sv4
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
Form S-4
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
CELGENE CORPORATION
(Exact name of registrant as
specified in its charter)
|
|
|
|
|
Delaware
(State of
Incorporation)
|
|
2834
(Primary Standard
Industrial
Classification Code Number)
|
|
22-2711928
(I.R.S. Employer
Identification No.)
|
86 Morris Avenue
Summit, New Jersey 07901
(908) 673-9000
(Address, including zip code,
and telephone number, including area code, of registrants
principal executive offices)
Robert J. Hugin
Chief Executive Officer
Celgene Corporation
86 Morris Avenue
Summit, New Jersey 07901
(908) 673-9000
(Name, address, including zip
code, and telephone number, including area code, of agent for
service)
With
copies to:
|
|
|
|
|
Jonn R. Beeson
Kevin B. Espinola
Jones Day
3161 Michelson Drive, Suite 800
Irvine, California
92612-4408
(949) 851-3939
|
|
Charles Kim
Abraxis BioScience, Inc.
11755 Wilshire Boulevard, Suite 2000
Los Angeles, California 90025
(310) 883-1300
|
|
Philip Richter
Brian Mangino
Fried, Frank, Harris, Shriver &
Jacobson LLP
One New York Plaza
New York, New York 10004
(212) 859-8000
|
Approximate date of commencement of proposed
offering: As soon as practicable after this
registration statement is declared effective.
If the securities being registered on this form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, please
check the following
box. o
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act
of 1933, as amended (the Securities Act), check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same
offering. o
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a
non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):
|
|
|
|
Large
accelerated
filer þ
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Smaller reporting
company o
|
(Do not check if a smaller
reporting company)
CALCULATION
OF REGISTRATION FEE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposed Maximum
|
|
|
Proposed Maximum
|
|
|
Amount of
|
Title of Class of
|
|
|
Amount to be
|
|
|
Offering
|
|
|
Aggregate
|
|
|
Registration
|
Securities to be Registered
|
|
|
Registered
|
|
|
Price per Unit
|
|
|
Offering Price
|
|
|
Fee
|
Common Stock, par value $0.01 per share
|
|
|
|
11,300,440(1
|
)
|
|
|
|
N/A
|
|
|
|
$712,971,363.03(2)
|
|
|
$50,834.86(3)
|
Contingent Value Rights (CVRs)
|
|
|
|
43,430,895(1
|
)
|
|
|
|
N/A
|
|
|
|
(2)
|
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents the maximum number of
shares of common stock, par value $0.01 per share, of Celgene
Corporation (Celgene), and the maximum number of
contingent value rights (CVRs), issuable to holders
of common stock, par value $0.001 per share, of Abraxis
BioScience, Inc. (Abraxis) and to holders of certain
Abraxis options and stock appreciation rights, in connection
with the proposed merger described in this registration
statement. The maximum number of shares of Celgene common stock
issuable pursuant to the merger was calculated by multiplying
0.2617, the exchange ratio in the merger, by the sum of (such
sum, the Estimated Number) (i) 40,463,501, the
number of shares of Abraxis common stock outstanding as of
July 23, 2010, (ii) 1,737,326, the number of shares of
Abraxis common stock issuable upon the exercise of Abraxis
options outstanding as of July 23, 2010, (iii) 12,236,
the number of shares of Abraxis common stock that are subject to
stock appreciation rights of Abraxis outstanding as of
July 23, 2010, and (iv) 967,832, the number of shares
of Abraxis common stock issuable in respect of Abraxis
restricted stock units outstanding as of July 23, 2010. The
maximum number of CVRs issuable pursuant to the merger is equal
to the Estimated Number plus 250,000, the number of restricted
stock units issuable prior to the effective time of the merger
under the terms of the merger agreement (the Estimated RSU
Number).
|
|
(2)
|
|
Determined on a combined basis with
respect to both the shares of Celgene common stock and the CVRs
to be issued pursuant to the proposed merger described in this
registration statement based on Rules 457(c), 457(f)(1) and
457(f)(3) promulgated under the Securities Act as the sum of
(i) multiplying (a) $16.50 (the result of $74.50, the
average of the high and low prices of the Abraxis common stock
as reported on The NASDAQ Global Select Market as of
July 23, 2010, less $58.00, the amount of cash
consideration per share payable in the merger in respect of each
outstanding share of Abraxis common stock), by (b) the
Estimated Number and (ii) multiplying (a) $2.81 (the
result of $74.50, the average of the high and low prices of the
Abraxis common stock as reported on The NASDAQ Global Select
Market as of July 23, 2010, less $58.00, the amount of cash
consideration per share payable in the merger in respect of each
outstanding share of Abraxis common stock, less $13.63, the
value of 0.2617 of a share of Celgene common stock (determined
as the average of the high and low prices of Celgene common
stock as reported on The NASDAQ Global Select Market on
July 23, 2010), by (b) the Estimated RSU Number.
|
|
(3)
|
|
Determined on a combined basis with
respect to both the shares of Celgene common stock and the CVRs
to be issued pursuant to the proposed merger described in this
registration statement in accordance with Section 6(b) of
the Securities Act at a rate equal to $71.30 per $1,000,000 of
the proposed maximum aggregate offering price.
|
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act or until this Registration Statement shall
become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may
determine.
The
information in this proxy statement/prospectus is not complete
and may be changed. Celgene Corporation may not sell the
securities offered by this proxy statement/prospectus until the
registration statement filed with the Securities and Exchange
Commission is effective. This proxy statement/prospectus is not
an offer to sell these securities and Celgene Corporation is not
soliciting an offer to buy these securities in any state where
the offer or sale is not permitted.
|
SUBJECT
TO COMPLETION, DATED July 29, 2010
MERGER PROPOSAL
[ ],
2010
Dear Stockholder:
As previously announced, on June 30, 2010, Abraxis
BioScience, Inc., or Abraxis, entered into a merger agreement
with Celgene Corporation, or Celgene, under which Celgene will
acquire Abraxis. Following the merger, Abraxis will become a
direct or indirect wholly-owned subsidiary of Celgene. If the
merger is completed, Abraxis stockholders (other than
stockholders who validly perfect appraisal rights under Delaware
law) will be entitled to receive, for each share of Abraxis
common stock that they hold:
|
|
|
|
|
$58.00 in cash, without interest;
|
|
|
|
0.2617 of a share of common stock of Celgene; and
|
|
|
|
one contingent value right, or CVR, issued by Celgene.
|
Each CVR will entitle its holder to receive additional cash
payments if certain U.S. regulatory approval milestones
with respect to
Abraxane®
are achieved
and/or if
aggregate annual net sales of
Abraxane®
and certain Abraxis pipeline products that are currently under
development exceed $1 billion.
Celgene common stock is listed on The NASDAQ Global Select
Market under the symbol CELG. On
[ ], 2010, the last trading day prior to the
date of this proxy statement/prospectus, the last reported sale
price per share of Celgene common stock on The NASDAQ Global
Select Market was $[ ]. There is currently no
public market for the CVRs. Celgene has agreed to use reasonable
best efforts to cause the CVRs to be approved for listing on The
NASDAQ Global Select Market.
Abraxis will hold a special meeting of stockholders to consider
and vote on a proposal to adopt the merger agreement. You will
find the notice of meeting, logistics of the proposed merger and
details in the attached documents.
OUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE
MERGER, ARE ADVISABLE AND FAIR TO, AND IN THE BEST INTEREST OF,
ABRAXIS AND ITS STOCKHOLDERS, ADOPTED THE MERGER AGREEMENT AND
DECLARED ADVISABLE THE MERGER AND UNANIMOUSLY RECOMMENDS THAT
YOU VOTE FOR THE ADOPTION OF THE MERGER
AGREEMENT.
Under Delaware law, the approval of holders of a majority of the
outstanding shares of Abraxis common stock is required to adopt
the merger agreement. On June 30, 2010,
Dr. Soon-Shiong and certain entities affiliated with him,
who together own approximately 82.1% of the outstanding shares
of Abraxis common stock, entered into a Voting Agreement with
Celgene and a wholly-owned subsidiary of Celgene, under which
they agreed to vote all of their shares of Abraxis common stock
in favor of the approval and adoption of the merger agreement
and the transactions contemplated by the merger agreement.
For a discussion of risk factors that you should consider in
evaluating the transaction, see Risk Factors
beginning on page 22 of the attached proxy
statement/prospectus.
We urge you to read this proxy statement/prospectus carefully
and in its entirety.
By Order of the Board of Directors,
Patrick Soon-Shiong, M.D.
Executive Chairman
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER OR
OTHER TRANSACTIONS DESCRIBED IN THE ATTACHED PROXY
STATEMENT/PROSPECTUS OR THE SECURITIES TO BE ISSUED PURSUANT TO
THE MERGER UNDER THE ATTACHED PROXY STATEMENT/PROSPECTUS NOR
HAVE THEY DETERMINED IF THE ATTACHED PROXY STATEMENT/PROSPECTUS
IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The proxy statement/prospectus is dated [ ],
2010 and is first being mailed to Abraxis stockholders on or
about [ ], 2010.
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
To Be Held
[ ], 2010
The special meeting of stockholders of Abraxis BioScience, Inc.
will be held at [ ], on [ ],
2010, at [ ] local time. The purpose of the
special meeting is to vote on a proposal to adopt the Agreement
and Plan of Merger, dated as of June 30, 2010, by and among
Celgene Corporation, Artistry Acquisition Corp., a wholly-owned
subsidiary of Celgene Corporation, and Abraxis BioScience, Inc.,
as it may be amended from time to time (the merger
agreement).
The board of directors of Abraxis unanimously recommends a
vote FOR this proposal.
Only holders of record of Abraxis common stock at the close of
business on [ ], 2010 will be entitled to vote
at the special meeting or any adjournments or postponements
thereof. A list of stockholders entitled to vote at the special
meeting will be available in Abraxis office located at
11755 Wilshire Boulevard, Suite 2000, Los Angeles,
California 90025, during regular business hours for a period not
less than ten days before the special meeting, as well as at the
place of the special meeting during the special meeting.
For the security of everyone attending the special meeting, a
stockholder must present photo identification to be admitted to
the special meeting.
Whether or not you plan to attend the special meeting, please
vote in advance by marking, signing, dating and returning the
proxy card in the enclosed postage-prepaid envelope.
By Order of the Board of Directors,
Patrick Soon-Shiong, M.D.
Executive Chairman
Los Angeles, California
[ ], 2010
REFERENCES
TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business
and financial information about Abraxis and Celgene from other
documents that Abraxis and Celgene have filed with the
Securities and Exchange Commission, which we refer to as the
SEC, and that are included in this proxy statement/prospectus
and can be found following the annexes. For a listing of
documents incorporated by reference in this proxy
statement/prospectus, please see the section entitled
Where You Can Find More Information. This
information is available for you to review at the SECs
public reference room located at 100 F Street, N.E.,
Room 1580, Washington, DC 20549, and through the SECs
website at www.sec.gov. You can also obtain those documents
incorporated by reference in this proxy statement/prospectus
free of charge by requesting them in writing or by telephone
from the appropriate company at the following addresses and
telephone numbers:
|
|
|
Abraxis BioScience, Inc.
11755 Wilshire Boulevard, Suite 2000
Los Angeles, California 90025
Attention: Investor Relations
Telephone Number:
(310) 883-1300
www.abraxisbio.com
|
|
Celgene Corporation
86 Morris Avenue
Summit, New Jersey 07901
Attention: Investor Relations
Telephone Number: (908) 673-9000
www.celgene.com
|
TABLE OF
CONTENTS
|
|
|
|
|
|
|
Page
|
|
|
|
|
iii
|
|
|
|
|
1
|
|
|
|
|
14
|
|
|
|
|
17
|
|
|
|
|
19
|
|
|
|
|
20
|
|
|
|
|
21
|
|
|
|
|
22
|
|
|
|
|
31
|
|
|
|
|
32
|
|
|
|
|
36
|
|
|
|
|
37
|
|
|
|
|
37
|
|
|
|
|
43
|
|
|
|
|
47
|
|
|
|
|
58
|
|
|
|
|
59
|
|
|
|
|
65
|
|
|
|
|
66
|
|
|
|
|
66
|
|
|
|
|
67
|
|
|
|
|
67
|
|
|
|
|
67
|
|
|
|
|
67
|
|
|
|
|
67
|
|
|
|
|
67
|
|
|
|
|
67
|
|
|
|
|
68
|
|
|
|
|
68
|
|
|
|
|
68
|
|
|
|
|
69
|
|
|
|
|
70
|
|
|
|
|
74
|
|
|
|
|
76
|
|
|
|
|
76
|
|
|
|
|
77
|
|
|
|
|
78
|
|
|
|
|
79
|
|
|
|
|
80
|
|
|
|
|
81
|
|
|
|
|
81
|
|
|
|
|
82
|
|
|
|
|
83
|
|
|
|
|
84
|
|
|
|
|
85
|
|
QUESTIONS
AND ANSWERS ABOUT THE MERGER
The following questions and answers are intended to address
briefly some commonly asked questions regarding the merger.
These questions and answers may not address all questions that
may be important to you as an Abraxis stockholder. To better
understand these matters, and for a description of the legal
terms governing the merger, you should carefully read this
entire proxy statement/prospectus, including the annexes, as
well as the documents that we have incorporated by reference
into this document. See Where You Can Find More
Information.
Unless otherwise indicated or required by the context, in this
proxy statement/prospectus, all references to
Celgene refer to Celgene Corporation and its
subsidiaries; all references to merger sub refer to
Artistry Acquisition Corp., a direct or indirect wholly-owned
subsidiary of Celgene; all references to Abraxis
refer to Abraxis BioScience, Inc. and its subsidiaries; all
references to the merger agreement refer to the
Agreement and Plan of Merger, dated as of June 30, 2010, by
and among Abraxis, Celgene and merger sub, a copy of which is
attached as Annex A to this proxy statement/prospectus, as
it may be amended from time to time; all references to the
merger refer to the merger contemplated by the
merger agreement; all references to the principal
stockholders refer to Dr. Patrick Soon-Shiong and
certain entities affiliated with him, who together own
approximately 82.1% of the outstanding shares of Abraxis common
stock; and all references to the CVR agreement refer
to the Contingent Value Rights Agreement to be entered into by
Celgene and a mutually acceptable trustee, prior to the
completion of the merger, a copy of which is attached as
Annex B to this proxy statement/prospectus.
|
|
|
Q: |
|
Why am I receiving this document? |
|
A: |
|
Celgene and Abraxis have agreed to the merger, pursuant to which
Abraxis will become a direct or indirect wholly-owned subsidiary
of Celgene and will cease to be a publicly held corporation. In
order for the companies to complete the merger, the holders of a
majority of the outstanding shares of Abraxis common stock must
vote to adopt the merger agreement. Abraxis is holding a special
meeting of stockholders solely to obtain such stockholder
approval. |
|
|
|
This document is being delivered to you as both a proxy
statement of Abraxis and a prospectus of Celgene in connection
with the merger. It is the proxy statement by which the Abraxis
board of directors is soliciting proxies from you to vote on the
adoption of the merger agreement at the special meeting or at
any adjournment or postponement of the special meeting. It is
also the prospectus by which Celgene will issue Celgene common
stock and contingent value rights, which we refer to as CVRs, to
you in the merger. |
|
Q: |
|
What is the proposed transaction for which I am being asked
to vote? |
|
A: |
|
You are being asked to adopt the merger agreement providing for
the acquisition of Abraxis by Celgene upon the terms and
conditions of the merger agreement described in this proxy
statement/prospectus, which is attached as Annex A to this
proxy statement/prospectus. This proxy statement/prospectus
contains important information about the merger, including the
special meeting of the stockholders of Abraxis. You should read
it carefully and in its entirety. |
|
Q: |
|
If the merger is completed, what will I receive for my shares
of Abraxis common stock? |
|
A: |
|
Upon completion of the merger, each share of Abraxis common
stock that is issued and outstanding (other than those for which
appraisal rights are validly perfected or owned by Celgene or
merger sub or any wholly-owned subsidiary of Celgene or Abraxis)
will be cancelled and converted into the right to receive
(1) $58.00 in cash, without interest, (2) 0.2617 of a
share of Celgene common stock and (3) one CVR. We refer to
the consideration payable in the merger described in clauses
(1), (2) and (3) together as the merger consideration.
See The Merger Agreement Merger
Consideration and The Merger Agreement
Treatment of Abraxis Stock Options and Other Equity Awards. |
iii
|
|
|
Q: |
|
How did you determine the merger consideration to be paid to
holders of Abraxis common stock? |
|
A: |
|
The merger consideration was determined as a result of
arms length negotiations between the management of Abraxis
and its board of directors, on the one hand, and the management
of Celgene and its board of directors, on the other hand. |
|
Q: |
|
What will happen to Abraxis as a result of the merger? |
|
A: |
|
The acquisition of Abraxis by Celgene will be accomplished
through a merger of merger sub, with and into Abraxis, with
Abraxis surviving the merger as a subsidiary of Celgene. As a
result of the merger, Abraxis common stock will be cancelled and
delisted from The NASDAQ Global Select Market and will no longer
be publicly traded. |
|
Q: |
|
Why did the Abraxis board of directors approve the merger
agreement and the transactions contemplated by the merger
agreement, including the merger? |
|
A: |
|
To review the Abraxis board of directors reasons for
recommending and approving the merger agreement and the
transactions contemplated by the merger agreement, including the
merger, see The Merger Reasons for the
Merger Abraxis Reasons for the Merger. |
|
Q: |
|
How does the Abraxis board of directors recommend that I
vote? |
|
A: |
|
After careful consideration, the Abraxis board of directors
unanimously recommends that you vote your shares
FOR the adoption of the merger agreement. |
|
Q: |
|
Is the approval of stockholders necessary to adopt the merger
agreement? |
|
A: |
|
Adoption of the merger agreement requires approval of the
holders of a majority of the outstanding shares of Abraxis
common stock, voting together as a single class. On
June 30, 2010, the principal stockholders, who together
owned at that date approximately 82.1% of the outstanding shares
of Abraxis common stock and approximately 82.1% of the
outstanding shares of Abraxis common stock as of
[ ], 2010, the record date established for the
special meeting, entered into a voting agreement with Celgene
and merger sub, under which they agreed, subject to the terms
thereof, to vote all of their shares of Abraxis common stock in
favor of the approval and adoption of the merger agreement and
the transactions contemplated by the merger agreement and
against, among other things, any business combination or
extraordinary corporate transaction involving Abraxis or any or
its subsidiaries, other than the merger or any business
combination or transaction with Celgene or any of its
affiliates. Each of the principal stockholders also granted an
irrevocable proxy to Celgene to vote or execute consents with
respect to such principal stockholders shares of Abraxis
common stock in accordance with the preceding sentence. The
voting agreement will terminate upon the earliest to occur of:
(1) the completion of the merger, (2) any material
amendment to the merger agreement that is adverse to the
principal stockholders that has not been approved by them and
(3) the termination of the merger agreement in accordance
with its terms. A copy of the voting agreement is attached to
this proxy statement/prospectus as Annex C. The principal
stockholders vote will be sufficient under Delaware law to
adopt the merger agreement. See Voting Agreement. |
|
Q: |
|
When and where will the special meeting be held? |
|
A: |
|
The special meeting is scheduled to be held at
[ ], local time, on [ ], 2010,
at [ ] located at [ ]. |
|
Q: |
|
Who is entitled to vote at the special meeting? |
|
A: |
|
The Abraxis board of directors has fixed [ ],
2010 as the record date for the special meeting. If you were an
Abraxis stockholder as of the close of business on the record
date, you are entitled to vote your Abraxis shares at the
special meeting. |
|
Q: |
|
How many votes do I have? |
|
A: |
|
You are entitled to one vote at the special meeting for each
share of Abraxis common stock that you owned as of the record
date. As of the close of business on the record date, there were
[ ] outstanding shares of Abraxis common stock.
As of that date, the principal stockholders owned approximately
82.1% of the outstanding shares of Abraxis common stock. |
iv
|
|
|
Q: |
|
What constitutes a quorum? |
|
A: |
|
Stockholders who hold at least a majority of the outstanding
shares of Abraxis common stock as of the close of business on
the record date must be present, either in person or represented
by proxy, in order to constitute a quorum to conduct business at
the special meeting. |
|
Q: |
|
What is the difference between holding shares as a
stockholder of record or in street name? |
|
A: |
|
If your shares are registered directly in your name with
Abraxis transfer agent, American Stock
Transfer & Trust Company, you are considered,
with respect to those shares, the stockholder of
record. If you are a stockholder of record, this proxy
statement/prospectus and the enclosed proxy card have been sent
directly to you by Abraxis. |
|
|
|
If your shares are held in a stock brokerage account or by a
bank or other nominee, you are considered the beneficial owner
of shares held in street name. This proxy
statement/prospectus has been forwarded to you by your broker,
bank or other nominee who is considered, with respect to those
shares, the stockholder of record. As the beneficial owner of
shares held in street name, you have the right to direct your
broker, bank or other nominee how to vote your shares by using
the voting instruction card provided by your broker, bank or
other nominee with this proxy statement/prospectus. If you do
not provide instructions on how to vote your shares to your
broker, bank or other nominee, your shares will not be voted at
the special meeting. This will have the same effect as a vote
AGAINST the merger agreement. |
|
Q: |
|
How do I vote my shares at the special meeting? |
|
A: |
|
If you are entitled to vote at the special meeting and you hold
your shares in your own name, you can submit a proxy or vote in
person by completing a ballot at the special meeting. However,
in order to ensure your vote is counted if you are not able to
attend the special meeting, Abraxis encourages you to submit a
proxy before the special meeting, even if you plan to attend the
special meeting. If you are a stockholder of record, you may
submit a proxy for your shares by completing, signing and dating
the enclosed proxy card and mailing it in the pre-paid envelope
included with these proxy materials. If your shares are held by
a broker, bank or other nominee, you may direct your broker,
bank or other nominee to submit a proxy card by following the
instructions that the broker, bank or other nominee provides to
you with these materials. |
|
Q: |
|
If my shares are held in street name by my
broker, will my broker automatically vote my shares for me? |
|
A: |
|
No. If your shares are held in an account at a broker, bank
or other nominee, you must instruct the broker, bank or other
nominee on how to vote your shares by following the instructions
that the broker, bank or other nominee provides to you with
these materials. |
|
|
|
Brokers do not have discretionary authority to vote on the
proposal to adopt the merger agreement. The broker may still
register your shares as being present at the special meeting for
purposes of determining a quorum but without your specific
authorization, your shares will not be voted in favor of the
adoption of the merger agreement or on any other matters over
which brokers lack discretionary authority. This is called a
broker non-vote. A broker non-vote will have the same effect as
a vote AGAINST the adoption of the merger agreement. |
|
|
|
If you hold shares through a broker, bank or other nominee and
wish to vote your shares in person at the special meeting, you
must obtain a proxy from your broker, bank or other nominee and
present it to the inspector of elections with your ballot when
you vote at the special meeting. |
|
Q: |
|
How will my proxy be voted? |
|
A: |
|
If you vote by completing, signing, dating and mailing your
proxy card or voting instruction card, your shares will be voted
in accordance with your instructions. If you are a stockholder
of record and you sign, date and return your proxy card but do
not indicate how you want to vote or do not indicate that you
wish to abstain, your shares will be voted in favor of the
adoption of the merger agreement. |
|
Q: |
|
As an Abraxis stockholder, what risks should I consider in
deciding whether to vote in favor of the merger? |
|
A: |
|
You should carefully review the section of this proxy
statement/prospectus entitled Risk Factors, which
sets forth and incorporates by reference certain risks and
uncertainties related to the merger and the CVRs, certain |
v
|
|
|
|
|
risks and uncertainties to which Celgene will be subject
following the completion of the merger, and certain risks and
uncertainties to which each of Abraxis and Celgene, as an
independent company, is subject. |
|
Q: |
|
Can I attend the special meeting? |
|
A: |
|
All Abraxis stockholders as of the close of business on the
record date may attend the special meeting by showing photo
identification and signing in at the special meeting. If you are
a stockholder of record (i.e., your shares are held in your
name), you must list your name exactly as it appears on your
stock ownership records from American Stock Transfer &
Trust Company. If you hold shares through a broker, bank or
other nominee, you must also provide a copy of your latest bank
or broker statement showing your ownership as of the close of
business on the record date. |
|
Q: |
|
Can I change my vote after I have submitted a proxy or voting
instruction card? |
|
A: |
|
Yes. If you are a stockholder of record you can change your vote
at any time before your proxy is voted at the special meeting.
You can do this in one of three ways: |
|
|
|
you can send a signed notice of revocation to the
Corporate Secretary of Abraxis;
|
|
|
|
you can submit a revised proxy bearing a later date;
or
|
|
|
|
you can attend the special meeting and vote in
person, which will automatically cancel any proxy previously
given, or you may revoke your proxy in person, but your
attendance alone will not revoke any proxy that you have
previously given.
|
|
|
|
If you choose either of the first two methods, you must submit
your notice of revocation or your new proxy no later than the
beginning of the special meeting. If you are a beneficial owner
of shares held in street name, you may submit new voting
instructions by contacting your broker, bank or other nominee.
You may also vote in person at the special meeting if you obtain
a proxy from your broker, bank or other nominee and present it
to the inspectors of election with your ballot when you vote at
the special meeting. |
|
Q: |
|
What are the CVRs? |
|
A: |
|
The CVRs are contingent value rights to be issued in the merger
by Celgene. Each CVR represents the right to receive a pro rata
portion of certain cash payments required to be paid by Celgene.
Celgene is obligated to make these cash payments: |
|
|
|
if certain U.S. regulatory milestones with respect
to
Abraxane®
are achieved; and/or
|
|
|
|
if aggregate annual net sales of
Abraxane®
and those pipeline products described in the definition of
Products contained in the CVR agreement, which we
refer to as the Abraxis pipeline products, exceed
$1 billion.
|
|
|
|
See Description of the CVRs. |
|
Q: |
|
Will the merger consideration I receive in the merger
increase if the results of operations of Abraxis improve or if
the market price of Abraxis common stock increases? |
|
A: |
|
No. The merger consideration payable for each share of
Abraxis common stock at closing is fixed at (1) $58.00 in
cash, without interest, (2) 0.2617 of a share of common
stock of Celgene and (3) one CVR, and the payment received
at closing will not change regardless of the results of
operations of Abraxis or the price of publicly traded common
stock of Abraxis. |
|
Q: |
|
What happens if the merger is not completed? |
|
A: |
|
If the merger agreement is not adopted by Abraxis stockholders
or if the merger is not completed for any other reason, you will
not receive any payment for your shares of Abraxis common stock
in connection with the merger. Instead, Abraxis will remain an
independent public company and its common stock will continue to
be listed and traded on The NASDAQ Global Select Market. If the
merger agreement is terminated under specified circumstances,
Abraxis may be required to pay Celgene a fee of
$145 million. See The Merger Agreement
Termination Fees and Expenses. |
|
Q: |
|
When is the merger expected to be completed? |
|
A: |
|
Abraxis and Celgene are working hard to complete the merger as
quickly as practicable. A number of conditions must be satisfied
before we can complete the merger, including the approval of the
adoption of the merger |
vi
|
|
|
|
|
agreement by Abraxis stockholders and the expiration or
termination of the applicable waiting periods under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, which we refer to as the HSR
Act. We anticipate that the merger will be completed in the
third or fourth quarter of 2010. However, we cannot predict the
exact timing of the completion of the merger or guarantee that
the merger will be completed. See Merger
Agreement Conditions to the Merger. |
|
Q: |
|
Am I entitled to appraisal rights? |
|
A: |
|
Yes. Stockholders who do not vote FOR the adoption
of the merger agreement and who hold their shares through the
completion of the merger will be entitled to seek appraisal
rights under Delaware law in connection with the merger so long
as they take all the steps required to perfect their rights
under Delaware law. See Rights of Stockholders to Seek
Appraisal. |
|
Q: |
|
What are the material U.S. federal income tax consequences to
the Abraxis stockholders of the merger? |
|
A: |
|
The receipt by a U.S. holder of cash, Celgene common stock and
CVRs in exchange for shares of Abraxis common stock pursuant to
the merger will be a taxable transaction for U.S. federal income
tax purposes (and may also be a taxable transaction under
applicable state, local and foreign income or other tax laws).
For U.S. federal income tax purposes, a U.S. holder of Abraxis
common stock generally will recognize capital gain or loss at
the time of the merger equal to the difference, if any, between |
|
|
|
the sum of (1) the amount of cash (including
any cash received in lieu of fractional shares of Celgene common
stock), (2) the fair market value of the Celgene common
stock and (3) the fair market value of the CVRs received by
the U.S. holder in exchange for such Abraxis common stock; and
|
|
|
|
the U.S. holders adjusted tax basis in such
Abraxis common stock.
|
|
|
|
Pursuant to the merger agreement and the CVR agreement, the
parties to the merger agreement and the CVR agreement have
agreed or will agree, as applicable, to treat and report any CVR
payments (except to the extent of any imputed interest) for all
tax purposes as additional consideration for the sale of Abraxis
common stock in the merger, except as required by applicable
law. Because individual circumstances may differ, we strongly
recommend that you consult your own tax advisors to determine
the specific tax consequences to you of the merger. See
Certain Material U.S. Federal Income Tax
Consequences. |
|
Q: |
|
Should I send my Abraxis common stock certificates now? |
|
A: |
|
No. After the completion of the merger, you will be sent a
letter of transmittal and detailed instructions for exchanging
your Abraxis common stock certificates for the merger
consideration. |
|
Q: |
|
Where can I find more information about Abraxis and
Celgene? |
|
A: |
|
Abraxis and Celgene file periodic reports and other information
with the SEC. You may read and copy this information at the
SECs public reference facilities. Please call the SEC at
1-800-SEC-0330
for information about these facilities. This information is also
available on the website maintained by the SEC, at www.sec.gov,
and on the appropriate companys website, at
www.abraxisbio.com or www.celgene.com. For a more detailed
description of the information available, please see Where
You Can Find More Information. |
|
Q: |
|
Who can help answer my questions? |
|
A: |
|
If you have additional questions about the merger after reading
this proxy statement/prospectus, or require assistance or need
additional copies of this proxy statement/prospectus, please
contact: |
|
|
|
Abraxis BioScience, Inc.
Attention: Investor Relations
11755 Wilshire Boulevard, Suite 2000
Los Angeles, California 90025 |
Telephone Number:
(310) 883-1300
vii
SUMMARY
The following summary highlights only selected information,
and is qualified in its entirety by other information contained
elsewhere in this proxy statement/prospectus and may not contain
all the information that may be important to you. Accordingly,
you are encouraged to read this proxy statement/prospectus
carefully and in its entirety, including its annexes and the
documents incorporated by reference in this proxy
statement/prospectus. See Where You Can Find More
Information.
Parties
to the Merger Agreement
Celgene
Corporation
86 Morris Avenue
Summit, New Jersey 07901
Telephone:
(908) 673-9000
Celgene Corporation, a corporation organized under the laws of
Delaware, which we refer to as Celgene, is a global integrated
biopharmaceutical company primarily engaged in the discovery,
development and commercialization of innovative therapies
designed to treat cancer and immune-inflammatory related
diseases. Celgene is dedicated to innovative research and
development which is designed to bring new therapies to market.
Celgene is also involved in research in several scientific areas
that may deliver proprietary next-generation therapies,
targeting areas such as intracellular signaling pathways in
cancer and immune cells, immunomodulation in cancer and
autoimmunity and placental cell, including stem and progenitor
cell, research. The drug and cell therapies Celgene develops are
designed to treat life-threatening diseases or chronic
debilitating conditions.
Celgene common stock is listed on The NASDAQ Global Select
Market under the symbol CELG.
Additional information about Celgene is included in the
documents incorporated by reference into this proxy
statement/prospectus. See Where You Can Find More
Information.
Abraxis
BioScience, Inc.
11755 Wilshire Boulevard, Suite 2000
Los Angeles, California 90025
Telephone:
(310) 883-1300
Abraxis BioScience, Inc., a corporation organized under the laws
of Delaware, which we refer to as Abraxis, is a fully integrated
global biotechnology company dedicated to the discovery,
development and delivery of next-generation therapeutics and
core technologies that offer patients safer and more effective
treatments for cancer and other critical illnesses.
Abraxis product portfolio includes the chemotherapeutic
compound
Abraxane®,
which is based on Abraxis proprietary tumor targeting
technology known as the
nab®
platform. The first product approved by the U.S. Food and
Drug Administration, which we refer to as the FDA, to use this
nab®
platform,
Abraxane®,
was launched in 2005 for the treatment of metastatic breast
cancer and is now approved in 41 countries. Abraxis
continues to expand the
nab®
platform through a robust clinical program and deep product
pipeline.
Abraxis common stock is listed on The NASDAQ Global Select
Market under the symbol ABII.
Additional information about Abraxis is included in the
documents incorporated by reference into this proxy
statement/prospectus. See Where You Can Find More
Information.
Artistry
Acquisition Corp.
86 Morris Avenue
Summit, New Jersey 07901
Telephone:
(908) 673-9000
Artistry Acquisition Corp., a corporation organized under the
laws of Delaware, which we refer to as merger sub, was formed
solely for the purpose of facilitating the merger. Merger sub
has not carried on any activities or operations to date, except
for those activities incidental to its formation and undertaken
in connection with the
1
transactions contemplated by the merger agreement. By operation
of the merger, merger sub will be merged with and into Abraxis,
merger subs separate existence will cease and Abraxis will
become a direct or indirect wholly-owned subsidiary of Celgene.
The
Merger
Under the merger agreement, merger sub will merge with and into
Abraxis, and Abraxis will be the surviving corporation in the
merger. As a result of the merger, Abraxis will become a direct
or indirect wholly-owned subsidiary of Celgene. Common stock of
Celgene will continue to be listed on the NASDAQ Global Select
Market under the symbol CELG. If Abraxis stockholder
approval and regulatory approvals are obtained and the other
conditions to the merger are satisfied, Celgene and Abraxis
anticipate that the merger will be completed in the third or
fourth quarter of 2010.
Merger
Consideration
Upon completion of the merger, each share of Abraxis common
stock outstanding immediately prior to the completion of the
merger, other than those held by stockholders who properly
demand and perfect appraisal rights, shares held in the treasury
of Abraxis or those owned by Celgene or merger sub or any direct
or indirect wholly-owned subsidiary of Celgene or Abraxis, will
be cancelled and converted into the right to receive
(1) $58.00 in cash, without interest, (2) 0.2617 of a
share of common stock of Celgene and (3) one CVR.
The
CVRs
The CVRs will be issued under the CVR agreement to be entered
into by Celgene and a trustee mutually acceptable to Celgene and
Abraxis prior to the completion of the merger. A copy of the
form of CVR agreement is attached to this proxy
statement/prospectus as Annex B.
If required by law, Celgene will use its reasonable best efforts
to cause the CVR agreement to be qualified under the
Trust Indenture Act of 1939, as amended, which we refer to
as the Trust Indenture Act. The terms of the CVRs include
those stated in the CVR agreement and those made part of the CVR
agreement by reference to the applicable provisions of
Trust Indenture Act.
Each holder of a CVR is entitled to receive a pro rata portion,
based on the number of CVRs then outstanding, of each of the
following cash payments that Celgene is obligated to pay:
|
|
|
|
|
Milestone Payment #1. Celgene agreed to
pay $250 million upon FDA approval of
Abraxane®
for use in the treatment of non-small cell lung cancer, which
approval permits Celgene to market
Abraxane®
under a label that includes a progression free survival claim,
but only if the foregoing milestone is achieved no later than
the fifth anniversary of the merger.
|
|
|
|
Milestone Payment #2. Celgene agreed to
pay $400 million (if achieved no later than April 1,
2013) or $300 million (if achieved after April 1,
2013 and before the fifth anniversary of the merger) upon FDA
approval of
Abraxane®
for use in the treatment of pancreatic cancer, which approval
permits Celgene to market
Abraxane®
under a label that includes an overall survival claim.
|
|
|
|
Net Sales Payments. For each full one-year
period ending December 31st during the term of the CVR
agreement, which we refer to as a net sales measuring period
(with the first net sales measuring period beginning
January 1, 2011 and ending December 31, 2011), Celgene
agreed to pay:
|
|
|
|
|
|
2.5% of the net sales of
Abraxane®
and the Abraxis pipeline products that exceed $1 billion
but are less than or equal to $2 billion for such period,
plus
|
|
|
|
an additional amount equal to 5% of the net sales of
Abraxane®
and the Abraxis pipeline products that exceed $2 billion
but are less than or equal to $3 billion for such period,
plus
|
|
|
|
an additional amount equal to 10% of the net sales of
Abraxane®
and the Abraxis pipeline products that exceed $3 billion
for such period.
|
2
For a description of
Abraxane®
and the Abraxis pipeline products, see Description of the
CVRs CVR Agreement Selected Definitions
Related to the CVR Agreement.
No payments will be due under the CVR agreement with respect to
net sales of
Abraxane®
and the Abraxis pipeline products achieved after
December 31, 2025, which we refer to as the net sales
payment termination date, unless net sales for the net sales
measuring period ending on December 31, 2025 are equal to
or greater than $1 billion, in which case the net sales
payment termination date will be extended until the last day of
the net sales measuring period subsequent to December 31,
2025 during which net sales of
Abraxane®
and the Abraxis pipeline products are less than $1 billion
or, if earlier, December 31, 2030.
Celgene has agreed to use diligent efforts to achieve each of
the milestones above through the fifth year anniversary of the
CVR agreement and to obtain regulatory approval for the
commercial manufacture, marketing and sale of
Abraxane®
for the treatment of melanoma, ovarian cancer, bladder cancer
and first-line metastatic breast cancer until the earlier of the
net sales payment termination date or such time that the data
generated in an appropriate clinical trial does not support
further development of
Abraxane®
for the applicable indication. Celgene has also agreed to use
diligent efforts, until the net sales payment termination date,
to sell
Abraxane®
or any of the Abraxis pipeline products for which Celgene has
obtained regulatory approval for the commercial manufacture,
marketing and sale thereof. For purposes of the CVR agreement,
the term diligent efforts is defined as, with
respect to any product, efforts of a person to carry out its
obligations in a diligent manner using such effort and employing
such resources normally used by such person in the exercise of
its reasonable business discretion relating to the research,
development or commercialization of a product, that is of
similar market potential at a similar stage in its development
or product life, taking into account issues of market
exclusivity (including patent coverage, regulatory and other
exclusivity), safety and efficacy, product profile, the
competitiveness of alternate products in the marketplace or
under development, the launch or sales of a generic or
biosimilar product, the regulatory structure involved, and the
profitability of the applicable product (including pricing and
reimbursement status achieved), and other relevant factors,
including technical, commercial, legal, scientific,
and/or
medical factors.
Celgene may, at any time on and after the date that 50% of the
CVRs issued pursuant to the terms of the merger agreement either
are no longer outstanding,
and/or
repurchased, acquired, redeemed or retired by Celgene, redeem
all, but not less than all, of the outstanding CVRs at a cash
redemption price equal to the average price per CVR paid for all
CVRs by Celgene in prior transactions.
The CVRs are unsecured obligations of Celgene, subordinated to
an unlimited amount of Celgenes senior obligations.
There are numerous risks associated with the CVRs, including
whether Celgene will achieve the milestones and generate
sufficient net sales to require any payment under the CVR
agreement, and there is no assurance that the milestones will be
achieved or the net sales thresholds will be met or exceeded.
The CVRs are freely transferable (subject to restrictions under
applicable securities laws) and are being registered with the
SEC in connection with the merger pursuant to the registration
statement, of which this proxy statement/prospectus forms a
part. Celgene has agreed to use its reasonable best efforts to
cause the CVRs to be approved for listing on The NASDAQ Global
Select Market and to maintain such listing for as long as CVRs
remain outstanding. See Risk Factors and
Description of the CVRs.
Opinions
of Financial Advisors to Abraxis
Merrill
Lynch, Pierce, Fenner & Smith
Incorporated
On June 29, 2010, at a meeting of the Abraxis board of
directors held to evaluate the merger, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, which we refer to as BofA
Merrill Lynch, rendered to the Abraxis board of directors an
oral opinion, which was confirmed by delivery of a written
opinion dated June 30, 2010, to the effect that, as of the
date of the opinion, and based upon and subject to the factors,
assumptions and limitations set forth therein, the merger
consideration to be received in the merger by holders of Abraxis
common stock (other than Dr. Soon-Shiong and his
affiliates) was fair, from a financial point of view, to such
holders.
The full text of the written opinion of BofA Merrill Lynch to
the Abraxis board of directors, dated June 30, 2010, which
sets forth assumptions made, procedures followed, matters
considered and limitations on the review
3
undertaken in connection with the opinion, is attached as
Annex E to this proxy statement/prospectus. BofA Merrill
Lynch provided its opinion to the Abraxis board of directors for
the benefit and use of the Abraxis board of directors in
connection with and for purposes of its evaluation of the merger
consideration from a financial point of view. BofA Merrill
Lynchs opinion does not address any other aspect of the
merger and does not constitute a recommendation to any
stockholder as to how to vote or act in connection with the
merger or any related matter.
Goldman,
Sachs & Co.
On June 29, 2010, at a meeting of Abraxis board of
directors held to evaluate the merger, Goldman,
Sachs & Co., which we refer to as Goldman Sachs,
rendered to the board of directors of Abraxis an oral opinion,
which was confirmed by delivery of a written opinion dated
June 30, 2010, to the effect that, as of the date of the
opinion, and based upon and subject to the factors, assumptions
and limitations set forth therein, the merger consideration to
be paid to the holders of shares of Abraxis common stock
pursuant to the merger agreement was fair from a financial point
of view to such holders.
The full text of the written opinion of Goldman Sachs, dated
June 30, 2010, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion, is attached as
Annex F to this proxy statement/prospectus. Goldman Sachs
provided its opinion for the information and assistance of the
Abraxis board of directors in connection with its consideration
of the merger. The Goldman Sachs opinion is not a recommendation
as to how any holder of Abraxis common stock should vote with
respect to the merger or any other matter.
Lazard
Frères & Co. LLC
Lazard Frères & Co. LLC, which we refer to as
Lazard, rendered its oral opinion to the Abraxis board of
directors that, as of June 29, 2010, and based upon and
subject to the factors, assumptions and limitations set forth
therein, the merger consideration to be paid to holders of
Abraxis common stock (other than Dr. Soon-Shiong, any of
his affiliates, Celgene and merger sub) in the merger was fair
from a financial point of view to such holders. Lazard
subsequently confirmed its earlier opinion by delivery of a
written opinion dated June 30, 2010.
The full text of the written opinion of Lazard, dated
June 30, 2010, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion, is attached as
Annex G to this proxy statement/prospectus. Lazard provided
its opinion for the benefit of the Abraxis board of directors in
connection with its evaluation of the merger. The Lazard opinion
is not a recommendation to any stockholder as to how such
stockholder should vote or act with respect to the merger or any
matter relating thereto.
Interests
of Directors and Executive Officers of Abraxis in the
Merger
When reading this proxy statement/prospectus, you should be
aware that the executive officers and directors of Abraxis may
have interests in the merger that may be different from, or in
addition to, the interests of other Abraxis stockholders
generally. A description of these interests is set forth below.
Each executive officer and director of Abraxis holds options to
purchase common stock
and/or
restricted stock units, which we refer to as RSUs, of Abraxis,
which, whether or not vested, will immediately vest and be
cancelled upon the completion of the merger in exchange for a
cash payment and a CVR as more fully described below. See
The Merger Agreement Treatment of Abraxis
Stock Options and Other Equity Awards. Assuming the merger
was completed on June 30, 2010, and based upon certain
assumptions, the total amount that the executive officers and
directors of Abraxis would have received in respect of their
vested and unvested equity awards would have been approximately
$38.5 million and 444,331 CVRs.
Under a retention agreement entered into by Abraxis with Bruce
Wendel, Vice Chairman and Chief Executive Officer, in the event
of a termination by Abraxis without cause or by
Mr. Wendel for good reason within eighteen
months after the completion of the merger, Mr. Wendel will
be entitled to receive:
|
|
|
|
|
severance pay equal to two times the sum of his then-current
base salary plus the amount of his most recently established
target bonus;
|
4
|
|
|
|
|
reimbursement of COBRA premiums for up to eighteen
months; and
|
|
|
|
life insurance coverage for two years.
|
Under an offer letter entered into between Abraxis and Mitchell
Fogelman, Senior Vice President of Finance and Principal
Financial Officer, Mr. Fogelman will be entitled to receive
severance pay equal to six months of his current base salary if
he is terminated without cause prior to
October 19, 2010, regardless of whether or not the merger
occurs.
Assuming the merger was completed on June 30, 2010 and
Messrs. Wendels and Fogelmans employment with
Abraxis was terminated immediately after completion of the
merger without cause or for good reason,
the total aggregate value of these payments to, and benefits
for, these two executive officers would have been approximately
$2.0 million.
In addition, under agreements with Abraxis, each of
Dr. Soon-Shiong and Mr. Wendel is entitled to a
gross-up
payment, if necessary, so that the net amount of his total
payments contingent on the merger received on an after-tax basis
would equal the amount he would have received in the absence of
the imposition of golden parachute excise taxes imposed by the
Internal Revenue Code of 1986, as amended, which we refer to as
the Code. Based upon the assumptions described herein, the total
maximum estimated amount that would be due in respect of such a
gross-up
payment to these executive officers would be approximately
$17.9 million.
The Abraxis board of directors was aware of these interests and
considered them, among other factors, in unanimously determining
that the transactions contemplated by the merger agreement,
including the merger, are advisable and fair to, and in the best
interest of, Abraxis and its stockholders, adopting the merger
agreement and declaring advisable the merger.
Treatment
of Abraxis Stock Options and Other Equity Awards
Stock
Options
At least five business days prior to the completion of the
merger, each holder of an outstanding option to purchase Abraxis
common stock that was granted under any stock option or equity
incentive plan of Abraxis, which we refer to as a stock option,
and that has an exercise price greater than the per share
amount (which we define below) will, whether such stock
option is vested or unvested, be provided with written notice
that such holder has the right, until the business day preceding
the completion of the merger, which we refer to as the exercise
period, to exercise such stock option by paying Abraxis a cash
amount equal to:
|
|
|
|
|
the exercise price of the stock option, less
|
|
|
|
the per share amount.
|
Each such stock option that is exercised during the exercise
period will be settled in exchange for one CVR. Any such stock
option that is not exercised during the exercise period will be
cancelled upon the completion of the merger for no consideration.
Each stock option that remains outstanding immediately prior to
the completion of the merger and that has an exercise price that
is equal to or less than the per share amount will be cancelled
in exchange for the right to receive:
|
|
|
|
|
an amount in cash, without interest, equal to the excess, if
any, of the per share amount over the exercise price of such
stock option, and
|
|
|
|
one CVR.
|
The per share amount means the sum of $58.00 and the
amount obtained by multiplying (1) the exchange ratio of
0.2617 by (2) an amount equal to the average of the closing
sale prices for Celgene common stock on The NASDAQ Global Select
Market, as reported in The Wall Street Journal, for each of the
ten consecutive trading days ending with the seventh complete
trading day prior to the completion of the merger, with such
amount rounded up to the nearest cent.
5
Stock
Appreciation Rights
At least five business days prior to the completion of the
merger, each holder of an outstanding stock appreciation right
that was granted under any stock option or equity incentive plan
of Abraxis, which we refer to as a SAR, and that has a base
appreciation amount greater than the per share amount will,
whether such SAR is vested or unvested, be provided with written
notice that such holder has the right to exercise such SAR
during the exercise period by paying to Abraxis a cash amount
equal to:
|
|
|
|
|
the base appreciation amount of the SAR, less
|
|
|
|
the per share amount.
|
Each such SAR that is exercised during the exercise period will
be settled in exchange for one CVR. Any SAR that is not
exercised during the exercise period will be cancelled upon the
completion of the merger for no consideration.
Each SAR that remains outstanding immediately prior to the
completion of the merger and that has a base appreciation amount
equal to or less than the per share amount will be cancelled
upon the completion of the merger in exchange for the right to
receive:
|
|
|
|
|
an amount in cash, without interest, equal to the excess, if
any, of the per share amount over the base appreciation amount
of such SAR, and
|
|
|
|
one CVR.
|
RSUs
Each RSU granted by Abraxis under any stock option or equity
incentive plan of Abraxis and which is outstanding immediately
prior to the completion of the merger will vest upon the
completion of the merger and will be canceled and converted into
the right to receive:
|
|
|
|
|
cash, without interest, equal to the per share amount, and
|
|
|
|
one CVR.
|
Ownership
of Celgene After the Merger
Based on the number of shares of Abraxis common stock
outstanding as of July 23, 2010, Celgene expects to issue
approximately 11 million shares of its common stock to
Abraxis stockholders pursuant to the merger. The actual number
of shares of Celgene common stock to be issued pursuant to the
merger will be determined at the completion of the merger based
on the conversion ratio and the number of shares of Abraxis
common stock outstanding at such time. Immediately after
completion of the merger, it is expected that former Abraxis
stockholders will own approximately [ ]% of the
[ ] then outstanding shares of Celgene common
stock, based on the number of shares of Abraxis and Celgene
common stock outstanding, on a fully diluted basis, as of
[ ], 2010.
Key Terms
of the Merger Agreement
Conditions
to the Merger
Before the merger can be completed, a number of conditions must
be satisfied or waived (to the extent permitted under applicable
law and the terms of the merger agreement). For a complete
listing of, and additional information on the conditions to the
merger, see The Merger Agreement Conditions to
the Merger.
Restrictions
on Solicitation of Third Party Acquisition
Proposals
In the merger agreement Abraxis agreed that neither Abraxis nor
its subsidiaries will, and agreed to use its reasonably best
efforts to cause its representatives not to: (1) solicit,
initiate, or knowingly encourage the making, submission or
announcement of any third party proposal which would reasonably
be expected to lead to a transaction involving the acquisition
of 15% or more of the assets, revenues or voting securities of
Abraxis, which
6
we refer to as an acquisition proposal, (2) enter into,
participate, continue or otherwise engage in discussions or
negotiations with, or provide any non-public information to any
third party with respect to any inquiries regarding, or the
making, submission or announcement of, an acquisition proposal,
(3) enter into or approve any letter of intent, agreement
in principle, option agreement, share purchase agreement,
acquisition agreement or similar agreement for an acquisition
proposal, or (4) subject to certain exceptions, terminate,
waive, amend or modify any provision of, or grant permission
under, any standstill, confidentiality agreement or similar
contract to which Abraxis or any of its subsidiaries is a party
(we refer to the restrictions described in clauses (1)
through (4) together as the no-shop
restrictions).
However, before the special meeting, Abraxis may, and may permit
its representatives to, subject to the terms and conditions set
forth in the merger agreement, provide information to and engage
in discussions with a third party that makes an acquisition
proposal that was not initiated or solicited in violation of the
no-shop restrictions, and that the Abraxis board of
directors determines constitutes or is reasonably likely to lead
to a superior proposal (as defined in the merger agreement). The
merger agreement also permits Abraxis to terminate the merger
agreement to enter into a definitive agreement for a superior
proposal with a third party if, among other things, Abraxis has
complied in all material respects with the no-shop
restrictions, has provided Celgene with five business days to
modify the merger agreement in a manner that would cause the
superior proposal to no longer be superior and simultaneously
with such termination pays to Celgene a termination fee of
$145 million.
Termination
of the Merger Agreement
The merger agreement specifies limited circumstances under which
the merger agreement may be terminated by the parties as well as
termination fees to be paid by Abraxis in such event. Either
Abraxis or Celgene may terminate the merger agreement if the
merger has not been completed by the termination date of
March 31, 2011 (however, the right to terminate the merger
agreement is not available to any party whose failure to fulfill
any obligation is the cause of, or results in, the failure of
the closing to occur on or before the termination date).
Abraxis and Celgene may terminate the merger agreement by mutual
written consent at any time before the completion of the merger
(whether before or after Abraxis stockholders have adopted the
merger agreement). In addition, either Abraxis or Celgene may
terminate the merger agreement if:
|
|
|
|
|
any permanent injunction or other order issued by any
governmental entity in the United States, the European Union,
Canada or Switzerland is in effect preventing or prohibiting the
completion of the merger has become final and
non-appealable; or
|
|
|
|
Abraxis stockholders do not vote to adopt the merger agreement
at the special meeting (including any postponement or
adjournment of the special meeting).
|
Celgene may terminate the merger agreement:
|
|
|
|
|
if Abraxis breaches or fails to perform any of its
representations, warranties, covenants or obligations contained
in the merger agreement, which breach or failure to perform
results in the conditions described under The Merger
Agreement Conditions to the Merger relating to
the accuracy of Abraxis representations and warranties or
the performance of Abraxis obligations and covenants in
the merger agreement not being able to be satisfied by the
termination date;
|
|
|
|
if Abraxis breaches or fails to perform in any material respect
its obligations with respect to the no shop
restrictions; or
|
|
|
|
prior to the special meeting, if (1) the Abraxis board of
directors has publicly withdrawn its approval or recommendation
of the merger agreement or the merger or has publicly
recommended to Abraxis stockholders any acquisition proposal or
(2) a tender offer or exchange offer has been commenced
that, if successful, would result in any person or group
becoming the beneficial owner of 15% or more of Abraxis common
stock, and the Abraxis board of directors fails to recommend
that Abraxis stockholders not tender their shares in connection
with such tender or exchange offer within ten days of the
commencement.
|
See The Merger Agreement Termination.
7
Abraxis may terminate the merger agreement:
|
|
|
|
|
if Celgene or merger sub breaches or fails to perform any of its
representations, warranties, covenants or obligations contained
in the merger agreement, which breach or failure to perform
results in the conditions described under The Merger
Agreement Conditions to the Merger relating to
the accuracy of Celgenes or merger subs
representations and warranties or the performance of
Celgenes or merger subs obligations and covenants in
the merger agreement not being able to be satisfied by the
termination date; or
|
|
|
|
prior to the special meeting, in order to concurrently enter
into a definitive agreement with respect to any superior
proposal with a third party if, among other things Abraxis has
complied in all material respects with the no-shop
restrictions of the merger agreement and concurrently pays a
termination fee of $145 million to Celgene.
|
See The Merger Agreement Termination in
Connection with a Superior Proposal.
Termination
Fee Payable by Abraxis
Abraxis has agreed to pay to Celgene a termination fee of
$145 million if the merger agreement is terminated under
any of the following circumstances:
|
|
|
|
|
Abraxis terminates the merger agreement, prior to the special
meeting, in order to concurrently with such termination enter
into a definitive agreement with respect to a superior proposal
and has complied in all material respects with the no
shop restrictions of the merger agreement;
|
|
|
|
Celgene terminates the merger agreement if Abraxis breaches or
fails to perform in any material respect its obligations under
the no shop restrictions of the merger agreement, or
if prior to the special meeting, (1) the Abraxis board of
directors has publicly withdrawn its approval or recommendation
of the merger agreement or the merger or has publicly
recommended to the stockholders of Abraxis any acquisition
proposal, or (2) a tender offer or exchange offer has been
commenced that, if successful, would result in any person or
group becoming the beneficial owner of 15% or more of the
outstanding stock of Abraxis, and the Abraxis board of directors
fails to recommend that Abraxis stockholders not tender their
shares in connection with such tender or exchange offer within
ten business days of the commencement;
|
|
|
|
(1) Celgene terminates the merger agreement if Abraxis
breaches or fails to perform any of its representations,
warranties, covenants or obligations contained in the merger
agreement, which breach or failure to perform results in the
conditions described in The Merger Agreement
Conditions to the Merger relating to the accuracy of
Abraxis representations and warranties or the performance
of Abraxis obligations or covenants not being able to be
satisfied by the termination date, (2) prior to the date
upon which such breach or failure to perform occurs but after
the date of the merger agreement, a bona fide acquisition
proposal (for the purposes of this definition of acquisition
proposal, the references to 15% will be deemed
references to 60%) for Abraxis has been publicly
announced and (3) within 12 months after such
termination either Abraxis has entered into a definitive
agreement relating to an acquisition proposal or a transaction
contemplated by an acquisition proposal for Abraxis has been
completed;
|
|
|
|
(1) Celgene or Abraxis terminates the merger agreement if
the requisite stockholder approval is not obtained at the
special meeting (including any postponement or adjournment of
the special meeting), (2) prior to the date of the special
meeting but after the date of the merger agreement, a bona fide
acquisition proposal (for the purposes of this definition of
acquisition proposal, the references to 15% will be
deemed references to 60%) for Abraxis has been
publicly announced and (3) within 12 months after such
termination either Abraxis has entered into a definitive
agreement relating to an acquisition proposal or a transaction
contemplated by an acquisition proposal for Abraxis has been
completed; or
|
|
|
|
(1) Celgene or Abraxis terminates the merger agreement if
the merger has not been completed on or before the termination
date of March 31, 2011, (2) prior to such termination,
the waiting period (and any extension thereof) applicable to the
merger under the HSR Act has expired or been terminated,
(3) prior to such termination but after the date of the
merger agreement, a bona fide acquisition proposal (for the
purposes of this definition of acquisition proposal, the
references to 15% will be deemed references to
60%) for
|
8
|
|
|
|
|
Abraxis has been publicly announced and (4) within
12 months after such termination either Abraxis has entered
into a definitive agreement relating to an acquisition proposal
or a transaction contemplated by an acquisition proposal for
Abraxis has been completed.
|
For additional information on termination fees, see The
Merger Agreement Termination Fees and Expenses.
Voting
Agreement
On June 30, 2010, the principal stockholders, who together
own approximately 82.1% of the outstanding shares of Abraxis
common stock as of [ ], 2010, the record date
established for the special meeting, entered into a voting
agreement with Celgene and merger sub, under which they agreed
to vote all of their shares of Abraxis common stock in favor of
the approval and adoption of the merger agreement and the
transactions contemplated by the merger agreement and against,
among other things, any business combination or extraordinary
corporate transaction involving Abraxis or any or its
subsidiaries, other than the merger or any business combination
or transaction with Celgene or any of its affiliates. Each of
the principal stockholders also granted an irrevocable proxy to
Celgene to vote or execute consents with respect to such
principal stockholders shares of Abraxis common stock in
accordance with the preceding sentence. Additionally, the
principal stockholders agreed, among other things, not to
transfer their shares of Abraxis common stock, subject to
certain exceptions, or to solicit any acquisition proposal. The
voting agreement will terminate upon the earliest to occur of:
|
|
|
|
|
the completion of the merger;
|
|
|
|
any material amendment to the merger agreement that is adverse
to the principal stockholders that has not been approved by
them; and
|
|
|
|
the termination of the merger agreement in accordance with its
terms.
|
A copy of the voting agreement is attached to this proxy
statement/prospectus as Annex C. See Voting
Agreement.
The principal stockholders vote will be sufficient under
Delaware law to adopt the merger agreement without the approval
of any other stockholder of Abraxis.
Stockholders
Agreement
On June 30, 2010, certain of the principal stockholders,
including Dr. Soon-Shiong, entered into a
stockholders agreement with Celgene under which they
agreed, among other things, not to sell, transfer, pledge or
otherwise dispose of any of the shares of Celgene common stock
issued to them in the merger, prior to the third anniversary of
the merger, subject to certain limited exceptions. In addition
to such limited exceptions, after the second anniversary of the
merger, these stockholders may, subject to the limitation set
forth in the following sentence, sell, transfer, pledge or
otherwise dispose of, in the aggregate, a number of shares of
Celgene common stock issued to them in the merger equal to 25%
of the number of shares of Celgene common stock issued to these
stockholders in the merger. Prior to the fourth anniversary of
the merger, these stockholders may not, during any calendar
month, sell, in the aggregate, pursuant to open market
transactions, shares of Celgene common stock issued to them in
the merger representing more than 30% of the number of shares of
Celgene common stock issued to these stockholders in the merger.
See The Merger Interests of Abraxis Directors
and Officers in the Merger Stockholders
Agreement.
Non-Competition,
Non-Solicitation and Confidentiality Agreement
On June 30, 2010, Dr. Soon-Shiong entered into a
non-competition, non-solicitation and confidentiality agreement
with Celgene, which we refer to as the non-competition
agreement, pursuant to which Dr. Soon-Shiong will be
generally prohibited for ten years after completion of the
merger from, without the prior written consent of Celgene,
owning, managing, financing, investing in, controlling, engaging
in, operating or conducting, lending his name to, lending credit
to, rendering services or advising, devoting material endeavor
or effort to, or assisting any person or entity to conduct, the
business of researching, developing, licensing, manufacturing,
selling, offering for
9
sale, importing, using, marketing, distributing, practicing, or
otherwise exploiting
Abraxane®
or any other pharmaceutical or diagnostic product developed or
manufactured using the albumin-bound
(nab®)
technology (as defined in the non-competition agreement), which
we refer to as the business, in the United States and all other
countries in which Abraxis was engaged in the business at the
completion of the merger. Additionally, Dr. Soon-Shiong
will be generally prohibited for ten years after completion of
the merger from, without the prior written consent of Celgene:
|
|
|
|
|
(i) soliciting, knowingly encouraging or inducing any
customer, supplier or licensee with whom Abraxis or its
subsidiaries were engaged in a contractual relationship, or
substantive discussions or proposal negotiations, in each case
as of the completion of the merger, with respect to the business
to cease doing business with Abraxis, Celgene or any of their
subsidiaries with respect to the business in the United States
and all other countries in which Abraxis or its subsidiaries
were engaged in the business at the completion of the merger; or
(ii) otherwise knowingly interfering with Abraxis,
Celgenes or their respective subsidiaries
relationship with any customer, supplier or licensee of the
business,
|
|
|
|
soliciting, encouraging or inducing any employee, consultant or
independent contractor that was engaged by Abraxis or its
subsidiaries as of the completion of the merger to terminate or
breach an employment, contractual or other relationship with
Abraxis, Celgene or their respective subsidiaries, and
|
|
|
|
making any public statements that directly or indirectly
disparage Abraxis, Celgene or any of their respective affiliates,
|
in each case subject to certain exceptions. Dr. Soon-Shiong
has also agreed not to use or disclose, except as required by
law or as directed by Abraxis or Celgene, confidential
information that is owned or held by Abraxis as of the
completion of the merger. The non-competition agreement will
become effective as of the completion of the merger and will
have no force or effect if the merger agreement is terminated
prior to the completion of the merger or if the merger is
otherwise not completed.
A copy of the non-competition agreement is attached as
Annex D to this proxy statement/prospectus. See The
Merger Interests of Abraxis Directors and Officers
in the Merger Non-Competition, Non-Solicitation and
Confidentiality Agreement.
The
Special Meeting
The stockholders of Abraxis will hold a special meeting at
[ ] on [ ], 2010, at
[ ] local time, unless the special meeting is
adjourned or postponed. At the special meeting, Abraxis
stockholders will be asked to consider and act on a proposal to
adopt the merger agreement. Only stockholders listed on
Abraxis records at the close of business on
[ ], 2010, the record date for the special
meeting, are entitled to vote at the special meeting or any
adjournments or postponements of the special meeting. As of the
close of business on the record date, there were
[ ] shares of Abraxis common stock
outstanding and entitled to vote at the special meeting. See
Information about the Special Meeting for more
information on how to cast your vote at the special meeting.
Provided a quorum of stockholders is present in person or by
proxy at the special meeting, in order to adopt the merger
agreement, holders of a majority of the outstanding shares of
Abraxis common stock must cast a vote in favor of the proposal
to adopt the merger agreement. Abstentions and broker non-votes
will have the effect of a vote AGAINST the proposal
to adopt the merger agreement.
As of the record date, directors and executive officers of
Abraxis had the right to
vote [ ] shares of Abraxis common
stock, entitling them to collectively cast approximately
[ ]% of the votes entitled to be cast at the
special meeting. This includes [ ] shares
of Abraxis common stock that the principal stockholders had the
right to vote. As noted above, the principal stockholders have
agreed collectively to vote their shares of Abraxis common stock
in favor of the adoption of the merger agreement.
Except as described above as to shares held by the principal
stockholders, none of Abraxis directors or officers has
entered into any agreement requiring them to vote for or against
the proposal to adopt the merger agreement.
10
No vote of the stockholders of Celgene is required to adopt the
merger agreement or to effect the transactions contemplated by
the merger agreement.
Regulatory
Approvals
Under the provisions of the HSR Act, the merger may not be
completed until notification and report forms have been filed
with the U.S. Federal Trade Commission, which we refer to
as the FTC, and the Antitrust Division of the
U.S. Department of Justice, which we refer to as the
Antitrust Division, and until the expiration of a 30 calendar
day waiting period, or the early termination of that waiting
period, following the parties filing of their respective
notification and report forms. If the FTC or the Antitrust
Division issues a Request for Additional Information and
Documentary Material prior to the expiration of the waiting
period, the parties must observe a second 30 calendar day
waiting period, which would begin to run only after both parties
have substantially complied with the request for information,
unless the waiting period is terminated earlier or extended with
the consent of the parties. On July 14, 2010, Abraxis and
Celgene filed their respective notification and report forms
under the HSR Act with the FTC and the Antitrust Division,
commencing the initial 30 calendar day waiting period that will
expire on August 13, 2010.
Subject to the terms and conditions of the merger agreement,
Abraxis and Celgene have agreed to use their reasonable best
efforts to obtain all regulatory clearances necessary to
complete, in the most expeditious manner practicable, the
merger; however, Celgene is not required to sell, divest or
otherwise dispose of, hold separate, enter into any license or
similar agreement with respect to, restrict the ownership or
operation of, or agree to sell, divest or otherwise dispose of,
hold separate, enter into any license or similar agreement with
respect to, or restrict the ownership or operation of:
|
|
|
|
|
(A) any assets or businesses of Abraxis or any of its
subsidiaries or (B) any assets or businesses of Celgene or
any of its affiliates or subsidiaries, in the case of either
clause (A) or (B), to the extent that the sale,
divestiture, disposition, or agreement would have a material
adverse effect on the business, operations, financial condition
or results of operations of the combined business of Abraxis and
Celgene after giving effect to the completion of merger; or
|
|
|
|
Abraxane®
to the extent such sale, divestiture, disposition, agreement or
restriction would have a material adverse effect on the ability
of Abraxis to market
Abraxane®
in the United States, the European Union, Canada and Switzerland.
|
In addition, Abraxis is not required to divest, hold separate or
otherwise take or commit to take any action that limits its
freedom of action with respect to, or its ability to retain, any
of the businesses, services, or assets of Abraxis or any of its
subsidiaries, unless it is conditioned upon the completion of
the merger.
Rights of
Stockholders to Seek Appraisal
Under Delaware law, holders of Abraxis common stock other than
the principal stockholders will have the right to seek appraisal
of the fair value of their shares of Abraxis common stock as
determined by the Delaware Court of Chancery if the merger is
completed, but only if they comply with all applicable
requirements of Delaware law. This appraisal amount could be
more than, the same as or less than the merger consideration.
Among other requirements, any holder of Abraxis common stock
intending to exercise appraisal rights must not vote in favor of
the merger and must submit a written demand for an appraisal to
Abraxis before the vote on the merger at the special meeting.
Your failure to strictly follow the procedures specified under
Delaware law will result in the loss of your appraisal rights.
For a summary of the requirements for asserting and perfecting
your appraisal rights, see Rights of Stockholders to Seek
Appraisal. The provisions of Delaware law that address
appraisal rights and govern the required procedures are attached
as Annex H to this proxy statement/prospectus.
11
Certain
Material U.S. Federal Income Tax Consequences
The receipt by a U.S. holder of cash, Celgene common stock
and CVRs in exchange for shares of Abraxis common stock pursuant
to the merger will be a taxable transaction for
U.S. federal income tax purposes (and may also be a taxable
transaction under applicable state, local, and foreign income or
other tax laws). For U.S. federal income tax purposes, a
U.S. holder of Abraxis common stock generally will
recognize capital gain or loss at the time of the merger equal
to the difference, if any, between:
|
|
|
|
|
the sum of (1) the amount of cash (including any cash
received in lieu of fractional shares of Celgene common stock),
(2) the fair market value of the Celgene common stock and
(3) the fair market value of the CVRs received by the
U.S. holder in exchange for such Abraxis common
stock; and
|
|
|
|
the U.S. holders adjusted tax basis in such Abraxis
common stock.
|
Pursuant to the merger agreement and the CVR agreement, the
parties to the merger agreement and the CVR agreement have
agreed or will agree, as applicable, to treat and report any CVR
payments (except to the extent of any imputed interest) for all
tax purposes as additional consideration for the sale of Abraxis
common stock in the merger, except as required by applicable
law. Tax matters can be complicated. Abraxis stockholders are
strongly urged to consult their tax advisors as to the specific
tax consequences to them of the merger. See Certain
Material U.S. Federal Income Tax Consequences for a
more detailed discussion.
Accounting
Treatment
In accordance with U.S. generally accepted accounting
principles, which we refer to as U.S. GAAP, Celgene will
account for the merger using the acquisition method of
accounting for business combinations. Under this method of
accounting, Celgene will record the acquisition based on the
fair value of the merger consideration, which includes the cash
consideration paid, the market value of shares of Celgene common
stock issued in connection with the merger (based on the closing
price of Celgene common stock on the date of the completion of
the merger) and the CVRs issued in connection with the merger.
Celgene will allocate the purchase price to the identifiable
assets acquired and liabilities assumed based on their
respective fair values at the date of the completion of the
merger. Any excess of the value of consideration paid over the
aggregate fair value of those net assets will be recorded as
goodwill. Financial statements of Celgene issued after the
completion of the merger will reflect such fair values and will
not be restated retroactively to reflect historical financial
position or results of operations of Celgene. The results of
operations of Abraxis will be included in the results of
operations of Celgene beginning on the date of the completion of
the merger.
Market
Price of Abraxis Common Stock
Abraxis common stock is listed on The NASDAQ Global Select
Market under the symbol ABII. The closing sale price
of Abraxis common stock on The NASDAQ Global Select Market on
June 29, 2010, the last trading day prior to the
announcement of the merger, was $61.31. The $58.00 cash
consideration and $13.93, the value of 0.2617 of a share of
common stock of Celgene on June 29, 2010, represents a
premium of approximately 17% over the closing sale price of
Abraxis common stock on June 29, 2010. On
[ ], 2010, the last trading day before the date
of this proxy statement/prospectus, the closing sale price of
Abraxis common stock on The NASDAQ Global Select Market was
$[ ] per share.
Market
Price of Celgene Common Stock
Celgene common stock is listed on The NASDAQ Global Select
Market under the symbol CELG. The closing sale price
of Celgene common stock on The NASDAQ Global Select Market on
June 29, 2010, the last trading day prior to the
announcement of the merger, was $53.24. On [ ],
2010, the last trading day before the date of this proxy
statement/prospectus, the closing sale price of Celgene common
stock on The NASDAQ Global Select Market was
$[ ] per share. It is a condition to the
completion of the merger that the shares of Celgene common stock
issued in the merger will be approved for listing on The NASDAQ
Global Select Market.
12
Litigation
Related to the Merger
Abraxis, the members of the Abraxis board of directors and
Celgene are named as defendants in putative class action
lawsuits brought by Abraxis stockholders challenging the merger
in Los Angeles County Superior Court. The plaintiffs in such
actions assert claims for breaches of fiduciary duty arising out
of the merger and allege that Abraxis directors engaged in
self-dealing and obtained for themselves personal benefits and
have failed or are failing to provide stockholders with material
information relating to the merger. The plaintiffs also allege
claims for aiding and abetting breaches of fiduciary duty
against Abraxis and Celgene. These lawsuits generally seek,
among other things, to enjoin the defendants from consummating
the merger until such time as Abraxis:
|
|
|
|
|
adopts and implements a procedure or process to obtain the
highest possible price for stockholders;
|
|
|
|
discloses all material information to stockholders regarding the
merger; and
|
|
|
|
institutes a majority of the minority vote provision.
|
Risks
In evaluating the CVRs and Celgene common stock, you should
carefully read this proxy statement/prospectus and especially
consider the factors discussed in the section entitled
Risk Factors beginning on page 22.
13
SELECTED
HISTORICAL CONSOLIDATED AND COMBINED FINANCIAL DATA OF
ABRAXIS
The following selected historical consolidated and combined
financial data of Abraxis for the years ended December 31,
2009, 2008 and 2007 and as of December 31, 2009 and 2008,
have been derived from Abraxis historical audited
consolidated and combined financial statements contained in
Abraxis Annual Report on
Form 10-K
for the year ended December 31, 2009, which is incorporated
by reference into this proxy statement/prospectus. The following
selected historical consolidated and combined financial data for
the years ended December 31, 2006 and 2005 and as of
December 31, 2007, 2006 and 2005 have been derived from
Abraxis historical audited consolidated and combined
financial statements not required to be incorporated by
reference into this proxy statement/prospectus. Historical
results of operations and financial position are not necessarily
indications of the results that may be expected in the future
periods. The following selected historical consolidated
financial data for Abraxis as of and for the three months ended
March 31, 2010 and 2009 have been derived from
Abraxis unaudited interim consolidated financial
statements contained in Abraxis Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010, which is incorporated
by reference into this proxy statement/prospectus. In the
opinion of Abraxis management, the unaudited interim
consolidated financial statements have been prepared on the same
basis as the audited consolidated and combined financial
statements and include all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of the
financial position and results of operations at these dates and
for these periods. Results of interim periods are not
necessarily indicative of the results expected for a full year
or for future periods. This information is only a summary and
you should read this selected historical consolidated and
combined financial data together with Abraxis
Managements Discussion and Analysis of Financial
Condition and Results of Operations, and the unaudited and
audited consolidated and combined financial statements and notes
thereto incorporated by reference into this proxy
statement/prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
March 31,
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Unaudited)
|
|
|
(In thousands, except per share data)
|
|
|
Consolidated and Combined Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Abraxane revenue
|
|
$
|
87,947
|
|
|
$
|
70,093
|
|
|
$
|
314,545
|
|
|
$
|
335,631
|
|
|
$
|
324,692
|
|
|
$
|
174,906
|
|
|
$
|
133,731
|
|
Other Products
|
|
|
18,767
|
|
|
|
525
|
|
|
|
36,686
|
|
|
|
1,770
|
|
|
|
1,269
|
|
|
|
|
|
|
|
|
|
Other revenue
|
|
|
4,116
|
|
|
|
1,964
|
|
|
|
7,819
|
|
|
|
7,908
|
|
|
|
7,725
|
|
|
|
7,381
|
|
|
|
1,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
|
110,830
|
|
|
|
72,582
|
|
|
|
359,050
|
|
|
|
345,309
|
|
|
|
333,686
|
|
|
|
182,287
|
|
|
|
135,675
|
|
Cost of sales
|
|
|
22,630
|
|
|
|
9,127
|
|
|
|
63,665
|
|
|
|
39,068
|
|
|
|
34,450
|
|
|
|
21,183
|
|
|
|
24,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
88,200
|
|
|
|
63,455
|
|
|
|
295,385
|
|
|
|
306,241
|
|
|
|
299,236
|
|
|
|
161,104
|
|
|
|
111,609
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
33,446
|
|
|
|
32,331
|
|
|
|
154,615
|
|
|
|
98,976
|
|
|
|
85,424
|
|
|
|
63,073
|
|
|
|
50,121
|
|
Selling, general and administrative
|
|
|
50,413
|
|
|
|
45,149
|
|
|
|
200,734
|
|
|
|
221,418
|
|
|
|
233,324
|
|
|
|
119,462
|
|
|
|
69,239
|
|
Reacquisition costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
158,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired in-process research and development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,900
|
|
|
|
|
|
|
|
83,447
|
|
|
|
|
|
Impairment charge
|
|
|
|
|
|
|
|
|
|
|
13,999
|
|
|
|
9,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
10,088
|
|
|
|
9,950
|
|
|
|
39,782
|
|
|
|
39,429
|
|
|
|
38,615
|
|
|
|
27,349
|
|
|
|
|
|
Merger related costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
93,947
|
|
|
|
87,430
|
|
|
|
409,130
|
|
|
|
599,481
|
|
|
|
357,363
|
|
|
|
310,053
|
|
|
|
119,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
March 31,
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Unaudited)
|
|
|
(In thousands, except per share data)
|
|
|
Loss from operations
|
|
|
(5,747
|
)
|
|
|
(23,975
|
)
|
|
|
(113,745
|
)
|
|
|
(293,240
|
)
|
|
|
(58,127
|
)
|
|
|
(148,949
|
)
|
|
|
(7,751
|
)
|
Equity in net (loss) income of unconsolidated entities
|
|
|
(1,009
|
)
|
|
|
1,031
|
|
|
|
2,090
|
|
|
|
908
|
|
|
|
3,771
|
|
|
|
2,776
|
|
|
|
1,843
|
|
Interest income
|
|
|
565
|
|
|
|
1,146
|
|
|
|
3,052
|
|
|
|
18,809
|
|
|
|
4,990
|
|
|
|
399
|
|
|
|
287
|
|
Other income (expense)
|
|
|
2,687
|
|
|
|
(1,440
|
)
|
|
|
1,255
|
|
|
|
(5,186
|
)
|
|
|
(190
|
)
|
|
|
(4,741
|
)
|
|
|
(6,563
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(3,504
|
)
|
|
|
(23,238
|
)
|
|
|
(107,348
|
)
|
|
|
(278,709
|
)
|
|
|
(49,556
|
)
|
|
|
(150,515
|
)
|
|
|
(12,184
|
)
|
(Benefit) provision for income taxes
|
|
|
(239
|
)
|
|
|
63
|
|
|
|
(2,580
|
)
|
|
|
(1,938
|
)
|
|
|
(7,952
|
)
|
|
|
(25,964
|
)
|
|
|
478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,265
|
)
|
|
$
|
(23,301
|
)
|
|
$
|
(104,768
|
)
|
|
$
|
(276,771
|
)
|
|
$
|
(41,604
|
)
|
|
$
|
(124,551
|
)
|
|
$
|
(12,662
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to noncontrolling interest
|
|
$
|
(262
|
)
|
|
$
|
(380
|
)
|
|
$
|
(1,652
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Net loss attributable to common shareholders
|
|
$
|
(3,003
|
)
|
|
$
|
(22,921
|
)
|
|
$
|
(103,116
|
)
|
|
$
|
(276,771
|
)
|
|
$
|
(41,604
|
)
|
|
$
|
(124,551
|
)
|
|
$
|
(12,662
|
)
|
Basic and diluted net loss per common share
|
|
$
|
(0.07
|
)
|
|
$
|
(0.57
|
)
|
|
$
|
(2.57
|
)
|
|
$
|
(6.91
|
)
|
|
$
|
(1.04
|
)
|
|
$
|
(3.11
|
)
|
|
$
|
(0.32
|
)
|
Weighted-average common shares outstanding(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
40,181
|
|
|
|
40,081
|
|
|
|
40,100
|
|
|
|
40,032
|
|
|
|
39,991
|
|
|
|
39,990
|
|
|
|
39,990
|
|
Diluted
|
|
|
40,181
|
|
|
|
40,081
|
|
|
|
40,100
|
|
|
|
40,032
|
|
|
|
39,991
|
|
|
|
39,990
|
|
|
|
39,990
|
|
Other data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow provided by (used in) operating activities
|
|
$
|
5,723
|
|
|
$
|
9,367
|
|
|
$
|
4,488
|
|
|
$
|
(315,468
|
)
|
|
$
|
(2,893
|
)
|
|
$
|
170,870
|
|
|
$
|
(22,272
|
)
|
Purchases of property plant and equipment
|
|
|
(15,331
|
)
|
|
|
(18,963
|
)
|
|
|
(94,473
|
)
|
|
|
(43,729
|
)
|
|
|
(40,581
|
)
|
|
|
(64,431
|
)
|
|
|
(17,212
|
)
|
Cash from consolidation of DSC
|
|
|
15,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for acquisition
|
|
|
(5,754
|
)
|
|
|
|
|
|
|
(2,640
|
)
|
|
|
(14,998
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of investments and marketable securities
|
|
|
(3,000
|
)
|
|
|
|
|
|
|
(15,431
|
)
|
|
|
(24,244
|
)
|
|
|
(150
|
)
|
|
|
|
|
|
|
|
|
Investment in notes receivable
|
|
|
(10,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of subsidiary
|
|
|
|
|
|
|
2,046
|
|
|
|
2,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of marketable securities
|
|
|
|
|
|
|
3,677
|
|
|
|
3,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow provided by (used in) financing activities
|
|
|
1,398
|
|
|
|
269
|
|
|
|
(561
|
)
|
|
|
2,360
|
|
|
|
752,082
|
|
|
|
(94,398
|
)
|
|
|
40,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31,
|
|
As of December 31,
|
|
|
2010
|
|
2009
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
|
(Unaudited)
|
|
(In thousands)
|
|
Consolidated balance sheet data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital
|
|
$
|
182,946
|
|
|
$
|
320,322
|
|
|
$
|
192,747
|
|
|
$
|
347,321
|
|
|
$
|
735,181
|
|
|
$
|
25,093
|
|
|
$
|
55,232
|
|
Total assets
|
|
|
1,081,091
|
|
|
|
1,092,173
|
|
|
|
1,068,380
|
|
|
|
1,399,757
|
|
|
|
1,502,255
|
|
|
|
764,783
|
|
|
|
179,080
|
|
Total debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
190,000
|
|
Total equity (deficit)
|
|
|
851,031
|
|
|
|
908,833
|
|
|
|
846,265
|
|
|
|
929,472
|
|
|
|
1,197,387
|
|
|
|
459,021
|
|
|
|
(65,644
|
)
|
15
|
|
|
(1) |
|
As of the completion of Abraxis separation from APP
Pharmaceuticals, Inc. on November 13, 2007, Abraxis had
40.0 million common shares outstanding. The same number of
shares is being used for both diluted earnings per share and
basic earnings per share for all periods prior to the separation
date. All potentially dilutive employee stock awards were
excluded from the computation of diluted loss per common share
for all periods as the effect on net loss per share was
anti-dilutive. The selected historical financial data reflect
the consolidated operations of Abraxis and its subsidiaries as
an independent, publicly-traded company as of and subsequent to
November 13, 2007 and a combined reporting entity
comprising the assets and liabilities that constituted the
proprietary business of the predecessor Abraxis Bioscience for
periods prior to November 13, 2007. The selected historical
consolidated and combined financial data for periods prior to
and including November 13, 2007 may not be indicative
of Abraxis future performance and do not necessarily
reflect what the consolidated and combined results of
operations, financial position and cash flows would have been
had Abraxis operated as an independent, publicly-traded company
during the periods presented. |
16
SELECTED
HISTORICAL CONSOLIDATED FINANCIAL DATA OF CELGENE
The following selected historical consolidated financial data of
Celgene for the years ended December 31, 2009, 2008 and
2007 and as of December 31, 2009 and 2008 have been derived
from Celgenes historical audited financial statements
contained in Celgenes Annual Report on
Form 10-K
for the year ended December 31, 2009 incorporated by
reference into this proxy statement/prospectus. The following
selected historical consolidated financial data for the years
ended December 31, 2006 and 2005 and as of
December 31, 2007, 2006 and 2005 have been derived from
Celgenes historical audited consolidated financial
statements not required to be incorporated by reference into
this proxy statement/prospectus. Historical results of
operations and financial position are not necessarily
indications of the results that may be expected in the future
periods. The following selected historical consolidated
financial data for Celgene as of and for the three months ended
March 31, 2010 and 2009 have been derived from
Celgenes unaudited consolidated financial statements
contained in Celgenes Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010, which is incorporated
by reference into this proxy statement/prospectus. In the
opinion of the management of Celgene, the unaudited consolidated
financial statements have been prepared on the same basis as the
audited consolidated financial statements and include all
adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of the financial position and
results of operations at these dates and for these periods.
Results of interim periods are not necessarily indicative of the
results expected for a full year or for future periods. This
information is only a summary and you should read this selected
historical consolidated financial data together with
Celgenes Managements Discussion and Analysis
of Financial Condition and Results of Operations and the
unaudited and audited consolidated financial statements and
notes thereto incorporated by reference into this proxy
statement/prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
March 31,
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Unaudited)
|
|
|
(In thousands, except per share data)
|
|
|
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
791,254
|
|
|
$
|
605,053
|
|
|
$
|
2,689,893
|
|
|
$
|
2,254,781
|
|
|
$
|
1,405,820
|
|
|
$
|
898,873
|
|
|
$
|
536,941
|
|
Costs and operating expenses
|
|
|
521,005
|
|
|
|
442,612
|
|
|
|
1,848,367
|
|
|
|
3,718,999
|
|
|
|
980,699
|
|
|
|
724,182
|
|
|
|
453,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
270,249
|
|
|
|
162,441
|
|
|
|
841,526
|
|
|
|
(1,464,218
|
)
|
|
|
425,121
|
|
|
|
174,691
|
|
|
|
83,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and investment income, net
|
|
|
14,084
|
|
|
|
17,453
|
|
|
|
76,785
|
|
|
|
84,835
|
|
|
|
109,813
|
|
|
|
40,352
|
|
|
|
24,557
|
|
Equity in (gains) losses of affiliated companies
|
|
|
(741
|
)
|
|
|
771
|
|
|
|
1,103
|
|
|
|
9,727
|
|
|
|
4,488
|
|
|
|
8,233
|
|
|
|
6,923
|
|
Interest expense
|
|
|
481
|
|
|
|
464
|
|
|
|
1,966
|
|
|
|
4,437
|
|
|
|
11,127
|
|
|
|
9,417
|
|
|
|
9,497
|
|
Other income (expense), net
|
|
|
3,766
|
|
|
|
32,610
|
|
|
|
60,461
|
|
|
|
24,722
|
|
|
|
(2,350
|
)
|
|
|
5,502
|
|
|
|
(7,509
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before tax
|
|
|
288,359
|
|
|
|
211,269
|
|
|
|
975,703
|
|
|
|
(1,368,825
|
)
|
|
|
516,969
|
|
|
|
202,895
|
|
|
|
84,212
|
|
Income tax provision
|
|
|
53,917
|
|
|
|
48,386
|
|
|
|
198,956
|
|
|
|
164,828
|
|
|
|
290,536
|
|
|
|
133,914
|
|
|
|
20,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
234,442
|
|
|
$
|
162,883
|
|
|
$
|
776,747
|
|
|
$
|
(1,533,653
|
)
|
|
$
|
226,433
|
|
|
$
|
68,981
|
|
|
$
|
63,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
Years Ended December 31,
|
|
|
2010
|
|
2009
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
|
(Unaudited)
|
|
(In thousands, except per share data)
|
|
Net income (loss) per common share(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.51
|
|
|
$
|
0.35
|
|
|
$
|
1.69
|
|
|
$
|
(3.46
|
)
|
|
$
|
0.59
|
|
|
$
|
0.20
|
|
|
$
|
0.19
|
|
Diluted
|
|
$
|
0.50
|
|
|
$
|
0.35
|
|
|
$
|
1.66
|
|
|
$
|
(3.46
|
)
|
|
$
|
0.54
|
|
|
$
|
0.18
|
|
|
$
|
0.18
|
|
Weighted average shares(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
459,914
|
|
|
|
459,583
|
|
|
|
459,304
|
|
|
|
442,620
|
|
|
|
383,225
|
|
|
|
352,217
|
|
|
|
335,512
|
|
Diluted
|
|
|
467,655
|
|
|
|
468,105
|
|
|
|
467,354
|
|
|
|
442,620
|
|
|
|
431,858
|
|
|
|
407,181
|
|
|
|
390,585
|
|
|
|
|
(1) |
|
Amounts have been adjusted for the
two-for-one
stock split effected in February 2006. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31,
|
|
As of December 31,
|
|
|
2010
|
|
2009
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
|
(Unaudited)
|
|
(In thousands)
|
|
Consolidated Balance Sheets Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and marketable securities
|
|
$
|
2,953,950
|
|
|
$
|
2,393,345
|
|
|
$
|
2,996,752
|
|
|
$
|
2,222,091
|
|
|
$
|
2,738,918
|
|
|
$
|
1,982,220
|
|
|
$
|
724,260
|
|
Total assets
|
|
|
5,985,623
|
|
|
|
4,606,392
|
|
|
|
5,389,311
|
|
|
|
4,445,270
|
|
|
|
3,611,284
|
|
|
|
2,735,791
|
|
|
|
1,258,313
|
|
Convertible notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
196,555
|
|
|
|
399,889
|
|
|
|
399,984
|
|
(Accumulated deficit) retained earnings
|
|
|
(397,804
|
)
|
|
|
(1,246,110
|
)
|
|
|
(632,246
|
)
|
|
|
(1,408,993
|
)
|
|
|
124,660
|
|
|
|
(101,773
|
)
|
|
|
(170,754
|
)
|
Stockholders equity
|
|
|
4,764,406
|
|
|
|
3,755,079
|
|
|
|
4,394,606
|
|
|
|
3,491,328
|
|
|
|
2,843,944
|
|
|
|
1,976,177
|
|
|
|
635,775
|
|
18
SELECTED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
DATA
The following selected unaudited pro forma condensed
consolidated financial data gives effect to the proposed merger
as if it had occurred on January 1, 2009, for statement of
operations purposes, and on March 31, 2010, for balance
sheet purposes. The selected unaudited pro forma condensed
consolidated financial data presented below is based on, and
should be read together with, the historical financial
statements of Celgene and Abraxis that are contained in their
respective filings with the SEC and incorporated by reference
into this proxy statement/prospectus and the unaudited pro forma
condensed consolidated financial statements that appear
elsewhere in this proxy statement/prospectus. See Where
You Can Find More Information and Unaudited Pro
Forma Condensed Consolidated Financial Statements.
The unaudited pro forma condensed consolidated financial data is
presented for illustrative purposes only and is not necessarily
indicative of the actual or future financial position or results
of operations that would have been realized if the proposed
merger had been completed as of the dates indicated or will be
realized upon the completion of the proposed merger.
|
|
|
|
|
|
|
|
|
|
|
Unaudited Pro Forma Consolidated
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
March 31, 2010
|
|
December 31, 2009
|
|
|
(In thousands, except per share data)
|
|
Statement of operations data:
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
902,084
|
|
|
$
|
3,048,943
|
|
Costs and expenses
|
|
$
|
644,700
|
|
|
$
|
2,350,204
|
|
Operating income
|
|
$
|
257,384
|
|
|
$
|
698,739
|
|
Other income and expenses
|
|
$
|
12,212
|
|
|
$
|
73,788
|
|
Income before income taxes
|
|
$
|
269,596
|
|
|
$
|
772,527
|
|
Income tax provision
|
|
$
|
47,574
|
|
|
$
|
158,045
|
|
Net income
|
|
$
|
222,022
|
|
|
$
|
614,482
|
|
Basic earnings per share
|
|
$
|
0.47
|
|
|
$
|
1.31
|
|
Diluted earnings per share
|
|
$
|
0.46
|
|
|
$
|
1.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
2010
|
|
|
|
|
(In thousands)
|
|
Balance sheet data:
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
$
|
8,191,499
|
|
Total liabilities
|
|
|
|
|
|
$
|
2,897,472
|
|
Stockholders equity
|
|
|
|
|
|
$
|
5,284,406
|
|
19
COMPARATIVE
PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
Celgene common stock and Abraxis common stock are each listed
and traded on The NASDAQ Global Select Market under the symbols
CELG and ABII, respectively. The
following table sets forth, for the respective periods of
Celgene and Abraxis indicated, the high and low sale prices per
share of Celgene common stock and Abraxis common stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Celgene
|
|
Abraxis
|
|
|
High
|
|
Low
|
|
Dividend
|
|
High
|
|
Low
|
|
Dividend
|
|
Year Ended December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter (through July 27, 2010)
|
|
$
|
54.74
|
|
|
$
|
48.02
|
|
|
|
|
|
|
$
|
75.34
|
|
|
$
|
73.34
|
|
|
|
|
|
Second Quarter
|
|
|
63.76
|
|
|
|
49.54
|
|
|
|
|
|
|
|
75.75
|
|
|
|
40.03
|
|
|
|
|
|
First Quarter
|
|
|
65.07
|
|
|
|
54.10
|
|
|
|
|
|
|
|
54.03
|
|
|
|
31.82
|
|
|
|
|
|
Year Ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
57.79
|
|
|
|
49.74
|
|
|
|
|
|
|
|
43.00
|
|
|
|
31.20
|
|
|
|
|
|
Third quarter
|
|
|
58.31
|
|
|
|
45.27
|
|
|
|
|
|
|
|
39.90
|
|
|
|
24.52
|
|
|
|
|
|
Second quarter
|
|
|
48.77
|
|
|
|
36.90
|
|
|
|
|
|
|
|
57.60
|
|
|
|
35.25
|
|
|
|
|
|
First quarter
|
|
|
56.60
|
|
|
|
39.32
|
|
|
|
|
|
|
|
73.98
|
|
|
|
42.40
|
|
|
|
|
|
Year Ended December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
66.50
|
|
|
|
45.44
|
|
|
|
|
|
|
|
74.50
|
|
|
|
46.28
|
|
|
|
|
|
Third Quarter
|
|
|
77.39
|
|
|
|
56.00
|
|
|
|
|
|
|
|
78.95
|
|
|
|
59.03
|
|
|
|
|
|
Second Quarter
|
|
|
65.90
|
|
|
|
56.88
|
|
|
|
|
|
|
|
69.91
|
|
|
|
58.33
|
|
|
|
|
|
First Quarter
|
|
|
62.20
|
|
|
|
46.07
|
|
|
|
|
|
|
|
69.00
|
|
|
|
53.00
|
|
|
|
|
|
On June 29, 2010, the last trading day prior to the date of
the public announcement of the execution of the merger
agreement, the closing sale price per share of Abraxis common
stock was $61.31 and the closing sale price per share of Celgene
common stock was $53.24. On
[ ], 2010,
the most recent practicable date prior to the date of this proxy
statement/prospectus, the last reported sale price per share of
Abraxis common stock was $[ ] and the last
reported sale price per share of Celgene common stock was
$[ ]. The market prices of shares of Abraxis
common stock and Celgene common stock are subject to
fluctuation. As a result, Abraxis and Celgene stockholders are
urged to obtain current market quotations.
Dividend
Policy
Celgene has never declared or paid any cash dividends on its
common stock. Celgene currently intends to retain any future
earnings for funding growth and, therefore, does not anticipate
paying any cash dividends on its common stock in the foreseeable
future.
Abraxis has never declared or paid any cash dividends on its
common stock. Any future payment of cash dividends on Abraxis
common stock will be at the discretion of the Abraxis board of
directors and will depend upon Abraxis results of
operations, earnings, capital requirements, contractual
restrictions and other factors deemed relevant by the Abraxis
board of directors. The merger agreement restricts the ability
of Abraxis to declare or pay dividends.
20
COMPARATIVE
HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA
The following table sets forth for Celgene common stock and
Abraxis common stock certain historical and unaudited pro forma
consolidated and pro forma-equivalent per share financial
information. The unaudited pro forma consolidated and pro
forma-equivalent per share information gives effect to the
proposed merger as if it had occurred on January 1, 2009.
The information in the table is based on, and should be read
together with, the historical financial information that Celgene
and Abraxis have presented in their respective filings with the
SEC and the pro forma financial information that appears
elsewhere in this proxy statement/prospectus. See Where
You Can Find More Information and Unaudited Pro
Forma Consolidated Financial Statements.
The unaudited pro forma consolidated and pro forma-equivalent
data is presented for illustrative purposes only and is not
necessarily indicative of actual or future financial position or
results of operations that would have been realized if the
proposed merger had been completed as of the dates indicated or
will be realized upon the completion of the proposed merger.
Neither Celgene nor Abraxis declared or paid any dividends
during the periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Pro
|
|
Unaudited Pro
|
|
|
|
|
|
|
Forma
|
|
Forma
|
|
|
|
|
|
|
Consolidated per
|
|
Equivalent per
|
|
|
Celgene
|
|
Abraxis
|
|
Share of Celgene
|
|
Share of Abraxis
|
|
|
Historical
|
|
Historical
|
|
Common Stock
|
|
Common Stock
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.69
|
|
|
$
|
(2.57
|
)
|
|
$
|
1.31
|
|
|
$
|
0.34
|
|
Diluted
|
|
$
|
1.66
|
|
|
$
|
(2.57
|
)
|
|
$
|
1.29
|
|
|
$
|
0.34
|
|
For the three months ended March 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.51
|
|
|
$
|
(0.07
|
)
|
|
$
|
0.47
|
|
|
$
|
0.12
|
|
Diluted
|
|
$
|
0.50
|
|
|
$
|
(0.07
|
)
|
|
$
|
0.46
|
|
|
$
|
0.12
|
|
Book value per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2009
|
|
$
|
9.57
|
|
|
$
|
21.02
|
|
|
|
N/A
|
|
|
|
N/A
|
|
As of March 31, 2010
|
|
$
|
10.34
|
|
|
$
|
21.02
|
|
|
$
|
11.24
|
|
|
$
|
2.94
|
|
21
RISK
FACTORS
Before you vote, you should carefully consider the risks related
to the merger described below, those described in the section
entitled Cautionary Statement Regarding Forward-Looking
Statements and the other information contained in this
proxy statement/prospectus or in Abraxis and
Celgenes documents incorporated by reference herein,
particularly the risk factors set forth in Abraxis and
Celgenes documents incorporated herein, as set forth under
Where You Can Find More Information (including the
risk factors contained in Abraxis Annual Report on
Form 10-K
for the year ended December 31, 2009, as supplemented by
Abraxis Annual Report on
Form 10-K/A
for the year ended December 31, 2009 and by Abraxis
Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010, and in Celgenes
Annual Report on
Form 10-K
for the year ended December 31, 2009, and Celgenes
Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010). Because the merger
consideration is partially comprised of Celgene common stock and
CVRs, by voting in favor of the adoption of the merger
agreement, you will be choosing to invest in Celgene common
stock and the CVRs. The risks and uncertainties described below
and incorporated by reference are not the only risks and
uncertainties Celgene may face. Additional risks and
uncertainties not presently known to Celgene, or risks that
Celgene currently considers immaterial could also negatively
affect its business, results and operations. If any of the
following risks actually occur, Celgenes business,
financial condition or results of operations could be materially
adversely affected, which could cause the value of Celgene
common stock to decline and adversely affect the likelihood of
any payments being made under the CVRs and the amount of such
payments.
Risks
Related to the Merger
Because the market price of Celgene common stock will
fluctuate and because of the uncertainty of the ultimate
realization of the CVRs, Abraxis stockholders cannot be certain
of the value of the merger consideration that they will be
entitled to receive in the merger.
At the completion of the merger, each outstanding share of
Abraxis common stock will be converted into the right to receive
(1) $58.00 in cash, without interest,
(2) 0.2617 shares of Celgene common stock, and
(3) one CVR. The 0.2617 exchange ratio is fixed and will
not be adjusted for changes in the market price of either
Abraxis common stock or Celgene common stock. The market value
of the Celgene common stock that Abraxis stockholders will be
entitled to receive in the merger will depend on the market
value of Celgene common stock immediately before the merger is
completed and could vary significantly from the market value on
the date of the announcement of the merger agreement, the date
that this proxy statement/prospectus was mailed to stockholders
of Abraxis or the date of the special meeting of Abraxis
stockholders. The merger agreement does not provide for any
price-based termination right. For example, the closing sale
price of Celgene common stock on June 29, 2010, the last
trading day prior to the execution of the merger agreement, was
$53.24 per share and, therefore, if the transaction had closed
on that date, the value of the merger consideration that Abraxis
stockholders would have received for each share of common stock,
including the $58.00 in cash consideration (but excluding any
value relating to the CVR), would have been $71.93. On
[ ], 2010, the last trading day before the date
of this proxy statement/prospectus, the closing sale price of
Celgene common stock was $[ ] per share, and,
therefore, if the transactions had closed on that date, the
value of the merger consideration that Abraxis stockholders
would have received for each share of common stock, including
the $58.00 in cash consideration (but excluding any value
relating to the CVR), would have been $[ ].
Moreover, the market value of Celgene common stock will likely
fluctuate after the completion of the merger. See
Comparative Per Share Market Price and Dividend
Information.
Fluctuations in the market price of Celgene common stock could
result from changes in the business, operations or prospects of
Abraxis or Celgene prior to the completion of the merger or
Celgene following the completion of the merger, regulatory
considerations, general market and economic conditions and other
factors both within and beyond the control of Abraxis or Celgene.
The
issuance of Celgene common stock in connection with the merger
could decrease the market price of Celgene common
stock.
At the completion of the merger, Celgene expects to issue up to
approximately 11 million shares of Celgene common stock, or
approximately 2.5% of the number of shares of Celgene common
stock outstanding as of July 23,
22
2010, to Abraxis stockholders in the merger. The issuance of the
Celgene common stock may result in fluctuations in the market
price of Celgene common stock, including a stock price decline.
The
shares of Celgene common stock to be received by Abraxis
stockholders as a result of the merger will have different
rights from the shares of Abraxis common stock.
Upon completion of the merger, Abraxis stockholders will become
Celgene stockholders and their rights as stockholders will be
governed by Celgenes certificate of incorporation and
Celgenes by-laws. Certain of the rights associated with
Abraxis common stock are different from, and may be viewed as
less favorable than, the rights associated with Celgene common
stock. See Comparative Rights of Abraxis Stockholders and
Celgene Stockholders for a discussion of the different
rights associated with Celgene common stock.
Regulatory
approvals that are required to complete the merger may not be
received, may take longer than expected or may impose conditions
which are not presently anticipated.
Under the provisions of the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, which we refer to as the HSR
Act, the merger may not be completed until notification and
report forms have been filed with the FTC and the Antitrust
Division and the expiration of a 30 calendar day waiting period,
or the early termination of that waiting period, following the
parties filing of their respective notification and report
forms. If the FTC or the Antitrust Division issues a Request for
Additional Information and Documentary Material prior to the
expiration of the waiting period, the parties must observe a
second 30 calendar day waiting period, which would begin to run
only after both parties have substantially complied with the
request for information, unless the waiting period is terminated
earlier or extended with the consent of the parties. On
July 14, 2010, Abraxis and Celgene filed their respective
notification and report forms under the HSR Act with the FTC and
the Antitrust Division, commencing the initial 30 calendar day
waiting period that will expire on August 13, 2010.
The FTC and the Antitrust Division frequently scrutinize the
legality under the antitrust laws of transactions such as the
merger. The FTC or the Antitrust Division may take such action
under the antitrust laws as it deems necessary or desirable in
the public interest, including seeking to enjoin the merger or
seeking the divestiture of substantial assets of Celgene or its
subsidiaries, or of Abraxis or its subsidiaries. Private parties
who may be adversely affected by the merger and individual
states may also bring legal actions under the antitrust laws in
certain circumstances. Although the parties believe that
completion of merger would not violate any antitrust law, there
can be no assurance that a challenge to the merger on antitrust
grounds will not be made or, if a challenge is made, what the
result will be. Under the merger agreement, Abraxis and Celgene
have agreed to use their reasonable best efforts to obtain all
regulatory clearances necessary to complete, in the most
expeditious manner practicable, the merger; however, Celgene is
not required to sell, divest or otherwise dispose of, hold
separate, enter into any license or similar agreement with
respect to, restrict the ownership or operation of, or agree to
sell, divest or otherwise dispose of, hold separate, enter into
any license or similar agreement with respect to, or restrict
the ownership or operation of:
|
|
|
|
|
(A) any assets or businesses of Abraxis or any of its
subsidiaries or (B) any assets or businesses of Celgene or
any of its affiliates or subsidiaries, in the case of either
clause (A) or (B), to the extent that the sale,
divestiture, disposition, or agreement would have a material
adverse effect on the business, operations, financial condition
or results of operations of the combined business of Abraxis and
Celgene after giving effect to the completion of merger, or
|
|
|
|
Abraxane®
to the extent such sale, divestiture, disposition, agreement or
restriction would have a material adverse effect on the ability
of Abraxis to market
Abraxane®
in the United States, the European Union, Canada and Switzerland.
|
If either Celgene or Abraxis becomes subject to any term,
condition, obligation or restriction (whether because such term,
condition, obligation or restriction does not rise to the
specified level of materiality or Celgene otherwise consents to
its imposition), the imposition of such term, condition,
obligation or restriction could adversely affect Celgenes
ability to integrate Abraxis operations into
Celgenes operations, reduce the anticipated benefits of
the merger or otherwise adversely affect Celgenes business
and results of operations following the completion of the merger.
23
Legal proceedings in connection with the merger, the
outcomes of which are uncertain, could delay or prevent the
completion of the merger.
Since July 1, 2010, several putative class action
complaints have been filed on behalf of Abraxis stockholders.
The complaints seek, among other things, (1) declarations
that they are maintainable as class actions, (2) an order
preliminarily and permanently enjoining the defendants from
completing the merger until certain conditions are satisfied,
and (3) attorneys fees and costs. Such legal
proceedings could delay or prevent the merger from becoming
effective. See The Merger Litigation Related
to the Merger.
The integration of Abraxis and other acquired businesses
may present significant challenges to Celgene.
Achieving the anticipated benefits of the merger will depend in
part upon whether Abraxis and Celgene can integrate their
businesses in an efficient and effective manner. In addition,
Celgene has recently acquired and may acquire additional
businesses from time to time. The integration of Abraxis and any
future businesses that Celgene may acquire involves a number of
risks, including, but not limited to:
|
|
|
|
|
demands on management related to the increase in the size of
Celgene after the acquisition;
|
|
|
|
the diversion of managements attention from the management
of daily operations to the integration of operations;
|
|
|
|
higher integration costs than anticipated;
|
|
|
|
failure to achieve synergies and costs savings;
|
|
|
|
difficulties in the assimilation and retention of employees;
|
|
|
|
difficulties in the assimilation of different cultures and
practices, as well as in the assimilation of broad and
geographically dispersed personnel and operations; and
|
|
|
|
difficulties in the integration of departments, systems,
including accounting systems, technologies, books and records,
and procedures, as well as in maintaining uniform standards,
controls, including internal control over financial reporting
required by the Sarbanes-Oxley Act of 2002 and related
procedures and policies.
|
If Celgene cannot successfully integrate Abraxis or other
acquired businesses, Celgene may experience material negative
consequences to its business, financial condition or results of
operations. Successful integration of Abraxis and other acquired
businesses will depend on Celgenes ability to manage these
operations, to realize opportunities for revenue growth
presented by offerings and expanded geographic market coverage
and, to some degree, to eliminate redundant and excess costs.
Because of difficulties in combining geographically distant
operations, Celgene may not be able to achieve the benefits that
it hopes to achieve as a result of the merger.
Failure
to achieve expected benefits of the merger and integrate
Abraxis operations with Celgenes could adversely
affect Celgene following the completion of the merger and the
market price of Celgene common stock.
Although Celgene expects to realize strategic, operational and
financial benefits as a result of the merger, Celgene cannot be
certain whether, and to what extent, such benefits will be
achieved in the future. In particular, the success of the merger
will depend on achieving efficiencies and cost savings, and no
assurances can be given that Celgene will be able to do so. In
addition, in order to obtain the benefits of the merger, Celgene
must integrate Abraxis subsidiaries and operations and
such integration may be complex and the failure to do so quickly
and effectively may negatively affect earnings.
In addition, the market price of Celgene common stock may
decline as a result of the merger if the integration of Celgene
and Abraxis is unsuccessful, takes longer than expected or fails
to achieve financial benefits to the extent anticipated by
financial analysts or investors, or the effect of the merger on
Celgenes financial results is otherwise not consistent
with the expectations of financial analysts or investors.
24
Abraxis and Celgenes business relationships,
including customer relationships, may be subject to disruption
due to uncertainty associated with the merger.
Parties with which Abraxis and Celgene do business, including
customers and suppliers, may experience uncertainty associated
with the merger, including with respect to current or future
business relationships with Abraxis or Celgene. As a result,
Abraxis and Celgenes business relationships may be
subject to disruptions if customers, suppliers and others
attempt to negotiate changes in existing business relationships
or consider entering into business relationships with parties
other than Abraxis or Celgene. These disruptions could have an
adverse effect on the businesses, financial condition, results
of operations or prospects of Celgene following the completion
of the merger. The adverse effect of such disruptions could be
exacerbated by a delay in the completion of the merger or
termination of the merger agreement.
Future results of Celgene following the completion of the
merger may differ materially from the Unaudited Pro Forma
Consolidated Financial Statements of Celgene and Abraxis
presented in this proxy statement/prospectus.
The future results of Celgene following the completion of the
merger may be materially different from those shown in the
Unaudited Pro Forma Consolidated Financial Statements presented
in this proxy statement/prospectus that show only a combination
of Celgenes and Abraxis historical results.
Celgene
will incur significant transaction and merger-related costs in
connection with the merger.
Celgene expects to incur a number of non-recurring costs
associated with combining the operations of the two companies.
Most of these costs will be comprised of transaction costs,
including fees paid to financial and legal advisors, related to
the merger, facilities and systems consolidation costs and
employment-related costs, including
change-in-control
related payments made to certain Abraxis executives and the cash
out of unvested stock-based awards. Celgene will also incur
transaction fees and costs related to formulating integration
plans. Additional unanticipated costs may be incurred in the
integration of the two companies businesses. Although
Celgene expects that the elimination of duplicative costs, as
well as the realization of other efficiencies related to the
integration of the businesses, should allow Celgene to offset
incremental transaction and merger-related costs over time, this
net benefit may not be achieved in the near term, or at all.
Celgene may be unable to hire and retain sufficient
qualified personnel; the loss of any of its key executive
officers could adversely affect Celgene.
Celgene believes that its future success will depend in large
part on its ability to attract and retain highly skilled,
knowledgeable, sophisticated and qualified managerial,
professional and technical personnel. In addition, the success
of the combined operations after the merger will depend in part
upon Celgenes ability to retain key employees of Abraxis.
Key employees may depart because of issues relating to the
difficulty of integration or accelerated retirement as a result
of change in control severance provisions in their agreements
with Abraxis. Accordingly, no assurance can be given that
Celgene will be able to retain key employees of Abraxis.
The
merger agreement limits Abraxis ability to pursue
alternatives to the merger.
The merger agreement contains no shop provisions
that, subject to limited exceptions, preclude Abraxis from
(1) soliciting, initiating, or knowingly encouraging the
making, submission or announcement of any third party proposal
which would reasonably be expected to lead to an acquisition
proposal, (2) entering into, participating, continuing or
otherwise engaging in discussions or negotiations with, or
providing any non-public information to any third party with
respect to any inquiries regarding, or the making, submission or
announcement of, an acquisition proposal, (3) entering into
or approving any letter of intent, agreement in principle,
option agreement, share purchase agreement, acquisition
agreement or similar agreement for an acquisition proposal, or
(4) terminating, waiving, amending or modifying any
provision of, or granting permission under, any standstill,
confidentiality agreement or similar contract to which Abraxis
or any of its subsidiaries is a party. The merger agreement also
provides that Abraxis will be required to pay a termination fee
of $145 million to Celgene upon termination of the merger
agreement under certain circumstances. These provisions might
discourage a potential
25
competing acquiror that might have an interest in acquiring all
or a significant part of Abraxis from considering or proposing
an acquisition even if it were prepared to pay consideration
with a higher per share market price than that proposed in the
merger, or might result in a potential competing acquiror
proposing to pay a lower per share price to acquire Abraxis than
it might otherwise have proposed to pay.
Failure to complete the merger could negatively impact the
stock price and the future business and financial results of
Abraxis.
If the merger is not completed, the ongoing businesses of
Abraxis may be adversely affected and, without realizing any of
the benefits of having completed the merger, Abraxis will be
subject to a number of risks, including the following:
|
|
|
|
|
Abraxis may be required to pay Celgene a termination fee of
$145 million if the merger agreement is terminated under
certain circumstances, as described under The Merger
Agreement Termination Fees and Expenses;
|
|
|
|
Abraxis will be required to pay its costs relating to the
proposed merger if the merger is not completed;
|
|
|
|
under the merger agreement, Abraxis is subject to certain
restrictions on the conduct of its business prior to completing
the merger which may affect its ability to execute certain of
its business strategies; and
|
|
|
|
matters relating to the merger (including integration planning)
may require substantial commitments of time and resources by
Abraxis management, which could otherwise have been devoted to
other opportunities that may have been beneficial to Abraxis as
an independent company.
|
In addition, Abraxis could be subject to litigation related to
any failure to complete the merger or related to any enforcement
proceeding commenced against Abraxis to perform its respective
obligations under the merger agreement. If the merger is not
completed, these risks may materialize and may adversely affect
Abraxis business, financial results and market price of
Abraxis common stock.
The
market price of Celgene common stock and Celgenes results
of operations may be affected by factors different from those
affecting the market price of Abraxis common stock and
Abraxis results of operations.
Abraxis stockholders will be entitled to receive merger
consideration that is partially comprised of Celgene common
stock and will thus become Celgene stockholders. Celgenes
business is different from that of Abraxis, and Celgenes
results of operations, as well as the market price of Celgene
common stock, may be affected by factors different from those
affecting Abraxis results of operations and the market
price of Abraxis common stock. The market price of Celgene
common stock may fluctuate significantly following the merger,
including as a result of factors over which Celgene has no
control.
Abraxis
executive officers and directors have financial interests in the
merger that may be different from, or in addition to, the
interests of Abraxis stockholders.
Executive officers of Abraxis negotiated the terms of the merger
agreement with their counterparts at Celgene, and the Abraxis
board of directors unanimously determined that the transactions
contemplated by the merger agreement, including the merger, are
advisable and fair to, and in the best interest of, Abraxis and
its stockholders, adopted the merger agreement and declared
advisable the merger and unanimously recommended that Abraxis
stockholders vote for the adoption of the merger agreement. In
considering these facts and the other information contained in
this proxy statement/prospectus, you should be aware that
Abraxis executive officers and directors have financial
interests in the merger that may be different from, or in
addition to, the interests of Abraxis stockholders. For a
detailed discussion of the special interests that Abraxis
directors and executive officers may have in the merger, please
see The Merger Interests of Directors and
Executive Officers of Abraxis in the Merger.
26
The market price of Celgene common stock may fluctuate
significantly, which may make it difficult for you to sell
Celgene common stock you receive in the merger when you want to
or at prices you find attractive.
There has been significant volatility in the market prices for
publicly traded shares of biopharmaceutical companies, including
shares of Celgene common stock. Celgene expects that the market
price of its common stock will continue to fluctuate. The price
of Celgene common stock fluctuated from a high of $58.31 per
share to a low of $36.90 per share in 2009. The price of Celgene
common stock may not remain at or exceed current levels. The
following key factors, among others, may have an adverse impact
on the market price of Celgene common stock:
|
|
|
|
|
adverse results of Celgenes clinical trials or adverse
events associated with its marketed products;
|
|
|
|
Celgenes products ability to demonstrate efficacy or
an acceptable safety profile;
|
|
|
|
product introductions and sales by Celgenes competitors;
|
|
|
|
new product discovery and development by Celgenes
competitors;
|
|
|
|
Celgenes ability to obtain and maintain regulatory
approval for its existing products as well as for new products
in development;
|
|
|
|
announcements of technical or product developments by
Celgenes competitors;
|
|
|
|
Celgenes failure to effectively implement its business
strategy or Celgenes adoption and implementation of a
business strategy that places it at a disadvantage to its
competitors;
|
|
|
|
market conditions for pharmaceutical and biotechnology stocks;
|
|
|
|
market conditions generally;
|
|
|
|
governmental regulation;
|
|
|
|
new accounting pronouncements, regulatory rulings or actions by
the FDA;
|
|
|
|
health care legislation generally and potential changes in
insurance or governmental reimbursement policies on
Celgenes products and pipeline products;
|
|
|
|
public announcements by competitors regarding medical advances
in the treatment of the disease states that Celgene is targeting;
|
|
|
|
patent or proprietary rights developments
and/or
changes in patent laws, including Celgenes ability to
successfully protect and enforce its intellectual property
rights;
|
|
|
|
royalties and contract revenues that Celgene becomes obligated
to pay;
|
|
|
|
potential changes in reimbursement policies or rates for
Celgenes products
|
|
|
|
product manufacturing, including Celgenes arrangements
with third party suppliers;
|
|
|
|
Celgenes expenses and net income;
|
|
|
|
credit and foreign exchange risk management by Celgene;
|
|
|
|
Celgenes liquidity;
|
|
|
|
asset and liability risk management by Celgene;
|
|
|
|
the outcome of litigation involving Celgenes products or
processes related to production and formulation of those
products or uses of those products;
|
|
|
|
competition; and
|
|
|
|
operational and legal risks.
|
In addition, the stock market in general and the biotechnology
sector in particular have experienced extreme volatility that
has often been unrelated to the operating performance of a
particular company. These broad market fluctuations may
adversely affect the market price of Celgene common stock.
27
Celgene may obtain financing in connection with the
merger, which may have an adverse effect on the business,
financial condition and results of operations of Celgene and may
result in dilution to Celgene stockholders.
Celgene does not require financing for the merger. However,
Celgene is considering and may pursue financing arrangements on
terms and conditions favorable to Celgene, including, without
limitation, an offering of debt securities, to maintain
financial flexibility. Celgene cannot guarantee that financing,
in any form, will be available at all, or on the terms
acceptable to it. In addition, any debt that Celgene incurs in
connection with the merger may, among other things:
|
|
|
|
|
limit Celgenes ability to borrow additional funds;
|
|
|
|
limit Celgenes flexibility in planning for, or reacting
to, changes in its operations and the industry in which it
operates;
|
|
|
|
increase Celgenes vulnerability to adverse general
economic and industry conditions;
|
|
|
|
limit Celgenes ability to make strategic acquisitions;
|
|
|
|
require Celgene to dedicate a substantial portion of its cash
flow from operations to principal and interest payments on such
debt, reducing the availability of cash flow to fund working
capital, capital expenditures and other general corporate
activities; and
|
|
|
|
place Celgene at a competitive disadvantage compared to
competitors that have less debt.
|
Additionally, in the event that Celgene pursues an offering of
debt securities convertible into shares of Celgene common stock,
the issuance of a substantial number of shares of Celgene common
stock in connection with the conversion or settlement of such
securities could depress the market price of Celgene common
stock and impair its ability to raise capital through the sale
of additional equity securities. Any transaction involving the
issuance of shares of Celgene common stock, or securities
convertible into shares of Celgene common stock, would result in
dilution, which could be substantial, to Celgene stockholders.
Risks
Related to the CVRs
You
may not receive any payment on the CVRs.
Your right to receive any future payment on the CVRs will be
contingent upon the achievement by Abraxis and Celgene of
certain agreed upon U.S. regulatory milestones and net
sales (calculated in accordance with the CVR agreement) in
excess of the thresholds specified in the CVR agreement within
the time periods specified in the CVR agreement. If the
milestones specified in the CVR agreement are not achieved for
any reason within the time periods specified in the CVR
agreement, and if net sales do not exceed the thresholds set
forth in the CVR agreement for any reason within the time
periods specified in the CVR agreement, no payment will be made
under the CVRs and the CVRs will expire valueless. Accordingly,
the value, if any, of the CVRs is speculative, and the CVRs may
ultimately have no value. See Description of the
CVRs.
You will not be able to determine the amount of cash to be
received under the CVRs until the achievement of certain agreed
upon milestones and/or after the conclusion of the first net
sales measuring period which ends on December 31, 2011,
which makes it difficult to value the CVRs.
If any payment is made on the CVR, it will not be made until the
achievement of certain agreed upon milestones and/or, with
respect to net sales payments, after the conclusion of the first
net sales measuring period, which ends on December 31, 2011
(provided that net sales for such net sales measuring period
exceed the thresholds set forth in the CVR agreement, calculated
in accordance with the CVR agreement), and the amount of any
payment will not be paid until after the achievement of such
milestones and/or, with respect to net sales payments, until
15 days after the date Celgene is required to provide the
net sales statement for the net sales measuring period in
respect of which a net sales payment under the CVR is due. The
CVR agreement sets forth the time frame in which a CVR payment
is to be paid if Celgene is no longer required to file with the
Securities and Exchange Commission,
28
which we refer to as the SEC, copies of its annual or quarterly
reports (provided that net sales for such net sales measuring
period exceed the thresholds set forth in the CVR agreement,
calculated in accordance with the CVR agreement). In accordance
with the CVR agreement, Celgene will provide an annual net sales
statement. The final calculation of any CVR payment, however,
will be provided to you no earlier than 15 days after the
date Celgene is required to provide the net sales statement for
the net sales measuring period in respect of which a net sales
payment under the CVR is due. As such, it may be difficult to
value the CVRs, and accordingly it may be difficult or
impossible for you to resell your CVRs.
The
U.S. federal income tax treatment of the CVRs is
unclear.
Pursuant to the merger agreement and the CVR agreement, the
parties to the merger agreement and the CVR agreement have
agreed or will agree, as applicable, to treat and report any CVR
payments (except to the extent of any imputed interest) for all
tax purposes as additional consideration for the sale of Abraxis
common stock in the merger, except as required by applicable
law. Assuming this treatment is correct, a U.S. holder
generally should recognize capital gain as and to the extent
aggregate CVR payments received (less any imputed interest)
exceed the U.S. holders adjusted tax basis in the
CVR. A U.S. holders initial tax basis in CVRs
received in the merger will equal the fair market value of such
CVRs as determined for U.S. federal income tax purposes. A
U.S. holder who does not sell, exchange or otherwise
dispose of a CVR may not be able to recognize a loss with
respect to the CVR until the U.S. holders right to
receive CVR payments terminates. In accordance with the CVR
agreement, Celgene has agreed to report imputed interest on the
CVRs pursuant to Section 483 of the Code. However, there is
no legal authority directly addressing the U.S. federal
income tax treatment of the CVRs and, therefore, there can be no
assurance that the Internal Revenue Service would not assert, or
that a court would not sustain, a position that any CVR payment
does not attract capital gain treatment, or that a different
method should be used for purposes of reporting imputed
interest. If such a position were sustained, all or any part of
any CVR payment could be treated as ordinary income and could be
required to be included in income prior to the receipt of the
CVR payment. See Certain Material U.S. Federal Income
Tax Consequences.
Any payments in respect of the CVRs are subordinated to
the right of payment of Celgenes other
indebtedness.
The CVRs are unsecured obligations of Celgene and the CVR
payments and all other obligations under the CVR agreement,
together with the CVRs and any rights or claims relating
thereto, are subordinated in right of payment to the prior
payment in full of all senior obligations of Celgene. Senior
obligations of Celgene include any existing or future
obligations of Celgene, including the principal of, premium (if
any), interest on, and all other amounts owing thereon:
|
|
|
|
|
with respect to borrowed money;
|
|
|
|
evidenced by notes, debentures, bonds or other similar debt
instruments;
|
|
|
|
with respect to the net obligations owed under interest rate
swaps or similar agreements or currency exchange transactions;
|
|
|
|
reimbursement obligations in respect of letters of credit and
similar obligations;
|
|
|
|
in respect of capital leases; or
|
|
|
|
guarantees in respect of the foregoing obligations, unless the
instrument creating or evidencing the same provides otherwise.
|
Celgenes senior obligations do not include, among other
things:
|
|
|
|
|
trade debt incurred in the ordinary course of business;
|
|
|
|
any intercompany indebtedness between Celgene and any of its
subsidiaries or affiliates;
|
|
|
|
indebtedness of Celgene that is subordinated in right of payment
to Celgenes senior obligations;
|
|
|
|
indebtedness or other obligations of Celgene that by its terms
ranks equal or junior in right of payment to the CVR payments,
milestone, and net sales payments; and all other obligations
under the CVR agreement;
|
29
|
|
|
|
|
indebtedness of Celgene that, by operation of applicable law, is
subordinate to any general unsecured obligations of
Celgene; and
|
|
|
|
indebtedness evidenced by any guarantee of indebtedness ranking
equal or junior in right of payment to the CVR payments.
|
In addition, if a default on Celgenes senior obligations
would occur as a result of the CVR payment, there is an existing
payment default on Celgenes senior obligations, the
maturity of Celgenes senior obligations is accelerated, in
each case in excess of certain agreed upon thresholds as set
forth in the CVR agreement, or in other circumstances, no CVR
payment will be payable, if any payment is due, until any such
default is remedied.
An active public market for the CVRs may not develop or
the CVRs may trade at low volumes, both of which could have an
adverse effect on the resale price, if any, of the CVRs.
The CVRs are a new security for which there is currently no
public trading market. An active public trading market for the
securities may not develop or be sustained. Celgene has agreed
to use its reasonable best efforts to cause the CVRs to be
approved for listing at the completion of the merger on The
NASDAQ Global Select Market. Notwithstanding its efforts,
Celgene may be unable to cause the CVRs to be listed for trading.
Even if an active public trading market develops, there may be
little or no market demand for the CVRs, making it difficult or
impossible to resell the CVRs, which would have an adverse
effect on the resale price, if any, of the CVRs. Immediately
following the completion of the merger, the principal
stockholders will hold a majority of the CVRs. In addition,
holders of CVRs may incur brokerage charges in connection with
the resale of the CVRs, which in some cases could exceed the
proceeds realized by the holder from the resale of its CVRs.
Neither Celgene nor Abraxis can predict the price, if any, at
which the CVRs will trade following the completion of the merger.
Celgene
may under certain circumstances redeem the CVRs.
The CVR agreement does not prohibit Celgene or any of its
subsidiaries or affiliates from acquiring the CVRs, whether in
open market transactions, private transactions or otherwise.
Pursuant to the terms of the CVR agreement, subject to certain
notice requirements, Celgene may, at any time on and after the
date that 50% of the CVRs either are (1) no longer
outstanding
and/or
(2) repurchased, acquired, redeemed or retired by Celgene,
redeem all, but not less than all, of the outstanding CVRs at a
cash redemption price equal to the average price paid per CVR
for all CVRs previously purchased by Celgene calculated as of
the business day immediately prior to the date of the notice of
redemption. Neither Celgene nor Abraxis can predict the price at
which the CVRs may be redeemed by Celgene in the future pursuant
to these rights, if at all.
Because there has not been any public market for the CVRs,
the market price and trading volume of the CVRs may be
volatile.
Neither Abraxis nor Celgene can predict the extent to which
investor interest will lead to a liquid trading market in the
CVRs or whether the market price of the CVRs will be volatile
following the merger. The market price of the CVRs could
fluctuate significantly for many reasons, including, without
limitation:
|
|
|
|
|
as a result of the risk factors listed in this proxy
statement/prospectus;
|
|
|
|
in the ability of Celgene to obtain FDA approval of
Abraxane®
in a manner that will require milestone payments to be made or
to sell
Abraxane®
or Abraxis pipeline products at a level that will require
royalties on these products to be paid to the holders of the
CVRs;
|
|
|
|
for reasons unrelated to operating performance, such as reports
by industry analysts, investor perceptions, or negative
announcements by our customers or competitors regarding their
own performance;
|
|
|
|
regulatory changes that could impact Celgenes
business; and
|
|
|
|
|
|
general economic, securities markets and industry conditions.
|
30
Upon expiration of Celgenes obligations to use
diligent efforts to achieve each of the CVR milestones and to
sell
Abraxane®
or any of the other Abraxis pipeline products, Celgene may
discontinue such efforts, which would have an adverse effect on
the value, if any, of the CVRs.
Celgene has agreed to use diligent efforts, until the net sales
payment termination date, to sell
Abraxane®
or any of the other Abraxis pipeline products for which Celgene
has obtained regulatory approval for the commercial manufacture,
marketing and sale thereof.
Celgene has also agreed to use diligent efforts to obtain FDA
approval for the commercial manufacture, marketing and sale of
Abraxane®
for the treatment of melanoma, ovarian cancer, bladder cancer
and first-line metastatic breast cancer until the earlier of the
net sales payment termination date or such time that the data
generated in an appropriate clinical trial does not support
further development of
Abraxane®
for the applicable indication.
However, under the CVR agreement, the definition of
diligent efforts allows for the consideration of a
variety of factors in determining the efforts Celgene is
required to use to sell
Abraxane®
or any of the other Abraxis pipeline products and to obtain
additional regulatory approvals of
Abraxane®.
The CVR agreement defines diligent efforts as, with
respect to any product, efforts of a person to carry out its
obligations in a diligent manner using such effort and employing
such resources normally used by such person in the exercise of
its reasonable business discretion relating to the research,
development or commercialization of a product, that is of
similar market potential at a similar stage in its development
or product life, taking into account issues of market
exclusivity (including patent coverage, regulatory and other
exclusivity), safety and efficacy, product profile, the
competitiveness of alternate products in the marketplace or
under development, the launch or sales of a generic or
biosimilar product, the regulatory structure involved, and the
profitability of the applicable product (including pricing and
reimbursement status achieved), and other relevant factors,
including technical, commercial, legal, scientific,
and/or
medical factors.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus and the documents incorporated
by reference herein contain forward-looking statements within
the meaning of Section 27A of the Securities Act and
Section 21E of the Securities Exchange Act of 1934, as
amended (the Exchange Act) that involve risks and
uncertainties, as well as assumptions and information that are
based on the current beliefs and expectations of the respective
managements of Abraxis and Celgene, as the case may be. All
statements other than statements of historical fact are
statements that could be deemed forward-looking statements,
including any projections of earnings, revenues, synergies,
margins, royalties, profit split payments, net sales or other
financial items; any statements of the plans, strategies and
objectives of management for future operations, including
integration and any potential restructuring plans and the
anticipated timing of filings and approvals relating to the
merger; any statements concerning proposed new products,
services, developments or industry rankings; any statements
regarding future economic conditions or performance; any
statements of belief; and any statements of assumptions
underlying any of the foregoing. In addition to the foregoing,
when used in or incorporated by reference into this proxy
statement/prospectus, the words anticipate,
believe, plan, estimate,
expect, and intend and other similar
expressions, as they relate to Abraxis or Celgene or their
respective managements or stockholders, are intended to identify
forward-looking statements.
Such forward-looking statements, whether expressed or implied,
reflect the current views of Abraxis and Celgene with respect to
future events and are subject to a number of known and unknown
risks, delays, uncertainties and other important factors which
could cause the actual results of Abraxis or Celgene to differ
materially from those implied by such forward-looking
statements, due to a number of factors, many of which are beyond
either Abraxis or Celgenes control, which include,
but are not limited to, those set forth under the heading
Risk Factors; the risks described in Abraxis
filings with the SEC, including Abraxis Annual Report on
Form 10-K
for the year ended December 31, 2009 and its Quarterly
Report on
Form 10-Q
for the quarter ended March 31, 2010; the risks described
in Celgenes filings with the SEC, including Celgenes
Annual Report on
Form 10-K
for the year ended December 31, 2009 and its Quarterly
Report on
Form 10-Q
for the quarter ended March 31, 2010; and the following
important factors and assumptions that could affect the future
results of Celgene following the merger, or the future results
of Abraxis and Celgene if the merger does not occur, and could
cause actual results to differ
31
materially from the results, performance or other expectations
implied or expressed in any forward-looking statements:
|
|
|
|
|
the market adoption of and demand for existing and new
pharmaceutical products;
|
|
|
|
the ability to maintain
and/or
improve revenues
and/or
earnings;
|
|
|
|
the ability to successfully manufacture products in an
efficient, timely and cost-effective manner;
|
|
|
|
anticipated dates on which Abraxis and Celgene will begin
marketing certain products or therapies or will reach specific
milestones in the development and implementation of their
respective business strategies;
|
|
|
|
the impact on products and revenues of patents and other owned
or licensed proprietary rights;
|
|
|
|
compliance with laws, regulations and standards, and the
application and interpretation of those laws, regulations and
standards, that govern or affect the pharmaceutical industry,
the non-compliance with which may delay or prevent the sale of
products;
|
|
|
|
the possibility that the merger may involve unexpected costs;
|
|
|
|
the difficulty in predicting the timing or outcome of product
development efforts and regulatory approvals;
|
|
|
|
risks that the merger disrupts Abraxis current plans and
operations, and the potential difficulties for Abraxis
employee retention as a result of the announcement or completion
of the merger;
|
|
|
|
the outcome of any pending or future litigation and
administrative claims;
|
|
|
|
the impact of recent legislation changes to the governmental
reimbursement system;
|
|
|
|
the ability of Celgene following the merger to generate net
sales sufficient to trigger a payment under the CVRs
and/or
achieve milestones;
|
|
|
|
challenges of integration and restructuring associated with the
merger or other planned acquisitions and the challenges of
achieving anticipated synergies; and
|
|
|
|
other matters that are not historical facts and other risks that
are described in the section titled Risk Factors and
in the documents that are incorporated by reference into this
proxy statement/prospectus.
|
If any of these risks or uncertainties materialize or any of
these assumptions prove incorrect, results of Abraxis and
Celgene could differ materially from the expectations in these
statements. Abraxis and Celgene do not undertake any obligation
to update these forward-looking statements, except as required
by law.
INFORMATION
ABOUT THE SPECIAL MEETING
This section contains information about the special meeting of
Abraxis stockholders, which we refer to as the special meeting,
that has been called to consider and act on the proposal to
adopt the merger agreement.
Date,
Time and Place of the Special Meeting
The stockholders of Abraxis will hold a special meeting at
[ ] on [ ], 2010, at
[ ] local time, unless the special meeting is
adjourned or postponed.
Purpose
of the Special Meeting
At the special meeting, Abraxis stockholders will be asked to
consider and act on a proposal to adopt the merger agreement.
Record
Date; Shares Entitled to Vote; Outstanding Shares
Only stockholders listed on Abraxis records at the close
of business on [ ], 2010, the record date for
the special meeting, are entitled to receive notice of and to
vote at the special meeting, or any adjournments or
postponements of the special meeting. As of the close of
business on the record date, there were
[ ] shares of
32
Abraxis common stock outstanding and entitled to vote at the
special meeting. Each holder of Abraxis common stock is entitled
to one vote for each share of Abraxis common stock held as of
the record date.
A complete list of Abraxis stockholders entitled to vote at the
special meeting will be available for inspection at the
principal place of business of Abraxis during regular business
hours for a period of no less than ten days before the special
meeting, as well as the place of the special meeting during the
meeting.
Ownership
of Shares
If your shares are registered directly in your name with
Abraxis transfer agent, American Stock
Transfer & Trust Company, you are considered,
with respect to those shares, the stockholder of
record. If you are a stockholder of record, this proxy
statement/prospectus and the enclosed proxy card have been sent
directly to you by Abraxis.
If your shares are held in a stock brokerage account or by a
bank or other nominee, you are considered the beneficial owner
of shares held in street name. This proxy
statement/prospectus has been forwarded to you by your broker,
bank or other nominee who is considered, with respect to those
shares, the stockholder of record. As the beneficial owner of
shares held in street name, you have the right to direct your
broker, bank or other nominee how to vote your shares by using
the voting instruction card included in the mailing.
Quorum
In order to transact business at the special meeting, a quorum
of Abraxis stockholders must be present. A quorum will exist if
holders of a majority of the outstanding shares of Abraxis
common stock as of the close of business on the record date are
present in person, or represented by proxy, at the special
meeting. The presence at the special meeting, either in person
or by proxy, of the principal stockholders will establish a
quorum. If a quorum is not present, the special meeting may be
adjourned to a later date.
Holders of shares of Abraxis common stock present in person at
the special meeting but not voting, and shares of Abraxis common
stock for which Abraxis has received proxies indicating that
their holders have abstained, will be counted as present at the
special meeting for purposes of determining whether a quorum is
established.
Vote
Required
Provided a quorum of stockholders is present in person or by
proxy at the special meeting, in order to adopt the merger
agreement, holders of a majority of the outstanding shares of
Abraxis common stock must cast a vote in favor of the proposal
to adopt the merger agreement. Because approval is based on the
affirmative vote of a majority of the outstanding shares of
Abraxis common stock, an Abraxis stockholders failure to
submit a proxy card or to vote in person at the special meeting
or an abstention from voting, or the failure of a Abraxis
stockholder who holds his or her shares in street
name through a broker, bank or other nominee to give
voting instructions to such broker, bank or other nominee, will
have the same effect as a vote AGAINST the adoption
of the merger agreement.
If there are not sufficient votes to adopt the merger agreement
at the time of the special meeting, a majority of the votes
present in person or by proxy (whether or not a quorum is
present) may adjourn the meeting to another time and place in
order to solicit additional proxies. Abstentions and broker
non-votes will have the same effect as a vote
AGAINST the proposal to adjourn the special meeting.
Shares not in attendance at the special meeting will have no
effect on the outcome of any vote to adjourn the special meeting.
Recommendation
of the Abraxis Board of Directors
The Abraxis board of directors unanimously determined that the
transactions contemplated by the merger agreement, including the
merger, are advisable and fair to, and in the best interest of,
Abraxis and its stockholders, adopted the merger agreement and
declared advisable the merger. The Abraxis board of directors
unanimously recommends that Abraxis stockholders vote
FOR the proposal to adopt the merger
agreement. See The Merger Reasons for the
Merger.
33
Abraxis stockholders should carefully read this proxy
statement/prospectus in its entirety for more detailed
information concerning the merger agreement and the transactions
contemplated by the merger agreement, including the merger. In
addition, Abraxis stockholders are directed to the merger
agreement, which is attached as Annex A to this proxy
statement/prospectus.
Voting by
the Principal Stockholders
On June 30, 2010, the principal stockholders, who together
own approximately 82.1% of the outstanding shares of Abraxis
common stock as of the record date, entered into a voting
agreement with Celgene and merger sub, under which they agreed,
subject to the terms thereof, to vote all of their shares of
Abraxis common stock in favor of the approval and adoption of
the merger agreement and the transactions contemplated by the
merger agreement and against, among other things, any business
combination or extraordinary corporate transaction involving
Abraxis or any or its subsidiaries, other than the merger or any
business combination or transaction with Celgene or any of its
affiliates. Each of the principal stockholders also granted an
irrevocable proxy to Celgene to vote or execute consents with
respect to such principal stockholders shares of Abraxis
common stock in accordance with the preceding sentence. The
voting agreement will terminate upon the earliest to occur of:
(1) the completion of the merger, (2) any material
amendment to the merger agreement that is adverse to the
principal stockholders that has not been approved by them and
(3) the termination of the merger agreement in accordance
with its terms. The principal stockholders vote will be
sufficient under Delaware law to adopt the merger agreement
without the approval of any other stockholder of Abraxis.
Stock
Ownership of, and Voting by, Abraxis Directors and
Executive Officers
As of the record date, directors and executive officers of
Abraxis had the right to
vote [ ] shares of Abraxis common
stock, entitling them to collectively cast approximately
[ ]% of the votes entitled to be cast at the
special meeting. This includes [ ] shares
of Abraxis common stock that the principal stockholders had the
right to vote. As noted above, the principal stockholders have
agreed collectively to vote their shares of Abraxis common stock
in favor of the adoption of the merger agreement.
Except as described above as to shares held by the principal
stockholders, none of Abraxis directors or officers has
entered into any agreement requiring them to vote for or against
the proposal to adopt the merger agreement.
How to
Vote
There are two ways for Abraxis stockholders to vote:
Mail. You can vote by mail by completing,
signing, dating and mailing your proxy card or voting
instruction card in the postage-paid envelope included with this
proxy statement/prospectus. Abraxis must receive your proxy card
no later than the close of business on [ ],
2010.
In Person. In addition, all Abraxis
stockholders as of the record date may attend the special
meeting and vote in person. You may also be represented by
another person at the special meeting by executing a proper
proxy designating that person. If you are a beneficial owner of
shares held in street name, you must obtain a proxy from your
broker, bank or other nominee and present it to the inspectors
of election with your ballot when you vote at the special
meeting.
Voting of
Shares Held in Street Name
If your shares are held in an account at a broker, bank or other
nominee, you must instruct the broker, bank or other nominee on
how to vote your shares by following the instructions that the
broker, bank or other nominee provides you with this proxy
statement/prospectus. If you do not provide voting instructions
to your broker, your shares will not be voted on any proposal on
which your broker does not have discretionary authority to vote.
This is referred to in this proxy statement/prospectus and in
general as a broker non-vote. In these cases, the broker, bank
or other nominee can register your shares as being present at
the special meeting for purposes of determining a quorum, but
will not be able to vote your shares on those matters for which
specific authorization is required. Brokers do not have
discretionary authority to vote on the proposal to adopt the
merger agreement. Therefore, a broker non-vote will have the
same effect as a vote AGAINST adoption of the merger
agreement.
34
Attending
the Special Meeting
All Abraxis stockholders as of the close of business on the
record date may attend the special meeting by showing photo
identification and signing in at the special meeting. If you are
a stockholder of record (i.e., your shares are held in your
name), you must list your name as it appears on your stock
ownership records from American Stock Transfer &
Trust Company. Your proxy card will admit you and one
guest. If you hold shares through a broker, bank or other
nominee, you must also provide a copy of your bank, broker or
other nominee statement showing your ownership as of the close
of business on the record date.
Voting of
Proxies
If you vote by completing, signing, dating and mailing your
proxy card or voting instruction card, your shares will be voted
in accordance with your instructions. If you are a stockholder
of record and you sign, date and return your proxy card but do
not indicate how you want to vote or do not indicate that you
wish to abstain, your shares will be voted
FOR the adoption of the merger agreement.
Revoking
Your Proxy
If you are a stockholder of record, you may revoke your proxy at
any time before it is voted at the special meeting by:
|
|
|
|
|
sending a signed notice of revocation to the Corporate Secretary
of Abraxis;
|
|
|
|
submitting a revised proxy bearing a later date; or
|
|
|
|
attending the special meeting and voting in person, which will
automatically cancel any proxy previously given, or revoking
your proxy in person, but your attendance alone will not revoke
any proxy that you have previously given.
|
If you choose either of the first two methods, you must submit
your notice of revocation or your new proxy no later than the
beginning of the special meeting. If you are a beneficial owner
of shares of Abraxis common stock, you may submit new voting
instructions by contacting your broker, bank or other nominee.
You may also vote in person at the special meeting if you obtain
a proxy from your broker, bank or other nominee and present it
to the inspectors of election with your ballot when you vote at
the special meeting.
Solicitation
of Proxies
This proxy statement/prospectus is furnished in connection with
the solicitation of proxies by the Abraxis board of directors to
be voted at the special meeting. Abraxis will bear all costs and
expenses in connection with the solicitation of proxies,
including the charges of brokerage houses and other custodians,
nominees or fiduciaries for forwarding documents to security
owners. Proxies may also be solicited by certain of
Abraxis directors, officers and employees by telephone,
electronic mail, letter, facsimile or in person, but no
additional compensation will be paid to them.
Stockholders should not send stock certificates with their
proxies. A letter of transmittal and instructions
for the surrender of Abraxis common stock certificates will be
mailed to Abraxis stockholders shortly after the completion of
the merger.
Stockholders
Sharing an Address
Consistent with notices sent to record stockholders sharing a
single address, Abraxis is sending only one copy of this proxy
statement/prospectus to that address unless Abraxis received
contrary instructions from any stockholder at that address. This
householding practice reduces Abraxis printing
and postage costs. Stockholders may request to discontinue
householding, or may request a separate copy of this proxy
statement/prospectus by one of the following methods:
|
|
|
|
|
record stockholders wishing to discontinue or begin
householding, or any record stockholder residing at a household
address wanting to request delivery of a copy of this proxy
statement/prospectus should contact
|
35
|
|
|
|
|
the Corporate Secretary at Abraxis BioScience, Inc., 11755
Wilshire Boulevard, Suite 2000, Los Angeles, CA
90025; and
|
|
|
|
|
|
stockholders owning their shares through a bank, broker or other
holder of record who wish to either discontinue or begin
householding should contact their record holder.
|
Other
Business
The Abraxis board of directors is not aware of any other
business to be acted upon at the special meeting.
Assistance
If you need assistance in completing your proxy card or have
questions regarding the special meeting, please contact:
Abraxis BioScience, Inc.
Attention: Investor Relations
11755 Wilshire Boulevard, Suite 2000
Los Angeles, California 90025
Telephone Number:
(310) 883-1300.
THE
PARTIES TO THE MERGER
Celgene
Corporation
86 Morris Avenue
Summit, New Jersey 07901
Telephone:
(908) 673-9000
Celgene Corporation, a corporation organized under the laws of
Delaware, which we refer to as Celgene, is a global integrated
biopharmaceutical company primarily engaged in the discovery,
development and commercialization of innovative therapies
designed to treat cancer and immune-inflammatory related
diseases. Celgene is dedicated to innovative research and
development which is designed to bring new therapies to market.
Celgene is also involved in research in several scientific areas
that may deliver proprietary next-generation therapies,
targeting areas such as intracellular signaling pathways in
cancer and immune cells, immunomodulation in cancer and
autoimmunity and placental cell, including stem and progenitor
cell, research. The drug and cell therapies Celgene develops are
designed to treat life-threatening diseases or chronic
debilitating conditions.
Celgene common stock is listed on The NASDAQ Global Select
Market, under the symbol CELG.
Additional information about Celgene is included in the
documents incorporated by reference into this proxy
statement/prospectus. See Where You Can Find More
Information.
Abraxis
BioScience, Inc.
11755 Wilshire Boulevard, Suite 2000
Los Angeles, California 90025
Telephone:
(310) 883-1300
Abraxis BioScience, Inc., a corporation organized under the laws
of Delaware, which we refer to as Abraxis, is a fully integrated
global biotechnology company dedicated to the discovery,
development and delivery of next-generation therapeutics and
core technologies that offer patients safer and more effective
treatments for cancer and other critical illnesses.
Abraxis product portfolio includes the chemotherapeutic
compound
Abraxane®,
which is based on Abraxis proprietary tumor targeting
technology known as the
nab®
platform. The first product approved by the U.S. Food and
Drug Administration, which we refer to as FDA, to use this
nab®
platform,
Abraxane®,
was launched in 2005 for the treatment of metastatic breast
cancer and is now approved in 41 countries. Abraxis
continues to expand the
nab®
platform through a robust clinical program and deep product
pipeline.
36
Abraxis common stock is listed on The NASDAQ Global Select
Market under the symbol ABII.
Additional information about Abraxis is included in the
documents incorporated by reference into this proxy
statement/prospectus. See Where You Can Find More
Information.
Artistry
Acquisition Corp.
86 Morris Avenue
Summit, New Jersey 07901
Telephone:
(908) 673-9000
Artistry Acquisition Corp., a corporation organized under the
laws of Delaware, which we refer to as merger sub, was formed
solely for the purpose of facilitating the merger. Merger sub
has not carried on any activities or operations to date, except
for those activities incidental to its formation and undertaken
in connection with the transactions contemplated by the merger
agreement. By operation of the merger, merger sub will be merged
into Abraxis, merger subs separate existence will cease
and Abraxis will become a direct or indirect wholly-owned
subsidiary of Celgene.
THE
MERGER
The following is a description of the material aspects of the
merger. While we believe that the following description covers
the material terms of the merger, the description may not
contain all of the information that may be important to you. The
discussion of the merger in this proxy statement/prospectus is
qualified in its entirety by reference to the merger agreement,
which is attached to this proxy statement/prospectus as
Annex A and incorporated by reference into this proxy
statement/prospectus. We encourage you to read carefully this
entire proxy statement/prospectus, including the merger
agreement, for a more complete understanding of the merger.
Background
of the Merger
On January 20, 2009, Abraxis announced its intention to
spin-off Abraxis Health, a new company that would hold the
assets and liabilities constituting the drug discovery,
manufacturing and development operations then being conducted by
Abraxis. On January 21, 2009, Abraxis Health filed a
Registration Statement on Form 10 with respect to the
spin-off.
On May 15, 2009, Bruce Wendel, Abraxis current Chief
Executive Officer and then Executive Vice President of Corporate
Operations and Development, received a telephone call from a
senior executive of a company that we refer to as Party A
inquiring about Abraxis interest in providing Party A with
a European license for
Abraxane®.
Mr. Wendel indicated that Abraxis was not interested in
pursuing licensing transactions at that time. Later in May 2009,
Party A expressed interest in exploring a potential acquisition
of Abraxis in connection with the then contemplated spin-off of
Abraxis Health and requested access to non-public information
regarding Abraxis so that it could formulate a proposal.
Between June 2009 and March 2010, following the execution of a
confidentiality agreement by Party A, Abraxis provided Party A
with access to certain non-public information requested by Party
A. In addition, Mr. Wendel, and other members of Abraxis
management made presentations to representatives of Party A
regarding Abraxis and its operations.
In September 2009, Party A made a preliminary non-binding
proposal to acquire Abraxis simultaneously with a spin-off of
Abraxis Health in a transaction in which Abraxis stockholders
would receive an upfront cash payment and shares of Abraxis
Health in the spin-off. Abraxis Health would be entitled to
receive annual royalties based on the net sales of
Abraxane®
through 2020. After reviewing Party As proposal with
representatives of Lazard Frères & Co. LLC, which
we refer to as Lazard, and Goldman, Sachs & Co., which
we refer to as Goldman Sachs, and engaging in further
discussions with Party A, including a meeting on
November 19, 2009, Abraxis rejected Party As proposal.
In September 2009, after receiving the non-binding proposal from
Party A, Abraxis directed representatives of Lazard and Goldman
Sachs to contact potential acquirors to assess their interest in
a potential acquisition of
37
Abraxis. Representatives of Lazard and Goldman Sachs thereafter
contacted more than 20 potential acquirors of Abraxis.
On September 19, 2009, representatives of Lazard and George
Golumbeski, Senior Vice President of Business Development for
Celgene, discussed exploring a possible transaction with
Abraxis. Celgene and Abraxis executed a mutual non-disclosure
agreement effective as of October 16, 2009, with only
limited diligence taking place at this time and no subsequent
plans for additional meetings.
Between October 2009 and March 2010, of the parties contacted by
representatives of Lazard and Goldman Sachs, 10 parties executed
confidentiality agreements and performed due diligence on
Abraxis. Following execution of the confidentiality agreements,
the parties and their legal and financial advisors were given
access to due diligence materials and several attended
management presentations given by members of management of
Abraxis. From October 2009 through March 2010, representatives
of Abraxis engaged in periodic discussions and meetings with
parties that had executed confidentiality agreements with
Abraxis, including Party A. At such meetings, the parties
discussed general industry trends and the potential strategic
fit of Abraxis with their companies and various due diligence
matters.
On January 28, 2010, Abraxis publicly reiterated its
intention to complete the spin-off of Abraxis Health in 2010.
On March 12, 2010, a potential acquiror, who we refer to as
Party B, executed a confidentiality agreement. Following the
execution of the confidentiality agreement, Party B and its
legal and financial advisors were provided access to due
diligence information regarding Abraxis.
On March 17, 2010, Mr. Wendel and other members of
Abraxis management made a presentation to representatives of
Party B regarding Abraxis and its operations. After this
meeting, Party B indicated that it was interested in concluding
a transaction to acquire Abraxis simultaneously with the
spin-off of Abraxis Health.
Also on March 17, 2010, Abraxis announced that it had
achieved the primary endpoint of overall response rate in its
Phase 3 trial comparing
Abraxane®
with
Taxol®,
both in combination with carboplatin, in the first-line
treatment of patients with advanced non-small cell lung cancer.
As a result of this announcement, representatives of Lazard and
Goldman Sachs received several phone calls from parties
expressing an interest in a possible strategic transaction with
Abraxis. In addition, discussions with Party A, Party B and four
other potential acquirors continued.
In light of the March 17th data announcement, on
March 18, 2010, Celgene contacted representatives of Lazard
to schedule a meeting in April with representatives of Abraxis.
The meeting was scheduled for April 20, 2010.
On March 30 and 31, 2010, Party B performed due diligence on
Abraxis manufacturing facility in Phoenix, Arizona.
On April 5, 2010, at a meeting of the Abraxis board of
directors, management delivered an update regarding discussions
with potential acquirors. After discussion, the Abraxis board of
directors unanimously authorized management to continue
discussions with interested parties and invite them to submit a
preliminary proposal for an acquisition of Abraxis
simultaneously with the spin-off of Abraxis Health. The Abraxis
board of directors also unanimously authorized management to
formally engage investment bankers to assist in this process,
and Lazard and Goldman Sachs were formally engaged by Abraxis.
Following this discussion, during the week of April 5,
2010, at the direction of Abraxis, representatives of Lazard and
Goldman Sachs distributed a letter to Party B, Celgene and four
other potential acquirors inviting them to deliver a non-binding
proposal for an acquisition of Abraxis simultaneously with a
spin-off of Abraxis Health. During this time, Party A and
representatives of Abraxis continued to have discussions.
On April 6, 2010, representatives of Abraxis, Lazard and
Celgene held a call to discuss the new
Abraxane®
data from the Phase 3 non-small cell lung cancer trial in
preparation for the April 20, 2010 meeting. During the
discussion, Celgene indicated a desire to perform a
comprehensive due diligence review of Abraxis and its operations.
On April 20, 2010, Mr. Wendel and other
representatives of Abraxis met with representatives of
Celgenes Business Development, Clinical Development,
Marketing and Regulatory departments at Celgenes
headquarters in New Jersey. At the meeting, the parties
discussed due diligence topics, general industry trends and the
potential strategic opportunity for Celgene to acquire Abraxis.
Celgene and representatives from its legal counsel, Jones Day,
subsequently performed due diligence on Abraxis
manufacturing facility in Phoenix Arizona on April 29 and 30,
2010 and on the manufacturing facilities in Grand Island, New
York and Melrose Park, Illinios on June 2 and 3, 2010,
respectively.
38
At a meeting of the Abraxis board of directors held on
May 5, 2010, members of management updated the board of
directors on the on-going discussions with the potential
acquirors.
As a result of the April 20th meeting and subsequent
diligence conducted by Celgene representatives on
April 29th and 30th, Celgenes Business
Development executives recommended to Celgene senior management
that the company submit a non-binding, preliminary acquisition
proposal. On May 12, 2010, Celgene submitted a non-binding,
preliminary proposal, subject to further due diligence, to
acquire the outstanding shares of Abraxis common stock. This
initial proposal contemplated the acquisition by Celgene of all
of the outstanding shares of Abraxis common stock at a price per
share of $62.00 in cash plus the following post-closing payments
to the stockholders of Abraxis:
|
|
|
|
|
$250 million upon the achievement of FDA approval of
Abraxane®
for use in the treatment of non-small cell lung cancer, which
approval permits Celgene to market
Abraxane®
under a label that includes a progression free survival claim;
|
|
|
|
$300 million upon the achievement of FDA approval of
Abraxane®
for use in the treatment of pancreatic cancer, which approval
permits Celgene to market
Abraxane®
under a label that includes an overall survival claim; and
|
|
|
|
Cash payments equal to 5% of annual net sales of
Abraxane®
in excess of $2.5 billion in any year.
|
The proposal indicated that Celgene was open to discussing the
most efficient manner to deliver the post-closing payments.
Celgene indicated that the proposal assumed the full acquisition
of Abraxis
nab®
technology platform, all of Abraxis manufacturing
operations and all compounds in development by Abraxis but
indicated that Celgene would consider a simultaneous spin-off of
Abraxis Health with certain assets, including potential access
by Abraxis Health to the
nab®
technology, to be determined.
On May 20, 2010, Party B submitted a non-binding,
preliminary proposal, subject to further due diligence, to
acquire 100% of the outstanding shares of Abraxis common stock.
The proposal contemplated the spin-off of Abraxis Health
simultaneous with the acquisition of Abraxis and included
up-front cash consideration and post-closing cash payments based
on the achievement of certain milestones and royalty payments.
On May 24, 2010, Sol Barer, the current Executive Chairman
of Celgene and then Chairman and Chief Executive Officer, and
Robert Hugin, the current Chief Executive Officer of Celgene and
then President and Chief Operating Officer, met with
Dr. Patrick Soon-Shiong, Executive Chairman of Abraxis in
Los Angeles. Mr. Wendel was also present. At this time,
Dr. Soon-Shiong discussed
Abraxane®,
the
nab®
pipeline products and the
nab®
technology, as well as other technologies and assets being
pursued by Abraxis, including those technologies and assets that
were previously identified for a potential spin off of Abraxis
Health. The participants also discussed Celgenes
non-binding proposal and Celgenes principal interest in
Abraxane®,
the
nab®
pipeline products and the
nab®
technology being the primary strategic fit with Celgenes
businesses. Following the meeting, representatives of Abraxis
and Celgene, together with representatives of the legal and
financial advisors to Celgene, and representatives of
Morrison & Foerster LLP, Abraxis intellectual
property counsel, held due diligence meetings in Los Angeles on
May 25 and 26.
In late May 2010, Abraxis learned from the United States Patent
and Trademark Office that a pending patent application covering
Abraxane®
with composition of matter and method of use claims would be
receiving a notice of allowance that could extend patent
coverage for
Abraxane®
through the end of 2023. At the direction of Abraxis,
representatives of Lazard, Goldman Sachs and an additional
financial advisor retained by Abraxis, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, which we refer to as BofA
Merrill Lynch, shared this information with interested parties,
including Celgene, Parties A and B and several other global
pharmaceutical companies that had performed due diligence on
Abraxis.
On June 1, 2010, at the instruction of Abraxis,
representatives of Lazard, Goldman Sachs and BofA Merrill Lynch,
distributed a letter to Celgene and Party B inviting them to
submit their final proposals for an acquisition of Abraxis.
Later that week, Dr. Soon-Shiong and Party Bs Chief
Executive Officer held a telephone conference to discuss Party
Bs non-binding proposal in more detail and the potential
strategic fit of their companies as well as the process and
timing for a potential transaction.
At a meeting of the Abraxis board of directors held on
June 3, 2010, management updated the board of directors on
the transaction process and discussed the non-binding,
preliminary proposals received from Celgene and Party B.
39
From June 2, 2010 to June 4, 2010, representatives of
Celgene and Jones Day conducted diligence at Abraxis Grand
Island, New York and Melrose Park, Illinois manufacturing
facilities.
On June 4, 2010, at the instruction of Abraxis,
representatives of Lazard distributed to Celgene and Party B
drafts of a merger agreement, a CVR agreement and a voting
agreement to be entered into by certain principal stockholders
of Abraxis. On June 9, 2010, at the instruction of Abraxis,
representatives of Lazard distributed to Celgene and Party B a
draft of a term sheet outlining the principal terms and
agreements of the spin-off of Abraxis Health.
Subsequent to the draft definitive agreements and term sheet
being provided to Celgene and Party B and at the direction of
Abraxis, representatives of Lazard, Goldman Sachs and BofA
Merrill Lynch requested that Celgene and Party B deliver marked
copies of the transaction documents by Friday, June 18,
2010, and deliver a final acquisition proposal on Monday,
June 21, 2010.
During the week of June 14, representatives of Jones Day
and Fried Frank Harris Shriver & Jacobson LLP, counsel
to Abraxis which we refer to as Fried Frank, engaged in
telephone conferences to discuss various terms of the draft
transaction documents circulated to Celgene.
On June 17, 2010, Dr. Soon-Shiong and Mr. Hugin
met again in Los Angeles to discuss the proposed next steps in
the transaction and various other matters. At this meeting,
Mr. Hugin indicated that, because of the complexity and
potential delay involved in a simultaneous spin-off and in the
interest of consummating an acquisition expeditiously, Celgene
was prepared to acquire all of Abraxis without a simultaneous
spin-off of Abraxis Health.
On June 18, 2010, Celgene delivered to representatives of
Lazard a markup of the draft merger agreement, voting agreement
and CVR agreement as well as a markup of the term sheet for the
Abraxis Health spin-off. The accompanying cover letter and
subsequent communications re-iterated that, for the sake of
simplicity and timing, Celgene was interested in acquiring
Abraxis without the spin-off of Abraxis Health and strongly
believed proceeding with a full acquisition of Abraxis would
benefit timing of the completion of the transaction and simplify
the necessary agreements. The draft agreements provided for
execution by the principal stockholders of an action by written
consent approving and adopting the merger agreement immediately
after the SECs declaration that the registration statement
required for the issuance of the CVRs was effective, providing
that until such time the Abraxis board of directors could
terminate the agreement to accept a superior acquisition
proposal, and prohibited the principal stockholders from
engaging in discussions with a third party that made an
unsolicited proposal even in circumstances where Abraxis would
be permitted under the merger agreement to engage in those
discussions. The markup also contemplated that
Dr. Soon-Shiong and potentially other employees of Abraxis
would execute noncompetition agreements in favor of Celgene.
On June 21, 2010, Celgene submitted a revised proposal,
subject to certain limited confirmatory due diligence items, to
acquire all of the outstanding shares of Abraxis common stock.
This proposal contemplated the acquisition by Celgene of all of
the outstanding shares of Abraxis common stock at a price per
share of $70.00 in cash plus the following post-closing payments
through the CVRs:
|
|
|
|
|
$250 million upon the achievement of FDA approval of
Abraxane®
for use in the treatment of non-small cell lung cancer, which
approval permits Celgene to market
Abraxane®
under a label that includes a progression free survival claim;
|
|
|
|
$100 million upon the achievement of accelerated FDA
approval of
Abraxane®
for use in the treatment of pancreatic cancer based on phase
I/II data;
|
|
|
|
$300 million upon the achievement of FDA approval of
Abraxane®
for use in the treatment of pancreatic cancer, which approval
permits Celgene to market
Abraxane®
under a label that includes an overall survival claim; and
|
|
|
|
Cash payments equal to 2.5% of annual net sales of
Abraxane®
between $1.5 billion and $2.5 billion and 5% of annual
net sales of
Abraxane®
in excess of $2.5 billion.
|
The proposal indicated that the payment of the milestone
payments in the first three bullets above was contingent on
achievement of the milestone within 5 years after the
completion of the merger. The proposal also contemplated a
potential spin-off of Abraxis Health immediately prior to the
completion of the merger but did not identify what assets or
business would be transferred to Abraxis Health or constitute
the Abraxis Health business. In
40
subsequent conversations, Celgene again confirmed its interest
in an acquisition of all of Abraxis without a spin-off of
Abraxis Health.
On June 22, 2010, representatives of Celgene and Jones Day
met with representatives of Abraxis, Goldman Sachs and
Abraxis regulatory counsel to discuss the current and
future potential regulatory approvals of
Abraxane®
and Abraxis
nab®
pipeline products.
On June 22, 2010, Party B submitted a proposal to acquire
100% of Abraxis that provided for different payments to be made
to each of Dr. Soon-Shiong and his affiliated entities and
to other stockholders of Abraxis. Under the proposal,
Dr. Soon-Shiong and his affiliated entities would have
received only the shares of Abraxis Health at closing plus all
future milestone and royalty payments based on
Abraxane®
approvals and revenues. Abraxis stockholders other than
Dr. Soon-Shiong and his affiliated entities would receive
only an up front cash payment for their shares. The up front
cash payment payable to Abraxis stockholders other than
Dr. Soon-Shiong and his affiliated entities would depend on
a number of variables, including Abraxis available cash at
the completion of any such transaction. Abraxis management made
various assumptions regarding the proposed variables and the
potential performance of Abraxis pending the completion of such
a transaction and based on this analysis concluded that the up
front cash payment that would be received by Abraxis
stockholders other than Dr. Soon-Shiong and his affiliated
entities would be approximately $72 per share.
Also on June 22, 2010, a special meeting of the Abraxis
board of directors was held to discuss the proposals submitted
by Celgene and Party B at which members of senior management of
Abraxis and representatives of Lazard, Goldman Sachs, BofA
Merrill Lynch, Fried Frank and Morrison & Foerster,
counsel to the Abraxis board of directors, were present. At the
meeting, members of senior management and representatives of
Lazard, Goldman Sachs, BofA Merrill Lynch and Fried Frank
discussed with the board the terms of the proposals submitted by
Celgene and Party B. Also at this meeting, representatives of
Lazard, Goldman Sachs and BofA Merrill Lynch noted that they
believed they had contacted or been contacted by the most likely
potential acquirors for Abraxis. Morrison & Foerster
discussed the boards fiduciary duties in connection with a
potential acquisition transaction. The Abraxis board of
directors then authorized its financial and legal advisors to
continue discussions with Celgene pending a scheduled meeting
between Dr. Soon-Shiong and Mr. Wendel from Abraxis
and Dr. Barer and Mr. Hugin of Celgene on Friday,
June 25, 2010 and to continue discussions with Party B.
On June 23, 2010, Fried Frank delivered to Jones Day
revised copies of the transaction agreements and on
June 24, 2010 representatives of Fried Frank and Jones Day
participated in a conference call to discuss the comments to the
transaction documents. Among other items, the revised
transaction agreements contemplated that the Abraxis board of
directors would be permitted to terminate the merger agreement
to accept a superior proposal until Abraxis stockholders
approved the merger at a special meeting rather than approving
the merger by written consent as proposed by Celgene.
On June 24, 2010, Dr. Soon-Shiong and Party Bs
Chief Executive Officer held a telephone conference to discuss
Party Bs non-binding proposal in more detail as well as
the process and timing for a potential transaction. Later that
day, the Abraxis board of directors met and were given an update
on the discussions with Celgene and Party B.
On June 25, 2010, Dr. Soon-Shiong and Mr. Wendel
met Dr. Barer and Mr. Hugin at the offices of BofA
Merrill Lynch in New York. At the meeting, Dr. Soon-Shiong
indicated that Abraxis would be prepared to consider
Celgenes proposal to acquire all of Abraxis if Celgene
would increase the consideration payable to Abraxis
stockholders. During the meeting, Celgene revised its proposal
offering to pay at closing $72.00 per share of Abraxis common
stock. The parties discussed that approximately 20% of the total
merger consideration would be paid in the form of Celgene common
stock. The revised proposal provided for cash payments through
the CVRs equal to 2.5% of annual net sales of
Abraxane®
and Abraxis current
nab®
pipeline products between $1.0 billion and
$2.0 billion, 5% of annual net sales of
Abraxane®
and Abraxis current
nab®
pipeline products between $2.0 and $3.0 billion and 10% of
annual net sales of
Abraxane®
and Abraxis current
nab®
pipeline products in excess of $3.0 billion. Finally, the
revised proposal from Celgene provided that the proposed
additional $100 million milestone for accelerated approval
of
Abraxane®
for the treatment of pancreatic cancer could be achieved by any
means (and not only by use of Phase I/II data), as long as such
approval was achieved by December 31, 2012. At this
meeting, Dr. Soon-Shiong indicated that he would review
with the Abraxis board of directors, and the board of directors
would consider, Celgenes revised proposal.
41
Early in the morning of June 26, 2010, Celgene delivered
revised drafts of the transaction agreements, including an
initial draft of a noncompetition agreement proposed to be
executed by Dr. Soon-Shiong and potentially other Abraxis
employees in connection with a transaction and a proposed
stockholders agreement to be executed by
Dr. Soon-Shiong and his affiliated entities with respect to
the shares of Celgene common stock they would receive in the
transaction under Celgenes revised proposal. The
stockholders agreement provided that Dr. Soon-Shiong
and his affiliated entities (but not other stockholders of
Abraxis) would be required to retain the shares of Celgene
common stock owned by such stockholder for three years following
the merger.
Around June 26 to 27, 2010, Dr. Soon-Shiong and Party
Bs Chief Executive Officer exchanged further telephone
calls regarding the non-binding proposal and the process and
timing for a potential transaction.
From June 26 through June 29, 2010, representatives of
Fried Frank and Jones Day met in person and exchanged drafts of
the transaction documents, and made substantial progress toward
finalizing the definitive documentation for the transaction. In
addition, Celgene finalized its due diligence review of Abraxis,
including conducting confirmatory
on-site due
diligence at Abraxis Melrose Park manufacturing facilities
on June 28, 2010. Among the key issues subject to
negotiation were the period after signing of the merger
agreement during which the Abraxis board of directors would be
permitted to terminate the merger agreement to accept a superior
proposal (with the parties agreeing that the board of directors
could terminate the merger agreement to accept a superior
proposal until Abraxis stockholders approved the merger at the
special meeting) and the size of termination fee payable by
Abraxis in the event of such a termination (with the parties
ultimately agreeing to a $145 million termination fee). In
addition, Abraxis negotiated that the $100 million
milestone payment for accelerated approval of
Abraxane®
to treat pancreatic cancer, with a label that includes an
overall survival claim, would be payable if
Abraxane®
received such approval prior to April 1, 2013 (rather than
December 31, 2012) and the parties determined the
exchange ratio for the Celgene common stock to be received in
the merger using the weighted average sales price of Celgene
common stock in the 30 days prior to the announcement of
the merger.
On June 28, 2010, a special meeting of the Abraxis board of
directors was held to discuss the status of discussions with
Celgene and Party B. At the meeting, members of management of
Abraxis and representatives of Lazard, Goldman Sachs, BofA
Merrill Lynch and Fried Frank discussed with the Abraxis board
of directors the status of negotiations of the transaction
documentation and the transaction timeline. At the meeting,
representatives of Lazard, Goldman Sachs and BofA Merrill Lynch
also reviewed with the Abraxis board of directors their
financial analyses of the proposed merger consideration in the
proposed transaction with Celgene.
On June 29, 2010, the Abraxis board of directors held a
special meeting to discuss and consider the negotiated terms of
the transaction documents with Celgene and to seek to reach a
final determination of the board of directors views on the
merger agreement and the proposed merger. Representatives of
Lazard, Goldman Sachs and BofA Merrill Lynch discussed and
responded to additional questions from the Abraxis board of
directors regarding the financial analyses of the merger
consideration previously reviewed with the board of directors.
Following further discussion, Lazard, Goldman Sachs and BofA
Merrill Lynch orally rendered their respective opinions, each of
which was subsequently confirmed by delivery of a written
opinion dated June 30, 2010 to the effect that, as of that
date and, subject to the qualifications, limitations and
assumptions reflected in their respective written opinions, the
merger consideration proposed to be received by the holders
(other than Dr. Soon-Shiong and his affiliates to the
extent excluded from such opinion) of shares of Abraxis common
stock pursuant to the merger agreement was fair, from a
financial point of view, to such stockholders as more fully
described below in The Merger Opinions of
Financial Advisors to Abraxis. Representatives of Fried
Frank then reviewed the terms of the merger agreement and
related documents.
Following additional discussion, after considering, among other
things, the factors described below under The
Merger Reasons for the Merger the
Abraxis Board of Directors, the Abraxis board of directors
unanimously adopted resolutions reflecting that the proposed
terms of the merger agreement and other transaction documents,
and the merger and other transactions contemplated by the merger
agreement, are advisable, fair to and in the best interests of
Abraxis and its stockholders, adopting the merger agreement and
other transaction documents, approving the merger and the other
transactions contemplated by the merger agreement, and
unanimously recommending that Abraxis stockholders adopt the
merger agreement and approve the merger and the other
transactions contemplated by the merger agreement.
42
After the Abraxis board of directors meeting adjourned, Fried
Frank and Jones Day finalized the definitive documentation for
the transaction, and the merger agreement and related agreements
were executed later the following morning. The transaction was
publicly announced in a press release issued before the opening
of the market on June 30, 2010.
Reasons
for the Merger
Abraxis
Reasons for the Merger
In evaluating the merger agreement and the merger, the Abraxis
board of directors consulted with Abraxis management and legal
and financial advisors and, in reaching its decision to approve
the merger agreement and to recommend that Abraxis stockholders
vote for the adoption of the merger agreement, the Abraxis board
of directors considered a variety of factors, including the
following:
|
|
|
|
|
the fact that the upfront consideration payable in a combination
of cash and shares of Celgene common stock represents a premium
of (1) 14.3% over the closing price per share of the
Abraxis common stock on June 28, 2010 and the high per
share price of the Abraxis common stock over the 52 week
period ended June 28, 2010; (2) 27.2% over the volume
weighted average price per share, or VWAP, over the 30 calendar
days ended June 28, 2010; and (3) 41.7% over the
closing price per share of the Abraxis common stock on
June 1, 2010, the first trading day within the 30 calendar
days prior to June 28, 2010;
|
|
|
|
the fact that approximately 80% of the upfront merger
consideration is in the form of cash, which provides immediate
liquidity and a high degree of certainty of value to Abraxis
stockholders;
|
|
|
|
the fact that approximately 20% of the upfront merger
consideration is in the form of SEC-registered and transferable
and tradable Celgene common stock, which allows Abraxis
stockholders to participate in the benefits of a more
diversified company with greater resources and to benefit from
any future growth of the combined company;
|
|
|
|
the fact that, in addition to cash, each Abraxis stockholder
will receive SEC-registered and transferable and tradable CVRs
with a potential duration of 20 years, which may provide
Abraxis stockholders an opportunity to realize additional value
by trading those CVRs in the public markets or, to the extent
Abraxis as the surviving corporation generates net sales
sufficient to meet certain thresholds
and/or
achieves certain milestones, through additional cash payments
under the terms of the CVRs;
|
|
|
|
the board of directors view that the stand-alone prospects
of Abraxis may be adversely impacted by Abraxis limited
financial resources;
|
|
|
|
the board of directors view that Abraxis stockholders will
receive value in the merger that is materially greater than the
value realizable by Abraxis stockholders on a stand-alone basis
and under any reasonably available transaction alternatives;
|
|
|
|
the board of directors view that the sales process
undertaken with assistance of Lazard, Goldman Sachs and BofA
Merrill Lynch, in which multiple potential acquirors of Abraxis
were contacted and ten parties executed confidentiality
agreements and performed due diligence on Abraxis, was an
effective process;
|
|
|
|
the board of directors view that the sale and negotiation
process yielded a full and fair price for Abraxis;
|
|
|
|
the belief that the business of Abraxis could potentially
benefit from being part of the larger Celgene corporate group
and having access to its international distribution network and
customers, and that by virtue of the shares of Celgene common
stock and CVRs, Abraxis stockholders would have an ongoing
opportunity to participate in those potential benefits;
|
|
|
|
managements assessment, after consultation with Morgan
Stanley & Co. Incorporated, Celgenes financial
advisor, that Celgene will have adequate capital resources to
pay the cash portion of the merger consideration;
|
|
|
|
the fact that Abraxis stockholders who do not vote to adopt the
merger agreement and who follow certain prescribed procedures
are entitled to appraisal rights under Delaware law;
|
43
|
|
|
|
|
the fact that Dr. Soon-Shiong and his related entities,
which together hold approximately 82% of Abraxis
outstanding common stock, indicated their support for the merger
and their intention to enter into the voting agreement in
support of the merger; and
|
|
|
|
the respective opinions of Goldman Sachs, Lazard and BofA
Merrill Lynch to the Abraxis board of directors that, as of the
date of their opinions, and based upon and subject to the
qualifications, limitations and assumptions set forth in their
respective written opinions, the merger consideration to be
received by the holders (other than Dr. Soon-Shiong and his
affiliates to the extent excluded from such opinion) of shares
of Abraxis common stock pursuant to the merger agreement was
fair, from a financial point of view, to such holders, and the
financial analyses related thereto prepared by Goldman Sachs,
Lazard and BofA Merrill Lynch and described below under
The Merger Opinions of Financial Advisors to
Abraxis.
|
The Abraxis board of directors also specifically considered the
following terms of the merger agreement:
|
|
|
|
|
the merger agreement permits Abraxis to respond to, and engage
in discussions with, third parties who make unsolicited
acquisition proposals, and permits the board of directors to
terminate the merger agreement to accept a superior proposal
prior to the stockholder vote at the special meeting;
|
|
|
|
the voting agreement entered into by Dr. Soon-Shiong and
his related entities terminates if the merger agreement is
terminated by Abraxis to accept a superior proposal, allowing
the principal stockholders to support such superior proposal;
|
|
|
|
the limited and customary conditions to the parties
obligations to complete the merger and the fact that there is no
financing condition to Celgenes obligations;
|
|
|
|
the customary nature of the representations, warranties and
covenants of Abraxis in the merger agreement; and
|
|
|
|
a covenant requiring that Celgene use its reasonable best
efforts to register the CVRs under the Securities Act and cause
those securities to be listed on The NASDAQ Global Select Market
or another exchange, electronic trading network or trading
platform as agreed by Abraxis and Celgene and a condition that
the shares of Celgene common stock to be issued in the merger be
listed on The NASDAQ Global Select Market.
|
In addition to the merger agreement, the Abraxis board of
directors also reviewed, considered and discussed the terms and
potential ramifications of the other transaction documents
proposed to be executed in connection with the merger agreement,
including the voting agreement, the form of CVR agreement
(including the potential 20 year duration, the fact that it
covers all current
nab®
pipeline products and the fact that it contains certain
diligence requirements with respect to development and
commercialization), the non-competition agreement pursuant to
which the principal stockholders will be generally prohibited
for ten years after completion of the merger, subject to certain
exceptions, from competing with the Abraxis business in the
United States and all other countries in which Abraxis was
engaged in the business at the time of the merger and the
stockholders agreement pursuant to which certain of the
principal stockholders have agreed not to dispose of any of the
shares of Celgene common stock that they acquired in the merger
for two years and not to transfer more than 25% of the shares of
Celgene common stock held by them immediately after the merger
prior to the third anniversary of the merger.
In the course of its deliberations, the Abraxis board of
directors also considered a variety of risks and other
potentially negative factors, including the following:
|
|
|
|
|
the price of Celgene common stock at the closing of the merger
may vary significantly from the price of Celgene common stock at
the date of the announcement of the merger agreement and the
date of this proxy statement/prospectus and the merger agreement
does not provide for any mechanism to increase the exchange
ratio in such circumstances;
|
|
|
|
the milestones and net sales goals necessary to trigger payments
under the CVRs may not be achieved by Abraxis and Celgene,
potentially impacting the value and marketability of the CVRs;
|
|
|
|
Abraxis has incurred and will continue to incur significant
transaction costs and expenses in connection with the proposed
transaction, regardless of whether or not the merger is
consummated;
|
44
|
|
|
|
|
since the merger consideration includes CVRs (which are
unsecured obligations and are expressly subordinated to all
senior obligations of the issuer), Abraxis stockholders are
subject, with respect to the portion of the merger consideration
represented by the CVRs, to the risk that there may be
limitations on paying amounts as and when they become payable to
the holders of the CVRs;
|
|
|
|
the merger agreement precludes Abraxis from actively soliciting
alternative acquisition proposals from third parties;
|
|
|
|
the deal protection measures in the merger agreement, including
the fact that the merger agreement included a $145 million
termination fee and matching rights, may inhibit other potential
acquirors from submitting potentially superior proposals to
acquire Abraxis and, if Abraxis terminates the merger agreement
to accept a superior proposal, would result in an immediate
$145 million payment obligation to Celgene;
|
|
|
|
if the merger is not consummated for certain reasons, Abraxis
may be required to pay a termination fee to Celgene equal to
$145 million (for a full descriptions of the reasons
Abraxis would be required to pay a termination fee to Celgene,
see The Merger Agreement Termination Fees and
Expenses);
|
|
|
|
the operations of Abraxis will be restricted by interim
operating covenants under the merger agreement during the period
between signing the merger agreement and the closing of the
merger, which could effectively prohibit Abraxis from
undertaking any strategic initiatives or other material
transactions to the detriment of Abraxis and its stockholders;
|
|
|
|
the receipt by a U.S. holder of the merger consideration in
exchange for Abraxis common stock pursuant to the merger will be
a taxable transaction for U.S. federal income tax
purposes; and
|
|
|
|
certain of Abraxis directors and executive officers may
receive certain benefits that are different from, and in
addition to, those of Abraxis other stockholders (See
The Merger Interests of Directors and
Executive Officers of Abraxis in the Merger).
|
The foregoing discussion of the information and factors
considered by the Abraxis board of directors is not exhaustive
but is intended to reflect the material factors considered by
the Abraxis board of directors. The Abraxis board of directors
did not quantify or assign any relative or specific weight to
the various factors that it considered. Rather, the Abraxis
board of directors based its recommendation on the totality of
the information presented to and considered by it. In addition,
individual members of the Abraxis board of directors may have
given different weights to different factors.
After careful consideration, the Abraxis board of directors
unanimously determined that the merger and the other
transactions contemplated by the merger agreement are advisable,
fair to and in the best interests of Abraxis stockholders and
unanimously approved the merger agreement.
Celgenes
Reasons for the Merger
The Celgene board of directors unanimously approved the merger
agreement and the transactions contemplated by the merger
agreement, including the merger. In evaluating the merger
agreement and the transactions contemplated by the merger
agreement, including the merger, the Celgene board of directors
consulted with the management of Celgene and outside legal and
financial advisors for Celgene. In determining to approve the
merger agreement and the transactions contemplated by the merger
agreement, including the merger, the Celgene board of directors
considered numerous factors, including the following:
|
|
|
|
|
the belief that the acquisition of Abraxis accelerates
Celgenes strategy to become a global leader in hematology
and oncology by adding
Abraxane®
to Celgenes existing portfolio of leading cancer therapies;
|
|
|
|
Abraxane®
will provide Celgene with an immediate entry into the solid
tumor therapeutic area (or market) because
Abraxane®
is marketed and approved for second-line line use in metastatic
breast cancer in the United States and certain international
markets. Additionally, based on encouraging clinical data
recently announced at major medical meetings,
Abraxane®
holds the potential to serve patients with a number of other
serious cancers such as non-small cell lung and pancreatic
cancers, as well as melanoma, ovarian cancer, bladder cancer and
first-line metastatic breast cancer;
|
45
|
|
|
|
|
Abraxis core technology, which is known as the
nab®
platform, facilitates the targeting of compounds to tumor cells.
The potential of the nab-technology platform coupled with
Celgenes innovative drug discovery and development
capabilities enhances Celgenes future product pipeline and
its potential to deliver multiple novel anti-cancer agents;
|
|
|
|
The management of Celgene, assisted by advisors for Celgene,
reviewed Abraxis financial condition, results of
operations, business, reputation, risks and prospects, and
concluded that an acquisition of Abraxis provides Celgene with
additional current revenue that could significantly increase if
regulatory approvals for
Abraxane®
in non-small cell lung and pancreatic cancers are received;
|
|
|
|
the exchange ratio of 0.2617 of a share of Celgene common stock
for each share of Abraxis common stock is fixed and will not be
adjusted for fluctuations in the market price of Celgene common
stock or Abraxis common stock and the fact that, because the
exchange ratio under the merger agreement is fixed, the per
share value of the merger consideration to be paid to Abraxis
stockholders upon completion of the merger could be
significantly more or less than its implied value immediately
prior to the announcement of the merger agreement;
|
|
|
|
the resulting percentage ownership interests and voting power
that current Celgene stockholders would have in Celgene
following the merger;
|
|
|
|
the fact that the CVRs will require Celgene to pay additional
consideration only if specified regulatory approval milestones
are achieved for
Abraxane®
or sales of
Abraxane®
and the Abraxis pipeline products exceed at least
$1.0 billion in annual net sales;
|
|
|
|
the terms and conditions of the merger agreement; and
|
|
|
|
current industry, economic and market conditions and trends,
including Abraxis market position.
|
The Celgene board of directors also considered a number of
potentially negative factors in its deliberations considering
the merger, including:
|
|
|
|
|
the risk that the safety
and/or
efficacy results of clinical trials of
Abraxane®
and other Abraxis pipeline products will not support additional
FDA or other regulatory agencies approval of those products;
|
|
|
|
competition and its effect on pricing, spending, third-party
relationships and revenues;
|
|
|
|
the risk that regulatory authorities will condition their
approval of the merger on Celgenes agreement to
divestitures or other actions that could negatively impact the
business and prospects of the Celgene following the completion
of the merger, which Celgene has, subject to limited exceptions,
agreed under the merger agreement to undertake if necessary to
complete the merger;
|
|
|
|
the possible disruption to Celgenes business that may
result from the merger, including the resulting distraction of
the attention of the management of Celgene, and the costs and
expenses associated with completing the merger;
|
|
|
|
the risks that the potential benefits, synergies and cost
savings sought in the merger may not be realized or may not be
realized within the expected time period, and that the cost of
achieving such benefits, synergies and savings may be
significantly higher than estimated;
|
|
|
|
the fact that Celgene has historically sold or otherwise
disposed of non-core assets of companies that it acquires and
may not be able to sell the non-core assets of Abraxis at fair
market value, if at all, and prior to any such sale, Celgene
will be required to expend the resources necessary to maintain
and operate these assets, which may distract from Celgenes
core businesses;
|
|
|
|
potential changes in reimbursement policies or rates for
Abraxane®
or the Abraxis pipeline products;
|
|
|
|
the ability of Celgene and Abraxis to successfully protect and
enforce their respective intellectual property rights; and
|
46
|
|
|
|
|
the other risks described in the section entitled Risk
Factors.
|
In view of the wide variety of factors considered in connection
with its evaluation of the merger and the complexity of these
matters, the Celgene board of directors did not find it useful,
and did not attempt, to quantify, rank or otherwise assign any
relative or specific weights to the factors that it considered
in reaching its determination to approve the merger agreement
and the transactions contemplated by the merger agreement,
including the merger. In addition, individual members of the
Celgene board of directors may have given differing weights to
differed factors. The Celgene board of directors conducted an
overall analysis of the factors described above, including
through discussions with, and inquiry of, the management of
Celgene and outside legal and financial advisors regarding
certain of the matters described above.
Opinions
of Financial Advisors to Abraxis
Merrill
Lynch, Pierce, Fenner & Smith
Incorporated
On June 29, 2010, at a meeting of the Abraxis board of
directors held to evaluate the merger, BofA Merrill Lynch
rendered to the Abraxis board of directors an oral opinion,
which was confirmed by delivery of a written opinion dated
June 30, 2010, to the effect that, as of the date of the
opinion, and based upon and subject to the factors, assumptions
and limitations set forth therein, the merger consideration to
be received in the merger by holders of Abraxis common stock
(other than Dr. Soon-Shiong and his affiliates) was fair,
from a financial point of view, to such holders.
The full text of the written opinion of BofA Merrill Lynch to
the Abraxis board of directors, dated June 30, 2010, which
sets forth assumptions made, procedures followed, matters
considered and limitations on the review undertaken in
connection with the opinion, is attached to this proxy
statement/prospectus as Annex E. The following summary of
BofA Merrill Lynchs opinion is qualified in its entirety
by reference to the full text of the opinion. BofA Merrill Lynch
provided its opinion to the Abraxis board of directors for the
benefit and use of the Abraxis board of directors in connection
with and for purposes of its evaluation of the merger
consideration from a financial point of view. BofA Merrill
Lynchs opinion does not address any other aspect of the
merger and does not constitute a recommendation to any
stockholder as to how to vote or act in connection with the
merger or any related matter.
In connection with rendering its opinion, BofA Merrill Lynch:
|
|
|
|
|
reviewed certain publicly available business and financial
information relating to Abraxis and Celgene;
|
|
|
|
reviewed certain internal financial and operating information
with respect to the business, operations and prospects of
Abraxis furnished by or discussed with the management of
Abraxis, including certain internal financial analyses and
forecasts relating to Abraxis prepared by Abraxis management, or
the Abraxis forecasts;
|
|
|
|
reviewed a certain research analysts publicly available
financial forecasts relating to Celgene, which we refer to as
the Celgene Analyst Forecasts, as well as publicly available
consensus financial forecasts relating to Celgene, which we
refer to as the Celgene Consensus Forecasts, and together with
the Celgene Analyst Forecasts, the Celgene Public Forecasts;
|
|
|
|
reviewed estimates as to the amount and timing of certain cost
savings and operating synergies anticipated by the management of
Abraxis to result from the merger;
|
|
|
|
discussed the past and current business, operations, financial
condition and prospects of Abraxis with members of senior
managements of Abraxis and Celgene, and discussed the past and
current business, operations, financial condition and prospects
of Celgene with members of senior managements of Abraxis and
Celgene;
|
|
|
|
reviewed the potential pro forma financial impact of the merger
on the future financial performance of Celgene, including the
potential effect on Celgenes estimated earnings per share;
|
|
|
|
reviewed the trading histories for Abraxis common stock and
Celgene common stock and a comparison of such trading histories
with the trading histories of other companies BofA Merrill Lynch
deemed relevant;
|
|
|
|
compared certain financial and stock market information of
Abraxis and Celgene with similar information of other companies
BofA Merrill Lynch deemed relevant;
|
47
|
|
|
|
|
compared certain financial terms of the merger to financial
terms, to the extent publicly available, of other transactions
BofA Merrill Lynch deemed relevant;
|
|
|
|
considered the results of its efforts on behalf of Abraxis to
solicit, at the direction of Abraxis, indications of interest
and definitive proposals from third parties with respect to a
possible acquisition of Abraxis;
|
|
|
|
reviewed the merger agreement and certain ancillary agreements
thereto; and
|
|
|
|
performed such other analyses and studies and considered such
other information and factors as BofA Merrill Lynch deemed
appropriate.
|
In arriving at its opinion, BofA Merrill Lynch assumed and
relied upon, without independent verification, the accuracy and
completeness of the financial and other information and data
publicly available or provided to or otherwise reviewed by or
discussed with it and relied upon the assurances of the
managements of Abraxis and Celgene that they were not aware of
any facts or circumstances that would make such information or
data inaccurate or misleading in any material respect. With
respect to the Abraxis forecasts and the estimates as to the
amount and timing of certain cost savings and operating
synergies anticipated by the managements of Abraxis to result
from the merger, BofA Merrill Lynch was advised by Abraxis, and
assumed that they were reasonably prepared on bases reflecting
the best currently available estimates and good faith judgments
of the management of Abraxis as to the future financial
performance of Abraxis and the other matters covered thereby.
The management of Celgene did not provide BofA Merrill Lynch
with, and BofA Merrill Lynch did not have access to, financial
forecasts relating to Celgene prepared by the management of
Celgene, but was directed by management of Celgene to the
Celgene Consensus Forecasts. At Abraxis direction, BofA
Merrill Lynch assumed, that the Celgene Analyst Forecasts and
the Celgene Consensus Forecasts are a reasonable basis upon
which to evaluate the future financial performance of Celgene
and, at Abraxis direction, BofA Merrill Lynch used the
Celgene Public Forecasts in performing its analyses. BofA
Merrill Lynch did not make or was not provided with any
independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of Abraxis or Celgene, nor did it make
any physical inspection of the properties or assets of Abraxis
or Celgene. BofA Merrill Lynch did not evaluate the solvency or
fair value of Abraxis or Celgene under any state, federal or
other laws relating to bankruptcy, insolvency or similar
matters. BofA Merrill Lynch assumed, at the direction of
Abraxis, that the merger would be consummated in accordance with
its terms, without waiver, modification or amendment of any
material term, condition or agreement, that the CVRs will not be
redeemed and that, in the course of obtaining the necessary
governmental, regulatory and other approvals, consents, releases
and waivers for the merger, no delay, limitation, restriction or
condition, including any divestiture requirements or amendments
or modifications, would be imposed that would have an adverse
effect on Abraxis, Celgene or the contemplated benefits of the
merger in any way meaningful to its analysis.
BofA Merrill Lynch expressed no view or opinion as to any terms
or other aspects of the merger (other than the merger
consideration to the extent expressly specified in its opinion),
including, without limitation, the form or structure of the
merger. BofA Merrill Lynchs opinion was limited to the
fairness, from a financial point of view, of the merger
consideration to be received in the merger by holders of Abraxis
common stock (other than Dr. Soon-Shiong and his
affiliates) and no opinion or view was expressed with respect to
any consideration received in connection with the merger by the
holders of any other class of securities, creditors or other
constituencies of any party. In addition, no opinion or view was
expressed with respect to the fairness (financial or otherwise)
of the amount, nature or any other aspect of any compensation to
any of the officers, directors or employees of any party to the
merger, or class of such persons, relative to the merger
consideration. Furthermore, no opinion or view was expressed as
to the relative merits of the merger in comparison to other
strategies or transactions that might be available to Abraxis or
in which Abraxis might engage or as to the underlying business
decision of Abraxis to proceed with or effect the merger. BofA
Merrill Lynch did not express any opinion as to what the value
of Celgene common stock actually will be when issued or the
prices at which Abraxis common stock, Celgene common stock or
the CVRs will trade at any time, including following
announcement or consummation of the merger. In addition, BofA
Merrill Lynch expressed no opinion or recommendation as to how
any stockholder should vote or act in connection with the merger
or any related matter.
BofA Merrill Lynchs opinion was necessarily based on
financial, economic, monetary, market and other conditions and
circumstances as in effect on, and the information made
available to BofA Merrill Lynch as of, the
48
date of its opinion. It should be understood that subsequent
developments may affect its opinion, and BofA Merrill Lynch does
not have any obligation to update, revise or reaffirm its
opinion. The issuance of BofA Merrill Lynchs opinion was
approved by BofA Merrill Lynchs Americas Fairness Opinion
Review Committee.
Abraxis agreed to pay BofA Merrill Lynch for its services in
connection with the merger an aggregate fee of $13 million
(provided, that Abraxis may in its sole discretion, pay an
additional advisory fee of up to $2 million), all of which
is contingent upon the consummation of the merger. Abraxis also
agreed to reimburse BofA Merrill Lynch for its reasonable
expenses and to indemnify BofA Merrill Lynch and certain related
parties against certain liabilities arising out of its
engagement.
BofA Merrill Lynch and its affiliates comprise a full service
securities firm and commercial bank engaged in securities,
commodities and derivatives trading, foreign exchange and other
brokerage activities, and principal investing as well as
providing investment, corporate and private banking, asset and
investment management, financing and financial advisory services
and other commercial services and products to a wide range of
companies, governments and individuals. In the ordinary course
of their businesses, BofA Merrill Lynch and its affiliates
invest on a principal basis or on behalf of customers or manage
funds that invest, make or hold long or short positions, finance
positions or trade or otherwise effect transactions in equity,
debt or other securities or financial instruments (including
derivatives, bank loans or other obligations) of Abraxis,
Celgene and certain of their respective affiliates.
BofA Merrill Lynch and its affiliates in the past have provided,
currently are providing, and in the future may provide,
investment banking, commercial banking and other financial
services to Celgene and have received or in the future may
receive compensation for the rendering of these services,
including (1) having acted as a financial advisor to
Celgene in connection with an acquisition transaction and
(2) having acted or acting as lender under, or otherwise
having extended credit under, certain letters of credit and
other arrangements with Celgene.
BofA Merrill Lynch is an internationally recognized investment
banking firm that is regularly engaged in the valuation of
businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions
of listed and unlisted securities, private placements and
valuations for corporate and other purposes. Abraxis selected
BofA Merrill Lynch as a financial advisor in connection with the
merger because of its qualifications, expertise and reputation
in investment banking and mergers and acquisitions as well as
its familiarity with Abraxis and its business.
Goldman,
Sachs & Co.
On June 29, 2010, at a meeting of Abraxis board of
directors held to evaluate the merger, Goldman Sachs rendered to
the board of directors of Abraxis an oral opinion, which was
confirmed by delivery of a written opinion dated June 30,
2010, to the effect that, as of the date of the opinion, and
based upon and subject to the factors, assumptions and
limitations set forth therein, the right to receive 0.2617 of a
share of Celgene common stock, which we refer to as the stock
consideration, $58.00 in cash, which we refer to as the cash
consideration and together with the stock consideration as the
upfront consideration, and a CVR issued by Celgene under the CVR
agreement, which we refer to as the CVR consideration, to be
paid to the holders of shares of Abraxis common stock pursuant
to the merger agreement was fair from a financial point of view
to such holders.
The full text of the written opinion of Goldman Sachs, dated
June 30, 2010, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion, is attached to
this proxy statement/prospectus as Annex F. The following
summary of Goldman Sachs opinion is qualified in its
entirety by reference to the full text of the opinion. Goldman
Sachs provided its opinion for the information and assistance of
the Abraxis board of directors in connection with its
consideration of the merger. The Goldman Sachs opinion is not a
recommendation as to how any holder of Abraxis common stock
should vote with respect to the merger or any other matter.
In connection with rendering the opinion described above and
performing its related financial analyses, Goldman Sachs
reviewed, among other things:
|
|
|
|
|
the merger agreement;
|
|
|
|
annual reports to stockholders and Annual Reports on
Form 10-K
of Abraxis for the 3 years ended December 31, 2009,
and of Celgene for the 5 years ended December 31, 2009;
|
49
|
|
|
|
|
Abraxis initial registration statement on Form 10;
|
|
|
|
certain interim reports to stockholders and Quarterly Reports on
Form 10-Q
of Abraxis and Celgene;
|
|
|
|
certain other communications from Abraxis and Celgene to their
stockholders, respectively;
|
|
|
|
certain publicly available research analyst reports for Abraxis
and Celgene; and
|
|
|
|
the Abraxis forecasts and certain cost savings and operating
synergies projected by the management of Abraxis to result from
the merger, or the synergies, each as approved by Abraxis for
use by Goldman Sachs.
|
The management of Celgene did not make available its forecasts
of the future financial performance of Celgene. With
Abraxis consent, Goldman Sachs review of the future
financial performance of Celgene was limited to the current
consensus forecasts for Celgene, publicly available estimates of
a certain research analyst and its discussions with the
management of Celgene regarding the current consensus forecasts
for Celgene. Goldman Sachs also held discussions with members of
the senior managements of Abraxis and Celgene regarding their
assessment of the strategic rationale for, and the potential
benefits of, the merger and the past and current business
operations, financial condition and future prospects of Abraxis
and Celgene. In addition, Goldman Sachs reviewed the reported
price and trading activity for shares of Abraxis common stock
and Celgene common stock, respectively, compared certain
financial and stock market information for Abraxis and Celgene
with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial
terms of certain recent business combinations in the
pharmaceutical industry specifically and in other industries
generally and performed such other studies and analyses, and
considered such other factors, as it deemed appropriate.
Goldman Sachs relied upon and assumed, without assuming any
responsibility for independent verification, the accuracy and
completeness of all of the financial, legal, regulatory, tax,
accounting and other information provided to, discussed with or
reviewed by it. In that regard, Goldman Sachs assumed, with
Abraxis consent, that the Abraxis forecasts and the
synergies have been reasonably prepared on a basis reflecting
the best then available estimates and judgments of the
management of Abraxis. In addition, Goldman Sachs did not make
any independent evaluation or appraisal of the assets and
liabilities (including any contingent, derivative or other
off-balance-sheet assets and liabilities) of Abraxis or Celgene
or any of their respective subsidiaries and was not furnished
with any such evaluation or appraisal. Goldman Sachs also
assumed that all governmental, regulatory or other consents and
approvals necessary for the consummation of the merger would be
obtained without any adverse effect on Abraxis or Celgene or on
the expected benefits of the merger in any way meaningful to its
analysis. Goldman Sachs also assumed that the merger will be
consummated on the terms set forth in the merger agreement,
without the waiver or modification of any term or condition the
effect of which would be in any way meaningful to its analysis
and that the CVRs will not be redeemed. Goldman Sachs
opinion did not address the underlying business decision of
Abraxis to engage in the merger, or the relative merits of the
merger as compared to any strategic alternatives that may be
available to Abraxis, nor did it address any legal, regulatory,
tax or accounting matters.
Goldman Sachs opinion addressed only the fairness from a
financial point of view, as of the date of its opinion, of the
merger consideration to be paid to the holders of shares of
Abraxis common stock pursuant to the merger agreement. Goldman
Sachs did not express any view on, and its opinion did not
address, any other term or aspect of the merger agreement or the
merger or any term or aspect of any other agreement or
instrument contemplated by the merger agreement or entered into
or amended in connection with the merger, including, without
limitation, the stockholders agreement and the
non-competition agreement, the fairness of the merger to, or any
consideration received in connection therewith by, the holders
of any other class of securities, creditors or other
constituencies of Abraxis; nor as to the fairness of the amount
or nature of any compensation to be paid or payable to any of
the officers, directors or employees of Abraxis, or class of
such persons in connection with the merger, whether relative to
the merger consideration to be paid to the holders pursuant to
the merger agreement or otherwise. In addition, Goldman Sachs
expressed no opinion as to the prices at which the Celgene
common stock or the CVRs would trade at any time or as to the
impact of the merger on the solvency or viability of Abraxis or
Celgene or the ability of Abraxis to pay its obligations when
they come due. Goldman Sachs opinion was necessarily based
on economic, monetary, market and other conditions as in effect
on, and the information made available to Goldman Sachs as of,
the date of its opinion and Goldman Sachs assumed no
responsibility for updating, revising or reaffirming its
50
opinion based on circumstances, developments or events occurring
after the date of its opinion. Goldman Sachs advisory
services and the opinion expressed in its opinion were provided
for the information and assistance of the Abraxis board of
directors in connection with its consideration of the merger and
such opinion did not constitute a recommendation as to how any
holder of shares of Abraxis common stock should vote with
respect to the merger or any other matter. Goldman Sachs
opinion was approved by a fairness committee of Goldman Sachs.
Goldman, Sachs and its affiliates are engaged in investment
banking and financial advisory services, commercial banking,
securities trading, investment management, principal investment,
financial planning, benefits counseling, risk management,
hedging, financing, brokerage activities and other financial and
non-financial activities and services for various persons and
entities. In the ordinary course of these activities and
services, Goldman Sachs and its affiliates may at any time make
or hold long or short positions and investments, as well as
actively trade or effect transactions, in the equity, debt and
other securities (or related derivative securities) and
financial instruments (including bank loans and other
obligations) of third parties, Abraxis, Celgene and any of their
respective affiliates and affiliates of Dr. Soon-Shiong or
any currency or commodity that may be involved in the merger for
their own account and for the accounts of their customers.
Goldman Sachs acted as financial advisor to Abraxis in
connection with, and participated in certain of the negotiations
leading to, the merger. Goldman Sachs has provided certain
investment banking and other financial services to Abraxis and
its affiliates from time to time, for which the investment
banking division of Goldman Sachs has received, and may receive,
compensation, including having acted as financial advisor to APP
Pharmaceuticals, Inc., a former affiliate of Abraxis and
Dr. Soon-Shiong,
in its acquisition by Fresenius Kabi Pharmaceuticals Holding,
LLC. Goldman Sachs also may provide investment banking and other
financial services to Abraxis, Celgene, Dr. Soon-Shiong and
their respective affiliates in the future, for which the
investment banking division of Goldman Sachs may receive
compensation.
Abraxis selected Goldman Sachs as a financial advisor because of
its qualifications, expertise and reputation in investment
banking and mergers and acquisitions as well as its familiarity
with Abraxis and its business. Abraxis agreed to pay Goldman
Sachs for its services in connection with the merger an
aggregate fee of $13 million (provided, that Abraxis may in
its sole discretion, pay an additional advisory fee of up to
$2 million), all of which is contingent upon the
consummation of the merger. In addition, Abraxis has agreed to
reimburse Goldman Sachs for its reasonable expenses arising in
connection with the engagement, including attorneys fees
and disbursements, plus any sales, use or similar taxes arising
in connection with the engagement, and to indemnify Goldman
Sachs and related persons against various liabilities, including
certain liabilities under the federal securities laws.
Lazard
Frères & Co. LLC
Lazard rendered its oral opinion to the Abraxis board of
directors that, as of June 29, 2010, and based upon and
subject to the factors, assumptions and limitations set forth
therein, the merger consideration to be paid to holders of
Abraxis common stock (other than Dr. Soon-Shiong, any of
his affiliates, Celgene and merger sub) in the merger was fair
from a financial point of view to such holders. Lazard
subsequently confirmed its earlier opinion by delivery of a
written opinion dated June 30, 2010.
The full text of the written opinion of Lazard, dated
June 30, 2010, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion, is attached to
this proxy statement/prospectus as Annex G. The following
summary of Lazards opinion is qualified in its entirety by
reference to the full text of the opinion. Lazard provided its
opinion for the benefit of the Abraxis board of directors in
connection with its evaluation of the merger. The Lazard opinion
is not a recommendation to any stockholder as to how such
stockholder should vote or act with respect to the merger or any
matter relating thereto.
Lazards opinion was necessarily based on economic,
monetary, market and other conditions as in effect on, and the
information available to Lazard as of, the date of Lazards
opinion. Lazard assumed no responsibility for updating or
revising its opinion based on circumstances or events occurring
after the date of Lazards opinion. Lazard did not express
any opinion as to the price at which shares of Abraxis common
stock, Celgene common stock or CVRs may trade at any time
subsequent to the announcement of the merger. The following is a
summary of Lazards opinion. You are urged to read
Lazards written opinion carefully in its entirety.
51
In connection with its opinion, Lazard:
|
|
|
|
|
reviewed the financial terms and conditions of the merger
agreement and the ancillary agreements thereto;
|
|
|
|
analyzed certain publicly available historical business and
financial information relating to Abraxis and Celgene;
|
|
|
|
reviewed various financial forecasts and other data provided by
the management of Abraxis relating to the business of Abraxis,
the publicly available estimates of a certain research analyst,
as well as current consensus forecasts for Celgene with respect
to the business of Celgene, or the Celgene public forecasts, and
the synergies, as approved for Lazards use by Abraxis;
|
|
|
|
held discussions with members of the senior managements of
Abraxis and Celgene with respect to the businesses and prospects
of Abraxis and Celgene, respectively;
|
|
|
|
reviewed public information with respect to certain other
companies in lines of business Lazard believed to be generally
relevant in evaluating the businesses of Abraxis and Celgene,
respectively;
|
|
|
|
reviewed the financial terms of certain business combinations
involving companies in lines of business Lazard believed to be
generally relevant in evaluating the businesses of Abraxis and
Celgene, respectively;
|
|
|
|
reviewed the historical stock prices and trading volumes of
Abraxis common stock and Celgene common stock; and
|
|
|
|
conducted such other financial studies, analyses and
investigations as Lazard deemed appropriate.
|
Lazard assumed and relied upon the accuracy and completeness of
the foregoing information, without independent verification of
such information. Lazard did not conduct any independent
valuation or appraisal of any of the assets or liabilities
(contingent or otherwise) of Abraxis or Celgene or concerning
the solvency or fair value of Abraxis or Celgene, and Lazard was
not furnished with such valuation or appraisal. With respect to
the financial forecasts related to Abraxis it reviewed, Lazard
assumed, with the consent of Abraxis, that they have been
reasonably prepared on bases reflecting the best then currently
available estimates and judgments of the management of Abraxis
as to the future financial performance of Abraxis. The
management of Celgene did not make available its forecasts of
the future financial performance of Celgene but directed Lazard
to current consensus forecasts for Celgene. Lazard assumed,
with the consent of Abraxis, that the Celgene public forecasts
are a reasonable basis upon which to evaluate the future
financial performance of Celgene, and are appropriate for Lazard
to utilize in its analyses. Lazard assumed, with the consent of
Abraxis, that the Celgene public forecasts are a reasonable
basis upon which to evaluate the future financial performance of
Celgene, and are appropriate for Lazard to utilize in its
analyses. Lazard assumed no responsibility for and expressed no
view as to such forecasts or the assumptions on which they were
based.
In rendering its opinion, Lazard assumed, with Abraxis
consent, that the merger would be consummated on the terms
described in the merger agreement, without any waiver or
modification of any material terms or conditions and that the
CVRs will not be redeemed. Lazard further assumed, with
Abraxis consent, that obtaining the necessary regulatory
or third party approvals and consents for the merger will not
have an adverse effect on Abraxis or Celgene in any way
meaningful to its analysis. Lazard did not express any opinion
as to any tax or other consequences that might result from the
merger, nor did Lazards opinion address any legal, tax,
regulatory or accounting matters, as to which Lazard understood
that Abraxis obtained such advice as it deemed necessary from
qualified professionals. Lazard expressed no view or opinion as
to any terms or other aspects of the merger (other than the
merger consideration to the extent expressly specified in
Lazards opinion). In addition, Lazard expressed no view or
opinion as to the fairness of the amount or nature of, or any
other aspects relating to, the compensation to any officers,
directors or employees of any parties to the merger, or class of
such persons, or the holders of any class of securities other
than Abraxis common stock, creditors, or other constituencies of
Abraxis; in each case relative to the merger consideration or
otherwise. Lazard noted that Celgene, merger sub and certain
stockholders of Abraxis agreed to enter into the voting
agreement pursuant to which such stockholders, subject to the
terms thereof, agreed to vote their shares of Abraxis common
stock in favor of adoption of the merger agreement.
52
Lazards engagement and the opinion are for the benefit of
the Abraxis board of directors and Lazards opinion was
rendered to the Abraxis board of directors in connection with
its evaluation of the merger. Lazards opinion was not
intended to and did not constitute a recommendation to any
stockholder as to how such stockholder should vote or act with
respect to the merger or any matter relating thereto.
Abraxis agreed to pay Lazard for its services in connection with
the merger an aggregate fee of $13 million (provided, that
Abraxis may in its sole discretion, pay an additional advisory
fee of up to $2 million), all of which is contingent upon
the consummation of the merger. Abraxis has also agreed to
reimburse Lazard for its reasonable expenses incurred in
connection with the engagement and to indemnify Lazard and
certain related parties against certain liabilities under
certain circumstances that may arise out of the rendering of its
advice, including certain liabilities under U.S. federal
securities laws. Lazard in the past provided investment banking
services to Abraxis, including having acted as financial advisor
to APP Pharmaceuticals, Inc., a former affiliate of Abraxis, in
its acquisition by Fresenius Kabi Pharmaceuticals Holding, LLC,
for which Lazard received compensation. In addition, in the
ordinary course of their respective businesses, Lazard
Frères & Co. LLC and LFCM Holdings LLC (an entity
indirectly owned in large part by managing directors of Lazard
Frères & Co. LLC) and their respective
affiliates may actively trade securities of Abraxis
and/or the
securities of Celgene and certain of their respective affiliates
for their own accounts and for the accounts of their customers
and, accordingly, may at any time hold a long or short position
in such securities. The issuance of Lazards opinion was
approved by the Opinion Committee of Lazard.
Lazard is an internationally recognized investment banking firm
providing a full range of financial advisory and other services.
Abraxis selected Lazard as a financial advisor because of its
qualifications, expertise and reputation in investment banking
and mergers and acquisitions, as well as its familiarity with
the business of Abraxis.
Financial
Analyses by Financial Co-Advisors
The following is a summary of the material financial analyses
delivered by BofA Merrill Lynch, Goldman Sachs and Lazard, which
we refer to collectively as the financial
co-advisors, to the Abraxis board of directors in
connection with rendering their respective opinions described
above. The following summary, however, does not purport to be a
complete description of the financial analyses performed by the
financial co-advisors, nor does the order of analyses described
represent relative importance or weight given to those analyses
by the financial
co-advisors.
Some of the summaries of the financial analyses include
information presented in tabular format. In order to fully
understand the financial analyses performed by the financial
co-advisors, the tables must be read together with the full text
of each summary and are alone not a complete description of the
financial co-advisors financial analyses. Considering the
data set forth in the tables below without considering the
narrative description of the financial analyses, including the
methodologies and assumptions underlying the analyses, could
create a misleading or incomplete view of the financial
co-advisors financial analyses. Except as otherwise noted,
the following quantitative information, to the extent that it is
based on market data, is based on market data as it existed on
or before June 29, 2010, and is not necessarily indicative
of current market conditions.
The preparation of fairness opinions is a complex process
involving various determinations as to the most appropriate and
relevant methods of financial analysis and the application of
those methods to particular circumstances and, therefore, is not
necessarily susceptible to partial analysis or summary
description. Selecting portions of the analyses or of the
summary set forth above, without considering the analyses as a
whole, could create an incomplete view of the processes
underlying each financial co-advisors opinion. In arriving
at their respective fairness determination, the financial
co-advisors considered the results of all of their analyses and
did not attribute any particular weight to any factor or
analysis considered by them. Rather, each financial co-advisor
made its determination as to fairness on the basis of its
experience and professional judgment after considering the
results of all of its analyses. No company or transaction used
in the analyses below as a comparison is directly comparable to
Abraxis or the merger.
The financial co-advisors prepared these analyses solely for
purposes of, and the analyses were delivered to the Abraxis
board of directors in connection with, their provision of their
respective opinions to the Abraxis board of directors as to the
fairness from a financial point of view of the merger
consideration to be received by the holders of Abraxis common
stock (except for certain holders identified in their respective
opinions) pursuant to the merger
53
agreement to such holders. These analyses do not purport to be
appraisals nor do they necessarily reflect or purport to reflect
the prices at which businesses or securities actually may be
sold or the prices at which any securities have traded or may
trade at anytime in the future. Analyses based upon forecasts of
future results are not necessarily indicative of actual future
results, which may be significantly more or less favorable than
suggested by these analyses. Because these analyses are
inherently subject to uncertainty, being based upon numerous
factors or events beyond the control of the parties or their
respective advisors, none of Abraxis, BofA Merrill Lynch,
Goldman Sachs, Lazard or any other person assumes responsibility
if future results are materially different from those forecast.
The type and amount of consideration payable in the merger was
determined through arms-length negotiations between
Abraxis and Celgene, rather than by any financial advisor, and
was approved by the Abraxis board of directors. The financial
co-advisors did not recommend any specific merger consideration
to the Abraxis board of directors or to Abraxis or that any
given merger consideration constituted the only appropriate
consideration for the merger. The decision to enter into the
merger agreement was solely that of the Abraxis board of
directors. The opinions of financial co-advisors were some of
many factors taken into consideration by the Abraxis board of
directors in its evaluation of the proposed merger.
Consequently, the analyses described below should not be viewed
as determinative of the opinion of the Abraxis board of
directors with respect to the merger consideration or of whether
the Abraxis board of directors would have been willing to
determine that a different merger consideration was fair.
Historical Stock Trading Analysis. The
financial co-advisors analyzed the implied equity premium per
share of Abraxis common stock represented by each of
(1) the $72.00 per share implied value of the upfront
consideration, without considering any potential CVR payout,
(2) the net present value of the merger consideration
determined by adding the $72.00 per share implied value of the
upfront consideration and the present value (discounted at 11%)
of potential CVR payouts calculated using the
probability-adjusted forecast prepared by Abraxis management and
(3) the nominal value of the merger consideration
determined by adding the $72.00 per share implied value of the
upfront consideration and the undiscounted amounts of the
potential CVR payouts calculated using the unadjusted forecast
prepared by Abraxis management, in each case as compared to
(w) the closing price per share of the Abraxis common stock
on June 28, 2010, (x) the high per share price of the
Abraxis common stock over the 52 week period ended
June 28, 2010, (y) the volume weighted average price
per share, or VWAP, over the 30 calendar days ended
June 28, 2010, and (z) the closing price per share of
the Abraxis common stock on June 1, 2010, the first trading
day within the 30 calendar days prior to June 28, 2010. The
probability-adjusted forecast used to calculate the
probability-adjusted CVR payout for purpose of this analysis
reflected Abraxis managements estimates of the probability
of receiving regulatory approval for use of
Abraxane®
for additional indications and Abraxis managements
estimates of the probability of Celgene achieving estimated
sales for
Abraxane®
using Celgenes commercial capabilities. The potential
unadjusted CVR payout calculation assumes
Abraxane®
sales are achieved without any probability adjustment. Fully
diluted share values used in the analysis were calculated
assuming exercise of options using the treasury method based on
a $72.00 implied value of the upfront consideration.
The results of these analyses are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NPV of Merger
|
|
Nominal Value of
|
|
|
Implied Value of
|
|
Consideration
|
|
Merger
|
|
|
the Upfront
|
|
(Probability-
|
|
Consideration
|
|
|
Consideration
|
|
Adjusted
|
|
(Unadjusted CVR
|
|
|
(w/o CVR)
|
|
CVR Payout)
|
|
Payout)
|
|
Implied Value per Share
|
|
$
|
72.00
|
|
|
$
|
84.80
|
|
|
$
|
106.69
|
|
% Premium to June 28, 2010 ($63.00)
|
|
|
14.3
|
%
|
|
|
34.6
|
%
|
|
|
69.4
|
%
|
% Premium to 52 week high ($63.00)
|
|
|
14.3
|
%
|
|
|
34.6
|
%
|
|
|
69.4
|
%
|
% Premium to
1-Month VWAP
($56.62)
|
|
|
27.2
|
%
|
|
|
49.8
|
%
|
|
|
88.4
|
%
|
% Premium to
1-Month Spot
($50.81)
|
|
|
41.7
|
%
|
|
|
66.9
|
%
|
|
|
110.0
|
%
|
Implied Multiples Analysis. In addition, the
financial co-advisors calculated implied multiples of
(1) the implied enterprise value of Abraxis determined
based on (x) the $72.00 per share implied value of the
upfront consideration, without considering any potential CVR
payout, (y) the net present value of the merger
consideration determined by adding the $72.00 per share implied
value of the upfront consideration and the present value
(discounted at 11%) of potential CVR payouts calculated using
the probability-adjusted forecast prepared by
54
Abraxis management and (z) the nominal value of the merger
consideration determined by adding the $72.00 per share implied
value of the upfront consideration and the undiscounted amounts
of the potential CVR payouts calculated using the unadjusted
forecast prepared by Abraxis management, to (2) (x) the
actual revenues of Abraxis for the twelve months ended
March 31, 2010, and (y) Abraxis managements
probability-adjusted estimate of Abraxis 2010 stand-alone
revenues. The probability-adjusted forecast used to calculate
the probability-adjusted CVR payouts for purpose of this
analysis reflected Abraxis managements estimates of the
probability of receiving regulatory approval for use of
Abraxane®
for additional indications and Abraxis managements
estimates of the probability of Celgene achieving estimated
sales for
Abraxane®
using Celgenes commercial capabilities. The
probability-adjusted estimates of Abraxis 2010 stand-alone
revenues used for purposes of this analysis reflected Abraxis
managements probability-adjusted estimates of achieving
potential 2010 net sales for
Abraxane®
using Abraxis commercial capabilities. The potential
unadjusted CVR payout calculation assumes
Abraxane®
sales are achieved without any probability adjustment. Fully
diluted share values used in the analysis were calculated
assuming exercise of options using the treasury method based on
a $72.00 implied value of the upfront consideration.
The results of these implied multiples analyses are summarized
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NPV of Merger
|
|
Nominal Value of
|
|
|
Implied Value of
|
|
Consideration
|
|
Merger
|
|
|
the Upfront
|
|
(Probability-
|
|
Consideration
|
|
|
Consideration
|
|
Adjusted
|
|
(Unadjusted CVR
|
|
|
(w/o CVR)
|
|
CVR Payout)
|
|
Payout)
|
|
Enterprise Value/Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
LTM (March 31, 2010)
|
|
|
7.2
|
x
|
|
|
8.6
|
x
|
|
|
10.9
|
x
|
2010 Estimate
|
|
|
7.1
|
x
|
|
|
8.4
|
x
|
|
|
10.6
|
x
|
Selected Companies Analysis. The financial
co-advisors reviewed and compared certain financial information
for Abraxis to corresponding financial information and multiples
for the following publicly traded corporations:
|
|
|
|
|
Amylin Pharmaceuticals, Inc.
|
|
|
|
United Therapeutics Corporation
|
|
|
|
BioMarin Pharmaceutical Inc.
|
|
|
|
Regeneron Pharmaceuticals, Inc.
|
|
|
|
Cubist Pharmaceuticals, Inc.
|
|
|
|
Onyx Pharmaceuticals, Inc.
|
The companies included were chosen because they are publicly
traded companies with operations that for purposes of analysis
may in certain respects be considered similar to those of
Abraxis. However, none of the selected companies is directly
comparable to Abraxis.
The financial co-advisors calculated and compared multiples of
enterprise value to estimated 2010 revenues for Abraxis and for
the selected company. For purposes of this analysis, enterprise
value was calculated for Abraxis and for the selected companies
to equal the fully diluted market value of the companys
common equity as of the close of trading on June 28, 2010
plus the book value of the companys debt, minority
interest and preferred shares, less the companys cash and
cash equivalents as reflected in the companys most recent
SEC filings. For purposes of this analysis, the co-financial
advisors used Abraxis managements probability-adjusted
estimate of Abraxis stand-alone 2010 revenues. Estimated
2010 revenues used for each of the selected companies reflected
consensus estimates of financial analysts as published by
Thomson.
The derived multiples are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Companies
|
|
|
Enterprise Value as a Multiple of:
|
|
Range
|
|
Median
|
|
Abraxis
|
|
2010 Estimated Revenue
|
|
|
1.6x-5.4
|
x
|
|
|
4.0
|
x
|
|
|
6.0x
|
|
55
The financial co-advisors then applied the low to high range of
the multiples of 1.6x to 5.4x calculated for the selected
companies and applied them to Abraxis managements
probability-adjusted estimate of Abraxis 2010 stand-alone
revenue. Adjusting for Abraxis estimated net debt at
June 30, 2010, this resulted in illustrative per share
value indications for the Abraxis common stock, rounded to the
nearest dollar, ranging from $19.00 to $56.00.
Selected Precedent Transactions Analysis. The
financial co-advisors analyzed, to the extent publicly
available, certain information relating to the following
selected transactions:
|
|
|
|
|
Astellas Pharma Inc.s acquisition of OSI Pharmaceuticals,
Inc. announced in May 2010;
|
|
|
|
Bristol-Myers Squibb Companys acquisition of Medarex, Inc.
announced in July 2009;
|
|
|
|
Johnson & Johnsons acquisition of Cougar
Biotechnology announced in May 2009;
|
|
|
|
GlaxoSmithKline plcs acquisition of Stiefel Laboratories
Inc. announced in April 2009;
|
|
|
|
Gilead Sciences, Inc.s acquisition of CV Therapeutics
announced in March 2009;
|
|
|
|
Eli Lilly and Companys acquisition of ImClone Systems
announced in September 2008;
|
|
|
|
Shionogi Inc.s acquisition of Sciele Pharma Inc. announced
in September 2008;
|
|
|
|
Eisai Co. Ltd.s acquisition of MGI Pharma, Inc. announced
in December 2007;
|
|
|
|
Reckitt Benckiser Plcs acquisition of Adams Respiratory
Therapeutics announced in December 2007;
|
|
|
|
TPG Capitals acquisition of Axcan Pharma announced in
November 2007;
|
|
|
|
GlaxoSmithKline plcs acquisition of Reliant
Pharmaceuticals Inc. announced in November 2007;
|
|
|
|
Celgene Corporations acquisition of Pharmion Corporation
announced in November 2007;
|
|
|
|
AstraZeneca PLCs acquisition of MedImmune Inc. announced
in April 2007; and
|
|
|
|
Schering-Plough Corporations acquisition of Organon
BioSciences NV announced in March 2007.
|
None of the companies, businesses or transactions used in this
analysis is directly comparable to Abraxis or the merger.
For each of the selected transactions, the financial co-advisors
calculated and compared the enterprise value of the target
company calculated based on the purchase price paid in the
transaction as a multiple of latest revenues of the target for
the last four quarter period ended prior to the announcement of
the transaction. The following table presents the results of
this analysis:
|
|
|
|
|
|
|
|
|
|
|
Selected Transactions
|
Enterprise Value as a Multiple of:
|
|
Range
|
|
Median
|
|
LTM Revenue
|
|
|
2.9x-11.3x
|
|
|
|
7.1x
|
|
The financial co-advisors then applied the low to high range of
latest twelve months revenue multiples of 2.9x to 11.3x to
Abraxis revenues for the four quarters ended
March 31, 2010. Adjusting for Abraxis estimated net
debt at June 30, 2010, this resulted in illustrative per
share values for the Abraxis common stock, rounded to the
nearest dollar, ranging from $32.00 to $109.00.
Discounted Cash Flow Analysis. The financial
co-advisors performed an illustrative discounted cash flow,
which we refer to as DCF, analysis on Abraxis using the
stand-alone, probability-adjusted forecast prepared by Abraxis
management to determine a range of implied values per share of
Abraxis common stock. The financial
co-advisors
discounted back to June 30, 2010 the probability-adjusted
projected unlevered after-tax free cash flows for Abraxis
through the end of 2020, using discount rates ranging from 10.0%
to 12.0%, reflecting estimates of Abraxis weighted average
cost of capital and a range of terminal values for Abraxis as of
the end of 2020 derived by multiplying estimated 2020 earnings
before income, tax, depreciation and amortization, or EBITDA,
for Abraxis by multiples ranging between 5x and 9x. This
analysis resulted in illustrative per share value indications
for the Abraxis common stock, ranging from $61.53 to $79.24.
56
Using the stand-alone, probability-adjusted forecast prepared by
Abraxis and based on assumptions and probabilities provided by
Abraxis, the financial co-advisors performed sensitivity
analyses on the DCF analysis. For each sensitivity analysis, the
financial co-advisors applied a discount rate of 11% to the
sensitivity-adjusted, projected unlevered after-tax free cash
flows for Abraxis through the end of 2020 and applied a 7x
terminal multiple to sensitivity-adjusted, projected 2020 EBITDA.
First, the financial co-advisors calculated the sensitivity of
the DCF analysis to commercial success of
Abraxane®.
The sensitivity analysis utilized a range of probabilities of
achieving estimated peak sales for
Abraxane®
in the United States and European Union for various indications.
This analysis resulted in illustrative per share value
indications for the Abraxis common stock, rounded to the nearest
25 cents, ranging from $61.75 to $77.75.
Additionally, the financial co-advisors calculated the
sensitivity of the DCF analysis to a range of assumptions
provided by Abraxis related to the cost of goods sold, selling,
general and administrative expenses (or SG&A), a range of
probabilities of achieving regulatory approval for the use of
Abraxane®
to treat pancreatic cancer, to treat non-small cell lung cancer
under a label that includes a progression free survival claim
and for other new indications. The analysis resulted in
illustrative per share value indications for the Abraxis common
stock, rounded to the nearest 25 cents, ranging from $60.50 to
$83.00.
In addition, the financial co-advisors performed additional
sensitivity analyses applying various hypothetical dates
provided by Abraxis upon which
Abraxane®
could begin to face competition from a substitutable generic
product in the United States and European Union and a
hypothetical scenario provided by Abraxis of gradual competition
from other products. This resulted in illustrative per share
value indications for the Abraxis common stock, rounded to the
nearest 25 cents, ranging from $19.00 to $86.25.
Accretion/Dilution Analysis. The financial
co-advisors analyzed the potential pro forma financial effects
of the merger on Celgenes estimated earnings per share
using the stand-alone, probability-adjusted forecast of Abraxis
net revenues prepared by Abraxis management and publicly
available estimates for Celgene, and taking into account
projected synergies. The financial co-advisors compared the
projected earnings per share of Celgene common stock on a
standalone basis (assuming there is no merger) for 2010, 2011
and 2012 to the projected earnings per share of Celgene on a
pro-forma basis assuming the consummation of the merger. This
analysis indicated that the merger could be dilutive by 11% to
the resulting companys estimated earnings per share for
2010 and accretive by 1% and 13%, respectively, to the resulting
companys estimated earnings per share for 2011 and 2012.
Selected Companies Analysis for Celgene. In
addition to the various financial analyses regarding Abraxis,
the financial co-advisors reviewed and compared certain
financial information for Celgene to corresponding financial
information, ratios and public market multiples for the
following publicly traded corporations:
|
|
|
|
|
Amgen Inc.
|
|
|
|
Gilead Sciences, Inc.
|
|
|
|
Genzyme Corporation
|
|
|
|
Biogen Idec Inc.
|
The companies included were chosen because they are publicly
traded companies with operations that for purposes of analysis
may in certain respects be considered similar to those of
Celgene. However, none of the selected companies is directly
comparable to Celgene.
The financial co-advisors calculated and compared various
financial multiples based on financial data as of June 28,
2010 and information they obtained from FactSet, Celgene filings
and Wall Street research. The multiples of Celgene and each of
the selected companies were based on the most recent publicly
available information. With respect to the selected companies,
the financial co-advisors calculated the following:
|
|
|
|
|
enterprise value as a multiple of EBITDA for 2009 and estimates
for 2010;
|
|
|
|
price as a multiple of earnings per share for 2009 and estimates
for 2010; and
|
57
|
|
|
|
|
price over earnings per share as a multiple of earnings per
share growth rate, or PEG, for 2009 and estimates for 2010.
|
The derived multiples are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Companies
|
|
|
Enterprise Value as a Multiple of:
|
|
Range
|
|
Median
|
|
Celgene
|
|
2009 EBITDA
|
|
|
7.2x-10.8x
|
|
|
|
7.7x
|
|
|
|
18.9x
|
|
2010 EBITDA Estimates
|
|
|
6.0x-10.0x
|
|
|
|
6.8x
|
|
|
|
16.3x
|
|
|
|
|
|
|
|
|
|
|
Selected Companies
|
|
|
Price as a Multiple of:
|
|
Range
|
|
Median
|
|
Celgene
|
|
2009 Earnings per Share
|
|
12.3x-23.6x
|
|
13.7x
|
|
26.9x
|
2010 Earnings per Share Estimates
|
|
10.0x-22.4x
|
|
10.9x
|
|
21.0x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Companies
|
|
|
Price/Earnings per Share as a Multiple of:
|
|
Range
|
|
Median
|
|
Celgene
|
|
2009 Earnings per Share Growth Rate
|
|
0.9-1.6
|
|
|
1.3
|
|
|
|
1.2
|
|
2010 Earnings per Share Growth Rate estimates
|
|
0.7-1.3
|
|
|
1.2
|
|
|
|
0.9
|
|
Certain
Illustrative Projections for Abraxis
In connection with the transaction process, Abraxis management
prepared illustrative projections of the future financial
performance of Abraxis on a stand-alone basis. Abraxis is
including net revenue forecasts from these projections below
because these projections were presented to the Abraxis board of
directors as part of its review of the transaction and provided
to Goldman Sachs, Lazard and BofA Merrill Lynch in connection
with the preparation of their respective fairness opinions and
their associated financial analyses described above under
The Merger Opinions of Financial Advisors to
Abraxis.
The projections below set forth illustrative net revenue
forecasts for Abraxis on a stand-alone basis reflecting
managements estimates of, among other things, the
probability of (1) Abraxis receiving regulatory approval
within various timeframes to allow marketing of
Abraxane®
for different indications and (2) Abraxis achieving certain
sales of
Abraxane®
as a treatment for those different indications, and competition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010E
|
|
2011E
|
|
2012E
|
|
2013E
|
|
2014E
|
|
2015E
|
|
2016E
|
|
2017E
|
|
2018E
|
|
2019E
|
|
2020E
|
|
|
(In millions)
|
|
Net Revenue
|
|
$
|
407
|
|
|
$
|
594
|
|
|
$
|
1,081
|
|
|
$
|
1,633
|
|
|
$
|
2,200
|
|
|
$
|
2,374
|
|
|
$
|
2,555
|
|
|
$
|
2,089
|
|
|
$
|
1,672
|
|
|
$
|
1,350
|
|
|
$
|
1,188
|
|
The illustrative net revenue projections set forth above were
not prepared in connection with a detailed analysis of the
fundamentals of Abraxis business and assets nor were they
prepared on a basis consistent with the historical accounting
policies included in the section titled Managements
Discussion and Analysis of Financial Conditions and Results of
Operations contained in Abraxis Annual Report on
Form 10-K
for the year ended December 31, 2009, which is incorporated
by reference in this proxy statement/prospectus. For more
information, see Where you Can Find More Information
in this proxy statement/prospectus.
The illustrative net revenue projections are not being included
in this proxy statement/prospectus for the purpose of
influencing your decision whether to vote for the adoption of
the merger agreement or exercise appraisal rights with respect
to your shares of Abraxis common stock. Such illustrative net
revenue projections were not prepared in compliance with
U.S. generally accepted accounting principles, which we
refer to as U.S. GAAP, or with published guidelines of the
SEC or the American Institute of Certified Public Accountants
regarding financial projections. Abraxis independent
public registered accounting firm has not examined or compiled
any of the illustrative net revenue projections, expressed any
conclusion or provided any form of assurance with respect to the
illustrative net revenue projections and, accordingly, assumes
no responsibility for them.
Abraxis cautions you that the illustrative net revenue
projections are speculative in nature and based upon subjective
decisions and assumptions. The illustrative net revenue
projections were prepared prior to Abraxis most recent
quarter ended June 30, 2010 and do not reflect actual
results through the end of that quarter. The illustrative
58
net revenue projections are inherently subject to uncertainty
because they are based upon numerous factors and events beyond
the control of the parties and their respective advisors, and
the inclusion of this information should not be regarded as an
indication that any of Abraxis, Celgene or any other person
considered, or now considers, it to be necessarily predictive of
actual future results. Accordingly, none of Celgene, Abraxis or
their respective affiliates or representatives assumes any
responsibility for the accuracy of this information.
While presented with numerical specificity, the illustrative net
revenue projections are necessarily speculative given the time
periods involved and are based upon various assumptions
regarding, among other things, the timing and receipt of future
regulatory approvals of
Abraxane®
for various indications, its market share for treatment of those
indications, the price and market share of
Abraxane®.
The illustrative assumptions are likely to be different than
actual results for any number of reasons, including general
economic conditions, competition and the risks discussed in this
proxy statement/prospectus under the section titled Risk
Factors and the risk factors found under Part I,
Item IA, Risk Factors in Abraxis Annual
Report on
Form 10-K
for the year ended December 31, 2009.
Because the illustrative net revenue projections cover multiple
years, such information by its nature becomes less reliable with
each successive year. The illustrative net revenue projections
also do not take into account any circumstances or events
occurring after the date on which they were prepared and do not
give effect to the transactions contemplated by the merger
agreement, including the merger. Accordingly, there can be no
assurance that the net revenue reflected in the illustrative
financial projections will be realized, and actual results may
vary materially from those reflected in such illustrative
financial projections. You should read the section entitled
Cautionary Statement Regarding Forward-Looking
Statements for additional information regarding the risks
inherent in forward-looking information such as the illustrative
financial projections.
Readers of this proxy statement/prospectus are cautioned not to
place any reliance on the excerpts of the illustrative net
revenue projections set forth above. No representation is made
by Abraxis, Celgene or any other person to any stockholder of
Abraxis or any stockholder of Celgene regarding the ultimate
performance of Abraxis compared to the information included in
the above summary of the illustrative net revenue projections
nor with respect to the value of the CVRs or any payments to be
made under the CVR agreement. In addition, the illustrative net
revenue projections above include forecasts of Abraxis net
revenue in addition to the net revenue forecasted from sales of
Abraxane®
and the Abraxis pipeline products. Any such additional net
revenues is not covered by the CVR agreement and therefore will
not be taken into consideration in determining the amounts
payable to the holders of the CVRs. The inclusion of the
excerpts of the illustrative net revenue projections in this
proxy statement/prospectus should not be regarded as an
indication that such illustrative projections will be an
accurate prediction of future events nor construed as financial
guidance, and they should not be relied on as such. Abraxis has
made no representation to Celgene or any other person concerning
the projected financial data.
Abraxis will not update or otherwise revise the illustrative
net revenue projections to reflect circumstances existing after
the date when made or to reflect the occurrence of future
events, even in the event that any or all of the assumptions
underlying such illustrative net revenue projections are no
longer appropriate.
Interests
of Directors and Executive Officers of Abraxis in the
Merger
When reading this proxy statement/prospectus, you should be
aware that the executive officers and directors of Abraxis may
have interests in the merger that may be different from, or in
addition to, the interests of other Abraxis stockholders
generally. The Abraxis board of directors was aware of these
interests and considered them, among other factors, in
unanimously determining that the transactions contemplated by
the merger agreement, including the merger, are advisable and
fair to, and in the best interest of, Abraxis and its
stockholders, adopting the merger agreement and declaring
advisable the merger. A description of these interests is set
forth below.
Value
of Equity Awards
Each executive officer and director of Abraxis holds options to
purchase Abraxis common stock, which we refer to as options,
and/or
restricted stock units, which we refer to as RSUs, of Abraxis
which, whether or not vested, pursuant to the merger agreement,
will immediately vest and be cancelled in exchange for a cash
payment, if any, and a CVR, as more fully described below in the
sections entitled Stock Options and Stock
Appreciation Rights and Restricted Stock
Units.
59
The following table sets forth the total amount of cash and
number of CVRs that executive officers and directors of Abraxis
would have received in respect of their vested and unvested
equity awards assuming the merger was completed on June 30,
2010 and no vested equity awards were disposed of prior to that
time. For purposes of this table: (1) the per share
amount described under The Merger
Agreement Treatment of Abraxis Stock Options and
Other Equity Awards has an assumed value of $71.93 per
share based upon the closing price of Celgene common stock on
June 29, 2010;
(2) out-of-the-money
stock options (i.e., those with an exercise price greater
than $71.93 per share) are not included; and (3) no value
has been attributed to the CVRs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
|
|
Underlying
|
|
Number of
|
|
|
|
|
|
|
Vested and
|
|
Unvested
|
|
|
|
|
|
|
Unvested Options
|
|
Restricted Stock
|
|
|
|
|
Name
|
|
(Exercise Price)
|
|
Units(1)
|
|
Total(2)
|
|
Total CVRs
|
|
Non-Employee Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kirk K. Calhoun
|
|
|
4,773 ($29.44
|
)
|
|
|
N/A
|
|
|
$
|
881,877
|
|
|
|
30,925
|
|
|
|
|
1,909 ($34.65
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 ($38.08
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,243 ($47.30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 ($55.44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Chen, Ph.D.
|
|
|
1,909 ($29.44
|
)
|
|
|
N/A
|
|
|
$
|
760,186
|
|
|
|
28,061
|
|
|
|
|
1,909 ($34.65
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 ($38.08
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,243 ($47.30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 ($55.44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen D. Nimer, M.D.
|
|
|
4,773 ($6.29
|
)
|
|
|
N/A
|
|
|
$
|
1,296,767
|
|
|
|
37,607
|
|
|
|
|
4,773 ($25.15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,909 ($29.44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,909 ($34.65
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 ($38.08
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,243 ($47.30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 ($55.44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Leonard Shapiro
|
|
|
4,773 ($14.12
|
)
|
|
|
N/A
|
|
|
$
|
955,000
|
|
|
|
30,925
|
|
|
|
|
1,909 ($34.65
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 ($38.08
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,243 ($47.30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 ($55.44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael S. Sitrick
|
|
|
10,000 ($38.08
|
)
|
|
|
N/A
|
|
|
$
|
338,500
|
|
|
|
10,000
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick Soon-Shiong, M.D.
|
|
|
150,000 ($39.93
|
)
|
|
|
206,204
|
|
|
$
|
19,684,046
|
|
|
|
367,164
|
|
Executive Chairman
|
|
|
6,640 ($64.99
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,781 ($70.12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,539 ($71.49
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce Wendel
|
|
|
138,125 ($39.93
|
)
|
|
|
126,756
|
|
|
$
|
13,631,605
|
|
|
|
281,287
|
|
Vice Chairman and Chief
|
|
|
3,678 ($64.99
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer
|
|
|
10,607 ($65.73
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,121 (70.63
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Mitchell Fogelman
|
|
|
13,000 ($39.93
|
)
|
|
|
7,000
|
|
|
$
|
919,510
|
|
|
|
20,000
|
|
Principal Financial and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Upon vesting, each RSU entitles its holder to one share of
Abraxis common stock. |
|
(2) |
|
Represents (a) the difference between $71.93 (i.e.,
the assumed per share amount) and the exercise price, multiplied
by the number of underlying vested and unvested options, plus
(b) the value of the RSUs based on the assumed $71.93 per
share amount. Under the merger agreement, the value of the stock
portion of the merger consideration will be calculated by
multiplying (a) the exchange ratio of 0.2617 and
(b) the average of the |
60
|
|
|
|
|
closing sale prices for Celgene common stock on The NASDAQ
Global Select Market, as reported in The Wall Street Journal,
for each of the ten consecutive trading days ending with the
seventh complete trading day prior to the closing of the merger,
with such amount rounded up to the nearest cent. |
Retention
and Employment Agreements with Executive Officers
Bruce Wendel, the Vice Chairman and Chief Executive Officer of
Abraxis, is party to a retention agreement with Abraxis under
which Abraxis is obligated to pay to Mr. Wendel certain
benefits if both (1) a change of control, including the
pending merger, occurs on or before December 31, 2011 and
(2) Mr. Wendels employment is terminated by
Abraxis without cause or by Mr. Wendel for
good reason at any time during the
18-month
period following such change of control. Upon such a termination
and provided he executes and delivers to Abraxis a general
release, he would receive:
|
|
|
|
|
a lump sum payment equal to two times his annual base salary
($500,000) and two times his most recently-established target
bonus ($325,000) for a total payment of $1.65 million;
|
|
|
|
reimbursement of COBRA premiums until he obtains new employment,
up to a maximum of 18 months; and
|
|
|
|
life insurance coverage at present levels for a period of
24 months.
|
Mitchell Fogelman, the Principal Financial and Accounting
Officer of Abraxis, is party to an offer letter with Abraxis
under which Abraxis is obligated to make a lump sum severance
payment to Mr. Fogelman equal to $162,500, which is six
months of his annual base salary if Mr. Fogelmans
employment is terminated by Abraxis without cause on
or prior to October 19, 2010. The severance payment is
conditioned upon Mr. Fogelman signing a general release.
The following table sets forth for each executive officer of
Abraxis (other than Dr. Soon-Shiong, the Executive Chairman
of Abraxis, who is not entitled under any Abraxis program,
policy or practice to any severance or other benefits upon
termination of employment) the estimated amount of cash
severance pay, the value of health and dental benefits and the
value of life insurance premiums to which the executive officer
would have been entitled assuming that the merger was completed
on June 30, 2010 and all such executive officers were
terminated immediately after closing without cause
or for good reason, as applicable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
Estimated
|
|
Estimated
|
|
Life
|
|
|
|
|
Severance
|
|
COBRA
|
|
Insurance
|
|
|
Name and Title
|
|
Payments
|
|
Payments
|
|
Premiums
|
|
Total
|
|
Bruce Wendel
Vice Chairman and Chief Executive Officer
|
|
$
|
1,650,000
|
(1)
|
|
$
|
25,022
|
(2)
|
|
$
|
133,562
|
(3)
|
|
$
|
1,808,584
|
|
Mitchell Fogelman
Principal Financial and Accounting Officer
|
|
$
|
162,500
|
(4)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
162,500
|
|
|
|
|
(1) |
|
Represents two times Mr. Wendels current annual base
salary plus two times his current annual target bonus of 65%. |
|
(2) |
|
Represents 18 months of COBRA premiums. |
|
(3) |
|
Represents life insurance premiums for two years at current
coverage level. |
|
(4) |
|
Represents six months of Mr. Fogelmans current annual
base salary. If Mr. Fogelmans employment is
terminated, with or without cause, after October 19, 2010,
then he would not be entitled to any severance. |
280G
Gross-Up
Agreements
Each of Dr. Soon-Shiong and Mr. Wendel is party to an
agreement with Abraxis that requires Abraxis to pay an amount to
each of these executive officers to compensate for any
additional taxes that may be payable as a result of the
application of the excise tax associated with Section 280G
of the Code on the benefits received in a
change-in-control
transaction, including the merger, and any other benefits
contingent on a
change-in-control
transaction, including the merger. Based upon the assumptions
described above, the maximum estimated
gross-up
61
payment that Dr. Soon-Shiong and Mr. Wendel would be
entitled to receive is approximately $9.6 million and
$8.2 million, respectively (Mr. Wendels total
assumes that he receives benefits under his retention agreement).
Directors
and Officers Indemnification and Continuation of
Insurance
Celgene has agreed to cause Abraxis, as the surviving
corporation in the merger, and its subsidiaries to establish and
maintain, for a period of not less than six years following the
completion of the merger, provisions in their certificates of
incorporation, bylaws and other organizational documents
concerning the indemnification and exoneration (including
provisions relating to expense advancement) of Abraxis and
its subsidiaries former and current officers, directors
and employees that are no less favorable to those persons than
the provisions of the certificate of incorporation, bylaws and
other organizational documents of Abraxis and its subsidiaries
as in effect on the date of the merger agreement. In addition,
each of Celgene and Abraxis (as the surviving corporation) have
agreed that during the period ending on the sixth anniversary of
the merger, they will indemnify and hold harmless, and provide
advancement of expenses to, to the fullest extent permitted by
applicable law, each present and former director, officer and
employee of Abraxis and its subsidiaries against any costs or
expenses paid in settlement in connection with any actual or
threatened claim, action, suit, proceeding or investigation in
connection with (1) any acts or omissions occurring or
alleged to occur prior to, or as of, the completion of the
merger in their capacities as officers, directors, employees or
controlling stockholders of Abraxis or any of its subsidiaries
or taken by them at the request of Abraxis or (2) the
negotiation, execution, adoption and approval of the merger
agreement or the transactions contemplated by the merger
agreement. We refer to each of the persons entitled to
indemnification as an indemnified party.
Celgene has agreed to cause to be maintained, for a period of
six years after the completion of the merger, without any lapse
in coverage, the current policies of directors and
officers liability insurance and fiduciary liability
insurance maintained by Abraxis and its subsidiaries (Celgene
may, however, substitute policies of at least the same coverage
and amounts containing terms and conditions that are no less
advantageous to the directors and officers than the current
policies) for a claims-reporting or discovery period of at least
such six-year period with respect to matters arising on or
before the completion of the merger. In lieu of the purchase of
such insurance by Celgene, Abraxis may purchase a six-year
extended reporting period endorsement under its existing
directors and officers liability insurance coverage
effective for claims asserted for the full six-year period
referred to above. During this six-year period, Celgene is not
required to procure any coverage in excess of the amount that
can be obtained for the remainder of the period for an annual
premium of 250% of the current annual premium paid by Abraxis
for existing coverage.
The rights of each indemnified party under the merger agreement
are in addition to any rights such indemnified party may have
under the certificate of incorporation, bylaws or any other
organizational documents of Abraxis or any of its subsidiaries,
any other indemnification arrangement in existence as of the
date of the merger agreement, under Delaware law or otherwise.
Celgene has agreed that, if Celgene, Abraxis (as the surviving
corporation) or any of their successors or assigns consolidates
with or merges into any other corporation or entity and is not
the continuing or surviving corporation or entity of the
consolidation or merger, or transfers all or substantially all
of its properties and assets to any individual, corporation or
other entity, then, and in each case, proper provisions will be
made so that the successors and assigns of Celgene or Abraxis
(as the surviving corporation), as applicable, will assume the
indemnification obligations of Celgene, Abraxis or any of their
respective successors or assigns, as applicable, as set forth in
the merger agreement.
Continuation
of Benefit Plans
During the period beginning on the completion of the merger and
ending no earlier than December 31, 2011, Celgene has
agreed to provide, or cause Abraxis (as the surviving
corporation) to provide, each active employee of Abraxis or its
subsidiaries as of the completion of the merger with salary,
cash bonus opportunities and employee benefits (including
equity-based benefits) that are not materially less favorable in
the aggregate than those provided to such employee at the time
of the merger, those generally provided by Celgene and its
subsidiaries to similarly situated employees in the country of
the employees principal place of employment or any
combination of the foregoing.
62
To the extent that employees of Abraxis and its subsidiaries
become eligible to participate in any employee benefit plan,
program or arrangement maintained by Celgene or any of its
subsidiaries (including any severance plan), then for purposes
of determining eligibility to participate and vesting and with
respect to severance, vacation or paid-time off benefits, for
purposes of benefits accrual, service with Abraxis or any of its
subsidiaries prior to the completion of the merger will be
treated as service with Celgene or any of its subsidiaries,
subject to applicable law and so long as such treatment does not
result in a duplication of benefits. Celgene has also agreed to
use reasonable best efforts to (1) waive all limitations as
to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to
employees under any such plan, program or arrangement that is a
welfare benefit plan in which such employees may be eligible to
participate after the completion of the merger and
(2) provide each employee with credit for any co-payments
and deductibles paid prior to the completion of the merger in
satisfying any applicable deductible or
out-of-pocket
requirements under any such plans, programs or arrangement that
are welfare plans in which such employees are eligible to
participate after the completion of the merger.
In addition, Celgene has agreed to pay, within thirty days
following the completion of the merger, to all employees of
Abraxis and its subsidiaries cash bonuses for the calendar year
in which the completion of the merger occurs. Such bonuses will
be paid out based on target bonus levels and prorated for the
number of days elapsed in the year in which the completion of
the merger occurs. If the merger were completed on June 30,
2010, Abraxis executive officers would have received the
following bonuses: (1) Dr. Soon-Shiong, $518,837;
(2) Bruce Wendel, $163,403; and (3) Mitchell Fogelman,
$73,531.
Stock
Options and Stock Appreciation Rights
Stock
Options
At least five business days prior to the completion of the
merger, each holder of an outstanding option to purchase Abraxis
common stock that was granted under any stock option or equity
incentive plan of Abraxis, which we refer to as a stock option,
and that has an exercise price greater than the per share
amount (which we define below) will, whether such stock
option is vested or unvested, be provided with written notice
that such holder has the right until the business day preceding
the completion of the merger, which we refer to as the exercise
period, to exercise such stock option by paying Abraxis a cash
amount equal to:
|
|
|
|
|
the exercise price of the stock option, less
|
|
|
|
the per share amount.
|
Each such stock option that is exercised during the exercise
period will be settled in exchange for one CVR. Any such stock
option that is not exercised during the exercise period will be
cancelled upon the completion of the merger for no consideration.
Each stock option that remains outstanding immediately prior to
the completion of the merger and that has an exercise price that
is equal to or less than the per share amount will be cancelled
in exchange for the right to receive:
|
|
|
|
|
an amount in cash, without interest, equal to the excess, if
any, of the per share amount over the exercise price of such
stock option, and
|
|
|
|
one CVR.
|
The per share amount means the sum of $58.00 and the
amount obtained by multiplying (1) the exchange ratio of
0.2617 by (2) an amount equal to the average of the closing
sale prices for Celgene common stock on The NASDAQ Global Select
Market, as reported in The Wall Street Journal, for each of the
ten consecutive trading days ending with the seventh complete
trading day prior to the completion of the merger, with such
amount rounded up to the nearest cent.
Stock
Appreciation Rights
At least five business days prior to the completion of the
merger, each holder of an outstanding stock appreciation right
that was granted under any stock option or equity incentive plan
of Abraxis, which we refer to as a
63
SAR, and that has a base appreciation amount greater than the
per share amount will, whether such SAR is vested or unvested,
be provided with written notice that such holder has the right
to exercise such SAR during the exercise period by paying to
Abraxis a cash amount equal to:
|
|
|
|
|
the base appreciation amount of the SAR, less
|
|
|
|
the per share amount.
|
Each such SAR that is exercised during the exercise period will
be settled in exchange for one CVR. Any SAR that is not
exercised during the exercise period will be cancelled upon the
completion of the merger for no consideration.
Each SAR that remains outstanding immediately prior to the
completion of the merger and that has a base appreciation amount
equal to or less than the per share amount will be cancelled
upon the completion of the merger in exchange for the right to
receive:
|
|
|
|
|
an amount in cash, without interest, equal to the excess, if
any, of the per share amount over the base appreciation amount
of such SAR, and
|
|
|
|
one CVR.
|
Restricted
Stock Units
Each RSU granted by Abraxis under any stock option or equity
incentive plan of Abraxis and which is outstanding immediately
prior to the completion of the merger will vest upon the
completion of the merger and will be canceled and converted into
the right to receive:
|
|
|
|
|
cash, without interest, equal to the per share amount, and
|
|
|
|
one CVR.
|
Non-Competition,
Non-Solicitation and Confidentiality Agreement
On June 30, 2010, Dr. Soon-Shiong entered into a
non-competition, non-solicitation and confidentiality agreement
with Celgene, which we refer to as the non-competition
agreement, pursuant to which Dr. Soon-Shiong will be
generally prohibited for ten years after completion of the
merger from, without the prior written consent of Celgene,
owning, managing, financing, investing in, controlling, engaging
in, operating or conducting, lending his name to, lending credit
to, rendering services or advising, devoting material endeavor
or effort to, or assisting any person or entity to conduct, the
business of researching, developing, licensing, manufacturing,
selling, offering for sale, importing, using, marketing,
distributing, practicing, or otherwise exploiting
Abraxane®
or any other pharmaceutical or diagnostic product developed or
manufactured using the albumin-bound
(nab®)
technology (as defined in the non-competition agreement), which
we refer to as the business, in the United States and all other
countries in which Abraxis was engaged in the business at the
completion of the merger. Additionally,
Dr. Soon-Shiong
will be generally prohibited for ten years after completion of
the merger from, without the prior written consent of Celgene:
|
|
|
|
|
(i) soliciting, knowingly encouraging or inducing any
customer, supplier or licensee with whom Abraxis or its
subsidiaries were engaged in a contractual relationship, or
substantive discussions or proposal negotiations, in each case
as of the completion of the merger, with respect to the business
to cease doing business with Abraxis, Celgene or any of their
subsidiaries with respect to the business in the United States
and all other countries in which Abraxis or its subsidiaries
were engaged in the business at the completion of the merger; or
(ii) otherwise knowingly interfering with Abraxis,
Celgenes or their respective subsidiaries
relationship with any customer, supplier or licensee of the
business,
|
|
|
|
soliciting, encouraging or inducing any employee, consultant or
independent contractor that was engaged by Abraxis or its
subsidiaries as of the completion of the merger to terminate or
breach an employment, contractual or other relationship with
Abraxis, Celgene or their respective subsidiaries, and
|
64
|
|
|
|
|
making any public statements that directly or indirectly
disparage Abraxis, Celgene or any of their respective affiliates,
|
in each case subject to certain exceptions. Dr. Soon-Shiong
has also agreed not to use or disclose, except as required by
law or as directed by Abraxis or Celgene, confidential
information that is owned or held by Abraxis as of the
completion of the merger. Dr. Soon-Shiongs
confidentiality obligations will survive the expiration of the
term and any termination of the non-competition agreement.
The non-competition agreement will become effective as of the
completion of the merger and will have no force or effect if the
merger agreement is terminated prior to the completion of the
merger or if the merger is otherwise not completed.
Stockholders
Agreement
On June 30, 2010, certain of the principal stockholders,
including Dr. Soon-Shiong, entered into a
stockholders agreement with Celgene, which we refer to as
the stockholders agreement, under which they agreed, among
other things, not to sell, transfer, pledge or otherwise dispose
of any of the shares of Celgene common stock issued to them in
the merger prior to the third anniversary of the merger, other
than sales, transfers, pledges or other dispositions:
|
|
|
|
|
to any trusts for the benefit of Dr. Soon-Shiong or any
member of his immediate family, any other entity in which
Dr. Soon-Shiong or any members of his immediate family
separately or collectively hold, directly or indirectly, a
majority of the outstanding equity interests, or any charitable
foundation or organization, in each case only if such persons
agree to be bound by the terms of the stockholders
agreement;
|
|
|
|
pursuant to a third party tender offer or exchange offer
(1) which is approved by the Celgene board of directors or
(2) in circumstances in which it is reasonably likely that
these stockholders would be, as a result of not tendering or
exchanging, relegated to different consideration than would be
available to those stockholders who did tender or exchange,
taking into account any provisions thereof;
|
|
|
|
to the estate of a deceased holder upon a deceased holders
death;
|
|
|
|
from the estate of a deceased holder to the beneficiaries
thereof; or
|
|
|
|
pursuant to a merger or similar transaction involving Celgene.
|
In addition to the exceptions set forth in the preceding
sentence, after the second anniversary of the merger, the
stockholders that are party to the stockholders agreement
may, subject to the limitation set forth in the following
sentence, sell, transfer, pledge or otherwise dispose of, in the
aggregate, a number of shares of Celgene common stock issued to
them in the merger equal to 25% of the number of shares of
Celgene common stock issued to these stockholders in the merger.
Prior to the fourth anniversary of the merger, these
stockholders may not, during any calendar month, sell, in the
aggregate, pursuant to open market transactions, shares of
Celgene common stock issued to them in the merger representing
more than 30% of the number of shares of Celgene common stock
issued to these stockholders in the merger.
The stockholders agreement will terminate, as to each
stockholder party thereto, on the first date on which such
stockholder does not own any shares of Celgene common stock
issued to such stockholder in the merger. The stockholders
agreement will also terminate in the event of the termination of
the merger agreement prior to the completion of the merger
Regulatory
Approvals
Under the provisions of the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, which we refer to as the HSR
Act, the merger may not be completed until notification and
report forms have been filed with the U.S. Federal Trade
Commission, which we refer to as the FTC, and the Antitrust
Division of the U.S. Department of Justice, which we refer
to as the Antitrust Division, and until the expiration of a 30
calendar day waiting period, or the early termination of that
waiting period, following the parties filing of their
respective notification and report forms. If the FTC or the
Antitrust Division issues a Request for Additional Information
and Documentary Material prior to
65
the expiration of the waiting period, the parties must observe a
second 30 calendar day waiting period, which would begin to run
only after both parties have substantially complied with the
request for information, unless the waiting period is terminated
earlier or extended with the consent of the parties.
On July 14, 2010, Abraxis and Celgene filed their
respective notification and report forms under the HSR Act with
the FTC and the Antitrust Division, commencing the initial 30
calendar day waiting period that will expire on August 13,
2010.
Subject to the terms and conditions of the merger agreement,
Abraxis and Celgene have agreed to use their reasonable best
efforts to obtain all regulatory clearances necessary to
complete in the most expeditious manner practicable, the merger;
however, Celgene is not required to sell, divest or otherwise
dispose of, hold separate, enter into any license or similar
agreement with respect to, restrict the ownership or operation
of, or agree to sell, divest or otherwise dispose of, hold
separate, enter into any license or similar agreement with
respect to, or restrict the ownership or operation of:
|
|
|
|
|
(A) any assets or businesses of Abraxis or any of its
subsidiaries or (B) any assets or businesses of Celgene or
any of its affiliates or subsidiaries, in the case of either
clause (A) or (B), to the extent that such sale,
divestiture, disposition, or agreement would have a material
adverse effect on the business, operations, financial condition
or results of operations of the combined business of Abraxis and
Celgene after giving effect to the completion of the
merger; or
|
|
|
|
Abraxane®
to the extent such sale, divestiture, disposition, agreement or
restriction would have a material adverse effect on the ability
of Abraxis to market
Abraxane®
in the United States, the European Union, Canada and Switzerland.
|
In addition, Abraxis is not required to divest, hold separate or
otherwise take or commit to take any action that limits its
freedom of action with respect to, or its ability to retain, any
of the businesses, services, or assets of Abraxis or any of its
subsidiaries, unless it is conditioned upon the completion of
the merger.
Litigation
Related to the Merger
Abraxis, the members of the Abraxis board of directors and
Celgene are named as defendants in putative class action
lawsuits brought by Abraxis stockholders challenging the merger
in Los Angeles County Superior Court. The plaintiffs in such
actions assert claims for breaches of fiduciary duty arising out
of the merger and allege that Abraxis directors engaged in
self-dealing and obtained for themselves personal benefits and
have failed or are failing to provide stockholders with material
information relating to the merger. The plaintiffs also allege
claims for aiding and abetting breaches of fiduciary duty
against Abraxis and Celgene. These lawsuits generally seek,
among other things, to enjoin the defendants from consummating
the merger until such time as Abraxis:
|
|
|
|
|
adopts and implements a procedure or process to obtain the
highest possible price for stockholders;
|
|
|
|
discloses all material information to stockholders regarding the
merger; and
|
|
|
|
institutes a majority of the minority vote provision.
|
Accounting
Treatment
In accordance with U.S. GAAP, Celgene will account for the
merger using the acquisition method of accounting for business
combinations. Under this method of accounting, Celgene will
record the acquisition based on the fair value of the merger
consideration, which includes the cash consideration paid, the
market value of shares of Celgene common stock issued in
connection with the merger (based on the closing price of
Celgene common stock on the date of the completion of the
merger) and the CVRs issued in connection with the merger.
Celgene will allocate the purchase price to the identifiable
assets acquired and liabilities assumed based on their
respective fair values at the date of the completion of the
merger. Any excess of the value of consideration paid over the
aggregate fair value of those net assets will be recorded as
goodwill. Financial statements of Celgene issued after the
completion of the merger will reflect such fair values and will
not be restated retroactively to reflect
66
historical financial position or results of operations of
Celgene. The results of operations of Abraxis will be included
in the results of operations of Celgene beginning on the date of
the completion of the merger.
Delisting
and Deregistration of Abraxis Common Stock
If the merger is completed, Abraxis common stock will be
delisted from The NASDAQ Global Select Market and deregistered
under the Exchange Act, and Abraxis will no longer file periodic
reports with the SEC related to Abraxis common stock.
Stock
Exchange Listing of Celgene Common Stock Issued in the
Merger
It is a condition to the completion of the merger that the
shares of Celgene common stock issued in the merger will be
approved for listing on The NASDAQ Global Select Market.
Stock
Exchange Listing of CVRs
An application will be made to The NASDAQ Global Select Market
to list and trade the CVRs on The NASDAQ Global Select Market.
If the CVRs are not accepted for listing on The NASDAQ Global
Select Market, application will be made to list the CVRs on such
other exchange(s), electronic trading networks or other suitable
trading platforms as mutually agreed by Abraxis and Celgene at
or prior to the completion of the merger.
Financing
the Merger
Celgene does not require financing for the merger. However,
Celgene is considering and may pursue financing arrangements on
terms and conditions favorable to Celgene, including, without
limitation, an offering of debt securities, to maintain
financial flexibility. The Unaudited Pro Forma Condensed
Consolidated Financial Statements contemplate the use of
Celgenes cash on hand and the sale of Celgene investments
in marketable securities to finance the merger.
THE
MERGER AGREEMENT
The following summary describes certain material provisions of
the merger agreement and is qualified in its entirety by
reference to the merger agreement, a copy of which is attached
to this proxy statement/prospectus as Annex A and which is
incorporated by reference into this proxy statement/prospectus.
This summary does not purport to be complete and may not contain
all of the information about the merger agreement that may be
important to you. We encourage you to read the merger agreement
carefully and in its entirety, as it is the legal document
governing the merger.
The
Merger
The merger agreement provides for the merger of merger sub with
and into Abraxis upon the terms and subject to the conditions of
the merger agreement, and in accordance with the General
Corporation Law of the State of Delaware, which we refer to as
the DGCL, with Abraxis being the surviving corporation. As a
result of the merger, Abraxis will become a direct or indirect
wholly-owned subsidiary of Celgene, and will continue its
corporate existence under the laws of the State of Delaware.
Upon completion of the merger, the directors of merger sub and
the officers of Abraxis immediately prior to the completion of
the merger will be the initial directors and officers of Abraxis
as the surviving corporation.
Effective
Time
The effective time, or completion, of the merger will occur at
the time that a certificate of merger is duly executed and filed
with the Secretary of State of the State of Delaware in
accordance with the DGCL on the closing date of the merger. The
closing date will occur on the day that is no later than two
business days following the satisfaction or waiver (to the
extent permitted under applicable law and the terms of the
merger agreement) of the conditions to the completion of the
merger (other than those that can only be fulfilled at the
closing, but subject to
67
the satisfaction or waiver of such conditions) described under
Conditions to the Merger, or another
date as Abraxis and Celgene may agree in writing.
Merger
Consideration
Each share of Abraxis common stock issued and outstanding
immediately prior to the completion of the merger, other than
shares held by stockholders who have properly exercised
appraisal rights with respect to such shares in accordance with
Section 262 of the DGCL, which we refer to as dissenting
shares, and shares held in the treasury of Abraxis or owned by
Celgene, merger sub or any wholly-owned subsidiary of Celgene or
Abraxis, which we refer to as excluded shares, will be converted
in the merger into the right to receive (1) $58.00 in cash,
without interest, (2) 0.2617 of a share of common stock of
Celgene, and (3) one CVR, issued by Celgene subject to and
in accordance with the CVR agreement. We refer to the
consideration for the merger described in clauses (1),
(2) and (3) as the merger consideration.
Dissenting
Shares
Shares of Abraxis common stock held by any stockholder who
properly demands appraisal with respect to such shares in
compliance with Section 262 of the DGCL will not be
converted into the right to receive the merger consideration,
and holders of such shares will be entitled to receive payment
of the value of such shares determined in accordance with the
applicable provisions of the DGCL and as further described in
the section entitled Rights of Stockholders to Seek
Appraisal. However, if, after the completion of the
merger, any holder of dissenting shares fails to perfect or
effectively withdraws or loses its right to appraisal and
payment under the DGCL, the shares of Abraxis common stock held
by that stockholder that were dissenting shares will be treated
as if they had been converted into the right to receive the
merger consideration, any cash in lieu of fractional shares and
any dividends or other distributions to which such stockholder
is entitled to receive, without any interest thereon.
Treatment
of Abraxis Stock Options and Other Equity Awards
Stock
Options
At least five business days prior to the completion of the
merger, each holder of an outstanding option to purchase Abraxis
common stock that was granted under any stock option or equity
incentive plan of Abraxis, which we refer to as a stock option,
and that has an exercise price greater than the per share
amount (which we define below) will, whether such stock
option is vested or unvested, be provided with written notice
that such holder has the right until the business day preceding
the completion of the merger, which we refer to as the exercise
period, to exercise such stock option by paying Abraxis a cash
amount equal to:
|
|
|
|
|
the exercise price of the stock option, less
|
|
|
|
the per share amount.
|
Each such stock option that is exercised during the exercise
period will be settled in exchange for one CVR. Any such stock
option that is not exercised during the exercise period will be
cancelled upon the completion of the merger for no consideration.
Each stock option that remains outstanding immediately prior to
the completion of the merger and that has an exercise price that
is equal to or less than the per share amount will be cancelled
upon the completion of the merger in exchange for the right to
receive:
|
|
|
|
|
an amount in cash, without interest, equal to the excess, if
any, of the per share amount over the exercise price of such
stock option, and
|
|
|
|
one CVR.
|
The per share amount means the sum of $58.00 and the
amount obtained by multiplying (1) the exchange ratio of
0.2617 by (2) an amount equal to the average of the closing
sale prices for Celgene common stock on The NASDAQ Global Select
Market, as reported in The Wall Street Journal, for each of the
ten consecutive trading days
68
ending with the seventh complete trading day prior to the
completion of the merger, with such amount rounded up to the
nearest cent.
Stock
Appreciation Rights
At least five business days prior to the completion of the
merger, each holder of an outstanding stock appreciation right
that was granted under any stock option or equity incentive plan
of Abraxis, which we refer to as a SAR, and that has a base
appreciation amount greater than the per share amount will,
whether such SAR is vested or unvested, be provided with written
notice that such holder has the right to exercise such SAR
during the exercise period by paying to Abraxis a cash amount
equal to:
|
|
|
|
|
the base appreciation amount of the SAR, less
|
|
|
|
the per share amount.
|
Each such SAR that is exercised during the exercise period will
be settled in exchange for one CVR. Any SAR that is not
exercised during the exercise period will be cancelled upon
completion of the merger for no consideration.
Each SAR that remains outstanding immediately prior to the
completion of the merger and that has a base appreciation amount
equal to or less than the per share amount will be cancelled
upon completion of the merger in exchange for the right to
receive:
|
|
|
|
|
an amount in cash, without interest, equal to the excess, if
any, of the per share amount over the base appreciation amount
of such SAR, and
|
|
|
|
one CVR.
|
Restricted
Stock Units
Each restricted stock unit, which we refer to as a RSU, granted
by Abraxis under any stock option or equity incentive plan of
Abraxis which is outstanding immediately prior to the completion
of the merger will vest upon completion of the merger and will
be canceled and converted into the right to receive:
|
|
|
|
|
cash, without interest, equal to the per share amount and
|
|
|
|
one CVR.
|
Payment
and Exchange Procedures
Upon the completion of the merger, Celgene agreed to deposit, or
cause to be deposited, with American Stock Transfer &
Trust Company, the paying agent appointed by Celgene, which
we refer to as the paying agent, (1) cash in an amount
sufficient to pay the aggregate cash consideration to be paid to
stockholders in connection with the merger,
(2) certificates representing number of shares of Celgene
common stock equal to 0.2617 multiplied by the number of
outstanding shares of Abraxis common stock (other than
dissenting shares and excluded shares), and (3) CVR
certificates representing the aggregate number of CVRs issuable
pursuant to the CVR agreement in accordance with the merger
agreement. Celgene also agreed to deposit, or cause to be
deposited, with the paying agent, immediately available funds
sufficient to pay cash in lieu of fractional shares and any
dividends and other distributions payable pursuant to the merger
agreement. We refer to the aggregate amount described in clauses
(1), (2) and (3) as the exchange fund.
As soon as practicable, and in any event within two business
days after the completion of the merger, the paying agent will
mail to each holder of record of Abraxis common stock, other
than holders of dissenting shares and excluded shares, a letter
of transmittal (which will specify that the delivery will be
effected, and risk of loss and title will pass, only upon actual
delivery of the certificates of Abraxis common stock or transfer
of the book-entry shares of Abraxis common stock to the paying
agent) and instructions for use in surrendering the certificates
or transferring the book-entry shares in exchange for the merger
consideration.
69
Upon surrender of a certificate of Abraxis common stock (or
delivery of such customary affidavits and indemnities with
respect to a lost certificate which the paying agent
and/or
Abraxis transfer agent may reasonably require) or transfer
of book-entry shares of Abraxis common stock for cancellation to
the paying agent, together with a letter of transmittal duly
executed and in proper form, the holder of such certificate or
book-entry shares will be entitled to receive the merger
consideration pursuant to the merger agreement, any cash in lieu
of fractional shares and any dividends or other distributions
payable pursuant to the merger agreement. The surrendered
certificates of Abraxis common stock and the transferred
book-entry shares will then be canceled. No interest will be
paid or will accrue on the merger consideration, cash in lieu of
fractional shares or dividends or other distributions payable to
such holders upon the surrender of any certificate of Abraxis
common stock or transfer of book-entry shares of Abraxis common
stock.
If a transfer of ownership of Abraxis common stock is not
registered in the transfer records of Abraxis, payment may be
made to a person other than the person in whose name the
surrendered certificate of Abraxis common stock is registered,
if such certificate is properly endorsed or otherwise in proper
form for transfer and the person requesting payment pays any
transfer or other taxes and establishes to Celgenes
satisfaction that such tax has been paid or is not applicable.
Until surrendered or transferred as contemplated by the merger
agreement, each certificate of Abraxis common stock or
book-entry share of Abraxis common stock (other than those
representing any dissenting shares or excluded shares) will be
deemed after the completion of the merger to represent only the
right to receive the merger consideration pursuant to the merger
agreement, without interest. No dividends or other distributions
declared or made after the completion of the merger with respect
to Celgene common stock, with a record date after the completion
of the merger, will be paid to the holder of any unsurrendered
certificate of Abraxis common stock. No cash payment in lieu of
fractional shares will be paid to any such holder, unless and
until such holder surrenders such certificate of Abraxis common
stock.
Following the surrender of any certificate of Abraxis common
stock, the holder of the certificates representing whole shares
of Celgene common stock issued in exchange therefor will be
paid, without interest, (1) any cash payable with respect
to a fractional share of Celgene common stock to which such
holder is entitled and the dividends or other distributions with
a record date after the completion of the merger paid with
respect to such whole shares of Celgene common stock and
(2) at the appropriate payment date, the dividends or other
distributions, with a record date after the completion of the
merger but prior to surrender and a payment date occurring after
surrender, payable with respect to such whole shares of Celgene
common stock.
No certificates or scrip representing fractional shares of
Celgene common stock, or book-entry credit of the same, will be
issued upon the surrender of certificates of Abraxis common
stock, and no dividend or distribution with respect to Celgene
common stock will be payable on or with respect to any
fractional share. All fractional shares to which a holder of
Abraxis common stock would be entitled will be aggregated and
rounded to the fourth decimal point. In lieu of any such
fractional share of Celgene common stock, each holder of Abraxis
common stock will be entitled to receive from the paying agent a
cash payment, rounded up to the nearest cent, equal to the
product of (1) the fractional part of a share of Celgene
common stock multiplied by (2) the average of the closing
sale prices for Celgene common stock on The NASDAQ Global Select
Market, as reported in The Wall Street Journal, for each of the
ten consecutive trading days ending with the seventh complete
trading day prior to the completion of the merger.
Any portion of the exchange fund that remains undistributed to
the former holders of Abraxis common stock one year after the
completion of the merger will be delivered to Celgene at such
time. Thereafter, former holders of Abraxis common stock will
only look only to Celgene as a general creditor for payment of
the merger consideration payable to them pursuant to the merger
agreement, without interest, upon the surrender of any
certificates of Abraxis common stock held by them.
Representations
and Warranties
The merger agreement contains representations and warranties
which the parties made to each other. The statements embodied in
those representations and warranties were made for purposes of
the contract between the parties and are subject to
qualifications and limitations agreed to by the parties in
connection with negotiating the
70
terms of that contract. Certain representations and warranties
were made as of the date of the merger agreement (or other date
specified in the merger agreement), may be subject to
contractual standards of materiality different from those
generally applicable to stockholders or may have been used for
the purpose of allocating risk between the parties rather than
establishing matters of fact. In addition, the representations
and warranties are qualified by information in a confidential
disclosure letter that Abraxis provided to Celgene in connection
with signing the merger agreement. Accordingly, you should not
rely on the representations and warranties as characterizations
of the actual state of facts, since they are qualified as
described above. Moreover, information concerning the subject
matter of the representations and warranties may have changed
since the date of the merger agreement, and these changes may or
may not be fully reflected in our public disclosures. The merger
agreement should not be read alone, but should instead be read
in conjunction with the other information regarding Abraxis,
Celgene and the merger that is contained in this proxy
statement/prospectus as well as in the filings that Abraxis and
Celgene make and have made with the SEC. The representations and
warranties contained in the merger agreement may or may not have
been accurate as of the date they were made and we make no
assertion herein that they are accurate as of the date of this
proxy statement/prospectus.
In the merger agreement, Abraxis made various representations
and warranties that are subject, in some cases, to specified
exceptions and qualifications. Abraxis representations and
warranties relate to, among other things:
|
|
|
|
|
Abraxis and its subsidiaries organization, good
standing, and qualification to do business;
|
|
|
|
Abraxis capitalization, including the particular number of
outstanding shares of Abraxis common stock, stock options, SARs
and RSUs, and Abraxis equity interest in its subsidiaries;
|
|
|
|
Abraxis corporate power and authority to enter into the
merger agreement and to complete the merger and the transactions
contemplated by the merger agreement;
|
|
|
|
the execution and delivery of the merger agreement by Abraxis;
|
|
|
|
the approval and authorization by the Abraxis board of directors
of the merger agreement, the merger and the other transactions
contemplated by the merger agreement;
|
|
|
|
the enforceability of the merger agreement against Abraxis;
|
|
|
|
the absence of any violation or conflict with Abraxis or
its subsidiaries governing documents, applicable law or
certain agreements as a result of the execution and delivery of
the merger agreement and completion of the merger;
|
|
|
|
the required registrations and consents of governmental entities
in connection with the merger agreement, the merger and the
other transactions contemplated by the merger agreement;
|
|
|
|
Abraxis filings with the SEC since January 1, 2008,
including financial statements, Sarbanes-Oxley certifications,
absence of complaints regarding accounting practices, controls
over financial reporting, and the absence of certain undisclosed
liabilities;
|
|
|
|
information supplied by Abraxis for inclusion or incorporation
by reference in this document;
|
|
|
|
the conduct of Abraxis and its subsidiaries of their operations
and the absence of certain events, including an Abraxis
material adverse effect (which we define below), since
March 31, 2010 until June 30, 2010;
|
|
|
|
the absence of legal proceedings and orders;
|
|
|
|
Abraxis and its subsidiaries permits and compliance
with applicable law;
|
|
|
|
taxes;
|
|
|
|
employee benefit plans and ERISA matters;
|
|
|
|
employee matters;
|
|
|
|
environmental matters;
|
|
|
|
the absence of related-party transactions;
|
71
|
|
|
|
|
intellectual property matters;
|
|
|
|
inapplicability of takeover statutes;
|
|
|
|
owned and leased real property;
|
|
|
|
material contracts and performance of obligations thereunder;
|
|
|
|
receipt by the Abraxis board of directors of a fairness opinion
from each of Goldman Sachs, Lazard and BofA Merrill Lynch;
|
|
|
|
regulatory issues related to pharmaceutical matters;
|
|
|
|
the absence of undisclosed brokers fees;
|
|
|
|
insurance coverage; and
|
|
|
|
anti-corruption and anti-bribery laws.
|
The representations and warranties of Abraxis will not survive
the completion of the merger or the termination of the merger
agreement.
Many of Abraxis representations and warranties are
qualified by reference to an Abraxis material adverse
effect standard; that is, they will not be deemed to be
untrue or incorrect unless their failure to be true and correct,
individually or in the aggregate, would reasonably be expected
to have an Abraxis material adverse effect. For
purposes of the merger agreement, an Abraxis material
adverse effect means any effect, that, in the aggregate
with all other effects, is, or would reasonably be expected to
be, materially adverse to the business, assets, financial
condition or results of operations of Abraxis and its
subsidiaries taken as a whole or which would prevent the
completion of the merger.
In no event will any of the following, alone or in combination,
be deemed to constitute, nor will any of the following be taken
into account in determining whether there has been, or there
would reasonably be expected to be, an Abraxis material adverse
effect:
|
|
|
|
|
any effect relating to, or resulting from, any change or
development in or to local, regional, national or foreign
political, economic or financial conditions or in or to local,
regional, national or foreign credit, financial, banking or
securities markets (including any disruption thereof), including
any effect caused by acts of terrorism or war or armed
hostilities (whether or not declared);
|
|
|
|
any effect affecting generally any of the industries, geographic
areas or business segments in which Abraxis or any of its
subsidiaries operate;
|
|
|
|
any effect relating to, or resulting from, hurricanes,
earthquakes or other natural disasters;
|
|
|
|
any change in the share price or trading volume (as opposed to
the facts underlying such change) of Abraxis common stock
on The NASDAQ Global Select Market;
|
|
|
|
any effect relating to, or resulting from, the adoption,
implementation, promulgation, repeal, modification or proposal
of any applicable law or U.S. GAAP after June 30, 2010;
|
|
|
|
any failure, in and of itself (as opposed to the facts
underlying such failure) by Abraxis to meet any budgets, plans,
projections or forecasts of Abraxis or its
subsidiaries revenue, earnings or other financial
performance or results of operations, or any published financial
forecasts or analyst estimates with respect to the revenue,
earnings or other financial performance or results of operations
of Abraxis or its subsidiaries or any change in analyst
recommendations, for any period; or
|
|
|
|
any effect directly relating to, or resulting from, the
execution, performance or announcement of the merger agreement
or the related agreements (we refer to the non-competition
agreement with Dr. Soon-Shiong, the CVR agreement and the
voting agreement collectively as the related agreements),
including the impact thereof on relationships with customers,
suppliers, licensors, licensees, distributors, partners or
employees, the loss or departure of officers or other employees
of Abraxis or its subsidiaries and any pending or threatened
legal proceeding challenging the merger agreement, any of the
related agreements or the
|
72
|
|
|
|
|
transactions contemplated by the merger agreement or the related
agreements, or otherwise resulting from the pursuit of the
completion of the transactions contemplated by the merger
agreement or the related agreements;
|
except that the first, second, third and fifth bullets above
will not be applicable with respect to effects to the extent
that any such effects have had, or would reasonable be expected
to have, a disproportionate impact on Abraxis and its
subsidiaries, taken as a whole, relative to other participants
in the industry in which Abraxis and its subsidiaries operate.
In the merger agreement, Celgene and merger sub also made
various representations and warranties that are subject, in some
cases, to specified exceptions and qualifications.
Celgenes and merger subs representations and
warranties relate to, among other things:
|
|
|
|
|
Celgenes and merger subs organization, good
standing, and qualification to do business;
|
|
|
|
Celgenes capitalization, including the particular number
of outstanding shares of Celgene common stock, stock options and
warrants;
|
|
|
|
Celgenes equity interest in merger sub and the operations
of merger sub;
|
|
|
|
Celgenes and merger subs corporate power and
authority to enter into the merger agreement and to complete the
merger and the transactions contemplated by the merger agreement;
|
|
|
|
the execution and delivery of the merger agreement by each of
Celgene and merger sub;
|
|
|
|
the enforceability of the merger agreement against Celgene and
merger sub;
|
|
|
|
the absence of any violation or conflict with Celgenes and
its subsidiaries governing documents, applicable law or
certain agreements as a result of the execution and delivery of
the merger agreement and the completion of the merger;
|
|
|
|
the required registrations and consents of governmental entities
in connection with the merger agreement, the merger and the
other transactions contemplated by the merger agreement;
|
|
|
|
Celgenes filings with the SEC since January 1, 2008,
including financial statements, Sarbanes-Oxley certifications,
absence of complaints regarding accounting practices, controls
over financial reporting and the absence of certain undisclosed
liabilities;
|
|
|
|
the absence of a Celgene material adverse effect
(which we define below) since March 31, 2010 until
June 30, 2010;
|
|
|
|
information supplied by Celgene for inclusion or incorporation
by reference in this document;
|
|
|
|
Celgenes ability to pay the merger consideration at the
completion of the merger;
|
|
|
|
the absence of legal proceedings and orders;
|
|
|
|
Celgenes and its subsidiaries permits and compliance
with applicable law;
|
|
|
|
the absence of undisclosed brokers fees;
|
|
|
|
non-ownership by Celgene or merger sub of any shares of Abraxis
common stock as of June 30, 2010; and
|
|
|
|
solvency of Celgene and Abraxis as the surviving corporation
following completion of the merger.
|
The representations and warranties of Celgene and merger sub do
not survive the completion of the merger or the termination of
the merger agreement.
Some of Celgenes representations and warranties are
qualified by reference to a Celgene material adverse
effect standard; that is, they will not be deemed to be
untrue or incorrect unless their failure to be true and correct,
individually or in the aggregate, would reasonably be expected
to have a Celgene material adverse effect. For
purposes of the merger agreement, a Celgene material
adverse effect means any effect, that, in the aggregate
with all other effects, is, or would reasonably be expected to
be, materially adverse to the business, assets, financial
73
condition or results of operations of Celgene and its
subsidiaries taken as a whole or which would prevent the
completion of the merger.
In no event will any of the following, alone or in combination,
be deemed to constitute, nor will any of the following be taken
into account in determining whether there has been, or there
would reasonably expected to be, a Celgene material adverse
effect:
|
|
|
|
|
any effect relating to, or resulting from, any change or
developments in or to local, regional, national or foreign
political, economic or financial conditions or in or to local,
regional, national or foreign credit, financial, banking or
securities markets (including any disruption thereof), including
any effect caused by acts of terrorism or war or armed
hostilities (whether or not declared);
|
|
|
|
any effect affecting generally any of the industries, geographic
areas or business segments in which Celgene or any of its
subsidiaries operate;
|
|
|
|
any effect relating to, or resulting from, hurricanes,
earthquakes or other natural disasters;
|
|
|
|
any change in the share price or trading volume (as opposed to
the facts underlying such change) of Celgene common stock on The
NASDAQ Global Select Market;
|
|
|
|
any effect relating to, or resulting from, the adoption,
implementation, promulgation, repeal, modification or proposal
of any applicable law or U.S. GAAP after June 30, 2010;
|
|
|
|
any failure, in and of itself (as opposed to the facts
underlying such failure), to meet any budgets, plans,
projections or forecasts of Celgenes or its
subsidiaries revenue, earnings or other financial
performance or results of operations, or any published financial
forecasts or analyst estimates with respect to the revenue,
earnings or other financial performance or results of operations
of Celgene or its subsidiaries or any change in analyst
recommendations, for any period; or
|
|
|
|
any effect directly relating to, or resulting from, the
execution, performance or announcement of the merger agreement
or the related agreements, including the impact thereof on
relationships with customers, suppliers, licensors, licensees,
distributors, partners or employees, the loss or departure of
officers or other employees of Celgene or its subsidiaries and
any pending or threatened legal proceeding challenging the
merger agreement, any of the related agreements or the
transactions contemplated by the merger agreement or the related
agreements, or otherwise resulting from the pursuit of the
completion of the transactions contemplated by the merger
agreement or the related agreements;
|
except that the first, second, third and fifth bullets above
will not be applicable with respect to effects to the extent
that any such effects have had, or would reasonably be expected
to have, a disproportionate impact on Celgene and its
subsidiaries, taken as a whole, relative to other participants
in the industry in which Celgene and its subsidiaries operate.
Conduct
of Abraxis Business Pending the Merger
Under the merger agreement, Abraxis has agreed that, subject to
specified exceptions or unless consented to in writing by
Celgene or required by applicable law, between the date of the
merger agreement and the earlier of the completion of the merger
and the date on which the merger agreement is terminated,
Abraxis will, and will cause each of its subsidiaries to:
|
|
|
|
|
carry on their respective businesses in the ordinary course in
all material respects;
|
|
|
|
use reasonable best efforts to preserve intact its respective
current business organization;
|
|
|
|
use reasonable best efforts to keep available the services of
its current officers and employees; and
|
|
|
|
use reasonable best efforts to preserve its relationships with
customers, suppliers and others having significant business
dealings with it.
|
Abraxis has also agreed that, between the date of the merger
agreement and the earlier of the completion of the merger and
the date on which the merger agreement is terminated, subject to
specified exceptions, it will not, and
74
will cause each of its subsidiaries not to, without the prior
written consent of Celgene (which consent will not be
unreasonably withheld or delayed):
|
|
|
|
|
split, combine, reclassify, subdivide or amend the terms of any
of its capital stock; declare, set aside or pay any dividends;
or acquire any shares of Abraxis capital stock or any
securities convertible into shares of Abraxis capital
stock;
|
|
|
|
issue, deliver, sell, pledge, transfer, convey, dispose of or
encumber any shares of its capital stock, other equity
securities or any securities convertible into any such shares of
its capital stock (other than the issuance of shares of Abraxis
common stock upon the exercise of the stock options
and/or
vesting of the RSUs);
|
|
|
|
amend Abraxis certificate of incorporation, by-laws or
other organizational documents of Abraxis or its subsidiaries;
|
|
|
|
merge or consolidate with any other person, except for any such
transactions between wholly-owned subsidiaries of Abraxis or
between Abraxis and any of its wholly-owned subsidiaries;
|
|
|
|
make any acquisition or agree to make any acquisition of any
business, by merger or otherwise;
|
|
|
|
dispose of or encumber, or agree to dispose of or encumber, any
of the assets of Abraxis that have a value in excess of
$1 million individually and $5 million in the
aggregate, except sales of inventory or obsolete assets in the
ordinary course of business;
|
|
|
|
except for trade payables of Abraxis or any of its subsidiaries
incurred in the ordinary course of business, incur any
additional indebtedness, issue any debt securities or assume,
guarantee or endorse or otherwise becomes responsible for the
obligations of any person for borrowed money or make any loans,
advance or capital contributions to, or investments in, any
other person (other than a wholly-owned subsidiary of Abraxis);
|
|
|
|
except as may be required by changes in regulatory accounting
standards and practices or in U.S. GAAP, change any of the
accounting principles or practices used by it materially
affecting the reported consolidated assets, liabilities or
results of operations of Abraxis and its subsidiaries;
|
|
|
|
waive, settle or compromise any legal proceeding involving the
payment of monetary damages of more than $2 million
individually or $6 million in the aggregate or involving
the imposition of equitable relief on, or the admission of
wrongdoing by, Abraxis or any of its subsidiaries;
|
|
|
|
(1) terminate, establish, adopt, enter into, make any new
grants or awards of stock based compensation or other benefits
under, amend or otherwise modify, any stock option or equity
incentive plans, employee benefit plans or employment agreements
or increase the salary, wage, bonus or other compensation of any
directors or employee of Abraxis or its subsidiaries at or above
the level of Vice President or its equivalent,
(2) enter into any severance, change of control,
termination or retention arrangements with, or accelerate the
compensation or benefits of, any employee or director;
(3) subject to certain specified exceptions, hire any
person or promote any person at the level of Vice
President or above, or with an annual base salary in
excess of $200,000; or (4) make or forgive any loan to
employees or directors (other than reasonable travel and other
business expenses in the ordinary course of business);
|
|
|
|
make or change any material tax election, change any tax
accounting period, adopt or change any tax accounting method,
amend any material tax return, enter into any material closing
agreement, settle any material tax claim or assessment,
surrender any right to claim a refund of material taxes, or
consent to any extension or waiver of the limitation period
applicable to any material tax claim or assessment, except as
required by applicable law;
|
|
|
|
authorize, recommend, adopt, propose or announce an intention of
adopt a plan of complete or partial liquidation or other
reorganization of Abraxis or any of its subsidiaries;
|
|
|
|
incur or commit to any capital expenditures in excess of the
capital expenditure budget provided to Celgene, except to the
extent that such excess is not greater than $10 million in
the aggregate;
|
75
|
|
|
|
|
(1) except for certain material contracts specified in the
merger agreement, enter into, terminate or modify in any
material respect any material contract or waive, release or
assign any material rights or claims thereunder; (2) grant
or acquire, agree to grant or to acquire from any third party,
or dispose of or permit to lapse any rights, title or interest
to, any intellectual property or, subject to certain specified
exceptions, encumber, impair, abandon, fail to diligently
maintain, transfer or otherwise dispose of any right, title or
interest of Abraxis or any of its subsidiaries in any
intellectual property of Abraxis, or (3) divulge, furnish
or make accessible any trade secret to any person not subject to
an enforceable written confidentiality agreement with respect to
such trade secret;
|
|
|
|
announce, implement or effect any reduction in force, lay-off,
early retirement program, severance program or other program or
effort concerning the termination of employment of employees of
Abraxis or any of its subsidiaries;
|
|
|
|
enter into, amend or cancel any insurance policies other than in
the ordinary course of business;
|
|
|
|
adopt or enter into stockholder rights agreement or poison
pill;
|
|
|
|
acquire or dispose of any manufacturing facilities; or
|
|
|
|
agree in writing or otherwise to take any of the foregoing
actions.
|
Obligation
to Call Special Meeting and Recommend the Merger
Agreement
Abraxis has agreed to take all lawful action reasonably
necessary in accordance with the DGCL and its certificate of
incorporation and by-laws to call a special meeting of its
stockholders for the purpose of voting upon the adoption of the
merger agreement and the approval of the merger, as soon as
reasonably practicable after the registration statement of which
this proxy statement/prospectus forms a part is declared
effective by the SEC, this proxy statement/prospectus is cleared
by the SEC and, if required by law, the CVR Agreement has been
qualified under the Trust Indenture Act. Abraxis has
agreed, in consultation with Celgene, to establish a record date
for, call, give notice of, convene and use its reasonable best
efforts to hold the special meeting within the shortest time
period allowed under applicable law and the rules and
regulations of The NASDAQ Global Select Market after the date
that the registration statement has been declared effective by
the SEC.
The Abraxis board of directors will, subject to the provisions
of the merger agreement and their fiduciary duties under
applicable law as determined by the Abraxis board of directors
in good faith after consultation with Abraxis outside
counsel, recommend to Abraxis stockholders the adoption of the
merger agreement and approval of the merger.
Registration
Statement and Proxy Statement/Prospectus
Pursuant to the merger agreement, each of Celgene, Abraxis and
merger sub agreed to use its reasonable best efforts to respond
to any comments of the SEC or its staff and to cause the
registration statement of which this proxy statement/prospectus
forms a part to be declared effective by the SEC, to have this
proxy statement/prospectus cleared by the SEC and, if required
by applicable law, to have the CVR Agreement become qualified
under the Trust Indenture Act, in each case as soon as
reasonably practicable after the date of the merger agreement.
The parties agreed to use their respective reasonable best
efforts to keep the registration statement effective as long as
is necessary to complete the merger and the transactions
contemplated by merger agreement. Each of Abraxis, merger sub
and Celgene agreed to use its reasonable best efforts, after
consultation with the other parties, to respond promptly to all
comments of and requests by the SEC. Each of the Abraxis, merger
sub and Celgene agreed to notify the other parties promptly of
the receipt of any written or oral comments from the SEC or its
staff and of any request by the SEC or its staff for amendments
or supplements to the registration statement or this proxy
statement/prospectus or for additional information. Each of the
Abraxis, merger sub and Celgene agreed to supply the other
parties with copies of all correspondence between such party or
any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the registration
statement or this proxy statement/prospectus.
Pursuant to the merger agreement, as soon as practicable and in
any event within ten business days after the date that the
registration statement has been declared effective by the SEC,
Abraxis agreed to mail this proxy
76
statement/prospectus to the holders of shares of Abraxis common
stock, soliciting each Abraxis stockholder to vote in favor of
adopting the merger agreement and approving the merger.
Pursuant to the merger agreement, after the time that the
registration statement becomes effective, each of Celgene,
Abraxis and merger sub will promptly advise the other parties of
the issuance of any stop order or the suspension of the
qualification of the CVRs issuable in connection with the
merger. If, prior to the completion of the merger, any
information relating to merger sub or Abraxis or any of their
respective affiliates is discovered by Celgene, Abraxis or
merger sub that should be set forth in an amendment or
supplement to any of the registration statement or this proxy
statement/prospectus so that they would not include any
misstatement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the
party discovering this information will promptly notify the
other parties and, to the extent required by applicable law, the
parties will cause an appropriate amendment or supplement
describing this information to be promptly filed with the SEC
and, to the extent required by applicable law, disseminated to
the stockholders of Abraxis.
Restrictions
on Solicitation of Third Party Acquisition Proposals
After the date of the merger agreement until the completion of
the merger, Abraxis has agreed that it and its subsidiaries will
not, and has agreed to use its reasonably best efforts to cause
its representatives and the representatives of its subsidiaries
not to:
|
|
|
|
|
solicit, initiate or knowingly encourage the making, submission
or announcement of any inquiry regarding, or any proposal or
offer which would reasonably be expected to lead to a merger,
acquisition, consolidation, tender offer, exchange offer or
other transaction involving, or any proposal or offer to
purchase or acquire in any manner, directly or indirectly
(1) assets representing 15% or more of the assets or
revenues of Abraxis and its subsidiaries, taken as a whole, or
(2) 15% or more of the voting securities of Abraxis, other
than, in each case, transactions with Celgene (we refer to each
proposal or offer described in clauses (1) and (2) as
an acquisition proposal);
|
|
|
|
enter into, participate, continue or otherwise engage in
discussions or negotiations with, or provide any non-public
information to any third party with respect to any inquiries
regarding, or the making, submission or announcement of, an
acquisition proposal;
|
|
|
|
enter into or approve any letter of intent, agreement in
principle, option agreement, share purchase agreement,
acquisition agreement or similar agreement for an acquisition
proposal; or
|
|
|
|
subject to certain exceptions, terminate, waive, amend or modify
any provision of, or grant permission under, any standstill,
confidentiality agreement or similar contract to which Abraxis
or any of its subsidiaries is a party;
|
except that the above no shop restrictions will not
prohibit the Abraxis board of directors from terminating,
waiving, amending or modifying any provision of, or granting
permission under, any standstill, confidentiality agreement or
similar contract if the Abraxis board of directors determines in
good faith that the failure to take such action would be
reasonably likely to constitute a breach of its fiduciary duties
to Abraxis stockholders under applicable law.
Abraxis is obligated to immediately cease any existing
solicitation, discussion or negotiation with any third party
conducted prior to the date of the merger agreement with respect
to any actual or potential acquisition proposal.
Notwithstanding the no shop restrictions described
above, prior to the date on which stockholder approval for the
merger is obtained, Abraxis has the right to, and may authorize
its representatives to, (1) provide information in response
to a request by a person who has made a bona fide written
acquisition proposal that was not initiated or solicited in
violation of the no shop restrictions if Abraxis
receives from that person an executed confidentiality agreement
no more favorable in any material respect to such person than
the confidentiality agreement, dated October 16, 2009,
between Abraxis and Celgene, is to Celgene,
and/or
(2) engage in discussions or negotiations with any person
who had made a bona fide written acquisition proposal that was
not initiated or solicited in violation
77
of the no shop restrictions, if, in each case, the
Abraxis board of directors determines in good faith after
consultation with Abraxis financial advisor and outside
legal counsel that:
|
|
|
|
|
failure to take such action would be reasonably likely to
constitute a breach of its fiduciary duties to Abraxis
stockholders under applicable law; and
|
|
|
|
the acquisition proposal either constitutes a superior proposal
(which we define below) or is reasonably likely to lead to a
superior proposal.
|
Abraxis has agreed to notify Celgene orally and in writing
promptly (and in any event within 24 hours) after receipt
of any acquisition proposal or any request for information or
inquiry which could reasonably be expected to lead to an
acquisition proposal. The notice from Abraxis to Celgene must
include the identity of the person making such acquisition
proposal, request or inquiry and the material terms of the
acquisition proposal, request or inquiry (including any material
written amendments or modifications thereto). Abraxis has agreed
to keep Celgene reasonably informed on a current basis of any
material changes with respect to such acquisition proposal,
request or inquiry. In addition, Abraxis has agreed to provide
Celgene with at least 36 hours prior notice of any meeting
of the Abraxis board of directors at which the Abraxis board of
directors is reasonably expected to determine that an
acquisition proposal is a superior proposal.
For purposes of the merger agreement, a superior
proposal means an unsolicited bona fide acquisition
proposal made after the date of the merger agreement that the
Abraxis board of directors determines in good faith (after
consultation with Abraxis financial advisor and outside
legal counsel) is reasonably expected to be completed on the
terms proposed, taking into account all legal, financial and
regulatory aspects of the proposal, including the financing
terms thereof and the person making the proposal, and if
completed, would result in a transaction that is more favorable
to Abraxis stockholders from a financial point of view than the
transactions contemplated by the merger agreement (after taking
into account any revisions to the terms of the transactions
contemplated by the merger agreement agreed to by Celgene
pursuant to the merger agreement). For the purposes of the
definition of superior proposal, the references to
15% or more in the definition of acquisition
proposal are deemed to be references to 60% or
more.
Termination
in Connection with a Superior Proposal
The merger agreement permits Abraxis to terminate the merger
agreement prior to the special meeting in order to concurrently
enter into a definitive agreement with respect to a superior
proposal if Abraxis complies with certain notice and other
requirements set forth in the merger agreement and pays Celgene
a termination fee of $145 million.
Abraxis can terminate the merger agreement to enter into a
definitive agreement with respect to a superior proposal. Before
effecting such a termination, however, Abraxis must give Celgene
written notice, advising Celgene that the Abraxis board of
directors has received a superior proposal, specifying the
material terms and conditions of the superior proposal (and
attaching a copy of the definitive agreement related thereto, if
available) and stating that the Abraxis board of directors
intends to exercise its right to terminate the merger agreement.
Abraxis cannot exercise its right to terminate the merger
agreement until after the fifth business day following
Celgene receipt of such notice.
After notifying Celgene that an acquisition proposal is a
superior proposal, including during this five business day
period, Celgene is permitted to propose to Abraxis revisions to
the terms of the transactions contemplated by the merger
agreement, and Abraxis and its representatives will, if
requested by Celgene, consider in good faith any revisions to
the terms of the transactions contemplated by the merger
agreement proposed by Celgene. Abraxis cannot terminate the
merger agreement if during the five business day review period
Celgene makes a binding offer that, after consideration of such
offer by the Abraxis board of directors in good faith and after
consultation with Abraxis financial advisor and outside
legal counsel, results in the Abraxis board of directors
concluding that such superior proposal no longer constitutes a
superior proposal. In the event of any amendment to the
consideration or any other material revisions to the superior
proposal, Abraxis is required to deliver a new written notice to
Celgene and permit Celgene an additional three business day
review period. Upon termination of the merger agreement by
Abraxis to accept a superior proposal, Abraxis is required to
pay to Celgene a termination fee of $145 million, described
below under Termination Fees and
Expenses.
78
Agreement
to Use Reasonable Best Efforts and Take Further Action
Pursuant to the merger agreement, Celgene, merger sub, and
Abraxis agreed to use their reasonable best efforts to complete,
in the most expeditious manner practicable, the merger including:
|
|
|
|
|
obtaining the consents and making the registrations required
under the merger agreement and taking all reasonable steps as
may be necessary to obtain such consents and to make such
registrations;
|
|
|
|
obtaining all necessary approvals, consents or waivers from
third parties;
|
|
|
|
defending any lawsuits or other legal proceedings challenging
the merger agreement or the completion of the merger; and
|
|
|
|
executing and delivering any additional instruments necessary to
complete the merger and to fully carry out the purposes of the
merger agreement.
|
Celgene, merger sub and Abraxis will not take or agree to take
any action that could reasonably be expected to result in any of
the conditions to the completion of the merger described under
Conditions to the Merger not being
satisfied or to prevent or materially delay the completion of
the merger or the transactions contemplated by the merger
agreement.
On July 14, 2010, Abraxis and Celgene filed the appropriate
pre-merger notification forms under the HSR Act with the United
States Federal Trade Commission, which we refer to as the FTC,
and the Antitrust Division of the United States Department of
Justice, which we refer to as the Antitrust Division, commencing
the initial 30- calendar day waiting period that will expire on
August 13, 2010.
Abraxis and Celgene have agreed to:
|
|
|
|
|
respond as promptly as practicable to any inquiries received
from the FTC or the Antitrust Division for additional
information or documentation and to all inquiries and requests
received from any state attorney general or other governmental
entity in connection with antitrust matters, and
|
|
|
|
not extend any waiting period under the HSR Act or enter into
any agreement with the FTC or the Antitrust Division not to
complete the transactions contemplated by the merger agreement,
except with the prior written consent of the other parties to
the merger agreement (which consent will not be unreasonably
withheld or delayed).
|
In addition, Celgene has agreed to use its reasonable best
efforts to avoid or eliminate impediments under any antitrust,
competition, or trade regulation law that may be asserted by the
FTC, the Antitrust Division, any state attorney general or any
other governmental entity with respect to the merger so as to
enable the completion of the merger as promptly as reasonably
practicable. Celgene has also agreed to defend through
litigation on the merits any claim asserted in any court by any
party, including appeals. Celgene has agreed to divest or
dispose of such assets or businesses of Celgene or, after the
completion of the merger, Abraxis as the surviving corporation,
or their respective subsidiaries, to take such action that
limits its freedom of action with respect to, or its ability to
retain, any of the businesses, services or assets of Celgene,
Abraxis as the surviving corporation or their respective
subsidiaries, in order to avoid the entry of, or to effect the
dissolution of, any order or any impediment under any antitrust
law, competition, or trade regulation law, which would otherwise
have the effect of preventing the completion of the merger.
Celgene is not required to sell, divest or otherwise dispose of,
hold separate, enter into any license or similar agreement with
respect to, restrict the ownership or operation of, or agree to
any of the foregoing with respect to:
|
|
|
|
|
(1) any assets or businesses of Abraxis or any of its
subsidiaries, (2) any assets or businesses of Celgene, any
of its subsidiaries or affiliates, in either case, to the extent
that such sale, divestiture, disposition, or agreement would
have a material adverse effect on the business, operations,
financial condition or results of operations of the combined
business of Abraxis and Celgene after giving effect to the
completion of the transactions contemplated by the merger
agreement; or
|
79
|
|
|
|
|
Abraxane®,
to the extent such sale, divestiture, disposition, agreement or
restriction would have a material adverse effect on the ability
of Abraxis to market
Abraxane®
in the United States, the European Union, Canada and Switzerland.
|
If requested by Celgene, Abraxis will agree to divest, hold
separate or otherwise take any action that limits its freedom of
action with respect to, or its ability to retain, any of the
businesses, services, or assets of Abraxis or any of its
subsidiaries, provided that any such action is conditioned upon
the completion of the merger and the transactions contemplated
by the merger agreement.
Abraxis and Celgene have agreed to:
|
|
|
|
|
promptly notify the other party of any material communication to
that party from the FTC, the Antitrust Division, any state
attorney general or any other governmental entity and permit the
other party to review in advance any proposed written
communication to any of the foregoing;
|
|
|
|
to the extent practicable not agree to participate in any
substantive meeting or discussion with any governmental entity
in respect of any filings, investigation or inquiry concerning
the merger agreement or the merger unless it consults with the
other party in advance and, to the extent permitted by such
governmental entity, gives the other party the opportunity to
attend and participate thereat; and
|
|
|
|
furnish the other party with copies of all correspondence,
filings, and communications (and memoranda setting forth the
substance thereof) between them on the one hand, and any
governmental entity or members of their respective staffs on the
other hand, with respect to the merger agreement and the merger.
|
Celgene will have the right to determine and direct the strategy
and process by which the parties will seek required approvals
under antitrust, competition or trade regulation laws; provided
that Celgene will consult with and consider in good faith the
views of Abraxis in connection with proceedings under or
relating to any such laws.
Employee
Benefit Plans
During the period beginning on the completion of the merger and
ending no earlier than December 31, 2011, Celgene has
agreed to provide, or cause Abraxis as the surviving corporation
to provide, each active employee of Abraxis or its subsidiaries
as of the completion of the merger with salary, cash bonus
opportunities and employee benefits (including equity-based
benefits) that are not materially less favorable in the
aggregate than those provided to such employee currently, those
generally provided by Celgene and its subsidiaries to similarly
situated employees in the country of the employees
principal place of employment, or any combination of the
foregoing.
To the extent that employees of Abraxis and its subsidiaries
become eligible to participate in any employee benefit plan,
program or arrangement maintained by Celgene or any of its
subsidiaries (including any severance plan), then for purposes
of determining eligibility to participate and vesting and with
respect to any such plan that provides severance, vacation or
paid-time off benefits, for purposes of benefits accrual,
service with Abraxis or any of its subsidiaries prior to the
completion of the merger will be treated as service with Celgene
or any of its subsidiaries subject to applicable law and so long
as such treatment does not result in a duplication of benefits.
Celgene has also agreed to use reasonable best efforts to
(1) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and
coverage requirements applicable to employees under any such
plan, program or arrangement that is a welfare benefit plan in
which such employees may be eligible to participate after the
merger, and (2) provide each employee with credit for any
co-payments and deductibles paid prior to the merger in
satisfying any applicable deductible or
out-of-pocket
requirements under any such plans, programs or arrangement that
are welfare plans in which such employees are eligible to
participate after the merger.
In addition, Celgene has agreed to pay, within thirty days
following the completion of the merger, to all employees of
Abraxis and its subsidiaries cash bonuses for the calendar year
in which the completion of the merger occurs. Such bonuses will
be paid out based on target bonus levels and prorated for the
number of days elapsed in the year in which the completion of
the merger occurs.
80
Directors
and Officers Indemnification and Insurance
Celgene has agreed to cause Abraxis, as the surviving
corporation, and its subsidiaries to establish and maintain, for
a period of not less than six years following the completion of
the merger, provisions in their certificates of incorporation,
by-laws and other organizational documents concerning the
indemnification and exoneration (including provisions relating
to expense advancement) of Abraxis and its
subsidiaries former and current officers, directors and
employees that are no less favorable to those persons than the
provisions of the certificate of incorporation, by-laws and
other organizational documents of Abraxis and its subsidiaries
as in effect on the date of the merger agreement, and such
provisions will not be amended, repealed or otherwise modified
in any manner adverse to such officer, director or employee,
except as required by applicable law. In addition, each of
Celgene and Abraxis (as the surviving corporation) have agreed
that during the period ending on the sixth anniversary of the
merger, they will indemnify and hold harmless, and provide
advancement of expenses to, to the fullest extent permitted
under applicable law, each present and former director, officer
and employee of Abraxis and its subsidiaries against any costs
or expenses paid in settlement in connection with any actual or
threatened claim, action, suit, proceeding or investigation in
connection with (1) any acts or omissions occurring or
alleged to occur prior to, or as of, the completion of the
merger in their capacities as officers, directors, employees or
controlling stockholders of Abraxis or any of its subsidiaries
or taken by them at the request of Abraxis or (2) the
negotiation, execution, adoption and approval of the merger
agreement, the merger or the transactions contemplated by the
merger agreement. We refer to each of the persons entitled to
indemnification as an indemnified party.
Celgene has agreed to cause to be maintained, for a period of
six years after the completion of the merger, without any lapse
in coverage, the current policies of directors and
officers liability insurance and fiduciary liability
insurance maintained by Abraxis and its subsidiaries (Celgene
may, however, substitute policies of at least the same coverage
and amounts containing terms and conditions that are no less
advantageous to the directors and officers than the current
policies) for a claims-reporting or discovery period of at least
such six-year period with respect to matters arising on or
before the completion of the merger. In lieu of the purchase of
such insurance by Celgene, Abraxis may purchase a six-year
extended reporting period endorsement under Abraxis
existing directors and officers liability insurance
coverage effective for claims asserted for the full six-year
period referred to above. During this six-year period, Celgene
is not required to procure any coverage in excess of the amount
that can be obtained for the remainder of the period for an
annual premium of 250% of the current annual premium paid by
Abraxis for existing coverage.
The rights of each indemnified party under the merger agreement
are in addition to any rights such indemnified party may have
under the certificate of incorporation, by-laws or any other
organizational documents of Abraxis or any of its subsidiaries,
any other indemnification arrangement in existence as of the
date of the merger agreement, the DGCL or otherwise.
Pursuant to the merger agreement, if Celgene, Abraxis as the
surviving corporation or any of their respective successors or
assigns consolidates with or merges into any other corporation
or entity and is not the continuing or surviving corporation or
entity of the consolidation or merger, or transfers all or
substantially all of its properties and assets to any
individual, corporation or other entity, then, and in each case,
proper provisions will be made so that the successors and
assigns of Celgene or Abraxis, as applicable, will assume the
indemnification obligations of Celgene, Abraxis or any of their
respective successors or assigns, as applicable, as set forth in
the merger agreement.
Other
Covenants and Agreements
The merger agreement contains additional agreements among
Abraxis, Celgene and merger sub relating to, among other things:
|
|
|
|
|
Abraxis providing Celgene and its representatives reasonable
access to Abraxis and its subsidiaries employees,
agents, properties, books, contracts, commitments and records;
|
|
|
|
coordination of press releases and other public statements with
respect to the merger agreement, the merger and the other
transactions contemplated by the merger agreement;
|
|
|
|
actions by Celgene to cause merger sub to fulfill its
obligations under the merger agreement to complete the merger in
accordance with the terms and subject to the conditions set
forth in the merger agreement and
|
81
|
|
|
|
|
ensure that, prior to the completion of the merger, merger sub
does not conduct any business or make any investment other than
as specifically contemplated by the merger agreement;
|
|
|
|
|
|
Celgene adopting, executing and delivering, and ensuring that a
duly qualified trustee executes and delivers, the CVR agreement,
subject to any reasonable revisions to the CVR agreement
requested by such trustee;
|
|
|
|
Celgenes assumption of liability for all transfer taxes
resulting from the transactions effected pursuant to the merger
agreement;
|
|
|
|
Celgene, as promptly as practicable after the date of the merger
agreement, preparing and submitting to The NASDAQ Global Select
Market (or such other exchange(s), electronic trading networks
or other suitable trading platforms as agreed by Abraxis and
Celgene) an application to list the CVRs and the shares of
Celgene common stock being issued as part of the merger
consideration and Celgene using its reasonable best efforts to
cause such CVRs and shares of Celgene common stock to be
approved for listing for trading on The NASDAQ Global Select
Market (or such other exchange(s), electronic trading networks
or other suitable trading platforms as agreed by Abraxis and
Celgene) at or prior to the completion of the merger;
|
|
|
|
the Abraxis board of directors adopting a resolution consistent
with SEC guidance so that the disposition by any officer or
director of Abraxis who is a covered person for purposes of
Section 16 of the Exchange Act of Abraxis common stock,
stock options, RSUs and SARs will be an exempt transaction for
purposes of Section 16 of the Exchange Act; and
|
|
|
|
Abraxis using reasonable best efforts to deliver to Celgene a
FIRPTA statement on or prior to the completion of the merger.
|
Conditions
to the Merger
The respective obligation of each party to effect the merger is
subject to the satisfaction or waiver (to the extent permitted
under applicable law and the terms of the merger agreement) on
or prior to the completion of the merger, of the following
conditions:
|
|
|
|
|
Stockholder Approval. The merger agreement and
the merger must have been adopted by the holders of a majority
of the outstanding shares of Abraxis common stock in accordance
with the DGCL.
|
|
|
|
No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other
order will have been issued or entered by any governmental
entity in the United States, the European Union, Canada or
Switzerland, that is in effect and that prohibits the completion
of the merger.
|
|
|
|
HSR Act. The waiting period (and any extension
thereof) applicable to the merger under the HSR Act must have
expired or been terminated.
|
|
|
|
Registration Statement. The registration
statement of which this proxy statement/prospectus forms a part,
must have been declared effective and no stop order suspending
the effectiveness of the registration statement may be in effect.
|
Celgenes and merger subs obligation to effect the
merger is subject to the satisfaction or waiver (to the extent
permitted under applicable law and the terms of the merger
agreement) by Celgene on or prior to the completion of the
merger, of the following additional conditions:
|
|
|
|
|
Representations and Warranties. The
representations and warranties relating to the capitalization of
Abraxis must be true and correct in all but de minimis respects
(which means 2% or less of the aggregate outstanding shares of
Abraxis common stock on a fully diluted basis) on the date of
the merger agreement and at the closing as though made on and as
of the closing date (except to the extent any representation and
warranty speaks as of a particular date, in which case the
representation and warranty need only be true and correct as of
that date), and the other representations and warranties of
Abraxis set forth in the merger agreement must be true and
correct (without giving effect to any limitation as to
materiality or Abraxis material adverse effect set
forth therein) on the date of the merger agreement and at the
closing as though made on and as of the closing date (except to
the extent any representation and warranty speaks as of a
particular date, in which case the representation and warranty
need only be true and correct as of that date),
|
82
|
|
|
|
|
except where the failure of the representations and warranties
to so be true and correct has not had and would not reasonably
be expected to have, individually or in the aggregate, an
Abraxis material adverse effect.
|
|
|
|
|
|
Performance of Obligations. Abraxis must have
performed or complied with, in all material respects, its
obligations and covenants required to be performed or complied
with by it under the merger agreement at or prior to the closing.
|
|
|
|
Absence of Material Adverse Effect. Since the
date of the merger agreement, there must not have occurred any
Abraxis material adverse effect.
|
|
|
|
Related Agreements. The related agreements
(the non-competition agreement with Dr. Soon-Shiong, the
CVR agreement and the voting agreement) must be in full force
and effect in accordance with their terms.
|
Abraxis obligation to effect the merger is subject to the
satisfaction or waiver (to the extent permitted under applicable
law and the terms of the merger agreement) on or prior to the
completion of the merger, of the following additional conditions:
|
|
|
|
|
Representations and Warranties. The
representations and warranties of Celgene set forth in the
merger agreement must be true and correct in all material
respects (without giving effect to any limitation as to
materiality or Celgene material adverse effect set
forth therein) on the date of the merger agreement and at the
closing as though made on and as of the closing date (except to
the extent any representation and warranty speaks as of a
particular date, in which case the representation and warranty
need only be true and correct as of that date), except where the
failure of the representations and warranties to so be true and
correct has not had and would not reasonably be expected to
have, individually or in the aggregate, a Celgene material
adverse effect.
|
|
|
|
Performance of Obligations. Celgene and merger
sub must have performed or complied with, in all material
respects, their respective obligations and covenants required to
be performed or complied with by them under the merger agreement
at or prior to the closing.
|
|
|
|
Absence of Material Adverse Effect. Since the
date of the merger agreement, there must not have occurred any
Celgene material adverse effect.
|
|
|
|
CVR Agreement. The CVR agreement must have
been duly executed and delivered by Celgene and the trustee and
be in full force and effect.
|
|
|
|
Listing. The shares of Celgene common stock
being issued in the merger must have been approved for listing
(subject to notice of issuance) for trading on The NASDAQ Global
Select Market.
|
Termination
Abraxis and Celgene may terminate the merger agreement by mutual
written consent at any time before the completion of the merger
(whether before or after the special meeting). In addition,
either Abraxis or Celgene may terminate the merger agreement if:
|
|
|
|
|
the completion of the merger has not occurred on or before
March 31, 2011, the termination date specified in the
merger agreement. However, the right to terminate the merger
agreement on these grounds is not available to any party whose
failure to fulfill any obligation under the merger agreement is
the cause of, or resulted in, the failure of the completion of
the merger to occur on or before the termination date;
|
|
|
|
any permanent injunction or other order issued by any
governmental entity in the United States, the European Union,
Canada or Switzerland is in effect preventing or prohibiting the
completion of the merger has become final and non-appealable.
However, the right to terminate the merger agreement on these
grounds is not available to any party whose failure to fulfill
any obligation under the merger agreement has been the cause of,
or resulted in, the imposition of the permanent injunction or
other order; or
|
|
|
|
Abraxis stockholders do not vote to adopt the merger agreement
at the special meeting (including any postponement or
adjournment of the special meeting).
|
83
Celgene may terminate the merger agreement:
|
|
|
|
|
if Abraxis breaches or fails to perform any of its
representations, warranties, covenants or obligations contained
in the merger agreement, which breach or failure to perform
results in the conditions described in
Conditions to the Merger relating to the
accuracy of Abraxis representations and warranties or the
performance of Abraxis obligations and covenants to the
merger agreement not being able to be satisfied by the
termination date;
|
|
|
|
if Abraxis breaches or fails to perform in any material respect
its obligations under the no shop restrictions of
the merger agreement; or
|
|
|
|
prior to the special meeting, if (1) the Abraxis board of
directors has publicly withdrawn its approval or recommendation
of the merger agreement or the merger or has publicly
recommended to the stockholders of Abraxis any acquisition
proposal, or (2) a tender offer or exchange offer has been
commenced that, if successful, would result in any person or
group becoming the beneficial owner of 15% or more of Abraxis
common stock, and the Abraxis board of directors fails to
recommend that Abraxis stockholders not tender their shares in
connection with such tender or exchange offer within ten
business days of the commencement.
|
Abraxis may terminate the merger agreement:
|
|
|
|
|
if Celgene or merger sub breaches or fails to perform any of its
representations, warranties, covenants or obligations contained
in the merger agreement, which breach or failure to perform
results in the conditions described in
Conditions to the Merger relating to the
accuracy of Celgenes or merger subs representations
and warranties or the performance of Celgenes or
mergers subs obligations and covenants to the merger
agreement not being able to be satisfied by the termination
date; or
|
|
|
|
prior to the special meeting, in order to concurrently enter
into a definitive agreement with respect to any superior
proposal, provided that Abraxis has complied in all material
respects with the no shop restrictions of the merger
agreement and concurrently pays a termination fee of
$145 million to Celgene.
|
See Termination in Connection with a Superior
Proposal.
Termination
Fees and Expenses
All fees and expenses incurred by the parties to the merger
agreement in connection with the merger and the other
transactions contemplated by the merger agreement will be paid
by the party incurring such fees or expenses, whether or not the
merger is completed. Abraxis is obligated to pay a
$145 million
break-up fee
to Celgene if:
|
|
|
|
|
Abraxis terminates the merger agreement, prior to the special
meeting, in order to concurrently enter into a definitive
agreement with respect to a superior proposal and has complied
in all material respects with the no shop
restrictions of the merger agreement;
|
|
|
|
Celgene terminates the merger agreement if Abraxis breaches or
fails to perform in any material respect its obligations under
the no shop restrictions of the merger agreement;
|
|
|
|
prior to the special meeting, (1) the Abraxis board of
directors has publicly withdrawn its approval or recommendation
of the merger agreement or the merger or has publicly
recommended to Abraxis stockholders any acquisition proposal, or
(2) a tender offer or exchange offer has been commenced
that, if successful, would result in any person or group
becoming the beneficial owner of 15% or more of the outstanding
stock of Abraxis, and the Abraxis board of directors fails to
recommend that Abraxis stockholders not tender their shares in
connection with such tender or exchange offer within ten
business days of the commencement;
|
|
|
|
(1) Celgene terminates the merger agreement if Abraxis
breaches or fails to perform any of its representations,
warranties, covenants or obligations contained in the merger
agreement, which breach or failure to perform results in the
conditions described in Conditions to the
Merger relating to the accuracy of Abraxis
representations and warranties or the performance of
Abraxis obligations or covenants not being able to be
satisfied by the termination date, (2) prior to the date
upon which such breach or failure to perform
|
84
|
|
|
|
|
occurs but after the date of the merger agreement, a bona fide
acquisition proposal (for the purposes of this definition of
acquisition proposal, the references to 15% will be
deemed references to 60%) for Abraxis has been
publicly announced and (3) within 12 months after such
termination either Abraxis has entered into a definitive
agreement relating to an acquisition proposal or a transaction
contemplated by an acquisition proposal for Abraxis has been
consummated;
|
|
|
|
|
|
(1) Celgene or Abraxis terminates the merger agreement if
Abraxis stockholders do not vote to adopt the merger agreement
at the special meeting (including any postponement or
adjournment thereof), (2) prior to the date of the special
meeting but after the date of the merger agreement, a bona fide
acquisition proposal (for the purposes of this definition of
acquisition proposal, the references to 15% will be
deemed references to 60%) for Abraxis has been
publicly announced and (3) within 12 months after such
termination either Abraxis has entered into a definitive
agreement relating to an acquisition proposal or a transaction
contemplated by an acquisition proposal for Abraxis has been
consummated; or
|
|
|
|
(1) Celgene or Abraxis terminates the merger agreement if
the merger has not been completed on or before the termination
date of March 31, 2011, (2) prior to such termination,
the waiting period (and any extension thereof) applicable to the
merger under the HSR Act has expired or been terminated,
(3) prior to such termination but after the date of the
merger agreement, a bona fide acquisition proposal (for the
purposes of this definition of acquisition proposal, the
references to 15% will be deemed references to
60%) for Abraxis has been publicly announced and
(4) within 12 months after such termination either
Abraxis has entered into a definitive agreement relating to an
acquisition proposal or a transaction contemplated by an
acquisition proposal for Abraxis has been consummated.
|
See Termination in Connection with a Superior
Proposal.
Amendment
and Waiver
The merger agreement may be amended, modified or supplemented by
a written instrument signed by Abraxis, Celgene and merger sub
at any time before or after Abraxis stockholders have approved
the merger agreement.
VOTING
AGREEMENT
On June 30, 2010, the principal stockholders entered into a
voting agreement with Celgene and merger sub. The following
summary describes certain material provisions of the voting
agreement and is qualified in its entirety by reference to the
voting agreement, a copy of which is attached to this proxy
statement/prospectus as Annex C and which is incorporated
by reference into this proxy statement/prospectus. This summary
does not purport to be complete and may not contain all of the
information about the voting agreement that may be important to
you. We encourage you to read the voting agreement carefully and
in its entirety.
Agreement
to Vote and Irrevocable Proxy
Under the voting agreement, the principal stockholders agreed to
vote all of their shares of Abraxis common stock (representing
approximately 82.1% of the outstanding shares of Abraxis common
stock as of [ ], 2010, the record date
established for the special meeting, in favor of the approval
and adoption of the merger agreement and the transactions
contemplated by the merger agreement at any meeting of, or in
connection with any proposed action by written consent of,
Abraxis stockholders at or in connection with which any of
Abraxis stockholders vote or execute consent with respect to the
approval and adoption of the merger agreement or the
transactions contemplated by the merger agreement.
Each of the principal stockholders also agreed, while the voting
agreement remains in effect and subject to certain exceptions,
to vote or execute consents, as applicable, with respect to
their shares of Abraxis common stock, against:
|
|
|
|
|
any merger agreement or merger (other than the merger agreement,
the merger, or any business combination or transaction with
Celgene or any of its affiliates), consolidation, combination,
reorganization, recapitalization, dissolution, liquidation or
winding up of or by Abraxis or any other business combination or
|
85
|
|
|
|
|
extraordinary corporate transaction involving Abraxis or any of
its subsidiaries, or any sale, lease or transfer of a material
amount of assets of Abraxis or any of its subsidiaries;
|
|
|
|
|
|
any amendment of Abraxis certificate of incorporation,
unless such amendment is consented to by Celgene;
|
|
|
|
any action, proposal, transaction or agreement that would
reasonably be expected to result in a breach in any respect of
any covenant, representation or warranty or any other obligation
or agreement of Abraxis contained in the merger agreement or of
such principal stockholder contained in the voting
agreement; and
|
|
|
|
any action, proposal, transaction or agreement involving Abraxis
or any of its subsidiaries that would reasonably be expected to
prevent, impede, frustrate, interfere with, delay, postpone or
adversely affect the merger and the other transactions
contemplated by the merger agreement.
|
In connection with the foregoing voting covenants and to secure
their duties under the voting agreement, each of the principal
stockholders irrevocably appointed Celgene and any designee of
Celgene, and each of them individually, as such principal
stockholders proxy and attorney-in-fact, with full power
of substitution and re-substitution, to vote or execute
consents, with respect to the shares of Abraxis common stock
owned by such principal stockholder. The proxy and power of
attorney granted is irrevocable during the period beginning on
June 30, 2010 and ending on the earliest to occur of:
|
|
|
|
|
the completion of the merger;
|
|
|
|
any material amendment to merger agreement that is adverse to
the principal stockholders that has not been approved by the
principal stockholders; or
|
|
|
|
the termination of the merger agreement in accordance with its
terms.
|
Transfer
Restrictions
While the voting agreement remains in effect, each of the
principal stockholders agreed not to (1) transfer any
shares of Abraxis common stock that are subject to the voting
agreement or (2) grant any proxies or powers of attorney,
deposit any shares of Abraxis common stock that are subject to
the voting agreement into a voting trust or enter into a voting
agreement with respect to such shares of Abraxis common stock.
The foregoing does not prevent:
|
|
|
|
|
transfers upon the death of a principal stockholder pursuant to
the terms of any trust or will of such principal stockholder or
by the laws of intestate succession, but only if the transferee
executes and delivers to Celgene an agreement to be bound by the
terms of the voting agreement to the same extent as such
principal stockholder;
|
|
|
|
transfers to Dr. Soon-Shiong, the trusts established for
the benefit of Dr. Soon-Shiong or any members of his
immediate family, any other entity in which Dr. Soon-Shiong
or any members of his immediate family hold a majority of the
outstanding equity interests, or any charitable foundation or
organization, in each case only if such persons agree to be
bound by the terms of the voting agreement;
|
|
|
|
transfers solely in connection with the payment of the exercise
price and/or
the satisfaction of any tax withholding obligation arising from
the exercise of any option or the vesting of any RSU;
|
|
|
|
the conversion of any shares of Abraxis common stock that are
subject to the voting agreement into the right to receive the
merger consideration pursuant to the merger in accordance with
the merger agreement; or
|
|
|
|
the granting of proxies to vote shares of Abraxis common stock
that are subject to the voting agreement with respect to the
election of directors and ratification of the appointment of
Abraxis auditors at Abraxis annual meeting of
stockholders, in accordance with the recommendation of the
Abraxis board of directors.
|
86
No
Shop Obligations
Each of the principal stockholders agreed, subject to certain
exceptions, that it will not, and will use reasonable best
efforts to cause its respective representatives not to, directly
or indirectly:
|
|
|
|
|
solicit, initiate or knowingly encourage the making, submission
or announcement of any inquiry regarding, or any proposal or
offer which would reasonably be expected to lead to, an
acquisition proposal;
|
|
|
|
enter into, participate, continue or otherwise engage in
discussions or negotiations with, or provide any non-public
information to any person (other than Celgene, merger sub and
their representatives) with respect to any inquiries regarding,
or the making, submission or announcement of, an acquisition
proposal; or
|
|
|
|
enter into or approve any letter of intent, agreement in
principle, option agreement, share purchase agreement,
acquisition agreement or similar agreement relating to an
acquisition proposal.
|
The foregoing restrictions do not prohibit the principal
stockholders, or their respective representatives, from
providing non-public information to, and participating in
discussions or negotiations with, any person if the principal
stockholders have been notified by Abraxis that its board of
directors is permitted to provide non-public information to, or
engage in discussions or negotiations with, such person in
accordance with the merger agreement. The principal stockholders
are required to notify Celgene within 24 hours after the
receipt of any acquisition proposal or any request for
information or inquiry which could reasonably be expected to
lead to an acquisition proposal, detailing the identity of the
person making the acquisition proposal, request or inquiry and
the terms thereof. The principal stockholders must keep Celgene
reasonably informed of any material changes with respect to such
acquisition proposal, request or inquiry.
Termination
The voting agreement will terminate upon the earliest to occur
of:
|
|
|
|
|
the completion of the merger;
|
|
|
|
any material amendment to the merger agreement that is adverse
to the principal stockholders that has not been approved by the
principal stockholders, including any amendment which decreases
or changes the form of the merger consideration, unless
consented to in writing by each of the principal
stockholders; and
|
|
|
|
the termination of the merger agreement in accordance with its
terms.
|
DESCRIPTION
OF THE CVRS
CVR
Agreement
The rights of holders of the CVRs will be governed by and
subject to the terms and conditions of a CVR agreement to be
entered into between Celgene and a trustee mutually acceptable
to Celgene and Abraxis prior to the completion of the merger.
The following summary describes the material provisions of the
CVR agreement. This summary may not contain all of the
information about the CVRs that is important to you. The form of
CVR agreement is attached to this proxy statement/prospectus as
Annex B and is incorporated by reference into this proxy
statement/prospectus, and we encourage you to read it carefully
for a more complete understanding of the CVRs.
Contingent
Value Rights Agreement
If required by applicable law, Celgene will use its reasonable
best efforts to cause the CVR agreement to be qualified under
the Trust Indenture Act. The terms of the CVRs include
those that will be stated in the CVR agreement and those that
will be made part of the CVR agreement by reference to the
applicable provisions of the Trust Indenture Act.
87
Characteristics
of the CVRs
The CVRs are not equity or voting securities of Celgene, do not
represent ownership interests in Celgene and holders of the CVRs
are not entitled to any rights of a stockholder or other equity
or voting security of Celgene, either at law or in equity. The
rights of the CVR holders will be limited to those expressly
provided for in the CVR agreement.
Net Sales
Payments and Milestone Payments
Each holder of a CVR is entitled to receive a pro rata portion,
based on the number of the CVRs then outstanding, of each of the
following cash payments that Celgene is obligated to pay:
|
|
|
|
|
Milestone Payment #1. Celgene agreed to
pay $250 million upon FDA approval of
Abraxane®
for use in the treatment of non-small cell lung cancer, which
approval permits Celgene to market
Abraxane®
under a label that includes a progression free survival claim,
but only if the foregoing milestone is achieved no later than
the fifth anniversary of the merger.
|
|
|
|
Milestone Payment #2. Celgene agreed to
pay $400 million (if achieved no later than April 1,
2013) or $300 million (if achieved after April 1,
2013 and before the fifth anniversary of the merger) upon FDA
approval of
Abraxane®
for use in the treatment of pancreatic cancer, which approval
permits Celgene to market
Abraxane®
under a label that includes an overall survival claim.
|
|
|
|
Net Sales Payments. For each full one-year
period ending December 31st during the term of the CVR
agreement, which we refer to as a net sales measuring period
(with the first net sales measuring period beginning
January 1, 2011 and ending December 31, 2011), Celgene
agreed to pay:
|
|
|
|
|
|
2.5% of the net sales of
Abraxane®
and the Abraxis pipeline products, that exceeds $1 billion
but are less than or equal to $2 billion for such period,
plus
|
|
|
|
an additional amount equal to 5% of the net sales of
Abraxane®
and the Abraxis pipeline products that exceed $2 billion
but are less than or equal to $3 billion for such period,
plus
|
|
|
|
an additional amount equal to 10% of the net sales of
Abraxane®
and the Abraxis pipeline products that exceed $3 billion
for such period.
|
No payments will be due under the CVR agreement with respect to
net sales of
Abraxane®
and the Abraxis pipeline products achieved after
December 31, 2025, which we refer to as the net sales
payment termination date, unless net sales for the net
sales measuring period ending on December 31, 2025 are
equal to or greater than $1 billion, in which case the net
sales payment termination date will be extended until the last
day of the net sales measuring period subsequent to
December 31, 2025 during which net sales of
Abraxane®
and the Abraxis pipeline products are less than $1 billion
or, if earlier, December 31, 2030.
Payment
Dates
Within ten days after Celgene files its annual report with the
SEC (or within 90 days after each calendar year if Celgene
is not required to file periodic reports under Section 13
or 15(d) of the Exchange Act), Celgene is required to provide a
net sales statement to the trustee that includes a calculation
of net sales for
Abraxane®
and the Abraxis pipeline products with respect to the last
completed calendar year. The net sales payments on the CVRs, if
any, will be paid 15 days after delivery of such net sales
statement. The milestone payments, if any, will be paid 20
business days after the achievement of the relevant milestone.
Amounts payable by Celgene in respect of the CVRs will be
considered paid on the date due if on such date the trustee or
the paying agent holds money sufficient to pay all such amounts
then due in accordance with the CVR agreement. The trustee and
the paying agent will comply with all U.S. federal
withholding requirements with respect to payments to holders of
CVRs that Celgene, the trustee or the paying agent reasonably
believes are applicable under the Code and the treasury
regulations thereunder. The consent of the CVR holder is not
required for any such withholding.
88
Issuance
of CVRs
The CVRs will be issued following the completion of the merger.
The number of CVRs to be issued will be equal to the sum of
(1) the number of shares of Abraxis common stock and RSUs
outstanding immediately prior to the completion of the merger
and (2) any CVRs issued to holders of options and SARs.
The CVR agreement provides for authentication of the CVRs by the
trustee upon execution and delivery of such CVRs pursuant to the
CVR agreement.
Transferability
of CVRs; Listing
The CVRs are freely transferable and any interest therein may be
sold, assigned, pledged, encumbered or in any manner transferred
or disposed of, in whole or in part, as long as the transfer or
other disposition is made in accordance with the applicable
provisions of the CVR agreement and in compliance with
applicable United States federal and state securities laws and
any other applicable securities laws. A sale or exchange of a
CVR would be a taxable transaction. See Certain Material
U.S. Federal Income Tax Consequences for a more
detailed explanation.
Celgene has agreed to use its reasonable best efforts to cause
the CVRs to be approved for listing on The NASDAQ Global Select
Market and maintain such listing for as long as the CVRs remain
outstanding. If the CVRs are not accepted for listing on The
NASDAQ Global Select Market, application will be made to list
the CVRs on such other exchange(s), electronic trading networks
or other suitable trading platforms as mutually agreed by
Abraxis and Celgene at or prior to the completion of the merger.
Notwithstanding its efforts, Celgene may be unable to cause the
CVRs to be listed for trading.
Selected
Definitions Related to the CVR Agreement
The following terms are defined in the CVR agreement attached as
Annex B to this proxy statement/prospectus included in this
registration statement. For the purposes of the CVRs and CVR
agreement:
Diligent Efforts means, with respect to any
Product, efforts of a person to carry out its obligations in a
diligent manner using such effort and employing such resources
normally used by such person in the exercise of its reasonable
business discretion relating to the research, development or
commercialization of a product, that is of similar market
potential at a similar stage in its development or product life,
taking into account issues of market exclusivity (including
patent coverage, regulatory and other exclusivity), safety and
efficacy, product profile, the competitiveness of alternate
products in the marketplace or under development, the launch or
sales of a generic or biosimilar product, the regulatory
structure involved, and the profitability of the applicable
product (including pricing and reimbursement status achieved),
and other relevant factors, including technical, commercial,
legal, scientific,
and/or
medical factors.
Existing Licenses means licenses and related
agreements (for so long as they are in effect) with respect to
the Products granted by Celgene or its affiliates to third
parties (other than Celgene or its affiliates) as in effect
immediately prior to the completion of the merger (with such
modifications thereto after the completion of the merger that do
not reduce the amounts of royalties, milestone payments or
profit split payments thereunder).
Net Sales means, for each net sales measuring
period, the sum of, without any duplication: (1) the gross
amounts invoiced for the Products sold by Celgene, its
affiliates or its licensees (other than licensees under Existing
Licenses) to third parties (other than Celgene, its affiliates
or its licensees) during such net sales measuring period,
including wholesale distributors, less deductions from such
amounts calculated in accordance with accounting standards so as
to arrive at net sales under applicable accounting
standards as reported by Celgene, its affiliate or its licensee,
as applicable, in such persons financial statements, and
further reduced by write-offs of accounts receivables or
increased for collection of accounts that were previously
written off; plus (2) (A) the amount of royalties and
profit split payments received by Celgene or its affiliates from
their respective licensees under Existing Licenses for sales
(but not the supply) of Products sold by such licensees to third
parties (other than Celgene or its affiliates) during such net
sales measuring period, and (B) the amount of
89
any milestone payments received during such net sales measuring
period by Celgene or its affiliates from their licensees under
Existing Licenses with respect to the Products.
Any and all set-offs against gross invoice prices shall be
calculated in accordance with applicable accounting standards.
Sales or other commercial dispositions of a Product between
Celgene and its affiliates and its licensees shall be excluded
from the computation of Net Sales; Product provided to third
parties without charge, in connection with research and
development, clinical trials, compassionate use, humanitarian
and charitable donations, or indigent programs or for use as
samples shall be excluded from the computation of Net Sales; and
no payments will be payable on such sales or such other
commercial dispositions, except where such an affiliate or
licensee is an end user of the Product.
Notwithstanding the foregoing, if a Product is sold or otherwise
commercially disposed of for consideration other than cash or in
a transaction that is not at arms length between the buyer
and the seller, then the gross amount to be included in the
calculation of Net Sales shall be the amount that would have
been invoiced had the transaction been conducted at arms
length and for cash. Such amount that would have been invoiced
shall be determined, wherever possible, by reference to the
average selling price of such Product in arms length
transactions in the relevant country.
Notwithstanding the foregoing, in the event a Product is sold in
conjunction with another active component, which we refer to as
a combination product, in a particular country, Net Sales shall
be calculated by multiplying the Net Sales of the combination
product by the fraction A/(A+B), where A is the gross invoice
price of the Product if sold separately in a country and B is
the gross invoice price of the other product(s) included in the
combination product if sold separately in such country. If no
such separate sales are made by Celgene, its affiliates or
licensees in a country, Net Sales of the combination product
shall be calculated in a manner determined by Celgene in good
faith based upon the relative value of the active components of
such combination product.
Products means each of:
|
|
|
|
|
the pharmaceutical product comprising the chemical compound
having the chemical name of 5β,20-Epoxy-1,
2a,4,7β,10β,13a-hexahydroxytax-11-en-9-one
4,10-diacetate 2-benzoate 13-ester with
(2R,3S)-N-benzoyl-3-phenylisoserine, known by the generic name
paclitaxel and bound to albumin that is the subject
of the New Drug Application
No. 21-660
filed with the FDA and subject of the European Medicines Agency
Marketing Authorization granted on January 11, 2008,
together with all amendments and supplements to such FDA and
European Medicines Agency approvals (identified by Abraxis as
Abraxane®);
provided that in all cases such Product is an injectable
formulation.
|
|
|
|
the pharmaceutical product comprising the chemical compound
having the chemical name of (2R,3S)-
N-carboxy-3-phenylisoserine,N-tert-butyl ester, 13-ester with
5β-20-epoxy-1,2 ,4,7β,10β,13
-hexahydroxytax-11-en-9-one
4-acetate
2-benzoate, anhydrous bound to albumin that is the subject of
the Investigational New Drug Application No. 73,527 filed
with the FDA together with all amendments (identified by Abraxis
as nab-docetaxel (ABI-008)); provided that in all
cases such Product is an injectable formulation.
|
|
|
|
|
|
the pharmaceutical product comprising the chemical compound
having the chemical name of (3S, 6R, 7E, 9R, 10R, 12R, 14S, 15E,
17E, 19E, 21S, 23S, 26R, 27R, 34aS)-9, 10, 12, 13, 14, 21, 22,
23, 24, 25, 26, 27, 32, 33, 34,
34a-hexadecahydro-9,27-dihydroxy-3-[(1R)-2-[(1S,
3R,
4R)-4-hydroxy-3-methoxycyclohexyl]-1-methylethyl]-10,21-dimethoxy-6,
8, 12, 14, 20, 26-hexamethyl-23, 27-epoxy-3H-pyrido[2, 1-c][1,4]
oxaazacyclohentriacontine -1, 5, 11, 28, 29 (4H,6H,31H)-pentone
bound to albumin that is the subject of the Investigational New
Drug Application No. 74.610 filed with the FDA together
with all amendments (identified by Abraxis as
nab-rapamycin (ABI-009)); provided that in all cases
such Product is an injectable formulation.
|
|
|
|
|
|
the pharmaceutical product comprising the chemical compound
having the chemical name of
17-allylamino-17-demethoxygeldanamycin,
17-allylamino
geldanamycin bound to albumin that is the subject of the
Investigational New Drug Application No. 78,298 filed with
the FDA together with all amendments (identified by Abraxis as
nab-17AAG (ABI-010)); provided that in all cases
such Product is an injectable formulation.
|
90
|
|
|
|
|
the pharmaceutical product comprising the chemical compound
having the chemical name of
N-(1,2,3-trimethoxy-10-methylsulfanyl-9-oxo-5,6,7,9-tetrahydro-benzo[a]heptalen-7-yl)-3-[3-(1,2,3-trimethoxy-10-methylsulfanyl-9-oxo-5,6,7,9-tetrahydro-benzo[a]heptalen-7-yl)-ureido]-propionamide
bound to albumin that is the subject of the Investigational New
Drug Application No. 103,698 filed with the FDA together
with all amendments (identified by Abraxis as
nab-thiocolchicine dimer (ABI-011)); provided that
in all cases the Product is an injectable formulation.
|
|
|
|
the pharmaceutical product comprising the chemical compound
having the chemical name of (αR,
βS)-β-[[(1,
1-Dimethylethoxy)carbonyl]amino]-α-(hexanoyloxy)benzenepropanoic
acid
(2aR, 4S, 4aS, 6R, 9S, 11S, 12S, 12aR, 12bS)-12b-(acetyloxy)-12-(benzoyloxy)-2a, 3, 4, 4a, 5, 6, 9, 10, 11, 12, 12a, 12b-dodecahydro-4, 6, 11-trihydroxy-4a, 8, 13, 13-tetramethyl-5-oxo-7, 11-methano-1H-cyclodecal[3, 4]benz[1, 2-b]oxet-9-yl
ester bound to albumin (identified by Abraxis as nab-novel
taxane (ABI-013)) provided that in all cases the Product
is an injectable formulation.
|
|
|
|
the pharmaceutical product comprising the chemical compound
having the chemical name of Benzenepropanoic
acid, β-(benzoylamino)-α-hydroxy-, 6, 12bbis(acetyloxy)-12-(benzoyloxy)-2a, 3, 4, 4a, 5, 6, 9, 10, 11, 12, 12a, 12bdodecahydro-4, 11-dihydroxy-4a, 8, 13, 13-tetramethyl-5-oxo-7, 11-methano-1H-cyclodeca[3, 4]benz[1, 2-b]-oxet-9-yl
ester, [2aR-[2aα, 4β, 4aβ, 6β, 9α(αR*, βS*), 11α, 12α, 12aα, 12bα]]
bound to albumin that is the subject of the Investigational New
Drug Application No. 63, 082 filed with the FDA
together with all amendments (identified by Abraxis as
Coroxane); provided that in all cases the Product is
an injectable formulation.
|
Regulatory Approval means all approvals from
the FDA or other
non-U.S. regulatory
authority necessary for the commercial manufacture, marketing
and sale of a product in the United States or other jurisdiction
in accordance with applicable law.
Subordination
The CVRs are unsecured obligations of Celgene and all payments
on the CVRs, all other obligations under the CVR agreement and
any rights or claims relating to the CVRs and the CVR Agreement
will be subordinated in right of payment to the prior payment in
full of senior obligations of Celgene, including the principal
of, premium (if any) and interest on, and all other amounts
owing thereon:
|
|
|
|
|
with respect to borrowed money;
|
|
|
|
evidenced by notes, debentures, bonds or other similar debt
instruments;
|
|
|
|
with respect to the net obligations owed under interest rate
swaps or similar agreements or currency exchange transactions;
|
|
|
|
as a result of reimbursement obligations in respect of letters
of credit and similar obligations;
|
|
|
|
in respect of capital leases; or
|
|
|
|
as a result of guarantees in respect of obligations referred to
in the first five bullets above; unless, in any case, the
instrument creating or evidencing the foregoing or pursuant to
which the foregoing is outstanding provides that such
obligations are pari passu to or subordinate in right of payment
to the CVRs.
|
Celgenes senior obligations do not include:
|
|
|
|
|
trade debt incurred in the ordinary course of business;
|
|
|
|
any intercompany indebtedness between Celgene and any of its
subsidiaries or affiliates;
|
|
|
|
indebtedness of Celgene that is subordinated in right of payment
to Celgenes senior obligations;
|
|
|
|
indebtedness or other obligations of Celgene that by its terms
ranks equal or junior in right of payment to the CVR payments,
milestone, and net sales payments, and all other obligations
under the CVR agreement;
|
|
|
|
indebtedness of Celgene that, by operation of applicable law, is
subordinate to any general unsecured obligations of
Celgene; and
|
91
|
|
|
|
|
indebtedness evidenced by any guarantee of indebtedness ranking
equal or junior in right of payment to the CVR payments.
|
Upon any distribution to creditors of Celgene in liquidation,
dissolution, bankruptcy, reorganization, insolvency,
receivership or similar proceedings of Celgene, holders of
senior obligations of Celgene (as described above) will be
entitled to payment in full in cash of all such obligations
prior to any payment being made on the CVRs. In addition,
Celgene may not make any payment or distribution to any CVR
holder of the CVR payments or other obligation under the CVR
agreement or acquire from any CVR holder for cash any CVR, or
propose the foregoing:
|
|
|
|
|
if any default on any senior obligations exceeding
$25 million in aggregate principal amount would occur as a
result of such payment, distribution or acquisition;
|
|
|
|
during the continuance of any payment default in respect of any
senior obligations (after expiration of any applicable grace
period) exceeding $25 million in aggregate principal amount;
|
|
|
|
if the maturity of any senior obligations representing more than
$25 million in aggregate principal amount is accelerated in
accordance with its terms and such acceleration has not been
rescinded; or
|
|
|
|
following the occurrence of any default (other than a payment
default, and after the expiration of any applicable grace
period) with respect to any senior obligations with an aggregate
principal amount of more than $25 million, the effect of
which is to permit the holders of such senior obligations (or a
trustee or agent acting on their behalf) to cause, with the
giving of notice if required, the maturity of such senior
obligations to be accelerated, for a period commencing upon the
receipt by the trustee (with a copy to Abraxis) of a written
notice of such default from the representative of the holders of
such senior obligations and ending when such senior obligations
are paid in full in cash or cash equivalents or, if earlier,
when such default is cured or waived.
|
Reporting
Obligations
The CVR agreement provides that Celgene will file with the
trustee:
|
|
|
|
|
within 15 days after Celgene is required to file the same
with the SEC, copies of the annual reports and of the
information, documents and other reports (or copies of such
portions of the foregoing as the SEC may from time to time by
rules and regulations prescribe) which Celgene is required to
file with the SEC pursuant to Section 13 or Section 15(d)
of the Exchange Act;
|
|
|
|
if Celgene is not required to file periodic reports under
Section 13 or 15(d) the Exchange Act, within 45 days
after each calendar quarter (other than the last quarter of each
calendar year), quarterly financial information and, within
90 days after each calendar year, annual financial
information that would be required pursuant to Section 13
of the Exchange Act in respect of a security listed and
registered on a national securities exchange (provided that
Celgene also delivers with, or includes within, the annual
reports referred to in this bullet point and the preceding
bullet point a calculation of net sales for
Abraxane®
and the Abraxis pipeline products for the annual period to date);
|
|
|
|
within ten days after Celgene files its annual report with the
SEC for any year if Celgene is required to file periodic reports
under Section 13 or 15(d) of the Exchange Act, or if
Celgene is not required to file periodic reports under
Section 13 or 15(d) of the Exchange Act within ninety
(90) days after each calendar year, a net sales statement
with respect to the last completed calendar year; and
|
|
|
|
within four business days after the occurrence of any milestone,
a notice stating that the milestone has occurred, the amount of
the corresponding milestone payment and the applicable milestone
payment date.
|
In addition, Celgene is required to file with the trustee such
additional information, documents and reports with respect to
compliance by Celgene with the conditions and covenants of the
CVR agreement, and make available to the CVR holders on
Celgenes website as of the date of the filing of the
foregoing materials with the trustee, the information, documents
and reports required to be filed by Celgene as described above.
92
Audit
Upon the written request of holders representing at least a
majority of the outstanding CVRs and no more than once during
any calendar year, and upon reasonable notice, Celgene is
required to permit an independent certified public accounting
firm of nationally recognized standing (jointly agreed by such
holders and Celgene) to have access to such records of Celgene
as may be reasonably necessary to verify the accuracy of the net
sales statements and the figures underlying the calculations set
forth in such net sales statement for any period within the
preceding three years that has not previously been audited.
If the independent certified public accountant concludes that
any net sales payment should have been greater than the net
sales payment as set forth in the net sales statement, Celgene
is required to pay such shortfall with respect to each CVR
within six months of the date that the holders representing at
least a majority of the outstanding CVRs deliver the written
report of the independent certified public accountants to
Celgene. The decision of the independent certified public
accountant shall be final, conclusive and binding on Celgene and
the CVR holders. The fees charged by the independent certified
public accounting firm will be paid by Celgene if the amount
originally paid is more than 10% below the amount due pursuant
to the independent written report. The CVR holders shall pay the
fees charged by the independent certified public accounting firm
if the amount originally paid by Celgene is equal to or less
than 10% below the amount due pursuant to the independent
written report, which amount Celgene may deduct from any future
CVR payments.
If no review of the net sales statement is requested by holders
of a majority of the CVRs within three years following the end
of any net sales measuring period, the calculation of the net
sales payment set forth in the net sales statement shall be
binding on all CVR holders.
Celgene has agreed not to, and to cause its affiliates not to,
enter into any license or distribution agreement with any third
party (other than Celgene or its affiliates) with respect to any
Product unless such agreement contains provisions that would
allow an independent certified public accountant appointed
pursuant to the CVR agreement such access to the records of the
other party to such license or distribution agreement as may be
reasonably necessary to perform such independent certified
public accountants duties under the CVR agreement;
provided that Celgene and its affiliates will not be required to
amend any Existing Licenses.
Diligent
Efforts
Celgene has agreed to use Diligent Efforts to achieve each of
the milestones through the fifth anniversary of the CVR
agreement. Celgene has agreed to use Diligent Efforts to obtain
Regulatory Approvals for the commercial manufacture, marketing
and sale of
Abraxane®
for the treatment of melanoma, ovarian cancer, bladder cancer
and first-line metastatic breast cancer until the earlier of the
net sales payment termination date or such time that the data
generated in an appropriate clinical trial does not support
further development of
Abraxane®
for the applicable indication. Celgene has also agreed to use
Diligent Efforts, until the net sales payment termination date,
to sell
Abraxane®
or any of the Abraxis pipeline products for which Celgene has
obtained Regulatory Approval for the commercial manufacture,
marketing and sale thereof.
Covenants
The CVR agreement provides that while any CVRs remain
outstanding, Celgene will not merge or consolidate with or into
any other person or sell or convey all or substantially all of
its assets to any person, unless (1) Celgene shall be the
continuing person, or the successor person which acquires by
sale or conveyance substantially all the assets of Celgene
(including the shares of Abraxis) shall be a person organized
under the laws of the United States of America or any State
thereof and shall expressly assume by an instrument, executed
and delivered to the trustee, in form satisfactory to the
trustee, the due and punctual payment of the CVRs, and the due
and punctual performance and observance of all of the covenants
and conditions of the CVR agreement to be performed or observed
by the Celgene and (2) Celgene or its successor would not
be in default of the covenants and conditions of the CVR
agreement immediately following the merger, consolidation or
sale.
93
Celgene agreed not to enter into any binding agreement,
arrangement or understanding or take or permit to be taken any
action that would, or would reasonably be expected to, delay or
prevent Celgenes ability to timely make payment of the net
sales payments or milestone payments, if any, when due.
The CVR agreement provides that while any CVRs remain
outstanding, Celgene and its affiliates will not, directly or
indirectly, sell, transfer, convey or otherwise dispose of their
respective rights in any Product to a third party (other than
Celgene or its affiliates), unless at all times after any such
sale, transfer, conveyance or other disposition, the gross
amounts invoiced for the Products by the applicable transferee
(or the amounts of royalties, profit split payments and
milestone payments, as described in clause (2) of the
definition of Net Sales, with respect to Existing Licenses, as
applicable) will be reflected in Net Sales in accordance with
the terms of the CVR agreement (with the transferee substituted
for Celgene for purposes of the definition of Net Sales) as if
such transferee was Celgene, and the contract for such sale,
transfer, conveyance or other disposition (which Celgene will
take all reasonable actions necessary to enforce in all material
respects) will provide for such treatment and will require the
transferee to comply with certain covenants in the CVR agreement
to the same extent as Celgene.
Events of
Default
Each one of the following events is an event of default under
the CVR agreement:
|
|
|
|
|
default in the payment of all or any part of the net sales
payments or milestone payments after a period of ten business
days when they become due and payable;
|
|
|
|
material default in the performance, or breach in any material
respect, of any other covenant or warranty of Celgene in respect
of the CVRs, and continuance of such default or breach for a
period of ninety days after written notice has been given to
Celgene by the trustee or to Celgene and the trustee by the
holders of a majority of the outstanding CVRs specifying such
default or breach and requiring it to be remedied;
|
|
|
|
a court having jurisdiction in the premises entering a decree or
order for relief in respect of Celgene in an involuntary case
under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or
similar official) of Celgene or for any substantial part of its
property or ordering the winding up or liquidation of its
affairs, and such decree or order remaining unstayed and in
effect for a period of 90 consecutive days; or
|
|
|
|
Celgene commencing a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in
effect, or consenting to the entry of an order for relief in an
involuntary case under any such law, or consent to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee or sequestrator (or similar
official) of Celgene or for any substantial part of its
property, or making any general assignment for the benefit of
creditors.
|
If an event of default described above occurs and is continuing,
then, and in each and every such case, either the trustee or the
trustee upon the written request of holders of a majority of the
outstanding CVRs, shall bring suit to protect the rights of the
holders, including to obtain payment for any amounts then due
and payable, which amounts shall bear interest at the default
interest rate (as set forth in the CVR agreement) until payment
is made to the trustee.
The foregoing provisions, however, are subject to the condition
that if, at any time after the trustee shall have begun such
suit, and before any judgment or decree for the payment of the
moneys due shall have been obtained or entered, Celgene shall
pay or shall deposit with the trustee a sum sufficient to pay
all amounts which shall have become due (with interest upon such
overdue amount at the default interest rate specified in the CVR
agreement to the date of such payment or deposit) and such
amount as shall be sufficient to cover reasonable compensation
to the trustee, its agents, attorneys and counsel, and all other
expenses and liabilities incurred and all advances made, by the
trustee, and if any and all events of default under the CVR
agreement shall have been cured, waived or otherwise remedied as
provided herein, then and in every such case the holders of a
majority of all the CVRs then outstanding, by written notice to
Celgene and to the trustee, may waive all defaults with respect
to the CVRs, but no such waiver or rescission and annulment will
extend to or will affect any subsequent default or shall impair
any right consequent thereof.
94
Restrictions
on Purchases by Celgene and Affiliates
The CVR agreement does not prohibit Celgene or any of its
subsidiaries or affiliates from acquiring the CVRs, whether in
open market transactions, private transactions or otherwise.
Registration
and Transfers
Celgene will cause to be kept at the office of the trustee a
register in which, subject to such reasonable regulations as it
may prescribe, Celgene shall provide for the registration and
transfer of the CVRs.
Upon surrender for registration of transfer of any CVR at the
office or agency of Celgene, Celgene shall execute, and the
trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new CVR
certificates representing the same aggregate number of CVRs
represented by the CVR certificate so surrendered that are to be
transferred and Celgene shall execute and the trustee shall
authenticate and deliver, in the name of the transferor, one or
more new CVR certificates representing the aggregate number of
CVRs represented by such CVR certificate that are not to be
transferred.
No service charge shall be made for any registration of transfer
or exchange of CVRs, but Celgene may require payment of a sum
sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer
or exchange of CVRs.
Amendment
of CVR Agreement without Consent of CVR Holders
Without the consent of any CVR holders, Celgene and the trustee
may amend the CVR agreement for any of the following purposes:
|
|
|
|
|
to convey, transfer, assign, mortgage or pledge to the trustee
as security for the CVRs any property or assets;
|
|
|
|
to evidence the succession of another person to Celgene, and the
assumption by any such successor of the covenants of Celgene in
the CVR agreement and in the CVRs;
|
|
|
|
to add to Celgenes covenants such further covenants,
restrictions, conditions or provisions as its board of directors
and the trustee shall consider to be for the protection of CVR
holders, and to make the occurrence, or the occurrence and
continuance, of a default in any such additional covenants,
restrictions, conditions or provisions an event of default
permitting the enforcement of all or any of the several remedies
provided in the CVR agreement, provided that in respect of any
such additional covenant, restriction, condition or provision,
such amendment may (1) provide for a particular grace
period after default, (2) provide for an immediate
enforcement upon such event of default, (3) limit the
remedies available to the trustee upon such event of default, or
(4) limit the right of the holders of a majority of the
outstanding CVRs to waive an event of default;
|
|
|
|
to cure any ambiguity, to correct or supplement any provision in
the CVR agreement or in the CVRs which may be defective or
inconsistent with any other provision in the CVR agreement,
provided that these provisions shall not materially reduce the
benefits of the CVR agreement or the CVRs to the CVR holders;
|
|
|
|
to make any other provisions with respect to matters or
questions arising under the CVR agreement, provided that such
provisions shall not adversely affect the interests of the CVR
holders;
|
|
|
|
to make any amendments or changes necessary to comply or
maintain compliance with the Trust Indenture Act, if
applicable; or
|
|
|
|
to make any change that does not adversely affect the interests
of the CVR holders.
|
95
Amendment
of CVR Agreement with Consent of CVR Holders
With the consent of the holders of at least a majority of the
outstanding CVRs, Celgene and the trustee may make other
amendments to the CVR agreement, provided that no such amendment
shall, without the consent of each holder of a CVR affected
thereby:
|
|
|
|
|
modify in a manner adverse to the CVR holders (1) any
provision contained in the CVR agreement with respect to the
termination of the CVR agreement or the CVRs, (2) the time
for payment and amount of the net sales payment or milestone
payment or otherwise extend the maturity of the CVRs or reduce
the amounts payable in respect of the CVRs or modify any other
payment term or payment date (except that this provision does
not impair the right of Celgene to redeem the CVRs as described
under CVR Redemption Rights below;
|
|
|
|
reduce the number of CVRs, the consent of whose holders is
required for any such amendment; or
|
|
|
|
modify any of the provisions of the CVR agreement regarding
amendments to the CVR agreement, except to increase the
percentage of outstanding CVRs required for an amendment or to
provide that certain other provisions of the CVR agreement
cannot be modified or waived without the consent of each CVR
holder affected by such modification or waiver.
|
CVR
Redemption Rights
Subject to certain notice requirements described below, Celgene
may, at any time on and after the date that 50% of the CVRs
either are no longer outstanding
and/or
repurchased, acquired, redeemed or retired by Celgene,
optionally redeem all (but not less than all) of the outstanding
CVRs at a cash redemption price equal to the average price paid
per CVR for all CVRs previously purchased by Celgene calculated
as of the business day immediately prior to the date of the
notice of redemption.
In order to optionally redeem the CVRs, Celgene must give a
notice to the trustee at least 45 days but not more than
60 days prior to the redemption date and a notice to each
CVR holder whose CVRs are to be redeemed at least 30 days
but not more than 60 days prior to the redemption date.
The notice to the trustee must include (1) the clause of
the CVR agreement pursuant to which the redemption shall occur,
(2) the redemption date, (3) the amount of CVRs to be
redeemed and (4) the redemption price.
The notice to the CVR holders must include:
|
|
|
|
|
the redemption date;
|
|
|
|
the redemption price;
|
|
|
|
the name and address of the paying agent;
|
|
|
|
a statement that CVRs called for redemption must be surrendered
to the paying agent to collect the redemption price;
|
|
|
|
a statement that unless Celgene defaults in making such
redemption payment, all right, title and interest in and to the
CVRs and any CVR payments will cease to accrue on and after the
redemption date;
|
|
|
|
the clause of the CVR agreement pursuant to which the CVRs
called for redemption are being redeemed; and
|
|
|
|
a statement that no representation is made as to the correctness
or accuracy of the CUSIP and ISIN number, if any, listed in such
notice or printed on the CVRs.
|
If less than all of the CVRs are to be redeemed or purchased at
any time, the trustee will select the CVRs to be redeemed or
purchased among the CVR holders in compliance with the
requirements of the principal national securities exchange, if
any, on which the CVRs are listed or, if the CVRs are not so
listed, on a pro rata basis, by lot or in any other method the
trustee considers fair and appropriate.
96
CERTAIN
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain material
U.S. federal income tax consequences of the merger to
U.S. holders (as defined below) of Abraxis common stock
whose shares are exchanged for the merger consideration in the
merger. This discussion is for general information only and is
not tax advice. This discussion does not purport to consider all
aspects of U.S. federal income taxation that might be
relevant to Abraxis stockholders. This discussion is based on
the provisions of the Code, applicable current and proposed
U.S. Treasury Regulations, judicial authority, and
administrative rulings and practice, all of which are subject to
change, possibly on a retroactive basis. Any such change could
alter the tax consequences described herein.
For purposes of this discussion, the term
U.S. holder means a beneficial owner of shares
of Abraxis common stock that is, for U.S. federal income
tax purposes:
|
|
|
|
|
an individual citizen or resident of the United States;
|
|
|
|
a corporation (or other entity taxable as a corporation) created
or organized under the laws of the United States or any
state thereof (or the District of Columbia);
|
|
|
|
a trust if it (1) is subject to the primary supervision of
a court within the United States and one or more
U.S. persons have the authority to control all substantial
decisions of the trust or (2) has a valid election in
effect under applicable U.S. Treasury Regulations to be
treated as a U.S. person; or
|
|
|
|
an estate the income of which is subject to U.S. federal
income tax regardless of its source.
|
This discussion assumes that a U.S. holder holds its shares
of Abraxis common stock as a capital asset, and will hold its
CVRs as a capital asset, in each case within the meaning of
Section 1221 of the Code (generally, property held for
investment). This discussion does not address all aspects of
U.S. federal income tax that may be relevant to an Abraxis
stockholder in light of its particular circumstances, or that
may apply to Abraxis stockholders that are subject to special
treatment under the U.S. federal income tax laws
(including, for example, insurance companies, dealers in
securities or foreign currencies, traders in securities who
elect the
mark-to-market
method of accounting for their securities, persons subject to
the alternative minimum tax, persons that have a functional
currency other than the U.S. dollar, tax-exempt
organizations (including private foundations), financial
institutions, mutual funds, subchapter S corporations,
partnerships or other pass-through entities for
U.S. federal income tax purposes, holders that are not
U.S. holders, controlled foreign corporations, passive
foreign investment companies, certain expatriates, corporations
that accumulate earnings to avoid U.S. federal income tax,
persons who hold shares of Abraxis common stock as part of a
hedge, straddle, constructive sale, conversion or other
integrated transaction, persons who acquired their shares of
Abraxis common stock through the exercise of options or other
compensation arrangements, persons who exercise statutory
appraisal rights or persons whose ability to sell their Abraxis
common stock is limited by SEC Rule 144). In addition, this
discussion does not address any aspect of state, local, foreign,
estate, gift or other tax law that may apply to Abraxis
stockholders. The U.S. federal income tax consequences
described below are not intended to constitute a complete
description of all tax consequences relating to the merger.
Abraxis stockholders are urged to consult their own tax advisors
to determine the tax consequences to them of, including the
application and effect of any U.S. federal, state, local
and foreign income, estate, gift and other tax laws to, the
receipt of cash, Celgene common stock and CVRs in exchange for
Abraxis common stock pursuant to the merger, and receipt of any
CVR payments.
If any entity that is treated as a partnership for
U.S. federal tax purposes holds Abraxis common stock, the
tax treatment of its partners or members generally will depend
upon the status of the partner or member and the activities of
the entity. If you are a partner of a partnership or a member of
a limited liability company or other entity classified as a
partnership for U.S. federal tax purposes and that entity
holds shares of Abraxis common stock, you should consult your
tax advisor.
The receipt by a U.S. holder of cash, Celgene common stock
and CVRs in exchange for shares of Abraxis common stock pursuant
to the merger will be a taxable transaction for
U.S. federal income tax purposes (and may also be a taxable
transaction under applicable state, local, and foreign income or
other tax laws). For U.S. federal
97
income tax purposes, a U.S. holder of Abraxis common stock
generally will recognize capital gain or loss at the time of the
merger equal to the difference, if any, between:
|
|
|
|
|
the sum of (1) the amount of cash (including any cash
received in lieu of fractional shares of Celgene common stock),
(2) the fair market value of the Celgene common stock and
(3) the fair market value of the CVRs received by the
U.S. holder in exchange for such Abraxis common
stock; and
|
|
|
|
the U.S. holders adjusted tax basis in such Abraxis
common stock.
|
Such gain or loss generally will be long-term capital gain or
loss provided the U.S. holders holding period for the
Abraxis common stock surrendered in the merger exceeds one year
as of the date of the merger. In general, long-term capital gain
of individuals currently is subject to U.S. federal income
tax at a maximum rate of 15%. The legislation providing for this
15% rate is scheduled to expire at the end of 2010, at which
time the rate may increase. The deductibility of capital losses
is subject to limitations under the Code. The amount and
character of gain or loss must be determined separately for each
block of Abraxis common stock (i.e., shares acquired at the same
cost in a single transaction) exchanged for the merger
consideration in the merger. The installment method of reporting
any gain attributable to receipt of a CVR will not be available
because Abraxis common stock is traded on an established
securities market.
A U.S. holders initial tax basis in Celgene common
stock received in the merger will equal the fair market value of
such stock upon receipt, and the holding period for such stock
will begin on the day following the date of the merger.
A U.S. holders initial tax basis in CVRs received in
the merger will equal the fair market value of such CVRs as
determined for U.S. federal income tax purposes, and the
holding period for such CVRs will begin on the day following the
date of the merger.
There is no legal authority directly addressing the
U.S. federal income tax treatment of the CVRs. Pursuant to
the merger agreement and the CVR agreement, the parties to the
merger agreement and the CVR agreement have agreed or will
agree, as applicable, to treat and report any CVR payments
(except to the extent of any imputed interest, as described
below) for all tax purposes as additional consideration for the
sale of Abraxis common stock in the merger, except as required
by applicable law. Assuming this treatment is correct, a
U.S. holder should recognize gain as and to the extent
aggregate CVR payments received (less imputed interest, as
described below) exceed the U.S. holders adjusted tax
basis in the CVR, and such gain should be long-term capital gain
if the U.S. holder has held the CVR for more than one year.
A U.S. holder who does not sell, exchange or otherwise
dispose of a CVR may not be able to recognize a loss with
respect to the CVR until the U.S. holders right to
receive CVR payments terminates.
In accordance with the CVR agreement, Celgene has agreed to
report imputed interest on the CVRs pursuant to Section 483
of the Code. Under Section 483 of the Code, a portion of
any CVR payment due more than six months after the date of the
merger should be treated as interest income that is ordinary
income to a U.S. holder, and the amount of such a CVR
payment treated as imputed interest generally should be equal to
the excess of (1) the amount of the CVR payment over
(2) the present value of such amount as of the completion
of the merger, discounted at the relevant applicable federal
rate. The relevant applicable federal rate will be the lower of
(a) the lowest applicable federal rate in effect during the
three-month period ending with the month that includes the date
on which the merger agreement was signed, and (b) the
lowest applicable federal rate in effect during the three-month
period ending with the month that includes the completion of the
merger. Under Section 483, the imputed interest is
accounted for in accordance with the holders regular
method of accounting. Upon the making of any CVR payment,
Celgene will report to the holder of the CVR and to the Internal
Revenue Service, which we refer to as the IRS, the amount of
such interest income, if any, as calculated above.
Upon a sale or exchange of a CVR, a U.S. holder should
recognize capital gain or loss equal to the difference between
(1) the sum of the amount of any cash received upon such
sale or exchange and the fair market value of any property
received upon such sale or exchange (less any imputed interest,
as described below) and (2) the U.S. holders
adjusted tax basis in the CVR. Such gain or loss generally will
be long-term capital gain or loss if the U.S. holder has
held the CVR for more than one year. A portion of the amount
received by a U.S. holder upon
98
the sale or exchange of a CVR may be treated as imputed interest
income, determined under the method described above.
As discussed above, the U.S. federal income tax treatment
of the CVRs is unclear. Thus, there can be no assurance that the
IRS would not assert, or that a court would not sustain, a
position that any CVR payment or a sale or exchange of a CVR
does not attract capital gain treatment, or that a different
method should be used for purposes of reporting imputed
interest. If such a position were sustained, all or any part of
any CVR payment (or a payment in exchange for a CVR) could be
treated as ordinary income and could be required to be included
in income prior to receipt.
Under the Code, consideration received in the merger and any CVR
payment received by a U.S. holder may be subject to
U.S. information reporting and backup withholding. Backup
withholding (currently at a rate of 28%) will apply with respect
to the amount of cash received by a non-corporate
U.S. holder, unless the U.S. holder provides proof of
an applicable exemption or a correct taxpayer identification
number, and otherwise complies with the applicable requirements
of the backup withholding rules. Backup withholding is not an
additional tax and any amounts withheld under the backup
withholding rules may be refunded or credited against a
U.S. holders U.S. federal income tax liability,
if any, provided that such U.S. holder furnishes the
required information to the IRS in a timely manner.
TAX MATTERS CAN BE COMPLICATED. THE FOREGOING
DISCUSSION DOES NOT PURPORT TO BE A COMPLETE DISCUSSION OF THE
POTENTIAL TAX CONSEQUENCES OF THE MERGER. ABRAXIS STOCKHOLDERS
ARE STRONGLY URGED TO CONSULT THEIR TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE
APPLICABILITY AND EFFECT OF U.S. FEDERAL, STATE, LOCAL AND
FOREIGN INCOME, ESTATE, GIFT AND OTHER TAX LAWS IN THEIR
PARTICULAR CIRCUMSTANCES. NOTHING IN THIS DISCUSSION IS INTENDED
TO BE, OR SHOULD BE CONSTRUED AS, TAX ADVICE.
DESCRIPTION
OF THE CAPITAL STOCK OF CELGENE
The following discussion is a summary of the terms of the
capital stock of Celgene and should be read in conjunction with
the section entitled Comparative Rights of Abraxis
Stockholders and Celgene Stockholders. This summary is not
meant to be complete and is qualified by reference to the
relevant provisions of the DGCL and Celgenes certificate
of incorporation, as amended, which we refer to as
Celgenes certificate of incorporation, and Celgenes
by-laws, as amended, which we refer to as Celgenes bylaws.
You are urged to read those documents carefully. Copies of
Celgenes certificate of incorporation and bylaws are
incorporated by reference as exhibits to the reports Celgene
files with the SEC, which are incorporated by reference in this
proxy statement/prospectus. See Where You Can Find More
Information for the location of information incorporated
by reference into this proxy statement/prospectus.
Celgenes authorized capital stock consists of:
|
|
|
|
|
575,000,000 shares of common stock, par value $.01 per
share; and
|
|
|
|
5,000,000 shares of preferred stock, par value $.01 per
share, of which 520 shares have been designated
Series A convertible preferred stock and 20,000 shares
have been designated as Series B convertible preferred
stock.
|
As of July 23, 2010, there were 460,038,147 shares of
Celgene common stock outstanding and no shares of Celgene
preferred stock outstanding.
Common
Stock
Holders of Celgene common stock are entitled to one vote for
each share held on all matters submitted to a vote of
stockholders and do not have cumulative voting rights. Holders
of Celgene common stock are entitled to receive ratably such
dividends, if any, as may be declared by the Celgene board of
directors out of funds legally available therefor, and subject
to any preferential dividend rights of any then-outstanding
preferred stock. Upon Celgenes liquidation, dissolution or
winding up, the holders of Celgene common stock are entitled to
receive ratably
99
Celgenes net assets available after the payment of all
debts and other liabilities and subject to any liquidation
preference of any then outstanding preferred stock. Holders of
Celgene common stock have no preemptive, subscription or
conversion rights. There are no redemption or sinking fund
provisions applicable to the Celgene common stock. The
outstanding shares of Celgene common stock are, and the shares
to be issued in connection with the merger will be, fully paid
and non-assessable.
American Stock Transfer & Trust Company is the
transfer agent and registrar for Celgene common stock. Shares of
Celgene common stock are listed on The NASDAQ Global Select
Market under the symbol CELG.
Preferred
Stock
The Celgene board of directors has the authority, subject to
certain restrictions, without further stockholder approval, to
issue, at any time and from time to time, shares of preferred
stock in one or more series. Each such series shall have such
number of shares, designations, preferences, voting powers,
qualifications and special or relative rights or privileges as
shall be determined by the Celgene board of directors, which may
include, among others, dividend rights, voting rights,
redemption and sinking fund provisions, liquidation preferences,
conversion rights and preemptive rights, to the full extent now
or hereafter permitted by the DGCL.
The rights of the holders of Celgene common stock will be
subject to, and may be adversely affected by, the rights of
holders of any Celgene preferred stock that may be issued in the
future. Such rights may include voting and conversion rights
which could adversely affect the holders of Celgene common
stock. Satisfaction of any dividend or liquidation preferences
of outstanding Celgene preferred stock would reduce the amount
of funds available, if any, for the payment of dividends or
liquidation amounts on Celgene common stock. Holders of Celgene
preferred stock would typically be entitled to receive a
preference payment.
Delaware
Law and Bylaw Provisions
The Celgene board of directors has adopted certain provisions
in, and amendments to, Celgenes bylaws intended to
strengthen the Celgene board of directors position in the
event of a hostile takeover attempt. These bylaw provisions
provide:
|
|
|
|
|
that only persons who are nominated in accordance with the
procedures set forth in the bylaws shall be eligible for
election as directors;
|
|
|
|
for the election of directors by majority voting in uncontested
elections and by plurality voting in contested elections;
|
|
|
|
that only business brought before the annual meeting by the
Celgene board of directors or by a stockholder who complies with
the procedures set forth in the bylaws may be transacted at an
annual meeting of stockholders;
|
|
|
|
that only the chairman of the board, if any, the chief executive
officer, the president, the secretary or a majority of the
Celgene board of directors may call special meetings of Celgene
stockholders;
|
|
|
|
a procedure for the Celgene board of directors to fix the record
date whenever stockholder action by written consent is
undertaken; and
|
|
|
|
that a vote of holders of not less than a majority of the
outstanding shares of Celgene common stock may amend bylaw
provisions, and the Celgene board of directors, except as
otherwise provided by law, shall have power equal to that of the
stockholders to amend the bylaws by vote of not less than a
majority of the entire board of directors.
|
Furthermore, Celgene is subject to the provisions of
Section 203 of the DGCL. In general, the statute prohibits
a publicly held Delaware corporation from engaging in a
business combination with an interested
stockholder for a period of three years after the time of
the transaction in which the person became an interested
stockholder, subject to certain exceptions. For purposes of
Section 203, a business combination includes a
merger, asset sale or other transaction resulting in a financial
benefit to the interested stockholder, and an interested
stockholder is a
100
person who, together with affiliates and associates, owns, or is
an affiliate or associate of the corporation and within the
prior three years, did own, 15% or more of the
corporations voting stock.
COMPARATIVE
RIGHTS OF ABRAXIS STOCKHOLDERS AND CELGENE
STOCKHOLDERS
Both Abraxis and Celgene are incorporated under the laws of the
State of Delaware and, accordingly, the rights of the
stockholders of each are currently, and will continue to be,
governed by the DGCL. Before the completion of the merger, the
rights of holders of Abraxis common stock are also governed by
the certificate of incorporation and the bylaws of Abraxis, as
amended, which we refer to as Abraxis bylaws. After the
completion of the merger, Abraxis stockholders will become
stockholders of Celgene, and their rights will be governed by
the DGCL, the certificate of incorporation of Celgene and
Celgenes bylaws.
The following is a summary of the material differences between
the rights of Abraxis stockholders and the rights of Celgene
stockholders. While we believe that this summary covers the
material differences between the two, this summary may not
contain all of the information that is important to you. This
summary is not intended to be a complete discussion of the
respective rights of Abraxis and Celgene stockholders and is
qualified in its entirety by reference to the DGCL and the
various documents of Abraxis and Celgene that we refer to in
this summary. You should carefully read this proxy
statement/prospectus in its entirety and the other documents we
refer to in this proxy statement/prospectus for a more complete
understanding of the differences between being a stockholder of
Abraxis and being a stockholder of Celgene. Abraxis and Celgene
have filed their respective documents referred to herein with
the SEC
and/or have
attached them as exhibits to this proxy statement/prospectus,
and will send copies of these documents to you upon your
request. Please see the section entitled Where You Can
Find More Information.
|
|
|
|
|
|
|
Abraxis
|
|
Celgene
|
|
Authorized Capital Stock:
|
|
The authorized capital stock of Abraxis currently consists of
106,000,000 shares, consisting of 100,000,000 shares
of common stock, $.001 par value per share, and
6,000,000 shares of preferred stock, $.001 par value
per share.
|
|
The authorized capital stock of Celgene currently consists of
580,000,000 shares, consisting of 575,000,000 shares
of common stock, $.01 par value per share, and
5,000,000 shares of preferred stock, $.01 par value
per share.
|
Rights of Preferred Stock:
|
|
The Abraxis board of directors has the authority, without
stockholder approval, to create or provide for any series of
preferred stock, and to fix the designations, preferences and
rights, and qualifications, limitations or restrictions thereof,
which designations, preferences or rights may be superior to
those of Abraxis common stock. Abraxis currently has no shares
of preferred stock outstanding.
|
|
The Celgene board of directors has the authority, without stockholder approval, to issue shares of authorized preferred stock from time to time in one or more series and to fix the designations, powers, preferences and rights and the qualifications, limitations and restrictions of each series of preferred stock, which rights and preferences may be superior to those of Celgene common stock.
Celgene currently has no shares of preferred stock outstanding.
|
Number of Directors:
|
|
Abraxis bylaws currently provide that a majority of the
members of the Abraxis board of directors can determine the
number of directors on its board, provided that the board
consists of at least one member. There currently are seven
directors serving on the Abraxis board of directors.
|
|
Celgenes bylaws currently provide that the number of
members of the Celgene board of directors shall consist of no
less than three and no more than 15 directors; provided,
however, that a majority of the then authorized number of
directors may increase or decrease the number of directors.
There are currently nine directors serving on the Celgene board
of directors.
|
Election of Directors:
|
|
Abraxis bylaws provide that, directors shall be elected by
a plurality vote of the shares present in person, by remote
communication, if applicable, or represented by proxy at the
stockholders annual meeting in each year and entitled to
vote on the election of directors.
|
|
Celgenes bylaws provide that, at any meeting duly called
and held for the election of directors at which a quorum is
present, each nominee for director shall be elected to the board
of directors if the votes cast for such nominees election
exceed the votes cast against such nominees election;
provided, however, that directors shall be elected by a
plurality of the votes cast by the holders (acting as such) of
shares of stock of Celgene entitled to elect such directors at
any meeting of stockholders for which (1) the secretary of
Celgene receives a notice that a stockholder has nominated a
person for election to the board of directors in compliance with
the advance notice requirements for stockholder nominees for
director set forth in Celgenes bylaws and (2) such
nomination has not been withdrawn by such stockholder on or
prior to the day next preceding the date Celgene first mails its
notice of meeting for such meeting to the stockholders. If
directors are to be elected by a plurality of the votes cast,
stockholders shall not be permitted to vote against a nominee.
|
101
|
|
|
|
|
|
|
Abraxis
|
|
Celgene
|
|
Cumulative Voting:
|
|
Abraxis certificate of incorporation and bylaws do not
provide for cumulative voting, and as a result, holders of
Abraxis capital stock have no cumulative voting rights in
connection with the election of directors.
|
|
Celgenes certificate of incorporation and bylaws do not
provide for cumulative voting, and as a result, holders of
Celgenes capital stock have no cumulative voting rights in
connection with the election of directors.
|
Classification of Board of Directors:
|
|
Abraxis does not have a classified board of directors.
Abraxis bylaws provide that the directors shall be elected
at each annual meeting of Abraxis stockholders and shall hold
office until the next annual meeting and until their successors
shall be duly elected and qualified, or until such
directors earlier death, resignation or removal.
|
|
Celgene does not have a classified board of directors.
Celgenes bylaws provide that the directors shall be
elected at each annual meeting of Celgene stockholders and shall
serve until the next succeeding annual meeting of stockholders
and until their respective successors have been elected and
qualified.
|
Removal of Directors:
|
|
Abraxis bylaws provide that any director or the entire
board of directors may be removed from office, with or without
cause, by the affirmative vote of the holders of a majority of
the outstanding shares entitled to vote at an election of
directors.
|
|
Celgenes bylaws provide that any director or the entire
board of directors may be removed, with or without cause, by the
holders of a majority of the shares at the time entitled to vote
at an election of directors.
|
Board Vacancies:
|
|
Abraxis bylaws provide that vacancies on the board of
directors or newly created directorships resulting from an
increase in the authorized number of directors may, unless
otherwise provided in the certificate of incorporation, be
filled by the affirmative vote of a majority of directors then
in office, even though less than a quorum, or by a sole
remaining director. Any director so elected shall hold office
for the unexpired portion of the term of the director whose
place shall be vacant, and until his successor shall have been
duly elected and qualified. A board vacancy shall be deemed to
exist in the case of the death, removal or resignation of any
director, or if the stockholders fail at any meeting of
stockholders at which directors are to be elected to elect the
number of directors then constituting the whole board of
directors.
|
|
Celgenes bylaws provide that vacancies on the board of
directors caused by death, resignation, removal,
disqualification, or other cause, or additional directorships
resulting from an increase in the number of directors may be
filled at any time by a majority of directors then in office,
even though less than a quorum, or in the case of any vacancy in
the office of any director, by the stockholders. Any director so
chosen shall hold office until his successor shall have been
elected and qualified; or, if the person so chosen is a director
elected to fill a vacancy, he shall hold office for the
unexpired term of his predecessor.
|
102
|
|
|
|
|
|
|
Abraxis
|
|
Celgene
|
|
Director Nominations by Stockholders:
|
|
Abraxis bylaws provide that nominations of persons for
election to the Abraxis board of directors may be made at a
meeting of stockholders by or at the direction of the board of
directors, by any nominating committee or person appointed by
the board of directors or by any stockholder entitled to vote
for the election of directors at the meeting who complies with
the applicable notice procedures set forth in Abraxis
bylaws. Such nominations, other than those made by or at the
direction of the board of directors, shall be made pursuant to
timely notice in writing to the secretary of Abraxis. To be
timely, a stockholders notice must be delivered to or
mailed and received not less than 120 calendar days prior to the
date on which Abraxis first mailed its proxy materials for the
previous years annual meeting of stockholders. If during
the prior year Abraxis did not hold an annual meeting, or if the
date of the annual meeting was changed more than 30 days
from the previous years meeting, then the deadline is a
reasonable time before Abraxis begins to print and mail its
proxy materials. Such stockholders notice shall set forth
(a) as to each person whom the stockholder proposes to nominate
for election or re-election as a director, (1) the name, age,
business address and residence address of the person, (2) the
principal occupation or employment of the person, (3) the class
and number of shares of Abraxis which are beneficially owned by
the person and (4) any other information relating to the person
that is required to be disclosed in solicitations for proxies
for election of directors pursuant to Rule 14a under the
Exchange Act; and (b) as to the stockholder giving the notice,
(1) the name and record address of the stockholder, and (2) the
class and number of shares of Abraxis which are beneficially
owned by the stockholder. These provisions do not apply to
nomination of any persons entitled to be separately elected by
holders of Abraxis preferred stock.
|
|
Celgenes bylaws provide that nominations of persons for
election to the Celgene board of directors may be made at any
annual meeting of stockholders, (a) by or at the direction of
the board of directors (or any duly authorized committee
thereof) or (b) by any Celgene stockholder (1) who is a
stockholder of record on the date of the giving of the required
notice and on the record date for the determination of
stockholders entitled to vote at such annual meeting and (2) who
complies with the notice procedures set forth in the bylaws. For
a nomination to be made by a stockholder, such stockholder must
have given timely notice thereof in proper written form to the
secretary of Celgene. To be timely, a stockholders notice
to the secretary must be delivered to or mailed and received at
the principal executive offices of Celgene not less than
60 days nor more than 90 days prior to the date of the
annual meeting; provided, however, that in the event that less
than 70 days notice or prior public disclosure of the
date of the annual meeting is given or made to stockholders,
notice by the stockholder (in order to be timely) must be so
received not later than the close of business on the
10th day following the day on which such notice of the date
of the annual meeting was mailed or such public disclosure of
the date of the annual meeting was made, whichever first
occurs. To be in proper written form, a stockholders
notice to the secretary must set forth (a) as to each person
whom the stockholder proposes to nominate for election as a
director (1) the name, age, business address and residence
address of the person, (2) the principal occupation or
employment of the person, (3) the class or series and number of
shares of capital stock of Celgene which are owned beneficially
or of record by the person and (4) any other information
relating to the person that would be required to be disclosed in
a proxy statement or other filing required to be made in
connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act, and the
rules and regulations promulgated thereunder; and (b) as to the
stockholder giving the notice (1) the name and record address of
such stockholder, (2) the class or series and number of shares
of capital stock of Celgene which are owned beneficially or of
record by such stockholder, (3) a description of all
arrangements or understandings between such stockholder and each
proposed nominee and any other person or persons (including
their names) pursuant to which the nomination(s) are to be made
by such stockholder, (4) a representation that such stockholder
intends to appear in person or by proxy at the annual meeting to
nominate the persons named in his notice and (5) any other
information relating to such stockholder that would be required
to be disclosed in a proxy statement or other filing required to
be made in connection with solicitations of proxies for election
of directors pursuant to Section 14 of the Exchange Act and the
rules and regulations promulgated thereunder. Such notice must
be accompanied by a written consent of each proposed nominee to
being named as a nominee and to serve as a director if elected.
|
Stockholder Action by Written Consent:
|
|
Abraxis bylaws provide that, unless otherwise provided in
the certificate of incorporation, any action required by statute
to be taken at any annual or special meeting of the
stockholders, or any action which may be taken at any annual or
special meeting of the stockholders, may be taken by written
consent if the written consent is signed by the holders of
outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were
present and voted. No written consent shall be effective to take
the corporate action referred to therein unless, within
60 days of the earliest dated consent duly delivered to
Abraxis, written consents signed by a sufficient number of
stockholders to take such action are duly delivered to Abraxis.
Abraxis certificate of incorporation does not prohibit
stockholders from taking action by written consent as provided
in Abraxis bylaws.
|
|
Celgenes certificate of incorporation does not provide for
action to be taken by the stockholders of Celgene by written
consent. Accordingly, the default DGCL Section 228 applies,
providing that any action required by statute to be taken at any
annual or special meeting of the stockholders, or any action
which may be taken at any annual or special meeting of the
stockholders, may be taken by written consent if the written
consent is signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
|
103
|
|
|
|
|
|
|
Abraxis
|
|
Celgene
|
|
Certificate of Incorporation Amendments:
|
|
Abraxis reserves the right to amend, alter, change or repeal any
provision contained in its certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights
conferred upon Abraxis stockholders therein are granted subject
to this reservation. The DGCL requires that any amendment to
Abraxis certificate of incorporation must be approved by
the board of directors and that a resolution be adopted
recommending that the amendment be approved by a majority of the
outstanding stock entitled to vote on the amendment, plus the
amendment must be approved by a majority of the outstanding
stock of any class entitled under the DGCL to vote separately as
a class on the amendment.
|
|
The DGCL requires that any amendment to Celgenes
certificate of incorporation must be approved by the board of
directors and that a resolution be adopted recommending that the
amendment be approved by a majority of the outstanding stock
entitled to vote on the amendment, plus the amendment must be
approved by a majority of the outstanding stock of any class
entitled under the DGCL to vote separately as a class on the
amendment.
|
Bylaw Amendments:
|
|
Abraxis bylaws may be repealed, altered or amended or new
bylaws adopted at any meeting of the stockholders, either annual
or special, by the affirmative vote of at least 80% of the stock
entitled to vote at such meeting, unless a larger vote is
required by Abraxis bylaws or certificate of
incorporation. The Abraxis board of directors also has the
authority to repeal, alter or amend Abraxis bylaws or
adopt new bylaws (including, without limitation, the amendment
of any bylaws setting forth the number of directors who
constitute the whole board of directors) by unanimous written
consent or at any annual, regular or special meeting by the
affirmative vote of a majority of the whole number of directors,
subject to the power of Abraxis stockholders to change or repeal
such bylaws and provided that the Abraxis board of directors
will not make or alter any bylaws fixing the qualifications,
classifications or term of office of directors.
|
|
Celgenes bylaws provide that the holders of shares
entitled at the time to vote for the election of directors have
power to adopt, amend, or repeal the bylaws by vote of not less
than a majority of such shares, and except as otherwise provided
by law, the board of directors has power equal in all respects
to that of the stockholders to adopt, amend, or repeal the
bylaws by vote of not less than a majority of the entire board.
|
Special Meetings of Stockholders:
|
|
Abraxis bylaws provide that special meetings of the
stockholders may be called, for any purpose or purposes, by the
chairman of the board of directors, the president, the secretary
or the board of directors at any time.
|
|
Celgenes bylaws provide that special meetings of the
stockholders may be called, for any purpose or purposes, by the
chairman of the board of directors, if any, the chief executive
officer, the president, the secretary, or a majority of the
board of directors at any time.
|
Notice of Special Meetings of Stockholders:
|
|
Abraxis bylaws require that written notice of a special
meeting be given to stockholders not less than ten days or more
than 60 days before the date of the meeting, except that
where the matter to be acted on is a merger or consolidation of
Abraxis or a sale, lease or exchange of all or substantially all
of its assets, such notice must be given not less than 20 nor
more than 60 days prior to such meeting.
|
|
Celgenes bylaws require that notice of a special meeting
must be given by the chairman of the board of directors, if any,
the chief executive officer, the president, any vice-president,
the secretary, or an assistant secretary, to stockholders not
less than ten days or more than 60 days before the date of
the meeting, unless a different period is prescribed by law.
|
Stockholder Nominations and Proposals (Requirements for
Delivery and Notice):
|
|
Abraxis bylaws provide that in order for a stockholder to make a nomination or propose business at an annual meeting of the stockholders, the stockholder must give timely written notice to Abraxis secretary not less than 120 calendar days prior to the date on which Abraxis first mailed its proxy materials for the prior years annual meeting. If during the prior year Abraxis did not hold an annual meeting, or if the date of the annual meeting was changed more than 30 days from the prior years meeting, then the deadline is a reasonable time before Abraxis begins to print and mail its proxy materials.
A stockholders notice to the secretary must set forth as to each matter the stockholder proposes to bring before the annual meeting (1) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (2) the name and record address of the stockholder proposing such business, (3) the class and number of shares of Abraxis which are beneficially owned by the stockholder and (4) any material interest of the stockholder in such business.
|
|
Celgenes bylaws provide that in order for a stockholder to
make a nomination or propose business at an annual meeting of
the stockholders, the stockholder must give timely written
notice to Celgenes secretary not less than 60 days
nor more than 90 days prior to the date of the annual
meeting; provided, however, that in the event that less than
70 days notice or prior public disclosure of the date
of the annual meeting is given or made to stockholders, notice
by the stockholder (in order to be timely) must be so received
not later than the close of business on the tenth (10th) day
following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure of the date of the
annual meeting was made, whichever first occurs. A
stockholders notice to the secretary must set forth as to
each matter such stockholder proposes to bring before the annual
meeting (1) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting
such business at the annual meeting, (2) the name and record
address of such stockholder, (3) the class or series and number
of shares of capital stock of Celgene which are owned
beneficially or of record by such stockholder, (4) a description
of all arrangements or understandings between such stockholder
and any other person or persons (including their names) in
connection with the proposal of such business by such
stockholder and any material interest of such stockholder in
such business, and (v) a representation that such stockholder
intends to appear in person or by proxy at the annual meeting to
bring such business before the meeting.
|
104
|
|
|
|
|
|
|
Abraxis
|
|
Celgene
|
|
Proxy:
|
|
Abraxis bylaws provide that every person entitled to vote
or execute consents has the right to do so either in person, by
remote communication, if applicable, or by an agent or agents
authorized by a written proxy executed by such person or his
duly authorized agent, which proxy must be filed with the
secretary of Abraxis at or before the meeting at which it is to
be used. The proxy so appointed need not be a stockholder. No
proxy may be voted on after three years from its date of
creation unless the proxy provides for a longer period. Unless
and until voted, every proxy will be revocable at the pleasure
of the person who executed it or of his legal representatives or
assigns, except in those cases where an irrevocable proxy
permitted by statute has been given.
|
|
Celgenes bylaws provide that at any meeting duly called
and held at which a quorum is present, every person entitled to
vote or execute consents has the right to do so either in person
or by proxy to decide such matters.
|
Limitation of Personal Liability of Directors:
|
|
Abraxis certificate of incorporation provides that to the
fullest extent permitted by Delaware statutory or decisional
law, as amended or interpreted, no Abraxis director will be
personally liable to Abraxis or its stockholders for monetary
damages for breach of fiduciary duty as a director.
|
|
Celgenes certificate of incorporation provides that no
director of Celgene will be liable to Celgene or any of its
stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability (1) for any breach of the
directors duty of loyalty to Celgene or its stockholders,
(2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) under
Section 174 of the DGCL, or (4) for any transaction from which
the director derived an improper personal benefit.
|
Indemnification of Directors and Officers:
|
|
Abraxis bylaws provides that Abraxis will indemnify and
hold harmless, to the fullest extent permitted by the DGCL (as
the same exists or may be subsequently amended or interpreted),
any person made or threatened to be made a party to an action or
proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that such person, or a
person of whom he is the legal representative, is or was a
director, officer, employee or agent of Abraxis, or is or was
serving as a director, officer, employee or agent of another
entity at the request of Abraxis. Abraxis will indemnify such
person with respect to legal proceedings initiated by such
person only if such legal proceedings were approved by the
Abraxis board of directors.
|
|
Celgenes certificate of incorporation provides that
Celgene will indemnify, to the fullest extent permitted by law,
any person made or threatened to be made a party to an action or
proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that such person is or was
a director, officer, incorporator, employee or agent of Celgene,
or is or was serving as a director, officer, incorporator,
employee or agent of another entity at the request of Celgene.
|
DGCL Section 203 Election:
|
|
Under Delaware law a corporation can elect not to be governed by Section 203 of the DGCL, which generally protects publicly traded Delaware corporations from hostile takeovers and from certain actions following such takeovers.
Abraxis has expressly opted not to be governed by Section 203 of the DGCL.
|
|
Under Delaware law a corporation can elect not to be governed by Section 203 of the DGCL, which generally protects publicly traded Delaware corporations from hostile takeovers and from certain actions following such takeovers.
Celgene has not made this election and is therefore governed by Section 203 of the DGCL.
|
Vote on Business Combinations:
|
|
Neither Abraxis certificate of incorporation nor its
bylaws contain any provisions relating to business combinations.
|
|
Neither Celgenes certificate of incorporation nor its
bylaws contain any provisions relating to business combinations.
|
RIGHTS OF
STOCKHOLDERS TO SEEK APPRAISAL
Under Delaware law, holders of Abraxis common stock who do not
wish to accept the merger consideration have the right to
dissent from the merger and to receive payment in cash for the
fair value of their shares of Abraxis common stock together with
a fair rate of interest, if any, as determined by the Delaware
Court of Chancery. These rights are known as appraisal rights.
Stockholders may only exercise these appraisal rights by
strictly complying with the provisions of Section 262 of
the DGCL, which is referred to in this proxy
statement/prospectus as Section 262.
The following is intended as a brief summary of the material
provisions of the Delaware statutory procedures required to be
followed by a stockholder in order to dissent from the merger
and perfect its appraisal rights. This summary, however, is not
a complete statement of all applicable requirements and is
qualified in its entirety by reference to Section 262, the
full text of which appears in Annex H to this proxy
statement/prospectus. Failure to precisely follow any of the
statutory procedures set forth in Section 262 may result in
a termination or waiver of your appraisal rights. This summary
does not constitute legal or other advice, nor does it
constitute a recommendation that holders of Abraxis common stock
exercise their appraisal rights.
105
Abraxis is required to send a notice of appraisal rights to each
of its stockholders not less than 20 days prior to the
special meeting. This proxy statement/prospectus constitutes the
notice to Abraxis stockholders of the availability of appraisal
rights in connection with the merger in compliance with the
requirements of Section 262. If you wish to consider
exercising your appraisal rights, you should carefully review
the text of Section 262 contained in Annex H to this
proxy statement/prospectus because failure to timely and
properly comply with the requirements of Section 262 will
result in the loss of your appraisal rights under Delaware law.
Holders of shares of Abraxis common stock who desire to exercise
their appraisal rights must (1) not vote in favor of the
merger and (2) deliver a written demand for appraisal of
his or her shares to the Corporate Secretary of Abraxis before
the vote on the merger at the special meeting. A demand for
appraisal must reasonably inform Abraxis of the identity of the
stockholder and that such stockholder intends thereby to demand
appraisal of the shares of Abraxis common stock held by such
stockholder. All demands for appraisal should be addressed to
Abraxis BioScience, Inc., 11755 Wilshire Boulevard,
Suite 2000, Los Angeles, CA 90025, Attention: Corporate
Secretary, and should be executed by, or on behalf of, the
record holder of shares of Abraxis common stock. ALL DEMANDS
MUST BE RECEIVED BY ABRAXIS BEFORE THE VOTE ON THE MERGER AT THE
SPECIAL MEETING AT [ ] LOCAL TIME ON
[ ], 2010.
If you fail to deliver a written demand for appraisal within the
time period specified above and the merger is completed, you
will be entitled to receive the merger consideration for your
shares of Abraxis common stock as provided for in the merger
agreement, but you will have no appraisal rights with respect to
your shares of Abraxis common stock.
To be effective, a demand for appraisal by a holder of shares of
Abraxis common stock must be made by, or in the name of, the
registered stockholder, fully and correctly, as the
stockholders name appears on the stockholders stock
certificate(s). Beneficial owners who do not also hold the
shares of record may not directly make appraisal demands to
Abraxis. The beneficial owner must, in these cases, have the
registered owner, such as a broker, bank or other custodian,
submit the required demand in respect of those shares. If shares
are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, execution of a demand for
appraisal should be made by or for the fiduciary; and if the
shares are owned of record by more than one person, as in a
joint tenancy or tenancy in common, the demand should be
executed by or for all joint owners. An authorized agent,
including an authorized agent for two or more joint owners, may
execute the demand for appraisal for a stockholder of record;
however, the agent must identify the record owner or owners and
expressly disclose the fact that, in executing the demand, he or
she is acting as agent for the record owner. A record owner,
such as a broker, who holds shares as a custodian for others,
may exercise the record owners right of appraisal with
respect to the shares held for one or more beneficial owners,
while not exercising this right for other beneficial owners. In
that case, the written demand should state the number of shares
as to which appraisal is sought. Where no number of shares is
expressly mentioned, the demand will be presumed to cover all
shares held in the name of the record owner. In addition, the
stockholder must continuously hold the shares of record from the
date of making the demand through the completion of the merger.
If you hold your shares of Abraxis common stock in a brokerage
account or in other custodian form and you wish to exercise
appraisal rights, you should consult with your bank, broker or
other custodian to determine the appropriate procedures for the
making of a demand for appraisal by the custodian.
Within ten days after the completion of the merger, the
surviving corporation must give written notice that the merger
has become effective to each stockholder who is entitled to
appraisal rights and has properly filed a written demand for
appraisal in accordance with Section 262. At any time
within 60 days after the completion of the merger, any
stockholder who has demanded an appraisal has the right to
withdraw the demand and accept the terms of the merger by
delivering a written withdrawal of the stockholders
demands for appraisal. If, following a demand for appraisal, you
have withdrawn your demand for appraisal in accordance with
Section 262, you will have the right to receive the merger
consideration for your shares of Abraxis common stock.
Within one hundred and twenty days after the effective date of
the merger, any stockholder who has delivered a demand for
appraisal in accordance with Section 262 will, upon written
request to the surviving corporation, be entitled to receive a
written statement setting forth the aggregate number of shares
not voted in favor of the merger agreement and with respect to
which demands for appraisal rights have been received and the
aggregate number of holders of these shares. This written
statement will be mailed to the requesting stockholder within
ten days after the
106
stockholders written request is received by the surviving
corporation or within ten days after expiration of the period
for delivery of demands for appraisal, whichever is later.
Within 120 days after the effective date of the merger,
either the surviving corporation or any stockholder who has
delivered a demand for appraisal in accordance with
Section 262 may file a petition in the Delaware Court of
Chancery demanding a determination of the fair value of the
shares held by all such stockholders. Upon the filing of the
petition by a stockholder, service of a copy of the petition
must be made upon the surviving corporation. The surviving
corporation has no obligation to file a petition in the Delaware
Court of Chancery in the event there are dissenting
stockholders, and the surviving corporation has no present
intent to file a petition in the Delaware Court of Chancery.
Accordingly, the failure of a stockholder to file a petition
within the period specified could nullify the stockholders
previously written demand for appraisal.
If a petition for appraisal is duly filed by a stockholder and a
copy of the petition is delivered to the surviving corporation,
the surviving corporation will then be obligated, within twenty
days after receiving service of a copy of the petition, to
provide the Delaware Court of Chancery with a duly verified list
containing the names and addresses of all stockholders who have
demanded an appraisal of their shares and with whom agreements
as to the value of their shares have not been reached by the
surviving corporation. After notice to dissenting stockholders
who demanded appraisal of their shares, the Delaware Court of
Chancery is empowered to conduct a hearing upon the petition,
and to determine those stockholders who have complied with
Section 262 and who have become entitled to the appraisal
rights provided thereby. The Delaware Court of Chancery may
require the stockholders who have demanded appraisal for their
shares and who hold stock represented by certificates to submit
their stock certificates to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings;
and if any stockholder fails to comply with that direction, the
Delaware Court of Chancery may dismiss the proceedings as to
that stockholder.
After determination of the stockholders entitled to appraisal of
their shares, the Delaware Court of Chancery will appraise the
fair value of the shares owned by those
stockholders. This value will be exclusive of any element of
value arising from the accomplishment or expectation of the
merger, but will include a fair rate of interest, if any, upon
the amount determined to be the fair value. When the value is
determined, the Delaware Court of Chancery will direct the
payment of the value, with interest thereon accrued during the
pendency of the proceeding, if the Delaware Court of Chancery so
determines, to the stockholders entitled to receive the same,
upon surrender by the holders of the certificates representing
those shares.
In determining fair value, and, if applicable, a fair rate of
interest, the Delaware Court of Chancery is required to take
into account all relevant factors. In Weinberger v. UOP,
Inc., the Delaware Supreme Court discussed the factors that
could be considered in determining fair value in an appraisal
proceeding, stating that proof of value by any techniques
or methods which are generally considered acceptable in the
financial community and otherwise admissible in court
should be considered, and that fair price obviously
requires consideration of all relevant factors involving the
value of a company.
Section 262 provides that fair value is to be
exclusive of any element of value arising from the
accomplishment or expectation of the merger. In
Cede & Co. v. Technicolor, Inc., the
Delaware Supreme Court stated that this exclusion is a
narrow exclusion [that] does not encompass known elements
of value, but which rather applies only to the speculative
elements of value arising from such accomplishment or
expectation. In Weinberger, the Delaware Supreme Court
construed Section 262 to mean that elements of future
value, including the nature of the enterprise, which are known
or susceptible of proof as of the date of the merger and not the
product of speculation, may be considered.
You should be aware that the fair value of your shares as
determined under Section 262 could be more than, the same
as, or less than the value that you are entitled to receive
under the terms of the merger agreement.
Costs of the appraisal proceeding may be imposed upon the
surviving corporation and the stockholders participating in the
appraisal proceeding by the Delaware Court of Chancery as the
Court deems equitable in the circumstances. Upon the application
of a stockholder, the Delaware Court of Chancery may order all
or a portion of the expenses incurred by any stockholder in
connection with the appraisal proceeding, including, without
limitation, reasonable attorneys fees and the fees and
expenses of experts, to be charged pro rata against the value of
all shares entitled to appraisal. In the absence of such a
determination of assessment, each party bears its own expenses.
Any stockholder who had demanded appraisal rights will not,
after the completion of the merger, be
107
entitled to vote shares subject to that demand for any purpose
or to receive payments of dividends or any other distribution
with respect to those shares, other than with respect to payment
as of a record date prior to the completion; however, if no
petition for appraisal is filed within one hundred and twenty
days after the completion of the merger, or if the stockholder
delivers a written withdrawal of his or her demand for appraisal
and an acceptance of the terms of the merger within sixty days
after the completion of the merger, then the right of that
stockholder to appraisal will cease and that stockholder will be
entitled to receive the merger consideration for his or her
shares of Abraxis common stock pursuant to the merger agreement.
Any withdrawal of a demand for appraisal made more than sixty
days after the completion of the merger may only be made with
the written approval of the surviving corporation. No appraisal
proceeding in the Delaware Court of Chancery will be dismissed
as to any stockholder without the approval of the court.
Failure to follow the steps required by Section 262 for
perfecting appraisal rights may result in the loss of appraisal
rights. In view of the complexity of Section 262,
stockholders who may wish to dissent from the merger and pursue
appraisal rights should consult their legal advisors.
108
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated financial
statements presented below are based on, and should be read
together with, the historical financial statements of Celgene
and Abraxis that are contained in their respective filings with
the SEC and incorporated by reference into this proxy
statement/prospectus. See Where You Can Find More
Information. The unaudited pro forma condensed
consolidated balance sheet gives effect to the proposed merger
as if it had occurred on March 31, 2010, and combines the
historical balance sheets of Celgene and Abraxis as of
March 31, 2010. The unaudited pro forma condensed
consolidated statements of operations are presented as if the
proposed merger had occurred on January 1, 2009, and
combines the historical results of operations of Celgene and
Abraxis for the year ended December 31, 2009 and for the
three months ended March 31, 2010. The historical financial
information is adjusted to give effect to pro forma events that
are (1) directly attributable to the merger,
(2) factually supportable and (3) with respect to the
statement of operations, expected to have a continuing impact on
the combined results of Celgene and Abraxis. The unaudited pro
forma condensed consolidated financial statements should be read
in conjunction with the accompanying notes to the unaudited pro
forma condensed financial statements presented below and with
the separate historical financial statements of Celgene and
Abraxis incorporated by reference into this proxy
statement/prospectus.
The pro forma adjustments related to the merger have been
prepared using the acquisition method of accounting and are
based on a preliminary purchase price allocation whereby the
cost to acquire Abraxis was allocated to the assets acquired and
the liabilities assumed, based upon their estimated fair values.
Actual adjustments will be based on analyses of fair values of
identifiable tangible and intangible assets, in-process research
and development, deferred tax assets and liabilities and
estimates of the useful lives of tangible and amortizable
intangible assets, which will be completed following the
completion of the merger and after Celgene obtains a final
third-party valuation, performs its own assessments and reviews
all available data. The final purchase price allocation will be
performed using estimated fair values as of the date of the
completion of the merger. Differences between the preliminary
and final purchase price allocations could have a material
impact on the unaudited pro forma condensed consolidated
financial statements and Celgenes future results of
operations and financial position.
The unaudited pro forma condensed consolidated financial
statements do not reflect the realization of potential cost
savings, or any related restructuring or integration costs that
may result from the integration of Abraxis. Although Celgene
believes that certain cost savings may result from the merger,
there can be no assurance that these cost savings will be
achieved.
The unaudited pro forma condensed consolidated financial
statements are based on estimates and assumptions, are presented
for illustrative purposes only and are not necessarily
indicative of the consolidated financial position or results of
operations in future periods or the results that actually would
have been realized if the proposed merger had been completed as
of the dates indicated.
109
CELGENE
CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
As of March 31, 2010
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Celgene
|
|
|
Abraxis
|
|
|
Pro Forma
|
|
|
See
|
|
|
Pro Forma
|
|
|
|
(Historical)
|
|
|
(Historical)
|
|
|
Adjustments
|
|
|
Note 4
|
|
|
Consolidated
|
|
|
Assets
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,055,546
|
|
|
$
|
191,439
|
|
|
$
|
(1,000,000
|
)
|
|
|
(a
|
)
|
|
$
|
246,985
|
|
Marketable securities available for sale
|
|
|
1,898,404
|
|
|
|
|
|
|
|
(1,380,000
|
)
|
|
|
(a
|
)
|
|
|
518,404
|
|
Accounts receivable, net
|
|
|
481,072
|
|
|
|
57,657
|
|
|
|
|
|
|
|
|
|
|
|
538,729
|
|
Inventory
|
|
|
102,479
|
|
|
|
56,215
|
|
|
|
96,335
|
|
|
|
(b
|
)
|
|
|
255,029
|
|
Deferred income taxes
|
|
|
70,472
|
|
|
|
25,510
|
|
|
|
107,218
|
|
|
|
(e
|
)
|
|
|
203,200
|
|
Other current assets
|
|
|
312,066
|
|
|
|
31,355
|
|
|
|
(6,335
|
)
|
|
|
(b
|
)
|
|
|
337,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets:
|
|
|
3,920,039
|
|
|
|
362,176
|
|
|
|
(2,182,782
|
)
|
|
|
|
|
|
|
2,099,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
303,729
|
|
|
|
247,423
|
|
|
|
|
|
|
|
|
|
|
|
551,152
|
|
Investment in affiliated companies
|
|
|
22,767
|
|
|
|
9,656
|
|
|
|
|
|
|
|
|
|
|
|
32,423
|
|
Intangible assets, net
|
|
|
853,665
|
|
|
|
142,248
|
|
|
|
2,527,752
|
|
|
|
(c
|
)
|
|
|
3,523,665
|
|
Goodwill
|
|
|
764,622
|
|
|
|
253,821
|
|
|
|
779,815
|
|
|
|
(d
|
)
|
|
|
1,798,258
|
|
Other assets
|
|
|
120,801
|
|
|
|
65,767
|
|
|
|
|
|
|
|
|
|
|
|
186,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
5,985,623
|
|
|
$
|
1,081,091
|
|
|
$
|
1,124,785
|
|
|
|
|
|
|
$
|
8,191,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
66,697
|
|
|
$
|
22,115
|
|
|
$
|
50,000
|
|
|
|
(f
|
)
|
|
$
|
138,812
|
|
Accrued expenses
|
|
|
269,776
|
|
|
|
94,225
|
|
|
|
107,988
|
|
|
|
(g
|
)
|
|
|
471,989
|
|
Accrued litigation costs
|
|
|
|
|
|
|
57,635
|
|
|
|
|
|
|
|
|
|
|
|
57,635
|
|
Related party payable
|
|
|
|
|
|
|
1,815
|
|
|
|
|
|
|
|
|
|
|
|
1,815
|
|
Income taxes payable
|
|
|
33,603
|
|
|
|
282
|
|
|
|
|
|
|
|
|
|
|
|
33,885
|
|
Current portion of deferred revenue
|
|
|
2,179
|
|
|
|
3,158
|
|
|
|
|
|
|
|
|
|
|
|
5,337
|
|
Other current liabilities
|
|
|
87,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities:
|
|
|
459,447
|
|
|
|
179,230
|
|
|
|
157,988
|
|
|
|
|
|
|
|
796,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent value rights
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
(h
|
)
|
|
|
300,000
|
|
Deferred revenue, net of current portion
|
|
|
7,695
|
|
|
|
4,082
|
|
|
|
|
|
|
|
|
|
|
|
11,777
|
|
Non-current income taxes payable
|
|
|
444,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
444,597
|
|
Deferred income taxes, non-current
|
|
|
|
|
|
|
31,765
|
|
|
|
988,207
|
|
|
|
(e
|
)
|
|
|
1,019,972
|
|
Other non-current liabilities
|
|
|
309,478
|
|
|
|
14,983
|
|
|
|
|
|
|
|
|
|
|
|
324,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,221,217
|
|
|
|
230,060
|
|
|
|
1,446,195
|
|
|
|
|
|
|
|
2,897,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
4,690
|
|
|
|
40
|
|
|
|
66
|
|
|
|
(i
|
)
|
|
|
4,796
|
|
Common stock in treasury, at cost
|
|
|
(352,981
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(352,981
|
)
|
Additional paid-in capital
|
|
|
5,504,417
|
|
|
|
1,216,951
|
|
|
|
(677,057
|
)
|
|
|
(j
|
)
|
|
|
6,044,311
|
|
Accumulated deficit
|
|
|
(397,804
|
)
|
|
|
(378,808
|
)
|
|
|
358,808
|
|
|
|
(k
|
)
|
|
|
(417,804
|
)
|
Accumulated other comprehensive income
|
|
|
6,084
|
|
|
|
3,227
|
|
|
|
(3,227
|
)
|
|
|
(l
|
)
|
|
|
6,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
4,764,406
|
|
|
|
841,410
|
|
|
|
(321,410
|
)
|
|
|
|
|
|
|
5,284,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest
|
|
|
|
|
|
|
9,621
|
|
|
|
|
|
|
|
|
|
|
|
9,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
4,764,406
|
|
|
|
851,031
|
|
|
|
(321,410
|
)
|
|
|
|
|
|
|
5,294,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
5,985,623
|
|
|
$
|
1,081,091
|
|
|
$
|
1,124,785
|
|
|
|
|
|
|
$
|
8,191,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements
110
CELGENE
CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2010
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Celgene
|
|
|
Abraxis
|
|
|
Pro Forma
|
|
|
See
|
|
|
Pro Forma
|
|
|
|
(Historical)
|
|
|
(Historical)
|
|
|
Adjustments
|
|
|
Note 4
|
|
|
Consolidated
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net product sales
|
|
$
|
759,411
|
|
|
$
|
106,714
|
|
|
$
|
(365
|
)
|
|
|
(m.i
|
)
|
|
$
|
865,760
|
|
Collaborative agreements and other revenue
|
|
|
2,380
|
|
|
|
4,116
|
|
|
|
(41
|
)
|
|
|
(m.i
|
)
|
|
|
6,455
|
|
Royalty revenue
|
|
|
29,463
|
|
|
|
|
|
|
|
406
|
|
|
|
(m.i
|
)
|
|
|
29,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
791,254
|
|
|
|
110,830
|
|
|
|
|
|
|
|
|
|
|
|
902,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold (excluding amortization of acquired
intangible assets)
|
|
|
61,915
|
|
|
|
22,630
|
|
|
|
|
|
|
|
|
|
|
|
84,545
|
|
Research and development
|
|
|
204,657
|
|
|
|
33,446
|
|
|
|
|
|
|
|
|
|
|
|
238,103
|
|
Selling, general and administrative
|
|
|
207,978
|
|
|
|
50,413
|
|
|
|
|
|
|
|
|
|
|
|
258,391
|
|
Amortization of acquired intangible assets
|
|
|
41,593
|
|
|
|
10,088
|
|
|
|
7,118
|
|
|
|
(m.ii
|
)
|
|
|
58,799
|
|
Acquisition related charges
|
|
|
4,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
521,005
|
|
|
|
116,577
|
|
|
|
7,118
|
|
|
|
|
|
|
|
644,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
270,249
|
|
|
|
(5,747
|
)
|
|
|
(7,118
|
)
|
|
|
|
|
|
|
257,384
|
|
Other income and expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and investment income, net
|
|
|
14,084
|
|
|
|
565
|
|
|
|
(8,141
|
)
|
|
|
(m.iii
|
)
|
|
|
6,508
|
|
Equity in (gains) losses of affiliated companies
|
|
|
(741
|
)
|
|
|
1,009
|
|
|
|
|
|
|
|
|
|
|
|
268
|
|
Interest expense
|
|
|
481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
481
|
|
Other income, net
|
|
|
3,766
|
|
|
|
2,687
|
|
|
|
|
|
|
|
|
|
|
|
6,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
288,359
|
|
|
|
(3,504
|
)
|
|
|
(15,259
|
)
|
|
|
|
|
|
|
269,596
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision (benefit)
|
|
|
53,917
|
|
|
|
(239
|
)
|
|
|
(6,104
|
)
|
|
|
(m.iv
|
)
|
|
|
47,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
234,442
|
|
|
|
(3,265
|
)
|
|
|
(9,155
|
)
|
|
|
|
|
|
|
222,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to noncontrolling interest
|
|
|
|
|
|
|
(262
|
)
|
|
|
|
|
|
|
|
|
|
|
(262
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common shareholders
|
|
$
|
234,442
|
|
|
$
|
(3,003
|
)
|
|
$
|
(9,155
|
)
|
|
|
|
|
|
$
|
222,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.47
|
|
Diluted
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.46
|
|
Weighted average shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
459,914
|
|
|
|
|
|
|
|
10,574
|
|
|
|
(n
|
)
|
|
|
470,488
|
|
Diluted
|
|
|
467,655
|
|
|
|
|
|
|
|
10,574
|
|
|
|
(n
|
)
|
|
|
478,229
|
|
See Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements
111
CELGENE
CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2009
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Celgene
|
|
|
Abraxis
|
|
|
Pro Forma
|
|
|
See
|
|
|
Pro Forma
|
|
|
|
(Historical)
|
|
|
(Historical)
|
|
|
Adjustments
|
|
|
Note 4
|
|
|
Consolidated
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net product sales
|
|
$
|
2,567,354
|
|
|
$
|
314,545
|
|
|
$
|
(749
|
)
|
|
|
(m.i
|
)
|
|
$
|
2,881,150
|
|
Collaborative agreements and other revenue
|
|
|
13,743
|
|
|
|
44,505
|
|
|
|
|
|
|
|
|
|
|
|
58,248
|
|
Royalty revenue
|
|
|
108,796
|
|
|
|
|
|
|
|
749
|
|
|
|
(m.i
|
)
|
|
|
109,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
2,689,893
|
|
|
|
359,050
|
|
|
|
|
|
|
|
|
|
|
|
3,048,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold (excluding amortization of acquired
intangible assets)
|
|
|
216,289
|
|
|
|
63,665
|
|
|
|
|
|
|
|
|
|
|
|
279,954
|
|
Research and development
|
|
|
794,848
|
|
|
|
154,615
|
|
|
|
|
|
|
|
|
|
|
|
949,463
|
|
Selling, general and administrative
|
|
|
753,827
|
|
|
|
200,734
|
|
|
|
|
|
|
|
|
|
|
|
954,561
|
|
Amortization of acquired intangible assets
|
|
|
83,403
|
|
|
|
39,782
|
|
|
|
29,042
|
|
|
|
(m.ii
|
)
|
|
|
152,227
|
|
Impairment charge
|
|
|
|
|
|
|
13,999
|
|
|
|
|
|
|
|
|
|
|
|
13,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
1,848,367
|
|
|
|
472,795
|
|
|
|
29,042
|
|
|
|
|
|
|
|
2,350,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
841,526
|
|
|
|
(113,745
|
)
|
|
|
(29,042
|
)
|
|
|
|
|
|
|
698,739
|
|
Other income and expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and investment income, net
|
|
|
76,785
|
|
|
|
3,052
|
|
|
|
(66,786
|
)
|
|
|
(m.iii
|
)
|
|
|
13,051
|
|
Equity in losses (gains) of affiliated companies
|
|
|
1,103
|
|
|
|
(2,090
|
)
|
|
|
|
|
|
|
|
|
|
|
(987
|
)
|
Interest expense
|
|
|
1,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,966
|
|
Other income, net
|
|
|
60,461
|
|
|
|
1,255
|
|
|
|
|
|
|
|
|
|
|
|
61,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
975,703
|
|
|
|
(107,348
|
)
|
|
|
(95,828
|
)
|
|
|
|
|
|
|
772,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision (benefit)
|
|
|
198,956
|
|
|
|
(2,580
|
)
|
|
|
(38,331
|
)
|
|
|
(m.iv
|
)
|
|
|
158,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
776,747
|
|
|
|
(104,768
|
)
|
|
|
(57,497
|
)
|
|
|
|
|
|
|
614,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to noncontrolling interest
|
|
|
|
|
|
|
(1,652
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,652
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to common shareholders
|
|
$
|
776,747
|
|
|
$
|
(103,116
|
)
|
|
$
|
(57,497
|
)
|
|
|
|
|
|
$
|
616,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.31
|
|
Diluted
|
|
$
|
1.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.29
|
|
Weighted average shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
459,304
|
|
|
|
|
|
|
|
10,574
|
|
|
|
(n
|
)
|
|
|
469,878
|
|
Diluted
|
|
|
467,354
|
|
|
|
|
|
|
|
10,574
|
|
|
|
(n
|
)
|
|
|
477,928
|
|
See Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements
112
NOTES TO
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
|
(1)
|
Description
of Transaction
|
On June 30, 2010 Celgene, Abraxis and merger sub entered
into a merger agreement pursuant to which merger sub will merge
with and into Abraxis, and Abraxis will become a wholly-owned
subsidiary of Celgene. This transaction will be accounted for by
Celgene under the acquisition method of accounting, with Celgene
as the acquiror. Under the acquisition method of accounting, the
assets and liabilities of Abraxis will be recorded as of the
acquisition date, at their respective fair values, and
consolidated with those of Celgene. The reported consolidated
financial condition and results of operations of Celgene after
completion of the merger will reflect these fair values.
Under the terms and subject to the conditions of the merger
agreement, each share of Abraxis common stock will be converted
into the right to receive (1) $58.00 in cash, without
interest, (2) 0.2617 of a share of Celgene common stock and
(3) one CVR issued by Celgene. Holders of stock options and
stock appreciation rights, whether vested or unvested, with an
exercise price or base appreciation amount below the per share
amount (as defined below) will receive, for each share of
Abraxis common stock subject to such stock option or stock
appreciation right, (1) a cash payment equal to the
difference between the per share amount and the exercise price
or base appreciation amount of the stock option or stock
appreciation right, as applicable, and (2) one CVR. Holders
of stock options and stock appreciation rights with an exercise
price or base appreciation amount above the per share amount
will be given the right to elect to pay to Abraxis a cash
payment equal to the difference between the exercise price or
base appreciation amount of the stock option or stock
appreciation right, as applicable, and the per share amount, and
in exchange receive one CVR. Holders of restricted stock units
will receive (1) a cash payment equal to the per share
amount and (2) one CVR.
The per share amount means the sum of $58.00, plus
the amount obtained by multiplying (1) the exchange ratio
of 0.2617 and (2) an amount equal to the average of the
closing sale prices for Celgene common stock on The NASDAQ
Global Select Market, as reported in The Wall Street Journal,
for each of the ten consecutive trading days ending with the
seventh complete trading day prior to the completion of the
merger, with such amount rounded up to the nearest cent.
Celgene estimates that the aggregate value of the consideration
to be paid in the merger will be approximately
$3.2 billion. The value of the shares of Celgene common
stock and CVRs to be issued pursuant to the merger will not be
determined until the completion of the merger and therefore, the
final aggregate value of the consideration paid in the merger
may be more or less than $3.2 billion.
The merger is subject to customary closing conditions, including
the adoption of the merger agreement by Abraxis stockholders and
the expiration or termination of the applicable waiting periods
under the HSR Act. Subject to these conditions, the merger is
expected to close in the third or fourth quarter of 2010.
Prior to June 30, 2010, there were no material transactions
between Celgene or its subsidiaries, on the one hand, and
Abraxis and its subsidiaries, on the other hand.
|
|
(2)
|
Contingent
Value Rights
|
The unaudited pro forma balance sheet as of March 31, 2010
includes Celgenes estimate of the fair value of the total
potential payments under the CVRs. Subsequent to the completion
of the merger, the liability relating to the CVRs will be
re-measured to fair value at each reporting date, with changes
reflected in earnings. Each CVR will entitle its holder to
receive a pro rata portion of the following payments:
(1) $250 million upon FDA approval of
Abraxane®
for use in the treatment of non-small cell lung cancer, which
approval permits Celgene to market
Abraxane®
under a label that includes a progression free survival claim,
but only if the foregoing milestone is achieved no later than
the fifth anniversary of the merger, (2) $400 million
(if achieved no later than April 1, 2013) or
$300 million (if achieved after April 1, 2013 and
before the fifth anniversary of the merger) upon FDA approval of
Abraxane®
for use in the treatment of pancreatic cancer, which approval
permits Celgene to market
Abraxane®
under a label that includes an overall survival claim, and
(3) for each full one-year period ending
December 31st during the term of the CVR agreement,
which we refer to as a net sales measuring period (with the
113
NOTES TO
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
first net sales measuring period beginning January 1, 2011
and ending December 31, 2011) (a) 2.5% of the net
sales of
Abraxane®
and the Abraxis pipeline products that exceed $1 billion
but are less than or equal to $2 billion for such period,
plus (b) an additional amount equal to 5% of the net sales
of
Abraxane®
and the Abraxis pipeline products that exceed $2 billion
but are less than or equal to $3 billion for such period,
plus (c) an additional amount equal to 10% of the net sales
of
Abraxane®
and the Abraxis pipeline products that exceed $3 billion
for such period.
The unaudited pro forma condensed consolidated balance sheet as
of March 31, 2010 reflects an estimated value of
$300 million in the aggregate attributable to the CVRs to
be issued in the merger, based on Celgenes internal
valuation considering the probability of approval and the
expected timing of such approvals and future sales of
Abraxane®
and the Abraxis pipeline products. The value placed on the CVRs
by Celgene for purposes of these unaudited pro forma condensed
consolidated financial statements may not be indicative of the
actual fair value of the CVRs or of the payment to be made or
the value at which the CVRs will trade following the completion
of the merger. In addition, no accretion expense has been
included in the unaudited pro forma condensed consolidated
statement of operations.
The CVR payments, all other obligations under the CVR agreement
and the CVRs and any rights or claims relating thereto, are
subordinated in right of payment to the prior payment in full in
cash or cash equivalents of all senior obligations of Celgene.
For a description of the senior obligations of Celgene, see
Description of the CVRs Subordination.
If any default on any senior obligations of Celgene exceeding
$25 million in aggregate principal amount would occur as a
result of CVR payment, there is an existing payment default on
senior obligations of Celgene exceeding $25 million in
aggregate principal amount, the maturity of any senior
obligations of Celgene representing more than $25 million
in aggregate principal amount is accelerated or in other
circumstances, no CVR payment will be made, so long as such
circumstance remains in effect.
|
|
(3)
|
Estimated
Purchase Price
|
The accompanying unaudited pro forma condensed consolidated
financial statements reflect an estimated purchase price of
approximately $3.2 billion. This amount is comprised of the
following:
|
|
|
|
|
To holders of Abraxis common stock, for each share of Abraxis
common stock: (1) $58.00 in cash, without interest,
(2) 0.2617 of a share of Celgene common stock and
(3) one CVR, and reflect approximately 40.4 million
shares of Abraxis common stock to be exchanged in the merger,
based on the number of Abraxis common stock outstanding at
June 30, 2010.
|
|
|
|
To holders of Abraxis stock options and stock appreciation
rights with an exercise price or base appreciation amount below
the per share amount (as defined above), for each stock option
or stock appreciation right, as applicable: (1) a cash
payment equal to the difference between the per share amount and
the exercise price or base appreciation amount of the stock
option or stock appreciation right, as applicable, and
(2) one CVR.
|
|
|
|
To holders of Abraxis restricted stock units, for each
restricted stock unit: (1) a cash payment equal to the per
share amount and (2) one CVR.
|
The actual number of shares of Celgene common stock and CVRs
that are to be exchanged in the merger will not be determined
until the completion of the merger.
The total estimated purchase price is summarized as follows:
|
|
|
|
|
|
|
March 31, 2010
|
|
|
|
(In thousands)
|
|
|
Estimated amount of cash to be received by Abraxis stockholders,
stock option holders, stock appreciation right holders and
restricted stock unit holders
|
|
$
|
2,360,000
|
|
Estimated fair value of shares of Celgene common stock to be
issued
|
|
|
540,000
|
|
Estimated fair value of contingent value rights
|
|
|
300,000
|
|
|
|
|
|
|
Total preliminary estimated purchase price
|
|
$
|
3,200,000
|
|
|
|
|
|
|
114
NOTES TO
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
For purposes of this pro forma analysis, the above estimated
purchase price has been allocated based on a preliminary
estimate of the fair value of assets and liabilities to be
acquired.
|
|
|
|
|
|
|
March 31, 2010
|
|
|
|
(In thousands)
|
|
|
Net book value of assets acquired as of March 31, 2010
|
|
$
|
841,410
|
|
Less: Write-off of existing goodwill, other intangible assets
and certain deferred taxes
|
|
|
(253,058
|
)
|
|
|
|
|
|
Adjusted net book value of assets acquired
|
|
|
588,352
|
|
Remaining allocation:
|
|
|
|
|
Increase inventory to fair value(i)
|
|
|
90,000
|
|
Acquired identifiable intangible assets at fair value:
|
|
|
|
|
Developed products(ii)
|
|
|
1,200,000
|
|
In-process research and development (iii)
|
|
|
1,400,000
|
|
Licensing agreement and other(ii)
|
|
|
70,000
|
|
Abraxis transaction costs(iv)
|
|
|
(50,000
|
)
|
Fair value adjustment of contingent liability
|
|
|
(107,988
|
)
|
Deferred income taxes
|
|
|
(1,024,000
|
)
|
Goodwill(v)
|
|
|
1,033,636
|
|
|
|
|
|
|
Total preliminary estimated purchase price
|
|
$
|
3,200,000
|
|
|
|
|
|
|
|
|
|
(i) |
|
The estimated fair value of inventory is based on estimated fair
value of finished goods on hand and estimated completion of work
in progress. |
|
(ii) |
|
Developed products relate to
Abraxane®
for the treatment of breast cancer, which has a finite life
estimated at 17 years. The licensing agreement and other
also have finite lives primarily estimated at 17 years. |
|
(iii) |
|
In-process research and development, which we refer to as
IPR&D, represents the research and development projects of
Abraxis which were in-process, but not yet completed, and which
Celgene plans to complete. They include the development of
Abraxane®
for treatment of pancreatic cancer and non-small cell lung
cancer. Current accounting standards require that the fair value
of IPR&D projects acquired in a business combination be
capitalized at the acquisition date and subsequently accounted
as an indefinite-lived intangible asset until completion or
abandonment of the associated research and development efforts.
Accordingly, during the development period after the completion
of the merger, these assets will not be amortized into earnings;
instead these assets will be subject to periodic impairment
testing. Upon successful completion of the development process
for an acquired in-process research and development project,
determination as to the useful life of the asset will be made.
The asset would then be considered a finite-lived intangible
asset and amortization of the asset into earnings would begin
over the estimated useful life of the asset. |
|
|
|
As part of the final purchase price allocation, the fair value
estimates will be finalized and adjusted, if necessary, using
estimated fair values as of the date of completion of the merger. |
|
(iv) |
|
Adjustment relates to the transaction costs to be incurred by
Abraxis in connection with the merger, which will reduce
Abraxis net working capital to be acquired by Celgene at
the completion of the merger. |
|
(v) |
|
The amount allocated to goodwill is preliminary and subject to
change, depending on the results of the final purchase price
allocation. In accordance with current accounting standards,
goodwill associated with the transaction will not be amortized
and will be subject to review for impairment. |
115
NOTES TO
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
|
|
(4)
|
Pro Forma
Adjustments
|
Adjustments included in the column under the heading Pro
Forma Adjustments are primarily based on the preliminary
purchase price valuation and certain adjustments to conform
Abraxis historical amounts to Celgenes financial
statements presentation.
For purposes of these unaudited pro forma condensed consolidated
financial statements, the fixed asset book value approximates
fair value. There are no fair value adjustments to leases, other
contracts or the non-controlling financial interests included
herein. Further analysis will be performed after the completion
of the merger to confirm these estimates or make adjustments in
the final purchase price allocation, as necessary.
Celgene does not require financing for the merger. However,
Celgene is considering and may pursue financing arrangements on
terms and conditions favorable to Celgene, including, without
limitation, an offering of debt securities, to maintain
financial flexibility. These unaudited pro forma condensed
consolidated financial statements contemplate the use of
Celgenes cash on hand and the sale of Celgene investments
in marketable securities to finance the merger.
The cash consideration estimated in these unaudited pro forma
condensed consolidated financial statements assumes that Abraxis
stock options currently outstanding will not be exercised prior
to the completion of the merger and that option holders will
receive a cash payment equal to the difference between the per
share amount and the exercise price.
The adjustments relate to the following:
(a) Cash and cash equivalents and marketable securities
available for sale adjustments consist of the following:
|
|
|
|
|
|
|
March 31, 2010
|
|
|
|
(In thousands)
|
|
|
Estimated amount of cash to be received by Abraxis stockholders,
stock option holders, and restricted stock unit holders
|
|
$
|
2,360,000
|
|
Celgenes estimated transaction fees (to accumulated
deficit)
|
|
|
20,000
|
|
|
|
|
|
|
Total
|
|
$
|
2,380,000
|
|
|
|
|
|
|
To be funded by:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,000,000
|
|
Marketable securities available for sale
|
|
|
1,380,000
|
|
|
|
|
|
|
Total
|
|
$
|
2,380,000
|
|
|
|
|
|
|
(b) Inventory and other current assets adjustments consist
of the following:
|
|
|
|
|
|
|
March 31, 2010
|
|
|
|
(In thousands)
|
|
|
Inventory
step-up
|
|
$
|
90,000
|
|
Reclassification from other current assets to inventory
|
|
|
6,335
|
|
|
|
|
|
|
Total
|
|
$
|
96,335
|
|
|
|
|
|
|
116
NOTES TO
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(c) To adjust intangible assets for the following:
|
|
|
|
|
|
|
March 31, 2010
|
|
|
|
(In thousands)
|
|
|
Elimination of Abraxis intangible assets
|
|
$
|
(142,248
|
)
|
Acquired identifiable amortizable intangible assets:
|
|
|
|
|
Developed products
|
|
|
1,200,000
|
|
In-process research and development
|
|
|
1,400,000
|
|
Licensing agreements and other
|
|
|
70,000
|
|
|
|
|
|
|
Total
|
|
$
|
2,527,752
|
|
|
|
|
|
|
(d) To record the following goodwill adjustments:
|
|
|
|
|
|
|
March 31, 2010
|
|
|
|
(In thousands)
|
|
|
Elimination of pre-existing Abraxis goodwill
|
|
$
|
(253,821
|
)
|
Acquired goodwill(i)
|
|
|
1,033,636
|
|
|
|
|
|
|
Total
|
|
$
|
779,815
|
|
|
|
|
|
|
|
|
|
(i) |
|
Goodwill is the excess of the purchase price over the interest
in the fair value of the acquired assets and liabilities. The
purchase price, summarized in Note 3 above, includes equity
consideration, and therefore, is dependent upon the value of
Celgene common stock. Thus, changes in the market value of
Celgene common stock will result in changes in the purchase
price and consequently in goodwill. Based on the price of
Celgene common stock at June 30, 2010, a 10% increase or
decrease in market value of the common stock will result in an
increase or decrease in goodwill of approximately
$54 million. |
(e) Adjustments to income taxes in the pro forma balance
sheet presentation:
|
|
|
|
|
|
|
March 31, 2010
|
|
|
|
(In thousands)
|
|
|
Deferred income taxes (current):
|
|
|
|
|
To release the valuation allowance against the current deferred
income tax assets of Abraxis
|
|
$
|
60,072
|
|
To record deferred taxes on a fair value adjustment to the
contingent liability in purchase accounting (see(g) below
for additional information)
|
|
|
47,146
|
|
|
|
|
|
|
Total
|
|
$
|
107,218
|
|
|
|
|
|
|
Deferred income taxes (non-current):
|
|
|
|
|
To release the valuation allowance against the non-current
deferred income tax assets of Abraxis
|
|
$
|
(71,325
|
)
|
To record deferred taxes on a fair value adjustment to the
assets and liabilities of Abraxis in purchase accounting
|
|
|
1,059,532
|
|
|
|
|
|
|
Total
|
|
$
|
988,207
|
|
|
|
|
|
|
Adjustments to reverse deferred taxes related to Abraxis
historical intangible assets and the contingent liability were
based on the actual historical amounts recorded for these items.
Deferred taxes recorded by Celgene for those intangible assets
and the contingent liability were based on Celgenes
U.S. statutory tax rate estimated at 40%.
Adjustments to income taxes in pro forma statements of
operations reflect changes to income taxes from pro forma
adjustments, as presented in (m.iv).
117
NOTES TO
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(f) To record transaction costs to be incurred by Abraxis
in connection with the merger, which will reduce Abraxis
net working capital to be acquired by Celgene upon the
completion of the merger.
(g) To record a fair value adjustment to the contingent
liability related to a lawsuit Abraxis is currently defending,
which is anticipated to be a continuing liability of Celgene.
(h) To record the liability for the CVRs.
(i) To record the following common stock adjustments:
|
|
|
|
|
|
|
March 31, 2010
|
|
|
|
(In thousands)
|
|
|
Elimination of Abraxis common stock
|
|
$
|
(40
|
)
|
Issuance of Celgene common stock(i)
|
|
|
106
|
|
|
|
|
|
|
Total
|
|
$
|
66
|
|
|
|
|
|
|
|
|
|
(i) |
|
Based on the exchange of 40.4 million shares of Abraxis
common stock (obtained from the number of shares of Abraxis
common stock outstanding at June 30, 2010), the 0.2617
exchange ratio and the $0.01 par value of Celgene common
stock. |
(j) To record the following adjustments to additional
paid-in capital:
|
|
|
|
|
|
|
March 31, 2010
|
|
|
|
(In thousands)
|
|
|
Elimination of Abraxis additional paid-in capital
|
|
$
|
(1,216,951
|
)
|
Issuance of Celgene common stock
|
|
|
539,894
|
|
|
|
|
|
|
Total
|
|
$
|
(677,057
|
)
|
|
|
|
|
|
(k) To record the following accumulated deficit adjustments:
|
|
|
|
|
|
|
March 31, 2010
|
|
|
|
(In thousands)
|
|
|
Elimination of Abraxis accumulated deficit
|
|
$
|
378,808
|
|
Transaction fees (see(a) above)
|
|
|
(20,000
|
)
|
|
|
|
|
|
Total
|
|
$
|
358,808
|
|
|
|
|
|
|
(l) To record the elimination of Abraxis accumulated
other comprehensive income.
118
NOTES TO
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(m) To record the following adjustments to revenues and
expenses for the year ended December 31, 2009 and the three
months ended March 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease)
|
|
|
|
Revenues and Expenses
|
|
|
|
Year Ended
|
|
|
Three Months Ended
|
|
|
|
December 31, 2009
|
|
|
March 31, 2010
|
|
|
|
(In thousands)
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Net product sales(i)
|
|
$
|
(749
|
)
|
|
$
|
(365
|
)
|
Collaborative agreements and other revenue(i)
|
|
|
|
|
|
|
(41
|
)
|
Royalty revenue(i)
|
|
|
749
|
|
|
|
406
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Amortization of acquired intangible assets(ii)
|
|
$
|
29,042
|
|
|
$
|
7,118
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
29,042
|
|
|
$
|
7,118
|
|
|
|
|
|
|
|
|
|
|
Other income and expense:
|
|
|
|
|
|
|
|
|
Interest and investment income, net(iii)
|
|
$
|
66,786
|
|
|
$
|
8,141
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
66,786
|
|
|
$
|
8,141
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit(iv)
|
|
$
|
38,331
|
|
|
$
|
6,104
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
38,331
|
|
|
$
|
6,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) |
|
To conform Abraxis royalty revenues to Celgenes
presentation. |
|
(ii) |
|
Adjustment reflects amortization expenses for finite-lived
intangible assets acquired by Celgene upon the completion of the
merger less the historical amortization of intangible assets
from Abraxis. |
|
(iii) |
|
To record interest income forgone on net cash and cash
equivalents and marketable securities available for sale
anticipated to be used in the merger. |
|
(iv) |
|
To record the income tax benefit, calculated using
Celgenes U.S. statutory tax rate estimated at 40%, as a
result of pro forma adjustments (ii) and (iii). |
(n) To adjust basic and diluted shares for common stock
issued to Abraxis stockholders as contemplated in the merger.
Based on the exchange of 40.4 million shares of Abraxis
common stock (obtained from the number of shares of Abraxis
common stock outstanding at June 30, 2010), the 0.2617
exchange ratio and the $0.01 par value of Celgene common
stock. The common stock was assumed to have been issued as of
January 1, 2009.
|
|
(5)
|
Subsequent
integration costs
|
After the completion of the merger, Celgene may incur additional
integration costs. These costs have not been reflected in the
pro forma condensed consolidated financial statements and may be
material.
119
LEGAL
MATTERS
The legality of the CVRs and the shares of Celgene common stock
to be issued pursuant to the merger will be passed upon for
Celgene by Jones Day.
EXPERTS
The consolidated financial statements and schedule of Celgene
and its subsidiaries as of December 31, 2009 and 2008 and
for each of the years in the three-year period ended
December 31, 2009, and the effectiveness of Celgenes
internal control over financial reporting as of
December 31, 2009, have been incorporated by reference
herein and in the registration statement in reliance upon the
reports of KPMG LLP, independent registered public accounting
firm, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing. The audit
report covering the December 31, 2009 consolidated
financial statements refers to a change in its method of
accounting for business combinations as of January 1, 2008,
change in its method of accounting for the measurement of the
fair value of financial assets and liabilities as of
January 1, 2008 and a change in its method of recognizing
and measuring the tax effects related to uncertain tax positions
as of January 1, 2007.
The consolidated financial statements of Abraxis BioScience,
Inc. appearing in Abraxis BioScience, Inc.s Annual Report
(Form 10-K)
for the year ended December 31, 2009, and the effectiveness
of Abraxis BioScience, Inc.s internal control over
financial reporting as of December 31, 2009, have been
audited by Ernst & Young LLP, independent registered
public accounting firm, as set forth in their reports thereon
(which contains an explanatory paragraph describing a change in
its method of accounting for noncontrolling interests in
consolidated financial statements as of January 1, 2009 as
described in Note 2 to the consolidated financial
statements), included therein, and incorporated by reference
herein. Such consolidated financial statements and Abraxis
BioScience, Inc.s managements assessment of the
effectiveness of internal control over financial reporting as of
December 31, 2009 are incorporated by reference herein in
reliance upon such reports given on the authority of such firm
as experts in accounting and auditing.
STOCKHOLDER
PROPOSALS
If the merger is completed, Abraxis will have no public
stockholders and no public participation in any of its future
stockholder meetings. If the merger is not completed, Abraxis
stockholders will continue to be entitled to attend and
participate in Abraxis stockholders meetings and Abraxis will
hold an annual meeting of stockholders in 2010.
As set forth in Abraxis definitive proxy statement filed
with the SEC on October 30, 2009, which is referred to as
Abraxis last proxy statement, notice of any proposal of a
stockholder of Abraxis intended to be included in Abraxis
proxy statement and form of proxy relating to its 2010 annual
meeting of stockholders (i.e., Abraxis next annual
meeting) must have been received in writing by Abraxis
Corporate Secretary at 11755 Wilshire Boulevard,
Suite 2000, Los Angeles, CA 90025 not less than
120 days prior to the one year anniversary from the first
date of mailing of the proxy materials for the 2009 annual
meeting, or by July 2, 2010. However, if the 2010 annual
meeting is held earlier than November 5, 2010, then the
deadline will be a reasonable time before Abraxis begins to
print and mail its proxy materials for the 2010 annual meeting.
Also as set forth in Abraxis last proxy statement, for any
other proposal that a stockholder wishes to have considered at
the 2010 annual meeting of Abraxis stockholders, and for any
nomination of a person for election to the Abraxis board of
directors at the 2010 annual meeting of Abraxis stockholders,
Abraxis must have received written notice of such proposal or
nomination not less than 120 days prior to the one year
anniversary from the first date of mailing of proxy materials
for the 2009 annual meeting, or July 2, 2010, or if the
date of the 2010 annual meeting has been changed by more than
30 days from the date of the 2009 annual meeting, then the
deadline for submitting proposals will be a reasonable time
before Abraxis begins to print and mail its proxy materials for
the 2010 annual meeting.
120
Proposals and nominations that are not received by the dates
specified above will be considered untimely. In addition,
proposals and nominations must comply with Delaware law,
Abraxis bylaws and the rules and regulations of the SEC.
You may contact the Corporate Secretary, at Abraxis BioScience,
Inc., 11755 Wilshire Boulevard, Suite 2000, Los Angeles, CA
90025, for a copy of the relevant bylaw provisions regarding the
requirements for making stockholder proposals and nominating
director candidates.
WHERE YOU
CAN FIND MORE INFORMATION
Abraxis and Celgene file annual, quarterly and current reports,
proxy statements and other information with the SEC. You may
read and copy any reports, statements or other information filed
by Abraxis or Celgene at the SECs Public Reference Room at
100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at
1-800-SEC-0330
for further information on the operation of the Public Reference
Room.
You may also obtain copies of this information by mail from the
Public Reference Section of the SEC, 100 F Street,
N.E., Room 1024, Washington, D.C. 20549, at prescribed
rates, or from commercial document retrieval services.
The SEC maintains a website that contains reports, proxy
statements and other information, including those filed by
Abraxis and Celgene, at
http://www.sec.gov.
You may also access the SEC filings and obtain other information
about Abraxis and Celgene through the websites maintained by
Abraxis and Celgene, which are
http://www.abraxisbio.com
and
http://www.celgene.com,
respectively. The information contained in those websites is not
incorporated by reference into this proxy statement/prospectus
Statements contained in this proxy statement/prospectus, or in
any document incorporated by reference in this proxy
statement/prospectus regarding the content of any contract or
other document, are not necessarily complete, and each of these
statements is qualified in its entirety by reference to that
contract or other document filed as an exhibit with the SEC. As
allowed by SEC rules, this proxy statement/prospectus
incorporates by reference into this proxy
statement/prospectus certain information required to be included
in the registration statement on
Form S-4
filed by Celgene to register the CVRs and the shares of Celgene
common stock to be issued pursuant to the merger and the
exhibits to the registration statement, which means that
important information can be disclosed to you by referring you
to other documents filed separately with the SEC. The
information incorporated by reference is deemed to be part of
this proxy statement/prospectus, except for any information
superseded by information in this proxy statement/prospectus.
This proxy statement/prospectus incorporates by reference the
documents set forth below that Abraxis and Celgene have
previously filed with the SEC as well as all documents filed by
Abraxis and Celgene pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act from the date of this proxy
statement/prospectus to the date of the special meeting.
Abraxis
|
|
|
|
|
Abraxis Annual Report on
Form 10-K
for the year ended December 31, 2009;
|
|
|
|
Abraxis Annual Report on
Form 10-K/A
for the year ended December 31, 2009;
|
|
|
|
Abraxis Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010; and
|
|
|
|
Abraxis Current Reports on
Form 8-K
filed with the SEC on January 28, 2010, February 5,
2010, June 30, 2010 and July 1, 2010.
|
You may request a copy of these filings free of charge by
writing or telephoning Abraxis at:
Abraxis BioScience, Inc.
11755 Wilshire Boulevard, Suite 2000
Los Angeles, California 90025
Attention: Investor Relations
Telephone Number:
(310) 883-1300
121
Celgene
|
|
|
|
|
Celgenes Annual Report on
Form 10-K
for the year ended December 31, 2009;
|
|
|
|
Celgenes Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010; and
|
|
|
|
Celgenes Current Reports on
Form 8-K
filed with the SEC on January 6, 2010, January 15,
2010, February 12, 2010, April 15, 2010, June 18,
2010, June 30, 2010 and July 1, 2010.
|
You may request a copy of these filings free of charge by
writing or telephoning Celgene at:
Celgene Corporation
86 Morris Avenue
Summit, New Jersey 07901
Attention: Investor Relations
Telephone Number:
(908) 673-9000
Any statements made in a document incorporated by reference in
this proxy statement/prospectus is deemed to be modified or
superseded for purposes of this proxy statement/prospectus to
the extent that a statement in this proxy statement/prospectus
or in any other subsequently filed document, which is also
incorporated by reference, modifies or supersedes the statement.
Any statement made in this proxy statement/prospectus is deemed
to be modified or superseded to the extent a statement in any
subsequently filed document, which is incorporated by reference
in this proxy statement/prospectus, modifies or supersedes such
statement. Any statement so modified or superseded will not be
deemed, except as so modified or superseded, to constitute a
part of this proxy statement/prospectus.
Neither Celgene nor Abraxis has authorized anyone to give any
information or make any representation about the merger or our
companies that is different from, or in addition to, that
contained in this proxy statement/prospectus or in any of the
materials that are incorporated into this proxy
statement/prospectus. Therefore, if anyone does give you
information of this sort, you should not rely on it. If you are
in a jurisdiction where offers to exchange or sell, or
solicitations of offers to exchange or purchase, the securities
offered by this proxy statement/prospectus is unlawful, or if
you are a person to whom it is unlawful to direct these types of
activities, then the offer presented in this proxy
statement/prospectus does not extend to you. The information
contained in this proxy statement/prospectus is accurate only as
of the date of this document unless the information specifically
indicates that another date applies.
122
Annex A
AGREEMENT
AND PLAN
OF MERGER
DATED AS OF
JUNE 30, 2010
AMONG
CELGENE CORPORATION,
ARTISTRY ACQUISITION CORP.
AND
ABRAXIS BIOSCIENCE, INC.
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
ARTICLE I THE
MERGER
|
|
|
A-1
|
|
Section 1.1
|
|
The Merger
|
|
|
A-1
|
|
Section 1.2
|
|
Effective Time of the Merger
|
|
|
A-1
|
|
Section 1.3
|
|
Certificate of Incorporation
|
|
|
A-1
|
|
Section 1.4
|
|
By-laws
|
|
|
A-1
|
|
Section 1.5
|
|
Board of Directors and Officers
|
|
|
A-2
|
|
Section 1.6
|
|
Effects of Merger
|
|
|
A-2
|
|
|
|
|
|
|
ARTICLE
II CONVERSION OF SHARES
|
|
|
A-2
|
|
Section 2.1
|
|
Conversion of Shares
|
|
|
A-2
|
|
Section 2.2
|
|
Payment and Exchange of Certificates
|
|
|
A-2
|
|
Section 2.3
|
|
Dissenting Company Shares
|
|
|
A-4
|
|
Section 2.4
|
|
No Further Ownership Rights in the Shares
|
|
|
A-5
|
|
Section 2.5
|
|
Closing of Company Transfer Books
|
|
|
A-5
|
|
Section 2.6
|
|
Adjustments
|
|
|
A-5
|
|
Section 2.7
|
|
Stock Options, RSUs, SARs
|
|
|
A-5
|
|
Section 2.8
|
|
Withholding of Tax
|
|
|
A-6
|
|
Section 2.9
|
|
Closing
|
|
|
A-6
|
|
|
|
|
|
|
ARTICLE
III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
|
|
A-7
|
|
Section 3.1
|
|
Organization, Standing and Power
|
|
|
A-7
|
|
Section 3.2
|
|
Capital Structure
|
|
|
A-8
|
|
Section 3.3
|
|
Authority; Non-Contravention
|
|
|
A-9
|
|
Section 3.4
|
|
SEC Documents
|
|
|
A-10
|
|
Section 3.5
|
|
Proxy Statement/Prospectus and Registration Statement
|
|
|
A-11
|
|
Section 3.6
|
|
Absence of Certain Events
|
|
|
A-11
|
|
Section 3.7
|
|
Litigation
|
|
|
A-12
|
|
Section 3.8
|
|
No Violation of Law
|
|
|
A-12
|
|
Section 3.9
|
|
Taxes
|
|
|
A-12
|
|
Section 3.10
|
|
Employee Benefit Plans; ERISA
|
|
|
A-13
|
|
Section 3.11
|
|
Employment Matters
|
|
|
A-15
|
|
Section 3.12
|
|
Environmental Matters
|
|
|
A-16
|
|
Section 3.13
|
|
Affiliate Transactions
|
|
|
A-17
|
|
Section 3.14
|
|
Intellectual Property
|
|
|
A-17
|
|
Section 3.15
|
|
Takeover Statutes
|
|
|
A-19
|
|
Section 3.16
|
|
Title to Properties; Assets/Services
|
|
|
A-19
|
|
Section 3.17
|
|
Material Contracts
|
|
|
A-19
|
|
Section 3.18
|
|
Opinion of Financial Advisors
|
|
|
A-20
|
|
Section 3.19
|
|
Pharmaceutical Matters
|
|
|
A-21
|
|
Section 3.20
|
|
Brokers and Finders
|
|
|
A-22
|
|
Section 3.21
|
|
Insurance
|
|
|
A-22
|
|
Section 3.22
|
|
Anti-Corruption and Anti-Bribery
|
|
|
A-22
|
|
Section 3.23
|
|
No Other Representations or Warranties
|
|
|
A-23
|
|
A-i
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
ARTICLE
IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
|
|
|
A-23
|
|
Section 4.1
|
|
Organization, Standing and Power
|
|
|
A-23
|
|
Section 4.2
|
|
Capital Structure
|
|
|
A-23
|
|
Section 4.3
|
|
Operations of Sub
|
|
|
A-24
|
|
Section 4.4
|
|
Authority; Non-Contravention
|
|
|
A-24
|
|
Section 4.5
|
|
SEC Documents
|
|
|
A-25
|
|
Section 4.6
|
|
Absence of Certain Events
|
|
|
A-26
|
|
Section 4.7
|
|
Proxy Statement/Prospectus and Registration Statement
|
|
|
A-27
|
|
Section 4.8
|
|
Availability of Funds; Parent Common Stock
|
|
|
A-27
|
|
Section 4.9
|
|
Litigation
|
|
|
A-27
|
|
Section 4.10
|
|
No Violation of Law
|
|
|
A-27
|
|
Section 4.11
|
|
Brokers and Finders
|
|
|
A-28
|
|
Section 4.12
|
|
Ownership of Shares
|
|
|
A-28
|
|
Section 4.13
|
|
Solvency
|
|
|
A-28
|
|
Section 4.14
|
|
No Other Representations or Warranties
|
|
|
A-28
|
|
|
|
|
|
|
ARTICLE
V COVENANTS RELATING TO CONDUCT OF BUSINESS
|
|
|
A-28
|
|
Section 5.1
|
|
Conduct of Business by the Company Pending the Merger
|
|
|
A-28
|
|
Section 5.2
|
|
Control of the Companys Operations
|
|
|
A-30
|
|
|
|
|
|
|
ARTICLE
VI ADDITIONAL AGREEMENTS
|
|
|
A-31
|
|
Section 6.1
|
|
Company Stockholder Approval; Proxy Statement
|
|
|
A-31
|
|
Section 6.2
|
|
Directors and Officers Indemnification
|
|
|
A-32
|
|
Section 6.3
|
|
No Solicitation
|
|
|
A-33
|
|
Section 6.4
|
|
Access to Information; Confidentiality
|
|
|
A-34
|
|
Section 6.5
|
|
Reasonable Best Efforts; Notification
|
|
|
A-35
|
|
Section 6.6
|
|
Benefit Plans
|
|
|
A-36
|
|
Section 6.7
|
|
Fees and Expenses
|
|
|
A-37
|
|
Section 6.8
|
|
Public Announcements
|
|
|
A-38
|
|
Section 6.9
|
|
Sub
|
|
|
A-38
|
|
Section 6.10
|
|
CVR Agreement
|
|
|
A-38
|
|
Section 6.11
|
|
Transfer Taxes
|
|
|
A-38
|
|
Section 6.12
|
|
Listing
|
|
|
A-39
|
|
Section 6.13
|
|
Certain Notices
|
|
|
A-39
|
|
Section 6.14
|
|
Section 16 Matters
|
|
|
A-39
|
|
Section 6.15
|
|
State Takeover Laws
|
|
|
A-39
|
|
Section 6.16
|
|
FIRPTA Statement
|
|
|
A-39
|
|
Section 6.17
|
|
Further Actions
|
|
|
A-39
|
|
|
|
|
|
|
ARTICLE
VII CONDITIONS PRECEDENT
|
|
|
A-40
|
|
Section 7.1
|
|
Conditions to Each Partys Obligation to Effect the Merger
|
|
|
A-40
|
|
Section 7.2
|
|
Additional Conditions to Obligations of Parent and Sub
|
|
|
A-40
|
|
Section 7.3
|
|
Additional Conditions to Obligations of the Company
|
|
|
A-40
|
|
Section 7.4
|
|
Frustration of Closing Conditions
|
|
|
A-41
|
|
Section 7.5
|
|
Invoking Certain Provisions
|
|
|
A-41
|
|
A-ii
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
ARTICLE
VIII TERMINATION, AMENDMENT AND WAIVER
|
|
|
A-41
|
|
Section 8.1
|
|
Termination
|
|
|
A-41
|
|
Section 8.2
|
|
Effect of Termination
|
|
|
A-42
|
|
Section 8.3
|
|
Amendment
|
|
|
A-42
|
|
Section 8.4
|
|
Extension; Waiver
|
|
|
A-42
|
|
Section 8.5
|
|
Procedure for Termination, Amendment, Extension or Waiver
|
|
|
A-43
|
|
|
|
|
|
|
ARTICLE
IX MISCELLANEOUS
|
|
|
A-43
|
|
Section 9.1
|
|
Non-Survival of Representations, Warranties and Agreements
|
|
|
A-43
|
|
Section 9.2
|
|
Notices
|
|
|
A-43
|
|
Section 9.3
|
|
Specific Performance
|
|
|
A-44
|
|
Section 9.4
|
|
Assignment; Binding Effect
|
|
|
A-44
|
|
Section 9.5
|
|
Entire Agreement
|
|
|
A-45
|
|
Section 9.6
|
|
Governing Law
|
|
|
A-45
|
|
Section 9.7
|
|
Counterparts
|
|
|
A-45
|
|
Section 9.8
|
|
Headings and Table of Contents; Interpretation
|
|
|
A-45
|
|
Section 9.9
|
|
No Third Party Beneficiaries
|
|
|
A-45
|
|
Section 9.10
|
|
Incorporation of Exhibits
|
|
|
A-45
|
|
Section 9.11
|
|
Severability
|
|
|
A-45
|
|
Section 9.12
|
|
Subsidiaries
|
|
|
A-46
|
|
Section 9.13
|
|
Person
|
|
|
A-46
|
|
Section 9.14
|
|
Applicable Jurisdictions
|
|
|
A-46
|
|
Section 9.15
|
|
Knowledge of the Company; Knowledge of Parent
|
|
|
A-46
|
|
Section 9.16
|
|
Mutual Drafting
|
|
|
A-46
|
|
Section 9.17
|
|
Tax Reporting
|
|
|
A-46
|
|
A-iii
TABLE OF
DEFINED TERMS
|
|
|
|
|
Page
|
|
2007 Separation and Distribution Agreement
|
|
Section 3.9(f)
|
2007 Spin-Off
|
|
Section 3.9(f)
|
2007 Tax Allocation Agreement
|
|
Section 3.9(f)
|
Acquisition Proposal
|
|
Section 6.3(a)
|
Affiliate
|
|
Section 3.13
|
Agreement
|
|
Preamble
|
Anti-Corruption and Anti-Bribery Laws
|
|
Section 3.22(a)
|
Antitrust Approval
|
|
Section 7.1(c)
|
Antitrust Division
|
|
Section 6.5(b)
|
Applicable Exercise Price
|
|
Section 2.7(a)(i)
|
Applicable Jurisdiction
|
|
Section 9.14
|
Applicable SAR Base Amount
|
|
Section 2.7(b)(i)
|
Board of Directors
|
|
Section 2.7(e)
|
Book Entry Shares
|
|
Section 2.1(a)(ii)
|
Business Day
|
|
Section 2.2(a)
|
Cash Consideration
|
|
Section 2.1(a)(ii)
|
Certificate of Incorporation
|
|
Section 1.3
|
Certificate of Merger
|
|
Section 1.2
|
Certificates
|
|
Section 2.1(a)(ii)
|
Closing
|
|
Section 2.9
|
Closing Date
|
|
Section 2.9
|
Code
|
|
Section 2.8
|
Company
|
|
Preamble
|
Company Common Stock
|
|
Section 2.1(a)(i)
|
Company Contract
|
|
Section 3.3(b)
|
Company Financial Advisors
|
|
Section 3.18
|
Company Financial Statements
|
|
Section 3.4(a)
|
Company Intellectual Property
|
|
Section 3.14(b)
|
Company Material Adverse Effect
|
|
Section 3.1
|
Company Patents
|
|
Section 3.14(e)
|
Company Permits
|
|
Section 3.8
|
Company SEC Documents
|
|
Section 3.4(a)
|
Company Stock Plan
|
|
Section 2.7(a)(i)
|
Company Stockholder Meeting
|
|
Section 6.1(a)
|
Confidentiality Agreement
|
|
Section 6.4
|
Consent
|
|
Section 3.3(c)
|
Contract
|
|
Section 3.3(b)
|
control
|
|
Section 3.13
|
Copyrights
|
|
Section 3.14
|
CVR
|
|
Section 2.1(a)(ii)
|
CVR Agreement
|
|
Recitals
|
CVR Certificate
|
|
Section 2.1(a)(ii)
|
DGCL
|
|
Section 1.1
|
Disclosure Schedule
|
|
Article III
|
Dissenting Company Shares
|
|
Section 2.3
|
Effective Time
|
|
Section 1.2
|
Effects
|
|
Section 3.1
|
Employee
|
|
Section 6.6(a)
|
Employee Benefit Plans
|
|
Section 3.10(a)
|
Employment Practices
|
|
Section 3.11(b)
|
A-iv
|
|
|
|
|
Page
|
|
Environmental Laws
|
|
Section 3.12(c)
|
Environmental Liabilities
|
|
Section 3.12(c)
|
ERISA
|
|
Section 3.10(a)
|
ERISA Affiliate
|
|
Section 3.10(a)
|
Exchange Act
|
|
Article III
|
Exchange Fund
|
|
Section 2.2(b)
|
Exchange Ratio
|
|
Section 2.1(a)(ii)
|
Excluded Company Shares
|
|
Section 2.1(a)(i)
|
Exercise Period
|
|
Section 2.7(a)(i)
|
FDA
|
|
Section 3.19(a)
|
FDCA
|
|
Section 3.19(a)
|
Foreign Plan
|
|
Section 3.10(h)
|
FTC
|
|
Section 6.5(b)
|
Governmental Entity
|
|
Section 3.3(c)
|
Hazardous Materials
|
|
Section 3.12(c)
|
HSR Act
|
|
Section 3.3(c)
|
Indemnified Parties
|
|
Section 6.2(b)
|
Indemnified Party
|
|
Section 6.2(b)
|
Insurance Policies
|
|
Section 3.21
|
Intellectual Property
|
|
Section 3.14
|
IRS
|
|
Section 3.10(b)
|
Knowledge of Parent
|
|
Section 9.15
|
Knowledge of the Company
|
|
Section 9.15
|
Law
|
|
Section 3.3(b)
|
Leased Real Property
|
|
Section 3.16(a)
|
Liens
|
|
Section 3.2(d)
|
Material Contract
|
|
Section 3.17(a)
|
Material Employment Agreement
|
|
Section 3.10(a)
|
Merger
|
|
Recitals
|
Merger Consideration
|
|
Section 2.1(a)(ii)
|
Nab®Technology
|
|
Section 3.14
|
NASDAQ
|
|
Section 3.1
|
Non-Competition and Confidentiality Agreement
|
|
Recitals
|
Option
|
|
Section 2.7(a)(i)
|
Options
|
|
Section 2.7(a)(i)
|
Parent
|
|
Preamble
|
Parent Common Stock
|
|
Section 2.1(a)(ii)
|
Parent Financial Statements
|
|
Section 4.5(a)
|
Parent Material Adverse Effect
|
|
Section 4.6
|
Parent Permits
|
|
Section 4.10
|
Parent Plans
|
|
Section 6.6(b)
|
Parent Review Period
|
|
Section 6.3(c)
|
Parent SEC Documents
|
|
Section 4.5(a)
|
Parent Share Cash Value
|
|
Section 2.2(e)
|
Patents
|
|
Section 3.14
|
Paying Agent
|
|
Section 2.2(a)
|
Per Share Amount
|
|
Section 2.7(a)(i)
|
Person
|
|
Section 9.13
|
Pharmaceutical Products
|
|
Section 3.14
|
Pipeline Products
|
|
Section 3.14
|
Proceeding
|
|
Section 3.7
|
A-v
|
|
|
|
|
Page
|
|
Product
|
|
Section 3.14
|
Programs
|
|
Section 3.19(c)
|
Proxy Statement/Prospectus
|
|
Section 2.2(a)
|
Real Property
|
|
Section 3.16(a)
|
Registration
|
|
Section 3.3(c)
|
Registration Statement
|
|
Section 2.2(a)
|
Regulatory Authorities
|
|
Section 3.19(a)
|
Regulatory Registrations
|
|
Section 3.19(f)
|
Related Agreements
|
|
Recitals
|
Representatives
|
|
Section 6.3(a)
|
RSU
|
|
Section 2.7(c))
|
RSUs
|
|
Section 2.7(c)
|
SAR
|
|
Section 2.7(b)(i)
|
Sarbanes Oxley Act
|
|
Section 3.4(c)
|
SARs
|
|
Section 2.7(b)(i)
|
Screening Test
|
|
Section 3.19(a)
|
SEC
|
|
Section 3.4(a)
|
Section 16
|
|
Section 6.14
|
Securityholders
|
|
Section 2.2(b)
|
Solvent
|
|
Section 4.13
|
Stock Consideration
|
|
Section 2.1(a)(ii)
|
Stockholder Approval
|
|
Section 7.1(a)
|
Sub
|
|
Preamble
|
Subsidiary
|
|
Section 9.12
|
Superior Proposal
|
|
Section 6.3(b)
|
Surviving Corporation
|
|
Section 1.1
|
Tax
|
|
Section 3.9(f)
|
Tax Return
|
|
Section 3.9(f)
|
Termination Date
|
|
Section 8.1(b)(i)
|
Trade Secrets
|
|
Section 3.14
|
Trademarks
|
|
Section 3.14
|
Transfer Taxes
|
|
Section 6.11
|
Transition Period
|
|
Section 6.6(a)
|
Trust Indenture Act
|
|
Section 4.4(c)
|
Trustee
|
|
Recitals
|
U.S. GAAP
|
|
Section 3.1
|
Voting Agreement
|
|
Recitals
|
WARN Act
|
|
Section 3.11(e)(i)
|
willful and material breach
|
|
Section 8.2
|
Worker
|
|
Section 3.11(c)
|
Workers
|
|
Section 3.11(c)
|
A-vi
THIS AGREEMENT AND PLAN OF MERGER (this
Agreement), dated as of June 30, 2010,
is entered into by and among Celgene Corporation, a Delaware
corporation (Parent); Artistry Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of
Parent (Sub); and Abraxis BioScience Inc., a
Delaware corporation (the Company).
W I T
N E S S E T
H:
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved the acquisition of the Company by
Parent on the terms and subject to the conditions set forth in
this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved a merger of Sub with and into the
Company (the Merger), upon the terms and
subject to the conditions set forth in this Agreement, and have
declared the Merger advisable;
WHEREAS, the Company, Parent and Sub desire to make certain
representations, warranties, covenants and agreements in
connection with this Agreement;
WHEREAS, concurrently with the execution of this Agreement,
Parent, Sub and certain stockholders of the Company are entering
into a voting agreement of even date herewith (the
Voting Agreement) pursuant to which
such stockholders have agreed, subject to the terms thereof, to
vote their shares of Company Common Stock (as defined below) in
favor of adoption of this Agreement; and
WHEREAS, (i) concurrently with the execution of this
Agreement, Parent, Dr. Patrick Soon-Shiong will execute and
deliver a Noncompetition and Confidentiality Agreement in
substantially the form attached hereto as Exhibit A
(the Noncompetition and Confidentiality
Agreement), which will become effective at the
Effective Time (as hereinafter defined), and (ii) as of or
prior to the Closing, Parent and a trustee mutually agreeable to
Parent and the Company (the Trustee) will
enter into a Contingent Value Rights Agreement in substantially
the form attached hereto as Exhibit B (the
CVR Agreement and, together with the
Noncompetition and Confidentiality Agreement and the Voting
Agreement, the Related
Agreements); and
NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties and agreements contained herein,
the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The
Merger. Upon the terms and subject to the
conditions hereof, and in accordance with the General
Corporation Law of the State of Delaware (the
DGCL), at the Effective Time, Sub shall be
merged with and into the Company and the separate existence of
Sub shall thereupon cease, and the Company, as the corporation
surviving the Merger (the Surviving
Corporation), shall by virtue of the Merger continue
its corporate existence under the laws of the State of Delaware.
Section 1.2 Effective
Time of the Merger. The Merger shall become
effective at the date and time (the Effective
Time) when the certificate of merger (the
Certificate of Merger) shall have been duly
executed and filed with the Secretary of State of the State of
Delaware in accordance with the DGCL, or at such other time as
is specified in the Certificate of Merger in accordance with the
DGCL, which Certificate of Merger shall be filed on the Closing
Date as soon as practicable following the Closing.
Section 1.3 Certificate
of Incorporation. Subject to
Section 6.2(a), at the Effective Time, the amended
and restated certificate of incorporation of the Company (the
Certificate of Incorporation) shall, by
virtue of the Merger, be amended and restated in a form mutually
agreed and, as so amended, shall be the certificate of
incorporation of the Surviving Corporation, until thereafter
changed or amended in accordance with its terms and as provided
by Law and this Agreement.
Section 1.4 By-laws. Subject
to Section 6.2(a), at the Effective Time, the
by-laws of Sub in effect immediately prior to the Effective Time
shall be the by-laws of the Surviving Corporation, except that
all references
A-1
to Sub therein shall be automatically amended and replaced with
references to the Surviving Corporation, until thereafter
changed or amended in accordance with their terms and as
provided by Law and this Agreement.
Section 1.5 Board
of Directors and Officers. The directors of
Sub and the officers of the Company in office immediately prior
to the Effective Time shall, from and after the Effective Time,
be the directors and officers, respectively, of the Surviving
Corporation, in each case until their respective successors have
been duly elected or appointed and qualified or until their
earlier death, resignation or removal, in accordance with the
Surviving Corporations Certificate of Incorporation and
by-laws.
Section 1.6 Effects
of Merger. The Merger shall have the effects
set forth in the DGCL.
ARTICLE II
CONVERSION
OF SHARES
Section 2.1 Conversion
of Shares.
(a) Conversion of Shares. As of the
Effective Time, by virtue of the Merger and without any action
on the part of Parent, Sub, the Company or any holders of shares
of capital stock of the Company:
(i) Each outstanding share of common stock, par value
$0.001 per share, of the Company (the Company
Common Stock) that is held in the treasury of the
Company and any shares of Company Common Stock owned by Parent,
Sub or any wholly owned subsidiary of Parent or the Company
shall be canceled and no consideration shall be delivered in
exchange therefor (such shares, the Excluded
Company Shares).
(ii) Subject to Section 2.3, each share of
Company Common Stock issued and outstanding immediately prior to
the Effective Time (other than Excluded Company Shares) shall be
converted into the right to receive from Parent (1) an
amount in cash, without interest, equal to $58.00 (the
Cash Consideration), (2) 0. 2617
(the Exchange Ratio) of a share of common
stock, par value $.01 per share (the Parent Common
Stock), of Parent (the Stock
Consideration), and (3) one contingent value
right (a CVR) issued by Parent subject to and
in accordance with the CVR Agreement (the consideration
contemplated by subclauses (1), (2) and (3) together,
the Merger Consideration). Each CVR issued as
Merger Consideration hereunder will be substantially in the form
attached as Annex A to the CVR Agreement (the CVR
Certificate).
All such shares of Company Common Stock, when so converted,
shall no longer be outstanding and shall automatically be
canceled and retired, and each holder of a certificate or
certificates (the Certificates)
representing any such shares of Company Common Stock, and each
holder of non-certificated shares of Company Common Stock
represented by book-entry on the records of the Company or the
Companys transfer agent (Book-Entry
Shares), shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration,
any cash in lieu of fractional shares payable pursuant to
Section 2.2(e) and any dividends or other
distributions to which such holder is entitled pursuant to
Section 2.2(d), without interest.
(b) Each share of common stock of Sub issued and
outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the
holder thereof, be converted into and become at the Effective
Time one validly issued, fully paid and nonassessable share of
common stock, par value $0.001 per share, of the Surviving
Corporation.
Section 2.2 Payment
and Exchange of Certificates.
(a) Prior to the mailing of the proxy statement/prospectus
to be included in the registration statement on
Form S-4
to be filed by Parent with the SEC (as defined in
Section 3.4(a)) to register the shares of Parent
Common Stock and CVRs to be issued in connection with the Merger
(such proxy statement/prospectus, together with any amendments
or supplements thereto, the Proxy
Statement/Prospectus, and such registration statement,
together with any amendments, supplements and exhibits thereto,
the Registration Statement), Parent shall
appoint a commercial bank or trust company reasonably acceptable
to the Company to act as paying agent hereunder (the
Paying Agent) for the purpose of payment of
the aggregate Merger Consideration to be paid and delivered to
Securityholders (as defined in Section 2.2(b)) under
this ARTICLE II. Parent will enter into a
paying agent agreement in form and substance reasonably
acceptable to the Company at least two Business Days prior to
the
A-2
mailing of the Proxy Statement/Prospectus to the stockholders of
the Company. As used herein, Business Day
means any day of the year on which national banking institutions
in New York are open to the public for conducting business and
are not required or authorized to close.
(b) At the Closing, Parent shall deposit, or cause to be
deposited, with the Paying Agent (i) cash in an amount
sufficient to pay the aggregate Cash Consideration
(ii) certificates representing a number of shares of Parent
Common Stock equal to the Exchange Ratio multiplied by the
number of outstanding shares of Company Common Stock held by
holders (collectively, the
Securityholders) of all shares of
Company Common Stock (other than Excluded Company Shares and
Dissenting Company Shares), and (iii) CVR Certificates
representing the aggregate number of CVRs issuable pursuant to
the CVR Agreement in accordance with
Section 2.1(a)(ii) to which the Securityholders will
become entitled under this ARTICLE II at the Effective
Time. Parent further agrees to deposit, or cause to be
deposited, with the Paying Agent, from time to time as needed,
immediately available funds sufficient to pay cash in lieu of
fractional shares pursuant to Section 2.2(e) and any
dividends and other distributions pursuant to
Section 2.2(d). The aggregate amount of such Cash
Consideration and other cash amounts, certificates representing
shares of Parent Common Stock and CVRs deposited with the Paying
Agent is referred to herein as the Exchange
Fund. The Paying Agent shall cause the Exchange Fund
to be (1) held for the benefit of the Securityholders and
(2) promptly applied to making the payments and deliveries
provided for in this ARTICLE II. The
Exchange Fund shall not be used for any purpose that is not
provided for herein. The Paying Agent shall invest any cash
included in the Exchange Fund as directed by Parent, in direct
obligations of the United States of America or obligations for
which the full faith and credit of the United States of America
is pledged to provide for the payment of all principal and
interest, or a combination thereof. Any interest and other
income resulting from such investments shall be kept in the
Exchange Fund. To the extent that there are losses with respect
to such investments, or the Exchange Fund diminishes for other
reasons below the level required to make prompt payments of the
aggregate cash consideration to be paid to Securityholders as
contemplated hereby, Parent shall promptly replace or restore
the portion of the Exchange Fund lost through investments or
other events so as to ensure that the Exchange Fund is, at all
times, maintained at a level sufficient to make such payments.
Any portion of the Exchange Fund (including the proceeds of any
interest and other income received by the Paying Agent in
respect of such funds) that remains undistributed to the
Securityholders one year after the Effective Time of the Merger
shall be delivered to Parent at such time. Thereafter,
Securityholders shall look only to Parent (subject to the terms
of this Agreement and to abandoned property, escheat or other
similar Laws) as a general creditor for payment of the
consideration payable to them under this ARTICLE II,
without interest, upon the surrender of any Certificates held by
them. Notwithstanding any provision of this Agreement to the
contrary, none of the Paying Agent, Parent, the Surviving
Corporation or any other party hereto shall be liable to any
Person for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or other
similar Law.
(c) As soon as practicable (but in any event within two
Business Days) after the Effective Time, Parent shall cause the
Paying Agent to mail to each holder of record of shares of
Company Common Stock represented by Certificates and to each
holder of Book-Entry Shares, other than Excluded Company Shares
and Dissenting Company Shares: (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates or Book-Entry Shares shall
pass, only upon actual delivery of the Certificates or transfer
of Book-Entry Shares, as the case may be, to the Paying Agent
and shall be in a form reasonably agreed upon by Parent and the
Company prior to the Closing); and (ii) instructions for
use in effecting the surrender of the Certificates or transfer
of Book-Entry Shares, as the case may be, in exchange for the
Merger Consideration. Upon surrender of a Certificate (or
delivery of such customary affidavits and indemnities with
respect to a lost Certificate which the Paying Agent
and/or the
Companys transfer agent may reasonably require) or
transfer of Book-Entry Shares for cancellation to the Paying
Agent, together with such letter of transmittal duly executed
and in proper form, and such other documents as may reasonably
be required by the Paying Agent, the holder of such Certificate
or Book-Entry Shares shall be entitled to receive in exchange
therefor the Merger Consideration into which the shares of
Company Common Stock theretofore represented by such Certificate
or Book-Entry Shares shall have been converted pursuant to
Section 2.1, any cash in lieu of fractional shares
payable pursuant to Section 2.2(e) and any dividends
or other distributions to which such holder is entitled pursuant
to Section 2.2(d), and the Certificates so
surrendered or Book-Entry Shares so transferred shall forthwith
be canceled. No interest will be paid or will accrue on the
Merger Consideration, cash in lieu of fractional shares payable
pursuant to Section 2.2(e) or dividends or other
distributions to which such holder is entitled pursuant to
Section 2.2(d), payable upon the surrender of any
Certificate or transfer
A-3
of Book-Entry Shares. In the event of a transfer of ownership of
Company Common Stock that is not registered in the transfer
records of the Company, payment may be made to a Person other
than the Person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the Person
requesting such payment shall pay any transfer or other Taxes
required by reason of such Certificate and establish to the
satisfaction of Parent that such Tax has been paid or is not
applicable. Until surrendered or transferred as contemplated by
this Section 2.2, each Certificate or Book-Entry
Share (other than Certificates or Book-Entry Shares representing
any Dissenting Company Shares or Excluded Company Shares) shall
be deemed at any time after the Effective Time to represent only
the right to receive upon such surrender or transfer the amount
of Merger Consideration, without interest, into which the shares
of Company Common Stock theretofore represented by such
Certificate or Book-Entry Shares shall have been converted
pursuant to Section 2.1.
(d) No dividends or other distributions declared or made
after the Effective Time with respect to Parent Common Stock,
with a record date after the Effective Time, shall be paid to
the holder of any unsurrendered Certificate, and no cash payment
in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.2(e), unless and until the
holder of such Certificate shall surrender such Certificate in
accordance with Section 2.2(c). Subject to the
effect of escheat, Tax or other applicable Laws, following
surrender of any such Certificate, there shall be paid to the
holder of the certificates representing whole shares of Parent
Common Stock issued in exchange therefor, without interest,
(i) the amount of any cash payable with respect to a
fractional share of Parent Common Stock to which such holder is
entitled pursuant to Section 2.2(e) and the amount
of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole
shares of Parent Common Stock and (ii) at the appropriate
payment date, the amount of dividends or other distributions,
with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable
with respect to such whole shares of Parent Common Stock.
(e) No certificates or scrip representing fractional shares
of Parent Common Stock, or book-entry credit of the same, shall
be issued upon the surrender for exchange of Certificates, no
dividend or distribution with respect to Parent Common Stock
shall be payable on or with respect to any fractional share and
such fractional share interests shall not entitle the owner
thereof to any rights of a stockholder of Parent. For purposes
of this Section 2.2(e), all fractional shares to
which a single holder of shares of Company Common Stock would be
entitled shall be aggregated and calculations shall be rounded
to the fourth decimal point. In lieu of any such fractional
share of Parent Common Stock, each holder of Company Common
Stock otherwise entitled to a fraction of a share of Parent
Common Stock will be entitled to receive from the Paying Agent a
cash payment in an amount, rounded up to the nearest cent, equal
to the product of (i) such fractional part of a share of
Parent Common Stock multiplied by (ii) an amount equal to
the average of the closing sale prices for Parent Common Stock
on NASDAQ, as reported in The Wall Street Journal, for each of
the ten consecutive trading days ending with the seventh
complete trading day prior to the Effective Time (the
Parent Share Cash Value).
Section 2.3 Dissenting
Company Shares. Notwithstanding any provision
of this Agreement to the contrary, shares of Company Common
Stock which are issued and outstanding immediately prior to the
Effective Time and which are held by holders who have properly
exercised appraisal rights with respect thereto in accordance
with Section 262 of the DGCL (the Dissenting
Company Shares) will not be converted as described in
Section 2.1(a)(ii), and holders of such shares will
be entitled to receive payment of the value of such shares
determined in accordance with the applicable provisions of the
DGCL. Notwithstanding the foregoing, if, after the Effective
Time, any such holder fails to perfect or effectively withdraws
or loses its right to appraisal and payment under the DGCL, the
shares of Company Common Stock held by such holder that were
Dissenting Company Shares will thereupon be treated as if they
had been converted into, at the Effective Time, the right to
receive the Merger Consideration, any cash in lieu of fractional
shares payable pursuant to Section 2.2(e) and any
dividends or other distributions to which such holder is
entitled pursuant to Section 2.2(d), without any
interest thereon. Upon the Companys receipt of any notice
of intent to demand payment in accordance with the provisions of
the DGCL, or any withdrawal of such notice, and any other
instruments served pursuant to Section 262 of the DGCL and
received by the Company, the Company shall as promptly as
reasonably practicable provide Parent with a copy of such notice
or instrument. The Company shall give Parent the opportunity to
participate in and control all negotiations and proceedings with
respect to the exercise of dissenters rights under
Section 262 of the DGCL. The Company, on the one hand, and
Parent, prior to the Closing, on the other hand, shall not,
except with the prior written consent of the
A-4
other party hereto or pursuant to a court order, make any
payment with respect to any such election to dissent or offer to
settle or settle any such election to dissent.
Section 2.4 No
Further Ownership Rights in the Shares. From
and after the Effective Time, the holders of shares of Company
Common Stock which were outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to
such shares except as otherwise provided in this Agreement or by
applicable Law. All cash paid (including pursuant to
Section 2.2(d) or Section 2.2(e)) and all
shares of Parent Common Stock and CVR Certificates issued upon
the surrender of Certificates and Book-Entry Shares, in each
case in accordance with the terms hereof, shall be deemed to
have been paid and issued in full satisfaction of all rights
pertaining to the shares of Company Common Stock represented by
such Certificates
and/or such
Book-Entry Shares, as applicable.
Section 2.5 Closing
of Company Transfer Books. At the Effective
Time, the stock transfer books of the Company shall be closed
and no transfer of shares of Company Common Stock outstanding
immediately prior to the Effective Time shall thereafter be
made. If, after the Effective Time, Certificates representing
shares of Company Common Stock outstanding immediately prior to
the Effective Time are presented to the Surviving Corporation or
the Paying Agent for any reason, they shall be canceled and
exchanged as provided in this ARTICLE II.
Section 2.6 Adjustments. If
prior to the Effective Time there is an increase in the number
of shares of outstanding Company Common Stock or Company Common
Stock subject to outstanding Options or SARs (as each such term
is defined in Section 2.7) as a result of a
distribution, reclassification, stock split (including a reverse
split), stock dividend or distribution, recapitalization,
reorganization, merger, subdivision, spin-off, issuer tender or
exchange offer, or other similar transaction, the Cash Merger
Consideration, the Exchange Ratio, and any other payments to
Securityholders based upon the Merger Consideration will be
equitably adjusted to eliminate the effects of such event on the
Merger Consideration and such other payments.
Section 2.7 Stock
Options, RSUs, SARs.
(a) Options.
(i) At least five Business Days prior to the Closing Date,
each holder of an outstanding option, whether vested or unvested
(individually, an Option and collectively,
the Options), that was granted under
any Company stock option or equity incentive plan
(Company Stock Plan) and that has an exercise
price per share of Company Common Stock underlying such Option
(the Applicable Exercise Price) that is
greater than the Per Share Amount shall be provided with written
notice that such holder shall, during the period beginning on
the date of such notice and ending on the Business Day preceding
the Closing Date (the Exercise Period),
have the right to exercise such Option by providing the Company
with a notice of exercise and a cash amount equal to
(A) the Applicable Exercise Price, less (B) the Per
Share Amount, with such exercise conditioned on the occurrence
of the Effective Time. Each Option that is exercised pursuant to
this Section 2.7(a)(i) shall be settled at the
Effective Time in exchange for, in respect of each share of
Company Common Stock subject to such Option, one CVR. Any Option
described in this Section 2.7(a)(i) that is not
exercised during the Exercise Period shall be cancelled at the
Effective Time for no consideration therefor. For purposes of
this Agreement, Per Share Amount means the
sum of (x) the amount obtained by multiplying (1) the
Exchange Ratio and (2) the Parent Share Cash Value, with
such amount rounded up to the nearest cent, and (y) the
Cash Consideration.
(ii) Each Option that remains outstanding immediately prior
to the Effective Time and that has an Applicable Exercise Price
that is equal to or less than the Per Share Amount shall be
cancelled at the Effective Time in exchange for the right of the
holder of such Option to receive, for each share of Company
Common Stock subject to such Option, (A) an amount in cash,
without interest, equal to the excess, if any, of the Per Share
Amount over the Applicable Exercise Price, with the aggregate
amount of such payment rounded down to the nearest cent, and
(B) one CVR.
(b) SARs.
(i) At least five Business Days prior to the Closing Date,
each holder of an outstanding stock appreciation right, whether
vested or unvested (individually, a SAR and
collectively, the SARs), that was
granted under any Company Stock Plan and that has a base
appreciation amount (the Applicable SAR Base
Amount) that is greater than the Per Share Amount
shall be provided with written notice that such holder shall
have the right to exercise
A-5
such SAR during the Exercise Period by providing the Company
with a notice of exercise and a cash amount equal to
(A) the Applicable SAR Base Amount, less (B) the Per
Share Amount, with such exercise conditioned on the occurrence
of the Effective Time. Each SAR that is exercised pursuant to
this Section 2.7(b)(i) shall be settled at the
Effective Time in exchange for one CVR. Any SAR described in
this Section 2.7(b)(i) that is not exercised during
the Exercise Period shall be cancelled at the Effective Time for
no consideration therefor.
(ii) Each SAR that remains outstanding immediately prior to
the Effective Time and that has an Applicable SAR Base Amount
that is equal to or less than the Per Share Amount shall be
cancelled at the Effective Time in exchange for the right of the
holder of such SAR to receive (A) an amount in cash,
without interest, equal to the excess, if any, of the Per Share
Amount over the Applicable SAR Base Amount, with the aggregate
amount of such payment rounded up to the nearest cent, and
(B) one CVR.
(c) RSUs. Each restricted stock
unit (individually, an RSU and collectively,
the RSUs) granted by the Company under any
Company Stock Plan which is outstanding immediately prior to the
Effective Time shall vest as of the Effective Time and shall be
cancelled and converted at the Effective Time into the right to
receive, and the holder thereof shall be entitled to receive,
(i) cash, without interest, equal to the Per Share Amount,
with the aggregate amount of such payment rounded up to the
nearest cent, and (ii) one CVR.
(d) Payment for Awards. Parent
shall pay, or cause the Surviving Corporation to pay through its
payroll system, to each holder of Options, SARs and RSUs the
cash payments and CVRs subject to and in accordance with this
Section 2.7.
(e) Termination of Plans; Determinations by the
Board. Each Company Stock Plan shall
terminate as of the Effective Time, and any other plan, program
or arrangement providing for the issuance or grant of any
interest in respect of the capital stock (or any interest
convertible into or exchangeable for such capital stock) of the
Company or any Subsidiary thereof shall be canceled as of the
Effective Time. At or prior to the Effective Time, the
Companys board of directors (the Board of
Directors) (or a committee thereof) will
(i) adopt amendments to, or make determinations with
respect to, the Employee Benefit Plans (as defined in
Section 3.10(a)), the Company Stock Plans, and the
individual agreements evidencing the grant of Options, SARs and
RSUs, as necessary, to implement the provisions of this
Section 2.7 and (ii) take such other actions as
may be reasonably requested by Parent to implement the
provisions of this Section 2.7.
Section 2.8 Withholding
of Tax. Notwithstanding anything to the
contrary in this Agreement, Parent, the Company, any Affiliate
thereof (including the Surviving Corporation, as applicable),
Trustee or the Paying Agent shall be entitled to deduct and
withhold, or cause to be deducted and withheld, from amounts
(including shares of Parent Common Stock and CVRs) otherwise
payable pursuant to this Agreement or the Related Agreements to
any holder of shares of Company Common Stock, Options, SARs or
RSUs, such amounts as Parent, the Company, any Affiliate
thereof, Trustee or the Paying Agent is required to deduct and
withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the
Code), or any provision of state, local or
foreign Tax Law. To the extent that amounts are so withheld by
Parent, the Company, any Affiliate thereof, Trustee or the
Paying Agent, such withheld amounts shall be (a) paid over
to the applicable Governmental Entity (as defined in
Section 3.3(c)) in accordance with applicable Law
and (b) treated for all purposes of this Agreement as
having been paid to such holder in respect of which such
deduction and withholding was made by Parent, the Company, any
Affiliate thereof, Trustee or the Paying Agent, as the case may
be.
Section 2.9 Closing. The
closing of the transactions contemplated by this Agreement (the
Closing) shall take place at the offices of
Fried, Frank, Harris, Shriver & Jacobson LLP, One New
York Plaza, New York, New York 10004, at 9:00 A.M. local
time on the day which is no later than two Business Days after
the day on which the last of the conditions set forth in
ARTICLE VII (other than those that can only be
fulfilled at the Closing, but subject to the fulfillment or
waiver of such conditions) is fulfilled or waived, or at such
other time and place as Parent and the Company shall agree in
writing. The date on which the Closing is required to occur
pursuant to the foregoing is referred to herein as the
Closing Date.
A-6
ARTICLE III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except (i) as disclosed in the Companys Annual Report
on
Form 10-K
for the year ended December 31, 2009, as amended, the
Companys Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010 or any of the
Companys Current Reports on Form 8 K
dated after December 31, 2009 filed by the Company with the
SEC pursuant to the Securities Exchange Act of 1934, as amended
(the Exchange Act) prior to the date of this
Agreement but excluding any disclosures contained or referenced
therein under the captions Risk Factors,
Forward-Looking Statements, and Quantitative
and Qualitative Disclosures About Market Risk and any
other disclosures contained or referenced therein of
information, factors or risks that are predictive, cautionary or
forward-looking in nature, and provided that any matters
required to be disclosed for purposes of
Section 3.2(a) (Capital Structure),
Section 3.14 (Intellectual Property) and
Section 3.17 (Material Contracts) of this Agreement
shall be specifically disclosed in sections of the Disclosure
Schedule pertaining thereto, or (ii) as set forth in the
Disclosure Schedule of the Company delivered concurrent with the
execution of this Agreement (the Disclosure
Schedule) (it being understood that any information
set forth in one section or subsection of the Disclosure
Schedule shall be deemed to apply to and qualify the Section or
subsection of this Agreement to which it corresponds in number
and each other Section or subsection of this Agreement to the
extent that it is reasonably apparent that such information is
relevant to such other Section or subsection), the Company
represents and warrants to Parent and Sub as follows:
Section 3.1 Organization,
Standing and Power. Each of the Company and
its Subsidiaries (as defined in Section 9.12) is a
legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and
has all requisite corporate or similar power and authority to
own, lease and operate its properties and assets and to carry on
its business as presently conducted and is qualified to do
business and is in good standing as a foreign legal entity in
each jurisdiction where the ownership, leasing or operation of
its assets or properties or conduct of its business requires
this qualification, except where the failure to be so organized,
qualified or in good standing, or to have such power or
authority, would not reasonably be expected to have a Company
Material Adverse Effect. For purposes of this Agreement,
Company Material Adverse Effect means
any change, effect, event, development, occurrence, condition or
state of facts (collectively, Effects), that,
in the aggregate with all other Effects, is, or would reasonably
be expected to be, (1) materially adverse to the business,
assets, financial condition or results of operations of the
Company and its Subsidiaries taken as a whole, or
(2) prevent the consummation of the Merger; provided that
in no event shall any of the following, alone or in combination,
be deemed to constitute, nor shall any of the following be taken
into account in determining whether there has been, or there
would reasonably be expected to be, a Company Material Adverse
Effect: (a) any Effect relating to, or resulting from, any
change or developments in or to local, regional, national or
foreign political, economic or financial conditions or in or to
local, regional, national or foreign credit, financial, banking
or securities markets (including any disruption thereof),
including any Effect caused by acts of terrorism or war or armed
hostilities (whether or not declared), (b) any Effect
affecting generally any of the industries, geographic areas or
business segments in which the Company or any of its
Subsidiaries operates, (c) any Effect relating to, or
resulting from, any hurricane, earthquake or other natural
disasters, (d) any change in the share price or trading
volume (as opposed to the facts underlying such change) of the
Company Common Stock on the Nasdaq Global Select Market of The
NASDAQ Stock Market LLC (NASDAQ) (provided,
however, that the facts and circumstances giving rise to such
Effect that are not otherwise excluded from the definition of
Company Material Adverse Effect may be considered for purposes
of determining whether there has been, or would reasonably be
expected to be, a Company Material Adverse Effect), (e) any
Effect relating to, or resulting from, the adoption,
implementation, promulgation, repeal, modification or proposal
of any Law (as defined in Section 3.3(b)) or
U.S. generally accepted accounting principles
(U.S. GAAP), after the date of this
Agreement, (f) any failure, in and of itself (as opposed to
the facts underlying such failure), to meet any budgets, plans,
projections or forecasts of the Companys or its
Subsidiaries revenue, earnings or other financial
performance or results of operations, or any published financial
forecasts or analyst estimates with respect to the revenue,
earnings or other financial performance or results of operations
of the Company or its Subsidiaries or any change in analyst
recommendations, for any period (provided, however, that the
facts and circumstances giving rise to such failures that are
not otherwise excluded from the definition of Company Material
Adverse Effect may be considered for purposes of determining
whether there has been, or there would
A-7
reasonably be expected to be, a Company Material Adverse Effect
may be considered for purposes of determining whether there has
been, or would reasonably be expected to be, a Company Material
Adverse Effect) or (g) any Effect directly relating to, or
resulting from, the execution, performance or announcement of
this Agreement or the Related Agreements (including the impact
thereof on relationships, contractual or otherwise, with
customers, suppliers, licensors, licensees, distributors,
partners or employees, the loss or departure of officers or
other employees of the Company or its Subsidiaries and any
pending or threatened Proceeding (as defined in
Section 3.7) challenging this Agreement, any of the
Related Agreements or the transactions contemplated hereby or
thereby, or otherwise resulting from the pursuit of the
consummation of the transactions contemplated hereby or thereby;
except that clauses (a), (b), (c) and (e), shall not be
applicable with respect to Effects to the extent, but only to
the extent, that any such Effects have had, or would reasonably
be expected to have, a disproportionate impact on the Company
and its Subsidiaries, taken as a whole, relative to other
participants in the industry in which the Company and its
Subsidiaries operate.
Section 3.2 Capital
Structure.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock and
6,000,000 shares of preferred stock, par value $0.001 per
share. As of the close of business on June 25, 2010,
(i) 40,403,163 shares of Company Common Stock were
issued and outstanding, (ii) no shares of preferred stock
were outstanding, (iii) an aggregate of
1,810,167 shares of Company Common Stock were issuable upon
exercise of then outstanding Options and SARs (whether or not
exercisable as of such date), and (iv) 939,570 RSUs were
outstanding. In addition to the shares of Company Common Stock
referred to in clauses (i), (iii) and (iv), as of the close
of business on June 25, 2010, 3,472,973 shares of
Company Common Stock were available for additional grants under
the Company Stock Plans. All of the outstanding shares of
Company Common Stock are validly issued and outstanding, fully
paid and non assessable and free of preemptive rights. All
shares of Company Common Stock subject to issuance under the
Company Stock Plans, including outstanding Options, SARs and
RSUs, will upon issuance be validly issued and outstanding,
fully paid and non-assessable and free of preemptive rights.
Section 3.2(a) of the Disclosure Schedule sets forth
an accurate and complete list of the Options and SARs
outstanding as of June 25, 2010 and the exercise or base
prices thereof.
(b) Each Option and SAR was validly and properly approved
by the Board of Directors (or a duly authorized committee or
subcommittee thereof), was granted in compliance in all material
respects with all applicable legal requirements and was recorded
on the Companys financial statements in accordance with
GAAP consistently applied, and no such grants involved any
back dating, forward dating or similar
practices with respect to the effective date of grant. All
Options, SARs and RSUs are in compliance in all material
respects with the terms of the applicable Company Stock Plan
under which such Options, SARs and RSUs were granted. The
Company has not granted any Options or SARs at an exercise or
base price that represents a discount from the fair market value
of the Company Common Stock underlying such Option or SAR on the
date of grant and the Company has disclosed any re-pricing of
Options or SARs in the Company Financial Statements.
(c) Except as otherwise set forth in this
Section 3.2, as of the date of this Agreement, the
Company has no (i) outstanding stock or securities
convertible into or exchangeable for any shares of its equity
securities, or any outstanding rights to subscribe for or to
purchase any shares of its equity securities, or any outstanding
options for the purchase thereof, (ii) any agreements
providing for the issuance of any equity securities or any stock
or securities convertible into or exchangeable for any equity
securities of the Company or (iii) outstanding bonds,
debentures, notes or other indebtedness having the right to vote
(or convertible into or exchangeable for securities having the
right to vote) on any matters on which stockholders of the
Company may vote. The Company is not subject to any obligation
to repurchase or otherwise acquire any shares of its equity
securities or any convertible securities, rights or options of
the type described in the preceding sentence (other than the
acquisition of Company Common Stock, Options, SARs or RSUs upon
the exercise, settlement or forfeiture thereof). From
June 25, 2010 to the date of this Agreement, the Company
has not (i) issued any shares of Company Common Stock
except in connection with the conversion, exercise or settlement
of any Options or RSUs or (ii) issued or granted any
options, warrants or securities convertible into or exercisable
for shares of its Company Common Stock.
(d) All of the outstanding shares of capital stock or other
equity securities of each Subsidiary of the Company are validly
issued, fully paid, nonassessable and free of preemptive rights
and are owned directly or indirectly by the
A-8
Company free and clear of any pledges, liens, charges,
mortgages, encumbrances and securities interests
(Liens) (other than Liens arising by
operation of Law, under securities Laws or under the
organizational documents applicable to such Subsidiary of the
Company). There are no subscriptions, options, warrants, rights,
calls, contracts, voting trusts, proxies or other arrangements
to which the Company or any of its Subsidiaries is a party
(other than with the Company or any of its Subsidiaries)
relating to the issuance, sale, voting, transfer, ownership or
other rights with respect to any shares of capital stock or
other equity securities of any Subsidiary of the Company,
including any right of conversion or exchange under any
outstanding securities, instrument or agreement.
Section 3.2(d) of the Disclosure Schedule sets
forth, as of the date of this Agreement, (i) for each
Subsidiary of the Company, the name of such Subsidiary, together
with the jurisdiction of organization or incorporation, as the
case may be, of such Subsidiary and (ii) for each
Subsidiary of the Company that is not wholly-owned by the
Company, the percentage of equity of such Subsidiary owned by
the Company or any of its Subsidiaries. No Subsidiary of the
Company owns any share of capital stock or other equity security
of the Company.
Section 3.3 Authority;
Non-Contravention.
(a) The Company has the requisite corporate power and
authority to enter into this Agreement and, subject to approval
of this Agreement by the stockholders of the Company, to
consummate the Merger and the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the Merger and
the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the
Company, subject only to the receipt of the Stockholder
Approval. The only vote of the stockholders of the Company
necessary to approve this Agreement, the Related Agreements, and
the transactions contemplated by this Agreement and the Related
Agreements is the Stockholder Approval. The Company has duly
executed and delivered this Agreement and (assuming the valid
authorization, execution and delivery of this Agreement by
Parent and Sub, as applicable) this Agreement constitutes a
valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar Laws of general applicability relating to or affecting
creditors rights and general equity principles. The Board
of Directors has unanimously determined that the transactions
contemplated by this Agreement, including the Merger, and the
Related Agreements, are advisable and fair to, and in the best
interest of, the Company and its stockholders, adopted this
Agreement, approved the execution of this Agreement, approved
and declared advisable the Merger, and resolved to recommend
adoption of this Agreement by the holders of shares of Company
Common Stock (subject to its right to change its recommendation
in accordance with this Agreement).
(b) The execution and delivery of this Agreement
and/or any
of the Related Agreements does not, and the consummation of the
Merger and compliance with the provisions hereof and thereof
will not, (i) conflict with, or result in any violation of,
the certificate of incorporation or by-laws of the Company,
(ii) conflict with, or result in any violation of
organizational documents of any of the Subsidiaries of the
Company, (iii) result in any violation or breach of, or
default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or
acceleration of any obligation, or result in the creation of any
Lien upon any of the properties or assets of the Company or any
of its Subsidiaries under, or impair the Companys or any
of its Subsidiaries rights under, or alter the rights of a
third party under, any provision of any agreement, note, bond,
mortgage, indenture, lease or other contractual obligation
(each, a Contract) binding on the
Company or any of its Subsidiaries or any of their properties or
assets (each, a Company Contract), except for
any such violation, breach, default or right of termination,
cancellation or acceleration or Lien as to which requisite
waivers or consents have been obtained or (iv) assuming
that the Registrations and Consents set forth in
Section 3.3(c) are duly and timely made or obtained
and that Stockholder Approval (as defined in
Section 7.1(a)) has been duly obtained, violate any
foreign, federal, state, local or municipal laws, rules,
judgments orders, regulations, statutes, ordinances, codes,
decisions, injunctions, orders, decrees or requirements of any
Governmental Entity (each a Law)
applicable to the Company or any of its Subsidiaries or their
properties or assets, other than, in the case of
clauses (iii) or (iv), any such conflict, violation,
default, termination, cancellation, acceleration or Lien that
would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(c) No registration or filing with (each, a
Registration) or clearance, authorization,
consent or approval (each, a Consent) of any
domestic (federal or state), or foreign court, commission,
governmental body, regulatory or administrative agency or other
political subdivision thereof (each, a Governmental
Entity) is required on the
A-9
part of the Company or any of its Subsidiaries in connection
with the execution and delivery of this Agreement, the Related
Agreements by the Company or the consummation by the Company of
the Merger or by the Company of the other transactions
contemplated hereby or thereby, except for (i) compliance
with and filings under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the HSR
Act), (ii) compliance with the provisions of the
Exchange Act and the rules of any national securities exchange,
(iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which
the Company or any of its Subsidiaries is qualified to do
business, (iv) such as may be required in connection with
the Taxes described in Section 6.11 and
(v) such other Consents or Registrations the failure of
which to be obtained or made would not reasonably be expected to
have, individually or in the aggregate, a Company Material
Adverse Effect.
Section 3.4 SEC
Documents.
(a) Since January 1, 2008, the Company has filed with,
or furnished to, the Securities and Exchange Commission (the
SEC) all documents required to be filed or
furnished by the Company under the Securities Act or the
Exchange Act (collectively, the Company SEC
Documents). None of the Subsidiaries of the Company
is, or has at any time been, subject to the reporting
requirements of Sections 13(a) and 15(d) of the Exchange
Act. As of their respective dates, the Company SEC Documents
complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and as
of their respective dates and except as amended or supplemented
prior to the date hereof (or with respect to Company SEC
Documents filed or furnished after the date hereof, except as
amended or supplemented prior to the Closing Date), none of the
Company SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by
the Company with respect to information supplied by Parent, Sub
or their respective Subsidiaries in writing for inclusion in the
Proxy Statement/Prospectus. Each of the consolidated financial
statements of the Company (including, in each case, any notes
thereto) included in the Company SEC Documents (collectively,
the Company Financial Statements) have been
prepared in accordance with U.S. GAAP applied on a
consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto) and fairly present in
all material respects the financial position of the Company and
its consolidated Subsidiaries as at the dates thereof and the
results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments set
forth therein). As of the date of this Agreement, neither the
Company nor any of its Subsidiaries has any pending or
unresolved comments from the SEC or any other Governmental
Entity with respect to any of the Company SEC Documents.
(b) To the Knowledge of the Company, neither the Company
nor any of its Subsidiaries has any liability or obligation of
any nature (whether accrued, absolute, contingent or otherwise),
except for liabilities, obligations or contingencies which
(i) are reflected, or for which reserves are established,
on the consolidated balance sheet of the Company as of
March 31, 2010, (ii) were incurred in the ordinary
course of business since March 31, 2010, (iii) would
not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect or (iv) have
been incurred in connection with the performance by the Company
of its obligations under this Agreement or the transactions
contemplated hereby. As of the date of this Agreement, neither
the Company nor any of its Subsidiaries has any indebtedness for
borrowed money or has guaranteed indebtedness for borrowed money
of another Person (other than the Company or a wholly owned
Subsidiary of the Company).
(c) Each of the principal executive officer and the
principal financial officer of the Company (or each former
principal executive officer and each former principal financial
officer of the Company, as applicable) has made the
certifications required by
Rules 13a-14
and 15d-14
promulgated under the Exchange Act or Sections 302 and 906
of the Sarbanes-Oxley Act of 2002 and the related rules and
regulations promulgated thereunder (the Sarbanes-Oxley
Act) with respect to the Company SEC Documents. For
purposes of the preceding sentence, principal executive
officer and principal financial officer have
the meanings ascribed to those terms under the Sarbanes-Oxley
Act.
(d) To the Knowledge of the Company, since January 1,
2008 and prior to the date of this Agreement, none of the
Company, any of its Subsidiaries or any director, officer,
auditor, accountant or representative of the Company or any of
its Subsidiaries has received any substantive complaint,
allegation, assertion or claim, whether written or
A-10
oral, that the Company or any of its Subsidiaries has engaged in
questionable accounting or auditing practices. No current or
former attorney representing the Company or any of its
Subsidiaries has reported evidence of a material violation of
securities Laws, breach of fiduciary duty or similar violation
by the Company or any of its Subsidiaries, or any of their
respective officers, directors, employees or agents, to the
current Board of Directors or any committee thereof or to any
current director or executive officer of the Company.
(e) The Company and its Subsidiaries have designed and
maintain internal controls over financial reporting (as defined
in
Rules 13a-15(f)
and
15d-15(f)
promulgated under the Exchange Act) to provide reasonable
assurances (i) regarding the reliability of the
Companys financial reporting and the preparation of
financial statements for external purposes in accordance with
U.S. GAAP (ii) that receipts and expenditures of the
Company and its Subsidiaries are being made only in accordance
with the authorization of management and directors of the
Company and such Subsidiaries and (iii) regarding
prevention or timely detection of the unauthorized acquisition,
use or disposition of the Companys or its
Subsidiaries assets that could have a material effect on
the Companys financial statements. The Company has
designed and maintains disclosure controls and procedures (as
defined in
Rules 13a-15(e)
and
15d-15(e)
promulgated under the Exchange Act) to ensure that material
information required to be disclosed by the Company in the
reports that the Company files or submits under the Exchange Act
is recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms and is
accumulated and communicated to the Companys management as
appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the principal
executive officer and principal financial officer of the Company
required under the Exchange Act with respect to such reports.
(f) Neither the Company nor any of its Subsidiaries is a
party to, or has any commitment to become a party to, any joint
venture, off balance sheet partnership or any similar Company
Contract (including any Company Contract or arrangement relating
to any transaction or relationship between or among the Company
and any of its Subsidiaries, on the one hand, and any
unconsolidated affiliate, including any structured finance,
special purpose or limited purpose entity or person, on the
other hand, or any off balance sheet arrangements
(as defined in Item 303(a) of
Regulation S-K
under the Exchange Act)), where the result, purpose or intended
effect of such Company Contract is to avoid disclosure of any
material transaction involving, or material liabilities of, the
Company or any of its Subsidiaries in the Companys or such
Subsidiarys published financial statements or other
Company SEC Documents.
(g) Since January 1, 2009, the Company has not
received any oral or written notification of any material
weakness in the Companys internal control over
financial reporting. There is no outstanding significant
deficiency or material weakness that the
Companys independent accountants certify has not been
appropriately and adequately remedied by the Company. For
purposes of this Agreement, the terms significant
deficiency and material weakness shall have
the meanings assigned to them in Release
No. 2007-005
of the Public Company Accounting Oversight Board, as in effect
on the date hereof.
Section 3.5 Proxy
Statement/Prospectus and Registration
Statement. None of the information supplied
or to be supplied by the Company for inclusion or incorporation
by reference in the Registration Statement or the Proxy
Statement/Prospectus, at the time the Registration Statement
becomes effective under the Securities Act, at the time the
Proxy Statement/Prospectus is mailed to stockholders of the
Company and at the time of the Company Stockholders Meeting,
will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading,
except that no representation is made by the Company with
respect to information supplied by Parent or Sub in writing
expressly for inclusion in any of such documents. The Proxy
Statement/Prospectus and the Registration Statement shall each
comply in all material respects with the requirements of the
Securities Act and the Exchange Act.
Section 3.6 Absence
of Certain Events. From March 31, 2010
to the date of this Agreement, (i) the Company and its
Subsidiaries have conducted their operations in all material
respects in the ordinary course of business, (ii) there has
not occurred any Effect that, individually or in the aggregate
with all other Effects, has had, or would reasonably be expected
to have, a Company Material Adverse Effect, and (iii) there
has not been any action taken by the Company or any of its
Subsidiaries that, if taken after the date of this Agreement,
would constitute a breach of Section 5.1(a),
(c), (d), (e), (f), (g),
(h), (k), (l), (o), (p),
(q) or (r).
A-11
Section 3.7 Litigation. There
is no material suit, action, arbitration, proceeding, claim,
charge, regulatory or accrediting agency investigation or other
proceeding (each, a Proceeding) pending
or, to the Knowledge of the Company (as defined in
Section 9.14), threatened against the Company or any
of its Subsidiaries or any property or asset of the Company or
any of its Subsidiaries. None of the Company or any of its
Subsidiaries is subject to any writ, judgment, settlement
agreement, injunction or decree that would reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 3.8 No
Violation of Law. Neither the Company nor any
of its Subsidiaries is or since January 1, 2008 has been in
material violation of any Law. To the Knowledge of the Company,
no material investigation or review by any Governmental Entity
is pending or threatened against the Company or any of its
Subsidiaries. The Company and its Subsidiaries have all material
permits, licenses, franchises, variances, exemptions, orders and
other governmental authorizations, consents and approvals
necessary to conduct its businesses in all material respects as
presently conducted (collectively, the Company
Permits). None of the Company or any of its
Subsidiaries is in violation of the terms of any Company Permit,
except for delays in filing reports or violations which would
not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. This
Section 3.8 does not relate to matters which are the
subject of Section 3.10 or Section 3.12.
Section 3.9 Taxes.
(a) Except as would not be material to the Company,
(i) the Company and its Subsidiaries have timely filed or
have had timely filed on their behalf (taking into account
extensions of time to file) all Tax Returns required to be filed
by them, and such Tax Returns are correct and complete in all
respects, (ii) the Company and its Subsidiaries have paid
(or have had paid on their behalf) all Taxes due and payable
with respect to such Tax Returns, except with respect to Taxes
for which adequate reserves have been established in accordance
with U.S. GAAP on the most recent financial statements of
the Company or its Subsidiaries, (iii) the Company and its
Subsidiaries have withheld or collected, and have paid over to
the appropriate Governmental Entities (or are properly holding
for such payment), all Taxes required to be withheld or
collected, (iv) neither the Company nor any of its
Subsidiaries has received any written notice of any pending or
ongoing audit, investigation, assessment, deficiency, or claim
with respect to Taxes (including any Taxes described in clause
(viii)(B) of this Section 3.9(a)) which remains
unresolved, (v) there are no Liens on any of the assets of
the Company or any of its Subsidiaries that arose in connection
with any failure or alleged failure to pay Taxes (other than
Taxes not yet due and payable, or Taxes for which adequate
reserves have been established in accordance with U.S. GAAP
on the most recent financial statements of the Company or its
Subsidiaries), (vi) neither the Company nor any of its
Subsidiaries has incurred any liability for Taxes subsequent to
the date of its most recent respective financial statements
other than in the ordinary course of business, (vii) no
written claim has been received by the Company or its
Subsidiaries from any Governmental Entity in a jurisdiction
where the Company or any of its Subsidiaries does not file Tax
Returns that the Company or any of its Subsidiaries is or may be
subject to taxation in that jurisdiction, (viii) with the
exception of the affiliated group of which the Company is the
parent within the meaning of Section 1504 of the Code,
neither the Company nor any of its Subsidiaries (A) is or
has ever been a member of an affiliated group filing a
consolidated federal income Tax Return or (B) has any
liability for the Taxes of any Person (other than the Company
and its Subsidiaries) under
Section 1.1502-6
of the Treasury Regulations (or any similar provision of Law),
as a transferee or successor, by contract, or otherwise,
(ix) neither the Company nor any of its Subsidiaries is a
party to, has participated in, or is currently participating in,
a tax shelter or listed transaction as
defined in Section 6111 of the Code or a reportable
transaction within the meaning of
Section 1.6011-4(b)
of the Treasury Regulations or any transaction requiring
disclosure under a corresponding or similar provision of state,
local or foreign Law, (x) neither the Company nor any of
its Subsidiaries will be required to include any item of income
in, or exclude any item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the
Effective Time as a result of any (A) change in the method
of accounting for a taxable period ending on or prior to the
Effective Time, (B) closing agreement as
described in Section 7121 of the Code (or any corresponding
or similar provision of state, local or foreign Tax Law)
executed prior to the Effective Time, (C) installment sale
or open transaction disposition made prior to the Effective
Time, or (D) prepaid amount received prior to the Effective
Time, and (xi) the Company is not now, nor has it ever
been, a United States real property holding
corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
A-12
(b) Neither the Company nor any of its Subsidiaries is a
party to any agreement providing for the allocation or sharing
of Taxes with any entity (other than the Company or any of its
Subsidiaries).
(c) Without regard to the execution of this Agreement and
the consummation of the transactions contemplated by this
Agreement and the Related Agreements, the 2007 Spin-Off
qualified for nonrecognition treatment under
Sections 355(a) and 361(c) of the Code. The Company has not
constituted either a distributing corporation or a
controlled corporation (within the meaning of
Section 355 or Section 361 of the Code) in a
distribution of stock purported to or intended to be governed by
Section 355 or Section 361 of the Code in any
transaction other than the 2007 Spin-Off. Neither the Company or
its Subsidiaries, nor any of their respective stockholders, has
received, as a result of its rights under Section 3.01 of
the 2007 Tax Allocation Agreement or otherwise, any notice of,
or is otherwise aware of, any pending or ongoing audit,
investigation, review, assessment, deficiency, or claim with
respect to Taxes related to the qualification of the 2007
Spin-Off for nonrecognition treatment under Sections 355(a)
and 361(c) of the Code.
(d) Neither the Company nor any of its Subsidiaries has any
deferred intercompany gain, excess loss account or gain
recognition agreement in effect under any applicable U.S.,
state, local or foreign Tax Law.
(e) None of the Tax Returns of the Company or any of its
Subsidiaries contains any position that is, or would be, subject
to material penalties under Section 6662 of the Code (or
any corresponding provisions of state, local, or foreign Tax
Law).
(f) For purposes of this Agreement: Tax
means any federal, state, local or foreign income, profits,
gross receipts, license, payroll, employment, severance, stamp,
occupation, premium, windfall profits, environmental, customs
duty, capital stock, franchise, sales, social security,
unemployment, disability, use, property, withholding, excise,
transfer, registration, production, value added, alternative
minimum, occupancy, estimated or any other tax of any kind
whatsoever, together with any interest, penalty or addition
thereto, imposed by any Governmental Entity responsible for the
imposition of any such tax, whether disputed or not;
Tax Return means any return, report,
declaration, claim or other statement (including attached
schedules) relating to Taxes; 2007 Tax Allocation
Agreement means that certain Tax Allocation Agreement
entered into by the Company, APP Pharmaceuticals, Inc., APP
Pharmaceuticals, LLC and Abraxis BioScience, LLC and dated
November 13, 2007; 2007 Separation and
Distribution Agreement means that certain Separation
and Distribution Agreement entered into by the Company, APP
Pharmaceuticals, Inc., APP Pharmaceuticals, LLC and Abraxis
BioScience, LLC and dated November 13, 2007; and
2007 Spin-Off means the distribution by APP
Pharmaceuticals, Inc. to its stockholders, on November 13,
2007, of all of the then-issued and outstanding shares of common
stock of the Company pursuant to the 2007 Separation and
Distribution Agreement, and the transactions entered into
therewith.
Section 3.10 Employee
Benefit Plans; ERISA.
(a) Section 3.10(a) of the Disclosure Schedule
includes a complete list as of the date of this Agreement of
(i) each material employee benefit plan, program or policy
providing benefits to any current or former employee, officer,
director, independent contractor or consultant of the Company or
its Subsidiaries, or any beneficiary or dependent thereof, that
is sponsored or maintained by the Company or any of its
Subsidiaries or any trade or business (whether or not
incorporated) under common control with the Company or any of
its Subsidiaries and which, together with the Company or any of
its Subsidiaries, is treated as a single employer within the
meaning of Section 414(b), (c), (m) or (o) of the
Code (an ERISA Affiliate) or with respect to
which the Company or any of its Subsidiaries or ERISA Affiliates
has any current or potential material liability, including any
employee welfare benefit plan within the meaning of
Section 3(1) of the Employee Retirement Income Security Act
of 1974, as amended (ERISA), any employee
pension benefit plan within the meaning of Section 3(2) of
ERISA (whether or not such plan is subject to ERISA) and any
material bonus, incentive, deferred compensation, vacation,
stock purchase, stock option, severance, employment, change of
control or fringe benefit plan, program or policy (collectively,
the Employee Benefit Plans) (but excluding,
for all purposes of this Agreement other than
Section 6.6 and Section 3.10(h) hereof,
any Employee Benefit Plan that is primarily subject to the Laws
of any jurisdiction outside of the United States),
(ii) each employment and severance agreement pursuant to
which the Company or any of its Subsidiaries has or would have
any obligation to provide compensation
and/or
benefits in an amount or having a value reasonably likely to be
in excess of $200,000 per year or $500,000 in the aggregate; and
(iii) any agreement which prohibits the Company or any of
its Subsidiaries from terminating the employment of any
A-13
employee on an at-will basis (which means that their employment
cannot be terminated at any time, with or without notice, for
any reason or no reason at all
and/or they
have been granted the right to continued employment by the
Company, its Subsidiaries, or any successor) (each agreement
referenced in (ii) and (iii), a Material
Employment Agreement). As of the date of this
Agreement, neither the Company nor any of its Subsidiaries has
agreed or committed to institute any material plan, program,
arrangement or agreement for the benefit of employees or former
employees of the Company or its Subsidiaries other than the
Employee Benefit Plans or Material Employment Agreements or to
make any amendments to any of the Employee Benefit Plans or
Material Employment Agreements, and the Company
and/or its
Subsidiaries, as applicable, have reserved all rights necessary
to amend or terminate each Employee Benefit Plan with regard to
their respective service providers without the consent of any
other person.
(b) With respect to each Employee Benefit Plan, the Company
has delivered or made available to Parent a true, correct and
complete copy of: (i) all plan documents and trust
agreements; (ii) the most recent Annual Report
(Form 5500 Series) and accompanying schedule, if any;
(iii) the current summary plan description, if any;
(iv) the most recent annual financial report, if any;
(v) the most recent actuarial report, if any; and
(vi) the most recent determination letter from the Internal
Revenue Service (IRS), if any. The Company
has delivered or made available to Parent a true, correct and
complete copy of each Material Employment Agreement.
(c) The Company has an IRS determination letter or opinion
letter with respect to each Employee Benefit Plan that is
intended to be a qualified plan within the meaning
of Section 401(a) of the Code, and the trust maintained
pursuant thereto has been determined to be so qualified and
exempt from federal income taxation under Section 501 of
the Code by the IRS, and to the Knowledge of the Company,
nothing has occurred with respect to the operation of any such
Employee Benefit Plan that would reasonably be expected to cause
the loss of such qualification or exemption from Tax that cannot
be corrected without material liability.
(d) Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect
(i) each Employee Benefit Plan and each Material Employment
Agreement has been administered in accordance with its terms and
the applicable provisions of ERISA, the Code and other
applicable Laws and (ii) neither the Company nor any of its
Subsidiaries has engaged in any prohibited
transaction (as defined in Section 4975 of the Code
or Section 406 of ERISA) with respect to any Employee
Benefit Plan which could subject the Company or any of its
Subsidiaries to any tax or penalty imposed under
Section 4975 of the Code or Section 502 of ERISA, and
no Proceeding has been brought, or to the Knowledge of the
Company is threatened, against or with respect to any such
Employee Benefit Plan, including any audit or inquiry by the IRS
or United States Department of Labor (other than routine
benefits claims).
(e) Except as set forth in Section 3.10(e) of
the Disclosure Schedule, neither the execution and delivery of
this Agreement nor the consummation of the transactions
contemplated hereby will (either alone or in conjunction with
any other event) (i) constitute an event under an Employee
Benefit Plan or a Material Employment Agreement that will result
in, cause the accelerated vesting, funding or delivery of, or
increase the amount or value of, any material payment or benefit
to any employee, officer or director of the Company or any of
its Subsidiaries or (ii) could reasonably be expected to
cause any material amount to fail to be deductible under
Section 280G of the Code.
(f) Neither the Company nor any Subsidiary or ERISA
Affiliate has ever (i) maintained an Employee Benefit Plan
or any other plan, program or arrangement that (A) was
subject to Section 412 of the Code or Title IV of
ERISA, (B) is a multiple employer plan (as
defined in Section 210(a) of ERISA), or had any liability
with respect to such a plan, program or arrangement or
(C) is funded through or maintained by a voluntary
employees beneficiary association within the meaning
of Section 501(c)(9) of the Code, or a welfare
benefit fund as defined in Section 419(e) of the Code
or a supplemental unemployment benefit plan within the meaning
of Section 501(c)(17) of the Code or (ii) been
obligated to contribute to a multiemployer plan (as
defined in Section 4001(a)(3) of ERISA).
(g) Except as required by Law or as provided in a Material
Employment Agreement, upon a severance event, no Employee
Benefit Plan provides any retiree or post-employment health,
disability, life insurance or other welfare benefits (whether or
not insured) to any Person.
A-14
(h) The term Foreign Plan shall mean any
Employee Benefit Plan or Material Employment Contract that is
maintained pursuant to the laws of any country other than the
United States. Each Foreign Plan complies with all applicable
Law (including applicable Law regarding the form, funding and
operation of the Foreign Plan) in all material respects. The
Company Financial Statements accurately reflect the material
Foreign Plan liabilities and accruals for contributions required
to be paid to the Foreign Plans, in accordance with applicable
generally accepted accounting principles consistently applied.
All material contributions required to have been made to all
Foreign Plans as of the Closing will have been made as of the
Closing. There are no material actions, suits or claims pending
or, to the Knowledge of the Company, threatened with respect to
the Foreign Plans (other than routine claims for benefits).
There have not occurred, nor are there continuing any
transactions or breaches of fiduciary duty under applicable Law
with respect to any Foreign Plan which would reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse Effect. With respect to each Foreign Plan,
there are (A) no pending material investigations by any
Governmental Entity, (B) no material claims pending or, to
the Knowledge of the Company, threatened in writing (except for
claims for benefits payable in the normal operation of such
plan) and (C) no material suits or proceedings against such
plan or asserting any rights or claims to benefits under such
plan.
Section 3.11 Employment
Matters.
(a) Neither the Company nor any of its Subsidiaries is a
party to any collective bargaining agreement or any other
labor-related agreement with any labor union, labor organization
or works council. As of the date of this Agreement, (i) no
such agreement is presently being negotiated by the Company or
any of its Subsidiaries, (ii) no labor union, labor
organization or works council has made a pending demand of the
Company or any of its Subsidiaries for recognition or
certification, (iii) there are no representation or
certification proceedings or petitions seeking a representation
proceeding with respect to the Company or any of its
Subsidiaries presently pending or, to the Knowledge of the
Company, threatened in writing to be brought or filed with the
National Labor Relations Board or any other labor relations
tribunal or authority, (iv) to the Knowledge of Company,
there are no labor union organizing activities with respect to
any employees of the Company or its Subsidiaries and
(v) there are no threatened, labor strikes, slowdowns, work
stoppages, lockouts, or any similar activity, by employees of
the Company or its Subsidiaries. None of the Company or any of
its Subsidiaries has experienced any strike, lockout or work
stoppage or other material labor difficulty involving its
employees since January 1, 2008.
(b) The Company and its Subsidiaries are in compliance in
all material respects with all Laws respecting employment and
employment practices, harassment, discrimination, retaliation,
terms and conditions of employment, immigration, workers
compensation, long term disability, occupational safety, plant
closings, compensation and benefits, wages and hours, proper
classification of employees and independent contractors, and the
payment of social security and other Taxes (Employment
Practices).
(c) Except as indicated in Section 3.11(c) of
the Disclosure Schedule, (i) there are no material
Proceedings pending or, to the Knowledge of the Company,
threatened involving any individuals providing services as an
employee or independent contractor to the Company
and/or any
of its Subsidiaries (collectively Worker or
Workers), group of Workers, or individual and
(ii) there are no material Proceedings relating to any
Employment Practices pending, or to the Knowledge of the
Company, threatened, before the Equal Employment Opportunity
Commission, the National Labor Relations Board, the
U.S. Department of Labor, the U.S. Occupational Health
and Safety Administration, the Workers Compensation Appeals
Board, or any other Governmental Authority against the Company
or any of its Subsidiaries pertaining to any Worker, nor, to the
Knowledge of the Company, are there any facts or circumstances
which would reasonably be expected to give rise to such a claim
being made.
(d) To the Knowledge of the Company, neither the Company
nor any of its Subsidiaries are delinquent in any material
payments to any current or former Worker for any wages,
salaries, commissions, bonuses, or other compensation for any
services performed by any current or former Worker or for any
other amounts required to be reimbursed by the Company or any of
its Subsidiaries to any current or former Worker (including
vacation, sick leave, other paid time off or severance pay).
(e) (i) The Company and its Subsidiaries are in
compliance in all material respects with the Worker Readjustment
and Notification Act (the WARN Act)
(29 USC §2101) and any applicable state laws or other
Laws regarding redundancies, reductions in force, mass layoffs,
and plant closings, including all obligations to promptly and
correctly furnish all notices required to be given thereunder in
connection with any redundancy,
A-15
reduction in force, mass layoff, or plant closing to affected
employees, representatives, any state dislocated worker unit and
local government officials, or any other governmental authority,
(ii) neither the Company nor any of its Subsidiaries have
taken any action that would constitute a mass layoff
or plant closing within the meaning of the WARN Act
or would otherwise trigger notice requirements or liability
under any other comparable state or local law in the United
States and (iii) neither the Company nor any of its
Subsidiaries have taken any action that resulted in the
termination of employment of 50 or more employees or more than
10% of the employees in any country outside of the United States
during any 90 day period.
(f) As of the date of this Agreement, to the Knowledge of
the Company, no employee of the Company or any of its
Subsidiaries is in violation in any material respect of any term
of any employment agreement, non-disclosure or confidentiality
agreement with the Company or any of its Subsidiaries or
non-competition agreement, non-solicitation agreement or any
restrictive covenant with a former employer relating to the
right of any such employee to be employed by or provide services
to the Company or any of its Subsidiaries because of the nature
of the business conducted or presently proposed to be conducted
by it or to the use of trade secrets or proprietary information
of others.
Section 3.12 Environmental
Matters.
(a) Except as otherwise set forth in
Section 3.12 of the Disclosure Schedule, (i) to
the Knowledge of the Company, the Company and its Subsidiaries
are and have been since January 1, 2008 in material
compliance with all applicable Environmental Laws (as defined in
Section 3.12(c)), (ii) there are no pending or,
to the Knowledge of the Company, threatened, material
Proceedings under or pursuant to Environmental Laws against the
Company or any of its Subsidiaries or, to the Knowledge of the
Company, any other Person whose Environmental Liabilities the
Company or any of its Subsidiaries has or may have retained or
assumed by contract or operation of Law, or involving any real
property currently or, to the Knowledge of the Company, formerly
owned, operated or leased by the Company or its Subsidiaries;
(iii) the Company and its Subsidiaries and, to the
Knowledge of the Company, Persons whose Environmental
Liabilities the Company or its Subsidiaries has or may have
retained or assumed by contract or operation of Law are not
subject to any material Environmental Liabilities; and
(iv) to the Knowledge of the Company, there are no actions,
activities, circumstances, conditions, events or incidents,
including the release, threatened release or presence of any
Hazardous Material (as defined in Section 3.12(c)),
which could reasonably be expected to form the basis of any such
material Environmental Liability.
(b) The Company has delivered to or otherwise made
available for inspection by Parent true, correct and complete
copies and results of any reports, studies, analyses, tests or
monitoring initiated by the Company or its Subsidiaries since
January 1, 2008 pertaining to Hazardous Materials in, on,
beneath or adjacent to any property currently or formerly owned,
operated or leased by the Company or any of its Subsidiaries, or
regarding the Companys or its Subsidiaries
compliance with applicable Environmental Laws.
(c) As used herein, Environmental Laws
means any and all Laws concerning pollution, Hazardous Materials
(as defined below) or the protection of human health or safety,
or the environment, and includes the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et
seq., the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901 et seq., the Clean Water
Act, 33 U.S.C. Section 1251 et seq., the Clean
Air Act, 33 U.S.C. Section 2601 et seq., the
Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq., the Occupational Safety and Health Act,
29 U.S.C. Section 651 et seq. (but solely as it
relates to the exposure of Hazardous Materials) and the Oil
Pollution Act of 1990, 33 U.S.C. Section 2701 et
seq., as such laws have been amended or supplemented, and
the regulations promulgated pursuant thereto, and all analogous
state or local statutes. As used in this Agreement,
Environmental Liabilities with respect to any
Person means any and all liabilities of or relating to such
Person (including any entity which is, in whole or in part, a
predecessor of such Person), whether vested or unvested,
contingent or fixed, actual or potential, known or unknown,
which arise under or relate to the presence, release or
threatened release of any Hazardous Materials at any location or
which otherwise arise under or relate to matters covered or
regulated by, or for which liability is imposed under,
Environmental Laws, including the alleged violation of any
Environmental Law. As used in this Agreement, Hazardous
Materials means all substances defined in, regulated
under or for which liability is imposed by Environmental Laws,
including hazardous substances, oils, pollutants or
contaminants, asbestos, mold, polychlorinated biphenyls and
radioactive materials.
A-16
(d) The representations and warranties in this
Section 3.12 constitute the sole representations and
warranties of the Company in this Agreement concerning
Environmental Laws and Hazardous Materials.
Section 3.13 Affiliate
Transactions. As of the date of this
Agreement, there are no transactions, agreements, arrangements
or understandings between the Company or its Subsidiaries, on
the one hand, and the Companys Affiliates (other than
wholly-owned Subsidiaries of the Company) or other Persons on
the other hand, that would be required to be disclosed under
Item 404 of
Regulation S-K
under the Securities Act. For purposes of this Agreement, the
term Affiliate when used with respect
to any Person, means any other Person directly or indirectly
controlling, controlled by, or under common control with such
Person. As used in the definition of Affiliate the term
control means possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
Section 3.14 Intellectual
Property. For purposes of this Agreement,
Intellectual Property means any or all of the
following in any jurisdiction throughout the world:
(i) patents, patent applications, provisional patent
applications and similar instruments (including any and all
substitutions, divisions, continuations,
continuations-in-part,
reissues, renewals, extensions, reexaminations, patents of
addition, supplementary protection certificates, inventors
certificates, pediatric data package exclusivity extensions, or
the like) (collectively, Patents);
(ii) trademarks, service marks, trade dress, trade names
and Internet domain names (including all registrations or
applications for any of the foregoing), together with all
goodwill associated with each of the foregoing (collectively,
Trademarks); (iii) copyrights, copyright
registrations, and copyright applications (collectively,
Copyrights); (iv) trade secrets,
know-how and other confidential and proprietary information,
including product specifications, manufacturing processes, batch
records and other documentation outlining manufacturing
processes, design of and modifications to machinery necessary
for use in the manufacturing process, compounds, formulae, and
inventions (Trade Secrets); and (v) all
other intellectual property or proprietary rights (in each case
whether or not subject to statutory registration or protection).
For purposes of this Agreement,
Nab®
Technology means (A) any and all methods,
techniques, know-how, trade secrets, and other technologies
(including manufacturing methods, techniques, know-how, trade
secrets, and other technologies) for the noncovalent association
of, or related to the association of, any agent (such as a
therapeutic or diagnostic agent) with one or more polymers such
as carbohydrates or polypeptides (including albumin),
(B) any product resulting therefrom, including any
intermediate or the Product (as defined in the CVR Agreement),
and (C) any methods of using such product;
Product means the Pharmaceutical Product
comprising the chemical compound having a chemical name of
5ß,20-Epoxy-1,2a,4,7ß,10ß,13a-hexahydroxytax-11-en-9-one
4,10-diacetate 2-benzoate 13-ester with
(2R,3S)-N-benzoyl-3-phenylisoserine known by the generic name
paclitaxel and bound to albumin that is in the
subject of the New Drug Application
No. 21-660
filed with the FDA and subject of the European Medicines Agency
Marketing Authorization granted on January 11, 2008,
together with all amendments and supplements to such FDA and
European Medicines Agency approvals (identified by the Company
as ABRAXANE); Pharmaceutical Products means
all biological and drug candidates, compounds or products being
researched, developed, labeled, manufactured, tested, stored,
used, sold, offered for sale, imported, and otherwise
distributed or commercially exploited by the Company or any of
its Subsidiaries; and Pipeline Products
means COROXANE, nab-docetaxel (ABI-008), nab-rapamycin
(ABI-009), nab-17AAG (ABI-010), nab-thiocolchicine dimer
(ABI-011), and nab-novel taxane (ABI 013).
(a) Section 3.14(a) of the Disclosure Schedule
sets forth a true, correct, and complete list (with owner(s),
country(ies) or region, registration and application numbers and
dates indicated, as applicable) of all U.S. and foreign
(i) Patents, (ii) Trademarks that are registered or
for which an application for registration is pending, and
(iii) Copyrights that are registered or for which an
application for registration is pending, in each case that is
owned (in whole or in part) by, or licensed to, the Company or
its Subsidiaries, in each case as directed to the Product, the
Pipeline Products or the
Nab®
Technology.
(b) The Company or its Subsidiaries owns or has a valid and
enforceable right to use or practice the Intellectual Property
required to be listed on Section 3.14(a) of the
Disclosure Schedule and the Trade Secrets used in connection
with the
Nab®
Technology or necessary for the manufacturing of the Product and
the Pipeline Products (collectively, the Company
Intellectual Property) in all material respects. As of
the date hereof, and to the Knowledge of the Company, no
Proceedings are pending or threatened against the Company or its
Subsidiaries
A-17
challenging in any material respect the validity,
enforceability, use, inventorship, or ownership, or seeking to
deny or restrict the use by the Company or its Subsidiaries of,
the Company Intellectual Property.
(c) As of the date hereof, and to the Knowledge of the
Company, (i) neither the Company nor any Subsidiary nor the
operation of their respective businesses (including the use and
practice of the Company Intellectual Property, the products and
services of the Company and its Subsidiaries, and the research,
development, labeling, manufacture, use, sale, offer for sale,
importation, and other distribution or commercial exploitation
of the Product, the Pipeline Products or the
Nab®Technology)
infringes, dilutes, misappropriates or otherwise violates in any
material respect the Intellectual Property of any other Person;
and (ii) no Proceeding is pending or threatened, and no
third party is asserting or threatening to assert, a claim of
such infringement, dilution, misappropriation or violation
against the Company.
(d) To the Knowledge of the Company, no third party is
infringing, diluting, misappropriating, or otherwise violating
in any material respect any Company Intellectual Property, and
the Company has not asserted or threatened to assert a claim of
such infringement, dilution, misappropriation or violation
against any third party.
(e) To the Knowledge of the Company, as of the date hereof,
(i) none of the Company Intellectual Property that consists
of Patents (the Company Patents) is the
subject of any litigation, reissue, interference, reexamination,
or opposition, (ii) the Company and its Subsidiaries have
not received any written notice that any such proceeding will
hereafter be commenced, (iii) the issued Company Patents
are subsisting and have not been declared invalid
and/or
unenforceable, and (iv) the Company Patents have been
prosecuted in compliance in all material respects with all
applicable Laws. The Company Patents listed in the FDAs
Orange Book with respect to New Drug Application
No. 21-660
for the Product cover the Product; and U.S. Patent
Application No. 11/553,339, when issued, will be listed and
is properly listable in the FDAs Orange Book with respect
to such New Drug Application.
(f) All current and former employees of, and all
consultants and independent contractors to, the Company and its
Subsidiaries who have contributed in any material respect to the
creation or development of any Company Intellectual Property
owned by the Company or any of its Subsidiaries have executed
and delivered to the Company or its Subsidiaries an agreement
regarding the assignment to the Company or its Subsidiaries of
any Intellectual Property rights arising from services performed
for the Company or its Subsidiaries by such Persons, the current
forms of which agreements have been made available to Parent.
All current and former employees of, and all consultants and
independent contractors to, the Company and its Subsidiaries,
and all other Persons, with access to the Companys and its
Subsidiaries Trade Secrets included in the Company
Intellectual Property owned by the Company or any of its
Subsidiaries are parties to written agreements under which each
is obligated to maintain the confidentiality of such Trade
Secrets of the Company and its Subsidiaries and not to use such
Trade Secrets except as authorized by the Company or its
Subsidiaries. To the Knowledge of the Company, none of such
employees, consultants, contractors or other Persons is in
violation in any material respect of such inventions or
confidentiality agreements. To the Knowledge of the Company, no
current or former employee, stockholder, consultant, contractor,
or independent contractor of the Company or its Subsidiaries
owns or claims any rights in (nor has any of them made
application for) any Company Intellectual Property.
(g) The Company and its Subsidiaries have taken
commercially reasonable actions to maintain and preserve the
Company Intellectual Property, including such measures to
protect the secrecy and confidentiality of the Companys
and its Subsidiaries Trade Secrets included in the Company
Intellectual Property.
(h) All manufacturing operations conducted by, or, to the
Knowledge of the Company, for the benefit of, the Company and
its Subsidiaries with respect to any Product or Pipeline Product
and all manufacturing facilities of the Company or its
Subsidiaries have since January 1, 2008 been and are being
conducted in all material respects in accordance with the
FDAs current Good Manufacturing Practice Regulations at
21 C.F.R. Parts 210 and 211 for products sold in the United
States and the respective counterparts thereof promulgated by
Governmental Entities in countries outside the United States.
The Company has sufficient capacity and capability and all
Regulatory Registrations and Company Permits necessary as of the
date of this Agreement to manufacture the Product in sufficient
quantities, taking into account safety stock, to meet the
current and the Companys expected demand for the Product
for the next 12 months in all countries where it is sold.
A-18
Section 3.15 Takeover
Statutes. No fair price,
moratorium, control share acquisition,
business combination or other similar antitakeover
statute or regulation enacted under state or federal laws in the
United States (with the exception of Section 203 of the
DGCL) is applicable to the transactions contemplated by this
Agreement. The Company has taken all action necessary such that
the restrictions contained in Section 203 of the DGCL do
not apply to the Merger, this Agreement and the transactions
contemplated hereby; provided, however, that, for purposes
hereof, Parent and Sub hereby specifically represent and warrant
to the Company that neither of them is an interested
stockholder in the Company, as such term is defined in
Section 203 of the DGCL.
Section 3.16 Title
to Properties; Assets/Services.
(a) The Company and its Subsidiaries have valid and legal
title to, a leasehold interest in, license or easement in the
real and personal properties as reflected in the Companys
consolidated balance sheet as of March 31, 2010, except for
properties and assets that have been disposed of in the ordinary
course of business since March 31, 2010, free and clear of
all Liens of any nature whatsoever, except (i) Liens for
current Taxes, payments of which are not yet delinquent and for
which adequate reserves have been established in accordance with
GAAP on the books and records of the Company;
(ii) mechanics, carriers, workmens,
warehousemans, repairmens, materialmens or
other Liens or security interests arising in the ordinary course
of business securing obligations that are not yet due and
payable or are being contested in good faith; (iii) Liens
imposed by applicable Law (other than Tax Law) arising in the
ordinary course of business securing obligations for sums that
are not yet due and payable or are being contested in good
faith; (iv) pledges or deposits to secure obligations under
workers compensation Laws or similar legislation or to
secure public or statutory obligations; (v) pledges and
deposits to secure the performance of bids, trade contracts,
leases, surety and appeal bonds, performance bonds and other
obligations of a similar nature; or (vi) such imperfections
in title and easements and encumbrances as are not substantial
in character, amount or extent and do not materially detract
from the business subject thereto or affected thereby, or
materially interfere with or materially adversely affect or
impair the present and continued use of the property subject
thereto or affected thereby, or otherwise materially impair the
operations of the Company or any of its Subsidiaries (in the
manner presently carried on by the Company and its
Subsidiaries). Section 3.16(a) of the Disclosure
Schedule sets forth a true, complete and correct list of all
real property owned, leased, subleased or licensed by the
Company and each of its Subsidiaries and the location of such
properties (collectively, the Real Property).
All Real Property leased or subleased by the Company or its
Subsidiaries is referred to herein as the Leased Real
Property.
(b) As of the date of this Agreement, there are no material
leases, subleases, licenses, concessions or other agreements,
written or oral, granting to any party or parties the right of
use or occupancy of any portion of any Real Property and Leased
Real Property. Except as would not reasonably be expected to
have, individually or in the aggregate, a Company Material
Adverse Effect, the Company or its Subsidiaries have a valid and
subsisting leasehold estate in and the right to quiet enjoyment
of each Leased Real Property for the full term of the lease or
sublease creating such interest. As of the date of this
Agreement, to the Knowledge of the Company there are no eminent
domain, condemnation or other similar actions or proceedings
pending or threatened with respect to any of the Real Property
by any Governmental Entity having jurisdiction over any such
Real Property. As currently operated and maintained, each of the
Real Properties is in compliance in all material respects with
all federal, state and local Law applicable to each such Real
Property.
Section 3.17 Material
Contracts.
(a) Section 3.17(a) of the Disclosure Schedule
sets forth a true and complete list as of the date of this
Agreement of each of the following Company Contracts, together
with all amendments thereto: (i) each Company Contract that
restricts in any material respect the ability of the Company or
any of its Subsidiaries or any of the Companys current or
future Affiliates to sell products in or otherwise compete in
any geographic area or line of business; (ii) any Company
Contract pursuant to which any Person provides manufacturing
services involving the Product, any Pipeline Product or any
product using
Nab®
Technology for the Company or any of its Subsidiaries,
(iii) each Company Contract pursuant to which the Company
or any of its Subsidiaries grants or is granted any license to
use or exploit, covenant not to sue, immunity from suit or
similar rights under any Intellectual Property of a third party
that, in each case, is related to the Product, any Pipeline
Product, or the
Nab®
Technology; (iv) each Company Contract pursuant to which
raw materials are supplied, or equipment is supplied or leased,
to the Company or any of its Subsidiaries (excluding purchase
orders given or received in the ordinary course of business),
A-19
in each case relating to any key component or manufacturing
involved in the compounding or formulation of the Product or any
products using
Nab®
Technology; (v) each Company Contract that grants any right
of first refusal or right of first offer or similar right or
that limits or purports to limit the ability of the Company or
any of its Subsidiaries to own, operate, sell, transfer, pledge
or otherwise dispose of any material amount of assets or
businesses relating to the Product, any Pipeline Product, or the
Nab®
Technology; (vi) each Company Contract providing for future
performance by the Company or any of its Subsidiaries in
consideration of amounts previously paid, the balance of which
exceeds $5,000,000 as of the date of this Agreement; and
(vii) any other material contract (as such term
is defined in Item 601(b)(10) of
Regulation S-K
of the Securities Act) that were required to be filed with or
furnished to the SEC prior to the date of this Agreement. Each
Company Contract (A) of the type described in
Section 3.17(a) of the Disclosure Schedule, whether
or not disclosed in response to this
Section 3.17(a), or referred to in
Section 3.17(b), whether or not provided or publicly
filed, and (B) entered into after the date of this
Agreement and of the type required to be described in
Section 3.17(a) or referred to in
Section 3.17(b), whether or not provided or publicly
filed of the Disclosure Schedule if such Company Contract were
in effect as of the date of this Agreement, is referred to
herein as a Material Contract.
(b) The Company has provided to Parent or publicly filed
with the SEC true and complete copies of each Company Contact
referred to in Section 3.17(a) and each of the
following Company Contacts, in each case that are in effect as
of the date of this Agreement: (i) each Company Contract
with customers (excluding purchase orders given or received in
the ordinary course of business) under which the Company or any
of its Subsidiaries received in excess of $10,000,000 in 2009 or
is expected to receive in excess of $10,000,000 in 2010 or any
year thereafter; (ii) each Company Contract pursuant to
which the Company or any of its Subsidiaries occupies Leased
Real Property and under which the Company or any of its
Subsidiaries is required to pay an annual rental in excess of
$5,000,000 in 2010 or any year thereafter; and (iii) each
Company Contract for any joint venture (whether in partnership,
limited liability company or other organizational form),
co-promote agreements or co-branding agreements (other than
distribution agreements) or agreements pursuant to which the
Company or any of its Subsidiaries permitted distribution of the
Product or the Pipeline Products under another partys name
or trademarks.
(c) All Material Contracts are valid and in full force and
effect and enforceable in accordance with their respective
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar Laws of general
applicability relating to or affecting creditors rights
and general equity principles, except to the extent that
(i) such Material Contracts have previously expired or
otherwise terminated in accordance with their terms or
(ii) the failure to be in full force and effect would not
reasonably be expected to have a Company Material Adverse
Effect. Neither the Company nor any of its Subsidiaries, nor, to
the Knowledge of the Company, any counterparty to any such
Material Contract, has violated any provision of, or committed
or failed to perform any act which, with or without notice,
lapse of time or both, would constitute a default under, or give
rise to a right of termination, modification, cancellation,
foreclosure, imposition of a Lien, prepayment or acceleration
under the provisions of any Material Contract, except in each
case for those violations or defaults which would not reasonably
be expected to have a Company Material Adverse Effect. Neither
the Company nor any of its Subsidiaries has received written
notice that it has breached, violated or defaulted under any
Material Contract. Prior to the date of this Agreement, the
Company and its Subsidiaries have not received any written
claims for indemnification pursuant to the 2007 Separation and
Distribution Agreement.
Section 3.18 Opinion
of Financial Advisors. The Companys
financial advisors, Goldman, Sachs & Co., Lazard,
Freres & Co. LLC and Merrill Lynch, Pierce,
Fenner & Smith Incorporated (the
Company Financial Advisors), have each
delivered to the Board of Directors an opinion, to the effect
that, as of the date of this Agreement and subject to the
matters and assumptions set forth in their respective opinions,
the Merger Consideration to be paid to the holders (other than
Parent, Patrick Soon-Shiong, M.D. and any of their
respective Affiliates) of shares of Company Common Stock
pursuant to the Merger Agreement is fair to such holders from a
financial point of view. The Company will provide, solely for
informational purposes, a true, complete and correct copy of
such opinions to Parent after receipt thereof in writing by the
Company.
A-20
|
|
|
|
Section 3.19
|
Pharmaceutical Matters.
|
(a) The Company and its Subsidiaries and to the Knowledge
of the Company its respective directors, officers, employees,
and agents (while acting in such capacity) are, and at all times
have been, in compliance, and the Companys business
(including the research, development, labeling, manufacture,
testing, storage, use, sale, offer for sale, importation, and
other distribution or commercial exploitation of the Product,
the Pipeline Products, and the cervical cancer screening test
marketed by the Companys Subsidiary Neodiagnostix, Inc.
(the Screening Test) and all preclinical
studies, clinical trials, and other studies and tests conducted
thereon) has been operated in accordance, in all material
respects with (i) all applicable Laws of the United States
Drug Enforcement Administration, the United States Department of
Health and Human Services and its constituent agencies, the
Centers for Medicare & Medicaid Services, the Office
of Inspector General and the United States Food and Drug
Administration (the FDA and, collectively
with other applicable U.S. or foreign drug regulatory
authorities, Regulatory Authorities),
(including the federal Food, Drug, and Cosmetic Act
(21 U.S.C. § 321 et seq.) (the
FDCA), the Controlled Substances Act (21
U.S.C. § 801 et seq.), the federal Anti-kickback
Statute (42 U.S.C.
§ 1320a-7b(b)),
the Anti-Inducement Law (42 U.S.C.
§ 1320a-7a(a)(5)),
the Stark Law (42 U.S.C. § 1395nn), the Health
Insurance Portability and Accountability Act of 1996
(42 U.S.C. § 1320d et seq.), the exclusion laws
(42 U.S.C.
§ 1320a-7),
the regulations promulgated pursuant to the foregoing laws, and
the Federal Acquisition Regulations (48 C.F.R. Parts
1-53)), (ii) the drug price reporting requirements of
titles XVIII and XIX of the Social Security Act, (iii) the
applicable laws precluding off-label marketing of drugs,
(iv) all other United States laws and regulations with
respect to the marketing, sale, pricing, price reporting, and
reimbursement of prescription drug products, including the
provisions of the Federal False Claims Act, 31 U.S.C.
§ 3729 et seq., the Medicare Program (Title XVIII
of the Social Security Act), the Medicaid Program
(Title XIX of the Social Security Act), the regulations
promulgated pursuant to such Laws, requirements of the Medicaid
Drug Rebate Program (42 U.S.C.
§ 1396r-8)
and any state supplemental rebate program, requirements of
Medicare average sales price reporting (42 U.S.C.
§ 1395w-3a),
the Public Health Service Act (42 U.S.C. § 256b),
the VA Federal Supply Schedule (38 U.S.C.
§ 8126) state pharmaceutical assistance programs
and regulations under such Laws, and (v) comparable state
and foreign laws. The Company and its Subsidiaries have complied
with any and all obligations pertaining to listing any relevant
Patents included in the Company Intellectual Property in the FDA
Orange Book and have also complied with any and all obligations
under the Bayh-Dole Act.
(b) Neither the Company nor any of its Subsidiaries is
excluded or debarred under the Generic Drug Enforcement Act of
1992 or any government health care program, including Medicare
and Medicaid; and no employee of the Company or any of its
Subsidiaries or to the Knowledge of the Company no consultants
or subcontractors of the Company or any of its Subsidiaries is
excluded or debarred. No claims, actions, proceedings or
investigations that would reasonably be expected to result in
such a material debarment are pending, and the Company has not
received written notice that any such claims, actions,
proceedings or investigations are threatened against the
Company, the Companys Subsidiaries, or any of their
respective officers or key employees.
(c) (i) Except as would not reasonably be expected to
have, individually or in the aggregate, a Company Material
Adverse Effect, the Company and its Subsidiaries meet all of the
requirements of participation and payment of Medicare, Medicaid,
any other state or federal government health care programs, and
any other public or private third party payor programs
(collectively, Programs) that the
Company or any of its Subsidiaries participates in or receives
payment from, and (ii) there is no investigation, audit,
claim review, or other action pending, or, to the Knowledge of
the Company, threatened, against the Company or any of its
Subsidiaries which could reasonably be expected to result in the
exclusion of the Companys business from any Program.
(d) Except as set forth on Section 3.19(d) of
the Disclosure Schedule, (i) to the Knowledge of the
Company, there is no pending action, investigation or inquiry of
any type by any Regulatory Authority (other than non-material
routine or periodic inspections or reviews) against the Company
or its Subsidiaries relating to the Product, the Pipeline
Products, or the Screening Test; (ii) since January 1,
2008, no Product, Pipeline Product, or Screening Test has been
recalled, suspended or discontinued; and (iii) since
January 1, 2008, none of the Company or any of its
Subsidiaries has received any written notification,
correspondence or any other written communication from any
Governmental Entity, including the FDA, the Centers for Medicare
and Medicaid Services, and the Department of
A-21
Health and Human Services Office of Inspector General, of
potential or actual material non-compliance by, or liability of,
the Company or any of its Subsidiaries, under any of the Laws
referenced in Section 3.19(a).
(e) To the Knowledge of the Company, there are no facts or
circumstances that could reasonably be construed as indicating
that marketing approval for the Product will be withdrawn.
Neither the Company nor its Subsidiaries has received any
written notification, correspondence or any other written
communication from the FDA or the European Medicines Agency
requesting that the Company or its Subsidiaries make any
material change in the labeling of the Product or any Pipeline
Product, or indicating that such a request may be made.
(f) Neither the Company nor its Subsidiaries have marketed,
sold, offered for sale, or distributed any Pharmaceutical
Products other than the Product and the Screening Test. For
purposes of this Agreement, Regulatory
Registrations means all investigational new drug
applications, new drug applications, product license
application, or biologics license application or similar
regulatory applications of the Company and its Subsidiaries that
have been submitted to or approved by the FDA or any applicable
Governmental Entity. All applications, notifications,
submissions, information, claims, reports and statistics and
other data, utilized as the basis for or submitted in connection
with any and all Regulatory Registrations from the FDA or other
Regulatory Authority relating to the Company and its
Subsidiaries or their respective business operations and
Pharmaceutical Products, when submitted to the FDA or other
Regulatory Authority were true, complete and correct in all
material respects as of the date of submission and any necessary
or required updates, changes, corrections or modification to
such applications, submissions, information and data have been
submitted to the FDA or such other Regulatory Authority.
(g) None of the Company or any of its Subsidiaries is a
party to any corporate integrity agreements, monitoring
agreements, consent decrees, settlement orders, or other similar
written agreements, in each case, entered into with or imposed
by any Regulatory Authority.
Section 3.20 Brokers
and Finders. The Company has not entered into
any Contract, arrangement or understanding with any Person which
may result in the obligation of the Company to pay any
investment banking fees, finders fees, brokerage or agent
commissions or other like payments in connection with the
Merger, other than fees payable to the Company Financial
Advisors.
Section 3.21 Insurance. Each
of the material insurance policies and material self insurance
programs and arrangements relating to the business, assets and
operations of the Company and its Subsidiaries (the
Insurance Policies) is in full force and
effect, all premiums due thereon have been paid in full and the
Company and its Subsidiaries are in compliance in all material
respects with the terms and conditions of such Insurance
Policies. Since January 1, 2009, and prior to the date of
this Agreement, none of the Company or any of its Subsidiaries
has received any written notice regarding any actual or possible
(a) cancellation of any Insurance Policy that has not been
renewed in the ordinary course without any lapse in coverage,
(b) invalidation of any Insurance Policy, (c) refusal
of any coverage, limitation in coverage or rejection of any
material claim under any Insurance Policy, or (d) material
adjustment in the amount of the premiums payable with respect to
any Insurance Policy. As of the date of this Agreement, there is
no material claim by the Company or any of its Subsidiaries
pending under any of the Insurance Policies and no material
claim made since January 1, 2009 that is still pending has
been questioned or disputed by the underwriters of such
Insurance Policies.
Section 3.22 Anti-Corruption
and Anti-Bribery.
(a) For the purposes of this Agreement, the term
Anti-Corruption and Anti-Bribery Laws shall
mean all applicable Laws governing corrupt or illicit business
practices, including laws dealing with improper or illegal
payments, gifts or gratuities
and/or the
payment or receipt of money or anything of value directly or
indirectly to or from any Person (whether a government official
or private individual) for the purpose of illegally inducing any
Person or government official, or political party or official
thereof, or any candidate for any such position, in making any
decision or illegally assisting any Person in obtaining or
retaining business or taking any other action favorable to such
Person,
and/or
dealing with business practices in relation to investments
outside of the United States (including, by way of example, if
applicable, the United States Foreign Corrupt Practices Act of
1977, as amended, any rules or regulations thereunder).
A-22
(b) Neither the Company nor its directors, officers,
agents, employees, Subsidiaries or Affiliates has, directly or
indirectly, (i) used any corporate funds in a manner which
would cause it to be in violation of any Anti-Corruption or
Anti-Bribery Laws, (ii) established or maintained any
unrecorded fund or asset for any purpose or made any false
entries on the books and records of the Company or any of its
Subsidiaries for any reason, (iii) paid, delivered or
received any fee, commission or any other sum or money or item
of property, however characterized, to or from any finder,
principal, agent, governmental official or other party in the
United States or any other country, which in any manner relates
to the assets, business or operations of the Company or any of
its Subsidiaries in violation of any Laws or (iv) made or
received any other unlawful payment.
(c) There are no pending or, to the Knowledge of the
Company, threatened claims against the Company with respect to
such Anti-Corruption or Anti-Bribery laws.
(d) The Company has established and maintains a compliance
program and internal controls and procedures appropriate to the
requirements of the Anti-Corruption and Anti-Bribery Laws.
Section 3.23 No
Other Representations or Warranties. Except
for the representations and warranties expressly contained in
this Agreement, each of Parent and Sub acknowledges that neither
the Company nor any other Person on behalf of the Company makes
any other express or implied representation or warranty with
respect to the Company, any of its Subsidiaries or their
respective businesses or any other matter or with respect to any
other information provided or made available to Parent or Sub,
and that all such representations and warranties, other than the
representations and warranties of the Company expressly
contained in this Agreement, are expressly disclaimed. Neither
the Company nor any other Person makes any representation or
warranty with respect to any such information, including any
information, projections, forecasts or other material made
available to Parent and Sub in a data room or
virtual data room, confidential information
memoranda or management presentations in expectation of the
transactions contemplated by this Agreement, except that the
foregoing limitations shall not (i) apply to the Company to
the extent the Company makes the specific representations and
warranties set forth in this Agreement, but always subject to
the limitations and restrictions contained herein, or
(ii) preclude Parent or Sub from seeking any remedy for
fraud.
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF PARENT AND SUB
Except as disclosed in Parents Annual Report on
Form 10-K
for the year ended December 31, 2009, Parents
Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010 or any of
Parents Current Reports on Form 8 K dated
after December 31, 2009 filed by Parent with the SEC
pursuant to the Exchange Act prior to the date of this Agreement
but excluding (i) any disclosures contained or referenced
therein under the captions Risk Factors,
Forward-Looking Statements, and Quantitative
and Qualitative Disclosures About Market Risk and any
other disclosures contained or referenced therein of
information, factors or risks that are predictive, cautionary or
forward-looking in nature, and (ii) with respect to
Section 4.2(a), any disclosures contained or
referenced therein, Parent and Sub, jointly and severally,
represent and warrant to the Company as follows:
Section 4.1 Organization,
Standing and Power. Each of Parent and Sub is
a legal entity duly organized, validly existing and in good
standing under the Laws of its jurisdiction of organization and
has all requisite corporate or similar power and authority to
own, lease and operate its properties and assets and to carry on
its business as presently conducted and is qualified to do
business and is in good standing as a foreign legal entity in
each jurisdiction where the ownership, leasing or operation of
its assets or properties or conduct of its business requires
such qualification, except where the failure to be so organized,
qualified or in good standing, or to have such power or
authority, would not reasonably be expected to have a Parent
Material Adverse Effect.
Section 4.2 Capital
Structure.
(a) The authorized capital stock of Parent consists of
575,000,000 shares of Parent Common Stock and
5,000,000 shares of preferred stock, par value $0.01 per
share. As of the close of business on May 31, 2010,
(i) 459,949,694 shares of Parent Common Stock were
issued and outstanding, (ii) no shares of preferred stock
were outstanding, (iii) an aggregate of
40,736,541 shares of Parent Common Stock were issuable upon
exercise of then
A-23
outstanding stock options (whether or not exercisable as of such
date) and the vesting of restricted stock units, and
(iv) 35,000 shares of Parent Common Stock were
issuable upon the exercise of then outstanding warrants. In
addition to the shares of Parent Common Stock referred to in
clauses (i) and (iii), as of the close of business on
May 31, 2010, 20,935,840 shares of Parent Common Stock
were available for additional grants under Parents stock
option or equity incentive plans. All of the outstanding shares
of Parent Common Stock are validly issued and outstanding, fully
paid and non assessable and free of preemptive rights.
(b) Except as otherwise set forth in this
Section 4.2, as of the date of this Agreement,
Parent has no (i) outstanding stock or securities
convertible into or exchangeable for any shares of its equity
securities, or any outstanding rights to subscribe for or to
purchase any shares of its equity securities, or any outstanding
options for the purchase thereof, (ii) any agreements
providing for the issuance of any equity securities or any stock
or securities convertible into or exchangeable for any equity
securities of Parent or (iii) outstanding bonds,
debentures, notes or other indebtedness having the right to vote
(or convertible into or exchangeable for securities having the
right to vote) on any matters on which stockholders of Parent
may vote. From June 25, 2010 to the date of this Agreement,
Parent has not (i) issued any shares of Parent Common Stock
except in connection with the conversion, exercise or settlement
of any stock options or (ii) issued or granted any options,
warrants or securities convertible into or exercisable for
shares of its Parent Common Stock other than in the ordinary
course of business.
(c) The shares of Parent Common Stock to be issued in the
Merger have been duly authorized and, when issued and delivered
in accordance with the terms of this Agreement, will have been
validly issued and will be fully paid and nonassessable and the
issuance thereof is not subject to any preemptive or other
similar right.
Section 4.3 Operations
of Sub. All of the issued and outstanding
capital stock of Sub is, and at the Effective Time will be,
owned by Parent or a direct or indirect wholly-owned Subsidiary
of Parent. Sub was formed solely for the purpose of effecting
the Merger. Sub has not conducted any business prior to the date
hereof and has no, and prior to the Effective Time will have no,
assets, liabilities or obligations of any nature other than
those incident to its formation and pursuant to this Agreement
and the Merger and the other transactions contemplated by this
Agreement.
Section 4.4 Authority;
Non-Contravention.
(a) Each of Parent and Sub has the requisite power and
authority to enter into this Agreement and to consummate the
Merger and the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by each of Parent and
Sub and the consummation by Parent and Sub of the Merger and the
transactions contemplated by this Agreement have been duly
authorized by all necessary action on the part of each of Parent
and Sub. This Agreement has been duly executed and delivered by
each of Parent and Sub and (assuming the valid authorization,
execution and delivery of this Agreement by the Company)
constitutes a valid and binding obligation of Parent and Sub,
enforceable against Parent and Sub in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar Laws of general
applicability relating to or affecting creditors rights
and general equity principles. No vote or approval of the
stockholders of Parent is required in connection with the
execution, delivery or performance by Parent and Sub of their
obligations hereunder or for the consummation of the Merger.
(b) The execution and delivery of this Agreement does not,
and the consummation of the Merger and compliance with the
provisions hereof will not, (i) conflict with, or result in
any violation of, the organizational documents of Parent,
(ii) conflict with, or result in any violation of the
organizational documents of any of Parents Subsidiaries,
(iii) result in any violation or breach of, or default
(with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or
acceleration of any obligation, or result in the creation of any
Lien upon any of the properties or assets of Parent or any of
its Subsidiaries under, any provision of any Contract to which
Parent or any of its Subsidiaries is a party or by which their
respective properties and assets are bound, except for any such
violation, breach, default or right of termination, cancellation
or acceleration or Lien as to which requisite waivers or
consents have been obtained or (iv) assuming that the
Registrations and Consents set forth in this
Section 4.3(b) are duly and timely made or obtained,
violate any Law applicable to Parent or any of its Subsidiaries
or any of their respective properties or assets, other than, in
the case of clauses (iii) or (iv), any such conflict,
violation, default, termination, cancellation, acceleration or
Lien that would not, individually or in the aggregate,
reasonably be expected to materially impair the ability of
Parent
and/or Sub
to perform their obligations
A-24
hereunder or prevent or materially delay the consummation of the
Merger or any of the other transactions contemplated hereby.
(c) No Consents of, or Registrations with, any Governmental
Entity is required on the part of Parent or any of its
Subsidiaries in connection with the execution and delivery of
this Agreement by Parent or Sub or is necessary for the
consummation by Parent and Sub of the Merger and the other
transactions contemplated hereby, except for (i) compliance
with and filings under the HSR Act, (ii) compliance with
the provisions of Exchange Act and the Securities Act or the
rules of any national securities exchange, (iii) the
qualification of the CVR Agreement under the
Trust Indenture Act of 1939, as amended (the
Trust Indenture Act), if required by
Law, (iv) the filing of the Certificate of Merger with the
Secretary of State of Delaware and appropriate documents with
the relevant authorities of other states in which the Company is
qualified to do business, (v) such as may be required in
connection with the Taxes described in Section 6.11,
and (vi) such other Consents or Registrations the failure
of which to be obtained or made would not, individually or in
the aggregate, materially impair the ability of Parent and Sub
to perform their obligations hereunder or prevent or materially
delay the consummation of the Merger or any of the transactions
contemplated hereby.
Section 4.5 SEC
Documents.
(a) Since January 1, 2008, Parent has filed with, or
furnished to, the SEC all documents required to be filed or
furnished by Parent under the Securities Act or the Exchange Act
(collectively, the Parent SEC Documents). As
of their respective dates, Parent SEC Documents complied in all
material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and as of their respective
dates and except as amended or supplemented prior to the date
hereof (or with respect to Parent SEC Documents filed or
furnished after the date hereof, except as amended or
supplemented prior to the Closing Date), none of Parent SEC
Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading,
except that no representation is made by Parent with respect to
information supplied by the Company or its Subsidiaries in
writing for inclusion in the Registration Statement. Each of the
consolidated financial statements of Parent (including, in each
case, any notes thereto) included in Parent SEC Documents
(collectively, the Parent Financial
Statements) have been prepared in accordance with
U.S. GAAP applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes
thereto) and fairly present in all material respects the
financial position of Parent and its consolidated Subsidiaries
as at the dates thereof and the results of their operations and
cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and
to any other adjustments set forth therein). As of the date of
this Agreement, neither Parent nor any of its Subsidiaries has
any pending or unresolved comments from the SEC or any other
Governmental Entity with respect to any of Parent SEC Documents.
(b) To the Knowledge of Parent, neither Parent nor any of
its Subsidiaries has any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise), except for
liabilities, obligations or contingencies which (i) are
reflected, or for which reserves are established, on the
consolidated balance sheet of Parent as of March 31, 2010,
(ii) were incurred in the ordinary course of business since
March 31, 2010, (iii) would not reasonably be expected
to have, individually or in the aggregate, a Parent Material
Adverse Effect or (iv) have been incurred in connection
with the performance by Parent of its obligations under this
Agreement or the transactions contemplated hereby.
(c) Each of the principal executive officer and the
principal financial officer of Parent (or each former principal
executive officer and each former principal financial officer of
Parent, as applicable) has made the certifications required by
Rules 13a-14
and 15d-14
promulgated under the Exchange Act or Sections 302 and 906
of the Sarbanes-Oxley Act with respect to Parent SEC Documents.
For purposes of the preceding sentence, principal
executive officer and principal financial
officer have the meanings ascribed to those terms under
the Sarbanes-Oxley Act.
(d) To the Knowledge of Parent, since January 1, 2008
and prior to the date of this Agreement, none of Parent, any of
its Subsidiaries or any director, officer, auditor, accountant
or representative of Parent or any of its Subsidiaries has
received any substantive complaint, allegation, assertion or
claim, whether written or oral, that Parent or any of its
Subsidiaries has engaged in questionable accounting or auditing
practices. No current or former attorney representing Parent or
any of its Subsidiaries has reported evidence of a material
violation of securities
A-25
Laws, breach of fiduciary duty or similar violation by Parent or
any of its Subsidiaries, or any of their respective officers,
directors, employees or agents, to Parents current board
of directors or any committee thereof or to any current director
or executive officer of Parent.
(e) Parent and its Subsidiaries have designed and maintain
internal controls over financial reporting (as defined in
Rules 13a-15(f)
and
15d-15(f)
promulgated under the Exchange Act) to provide reasonable
assurances (i) regarding the reliability of Parents
financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. GAAP
(ii) that receipts and expenditures of Parent and its
Subsidiaries are being made only in accordance with the
authorization of management and directors of Parent and such
Subsidiaries and (iii) regarding prevention or timely
detection of the unauthorized acquisition, use or disposition of
Parents or its Subsidiaries assets that could have a
material effect on Parents financial statements. Parent
has designed and maintains disclosure controls and procedures
(as defined in
Rules 13a-15(e)
and 15d-
15(e) promulgated under the Exchange Act) to ensure that
material information required to be disclosed by Parent in the
reports that Parent files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms and is
accumulated and communicated to Parents management as
appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the principal
executive officer and principal financial officer of Parent
required under the Exchange Act with respect to such reports.
(f) Neither Parent nor any of its Subsidiaries is a party
to, or has any commitment to become a party to, any joint
venture, off balance sheet partnership or any similar Contract
binding on Parent or any of its Subsidiaries or any of their
properties or assets (including any Contract binding on Parent
or any of its Subsidiaries or any of their properties or assets
or arrangement relating to any transaction or relationship
between or among Parent and any of its Subsidiaries, on the one
hand, and any unconsolidated affiliate, including any structured
finance, special purpose or limited purpose entity or person, on
the other hand, or any off balance sheet
arrangements (as defined in Item 303(a) of
Regulation S-K
under the Exchange Act)), where the result, purpose or intended
effect of such Contract is to avoid disclosure of any material
transaction involving, or material liabilities of, Parent or any
of its Subsidiaries in Parents or such Subsidiarys
published financial statements or other documents required to be
filed or furnished by Parent under the Securities Act or the
Exchange Act.
(g) Since January 1, 2009, Parent has not received any
oral or written notification of any material
weakness in Parents internal control over financial
reporting. There is no outstanding significant
deficiency or material weakness that
Parents independent accountants certify has not been
appropriately and adequately remedied by Parent. For purposes of
this Agreement, the terms significant deficiency and
material weakness shall have the meanings assigned
to them in Release
No. 2007-005
of the Public Company Accounting Oversight Board, as in effect
on the date hereof.
Section 4.6 Absence
of Certain Events. From March 31, 2010
to the date of this Agreement, there has not occurred any Effect
that, individually or in the aggregate with all other Effects,
has had, or would reasonably be expected to have, a Parent
Material Adverse Effect. For purposes of this Agreement,
Parent Material Adverse Effect means any
Effects, that, in the aggregate with all other Effects, is, or
would reasonably be expected to be, (1) materially adverse
to the business, assets, financial condition or results of
operations of Parent and its Subsidiaries taken as a whole, or
(2) prevent the consummation of the Merger; provided that
in no event shall any of the following, alone or in combination,
be deemed to constitute, nor shall any of the following be taken
into account in determining whether there has been, or there
would reasonably be expected to be, a Parent Material Adverse
Effect: (a) any Effect relating to, or resulting from, any
change or developments in or to local, regional, national or
foreign political, economic or financial conditions or in or to
local, regional, national or foreign credit, financial, banking
or securities markets (including any disruption thereof),
including any Effect caused by acts of terrorism or war or armed
hostilities (whether or not declared), (b) any Effect
affecting generally any of the industries, geographic areas or
business segments in which Parent or any of its Subsidiaries
operates, (c) any Effect relating to, or resulting from,
any hurricane, earthquake or other natural disasters,
(d) any change in the share price or trading volume (as
opposed to the facts underlying such change) of Parent Common
Stock on NASDAQ (provided, however, that the facts and
circumstances giving rise to such Effect that are not otherwise
excluded from the definition of Parent Material Adverse Effect
may be considered for purposes of determining whether there has
been, or would reasonably be expected to be, a Parent Material
Adverse Effect), (e) any Effect relating to, or
A-26
resulting from, the adoption, implementation, promulgation,
repeal, modification or proposal of any Law or U.S. GAAP,
after the date of this Agreement, (f) any failure, in and
of itself (as opposed to the facts underlying such failure), to
meet any budgets, plans, projections or forecasts of
Parents or its Subsidiaries revenue, earnings or
other financial performance or results of operations, or any
published financial forecasts or analyst estimates with respect
to the revenue, earnings or other financial performance or
results of operations of Parent or its Subsidiaries or any
change in analyst recommendations, for any period (provided,
however, that the facts and circumstances giving rise to such
failures that are not otherwise excluded from the definition of
Parent Material Adverse Effect may be considered for purposes of
determining whether there has been, or there would reasonably be
expected to be, a Parent Material Adverse Effect may be
considered for purposes of determining whether there has been,
or would reasonably be expected to be, a Parent Material Adverse
Effect), or (g) any Effect directly relating to, or
resulting from, the execution, performance or announcement of
this Agreement or the Related Agreements (including the impact
thereof on relationships, contractual or otherwise, with
customers, suppliers, licensors, licensees, distributors,
partners or employees, the loss or departure of officers or
other employees of Parent or its Subsidiaries and any pending or
threatened Proceeding challenging this Agreement, any of the
Related Agreements or the transactions contemplated hereby or
thereby, or otherwise resulting from the pursuit of the
consummation of the transactions contemplated hereby or thereby;
except that clauses (a), (b), (c) and (e), shall not be
applicable with respect to Effects to the extent, but only to
the extent, that any such Effects have had, or would reasonably
be expected to have, a disproportionate impact on Parent and its
Subsidiaries, taken as a whole, relative to other participants
in the industry in which Parent and its Subsidiaries operate.
Section 4.7 Proxy
Statement/Prospectus and Registration
Statement. None of the information supplied
or to be supplied by Parent or any of its Subsidiaries for
inclusion or incorporation by reference in the Registration
Statement or the Proxy Statement/Prospectus at the time the
Registration Statement becomes effective under the Securities
Act or at the time the Proxy Statement/Prospectus is mailed to
stockholders of the Company and at the time of the Company
Stockholders Meeting will contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are
made, not misleading, except that no representation is made by
Parent or Sub with respect to information supplied by the
Company for inclusion or incorporation by reference in any of
such documents.
Section 4.8 Availability
of Funds; Parent Common Stock. Parent shall
have available at the Closing (i) sufficient funds to pay
the Cash Consideration and all amounts payable in lieu of
fractional shares pursuant to Section 2.2(e) in respect of
all of the then outstanding shares of Company Common Stock, pay
all cash amounts payable in respect of then outstanding Options,
SARs and RSUs, and pay all fees, expenses and other amounts
payable by the Company and its Subsidiaries in connection with
the Merger, and (ii) sufficient authorized but unissued
shares of Parent Common Stock to issue the shares of Parent
Common Stock to be issued pursuant to
Section 2.1(a)(ii). Parent and Sub expressly
acknowledge and agree that their obligations hereunder,
including their obligations to consummate the Merger, are not
subject to, or conditioned on, receipt of financing.
Section 4.9 Litigation. There
is no Proceeding pending or, to the Knowledge of Parent (as
defined in Section 9.15), threatened against Parent
or Sub or any of their Subsidiaries or any property or asset of
the Parent or Sub or any of their respective Subsidiaries which,
if adversely determined, would reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse
Effect. As of the date of this Agreement, neither Parent nor Sub
is subject to any writ, judgment, injunction or decree that
would reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
Section 4.10 No
Violation of Law. Except for which would not
reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect: (i) neither
Parent nor any of its Subsidiaries is or since January 1,
2008, has been in violation of any Law; (ii) to the
Knowledge of Parent, no investigation or review by any
Governmental Entity is pending or threatened against Parent or
any of its Subsidiaries; (iii) Parent and its Subsidiaries
have all permits, licenses, franchises, variances, exemptions,
orders and other governmental authorizations, consents and
approvals necessary to conduct its businesses in all material
respects as presently conducted (collectively, the
Parent Permits); and (iv) none of Parent
or any of its Subsidiaries is in violation of the terms of any
Parent Permit.
A-27
Section 4.11 Brokers
and Finders. No broker, investment banker or
other Person, other than Morgan Stanley & Co.
Incorporated, the fees and expenses of which will be paid by
Parent, is entitled to any brokers, finders or other
similar fee or commission in connection with the Merger and the
transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Parent or Sub.
Section 4.12 Ownership
of Shares. As of the date of this Agreement,
none of Parent, Sub or their respective Affiliates owns
(beneficially or of record) any shares of Company Common Stock,
and none of Parent, Sub or their respective Affiliates is a
party to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares
of Company Common Stock.
Section 4.13 Solvency. Assuming
satisfaction of the conditions to Parents obligation to
consummate the Merger, and after giving effect to the
transactions contemplated by this Agreement, and the payment of
the aggregate cash consideration payable to the Securityholders
pursuant to ARTICLE II, payment of all amounts
required to be paid in connection with the consummation of the
Merger and the other transactions contemplated hereby, and
payment of all related fees and expenses, each of Parent and the
Surviving Corporation will be Solvent as of the Effective Time
and immediately after the consummation of the transactions
contemplated hereby. For the purposes of this Agreement, the
term Solvent when used with respect to any
Person, means that, as of any date of determination (a) the
amount of the fair saleable value of the assets of
such Person will, as of such date, exceed (i) the value of
all liabilities of such Person, including contingent and
other liabilities, as of such date, as such quoted terms
are generally determined in accordance with applicable Laws
governing determinations of the insolvency of debtors, and
(ii) the amount that will be required to pay the probable
liabilities of such Person on its existing debts (including
contingent and other liabilities) as such debts become absolute
and mature, and (b) such Person will be able to pay its
liabilities, including contingent and other liabilities, as they
mature. For purposes of this definition, able to pay its
liabilities, including contingent and other liabilities, as they
mature means that such Person will be able to generate
enough cash from operations, asset dispositions or refinancing,
or a combination thereof, to meet its obligations as they become
due.
Section 4.14 No
Other Representations or Warranties. Except
for the representations and warranties expressly contained in
this Agreement, the Company acknowledges that neither Parent,
Sub or any other Person on behalf of Parent or Sub makes any
other express or implied representation or warranty with respect
to Parent, any of its Subsidiaries or their respective
businesses or any other matter or with respect to any other
information provided or made available to the Company, and that
all such representations and warranties, other than the
representations and warranties of Parent and Sub expressly
contained in this Agreement, are expressly disclaimed. Neither
Parent, Sub nor any other Person makes any representation or
warranty with respect to any such information, including any
information, projections, forecasts, confidential information
memoranda or management presentations in expectation of the
transactions contemplated by this Agreement, except that the
foregoing limitations shall not (i) apply to Parent or Sub
to the extent Parent or Sub makes the specific representations
and warranties set forth in this Agreement, but always subject
to the limitations and restrictions contained herein, or
(ii) preclude the Company from seeking any remedy for fraud.
ARTICLE V
COVENANTS
RELATING TO CONDUCT OF BUSINESS
Section 5.1 Conduct
of Business by the Company Pending the
Merger. Except as otherwise expressly
contemplated by this Agreement, as consented in writing by
Parent, as set forth in the Disclosure Schedule or as required
by applicable Law, during the period from the date of this
Agreement to the earlier to occur of (x) the date of the
termination of this Agreement or (y) the Effective Time,
the Company shall, and shall cause each of its Subsidiaries to,
in all material respects carry on their respective businesses in
the ordinary course and, to the extent consistent therewith, use
its reasonable best efforts to preserve intact its current
business organizations, keep available the services of its
current officers and employees and preserve its relationships
with customers, suppliers and others having significant business
dealings with the Company or any of its Subsidiaries. Without
limiting the generality of the foregoing, and except as
otherwise expressly contemplated by this Agreement or as set
forth in Section 5.1 of the Disclosure Schedule or
as required by applicable Law, and subject to the provisions of
A-28
ARTICLE VIII, the Company shall not, and shall cause
each of its Subsidiaries not to, without the prior written
consent of Parent (which consent shall not be unreasonably
withheld or delayed):
(a) (i) split, combine, reclassify, subdivide or amend
the terms of any of its capital stock, (ii) declare, set
aside or pay any dividends on, or make any other distributions
(whether in cash, stock or property) in respect of, any shares
of its capital stock or enter into any agreement with respect to
the voting or registration of any shares of its capital stock,
or (iii) repurchase, redeem or otherwise acquire any shares
of its capital stock or any securities convertible into or
exchangeable or exercisable for shares of its capital stock;
provided that (A) the Company may acquire Options, RSUs and
SARs upon their exercise, settlement or forfeiture and
(B) each wholly-owned Subsidiary of the Company may
repurchase, redeem or otherwise acquire shares of its capital
stock or other equity interests or securities convertible into
or exchangeable or exercisable for any shares of its capital
stock or other equity interests;
(b) issue, deliver, sell, pledge, transfer, convey, dispose
of or encumber any shares of its capital stock, other equity
securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares of its capital
stock, such other equity securities or such convertible
securities (provided that the Company may issue shares of
Company Common Stock upon exercise of Options
and/or
vesting of RSUs);
(c) amend the Companys certificate of incorporation
or by-laws or other organizational documents of the Company or
its Subsidiaries;
(d) merge or consolidate with any other Person, except for
any such transactions between wholly-owned Subsidiaries of the
Company or between the Company and any of its wholly-owned
Subsidiaries;
(e) make any acquisition or agree to make any acquisition
of any business, by merger or otherwise;
(f) transfer, sell, lease, license, dispose of or encumber,
or agree to transfer, sell, lease, license, dispose of or
encumber, any of assets of the Company or any of its
Subsidiaries that have a value in excess of $1,000,000
individually and $5,000,000 in the aggregate, except sales of
inventory or obsolete assets in the ordinary course of business;
(g) except for trade payables of the Company or any of its
Subsidiaries incurred in the ordinary course of business,
(i) incur any additional indebtedness; (ii) issue any
debt securities or assume, guarantee or endorse, or otherwise
become responsible for (whether directly, contingently or
otherwise), the obligations of any Person for borrowed money; or
(iii) make any loans, advances or capital contributions to,
or investments in, any other Person (other than any wholly-owned
Subsidiary of the Company);
(h) except as may be required as a result of a change in
regulatory accounting standards and practice or in
U.S. GAAP (or any interpretation), change any of the
accounting principles or practices used by it materially
affecting the reported consolidated assets, liabilities or
results of operations of the Company and its Subsidiaries;
(i) waive, settle or compromise any Proceeding, other than
waivers, settlements or compromises that involve only the
payment of monetary damages by the Company or any of its
Subsidiaries of no more than $2,000,000 individually and
$6,000,000 in the aggregate, in any case without the imposition
of equitable relief on, or the admission of wrongdoing by, the
Company or any of its Subsidiaries;
(j) (i) terminate, establish, adopt, enter into, make
any new grants or awards of stock based compensation or other
benefits under, amend or otherwise modify, any Company Stock
Plans, Employee Benefit Plans or employment agreements (or any
plan or arrangement that would be a Company Stock Plan, Employee
Benefit Plan or employment agreement if in existence on the date
hereof) or increase the salary, wage, bonus or other
compensation of any directors or employee of the Company or any
of its Subsidiaries except (A) with respect to employees
with a designation or title that is below the level of
Vice President, or the equivalent, increases in
compensation in connection with annual performance and salary
reviews or upon promotion, payment of annual bonuses or
non-material increases in benefits, in each case, in the
ordinary course of business, (B) for grants of RSUs as
permitted under Section 5.1(b) or (C) to the
extent required by any of the Employee Benefit Plans, Company
Stock Plans or employment agreements existing as of the date of
this Agreement; (ii) enter into any severance, change of
control, termination or retention arrangements with, or
accelerate the compensation or benefits of, any employee or
director; (iii) hire any Person or promote any Person
(A) to be an officer or an employee
A-29
with a designation of Vice President or above,
except to fill a vacancy in the ordinary course of business or
(B) with an annual base salary in excess of $200,000, other
than Persons hired (x) to replace employees who are no
longer with the Company or its Subsidiaries, or (y) to fill
vacancies created by employee promotions; or (iv) make or
forgive any loan to employees or directors (other than making
advances of reasonable travel and other business expenses in the
ordinary course of business);
(k) except as required by applicable Law, make or change
any material Tax election, change any Tax accounting period,
adopt or change any Tax accounting method, amend any material
Tax Return, enter into any material closing agreement, settle
any material Tax claim or assessment relating to the Company or
any of its Subsidiaries, surrender any right to claim a refund
of material Taxes, or consent to any extension or waiver of the
limitation period applicable to any material Tax claim or
assessment relating to the Company or any of its Subsidiaries;
(l) authorize, recommend, adopt, propose or announce an
intention to adopt a plan of complete or partial liquidation,
dissolution, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries;
(m) make or commit to any capital expenditures in excess of
the capital expenditures budget set forth in
Section 5.1(m) of the Disclosure Schedule, except to
the extent that such excess is not greater than $10,000,000 in
the aggregate;
(n) (i) except for Material Contracts of the type
described in Section 3.17(b)(i) and entered into in
the ordinary course of business with respect to customers and
suppliers, enter into, terminate (except at the end of its term)
or modify in any material respect any Material Contract (or any
contract or agreement that if in existence on the date hereof
would be a Material Contract) or waive, release or assign any
material rights or claims thereunder, (ii) grant or
acquire, agree to grant or to acquire from any third party, or
dispose of or permit to lapse any right, title or interest to,
any Intellectual Property, or encumber, impair, abandon, fail to
diligently maintain, transfer or otherwise dispose of any right,
title or interest of the Company or any of its Subsidiaries in
any Company Intellectual Property (other than, in each case,
pursuant to any Company Contract that is (A) a material
transfer or sponsored research agreement, (B) a clinical
trial agreement, or (C) a clinical research agreement
entered into with a clinical research organization, in each
case, that solely grants non-exclusive rights in the ordinary
course of business consistent with past practices), or
(iii) divulge, furnish to or make accessible any trade
secrets within the Company Intellectual Property to any Person
who is not subject to an enforceable written agreement to
maintain the confidentiality of such trade secrets;
(o) announce, implement or effect any reduction in force,
lay-off, early retirement program, severance program or other
program or effort concerning the termination of employment of
employees of the Company or any of its Subsidiaries;
(p) enter into, amend or cancel any insurance policies
other than in ordinary course of business;
(q) adopt or enter into stockholder rights agreement or
poison pill;
(r) acquire or dispose of any manufacturing
facilities; or
(s) agree in writing or otherwise to take any of the
foregoing actions.
Section 5.2 Control
of the Companys Operations. Nothing
contained in this Agreement shall give to Parent, directly or
indirectly, rights to control or direct the Companys or
its Subsidiaries operations prior to the Effective Time.
Prior to the Effective Time, the Company and its Subsidiaries
shall exercise, consistent with the terms of this Agreement,
complete control of its business and operations.
A-30
ARTICLE VI
ADDITIONAL
AGREEMENTS
Section 6.1 Company
Stockholder Approval; Proxy Statement.
(a) The Company shall take all lawful action reasonably
necessary in accordance with the DGCL and its certificate of
incorporation and by-laws to call a meeting of its stockholders
(the Company Stockholder Meeting) for
the purpose of voting upon the adoption of this Agreement and
the approval of the Merger, as soon as reasonably practicable
after the Registration Statement is declared effective by the
SEC, the Proxy Statement/Prospectus is cleared by the SEC and,
if required by Law, the CVR Agreement has been qualified under
the Trust Indenture Act. Without limiting the generality of
the foregoing, the Company, in consultation with Parent, shall
establish a record date for, call, give notice of, convene and
shall use its reasonable best efforts to hold the Company
Stockholder Meeting within the shortest time period allowed
under Law and the rules and regulations of the NASDAQ after the
date that the Registration Statement has been declared effective
by the SEC. The Board of Directors shall, subject to the
provisions of Section 6.3 and their fiduciary duties
under applicable Law as determined by the Board of Directors in
good faith after consultation with the Companys outside
counsel, recommend to the Companys stockholders the
adoption of this Agreement and approval of the Merger.
(b) As soon as is reasonably practicable (A) Parent,
the Company and Sub shall prepare the Registration Statement,
which shall include the Proxy Statement/Prospectus,
(B) Parent shall file the Registration Statement, and the
Company shall file the Proxy Statement/Prospectus, in each case
with the SEC, and (C) each party shall cooperate with the
other party in the preparation of, and will provide the other
party with all information within such partys control that
is required to be included in, the foregoing documents. Each of
the parties shall use its reasonable best efforts to respond to
any comments of the SEC or its staff and to cause the
Registration Statement to be declared effective by the SEC, to
have the Proxy Statement/Prospectus cleared by the SEC and, if
required by Law, to have the CVR Agreement become qualified
under the Trust Indenture Act, in each case as soon as
reasonably practicable after the date of this Agreement. The
parties shall use their respective reasonable best efforts to
keep the Registration Statement effective as long as is
necessary to consummate the Merger and the transactions
contemplated by this Agreement. Each of the Company, Sub and
Parent agrees to use its reasonable best efforts, after
consultation with the other parties hereto, to respond promptly
to all such comments of and requests by the SEC. Each of the
Company, Sub and Parent agrees to notify the other parties
promptly of the receipt of any written or oral comments from the
SEC or its staff and of any request by the SEC or its staff for
amendments or supplements to the Registration Statement or the
Proxy Statement/Prospectus or for additional information and
shall supply the other parties with copies of all correspondence
between such party or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect
to the Registration Statement or the Proxy Statement/Prospectus.
Notwithstanding the foregoing, prior to filing the Registration
Statement or Proxy Statement/Prospectus (or any respective
amendment or supplement thereto) or responding to any comments
of the SEC with respect thereto, each party (i) shall
provide the other parties with a reasonable opportunity to
review and comment on such document or response and
(ii) shall reasonably consider all comments reasonably
proposed by the other party. As soon as practicable and in any
event within 10 Business Days after the date that the
Registration Statement has been declared effective by the SEC,
the Company shall mail the Proxy Statement/Prospectus
(including, with the cooperation of Parent, all Company SEC
Documents and Company SEC Documents incorporated therein by
reference) to the holders of shares of Company Common Stock,
soliciting each of the Companys stockholders to vote in
favor of adopting this Agreement and approving the Merger.
(c) Each of the Company, Sub, and Parent shall advise the
other party, promptly after it receives notice, after the time
when the Registration Statement has become effective, of the
issuance of any stop order or the suspension of the
qualification of the CVRs issuable in connection with the
Merger. If, at any time prior to the Effective Time, any
information relating to Sub or the Company or any of their
respective Affiliates is discovered by the Company, Sub or
Parent that should be set forth in an amendment or supplement to
any of the Registration Statement or the Proxy
Statement/Prospectus so that any of such documents would not
include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading,
the party discovering this information shall promptly notify the
other parties and, to the extent
A-31
required by Law, the parties shall cause an appropriate
amendment or supplement describing this information to be
promptly filed with the SEC and, to the extent required by Law,
disseminated to the stockholders of the Company.
Section 6.2 Directors
and Officers Indemnification.
(a) Parent shall cause the Surviving Corporation and its
Subsidiaries (and their successors) to establish and maintain
for a period of not less than six years from and after the
Effective Time provisions in their certificates of
incorporation, by-laws and other organizational documents
concerning the indemnification and exoneration (including
provisions relating to expense advancement) of the
Companys and its Subsidiaries former and current
officers, directors and employees that are no less favorable to
those persons than the provisions of the certificate of
incorporation, by-laws and other organizational documents of the
Company and its Subsidiaries as in effect as of the date hereof,
and such provisions shall not be amended, repealed or otherwise
modified in any manner adverse to such officer, director or
employee, except as required by applicable Law. Parent shall
assume, be jointly and severally liable for, and honor, guaranty
and stand surety for, and shall cause the Surviving Corporation
to honor, in accordance with their respective terms each of the
covenants contained in this Section 6.2.
(b) In addition to and not in limitation of the terms of
Section 6.2(a), during the period ending on the
sixth anniversary of the Effective Time, each of Parent and the
Surviving Corporation shall indemnify and hold harmless, and
provide advancement of expenses to, to the fullest extent
permitted under applicable Law, each present and former
director, officer and employee of the Company or any of its
Subsidiaries (each such director, officer or employee, together
with such persons heirs, executors or administrators, an
Indemnified Party and collectively, the
Indemnified Parties) against any costs or
expenses (including attorneys fees), judgments, fines,
losses, claims, damages, liabilities and amounts paid in
settlement in connection with any actual or threatened claim,
action, suit, Proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of,
relating to or in connection with (i) any acts or omissions
occurring or alleged to occur prior to, or as of, the Effective
Time in their capacities as officers, directors, employees or
controlling stockholders of the Company or any of its
Subsidiaries or taken by them at the request of the Company or
any of its Subsidiaries (including acts or omissions in
connection with such persons serving as an officer or director
or in their capacity as a controlling stockholder in any entity
if such service was at the request or for the benefit of the
Company) or (ii) the negotiation, execution, adoption and
approval of this Agreement, the Merger or the other transactions
contemplated by this Agreement or arising out of or pertaining
to the transactions contemplated by this Agreement.
(c) For a period of six years after the Effective Time,
Parent shall cause to be maintained in effect, without any lapse
in coverage, the current policies of directors and
officers liability insurance and fiduciary liability
insurance maintained by the Company and its Subsidiaries
(provided that Parent may substitute therefor policies of at
least the same coverage and amounts containing terms and
conditions that are no less advantageous to the directors and
officers than the current policies) for a claims-reporting or
discovery period of at least such six year period with respect
to matters arising on or before the Effective Time; provided,
however, that (i) in lieu of the purchase of such insurance
by Parent, the Company or the Surviving Corporation may purchase
a six-year extended reporting period endorsement under the
Companys existing directors and officers
liability insurance coverage effective for claims asserted for
the full six year period referred to above, and (ii) during
this period, Parent shall not be required to procure any
coverage in excess of the amount that can be obtained for the
remainder of the period for an annual premium of 250% of the
current annual premium paid by the Company for its existing
coverage.
(d) The Surviving Corporation and Parent shall pay all
reasonable expenses, including reasonable attorneys fees,
that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided in this
Section 6.2 as such fees are incurred upon the
written request of any Indemnified Party.
(e) Each Indemnified Party shall, at the cost and expense
of Parent, reasonably cooperate with Parent and the Surviving
Corporation in the defense of any Proceeding for which
indemnification may be sought pursuant to this
Section 6.2 and shall furnish, at the cost and
expense of Parent, or cause to be furnished records, documents,
information and testimony, as may be reasonably requested by
Parent in connection therewith.
(f) In the event of any Proceeding for which
indemnification may be sought pursuant to this
Section 6.2, at the Effective Time, Parent will have
the right to control the defense thereof; provided, that any
Indemnified Party may participate in such defense with counsel
retained by such Indemnified Party reasonably satisfactory to
Parent.
A-32
(g) The rights of each Indemnified Party hereunder shall be
in addition to, and not in limitation of, any other rights such
Indemnified Party may have under the certificate of
incorporation or by-laws or any other organizational documents
of the Company or any of its Subsidiaries, any other
indemnification arrangement in existence as of the date of this
Agreement, the DGCL or otherwise. The provisions of this
Section 6.2 shall survive the consummation of the
Merger and are expressly intended to be for the benefit of, and
shall be enforceable by, each of the Indemnified Parties and
shall be binding on the Parent, the Surviving Corporation and
their respective successors and assigns.
(h) If Parent or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or
merges into any other corporation or entity and is not the
continuing or surviving corporation or entity of the
consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any
individual, corporation or other entity, then and in each case,
proper provisions will be made so that the successors and
assigns of Parent or the Surviving Corporation, as applicable,
assume all of the obligations set forth in this
Section 6.2.
Section 6.3 No
Solicitation.
(a) Subject to the provisions of this
Section 6.3, after the date hereof and prior to the
Effective Time, the Company agrees that the Company and its
Subsidiaries shall not, and that it shall use its reasonably
best efforts to cause the officers, directors, employees,
investment bankers, attorneys and other advisors or
representatives (collectively,
Representatives) of the Company or its
Subsidiaries to not, (i) solicit, initiate, or knowingly
encourage the making, submission or announcement of any inquiry
regarding, or any proposal or offer which would reasonably be
expected to lead to, a merger, acquisition, consolidation,
tender offer, exchange offer or other transaction involving, or
any proposal or offer to purchase or acquire in any manner,
directly or indirectly, (A) assets (including equity
interests of a Company Subsidiary) representing 15% or more of
the assets or revenues of the Company and its Subsidiaries taken
as a whole, or (B) 15% or more of the voting securities of
the Company, other than, in each case, transactions with Parent
(any such proposal or offer being hereinafter referred to as an
Acquisition Proposal), (ii) enter
into, participate, continue or otherwise engage in discussions
or negotiations with, or provide any non-public information to
any Person (other than Parent, Sub and their Representatives)
with respect to any inquiries regarding, or the making,
submission or announcement of, an Acquisition Proposal,
(iii) enter into or approve any letter of intent, agreement
in principle, option agreement, share purchase agreement,
acquisition agreement or similar agreement for an Acquisition
Proposal, or (iv) terminate, waive, amend or modify any
provision of, or grant permission under, any standstill,
confidentiality agreement or similar contract to which the
Company or any Company Subsidiary is a party; provided, that the
foregoing shall not prohibit the Board of Directors from
terminating, waiving, amending or modifying any provision of, or
granting permission under, any standstill, confidentiality
agreement or similar contract if the Board of Directors
determines in good faith that the failure to take such action,
would be reasonably likely to constitute a breach of the Board
of Directors fiduciary duties to the Companys
stockholders under applicable Law. The Company shall
(i) immediately cease and cause to be terminated any
existing solicitation, discussion or negotiation with any Person
(other than Parent, Sub or their Representatives) conducted
prior to the date of this Agreement by the Company, its
Subsidiaries or any of their respective Representatives with
respect to any actual or potential Acquisition Proposal and
(ii) as promptly as reasonably practicable request that all
confidential information provided by or on behalf of the Company
or any of its Subsidiaries to such third party be returned or
destroyed.
(b) Subject to the provisions of this
Section 6.3, the Company may, and may authorize any
of its Representatives to, prior to the date on which the
Stockholder Approval is obtained, (A) in response to a
request by a Person who has made a bona fide written Acquisition
Proposal that was not initiated or solicited in violation of
Section 6.3(a), provide information to such Person
(including to potential financing sources of such Person), if
the Company receives from such Person so requesting the
information an executed confidentiality agreement no more
favorable in any material respect to such Person than the
Confidentiality Agreement (as defined in
Section 6.4) is to Parent (it being agreed that the
Company shall promptly provide to Parent, in accordance with the
terms of the Confidentiality Agreement, any information
concerning the Company or its Subsidiaries provided to such
other Person which was not previously provided to Parent);
and/or
(B) engage in discussions or negotiations with any Person
(and such Persons potential financing sources) who has
made a bona fide written Acquisition Proposal that was not
initiated or solicited in violation of
Section 6.3(a), if, in each case, the Board of
Directors determines in good faith after consultation with the
Companys financial advisor and outside legal counsel that
(1) failure to take
A-33
this action would be reasonably likely to constitute a breach of
its fiduciary duties to the Companys stockholders under
applicable Law and (2) the Acquisition Proposal either
constitutes a Superior Proposal or is reasonably likely to lead
to a Superior Proposal. As used in this Agreement,
Superior Proposal means an unsolicited, bona
fide written Acquisition Proposal made after the date hereof
(for this purpose substituting 60% for each
reference to 15% in the definition of Acquisition
Proposal) and that the Board of Directors determines in
good faith (after consultation with the Companys financial
advisor and outside legal counsel) is reasonably expected to be
consummated on the terms proposed, taking into account all
legal, financial and regulatory aspects of the proposal,
including the financing terms thereof and the Person making such
proposal, and if consummated would result in a transaction that
is more favorable to the stockholders of the Company from a
financial point of view than the transactions contemplated by
this Agreement (after taking into account any revisions to the
terms of the transactions contemplated by this Agreement agreed
to by Parent pursuant to Section 6.3(c)).
(c) The Company shall notify Parent orally and in writing
promptly (and in any event within 24 hours) after receipt
of any Acquisition Proposal or any request for information or
inquiry which could reasonably be expected to lead to an
Acquisition Proposal. The written notice shall include the
identity of the Person making such Acquisition Proposal, request
or inquiry, the material terms of the Acquisition Proposal,
request or inquiry (including any material written amendments or
modifications, or any proposed material written amendments or
modifications, thereto), and the Company shall keep Parent
reasonably informed on a current basis of any material changes
with respect to such Acquisition Proposal, request or inquiry.
The Company shall provide Parent with at least 36 hours
prior notice (or such shorter notice as may be provided to the
Board of Directors) of any meeting of the Board of Directors at
which the Board of Directors is reasonably expected to determine
that an Acquisition Proposal is a Superior Proposal. The Company
shall not exercise its right to terminate this Agreement
pursuant to Section 8.1(e) hereof, and any purported
termination pursuant thereto shall be void of no force or
effect, until after the fifth Business Day following
Parents receipt from the Company of written notice
(i) advising Parent that the Board of Directors has
received a Superior Proposal, specifying the material terms and
conditions of the Superior Proposal (and attaching a copy of the
definitive agreement related thereto, if available) and stating
that the Board of Directors intends to exercise its right to
terminate this Agreement pursuant to Section 8.1(e).
The Company agrees that after notifying Parent that an
Acquisition Proposal is a Superior Proposal, including during
the five-Business Day period specified in the preceding sentence
(such period, the Parent Review Period),
Parent will be permitted to propose to the Company revisions to
the terms of the transactions contemplated by this Agreement,
and the Company and its Representatives will, if requested by
Parent, consider in good faith any revisions to the terms of the
transactions contemplated by this Agreement proposed by Parent.
The Company shall not be entitled to terminate this Agreement
pursuant to Section 8.1(e) if Parent has, during the
Parent Review Period, made a binding offer that, after
consideration of such offer by the Board of Directors in good
faith and after consultation with the Companys financial
advisor and outside legal counsel, results in the Board of
Directors concluding that such Superior Proposal no longer
constitutes a Superior Proposal. In the event of any amendment
to the consideration or any other material revisions to the
Superior Proposal, the Company shall be required to deliver a
new written notice to Parent and to comply with the requirements
of this Section 6.3(c) with respect to such new
written notice (including a new Parent Review Period except that
the new Parent Review Period shall be three Business Days).
(d) The Company agrees that any action taken by any of its
Subsidiaries or a Representative of the Company or any of its
Subsidiaries that, if taken by the Company, would constitute a
breach of the restrictions set forth in this
Section 6.3, shall be deemed to be a breach of this
Agreement (including this Section 6.3) by the
Company.
(e) Nothing contained in this Section 6.3 shall
prohibit the Company or its Board of Directors from taking and
disclosing to the Companys stockholders a position with
respect to a tender offer by a third party pursuant to
Rules 14d-9
and 14e-2(a)
promulgated under the Exchange Act or from making such
disclosure to the Companys stockholders which, in the
judgment of the Board of Directors after receiving advice of
outside legal counsel, is reasonably likely to be required under
applicable Law.
Section 6.4 Access
to Information; Confidentiality. The Company
shall, and shall cause each of its Subsidiaries to,
(i) afford to Parent and its Representatives, upon
reasonable notice, reasonable access during normal business
hours during the period prior to the Effective Time to all their
respective employees, agents, properties, books, Contracts,
commitments and records; provided, however, that such
access shall not unreasonably disrupt the Companys
operations, and (ii) furnish promptly such information
concerning the business, properties,
A-34
Contracts, assets, liabilities, personnel and other aspects of
the Company and its Subsidiaries as Parent or its
Representatives may reasonably request. Notwithstanding anything
to the contrary in this Section 6.4, (x) the
Company shall not be required to provide any information which
it reasonably believes it may not provide Parent or Sub by
reason of applicable Law (including antitrust Laws), which
constitutes information protected by attorney/client privilege,
or which the Company or any Subsidiary is required to keep
confidential by reason of Contracts with third parties and
(y) with respect to the Trade Secrets included in the
Company Intellectual Property, prior to the Effective Time the
Company will provide during normal business hours, to not more
than three Representatives of Parent selected by Parent,
reasonable access to documentation related to Trade Secrets,
provided that such individuals execute a separate
confidentiality agreement with the Company covering chemistry,
manufacturing and controls and related matters in a form
substantially identical to the form previously executed by
Parents employees. The parties will use reasonable best
efforts to make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding
sentence apply. All information exchanged pursuant to this
Section 6.4 shall be subject to the confidentiality
agreement, dated October 16, 2009 (the
Confidentiality Agreement), between the
Company and Parent.
Section 6.5 Reasonable
Best Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth
in this Agreement, each of the parties shall use its reasonable
best efforts to take, or cause to be taken, all reasonable
actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things reasonably
necessary, proper or advisable to consummate and make effective,
in the most expeditious manner practicable, the Merger,
including (i) the obtaining of all Consents and the making
of all Registrations specified in Section 3.3(c) and
Section 4.4 and the taking of all reasonable steps
as may be necessary to obtain such Consents and to make such
Registrations, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties,
(iii) the defending of any lawsuits or other Proceedings,
whether judicial or administrative, challenging this Agreement
or the consummation of the Merger, including, seeking to have
any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, and (iv) the
execution and delivery of any additional instruments necessary
to consummate the Merger and to fully carry out the purposes of
this Agreement; provided, however, that the obligations
set forth in this sentence shall not be deemed to have been
breached as a result of actions taken by the Company that are
permitted under Section 6.3. Notwithstanding the
foregoing, neither Parent or Sub, on the one hand, and the
Company, on the other hand, shall be obligated to amend or waive
the provisions of any Contract, or obligated to pay any consent
or similar fees or payments, unless such action is conditioned
upon the consummation of the Merger. Without limiting the
foregoing, none of the parties shall take or agree to take any
action that could reasonably be expected to result in any of the
conditions set forth in Article VII not being
satisfied or to prevent or materially delay the consummation of
the Merger or the transactions contemplated by this Agreement.
(b) Without limiting the foregoing, each of Parent and the
Company undertakes and agrees to file as soon as practicable,
and in any event prior to 10 Business Days after the date
hereof, a Notification and Report Form under the HSR Act with
the United States Federal Trade Commission (the
FTC) and the Antitrust Division of the
United States Department of Justice (the
Antitrust Division). Each of Parent and
the Company shall (i) respond as promptly as practicable to
any inquiries received from the FTC or the Antitrust Division
for additional information or documentation and to all inquiries
and requests received from any state attorney general or other
Governmental Entity in connection with antitrust matters, and
(ii) not extend any waiting period under the HSR Act or
enter into any agreement with the FTC or the Antitrust Division
not to consummate the transactions contemplated by this
Agreement, except with the prior written consent of the other
parties hereto (which consent shall not be unreasonably withheld
or delayed). Parent shall use its reasonable best efforts to
avoid or eliminate impediments under any antitrust, competition,
or trade regulation law that may be asserted by the FTC, the
Antitrust Division, any state attorney general or any other
Governmental Entity with respect to the Merger so as to enable
the consummation thereof as promptly as reasonably practicable
and shall defend through litigation on the merits any claim
asserted in any court by any party, including appeals. Without
limiting the foregoing and subject to this
Section 6.5(b), Parent shall propose, negotiate,
commit to and effect, by consent decree, hold separate order, or
otherwise, the sale, divestiture or disposition of such assets
or businesses of Parent or, effective as of the Effective Time,
the Surviving Corporation, or their respective Subsidiaries or
otherwise commit to take any action which it is capable of
taking, take or commit to take such action that limits its
freedom of action with respect to, or its ability to
A-35
retain, any of the businesses, services or assets of Parent, the
Surviving Corporation or their respective Subsidiaries, in order
to avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order in any
suit or Proceeding, or any impediment under any antitrust Law,
competition, or trade regulation Law, which would otherwise
have the effect of preventing the consummation of the Merger.
Notwithstanding any of the foregoing, nor anything else
contained in this Agreement, Parent shall not be required to
sell, divest or otherwise dispose of, hold separate, enter into
any license or similar agreement with respect to, restrict the
ownership or operation of, or agree to sell, divest or otherwise
dispose of, hold separate, enter into any license or similar
agreement with respect to, or restrict the ownership or
operation of (i)(A) any assets or businesses of the Company or
any of its Subsidiaries or (B) any assets or businesses of
Parent or any of its Affiliates or Subsidiaries, in the case of
either clause (A) or (B), to the extent that such sale,
divestiture, disposition, or agreement would have a material
adverse effect on the business, operations, financial condition
or results of operations of the combined business of Parent and
the Company after giving effect to the consummation of the
transactions contemplated by this Agreement, or (ii) the
Product to the extent such sale, divestiture, disposition,
agreement or restriction would have a material adverse effect on
the ability of the Company to exploit the Product in the
Applicable Jurisdictions. The Company shall agree if, and solely
if, requested by Parent, to divest, hold separate or otherwise
take or commit to take any action that limits its freedom of
action with respect to, or its ability to retain, any of the
businesses, services, or assets of the Company or any of its
Subsidiaries, provided that any such action shall be conditioned
upon the consummation of the Merger and the transactions
contemplated hereby. Each party shall (i) promptly notify
the other party of any material communication to that party from
the FTC, the Antitrust Division, any state attorney general or
any other Governmental Entity and, subject to applicable Law,
permit the other party to review in advance any proposed written
communication to any of the foregoing; (ii) to the extent
practicable not agree to participate in any substantive meeting
or discussion with any Governmental Entity in respect of any
filings, investigation or inquiry concerning this Agreement or
the Merger unless it consults with the other party in advance
and, to the extent permitted by such Governmental Entity, gives
the other party the opportunity to attend and participate
thereat; and (iii) furnish the other party with copies of
all correspondence, filings, and communications (and memoranda
setting forth the substance thereof) between them and their
Affiliates and their respective Representatives on the one hand,
and any Governmental Entity or members of their respective
staffs on the other hand, with respect to this Agreement and the
Merger. Subject to its obligations in
Section 6.5(a), Parent shall have the right to
determine and direct the strategy and process by which the
parties will seek required approvals under antitrust,
competition or trade regulation Laws; provided that Parent
will consult with and consider in good faith the views of the
Company in connection with proceedings under or relating to any
such Laws.
Section 6.6 Benefit
Plans.
(a) During the period beginning on the Effective Time and
ending no earlier than December 31, 2011 (the
Transition Period), Parent shall provide, or
shall cause the Surviving Corporation to provide, each active
employee of the Company or its Subsidiaries as of the Effective
Time (each, an Employee) with salary, cash
bonus opportunities and employee benefits (including
equity-based benefits) that are not materially less favorable in
the aggregate than (i) the salary, cash bonus opportunities
and employee benefits in effect with respect to such Employee on
the date of this Agreement or as increased after the date of
this Agreement consistent with the provisions of
Section 5.1(j); (ii) the salary, cash bonus
opportunities and employee benefits generally provided by Parent
and its Subsidiaries (other than the Surviving Corporation and
its Subsidiaries) from time to time to employees of Parent and
its Subsidiaries (other than the Surviving Corporation and its
Subsidiaries) in the country that is such Employees
principal place of employment who are similarly situated to such
Employee in title, rank, tenure (counting tenure with the
Company and its Subsidiaries prior to the Effective Time to the
extent recognized by the Company or its Subsidiaries prior to
the Effective Time and reflected on the books and records of the
Company) and job duties; or (iii) any combination of the
foregoing (e.g., during the Transition Period, Parent may
transition an Employee into one or more of its employee benefit
programs while maintaining the Employees salary and cash
bonus opportunities as in effect immediately prior to the
Effective Time); provided, that, (x) for purposes of and
subject to this Section 6.6(a), Parent shall
determine in its sole discretion the combination of compensation
and benefits described in clauses (i) through (iii) to
be provided to any Employee during the Transition Period and
(y) nothing in this Section 6.6(a) shall be
deemed to prohibit Parent from changing the title, rank or job
duties of any Employee at any time after the Effective Time.
A-36
(b) To the extent that Employees become eligible to
participate in any employee benefit plan, as defined
in Section 3(3) of ERISA, maintained by Parent or any of
its Subsidiaries (collectively, the Parent
Plans), then for purposes of determining eligibility
to participate and vesting and, with respect to any Parent Plan
that provides severance, vacation or paid-time off benefits, for
purposes of benefit accrual, service with the Company or any of
its Subsidiaries prior to the Effective Time shall be treated as
service with Parent or any of its Subsidiaries, in each case
except as prohibited by an insurer or service provider under a
Parent Plan or by applicable Law; provided, however, that
such service shall not be recognized to the extent that such
recognition would result in any duplication of benefits. In
addition, subject to the terms of the applicable Parent Plan and
applicable Law, Parent shall use reasonable best efforts to
(i) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Employees under any
Parent Plan that is a welfare benefit plan in which such
Employees may be eligible to participate after the Effective
Time and (ii) provide each Employee with credit for any
co-payments and deductibles paid prior to the Effective Time in
satisfying any applicable deductible or
out-of-pocket
requirements under any Parent Plans that are welfare plans in
which such Employees are eligible to participate after the
Effective Time.
(c) Unless Parent directs the Company otherwise in writing
no later than five Business Days prior to the Effective Time,
the Board of Directors shall adopt resolutions terminating,
effective at least one day prior to the Effective Time, the
Companys 401(k) Retirement Plan. Prior to the Effective
Time, the Company shall provide Parent with executed resolutions
of the Board of Directors authorizing such termination in a form
reasonably acceptable to Parent. The Company shall also take
such other actions in furtherance of the termination of the
Companys 401(k) Retirement Plan as Parent may reasonably
require.
(d) Nothing contained in this Section 6.6 shall
(i) be treated as an amendment of any particular Parent
Plan, (ii) give any third party any right to enforce or
confer upon the applicability of the provisions of this
Section 6.6 or (iii) obligate Parent or any of
its Subsidiaries to (A) maintain any particular Employee
Benefit Plan or Parent Plan or (B) retain the employment of
any particular Employee.
(e) Parent shall, or shall cause the Surviving Corporation
to, comply with the provisions set forth on
Section 6.6(e) of the Disclosure Schedule.
Section 6.7 Fees
and Expenses.
(a) Except as otherwise provided by this Agreement, all
fees and expenses incurred in connection with the Merger and the
other transactions contemplated by this Agreement shall be paid
by the party incurring such fees or expenses, whether or not the
Merger is consummated.
(b) Subject to Section 6.7(d), the Company
agrees to pay Parent a fee equal to $145,000,000 if:
(i) this Agreement is terminated by (A) the Company
pursuant to Section 8.1(e) (in which case, the fee
shall be payable at the time of termination) or (B) Parent
pursuant to Section 8.1(c)(ii) or
Section 8.1(d) (in which case, the fee shall be
payable within two Business Days after such termination);
(ii) (x) this Agreement is terminated by Parent
pursuant to Section 8.1(c)(i), (y) prior to the
date upon which the breach giving rise to Parents right to
terminate this Agreement pursuant to
Section 8.1(c)(i) occurs but after the date hereof,
a bona fide Acquisition Proposal (which, for purposes of this
Section 6.7(b), shall have the meaning set forth in
the definition of Acquisition Proposal contained in
Section 6.3(a), except that all references to 15%
shall be deemed references to 60%) for the Company
shall have been publicly announced (other than by Parent or its
Affiliates) and (z) within 12 months after such
termination either the Company shall have entered into a
definitive agreement relating to an Acquisition Proposal or a
transaction contemplated by an Acquisition Proposal for the
Company shall have been consummated (in which case, the fee
shall be payable within two Business Days thereafter);
(iii) (x) this Agreement is terminated by Parent or
the Company pursuant to Section 8.1(b)(iii),
(y) prior to the date of the Company Stockholder Meeting
but after the date hereof, a bona fide Acquisition Proposal for
the Company shall have been publicly announced (other than by
Parent or its Affiliates) and (z) within 12 months
after such termination either the Company shall have entered
into a definitive agreement relating to an Acquisition
A-37
Proposal or a transaction contemplated by an Acquisition
Proposal for the Company shall have been consummated (in which
case, the fee shall be payable within two Business Days
thereafter); or
(iv) (w) this Agreement is terminated by Parent or the
Company pursuant to Section 8.1(b)(i),
(x) prior to such termination, the Antitrust Approval shall
have been obtained, (y) prior to such termination but after
the date hereof, a bona fide Acquisition Proposal for the
Company shall have been publicly announced (other than by Parent
or its Affiliates) and (z) within 12 months after such
termination either the Company shall have entered into a
definitive agreement relating to an Acquisition Proposal or a
transaction contemplated by an Acquisition Proposal for the
Company shall have been consummated (in which case, the fee
shall be payable within two Business Days thereafter).
(c) The fee payable pursuant to Section 6.7(b)
shall be made by wire transfer of same day funds to an account
designated in writing by Parent. The Company acknowledges that
the agreements contained in Section 6.7(b) are an
integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent and Sub
would not enter into this Agreement; accordingly, if the Company
fails to promptly pay the amount due pursuant to
Section 6.7(b), and, in order to obtain such
payment, Parent or Sub commences a suit which results in a
binding nonappealable judgment rendered by a court of competent
jurisdiction against the Company for the fee set forth in
Section 6.7(b), the Company shall pay to Parent or
Sub its reasonable documented costs and expenses (including
reasonable attorneys fees) in connection with such suit
together with interest on the amount due at the prime rate of
Bank of America N.A. in effect on the date such payment was
required to be made hereunder plus 2% per annum.
(d) Parent agrees that, except in the case of fraud or a
willful and material breach hereof (as defined in
Section 8.2), the payment provided for in
Section 6.7(b) shall be the sole and exclusive
remedy of Parent upon termination of this Agreement under
circumstances giving rise to an obligation (or potential
obligation) of the Company to pay the amounts set forth in
Section 6.7(b) and such remedy shall be limited to
the aggregate of the sums stipulated in such
Section 6.7(b). In no event shall the
Company be required to pay to Parent more than one termination
fee pursuant to Section 6.7(b).
Section 6.8 Public
Announcements. The initial press release with
respect to this Agreement, the Merger and the other transactions
contemplated hereby shall be a joint release mutually agreed
upon by the Company and Parent. Thereafter, Parent and Sub, on
the one hand, and the Company, on the other hand, shall use
reasonable efforts to consult with each other before issuing,
and provide each other the opportunity to review and comment
upon, any press release or other public statements with respect
to the Merger and the other transactions contemplated by this
Agreement and, unless it has made reasonable efforts to do the
foregoing, shall not issue any such press release or make any
such public statement prior to such consultation, except as may
be required by applicable Law, court process or by obligations
pursuant to any listing agreement with any national securities
exchange. Notwithstanding the foregoing provisions of this
Section 6.8, Parent and the Company and their
respective Representatives may make public releases or
announcements concerning the transactions contemplated hereby
that are not inconsistent with previous press releases or other
public statements made by Parent
and/or the
Company in compliance with this Section 6.8.
Section 6.9 Sub. Parent
will take all action necessary (a) to cause Sub to perform
its obligations under this Agreement to consummate the Merger in
accordance with the terms and subject to the conditions set
forth in this Agreement and (b) to ensure that, prior to
the Effective Time, Sub shall not conduct any business or make
any investments other than as specifically contemplated by this
Agreement.
Section 6.10 CVR
Agreement. At or prior to the Closing, Parent
will duly adopt, execute and deliver, and shall ensure that a
duly qualified Trustee executes and delivers, the CVR Agreement,
subject to any reasonable revisions to the CVR Agreement that
are requested by such Trustee.
Section 6.11 Transfer
Taxes. Parent shall assume liability for and
pay all sales, use, transfer, real property transfer,
documentary, recording, gains, stock transfer and similar Taxes
and fees, and any deficiency, interest or penalty asserted with
respect thereof (collectively, Transfer
Taxes) resulting from the transactions effected
pursuant to this Agreement. The Company shall cooperate with
Parent as to the filing of all necessary documentation and Tax
Returns with respect to such Transfer Taxes.
A-38
Section 6.12 Listing. As
promptly as practicable after the date hereof, Parent shall
prepare and submit to the NASDAQ (or such other exchange(s),
electronic trading networks or other suitable trading platforms
as are mutually agreed by Parent and the Company) an application
covering the CVRs and the shares of Parent Common Stock being
issued in the Merger and shall use its reasonable best efforts
to cause the CVRs and the shares of Parent Common Stock being
issued in the Merger (including any CVRs which may be issued
pursuant to Section 2.7(a)(i) and
Section 2.7(b)(i)) to be approved for listing
(subject to notice of issuance) for trading on the NASDAQ (or
such other exchange(s), electronic trading networks or other
suitable trading platforms as are mutually agreed by Parent and
the Company) at or prior to the Effective Time.
Section 6.13 Certain
Notices. Subject to compliance with all
applicable Laws, the Company and Parent, as the case may be,
shall confer on a regular basis with each other, report on
operational matters and shall promptly advise each other orally
and in writing upon becoming aware of any Event having, or which
would be reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect. Parent and the
Company shall give prompt notice to the other of any Event of
which it obtains Knowledge that would be reasonably expected to
materially delay or prevent the consummation of the Merger.
Furthermore, the Company shall give prompt notice to Parent, and
Parent or Sub shall give prompt notice to the Company, upon, to
the Knowledge of the Company or the Knowledge of Parent, as
applicable (i) any representation or warranty made by it in
this Agreement becoming untrue or inaccurate in any material
respect, (ii) the occurrence of any condition, event or
circumstance that would be reasonably expected to result in any
of the conditions in Section 7.2(a) or
Section 7.3(a) not being met, or (iii) the
failure by it to comply with or satisfy in any material respect
any covenant or agreement to be complied with or satisfied by it
under this Agreement; provided, however, that no such
notification shall affect the representations, warranties,
covenants or agreements of, or the conditions to the obligations
of, the parties hereto under this Agreement.
Section 6.14 Section 16
Matters. Prior to the Effective Time, the
Board of Directors, or an appropriate committee of non-employee
directors thereof, shall adopt a resolution consistent with the
interpretive guidance of the SEC so that the disposition by any
officer or director of the Company who is a covered Person of
the Company for purposes of Section 16 of the Exchange Act
and the rules and regulations thereunder
(Section 16) of Company Common Stock,
Options, RSUs and SARs pursuant to this Agreement and the Merger
shall be an exempt transaction for purposes of Section 16.
Prior to the Effective Time, Parents board of directors,
or an appropriate committee of non-employee directors thereof,
shall adopt a resolution consistent with the interpretive
guidance of the SEC so that the acquisition by any officer or
director of the Company who is a covered Person of the Company
for purposes of Section 16 of Parent Common Stock pursuant
to this Agreement and the Merger shall be an exempt transaction
for purposes of Section 16.
Section 6.15 State
Takeover Laws. If any fair price,
moratorium, control share acquisition,
business combination or other similar anti-takeover
statute or regulation enacted under state or federal laws in the
United States becomes or is deemed to be applicable to the
Company, Parent, Sub, the Merger or the Voting Agreement or any
other transaction contemplated by this Agreement, the Board of
Directors shall take all action necessary to render such Law
inapplicable to the foregoing.
Section 6.16 FIRPTA
Statement. The Company shall use reasonable
best efforts to deliver to Parent on or prior to the Closing
Date a statement conforming to the requirements of
Section 1.1445-2(c)(3)
of the Treasury Regulations.
Section 6.17 Further
Actions. The Company shall use reasonable
best efforts to take the actions listed on
Section 6.17 of the Disclosure Schedule prior to the
Effective Time.
A-39
ARTICLE VII
CONDITIONS
PRECEDENT
Section 7.1 Conditions
to Each Partys Obligation to Effect the
Merger. The respective obligation of each
party to effect the Merger is subject to the satisfaction or
waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This
Agreement and the Merger shall have been duly adopted by the
holders of a majority of the outstanding shares of Company
Common Stock in accordance with the DGCL (the
Stockholder Approval).
(b) No Injunctions or
Restraints. No Governmental Entity in an
Applicable Jurisdiction shall have issued or entered a temporary
restraining order, preliminary or permanent injunction or other
order that is in effect and that prohibits the consummation of
the Merger.
(c) HSR Act. The waiting period
(and any extension thereof) under the HSR Act applicable to the
Merger shall have expired or been terminated (the
Antitrust Approval).
(d) Registration Statement. The
Registration Statement shall have been declared effective and no
stop order suspending the effectiveness of the Registration
Statement shall be in effect.
Section 7.2 Additional
Conditions to Obligations of Parent and
Sub. The obligation of Parent and Sub to
effect the Merger is subject to the satisfaction or waiver by
Parent on or prior to the Closing Date of the following
additional conditions:
(a) Representations and
Warranties. (i) The representations and
warranties of the Company set forth in
Section 3.2(a) shall be true and correct in all but
de minimis respects (which for purposes of this
Section 7.2 shall mean 2% or less of the aggregate
outstanding shares of Company Common Stock on a fully diluted
basis) on the date of this Agreement and at the Closing as
though made on and as of the Closing Date (except to the extent
that such representation and warranty speaks as of a particular
date, in which case such representation and warranty shall be
true and correct as of that date), and (ii) the other
representations and warranties of the Company set forth in this
Agreement shall be true and correct (without giving effect to
any limitation as to materiality or Company
Material Adverse Effect set forth therein) on the date of
this Agreement and at the Closing as though made on and as of
the Closing Date (except to the extent that such representation
and warranty speaks as of a particular date, in which case such
representation and warranty shall be true and correct as of that
date), except where the failure of the representations and
warranties to so be true and correct has not had and would not
reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Parent shall have
received a certificate to such effect signed on behalf of the
Company by an executive officer of the Company.
(b) Performance of
Obligations. The Company shall have performed
or complied with, in all material respects, its obligations and
covenants required to be performed or complied with by it under
this Agreement at or prior to the Closing, and Parent shall have
received a certificate signed on behalf of the Company by an
executive officer of the Company to such effect.
(c) Absence of Material Adverse
Effect. Since the date of this Agreement,
there shall not have occurred any Company Material Adverse
Effect, and Parent shall have received a certificate signed on
behalf of the Company by an executive officer of the Company to
such effect.
(d) Related Agreements. The
Related Agreements shall be in full force and effect in
accordance with their terms.
Section 7.3 Additional
Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is subject to the
satisfaction or waiver by the Company on or prior to the Closing
Date of the following additional conditions:
(a) Representations and
Warranties. The representations and
warranties of Parent set forth in this Agreement shall be true
and correct (without giving effect to any limitation as to
materiality or Parent Material Adverse
Effect set forth therein) on the date of this Agreement
and at the Closing as though made on and as of the
A-40
Closing Date (except to the extent that such representation and
warranty speaks as of a particular date, in which case such
representation and warranty shall be true and correct as of that
date), except where the failure of the representations and
warranties to so be true and correct has not had and would not
reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect. The Company shall
have received a certificate to such effect signed on behalf of
Parent by an executive officer of Parent.
(b) Performance of
Obligations. Parent and Sub shall have
performed or complied with, in all material respects, its
obligations and covenants required to be performed or complied
with by them under this Agreement at or prior to Closing, and
the Company shall have received a certificate signed on behalf
of Parent and Sub by an executive officer of each of Parent and
Sub to such effect.
(c) Absence of Material Adverse
Effect. Since the date of this Agreement,
there shall not have occurred any Parent Material Adverse
Effect, and the Company shall have received a certificate signed
on behalf of Parent by an executive officer of Parent to such
effect.
(d) CVR Agreement. The CVR
Agreement shall have been duly executed and delivered by Parent
and the Trustee and be in full force and effect.
(e) Listing. The shares of Parent
Common Stock being issued in the Merger shall have been approved
for listing (subject to notice of issuance) for trading on
NASDAQ.
Section 7.4 Frustration
of Closing Conditions. None of the Company,
Parent or Sub may rely on the failure of any condition precedent
set forth in this ARTICLE VII to be satisfied if
such failure was caused by such partys failure to comply
with its obligations set forth in this Agreement to consummate
and make effective the transactions provided for herein, as
required by and subject to Section 6.5.
Section 7.5 Invoking
Certain Provisions. If Parent and Sub wish to
invoke any of the conditions set forth in
Section 7.2 as a basis not to consummate the Merger,
Parent or Sub, as applicable, will have the burden of proof to
establish that such condition has not been satisfied; provided,
that if Parent and Sub satisfy the burden of proof that a
Company Material Adverse Effect has occurred (without regard to
the exclusions applicable thereto), the Company will have the
burden of proof to establish that any exclusion in the
definition of Company Material Adverse Effect is applicable. If
the Company wishes to invoke any of the conditions set forth in
Section 7.3 as a basis not to consummate the Merger,
the Company will have the burden of proof to establish that such
condition has not been satisfied; provided, that if the Company
satisfies the burden of proof that a Parent Material Adverse
Effect has occurred (without regard to the exclusions applicable
thereto), Parent will have the burden of proof to establish that
any exclusion in the definition of Parent Material Adverse
Effect is applicable.
ARTICLE VIII
TERMINATION,
AMENDMENT AND WAIVER
Section 8.1 Termination. This
Agreement may be terminated at any time prior to the Effective
Time, whether before or after receipt of the Stockholder
Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Closing shall not have occurred on or before
March 31, 2011 (the Termination Date);
provided, however, that the right to terminate this
Agreement under this Section 8.1(b)(i) shall not be
available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before the Termination
Date; or
(ii) if any Governmental Entity in an Applicable
Jurisdiction shall have issued or entered a permanent injunction
or other order that is in effect preventing or prohibiting the
consummation of the Merger and such injunction or order shall
have become final and nonappealable; provided that the right to
terminate this Agreement pursuant to this
Section 8.1(b)(ii) shall not be available to any
party whose failure to fulfill any obligation under this
A-41
Agreement (including such partys obligations set forth in
Section 6.5) has been the cause of, or resulted in,
such action; or
(iii) if, upon a vote at a duly held Company Stockholder
Meeting (including any postponement or adjournment thereof) to
obtain the Stockholder Approval in accordance with this
Agreement, the Stockholder Approval is not obtained;
(c) by Parent, if (i) the Company breaches or fails to
perform any of its representations, warranties, covenants or
obligations contained in this Agreement, in any case, as a
result of which a condition set forth in
Section 7.2(a) or Section 7.2(b) will
not be able to be satisfied prior to or as of the Termination
Date (provided that Parent or Sub is not then in breach of any
representation, warranty or covenant contained in this Agreement
such that the conditions set forth in Section 7.3(a)
or Section 7.3(b) would not then be satisfied), or
(ii) the Company breaches or fails to perform in any
material respect its obligations under Section 6.3;
(d) by Parent, prior to the Company Stockholder Meeting, if
(i) the Board of Directors shall have publicly withdrawn
its approval or recommendation of this Agreement or the Merger
or shall have publicly recommended to the stockholders of the
Company any Acquisition Proposal, or (ii) a tender or
exchange offer, that if successful, would result in any Person
or group becoming the beneficial owner of 15% or more of the
outstanding Company Stock, has been commenced (other than by
Parent or any Affiliate of Parent) and the Board of Directors
fails to recommend that the stockholders of the Company not
tender their shares in such tender or exchange offer within 10
Business Days of such commencement;
(e) by the Company, prior to the date on which the
Stockholder Approval is obtained, in order to concurrently enter
into a definitive agreement with respect to a Superior Proposal,
provided that the Company shall have complied in all material
respects with the terms of Section 6.3 and
concurrently pays to Parent all amounts payable pursuant to
Section 6.7(b); or
(f) by the Company, if Parent or Sub breaches or fails to
perform any of its representations, warranties, covenants or
obligations contained in this Agreement, in any case, as a
result of which a condition set forth in
Section 7.3(a) or Section 7.3(b) will
not be able to be satisfied prior to or as of the Termination
Date (provided that the Company is not then in material breach
of any representation, warranty or covenant contained in this
Agreement).
Section 8.2 Effect
of Termination. In the event of termination
of this Agreement by either the Company or Parent as provided in
Section 8.1, this Agreement shall forthwith become
void and have no effect, without any liability or obligation on
the part of Parent, Sub or the Company, other than the last
sentence of Section 6.4, Section 6.7,
this Section 8.2 and Article IX, which
provisions shall survive such termination, and provided that
nothing herein shall relieve any party from liability for any
fraud or willful and material breach hereof. For purposes
hereof, a willful and material breach shall
mean a material breach that is a consequence of an act
undertaken by a breaching party with the knowledge (actual or
constructive) that the taking of such action would, or would
reasonably be expected to, give rise to a breach hereof.
Section 8.3 Amendment. Subject
to applicable Law, this Agreement may be amended, modified or
supplemented by the parties at any time before or after receipt
of the Stockholder Approval. This Agreement may not be amended,
modified or supplemented except by an instrument in writing
signed on behalf of each of the parties.
Section 8.4 Extension;
Waiver. At any time prior to the Effective
Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations
and warranties of the other parties contained in this Agreement
or in any document delivered pursuant to this Agreement or
(c) subject to the proviso of Section 8.3,
waive compliance with any of the agreements of the other parties
or conditions in favor of such party contained in this Agreement
(provided, that a waiver must be in writing and signed by the
party against whom the waiver is to be effective). Any agreement
on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement
to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
A-42
Section 8.5 Procedure
for Termination, Amendment, Extension or
Waiver. A termination of this Agreement
pursuant to Section 8.1, an amendment of this
Agreement pursuant to Section 8.3 or an extension or
waiver pursuant to Section 8.4 shall, in order to be
effective, require in the case of Parent, Sub or the Company,
action by its board of directors or the duly authorized designee
of its board of directors.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Non-Survival
of Representations, Warranties and
Agreements. All representations and
warranties set forth in this Agreement or in any instrument
delivered pursuant to this Agreement shall terminate at the
Effective Time. None of the covenants or agreements of the
parties in this Agreement shall survive the Effective Time,
other than (a) the covenants and agreements of the parties
contained in this ARTICLE IX, in
ARTICLE II and in Section 6.2 and
Section 6.6, and (b) those other covenants and
agreements contained herein that by their terms apply, or that
are to be performed in whole or in part, after the Effective
Time, which shall survive the consummation of the Merger until
fully performed.
Section 9.2 Notices. Except
for notices that are specifically required to be delivered
orally, all notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed
given (a) on the date of delivery, if delivered in person
or by facsimile or
e-mail (upon
confirmation of receipt) prior to 5:00 p.m. in the time
zone of the receiving party or on the next Business Day, if
delivered after 5:00 p.m. in the time zone of the receiving
party, (b) on the first Business Day following the date of
dispatch, if delivered by a recognized overnight courier service
(upon proof of delivery) or (c) on the fifth Business Day
following the date of mailing, if delivered by registered or
certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Company:
|
|
|
|
Abraxis BioScience Inc.
11755 Wilshire Blvd., 20th Floor
Los Angeles, CA 90025
Tel: 310.883.1300
Fax: 310.998.8553
Attention:
|
Dr. Patrick Soon-Shiong, Executive Chairman
pss@abraxisbio.com
|
with copies to:
|
|
|
|
Abraxis BioScience Inc.
11755 Wilshire Blvd., 20th Floor
Los Angeles, CA 90025
Tel: 310.883.1300
Fax: 310.998.8553
Attention:
|
Charles Kim, General Counsel
CKim@abraxisbio.com
|
and
|
|
|
|
Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza
New York, New York 10004
Tel: 212.859.8000
Fax: 212.859.4000
Attention:
|
Philip Richter, Esq.
philip.richter@friedfrank.com
Brian Mangino, Esq.
brian.mangino@friedfrank.com
|
A-43
If to Parent or Sub:
|
|
|
|
Celgene Corporation
86 Morris Avenue
Summit, New Jersey 07901
Tel: 908.673.9000
Fax: 908.673.2769
Attention:
|
George Golumbeski, Senior Vice President Business Development
ggolumbeski@celgene.com
|
with copies to:
|
|
|
|
Celgene Corporation
86 Morris Avenue
Summit, New Jersey 07901
Tel: 908.673.9000
Fax: 908.673.2771
Attention:
|
Thomas Perone, Corporate Counsel
tperone@celgene.com
|
and
|
|
|
|
Jones Day
3161 Michelson Drive
Suite 800
Irvine, CA 92612
Tel: 949.851.3939
Fax: 949.553.7539
Attention:
|
Jonn R. Beeson, Esq.
jbeeson@jonesday.com
Kevin Espinola, Esq.
kbespinola@jonesday.com
|
or to such other address as any party may have furnished to the
other parties in writing in accordance with this
Section 9.2.
Section 9.3 Specific
Performance. The parties hereby acknowledge
and agree that the failure of any party to perform its
agreements and covenants hereunder in accordance with their
specific terms, including its failure to take all actions as are
necessary on its part to consummate the transactions
contemplated hereby, will cause irreparable injury to the other
party, for which damages, even if available, will not be an
adequate remedy. Accordingly, each party hereby consents to the
issuance of temporary, preliminary and permanent injunctive
relief in any court of the United States or any state having
jurisdiction to compel performance of such partys
obligations, or to prevent breaches or threatened breaches of
this Agreement, and to the granting by any such court of the
remedy of specific performance of its obligations hereunder,
without, in any such case, the requirement to post any bond or
other undertaking, in addition to any other rights or remedies
available hereunder or at law or in equity. Each of the parties
further agrees that it will not oppose, and hereby waives any
defense to, the granting of an injunction, specific performance
and other equitable relief on the basis that the other parties
have an adequate remedy at law or an award of specific
performance is not an appropriate remedy for any reason at law
or equity. Each of the parties further waives any requirement
under any Law to post security as a prerequisite to obtaining
equitable relief.
Section 9.4 Assignment;
Binding Effect. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of
Law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement shall
be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
A-44
Section 9.5 Entire
Agreement. This Agreement, the Disclosure
Schedule, the Confidentiality Agreement, the Related Agreements
constitute the entire agreement among the parties with respect
to the subject matter hereof and supersede all prior agreements
and understandings among the parties with respect thereto.
Section 9.6 Governing
Law.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO ITS RULES OF CONFLICT OF LAWS. Each of the
parties hereto (i) consents to submit itself to the
personal jurisdiction of any court of the United States located
in the State of Delaware or of the Court of Chancery in the
State of Delaware in the event any dispute arises out of this
Agreement or the transactions contemplated by this Agreement,
(ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from
any such court and (iii) agrees that, except as permitted
by Section 9.3, it will not bring any action
relating to this Agreement or the transactions contemplated by
this Agreement in any court other than a court of the United
States located in the State of Delaware or the Court of Chancery
in the State of Delaware.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED
THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 9.7 Counterparts. This
Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall
be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may
consist of a number of copies hereof each signed by less than
all, but together signed by all of the parties hereto.
Section 9.8 Headings
and Table of Contents;
Interpretation. Headings of the Articles and
Sections of this Agreement, the Table of Contents, and the Index
of Defined Terms are for the convenience of the parties only,
and shall be given no substantive or interpretive effect
whatsoever. If a term is defined as one part of speech (such as
a noun), it shall have a corresponding meaning when used as
another part of speech (such as a verb). Whenever the context so
requires, the singular shall include the plural, the plural
shall include the singular, and the use of a gender shall
include all genders. The terms hereof,
herein and hereunder and terms of like
import used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
Whenever the terms include, includes or
including are used in this Agreement, they shall be
deemed to be followed by the words without
limitation, whether or not they are in fact followed by
those words or words of like import. The terms
writing and written and terms of like
import used in this Agreement shall refer to printing, typing
and other means of reproducing words (including electronic
media) in a visible form.
Section 9.9 No
Third Party Beneficiaries. Except as provided
in Section 2.2(c) (Exchange of Certificates) and
Section 6.2 (Directors and Officers
Indemnification) and except for the right of the Company, on
behalf of its stockholders, to pursue damages in the event of
Parents or Subs breach of this Agreement, this
Agreement is not intended to, and does not, confer upon any
Person other than the parties hereto any rights or remedies
hereunder.
Section 9.10 Incorporation
of Exhibits. The Disclosure Schedule and the
Exhibits attached hereto and referred to herein are hereby
incorporated herein and made a part hereof for all purposes as
if fully set forth herein.
Section 9.11 Severability. Any
term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability
A-45
without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
Section 9.12 Subsidiaries. As
used in this Agreement, Subsidiary of any
Person means another Person, an amount of the voting securities,
other voting ownership or voting partnership interests of which
is sufficient to elect at least a majority of its board of
directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which)
is owned directly or indirectly by such Person.
Section 9.13 Person. As
used in this Agreement, Person means an
individual, corporation, partnership, joint venture, limited
liability company, association, trust, unincorporated
organization, entity (including Governmental Entity) or group
(as defined in the Exchange Act).
Section 9.14 Applicable
Jurisdictions. As used in this Agreement,
Applicable Jurisdiction means any of the
United States, the European Union, Canada or Switzerland.
Section 9.15 Knowledge
of the Company; Knowledge of Parent. As used
in this Agreement, Knowledge of the
Company means the actual knowledge of the individuals
listed in Section 9.14 of the Disclosure Schedule.
As used in this Agreement, Knowledge of
Parent means the actual knowledge of Parents
Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer and General Counsel.
Section 9.16 Mutual
Drafting. This Agreement shall be deemed to
be the joint work product of Parent, Sub, and Company, and any
rule of construction that a document shall be interpreted or
construed against a drafter of such document shall not be
applicable.
Section 9.17 Tax
Reporting. Except to the extent any portion
of any CVR Payment (as that term is defined in the CVR
Agreement) is required to be treated as imputed interest
pursuant to applicable Law, the parties hereto agree to treat
the Cash Consideration, the Stock Consideration, the CVRs and
all CVR Payments for all Tax purposes as consideration for the
shares of Common Stock, the Options, the SARs and the RSUs, and
none of the parties hereto shall take any position to the
contrary on any Tax Return or for other Tax purposes except as
required by applicable Law.
A-46
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunder
duly authorized all as of the date first written above.
CELGENE CORPORATION
Name: Robert J. Hugin
|
|
|
|
Title:
|
Chief Executive Officer
|
ARTISTRY ACQUISITION CORP.
Name: Sandesh Mahatme
|
|
|
|
Title:
|
Secretary and Treasurer
|
ABRAXIS BIOSCIENCE, INC.
|
|
|
|
By:
|
/s/ Dr. Patrick
Soon-Shiong
|
Name: Dr. Patrick Soon-Shiong
|
|
|
|
Title:
|
Executive Chairman
|
A-47
Annex B
FORM OF
CONTINGENT VALUE RIGHTS AGREEMENT
by and between
CELGENE CORPORATION
and
[TRUSTEE]
Dated as of [ ], 2010
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
|
|
|
B-1
|
|
Section 1.1
|
|
Definitions
|
|
|
B-1
|
|
Section 1.2
|
|
Compliance and Opinions
|
|
|
B-10
|
|
Section 1.3
|
|
Form of Documents Delivered to Trustee
|
|
|
B-10
|
|
Section 1.4
|
|
Acts of Holders
|
|
|
B-11
|
|
Section 1.5
|
|
Notices, etc., to Trustee and Company
|
|
|
B-11
|
|
Section 1.6
|
|
Notice to Holders; Waiver
|
|
|
B-11
|
|
Section 1.7
|
|
Conflict with Trust Indenture Act
|
|
|
B-12
|
|
Section 1.8
|
|
Effect of Headings and Table of Contents
|
|
|
B-12
|
|
Section 1.9
|
|
Benefits of Agreement
|
|
|
B-12
|
|
Section 1.10
|
|
Governing Law
|
|
|
B-12
|
|
Section 1.11
|
|
Legal Holidays
|
|
|
B-12
|
|
Section 1.12
|
|
Separability Clause
|
|
|
B-12
|
|
Section 1.13
|
|
No Recourse Against Others
|
|
|
B-12
|
|
Section 1.14
|
|
Counterparts
|
|
|
B-13
|
|
Section 1.15
|
|
Acceptance of Trust
|
|
|
B-13
|
|
|
|
|
|
|
ARTICLE 2
SECURITY FORMS
|
|
|
B-13
|
|
Section 2.1
|
|
Forms Generally
|
|
|
B-13
|
|
|
|
|
|
|
ARTICLE 3 THE
SECURITIES
|
|
|
B-13
|
|
Section 3.1
|
|
Title and Terms
|
|
|
B-13
|
|
Section 3.2
|
|
Registrable Form
|
|
|
B-14
|
|
Section 3.3
|
|
Execution, Authentication, Delivery and Dating
|
|
|
B-14
|
|
Section 3.4
|
|
Temporary Securities
|
|
|
B-15
|
|
Section 3.5
|
|
Registration, Registration of Transfer and Exchange
|
|
|
B-15
|
|
Section 3.6
|
|
Mutilated, Destroyed, Lost and Stolen Securities
|
|
|
B-16
|
|
Section 3.7
|
|
Payments with respect to CVR Certificates
|
|
|
B-16
|
|
Section 3.8
|
|
Persons Deemed Owners
|
|
|
B-16
|
|
Section 3.9
|
|
Cancellation
|
|
|
B-16
|
|
|
|
|
|
|
ARTICLE 4 THE
TRUSTEE
|
|
|
B-16
|
|
Section 4.1
|
|
Certain Duties and Responsibilities
|
|
|
B-16
|
|
Section 4.2
|
|
Certain Rights of Trustee
|
|
|
B-17
|
|
Section 4.3
|
|
Notice of Default
|
|
|
B-18
|
|
Section 4.4
|
|
Not Responsible for Recitals or Issuance of Securities
|
|
|
B-18
|
|
Section 4.5
|
|
May Hold Securities
|
|
|
B-18
|
|
Section 4.6
|
|
Money Held in Trust
|
|
|
B-18
|
|
Section 4.7
|
|
Compensation and Reimbursement
|
|
|
B-18
|
|
Section 4.8
|
|
Disqualification; Conflicting Interests
|
|
|
B-18
|
|
Section 4.9
|
|
Corporate Trustee Required; Eligibility
|
|
|
B-19
|
|
Section 4.10
|
|
Resignation and Removal; Appointment of Successor
|
|
|
B-19
|
|
Section 4.11
|
|
Acceptance of Appointment of Successor
|
|
|
B-20
|
|
Section 4.12
|
|
Merger, Conversion, Consolidation or Succession to Business
|
|
|
B-20
|
|
Section 4.13
|
|
Preferential Collection of Claims Against Company
|
|
|
B-20
|
|
B-i
|
|
|
|
|
|
|
ARTICLE 5
HOLDERS LISTS AND REPORTS BY THE TRUSTEE AND COMPANY
|
|
|
B-20
|
|
Section 5.1
|
|
Company to Furnish Trustee Names and Addresses of Holders
|
|
|
B-20
|
|
Section 5.2
|
|
Preservation of Information; Communications to Holders
|
|
|
B-20
|
|
Section 5.3
|
|
Reports by Trustee
|
|
|
B-21
|
|
Section 5.4
|
|
Reports by Company
|
|
|
B-21
|
|
|
|
|
|
|
ARTICLE 6
AMENDMENTS
|
|
|
B-22
|
|
Section 6.1
|
|
Amendments Without Consent of Holders
|
|
|
B-22
|
|
Section 6.2
|
|
Amendments with Consent of Holders
|
|
|
B-22
|
|
Section 6.3
|
|
Execution of Amendments
|
|
|
B-23
|
|
Section 6.4
|
|
Effect of Amendments; Notice to Holders
|
|
|
B-23
|
|
Section 6.5
|
|
Conformity with Trust Indenture Act
|
|
|
B-23
|
|
Section 6.6
|
|
Reference in Securities to Amendments
|
|
|
B-23
|
|
|
|
|
|
|
ARTICLE 7
COVENANTS
|
|
|
B-23
|
|
Section 7.1
|
|
Payment of Amounts, if any, to Holders
|
|
|
B-23
|
|
Section 7.2
|
|
Maintenance of Office or Agency
|
|
|
B-24
|
|
Section 7.3
|
|
Money for Security Payments to Be Held in Trust
|
|
|
B-24
|
|
Section 7.4
|
|
Certain Purchases and Sales
|
|
|
B-24
|
|
Section 7.5
|
|
Books and Records
|
|
|
B-24
|
|
Section 7.6
|
|
Audits
|
|
|
B-25
|
|
Section 7.7
|
|
Listing of CVRs
|
|
|
B-25
|
|
Section 7.8
|
|
Conflicting Arrangements
|
|
|
B-26
|
|
Section 7.9
|
|
Product Transfer
|
|
|
B-26
|
|
Section 7.10
|
|
Milestones
|
|
|
B-26
|
|
Section 7.11
|
|
Product Sale and Development
|
|
|
B-26
|
|
Section 7.12
|
|
Notice of Default
|
|
|
B-26
|
|
Section 7.13
|
|
Confidentiality
|
|
|
B-26
|
|
Section 7.14
|
|
Non-Use of Name
|
|
|
B-27
|
|
|
|
|
|
|
ARTICLE 8
REMEDIES OF THE TRUSTEE AND HOLDERS ON EVENT OF DEFAULT
|
|
|
B-27
|
|
Section 8.1
|
|
Event of Default Defined; Waiver of Default
|
|
|
B-27
|
|
Section 8.2
|
|
Collection by the Trustee; the Trustee May Prove Payment
Obligations
|
|
|
B-28
|
|
Section 8.3
|
|
Application of Proceeds
|
|
|
B-29
|
|
Section 8.4
|
|
Suits for Enforcement
|
|
|
B-29
|
|
Section 8.5
|
|
Restoration of Rights on Abandonment of Proceedings
|
|
|
B-30
|
|
Section 8.6
|
|
Limitations on Suits by Holders
|
|
|
B-30
|
|
Section 8.7
|
|
Unconditional Right of Holders to Institute Certain Suits
|
|
|
B-30
|
|
Section 8.8
|
|
Powers and Remedies Cumulative; Delay or Omission Not Waiver of
Default
|
|
|
B-30
|
|
Section 8.9
|
|
Control by Holders
|
|
|
B-30
|
|
Section 8.10
|
|
Waiver of Past Defaults
|
|
|
B-31
|
|
Section 8.11
|
|
The Trustee to Give Notice of Default, But May Withhold in
Certain Circumstances
|
|
|
B-31
|
|
Section 8.12
|
|
Right of Court to Require Filing of Undertaking to Pay Costs
|
|
|
B-31
|
|
B-ii
|
|
|
|
|
|
|
ARTICLE 9
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
|
|
|
B-31
|
|
Section 9.1
|
|
Company May Consolidate, etc., on Certain Terms
|
|
|
B-31
|
|
Section 9.2
|
|
Successor Person Substituted
|
|
|
B-31
|
|
Section 9.3
|
|
Opinion of Counsel to the Trustee
|
|
|
B-32
|
|
Section 9.4
|
|
Successors
|
|
|
B-32
|
|
|
|
|
|
|
ARTICLE 10
SUBORDINATION
|
|
|
B-32
|
|
Section 10.1
|
|
Agreement to Subordinate
|
|
|
B-32
|
|
Section 10.2
|
|
Liquidation; Dissolution; Bankruptcy
|
|
|
B-32
|
|
Section 10.3
|
|
Default on Senior Obligations
|
|
|
B-33
|
|
Section 10.4
|
|
When Distribution Must Be Paid Over
|
|
|
B-33
|
|
Section 10.5
|
|
Notice by Company
|
|
|
B-33
|
|
Section 10.6
|
|
Subordination Effective Notwithstanding Deficiencies with
Respect to Senior Obligations; Waiver of Right to Contest Senior
Obligation; Reinstatement of Subordination Provisions
|
|
|
B-34
|
|
Section 10.7
|
|
Subrogation
|
|
|
B-34
|
|
Section 10.8
|
|
Relative Rights
|
|
|
B-34
|
|
Section 10.9
|
|
Subordination May Not Be Impaired by Company
|
|
|
B-34
|
|
Section 10.10
|
|
Distribution or Notice to Representative
|
|
|
B-34
|
|
Section 10.11
|
|
Rights of the Trustee
|
|
|
B-35
|
|
Section 10.12
|
|
Authorization to Effect Subordination
|
|
|
B-35
|
|
Section 10.13
|
|
Amendments
|
|
|
B-35
|
|
|
|
|
|
|
ARTICLE 11
REDEMPTION OF SECURITIES
|
|
|
B-35
|
|
Section 11.1
|
|
Notice to Trustee
|
|
|
B-35
|
|
Section 11.2
|
|
Selection of Securities to be Redeemed
|
|
|
B-35
|
|
Section 11.3
|
|
Notice of Redemption
|
|
|
B-35
|
|
Section 11.4
|
|
Effect of Notice of Redemption
|
|
|
B-36
|
|
Section 11.5
|
|
Deposit of Redemption Price
|
|
|
B-36
|
|
Section 11.6
|
|
Optional Redemption by the Company
|
|
|
B-36
|
|
Annex A Form of CVR Certificate
Note: This table of contents shall not, for any purpose, be
deemed to be a part of this CVR Agreement.
B-iii
Reconciliation and tie between Trust Indenture Act of 1939
and Contingent Value Rights Agreement, dated as of
[ ], 2010. [to be updated]
|
|
|
Trust Indenture Act Section
|
|
Agreement Section
|
|
Section 310(a)(1)
|
|
4.9
|
(a)(2)
|
|
4.9
|
(a)(3)
|
|
Not Applicable
|
(a)(4)
|
|
Not Applicable
|
(a)(5)
|
|
4.9
|
(b)
|
|
4.8, 4.10
|
Section 311(a)
|
|
4.13(a)
|
(b)
|
|
4.13(a)
|
Section 312(a)
|
|
5.1, 5.2(a)
|
(b)
|
|
5.2(b)
|
(c)
|
|
5.2(c)
|
Section 313(a)
|
|
5.3(a)
|
(b)
|
|
5.3(a)
|
(c)
|
|
5.3(a)
|
(d)
|
|
5.3(b)
|
Section 314(a)
|
|
5.4
|
(b)
|
|
Not Applicable
|
(c)(1)
|
|
1.2(a)
|
(c)(2)
|
|
1.2(a)
|
(c)(3)
|
|
Not Applicable
|
(d)
|
|
Not Applicable
|
(e)
|
|
1.2(b)
|
Section 315(a)
|
|
4.1(a), 4.1(b)
|
(b)
|
|
8.11
|
(c)
|
|
4.1(a)
|
(d)
|
|
4.1(c)
|
(d)(1)
|
|
4.1(a), 4.1(b)
|
(d)(2)
|
|
4.1(c)(ii)
|
(d)(3)
|
|
4.1(c)(iii)
|
(e)
|
|
8.12
|
Section 316(a)(last sentence)
|
|
1.15
|
(a)(1)(A)
|
|
8.9
|
(a)(1)(B)
|
|
8.10
|
(a)(2)
|
|
Not Applicable
|
(b)
|
|
8.7
|
Section 317(a)(1)
|
|
8.2
|
(a)(2)
|
|
8.2
|
(b)
|
|
7.3
|
Section 318(a)
|
|
1.7
|
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of this CVR Agreement.
B-iv
THIS CONTINGENT VALUE RIGHTS AGREEMENT, dated as of
[ ], 2010 (this CVR
Agreement), by and between Celgene Corporation, a
Delaware corporation (the Company), and
[ ], a national banking association, as trustee
(the Trustee), in favor of each person who
from time to time holds one or more Contingent Value Rights (the
Securities or CVRs)
to receive cash payments in the amounts and subject to the terms
and conditions set forth herein.
W I T N E S S E T H:
WHEREAS, this CVR Agreement is entered into pursuant to the
Agreement and Plan of Merger, dated as of June 30, 2010 (as
amended prior to the effective time thereof, the Merger
Agreement), by and among the Company, Artistry
Acquisition Corp., a Delaware corporation and wholly owned
Subsidiary of the Company (Sub), and Abraxis
BioScience, Inc., a Delaware corporation
(Abraxis);
WHEREAS, pursuant to the Merger Agreement, Sub will merge with
and into Abraxis (the Merger), with Abraxis
being the surviving corporation in the Merger and becoming a
wholly-owned Subsidiary of the Company;
WHEREAS, in the Merger, one (1) CVR will be issued in
respect of (a) each share of common stock, par value $0.001
per share, of Abraxis (Common Stock) (other
than shares of Common Stock that are Excluded Company Shares or
Dissenting Company Shares) (all as defined in the Merger
Agreement), (b) each share of Common Stock underlying each
Option (as defined in the Merger Agreement) having an exercise
price that is less than or equal to the Per Share Amount (as
defined in the Merger Agreement), (c) each share of Common
Stock underlying each Option having an exercise price that is
greater than the Per Share Amount, if such Option is exercised
and settled in accordance with the Merger Agreement,
(d) each SAR (as defined in the Merger Agreement) having a
base appreciation amount that is less than or equal to the Per
Share Amount, (e) each SAR having a base appreciation
amount that is greater than the Per Share Amount, if such SAR is
exercised and settled in accordance with the Merger Agreement,
and (f) each RSU (as defined in the Merger Agreement), in
each case, outstanding immediately prior to the Effective Time
(as defined in the Merger Agreement); and
WHEREAS, a registration statement on
Form S-4
(No. 333-[ ])
(the Registration Statement) with
respect to the CVRs has been prepared and filed by the Company
with the Commission (as defined below) and has become effective
in accordance with the Securities Act of 1933, as amended (the
Securities Act).
NOW, THEREFORE, in consideration of the foregoing premises and
the consummation of the transactions contemplated by the Merger
Agreement, it is covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as
follows:
ARTICLE 1
DEFINITIONS
AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1 Definitions. For all purposes of this CVR
Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well
as the singular;
(b) all accounting terms used herein and not expressly
defined herein shall, except as otherwise noted, have the
meanings assigned to such terms in accordance with applicable
Accounting Standards, where Accounting
Standards means (A) GAAP (United States Generally
Accepted Accounting Principles); or (B) to the extent that
the Company adopts International Financial Reporting Standards
(IFRS), then Accounting Standards means
International Financial Reporting Standards (IFRS), in either
case consistently applied;
(c) all capitalized terms used in this CVR Agreement
without definition shall have the respective meanings ascribed
to them in the Merger Agreement;
(d) all other terms used herein which are defined in the
Trust Indenture Act (as defined herein), either directly or
by reference therein, have the respective meanings assigned to
them therein; and
B-1
(e) the words herein,
hereof and hereunder and
other words of similar import refer to this CVR Agreement as a
whole and not to any particular Article, Section or other
subdivision.
Affiliate of any specified Person
means any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with
such specified Person. For the purposes of this definition,
control when used with respect to any specified
Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and
the terms controlling and controlled
have meanings correlative to the foregoing.
Board of Directors means the board of
directors of the Company or any other body performing similar
functions, or any duly authorized committee of that board.
Board Resolution means a copy of a
resolution certified by the Secretary or an Assistant Secretary
of the Company, to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
Business Day means any day (other than
a Saturday or a Sunday) on which banking institutions in The
City of New York, New York are not authorized or obligated by
Law or executive order to close and, if the CVRs are listed on a
national securities exchange, electronic trading network or
other suitable trading platform, such exchange, electronic
network or other trading platform is open for trading.
Call Notice shall have the meaning set
forth in Section 11.3 of this CVR Agreement.
Combination Product means any product
that comprises a Product sold in conjunction with another active
component (whether packaged together or in the same therapeutic
formulation or otherwise) or service.
Commission means the Securities and
Exchange Commission, as from time to time constituted, created
under the Exchange Act (as defined herein), or if at any time
after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the
Trust Indenture Act, then the body performing such duties
at such time.
Common Stock shall have the meaning
set forth in the Recitals of this CVR Agreement.
Company means the Person (as defined
herein) named as the Company in the first paragraph
of this CVR Agreement, until a successor Person shall have
become such pursuant to the applicable provisions of this CVR
Agreement, and thereafter Company shall mean such
successor Person. To the extent necessary to comply with the
requirements of the provisions of Trust Indenture Act
Sections 310 through 317, inclusive, to the extent that
they are applicable to the Company, the term Company
shall include any other obligor with respect to the Securities
for the purposes of complying with such provisions.
Company Request or Company
Order means a written request or order signed in
the name of the Company by the chairman of the Board of
Directors or the president or any vice president, the controller
or assistant controller and the treasurer or assistant treasurer
or the secretary or any assistant secretary, and delivered to
the Trustee.
Confidential Information shall have
the meaning set forth in Section 7.13 of this CVR Agreement.
Consent and Purchase Offer shall have
the meaning set forth in Section 11.1 of this CVR Agreement.
Corporate Trust Office means the
office of the Trustee at which at any particular time its
corporate trust business shall be principally administered,
which office at the date of execution of this CVR Agreement is
located at [ ].
CVRs shall have the meaning set forth
in the Preamble of this CVR Agreement.
CVR Agreement means this instrument as
originally executed and as it may from time to time be
supplemented or amended pursuant to the applicable provisions
hereof.
CVR Certificate means a certificate
representing any of the CVRs.
CVR Payment means any Net Sales
Payment and any Milestone Payment.
CVR Shortfall shall have the meaning
set forth in Section 7.6(b) of this CVR Agreement.
B-2
Default Interest Rate means a rate
equal to the sum of three percent (3%) plus the prime rate of
interest quoted in the Money Rates section of The Wall Street
Journal (New York Edition), or similar reputable data
source, calculated daily on the basis of a three hundred
sixty-five (365) day year or, if lower, the highest rate
permitted under applicable Law.
Diligent Efforts means, with respect
to any Product, efforts of a Person to carry out its obligations
in a diligent manner using such effort and employing such
resources normally used by such Person in the exercise of its
reasonable business discretion relating to the research,
development or commercialization of a product, that is of
similar market potential at a similar stage in its development
or product life, taking into account issues of market
exclusivity (including patent coverage, regulatory and other
exclusivity), safety and efficacy, product profile, the
competitiveness of alternate products in the marketplace or
under development, the launch or sales of a generic or
biosimilar product, the regulatory structure involved, and the
profitability of the applicable product (including pricing and
reimbursement status achieved), and other relevant factors,
including technical, commercial, legal, scientific,
and/or
medical factors.
Existing Licenses means those licenses
and related agreements (for so long as they are in effect) with
respect to the Products granted by the Company or its Affiliates
to third parties (other than the Company or its Affiliates) as
in effect immediately prior to the consummation of the Merger
(with such modifications thereto after the consummation of the
Merger that do not reduce the amounts of royalties, milestone
payments or profit split payments thereunder).
Event of Default shall have the
meaning set forth in Section 8.1 of this CVR Agreement.
Exchange Act means the Securities
Exchange Act of 1934, as amended.
Exchange Act Documents shall have the
meaning set forth in Section 5.4 of this CVR Agreement.
FDA means the United States Food and
Drug Administration or any successor agency.
Governmental Entity means any domestic
(federal or state), or foreign court, commission, governmental
body, regulatory or administrative agency or other political
subdivision thereof.
Holder means a Person in whose name a
Security is registered in the Security Register.
Independent Accountant shall have the
meaning set forth in Section 7.6(a) of this CVR Agreement.
Indications means U.S. Regulatory
Approval of the Product described in clause (a) of the
definition of Product for use in the treatment of:
(i) melanoma; (ii) ovarian cancer; (iii) bladder
cancer; and (iv) first-line metastatic breast cancer.
Junior Obligations has the meaning set
forth in Section 10.1.
Law means any foreign, federal, state,
local or municipal laws, rules, judgments orders, regulations,
statutes, ordinances, codes, decisions, injunctions, orders,
decrees or requirements of any Governmental Entity.
Majority Holders means, at the time of
determination, Holders of at least a majority of the Outstanding
CVRs.
Merger shall have the meaning set
forth in the Recitals of this CVR Agreement.
Merger Agreement shall have the
meaning set forth in the Recitals of this CVR Agreement.
Milestone means each of
(i) Milestone #1, and (ii) Milestone #2.
Milestone #1 means
U.S. Regulatory Approval of the Product described in
clause (a) of the definition of Product for use
in the treatment of non-small cell lung cancer (NSCLC), which
U.S. Regulatory Approval permits the Company to market such
Product under a label that includes a progression free survival
claim, but only if the foregoing milestone is achieved no later
than the Milestone Target Date. For the avoidance of doubt, an
approvable letter or similar communication published
by the FDA shall not constitute approval for purposes of the
foregoing.
Milestone #2 means
U.S. Regulatory Approval of the Product described in
clause (a) of the definition of Product for use
in the treatment of pancreatic cancer, which
U.S. Regulatory Approval permits the Company to
B-3
market such Product under a label that includes an overall
survival claim, but only if the foregoing milestone is achieved
no later than the Milestone Target Date. For the avoidance of
doubt, an approvable letter or similar communication
published by the FDA shall not constitute approval for purposes
of the foregoing.
Milestone Payment means, as
applicable, (i) two hundred fifty million dollars
($250,000,000), with respect to the achievement of
Milestone #1; and (ii) (a) four hundred million
dollars ($400,000,000), with respect to the achievement of
Milestone #2 if Milestone #2 is achieved no later than
April 1, 2013, and (b) three hundred million dollars
($300,000,000), with respect to the achievement of
Milestone #2 if Milestone #2 is achieved after
April 1, 2013 but no later than the Milestone Target Date.
Milestone Payment Date means, with
respect to each Milestone, the date that is twenty
(20) Business Days following the date of the achievement of
such Milestone.
Milestone Target Date means the fifth
anniversary of the date of this CVR Agreement.
Net Sales means, for each Net Sales
Measuring Period, the sum of, without any duplication:
(i) the gross amounts invoiced for the Products sold by the
Company, its Affiliates or its licensees (other than licensees
under Existing Licenses) to third parties (other than the
Company, its Affiliates or its licensees) during such Net Sales
Measuring Period, including wholesale distributors, less
deductions from such amounts calculated in accordance with
Accounting Standards so as to arrive at net sales
under Accounting Standards as reported by the Company, its
Affiliate or its licensee, as applicable, in such Persons
financial statements, and further reduced by write-offs of
accounts receivables or increased for collection of accounts
that were previously written off; plus (ii) (A) the amount
of royalties and profit split payments received by the Company
or its Affiliates from their respective licensees under Existing
Licenses for sales (but not the supply) of Products sold by such
licensees to third parties (other than the Company or its
Affiliates) during such Net Sales Measuring Period, and
(B) the amount of any milestone payments received during
such Net Sales Measuring Period by the Company or its Affiliates
from their licensees under Existing Licenses with respect to the
Products.
Any and all set-offs against gross invoice prices shall be
calculated in accordance with Accounting Standards. Sales or
other commercial dispositions of a Product between the Company
and its Affiliates and its licensees shall be excluded from the
computation of Net Sales; Product provided to third parties
without charge, in connection with research and development,
clinical trials, compassionate use, humanitarian and charitable
donations, or indigent programs or for use as samples shall be
excluded from the computation of Net Sales; and no payments will
be payable on such sales or such other commercial dispositions,
except where such an Affiliate or licensee is an end user of the
Product.
Notwithstanding the foregoing, if a Product is sold or otherwise
commercially disposed of for consideration other than cash or in
a transaction that is not at arms length between the buyer
and the seller, then the gross amount to be included in the
calculation of Net Sales shall be the amount that would have
been invoiced had the transaction been conducted at arms
length and for cash. Such amount that would have been invoiced
shall be determined, wherever possible, by reference to the
average selling price of such Product in arms length
transactions in the relevant country.
Notwithstanding the foregoing, in the event a Product is sold as
a Combination Product in a particular country, Net Sales shall
be calculated by multiplying the Net Sales of the Combination
Product by the fraction A/(A+B), where A is the gross invoice
price of the Product if sold separately in a country and B is
the gross invoice price of the other product(s) included in the
Combination Product if sold separately in such country. If no
such separate sales are made by the Company, its Affiliates or
licensees in a country, Net Sales of the Combination Product
shall be calculated in a manner determined by the Company in
good faith based upon the relative value of the active
components of such Combination Product.
Net Sales Measuring Period means the
one-year period beginning January 1st of each year
during the term of this CVR Agreement and ending
December 31st of each year during the term of this CVR
Agreement; provided that the first Net Sales Measuring Period
will begin on January 1, 2011 and end on December 31,
2011.
Net Sales Payment means, with respect
to any Net Sales Measuring Period, an amount equal to
(i) two and one-half percent (2.5%) of that portion of Net
Sales of the Products that exceeds one billion dollars
B-4
($1,000,000,000) but is less than or equal to two billion
dollars ($2,000,000,000) for such period, plus (ii) an
additional amount equal to five percent (5.0%) of that portion
of Net Sales of the Products that exceeds two billion dollars
($2,000,000,000) but is less than or equal to three billion
dollars ($3,000,000,000) for such period, plus (iii) an
additional amount equal to ten percent (10.0%) of that portion
of Net Sales of the Products that exceeds three billion dollars
($3,000,000,000) for such period; provided that no Net Sales
Payments will be due following a Net Sales Payment Termination
Date.
Net Sales Payment Dates means the
fifteenth (15th) day after the date the Company is required to
provide the Net Sales Statement pursuant to Section 5.4 for
the Net Sales Measuring Period in respect of which a Net Sales
Payment is due.
Net Sales Payment Termination Date
means the last day of the Net Sales Measuring Period ending on
December 31, 2025; provided that, if Net Sales of the
Products for the Net Sales Measuring Period ending on
December 31, 2025 are equal to or greater than one billion
dollars ($1,000,000,000), then the Net Sales Payment Termination
Date shall be extended until the earlier of (a) the last
day of the first Net Sales Measuring Period subsequent to
December 31, 2025 during which Net Sales of the Products
are less than one billion dollars ($1,000,000,000) and
(b) December 31, 2030.
Net Sales Statement means, with
respect to each Net Sales Measuring Period, the written
statement of the Company, certified by the Chief Financial
Officer of the Company and setting forth with reasonable detail
(i)(a), for the Products for all countries in the aggregate,
(X) the total of the gross invoice price charged by the
Company, its Affiliates and its licensees (other than licensees
under Existing Licenses) for sales of the Products by the
Company, its Affiliates and their respective licensees (other
than licensees under Existing Licenses) to third parties (other
than the Company or its Affiliates) during the applicable
period, (Y) an itemized calculation of Net Sales for the
Products showing deductions for such Net Sales Measuring Period
provided for in accordance with the definition of Net Sales, and
(Z)(1) the total of all royalties and profit split payments
received by the Company and its Affiliates from their respective
licensees under Existing Licenses for sales of the Products by
their respective licensees during the applicable period, and
(2) the amount of any milestone payments received during
such Net Sales Measuring Period by the Company or its Affiliates
from their licensees under Existing Licenses with respect to the
Products, (b) to the extent that Net Sales for the Products
for an applicable period is determined based on Net Sales of a
Combination Product for such period, the method of determining
the Net Sales of the Combination Product attributable to the
Products in accordance with the definition of Net Sales, and
(c) to the extent that sales for the Products for an
applicable period is recorded in currencies other than United
States dollars, the exchange rates used for conversion of such
foreign currency into United States dollars and (ii) the
calculation of the Net Sales Payment due, if any, in respect of
the applicable Net Sales Measuring Period in accordance with
this CVR Agreement.
Officers Certificate when used
with respect to the Company means a certificate signed by the
chairman of the Board of Directors or the president or any vice
president, the controller or assistant controller and the
treasurer or assistant treasurer or the secretary or any
assistant secretary of the Company delivered to the Trustee or
any other person authorized to act on behalf of the Company.
Opinion of Counsel means a written
opinion of counsel, who may be counsel for the Company.
Outstanding when used with respect to
Securities means, as of the date of determination, all
Securities theretofore authenticated and delivered under this
CVR Agreement, except: (i) Securities theretofore cancelled
by the Trustee or delivered to the Trustee for cancellation and
(ii) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to
this CVR Agreement, other than any such Securities in respect of
which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide
purchaser in whose hands the Securities are valid obligations of
the Company; provided, however, that in determining whether the
Holders of the requisite Outstanding Securities have given any
request, demand, direction, consent or waiver hereunder,
Securities owned by the Company or any Affiliate of the Company,
whether held as treasury securities or otherwise, shall be
disregarded and deemed not to be Outstanding.
Party shall mean the Trustee, the
Company
and/or
Holder(s), as applicable.
Paying Agent means any Person
authorized by the Company to pay the amount determined pursuant
to Section 3.1, if any, on any Securities on behalf of the
Company.
B-5
Payment Date means any Net Sales
Payment Date, any Milestone Payment Date, and any such date as
shall be required for any CVR Shortfall payment pursuant to the
review procedure set forth in Section 7.6.
Person means any individual,
corporation, partnership, joint venture, association,
joint-stock company, trust, limited liability company,
unincorporated organization or government or any agency or
political subdivision thereof.
Products means each of:
(a) the pharmaceutical product comprising the chemical
compound having the chemical name of
5β,20-Epoxy-1,2a,4,7β,10β,13a-hexahydroxytax-11-en-9-one
4,10-diacetate 2-benzoate 13-ester with
(2R,3S)-N-benzoyl-3-phenylisoserine (with the structure below),
known by the generic name paclitaxel and bound to
albumin that is the subject of the New Drug Application
No. 21-660
filed with the FDA and subject of the European Medicines Agency
Marketing Authorization granted on January 11, 2008,
together with all amendments and supplements to such FDA and
European Medicines Agency approvals (identified by the Company
as ABRAXANE); provided that in all cases such Product is an
injectable formulation.
(b) the pharmaceutical product comprising the chemical
compound having the chemical name of
(2R,3S)-N-carboxy-3-phenylisoserine,N-tert-butyl ester,
13-ester with 5β-20-epoxy-1,2 ,4,7β,10β,13
-hexahydroxytax-11-en-9-one
4-acetate
2-benzoate, anhydrous(with the structure below) bound to albumin
that is the subject of the Investigational New Drug Application
No. 73,527 filed with the FDA together with all amendments
(identified by the Company as nab-docetaxel
(ABI-008)); provided that in all cases such Product is an
injectable formulation.
(c) the pharmaceutical product comprising the chemical
compound having the chemical name of (3S, 6R,
7E, 9R, 10R, 12R, 14S,
15E, 17E, 19E, 21S, 23S,
26R, 27R, 34aS)-9, 10, 12, 13, 14, 21, 22,
23, 24, 25, 26, 27, 32, 33, 34,
34a-hexadecahydro-9,27-dihydroxy-3-[(1R)-2-[(1S,
3R,
4R)-4-hydroxy-3-methoxycyclohexyl]-1-methylethyl]-10,21-dimethoxy-6,
8, 12, 14, 20, 26-hexamethyl-23, 27-epoxy-3H-pyrido[2,
1-c][1,4] oxaazacyclohentriacontine -1, 5, 11, 28, 29
(4H,6H,31H)-pentone (with the structure below) bound to albumin
that is the subject of the Investigational New Drug Application
No. 74.610 filed with the FDA together with all amendments
(identified by the Company as nab-rapamycin
(ABI-009)); provided that in all cases such Product is an
injectable formulation.
B-6
(d) the pharmaceutical product comprising the chemical
compound having the chemical name of
17-allylamino-17-demethoxygeldanamycin,
17-allylamino
geldanamycin (with the structure below) bound to albumin that is
the subject of the Investigational New Drug Application
No. 78,298 filed with the FDA together with all amendments
(identified by the Company as nab-17AAG (ABI-010));
provided that in all cases such Product is an injectable
formulation.
(e) the pharmaceutical product comprising the chemical
compound having the chemical name of
N-(1,2,3-trimethoxy-10-methylsulfanyl-9-oxo-5,6,7,9-tetrahydro-benzo[a]heptalen-7-yl)-3-[3-(1,2,3-trimethoxy-10-methylsulfanyl-9-oxo-5,6,7,9-tetrahydro-benzo[a]heptalen-7-yl)-ureido]-propionamide(with
the structure below) bound to albumin that is the subject of the
Investigational New Drug Application No. 103,698
B-7
filed with the FDA together with all amendments (identified by
the Company as nab-thiocolchicine dimer (ABI-011));
provided that in all cases the Product is an injectable
formulation.
(f) the pharmaceutical product comprising the chemical
compound having the chemical name of (αR,
βS)-β-[[(1,1-Dimethylethoxy)carbonyl]amino]-α-(hexanoyloxy)benzenepropanoic
acid
(2aR,4S,4aS,6R,9S,11S,12S,12aR,12bS)-12b-(acetyloxy)-12-(benzoyloxy)-2a,3,4,4a,5,6,9,10,11,12,
12a,12b-dodecahydro-4,6,11-trihydroxy-4a,8,13,13-tetramethyl-5-oxo-7,11-methano-1H-cyclodecal[3,4]
benz[1, 2-b]oxet-9-yl ester (with the structure below) bound to
albumin (identified by the Company as
nab-novel
taxane (ABI-013)) provided that in all cases the Product
is an injectable formulation.
(g) the pharmaceutical product comprising the chemical
compound having the chemical name of Benzenepropanoic acid,
β-(benzoylamino)-α-hydroxy-,6,12bbis(acetyloxy)-12-(benzoyloxy)-2a,3,4,4a,5,6,9,
10,11,12,12a,12bdodecahydro-4,11-dihydroxy-4a,8,13,13-tetramethyl-5-oxo-7,11-methano-1H-cyclodeca
[3,4]benz[1,2-b]-oxet-9-yl
ester,[2aR-[2aα,4β,4aβ,
6β,9α(αR*,βS*),11α,12α,12aα,
12bα]] bound to albumin that is the subject of the
Investigational New Drug Application No. 63,082 filed with
the FDA together with all amendments (identified by the Company
as COROXANE); provided that in all cases the Product
is an injectable formulation.
Redemption Eligibility Date means
the date that fifty percent (50%) of the Securities issued
pursuant to the terms of the Merger Agreement either are
(i) no longer Outstanding,
and/or
(ii) repurchased, acquired, redeemed or retired by the
Company.
Registration Statement shall have the
meaning set forth in the Recitals of this CVR Agreement.
Regulatory Approval means all
approvals from the FDA or other
non-U.S. regulatory
authority necessary for the commercial manufacture, marketing
and sale of a product in the United States or other jurisdiction
in accordance with applicable Law.
Representatives shall have the meaning
set forth in Section 7.13 of this CVR Agreement.
Responsible Officer when used with
respect to the Trustee means any officer assigned to the
Corporate Trust Office and also means, with respect to any
particular corporate trust matter, any other officer of the
Trustee to whom such matter is referred because of his knowledge
of and familiarity with the particular subject.
Securities shall have the meaning set
forth in the Preamble of this CVR Agreement.
B-8
Securities Act shall have the meaning
set forth in the Recitals of this CVR Agreement.
Security Register shall have the
meaning set forth in Section 3.5(a) of this CVR Agreement.
Senior Obligations means any existing
or future obligations of the Company, including the principal
of, premium (if any), interest (including, without limitation,
any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with
respect thereto, whether or not such interest is an allowed
claim under applicable Law) on, and all other amounts owing
thereon, (i) with respect to borrowed money,
(ii) evidenced by notes, debentures, bonds or other similar
debt instruments, (iii) with respect to the net obligations
owed under interest rate swaps or similar agreements or currency
exchange transactions, (iv) reimbursement obligations in
respect of letters of credit and similar obligations,
(v) in respect of capital leases, or (vi) guarantees
in respect of obligations referred to in clauses (i)
through (v) above; unless, in any case, the instrument
creating or evidencing the same or pursuant to which the same is
outstanding provides that such obligations are pari passu to or
subordinate in right of payment to the Securities.
Notwithstanding the foregoing, Senior Obligations
shall not include:
(a) Junior Obligations;
(b) trade debt incurred in the ordinary course of business;
(c) any intercompany indebtedness between the Company and
any of its Subsidiaries or Affiliates;
(d) indebtedness of the Company that is subordinated in
right of payment to Senior Obligations;
(e) indebtedness or other obligations of the Company that
by its terms ranks equal or junior in right of payment to the
Junior Obligations;
(f) indebtedness of the Company that, by operation of Law,
is subordinate to any general unsecured obligations of the
Company; and
(g) indebtedness evidenced by any guarantee of indebtedness
ranking equal or junior in right of payment to the Junior
Obligations.
Shortfall Interest Rate means a rate
equal to the sum of two percent (2%) plus the prime rate of
interest quoted in the Money Rates section of The Wall Street
Journal (New York Edition), or similar reputable data
source, calculated daily on the basis of a three hundred
sixty-five (365) day year or, if lower, the highest rate
permitted under applicable Law.
Shortfall Report shall have the
meaning set forth in Section 7.6(b) of this CVR Agreement.
Sub shall have the meaning set forth
in the Recitals of this CVR Agreement.
Subsidiary means, with respect to any
Person, any corporation, limited liability company, association,
partnership or other business entity of which more than fifty
percent (50%) of the total voting power of shares of Voting
Securities is at the time owned or controlled, directly or
indirectly, by: (i) such Person; (ii) such Person and
one or more Subsidiaries of such Person; or (iii) one or
more Subsidiaries of such Person.
Tax means any federal, state, local or
foreign income, profits, gross receipts, license, payroll,
employment, severance, stamp, occupation, premium, windfall
profits, environmental, customs duty, capital stock, franchise,
sales, social security, unemployment, disability, use, property,
withholding, excise, transfer, registration, production, value
added, alternative minimum, occupancy, estimated or any other
tax of any kind whatsoever, together with any interest, penalty
or addition thereto, imposed by any Governmental Entity
responsible for the imposition of any such tax, whether disputed
or not.
Tax Return means any return, report,
declaration, claim or other statement (including attached
schedules) relating to Taxes.
Trust Indenture Act means the
Trust Indenture Act of 1939, as amended from time to time.
B-9
Trustee means the Person named as the
Trustee in the first paragraph of this CVR
Agreement, until a successor Trustee shall have become such
pursuant to the applicable provisions of this CVR Agreement, and
thereafter Trustee shall mean such successor Trustee.
Vice President when used with respect
to the Company or the Trustee, means any vice president, whether
or not designated by a number or a word or words added before or
after the title of vice president.
Voting Securities means securities or
other interests having voting power, or the right, to elect or
appoint a majority of the directors, or any Persons performing
similar functions, irrespective of whether or not stock or other
interests of any other class or classes shall have or might have
voting power or any right by reason of the happening of any
contingency.
Section 1.2 Compliance
and Opinions.
(a) Upon any application or request by the Company to the
Trustee to take any action under any provision of this CVR
Agreement, the Company shall furnish to the Trustee an
Officers Certificate stating that, in the opinion of the
signor, all conditions precedent, if any, provided for in this
CVR Agreement relating to the proposed action have been complied
with and an Opinion of Counsel stating, subject to customary
exceptions, that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except
that, in the case of any such application or request as to which
the furnishing of such documents is specifically required by any
provision of this CVR Agreement relating to such particular
application or request, no additional certificate or opinion
need be furnished.
(b) Every certificate or opinion with respect to compliance
with a condition or covenant provided for in this CVR Agreement
shall include: (i) a statement that each individual signing
such certificate or opinion has read such covenant or condition
and the definitions herein relating thereto; (ii) a brief
statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in
such certificate or opinion are based; (iii) a statement
that, in the opinion of each such individual, he or she has made
such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such
covenant or condition has been complied with; and (iv) a
statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 1.3 Form
of Documents Delivered to Trustee.
(a) In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such
Person may certify or give an opinion with respect to some
matters and one or more other such Persons as to other matters,
and any such Person may certify or give an opinion as to such
matters in one or several documents.
(b) Any certificate or opinion of an officer of the Company
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel. Any
such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of,
or representations by, an officer or officers of the Company
stating that the information with respect to such factual
matters is in the possession of the Company.
(c) Any certificate, statement or opinion of an officer of
the Company or of counsel may be based, insofar as it relates to
accounting matters, upon a certificate or opinion of or
representations by an accountant or firm of accountants in the
employ of the Company. Any certificate or opinion of any
independent firm of public accountants filed with the Trustee
shall contain a statement that such firm is independent.
(d) Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this CVR
Agreement, they may, but need not, be consolidated and form one
instrument.
B-10
Section 1.4 Acts
of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this CVR Agreement
to be given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed
by such Holders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the Act
of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this CVR
Agreement and (subject to Section 4.1) conclusive in favor
of the Trustee and the Company, if made in the manner provided
in this Section. The Company may set a record date for purposes
of determining the identity of Holders entitled to vote or
consent to any action by vote or consent authorized or permitted
under this CVR Agreement. If not previously set by the Company,
(i) the record date for determining the Holders entitled to
vote at a meeting of the Holders shall be the date preceding the
date notice of such meeting is mailed to the Holders, or if
notice is not given, on the day next preceding the day such
meeting is held, and (ii) the record date for determining
the Holders entitled to consent to any action in writing without
a meeting shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken
is delivered to the Company. If a record date is fixed, those
Persons who were Holders of Securities at such record date (or
their duly designated proxies), and only those Persons, shall be
entitled to take such action by vote or consent or, except with
respect to clause (d) below, to revoke any vote or consent
previously given, whether or not such Persons continue to be
Holders after such record date. No such vote or consent shall be
valid or effective for more than one hundred twenty
(120) days after such record date.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved in any reasonable
manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the
Security Register. Neither the Company nor the Trustee nor any
Agent of the Company or the Trustee shall be affected by any
notice to the contrary.
(d) At any time prior to (but not after) the evidencing to
the Trustee, as provided in this Section 1.4, of the taking
of any action by the Holders of the Securities specified in this
CVR Agreement in connection with such action, any Holder of a
Security the serial number of which is shown by the evidence to
be included among the serial numbers of the Securities the
Holders of which have consented to such action may, by filing
written notice at the Corporate Trust Office and upon proof
of holding as provided in this Section 1.4, revoke such
action so far as concerns such Security. Any request, demand,
authorization, direction, notice, consent, waiver or other
action by the Holder of any Security shall bind every future
Holder of the same Security or the Holder of every Security
issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done,
suffered or omitted to be done by the Trustee, any Paying Agent
or the Company in reliance thereon, whether or not notation of
such action is made upon such Security.
Section 1.5 Notices,
etc., to Trustee and Company. Any request,
demand, authorization, direction, notice, consent, waiver or Act
of Holders or other document provided or permitted by this CVR
Agreement to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished
or filed, in writing, to or with the Trustee at its Corporate
Trust Office; or
(b) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder if in writing and mailed,
first-class postage prepaid, to the Company addressed to it at
Celgene Corporation, 86 Morris Avenue, Summit, New Jersey 07901,
Legal Department, Attention: Senior Vice President and Chief
Counsel, or at any other address previously furnished in writing
to the Trustee by the Company.
Section 1.6 Notice
to Holders; Waiver.
(a) Where this CVR Agreement provides for notice to Holders
of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such
event, at his address as it appears in the Security Register,
not later than the latest date, and
B-11
not earlier than the earliest date, prescribed for the giving of
such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in
any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where
this CVR Agreement provides for notice in any manner, such
notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice
by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
(b) In case by reason of the suspension of regular mail
service or by reason of any other cause, it shall be
impracticable to mail notice of any event as required by any
provision of this CVR Agreement, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed
to be a sufficient giving of such notice.
Section 1.7 Conflict
with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this CVR
Agreement by any of the provisions of the Trust Indenture
Act, such required provision shall control.
Section 1.8 Effect
of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction
hereof.
Section 1.9 Benefits
of Agreement. Nothing in this CVR Agreement
or in the Securities, express or implied, shall give to any
Person (other than the Parties hereto and their successors
hereunder, any Paying Agent and the Holders) any benefit or any
legal or equitable right, remedy or claim under this CVR
Agreement or under any covenant or provision herein contained,
all such covenants and provisions being for sole benefit of the
Parties hereto and their successors, any Paying Agent and of the
Holders.
Section 1.10 Governing
Law. THIS CVR AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK INCLUDING, WITHOUT LIMITATION,
SECTIONS 5-1401
AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. EACH OF THE
COMPANY, THE TRUSTEE AND EACH OF THE HOLDERS BY THEIR ACCEPTANCE
OF THE SECURITIES, HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS CVR AGREEMENT AND THE SECURITIES, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. EACH OF THE COMPANY AND THE TRUSTEE AGREES THAT PROCESS
MAY BE SERVED UPON THEM IN ANY MANNER AUTHORIZED BY THE LAWS OF
THE STATE OF NEW YORK FOR SUCH PERSONS AND IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE
LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO SUCH SERVICE
OF PROCESS, THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
Section 1.11 Legal
Holidays. In the event that a Payment Date
shall not be a Business Day, then (notwithstanding any provision
of this CVR Agreement or the Securities to the contrary) payment
on the Securities need not be made on such date, but may be
made, without the accrual of any interest thereon, on the next
succeeding Business Day with the same force and effect as if
made on such Payment Date.
Section 1.12 Separability
Clause. In case any provision in this CVR
Agreement or in the CVRs shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or
impaired thereby.
Section 1.13 No
Recourse Against Others. A director, officer
or employee, as such, of the Company or the Trustee shall not
have any liability for any obligations of the Company or the
Trustee under the Securities or this CVR Agreement or for any
claim based on, in respect of or by reason of such obligations
or their creation. By
B-12
accepting a Security each Holder waives and releases all such
liability. The waiver and release are part of the consideration
for the issue of the Securities.
Section 1.14 Counterparts. This
CVR Agreement shall be signed in any number of counterparts with
the same effect as if the signatures to each counterpart were
upon a single instrument, and all such counterparts together
shall be deemed an original of this CVR Agreement.
Section 1.15 Acceptance
of Trust. [ ], the Trustee
named herein, hereby accepts the trusts in this CVR Agreement
declared and provided, upon the terms and conditions set forth
herein.
ARTICLE 2
SECURITY
FORMS
Section 2.1 Forms Generally.
(a) The Securities and the Trustees certificate of
authentication shall be in substantially the forms set forth in
Annex A, attached hereto and incorporated herein by this
reference, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted
by this CVR Agreement and may have such letters, numbers or
other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of
any securities exchange or as may be required by Law or any rule
or regulation pursuant thereto, all as may be determined by the
officers executing such Securities, as evidenced by their
execution of the Securities. Any portion of the text of any
Security may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Security.
(b) The definitive Securities shall be typewritten,
printed, lithographed or engraved on steel engraved borders or
produced by any combination of these methods or may be produced
in any other manner permitted by the rules of any securities
exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
ARTICLE 3
THE
SECURITIES
Section 3.1 Title
and Terms.
(a) The aggregate number of CVRs in respect of which CVR
Certificates may be authenticated and delivered under this CVR
Agreement is limited to a number equal to
[ ]1,
except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of,
other Securities pursuant to Section 3.4, 3.5, 3.6 or 6.6.
From and after the Effective Time, the Company shall not be
permitted to issue any CVRs that have the right to receive any
portion of the Milestone Payments or the Net Sales Payments,
except as provided and in accordance with the terms and
conditions of the Merger Agreement.
(b) The Securities shall be known and designated as the
Series A Contingent Value Rights of the Company.
(c) On each Net Sales Payment Date, the Company shall pay
to the Trustee, by wire transfer to the account designated by
the Trustee, the Net Sales Payment due, if any, in respect of
the Net Sales Measuring Period ended immediately preceding such
Net Sales Payment Date, and the Trustee shall pay the Holders of
the Securities as of such Net Sales Payment Date, a pro rata
portion of such Net Sales Payment based on the number of CVRs
held by each Holder as of such date. Notwithstanding the
foregoing, the Companys obligations to pay any Net Sales
Payment shall terminate in its entirety on the Net Sales Payment
Termination Date.
(d) On each Milestone Payment Date, the Company shall pay
to the Trustee, by wire transfer to the account designated by
the Trustee, the applicable Milestone Payment, and the Trustee
shall pay to the Holders of the Securities as of such Milestone
Payment Date, a pro rata portion of such Milestone Payment based
on the number of
1 Insert
total, as of the closing of the Merger, of all CVRs to be issued
pursuant to the Merger Agreement.
B-13
CVRs held by each Holder as of such date. Notwithstanding the
foregoing, the Companys obligations to pay any Milestone
Payment shall terminate in its entirety if the corresponding
Milestone for such Milestone Payment has not been achieved by
the Milestone Target Date.
(e) The Holders of the CVR Certificates, by acceptance
thereof, agree that no joint venture, partnership or other
fiduciary relationship is created hereby or by the Securities.
(f) Other than in the case of interest on amounts due and
payable after the occurrence of an Event of Default or with
respect to any CVR Shortfall, no interest or dividends shall
accrue on any amounts payable in respect of the CVRs.
(g) Except to the extent any portion of any CVR Payment is
required to be treated as imputed interest pursuant to
applicable Law, the Parties hereto agree to treat the CVRs and
all CVR Payments for all Tax purposes as additional
consideration for the shares of Common Stock, the Options, the
SARs and the RSUs pursuant to the Merger Agreement, and none of
the Parties hereto will take any position to the contrary on any
Tax Return or for other Tax purposes except as required by
applicable Law. The Company shall report imputed interest on the
CVRs pursuant to Section 483 of the Code.
(h) The CVRs and any interest thereon may be sold,
assigned, pledged encumbered or in any manner transferred or
disposed of, in whole or in part, only in compliance with
applicable United States federal and state securities Laws and,
to the extent applicable, in accordance with Section 3.5
hereof.
(i) The Holder of any CVR or CVR Certificate is not, and
shall not, by virtue thereof, be entitled to any rights of a
holder of any Voting Securities or other equity security or
other ownership interest of the Company or in any constituent
company to the Merger, either at Law or in equity, and the
rights of the Holders are limited to those contractual rights
expressed in this CVR Agreement.
(j) Except as provided in this CVR Agreement (including,
without limitation, Section 7.6), none of the Company or
any of its Affiliates shall have any right to set-off any
amounts owed or claimed to be owed by any Holder to any of them
against such Holders Securities or any CVR Payment or
other amount payable to such Holder in respect of such
Securities.
(k) In the event that all of the CVR Certificates not
previously cancelled shall have become due and payable pursuant
to the terms hereof, all disputes with respect to amounts
payable to the Holders brought pursuant to the terms and
conditions of this CVR Agreement have been resolved, and the
Company has paid or caused to be paid or deposited with the
Trustee all amounts payable to the Holders under this CVR
Agreement (including any amounts determined in accordance with
Section 7.6 herein), then this CVR Agreement shall cease to
be of further effect and shall be deemed satisfied and
discharged. Notwithstanding the satisfaction and discharge of
this CVR Agreement, the obligations of the Company under
Section 4.7(c) shall survive.
Section 3.2 Registrable
Form. The Securities shall be issuable only
in registered form.
Section 3.3 Execution,
Authentication, Delivery and Dating.
(a) The Securities shall be executed on behalf of the
Company by its chairman of the Board of Directors or its
president or any vice president or its treasurer, but need not
be attested. The signature of any of these officers on the
Securities may be manual or facsimile.
(b) Securities bearing the manual or facsimile signatures
of individuals who were, at the time of execution, the proper
officers of the Company shall bind the Company, notwithstanding
that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such
Securities.
(c) At any time and from time to time after the execution
and delivery of this CVR Agreement, the Company may deliver
Securities executed by the Company to the Trustee for
authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee,
in accordance with such Company Order, shall authenticate and
deliver such Securities as provided in this CVR Agreement and
not otherwise.
(d) Each Security shall be dated the date of its
authentication.
B-14
(e) No Security shall be entitled to any benefit under this
CVR Agreement or be valid or obligatory for any purpose unless
there appears on such Security a certificate of authentication
substantially in the form provided for herein duly executed by
the Trustee, by manual or facsimile signature of an authorized
officer, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and that the
Holder is entitled to the benefits of this CVR Agreement.
Section 3.4 Temporary
Securities.
(a) Pending the preparation of definitive Securities, the
Company may execute, and upon Company Order, the Trustee shall
authenticate and deliver, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise
produced, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may
determine with the concurrence of the Trustee. Temporary
Securities may contain such reference to any provisions of this
CVR Agreement as may be appropriate. Every temporary Security
shall be executed by the Company and be authenticated by the
Trustee upon the same conditions and in substantially the same
manner, and with like effect, as the definitive Securities.
(b) If temporary Securities are issued, the Company will
cause definitive Securities to be prepared without unreasonable
delay. After the preparation of definitive Securities, the
temporary Securities shall be exchangeable for definitive
Securities upon surrender of the temporary Securities at the
office or agency of the Company designated for such purpose
pursuant to Section 7.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like amount of
definitive Securities. Until so exchanged, the Temporary
Securities shall in all respects be entitled to the same
benefits under this CVR Agreement as definitive Securities.
Section 3.5 Registration,
Registration of Transfer and Exchange.
(a) The Company shall cause to be kept at the office of the
Trustee a register (the register maintained in such office and
in any other office or agency designated pursuant to
Section 7.2 being herein sometimes referred to as the
Security Register) in which, subject to such
reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities and of transfers of
Securities. The Trustee is hereby initially appointed
Security Registrar for the purpose of registering
Securities and transfers of Securities as herein provided.
(b) Upon surrender for registration of transfer of any
Security at the office or agency of the Company designated
pursuant to Section 7.2, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new CVR
Certificates representing the same aggregate number of CVRs
represented by the CVR Certificate so surrendered that are to be
transferred and the Company shall execute and the Trustee shall
authenticate and deliver, in the name of the transferor, one or
more new CVR Certificates representing the aggregate number of
CVRs represented by such CVR Certificate that are not to be
transferred.
(c) At the option of the Holder, CVR Certificates may be
exchanged for other CVR Certificates that represent in the
aggregate the same number of CVRs as the CVR Certificates
surrendered at such office or agency. Whenever any CVR
Certificates are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the CVR
Certificates which the Holder making the exchange is entitled to
receive.
(d) All Securities issued upon any registration of transfer
or exchange of Securities shall be the valid obligations of the
Company, evidencing the same rights, and entitled to the same
benefits under this CVR Agreement, as the Securities surrendered
upon such registration of transfer or exchange.
(e) Every Security presented or surrendered for
registration of transfer or for exchange shall (if so required
by the Company or the Security Registrar) be duly endorsed, or
be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized
in writing.
(f) No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in
B-15
connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 3.4 or
6.6 not involving any transfer.
Section 3.6 Mutilated,
Destroyed, Lost and Stolen Securities.
(a) If (i) any mutilated Security is surrendered to
the Trustee, or (ii) the Company and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft
of any Security, and there is delivered to the Company and the
Trustee such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired
by a bona fide purchaser, the Company shall execute and, upon
delivery of a Company Order, the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu
of any such destroyed, lost or stolen Security, a new CVR
Certificate of like tenor and amount of CVRs, bearing a number
not contemporaneously outstanding.
(b) In case any such mutilated, destroyed, lost or stolen
Security has become or is to become finally due and payable
within fifteen (15) days, the Company in its discretion
may, instead of issuing a new CVR Certificate, pay to the Holder
of such Security on the applicable Payment Date, as the case may
be, all amounts due and payable with respect thereto.
(c) Every new Security issued pursuant to this
Section 3.6 in lieu of any destroyed, lost or stolen
Security shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and
shall be entitled to all benefits of this CVR Agreement equally
and proportionately with any and all other Securities duly
issued hereunder.
(d) The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities.
Section 3.7 Payments
with respect to CVR Certificates. Payment of
any amounts pursuant to the CVRs shall be made in such coin or
currency of the United States of America as at the time is legal
tender for the payment of public and private debts. The Company
may, at its option, pay such amounts by wire transfer or check
payable in such money.
Section 3.8 Persons
Deemed Owners. Prior to the time of due
presentment for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat
the Person in whose name any Security is registered as the owner
of such Security for the purpose of receiving payment on such
Security and for all other purposes whatsoever, whether or not
such Security be overdue, and neither the Company, the Trustee
nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
Section 3.9 Cancellation. All
Securities surrendered for payment, registration of transfer or
exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly
canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in
any manner whatsoever, and all Securities so delivered shall be
promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section, except as expressly
permitted by this CVR Agreement. All cancelled Securities held
by the Trustee shall be destroyed and a certificate of
destruction shall be issued by the Trustee to the Company,
unless otherwise directed by a Company Order.
ARTICLE 4
THE TRUSTEE
Section 4.1 Certain
Duties and Responsibilities. (a) With
respect to the Holders, the Trustee, prior to the occurrence of
an Event of Default (as defined in Section 8.1) with
respect to the Securities and after the curing or waiving of all
Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth
in this CVR Agreement and no implied covenants shall be read
into this CVR Agreement against the Trustee. In case an Event of
Default with respect to the Securities has occurred (which has
not been cured or waived), the Trustee shall exercise such of
the rights and powers vested in it by this CVR Agreement, and
use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in
the conduct of his own affairs.
B-16
(b) In the absence of bad faith on its part, prior to the
occurrence of an Event of Default and after the curing or
waiving of all such Events of Default which may have occurred,
the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee
which conform to the requirements of this CVR Agreement; but in
the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this CVR Agreement.
(c) No provision of this CVR Agreement shall be construed
to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful
misconduct, except that (i) this Subsection (c) shall
not be construed to limit the effect of Subsections (a) and
(b) of this Section; (ii) the Trustee shall not be
liable for any error of judgment made in good faith by a
Responsible Officer, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders pursuant to
Section 8.9 relating to the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this CVR Agreement.
(d) Whether or not therein expressly so provided, every
provision of this CVR Agreement relating to the conduct or
affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section.
Section 4.2 Certain
Rights of Trustee. Subject to the provisions
of Section 4.1, including without limitation, the duty of
care that the Trustee is required to exercise upon the
occurrence of an Event of Default:
(a) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party
or parties and the Trustee need not investigate any fact or
matter stated in the document;
(b) any request or direction or order of the Company
mentioned herein shall be sufficiently evidenced by a Company
Request or Company Order and any resolution of the Board of
Directors may be sufficiently evidenced by a Board Resolution
and the Trustee shall not be liable for any action it takes or
omits to take in good faith reliance thereon;
(c) whenever in the administration of this CVR Agreement
the Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers Certificate and the Trustee
shall not be liable for any action it takes or omits to take in
good faith reliance thereon or an Opinion of Counsel;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith
and in accordance with such advice or Opinion of Counsel;
(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this CVR Agreement
at the request or direction of any of the Holders pursuant to
this CVR Agreement, unless such Holders shall have offered to
the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, appraisal, bond,
debenture, note, coupon, security, or other paper or document,
but the Trustee in its discretion may make such further inquiry
or investigation into such facts or matters as it may see fit,
and if the Trustee shall determine to make such further inquiry
or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or
attorney;
B-17
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it
hereunder; and
(h) the Trustee shall not be liable for any action taken,
suffered or omitted to be taken by it in good faith and believed
by it to be authorized or within the discretion or rights or
powers conferred upon it by this CVR Agreement.
Section 4.3 Notice
of Default. If a default occurs hereunder
with respect to the Securities, the Trustee shall give the
Holders notice of any such default actually known to it as and
to the extent applicable and provided by the
Trust Indenture Act; provided, however, that in the case of
any default of the character specified in Section 8.1(b)
with respect to the Securities, no notice to Holders shall be
given until at least thirty (30) days after the occurrence
thereof. For the purpose of this Section 4.3, the term
default means any event that is, or after notice or
lapse of time or both would become, an Event of Default with
respect to the Securities.
Section 4.4 Not
Responsible for Recitals or Issuance of
Securities. The Trustee shall not be
accountable for the Companys use of the Securities or the
proceeds from the Securities. The recitals contained herein and
in the Securities, except the Trustees certificates of
authentication, shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or
sufficiency of this CVR Agreement or of the Securities.
Section 4.5 May
Hold Securities. The Trustee, any Paying
Agent, Security Registrar or any other agent of the Company, in
its individual or any other capacity, may become the owner or
pledgee of Securities, and, subject to Sections 4.8 and
4.13, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Paying Agent, Security
Registrar or such other agent.
Section 4.6 Money
Held in Trust. Money held by the Trustee in
trust hereunder need not be segregated from other funds except
to the extent required by Law. The Trustee shall be under no
liability for interest on any money received by it hereunder.
Section 4.7 Compensation
and Reimbursement. The Company agrees:
(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder in such
amount as the Company and the Trustee shall agree from time to
time (which compensation shall not be limited by any provision
of Law in regard to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this CVR Agreement
(including the reasonable compensation and the reasonable
expenses and disbursements of its agents and counsel), except
any such expense, disbursement or advance as may be attributable
to the Trustees negligence or willful misconduct; and
(c) to indemnify the Trustee and each of its agents,
officers, directors and employees (each an
indemnitee) for, and to hold it harmless against,
any loss, liability or expense (including attorneys fees and
expenses) incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or
administration of this trust and the performance of its duties
hereunder, including the reasonable costs and expenses of
defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties
hereunder. The Companys payment obligations pursuant to
this Section shall survive the termination of this CVR
Agreement. When the Trustee incurs expenses after the occurrence
of an Event of Default specified in Section 8.1(c) or
8.1(d) with respect to the Company, the expenses are intended to
constitute expenses of administration under bankruptcy Laws.
Section 4.8 Disqualification;
Conflicting Interests.
(a) If applicable, to the extent that the Trustee or the
Company determines that the Trustee has a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee
shall, within ninety (90) days after ascertaining that it
has such conflicting interest, either eliminate such conflicting
interest or resign to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act
and this CVR Agreement. The Company shall take prompt steps to
have a successor appointed in the manner provided in this CVR
Agreement.
B-18
(b) In the event the Trustee shall fail to comply with the
foregoing subsection 4.8(a), the Trustee shall, within ten
(10) days of the expiration of such ninety (90) day
period, transmit a notice of such failure to the Holders in the
manner and to the extent provided in the Trust Indenture
Act and this CVR Agreement.
(c) If the Trustee fails to comply with Section 4.8(a)
after written request therefore by the Company or any Holder,
any Holder of any Security who has been a bona fide Holder for
at least six (6) months may on behalf of himself and all
others similarly situated, petition any court of competent
jurisdiction for the removal of such Trustee and the appointment
of a successor Trustee.
Section 4.9 Corporate
Trustee Required; Eligibility. There shall at
all times be a Trustee hereunder which satisfies the applicable
requirements of Sections 310(a)(1) and (5) of the
Trust Indenture Act and has a combined capital and surplus
of at least one hundred fifty million dollars ($150,000,000). If
such corporation publishes reports of condition at least
annually, pursuant to Law or to the requirements of a
supervising or examining authority, then for the purposes of
this Section 4.9, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter
specified in this Article.
Section 4.10 Resignation
and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article
shall become effective until the acceptance of appointment by
the successor Trustee under Section 4.11.
(b) The Trustee, or any trustee or trustees hereafter
appointed, may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee
within thirty (30) days after the giving of such notice of
resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by an act of the
Majority Holders, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 4.8
after written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Security for at least six
months, or
(2) the Trustee shall cease to be eligible under
Section 4.9 and shall fail to resign after written request
therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any case, (i) the
Company, by a Board Resolution, may remove the Trustee, or
(ii) the Holder of any Security who has been a bona fide
Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office
of Trustee for any cause, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee. If, within one year
after any removal by Holders of a majority of the Outstanding
Securities, a successor Trustee shall be appointed by act of the
Holders of a majority of the Outstanding Securities delivered to
the Company and the retiring Trustee the successor Trustee so
appointed shall, forthwith upon its acceptance of such
appointment in accordance with Section 4.11, become the
successor Trustee and supersede the successor Trustee appointed
by the Company. If no successor Trustee shall have been so
appointed by the Company or the Holders of the Securities and
accepted appointment within sixty (60) days after the
retiring Trustee tenders its resignation or is removed, the
retiring Trustee may, or, the Holder of any Security who has
been a bona fide Holder for at least six (6) months may on
behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a
successor Trustee.
B-19
(f) The Company shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor
Trustee by mailing written notice of such event by first-class
mail, postage prepaid, to the Holders of Securities as their
names and addresses appear in the Security Register. Each notice
shall include the name of the successor Trustee and the address
of its Corporate Trust Office. If the Company fails to send
such notice within ten (10) days after acceptance of
appointment by a successor Trustee, it shall not be a default
hereunder but the successor Trustee shall cause the notice to be
mailed at the expense of the Company.
Section 4.11 Acceptance
of Appointment of Successor.
(a) Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all
the rights, powers, trusts and duties of the retiring Trustee;
but, upon request of the Company or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all
the rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder. Upon
request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers
and trusts.
(b) No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee
shall be qualified and eligible under this Article.
Section 4.12 Merger,
Conversion, Consolidation or Succession to
Business. Any corporation into which the
Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all
of the corporate trust business of the Trustee, by sale or
otherwise shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the Parties
hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor
by merger, conversion, sale or consolidation to such
authenticating Trustee may adopt such authentication and deliver
the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities; and
such certificate shall have the full force which it is anywhere
in the Securities or in this CVR Agreement provided that the
certificate of the Trustee shall have; provided that the right
to adopt the certificate of authentication of any predecessor
Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
Section 4.13 Preferential
Collection of Claims Against Company. If and
when the Trustee shall be or shall become a creditor, directly
or indirectly, secured or unsecured, of the Company (or any
other obligor upon the Securities), excluding any creditor
relationship set forth in Section 311(b) of the
Trust Indenture Act, if applicable, the Trustee shall be
subject to the applicable provisions of the Trust Indenture
Act regarding the collection of claims against the Company (or
any such other obligor).
ARTICLE 5
HOLDERS
LISTS AND REPORTS BY THE TRUSTEE AND COMPANY
Section 5.1 Company
to Furnish Trustee Names and Addresses of
Holders. The Company will furnish or cause to
be furnished to the Trustee (i) promptly after the issuance
of the Securities, and semi-annually thereafter, a list, in such
form as the Trustee may reasonably require, of the names and
addresses of the Holders as of a recent date, and (ii) at
such times as the Trustee may request in writing, within thirty
(30) days after receipt by the Company of any such request,
a list, in such form as the Trustee may reasonably require, of
the names and addresses of the Holders as of a date not more
than fifteen (15) days prior to the time such list is
furnished; provided, however, that if and so long as the Trustee
shall be the Security Registrar, no such list need be furnished.
Section 5.2 Preservation
of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders
contained in the most recent list furnished to the Trustee as
provided in Section 5.1 and the names and
B-20
addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished
to it as provided in Section 5.1 upon receipt of a new list
so furnished.
(b) The rights of the Holders to communicate with other
Holders with respect to their rights under this CVR Agreement
and the corresponding rights and privileges of the Trustee shall
be as provided by Section 312(b)(2) of the
Trust Indenture Act, if applicable.
(c) Every Holder of Securities, by receiving and holding
the same, agrees with the Company and the Trustee that neither
the Company nor the Trustee shall be deemed to be in violation
of Law or held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders
made pursuant to the Trust Indenture Act (if applicable)
regardless of the source from which such information was derived.
Section 5.3 Reports
by Trustee.
(a) Within sixty (60) days after December 31 of each
year commencing with the December 31 following the date of this
CVR Agreement, the Trustee shall transmit to all Holders such
reports concerning the Trustee and its actions under this CVR
Agreement as may be required pursuant to the
Trust Indenture Act to the extent and in the manner
provided pursuant thereto. The Trustee shall also comply with
Section 313(b)(2) of the Trust Indenture Act, if
applicable. The Trustee shall also transmit by mail all reports
as required by Section 313(c) of the Trust Indenture
Act, if applicable.
(b) A copy of each such report shall, at the time of such
transmission to the Holders, be filed by the Trustee with each
stock exchange, if any, upon which the Securities are listed,
with the Commission and also with the Company. The Company will
promptly notify the Trustee when the Securities are listed on
any stock exchange.
Section 5.4 Reports
by Company. The Company shall: (a) file
with the Trustee, (i) within fifteen (15) days after
the Company is required to file the same with the Commission,
copies of the annual and quarterly reports and of the
information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) which the Company is
required to file with the Commission pursuant to Section 13
or Section 15(d) of the Exchange Act (such required
information, documents and other reports, together the
Exchange Act Documents); and (ii) if the
Company is not required to file Exchange Act Documents under
Section 13 or 15(d) of the Exchange Act, within forty-five
(45) days after each calendar quarter of the Company (other
than the last quarter of each calendar year), quarterly
financial information and, within ninety (90) days after
each calendar year of the Company, annual financial information
that would be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a
national securities exchange as may be prescribed from time to
time in such rules and regulations (provided that the Company
also delivers with, or includes within, the annual reports
referred to in (i) and (ii) a calculation of Net Sales
for the Products for the annual period to date),
(iii) within ten (10) days after the Company files its
annual report with the Commission for any year if the Company is
required to file Exchange Act Documents under Section 13 or
15(d) of the Exchange Act, or if the Company is not required to
file Exchange Act Documents under Section 13 or 15(d) of
the Exchange Act within ninety (90) days after each
calendar year, a Net Sales Statement with respect to the last
completed calendar year, and (iv) within four
(4) Business Days after the occurrence of any Milestone, a
notice setting forth the Milestone that occurred, the amount of
the Milestone Payment payable in connection therewith and the
applicable Milestone Payment Date; (b) file with the
Trustee such additional information, documents and reports with
respect to compliance by the Company with the conditions and
covenants of this CVR Agreement as may be required from time to
time by the rules and regulations of the Commission, and
(c) make available to the Holders on the Companys
website as of an even date with the filing of such materials
with the Trustee, the information, documents and reports
required to be filed by the Company pursuant to
subsections (a) or (b) of this Section 5.4.
B-21
ARTICLE 6
AMENDMENTS
Section 6.1 Amendments
Without Consent of Holders. Without the
consent of any Holders, the Company and the Trustee, at any time
and from time to time, may enter into one or more amendments
hereto or to the Securities, for any of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the
Trustee as security for the Securities any property or
assets; or
(b) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the
covenants of the Company herein and in the Securities; or
(c) to add to the covenants of the Company such further
covenants, restrictions, conditions or provisions as its Board
of Directors and the Trustee shall consider to be for the
protection of the Holders of Securities, and to make the
occurrence, or the occurrence and continuance, of a default in
any such additional covenants, restrictions, conditions or
provisions an Event of Default permitting the enforcement of all
or any of the several remedies provided in this CVR Agreement as
herein set forth; provided, that in respect of any such
additional covenant, restriction, condition or provision, such
amendment may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed
in the case of other defaults) or may provide for an immediate
enforcement upon such an Event of Default or may limit the
remedies available to the Trustee upon such an Event of Default
or may limit the right of the Majority Holders to waive such an
Event of Default; or
(d) to cure any ambiguity, or to correct or supplement any
provision herein or in the Securities which may be defective or
inconsistent with any other provision herein; provided, that
such provisions shall not materially reduce the benefits of this
CVR Agreement or the Securities to the Holders; or
(e) to make any other provisions with respect to matters or
questions arising under this CVR Agreement; provided, that such
provisions shall not adversely affect the interests of the
Holders;
(f) to make any amendments or changes necessary to comply
or maintain compliance with the Trust Indenture Act, if
applicable; or
(g) make any change that does not adversely affect the
interests of the Holders.
(h) Promptly following any amendment of this CVR Agreement
or the Securities in accordance with this Section 6.1, the
Trustee shall notify the Holders of the Securities of such
amendment; provided that any failure so to notify the Holders
shall not affect the validity of such amendment.
Section 6.2 Amendments
with Consent of Holders. With the consent of
the Majority Holders, by Act of said Holders delivered to the
Company and the Trustee, the Company (when authorized by a Board
Resolution) and the Trustee may enter into one or more
amendments hereto or to the Securities for the purpose of adding
any provisions to or changing in any manner or eliminating any
of the provisions of this CVR Agreement or to the Securities or
of modifying in any manner the rights of the Holders under this
CVR Agreement or to the Securities; provided, however, that no
such amendment shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(a) modify in a manner adverse to the Holders (i) any
provision contained herein with respect to the termination of
this CVR Agreement or the Securities, (ii) the time for
payment and amount of any Net Sales Payment or any Milestone
Payment, or otherwise extend the time for payment of the
Securities or reduce the amounts payable in respect of the
Securities or modify any other payment term or payment date.
Notwithstanding the foregoing, each Holder of a Security, by
acceptance thereof, consents to the optional redemption
provisions set forth in Article 11 hereof;
(b) reduce the number of CVRs, the consent of whose Holders
is required for any such amendment; or
(c) modify any of the provisions of this Section, except to
increase any such percentage or to provide that certain other
provisions of this CVR Agreement cannot be modified or waived
without the consent of the Holder of each Security affected
thereby.
B-22
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed
amendment, but it shall be sufficient if such Act shall approve
the substance thereof.
Section 6.3 Execution
of Amendments. In executing any amendment
permitted by this Article, the Trustee (subject to
Section 4.1) shall be fully protected in relying upon an
Opinion of Counsel stating that the execution of such amendment
is authorized or permitted by this CVR Agreement. The Trustee
shall execute any amendment authorized pursuant to this Article
if the amendment does not adversely affect the Trustees
own rights, duties or immunities under this CVR Agreement or
otherwise. Otherwise, the Trustee may, but need not, execute
such amendment.
Section 6.4 Effect
of Amendments; Notice to Holders.
(a) Upon the execution of any amendment under this Article,
this CVR Agreement and the Securities shall be modified in
accordance therewith, and such amendment shall form a part of
this CVR Agreement and the Securities for all purposes; and
every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
(b) Promptly after the execution by the Company and the
Trustee of any amendment pursuant to the provisions of this
Article, the Company shall mail a notice thereof by first class
mail to the Holders of Securities at their addresses as they
shall appear on the Security Register, setting forth in general
terms the substance of such amendment. Any failure of the
Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such
amendment.
Section 6.5 Conformity
with Trust Indenture Act. Every
amendment executed pursuant to this Article shall conform to the
applicable requirements of the Trust Indenture Act, if any.
Section 6.6 Reference
in Securities to Amendments. If an amendment
changes the terms of a Security, the Trustee may require the
Holder of the Security to deliver it to the Trustee. Securities
authenticated and delivered after the execution of any amendment
pursuant to this Article may, and shall if required by the
Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such amendment. If the Company shall
so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any such
amendment may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for
Outstanding Securities. Failure to make the appropriate notation
or to issue a new Security shall not affect the validity of such
amendment.
ARTICLE 7
COVENANTS
Section 7.1 Payment
of Amounts, if any, to Holders. The Company
will duly and punctually pay the amounts, if any, on the
Securities in accordance with the terms of the Securities and
this CVR Agreement. Such amounts shall be considered paid on the
applicable Payment Date if on such date the Trustee or the
Paying Agent holds in accordance with this CVR Agreement money
sufficient to pay all such amounts then due. Notwithstanding any
other provision of this CVR Agreement, the Company or any of its
Affiliates (including the Surviving Corporation, as applicable),
the Trustee or the Paying Agent, shall be entitled to deduct and
withhold, or cause to be deducted and withheld, from amounts
(including CVRs) otherwise payable pursuant to this CVR
Agreement or the Merger Agreement to any holder of shares of
Common Stock, Options, SARs, RSUs or CVRs, such amounts as the
Company or any of its Affiliates, the Trustee or the Paying
Agent is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986,
as amended, or any provision of state, local or foreign Tax Law.
To the extent that amounts are so withheld by the Company or any
of its Affiliates, the Trustee or the Paying Agent, such
withheld amounts shall be (a) paid over to the applicable
Governmental Entity in accordance with applicable Law and
(b) treated for all purposes of this CVR Agreement as
having been paid to such Holder in respect of which such
deduction and withholding was made by the Company or any of its
Affiliates, the Trustee or the Paying Agent, as the case may be.
The consent of Holder shall not be required for any such
withholding.
B-23
Section 7.2 Maintenance
of Office or Agency.
(a) As long as any of the Securities remain Outstanding,
the Company will maintain in the Borough of Manhattan, The City
of New York, an office or agency (i) where Securities may
be presented or surrendered for payment, (ii) where
Securities may be surrendered for registration of transfer or
exchange and (iii) where notices and demands to or upon the
Company in respect of the Securities and this CVR Agreement may
be served. The office or agency of the Trustee at
[ ] shall be such office or agency of the
Company, unless the Company shall designate and maintain some
other office or agency for one or more of such purposes. The
Company or any of its Subsidiaries may act as Paying Agent,
registrar or transfer agent; provided that such Person shall
take appropriate actions to avoid the commingling of funds. The
Company will give prompt written notice to the Trustee of any
change in the location of any such office or agency. If at any
time the Company shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office
of the Trustee, and the Company hereby appoints the Trustee as
its agent to receive all such presentations, surrenders, notices
and demands.
(b) The Company may from time to time designate one or more
other offices or agencies (in or outside of The City of New
York) where the Securities may be presented or surrendered for
any or all such purposes, and may from time to time rescind such
designation; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The
Company will give prompt written notice to the Trustee of any
such designation or rescission and any change in the location of
any such office or agency.
Section 7.3 Money
for Security Payments to Be Held in Trust.
(a) If the Company or any of its Subsidiaries shall at any
time act as the Paying Agent, it will, on or before the Payment
Date, as the case may be, segregate and hold in trust for the
benefit of the Holders all sums held by such Paying Agent for
payment on the Securities until such sums shall be paid to the
Holders as herein provided, and will promptly notify the Trustee
of any default by the Company in making payment on the
Securities.
(b) Whenever the Company shall have one or more Paying
Agents for the Securities, it will, on or before a Payment Date
deposit with a Paying Agent a sum in same day funds sufficient
to pay the amount, if any, so becoming due; such sum to be held
in trust for the benefit of the Persons entitled to such amount,
and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to
act.
(c) The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that (i) such Paying Agent
will hold all sums held by it for the payment of any amount
payable on Securities in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will notify the
Trustee of the sums so held and (ii) that it will give the
Trustee notice of any failure by the Company (or by any other
obligor on the Securities) to make any payment on the Securities
when the same shall be due and payable.
(d) Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment on
any Security and remaining unclaimed for one year after the
Payment Date shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such
trust; and the Holder of such Security shall thereafter, as an
unsecured general creditor, look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent
with respect to such trust money shall thereupon cease.
Section 7.4 Certain
Purchases and Sales. Nothing contained herein
shall prohibit the Company or any of its Subsidiaries or
Affiliates from acquiring in open market transactions, private
transactions or otherwise, the Securities.
Section 7.5 Books
and Records. The Company shall keep, and
shall cause its Subsidiaries to keep, true, complete and
accurate records in sufficient detail to enable the amounts
payable under this CVR Agreement to be determined by the Holders
and their consultants or professional advisors, for a period of
three (3) years following the end of any Net Sales
Measuring Period.
B-24
Section 7.6 Audits.
(a) Upon the written request of the Majority Holders and no
more than once during any calendar year, and upon reasonable
notice, the Company shall provide an independent certified
public accounting firm of nationally recognized standing
selected by the Majority Holders and the Company (the
Independent Accountant) with access during
normal business hours to such of the records of the Company as
may be reasonably necessary to verify the accuracy of the Net
Sales Statements and the figures underlying the calculations set
forth therein for any period within the preceding three
(3) years that has not previously been audited in
accordance with this Section 7.6. The Company shall pay for
the fees charged by the Independent Accountant in the event that
the Independent Accountant determines that the amount paid by
the Company is more than ten percent (10%) below the amount due;
provided, however, that the Majority Holders shall pay for the
fees charged by such Independent Accountant in the event that
the Independent Accountant determines that the amount paid by
the Company is equal to or less than ten percent (10%) below the
amount due, which amount the Company may deduct from any future
CVR Payments payable pursuant to this CVR Agreement. The
Independent Accountant shall disclose to the Majority Holders
only the amounts that the Independent Accountant believes to be
due and payable by the Company, details concerning any
discrepancy from the amount paid and the amount due, and shall
disclose no other information revealed in such audit. The
Independent Accountant shall provide the Company with a copy of
all disclosures made to the Majority Holders. This covenant
shall survive the termination of this CVR Agreement for a period
of three (3) years; provided that the Holders shall only be
entitled to one audit following termination of this CVR
Agreement.
(b) If the Independent Accountant concludes that any Net
Sales Payment amount should have been greater than the Net Sales
Payment set forth in an applicable Net Sales Statement (the
difference being the CVR Shortfall), the
Company shall pay the CVR Shortfall, within six (6) months
of the date the Majority Holders deliver to the Company the
Independent Accountants written report (the
Shortfall Report); provided that the CVR
Shortfall amount shall bear interest at the Shortfall Interest
Rate beginning from thirty (30) days after the date the
Majority Holders deliver to the Company the Shortfall Report
until payment is made to the Trustee. The decision of such
Independent Accountant shall be final, conclusive and binding on
the Company and the Holders, shall be non-appealable and shall
not be subject to further review.
(c) Upon the expiration of three (3) years following
the end of any Net Sales Measuring Period, the calculation of
the Net Sales Payment payable with respect to such Net Sales
Measuring Period shall be conclusive and binding on each Holder,
and the Company shall be released from any liability or
accountability with respect to payments in respect of such Net
Sales Measuring Period in excess of such Net Sales Payment.
(d) Each person seeking to receive information from the
Company in connection with a review or audit shall enter into,
and shall cause its accounting firm to enter into, a reasonable
and mutually satisfactory confidentiality agreement with the
Company obligating such party to retain all such financial
information disclosed to such party in confidence pursuant to
such confidentiality agreement.
(e) The Company shall not, and shall cause its Affiliates
not to, enter into any license or distribution agreement with
any third party (other than the Company or its Affiliates) with
respect to any Product unless such agreement contains provisions
that would allow any Independent Accountant appointed pursuant
to this Section 7.6 such access to the records of the other
party to such license or distribution agreement as may be
reasonably necessary to perform its duties pursuant to this
Section 7.6; provided that the Company and its Affiliates
shall not be required to amend any Existing Licenses. The
Parties agree that, if the Company or its Affiliates have
exercised audit rights under any license or distribution
agreement prior to the Majority Holders request for an
audit under this Section 7.6 and under such license or
distribution agreement the Company and its Affiliates cannot
request another audit, the results of the Companys prior
audit of such licensee or distributor will be used for purposes
of the audit requested by the Majority Holders under this
Section 7.6 and that the Company shall not have any further
obligation to provide access to an Independent Accountant with
respect to such licensee until such time as the Company may
again exercise its rights of audit under the license agreement
with such licensee.
Section 7.7 Listing
of CVRs. The Company hereby covenants and
agrees to use reasonable best efforts to cause the Securities to
be approved for listing (subject to notice of issuance) for
trading on the Nasdaq Capital Market and will use its reasonable
best efforts to maintain such listing for so long as any CVRs
remain Outstanding.
B-25
Section 7.8 Conflicting
Arrangements. So long as any of the
Securities remain Outstanding, the Company shall not enter into
any binding agreement, arrangement or understanding, or take or
permit to be taken any action, which would, or would reasonably
be expected to, delay or prevent the Companys ability to
timely make any CVR Payment that becomes due under this CVR
Agreement.
Section 7.9 Product
Transfer. Subject to Article 9, so long
as the Securities remain Outstanding, the Company and its
Affiliates may not, directly or indirectly, by a sale or swap of
assets, merger, reorganization, joint venture, lease, license or
any other transaction or arrangement, sell, transfer, convey or
otherwise dispose of their respective rights in and to any
Product to a third party (other than the Company or its
Affiliates), unless at all times after any such sale, transfer,
conveyance or other disposition, the gross amounts invoiced for
the Products by the applicable transferee (or the amounts of
royalties, profit split payments and milestone payments, as
described in clause (ii) of the definition of Net
Sales, with respect to Existing Licenses, as applicable)
will be reflected in Net Sales in accordance with the terms
hereunder (with the transferee substituted for the Company for
purposes of the definition of Net Sales) as if such
transferee was the Company, and the contract for such sale,
transfer, conveyance or other disposition (which the Company
shall take all reasonable actions necessary to enforce in all
material respects) shall provide for such treatment and shall
require the transferee to comply with the covenants in this
Section 7.9 and Sections 7.6, 7.10 and 7.11 hereof to
the same extent as the Company. For purposes of clarification,
this Section 7.9 shall not apply to sales of Products made
by the Company or its Affiliates or ordinary course licensing
arrangements between the Company and its Affiliates, on the one
hand, and third party licensees, distributors and contract
manufacturers, on the other hand, entered into in the ordinary
course of business for purposes of developing, manufacturing,
distributing and selling Products and for which the gross
amounts invoiced for sales of Products by the applicable third
party licensee, distributor or contract manufacturer (or the
amounts of royalties, profit split payments and milestone
payments, as described in clause (ii) of the definition of
Net Sales, with respect to Existing Licenses, as
applicable) will be reflected in Net Sales of such Products in
accordance with the terms of this Agreement.
Section 7.10 Milestones. The
Company shall use Diligent Efforts to achieve each of the
Milestones; provided, however, that such obligation to use
Diligent Efforts to achieve each of the Milestones shall
terminate upon the Milestone Target Date.
Section 7.11 Product
Sale and Development. The Company shall use
Diligent Efforts to obtain Regulatory Approval for the
Indications; provided, however, that such obligation to use
Diligent Efforts to obtain such Regulatory Approval shall
terminate upon the earlier of (a) the Net Sales Payment
Termination Date and (b) on an
Indication-by-Indication
basis, such time as the data generated in an appropriate
clinical trial does not support further development of the
Product described in clause (a) of the definition of
Product. The Company shall use Diligent Efforts to
sell the Products for which the Company has obtained Regulatory
Approval; provided, however, that such obligation to use
Diligent Efforts to sell the Products shall terminate upon the
Net Sales Payment Termination Date.
Section 7.12 Notice
of Default. The Company shall file with the
Trustee written notice of the occurrence of any Event of Default
or other default under this CVR Agreement within five
(5) business days of its becoming aware of any such Default
or Event of Default.
Section 7.13 Confidentiality. The
Trustee and the Holders hereby agree that any confidential or
non-public information (including Net Sales Statements) they
receive from or on behalf of the Company or any Affiliate of the
Company, which receipt arises out of the transactions
contemplated by this CVR Agreement (the Confidential
Information), shall: (a) not be used for any
purpose other than for purposes permitted under this CVR
Agreement; (b) not be used directly or indirectly in any
way that is for competitive purposes; and (c) not be
disclosed by, and be kept confidential by, such Trustee and the
Holders and its directors, officers, members, managers,
employees, affiliates, and agents (collectively,
Representatives); provided, however, that any
such Confidential Information may be disclosed only to their
Representatives (including the Independent Accountant) who
(i) need to know such Confidential Information and
(ii) are bound in writing to a non-disclosure agreement no
less restrictive than this Section 7.13. It is understood
that such Representatives shall be informed by the Trustee or
the applicable Holder of the confidential nature of such
Confidential Information, and that the Trustee or such Holder,
as applicable, shall be responsible for any disclosure or use
made by its Representatives in breach of obligations under this
CVR
B-26
Agreement to the same extent as if such disclosure or use had
been made directly by the Trustee or such Holder, as applicable.
Each of the Trustee and the Holders will as soon as practicable
notify the Company of any breach of this CVR Agreement of which
they become aware, and will use commercially reasonable efforts
to assist and cooperate with the Company in minimizing the
consequences of such breach. Confidential
Information shall not include any information that is
(i) publicly available other than because of disclosure by
the Trustee or the Holders or any of their respective
Representatives or (ii) is lawfully disclosed to the
Trustee or Holders by sources (other than the Company or its
Affiliates) rightfully in possession of the Confidential
Information. If the Trustee, Holders or their respective
Representatives are legally required or requested to disclose
any Confidential Information, they will in advance of such
disclosure, unless otherwise prohibited by Law, promptly notify
the Company of such request or requirement so that the Company
may seek to avoid or minimize the required disclosure
and/or
obtain an appropriate protective order or other appropriate
relief to ensure that any Confidential Information so disclosed
is maintained in confidence to the maximum extent possible by
the person receiving the disclosure, or, in the Companys
discretion, to waive compliance with the provisions of this CVR
Agreement. In any such case, the Trustee and the Holders agree
to cooperate and use reasonable efforts to avoid or minimize the
required disclosure
and/or
obtain such protective order or other relief. If, in the absence
of a protective order or the receipt of a waiver hereunder, the
Trustee, Holders or their respective Representatives are legally
obligated to disclose any Confidential Information, they will
disclose only so much thereof to the party compelling disclosure
as they believe in good faith, on the basis of advice of
counsel, is required by Law. The Trustee and Holders shall give
the Company prior written notice of the specific Confidential
Information that they believe they are required to disclose
under such circumstances. All Confidential Information disclosed
by or on behalf of the Company or any of its Affiliates shall
be, and shall remain, the property of the Company or such
Affiliate.
Section 7.14 Non-Use
of Name. Neither the Trustee nor the Holders
shall use the name, trademark, trade name, or logo of the
Company, its Affiliates, or their respective employees in any
publicity or news release relating to this CVR Agreement or its
subject matter, without the prior express written permission of
the Company.
ARTICLE 8
REMEDIES OF
THE TRUSTEE AND HOLDERS
ON EVENT OF
DEFAULT
Section 8.1 Event
of Default Defined; Waiver of
Default. Event of Default
with respect to the Securities, means each one of the following
events which shall have occurred and be continuing (whatever the
reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of Law or
pursuant to any judgment, decree or order of any court or any
order, rule or regulation of any administrative or governmental
body):
(a) default in the payment of all or any part of any CVR
Payment after a period of ten (10) Business Days after such
CVR Payment shall become due and payable on a Payment Date or
otherwise; or
(b) material default in the performance, or breach in any
material respect, of any covenant or warranty of the Company in
respect of the Securities (other than a covenant or warranty in
respect of the Securities, a default in whose performance or
whose breach is elsewhere in this Section specifically dealt
with), and continuance of such default or breach for a period of
ninety (90) days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Majority Holders, a written
notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a Notice of
Default hereunder; or
(c) a court having jurisdiction in the premises shall enter
a decree or order for relief in respect of the Company in an
involuntary case under any applicable bankruptcy, insolvency or
other similar Law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Company or for any
substantial part of its property or ordering the winding up or
liquidation of its affairs, and such decree or order shall
remain unstayed and in effect for a period of ninety
(90) consecutive days; or
(d) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar Law now or
hereafter in effect, or consent to the entry of an order for
relief in an involuntary case under any
B-27
such Law, or consent to the appointment of or taking possession
by a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Company or for any
substantial part of its property, or make any general assignment
for the benefit of creditors.
If an Event of Default described above occurs and is continuing,
then, and in each and every such case, either the Trustee or the
Trustee upon the written request of the Majority Holders by
notice in writing to the Company (and to the Trustee if given by
the Majority Holders), shall bring suit to protect the rights of
the Holders, including to obtain payment for any amounts then
due and payable, which amounts shall bear interest at the
Default Interest Rate until payment is made to the Trustee.
The foregoing provisions, however, are subject to the condition
that if, at any time after the Trustee shall have begun such
suit, and before any judgment or decree for the payment of the
moneys due shall have been obtained or entered as hereinafter
provided, the Company shall pay or shall deposit with the
Trustee a sum sufficient to pay all amounts which shall have
become due (with interest upon such overdue amount at the
Default Interest Rate to the date of such payment or deposit)
and such amount as shall be sufficient to cover reasonable
compensation to the Trustee, its agents, attorneys and counsel,
and all other expenses and liabilities incurred and all advances
made, by the Trustee, and if any and all Events of Default under
this CVR Agreement shall have been cured, waived or otherwise
remedied as provided herein, then and in every such case the
Majority Holders, by written notice to the Company and to the
Trustee, may waive all defaults with respect to the Securities,
but no such waiver or rescission and annulment shall extend to
or shall affect any subsequent default or shall impair any right
consequent thereof.
Section 8.2 Collection
by the Trustee; the Trustee May Prove Payment
Obligations. The Company covenants that in
case default shall be made in the payment of all or any part of
the Securities when the same shall have become due and payable,
whether at a Payment Date or otherwise, then upon demand of the
Trustee, the Company will pay to the Trustee for the benefit of
the Holders of the Securities the whole amount that then shall
have become due and payable on all Securities (with interest
from the date due and payable to the date of such payment upon
the overdue amount at the Default Interest Rate); and in
addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, including reasonable
compensation to the Trustee and each predecessor Trustee, their
respective agents, attorneys and counsel, and any expenses and
liabilities incurred, and all advances made, by the Trustee and
each predecessor Trustee, except as a result of its negligence
or bad faith.
The Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders by such appropriate
judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this CVR Agreement
or in aid of the exercise of any power granted herein, or to
enforce any other remedy.
In case the Company shall fail forthwith to pay such amounts
upon such demand, the Trustee, in its own name and as trustee of
an express trust, shall be entitled and empowered to institute
any action or proceedings at Law or in equity for the collection
of the sums so due and unpaid, and may prosecute any such action
or proceedings to judgment or final decree, and may enforce any
such judgment or final decree against the Company or other
obligor upon such Securities and collect in the manner provided
by Law out of the property of the Company or other obligor upon
such Securities, wherever situated, the moneys adjudged or
decreed to be payable.
In any judicial proceedings relative to the Company or other
obligor upon the Securities, irrespective of whether any amount
is then due and payable with respect to the Securities, the
Trustee is authorized:
(a) to file and prove a claim or claims for the whole
amount owing and unpaid in respect of the Securities, and to
file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including
any claim for reasonable compensation to the Trustee and each
predecessor Trustee, and their respective agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Trustee and each
predecessor Trustee, except as a result of negligence or bad
faith) and of the Holders allowed in any judicial proceedings
relative to the Company or other obligor upon the Securities, or
to their respective property;
(b) unless prohibited by and only to the extent required by
applicable Law, to vote on behalf of the Holders in any election
of a trustee or a standby trustee in arrangement,
reorganization, liquidation or other bankruptcy or insolvency
proceedings or person performing similar functions in comparable
proceedings; and
B-28
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all
amounts received with respect to the claims of the Holders and
of the Trustee on their behalf; and any trustee, receiver, or
liquidator, custodian or other similar official is hereby
authorized by each of the Holders to make payments to the
Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to the Holders, to pay to the
Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Trustee, each predecessor Trustee and their
respective agents, attorneys and counsel, and all other expenses
and liabilities incurred, and all advances made, by the Trustee
and each predecessor Trustee, except as a result of its
negligence or bad faith, and all other amounts due to the
Trustee or any predecessor Trustee pursuant to Section 4.6.
To the extent that such payment of reasonable compensation,
expenses, disbursements, advances and other amounts out of the
estate in any such proceedings shall be denied for any reason,
payment of the same shall be secured by a lien on, and shall be
paid out of, any and all distributions, dividends, moneys,
securities and other property which the Holders may be entitled
to receive in such proceedings, whether in liquidation or under
any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or vote for or accept or
adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities,
or the rights of any Holder thereof, or to authorize the Trustee
to vote in respect of the claim of any Holder in any such
proceeding except, as aforesaid, to vote for the election of a
trustee in bankruptcy or similar person.
All rights of action and of asserting claims under this CVR
Agreement, or under any of the Securities, may be enforced by
the Trustee without the possession of any of the Securities or
the production thereof and any trial or other proceedings
instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment,
subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their
respective agents and attorneys, shall be for the ratable
benefit of the Holders.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of
this CVR Agreement to which the Trustee shall be a party) the
Trustee shall be held to represent all the Holders, and it shall
not be necessary to make any Holders of such Securities parties
to any such proceedings.
Section 8.3 Application
of Proceeds. Any monies collected by the
Trustee pursuant to this Article in respect of any Securities
shall be applied in the following order at the date or dates
fixed by the Trustee upon presentation of the several Securities
in respect of which monies have been collected and stamping (or
otherwise noting) thereon the payment in exchange for the
presented Securities if only partially paid or upon surrender
thereof if fully paid:
FIRST: To the payment of costs and expenses in
respect of which monies have been collected, including
reasonable compensation to the Trustee and each predecessor
Trustee and their respective agents and attorneys and of all
expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of its
negligence or willful misconduct, and all other amounts due to
the Trustee or any predecessor Trustee pursuant to
Section 4.6;
SECOND: To the payment of the whole amount
then owing and unpaid upon all the Securities, with interest at
the Default Interest Rate on all such amounts, and in case such
monies shall be insufficient to pay in full the whole amount so
due and unpaid upon the Securities, then to the payment of such
amounts without preference or priority of any security over any
other Security, ratably to the aggregate of such amounts due and
payable; and
THIRD: To the payment of the remainder, if
any, to the Company or any other person lawfully entitled
thereto.
Section 8.4 Suits
for Enforcement. In case an Event of Default
has occurred, has not been waived and is continuing, the Trustee
may in its discretion proceed to protect and enforce the rights
vested in it by this CVR Agreement by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect
and enforce any of such rights, either at Law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this CVR Agreement or in
aid of the exercise of any power granted in this CVR Agreement
or to enforce any other legal or equitable right vested in the
Trustee by this CVR Agreement or by Law.
B-29
Section 8.5 Restoration
of Rights on Abandonment of Proceedings. In
case the Trustee or any Holder shall have proceeded to enforce
any right under this CVR Agreement and such proceedings shall
have been discontinued or abandoned for any reason, or shall
have been determined adversely to the Trustee or to such Holder,
then and in every such case the Company and the Trustee and the
Holders shall be restored respectively to their former positions
and rights hereunder, and all rights, remedies and powers of the
Company, the Trustee and the Holders shall continue as though no
such proceedings had been taken.
Section 8.6 Limitations
on Suits by Holders. Subject to the right of
the Majority Holders under Section 7.6, no Holder of any
Security shall have any right by virtue or by availing of any
provision of this CVR Agreement to institute any action or
proceeding at Law or in equity or in bankruptcy or otherwise
upon or under or with respect to this CVR Agreement, or for the
appointment of a trustee, receiver, liquidator, custodian or
other similar official or for any other remedy hereunder, unless
such Holder previously shall have given to the Trustee written
notice of default and of the continuance thereof, as
hereinbefore provided, and unless also the Majority Holders
shall have made written request upon the Trustee to institute
such action or proceedings in its own name as trustee hereunder
and shall have offered to the Trustee such reasonable indemnity
as it may require against the costs, expenses and liabilities to
be incurred therein or thereby and the Trustee for fifteen
(15) days after its receipt of such notice, request and
offer of indemnity shall have failed to institute any such
action or proceeding and no direction inconsistent with such
written request shall have been given to the Trustee pursuant to
Section 8.9. For the protection and enforcement of the
provisions of this Section, each and every Holder and the
Trustee shall be entitled to such relief as can be given either
at Law or in equity.
Section 8.7 Unconditional
Right of Holders to Institute Certain
Suits. Notwithstanding any other provision in
this CVR Agreement and any provision of any Security, the right
of any Holder of any Security to receive payment of the amounts
payable in respect of such Security on or after the respective
due dates expressed in such Security, or to institute suit for
the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of
such Holder.
Section 8.8 Powers
and Remedies Cumulative; Delay or Omission Not Waiver of
Default.
(a) Except as provided in Section 8.6, no right or
remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent
permitted by Law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at
Law or in equity or otherwise. The assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate
right or remedy.
(b) No delay or omission of the Trustee or of any Holder to
exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such
right or power or shall be construed to be a waiver of any such
Event of Default or an acquiescence therein; and, subject to
Section 8.6, every power and remedy given by this CVR
Agreement or by Law to the Trustee or to the Holders may be
exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or by the Holders.
Section 8.9 Control
by Holders.
(a) The Majority Holders shall have the right to direct the
time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any power
conferred on the Trustee with respect to the Securities by this
CVR Agreement; provided that such direction shall not be
otherwise than in accordance with Law and the provisions of this
CVR Agreement; and provided further that (subject to the
provisions of Section 4.1) the Trustee shall have the right
to decline to follow any such direction if the Trustee, being
advised by counsel, shall determine that the action or
proceeding so directed may not lawfully be taken or if the
Trustee in good faith by its board of directors, the executive
committee, or a committee of directors or responsible officers
of the Trustee shall determine that the action or proceedings so
directed would involve the Trustee in personal liability or if
the Trustee in good faith shall so determine that the actions or
forbearances specified in or pursuant to such direction would be
unduly prejudicial to the interests of Holders of the Securities
not joining in the giving of said direction.
(b) Nothing in this CVR Agreement shall impair the right of
the Trustee in its discretion to take any action deemed proper
by the Trustee and which is not inconsistent with such direction
or directions by Holders.
B-30
Section 8.10 Waiver
of Past Defaults.
(a) In the case of a default or an Event of Default
specified in clause (b), (c) or (d) of
Section 8.1, the Majority Holders may waive any such
default or Event of Default, and its consequences except a
default in respect of a covenant or provisions hereof which
cannot be modified or amended without the consent of the Holder
of each Security affected. In the case of any such waiver, the
Company, the Trustee and the Holders of the Securities shall be
restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.
(b) Upon any such waiver, such default shall cease to exist
and be deemed to have been cured and not to have occurred, and
any Event of Default arising therefrom shall be deemed to have
been cured, and not to have occurred for every purpose of this
CVR Agreement; but no such waiver shall extend to any subsequent
or other default or Event of Default or impair any right
consequent thereon.
Section 8.11 The
Trustee to Give Notice of Default, But May Withhold in Certain
Circumstances. The Trustee shall transmit to
the Holders, as the names and addresses of such Holders appear
on the Security Register (as provided under Section 313(c)
of the Trust Indenture Act, if applicable), notice by mail
of all defaults which have occurred and are known to the
Trustee, such notice to be transmitted within ninety
(90) days after the occurrence thereof, unless such
defaults shall have been cured before the giving of such notice
(the term default for the purposes of this Section
being hereby defined to mean any event or condition which is, or
with notice or lapse of time or both would become, an Event of
Default); provided that, except in the case of default in the
payment of the amounts payable in respect of any of the
Securities, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive
committee, or a trust committee of directors or trustees
and/or
Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interests of the
Holders.
Section 8.12 Right
of Court to Require Filing of Undertaking to Pay
Costs. All Parties to this CVR Agreement
agree, and each Holder of any Security by his acceptance thereof
shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right
or remedy under this CVR Agreement or in any suit against the
Trustee for any action taken, suffered or omitted by it as the
Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including
attorneys fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this
Section 8.12 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder or group of
Holders holding in the aggregate more than ten percent (10%) of
the Securities Outstanding or to any suit instituted by any
Holder for the enforcement of the payment of any Security on or
after the due date expressed in such Security.
ARTICLE 9
CONSOLIDATION,
MERGER, SALE OR CONVEYANCE
Section 9.1 Company
May Consolidate, etc., on Certain Terms. The
Company covenants that it will not merge or consolidate with or
into any other Person or sell or convey all or substantially all
of its assets to any Person, unless, (i) the Company shall
be the continuing Person, or the successor Person or the Person
which acquires by sale or conveyance substantially all the
assets of the Company (including the shares of Abraxis) shall be
a Person organized under the Laws of the United States of
America or any State thereof and shall expressly assume by an
instrument supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the Securities, according to their tenor,
and the due and punctual performance and observance of all of
the covenants and conditions of this CVR Agreement to be
performed or observed by the Company and (ii) the Company,
or such successor Person, as the case may be, shall not,
immediately after such merger or consolidation, or such sale or
conveyance, be in default in the performance of any such
covenant or condition.
Section 9.2 Successor
Person Substituted.
(a) In case of any such consolidation, merger, sale or
conveyance, and following such an assumption by the successor
Person, such successor Person shall succeed to and be
substituted for the Company with the same effect as if it had
been named herein. Such successor Person may cause to be signed,
and may issue either in its own name or
B-31
in the name of the Company prior to such succession any or all
of the Securities issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee;
and, upon the order of such successor corporation instead of the
Company and subject to all the terms, conditions and limitations
in this CVR Agreement prescribed, the Trustee shall authenticate
and shall deliver any Securities which previously shall have
been signed and delivered to the Trustee for authentication, and
any Securities which such successor corporation thereafter shall
cause to be signed and delivered to the Trustee for that
purpose. All of the Securities so issued shall in all respects
have the same legal rank and benefit under this CVR Agreement as
the Securities theretofore or thereafter issued in accordance
with the terms of this CVR Agreement as though all of such
Securities had been issued at the date of the execution hereof.
(b) In case of any such consolidation, merger, sale or
conveyance, such changes in phraseology and form (but not in
substance) may be made in the Securities thereafter to be issued
as may be appropriate. The successor entity to such
consolidation, merger, sale or conveyance may satisfy the
obligations of Section 5.4(a)(i) and (ii) of this CVR
Agreement by providing copies of such successor entitys
Exchange Act Documents in the case of Section 5.4(a)(i) or
such successor entitys financial information in the case
of Section 5.4(a)(ii).
(c) In the event of any such sale, transfer or conveyance
(other than a conveyance by way of lease) the Company or any
Person which shall theretofore have become such in the manner
described in this Article shall be discharged from all
obligations and covenants under this CVR Agreement and the
Securities and may be liquidated and dissolved.
Section 9.3 Opinion
of Counsel to the Trustee. The Trustee,
subject to the provisions of Sections 4.1 and 4.2, shall
receive an Officers Certificate and Opinion of Counsel,
prepared in accordance with Sections 1.3 and 1.4, as
conclusive evidence that any such consolidation, merger, sale or
conveyance, and any such assumption, and any such liquidation or
dissolution, complies with the applicable provisions of this CVR
Agreement, and if a supplemental agreement is required in
connection with such transaction, such supplemental agreement
complies with this Article and that there has been compliance
with all conditions precedent herein provided for or relating to
such transaction.
Section 9.4 Successors. All
covenants, provisions and agreements in this CVR Agreement by or
for the benefit of the Company, the Trustee or the Holders shall
bind and inure to the benefit of their respective successors,
assigns, heirs and personal representatives, whether so
expressed or not. The Company may assign this CVR Agreement
without the prior written consent of the other Parties to this
CVR Agreement to one or more of its direct or indirect
Subsidiaries, provided, however, that in the event of any such
assignment the Company shall remain subject to its obligations
and covenants hereunder, including but not limited to its
obligation to make any Net Sales Payments and any Milestone
Payments.
ARTICLE 10
SUBORDINATION
Section 10.1 Agreement
to Subordinate. The Company agrees, and each
Holder by accepting a Security hereunder agrees, that the CVR
Payments, all other obligations under this CVR Agreement and the
Securities and any rights or claims relating thereto
(collectively, the Junior Obligations)
are subordinated in right of payment, to the extent and in the
manner provided in this Article 10, to the prior payment in
full in cash or cash equivalents of all Senior Obligations of
the Company (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of the holders of such Senior
Obligations.
Section 10.2 Liquidation;
Dissolution; Bankruptcy. Upon any
distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the
Company or its property, in an assignment for the benefit of
creditors or any marshaling of the Companys assets and
liabilities:
(a) holders of Senior Obligations will be entitled to
receive payment in full in cash or cash equivalents of all
Senior Obligations of the Company (including interest after the
commencement of any bankruptcy proceeding at
B-32
the rate specified in the applicable Senior Obligation, whether
or not permitted under such bankruptcy proceedings) before the
Holders will be entitled to receive any payment of any kind with
respect to the Junior Obligations; and
(b) until all Senior Obligations of the Company (as
provided in clause (a) above) are paid in full in cash or
cash equivalents, any distribution to which Holders would be
entitled but for this Article 10 will be made to holders of
Senior Obligations of the Company, as their interests may appear.
Section 10.3 Default
on Senior Obligations. The Company may not
make any payment or distribution to any Holder in respect of
Junior Obligations or acquire from any Holder for cash or
property any Junior Obligations:
(a) if any default on any Senior Obligations exceeding
twenty-five million dollars ($25,000,000) in aggregate principal
amount would occur as a result of such payment, distribution or
acquisition;
(b) during the continuance of any payment default in
respect of any Senior Obligations (after expiration of any
applicable grace period) exceeding twenty-five million dollars
($25,000,000) in aggregate principal amount;
(c) if the maturity of any Senior Obligations representing
more than twenty-five million dollars ($25,000,000) in aggregate
principal amount is accelerated in accordance with its terms and
such acceleration has not been rescinded; or
(d) following the occurrence of any default (other than a
payment default, and after the expiration of any applicable
grace period) with respect to any Senior Obligations with an
aggregate principal amount of more than twenty-five million
dollars ($25,000,000), the effect of which is to permit the
holders of such Senior Obligations (or a trustee or agent acting
on their behalf) to cause, with the giving of notice if
required, the maturity of such Senior Obligations to be
accelerated, for a period commencing upon the receipt by the
Trustee (with a copy to the Company) of a written notice of such
default from the representative of the holders of such Senior
Obligations and ending when such Senior Obligations are paid in
full in cash or cash equivalents or, if earlier, when such
default is cured or waived.
Section 10.4 When
Distribution Must Be Paid Over.
(a) In the event that the Trustee or any Holder receives
any payment of any Junior Obligations at a time when such
payment is prohibited by this Article 10, such payment will
be held by the Trustee or such Holder, in trust for the benefit
of, and will be paid forthwith over and delivered, upon written
request, to, the holders of Senior Obligations of the Company as
their interests may appear or their representative under the
agreement, indenture or other document (if any) pursuant to
which such Senior Obligations may have been issued, as their
respective interests may appear, for application to the payment
of all such Senior Obligations remaining unpaid to the extent
necessary to pay such Senior Obligations in full in accordance
with their terms, after giving effect to any concurrent payment
or distribution to or for the holders of Senior Obligations.
(b) Any amount received by any Holder as a result of direct
or indirect credit support for the Junior Obligations from any
Affiliate of the Company shall be treated as payments received
by such Holder from the Company that are subject to the
provisions of this Article 10.
(c) With respect to the holders of Senior Obligations, the
Trustee undertakes to perform only those obligations on the part
of the Trustee as are specifically set forth in this
Article 10, and no implied covenants or obligations with
respect to the holders of Senior Obligations will be read into
this CVR Agreement against the Trustee. The Trustee will not be
deemed to owe any fiduciary duty to the holders of Senior
Obligations, and will not be liable to any such holders if the
Trustee pays over or distributes to or on behalf of Holders or
the Company or any other Person money or assets to which any
holders of Senior Obligations are then entitled by virtue of
this Article 10, except if such payment is made as a result
of the willful misconduct or gross negligence of the Trustee.
Section 10.5 Notice
by Company. The Company will promptly notify
the Trustee of any facts known to the Company that would cause a
payment of any Junior Obligations to violate this
Article 10, but failure to give such notice will not affect
the subordination of the Junior Obligations to the Senior
Obligations as provided in this Article 10.
B-33
Section 10.6 Subordination
Effective Notwithstanding Deficiencies with Respect to Senior
Obligations; Waiver of Right to Contest Senior Obligation;
Reinstatement of Subordination Provisions.
(a) The Holders hereby agree that subordination provisions
contained in this Article 10 are unconditional,
irrespective of the validity, regularity or enforceability of
the Senior Obligations, the absence of any action to enforce the
same, any waiver or consent by any holder of Senior Obligations
with respect to any provisions thereof, the recovery of any
judgment against the Company, any action to enforce the same or
any other circumstance which might otherwise constitute a legal
or equitable discharge or defense. Without limiting the
foregoing, and notwithstanding anything to the contrary
contained elsewhere in this CVR Agreement, in the event that the
amount of Senior Obligations are reduced or diminished for any
reason (other than as a result of the payment in cash or cash
equivalents thereof), whether because of the applicability of
fraudulent conveyance or other applicable Laws, or any other
invalidity or limitation on the amount of Senior Obligations,
the subordination provisions thereof shall apply to the full
amount of Senior Obligations (without giving effect to any
reduction, invalidity or diminution thereof), and the turnover
provisions hereunder shall be fully enforceable with respect to
the full amount of Senior Obligations (without giving effect to
any such reduction, invalidity or diminution thereof), even if
the effect thereof is that there will be no (or a limited amount
of) Senior Obligations to which the Junior Obligations are
subrogated after the payment in full in cash of any of then
remaining Senior Obligations (without giving effect to any
reductions, invalidity or diminution thereof, except for
reductions as a result of payments thereof in cash or cash
equivalents).
(b) The Trustee and the Holders agree that they shall not
(and hereby waive any right to) take any action to contest or
challenge (or assist or support any other Person in contesting
or challenging), directly or indirectly, whether or not in any
proceeding (including in any proceeding commenced by or against
any Person under any provision of Title 11 of the United
States Code, as now and hereinafter in effect, or any successor
statute or under any other state or federal bankruptcy or
insolvency Law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement,
or other similar relief), the validity or enforceability of the
Senior Obligations.
(c) If any payment made or in respect to the Senior
Obligations must be disgorged or returned for any reason, the
Senior Obligations shall be reinstated hereunder and for all
purposes of this Article 10 (including, without limitation,
the turnover provisions hereof) such payment shall be deemed to
have never been made with respect to the Senior Obligations.
Section 10.7 Subrogation. After
all Senior Obligations are paid in full in cash or cash
equivalents and until the Junior Obligations are paid in full,
Holders will be subrogated to the rights of holders of Senior
Obligations to receive distributions applicable to Senior
Obligations to the extent that distributions otherwise payable
to the Holders have been applied to the payment of Senior
Obligations. The Holders by accepting the Securities acknowledge
that to the extent that the Senior Obligations are determined to
be unenforceable, or the Senior Obligations are subordinated to
other obligations of the Company, such subrogation rights may be
impaired.
Section 10.8 Relative
Rights. This Article 10 defines the
relative rights of Holders and holders of Senior Obligations.
Nothing in this CVR Agreement will:
(a) impair, as between the Company and Holders, the
obligations of the Company under this CVR Agreement and the
Securities; or
(b) affect the relative rights of Holders and creditors of
the Company other than their rights in relation to holders of
Senior Obligations.
(c) If the Company fails because of this Article 10 to
pay any amounts due in respect of the Securities on a due date
in violation of Section 8.1, the failure is still an Event
of Default.
Section 10.9 Subordination
May Not Be Impaired by Company. No right of
any holder of Senior Obligations to enforce the subordination of
the Junior Obligations may be impaired by any act or failure to
act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this CVR Agreement.
Section 10.10 Distribution
or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of
Senior Obligations, the distribution may be made and the notice
given to their representative in accordance with the terms of
the instrument or other agreement governing such Senior
Obligations. Upon any
B-34
payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders will be
entitled to rely upon any order or decree made by any court of
competent jurisdiction or upon any certificate of such
representative or of the liquidating trustee or agent or other
Person making any distribution to the Trustee or to the Holders
for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior
Obligations and other obligations of the Company, the amount
thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to
this Article 10.
Section 10.11 Rights
of the Trustee. Notwithstanding the
provisions of this Article 10 or any other provision of
this CVR Agreement, the Trustee will not be charged with
knowledge of the existence of any facts that would prohibit the
making of any payment or distribution by the Trustee, and the
Trustee may continue to make payments on the Securities, unless
the Trustee has received at its address for notice specified in
Section 1.5 at least five (5) Business Days prior to
the date of such payment written notice of facts that would
cause the payment of any Junior Obligations to violate this
Article 10. Only the Company or a representative of Senior
Obligations may give the notice. Nothing in this Article 10
will impair the claims of, or payments to, the Trustee under or
pursuant to Section 4.7 hereof. The Trustee in its
individual or any other capacity may hold Senior Obligations
with the same rights it would have if it were not the Trustee.
Section 10.12 Authorization
to Effect Subordination. Each Holder, by the
Holders acceptance of the Securities, authorizes and
directs the Trustee on such Holders behalf to take such
action as may be necessary or appropriate to effectuate the
subordination as provided in this Article 10, and appoints
the Trustee to act as such Holders attorney-in-fact for
any and all such purposes. If the Trustee (or any other Person
acting on behalf of and at the direction of the Majority
Holders) does not file a proper proof of claim or proof of debt
in the form required in any proceeding referred to in
Section 8.2 hereof at least thirty (30) days before
the expiration of the time to file such claim, the
representatives of the Senior Obligations are hereby authorized
to file an appropriate claim for and on behalf of the Holders of
the Securities.
Section 10.13 Amendments. The
provisions of this Article 10 are expressly made for the
benefit of the holders from time to time of the Senior
Obligations, and may not be amended or modified without the
written consent of the representatives of the holders of all
Senior Obligations.
ARTICLE 11
REDEMPTION OF
SECURITIES
Section 11.1 Notice
to Trustee. If the Company elects to redeem
Securities pursuant to the optional redemption provisions of
Section 11.6 hereof, it shall furnish to the Trustee, at
least forty five (45) days (unless a shorter period shall
be agreed to by the Trustee) but not more than sixty
(60) days before a redemption date (but in any event prior
to the notice provided pursuant to Section 11.3 hereof), an
Officers Certificate (a Consent and Purchase
Offer) setting forth (i) the clause of this CVR
Agreement pursuant to which the redemption shall occur,
(ii) the redemption date, (iii) the amount of CVRs to
be redeemed and (iv) the redemption price.
Section 11.2 Selection
of Securities to be Redeemed. If less than
all of the Securities are to be redeemed or purchased in a
Consent and Purchase Offer at any time, the Trustee shall select
the Securities to be redeemed or purchased among the Holders in
compliance with the requirements of the principal national
securities exchange, if any, on which the Securities are listed
or, if the Securities are not so listed, on a pro rata basis, by
lot or in accordance with any other method the Trustee considers
fair and appropriate. In the event of partial redemption by lot,
the particular Securities to be redeemed shall be selected,
unless otherwise provided herein, not less than thirty
(30) nor more than sixty (60) days prior to the
redemption date by the Trustee from the outstanding Securities
not previously called for redemption. The Trustee shall promptly
notify the Company in writing of the Securities selected for
redemption or purchase.
Section 11.3 Notice
of Redemption. At least thirty (30) days
but not more than sixty (60) days before a redemption date,
the Company shall mail or cause to be mailed, by first class
mail, a notice of redemption to each Holder whose Securities are
to be redeemed at its registered address. The notice (the
Call Notice) shall identify the amount of
Securities to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
B-35
(c) the name and address of the paying agent;
(d) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(e) that, unless the Company defaults in making such
redemption payment, all right title and interest in and to the
Securities and any Net Sales Payment, Milestone Payment or any
other amounts due under this CVR Agreement, if any, on
Securities called for redemption ceases to accrue on and after
the redemption date;
(f) the clause of this CVR Agreement pursuant to which the
Securities called for redemption are being redeemed; and
(g) that no representation is made as to the correctness or
accuracy of the CUSIP and ISIN number, if any, listed in such
notice or printed on the Securities.
At the Companys request, the Trustee shall give the notice
of redemption in the Companys name and at its expense;
provided, however, that the Company shall have delivered to the
Trustee at least forty five (45) days (unless a shorter
period shall be agreed to by the Trustee) but not more than
sixty (60) days prior to the redemption date, an
Officers Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph.
Section 11.4 Effect
of Notice of Redemption. Once notice of
redemption is mailed in accordance with Section 11.3
hereof, Securities called for redemption shall become
irrevocably due and payable on the redemption date at the
redemption price. A notice of redemption shall be deemed to be
given when mailed, whether or not the Holder receives the
notice. In any event, failure to give such notice, or any defect
in such notice, shall not affect the validity of the proceedings
for the redemption of the Securities held by Holders to whom
such notice was properly given.
Section 11.5 Deposit
of Redemption Price. On or one
(1) Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the paying agent (if
different from the Trustee) money sufficient to pay the
redemption price of all Securities to be redeemed on that date.
The Trustee or the paying agent shall promptly return to the
Company any money deposited with the Trustee or the paying agent
by the Company in excess of the amounts necessary to pay the
redemption price of all Securities to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption or purchase date, as
applicable, all right title and interest of a Holder to any Net
Sales Payment or Milestone Payment, if any, shall cease to
accrue on the Securities called for redemption or subject to
purchase. If any Security called for redemption or subject to
purchase shall not be so paid upon surrender for redemption or
purchase because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid
redemption price from the redemption date or Purchase Date, as
applicable, until such redemption price is paid at the Shortfall
Interest Rate.
Section 11.6 Optional
Redemption by the Company. The Company may,
at any time on and after the Redemption Eligibility Date,
redeem all (but not less than all) of the outstanding Securities
at a cash redemption price equal to the average price paid per
Security for all Securities previously purchased by the Company
calculated as of the Business Day immediately prior to the date
of the Call Notice mailed by the Company in accordance with
Section 11.3 hereof.
B-36
IN WITNESS WHEREOF, the Parties hereto have caused this CVR
Agreement to be duly executed, all as of the day and year first
above written.
CELGENE CORPORATION
Name:
Title:
[ ],
as the Trustee
Name:
Title:
B-37
ANNEX A
CELGENE
CORPORATION
|
|
|
|
|
No.
|
|
Certificate for
|
|
Contingent Value Rights
|
This certifies
that ,
or registered assigns (the Holder), is the
registered holder of the number of Contingent Value Rights
(CVRs or Securities) set
forth above. Each CVR entitles the Holder, subject to the
provisions contained herein and in the CVR Agreement referred to
on the reverse hereof, to payments from Celgene Corporation, a
Delaware corporation (the Company), in an
amounts and in the forms determined pursuant to the provisions
set forth on the reverse hereof and as more fully described in
the CVR Agreement referred to on the reverse hereof. Such
payments shall be made on a Payment Date, as defined in the CVR
Agreement referred to on the reverse hereof.
Payment of any amounts pursuant to this CVR Certificate shall be
made only to the registered Holder (as defined in the CVR
Agreement) of this CVR Certificate. Such payment shall be made
in the Borough of Manhattan, The City of New York, or at any
other office or agency maintained by the Company for such
purpose, in such coin or currency of the United States of
America as at the time is legal tender for the payment of public
and private debts; provided, however, the Company may pay such
amounts by wire transfer or check payable in such money.
[TRUSTEE] has been initially appointed as Paying Agent at its
office or agency in the Borough of Manhattan, The City of New
York.
Reference is hereby made to the further provisions of this CVR
Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by
manual signature, this CVR Certificate shall not be entitled to
any benefit under the CVR Agreement, or be valid or obligatory
for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
[ ]
Name:
Title:
Dated:
Attest:
Authorized Signature
B-38
[Form of
Reverse of CVR Certificate]
1. This CVR Certificate is issued under and in accordance
with the Contingent Value Rights Agreement, dated as of
[ ], 2010 (the CVR
Agreement), between the Company and
[ ], a national banking association, as trustee
(the Trustee, which term includes any
successor Trustee under the CVR Agreement), and is subject to
the terms and provisions contained in the CVR Agreement, to all
of which terms and provisions the Holder of this CVR Certificate
consents by acceptance hereof. The CVR Agreement is hereby
incorporated herein by reference and made a part hereof.
Reference is hereby made to the CVR Agreement for a full
statement of the respective rights, limitations of rights,
duties, obligations and immunities thereunder of the Company,
the Trustee and the Holders of the CVRs. All capitalized terms
used in this CVR Certificate without definition shall have the
respective meanings ascribed to them in the CVR Agreement.
Copies of the CVR Agreement can be obtained by contacting the
Trustee.
2. On each Net Sales Payment Date, the Company shall pay to
the Holder hereof, for each CVR represented hereby, a pro rata
portion of the Net Sales Payment, if any, with respect to the
Net Sales Measuring Period ended immediately prior to such Net
Sales Payment Date.
3. In the event of any conflict between this CVR
Certificate and the CVR Agreement, the CVR Agreement shall
govern and prevail.
4. Subject to the terms and conditions of the CVR
Agreement, on each Milestone Payment Date (or, in any such case,
if such day is not a Business Day, without accruing any
interest, on the next succeeding Business Day), the Company
shall pay to the Holder hereof, for each CVR represented hereby,
a pro rata portion of the applicable Milestone Payment with
respect to the occurrence of a Milestone.
5. Each CVR Payment, if any, and interest thereon, if any,
shall be payable by the Company in such coin or currency of the
United States of America as at the time is legal tender for the
payment of public and private debts; provided, however, the
Company may pay such amounts by its check or wire transfer
payable in such money. [TRUSTEE] has been initially appointed as
Paying Agent at its office or agency in the Borough of
Manhattan, The City of New York.
6. If an Event of Default occurs and is continuing, either
the Trustee may or the Majority Holders, by notice to the
Company and to the Trustee shall bring suit in accordance with
the terms and conditions of the CVR Agreement to protect the
rights of the Holders, including to obtain payment of all
amounts then due and payable, with interest at the Default
Interest Rate from the date of the Event of Default through the
date payment is made or duly provided for.
7. No reference herein to the CVR Agreement and no
provision of this CVR Certificate or of the CVR Agreement shall
alter or impair the obligation of the Company, which is absolute
and unconditional, to pay any amounts determined pursuant to the
terms hereof and of the CVR Agreement at the times, place and
amount, and in the manner, herein prescribed.
8. Each CVR Payment or any other right, claim or payment of
any kind under this CVR Certificate, if any, shall be
subordinated in right of payment, as set forth in
Article 10 of the CVR Agreement, to the prior payment in
full in cash or cash equivalents of all Senior Obligations
whether outstanding on the date of the CVR Agreement or
thereafter incurred.
9. As provided in the CVR Agreement and subject to certain
limitations therein set forth, the transfer of the CVRs
represented by this CVR Certificate is registrable on the
Security Register, upon surrender of this CVR Certificate for
registration of transfer at the office or agency of the Company
maintained for such purpose in the Borough of Manhattan, The
City of New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and
the Security Registrar duly executed by, the Holder hereof or
his attorney duly authorized in writing, and thereupon one or
more new CVR Certificates, for the same amount of CVRs, will be
issued to the designated transferee or transferees. The Company
hereby initially designates the office of [TRUSTEE] at
[ ] as the office for registration of transfer
of this CVR Certificate.
10. As provided in the CVR Agreement and subject to certain
limitations therein set forth, this CVR Certificate is
exchangeable for one or more CVR Certificates representing the
same number of CVRs as represented by this CVR Certificate as
requested by the Holder surrendering the same.
B-39
11. No service charge will be made for any registration of
transfer or exchange of CVRs, but the Company may require
payment of a sum sufficient to cover all documentary, stamp or
similar issue or transfer taxes or other governmental charges
payable in connection with any registration of transfer or
exchange.
12. Prior to the time of due presentment of this CVR
Certificate for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this CVR Certificate is registered as
the owner hereof for all purposes, and neither the Company, the
Trustee nor any agent shall be affected by notice to the
contrary.
13. Neither the Company nor the Trustee has any duty or
obligation to the holder of this CVR Certificate, except as
expressly set forth herein or in the CVR Agreement.
14. Redemption.
(a) Notice to Trustee. If the
Company elects to redeem Securities pursuant to the optional
redemption provisions of Section 11.6 of the CVR Agreement,
it shall furnish to the Trustee, at least forty five
(45) days (unless a shorter period shall be agreed to by
the Trustee) but not more than sixty (60) days before a
redemption date (but in any event prior to the notice provided
pursuant to Section 11.3 of the CVR Agreement), an
Officers Certificate (a Consent and Purchase
Offer) setting forth (i) the clause of the CVR
Agreement pursuant to which the redemption shall occur,
(ii) the redemption date, (iii) the amount of CVRs to
be redeemed and (iv) the redemption price.
(b) Selection of Securities to be
Redeemed. If less than all of the Securities
are to be redeemed or purchased in a Consent and Purchase Offer
at any time, the Trustee shall select the Securities to be
redeemed or purchased among the Holders in compliance with the
requirements of the principal national securities exchange, if
any, on which the Securities are listed or, if the Securities
are not so listed, on a pro rata basis, by lot or in accordance
with any other method the Trustee considers fair and
appropriate. In the event of partial redemption by lot, the
particular Securities to be redeemed shall be selected, unless
otherwise provided herein, not less than thirty (30) nor
more than sixty (60) days prior to the redemption date by
the Trustee from the outstanding Securities not previously
called for redemption. The Trustee shall promptly notify the
Company in writing of the Securities selected for redemption or
purchase.
(c) Notice of Redemption. At least
thirty (30) days but not more than sixty (60) days
before a redemption date, the Company shall mail or cause to be
mailed, by first class mail, a notice of redemption to each
Holder whose Securities are to be redeemed at its registered
address. The notice shall identify the amount of Securities to
be redeemed and shall state:
(i) the redemption date;
(ii) the redemption price;
(iii) the name and address of the paying agent;
(iv) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(v) that, unless the Company defaults in making such
redemption payment, all right title and interest in and to the
Securities and any Net Sales Payment, Milestone Payment or any
other amounts due under the CVR Agreement, if any, on Securities
called for redemption ceases to accrue on and after the
redemption date;
(vi) the clause of the CVR Agreement pursuant to which the
Securities called for redemption are being redeemed; and
(vii) that no representation is made as to the correctness
or accuracy of the CUSIP and ISIN number, if any, listed in such
notice or printed on the Securities.
At the Companys request, the Trustee shall give the notice
of redemption in the Companys name and at its expense;
provided, however, that the Company shall have delivered to the
Trustee at least forty five (45) days (unless a shorter
period shall be agreed to by the Trustee) but not more than
sixty (60) days prior to the redemption date, an
Officers Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph.
B-40
(d) Effect of Notice of
Redemption. Once notice of redemption is
mailed in accordance with Section 11.3 of the CVR
Agreement, Securities called for redemption shall become
irrevocably due and payable on the redemption date at the
redemption price. A notice of redemption shall be deemed to be
given when mailed, whether or not the Holder receives the
notice. In any event, failure to give such notice, or any defect
in such notice, shall not affect the validity of the proceedings
for the redemption of the Securities held by Holders to whom
such notice was properly given.
(e) Deposit of
Redemption Price. On or one
(1) Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the paying agent (if
different from the Trustee) money sufficient to pay the
redemption price of all Securities to be redeemed on that date.
The Trustee or the paying agent shall promptly return to the
Company any money deposited with the Trustee or the paying agent
by the Company in excess of the amounts necessary to pay the
redemption price of all Securities to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption or purchase date, as
applicable, all right title and interest of a Holder to any Net
Sales Payment or Milestone Payment, if any, shall cease to
accrue on the Securities called for redemption or subject to
purchase. If any Security called for redemption or subject to
purchase shall not be so paid upon surrender for redemption or
purchase because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid
redemption price from the redemption date or Purchase Date, as
applicable, until such redemption price is paid at the Shortfall
Interest Rate.
(f) Optional Redemption by the
Company. The Company may, at any time on and
after the Redemption Eligibility Date, redeem all (but not
less than all) of the outstanding Securities at a cash
redemption price equal to the average price paid per Security
for all Securities previously purchased by the Company
calculated as of the Business Day immediately prior to the date
of the Call Notice mailed by the Company in accordance with
Section 11.3 of the CVR Agreement.
B-41
TRUSTEES
CERTIFICATE OF AUTHENTICATION
This is one of the CVR Certificates referred to in the
within-mentioned CVR Agreement.
[ ],
as the Trustee
Authorized Signatory
Dated:
B-42
Annex C
VOTING
AGREEMENT
This VOTING AGREEMENT (this Agreement) is
entered into as of June 30, 2010, by and among Celgene
Corporation, a Delaware corporation (Parent),
Artistry Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent (Sub), and the
Persons whose names are set forth on the signature pages hereto
under the caption Stockholders (each individually a
Stockholder and, collectively, the
Stockholders).
W I T N E
S S E T H:
WHEREAS, as of the date of this Agreement, each Stockholder owns
the number of shares of Common Stock, par value $.001 per share
(the Company Stock), of Abraxis BioScience,
Inc., a Delaware corporation (the
Company), set forth opposite such
Stockholders name on Schedule A attached
hereto;
WHEREAS, concurrently herewith, Parent, Sub and the Company are
entering into an Agreement and Plan of Merger, dated as of this
date (the Merger Agreement), pursuant to
which Sub will merge with and into the Company and the Company
will survive as a wholly-owned subsidiary of Parent (the
Merger), and each share of Company
Stock (other than Excluded Company Shares) will be converted
into the right to receive the Merger Consideration, in
accordance with the terms of, and subject to the conditions set
forth in, the Merger Agreement; and
WHEREAS, as a condition to the willingness of Parent and Sub to
enter into the Merger Agreement, and as an inducement and in
consideration therefor, Parent and Sub have required that the
Stockholders agree, and the Stockholders have agreed, to enter
into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements
contained in this Agreement, the parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined
Terms. For purposes of this Agreement, terms
used in this Agreement that are defined in the Merger Agreement
but not in this Agreement shall have the respective meanings
ascribed to them in the Merger Agreement.
Section 1.2 Other
Definitions. For purposes of this Agreement:
(a) Company Options means options
to acquire Company Stock granted to a Stockholder by the Company
and held by a Stockholder as of the date of this Agreement as
set forth on Schedule A.
(b) Company RSUs means restricted
stock units with respect to Company Stock granted to a
stockholder by the Company and held by a Stockholder as of the
date of this Agreement as set forth on Schedule A.
(c) Immediate Family means lineal
descendants (whether by blood or marriage), ancestral forebears,
current and former spouses, and persons related by blood,
adoption or marriage to any of the foregoing.
(d) New Shares means any shares
of Company Stock (other than Owned Shares) acquired by a
Stockholder at any time during the Voting Period.
(e) Option Shares means any
shares of Company Stock issued or issuable upon exercise of
Company Options.
(f) Owned Shares means all of the
shares of Company Stock owned by such Stockholder as of the date
of this Agreement as set forth on Schedule A.
C-1
(g) Permitted Transferee means
PSS and any PSS Entity or any charitable foundation or
organization, in each case only if such parties agree to be
bound by the terms of this Agreement.
(h) PSS means Dr. Patrick
Soon-Shiong.
(i) PSS Entity means any trust
for the benefit of PSS or any members of PSS Immediate
Family and any other entity in which PSS or any members of
PSS Immediate Family separately or collectively hold,
directly or indirectly, a majority of the outstanding equity
interests.
(j) Representative means, with
respect to any particular Person, the officers, directors,
employees, trustees, investment bankers, attorneys and other
advisors or representatives of such Person.
(k) RSU Shares means any shares
of Company Stock issued or issuable upon vesting of Company RSUs.
(l) Transfer means sell,
transfer, tender, assign, pledge, encumber or otherwise dispose.
(m) Voting Period means the
period from and including the date of this Agreement through and
including the earliest to occur of (i) the Effective Time,
and (ii) the termination of the Merger Agreement in
accordance with its terms.
ARTICLE II
VOTING
AGREEMENT AND IRREVOCABLE PROXY
Section 2.1 Agreement
to Vote.
(a) Each Stockholder hereby agrees that, during the Voting
Period, such Stockholder shall vote or execute consents, as
applicable, with respect to the Owned Shares and any New Shares
owned by such Stockholder as of the applicable record date (or
cause to be voted or a consent to be executed with respect to
the Owned Shares or any New Shares owned by such Stockholder as
of the applicable record date) in favor of the approval and
adoption of the Merger Agreement and the transactions
contemplated by the Merger Agreement, at any meeting (or any
adjournment or postponement thereof) of, or in connection with
any proposed action by written consent of, the holders of
Company Stock at or in connection with which any of the holders
vote or execute consents with respect to any of the foregoing
matters.
(b) Subject to Section 3.2 hereof, each
Stockholder hereby agrees that, during the Voting Period, such
Stockholder shall vote or execute consents, as applicable, with
respect to the Owned Shares and any New Shares owned by such
Stockholder as of the applicable record date (or cause to be
voted or a consent to be executed with respect to the Owned
Shares and any New Shares owned by such Stockholder as of the
applicable record date) against each of the matters set forth in
clauses (i), (ii), (iii) and (iv) below at any meeting
(or any adjournment or postponement thereof) of, or in
connection with any proposed action by written consent of, the
holders of Company Stock at or in connection with which any of
the holders vote or execute consents with respect to any of the
following matters:
(i) any merger agreement or merger (other than the Merger
Agreement, the Merger or any business combination or transaction
with Parent or any of its affiliates), consolidation,
combination, reorganization, recapitalization, dissolution,
liquidation or winding up of or by the Company or any other
business combination or extraordinary corporate transaction
involving the Company or any of its Subsidiaries, or any sale,
lease or transfer of a material amount of assets of the Company
or any of its Subsidiaries;
(ii) any amendment of the Companys certificate of
incorporation, as amended to date, unless such amendment is
consented to by Parent;
(iii) any action, proposal, transaction or agreement that
would reasonably be expected to result in a breach in any
respect of any covenant, representation or warranty or any other
obligation or agreement of the Company contained in the Merger
Agreement or of such Stockholder contained in this
Agreement; and
C-2
(iv) any action, proposal, transaction or agreement
involving the Company or any of its Subsidiaries that would
reasonably be expected to prevent, impede, frustrate, interfere
with, delay, postpone or adversely affect the Merger and the
other transactions contemplated by the Merger Agreement.
(c) Any vote required to be cast or consent required to be
executed pursuant to this Section 2.1 shall be cast
or executed in accordance with the applicable procedures
relating thereto so as to ensure that it is duly counted for
purposes of determining that a quorum is present (if applicable)
and for purposes of recording the results of that vote or
consent. Nothing contained in this Section 2.1 shall
require any Stockholder to vote or execute any consent with
respect to any Option Shares or RSU Shares not issued to the
Stockholder prior to the applicable record date for that vote or
consent.
Section 2.2 Grant
of Irrevocable Proxy. Each Stockholder hereby
irrevocably appoints Parent and any designee of Parent, and each
of them individually, as such Stockholders proxy and
attorney-in-fact, with full power of substitution and
resubstitution, to vote or execute consents during the Voting
Period, with respect to the Owned Shares and any New Shares
owned by such Stockholder as of the applicable record date, in
each case solely to the extent and in the manner specified in
Section 2.1. This proxy is given to secure the
performance of the duties of such Stockholder under this
Agreement, and its existence will not be deemed to relieve such
Stockholder of its obligations under Section 2.1.
Other than as described in this Section 2.2 and
other than the granting of proxies to vote Owned Shares or New
Shares with respect to the election of directors and
ratification of the appointment of the Companys auditors
at the Companys annual meeting of Stockholders, in
accordance with the recommendation of the Board of Directors of
the Company, such Stockholder shall not directly or indirectly
grant any Person any proxy (revocable or irrevocable), power of
attorney or other authorization with respect to any of such
Stockholders Owned Shares or New Shares. For Owned Shares
or New Shares as to which the Stockholder is the beneficial but
not the record owner, such Stockholder will cause any record
owner of such Owned Shares or New Shares to grant to Parent a
proxy to the same effect as that contained in this
Section 2.2.
Section 2.3 Nature
of Irrevocable Proxy. The proxy and power of
attorney granted pursuant to Section 2.2 by each
Stockholder shall be irrevocable during the Voting Period, shall
be deemed to be coupled with an interest sufficient in law to
support an irrevocable proxy and shall revoke any and all prior
proxies granted by such Stockholder with regard to such
Stockholders Owned Shares or any New Shares acquired by
such Stockholder, and such Stockholder acknowledges that the
proxy constitutes an inducement for Parent and Sub to enter into
the Merger Agreement. The power of attorney granted by each
Stockholder is a durable power of attorney and shall survive the
bankruptcy, dissolution, death or incapacity of such
Stockholder. The proxy and power of attorney granted hereunder
shall terminate only upon the expiration of the Voting Period.
ARTICLE III
COVENANTS
Section 3.1 Voting
Period Restrictions. Each Stockholder agrees
that such Stockholder shall not, during the Voting Period,
(i) Transfer any or all of such Stockholders Owned
Shares or New Shares, or any interest therein, or enter into any
agreement with respect to the Transfer of any or all of such
Stockholders Owned Shares or New Shares, or any
interest therein, or (ii) except pursuant to the terms of
this Agreement, grant any proxies or powers of attorney, deposit
any Owned Shares or New Shares into a voting trust or enter into
a voting agreement with respect to any Owned Shares or New
Shares; provided that the foregoing shall not prevent
(a) the Transfer of Owned Shares or New Shares upon the
death of such Stockholder pursuant to the terms of any trust or
will of such Stockholder or by the laws of intestate succession,
but only if, and any such Transfer shall be void unless, the
transferee executes and delivers to Parent an agreement to be
bound by the terms of this Agreement to the same extent as such
Stockholder, (b) the Transfer of Owned Shares or New Shares
to a Permitted Transferee, (c) the Transfer of Owned Shares
or New Shares solely in connection with the payment of the
exercise price
and/or the
satisfaction of any tax withholding obligation arising from the
exercise of any Company Option or the vesting of any Company
RSU, (d) the conversion of any Owned Shares and New Shares
into the right to receive the Merger Consideration pursuant to
the Merger in accordance with the terms of the Merger Agreement,
or (e) the granting of proxies to vote Owned Shares or New
Shares with respect to the election of directors and
ratification of the
C-3
appointment of the Companys auditors at the Companys
annual meeting of Stockholders, in accordance with the
recommendation of the Board of Directors of the Company.
Section 3.2 No
Shop Obligations of Each Stockholder. Each
Stockholder agrees that such Stockholder shall not, and that
such Stockholder shall use its reasonable best efforts to cause
the Representatives of such Stockholder to not, directly or
indirectly, (i) solicit, initiate, or knowingly encourage
the making, submission or announcement of any inquiry regarding,
or any proposal or offer which would reasonably be expected to
lead to, an Acquisition Proposal, (ii) enter into,
participate, continue or otherwise engage in discussions or
negotiations with, or provide any non-public information to any
Person (other than Parent, Sub and their Representatives) with
respect to any inquiries regarding, or the making, submission or
announcement of, an Acquisition Proposal, or (iii) enter
into or approve any letter of intent, agreement in principle,
option agreement, share purchase agreement, acquisition
agreement or similar agreement relating to an Acquisition
Proposal; provided, however, that each Stockholder
may, and may authorize and permit any Representative of such
Stockholder to, provide non-public information to, and
participate in discussions or negotiations, with any Person if
at such time such Stockholder has been notified by the Company
that the Board of Directors of the Company is permitted to
provide non-public information to, or engage in discussions or
negotiations with, such Person in accordance with the Merger
Agreement. The Stockholder shall immediately cease and cause to
be terminated any ongoing solicitation, discussion or
negotiation with any Person conducted prior to the date of this
Agreement by the Stockholder or any of its Representatives with
respect to any actual or potential Acquisition Proposal. A
Stockholder shall notify Parent orally and in writing promptly
(and in any event within 24 hours) after receipt of any
Acquisition Proposal or any request for information or inquiry
which could reasonably be expected to lead to an Acquisition
Proposal. The written notice shall include the identity of the
Person making such Acquisition Proposal, request or inquiry, the
material terms of the Acquisition Proposal, request or inquiry
(including any material written amendments or modifications, or
any proposed material written amendments or modifications,
thereto), and the Stockholder shall keep Parent reasonably
informed on a current basis of any material changes with respect
to such Acquisition Proposal, request or inquiry.
Section 3.3 General
Covenants. Each Stockholder agrees that such
Stockholder shall not:
(a) enter into any agreement, commitment, letter of intent,
agreement in principle, or understanding with any Person or take
any other action that violates or conflicts with or would
reasonably be expected to violate or conflict with, or result in
or give rise to a violation of or conflict with, such
Stockholders covenants and obligations under this
Agreement or make any of its representations and warranties
contained herein untrue or incorrect; or
(b) take any action that could restrict or otherwise affect
such Stockholders legal power, authority and right to
comply with and perform such Stockholders covenants and
obligations under this Agreement.
Section 3.4
Stockholders
Capacity. Parent and Sub acknowledge that no
Stockholder is making any agreement or understanding herein in
such Stockholders capacity as a director or officer of the
Company and that each Stockholder is executing this agreement
solely in such Stockholders capacity as the owner of
Company Stock and nothing herein shall limit or affect any
actions taken by such Stockholder in such Stockholders
capacity as a director or officer of the Company.
Section 3.5 Letter
of Transmittal and Delivery of Merger
Consideration. Parent agrees to provide the
Stockholders a copy of the letter of transmittal referenced in
Section 2.2 of the Merger Agreement a reasonable
time period prior to the anticipated Closing Date to allow the
Stockholders to complete the letter of transmittal and provide
such letter of transmittal to the Paying Agent prior to or on
the Closing Date. Parent agrees to use reasonable best efforts
to cause the Paying Agent to deliver by wire transfer of
immediately available funds the Merger Consideration to which
the Stockholders are entitled under the terms of the Merger
Agreement on the same date as the Closing Date.
C-4
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder hereby represents and warrants to Parent and
Sub as follows:
Section 4.1 Authorization. Such
Stockholder has all power and authority (or legal capacity in
the case of an individual) to execute and deliver this Agreement
and to perform its obligations hereunder. This Agreement has
been duly and validly authorized, executed and delivered by such
Stockholder and, assuming it has been duly and validly
authorized, executed and delivered by Parent and Sub,
constitutes a legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance
with its terms, except to the extent that enforceability may be
limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to
creditors rights generally, and (ii) general
principles of equity.
Section 4.2 Ownership
of Shares. As of the date hereof, all Owned
Shares, Company Options and Company RSUs owned by such
Stockholder are listed on Schedule A attached
hereto. Such Stockholder (a) is the sole beneficial owner
of all of the Owned Shares, Company Options and Company RSUs
listed opposite such Stockholders name on
Schedule A hereto free and clear of any Liens,
voting agreements or commitments of every kind that would
reasonably be expected to violate or conflict with, or result in
or give rise to a violation of or conflict with, or adversely
affect the exercise or fulfillment of, such Stockholders
covenants and obligations under this Agreement, and (b) has
the sole power to vote (or cause to be voted or consents to be
executed) and to dispose of (or cause to be disposed of) such
Owned Shares without restriction, and no proxies through and
including the date hereof given in respect of any or all of such
Stockholders Owned Shares, Company Options or Company RSUs
are irrevocable and any such proxies have been revoked.
Section 4.3 No
Conflicts. Except for a filing of an
amendment to a Schedule 13D and a filing of a Form 4
as required by the Exchange Act, (i) no filing with any
Governmental Entity, and no authorization, consent or approval
of any other Person is necessary for the execution of this
Agreement by such Stockholder or the performance by such
Stockholder of such Stockholders obligations hereunder and
(ii) none of the execution and delivery of this Agreement
by such Stockholder, or the performance by such Stockholder of
such Stockholders obligations hereunder shall
(A) result in, give rise to or constitute a violation or
breach of or a default (or any event which with notice or lapse
of time or both would become a violation, breach or default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a
Lien on, any of the Owned Shares pursuant to any of the terms of
any understanding, agreement, or other instrument or obligation
to which such Stockholder is a party or by which such
Stockholder or any of such Stockholders Owned Shares are
bound, or (B) violate any applicable law, rule, regulation,
order, judgment, or decree applicable to such Stockholder,
except for any of the foregoing as would not reasonably be
expected to impair such Stockholders ability to perform
such Stockholders obligations under this Agreement in any
material respect.
ARTICLE V
REPRESENTATIONS
AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub hereby represent and warrant to the
Stockholders as follows:
Section 5.1 Authorization. Such
party has all power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. This
Agreement has been duly and validly authorized, executed and
delivered by such party and, assuming it has been duly and
validly authorized, executed and delivered by the Stockholders,
constitutes a legal, valid and binding obligation of such party,
enforceable against it in accordance with the terms of this
Agreement.
Section 5.2 No
Conflicts. The execution and delivery of this
Agreement by such party does not and the performance of this
Agreement by such party will not (i) conflict with, result
in any violation of, require any consent under or constitute a
default (whether with notice or lapse of time or both) under any
mortgage, bond, indenture, agreement, instrument or obligation
to which it is a party or by which it or any of its properties
is bound; (ii) violate any judgment, order, injunction,
decree or award of any court, administrative agency or other
Governmental Entity
C-5
that is binding on such party or any of its properties; or
(iii) constitute a violation by such party of any law,
regulation, rule or ordinance applicable to such party, in each
case, except for any violation, conflict or consent as would not
reasonably be expected to materially impair the ability of such
party to perform its obligations under this Agreement.
ARTICLE VI
TERMINATION
This Agreement shall terminate upon the earliest to occur of
(i) the Effective Time, (ii) any material amendment to
the Merger Agreement that is adverse to the Stockholders that
has not been approved by the Stockholders (it being understood
that any decrease in or change in form of the Merger
Consideration shall constitute a material amendment to the
Merger Agreement that is adverse to the Stockholders), and
(iii) the termination of the Merger Agreement in accordance
with its terms. Upon the termination of this Agreement, neither
Parent, Sub nor the Stockholders shall have any rights or
obligations hereunder and this Agreement shall become null and
void and have no effect; provided, that, with respect to
termination pursuant to clause (i) above,
Sections 7.1, 7.3 and 7.5 through
7.12 shall survive such termination. Notwithstanding the
foregoing, termination of this Agreement shall not prevent any
party from seeking any remedies (at law or in equity) against
any other party for that partys breach of any of the terms
of this Agreement prior to the date of termination.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Publication. Each
Stockholder hereby permits Parent, Sub
and/or the
Company to publish and disclose in press releases,
Schedule 13D filings, and the Proxy Statement/Prospectus
(including all documents and schedules filed with the SEC) and
any other disclosures or filings required under the Merger
Agreement or by applicable Law such Stockholders identity
and ownership of shares of the Company Stock, the nature of such
Stockholders commitments, arrangements and understandings
pursuant to this Agreement
and/or the
text of this Agreement.
Section 7.2 Waiver
of Appraisal Rights and Actions. Each
Stockholder hereby (i) waives any rights of appraisal or
rights to dissent from the Merger or the adoption of the Merger
Agreement that such Stockholder may have under applicable law
and shall not permit any such rights of appraisal or rights of
dissent to be exercised with respect to such Stockholders
Owned Shares, any New Shares, any Option Shares or any RSU
Shares and (ii) agrees not to commence or participate in,
and to take all actions necessary to opt out of any class in any
class action with respect to, any claim, derivative or
otherwise, against Parent, Sub, the Company or any of their
respective successors relating to the negotiation, execution or
delivery of this Agreement or the Merger Agreement or the
consummation of the Merger, including any claim alleging a
breach of any fiduciary duty of the Board of Directors of the
Company in connection with the Merger Agreement or the
transactions contemplated thereby.
Section 7.3 Amendments,
Waivers, etc. This Agreement may be amended
by the parties at any time. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of
the parties. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including any investigation by
or on behalf of any party, shall be deemed to constitute a
waiver by the party taking the action of compliance with any
representations, warranties, covenants or agreements contained
in this Agreement. The waiver by any party of a breach of any
provision hereunder shall not operate or be construed as a
waiver of any prior or subsequent breach of the same or any
other provision hereunder.
Section 7.4 Enforcement
of Agreement; Specific Performance. The
Stockholders agree and acknowledge that Parent and Sub would
suffer irreparable damage in the event that any of the
obligations of the Stockholders in this Agreement were not
performed in accordance with its specific terms or if the
Agreement was otherwise breached by the Stockholders. It is
accordingly agreed by the Stockholders that Parent shall be
entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and
provisions of this Agreement, this being in addition to any
other remedy to which Parent may be entitled at law or in equity.
C-6
Section 7.5 Notices. Except
for notices that are specifically required to be delivered
orally, all notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed
given (a) on the date of delivery, if delivered in person
or by facsimile or
e-mail (upon
confirmation of receipt), (b) on the first Business Day
following the date of dispatch, if delivered by a recognized
overnight courier service (upon proof of delivery) or
(c) on the fifth Business Day following the date of
mailing, if delivered by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
(a) If to the Parent or Sub, addressed to it at:
|
|
|
|
Celgene Corporation
86 Morris Avenue
Summit, New Jersey 07901
Tel: 908.673.9000
Fax: 908.673.2769
Attention:
|
George Golumbeski, Senior Vice President Business Development
ggolumbeski@celgene.com
|
with copies to:
|
|
|
|
Celgene Corporation
86 Morris Avenue
Summit, New Jersey 07901
Tel: 908.673.9000
Fax: 908.673.2771
Attention:
|
Thomas Perone, Corporate Counsel
tperone@celgene.com
|
and a copy (which shall not constitute notice) to:
|
|
|
|
Jones Day
3161 Michelson Drive
Suite 800
Irvine, CA 92612
Tel: 949.851.3939
Fax: 949.553.7539
Attention:
|
Jonn R. Beeson, Esq.
jbeeson@jonesday.com
Kevin Espinola, Esq.
kbespinola@jonesday.com
|
(b) If to the Stockholders, addressed to them at:
|
|
|
|
Abraxis BioScience Inc.
11755 Wilshire Blvd., 20th Floor
Los Angeles, CA 90025
Tel: 310.883.1300
Fax: 310.998.8553
Attention:
|
Dr. Patrick Soon-Shiong, Executive Chairman
pss@abraxisbio.com
|
with copies to:
|
|
|
|
Abraxis BioScience Inc.
11755 Wilshire Blvd., 20th Floor
Los Angeles, CA 90025
Tel: 310.883.1300
Fax: 310.998.8553
Attention:
|
Charles Kim, General Counsel
CKim@abraxisbio.com
|
C-7
and a copy (which shall not constitute notice) to:
|
|
|
|
Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza
New York, New York 10004
Tel: 212.859.8000
Fax: 212.859.4000
Attention:
|
Philip Richter, Esq.
philip.richter@friedfrank.com
Brian Mangino, Esq.
brian.mangino@friedfrank.com
|
or to that other address as any party shall specify by written
notice so given, and notice shall be deemed to have been
delivered as of the date so telecommunicated or personally
delivered.
Section 7.6 Headings;
Titles. Headings and titles of the Articles
and Sections of this Agreement are for the convenience of the
parties only, and shall be given no substantive or
interpretative effect whatsoever.
Section 7.7 Severability. Any
term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of this invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions
of this Agreement in any other jurisdiction. Upon determination
that any term or other provision is invalid or incapable of
being enforced, the parties shall negotiate in good faith to
modify this Agreement as to effect the original intent of the
parties as closely as possible in an acceptable manner to the
end that the transactions contemplated hereby are fulfilled to
the extent possible.
Section 7.8 Entire
Agreement. This Agreement (together with the
Merger Agreement, to the extent referred to in this Agreement)
and any documents delivered by the parties in connection
herewith constitutes the entire agreement among the parties with
respect to the subject matter of this Agreement and supersedes
all prior agreements and understandings among the parties with
respect thereto. No addition to or modification of any provision
of this Agreement shall be binding upon any party unless made in
writing and signed by all parties.
Section 7.9 Assignment;
Binding Effect; No Third Party Beneficiaries; Further
Action. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by
any of the parties. This Agreement shall be binding upon and
shall inure to the benefit of Parent and Sub and their
respective successors and assigns and shall be binding upon the
Stockholders and the Stockholders successors, assigns,
heirs, executors and administrators. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this
Agreement, expressed or implied, is intended to confer on any
Person (other than, in the case of Parent and Sub, their
respective successors and assigns and, in the case of the
Stockholders, the Stockholders successors, assigns, heirs,
executors and administrators) any rights, remedies, obligations
or liabilities under or by reason of this Agreement. The
Stockholders shall take any further action and execute any other
instruments as may be reasonably requested by Parent to
effectuate the intent of this Agreement.
Section 7.10 Mutual
Drafting. Each party has participated in the
drafting of this Agreement, which each party acknowledges is the
result of extensive negotiations between the parties. This
Agreement shall not be deemed to have been prepared or drafted
by any one party or another or any partys attorneys.
Section 7.11 Governing
Law and Consent to Jurisdiction. This
Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to its rules
of conflict of laws. The Stockholders hereby irrevocably and
unconditionally consent to submit to the jurisdiction of the
federal courts located in the State of Delaware or any Delaware
state courts (and, if appropriate, appellate courts therefrom)
in connection with any action or proceeding arising out of or
relating to this Agreement and the transactions contemplated
hereby (and agree not to commence any suit, action or proceeding
relating thereto except in those
C-8
courts), waive any defense or objection they may have or
hereafter have relating to the laying of venue of any suit,
action or proceeding in any such courts and agree not to plead
or claim that any suit, action or proceeding brought therein has
been brought in an inconvenient forum.
Section 7.12 Counterparts;
Facsimiles. This Agreement may be executed by
the parties in separate counterparts, each of which when so
executed and delivered shall be an original, but all
counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies
each signed by less than all, but together signed by all of the
parties. This Agreement or any counterpart may be executed and
delivered by facsimile copies, each of which shall be deemed an
original.
(Signature
page follows.)
C-9
IN WITNESS WHEREOF, Parent, Sub and the Stockholders have caused
this Agreement to be duly executed as of the day and year first
above written.
CELGENE CORPORATION
|
|
|
|
By:
|
/s/ Robert
J. Hugin
Name: Robert
J. Hugin
Title: Chief Executive Officer
|
ARTISTRY ACQUISITION CORP.
Name: Sandesh Mahatme
|
|
|
|
Title:
|
Secretary and Treasurer
|
STOCKHOLDERS:
DR. PATRICK SOON-SHIONG
/s/ Dr. Patrick
Soon-Shiong
CALIFORNIA CAPITAL LP
By: Themba LLC, its general partner
Name: Steven H. Hassan
PATRICK SOON-SHIONG 2009 GRAT 1
|
|
|
|
By:
|
/s/ Patrick
Soon-Shiong
|
Name: Patrick Soon-Shiong
[Signature
Page to Voting Agreement]
C-10
PATRICK SOON-SHIONG 2009 GRAT 2
|
|
|
|
By:
|
/s/ Patrick
Soon-Shiong
|
Name: Patrick Soon-Shiong
MICHELE B. SOON-SHIONG GRAT 1
|
|
|
|
By:
|
/s/ Michele
B. Chan Soon-Shiong
|
Name: Michele B. Chan Soon-Shiong
MICHELE B. SOON-SHIONG GRAT 2
|
|
|
|
By:
|
/s/ Michele
B. Chan Soon-Shiong
|
Name: Michele B. Chan Soon-Shiong
SOON-SHIONG COMMUNITY PROPERTY
REVOCABLE TRUST
|
|
|
|
By:
|
/s/ Patrick
Soon-Shiong
|
Name: Patrick Soon-Shiong
|
|
|
|
By:
|
/s/ Michele
B. Chan Soon-Shiong
|
Name: Michele B. Chan Soon-Shiong
[Signature Page to Voting Agreement]
C-11
THE CHAN SOON-SHIONG FAMILY FOUNDATION
Name: C. Kenworthy
[Signature
Page to Voting Agreement]
C-12
CALIFORNIA CAPITAL TRUST
|
|
|
|
By:
|
/s/ Patrick
Soon-Shiong
|
Name: Patrick Soon-Shiong
|
|
|
|
By:
|
/s/ Michele
B. Chan Soon-Shiong
|
Name: Michele B. Chan Soon-Shiong
Name: Steven H. Hassan
I acknowledge that I have read the Voting Agreement, dated as of
June 30, 2010, among by and among Celgene Corporation, a
Delaware corporation, Artistry Acquisition Corp., a Delaware
corporation, and the other parties thereto, and understand its
contents. I am aware that by its provisions all or part of the
shares of common stock, par value $.001 per share, of Abraxis
BioScience, Inc., a Delaware corporation, held by my spouse,
Dr. Patrick Soon-Shiong, including my community interest in
such shares, if any, are subject to the provisions of such
agreement.
MICHELE B. CHAN SOON-SHIONG
/s/ Michele
B. Chan Soon-Shiong
[Signature
Page to Voting Agreement]
C-13
SCHEDULE A
STOCKHOLDERS
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholder
|
|
Owned Shares
|
|
|
Company Options
|
|
|
Company RSUs
|
|
|
Dr. Patrick Soon-Shiong
|
|
|
|
|
|
|
183,635
|
(1)
|
|
|
206,204
|
|
Dr. Soon-Shiong may be deemed the beneficial owner
|
|
|
|
|
|
|
|
|
|
|
|
|
California Capital LP
|
|
|
7,987,159
|
|
|
|
|
|
|
|
|
|
Patrick Soon-Shiong 2009 GRAT 1
|
|
|
5,759,109
|
|
|
|
|
|
|
|
|
|
Patrick Soon-Shiong 2009 GRAT 2
|
|
|
5,759,109
|
|
|
|
|
|
|
|
|
|
Michele B. Soon-Shiong GRAT 1
|
|
|
5,759,109
|
|
|
|
|
|
|
|
|
|
Michele B. Soon-Shiong GRAT 2
|
|
|
5,759,110
|
|
|
|
|
|
|
|
|
|
Soon-Shiong Community Property Revocable Trust
|
|
|
716,916
|
|
|
|
|
|
|
|
|
|
California Capital Trust
|
|
|
144,555
|
|
|
|
|
|
|
|
|
|
The Chan Soon-Shiong Family Foundation
|
|
|
1,301,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
33,186,067
|
|
|
|
183,635
|
|
|
|
206,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes 29,545 vested and 154,090 unvested Company Options as
of the date hereof. |
C-14
Annex D
NON-COMPETITION,
NON-SOLICITATION AND
CONFIDENTIALITY AGREEMENT
THIS NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY
AGREEMENT (this Agreement) is made as
of June 30, 2010, by and between Dr. Patrick
Soon-Shiong, an individual (the
Principal), and Celgene Corporation, a
Delaware corporation (Parent). Capitalized
terms used but not defined herein shall have the meanings
ascribed to such terms in the Merger Agreement (as defined
below).
RECITALS
WHEREAS, Parent, Artistry Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Parent
(Sub), and Abraxis BioScience, Inc., a
Delaware corporation (the Company), have
entered into an Agreement and Plan of Merger (the
Merger Agreement), dated as of the date of
this Agreement, pursuant to which Sub will merge with and into
the Company (the Merger), which will
result in the Company becoming a wholly owned subsidiary of
Parent;
WHEREAS, the Principal is the Executive Chairman of the Company
and owns, directly or indirectly, approximately 80% of the
outstanding shares of Company Common Stock and, as a result of
such position and ownership, has occupied a position of trust
and confidence with the Company and has become familiar with
Confidential Information (as defined below) of the Company and
its Subsidiaries;
WHEREAS, as a result of the Merger and pursuant to the terms of
the Merger Agreement, the Principal acknowledges that the
Principal is expected to receive significant, substantial and
material Merger Consideration in exchange for the shares of
Company Common Stock and for options to purchase, and restricted
stock units related to, Company Common Stock held by him (the
Company Equity), and that the sale of
the Company Equity to Parent is significant, substantial and
material to the consummation of the Merger;
WHEREAS, the Principal acknowledges that the Company and its
Subsidiaries are engaged in the Business (as defined below)
throughout the Territory (as defined below);
WHEREAS, Parents specific intent is to continue to conduct
the Business after the consummation of the Merger, and Parent
would not be willing to consummate the Merger unless the
Principal agreed to be bound by the terms of this Agreement,
including the restrictive covenants designed to protect the
Business and preserve the value and goodwill of the Business
being acquired by Parent; and
WHEREAS, the parties hereto intend for this Agreement to be in
compliance with any and all applicable Laws and further intend
for it to be fully enforceable.
NOW, THEREFORE, for good and valuable consideration, including
the inducement of Parent to consummate the Merger, and other
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Effective at Closing. This
Agreement shall be effective as of the Closing. This Agreement
shall be void and have no force or effect if the Merger
Agreement is terminated prior to the Closing or the Merger is
otherwise not consummated.
2. Non-Competition. The Principal
hereby agrees and covenants that, during the Term (as defined
below), the Principal will not, will not attempt to, and will
cause the Principals Affiliates not to and not attempt to,
without the prior written consent of Parent (such consent to be
given in Parents sole and absolute discretion), directly
or indirectly, own, manage, finance, invest in, control, engage
in, operate or conduct, lend the Principals name to, lend
credit to, render services or advise to, devote material
endeavor or effort to, or assist any Person or entity to
conduct, the Business, or have any interest in, as a principal,
owner, agent, employee, shareholder, officer, director, joint
venturer, partner, member, security holder, creditor, consultant
or in any other capacity, an entity (other than Parent or its
Affiliates) conducting the Business; provided
however, that this Section 2 shall not
prohibit the ownership of
D-1
publicly-traded securities constituting not more than 3% of the
outstanding securities of an entity conducting the Business.
The covenants set forth in this Section 2 shall be
construed as a series of separate covenants covering their
subject matter in each of the separate states and countries
within the Territory, and except for geographic coverage, each
such separate covenant shall be deemed identical in terms to the
covenant set forth above in this
Section 2. To the extent that any such
covenant shall be judicially unenforceable in any country or in
any one or more states in the United States, such covenant shall
not be affected with respect to each of such other countries or
states in the Territory. Each covenant with respect to such
country or state in the Territory shall be construed as
severable and independent.
3. Non-Solicitation. The Principal
hereby agrees and covenants that, during the Term, the Principal
will not, and will cause the Principals Affiliates not to,
without the prior written consent of Parent (such consent to be
given in Parents sole and absolute discretion) directly or
indirectly:
(a) (i) solicit, knowingly encourage or induce, or
attempt to solicit, knowingly encourage or induce, any customer
with whom the Company or its Subsidiaries was engaged in a
contractual relationship, or substantive discussions or proposal
negotiations, in each case as of the Effective Time, with
respect to the Business to cease doing business with the
Company, Parent or any of their Subsidiaries with respect to the
Business within the Territory; or (ii) otherwise knowingly
interfere with, impair or damage the Companys,
Parents or their respective Subsidiaries
relationship with any customers or prospective customers of the
Business (it being understood that nothing in this
Section 3(a) shall be interpreted to prevent or
preclude the Principal or any of his Affiliates from developing,
manufacturing, commercializing, importing, selling, marketing,
distributing products or services that are not Albumin Bound
(Nab)®
Products);
(b) (i) solicit, knowingly encourage or induce, or
attempt to solicit, knowingly encourage or induce, any
suppliers, licensees or business relations, or prospective
suppliers, licensees or business relations with whom the Company
or its Subsidiaries was engaged in a contractual relationship,
or substantive discussions or proposal negotiations, in each
case as of the Effective Time, with respect to the Business of
the Company and its Subsidiares to cease doing business with the
Company, Parent or their respective Subsidiaries with respect to
the Business within the Territory; or (ii) otherwise
knowingly interfere with, impair or damage the Companys,
Parents or their respective Subsidiaries
relationship with any supplier, licensee or business relation of
the Business (it being understood that nothing in this
Section 3(b) shall be interpreted to prevent or
preclude the Principal or any of his Affiliates from developing,
manufacturing, commercializing, importing, selling, marketing,
distributing products or services that are not Albumin Bound
(Nab)®
Products); or
(c) solicit, encourage or induce, or attempt to solicit or
induce, or assist any other Person in so soliciting, encouraging
or inducing, any employee, consultant or independent contractor
that was engaged by the Company or its Subsidiaries as of the
Effective Time to terminate or breach an employment, contractual
or other relationship with the Company, Parent or their
respective Subsidiaries; provided however, this
clause (c) shall not prohibit the Principal or any of his
Affiliates from soliciting or hiring any person who responds to
a general advertisement or solicitation, or efforts by any
recruiting or employment agencies, not specifically directed at
employees of the Company, Parent or their respective
Subsidiaries.
4. Non-Disparagement. The
Principal hereby agrees and covenants that, during the Term, the
Principal will make no, and will not permit the Principals
Affiliates or Representatives to make any, public statements,
verbal or written, that directly or indirectly disparage the
Company, Parent or any of their respective Affiliates. Parent
hereby agrees and covenants that, during the Term, Parent shall
not, and shall not permit any of its Affiliates or
Representatives to, make any public statements, verbal or
written, that directly or indirectly disparage the Principal or
any of his Affiliates. This Section 4 shall not
prohibit the Principal or his Affiliates, on the one hand, or
the Parent or any of its Affiliates, on the other hand, from
exercising or enforcing their rights under any agreement between
the Principal or his Affiliates, on the one hand, and the Parent
or any of its Affiliates, on the other hand or (subject, in the
case of the Principal, to Section 5 below) from
responding to any inquiry, request for information,
investigation, audit or proceeding involving a Governmental
Entity or as otherwise required by Law.
D-2
5. Confidentiality.
(a) The Principal (i) will not use Confidential
Information (as defined below) for any purpose detrimental to
the Company, Parent or any of their respective Affiliates,
(ii) will not, except as directed by the Company or Parent,
use for the Principal or for others, directly or indirectly, any
such Confidential Information, and (iii) except as required
by Law or as directed by the Company or Parent, will not
disclose Confidential Information, directly or indirectly, to
any other Person. The obligations set forth in this
Section 5(a) will survive the expiration of the Term
and any termination of this Agreement. The Principal
acknowledges that this covenant is necessary to protect the
trade secrets of the Company, Parent
and/or their
respective Affiliates. If the Principal is required by order of
a Governmental Entity to disclose any Confidential Information,
the Principal shall immediately notify the Company and Parent so
that the Company and Parent may attempt to obtain an appropriate
protective order, and, in all events, the Principal shall only
disclose the minimum portion of the Confidential Information
required by such order to be disclosed.
(b) All physical property and all notes, memoranda, files,
records, writings, documents and other materials of any and
every nature, written or electronic, that the Principal has or
will possess, control, prepare, develop or receive in his
capacity as an officer, director or employee of the Company or
any of its Subsidiaries and that are reasonably related to or
useful in the Business are and, unless agreed in writing by
Parent, will remain the sole and exclusive property of the
Company or its respective Subsidiaries.
(c) Notwithstanding the foregoing, Confidential Information
will not include (i) information that is already in or
subsequently enters the public domain, other than as a result of
any direct or indirect action or inaction by the Principal or
his controlled Affiliates in violation of this Agreement,
(ii) information that is approved for public release by the
Company, Parent or any of their respective Affiliates, or
(iii) the product of the Principals general
knowledge, education, training or experience obtained prior to
his association with the Company or its Affiliates or its or
their predecessors in interest without the benefit of any
non-public information of the Company or its Subsidiaries and
which does not relate to the Business of the Company or its
Subsidiaries, (iv) information that is subsequently
rightfully disclosed to the Principal by a third party without
any violation of duties of confidentiality and restricted use.
6. Future Employment. The
Principal agrees that, during the Term, if the Principal accepts
employment with an employer that is a commercial enterprise not
controlled by the Principal other than the Company, Parent or
their respective Affiliates, the Principal will, within ten
(10) days after accepting any employment, notify the
Company and Parent of the identity of any employer of the
Principal. The Company
and/or
Parent may serve notice upon each such employer that the
Principal is bound by this Agreement and furnish each such
employer with a copy of this Agreement or relevant portions
thereof. Further, during the Term, the Principal will
communicate the contents of Section 2 to
Section 5 hereof to any Person that the Principal
intends to be employed by, associated with or represent.
7. Reasonableness of
Restrictions. The Principal acknowledges that
(a) the Principal will significantly benefit from the
transactions contemplated by the Merger Agreement, including by
the Principals receipt of Merger Consideration,
(b) Parents specific intent is to continue the
specific conduct of the Business after the consummation of the
Merger and a substantial portion of the value of the Business is
the goodwill that the Company and its Subsidiaries has
established, (c) the covenants set forth in
Section 2 to Section 6 are necessary to
enable the Company, Parent and their respective Affiliates to
retain the goodwill of the Business that was based on the
Companys and its Subsidiaries efforts prior to the
consummation of the Merger, and (d) the covenants set forth
in Section 3 are necessary to enable the Company,
Parent and their respective Affiliates to maintain a stable
customer, supplier and employee base in order to conduct the
Business, and that it could disrupt, damage, impair and
interfere with the Business if the Principal was to engage in
such solicitation.
8. Specific Performance; Limitation of
Remedies
(a) Specific Performance. The
parties acknowledge that the failure of any party to perform his
or its covenants under Sections 2, 3, 4, 5, 6 and 7 of this
Agreement in accordance with their specific terms will cause
irreparable injury to the Principal, the Company, Parent and
their respective Subsidiaries, as the case may be, for which
damages, even if available, will not be an adequate remedy.
Accordingly, the parties consent to the issuance
D-3
of temporary, preliminary and permanent injunctive relief to
compel performance by the Principal, the Company or Parent of
the obligations hereunder or to prevent breaches or threatened
breaches by the Principal, the Company or Parent of this
Agreement, and to the grant by a court of competent jurisdiction
of the remedy of specific performance of the obligations
hereunder, without, in any such case, the requirement to post
any bond or other undertaking, in addition to any other rights
or remedies available hereunder or at law or in equity. The
parties agree to not oppose, and hereby waive any defense to,
the granting of an injunction, specific performance and other
equitable relief on the basis that the Principal, Parent or the
Company has an adequate remedy at law or an award of specific
performance is not an appropriate remedy for any reason at law
or equity. The parties further waive any requirement under any
Law to post security as a prerequisite to obtaining equitable
relief. Notwithstanding the foregoing, no party to this
Agreement shall under any circumstances be held liable, whether
in contract, in tort, under any warranty or any other theory of
liability, for any punative damages.
(b) Limitation of
Remedies. Notwithstanding the provisions set
forth in Section 7(a), above, or any other provision
contained in this Agreement, the Principal, Parent and the
Company acknowledge that no remedy conferred by any of the
specific provisions of this Agreement, including, without
limitation, this Section 7, is intended to be
exclusive of any other remedy, and each and every remedy shall
be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity
or by statute or otherwise.
(c) Notice. Parent shall not
commence any action seeking injunctive relief or other remedy
for violation of Section 2 unless and until Parent first
provides Principal with at least 10 days prior written
notice specifying the alleged violation.
9. Miscellaneous.
(a) Definitions. The following
terms referred to in this Agreement shall have the following
meanings:
(i) Albumin-Bound
(Nab)®
Products means (a) the Products (as defined
in the CVR Agreement) and (b) any pharmaceutical or
diagnostic product developed or manufactured using the
Albumin-Bound
(Nab®)
Technology.
(ii) Albumin-Bound
(Nab®)
Technology means any and all methods, techniques,
know-how, trade secrets, and other technologies (including
manufacturing methods, techniques, know-how, trade secrets, and
other technologies) for the association of, or related to the
association of, any agent (such as a therapeutic or diagnostic
agent) with albumin in the development, manufacturing or
production of albumin-bound nanoparticles or albumin- based
nanoparticles, as practiced by the Company or any of its
Subsidiaries as of the Effective Time; provided, however, that
for purposes of this Agreement, nanoparticles shall
mean any particles with a size less than 200 nanometers.
(iii) Business means the business
of researching, developing, licensing, manufacturing, selling,
offering for sale, importing, using, marketing, distributing,
practicing, or otherwise exploiting any Albumin-Bound
(Nab)®
Products.
(iv) Confidential Information
means any information of a confidential or proprietary nature,
including but not limited to trade secrets, or that derives
value from its not generally being available that is owned or
held by the Company or its Subsidiaries at the Effective Time in
whatever form.
(v) Governmental Entity means any
domestic (federal or state) or foreign court, commission,
governmental body, regulatory or administrative agency or other
political subdivision thereof.
(vi) Law means any foreign,
federal, state, local or municipal laws, rules, judgments
orders, regulations, statutes, ordinances, codes, decisions,
injunctions, orders, decrees or requirements of any Governmental
Entity.
(vii) Term means the period
commencing as of the Effective Time and continuing for
10 years after the Effective Time.
(viii) Territory means the United
States and all other foreign countries and jurisdictions
worldwide in which the Company or its Subsidiaries was engaged
in Business as of the Effective Time.
D-4
(b) Notices. All notices, requests,
claims, demands and other communications hereunder shall be in
writing and shall be deemed given (i) on the date of
delivery, if delivered in person or by facsimile or
e-mail (upon
confirmation of receipt) prior to 5:00 p.m. in the time
zone of the receiving party or on the next Business Day, if
delivered after 5:00 p.m. in the time zone of the receiving
party, (ii) on the first Business Day following the date of
dispatch, if delivered by a recognized overnight courier service
(upon proof of delivery), or (iii) on the third Business
Day following the date of mailing, if delivered by registered or
certified mail, postage prepaid, return receipt requested,
addressed as follows:
(i) If to the Principal, to:
Dr. Patrick Soon-Shiong
c/o Abraxis
BioScience Inc.
11755 Wilshire Blvd., 20th Floor
Los Angeles, CA 90025
Tel: 310.883.1300
Fax: 310.998.8553
pss@abraxisbio.com
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza
New York, NY 10004
Tel: 212.859.8000
Fax: 212.859.4000
|
|
|
|
Attention:
|
Philip Richter
philip.Richter@friedfrank.com
Brian Mangino
brian.mangino@friedfrank.com
|
(ii) If to Parent (or Company), to:
Celgene Corporation
86 Morris Avenue
Summit, New Jersey 07901
Tel: 908.673.9000
Fax: 908.673.2769
|
|
|
|
Attention:
|
George Golumbeski, Senior Vice
|
President Business Development
ggolumbeski@celgene.com
with a copy to:
Celgene Corporation
86 Morris Avenue
Summit, New Jersey 07901
Tel: 908.673.9000
Fax: 908.673.2771
|
|
|
|
Attention:
|
Thomas Perone, Corporate Counsel
|
tperone@celgene.com
D-5
and to:
Jones Day
3161 Michelson Drive
Suite 800
Irvine, CA 92612
Tel: 949.851.3939
Fax: 949.553.7539
|
|
|
|
Attention:
|
Jonn R. Beeson, Esq.
|
jbeeson@jonesday.com
Kevin Espinola, Esq.
kbespinola@jonesday.com
or to such other address as any party may have furnished to the
other parties in writing in accordance with this
Section 8(b).
(c) Entire Agreement. This
Agreement constitutes the entire agreement among the parties
with respect to the subject matter hereof and supersedes all
prior agreements and understandings among the parties with
respect thereto.
(d) Waiver. Either party hereto
may waive compliance with any of the agreements of the other
party or conditions in favor of such party contained in this
Agreement (provided, that a waiver must be in writing and signed
by the party against whom the waiver is to be effective). Any
agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
(e) Amendment. No addition to or
modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by both
parties hereto.
(f) No Third Party
Beneficiary. This Agreement is not intended
to, and does not, confer upon any Person other than the parties
hereto any rights or remedies hereunder.
(g) Assignment; Binding
Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by
any party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other party; provided,
that Parent may assign any of its respective rights, interest or
obligations to any direct or indirect Subsidiary of Parent.
Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, successors and permitted
assigns.
(h) Headings;
Interpretation. Headings of the Sections of
this Agreement are for the convenience of the parties only, and
shall be given no substantive or interpretive effect whatsoever.
If a term is defined as one part of speech (such as a noun), it
shall have a corresponding meaning when used as another part of
speech (such as a verb). Whenever the context so requires, the
singular shall include the plural, the plural shall include the
singular, and the use of a gender shall include all genders. The
terms hereof, herein and
hereunder and terms of like import used in this
Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. Whenever the terms
include, includes or
including are used in this Agreement, they shall be
deemed to be followed by the words without
limitation, whether or not they are in fact followed by
those words or words of like import. The terms
writing and written and terms of like
import used in this Agreement shall refer to printing, typing
and other means of reproducing words (including electronic
media) in a visible form.
(i) Severability. Any term or
provision of this Agreement which is invalid or unenforceable in
any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any term or provision of
this Agreement is deemed to be so broad as to be invalid or
unenforceable in a particular jurisdiction, the parties agree,
with respect to such jurisdiction, to reduce the scope,
duration, area or applicability of the term or provision,
D-6
to delete specific words or phrases, or to replace any invalid,
void or unenforceable term or provision with a term or provision
that is valid and enforceable and that comes closest to
expressing the original intention of the invalid or
unenforceable term or provision.
(j) Governing Law.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
REGARD TO ITS RULES OF CONFLICT OF
LAWS. Each of the parties hereto
(i) consents to submit itself to the personal jurisdiction
of any court of the United States located in the State of
California or in any state court located in the State of
California in the event any dispute arises out of this Agreement
or the transactions contemplated by this Agreement,
(ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from
any such court and (iii) agrees that it will not bring any
action relating to this Agreement or the transactions
contemplated by this Agreement in any court other than a court
of the United States located in the State of California or in
any state court located in the State of California.
(ii) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH
SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT
(A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH SUCH
PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
(k) Attorneys Fees. In the event
action is brought by any party under this Agreement to enforce
or construe any of its terms, the prevailing party shall be
entitled to recover, in addition to all other amounts and
relief, its reasonable costs and attorneys fees incurred at and
in preparation for trial, appeal and review, such sum to be set
by the court before which the matter is heard.
(l) Counterparts. This Agreement
may be executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute
one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but
together signed by all of the parties hereto.
(m) Construction. This Agreement
shall be deemed to be the joint work product of Parent and the
Principal, and any rule of construction that a document shall be
interpreted or construed against a drafter of such document
shall not be applicable.
(n) Independent Review and
Advice. The Principal represents and warrants
that the Principal (i) has carefully read this Agreement,
(ii) executes this Agreement with full knowledge of the
contents of this Agreement, the legal consequences thereof and
any and all rights that each party may have with respect to one
another, (iii) has had the opportunity to receive
independent legal advice with respect to the matters set forth
in this Agreement and with respect to the rights and asserted
rights arising out of such matters, and (iv) is entering
into this Agreement of his own free will.
[Remainder of page intentionally left blank.]
D-7
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
CELGENE CORPORATION
Name: Robert J. Hugin
|
|
|
|
Title:
|
Chief Executive Officer
|
DR. PATRICK SOON-SHIONG
/s/ Dr. Patrick
Soon-Shiong
[Signature Page to Non-Competition, Non-Solicitation and
Confidentiality Agreement]
D-8
Annex E
[LETTERHEAD
OF BANK OF AMERICA MERRILL LYNCH]
June 30,
2010
The Board of Directors
Abraxis BioScience, Inc.
11755 Wilshire Blvd.
Suite 2000
Los Angeles, CA 90025
Members of the Board of Directors:
We understand that Abraxis BioScience, Inc.
(Abraxis) proposes to enter into an Agreement and
Plan of Merger, dated as of June 30, 2010 (the
Agreement), among Abraxis, Celgene Corporation
(Celgene) and Artistry Acquisition Corp., a wholly
owned subsidiary of Celgene (Merger Sub), pursuant
to which, among other things, Merger Sub will merge with and
into Abraxis (the Merger) and each outstanding share
of the common stock, par value $0.001 per share (Abraxis
Common Stock), of Abraxis (not owned by Celgene or Merger
Sub) will be converted into a right to receive 0.2617 of a share
of common stock, par value $0.01 per share (Celgene Common
Stock), of Celgene (the Stock Consideration),
$58.00 in cash (the Cash Consideration), and a
contingent value right (a CVR) issued by Celgene
under the CVR Agreement (as defined in the Agreement) (the
CVR Consideration and together with the Cash
Consideration and the Stock Consideration, the
Consideration). As further described in the CVR
Agreement, each CVR will entitle the holder thereof to potential
payments equal to a pro rata portion of (x) certain
percentages of the Net Sales of Products with respect to the
periods set forth therein based upon the amount of such Net
Sales in each such period and (y) certain pre-set amounts
contingent upon the achievement of certain Milestones with
respect to the receipt of certain regulatory approvals for one
of the Products, as such terms are defined in the CVR Agreement.
We also understand that, concurrently with the execution of the
Agreement, Celgene, Merger Sub and certain stockholders of
Abraxis will enter into a voting agreement pursuant to which
such stockholders will agree, subject to the terms thereof, to
vote their shares of Abraxis Common Stock in favor of adoption
of the Agreement. The terms and conditions of the Merger are
more fully set forth in the Agreement.
You have requested our opinion as to the fairness, from a
financial point of view, to the holders of Abraxis Common Stock
(other than Patrick Soon-Shiong, M.D. and his affiliates
(together, Soon-Shiong)) of the Consideration to be
received by such holders in the Merger.
In connection with this opinion, we have, among other things:
(i) reviewed certain publicly available business and
financial information relating to Abraxis and Celgene;
(ii) reviewed certain internal financial and operating
information with respect to the business, operations and
prospects of Abraxis furnished to or discussed with us by the
management of Abraxis, including certain financial forecasts
relating to Abraxis prepared by the management of Abraxis (such
forecasts, Abraxis Forecasts);
(iii) reviewed a certain research analysts publicly
available financial forecasts relating to Celgene (the
Celgene Analyst Forecasts), as well as publicly
available consensus financial forecasts relating to Celgene (the
Celgene Consensus Forecasts, and together with the
Celgene Analyst Forecasts, the Celgene Public
Forecasts);
(iv) reviewed estimates as to the amount and timing of
certain cost savings and operating synergies (collectively, the
Cost Savings) anticipated by the management of
Abraxis to result from the Merger;
E-1
The Board of Directors
Abraxis BioScience, Inc.
Page 2
(v) discussed the past and current business, operations,
financial condition and prospects of Abraxis with members of
senior managements of Abraxis and Celgene, and discussed the
past and current business, operations, financial condition and
prospects of Celgene with members of senior managements of
Abraxis and Celgene;
(vi) reviewed the potential pro forma financial impact of
the Merger on the future financial performance of Celgene,
including the potential effect on Celgenes estimated
earnings per share;
(vii) reviewed the trading histories for Abraxis Common
Stock and Celgene Common Stock and a comparison of such trading
histories with the trading histories of other companies we
deemed relevant;
(viii) compared certain financial and stock market
information of Abraxis and Celgene with similar information of
other companies we deemed relevant;
(ix) compared certain financial terms of the Merger to
financial terms, to the extent publicly available, of other
transactions we deemed relevant;
(x) considered the results of efforts on behalf of Abraxis
to solicit, at the direction of Abraxis, indications of interest
and definitive proposals from third parties with respect to a
possible acquisition of Abraxis;
(xi) reviewed the Agreement and certain ancillary
agreements thereto; and
(xii) performed such other analyses and studies and
considered such other information and factors as we deemed
appropriate.
In arriving at our opinion, we have assumed and relied upon,
without independent verification, the accuracy and completeness
of the financial and other information and data publicly
available or provided to or otherwise reviewed by or discussed
with us and have relied upon the assurances of the managements
of Abraxis and Celgene that they are not aware of any facts or
circumstances that would make such information or data
inaccurate or misleading in any material respect. With respect
to the Abraxis Forecasts and the Cost Savings, we have been
advised by Abraxis, and have assumed, that they have been
reasonably prepared on bases reflecting the best currently
available estimates and good faith judgments of the management
of Abraxis as to the future financial performance of Abraxis and
the other matters covered thereby. As you are aware, the
management of Celgene did not provide us with, and we did not
have access to, financial forecasts relating to Celgene prepared
by the management of Celgene but directed us to the Celgene
Consensus Forecasts. At Abraxis direction, we have
assumed, that the Celgene Analyst Forecasts and the Celgene
Consensus Forecasts are a reasonable basis upon which to
evaluate the future financial performance of Celgene and, at
Abraxis direction, we have used the Celgene Public
Forecasts in performing our analyses. We have not made or been
provided with any independent evaluation or appraisal of the
assets or liabilities (contingent or otherwise) of Abraxis or
Celgene, nor have we made any physical inspection of the
properties or assets of Abraxis or Celgene. We have not
evaluated the solvency or fair value of Abraxis or Celgene under
any state, federal or other laws relating to bankruptcy,
insolvency or similar matters. We have assumed, at the direction
of Abraxis, that the Merger will be consummated in accordance
with its terms, without waiver, modification or amendment of any
material term, condition or agreement, that the CVRs will not be
redeemed and that, in the course of obtaining the necessary
governmental, regulatory and other approvals, consents, releases
and waivers for the Merger, no delay, limitation, restriction or
condition, including any divestiture requirements or amendments
or modifications, will be imposed that would have an adverse
effect on Abraxis, Celgene or the contemplated benefits of the
Merger in any way meaningful to our analysis.
We express no view or opinion as to any terms or other aspects
of the Merger (other than the Consideration to the extent
expressly specified herein), including, without limitation, the
form or structure of the Merger. Our opinion is limited to the
fairness, from a financial point of view, of the Consideration
to be received by holders of Abraxis Common Stock (other than
Soon-Shiong) and no opinion or view is expressed with respect to
any consideration received in connection with the Merger by the
holders of any class of securities, creditors or other
E-2
The Board of Directors
Abraxis BioScience, Inc.
Page 3
constituencies of any party. In addition, no opinion or view is
expressed with respect to the fairness (financial or otherwise)
of the amount, nature or any other aspect of any compensation to
any of the officers, directors or employees of any party to the
Merger, or class of such persons, relative to the Consideration.
Furthermore, no opinion or view is expressed as to the relative
merits of the Merger in comparison to other strategies or
transactions that might be available to Abraxis or in which
Abraxis might engage or as to the underlying business decision
of Abraxis to proceed with or effect the Merger. We are not
expressing any opinion as to what the value of Celgene Common
Stock actually will be when issued or the prices at which
Abraxis Common Stock, Celgene Common Stock or the CVRs will
trade at any time, including following announcement or
consummation of the Merger. In addition, we express no opinion
or recommendation as to how any stockholder should vote or act
in connection with the Merger or any related matter.
We have acted as financial advisor to Abraxis in connection with
the Merger and will receive a fee for our services, all of which
is contingent upon consummation of the Merger. In addition,
Abraxis has agreed to reimburse our expenses and indemnify us
against certain liabilities arising out of our engagement.
We and our affiliates comprise a full service securities firm
and commercial bank engaged in securities, commodities and
derivatives trading, foreign exchange and other brokerage
activities, and principal investing as well as providing
investment, corporate and private banking, asset and investment
management, financing and financial advisory services and other
commercial services and products to a wide range of companies,
governments and individuals. In the ordinary course of our
businesses, we and our affiliates may invest on a principal
basis or on behalf of customers or manage funds that invest,
make or hold long or short positions, finance positions or trade
or otherwise effect transactions in equity, debt or other
securities or financial instruments (including derivatives, bank
loans or other obligations) of Abraxis, Celgene and certain of
their respective affiliates.
We and our affiliates in the past have provided, currently are
providing, and in the future may provide, investment banking,
commercial banking and other financial services to Celgene and
have received or in the future may receive compensation for the
rendering of these services, including (i) having acted as
a financial advisor to Celgene in connection with an acquisition
transaction and (ii) having acted or acting as lender
under, or otherwise having extended credit under, certain
letters of credit and other arrangements with Celgene.
It is understood that this letter is for the benefit and use of
the Board of Directors of Abraxis in connection with and for
purposes of its evaluation of the Merger.
Our opinion is necessarily based on financial, economic,
monetary, market and other conditions and circumstances as in
effect on, and the information made available to us as of, the
date hereof. It should be understood that subsequent
developments may affect this opinion, and we do not have any
obligation to update, revise, or reaffirm this opinion. The
issuance of this opinion was approved by our Americas Fairness
Opinion Review Committee.
Based upon and subject to the foregoing, including the various
assumptions and limitations set forth herein, we are of the
opinion on the date hereof that the Consideration to be received
in the Merger by holders of Abraxis Common Stock (other than
Soon-Shiong) is fair, from a financial point of view, to such
holders.
Very truly yours,
/s/ Merrill
Lynch, Pierce, Fenner & Smith Incorporated
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
E-3
Annex F
[LETTERHEAD
OF GOLDMAN, SACHS & CO.]
PERSONAL
AND CONFIDENTIAL
June 30, 2010
Board of Directors
Abraxis BioScience, Inc.
11755 Wilshire Blvd.
Suite 2000
Los Angeles, CA 90025
Gentlemen:
You have requested our opinion as to the fairness from a
financial point of view to the holders of the outstanding shares
of common stock, par value $0.001 per share (the
Shares), of Abraxis BioScience, Inc. (the
Company) of the Per Share Consideration (as defined
below) to be paid to such holders pursuant to the Agreement and
Plan of Merger, dated as of June 30, 2010 (the
Agreement), by and among Celgene Corporation
(Celgene), Artistry Acquisition Corp., a wholly
owned subsidiary of Celgene (Acquisition Sub), and
the Company. Pursuant to the Agreement, Acquisition Sub will be
merged with and into the Company and each outstanding Share (not
owned by Celgene or Acquisition Sub) will be converted into a
right to receive 0.2617 of a share of common stock, par value
$0.01 per share (the Celgene Common Stock), of
Celgene (the Stock Consideration), $58.00 in cash
(the Cash Consideration), and a contingent value
right (a CVR) issued by Celgene under the CVR
Agreement (as defined in the Agreement) (the CVR
Consideration and together with the Cash Consideration and
the Stock Consideration, the Per Share
Consideration). Each CVR will entitle the holder thereof
to CVR Payments (as defined in the CVR Agreement) on the terms
and subject to the conditions set forth in the CVR Agreement.
Goldman, Sachs & Co. and its affiliates are engaged in
investment banking and financial advisory services, commercial
banking, securities trading, investment management, principal
investment, financial planning, benefits counseling, risk
management, hedging, financing, brokerage activities and other
financial and non-financial activities and services for various
persons and entities. In the ordinary course of these activities
and services, Goldman, Sachs & Co. and its affiliates
may at any time make or hold long or short positions and
investments, as well as actively trade or effect transactions,
in the equity, debt and other securities (or related derivative
securities) and financial instruments (including bank loans and
other obligations) of third parties, the Company, Celgene and
any of their respective affiliates and affiliates of Patrick
Soon-Shiong, M.D. (Soon-Shiong), a significant
shareholder of the Company, or any currency or commodity that
may be involved in the transaction contemplated by the Agreement
(the Transaction) for their own account and for the
accounts of their customers. We have acted as financial advisor
to the Company in connection with, and have participated in
certain of the negotiations leading to, the Transaction. We
expect to receive fees for our services in connection with the
Transaction, all of which are contingent upon consummation of
the Transaction, and the Company has agreed to reimburse our
expenses arising, and indemnify us against certain liabilities
that may arise, out of our engagement. In addition, we have
provided certain investment banking and other financial services
to the Company and its affiliates from time to time for which
our investment banking division has received, and may receive,
compensation, including having acted as financial advisor to APP
Pharmaceuticals, Inc., a former affiliate of the Company and
Soon-Shiong, in its acquisition by Fresenius Kabi
Pharmaceuticals Holding, LLC. We also may provide investment
banking and other financial services to the Company, Celgene,
Soon-Shiong and their respective affiliates in the future for
which our investment banking division may receive compensation.
In connection with this opinion, we have reviewed, among other
things, the Agreement; annual reports to stockholders and Annual
Reports on
Form 10-K
of the Company for the 3 years ended December 31, 2009
and for Celgene for the 5 years ended December 31,
2009; the Companys initial registration statement on
Form 10; certain interim reports to stockholders and
Quarterly Reports on
Form 10-Q
of the Company and Celgene; certain other communications from
the Company and Celgene to their respective stockholders;
certain publicly available
F-1
The Board of Directors
Abraxis BioScience, Inc.
June 30, 2010
Page Two
research analyst reports for the Company and Celgene; and
certain internal financial analyses and forecasts for the
Company prepared by its management and approved for our use by
the Company (the Forecasts) and certain cost savings
and operating synergies projected by the management of the
Company to result from the Transaction, as approved for our use
by the Company (the Synergies). As you are aware,
the management of Celgene did not make available its forecasts
of the future financial performance of Celgene. With your
consent, our review of the future financial performance of
Celgene was limited to the current consensus forecasts for
Celgene, publicly available estimates of a certain research
analyst and our discussions with the management of Celgene
regarding the current consensus forecasts for Celgene. We have
also held discussions with members of the senior managements of
the Company and Celgene regarding their assessment of the
strategic rationale for, and the potential benefits of, the
Transaction and the past and current business operations,
financial condition and future prospects of the Company and
Celgene; reviewed the reported price and trading activity for
the Shares and shares of Celgene Common Stock; compared certain
financial and stock market information for the Company and
Celgene with similar information for certain other companies the
securities of which are publicly traded; reviewed the financial
terms of certain recent business combinations in the
pharmaceutical industry specifically and in other industries
generally; and performed such other studies and analyses, and
considered such other factors, as we deemed appropriate.
For purposes of rendering this opinion, we have relied upon and
assumed, without assuming any responsibility for independent
verification, the accuracy and completeness of all of the
financial, legal, regulatory, tax, accounting and other
information provided to, discussed with or reviewed by us, and
we do not assume any responsibility for any such information. In
that regard, we have assumed with your consent that the
Forecasts and the Synergies have been reasonably prepared on a
basis reflecting the best currently available estimates and
judgments of the management of the Company. We have not made an
independent evaluation or appraisal of the assets and
liabilities (including any contingent, derivative or other
off-balance-sheet assets and liabilities) of the Company or
Celgene or any of their respective subsidiaries and we have not
been furnished with any such evaluation or appraisal. We have
assumed that all governmental, regulatory or other consents and
approvals necessary for the consummation of the Transaction will
be obtained without any adverse effect on the Company or Celgene
or on the expected benefits of the Transaction in any way
meaningful to our analysis. We also have assumed that the
Transaction will be consummated on the terms set forth in the
Agreement, without the waiver or modification of any term or
condition the effect of which would be in any way meaningful to
our analysis and that the CVRs will not be redeemed.
Our opinion does not address the underlying business decision of
the Company to engage in the Transaction, or the relative merits
of the Transaction as compared to any strategic alternatives
that may be available to the Company; nor does it address any
legal, regulatory, tax or accounting matters. This opinion
addresses only the fairness from a financial point of view, as
of the date hereof, of the Per Share Consideration to be paid to
the holders pursuant to the Agreement. We do not express any
view on, and our opinion does not address, any other term or
aspect of the Agreement or Transaction or any term or aspect of
any other agreement or instrument contemplated by the Agreement
or entered into or amended in connection with the Transaction,
including, without limitation, the Stockholders Agreement,
dated as of June 30, 2010, by and among Celgene and certain
stockholders of the Company, the Noncompetition and
Confidentiality Agreement (as defined in the Agreement), the
fairness of the Transaction to, or any consideration received in
connection therewith by, the holders of any other class of
securities, creditors, or other constituencies of the Company;
nor as to the fairness of the amount or nature of any
compensation to be paid or payable to any of the officers,
directors or employees of the Company, or class of such persons,
in connection with the Transaction, whether relative to the Per
Share Consideration to be paid to the holders pursuant to the
Agreement or otherwise. We are not expressing any opinion as to
the prices at which shares of Celgene Common Stock or the CVRs
will trade at any time or as to the impact of the Transaction on
the solvency or viability of the Company or Celgene or the
ability of the Company or Celgene to pay its obligations when
they come due. Our opinion is necessarily based on economic,
monetary, market and other conditions as in effect on, and the
information made available to us as of, the date hereof and we
assume no responsibility for updating, revising or reaffirming
this opinion based on circumstances, developments or events
occurring after the date hereof. Our
F-2
The Board of Directors
Abraxis BioScience, Inc.
June 30, 2010
Page Three
advisory services and the opinion expressed herein are provided
for the information and assistance of the Board of Directors of
the Company in connection with its consideration of the
Transaction and such opinion does not constitute a
recommendation as to how any holder of Shares should vote with
respect to such Transaction or any other matter. This opinion
has been approved by a fairness committee of Goldman,
Sachs & Co.
Based upon and subject to the foregoing, it is our opinion that,
as of the date hereof, the Per Share Consideration to be paid to
the holders of Shares pursuant to the Agreement is fair from a
financial point of view to such holders.
Very truly yours,
(GOLDMAN, SACHS & CO.)
F-3
Annex G
[LETTERHEAD
OF LAZARD FRERES & CO. LLC]
CONFIDENTIAL
June 30,
2010
The Board of Directors
Abraxis BioScience, Inc.
11755 Wilshire Blvd.
Suite 2000
Los Angeles, CA 90025
Dear Members of the Board:
We understand that Abraxis BioScience, Inc., a Delaware
corporation (the Company), Celgene Corporation, a
Delaware corporation (Buyer), and Artistry
Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of Buyer (Merger Sub), propose to enter
into an Agreement and Plan of Merger, dated as of June 30,
2010 (the Agreement), pursuant to which Buyer will
acquire the Company (the Transaction). Pursuant to
the Transaction, Merger Sub will be merged with and into the
Company and each outstanding share of the common stock, par
value $0.001 per share, of the Company (the Company Common
Stock), other than shares of Company Common Stock held by
Buyer or Merger Sub (such holders, but only with respect to such
shares of Company Common Stock, Excluded Holders),
will be converted into a right to receive 0.2617 of a share of
common stock, par value $0.01 per share (the Buyer Common
Stock), of Buyer (the Stock Consideration),
$58.00 in cash (the Cash Consideration), and a
contingent value right (a CVR) issued by Buyer under
the CVR Agreement (as defined in the Agreement) (the CVR
Consideration and together with the Cash Consideration and
the Stock Consideration, the Consideration). Each
CVR will entitle the holder thereof to potential payments equal
to a pro rata portion of (x) certain percentages of the Net
Sales of certain Products with respect to the periods set forth
therein based upon the amount of such Net Sales in each such
period and (y) certain pre-set amounts contingent upon the
achievement of certain Milestones with respect to the receipt of
certain regulatory approvals for one of the Products, as such
terms are defined in the CVR Agreement. The terms and conditions
of the Transaction are more fully set forth in the Agreement.
You have requested our opinion as of the date hereof as to the
fairness, from a financial point of view, to the holders of
Company Common Stock (other than Patrick Soon-Shiong, M.D.
and any of his affiliates (together, Soon-Shiong)
and Excluded Holders (as defined above)) of the Consideration to
be paid to such holders in the Transaction.
In connection with this opinion, we have:
(i) Reviewed the financial terms and conditions of the
Agreement and the ancillary agreements thereto;
(ii) Analyzed certain publicly available historical
business and financial information relating to the Company and
Buyer;
(iii) Reviewed various financial forecasts and other data
provided to us by the Company relating to the business of the
Company, publicly available estimates of a certain research
analyst, as well as current consensus forecasts for Buyer (the
Public Forecasts), with respect to the business of
Buyer, and certain cost savings and operating synergies
projected by the management of the Company to result from the
Transaction, as approved for our use by the Company;
(iv) Held discussions with members of the senior
managements of the Company and Buyer with respect to the
businesses and prospects of the Company and Buyer, respectively;
(v) Reviewed public information with respect to certain
other companies in lines of business we believe to be generally
relevant in evaluating the businesses of the Company and Buyer,
respectively;
G-1
The Board of Directors
Abraxis BioScience, Inc.
June 30, 2010
Page 2
(vi) Reviewed the financial terms of certain business
combinations involving companies in lines of business we believe
to be generally relevant in evaluating the businesses of the
Company and Buyer, respectively;
(vii) Reviewed historical stock prices and trading volumes
of Company Common Stock and Buyer Common Stock; and
(viii) Conducted such other financial studies, analyses and
investigations as we deemed appropriate.
We have assumed and relied upon the accuracy and completeness of
the foregoing information, without independent verification of
such information. We have not conducted any independent
valuation or appraisal of any of the assets or liabilities
(contingent or otherwise) of the Company or Buyer or concerning
the solvency or fair value of the Company or Buyer, and we have
not been furnished with such valuation or appraisal. With
respect to the financial forecasts related to the Company that
we have reviewed, we have assumed, with the consent of the
Company, that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments
of the management of the Company as to the future financial
performance of the Company. As you are aware, the management of
Buyer did not make available its forecasts of the future
financial performance of Buyer but directed us to current
consensus forecasts for Buyer. We have assumed, with the consent
of the Company, that the Public Forecasts are a reasonable basis
upon which to evaluate the future financial performance of
Buyer, and are appropriate for us to utilize in our analyses. We
assume no responsibility for and express no view as to any such
forecasts or the assumptions on which they are based.
Further, our opinion is necessarily based on economic, monetary,
market and other conditions as in effect on, and the information
made available to us as of, the date hereof. We assume no
responsibility for updating or revising our opinion based on
circumstances or events occurring after the date hereof. We do
not express any opinion as to the prices at which shares of
Company Common Stock, or Buyer Common Stock or the CVRs may
trade at any time subsequent to the announcement of the
Transaction.
In rendering our opinion, we have assumed, with your consent,
that the Transaction will be consummated on the terms described
in the Agreement, without any waiver or modification of any
material terms or conditions and that the CVRs will not be
redeemed. We also have assumed, with your consent, that
obtaining the necessary regulatory or third party approvals and
consents for the Transaction will not have an adverse effect on
the Company or Buyer in any way meaningful to our analysis. We
do not express any opinion as to any tax or other consequences
that might result from the Transaction, nor does our opinion
address any legal, tax, regulatory or accounting matters, as to
which we understand that the Company obtained such advice as it
deemed necessary from qualified professionals. We express no
view or opinion as to any terms or other aspects of the
Transaction (other than the Consideration to the extent
expressly specified herein). In addition, we express no view or
opinion as to the fairness of the amount or nature of, or any
other aspects relating to, the compensation to any officers,
directors or employees of any parties to the Transaction, or
class of such persons, or the holders of any class of securities
other than Company Common Stock, creditors, or other
constituencies of the Company; in each case relative to the
Consideration or otherwise. We note that Buyer, Merger Sub and
certain stockholders of the Company have agreed to enter into a
voting agreement pursuant to which such stockholders, subject to
the terms thereof, will vote their shares of Company Common
Stock in favor of adoption of the Agreement.
Lazard Frères & Co. LLC is
acting as financial advisor to the Company in connection with
the Transaction and will receive a fee for our services, all of
which is contingent upon the closing of the Transaction. We in
the past have provided investment banking services to the
Company, including having acted as financial advisor to APP
Pharmaceuticals, Inc., a former affiliate of the Company, in its
acquisition by Fresenius Kabi Pharmaceuticals Holding, LLC, for
which we have received compensation. In addition, in the
ordinary course of their respective businesses, Lazard
Frères & Co. LLC and LFCM Holdings LLC (an entity
indirectly owned in large part by managing directors of Lazard
Frères & Co. LLC) and their respective
affiliates may actively trade securities of the
G-2
The Board of Directors
Abraxis BioScience, Inc.
June 30, 2010
Page 3
Company
and/or the
securities of Buyer and certain of their respective affiliates
for their own accounts and for the accounts of their customers
and, accordingly, may at any time hold a long or short position
in such securities. The issuance of this opinion was approved by
the Opinion Committee of Lazard Frères & Co. LLC.
Our opinion does not address the relative merits of the
Transaction as compared to any other transaction or business
strategy in which the Company might engage or the merits of the
underlying decision by the Company to engage in the Transaction.
Our engagement and the opinion expressed herein are for the
benefit of the Board of Directors of the Company and our opinion
is rendered to the Board of Directors of the Company in
connection with its evaluation of the Transaction. Our opinion
is not intended to and does not constitute a recommendation to
any stockholder as to how such stockholder should vote or act
with respect to the Transaction or any matter relating thereto.
Based on and subject to the foregoing, we are of the opinion
that, as of the date hereof, the Consideration to be paid to
holders of Company Common Stock (other than Soon-Shiong and
Excluded Holders) in the Transaction is fair, from a financial
point of view, to such holders.
Very truly yours,
LAZARD FRERES & CO. LLC
Stephen Sands
Managing Director
G-3
Annex H
DELAWARE
GENERAL CORPORATION LAW
Section 262.
Appraisal Rights.
(a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with respect to
such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor
consented thereto in writing pursuant to § 228 of this
title shall be entitled to an appraisal by the Court of Chancery
of the fair value of the stockholders shares of stock
under the circumstances described in subsections (b) and
(c) of this section. As used in this section, the word
stockholder means a holder of record of stock in a
stock corporation and also a member of record of a nonstock
corporation; the words stock and share
mean and include what is ordinarily meant by those words and
also membership or membership interest of a member of a nonstock
corporation; and the words depository receipt mean a
receipt or other instrument issued by a depository representing
an interest in one or more shares, or fractions thereof, solely
of stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights shall be available for the shares of
any class or series of stock of a constituent corporation in a
merger or consolidation to be effected pursuant to
§ 251 (other than a merger effected pursuant to
§ 251(g) of this title), § 252,
§ 254, § 257, § 258,
§ 263 or § 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series
of stock, which stock, or depository receipts in respect
thereof, at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national
securities exchange or (ii) held of record by more than
2,000 holders; and further provided that no appraisal rights
shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for
its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of
§ 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the
shares of any class or series of stock of a constituent
corporation if the holders thereof are required by the terms of
an agreement of merger or consolidation pursuant to
§§ 251, 252, 254, 257, 258, 263 and 264 of this
title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository
receipts in respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository receipts
at the effective date of the merger or consolidation will be
either listed on a national securities exchange or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.
and b. of this paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.,
b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under § 253 of
this title is not owned by the parent corporation immediately
prior to the merger, appraisal rights shall be available for the
shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as
a result of an amendment to its certificate of incorporation,
any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all
of the assets of the corporation. If the certificate of
incorporation contains such a provision, the
H-1
procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply
as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record
date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or
(c) hereof that appraisal rights are available for any or
all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholders
shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for
appraisal of such stockholders shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such stockholders
shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as
herein provided. Within 10 days after the effective date of
such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of
the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to
§ 228 or § 253 of this title, then either a
constituent corporation before the effective date of the merger
or consolidation or the surviving or resulting corporation
within 10 days thereafter shall notify each of the holders
of any class or series of stock of such constituent corporation
who are entitled to appraisal rights of the approval of the
merger or consolidation and that appraisal rights are available
for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy
of this section. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also
notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may,
within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting corporation
the appraisal of such holders shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such holders shares. If
such notice did not notify stockholders of the effective date of
the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of
the holders of any class or series of stock of such constituent
corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second
notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder
who is entitled to appraisal rights and who has demanded
appraisal of such holders shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary
or of the transfer agent of the corporation that is required to
give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated
therein. For purposes of determining the stockholders entitled
to receive either notice, each constituent corporation may fix,
in advance, a record date that shall be not more than
10 days prior to the date the notice is given, provided,
that if the notice is given on or after the effective date of
the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is
given prior to the effective date, the record date shall be the
close of business on the day next preceding the day on which the
notice is given.
(e) Within 120 days after the effective date of the
merger or consolidation, the surviving or resulting corporation
or any stockholder who has complied with subsections (a)
and (d) of this section hereof and who is otherwise
entitled to appraisal rights, may commence an appraisal
proceeding by filing a petition in the Court of Chancery
demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within
60 days after the effective date of the merger or
consolidation, any stockholder who has not commenced an
appraisal proceeding or joined that proceeding as a named party
shall have the right to withdraw such stockholders demand
for appraisal and to accept the terms offered upon the merger or
consolidation.
H-2
Within 120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) of this
section hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting
from the consolidation a statement setting forth the aggregate
number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the
stockholder within 10 days after such stockholders
written request for such a statement is received by the
surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal
under subsection (d) of this section hereof, whichever is
later. Notwithstanding subsection (a) of this section, a
person who is the beneficial owner of shares of such stock held
either in a voting trust or by a nominee on behalf of such
person may, in such persons own name, file a petition or
request from the corporation the statement described in this
subsection.
(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or
resulting corporation, which shall within 20 days after
such service file in the office of the Register in Chancery in
which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the
value of their shares have not been reached by the surviving or
resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the
time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting
corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1
or more publications at least 1 week before the day of the
hearing, in a newspaper of general circulation published in the
City of Wilmington, Delaware or such publication as the Court
deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs
thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section
and who have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for
their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After the Court determines the stockholders entitled to
an appraisal, the appraisal proceeding shall be conducted in
accordance with the rules of the Court of Chancery, including
any rules specifically governing appraisal proceedings. Through
such proceeding the Court shall determine the fair value of the
shares exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation,
together with interest, if any, to be paid upon the amount
determined to be the fair value. In determining such fair value,
the Court shall take into account all relevant factors. Unless
the Court in its discretion determines otherwise for good cause
shown, interest from the effective date of the merger through
the date of payment of the judgment shall be compounded
quarterly and shall accrue at 5% over the Federal Reserve
discount rate (including any surcharge) as established from time
to time during the period between the effective date of the
merger and the date of payment of the judgment. Upon application
by the surviving or resulting corporation or by any stockholder
entitled to participate in the appraisal proceeding, the Court
may, in its discretion, proceed to trial upon the appraisal
prior to the final determination of the stockholders entitled to
an appraisal. Any stockholder whose name appears on the list
filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted such
stockholders certificates of stock to the Register in
Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder
is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of
the shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Payment shall be so made to each such stockholder, in the case
of holders of uncertificated stock forthwith, and the case of
holders of shares represented by certificates upon the surrender
to the corporation of the certificates representing such stock.
The Courts decree may be enforced as other decrees in the
Court of Chancery may be enforced, whether such surviving or
resulting corporation be a corporation of this State or of any
state.
H-3
(j) The costs of the proceeding may be determined by the
Court and taxed upon the parties as the Court deems equitable in
the circumstances. Upon application of a stockholder, the Court
may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorneys fees
and the fees and expenses of experts, to be charged pro rata
against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded appraisal rights
as provided in subsection (d) of this section shall be
entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the
merger or consolidation); provided, however, that if no petition
for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a
written withdrawal of such stockholders demand for an
appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the
merger or consolidation as provided in subsection (e) of
this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval
may be conditioned upon such terms as the Court deems just;
provided, however that this provision shall not affect the right
of any stockholder who has not commenced an appraisal proceeding
or joined that proceeding as a named party to withdraw such
stockholders demand for appraisal and to accept the terms
offered upon the merger or consolidation within 60 days
after the effective date of the merger or consolidation, as set
forth in subsection (e) of this section.
(l) The shares of the surviving or resulting corporation to
which the shares of such objecting stockholders would have been
converted had they assented to the merger or consolidation shall
have the status of authorized and unissued shares of the
surviving or resulting corporation.
H-4
PART II
INFORMATION
NOT REQUIRED IN THE PROSPECTUS
|
|
Item 20.
|
Indemnification
of Officers and Directors
|
The General Corporation Law of the State of Delaware (the
DGCL), permits Celgene and its stockholders to limit
directors exposure to liability for certain breaches of
the directors fiduciary duty, either in a suit on behalf
of Celgene or in an action by stockholders of Celgene.
The Certificate of Incorporation of Celgene (the
Charter), eliminates the liability of directors to
stockholders or Celgene for monetary damages arising out of the
directors breach of their fiduciary duty as a director,
except for liability (1) for any breach of the
directors duty of loyalty to Celgene or its stockholders,
(2) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law,
(3) under Section 174 of the DGCL or (4) for any
transaction from which the director derived an improper personal
benefit.
The Charter also requires Celgene to indemnify its directors,
officers, incorporators, employees and agents with respect to
certain costs, expenses and amounts incurred in connection with
an action, suit or proceeding by reason of the fact that such
person was serving as a director, officer, incorporator,
employee or agent of Celgene. In addition, the Charter permits
Celgene to provide additional indemnification rights to its
officers and directors and to indemnify them to the greatest
extent possible under the DGCL.
Celgene has entered into indemnification agreements with each of
its directors and certain officers and intends to enter into
indemnification agreements with its future directors and certain
of its future officers. Pursuant to such indemnification
agreements, Celgene has agreed to indemnify the officers and
directors against certain liabilities, including liabilities
arising out of the offering made by this registration statement.
Celgene maintains a standard form of officers and
directors liability insurance policy which provides
coverage to the officers and directors of Celgene for certain
liabilities, including certain liabilities which may arise out
of this registration statement.
|
|
Item 21.
|
Exhibits
and Financial Statements
|
The exhibits listed below in the Exhibit Index
are part of this registration statement and are numbered in
accordance with Item 601 of
Regulation S-K.
The undersigned Registrant hereby undertakes:
(a) That, for purposes of determining any liability under
the Securities Act of 1933, each filing of the Registrants
annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plans annual report pursuant
to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration
statement shall be deemed a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(b) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part
of this registration statement, by any person or party who is
deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the
applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(c) That every prospectus: (i) that is filed pursuant
to paragraph (e) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of
the Securities Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new
registration statement
II-1
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(d) To deliver or cause to be delivered with the
prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished
pursuant to and meeting the requirements of
Rule 14a-3
or
Rule 14c-3
under the Securities Exchange Act of 1934.
(e) To respond to requests for information that is
incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business
day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means.
This includes information contained in the documents filed
subsequent to the effective date of the registration statement
through the date of responding to the request.
(f) To supply by means of a post-effective amendment all
information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
Insofar as indemnification by the Registrant for liabilities
arising under the Securities Act may be permitted to directors,
officers and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the Registrant has been
advised that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final
adjudication of such issue.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Summit, State of New Jersey, on July
28, 2010.
CELGENE CORPORATION
Name: Robert J. Hugin
|
|
|
|
Title:
|
Chief Executive Officer
|
POWER OF
ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that each person whose signature
appears below constitutes and appoints Robert J. Hugin and David
W. Gryska, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any and all
amendments to this registration statement on
Form S-4
and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to
be done, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or
his substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act, this
registration statement has been signed by the following persons
in the capacities and on the date indicated.
|
|
|
|
|
|
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Sol
J. Barer
Sol
J. Barer
|
|
Executive Chairman and Director
|
|
July 28, 2010
|
|
|
|
|
|
/s/ Robert
J. Hugin
Robert
J. Hugin
|
|
Chief Executive Officer (Principal Executive Officer) and
Director
|
|
July 28, 2010
|
|
|
|
|
|
/s/ David
W. Gryska
David
W. Gryska
|
|
Chief Financial Officer (Principal Financial Officer and
Principal Accounting Officer)
|
|
July 28, 2010
|
|
|
|
|
|
/s/ Michael
D. Casey
Michael
D. Casey
|
|
Director
|
|
July 28, 2010
|
|
|
|
|
|
/s/ Carrie
S. Cox
Carrie
S. Cox
|
|
Director
|
|
July 28, 2010
|
|
|
|
|
|
/s/ Rodman
L. Drake
Rodman
L. Drake
|
|
Director
|
|
July 28, 2010
|
|
|
|
|
|
/s/ Gilla
Kaplan
Gilla
Kaplan
|
|
Director
|
|
July 28, 2010
|
II-3
|
|
|
|
|
|
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ James
Loughlin
James
Loughlin
|
|
Director
|
|
July 28, 2010
|
|
|
|
|
|
/s/ Ernest
Mario
Ernest
Mario
|
|
Director
|
|
July 28, 2010
|
|
|
|
|
|
/s/ Walter
L. Robb
Walter
L. Robb
|
|
Director
|
|
July 28, 2010
|
II-4
EXHIBIT INDEX
|
|
|
|
|
|
2
|
.1
|
|
Agreement and Plan of Merger, dated as of June 30, 2010,
among Celgene Corporation, Artistry Acquisition Corp. and
Abraxis BioScience, Inc. (attached as Annex A to the proxy
statement/prospectus included in this registration statement).
|
|
3
|
.1
|
|
Certificate of Incorporation of Celgene Corporation
(incorporated by reference to Exhibit 3.1 to Celgene
Corporations Annual Report on
Form 10-K
for the year ended December 31, 2005).
|
|
3
|
.2
|
|
Bylaws of the Celgene Corporation (incorporated by reference to
Exhibit 2 to Celgene Corporations Current Report on
Form 8-K,
dated September 16, 1996), as amended effective May 1,
2006 (incorporated by reference to Exhibit 3.2 to Celgene
Corporations Quarterly Report on
Form 10-Q,
for the quarter ended March 31, 2006) as amended,
effective December 16, 2009 (incorporated by reference to
Exhibit 3.1 to Celgene Corporations Current Report on
Form 8-K
filed on December 17, 2009), and, as amended, effective
February 17, 2010 (incorporated by reference to
Exhibit 3.2 to Celgene Corporations Annual Report on
Form 10-K,
for the year ended December 31, 2009).
|
|
4
|
.1
|
|
Form of Contingent Value Rights Agreement (attached as
Annex B to the proxy statement/prospectus included in this
registration statement).
|
|
5
|
.1
|
|
Opinion of Jones Day, with respect to the legality of the
securities being issued.*
|
|
10
|
.1
|
|
Voting Agreement, dated as of June 30, 2010, among Celgene
Corporation, Artistry Acquisition Corp. and Certain Stockholders
of Abraxis BioScience, Inc. (attached as Annex C to the
proxy statement/prospectus included in this registration
statement).
|
|
10
|
.2
|
|
Non-Competition, Non-Solicitation and Confidentiality Agreement,
dated as of June 30, 2010, between Celgene Corporation and
Dr. Patrick Soon-Shiong (attached as Annex D to the
proxy statement/prospectus included in this registration
statement).
|
|
10
|
.3
|
|
Stockholders Agreement dated as of June 30, 2010,
among Celgene Corporation and Certain Stockholders of Abraxis
BioScience, Inc. (incorporated by reference to Exhibit 10.4
to Celgene Corporations Current Report on
Form 8-K
filed on July 1, 2010).
|
|
23
|
.1
|
|
Consent of Jones Day (included in Exhibit 5.1).*
|
|
23
|
.2
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
23
|
.3
|
|
Consent of KPMG LLP.
|
|
24
|
.1
|
|
Power of Attorney of Directors of Celgene Corporation (included
on signature page to this registration statement).
|
|
25
|
.1
|
|
Form T-1
Statement of Eligibility of Trustee under the Contingent Value
Rights Agreement.*
|
|
99
|
.1
|
|
Consent of Goldman, Sachs & Co.
|
|
99
|
.2
|
|
Consent of Lazard Frères & Co. LLC.
|
|
99
|
.3
|
|
Consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
|
|
99
|
.4
|
|
Form of Proxy Card.
|
|
|
|
* |
|
To be filed as an amendment. |