or Merger Sub from, any Governmental Entity, in
connection with the execution and delivery by Teva and Merger Sub of this
Agreement and the consummation by Teva and Merger Sub of the Merger and the
other transactions contemplated hereby, except for those that the failure
to make or obtain would not be reasonably likely to have, either
individually or in the aggregate, a Teva Material Adverse Effect or
prevent, materially delay or materially impair the ability of Teva or
Merger Sub to consummate the transactions contemplated hereby.
(ii) The execution, delivery and performance of this Agreement by Teva
and Merger Sub do not, and the consummation by Teva and Merger Sub of the
Merger and the other transactions contemplated hereby will not, constitute
or result in (A) breach or violation of, or a default under, either the
Memorandum of Association or Articles of Association of Teva or the
certificate of incorporation or by-laws of Merger Sub or similar governing
documents of any of Teva's Significant Subsidiaries, (B) a breach or
violation of, or a default under, the acceleration of any obligations, the
loss of any right or benefit or the creation of a lien, pledge, security
interest or other encumbrance on the assets of Teva, Merger Sub or any of
Teva's Subsidiaries (with or without notice, lapse of time or both)
pursuant to any Contracts binding upon Teva, Merger Sub or any of Teva's
Significant Subsidiaries or any Law or governmental or non-governmental
permit or license to which Teva, Merger Sub or any of Teva's Subsidiaries
is subject or (C) any change in the rights or obligations of any party
under any of the Contracts, except, in the case of clause (B) or (C) above,
for any breach, violation, default, acceleration, creation or change that
would not be reasonably likely to have, either individually or in the
aggregate, a Teva Material Adverse Effect or prevent, materially delay or
materially impair the ability of Teva or Merger Sub to consummate the
transactions contemplated hereby.
(e) Teva Reports; Financial Statements. The filings required to be made by
Teva and, to the extent applicable, its Subsidiaries since December 31, 2000
under the Securities Act and the Exchange Act have been filed with the SEC,
including all forms, statements, reports, agreements (oral or written) and all
documents, exhibits, amendments and supplements appertaining thereto, and
complied, as of their respective dates, in all material respects with all
applicable requirements of the appropriate statutes and the rules and
regulations thereunder (collectively, including any amendments of any such
reports filed with or furnished to the SEC by Teva prior to the date hereof, the
"Teva Reports"). Teva has made available to Sicor (i) each Teva Report filed
with or furnished to the SEC by Teva pursuant to the Securities Act or the
Exchange Act since December 31, 2000, and prior to the date hereof, each in the
form (including exhibits, annexes and any amendments thereto) promulgated by the
SEC under the Securities Act or the Exchange Act, as the case may be and (ii)
each of Teva's press releases released to the public in 2003 which are located
at ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇.▇▇▇/▇▇/▇▇▇▇/▇▇▇▇▇.▇▇▇. None of the Teva Reports (in the
case of Teva Reports filed pursuant to the Securities Act), as of their
effective dates, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein not
-24-
misleading. None of the Teva Reports (in the case of Teva Reports filed pursuant
to the Exchange Act) as of the respective dates first mailed to stockholders, as
applicable, contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. None
of the Teva Reports (in the case of Teva Reports issued to the public as press
releases) as of their respective release dates, as applicable, contained any
untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of the Teva and its Subsidiaries included in such Teva
Reports comply as to form in all material respects with the applicable rules and
regulations of the SEC with respect thereto. Each of the consolidated balance
sheets included in or incorporated by reference into the Teva Reports (including
the related notes and schedules) presents fairly, in all material respects, the
financial position of the Teva and its Subsidiaries as of its date, and each of
the consolidated statements of income and of consolidated statements of cash
flows included in or incorporated by reference into the Teva Reports (including
any related notes and schedules) fairly presents in all material respects the
results of operations, retained earnings and changes in financial position, as
the case may be, of the Teva and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to the absence of notes
and normal year-end audit adjustments), in each case in accordance with U.S.
GAAP consistently applied during the periods involved, except as may be noted
therein. Any change by Teva in the accounting principles, practices or methods
used in such financial statements of Teva and its Subsidiaries included in the
Teva Reports has been appropriately disclosed in such financial statements.
Teva's disclosure controls and procedures (as defined in sections 13a-15(e) and
15d-15(e) of the Exchange Act) effectively enable Teva to comply with, and the
appropriate officers of Teva to make all certifications required under, the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. Teva qualifies as a "foreign private issuer" as defined in
Rule 3b-4 under the Exchange Act.
(f) Disclosure Documents.
(i) None of the information provided by Teva for inclusion in the
Proxy Statement/Prospectus or any amendment or supplement thereto, at the
time the Proxy Statement/Prospectus or any amendment or supplement thereto
is first mailed to stockholders of Sicor and at the time the stockholders
vote on adoption of this Agreement, will contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements make therein, in the light of the circumstances under which
they were made, not misleading.
(ii) The Registration Statements of Teva to be filed with the SEC with
respect to the offering of Teva ADSs representing Teva Ordinary Shares in
connection with the Merger (the "F-4 Registration Statement") and the Teva
ADSs issuable upon exercise of the assumed Sicor Stock Options (such
Registration Statement and the F-4 Registration Statement, collectively,
the "Registration Statements") and any amendments or supplements thereto,
when filed, will comply as to form in all material respects with the
requirements of the Securities Act. At the time a Registration Statement or
any amendment or supplement thereto becomes effective and at the Effective
Time, the Registration Statements, as amended or supplemented, will not
contain any untrue
-25-
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(g) No Undisclosed Material Liabilities. Except as set forth on Section
5.2(g) of the Teva Disclosure Schedules, there are no liabilities or obligations
of Teva or any of its Subsidiaries of any kind whatsoever in existence on the
date hereof, whether accrued, contingent, absolute, determined, determinable or
otherwise, other than: (i) liabilities or obligations disclosed and provided for
in the Teva balance sheet as of June 30, 2003 included in the Teva Reports or in
the notes thereto (the "Teva Balance Sheet") or in the Teva Reports to the date
hereof; (ii) liabilities or obligations incurred in the ordinary course of
business consistent with past practices since June 30, 2003; (iii) liabilities
and obligations not required to be disclosed on the Teva Balance Sheet under
U.S. GAAP and (iii) liabilities or obligations that would not reasonably be
expected have individually or in the aggregate, a Teva Material Adverse Effect.
(h) Absence of Certain Changes. Except as described in the Teva Reports or
as set forth on Schedule 5.2(h) of the Teva Disclosure Schedules, since the
Audit Date, except as expressly contemplated by this Agreement, Teva and its
Subsidiaries taken as a whole have conducted their business only in, and have
not engaged in any material transaction other than according to, the ordinary
and usual course of such business and there has not been (i) any change in the
financial condition, properties, assets, business or results of operations of
Teva and its Subsidiaries that has had or would be reasonably likely to have a
Teva Material Adverse Effect; (ii) any declaration, setting aside or payment of
any dividend or other distribution in respect of the capital stock of Teva or
any repurchase, redemption or other acquisition by Teva or any Subsidiary of any
securities of Teva other than regular quarterly dividends on shares of Teva
Common Stock in the ordinary course (including, in the case of Teva Ordinary
Shares, any periodic increase thereon consistent with past practice) or (iii)
any change by Teva in accounting principles, practices or methods which is not
required or permitted by U.S. GAAP. Since the Audit Date and through the date
hereof, except as provided for herein, there has not been any material increase
in the compensation payable or that could become payable by Teva or any of its
Significant Subsidiaries to officers or key employees or any material amendment
of any of the Compensation and Benefit Plans other than increases or amendments
in the ordinary course of business consistent with past practice. Except as
disclosed in the Teva Reports, since January 1, 2003, there have not been any
changes, circumstances or events which, individually or in the aggregate, have
had, or would reasonably be expected to have, a Teva Material Adverse Effect.
(i) Litigation. Except as described in the Teva Reports or as set forth on
Schedule 5.2(i) of the Teva Disclosure Schedules, there are no civil, criminal
or administrative actions, suits, claims, hearings, investigations, reviews or
proceedings pending or, to the knowledge of Teva threatened against Teva or any
of its Subsidiaries, except for those that would not be reasonably likely to
have, either individually or in the aggregate, a Teva Material Adverse Effect.
There are no material SEC inquiries or investigations, other material
governmental inquiries or investigations or material internal investigations
pending, or to the knowledge of Teva, threatened, in each case regarding any
accounting practices of Teva or any of its Subsidiaries or any malfeasance by
any director or executive officer of Teva or any of its Subsidiaries.
-26-
(j) Employee Benefits.
(i) Teva has made available to Sicor prior to the date hereof a copy
of all Compensation and Benefit Plans of Teva and its Significant
Subsidiaries other than those that, in the aggregate, are not material to
Teva and its Subsidiaries, taken as a whole (the "Teva Compensation and
Benefit Plans"), and a copy of each material agreement, policy, practice or
arrangement that covers key employees of Teva and its Significant
Subsidiaries as a group.
(ii) All Teva Compensation and Benefit Plans, to the extent subject to
the ERISA and the Code are in compliance in all material respects with the
applicable provisions of ERISA, the Code and other applicable Law. Each
Teva Pension Plan which is intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter from the IRS, and
nothing has occurred, whether by action or failure to act, that would cause
the loss of such qualification or that would result in costs to Teva or any
of its Significant Subsidiaries under the Internal Revenue Service's
Employee Plans Compliance Resolution System. There is no material pending
or, to the knowledge of Teva, threatened litigation or other proceeding
relating to Teva Compensation and Benefit Plans. Neither Teva nor any of
its Significant Subsidiaries has engaged in a transaction with respect to
any Pension Plan that, assuming the taxable period of such transaction
expired as of the date hereof, would subject Teva or any of its Significant
Subsidiaries to a material tax or penalty imposed by either Section 4975 of
the Code or Section 502(i) of ERISA.
(iii) No liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by Teva or any of its Significant
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the single-employer
plan of any ERISA Affiliate. Teva and its Significant Subsidiaries have not
incurred and do not expect to incur any withdrawal liability with respect
to a multi-employer plan under Subtitle E of Title IV of ERISA (regardless
of whether based on contributions of an ERISA Affiliate). No notice of a
"reportable event," within the meaning of Section 4043 of ERISA for which
the thirty (30) day reporting requirement has not been waived or extended,
other than an extension pursuant to Pension Benefit Guaranty Corporation
Reg. Section 4043.66, has been required to be filed for any Teva Pension
Plan or by any ERISA Affiliate within the twelve (12) month period ending
on the date hereof.
(iv) All contributions required to be made under the terms of any Teva
Compensation and Benefit Plan subject to United States law have been timely
made or have been reflected on the most recent consolidated balance sheet
filed or incorporated by reference in Teva Reports. Neither any Teva
Pension Plan nor any single-employer plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA and no ERISA Affiliate
has an outstanding funding waiver. Neither Teva nor any of its Significant
Subsidiaries has provided, or is required to provide, security to any
Pension
-27-
Plan subject to United States law or to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(v) Neither Teva nor its Significant Subsidiaries have any material
obligations for, or liabilities with respect to, retiree health and life
benefits under any Teva Compensation and Benefit Plan subject to United
States law, except for benefits required to be provided under Section 4980B
of the Code or any other applicable law requiring continuation of health
coverage.
(vi) Notwithstanding anything to the contrary contained in this
Section 5.2(j), the representations and warranties contained in this
Section 5.2(j) shall be deemed to be true and correct unless such failures
to be true and correct are reasonably likely to have a Teva Material
Adverse Effect.
(vii) Neither the negotiation and execution of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or
upon the occurrence of any additional or subsequent events) constitute an
event under any Teva Compensation and Benefit Plan that will or may result
in any payment (whether of severance pay or otherwise), acceleration of
payment, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee or
former employee of Teva or any of its Significant Subsidiaries.
(viii) With respect to each Teva Compensation and Benefit Plan not
subject to United States law (a "Teva Foreign Benefit Plan"): (i) each Teva
Foreign Benefit Plan is in material compliance with applicable Law; (ii)
each Teva Foreign Benefit Plan required to be registered with a regulatory
agency or authority has been registered and has been maintained in good
standing with such agency or authority, and (iii) as of the Effective Time,
the fair market value of the assets of each Teva Foreign Benefit Plan is
sufficient to provide for the accrued benefit obligations with respect to
all current and former participants in such plan according to the actuarial
assumptions and valuations most recently used to determine employer
contributions to such Teva Foreign Benefit Plan.
(k) Compliance with Laws. The business of Teva and its Subsidiaries is not
being conducted in violation of any Laws, including FDA and other Governmental
Entity rules, regulations and policies relating to good clinical practices, good
manufacturing practices, good laboratory practices, advertising and promotion,
pre- and post-marketing adverse drug experience and adverse drug reaction
reporting, and all other pre- and post-marketing reporting requirements, as
applicable, except for violations that would not be reasonably likely to have,
either individually or in the aggregate, a Teva Material Adverse Effect or
prevent or materially impair the ability of Teva to consummate the transactions
contemplated by this Agreement. Teva is not debarred under the Generic Drug
Enforcement Act of 1992 and does not employ or use the services of any
individual who is debarred or, to the best of Teva's knowledge, has engaged in
any activity that could lead to debarment. No investigation or review by any
Governmental Entity with respect to Teva or any of its Subsidiaries is pending
or, to the knowledge of Teva, threatened, nor has any Governmental Entity
indicated in writing an
-28-
intention to conduct the same, except for those the outcome of which would not
be reasonably likely to have, either individually or in the aggregate, a Teva
Material Adverse Effect or prevent or materially impair the ability of Teva to
consummate the transactions contemplated by this Agreement. Teva and each of its
Subsidiaries has all permits, licenses, franchises, variances, exemptions,
orders and other governmental authorizations, consents and approvals from
Governmental Entities necessary to conduct its business as currently conducted,
except for those the absence of which would not be reasonably likely to have,
either individually or in the aggregate, a Teva Material Adverse Effect or
prevent or materially impair the ability of Teva to consummate the transactions
contemplated by this Agreement. The provisions of this Section 5.2(k) shall not
apply to Environmental Laws which are covered exclusively in Sections 5.2(l).
(l) Environmental Matters. Except as set forth on Section 5.2(l) of the
Teva Disclosure Schedules and except for such matters that would not, either
individually or in the aggregate, be reasonably likely to cause a Teva Material
Adverse Effect: (i) the operations of Teva and its Subsidiaries are and have
been in compliance with all applicable Environmental Laws; (ii) each of Teva and
each of its Subsidiaries possesses and maintains in effect all environmental
permits, licenses, authorizations and approvals required under applicable
Environmental Laws with respect to the properties and business of Teva and its
Subsidiaries; (iii) neither Teva nor any of its Subsidiaries have received any
written environmental claim, notice or request for information concerning any
violation or alleged violation of any applicable Environmental Law, nor, to
Teva's knowledge, is there any existing factual or legal basis for any such
claim, notice or request for information; (iv) neither Teva nor any of its
Subsidiaries has any knowledge of a release or threat of release of any
Hazardous Substances which could reasonably be expected to result in liability
to Teva or any of it Subsidiaries at any of its or its Subsidiaries' current or
former properties or at any other property arising from its or any of its
Subsidiaries' current or former operations; (v) there are no writs, injunctions,
decrees, orders or judgments outstanding, or any actions, suits or proceedings
pending relating to compliance by Teva or any of its Subsidiaries with any
environmental permits, licenses, authorizations and approvals required under
applicable Environmental Laws or liability of Teva or any of its Subsidiaries
under any applicable Environmental Law; and (vi) no Lien has been placed upon
any of Teva's or its Subsidiaries' properties (whether owned, leased or managed)
under any Environmental Law.
Notwithstanding any other provision of this Agreement to the contrary
(including, but not limited to, Section 5.2(k)), the representations and
warranties of Teva in this Section 5.2(m) constitute the sole representations
and warranties of Teva with respect to any Environmental Law or Hazardous
Substance.
(m) Tax Matters. Teva and each of its Subsidiaries (i) have duly and timely
filed (taking into account any extension of time within which to file) all
material Tax Returns required to be filed by any of them as of the date hereof
and all such filed Tax Returns are complete and accurate in all material
respects; (ii) (A) have timely paid all Taxes that are shown as due on such
filed Tax Returns, except with respect to matters contested in good faith and
(B) no material penalties or charges are due with respect to the late filing of
any Tax Return required to be filed by or with respect to any of them on or
before the Effective Time; (iii) with respect to all Tax material Returns filed
by or with respect to any of them have not waived any statute of
-29-
limitations with respect to Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency; and (iv) as of the date hereof, does
not have any deficiency, or any such audits, examinations, investigations or
other proceedings in respect of Taxes or Tax matters pending or proposed or
threatened in writing.
(n) Labor Matters. Neither Teva nor any of its Subsidiaries is the subject
of any material proceeding asserting that Teva or any of its Significant
Subsidiaries has committed an unfair labor practice or any other violation of
law relating to employee matters, nor since January 1, 2003 has there been any
labor strike, dispute, walk-out, work stoppage, slow-down or lockout involving
Teva or any of its Subsidiaries, except for those that, either individually or
in the aggregate, are not reasonably likely to have a Teva Material Adverse
Effect.
(o) Intellectual Property. Except as described in the Teva Reports or on
Section 5.2(o) of the Teva Disclosure Schedules,
(i) Teva or one of its Subsidiaries owns, or is licensed or otherwise
possesses sufficient legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights, technology, know-how,
computer software programs or applications, databases and tangible or
intangible proprietary information or materials that are currently used in
its and its Subsidiaries' businesses (collectively, "Teva Intellectual
Property Rights"), except for any such failures to own, be licensed or
possess that, individually or in the aggregate, are not reasonably likely
to have a Teva Material Adverse Effect.
(ii) Except for such matters that, individually or in the aggregate,
are not reasonably likely to have a Teva Material Adverse Effect, (A) the
use of Teva Intellectual Property Rights by Teva or its Subsidiaries does
not conflict with, infringe upon, violate or interfere with or constitute
an appropriation of any right, title, interest or goodwill, including,
without limitation, any intellectual property right, patent, trademark,
trade name, service ▇▇▇▇, copyright of any other Person and (B) there have
been no claims made and neither Teva nor any of its Subsidiaries has
received written notice of any claim or otherwise knows that any Teva
Intellectual Property Right is invalid, or conflicts with the asserted
right of any other Person.
(p) Title to Properties. Teva and each of its Subsidiaries has good and
valid title to all of its material properties and assets, free and clear of all
Liens, except Liens for taxes not yet due and payable and such Liens or other
imperfections of title, if any, that, individually or in the aggregate, are not
reasonably likely to have a Teva Material Adverse Effect. All leases pursuant to
which Teva and each of its Subsidiaries leases from others material real or
personal property are valid and effective in accordance with their respective
terms, and there is not, under any of such leases, any existing default or event
of default of Teva or any of its Subsidiaries or, to the knowledge of Teva, any
other party (or any event which with notice or lapse of time, or both, would
constitute a material default), that, individually or in the aggregate, are
reasonably likely to have a Teva Material Adverse Effect.
-30-
(q) Contracts. Neither Teva nor any of its Subsidiaries has breached, or
received in writing any claim or notice that it has breached, any of the terms
and conditions of any Contract to which it is a party or by which it is bound in
such a manner as, individually or in the aggregate, are reasonably likely to
have a Teva Material Adverse Effect. Each Contract to which Teva or any of its
Subsidiaries is a party or by which it is bound that has not expired or
terminated by its terms is in full force and effect, except where the failure to
be in full force and effect is not reasonably likely to have a Teva Material
Adverse Effect.
(r) Product Liability. No product liability claims have been asserted in
writing against Teva or any of its Subsidiaries or, to the knowledge of Teva,
threatened against Teva or any of its Subsidiaries relating to any or their
products or product candidates developed, tested, manufactured, marketed,
distributed or sold by Teva or any of its Subsidiaries, except for claims that,
individually or in the aggregate, are not reasonably likely to have a Teva
Material Adverse Effect. There is no Order outstanding against Teva or any of
its Subsidiaries relating to product liability claims or assessments.
(s) Insurance. Teva maintains for itself and its Subsidiaries insurance
policies covering the assets, business, equipment, properties, operations,
employees, directors and officers, and product warranty and liability claims,
and such other forms of insurance in such amounts, with such deductibles and
against such risks and losses as, in its judgment, are reasonable for the
business and assets of Teva and its Subsidiaries. All such insurance policies
are in full force and effect, all premiums due and payable thereon have been
paid, and Teva and its Subsidiaries are otherwise in compliance with the terms
and conditions of such policies and bonds except for failures to so comply that,
individually or in the aggregate, are not reasonably likely to have a Teva
Material Adverse Effect.
(t) No Business Activities. Merger Sub is not a party to any material
agreement and has not conducted any activities other than in connection with the
organization of Merger Sub, the negotiation and execution of this Agreement and
the consummation of the transactions contemplated hereby. Merger Sub has no
Subsidiaries.
(u) No Vote Required. No approval of the stockholders of Teva is required
to approve this Agreement and the transactions contemplated hereby. The vote or
consent of Teva as the sole stockholder of Merger Sub (which shall have occurred
prior to the Effective Time) is the only vote or consent of the holders of any
class or series of capital stock of Merger Sub necessary to approve this
Agreement, the Merger or the transactions contemplated hereby.
(v) Ownership of Sicor Common Stock. Except pursuant to the Stockholders
Agreement, neither Teva, Merger Sub nor any of their respective Subsidiaries or,
to the knowledge of Teva, any of their respective affiliates or associates (as
such terms are defined under the Exchange Act) (i) beneficially owns, directly
or indirectly, or (ii) is a party to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of, in case of either
clause (i) or (ii), any shares of Sicor Common Stock.
(w) Transactions with Affiliates. Except as disclosed on Section 5.2(w) of
the Teva Disclosure Schedules or in the Teva Reports, no present or former
affiliate of Teva has, or since
-31-
December 31, 2001 has had, (i) any interest in any property (whether real,
personal or mixed and whether tangible or intangible) used in or pertaining to
any of the businesses of Teva or any of its Subsidiaries, (ii) has had business
dealings or a material financial interest in any transaction with Teva or any of
its Subsidiaries (other than compensation and benefits received in the ordinary
course of business as an employee or director of Teva or any of its
Subsidiaries) or (iii) any material equity interest or any other material
financial or profit interest in any Person that has had business dealings or a
material financial interest in any transaction with Teva or any of its
Subsidiaries.
(x) Brokers and Finders. Except for Credit Suisse First Boston LLC and
▇▇▇▇▇▇ Brothers Inc., the fees, commissions and expenses of which will be paid
by Teva, neither Teva, Merger Sub nor any of their respective officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the Merger, this Agreement, the Stockholders Agreement and the other
transactions contemplated hereby and thereby.
(y) Opinion of Financial Advisor. Teva has received opinions of Credit
Suisse First Boston LLC and ▇▇▇▇▇▇ Brothers Inc., dated as of the date hereof,
to the effect that, as of such date, the Merger Consideration to be paid to
holders of Sicor Common Stock in the Merger is fair from a financial point of
view to Teva.
(z) Financial Capability. Teva has the financial capacity to perform and to
cause Merger Sub to perform its obligations under this Agreement, and Teva has
currently available cash or cash equivalents that, together with committed bank
lines of credit, are sufficient to permit Teva to fund the Cash Consideration
set forth in Article III and any other amounts payable by Teva or Merger Sub
contemplated by this Agreement.
(aa) No Other Representations or Warranties. Except for the representations
and warranties contained in this Section 5.2, neither Teva nor any other Person
makes any other express or implied representation or warranty on behalf of Teva
or any of its Subsidiaries.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
--------------------------------------
6.1 Covenants of Sicor. Sicor covenants and agrees as to itself and its
Subsidiaries that, from the date hereof and continuing until the Effective Time,
except as expressly contemplated or permitted by this Agreement, as required by
Law or to the extent Teva shall otherwise consent in writing, which decision
regarding consent shall not be unreasonably withheld or delayed:
(a) Sicor shall conduct its business only in the ordinary and usual course
and, to the extent consistent therewith, it and its Subsidiaries shall use their
respective commercially reasonable efforts to (i) subject to prudent management
of workforce needs and ongoing programs currently in force, preserve its
business organization intact and maintain its existing relations and goodwill
with customers, suppliers, distributors, creditors, lessors, employees and
business associates, (ii) maintain and keep material properties and assets in
good repair and
-32-
condition and (iii) maintain in effect all material governmental permits
pursuant to which such party or any of its Significant Subsidiaries currently
operates;
(b) Sicor shall not (i) amend its certificate of incorporation or by-laws
or the comparable governing instruments of any of its Subsidiaries except for
such amendments that would not prevent or materially impair the consummation of
the transactions contemplated by this Agreement or by the Stockholders
Agreement; (ii) split, combine or reclassify its outstanding shares of capital
stock; (iii) declare, set aside or pay any dividend payable in cash, stock or
property in respect of any capital stock (other than dividends from its direct
or indirect wholly-owned Subsidiaries to it or a wholly-owned Subsidiary) or
(iv) repurchase, redeem or otherwise acquire any shares of its capital stock or
any securities convertible into or exchangeable or exercisable for any shares of
its capital stock or permit any of its Subsidiaries to purchase or otherwise
acquire, any shares of its capital stock or any securities convertible into or
exchangeable or exercisable for any shares of its capital stock (other than for
the purpose of funding or providing benefits under Sicor Stock Plans);
(c) neither Sicor nor any of its Subsidiaries shall issue, sell, pledge,
dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of its capital stock of any class or
any Voting Debt or any other property or assets (other than shares of common
stock issuable pursuant to options or restricted share units (whether or not
vested) outstanding on the date hereof under the Sicor Stock Plans, issuances of
additional options or restricted share units or rights to acquire shares of
common stock granted pursuant to the terms of the Sicor Stock Plans as in effect
on the date hereof in the ordinary and usual course of the operation of such
stock plans and issuances of shares of common stock pursuant to options or
restricted share units granted after the date hereof pursuant to the Sicor Stock
Plans);
(d) neither Sicor nor any of its Subsidiaries shall, other than in the
ordinary and usual course of business and other than transactions not in excess
of $10,000,000 in the aggregate in any calendar year, transfer, lease, license,
guarantee, sell, mortgage, pledge, dispose of or encumber any other property or
assets (including capital stock of any of its Subsidiaries);
(e) neither Sicor nor any of its Subsidiaries shall, by any means, make any
acquisition of, or investment in, assets or stock (whether by way of merger,
consolidation, tender offer, share exchange or other activity) in any
transaction or any series of transactions (whether or not related) for an
aggregate purchase price or prices, including the assumption of any debt, in
excess of $10,000,000 in the aggregate in any calendar year, except for
acquisitions mandated by binding legal commitments existing on the date hereof
or necessary to meet obligations to serve;
(f) except as disclosed in Schedule 6.1(f) of the Sicor Disclosure
Schedules, neither Sicor nor any of its Subsidiaries shall, other than in the
ordinary and usual course of business, (i) modify, amend, or terminate any
Contract that is material to Sicor and its Subsidiaries taken as a whole, (ii)
waive, release, relinquish or assign any such Contract (or any of the material
rights of Sicor, or any of its Subsidiaries thereunder), right or claim, or
(iii) cancel or forgive any material indebtedness owed to Sicor or any of its
Subsidiaries;
-33-
(g) Sicor will not (i) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, recapitalization or other similar
reorganization of such party or any Significant Subsidiary of such party, or
(ii) accelerate or delay collection of notes or accounts receivable in advance
of or beyond their regular due dates, other than in the usual and ordinary
course of business;
(h) neither Sicor nor any of its Subsidiaries shall terminate, establish,
adopt, enter into, make any new grants or awards under, amend or otherwise
modify any Compensation and Benefit Plans (other than issuances of additional
shares of common stock or options or rights to acquire shares of common stock,
granted pursuant to the terms of such party's stock plans as in effect on the
date hereof in the ordinary and usual course of the operation of such stock
plans), or increase the salary, wage, bonus or other compensation of any
employees except for (i) grants or awards or increases occurring in the ordinary
and usual course of business (which shall include normal periodic performance
reviews and related compensation and benefit increases), (ii) annual
reestablishment of Compensation and Benefit Plans and the provision of
individual compensation or benefit plans and agreements for newly hired or
appointed officers and employees of such party and its Subsidiaries or (iii)
actions necessary to satisfy existing contractual obligations under Compensation
and Benefit Plans or agreements existing as of the date hereof;
(i) Sicor shall, and shall cause its Subsidiaries to, maintain with
financially responsible insurance companies (or through self insurance)
insurance in such amounts and against such risks and losses as are consistent
with the insurance maintained by such party and its Subsidiaries in the ordinary
course of business consistent with past practice;
(j) except in the ordinary and usual course of business or as may be
required by applicable Law and except to the extent required by U.S. GAAP as
advised by such party's regular independent accountants, neither Sicor nor any
of its Subsidiaries shall change any accounting principle, practice or method in
a manner that is inconsistent with past practice;
(k) Sicor shall not, and shall not permit any of its Subsidiaries to, take
any action that could reasonably be expected to result in (a) any representation
or warranty of such party set forth in this Agreement that are qualified by
materiality becoming untrue, (b) any such representations and warranties that
are not so qualified becoming untrue in any material respect, (c) any of the
conditions to the Merger set forth in Article VIII not being satisfied or (d)
otherwise prevent or materially impair or delay the ability of such party to
consummate the transactions contemplated by this Agreement;
(l) Sicor and each of its Subsidiaries shall (i) file all material Tax
Returns required to be filed with any taxing authority in accordance with all
applicable laws, (ii) timely pay all taxes due and payable as shown in the
respective Tax Returns that are so filed and, as of the time of filing, the Tax
Returns will be based on tax positions that have substantial support, and (iii)
promptly notify Teva of any action, suit, proceeding, investigation, audit or
claim initiated or pending against or with respect to Sicor or any of its
Subsidiaries in respect of any Tax where there is a reasonable possibility of a
determination or decision that would reasonably be expected
-34-
to have a Material Adverse Effect on the Tax liabilities or other Tax attributes
of Sicor or its Subsidiaries;
(m) neither Sicor nor any of its Subsidiaries shall make any Tax election
or settle or compromise any income tax liability without the prior written
consent of Teva, which shall not be unreasonably withheld;
(n) Sicor shall not redeem the Rights outstanding under the Stockholders
Rights Plan, or amend, modify or terminate the Stockholders Rights Plan or
render it inapplicable to (or otherwise exempt from the application of the
Stockholders Rights Plan) any Person or action, other than to render the Rights
inapplicable to the execution, delivery and performance of this Agreement, the
Stockholders Agreement and the Merger; provided that the foregoing shall not
apply to any such actions that are taken in connection with entering into an
Acquisition Proposal to the extent permitted by Section 7.2;
(o) neither Sicor nor any of its Subsidiaries will enter into any Contract
that purports to limit or prohibit in any respect Sicor or any of its
Subsidiaries (A) from competing with any other Person, (B) from acquiring any
product or other asset or any services from any other Person, (C) from
developing, selling, supplying, distributing, offering, supporting or servicing
any product or any technology or other asset to or for any other Person or (D)
from transacting business or dealing in any other manner with any other Person,
except such a Contract (i) entered into in the ordinary course of business, (ii)
that is able to be terminated by Sicor or its Subsidiaries without penalty, or
otherwise expires on its terms, within two years of the date thereof, and (iii)
that does not bind any Affiliates of Sicor (other than its Subsidiaries); and
(p) neither Sicor nor any of its Subsidiaries will authorize or enter into
an agreement to do anything prohibited by the foregoing.
6.2 Covenants of Teva. Teva covenants and agrees as to itself and its
Subsidiaries (as applicable) that, from the date hereof and continuing until the
Effective Time, except as expressly contemplated or permitted by this Agreement,
except as described in Schedule 6.2 of the Teva Disclosure Schedules, as
required by Law or to the extent Sicor shall otherwise consent in writing, which
decision regarding consent shall be made as soon as reasonably practicable:
(a) Teva shall conduct its business only in the ordinary and usual course
and, to the extent consistent therewith, it and its Subsidiaries shall use their
respective commercially reasonable efforts to (i) subject to prudent management
of workforce needs and ongoing programs currently in force, preserve its
business organization intact and maintain its existing relations and goodwill
with customers, suppliers, distributors, creditors, lessors, employees and
business associates, (ii) maintain and keep material properties and assets in
good repair and condition and (iii) maintain in effect all material governmental
permits pursuant to which such party or any of its Significant Subsidiaries
currently operates;
(b) Teva shall not (i) amend its Memorandum or Articles of Association or
the comparable governing instruments of any of its Subsidiaries except for such
amendments that would not prevent or materially impair the consummation of the
transactions contemplated by this Agreement; (ii) split, combine or reclassify
its outstanding shares of capital stock without
-35-
adjusting the Merger Consideration pursuant to Section 3.4; (iii) declare, set
aside or pay any dividend payable in cash, stock or property in respect of any
capital stock (other than dividends from its direct or indirect wholly-owned
Subsidiaries to it or a wholly-owned Subsidiary and other than the declaration
and payment of regular quarterly dividends consistent with past practice) or
(iv) repurchase, redeem or otherwise acquire any shares of its capital stock or
any securities convertible into or exchangeable or exercisable for any shares of
its capital stock or permit any of its Subsidiaries to purchase or otherwise
acquire, any shares of its capital stock or any securities convertible into or
exchangeable or exercisable for any shares of its capital stock (other than for
the purpose of funding or providing benefits under the Teva Stock Plans);
(c) Teva will not adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, recapitalization or other similar
reorganization of such party or any of its Significant Subsidiaries;
(d) Teva shall not, nor shall it permit any of its Subsidiaries to, take
any action that could reasonably be expected to result in (a) any representation
or warranty of such party set forth in this Agreement that are qualified by
materiality becoming untrue, (b) any such representations and warranties that
are not so qualified becoming untrue in any material respect, (c) any of the
conditions to the Merger set forth in Article VIII not being satisfied or (d)
otherwise prevent or materially impair or delay the ability of such party to
consummate the transactions contemplated by this Agreement; and
(e) Neither Teva nor any of its Subsidiaries will authorize or enter into
an agreement to do anything prohibited by the foregoing.
6.3 No Control of Other Party's Business. Nothing contained in this
Agreement shall give Teva, directly or indirectly, the right to control or
direct Sicor's or its Subsidiaries' operations prior to the Effective Time, and
nothing contained in this Agreement shall give Sicor, directly or indirectly,
the right to control or direct Teva's or its Subsidiaries' operations prior to
the Effective Time. Prior to the Effective Time, each of Sicor and Teva shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its and its Subsidiaries' respective operations.
ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
7.1 Access. Teva and Sicor agree that upon reasonable notice, and except as
may otherwise be required or restricted by applicable Law, each shall (and shall
cause its Subsidiaries to) afford the other's officers, employees, counsel,
accountants and other authorized representatives ("Representatives") reasonable
access, during normal business hours throughout the period prior to the
Effective Time, to its executive officers, to its properties, books, contracts
and records and, during such period, each shall (and each shall cause its
Subsidiaries to) furnish promptly to the other all information concerning its
business, properties and personnel as may reasonably be requested but only to
the extent such access does not unreasonably interfere with the business or
operations of such party; provided that no investigation pursuant to this
Section
-36-
shall affect or be deemed to modify any representation or warranty made by
Sicor, Teva or Merger Sub in this Agreement. All requests for information made
pursuant to this Section 7.1 shall be directed to an executive officer of Teva
or Sicor, as applicable, or its financial advisors or such other Person as may
be designated by either of its executive officers. All such information shall be
governed by the terms of the Confidentiality Agreement.
7.2 Acquisition Proposals. Sicor shall not, nor shall it permit or
authorize any of its Subsidiaries or any officer, director, employee, agent or
representative (including accountants, attorneys and investment bankers) of
Sicor or any of its Subsidiaries to, directly or indirectly, initiate, solicit,
encourage or otherwise facilitate (including by way of furnishing confidential
information) any inquiries or the making of any proposal or offer, with respect
to (i) any merger, reorganization, share exchange, business combination,
recapitalization, consolidation, liquidation, dissolution or similar transaction
involving Sicor or its Significant Subsidiaries, (ii) any sale, lease, exchange,
mortgage, pledge, transfer or purchase of the assets or equity securities of
Sicor or any of its Subsidiaries, in each case comprising 15% or more in value
of Sicor and its Subsidiaries, taken as a whole, in a single transaction or
series of related transactions or (iii) any purchase or sale of, or tender offer
or exchange offer for, fifteen percent (15%) or more of the outstanding shares
of Sicor Common Stock (any such proposal or offer (other than a proposal or
offer by Teva) being hereinafter referred to as an "Acquisition Proposal").
Sicor shall not, nor shall it permit or authorize any of its Subsidiaries or any
officer, director, employee, agent or representative (including accountants,
attorneys and investment bankers) of Sicor or any of its Subsidiaries to,
directly or indirectly, (a) engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions (other than
discussions that only refer to this Section and Sicor's agreement not to engage
in further discussions) with, any Person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement or accept an
Acquisition Proposal, (b) withdraw or modify, or propose to withdraw or modify,
its approval or recommendation of this Agreement or the transactions
contemplated hereby, including the Merger, (c) approve, recommend, endorse or
resolve to approve, recommend or endorse an Acquisition Proposal or (d) enter
into any letter of intent or similar document contemplating, or enter into any
agreement (other than a confidentiality agreement entered into in accordance
with clause (A) below or a joint defense agreement with a party that has entered
into such a confidentiality agreement) with respect to, an Acquisition Proposal;
provided, however, that nothing contained in this Agreement shall prevent the
Board of Directors of Sicor or its representatives (including accountants,
attorneys and investment bankers) from (A) furnishing information to a third
party in response to an unsolicited bona fide written Acquisition Proposal by
such third party pursuant to a confidentiality agreement which may include
changes necessary in order to allow Sicor to be able to comply with this
Agreement but with terms and conditions similar to the Confidentiality Agreement
(provided that such confidentiality agreement may not include any provision
granting any such Person or group an exclusive right to negotiate with Sicor),
concerning Sicor and its business, properties or assets, (B) engaging in
discussions or negotiations with such third party, (C) following receipt of a
bona fide unsolicited written Acquisition Proposal, taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) under the Exchange Act,
(D) following receipt of a bona fide unsolicited written Acquisition Proposal,
recommending such an Acquisition Proposal to its stockholders or adopting an
agreement relating to such Acquisition Proposal, (E) following receipt of a bona
fide unsolicited written Acquisition
-37-
Proposal, failing to make or withdrawing or modifying its recommendation or
declaration of advisability of the Merger or adoption of this Agreement, (F)
taking any non-appealable, final action ordered to be taken by Sicor by any
court of competent jurisdiction and/or (G) making any disclosure or filing, in
its reasonable judgment after receiving advice from outside counsel, that is
required by Law (including, without limitation, the DGCL and the rules and
regulations promulgated under the federal securities laws), stock exchange rules
or the rules, regulations, order or request of any Governmental Entity
(including the SEC), but in each case referred to in the foregoing clauses (A)
through (E) only if (i) the Sicor Requisite Vote has not been obtained, (ii) if
such third party has submitted a Superior Proposal which is pending at the time
Sicor determines to take such action or, in the cases of action pursuant to
clauses (A) and (B), the Board of Directors of Sicor shall have concluded in
good faith that such bona fide Acquisition Proposal would reasonably be expected
to constitute or result in a Superior Proposal, and (iii) the Sicor Board of
Directors determines in good faith, after consultation with outside counsel,
that a failure to take such action would be inconsistent with the discharge of
the Sicor Board of Director's fiduciary duties to the Sicor stockholders under
Delaware Law; provided, further, that the Board of Directors of Sicor shall not
take any of the foregoing actions referred to in clauses (D) and (E) above,
until at least three (3) calendar days shall have passed following Teva's
receipt of written notice from Sicor advising Teva that the Sicor Board of
Directors has received such a Superior Proposal which it intends to accept,
specifying the material terms and conditions of such Superior Proposal, and Teva
does not make an offer that the Sicor Board of Directors shall have concluded in
its good faith judgment, after consultation with its financial advisors and
outside counsel, is as favorable (taking into account the termination fee
payable hereunder) to Sicor's stockholders as such Superior Proposal.
Sicor will promptly (and in any event within one business day) notify Teva
in writing, of the existence of any material proposal, material discussion,
material negotiation or material inquiry received by Sicor with respect to any
Acquisition Proposal, and Sicor will immediately communicate to Teva the
material terms of any proposal, discussion, negotiation or inquiry which it may
receive and the identity of the Person making such proposal or inquiry or
engaging in such discussion or negotiation. Sicor will promptly provide to Teva
any non-public material information concerning Sicor provided to any other
Person that was not previously provided to Teva on the same day as the providing
of any such information to any other Person. Sicor will keep Teva reasonably
informed of the status and details of any such Acquisition Proposal (including
modifications or proposed modifications thereto).
Without prejudice to any actions permitted to be taken by Sicor pursuant to
the immediately preceding paragraph, Sicor agrees that it will, and will cause
its officers, directors and representatives to, immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal. In
addition, Sicor shall promptly request that each Person who has heretofore
executed a confidentiality agreement in connection with such Person's
consideration of an Acquisition Proposal return or destroy all confidential
information heretofore furnished to such Person by or on behalf of Sicor in
accordance with such confidentiality agreement. Sicor shall not release any
third party from, or waive any provision of, any such confidentiality agreement
or any other confidentiality or standstill agreement to which Sicor is a party.
Sicor agrees that it will take the
-38-
necessary steps to promptly inform the individuals or entities referred to in
the first sentence hereof of the obligations undertaken by Sicor in this Section
7.2.
Nothing in this Section 7.2 shall (x) permit Sicor to terminate this
Agreement (except as specifically provided in Article IX hereof) or (y) affect
any other obligation of Sicor under this Agreement. Notwithstanding anything to
the contrary contained in this Section 7.2 or elsewhere in this Agreement, prior
to the Effective Time, Sicor may, in connection with a possible Acquisition
Proposal, refer any third party to this Section 7.2 and Section 9.5(b) and make
a copy of this Section 7.2 and Section 9.5(b) available to a third party.
"Superior Proposal" means an Acquisition Proposal to acquire, directly or
indirectly, for consideration consisting solely of cash and/or marketable
securities, 30% or more of the Sicor Common Stock then outstanding or 40% or
more of the assets of Sicor and its Subsidiaries, taken as a whole, in a single
transaction or a series of related transactions, and otherwise on terms which
the Sicor Board of Directors determines in good faith (after consultation with
its outside legal counsel and financial advisor), taking into account, among
other things, all legal, financial, regulatory and other aspects of the proposal
and the third party making the proposal, (i) to be more favorable to the
Company's stockholders than the Merger (after considering the views of the
Company's independent financial advisor with respect to the value of the
consideration provided for in such proposal as it compares to the value of the
consideration provided for in the Merger) and (ii) which, in the good faith
reasonable judgment of the Sicor Board of Directors, is reasonably capable of
being consummated without undue delay.
7.3 Sicor Stockholders Meeting. Subject to the fiduciary duties of Sicor's
Board of Directors under applicable Law and its rights and obligations under
Section 7.2, in each case as determined by the Board of Directors of Sicor,
Sicor will take, in accordance with applicable Law and its certificate of
incorporation, as amended, and by-laws, all action necessary to convene a
meeting of holders of shares of Sicor Common Stock as promptly as practicable
after the Proxy Statement/Prospectus is mailed to its stockholders to consider
and vote upon the approval of this Agreement and the transactions contemplated
hereby. Subject to fiduciary obligations under applicable Law and its rights and
obligations under Section 7.2 in each case as determined by the Board of
Directors of Sicor in accordance with this Agreement, Sicor's Board of Directors
shall recommend such approval and take all lawful action to solicit such
approval. Notwithstanding any change or withdrawal of Sicor's recommendation or
declaration of advisability of the Merger and adoption of this Agreement
pursuant to Section 7.2, this Agreement shall be submitted to the Sicor
stockholders at a meeting of holders of shares of Sicor Common Stock in
accordance with this Section 7.3 to consider and vote upon the approval of this
Agreement and the transactions contemplated hereby.
7.4 Filings; Other Actions; Notification. (a) Each party hereto shall file
or cause to be filed with (i) the Federal Trade Commission and the Department of
Justice any notifications required to be filed under the HSR Act and (ii) the
appropriate Governmental Entity each of the Foreign Antitrust Filings, in each
case in accordance with the applicable rules and regulations promulgated under
the relevant Law, with respect to the transactions contemplated hereby and by
the Stockholders Agreement. Each party hereto will use all commercially
reasonable efforts to
-39-
make such filings in a timely manner and to respond on a timely basis to any
requests for additional information made by any such agency.
(b) Sicor and Teva shall cooperate with each other and use (and shall cause
their respective Subsidiaries to use) all commercially reasonable efforts to
take or cause to be taken all actions, and do or cause to be done all things,
necessary, proper or advisable on its part under this Agreement and applicable
Laws to consummate and make effective the Merger and the other transactions
contemplated hereby and by the Stockholders Agreement as soon as practicable,
including preparing and filing as soon as practicable all documentation to
effect all necessary notices, reports and other filings and to obtain as soon as
practicable all Sicor Required Statutory Approvals or Teva Required Statutory
Approvals, as the case may be, and all consents, registrations, approvals,
permits and authorizations necessary or advisable to be obtained from any third
party in order to consummate the Merger or any of the other transactions
contemplated hereby and by the Stockholders Agreement. Subject to applicable
Laws relating to the exchange of information and the preservation of any
applicable attorney-client privilege, work-product doctrine, self-audit
privilege or other similar privilege, Teva and Sicor shall have the right to
review and comment on in advance, and to the extent practicable each will
consult the other on, all the information relating to Teva or Sicor, as the case
may be, and any of their respective Subsidiaries, that appear in any filing made
with, or written materials submitted to, any third party and/or any Governmental
Entity in connection with the Merger and the other transactions contemplated
hereby and by the Stockholders Agreement. In exercising the foregoing right,
each of Sicor and Teva shall act reasonably and as promptly as practicable.
(c) Subject to applicable Laws and the preservation of any applicable
attorney-client privilege, Sicor and Teva each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the Proxy Statement/Prospectus or any
other statement, filing, notice or application made by or on behalf of Teva,
Sicor or any of their respective Subsidiaries to any third party and/or any
Governmental Entity in connection with the Merger and the other transactions
contemplated hereby and by the Stockholders Agreement.
(d) Subject to any confidentiality obligations and the preservation of any
attorney-client privilege, Sicor and Teva each shall keep the other apprised of
the status of matters relating to completion of the transactions contemplated
hereby and by the Stockholders Agreement, including promptly furnishing the
other with copies of notices or other communications received by Teva or Sicor,
as the case may be, or any of its Subsidiaries, from any third party and/or any
Governmental Entity with respect to the Merger and the other transactions
contemplated hereby and by the Stockholders Agreement.
(e) Subject to the fiduciary duties of Sicor's Board of Directors under the
DGCL and its rights and obligations under Section 7.2, in each case as
determined by the Board of Directors of Sicor, in the event that any
administrative or judicial action or proceeding is instituted (or threatened to
be instituted) by a Governmental Entity or private party challenging any
transaction contemplated by this Agreement, or any other agreement contemplated
hereby each of Teva, Merger Sub and Sicor shall cooperate in all respects with
each other and use all of their
-40-
respective commercially reasonable efforts to contest and resist any such action
or proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement.
(f) In furtherance and not in limitation of the covenants of the parties
contained in paragraph (a)-(e) of this Section 7.4, if any objections are
asserted with respect to the transactions contemplated hereby under any
Antitrust Law or if any suit is instituted (or threatened to be instituted) by
the Federal Trade Commission, the Department of Justice or any other applicable
Governmental Entity challenging any of the transactions contemplated hereby as
violative of any Antitrust Law (as defined below) or which would otherwise
prohibit or materially impair or materially delay the consummation of the
transactions contemplated hereby, each of Teva, Merger Sub and Sicor shall use
its reasonable best efforts to resolve any such objections or suits so as to
permit consummation of the transactions contemplated by this Agreement,
including, without limitation, selling, holding separate or otherwise disposing
of or conducting its business in a manner which would resolve such objections or
suits or agreeing to sell, hold separate or otherwise dispose of or conduct its
business in a manner which would resolve such objections or suits or permitting
the sale, holding separate or other disposition of, any of its assets or the
assets of its Subsidiaries or the conducting of its business in a manner which
would resolve such objections or suits; provided, that, in no event shall any of
Teva, Merger Sub and Sicor be required to take any action, that, individually or
together with any other such actions, would reasonably be expected to have
either a Sicor Material Adverse Effect or a Teva Material Adverse Effect (each
defined, for purposes of this Section 7.4(f) to include prospects of Teva and
its Subsidiaries or Sicor and its Subsidiaries, as applicable). Without
excluding other possibilities, the transactions contemplated by this Agreement
shall be deemed to be materially delayed if unresolved objections or suits delay
or could reasonably be expected to delay the consummation of the transactions
contemplated hereby beyond the period, including any extension as therein
provided, contemplated by Section 9.2(a) of this Agreement. "Antitrust Law"
means the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other federal, state and
foreign, if any, Laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade or lessening of competition through merger or acquisition.
7.5 Proxy Statement/Prospectus; F-4 Registration Statement. (a) As promptly
as practicable after the execution and delivery of this Agreement, Teva and
Sicor shall prepare and file with the SEC the Proxy Statement/Prospectus, and
Teva shall prepare and file with the SEC the F-4 Registration Statement (in
which the Proxy Statement/Prospectus shall be included) covering the Teva ADSs
to be issued in the Merger. Each of Teva and Sicor shall use all commercially
reasonable efforts to cause such F-4 Registration Statement to become effective
under the Securities Act as soon practicable after the date of such filing and
to keep the F-4 Registration Statement effective as long as is necessary to
consummate the Merger. The Proxy Statement/Prospectus shall include the
recommendation of the Board of Directors of Sicor in favor of approval and
adoption of this Agreement and the Merger, except to the extent the Board of
Directors of Sicor shall have withdrawn or modified its approval or
recommendation as permitted by Section 7.2. Each of Teva and Sicor shall use all
commercially reasonable efforts to cause the Proxy Statement/Prospectus to be
mailed to the holders of Sicor Common Stock as
-41-
promptly as practicable after the F-4 Registration Statement becomes effective.
Teva and Sicor shall promptly provide to each other (i) notice of any oral
comments to the Proxy Statement/Prospectus or the F-4 Registration Statement
received from the SEC and (ii) copies of any written comments to the Proxy
Statement/Prospectus and the F-4 Registration Statement received from the SEC,
and in each case shall consult with each other in connection with the
preparation of written responses to such comments.
(b) Teva shall make, and Sicor shall cooperate in, all necessary filings
with respect to the Merger and the transactions contemplated thereby under the
Securities Act and all applicable Israeli securities laws and regulation and
United States state securities and "blue sky" laws. Each party shall advise the
other, promptly after receipt of notice thereof, of the time of the
effectiveness of the F-4 Registration Statement, the filing of any supplement or
amendment thereto, the issuance of any stop order relating thereto, the
suspension of the qualification of Teva ADSs issuable in connection with the
Merger for offering or sale in any jurisdiction, or of any SEC request for an
amendment to the Proxy Statement/Prospectus or the F-4 Registration Statement,
SEC comments thereon and each party's responses thereto or SEC requests for
additional information. No amendment or supplement to the Proxy
Statement/Prospectus or the F-4 Registration Statement shall be filed without
the approval of both parties hereto, which approval shall not be unreasonably
withheld or delayed. If, at any time prior to the Effective Time, Teva or Sicor
should discover any information relating to either party, or any of their
respective Affiliates, directors or officers, that should be set forth in an
amendment or supplement to the F-4 Registration Statement or the Proxy
Statement/Prospectus, so that the documents would not include any misstatement
of a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party that discovers such information shall promptly notify
the other party hereto and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and, to the extent
required by Law, disseminated to the stockholders of Teva and Sicor.
7.6 Accountants' Comfort Letters. (a) Teva shall use all commercially
reasonable efforts to cause to be delivered to Sicor two letters from Teva's
independent public accountants, one dated approximately the date on which the
F-4 Registration Statement covering the Teva ADSs to be issued in the Merger
shall become effective and one dated the Closing Date, each addressed to Sicor
and Teva, in form reasonably satisfactory to Sicor and customary in scope for
comfort letters delivered by independent public accountants in connection with
similar Registration Statements.
(b) Sicor shall use all commercially reasonable efforts to cause to be
delivered to Teva two letters from Sicor's independent public accountants, one
dated approximately the date on which the F-4 Registration Statement covering
the Teva ADSs to be issued in the Merger shall become effective and one dated
the Closing Date, each addressed to Teva and Sicor, in form reasonably
satisfactory to Teva and customary in scope for comfort letters delivered by
independent public accountants in connection with similar Registration
Statements.
7.7 Stock Exchange Listing. Teva shall use all commercially reasonable
efforts to cause the Teva ADSs to be
-42-
issued in connection with the Merger and the Teva ADSs to be reserved for
issuance upon exercise of the assumed Sicor Stock Options to be approved for
quotation of the Nasdaq National Market System subject to official notice of
issuance.
7.8 Affiliate Letters. Sicor has delivered to Teva a letter identifying all
Persons who, in the judgment of Sicor, may be deemed, at the time this Agreement
is submitted for adoption by the stockholders of Sicor, Affiliates of Sicor
under Rule 145 of the Securities Act. Sicor shall promptly update such list as
necessary to reflect any changes from the date thereof. Sicor shall use all
commercially reasonable efforts to obtain a written agreement from each Person
referred to in Section 3.5 as soon as practicable and, in any event, at least
ten (10) days prior to the Effective Time, substantially in the form of Exhibit
A hereto.
7.9 Resale Registration Statement. Teva shall use all commercially
reasonable efforts to cause a registration statement on Form F-3 or any
successor for or, if Form F-3 or any successor form is not then available, to
effect a registration of all of the Teva ADSs acquired by Persons who may be
deemed to be affiliates of Sicor under Rule 145 of the Securities Act
("Affiliate Stock"), or otherwise to include such Affiliate Stock on the F-4
Registration Statement (the "Resale Registration Statement") covering all shares
of Affiliate Stock to be filed with the SEC as soon as practicable following the
execution of this Agreement and to cause such Registration Statement to become
effective prior to or at the Effective Time. Teva shall use all commercially
reasonable efforts to keep the Resale Registration Statement effective until the
earlier of (a) the date which is two (2) years after the Effective Time, (b) the
date on which all persons who may be deemed to be Affiliates of Sicor under Rule
145 of the Securities Act no longer hold any shares of Affiliate Stock and (3)
the date such shares of Affiliate Stock may be sold within any three month
period pursuant to Rule 145.
7.10 Stock Exchange De-listing. The Surviving Corporation shall use all
commercially reasonable efforts to cause the shares of Sicor Common Stock to be
removed from listing on the Nasdaq National Market System and de-registered
under the Exchange Act as soon as practicable following the Effective Time.
7.11 Publicity. The initial press release shall be a joint press release
and thereafter Sicor and Teva each shall consult with the other prior to issuing
any press releases or otherwise making public announcements with respect to the
Merger and the other transactions contemplated hereby and by the Stockholders
Agreement and prior to making any filings with any third party and/or any
Governmental Entity with respect thereto, except as may be required by Law or by
obligations pursuant to any listing agreement with or rules of any national
securities exchange or national market system.
7.12 Benefits and Other Employee Matters.
(a) Employee Benefits. Teva agrees that, during the period commencing at
the Effective Time and ending on the second anniversary thereof, the current and
former employees of Sicor and its Subsidiaries who are receiving benefits under
the Sicor Compensation and Benefit Plans ("Affected Employees") will continue to
be provided with benefits under employee benefit plans that are the same or
substantially comparable in the aggregate to either (i) those currently provided
by Sicor and its Subsidiaries to such employees as of the Closing Date or
-43-
(ii) those provided by Teva and its Subsidiaries to similarly situated employees
from time to time during such two (2) year period. Following the Effective Time,
Teva shall cause service by Affected Employees of Sicor and its Subsidiaries
(and any predecessor entities) to be taken into account for purposes of
eligibility to participate, eligibility to commence benefits, vesting and,
solely for purposes of severance and vacation benefits, benefit accruals (except
to the extent such treatment would result in duplicative accrual of benefits for
the same period of service) under the Compensation and Benefit Plans or any
other benefit plans of Teva or its Subsidiaries in which such employees
participate.
From and after the Effective Time, Teva shall, with respect to Affected
Employees entitled to participate in Compensation and Benefit Plans subject to
United States law, (i) cause to be waived any pre-existing condition limitations
under welfare benefit plans, policies or practices of Teva or its Subsidiaries
in which employees of Sicor or its Subsidiaries participate and (ii) cause to be
credited any deductibles and out-of-pocket expenses incurred by such employees
and their beneficiaries and dependents during the portion of the calendar year
prior to participation in the benefit plans provided by Teva and its
Subsidiaries.
Teva shall, and shall cause the Surviving Corporation to, honor all
employee benefit obligations to current and former employees and directors under
the Sicor Compensation and Benefit Plans. Teva shall cause the Surviving
Corporation to assume in writing the obligations under the employment agreements
and change of control agreements to which Sicor is a party at the Effective Time
as required by such agreements.
Teva agrees that the transactions contemplated by this Agreement meet the
definition of, and shall constitute, a "change in control" under each Sicor
Compensation and Benefit Plan listed in Section 5.1(h)(i)(B) of Sicor Disclosure
Schedules.
(b) Employees. It is the present intention of Teva and Sicor that following
the Effective Time, there will be no significant involuntary reductions in
workforce at the Surviving Corporation or its Subsidiaries; provided, however,
that if any significant reductions in workforce in respect of employees of the
Surviving Corporation and its Subsidiaries become necessary, they shall be made
on a fair and equitable basis, in light of the circumstances and the objectives
to be achieved, to be determined by Teva in its reasonable discretion. Any
employee whose employment is terminated or job is eliminated by Teva, the
Surviving Corporation or any of their respective Subsidiaries shall be entitled
to participate on a fair and equitable basis in the job opportunity and
employment placement programs offered by Teva, the Surviving Corporation or any
of their respective Subsidiaries at such employee's local level. Any workforce
reductions carried out following the Effective Time by Teva or the Surviving
Corporation and their respective Subsidiaries shall be done in all material
respects in accordance with all applicable collective bargaining agreements, and
all Laws and regulations governing the employment relationship and termination
thereof including, without limitation, the Worker Adjustment and Retraining
Notification Act and regulations promulgated thereunder, and any comparable
state or local Law.
7.13 Indemnification; Directors' and Officers' Insurance. (a) Teva shall
indemnify and hold harmless (i) to the fullest extent permitted under applicable
Law and (ii) without
-44-
limitation of clause (i), as required pursuant to the existing indemnity
agreements of Sicor (and Teva also shall advance attorneys' fees and expenses as
incurred (x) to the fullest extent permitted under applicable Law and (y)
without limitation of clause (x), as required pursuant to the existing indemnity
agreements of Sicor, provided, if and only to the extent required by the DGCL
and such existing indemnity agreements, the Person to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately determined
that such Person is not entitled to indemnification), each present and former
director, officer and employee of Sicor and its Subsidiaries (collectively, the
"Indemnified Parties") against any costs or expenses (including attorneys' fees
and expenses), judgments, fines, losses, claims, settlements, damages or
liabilities (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time, including the
transactions contemplated hereby.
(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 7.13, upon receiving written notification of any such claim,
action, suit, proceeding or investigation, shall promptly notify Teva thereof,
but the failure to so notify shall not relieve Teva of any liability it may have
to such Indemnified Party except if, and only to the extent that, such failure
materially and irreversibly prejudices Teva. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) Teva shall pay the fees and expenses of counsel selected by
the Indemnified Party, promptly after statements therefor are received, and
otherwise advance to such Indemnified Party upon request reimbursement of
documented expenses reasonably incurred, (ii) Teva will cooperate in the defense
of any such matter, and (iii) any determination required to be made with respect
to whether an Indemnified Party's conduct complies with the standards set forth
under applicable Law shall be made by independent counsel mutually acceptable to
Teva and the Indemnified Party; provided, however, that (A) Teva shall be
obligated pursuant to this Section 7.13(b) to pay for only one firm of counsel
for all Indemnified Parties in any jurisdiction, except to the extent there is,
in the opinion of counsel to an Indemnified Party, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of such Indemnified Party and any other Indemnified Party or Indemnified
Parties, in which case each Indemnified Party with a conflicting position on a
significant issue shall be entitled to retain separate counsel mutually
satisfactory to Teva and such Indemnified Party, (B) the Indemnified Parties
shall cooperate in the defense of any such matter and (C) Teva shall not be
liable for any settlement effected without its prior written consent (which
consent may not be unreasonably withheld or delayed).
(c) As of the Effective Time, Teva or Merger Sub shall have purchased
directors' and officers' liability insurance coverage for Sicor's directors and
officers for a period of six (6) years after the Effective Time which provides
runoff coverage on the same terms and conditions as that currently provided by
Sicor for its directors and officers (as disclosed to Teva prior to the date
hereof) but broadened to include entity securities coverage, in an amount of $50
million; provided, that Teva or Merger Sub shall not be required to pay an
aggregate premium in excess of $6 million; and, provided, further, that if Teva
or Merger Sub have not purchased such limits of insurance at such cost by the
30th day before the Effective Time, Sicor will purchase as much coverage as is
available for such amount.
-45-
(d) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall include provisions for exculpation of director and officer
liability and indemnification on the same basis as set forth in Sicor's
certificate of incorporation and by-laws in effect on the date hereof. For six
(6) years after the Effective Time, Teva shall cause the Surviving Corporation
to maintain in effect the provisions in its Certificate of Incorporation
providing for indemnification of Indemnified Parties, with respect to facts and
circumstances occurring at or prior to the Effective Time, to the fullest extent
permitted from time to time under the DGCL, which provisions shall not be
amended except as required by applicable Law or except to make changes permitted
by applicable Law that would increase the scope of the Indemnified Parties'
indemnification rights thereunder.
(e) If Teva or the Surviving Corporation or any of its successors or
assigns shall (i) consolidate with or merge into any other Person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfer all or substantially all of its properties and assets to
any Person, then, and in each such case, proper provisions shall be made so that
the successors and assigns of Teva or the Surviving Corporation, as the case may
be, shall assume all of the obligations of Teva and the Surviving Corporation
set forth in this Section 7.13.
(f) The rights of each Indemnified Party under this Section 7.13 shall be
in addition to any right such Person might have under the certificate of
incorporation or by-laws of Sicor or any of its Subsidiaries, or under
applicable Law (including the DGCL) or under any agreement of any Indemnified
Party with Sicor or any of its Subsidiaries. The provisions of this Section 7.13
are intended to be for the benefit of, and shall be enforceable by, each of the
Indemnified Parties, their respective heirs and representatives.
7.14 Expenses. Subject to Section 9.5(b) and (c), whether or not the Merger
is consummated, all costs and expenses incurred in connection with the Merger
and the other transactions contemplated hereby shall be paid by the party
incurring such expense, except that each of Sicor and Teva shall bear and pay
one-half of the costs and expenses incurred in connection with the filing,
printing and mailing of the Proxy Statement/Prospectus (including any SEC filing
fees).
7.15 Takeover Statute. If any Takeover Statute is or may become applicable
to the Merger or the other transactions contemplated hereby or by the
Stockholders Agreement, each of Teva, Sicor and Merger Sub and their respective
Board of Directors, shall grant such approvals and take such actions as are
necessary so that such transactions may be consummated as promptly as
practicable hereafter on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such statute or regulation on such
transactions. "Takeover Statute" shall mean any restrictive provision of any
applicable "fair price," "moratorium," "control share acquisition," "interested
stockholder" or other similar anti-takeover Law, including Section 203 of the
DGCL.
7.16 Teva Vote. Teva shall vote (or consent with respect to) or cause to be
voted (or a consent to be given with respect to) any shares of Sicor Common
Stock and any shares of capital stock of Merger Sub beneficially owned by it or
any of its affiliates (as such term is defined under the Exchange Act) or with
respect to which it or any of such affiliates has the power (by
-46-
agreement, proxy or otherwise) to cause to be voted (or to provide a consent),
in favor of the approval of this Agreement and the transactions contemplated
hereby at any meeting of stockholders of Sicor or Merger Sub, respectively, at
which this Agreement shall be submitted for approval and at all adjournments or
postponements thereof (or, if applicable, by any action of stockholders of
either Sicor or Merger Sub by consent in lieu of a meeting).
7.17 Section 16 Matters. Prior to the Effective Time, Teva and Sicor shall
take all such steps as may be required and permitted to cause the transactions
contemplated by this Agreement, including any dispositions of shares of Sicor
Common Stock or acquisitions of Teva ADSs (including derivative securities with
respect to such shares of Sicor Common Stock or Teva ADSs) by each individual
who is or will be subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to Sicor to be exempt under Rule 16b-3 promulgated
under the Exchange Act.
7.18 Corporate Governance.
(a) Director. Within the thirty (30) day period following the Effective
Time, Teva shall use all commercially reasonable efforts to cause the Teva Board
of Directors, subject to applicable Law, to duly appoint the individual listed
on Schedule 7.18(a) as a member of the class of directors of Teva set forth
opposite such individual's name on Schedule 7.18(a).
(b) Case. In the event that Sicor has not settled ▇▇▇▇▇ ▇▇▇▇▇, Derivatively
on behalf of SICOR Inc., vs. ▇▇▇▇▇ ▇▇▇▇▇, Rakepoll Finance N.V, Karbona
Industries Ltd., Bio-Rakepoll N.V., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, and SICOR Inc. (the "Case")
by the Effective Time, Teva agrees to consult with Pillsbury Winthrop LLP for
purposes of determining appropriate actions with respect to litigating or
settling the Case or any similar claim.
ARTICLE VIII
CONDITIONS
----------
8.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Stockholder Approval. The Sicor Requisite Vote shall have been
obtained.
(b) HSR. The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been earlier terminated.
(c) Other Regulatory Consents. The Teva Required Statutory Approvals and
Sicor Required Statutory Approvals shall have been obtained at or prior to the
Effective Time, such approvals shall have become Final Orders (as hereinafter
defined), and no Final Order shall impose terms or conditions that would have,
or would be reasonably likely to have a Teva Material Adverse Effect or Sicor
Material Adverse Effect on Teva or Sicor (together with the Subsidiaries of Teva
and Sicor, respectively) taken as a whole, respectively. A "Final Order" means
action by the relevant regulatory authority that has not been reversed, stayed,
enjoined, set
-47-
aside, annulled or suspended, with respect to which any waiting period
prescribed by Law before the transactions contemplated hereby may be consummated
has expired, and as to which all conditions to the consummation of such
transactions prescribed by Law, regulation or order have been satisfied.
(d) Injunction. No court or Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, Law,
ordinance, rule, regulation, judgment, decree, injunction or other order that is
in effect and permanently enjoins or otherwise prohibits consummation of the
Merger, the Distribution or the other Transactions (collectively, an "Order");
provided, however, that prior to invoking this condition each party agrees to
comply with Section 7.4.
(e) F-4 Registration Statement. The F-4 Registration Statement shall have
been declared effective by the SEC and no stop order suspending the
effectiveness of the F-4 Registration Statement shall be in effect and no
proceedings for such purpose shall be pending before or threatened by the SEC,
and all Israeli, United States state securities and "blue sky" authorizations
necessary to carry out the transactions contemplated hereby shall have been
obtained and be in effect.
8.2 Conditions to Obligations of Teva and Merger Sub. The obligations of
Teva and Merger Sub to effect the Merger are also subject to the satisfaction or
waiver by Teva at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Sicor set forth in this Agreement shall be true and correct as of the Closing
Date as though made on and as of the Closing Date (except to the extent any such
representation or warranty expressly speaks as of an earlier date, which
representations and warranties shall be true and correct as of such date in the
same manner as specified above), except for failures to be true and correct that
individually or in the aggregate would not reasonably be likely to have a Sicor
Material Adverse Effect; provided, that for purposes of determining whether the
condition in this Section 8.2(a) is satisfied, "Sicor Material Adverse Effect"
and any other materiality qualification contained in such representations and
warranties shall be ignored, and Teva shall have received a certificate signed
on behalf of Sicor by the chief executive officer and the chief financial
officer of Sicor to such effect.
(b) Performance of Obligations of Sicor. Sicor shall have performed in all
material respects at or prior to the Closing Date all material obligations
required to be performed by it under this Agreement at or prior to the Closing
Date, and Teva shall have received a certificate signed on behalf of Sicor by
the chief executive officer and the chief financial officer of Sicor to such
effect.
(c) No Material Adverse Change. Sicor and its Subsidiaries shall not have
suffered from the date of this Agreement any change or other event that,
individually or in the aggregate, would reasonably be expected to have a Sicor
Material Adverse Effect.
-48-
8.3 Conditions to Obligation of Sicor. The obligation of Sicor to effect
the Merger is also subject to the satisfaction or waiver by Sicor at or prior to
the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Teva and Merger Sub set forth in this Agreement shall be true and correct as of
the Closing Date as though made on and as of the Closing Date (except to the
extent any such representation or warranty expressly speaks as of an earlier
date, which representations and warranties shall be true and correct as of such
date in the same manner as specified above), except for failures to be true and
correct that individually or in the aggregate would not reasonably be likely to
have a Teva Material Adverse Effect; provided, that for purposes of determining
whether the condition in this Section 8.3(a) is satisfied, "Teva Material
Adverse Effect" and any other materiality qualification contained in such
representations and warranties shall be ignored, and Sicor shall have received a
certificate signed on behalf of Teva and Merger Sub by the chief executive
officer and the chief financial officer of each of Teva and Merger Sub to such
effect.
(b) Performance of Obligations of Teva and Merger Sub. Each of Teva and
Merger Sub shall have performed in all material respects all material
obligations required to be performed by it under the Agreement at or prior to
the Closing Date, and Sicor shall have received a certificate signed on behalf
of Teva and Merger Sub by the chief executive officer and the chief financial
officer of each of Teva and Merger Sub to such effect.
(c) No Material Adverse Change. Teva and its Subsidiaries shall not have
suffered from the date of this Agreement any change or other event that,
individually or in the aggregate, would reasonably be expected to have a Teva
Material Adverse Effect.
(d) Stock Exchange Listing. The Teva ADSs to be issued in connection with
the Merger and the Teva ADSs reserved for issuance upon exercise of the assumed
Sicor Options shall have been approved for quotation on the Nasdaq National
Market System, subject to official notice of issuance.
ARTICLE IX
TERMINATION
-----------
9.1 Termination by Mutual Consent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after receipt of Sicor Requisite Vote, by mutual written consent of Sicor and
Teva by action of their respective Boards of Directors.
9.2 Termination by Either Teva or Sicor. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time by
action of the Board of Directors of either Teva or Sicor if
(a) the Merger shall not have been consummated by April 30, 2004, whether
such date is before or after the date of receipt of the Sicor Requisite Vote
(the "Termination Date"), provided that the Termination Date shall be
automatically extended for six (6) months if, on the
-49-
Termination Date any of the conditions set forth in Section 8.1(b) or (c) shall
not have been satisfied or waived but (i) each of the other conditions to the
consummation of the Merger set forth in Article VIII has been satisfied or
waived or remains capable of satisfaction, and (ii) any approvals required by
Section 8.1(b) or (c) that have not yet been obtained are being pursued
diligently and in good faith; provided, that the right to terminate this
Agreement pursuant to this clause (a) shall not be available to any party that
has breached in any material respect its obligations under this Agreement in any
manner that shall have proximately caused the occurrence of the failure of the
Merger to be consummated;
(b) the Sicor Requisite Vote shall not have been obtained at a meeting duly
convened therefor or at any adjournment or postponement thereof, or
(c) any Order permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger shall become final and non-appealable after such
party has used all commercially reasonable efforts to have such Order removed,
repealed or overturned (whether before or after the receipt of the Sicor
Requisite Vote).
9.3 Termination by Sicor. This Agreement may be terminated and the Merger
may be abandoned by action of the Board of Directors of Sicor at any time prior
to (a) receipt of the Sicor Requisite Vote, if the Board of Directors of Sicor
shall take any action contemplated by clause (D) or (E) of Section 7.2;
provided, however, that (i) Sicor complies with Section 7.2 and (ii) the
termination pursuant to this Section 9.3(a) shall not be effective unless Sicor
shall at or prior to the time of such termination make the payment required by
Section 9.5(b), or (b) the Effective Time, whether before or after receipt of
the Sicor Requisite Vote, if there has been a material breach by Teva or Merger
Sub of any material representation, warranty, covenant or agreement contained in
this Agreement such that the condition in Section 8.2(a) or Section 8.2(b), as
the case may be, would not be satisfied and that is not curable or, if curable,
is not cured within twenty (20) days after written notice of such breach is
given by Sicor to the party committing such breach.
9.4 Termination by Teva. This Agreement may be terminated and the Merger
may be abandoned by action of the Board of Directors of Teva at any time prior
to the Effective Time if (a) the Board of Directors of Sicor takes any action
contemplated by clause (D) or (E) of Section 7.2, (b) the Board of Directors of
Sicor shall have withdrawn or materially and adversely modified its adoption of
this Agreement or its recommendation that the stockholders of Sicor approve this
Agreement (it being understood, however, that for all purposes of this
Agreement, and without limitation, the fact that Sicor, in compliance with this
Agreement, has supplied any Person with information regarding Sicor or has
entered into discussions or negotiations with such Person as permitted by this
Agreement, or the disclosure of such facts, shall not be deemed a withdrawal or
modification of Sicor's Board of Directors' recommendation of the Merger or this
Agreement), (c) a tender offer or exchange offer that, if successful, would
result in any Person or "group" becoming a "beneficial owner" (such terms having
the meaning in this Agreement as is ascribed under Regulation 13D under the
Exchange Act) of thirty percent (30%) or more of the outstanding shares of Sicor
Common Stock is commenced (other than by Teva or an affiliate of Teva) and the
Board of Directors of Sicor recommends that the stockholders of Sicor tender
their shares in such tender or exchange offer, (d) for any reason Sicor fails to
call or hold the Sicor
-50-
stockholders meeting contemplated under Section 7.3 within six months of the
date hereof (provided that if the F-4 Registration Statement shall not have
become effective for purposes of the Securities Act by the date that is twenty
(20) business days (counting, for purposes of this clause (d), days that are not
business days in Tel Aviv but are business days in New York) prior to the date
that is five months from the date hereof, then such date shall be extended by
such number of days equal to the date from the end of such five-month period
until the effective date of such F-4 Registration Statement); provided, that
Teva's right to terminate this Agreement pursuant to this clause (d) shall not
be available to Teva if it has breached in any material respect its obligations
under this Agreement in any manner that shall have proximately caused the
occurrence of the failure of the Sicor stockholders meeting to be called or
held, or (e) there has been a material breach by Sicor of any material
representation, warranty, covenant or agreement contained in this Agreement such
that the condition in Section 8.3(a) or Section 8.3(b), as the case may be,
would not be satisfied and that is not curable or, if curable, is not cured
within twenty (20) days after written notice of such breach is given by Teva to
Sicor.
9.5 Effect of Termination and Abandonment. (a) In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this Article IX,
this Agreement (other than as set forth in Section 10.1) shall become void and
of no effect with no liability on the part of any party hereto (or of any of its
directors, officers, employees, agents, legal and financial advisors or other
representatives); provided, however, that no such termination shall relieve any
party hereto of any liability or damages resulting from any breach of this
Agreement.
(b) In the event that this Agreement is terminated (A) by either party
pursuant to Section 9.2(b), provided that at the time of the meeting referred to
in Section 9.2(b) an Acquisition Proposal or other announcement of any intention
with respect to an Acquisition Proposal shall have been made (even if such
Acquisition Proposal had been rejected or withdrawn), (B) by Sicor pursuant to
Section 9.3(a), or (C) by Teva pursuant to Section 9.4(a), (b), (c) or (d),
then, in each case of clauses (A) - (C), (X) Sicor shall promptly, but in no
event later than two (2) business days after the date of such termination, pay
Teva a fee in the amount of $5 million to reimburse it for expenses incurred in
connection with this Agreement and the transactions contemplated hereby (which
expenses need not be documented) and (Y) if, within twelve (12) months after any
such termination Sicor enters into a definitive agreement with respect to or
consummates a transaction contemplated by an Acquisition Proposal, then Sicor
shall promptly, but in no event later than two (2) business days after the date
of such entering into a definitive agreement or of such consummation, as
applicable, pay Teva a termination fee (as liquidated damages) of $120 million
(which includes charges and expenses incurred by Teva or Merger Sub in
connection with this Agreement and the transactions contemplated hereby). Any
such payment shall be made by wire transfer of same day funds to an account
previously designated in writing by Teva to Sicor.
(c) The parties acknowledge that the agreement contained in Section 9.5(b)
is an integral part of the transactions contemplated by this Agreement, and
that, without this agreement Teva would not have entered into this Agreement;
accordingly, if Sicor fails to promptly pay any amounts due pursuant to Section
9.5(b), and in order to obtain such payment Teva commences a suit which results
in a judgment against Sicor for payment of all or a portion of a termination
fee, Sicor shall pay to Teva its costs and expenses (including its reasonable
-51-
attorneys' fees) incurred in connection with such suit, together with interest
from the date such payment was due on the amounts owed at the prime rate in
effect from time to time and quoted in The Wall Street Journal during such
period. The payment of such termination fee pursuant to this Section 9.5 shall
be the sole and exclusive remedy of Teva with respect to the facts and
circumstances giving rise to such payment obligation (or facts and circumstances
which would have given rise to such payment but for a breach of this Agreement
by Teva).
ARTICLE X
MISCELLANEOUS AND GENERAL
-------------------------
10.1 Survival. This Article X and the agreements of Sicor, Teva and Merger
Sub contained in Sections 7.10 (Stock Exchange De-listing), 7.12 (Benefits and
Other Employee Matters), 7.13 (Indemnification; Directors' and Officers'
Insurance) and 7.14 (Expenses) and those other covenants and agreements
contained herein that by their terms apply, or that are to be performed in whole
or in part, after the Effective Time shall survive the consummation of the
Merger. This Article X, the agreements of Sicor, Teva and Merger Sub contained
in Section 7.14 (Expenses), Section 9.5 (Effect of Termination and Abandonment)
and the Confidentiality Agreement shall survive the termination of this
Agreement. All other representations, warranties, covenants and agreements in
this Agreement shall not survive the consummation of the Merger or the
termination of this Agreement.
10.2 Modification or Amendment. Subject to the provisions of applicable
Law, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties.
10.3 Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable Law.
10.4 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
10.5 GOVERNING LAW AND VENUE. PURSUANT TO SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK, THIS AGREEMENT SHALL BE INTERPRETED,
CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW
YORK. The parties hereby irrevocably submit to the jurisdiction of the courts of
the State of New York and the Federal courts of the United States of America
located in the State of New York in each case in the borough of Manhattan solely
in respect of the interpretation and enforcement of the provisions of this
Agreement and of the documents referred to in this Agreement, and in respect of
the Transactions, and hereby waive, and agree not to assert, as a defense in any
action, suit or proceeding for the interpretation or enforcement hereof or of
any such document, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that the
venue thereof may not be appropriate or that this Agreement or any such
-52-
document may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a State of New York or Federal court. The
parties hereby consent to and grant any such court jurisdiction over the Person
of such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 10.6 or in such other manner as may
be permitted by Law shall be valid and sufficient service thereof.
10.6 Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile (upon receipt of electronic or telephonic confirmation of successful
transmission):
if to Teva or Merger Sub,
Teva Pharmaceutical Industries Limited
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Israel
Attention: Chief Executive Officer
Telephone: ▇▇▇ ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Facsimile: 011 972 3 924 6026
with copies to
Teva Pharmaceutical Industries Limited
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Israel
Attention: General Counsel
Telephone: ▇▇▇ ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Facsimile: 011 972 3 926 7429
Teva Pharmaceuticals USA, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
-53-
if to Sicor,
SICOR Inc.
▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
Pillsbury Winthrop LLP
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other Persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
10.7 Entire Agreement; NO OTHER REPRESENTATIONS. This Agreement (including
any exhibits hereto), Sicor Disclosure Schedules, the Teva Disclosure Schedules
and the Confidentiality and Standstill Agreement, dated June 19, 2003, between
Teva and Sicor, as amended (the "Confidentiality Agreement"), constitute the
entire agreement by and among the parties hereto, and supersede all other prior
agreements, understandings, representations and warranties both written and
oral, among the parties, with respect to the subject matter hereof. EACH PARTY
HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN
THIS AGREEMENT, NEITHER TEVA AND MERGER SUB NOR SICOR MAKES ANY OTHER
REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER
REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR
THE TRANSACTIONS, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR THE
OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT
TO ANY ONE OR MORE OF THE FOREGOING.
10.8 No Third-Party Beneficiaries. Other than with respect to the matters
set forth in Section 7.13 (Indemnification; Directors' and Officers' Insurance),
this Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
-54-
10.9 Obligations of Teva and of Sicor. Except as otherwise specifically
provided herein, whenever this Agreement requires a Subsidiary of Teva to take
any action, such requirement shall be deemed to include an undertaking on the
part of Teva to cause such Subsidiary to take such action. Whenever this
Agreement requires a Subsidiary of Sicor to take any action, such requirement
shall be deemed to include an undertaking on the part of Sicor to cause such
Subsidiary to take such action and, after the Effective Time, on the part of the
Surviving Corporation to cause such Subsidiary to take such action.
10.10 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
10.11 Interpretation. The table of contents and headings herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
10.12 Assignment. This Agreement shall not be assignable by operation of
Law or otherwise; provided, however, that Teva may designate, by written notice
to Sicor, another wholly-owned direct or indirect subsidiary to be a constituent
corporation in lieu of Merger Sub, so long as such designation would not
reasonably be expected to (i) impose any material delay in the obtaining of, or
significantly increase the risk of not obtaining any Teva Required Statutory
Approval or Sicor Required Statutory Approval or the expiration or termination
of any applicable waiting period, (ii) significantly increase the risk of any
Governmental Entity entering an order prohibiting the consummation of the
Merger, (iii) significantly increase the risk of not being able to remove any
such order on appeal or otherwise or (iv) materially delay the consummation of
the Merger. If the requirements of the previous sentence are met and Teva wishes
to designate another wholly-owned direct or indirect subsidiary to be a
constituent corporation in lieu of Merger Sub, then, all references herein to
Merger Sub shall be deemed references to such other subsidiary, except that all
representations and warranties made herein with respect to Merger Sub as of the
date of this Agreement shall be deemed representations and warranties made with
respect to such other subsidiary as of the date of such designation.
-55-
IN WITNESS WHEREOF, this Agreement has been duly executed, acknowledged and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
SICOR INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief
Executive Officer
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
By: /s/Israel Makov
------------------------------
Name: Israel Makov
Title: Chief Executive Officer
By: /s/ ▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Vice President - Business
Development
SILICON ACQUISITION SUB, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Vice President
-56-
