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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
MAY 4, 2000
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
WARNER CHILCOTT PUBLIC LIMITED COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
IRELAND 005-52501 NOT APPLICABLE
(STATE OR OTHER JURISDICTION (COMMISSION FILE (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) NUMBER) IDENTIFICATION NO.)
LINCOLN HOUSE, LINCOLN PLACE,
DUBLIN 2,IRELAND
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
353-1-662-4962
(REGISTRANT'S TELEPHONE NUMBER,
INCLUDING AREA CODE)
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Item 5. Other Events
Warner Chilcott plc ("Warner Chilcott") has entered into an
agreement (the "Transaction Agreement") with Galen Holdings, plc ("Galen")
pursuant to which Warner Chilcott has agreed to become a wholly owned
subsidiary of Galen (the "Acquisition"). The Acquisition would be effected
through a scheme of arrangement under the laws of the Republic of Ireland. The
Acquisition is subject to various conditions, including, among other things,
sanction by the High Court of Ireland, regulatory approval, and approval by
Warner Chilcott's and Galen's shareholders.
The foregoing description of the Acquisition and the Transaction
Agreement is qualified in its entirety by reference to the Transaction
Agreement, a copy of which is filed herewith as Exhibit 2.1 and such exhibit is
incorporated herein by reference
THIS CURRENT REPORT ON FORM 8-K CONTAINS OR INCORPORATES BY
REFERENCE FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES.
THESE STATEMENTS MAY DIFFER MATERIALLY FROM ACTUAL FUTURE EVENTS OR RESULTS.
READERS ARE REFERRED TO ALL DOCUMENTS FILED BY WARNER CHILCOTT WITH THE
SECURITIES AND EXCHANGE COMMISSION, WHICH IDENTIFY IMPORTANT RISK FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER FROM THOSE CONTAINED IN ANY
FORWARD-LOOKING STATEMENTS.
Item 7. Exbihits
The following exhibits are filed pursuant to Item 601 of Regulation
S-K:
2.1 Transaction Agreement by and between Galen Holdings plc and
Warner Chilcott, plc, dated May 4, 2000.
2.2 Form of Scheme of Arrangement (included as Exhibit A to Exhibit
2.1 hereto).
99.1 Press release of Warner Chilcott plc, dated May 4. 2000.
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SIGNATURES
PURSUANT TO THE REQUIREMENTS THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, HEREUNTO DULY AUTHORIZED.
WARNER CHILCOTT PUBLIC LIMITED COMPANY
Date May 10, 2000 By: /s/ PAUL S. HERENDEEN
---------------------------------------
Paul S. Herendeen
Executive Vice President and Chief
Financial Officer
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TRANSACTION AGREEMENT
BY AND BETWEEN
GALEN HOLDINGS PLC
AND
WARNER CHILCOTT, PLC
MAY 4, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I THE ACQUISITION, INCLUDING THE SCHEME 2
ARTICLE II ADS EXCHANGE 8
ARTICLE III OPTIONS AND WARRANTS 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WARNER 9
ARTICLE V REPRESENTATIONS AND WARRANTIES OF GALEN 22
ARTICLE VI COVENANTS 32
ARTICLE VII CONDITIONS 43
ARTICLE VIII TERMINATION; AMENDMENTS; WAIVER 47
ARTICLE IX MISCELLANEOUS 50
ARTICLE X DEFINITIONS 53
</TABLE>
(i)
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TRANSACTION AGREEMENT
This TRANSACTION AGREEMENT (this "Agreement") dated as of May 4,
2000 is entered into by Galen Holdings PLC, a Northern Ireland public limited
company ("Galen"), and Warner Chilcott, PLC, an Irish public limited company
("Warner").
WHEREAS, the respective Boards of Directors of Galen and Warner have
approved the combination of the businesses of Galen and Warner on the terms and
subject to the conditions set forth in this Agreement and the Scheme; and
WHEREAS, Galen has received executed Employment Agreements in form
and substance satisfactory to Galen;
WHEREAS, such combination is proposed to be effected, subject to the
sanction of the High Court of Ireland (the "Court"), by means of a scheme of
arrangement in substantially the form attached hereto as Exhibit A (the
"Scheme") under Section 201 of the Companies Act, 1963, of Ireland (the "Irish
Companies Act"), whereby (i) all of the ordinary shares of US$0.05 each in the
capital of Warner ("Warner Shares"), excluding any Warner Shares held by or on
behalf of Galen or any Subsidiary of Galen (as more particularly described in
the Scheme, "Scheme Shares"), will be cancelled in consideration for the issue
to the holders of Scheme Shares of a number of new ordinary shares of 10p each
in the capital of Galen ("Galen Shares") determined as set forth herein and (ii)
the reserve arising on cancellation of the Scheme Shares will be applied to pay
up in full an issue of new shares in Warner to Galen, such that Warner will
become a wholly-owned subsidiary of Galen; and it is proposed that, in
conjunction with the Scheme, certain amendments will be made to the Articles of
Association of Warner (the "Amendments") so as to ensure that any Warner Shares
issued after the Effective Time (as defined in the Scheme) other than to Galen
or its nominee will be exchanged for Galen Shares on the same basis as under the
Scheme, and that arrangements will be made under which Options (as defined
herein) may be converted into options to acquire Galen Shares upon the terms and
subject to the conditions set forth herein and in accordance with the relevant
laws;
WHEREAS, Warner has previously (i) deposited Warner Shares with The
Bank of New York (the "Depositary") and (ii) caused the Depositary to issue
American Depositary Shares, each representing one Warner Share (the "Warner
ADS's") in respect thereof; and
WHEREAS, Galen intends to (i) deposit Galen Shares with the
Depositary and (ii) cause the Depositary to issue American Depositary Shares
(the "Galen ADSs") in respect thereof; and
WHEREAS, under the terms of the Scheme, holders of Scheme Shares
(including the Scheme Shares represented by the Warner ADSs) will receive 2.5
Galen Shares for each Warner Share subject to adjustment as provided by the
Scheme (as more particularly defined in the Scheme the "Per Share
Consideration"); and
WHEREAS, the parties intend to enter into arrangements whereby
holders of
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Warner ADSs representing Scheme Shares will receive Galen ADSs in respect of the
Per Share Consideration for such Scheme Shares; and
WHEREAS, the Boards of Directors of Galen and Warner have approved
the acquisition of Warner by Galen pursuant to the Scheme (the "Acquisition")
and the other transactions contemplated hereby (collectively the
"Transactions"), in accordance with the laws of Ireland ("Irish Law") and upon
the terms and subject to the conditions set forth in this Agreement; and
WHEREAS under the terms of the Scheme all the issued Deferred Shares
in the capital of Warner will be cancelled in consideration of the issue of one
new Galen Share; and
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Warner to enter into this Agreement, certain shareholders of Galen
have entered into shareholder agreements (each, a "Galen Shareholder Agreement")
in the form attached hereto as Annex A, pursuant to which, among other things,
such shareholders have agreed, pursuant to the terms thereof, to support, and
vote their Galen Shares in favor of, the Transactions; and
WHEREAS, Galen and Warner desire to make certain representations,
warranties, covenants and agreements in connection with the Transactions and
also to prescribe various conditions to the implementation of the Scheme set
forth herein; and
WHEREAS, for U.S. federal income tax purposes, the parties expect
that the Transactions will qualify as a reorganization within the meaning of
Section 368(a)(1)(B) of the U.S. Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, certain capitalized terms used in this Agreement have the
meaning as set forth or referred to in Article X hereof.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Galen
and Warner agree as follows:
ARTICLE I -- THE ACQUISITION, INCLUDING THE SCHEME
SECTION 1.01 Implementation of the Scheme.
(a) Warner and Galen shall take all such steps and actions
reasonably within their respective powers and shall prepare, execute, agree,
settle, publish and/or announce (and use their reasonable best efforts to
procure to be prepared, executed, agreed, settled, published and announced), all
such documents as may be necessary or appropriate for the implementation of the
Scheme and the Transactions in accordance with the terms and conditions of this
Agreement and the requirements of applicable law, the United States Securities
and Exchange Commission ("SEC"), the UK Listing Authority (as hereinafter
defined), the London
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Stock Exchange ("LSE"), the Nasdaq National Market ("Nasdaq") and the Court. The
parties shall respectively use their reasonable best efforts to cause the
Effective Date (as defined in the Scheme) to occur on or before August 31, 2000.
Notwithstanding the foregoing, if the Effective Date does not occur on or before
August 31, 2000, the parties shall use their respective reasonable best efforts
to cause the Effective Date to occur as soon as practicable thereafter. In any
event, the parties shall comply with any time limits which may be specified in
the Final Court Order.
(b) (i) As promptly as practicable after the date of this
Agreement, Warner shall prepare a Proxy Statement (the "Proxy Statement")
complying with all requirements of applicable law, the Court and the SEC and
without limitation containing:
(1) the text of the Scheme;
(2) an explanatory statement in relation to the
Scheme as required by Irish Law;
(3) a notice convening a meeting or meetings of
holders of Warner Shares pursuant to an order of the
Court for the purpose of voting on the Scheme (such
meetings, including any adjournment thereof, being the
"Court Meeting");
(4) a notice convening an extraordinary general
meeting of Warner for the purpose of voting on a Special
Resolution ("the Warner EGM Resolution") to approve the
reduction and cancellation of capital of Warner (the
"Capital Reduction") and creation and issue of new
Warner Shares to Galen contemplated by the Scheme and
the Amendments (such meeting, including any adjournment
thereof, being the "Warner EGM");
(5) such other information as may be required by
the SEC, Nasdaq, the Court or applicable law.
(ii) Warner shall give Galen and its advisers all
reasonable opportunity to review and comment on drafts of and
approve the final forms of drafts, and final forms of all
documents to be filed with the Court, including those
documents referred to in paragraph (b)(i) of this Section
1.01, prior to the filing thereof by Warner (such approval not
to be unreasonably withheld or delayed) and will duly take
account of any comments thereon made by Galen and its
advisers. Warner shall consult with Galen regarding the
conduct of all court proceedings and shall advise Galen's
counsel of the dates of any hearings.
(c) Galen shall be represented in the Court by solicitors or
counsel on
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the hearing of the Petition and any other hearings, and shall give such
undertakings, subject to the Scheme becoming effective, as are required by the
Court for the purposes of assuring the Court that Galen shall perform those acts
which the Scheme provides that it shall perform.
(d) The Proxy Statement will set forth, and Warner hereby
represents, that the Board of Directors of Warner (the "Warner Board") at a
meeting duly called and held, has (i) determined that the Scheme is fair to and
in the best interests of Warner and Warner Shareholders; and (ii) recommended
approval by Warner Shareholders of the Scheme and the Warner EGM Resolution
(such recommendation to the Warner Shareholders being referred to as the "Warner
Board Recommendation" and references to the Warner Board Recommendation herein
to include, where the context so allows, a recommendation against any proposed
adjournment of the Court Meeting or the Warner EGM other than due to practical
difficulties); provided, however, that the Warner Board recommendation may be
withdrawn, modified or amended to the extent that the Warner Board determines in
good faith, after taking due account of advice from its outside counsel as to
legal matters and from its independent financial adviser as to financial
matters, that its fiduciary duties would be likely to require it to do so.
Warner further represents that Credit Suisse First Boston Corporation ("CSFB")
has delivered to the Warner Board its written opinion to the effect that, as of
the date thereof, the Per Share Consideration to be offered to the holders of
Warner Shares and Warner ADSs (other than Galen and its affiliates) pursuant to
the Scheme is fair to such holders from a financial point of view.
(e) On the terms and subject to the conditions of this
Agreement, Warner shall promptly take or cause to be taken such steps as are
within its power and necessary or reasonably required to implement the Scheme,
including the following:
(i) Warner shall issue proceedings requesting the Court
to order that the Court Meeting be convened;
(ii) upon the giving by the Court of any directions in
that respect, and the Proxy Statement and related forms of
proxy for use at the Court Meeting and the Warner EGM being
approved (to the extent required) by the Court, Warner shall,
in accordance with the directions of the Court, promptly
dispatch the Proxy Statement and proxy forms to the Warner
Shareholders and thereafter publish and/or post the requisite
advertisements and such other documents and information as the
Court may approve or direct from time to time in connection
with the implementation of the Scheme in accordance with
applicable law;
(iii) (subject to the attendance of a quorum) Warner
shall hold the Court Meeting and the Warner EGM and, provided
the necessary resolutions are duly passed at such meetings (by
the requisite votes required under Section 201(3) of the Irish
Companies Act ("Section 201"), in the case of the Court
Meeting) promptly after such vote has been taken present a
petition or petitions (the "Petition") and issue a notice of
motion
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for directions and file any grounding affidavits required
requesting the Court to issue directions in relation to the
date to be fixed for the hearing of the Petition and for an
order of the Court directing the manner of advertisement of
the hearing of the Petition and for such further and other
orders as the Court deems fit. Warner shall as soon as
practicable thereafter proceed with the Petition for the
purpose of obtaining an order or orders of the Court (the
"Final Court Order") sanctioning the Scheme and confirming the
Capital Reduction; and
(iv) within three business days after the perfection of
the Final Court Order, Warner shall cause a copy of the Final
Court Order and the minute required by Section 75 of the Irish
Companies Act to be duly delivered to the Registrar of
Companies in Ireland and obtain from such Registrar a
certificate of registration in relation to the Capital
Reduction.
(f) Warner hereby represents and warrants to Galen that the
Proxy Statement will comply in all material respects with the provisions of
applicable federal securities laws, and on the date filed with the SEC, on the
date first published, sent or given to Warner's stockholders and on the date of
the Warner EGM, shall not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading (provided that for the purposes of this
Agreement Warner makes no representation or warranty with respect to any
information concerning Galen and its Subsidiaries supplied by Galen for
inclusion in the Proxy Statement). Warner and Galen agree promptly to correct
any information provided by either of them for use in the Proxy Statement if and
to the extent that it shall have become false or misleading, and Warner further
agrees to take all steps necessary to cause the Proxy Statement as so corrected
to be filed with the SEC and to be disseminated to the holders of the Warner
Shares, in each case, as and to the extent required by applicable federal
securities law.
(g) As promptly as practicable after the date hereof, Galen
and Warner shall prepare and file with the SEC (i) either a "no action" request
letter seeking an exemption from the registration requirements of the Securities
Act with respect to Galen Shares to be issued under the Scheme or (ii) at
Galen's discretion or in the event that a "no action" request letter is denied
or withdrawn a registration statement meeting, in all material respects, the
requirements of Form F-4 under the Securities Act, in which the Proxy Statement
will be included as part of a proxy statement/prospectus (in substantially the
form mailed to Warner's shareholders, the "PS/P") and in either case any other
documents required or mutually agreed by Galen and Warner to be necessary to
discharge their respective obligations under United States and Irish securities
laws, in connection with the Transactions. Galen hereby represents and warrants
that the PS/P shall not include any untrue statement (provided that for the
purposes of this Agreement Galen makes no representation or warranty with
respect to any information concerning Warner and its subsidiaries supplied by
Warner) of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
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circumstances under which they are made, not misleading. The written statements
supplied by Warner specifically for inclusion in the PS/P shall not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading. Galen and
Warner shall use all commercially reasonable efforts to have such Form F-4
declared effective under the Securities Act as promptly as practicable after
filing. Galen shall also take any action required to be taken under any
applicable provincial or state securities laws (including United States "Blue
Sky" laws) in connection with the issuance of the Galen Shares in the
Acquisition; provided, however, that neither Galen nor Warner shall be required
to register or qualify as a foreign corporation or to take any action that would
subject it to service of process in any jurisdiction where any such entity is
not now so subject.
(h) Each of Warner and Galen shall use its reasonable best
efforts to cause all conditions precedent set forth herein to be fulfilled and
to avoid the occurrence of, or cure, any event which may prevent such conditions
precedent set forth herein from being fulfilled.
SECTION 1.02 Additional Actions and Undertakings.
(a) Galen agrees to be bound by, and allot and issue Galen
Shares pursuant to, the Scheme upon its becoming effective and upon and subject
to the terms and conditions of this Agreement to cooperate fully with Warner in
providing such information and executing such documents and taking such other
actions reasonably within Galen's power as may be necessary or desirable for the
purpose of giving effect to the Scheme.
(b) As promptly as practicable following the date of this
Agreement, Galen shall file with the SEC a registration statement on Form 20-F
(the "Registration Statement") under the U.S. Securities Exchange Act of 1934
(the "Exchange Act"). Galen hereby represents and warrants to Warner that the
Registration Statement and all information concerning Galen and its Subsidiaries
supplied by Galen for inclusion in the Proxy Statement will comply in all
material respects with the provisions of applicable federal securities laws, and
on the date filed with the SEC, on the date first published, sent or given to
Warner Shareholders, shall not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading (provided that for the purposes of this
Agreement Galen makes no representation or warranty with respect to any
information concerning Warner and its Subsidiaries supplied by Warner for
inclusion in the Registration Statement). Each of Galen and Warner agrees
promptly to correct any information provided by it for use in the Proxy
Statement or the Registration Statement, if and to the extent that it shall have
become false or misleading in any material respect and Galen further agrees to
take all steps necessary to cause the Registration Statement as so corrected to
be filed with the SEC, in each case, as and to the extent required by applicable
federal securities laws.
(c) Galen shall, as soon as practicable after the date of this
Agreement
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and in accordance with applicable law and regulations, including without
limitation the listing rules made pursuant to the Financial Services Act 1986
(the "Listing Rules"):
(i) duly convene and hold an extraordinary general
meeting (such meeting, including any adjournment thereof,
being the "Galen Meeting") of holders of Galen Shares (the
"Galen Shareholders"), for the purpose of considering and
voting upon (among other things) an ordinary resolution to (A)
approve this Agreement and the Transactions; (B) increase the
authorized share capital of Galen to create additional Galen
Shares; and (C) authorize the directors of Galen to allot
Galen Shares pursuant to the Scheme and the Transactions and
to take such other actions, if any, as may be necessary to
give effect to this Agreement, the Scheme and the Transactions
(the passing of such a resolution by a majority of the votes
cast at the Galen Meeting being referred to in this Agreement
as the "Galen Shareholder Approval");
(ii) prepare and submit to the competent authority for
listing in the United Kingdom for purposes of Part IV of the
Financial Services Act 1986 (the "UK Listing Authority" or
"UKLA") for approval a document or documents comprising (A) a
class one circular to Galen Shareholders (or such other
document as may be required by the UKLA), including a notice
convening the Galen Meeting and (B) listing particulars in
respect of the new Galen Shares to be issued pursuant to the
Scheme, in each case containing all information required by
applicable law and the Listing Rules (such document or
documents collectively the "Listing Particulars");
(iii) give Warner and its advisers all reasonable
opportunity to review and comment on drafts of the Listing
Particulars before such drafts are submitted to the UKLA, duly
take account of any comments made thereon in relation to
information on Warner and in relation to the Transactions and,
to the extent reasonably practicable, provide copies of
comments from the UKLA thereon to Warner and its advisers as
soon as practicable after the same are received;
(iv) subject to final approval by the UKLA, procure that
the Listing Particulars are duly delivered to the Registrar of
Companies in Northern Ireland, published in accordance with
applicable law and the Listing Rules and dispatched to Galen
Shareholders in a manner sufficient to give lawful notice of
the Galen Meeting;
(v) apply for admission of the Galen Shares to be issued
pursuant to the Transactions to trading on the LSE in
accordance with the LSE's Admission and Disclosure Standards
for Listed Companies, or other relevant requirements, as
applicable.
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Without prejudice to any right it may have to terminate this Agreement, Galen
shall, if necessary under applicable law and the Listing Rules, promptly publish
supplementary Listing Particulars and, if required by the UKLA or the LSE or
applicable law, re-solicit votes of Galen Shareholders in support of the
Transactions. The provisions of paragraphs (c)(ii) to (iv) above shall apply in
the same manner in relation to any supplementary listing particulars and for
purposes of this Agreement references to the Listing Particulars shall where
appropriate include any such supplementary listing particulars.
(d) Galen shall include in the Listing Particulars the
recommendation of the Board of Directors of Galen (the "Galen Board") to Galen
Shareholders to vote in favor of the resolutions to be proposed at the Galen
Meeting referred to in Section 1.02(c)(i) (such recommendation to the Galen
Shareholders being referred to as the "Galen Board Recommendation" and
references to the Galen Board Recommendation herein to include, where the
context so allows, a recommendation against any proposed adjournment of the
Court Meeting or the Galen EGM other than due to practical difficulties);
provided, however, that such recommendation may be withdrawn, modified or
amended to the extent the Galen Board determines, in good faith, after taking
due account of advice from its outside counsel as to legal matters and from its
independent financial advisers as to financial matters, that its fiduciary
duties would be likely to require it to do so.
(e) Warner shall cooperate with Galen in the preparation of
the Listing Particulars and provide in a timely manner such information about
Warner and its subsidiaries and the directors, employees, business, prospects
and finances thereof as may be necessary or reasonably requested in connection
therewith.
ARTICLE II -- ADS EXCHANGE
Prior to the posting of the Proxy Statement to Warner Shareholders, Warner and
Galen shall, so far as lies within their respective powers, take such actions
and enter into such agreements or arrangements with the Depositary, on terms
reasonably satisfactory to Warner and Galen, as may be necessary or appropriate
to provide for holders of Warner ADSs to receive (at no additional cost to such
holders) whole Galen ADSs representing (as nearly as practicable) the number of
Galen Shares comprised in the consideration received by the Depositary in
respect of the Scheme Shares represented by their Warner ADSs in accordance with
reasonable and customary exchange procedures for securities traded on Nasdaq.
ARTICLE III -- OPTIONS AND WARRANTS
SECTION 3.01. Warner and Galen shall use their respective reasonable
best efforts to implement arrangements whereby each and every option and warrant
to purchase Warner Shares granted under the Warner Option Plan or pursuant to
any other arrangement adopted by the Warner Board to provide options, warrants
or other rights to acquire share capital of Warner (in any such case an
"Option") which is outstanding prior to the Effective Time shall be adjusted or
otherwise modified so as to become, with effect from the Effective Time, an
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option, warrant or other such right as aforesaid to acquire such number of Galen
Shares (a "Substitute Option") at such exercise price per Galen Share as shall
be determined by applying the following formulae:
Every one Warner share subject to an Option immediately prior to the Effective
Time shall be multiplied by the Per Share Consideration (rounded down to the
nearest whole number, if necessary) and the exercise price per Warner Share
immediately prior to the Effective Time shall be divided by the Per Share
Consideration (rounded up to the nearest cent) and except as provided above in
this Section 3.01, each Substitute Option shall after the Effective Time
continue to be subject to the provisions of the Warner Option Plan and shall be
exercisable upon the same terms and conditions as were applicable under the
Warner Option Plan immediately prior to the Effective Time. It is the intention
of the parties that the above formulae shall be applied in a manner consistent
with Section 424(a) of the Code. Galen shall take all corporate action necessary
to reserve for issuance a sufficient number of Galen Shares for delivery upon
exercise of Substitute Options. Promptly following the Effective Time, Galen
shall file a registration statement on Form S-8 or another appropriate form with
respect to the Galen Shares subject to such options and shall use its reasonable
best efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding.
With respect to those individuals who subsequent to the Transactions will be
subject to the reporting requirements under Section 16(a) of the Exchange Act,
where applicable, to the extent that the arrangements referred to in Section
3.01 are implemented Galen shall cause its Board of Directors to specifically
approve the transactions in this Article III and shall administer options in a
manner that complies with Rule 16b-3 promulgated under the Exchange Act to the
extent the Warner Option Plan complied with such rule prior to the Transactions.
SECTION 3.02. Warner shall procure that no amendments shall be made
to the Warner Option Plan other than as reasonably necessary to effect the
provisions of Section 3.01 above.
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF WARNER
Except as disclosed in the letter delivered to Galen concurrently
herewith and designated therein as the Warner Disclosure Letter (the "Warner
Disclosure Letter"), in each case with specific reference to the Section to
which exception is taken, and except as disclosed in the Warner SEC Documents,
Warner hereby represents and warrants to Galen as follows:
SECTION 4.01 Corporate Organization.
(a) Warner is a public limited company duly incorporated and
validly existing under the laws of Ireland. Warner has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business
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conducted by it or the character or location of the properties and assets owned
or leased by it makes such licensing or qualification necessary, except where
the failure to be so licensed or qualified would not have or is not likely to
have with due regard to all circumstances a Material Adverse Effect on Warner.
As used in this Agreement, the term "Material Adverse Effect" means, with
respect to Galen or Warner, as the case may be, a material adverse effect on (i)
the business, operations, results of operations or financial condition of such
party and its Subsidiaries taken as a whole or (ii) the ability of such party to
consummate the transactions contemplated hereby. As used in this Agreement, the
word "Subsidiary" means any corporation, partnership, limited liability company,
joint venture or other legal entity of which Galen or Warner, as the case may be
(either alone or through or together with any other Subsidiary), (A) owns,
directly or indirectly, 50% or more of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation, partnership, limited
liability company, joint venture or other legal entity, (B) is a general
partner, trustee or other entity or person performing similar functions or (C)
has control (as defined in Rule 405 under the Securities Act). For all purposes
of this Agreement, a "wholly-owned Subsidiary" shall be deemed to include those
entities which, for regulatory or other local law purposes, have issued nominal
ownership interests to persons other than Warner or Galen or their respective
Subsidiaries. True and complete copies of the Memorandum and Articles of
Association (the "Warner Memorandum and Articles") of Warner, as in effect as of
the date of this Agreement, have previously been made available by Warner to
Galen.
(b) The only Subsidiaries of Warner are those listed in
Section 4.01(b) of the Warner Disclosure Letter. Each Warner Subsidiary (i) is
duly organized and validly existing under the laws of its jurisdiction of
organization, (ii) is duly qualified to do business and in good standing (where
applicable) in all jurisdictions (whether federal, state, local or foreign)
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and in which the failure to be so qualified would
have or be likely to have a Material Adverse Effect on Warner and (iii) has all
requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
(c) Save as disclosed in Section 4.01(c) of the Warner
Disclosure Letter the minute books of Warner are fully up-to-date and accurately
reflect in all material respects all material corporate actions held or taken
since January 1, 1999 of its shareholders and Board of Directors (including
committees of the Board of Directors of Warner).
SECTION 4.02 Capitalization.
(a) The authorized share capital of Warner consists of
50,000,000 shares of Warner Shares, of which, as of April 30, 2000, 12,391,827
shares were issued and outstanding and (ii) 30,000 Deferred Shares, par value
one Irish punt per share, of Warner (the "Warner Deferred Shares"), all of
which, as of April 30, 2000, were designated, issued and outstanding. All of the
issued and outstanding Warner Shares have been duly authorized and validly
issued and are fully paid, non-assessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. As of April 30, 2000,
except pursuant to the terms of
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options issued pursuant to the Warner Incentive Share Option Scheme (the "Warner
Option Plan") and Options and Warrants listed in Section 4.02 of the Warner
Disclosure Letter, Warner does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase, transfer, sale or issuance of any Warner
Shares or any other equity securities of Warner or any securities representing
the right to purchase or otherwise receive any Warner Shares or Warner Deferred
Shares. As of April 30, 2000, no Warner Shares are reserved for issuance, except
for 1,573,707 Warner Shares reserved for issuance upon exercise of share options
granted pursuant to the Warner Option Plan (the "Warner Stock Options") and the
2,619,023 Warner Shares reserved for issuance under the Warrants described in
Section 4.02 of the Warner Disclosure Letter. Save as referred to in Section
4.02 of the Warner Disclosure Letter since December 31, 1999, Warner has not
issued any shares in its capital or any securities convertible into or
exercisable for any shares in its capital, other than pursuant to the exercise
of Warner Stock Options granted prior to such date.
(b) Warner owns, directly or indirectly, all of the issued and
outstanding shares in its capital or other equity ownership interests of each of
the Warner Subsidiaries as set forth in Section 4.02(b) of the Warner Disclosure
Letter, free and clear of any Liens other than as set forth in Section 4.02(b)
of the Warner Disclosure Letter, and all of such shares or equity ownership
interests are duly authorized and validly issued and are fully paid,
non-assessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Warner Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares in its
capital or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares in its
capital or any other equity security of such Subsidiary.
SECTION 4.03 Authority; No Violation.
(a) Subject to passing of the resolutions to be proposed at
the Court Meeting and the Warner EGM and to the issue of the Final Court Order
and registration thereof by the Registrar of Companies in Ireland, Warner has
all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, and no other
corporate proceedings on the part of Warner are necessary to approve and adopt
this Agreement and to consummate the transactions contemplated hereby. Without
prejudice to any other provisions of this Agreement, the consummation of the
transactions contemplated hereby has been duly and validly approved and declared
advisable by the Warner Board. This Agreement has been duly and validly executed
and delivered by Warner and (assuming due authorization, execution and delivery
by Galen of this Agreement) constitutes a valid and binding obligation of
Warner, enforceable against Warner in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
Warner nor the consummation by Warner of the transactions contemplated hereby,
nor compliance by Warner with any of the terms or provisions hereof, will (i)
violate any provision of the Warner Memorandum and Articles or similar
bylaw/organizational documents of its Subsidiaries or (ii)
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assuming that the consents and approvals, filings or waiting times referred to
in Section 4.04 are duly obtained, made or elapsed respectively (x) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Warner or any of its Subsidiaries or any of their
respective properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Warner or any of its Subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture or other agreement,
instrument for borrowed money, any guarantee of any agreement or instrument for
borrowed money or any license, lease or any other agreement or instrument
("Material Agreement") to which Warner or any of its Subsidiaries is a party, or
by which they or any of their respective properties or assets may be bound or
affected, except (in the case of clause (y) above) for such violations,
conflicts, breaches or defaults which, either individually or in the aggregate,
will not have and is not likely to have a Material Adverse Effect on Warner.
SECTION 4.04 Consents and Approvals. Except (i) in connection, or in
compliance, with the provisions of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), (ii) for the filing of any required
applications or notices with any state or foreign agencies and approval of such
applications and notices (the "State and Foreign Approvals"), (iii) in
connection with applicable requirements of the Mergers Act, (iv) for such
filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states or Nasdaq in connection with the
issuance or listing of the shares of Galen Shares pursuant to this Agreement,
(v) for the approval of this Agreement by the requisite vote of the shareholders
of Galen, (vi) in connection, or in compliance, with the Securities Act or
Exchange Act, and (vii) the passing of the resolutions to be proposed at the
Court Meeting and the Warner EGM and the issue of the Final Court Order and
registration thereof by the Registrar of Companies in Ireland, no consents or
approvals of or filings or registrations with any court, administrative agency
or commission or other governmental authority or instrumentality (each a
"Governmental Entity") or with any third party are necessary in connection with
(A) the execution and delivery by Warner of this Agreement and (B) the
consummation by Warner of the Transaction and the other transactions
contemplated by this Agreement, failure at which to make or obtain could not
reasonably be expected to have a Material Adverse Effect on Warner or impair or
delay the ability of either party to consummate the Transactions contemplated
hereby.
SECTION 4.05 SEC Documents and Other Reports. Warner has filed all
required documents with the SEC since January 1, 1999 (the "Warner SEC
Documents"). As of their respective dates, the Warner SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and, at the respective times they were filed,
none of the Warner SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The consolidated financial
statements (including, in each case, any notes thereto) of
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Warner included in the Warner SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto as of their respective dates of
filing, were prepared in accordance with generally accepted accounting
principles "U.S. GAAP") (except, in the case of the unaudited statements, as
permitted by Regulation S-X) applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and fairly
presented in all material respects the consolidated financial position of Warner
and its consolidated Subsidiaries as of the respective dates thereof and the
consolidated results of their operations and their consolidated 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 described therein).
Except as disclosed in the Warner SEC Documents or as required by U.S. GAAP,
Warner has not, since December 31, 1999, made any change in the accounting
practices or policies applied in the preparation of its financial statements.
SECTION 4.06 Registration Statement; Listing Particulars
(a) None of the information supplied or to be supplied by
Warner for inclusion or incorporation by reference in the Registration Statement
at the time it becomes effective under the Exchange Act, or the Registration
Statement on Form F-4 (if filed) at the time it becomes effective under the
Securities Act, 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 not misleading.
(b) All the information supplied or to be supplied by Warner
for inclusion in the Listing Particulars (and any supplementary listing
particulars required to be published) on the date the Listing Particulars (or,
if applicable, supplementary listing particulars) are first mailed to
shareholders of Galen and at the time of the Galen Meeting to vote on the
approval of the Transactions will be true and accurate in all material respects,
will not be misleading in any material respect, and will not omit any
information known or which could on reasonable enquiry have been known to the
directors of Warner the omission of which would make them misleading in any
material respect.
SECTION 4.07 Absence of Certain Changes or Events. Except as
disclosed in the Warner SEC Documents filed prior to the date of this Agreement
or in Section 4.07 of the Warner Disclosure Letter and except for the
Transactions, since December 31, 1999, (A) Warner and its Subsidiaries have not
incurred any material liability or obligation (indirect, direct or contingent),
or entered into any material oral or written agreement or other transaction,
that is not in the ordinary course of business or that would have a Material
Adverse Effect on Warner, (B) Warner and its Subsidiaries have not sustained any
loss or interference with their business or properties from fire, flood,
windstorm, accident or other calamity (whether or not covered by insurance) that
has had or that would have or is likely to have a Material Adverse Effect on
Warner, (C) there has been no change in the capital stock of Warner and no
dividend or distribution of any kind declared, paid or made by Warner on any
class of its stock, (D) there has not been (y) any granting by Warner or any of
its Subsidiaries to any executive officer or
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material modification of any severance or termination benefits or (z) any entry
or purported entry by Warner or any of its Subsidiaries into or material
modification of any employment, severance or termination agreement with any such
executive officer, (E) Warner and its Subsidiaries have not prepared or filed
any Tax Return (as defined in Section 4.09) inconsistent in any material respect
with past practice or, on any such Tax Return, taken any position, made any
election, or adopted any method that is inconsistent with positions taken,
elections made or methods used in preparing or filing similar Tax Returns in
prior periods, and (F) there has been no other event causing a Material Adverse
Effect on Warner, nor any development that would, individually or in the
aggregate, have or be likely to have a Material Adverse Effect on Warner. Set
forth in Section 4.07 of the Warner Disclosure Letter is a description of any
material changes, between December 31, 1999 and the date of this Agreement
(excluding any intervening fluctuations between such dates), to the amount and
terms of the indebtedness of Warner and its Subsidiaries as described in
Warner's Annual Report on Form 10-K for the year ended December 31, 1999, as
filed with the SEC (other than any changes in, or the incurrence of,
indebtedness of Warner or any of its Subsidiaries with a principal amount not in
excess of US$1,000,000).
SECTION 4.08 Permits and Compliance. Each of Warner and its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, charters, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity (collectively,
"Permits") necessary for Warner or any of its Subsidiaries to own, lease and
operate its properties or to carry on its business as it is now being conducted
(the "Warner Permits"), except where the failure to have any of the Warner
Permits would not, individually or in the aggregate, have or be likely to have a
Material Adverse Effect on Warner, and, as of the date of this Agreement, no
suspension or cancellation of any of the Warner Permits is pending or, to the
Knowledge of Warner, threatened, except where the suspension or cancellation of
any of the Warner Permits, individually or in the aggregate, would not have or
be likely to have a Material Adverse Effect on Warner. Neither Warner nor any of
its Subsidiaries is in violation of (i) its charter, by-laws or equivalent
documents, (ii) any applicable law, ordinance, administrative or governmental
rule or regulation or (iii) any order, decree or judgment of any Governmental
Entity having jurisdiction over Warner or any of its Subsidiaries, except, in
the case of clauses (i), (ii) and (iii), for any violations that, individually
or in the aggregate, would not have or be likely to have a Material Adverse
Effect on Warner. "Knowledge of Warner" means the knowledge (after reasonable
investigation) of Roger Boissoneault, Paul Herendeen, Beth Hecht or Norma
Enders.
SECTION 4.09 Tax Matters. Except as otherwise set forth in Section
4.09 of the Warner Disclosure Letter, (i) Warner and each of its Subsidiaries
have filed all federal, and all material state, local, foreign and provincial,
Tax Returns required to have been filed or appropriate extensions therefor have
been properly obtained, and to the Knowledge of Warner such Tax Returns are
correct and complete, except to the extent that any failure to so file or any
failure to be correct and complete, individually or in the aggregate, would not
have or be likely to have a Material Adverse Effect on Warner; (ii) all Taxes
shown to be due on such Tax Returns have been timely paid or extensions for
payment have been properly obtained, or such Taxes are being timely and properly
contested and any such contests do not contemplate payment of Taxes
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in excess of US$100,000 (in aggregate), (iii) Warner and each of its
Subsidiaries have complied in all material respects with all rules and
regulations relating to the withholding of Taxes except to the extent that any
failure to comply with such rules and regulations, individually or in the
aggregate, would not have or be likely to have a Material Adverse Effect on
Warner; (iv) neither Warner nor any of its Subsidiaries has waived any statute
of limitations in respect of its Taxes which waiver is currently in effect; (v)
no issues have been raised in writing by the relevant taxing authority in
connection with the examination of the Tax Returns referred to in clause (i) are
currently pending; and (vi) all deficiencies asserted or assessments made as a
result of any examination of such Tax Returns by any taxing authority have been
paid in full. To the Knowledge of Warner, the representations set forth in the
proposed form of the Warner tax certificate provided by Warner to Galen, if made
on the date hereof (assuming the Acquisition were consummated on the date
hereof), would be true and correct. Warner has not been a United States real
property holding corporation within the meaning of Code Section 897(c)(2) during
the applicable period (relative to the Closing) specified in Code Section
897(c)(1)(A)(ii). For purposes of this Agreement, "Tax Return" means any return,
report or similar statement (including the attached schedules) required to be
filed with respect to any Tax, including any information return, claim for
refund, amended return or declaration of estimated Tax.
SECTION 4.10 Actions and Proceedings. Except as set forth in the
Warner SEC Documents filed prior to the date of this Agreement, there are no
outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against or involving Warner or any of its Subsidiaries, or
against or involving any of the directors, officers or employees of Warner or
any of its Subsidiaries, as such, any of its or their properties, assets or
business or any Warner Plan that, individually or in the aggregate, would have
or be likely to have a Material Adverse Effect on Warner. Except as set forth in
Section 4.10 of the Warner Disclosure Letter, as of the date of this Agreement,
there are no actions, suits or claims or legal, administrative or arbitrative
proceedings or investigations pending or, to the Knowledge of Warner, threatened
against or involving Warner or any of its Subsidiaries or any of its or their
directors, officers or employees as such, or any of its or their properties,
assets or business or any Warner Plan that, individually or in the aggregate,
would have or be likely to have a Material Adverse Effect on Warner. There are
no actions, suits, labor disputes or other litigation, legal or administrative
proceedings or governmental investigations pending or, to the Knowledge of
Warner, threatened against or affecting Warner or any of its Subsidiaries or any
of its or their officers, directors or employees, as such, or any of its or
their properties, assets or business relating to the transactions contemplated
by this Agreement which would have a Material Adverse Effect on Warner.
SECTION 4.11 Certain Agreements. Except as set forth in Section 4.11
of the Warner Disclosure Letter: (i) neither Warner nor any of its Subsidiaries
is a party to any oral or written agreement or plan, including any employment
agreement, severance agreement, retention agreement, stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, the vesting of the benefits of which
will be accelerated, or which will become payable or which at the participant's
or holder's option may become payable, due to or by the occurrence of any of the
transactions contemplated by this
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Agreement or the value of any of the benefits of which will, or may at the
option of the holder or participant, be calculated on the basis of any of the
transactions contemplated by this Agreement; and (ii) no holder of any option to
purchase Warner Shares, or Warner Shares granted in connection with the
performance of services for Warner or its Subsidiaries, is or will be entitled
to receive cash from Warner or any Subsidiary in lieu of or in exchange for such
option or shares as a result of the transactions contemplated by this Agreement.
SECTION 4.12 ERISA.
(a) Section 4.12(a)(X) of Warner Disclosure Letter contains a
list of each Warner Plan. With respect to each Warner Plan, Warner has made
available to Galen a true and correct copy of (i) the most recent annual report
(Form 5500) filed with the IRS, (ii) such Warner Plan and all amendments
thereto, (iii) each trust agreement, insurance contract or administration
agreement relating to such Warner Plan, (iv) the most recent summary plan
description for each Warner Plan for which a summary plan description is
required, (v) the most recent actuarial report or valuation relating to a Warner
Plan subject to Title IV of the Employee Retirement Income Security Act of 1974
and the regulations promulgated thereunder ("ERISA"), (vi) the most recent
determination letter, if any, issued by the IRS with respect to any Warner Plan
intended to be qualified under Section 401(a) of the Code, (vii) any request for
a determination currently pending before the IRS and (viii) all correspondence
with the IRS, the Department of Labor or the Pension Benefit Guaranty
Corporation relating to any outstanding controversy. Each Warner Plan complies
with ERISA, the Code and all other applicable statutes and governmental rules
and regulations, except any failure to comply as would not have or be likely to
have, individually or in the aggregate, a Material Adverse Effect on Warner.
Except as set forth in Section 2.12(a)(Y) of the Warner Disclosure Letter, (i)
no "reportable event" (within the meaning of Section 4043 of ERISA) has occurred
within the past three years with respect to any Warner Plan which could result
in liability to Warner, (ii) neither Warner nor any of its ERISA Affiliates (as
hereinafter defined) has withdrawn from any Warner Multiemployer Plan (as
hereinafter defined) at any time or instituted, or is currently considering
taking, any action to do so, and (iii) no action has been taken, or is currently
being considered, to terminate any Warner Plan subject to Title IV of ERISA.
(b) There has been no failure to make any contribution or pay
any amount due to any Warner Plan as required by Section 412 of the Code,
Section 302 of ERISA, or the terms of any such Plan, and no Warner Plan, nor any
trust created thereunder, has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived.
(c) With respect to Warner Plans, no event has occurred and,
to the Knowledge of Warner, there exists no condition or set of circumstances in
connection with which Warner or any of its ERISA Affiliates would be subject to
any liability under the terms of such Warner Plans, ERISA, the Code or any other
applicable law which has had, or would have or be likely to have, individually
or in the aggregate, a Material Adverse Effect on Warner. Except as listed on
Section 2.12(c) of the Warner Disclosure Letter, all Warner Plans that are
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intended to be qualified under Section 401(a) of the Code have been determined
by the IRS to be so qualified, or a timely application for such determination is
now pending or will be filed on a timely basis and, except as listed on Section
2.12(c) of the Warner Disclosure Letter, to the Knowledge of Warner there is no
reason why any Warner Plan is not so qualified in operation. Neither Warner nor
any of its ERISA Affiliates has been notified by any Warner Multiemployer Plan
that such Warner Multiemployer Plan is currently in reorganization or insolvency
under and within the meaning of Section 4241 or 4245 of ERISA or that such
Warner Multiemployer Plan intends to terminate or has been terminated under
Section 4041A of ERISA. To the Knowledge of Warner, neither the termination of
any Warner Multiemployer Plan nor the complete or partial withdrawal by Warner
or any of its ERISA Affiliates from any Warner Multiemployer Plan would result
in any liability of Warner or any of its ERISA Affiliates that would have or be
likely to have, individually or in the aggregate, a Material Adverse Effect on
Warner. Except as set forth in Section 2.12(c) of the Warner Disclosure Letter,
neither Warner nor any of its ERISA Affiliates has any liability or obligation
under any welfare plan to provide life insurance or medical benefits after
termination of employment to any employee or dependent other than as required by
(i) Part 6 of Title I of ERISA or (ii) the laws of a jurisdiction outside the
United States.
(d) As used in this Agreement, (i) "Warner Plan" means a
"pension plan" (as defined in Section 3(2) of ERISA (other than a Warner
Multiemployer Plan (as hereinafter defined))), "Welfare Plan" means a welfare
plan as defined in Section 3(1) of ERISA, or any material bonus, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, vacation, severance, death benefit, insurance or
other plan, arrangement or understanding, in each case established or maintained
or contributed to by Warner or any of its ERISA Affiliates or as to which Warner
or any of its ERISA Affiliates or otherwise may have any liability, whether or
not covered by ERISA (other than a Warner Ex-U.S. Pension Plan (as hereinafter
defined)), (ii) "Warner Multiemployer Plan" means a "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA) to which Warner or any of its ERISA
Affiliates is or has been obligated to contribute or otherwise may have any
liability, and (iii) with respect to any person, "ERISA Affiliate" means any
corporation or trade or business (whether or not incorporated) which is under
common control, or otherwise would be considered a single employer with such
person pursuant to Section 414(b), (c), (m) or (o) of the Code and the
regulations promulgated thereunder or pursuant to Section 4001(b) of ERISA and
the regulations promulgated thereunder.
(e) Section 4.12(e) of the Warner Disclosure Letter contains a
list of each Warner Ex-U.S. Pension Plan (as hereinafter defined) and Warner has
provided to Galen a copy of any written plan document. Except as would not have,
nor be likely to have, individually or in the aggregate, a Material Adverse
Effect on Warner, each such plan has been maintained in compliance with all
applicable laws, orders and regulations, and the fair market value of the assets
of each such plan which is intended to be a funded Warner Ex-U.S. Pension Plan
or arrangement equals or exceeds the value of the accrued benefits. As used in
this Agreement, the term "Warner Ex-U.S. Pension Plan" shall mean any
arrangement (other than a Warner Plan) providing retirement pension benefits
that is established or maintained by Warner
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or any Subsidiary for the benefit of employees who are or were employed outside
the United States.
(f) Section 4.12(f) of the Warner Disclosure Letter contains a
list, as of the date of this Agreement, of all (i) severance and employment
agreements with officers of Warner and each ERISA Affiliate, (ii) severance
programs and policies of Warner with or relating to its employees and (iii)
plans, programs, agreements and other arrangements of Warner with or relating to
its employees which contain change of control or similar provisions, in each
case involving a severance or employment agreement or arrangement with an
individual officer or employee, only to the extent such agreement or arrangement
provides for minimum annual payments in excess of US$100,000. Warner has
provided to Galen a true and complete copy of each of the foregoing.
SECTION 4.13 Labor Matters. Except as disclosed in Section 4.13 of
the Warner Disclosure Letter, neither Warner nor any of its Subsidiaries is
party to any collective bargaining agreement or other labor agreement with any
union or labor organization and no union or labor organization has been
recognized by Warner or any of its Subsidiaries as an exclusive bargaining
representative for employees of Warner or any of its Subsidiaries. Neither
Warner nor any of its Subsidiaries is the subject of any material proceeding
asserting that it or any of its Subsidiaries has committed an unfair labor
practice or is seeking to compel it to bargain with any labor union or labor
organization nor is there pending or, to the Knowledge of Warner, threatened,
nor has there been for the past three years, any labor strike, dispute, walkout,
work stoppage, slow-down or lockout involving it or any of its Subsidiaries,
except in each case as would not, individually or in the aggregate, have or be
likely to have a Material Adverse Effect on Warner.
SECTION 4.14 Intellectual Property. Except as set forth in Section
4.14 of the Warner Disclosure Letter, Warner and its Subsidiaries own or have a
valid, enforceable right to use free from any encumbrances, other than those
that would not have or be likely to have a Material Adverse Effect on Warner,
all patents, patent applications, patent disclosure, patent rights, trademarks,
trade names, service marks, trade secrets, trade dress, corporate names, logos
and slogans (and all translations, adaptations, derivations and combinations of
the foregoing), design rights, database rights, copyrights, inventions,
know-how, confidential information processes, procedures, customer and supplier
lists, computer data, databases, documentation and software (including but not
limited to source code and executable code), domain names, applications for
registration or registrations of any of the foregoing and other proprietary
intellectual property rights (collectively, "Intellectual Property Rights")
necessary to conduct the business of Warner and its Subsidiaries, taken as a
whole, except where the failure to have such Intellectual Property Rights,
individually or in the aggregate, would not have or be likely to have a Material
Adverse Effect on Warner. Except as set forth in Section 4.14 of the Warner
Disclosure Letter, neither Warner nor any of its Subsidiaries has infringed any
Intellectual Property Rights of any third party other than any infringements
that, individually or in the aggregate, would not have a or be likely to have
Material Adverse Effect on Warner. Neither Warner nor its Subsidiaries are aware
of any infringement or misappropriation by any person
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with respect to the Intellectual Property Rights owned or used by Warner or its
Subsidiaries other than any such infringement or misappropriation that would not
have or be likely to have a Material Adverse Effect on Warner. All Intellectual
Property Rights owned or used by Warner or its Subsidiaries as of the date
hereof will be owned or available for use by Warner and its Subsidiaries on
terms and conditions immediately following the Effective Date that are not
materially different from those existing prior to the Effective Date.
SECTION 4.15 Environmental and Safety Matters.
(a) Except as set forth in Section 4.15 of the Warner
Disclosure Letter, the operations of Warner and Subsidiaries have complied and
are in compliance with all applicable federal, state, local, regional and
foreign laws, rules and regulations, orders, decrees, common law, judgments,
permits and licenses relating to public and worker health and safety
(collectively, "Worker Safety Laws") and relating to the protection, regulation
or clean-up of the indoor and outdoor environment and activities or conditions
related thereto, including, without limitation, those relating to the
generation, handling, disposal, transportation or release of hazardous or toxic
materials, substances, wastes, pollutants and contaminants including, without
limitation, asbestos, petroleum, radon and polychlorinated biphenyls
(collectively, "Environmental Laws"), except for any violations that,
individually or in the aggregate, have not had, and would not have, a Material
Adverse Effect on Warner. To the best of Warner's Knowledge with respect to
properties and assets of Warner including any previously owned, leased or
operated properties or assets, there are no past, present or reasonably
anticipated future events, conditions, circumstances, activities, practices,
incidents, actions or plans of Warner or any of its predecessors or Subsidiaries
that would interfere with or prevent compliance or continued compliance with or
give rise to any liabilities or investigatory, corrective or remedial
obligations under applicable Worker Safety Laws or Environmental Laws, other
than any such interference, prevention, liability or obligation that,
individually or in the aggregate, has not had, and would not have, a Material
Adverse Effect on Warner.
(b) Except as set forth in Section 4.15 of the Warner
Disclosure Letter, Warner and its Subsidiaries have not caused or permitted so
far as Warner is aware any property or asset including any previously owned
property or asset, to use, generate, manufacture, refine, transport, treat,
store, handle, dispose, transfer or process hazardous or toxic materials,
substances, wastes, pollutants or contaminants, except in material compliance
with all Environmental Laws and Worker Safety Laws, other than any such activity
that, individually or in the aggregate, has not had, and would not have, a
Material Adverse Effect on Warner. Warner and its Subsidiaries have not reported
to any Governmental Entity, or been notified by any Governmental Entity of the
existence of, any material violation of an Environmental Law or any release,
discharge or emission of any hazardous or toxic materials, substances, wastes,
pollutants or contaminants, other than any such violation, release, discharge or
emission that, individually or in the aggregate, has not had, and would not
have, a Material Adverse Effect on Warner.
(c) With respect to Warner, neither this Agreement nor the
consummation of the transactions that are the subject of this Agreement will
result in any
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obligations for transfer of permits under Environment Laws or Worker Safety Laws
site investigation or cleanup, or notification to or consent of any Governmental
Entity or third party, pursuant to any transfer of permits under Environment
Laws or Workers Safety Laws Environmental Laws or contract, other than any such
obligations that, individually or in the aggregate, would not have a Material
Adverse Effect on Warner.
(d) This Section sets forth the sole representations and
warranties of Warner with respect to all matters arising under Environmental
Laws and Worker Safety Laws.
SECTION 4.16 Insurance. Warner and its Subsidiaries have in effect
insurance coverage with reputable insurers, which in respect of amounts,
premiums, types and risks insured, constitutes reasonably adequate coverage
against all risks customarily insured against by companies of comparable size
and with similar operations.
SECTION 4.17 Opinion of Financial Advisor. Warner has received the
written opinion of CSFB to the effect that, as of the date thereof, the
consideration to be offered to the holders of Warner Shares and Warner ADSs
(other than Galen and its affiliates) pursuant to the Scheme is fair to such
holders from a financial point of view, a copy of which opinion has been
delivered to Galen.
SECTION 4.18 Broker's Fees. Except as set forth in the engagement
letter agreement between Warner and CSFB, a true and complete copy of which has
previously been provided to Galen, neither Warner nor any Warner Subsidiary nor
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Transactions or related transactions contemplated by this
Agreement.
SECTION 4.19 Real Property.
(a) Section 4.19(a) of the Warner Disclosure Letter lists each
material parcel of real property owned by Warner or any of its Subsidiaries (the
"Warner Owned Property"). Warner or its applicable Subsidiary has good and
marketable fee simple title in and to all of the Warner Owned Property, subject
to no Liens that would have a Material Adverse Effect on Warner or materially
impair Warner's rights to or ability to use any such property, except as
described on Section 4.19(a) of the Warner Disclosure Letter ("Permitted
Liens"). Except as set forth in Schedule 4.19(a) of the Warner Disclosure
Letter, (i) Warner or any of its Subsidiaries has not leased or otherwise
granted to any Person the right to use or occupy such Warner Owned Property or
any portion thereof; (ii) other than the right of Galen pursuant to this
Agreement, there are no outstanding options, rights of first offer or rights of
first refusal to purchase such Warner Owned Property or any portion thereof or
interest therein, and (iii) Warner or Subsidiary is not a party to any agreement
or option to purchase any real property or interest therein relating to the
business of Warner.
The term "Permitted Liens" shall mean with respect to each owned
real property
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and leased property of either Warner or Galen ("Real Property"): (A) real estate
taxes, assessments and other governmental levies, fees or charges imposed with
respect to such Real Property which are not due and payable as of the Effective
Time or which are being contested by appropriate proceedings; (B) mechanics
liens and similar liens for labor, materials or supplies provided with respect
to such Real Property incurred in the ordinary course of business for amounts
which are not delinquent and which would not, individually or in the aggregate,
have a material adverse effect on the business or which are being contested by
appropriate proceedings; (C) zoning, building codes and other land use Laws
regulating the use or occupancy of such Real Property or the activities
conducted thereon which are imposed by any governmental authority having
jurisdiction over such Real Property which are not violated by the current use
or occupancy of such Real Property or the operation of the business or any
violation of which would not have a material adverse effect on the business; (D)
easements, covenants, conditions, restrictions and other similar matters
affecting title to such Real Property and other title defects which do not
materially impair the use or occupancy of such Real Property or the operation of
the business.
(b) Section 4.19(b) of the Warner Disclosure Letter sets forth
a list of all material leases, subleases and other occupancy agreements,
including all amendments, extensions and other modifications (the "Warner
Leases") for real property (the "Warner Leased Property"; the Warner Owned
Property and the Warner Leased Property collectively the "Warner Real Property")
to which Warner or any of its Subsidiaries is a party. Warner or its applicable
Subsidiary has a good and valid leasehold interest in and to all of the Warner
Leased Property, subject to no Liens except Permitted Liens as described in
Section 4.19(b) of the Warner Disclosure Letter. Each Warner Lease is in full
force and effect and is enforceable in accordance with its terms. There exists
no default or condition which, with the giving of notice, the passage of time or
both, could become a default under any Warner Lease in any case, that would have
a Material Adverse Effect on Warner or materially impair Warner's rights to or
ability to use any such property. Warner has previously delivered to Galen true
and complete copies of all the Warner Leases. Except as described on Section
4.19(b) of the Warner Disclosure Letter, no consent, waiver, approval or
authorization is required from the landlord under any Warner Lease as a result
of the execution of this Agreement or the consummation of the transactions
contemplated hereby the failure to obtain would have a Material Adverse Effect
on Warner or materially impair Warner's rights to or ability to use any such
property.
(c) Real Property Used in The Business. The Warner Owned
Property identified in Schedule 4.19(a) and the Warner Leased Property
identified in Schedule 4.19(b) comprise all of the real property used or
intended to be used in, or otherwise related to, the Warner business.
SECTION 4.20 Material Contracts. There have been made available to
Galen, its affiliates and their representatives true and complete copies of all
of the following contracts to which Warner or any of its Subsidiaries is a party
or by which any of them is bound (collectively, the "Warner Material
Contracts"): (i) contracts with any current officer or director of Warner or any
of its Subsidiaries; (ii) contracts for the sale of any of the assets of Warner
or any of its
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Subsidiaries other than in the ordinary course of business or for the grant to
any person of any preferential rights to purchase any of its assets other than
inventory in the ordinary course of business; (iii) contracts containing
covenants of Warner or any of its Subsidiaries not to compete in any line of
business or with any person in any geographical area or covenants of any other
person not to compete with Warner or any of its Subsidiaries in any line of
business or in any geographical area; (iv) material indentures, credit
agreements, mortgages, promissory notes, and all contracts relating to the
borrowing of money; and (v) all other agreements contracts or instruments which,
in the reasonable opinion of Warner, are material to Warner or any of its
Subsidiaries. Except as set forth in Section 4.20 of the Warner Disclosure
Letter or as would not have or be likely to have a Material Adverse Effect on
Warner, all of the Warner Material Contracts are in full force and effect and
are the legal, valid and binding obligation of Warner or its Subsidiaries,
enforceable against them in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors, rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Except as set forth
in Section 4.20 of the Warner Disclosure Letter, neither Warner nor any
Subsidiary is in default in any material respect under any Warner Material
Contract nor, to the Knowledge of Warner, is any other party to any Warner
Material Contract in default thereunder in any material respect except, in each
case, for those defaults that, individually or in the aggregate, would not have
or be likely to have a Material Adverse Effect on Warner.
SECTION 4.21 Compliance with Laws. Warner has conducted its business
and operations in compliance with, and obtained all permits, licenses and other
authorizations required under, all applicable laws, rules, regulations, orders,
ordinances, judgments and decrees of all governmental authorities (foreign,
federal, state and local) (collectively "Laws") including, where applicable, all
requirements imposed by the U.S. Food and Drug Administration (the "FDA"),
except for such non-compliance which Warner does not reasonably expect would
have or would be likely to have a Material Adverse Effect. To the Knowledge of
Warner, Warner has not within the past 24 months received written notice of any
non-compliance with respect to, or potential liability under, any Laws, which
has not been satisfied or otherwise resolved, and there are no circumstances to
the Knowledge of Warner which are reasonably likely to give rise to any such
non-compliance except for such non-compliance which Warner does not reasonably
expect would have a Material Adverse Effect.
SECTION 4.22 Warner Approvals. The approval of the Scheme by Warner
Shareholders at the Court Meeting and the passing of the Warner EGM Resolution
and the sanction of the Scheme by the Court are the only actions required by
law, the Warner Memorandum and Articles or otherwise in order for Warner to
consummate the Transactions and the other transactions contemplated by this
Agreement.
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ARTICLE V -- REPRESENTATIONS AND WARRANTIES OF GALEN
Except as disclosed in the letter delivered to Warner concurrently
herewith and designated therein as the Galen Disclosure Letter (the "Galen
Disclosure Letter"), in each case with specific reference to the Section to
which exception is taken, and except as disclosed in the Galen Public Documents
Galen hereby represents and warrants to Warner as follows:
SECTION 5.01 Corporate Organization.
(a) Galen is a public limited company duly incorporated and
validly existing under the laws of Northern Ireland. Galen has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have or is not
likely to have with due regard to all circumstances a Material Adverse Effect on
Galen. True and complete copies of the Memorandum and Articles of Association
(the "Galen Memorandum and Articles") of Galen, as in effect as of the date of
this Agreement, have previously been made available by Galen to Warner.
(b) The only Subsidiaries of Warner or those listed in Section
6.01(b) of the Galen Disclosure Letter. Each Galen Subsidiary (i) is duly
organized and validly existing under the laws of its jurisdiction of
organization, (ii) is duly qualified to do business and in good standing (where
applicable) in all jurisdictions (whether federal, state, local or foreign)
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and in which the failure to be so qualified would
have or would be likely to have a Material Adverse Effect on Galen and (iii) has
all requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
(c) The minute books of Galen are fully up-to-date and
accurately reflect in all material respects all material corporate actions held
or taken since January 1, 1999 of its shareholders and Board of Directors
(including committees of the Board of Directors of Galen).
SECTION 5.02 Capitalization.
(a) The authorized share capital of Galen consists of (i)
170,000,000 Galen Shares, of which, as of the date hereof, 127,266,652 shares
are issued and outstanding. All of the issued and outstanding Galen Shares have
been duly authorized and validly issued and are fully paid and non-assessable
with no personal liability attaching to the ownership thereof. As of the date of
this Agreement, except pursuant to the terms of options granted pursuant to the
Galen Approved Executive Share Option Scheme, the Galen Unapproved Executive
Share Option Scheme, the Galen Savings Related Share Option Scheme and The Galen
Inc. Employee Stock Purchase Plan (the "Galen Stock Plans") and (ii) this
Agreement, Galen does not have and is not
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bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase, transfer, sale or issuance
of any Galen Shares or any other equity securities of Galen or any securities
representing the right to purchase or otherwise receive any Galen Shares. As of
the date of this Agreement, no Galen Shares are reserved for issuance, except
for 407,424 Galen Shares reserved for issuance upon exercise of stock options
issued pursuant to the Galen Stock Plans. Since September 30, 1999, and except
for the issue of 6,000,000 new Galen Shares announced on 25 November 1999 Galen
has not issued any shares of its capital stock or any securities convertible
into or exercisable for any shares of its capital stock, other than pursuant to
the exercise of employee stock options granted prior to such date.
(b) Subject to all approvals required to be sought under the
terms of this Agreement Galen owns, directly or indirectly, all of the issued
and outstanding shares in its capital or other equity ownership interests of
each of the Galen Subsidiaries as set forth in Section 5.02(b) of the Galen
Disclosure Letter, free and clear of any Liens other than as set forth in
Section 5.02(b) of the Galen Disclosure Letter, and all of such shares or equity
ownership interests are duly authorized and validly issued and are fully paid,
non-assessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof.
No Galen Subsidiary is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares in its capital or any other equity
security of such Subsidiary or any securities representing the right to purchase
or otherwise receive any shares in its capital or any other equity security of
such Subsidiary.
SECTION 5.03 Authority; No Violation.
(a) Subject to all approvals required to be sought under the
term of this Agreement, Galen has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Galen. No corporate proceedings on the
part of Galen, other than the Galen Shareholder Approval and the passing of a
resolution or resolutions of the directors of Galen to allot the new Galen
Shares to be issued pursuant to this Agreement, are necessary to approve and
adopt this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Galen and
(assuming due authorization, execution and delivery by Warner of this Agreement)
constitutes a valid and binding obligation of Galen, enforceable against Galen
in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
Galen nor the consummation by Galen of the transactions contemplated hereby or
thereby, nor compliance by Galen with any of the terms or provisions hereof,
will (i) violate any provision of the Galen Memorandum and Articles or similar
bylaw/organizational document of its Subsidiaries or (ii) assuming that the
consents and approvals, filings or waiting times referred to in Section 5.04 are
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duly obtained, made or elapsed respectively (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Galen or any of its Subsidiaries or any of their respective
properties or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) will
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of Galen or any of its
Subsidiaries under, any of the terms, conditions or provisions of any Material
Agreement to which Galen or any of its Subsidiaries is a party, or by which they
or any of their respective properties or assets may be bound or affected, except
(in the case of clause (y) above) for such violations, conflicts, breaches or
defaults which, either individually or in the aggregate, will not have and is
not likely to have a Material Adverse Effect on Galen.
SECTION 5.04 Consents and Approvals. Except (i) in connection, or in
compliance, with the provisions of the HSR Act, (ii) for the filing of any
required State and Foreign Approvals, (iii) in connection with the Securities
Act or the Exchange Act (including the filing with the SEC of the Proxy
Statement and the Registration Statement), (iv) the approval of the Listing
Particulars (and any supplementary listing particulars required to be published
by Galen) by the UKLA, the agreement of the UKLA to admit the new Galen Shares
to the Official List, the consent of the LSE to admit the new Galen Shares to
trading and the filing of the Listing Particulars (and any supplementary listing
particulars required to be published by Galen) with the Registrar of Companies
in Northern Ireland, (v) for such filings and approvals as are required to be
made or obtained under the securities or "Blue Sky" laws of various states in
connection with the issuance or listing of Galen Shares pursuant to this
Agreement, (vi) in connection with the applicable Requirements of the Mergers
Act, and (vii) for the Galen Shareholder Approval, no consents or approvals of
or filings or registrations with any Governmental Entity or with any third party
are necessary in connection with (A) the execution and delivery by Galen of this
Agreement and (B) the consummation by Galen of the Transactions and the other
transactions contemplated by this Agreement, failure of which to make or obtain
would not reasonably be expected to have a Material Adverse Effect on Galen or
impair or delay the ability of either party to consummate the Transactions
contemplated hereby.
SECTION 5.05 Public Documents and Other Reports. Galen has duly
published and delivered to the LSE all documents and announcements required by
the Listing Rules and the listing rules of the ISE since December 31, 1997
(collectively the "Galen Public Documents"). As of their respective dates, the
Galen Public Documents complied in all material respects with applicable law,
including, without limitation, the Companies (Northern Ireland) Order 1986 (as
amended), the Financial Services Act 1986 (as amended) and the Listing Rules as
to the form and content of the Galen Public Documents and, at the respective
times they were issued, none of the Galen Public Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The consolidated
financial statements (including, in each case, any notes thereto) of Galen
included in the Galen Public Documents complied as to form in all material
respects with applicable law
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and all applicable financial reporting standards and generally accepted
accounting principles and practices in the United Kingdom ("U.K. GAAP") applied
on a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly presented in all material respects
the consolidated financial position of Galen and its consolidated Subsidiaries
as at the respective dates thereof and the consolidated results of their
operations and their consolidated 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 described therein). Except as disclosed
in the Galen Public Documents or as required by U.K. GAAP or any reconciliation
to US GAAP, Galen has not, since September 30, 1998, made any change in the
accounting practices or policies applied in the preparation of its financial
statements.
SECTION 5.06 Registration Statement; Listing Particulars.
(a) The Registration Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the Registration
Statement on Form F-4 of which the PS/P forms a part, if any, will comply as to
form in all material respects with the provisions of the Securities Act.
(b) The Listing Particulars when published will contain all
such information as investors and their professional advisors would reasonably
require and reasonably expect to find there, for the purpose of making an
informed assessment of the assets and liabilities, financial position, profits
and losses and prospects of Galen as enlarged by the Transactions and of the
rights attaching to the Galen Shares to be issued pursuant to this Agreement,
having regard to the matters referred to in Section 146(3) of the Financial
Services Act 1986. All statements of fact contained in the Listing Particulars
will be true and accurate in all material respects, will not be misleading in
any material respect, and will not omit any information known or which could on
reasonable enquiry have been known to the directors of Galen the omission of
which would make them misleading in any material respect. All expressions of
opinion, intention or expectation on the part of the directors of Galen
contained therein will be made on reasonable grounds after appropriate enquiry
and accurately reflect the views honestly held by them. Notwithstanding anything
in this paragraph 5.06 Galen makes no representation or warranty with respect to
any information concerning Warner and its Subsidiaries supplied by Warner for
inclusion in the Listing Particulars.
SECTION 5.07 Absence of Certain Changes or Events. Except as
disclosed in the Galen Public Documents filed prior to the date of this
Agreement, since September 30, 1999, (A) Galen and its Subsidiaries have not
incurred any material liability or obligation (indirect, direct or contingent),
or entered into any material oral or written agreement or other transaction,
that is not in the ordinary course of business or that would have or is likely
to have a Material Adverse Effect on Galen, (B) Galen and its Subsidiaries have
not sustained any loss or interference with their business or properties from
fire, flood, windstorm, accident or other calamity (whether or not covered by
insurance) that has had or that would have or is likely to have a Material
Adverse Effect on Galen, (C) there has been no change in the capital stock of
Galen and no dividend or distribution of any kind declared, paid or made by
Galen on any class
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of its stock, (D) there has not been (y) any granting by Galen or any of its
Subsidiaries to any executive officer or material modification of any severance
or termination benefits or (z) any entry or purported entry by Galen or any of
its Subsidiaries into or material modification of any employment, severance or
termination agreement with any such executive officer, (E) Galen and its
Subsidiaries have not prepared or filed any Tax Return inconsistent in any
material respect with past practice or, on any such Tax Return, taken any
position, made any election, or adopted any method that is inconsistent with
positions taken, elections made or methods used in preparing or filing similar
Tax Returns in prior periods, and (F) there has been no other event causing a
Material Adverse Effect on Galen, nor any development that would, individually
or in the aggregate, have a Material Adverse Effect on Galen. Set forth in
Section 5.07 of Galen Disclosure Letter is a description of any material
changes, between December 31, 1999 and the date of this Agreement (excluding any
intervening fluctuations between such dates), to the amount and terms of the
indebtedness of Galen and its Subsidiaries as described in Galen's Annual Report
and Accounts for the financial year ended 30 September 1999 (other than any
changes in, or the incurrence of, indebtedness of Galen or any of its
Subsidiaries with a principal amount not in excess of US$1,000,000) other than
changes required by the transactions contemplated by this Agreement.
SECTION 5.08 Permits and Compliance. Except as set forth in Section
5.08 of the Galen Disclosure Letter, each of Galen and its Subsidiaries is in
possession of all Permits necessary for Galen or any of its Subsidiaries to own,
lease and operate its properties or to carry on its business as it is now being
conducted (the "Galen Permits"), except where the failure to have any of the
Galen Permits would not, individually or in the aggregate, have or is likely to
have or is likely to have a Material Adverse Effect on Galen, and, as of the
date of this Agreement, no suspension or cancellation of any of the Galen
Permits is pending or, to the Knowledge of Galen, threatened, except where the
suspension or cancellation of any of the Galen Permits, individually or in the
aggregate, would not have or is likely to have a Material Adverse Effect on
Galen. Neither Galen nor any of its Subsidiaries is in violation of (i) its
charter, bylaws or equivalent documents, (ii) any applicable law, ordinance,
administrative or governmental rule or regulation or (iii) any order, decree or
judgment of any Governmental Entity having jurisdiction over Galen or any of its
Subsidiaries, except, in the case of clauses (i), (ii) and (iii), for any
violations that, individually or in the aggregate, would not have or is likely
to have a Material Adverse Effect on Galen. "Knowledge of Galen" means the
knowledge (after reasonable investigation), of Allen McClay, John King, Geoffrey
Elliott, Stephen Campbell and Clare Gilligan.
SECTION 5.09 Tax Matters. Except as otherwise set forth in Section
5.09 of the Galen Disclosure Letter, Galen and each of its Subsidiaries have
filed all UK and federal, and all material state, local, foreign and provincial,
Tax Returns required to have been filed or appropriate extensions therefor have
been properly obtained, and to the Knowledge of Galen such Tax Returns are
correct and complete, except to the extent that any failure to so file or any
failure to be correct and complete, individually or in the aggregate, would not
have or is likely to have a Material Adverse Effect on Galen; (ii) all Taxes
shown to be due on such Tax Returns have been timely paid or extensions for
payment have been properly obtained, or such Taxes are
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being timely and properly contested and any such contests do not contemplate
payment of Taxes in excess of US$100,000 (in aggregate), (iii) Galen and each of
its Subsidiaries have complied in all material respects with all rules and
regulations relating to the withholding of Taxes except to the extent that any
failure to comply with such rules and regulations, individually or in the
aggregate, would not have or is likely to have a Material Adverse Effect on
Galen; (iv) neither Galen nor any of its Subsidiaries has waived any statute of
limitations in respect of its Taxes which waiver is currently in effect; (v) no
issues that have been raised in writing by the relevant taxing authority in
connection with the examination of the Tax Returns referred to in clause (i) are
currently pending; and (vi) all deficiencies asserted or assessments made as a
result of any examination of such Tax Returns by any taxing authority have been
paid in full. To the Knowledge of Galen, the representations set forth in the
proposed form of the Galen tax certificate provided by Galen to Warner, if made
on the date hereof (assuming the Acquisition were consummated on the date
hereof), would be true and correct.
SECTION 5.10 Actions and Proceedings. Except as set forth in Section
5.10 of the Galen Disclosure Letter and in the Galen Public Documents filed
prior to the date of this Agreement, there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against or involving
Galen or any of its Subsidiaries, or against or involving any of the directors,
officers or employees of Galen or any of its Subsidiaries, as such, any of its
or their properties, assets or business or any Galen Plan that, individually or
in the aggregate, would have or is likely to have a Material Adverse Effect on
Galen. As of the date of this Agreement, there are no actions, suits or claims
or legal, administrative or arbitrative proceedings or investigations pending
or, to the Knowledge of Galen, threatened against or involving Galen or any of
its Subsidiaries or any of its or their directors, officers or employees as
such, or any of its or their properties, assets or business or any Galen Plan
that, individually or in the aggregate, would have or be likely to have a
Material Adverse Effect on Galen. There are no actions, suits, labor disputes or
other litigation, legal or administrative proceedings or governmental
investigations pending or, to the Knowledge of Galen, threatened against or
affecting Galen or any of its Subsidiaries or any of its or their officers,
directors or employees, as such, or any of its or their properties, assets or
business relating to the transactions contemplated by this Agreement which would
have or is likely to have a Material Adverse Effect on Galen.
SECTION 5.11 Certain Agreements. Except as set forth in Section 5.11
of Galen Disclosure Letter, neither Galen nor any of its Subsidiaries is a party
to any oral or written agreement or plan, including any employment agreement,
severance agreement, retention agreement, stock option plan, stock appreciation
rights plan, restricted stock plan or stock purchase plan, any of the benefits
of which will be increased, the vesting of the benefits of which will be
accelerated, or which will become payable or which at the participant's or
holder's option may become payable, due to or by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will, or may at the option of the holder or participant, be calculated
on the basis of any of the transactions contemplated by this Agreement. No
holder of any option to purchase shares of Galen Shares, or shares of Galen
Shares granted in connection with the performance of services for Galen or its
Subsidiaries, is or will be entitled to receive cash from Galen or any
Subsidiary in lieu of or in exchange for such option or shares as a
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result of the transactions contemplated by this Agreement.
SECTION 5.12 Labor Matters. Except as disclosed in Section 5.12 of
the Galen Disclosure Letter, neither Galen nor any of its Subsidiaries is party
to any collective bargaining agreement or other labor agreement with any union
or labor organization and no union or labor organization has been recognized by
Galen or any of its Subsidiaries as an exclusive bargaining representative for
employees of Galen or any of its Subsidiaries. Other than as described in
Section 5.12 of the Galen Disclosure Letter, neither Galen nor any of its
Subsidiaries is the subject of any material proceeding asserting that it or any
of its Subsidiaries has committed an unfair labor practice or seeking to compel
it to bargain with any labor union or labor organization nor is there pending
or, to the Knowledge of Galen, threatened, nor has there been for the past three
years, any labor strike, dispute, walkout, work stoppage, slow-down or lockout
involving it or any of its Subsidiaries, except in each case as would not,
individually or in the aggregate, have or is likely to have a Material Adverse
Effect on Galen.
SECTION 5.13 Intellectual Property. Except as set forth in Section
5.13 of the Galen Disclosure Letter, Galen and its Subsidiaries own, possess all
right, title and interest in and to, or have a valid, enforceable right to use
free from any Liens or encumbrances, other than those that would not have or is
likely to have or be likely to have a Material Adverse Effect on Galen, the
Intellectual Property Rights in the intra-vaginal ring technology and all other
Intellectual Property Rights necessary to conduct the business of Galen and its
Subsidiaries, taken as a whole, except where the failure to have such
Intellectual Property Rights, individually or in the aggregate, would not have
or is likely to have or be likely to have a Material Adverse Effect on Galen.
Neither Galen nor any of its Subsidiaries has infringed, misappropriated or
otherwise conflicts with any Intellectual Property Rights of any third party
other than any infringements that, individually or in the aggregate, would not
have or is likely to have a Material Adverse Effect on Galen. Neither Galen nor
its Subsidiaries are aware of any infringement, misappropriation or conflict by
any person with respect to the Intellectual Property Rights owned or used by
Galen or its Subsidiaries other than any such infringement, misappropriation or
conflict that would not have a Material Adverse Effect on Galen. All
Intellectual Property Rights owned or used by Galen or its Subsidiaries as of
the closing hereof will be owned or available for use by Galen and its
Subsidiaries on terms and conditions immediately following the Effective Time
that are not materially different from those existing prior to the closing. The
Intellectual Property Rights owned or used by Galen are valid and enforceable,
none of the Intellectual Property Rights has been misused, and no claim by any
other party contesting the validity, enforceability, use or ownership of any of
Intellectual Property Rights owned or used by Galen is currently outstanding or
is threatened. No loss or expiration of any of the Intellectual Property Rights
owned or used by Galen is threatened, pending or reasonably foreseeable.
SECTION 5.14 Environmental and Safety Matters.
(a) Except as set forth in Section 5.14 of the Galen
Disclosure Letter, the operations of Galen and Subsidiaries have complied and
are in compliance with all Worker
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Safety Laws and Environmental Laws, except for any violations that, individually
or in the aggregate, have not had, and would not have, a Material Adverse Effect
on Galen. To Galen's knowledge with respect to properties, and assets of Galen,
including any previously owned, leased or operated properties or assets except
as set forth in Section 5.14 of the Galen Disclosure Letter, there are no past
or present events, conditions, circumstances, activities, practices, incidents,
actions or plans of Galen or any of its predecessors or Subsidiaries that would
interfere with or prevent compliance or continued compliance with or give rise
to any liabilities or investigatory, corrective or remedial obligations under
applicable Worker Safety Laws or Environmental Laws, other than any such
interference, prevention, liability or obligation that, individually or in the
aggregate, has not had, and would not have, a Material Adverse Effect on Galen.
(b) Except as set forth in Section 5.14 of the Galen
Disclosure Letter, Galen and Subsidiaries have not caused or permitted to
Galen's knowledge any property or asset, including any previously owned property
or asset, to use, generate, manufacture, refine, transport, treat, store,
handle, dispose, transfer or process hazardous or toxic materials, substances,
wastes, pollutants or contaminants, except in material compliance with all
Environmental Laws and Worker Safety Laws, other than any such activity that,
individually or in the aggregate, has not had, and would not have, a Material
Adverse Effect on Galen. Except as set forth in Section 5.14 of the Galen
Disclosure Letter, Galen and its Subsidiaries have not reported to any
Governmental Entity, or been notified by any Governmental Entity of the
existence of, any material violation of an Environmental Law or any release,
discharge or emission of any hazardous or toxic materials, substances, wastes,
pollutants or contaminants, other than any such violation, release, discharge or
emission that, individually or in the aggregate, has not had, and would not
have, a Material Adverse Effect on Galen.
(c) With respect to Galen, neither this Agreement nor the
consummation of the transactions that are the subject of this Agreement will
result in any obligations for transfer of permits under Environmental Laws or
Worker Safety Laws site investigation or cleanup, or notification to or consent
of any Governmental Entity or third party, pursuant to Environmental Laws or
contract, other than any such obligations that, individually or in the
aggregate, would not have, a Material Adverse Effect on Galen.
(d) This Section sets forth the sole representations and
warranties of Galen with respect to all matters arising under Environmental Laws
and Worker Safety Laws.
SECTION 5.15 Insurance. Galen and its Subsidiaries have in effect
insurance coverage with reputable insurers, which in respect of amounts,
premiums, types and risks insured, constitutes reasonably adequate coverage
against all risks customarily insured against by companies of comparable size
and with similar operations.
SECTION 5.16 Required Vote of Galen Shareholders. The Galen
Shareholders Approval is the only vote of the shareholders of Galen required by
law, the Galen Memorandum and Articles or otherwise in order for Galen to
consummate the Transactions and the other
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transactions contemplated by this Agreement. Without prejudice to the provisions
of Section 1.02(d), the Board of Directors of Galen has approved this Agreement
and the Transactions and has resolved to recommend that the shareholders of
Galen approve the Agreement and the Transactions.
SECTION 5.17 Broker's Fees. Except as set forth in the engagement
letter agreement between Galen and Merrill Lynch & Co. and ABN Amro Hoare
Govett, a true and complete copy of which has previously been provided to
Warner, neither Galen nor any Galen Subsidiary nor any of their respective
officers or directors has employed any broker or finder or incurred any
liability for any broker's fees, commissions or finder's fees in connection with
the Acquisition or related transactions contemplated by this Agreement.
SECTION 5.18 Real Property.
(a) Section 5.18(a) of the Galen Disclosure Letter lists each
parcel of real property owned by Galen or any of its Subsidiaries (the "Galen
Owned Property"). Galen or its applicable Subsidiary has good and marketable fee
simple title in and to all of the Galen Owned Property, subject to no Liens that
would have a Material Adverse Effect on Galen or materially impair Galen's
rights to or ability to use any such property, except Permitted Liens, as
described on Section 5.18(a) of the Galen Disclosure Letter. Except as set forth
in Schedule 5.18(a) of the Galen Disclosure Letter, (i) Galen or any of its
Subsidiaries has not leased or otherwise granted to any Person the right to use
or occupy such Galen Owned Property or any portion thereof; (ii) other than the
right of Galen pursuant to this Agreement, there are no outstanding options,
rights of first offer or rights of first refusal to purchase such Galen Owned
Property or any portion thereof or interest therein, and (iii) Galen or
Subsidiary is not a party to any agreement or option to purchase any real
property or interest therein relating to the business of Galen.
(b) Section 5.18(b) of the Galen Disclosure Letter sets forth
a list of all material leases, subleases and other occupancy agreements,
including all amendments, extensions and other modifications (the "Galen
Leases") for real property (the "Galen Leased Property"; the Galen Owned
Property and the Galen Leased Property collectively the "Galen Real Property")
to which Galen or any of its Subsidiaries is a party. Galen or its applicable
Subsidiary has a good and valid leasehold interest in and to all of the Galen
Leased Property, subject to no Liens except Permitted Liens, as described in
Section 5.18(b) of the Galen Disclosure Letter. Each Galen Lease is in full
force and effect and is enforceable in accordance with its terms. There exists
no default or condition which, with the giving of notice, the passage of time or
both, could become a default under any Galen Lease in any case, that would have
a Material Adverse Effect on Galen or materially impair Galen's rights to or
ability to use any such property. Except as described on Section 5.18(b) of the
Galen Disclosure Letter, no consent, waiver, approval or authorization is
required from the landlord under any Galen Lease as a result of the execution of
this Agreement or the consummation of the transactions contemplated hereby the
failure to obtain would have a Material Adverse Effect on Galen or materially
impair Galen's rights to or ability to use any such property.
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(c) Real Property Used in The Business. The Galen Owned
Property identified in Schedule 5.18(a) and the Galen Leased Property identified
in Schedule 5.18(b) comprise all of the real property used or intended to be
used in, or otherwise related to, the Galen business.
SECTION 5.19 Material Contracts. Except as set forth in Section 5.19
of the Galen Disclosure Letter, there have been made available to Warner, its
affiliates and their representatives true and complete copies of all of the
following contracts to which Galen or any of its Subsidiaries is a party or by
which any of them is bound (collectively, the "Galen Material Contracts"): (i)
contracts with any current officer or director of Galen or key employee of any
of its material Subsidiaries; (ii) contracts for the sale of any of the assets
of Galen or any of its Subsidiaries other than in the ordinary course of
business or for the grant to any person of any preferential rights to purchase
any of its assets other than inventory in the ordinary course of business; (iii)
contracts containing covenants of Galen or any of its Subsidiaries not to
compete in any line of business or with any person in any geographical area or
covenants of any other person not to compete with Galen or any of its
Subsidiaries in any line of business or in any geographical area; (iv) material
indentures, credit agreements, mortgages, promissory notes, and all contracts
relating to the borrowing of money; (v) contracts or agreement relating to the
licensing of Intellectual Property Rights by Galen to another party or by
another party to Galen, all other contracts or agreements affecting Galen's
ability to use or disclose any Intellectual Property Rights; and (vi) all other
agreements contracts or instruments which, in the reasonable opinion of Galen,
are material to Galen or any of its Subsidiaries, except as set forth in Section
5.19 of the Galen Disclosure Letter. Except as set forth or as would not have a
Material Adverse Effect on Galen, all of the Galen Material Contracts are in
full force and effect and are the legal, valid and binding obligation of Galen
or its Subsidiaries, enforceable against them in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors, rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity). Except as
set forth in Section 5.19 of the Galen Disclosure Letter, neither Galen nor any
Subsidiary is in default in any material respect under any Galen Material
Contract nor, to the Knowledge of Galen, is any other party to any Galen
Material Contract in default thereunder in any material respect except, in each
case, for those defaults that, individually or in the aggregate, would not have
a Material Adverse Effect on Galen.
SECTION 5.20 Compliance with Laws. Galen has conducted its business
and operations in compliance with, and obtained all permits, licenses and other
authorizations required under, all Laws, including, without limitation, all
requirements imposed by the FDA and comparable foreign regulatory authorities,
including, where applicable, the Medicines Act 1968 and the rules made and
marketing authorizations granted thereunder and the regulations of the UK
Department of Health governing the sale of products to the National Health
Service, except for such non-compliance which Galen does not reasonably expect
would have or be likely to have a Material Adverse Effect. To the Knowledge of
Galen, Galen has not within the past 24 months received written notice of any
non-compliance with respect to, or potential liability under, any Laws, which
has not been satisfied or otherwise resolved, except for such non-
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compliance which Galen does not reasonably expect would have or would be likely
to have a Material Adverse Effect and there are no circumstances to the
Knowledge of Galen which are reasonably likely to give rise to any such
non-compliance.
ARTICLE VI -- COVENANTS
SECTION 6.01 Conduct of Warner. Warner agrees that from the date
hereof until the Effective Time, except as set forth in Section 6.01 of the
Warner Disclosure Letter or as otherwise expressly contemplated by this
Agreement or required to effect the Scheme or complete the Transactions or with
the prior written consent of Galen, Warner and its Subsidiaries shall conduct
their business in the ordinary course consistent with past practice and shall
use their reasonable best efforts to preserve intact their business
organizations and relationships with third parties and to keep available the
services of their present officers and employees. Without limiting the
generality of the foregoing, from the date hereof until the Effective Time,
except as set forth in the Warner Disclosure Letter or as expressly contemplated
by this Agreement, without the prior written consent of Galen (such consent not
to be unreasonably withheld or delayed), Warner will not, and will not permit
any of its Subsidiaries to:
(a) adopt or propose any change in the Warner Memorandum and
Articles or equivalent documents;
(b) amend any material term of any outstanding security of
Warner or any of its Subsidiaries;
(c) merge or consolidate or announce its intention to merge or
consolidate with any Person;
(d) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee, encumber, or authorize the issuance, sale, pledge,
disposition, grant, transfer, lease, license, guarantee or encumbrance of, (i)
any shares in the capital of Warner or any of its Subsidiaries (other than the
issuance of shares by a wholly-owned Subsidiary of Warner to Warner or another
wholly-owned Subsidiary of Warner), or securities convertible or exchangeable or
exercisable for any shares in such capital, or any options, warrants or other
rights of any kind to acquire any shares in such capital or such convertible or
exchangeable securities, or any stock appreciation rights or limited stock
appreciation rights, or any other ownership interest of Warner or any of its
Subsidiaries or (ii) except in the ordinary course of business and in a manner
consistent with past practice, any property or assets (tangible or intangible)
(including, without limitation, by merger, consolidation, spin-off or other
dispositions of stock or assets) of Warner or any of its Subsidiaries, except in
the case of either clause (i) or (ii) (A) the issuance of Warner Shares upon the
exercise of stock options issued pursuant to the Warner Option Plan prior to the
date hereof, (B) the award of options in connection with new employee hires in
the ordinary course of business and consistent with past practice; provided,
however, that no such new employee shall receive options to purchase more than
5,000 Warner Shares, (C) pursuant to existing obligations under contracts or
agreements in
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force at the date of this Agreement and set forth in Section 6.01 of the Warner
Disclosure Letter and (D) sales or other dispositions of property and assets of
Warner and its Subsidiaries in an aggregate amount that does not exceed
US$1,000,000;
(e) create or incur any material Lien on any asset (tangible
or intangible) other than in the ordinary course of business and consistent with
past practice;
(f) make any material loan, advance or capital contributions
to or investments in any Person other than loans, advances or capital
contributions to or investments in wholly owned Subsidiaries of Warner made in
the ordinary course and consistent with past practices;
(g) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its share capital (except for dividends paid by any direct or indirect
wholly-owned Subsidiary of Warner to Warner or to any other direct or indirect
wholly-owned Subsidiary of Warner) or enter into any agreement with respect to
the voting of its share capital;
(h) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(i) (i) acquire (including, without limitation, by merger,
consolidation or acquisition of stock or assets) any interest in any Person or
any division thereof (other than a wholly-owned Subsidiary) or any assets, other
than acquisitions of assets in the ordinary course of business and consistent
with past practice, (ii) incur any indebtedness for borrowed money or guarantee
such indebtedness of another Person, or issue or sell any debt securities or
warrants or other rights to acquire any debt security of Warner or any of its
Subsidiaries, except for (A) indebtedness for borrowed money incurred in the
ordinary course of business and consistent with past practice or in connection
with transactions otherwise permitted under this Section 6.01, (B) other
indebtedness for borrowed money with a maturity of not more than one year in a
principal amount not, in the aggregate, in excess of US$5,000,000, and (C) other
indebtedness for borrowed money incurred under Warner's credit agreement for
working capital purposes only, (iii) terminate, cancel, waive any rights under
or request any material change in, or agree to any material change in, any
material contract or agreement of Warner or, except in connection with
transactions permitted under this Section 6.01(i), enter into any contract or
agreement material to the business, results of operations or financial condition
of Warner and its Subsidiaries, taken as a whole, in either case other than in
the ordinary course of business and consistent with past practice, (v) make or
authorize any capital expenditure, other than capital expenditures that are not,
in the aggregate, in excess of US$1,500,000 taken as a whole or (v) enter into
or amend any contract, agreement, commitment or arrangement that, if fully
performed, would not be permitted under this Section 6.01(i);
(j) take any action with respect to accounting policies or
procedures, other than actions in the ordinary course of business and consistent
with past practice or except
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as required by changes in U.S. GAAP;
(k) make any material Tax election or take any position on any
Tax Return filed on or after the date of this Agreement or adopt any method
therefor that is inconsistent with elections made, positions taken or methods
used in preparing or filing similar Tax Returns in prior periods;
(l) except as may be required by contractual commitments or
corporate policies with respect to severance or termination pay in existence on
the date hereof, (i) increase the compensation payable or to become payable to
its officers or employees (except for increases in the ordinary course of
business and consistent with past practice in salaries or wages of employees of
Warner or any of its Subsidiaries), (ii) establish, adopt, enter into or amend
any collective bargaining, bonus, profit sharing, thrift, compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, officer or employee, except as
contemplated by this Agreement or to the extent required by applicable law or
the terms of a collective bargaining agreement, (iii) increase the benefits
payable under any existing severance or termination pay policies or employment
or other agreements or (iv) take any affirmative action to accelerate the
vesting of any stock-based compensation;
(m) take any action that would, individually or in the
aggregate, reasonably be expected to make any representation and warranty of
Warner hereunder untrue in any material respect at, or as of any time prior to,
the Closing;
(n) take or propose any corporate action for its winding-up,
dissolution or reorganization of for the appointment of a receiver,
administrator, administrative receiver, trustee or similar officer of all or any
of its assets and revenues;
(o) waive or compromise any claim or proceedings involving
equitable relief (other than in the ordinary course of business) which is
material to Warner and its Subsidiaries taken as a whole; or
(p) save for any amendments required by the relevant insurers,
maintain in all material respects all insurance policies listed in Section 6.01
of the Warner Disclosure Letter on the same terms and at the same level of
insurance cover as those prevailing at the date of this Agreement;
(q) agree or commit to do any of the foregoing.
SECTION 6.02 Conduct of Galen. Galen agrees that from the date
hereof until the Effective Time, except as set forth in Section 6.02 of the
Galen Disclosure Letter or as otherwise expressly contemplated by this Agreement
or as may be necessary or desirable to effect the Transactions or with the prior
written consent of Warner, Galen and its Subsidiaries shall conduct their
business in the ordinary course consistent with past practice and shall use
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their reasonable best efforts to preserve intact their business organizations
and relationships with third parties and to keep available the services of their
present officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time, except as set forth in
the Galen Disclosure Letter or as expressly contemplated by this Agreement,
without the prior written consent of Warner (such consent not to be unreasonably
withheld or delayed), Galen will not, and will not permit any of its
Subsidiaries to:
(a) adopt or propose any change in the Galen Memorandum and
Articles or equivalent documents;
(b) amend any material term of any outstanding security of
Galen or any of its Subsidiaries;
(c) merge or consolidate or announce its intention to merger
or consolidate with any Person;
(d) issue, sell, dispose of, grant, transfer, or authorize the
issuance, sale, disposal, grant or transfer of more than 10% of its issued share
capital at the date of this document (other than the issuance of shares by a
wholly-owned Subsidiary of Galen to Galen or another wholly-owned Subsidiary of
Galen), or securities convertible or exchangeable or exercisable for any shares
in such capital, or any options, warrants or other rights of any kind to acquire
any shares in such capital or such convertible or exchangeable securities, or
any stock appreciation rights or limited stock appreciation rights, or any other
ownership interest of Galen or any of its Subsidiaries except (A) the issuance
of Galen Shares upon the exercise of stock options issued pursuant to the Galen
Stock Plans prior to the date hereof, (B) the award of options in connection
with new employee hires in the ordinary course of business and consistent with
practice; provided, however, that no such new employee shall receive options to
purchase more than 5,000 Galen Shares; and (C) pursuant to existing obligations
under contracts or agreements in force at the date of this Agreement;
(e) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its share capital (except for dividends paid by any direct or indirect
wholly-owned Subsidiary of Galen to Galen or to any other direct or indirect
wholly-owned Subsidiary of Galen and except for any interim or final cash
dividend(s) (as applicable) not materially inconsistent with the principles and
practices applied by Galen in relation to the dividends paid in respect of the
financial year ended September 30, 1999, or enter into any agreement with
respect to the voting of its share capital;
(f) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its share capital;
(g) enter into any agreement or arrangement with any Person
(other than a wholly-owned Subsidiary) for the purchase or acquisition of any
stock or assets, other than acquisitions of stocks or assets in the ordinary
course of business and consistent with past
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practice and any other acquisitions for consideration that (i) is, in the
aggregate, in excess of US$25,000,000; or (ii) would not be able to be financed
by way of Galen's own internal resources available and subsisting as at the date
of this Agreement provided that any proceeds receivable pursuant to an issue of
shares allowed pursuant to this section 6.02 shall be treated for the purposes
of this sub-section (ii) as internal financial resources available and
subsisting;
(h) take any action that would, individually or in the
aggregate, reasonably be expected to make any representation and warranty of
Galen hereunder untrue in any material respect at, or as of any time prior to,
the Effective Time.
(i) agree or commit to do any of the foregoing.
SECTION 6.03 Access to Information.
(a) From the date of this Agreement until the Effective Time,
Warner will, and will cause its Subsidiaries, and each of their respective
officers, directors, counsel, advisors and representatives (collectively, the
"Warner Representatives") to, give Galen and its officers, employees, counsel,
advisors and representatives (collectively, the "Galen Representatives") full
access (subject, however, to existing confidentiality and similar non-disclosure
obligations and the preservation of attorney client and work product privileges
or any further confidentiality assurances which may be required to update or
extend existing confidentiality agreements between the parties in order to
protect Warner's legitimate business interests), during normal business hours,
to the offices and other facilities and to the books and records of Warner and
its Subsidiaries and will cause the Warner Representatives to furnish Galen and
the Galen Representatives to the extent available with such financial and
operating data and such other information with respect to the business and
operations of Warner and its Subsidiaries as Galen may from time to time
reasonably request provided that Galen shall demonstrate to the Warner
Representatives a legitimate interest or purpose in relation to the consummation
of the Transactions for access to such information. Prior to the Closing,
neither Galen nor the Galen Representatives shall contact or in any manner
communicate with the employees, customers, lessors and suppliers of Warner and
its Subsidiaries with respect to any matter related to the transaction
contemplated hereby, except with the prior consent of Warner.
(b) From the date of this Agreement until the Effective Time,
Galen will, and will cause its Subsidiaries, and each Galen Representative to,
give Warner and the Warner Representatives full access (subject, however, to
existing confidentiality and similar non-disclosure obligations and the
preservation of attorney client and work product privileges or any further
confidentiality assurances which may be required to update or extend existing
confidentiality agreements between the parties in order to protect Galen's
legitimate business interests), during normal business hours, to the offices and
other facilities and to the books and records of Galen and its Subsidiaries and
will cause the Galen Representatives to furnish Warner and the Warner
Representatives to the extent available with such financial and operating data
and such other information with respect to the business and operations of Galen
and its Subsidiaries as Warner may from time to time reasonably request,
provided that Warner shall demonstrate to
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the Galen Representatives a legitimate interest or purpose in relation to the
consummation of the Transactions for access to such information. Prior to the
Closing, neither Warner nor the Warner Representatives shall contact or in any
manner communicate with the employees, customers, lessors and suppliers of Galen
and its Subsidiaries with respect to any matter related to the transaction
contemplated hereby, except with the prior consent of Galen.
SECTION 6.04 Reasonable Best Efforts.
(a) Subject to the terms and conditions herein provided and to
applicable legal requirements, each of the parties hereto agrees to use
reasonable best efforts to take, or cause to be taken, all action, and to do, or
cause to be done (consistent with the fiduciary duties of the Board of Directors
of Warner and Galen under applicable law), and to assist and cooperate with the
other parties hereto in doing, as promptly as practicable, all things necessary,
proper, desirable or advisable under applicable laws and regulations to ensure
that the conditions set forth in Article VII are satisfied and to consummate and
make effective the transactions contemplated by the Scheme and this Agreement.
(b) If at any time prior to the Closing any event or
circumstance relating to either Warner or Galen or any of their respective
Subsidiaries, should be discovered by Warner or Galen, as the case may be, and
which should be set forth in an amendment or supplement to the Proxy Statement
or the Registration Statement or the Listing Particulars, the discovering party
will promptly inform the other party of such event or circumstance. If at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, including the execution of additional
instruments, the proper officers and directors of each party to this Agreement
shall take all such necessary action.
SECTION 6.05 Consents.
(a) Each of the parties will use its reasonable best efforts
to obtain as promptly as practicable all consents of any Governmental Entity or
any other person required in connection with, and waivers of any violations that
may be caused by, the consummation of the transactions contemplated by the this
Agreement. Warner and Galen shall promptly prepare and file as soon as
practicable after the date hereof all documents required to be filed (i) with
the United States Federal Trade Commission and the Department of Justice in
order to comply with the HSR Act and (ii) any other documents which are required
under any non-United States laws regulating competition, antitrust, investment
or exchange controls. Warner and Galen shall promptly furnish all materials
thereafter required in connection therewith.
(b) In furtherance and not in limitation of the foregoing,
Galen and Warner shall use their respective best efforts to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated by this Agreement under any antitrust, competition or trade
regulatory laws, rules or regulations of any domestic or foreign government or
governmental authority or any multinational authority ("Antitrust Laws"). If any
suit is instituted challenging any of the transactions contemplated by this
Agreement as violative of any
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Antitrust Law, Galen shall use its reasonable best efforts to take such action
as may be required (a) by the applicable government or governmental or
multinational authority (including, without limitation, the Antitrust Division
of the United States Department of Justice, the Federal Trade Commission, the
Irish Department of Enterprise, Trade and Employment or the Competition
Authority of Ireland in order to resolve such objections or (b) by any domestic
or foreign court or similar tribunal, in any suit brought by a private party or
governmental or multinational authority challenging the transactions
contemplated by this Agreement as violative of any Antitrust Law, in order to
avoid the entry of, or to effect the dissolution of, any injunction, temporary
restraining order or other order that has the effect of preventing the
consummation of any of such transactions, provided always that, for the
avoidance of doubt, Galen shall not be obliged by this Section 6.05 to hold
separate or divest any businesses, product lines or assets of Galen or Warner or
any of their Subsidiaries or to agree to do so or to undertake to any such
bodies so to do.
(c) Any party hereto shall promptly inform the others of any
material communication from the United States Federal Trade Commission, the
Department of Justice or any other domestic or foreign government or
governmental or multinational authority regarding any of the transactions
contemplated by this Agreement. If any party or any affiliate thereof receives a
request for additional information or documentary material from any such
government or authority with respect to the transactions contemplated by this
Agreement, then such party will endeavor in good faith to make, or cause to be
made, as soon as reasonably practicable and after consultation with the other
party, an appropriate response in compliance with such request. Galen will
advise Warner promptly in respect of any understandings, undertakings or
agreements (oral or written) which Galen proposes to make or enter into with the
Federal Trade Commission, the Department of Justice, or any other domestic or
foreign government or governmental or multinational authority in connection with
the transactions contemplated by this Agreement.
SECTION 6.06 Public Announcements. The initial press release with
respect to the execution of this Agreement shall be a joint press release
acceptable to Warner and Galen. Thereafter, so long as this Agreement is in
effect, Warner and Galen shall consult with each other before issuing any press
release or otherwise making any public statements with respect to the
Transactions or this Agreement and shall not issue any such press release or
make any such public statement without the prior consent of the other party,
which shall not be unreasonably withheld; provided, however, that a party may,
without the prior consent of the other party, issue such press release or make
such public statement as may upon the advice of counsel be required by law,
Nasdaq, the LSE or the ISE if it has used all reasonable best efforts to consult
with the other party.
SECTION 6.07 Employee Benefit Arrangements. Galen agrees that it
will honor, or cause Warner to honor, all obligations under employee
arrangements (the "Employee Arrangements") to which Warner or any of its
Subsidiaries is presently a party which are listed in the Employee Arrangements
Schedule. Notwithstanding the foregoing, from and after the Effective Time,
subject to the remaining provisions of this Section 6.07, Galen shall have the
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right to amend, modify, alter or terminate any Employee Arrangements of Warner;
provided, that any such action shall not in the reasonable opinion of Galen
adversely affect the rights of any employees or other beneficiaries which shall
have arisen (1) under the Warner Option Plan; (2) under any Employee Arrangement
prior to such amendment, modification, alteration or termination; or (3) under
any agreement which requires the consent of the employee or any other party or
beneficiary for amendment, modification, alteration or termination, without
obtaining such consent. Notwithstanding the foregoing, for a period of one year
following the Effective Time, Galen shall continue to provide to employees of
Warner and its Subsidiaries (excluding employees covered by collective
bargaining agreements) broad-based employee benefit plans and arrangements which
are in the aggregate in the reasonable opinion of Galen no less favorable than
those provided to such employees as of the date hereof, provided always that
nothing in this section shall obligate Galen to continue (or procure to be
continued) the employment of any particular employee or employees during such
period. Solely for purposes of eligibility and vesting under Employee
Arrangements (including without limitation plans or programs of Galen and its
affiliates after the Closing), all service with Warner or any of its
Subsidiaries or their predecessors prior to the Closing shall be treated as
service with Galen and its affiliates.
SECTION 6.08 Indemnification.
(a) Galen agrees that all rights to indemnification now
existing in favor of any director or officer of Warner and its Subsidiaries (the
"Indemnified Parties") as provided in their respective charters or by-laws or,
in an agreement between an Indemnified Party and Warner or one of its
Subsidiaries, shall survive the Transactions and shall continue in full force
and effect for a period of not less than six years from the Effective Time;
provided, that in the event any claim or claims are asserted or made within such
six-year period, all rights to indemnification in respect of any such claim or
claims shall continue until final disposition of any and all such claims. After
the Effective Time, Galen agrees to cause Warner to honor all rights to
indemnification referred to in the preceding sentence. Without limitation of the
foregoing, in the event any such Indemnified Party is or becomes involved in any
capacity in any action, proceeding or investigation in connection with any
matter, including, without limitation, the transactions contemplated by this
Agreement, occurring prior to, and including, the Effective Time, Warner will
cause to be paid in accordance with the applicable charters, by-laws and
agreements, as incurred such Indemnified Party's legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith. Galen shall pay all reasonable expenses, including attorneys' fees,
that may be incurred by any Indemnified Party in enforcing the indemnity and
other obligations provided for in this Section 6.08 subject to the limitations
of Northern Ireland law to the extent applicable.
(b) Galen agrees that Warner shall cause to be maintained in
effect for not less than six years from the Effective Time the current policies
of the directors' and officers' liability insurance maintained by Warner;
provided, that Galen may substitute therefor other policies not less
advantageous (other than to a de minimus extent) to the beneficiaries of the
current policies and provided that such substitution shall not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time; and provided, further, that
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Galen shall not be required to pay an annual premium in excess of 300% of the
last annual premium paid by Warner prior to the date hereof and if Galen is
unable to obtain the insurance required by this Section 6.08(b) it shall obtain
as much comparable insurance as possible for an annual premium equal to such
maximum amount.
(c) Galen, unless prevented by laws or regulations in any
relevant jurisdiction, LSE, UKLA or SEC, shall take, prior to the Effective
Time, all appropriate actions within their remit to appoint to the Galen Board
Messrs. Boissoneault and Herendeen with effect from the Effective Time, provided
that neither of these individuals nor Warner shall have taken any action or
omitted to fulfill any obligation which would result in the termination of his
Employment Agreement or affect the ability of his Employment Agreement to become
unconditional. Galen further agrees (to the extent permitted by law) to
indemnify and hold harmless Roger Boissonneault and Paul Herendeen against and
in respect of all actions, claims, liabilities and losses which they may suffer
or incur as persons responsible for the Listing Particulars to the same extent
as Galen is permitted under applicable law to indemnify its existing directors.
(d) Galen agrees that with effect from the publication of the
Listing Particulars it will procure that Roger Boissonneault and Paul Herendeen
shall be covered by Galen's existing Directors and Officers liability insurance
policy in respect of liabilities as proposed Directors of Galen to the same
extent as Galen's existing Directors are so covered.
SECTION 6.09 Notification of Certain Matters. Galen and Warner shall
promptly notify each other of (a) the occurrence or non-occurrence of any fact
or event which would be reasonably likely (i) to cause any representation or
warranty of any party hereto contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time or (ii) to cause any material covenant, condition or agreement of
any party hereto under this Agreement not to be complied with or satisfied in
all material respects and (b) any failure of any party hereto to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder in any material respect; provided, however, that no such
notification shall affect the representations or warranties of any party or the
conditions to the obligations of any party hereunder .
SECTION 6.10 No Solicitation; Termination Right.
(a) Warner agrees that, during the term of this Agreement or,
if sooner, until the date upon which this Agreement is terminated, it shall not,
and shall not authorize or permit any of its Subsidiaries or any of its or its
Subsidiaries' directors, officers, employees, agents or representatives,
directly or indirectly, to solicit, initiate, or furnish or disclose non-public
information in furtherance of, any inquiries or the making of any proposal with
respect to any recapitalization, merger, consolidation or other business
combination involving Warner, or acquisition of any capital (other than upon
exercise of the Options or Warrants which are outstanding as of the date hereof)
or any material portion of the assets (except for acquisition of assets in the
ordinary course of business consistent with past practice) of Warner and its
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Subsidiaries, or any combination of the foregoing (a "Competing Transaction"),
or negotiate, or otherwise engage in discussions with any person (other than
Galen or their respective directors, officers, employees, agents and
representatives) with respect to any Competing Transaction or enter into any
agreement, arrangement or understanding requiring it to abandon, terminate or
fail to consummate the Acquisition or any other transactions contemplated by
this Agreement; provided, that prior to the hearing of the Petition, and having
complied with Section 6.10(b) hereof, Warner may furnish information to, and
negotiate or otherwise engage in discussions with, any party who initiates
contact with Warner regarding a Competing Transaction if and so long as the
Board of Directors of Warner determines in good faith, after being advised as to
legal matters by its outside counsel and as to financial matters from its
independent financial adviser, that failing to consider and cooperate with such
other party regarding such Competing Transaction would be likely to constitute a
breach of the fiduciary duties of the Board under applicable law.
(b) Warner shall, and shall cause its Subsidiaries, directors,
officers, employees, agents and representatives immediately to cease all
existing activities, discussions and negotiations with any parties conducted
heretofore with respect to any Competing Transaction. Warner agrees that neither
the Board of Directors nor any committee thereof will, during the period
referenced in the first sentence of Subsection (a), (A) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Galen, the Warner
Board Recommendation, or (B) approve or recommend, or propose publicly to
approve or recommend, any Competing Transaction, unless the Board of Directors
of Warner (after being advised as referred to in Section 6.10(a) hereof)
determines in good faith that failure to do so would be likely to result in
breach of its fiduciary duties under applicable law. During the period
referenced in the first sentence of Subsection (a), Warner shall immediately
advise Galen orally (so far as is reasonably practicable) and in writing of the
receipt, directly or indirectly, of any inquiries, discussions, negotiations, or
proposals relating to a Competing Transaction, such advice to include the
material terms and details thereof (so far as then known to Warner), provided
that, for the avoidance of doubt, Warner shall not be obliged to disclose the
identity of any third party involved in any such possible Competing Transaction
unless and until notice is given by Warner pursuant to sub-section (d) of this
Section 6.10 of an intention to take any action referred to in (A) or (B) above
in connection with such Competing Proposal. Warner will keep Galen reasonably
informed of the status and details (including amendments or proposed
amendments)of any such inquiries, discussions, negotiations or proposals
relating to a Competing Transaction.
(c) Notwithstanding the foregoing, in the event that the
Warner Board receives a proposal for a Competing Transaction that it determines
in good faith is reasonably capable of being completed, taking into account all
legal, financial, regulatory and other aspects of the proposal and which would,
if completed, result in a transaction (involving at least 50% of the Warner
Shares in issue and/or 50% of the assets of Warner and its Subsidiaries as the
case may be) which is determined by a majority of the members of the Warner
Board (being, where relevant, a majority of those members who shall be
disinterested in the proposal), in good faith (after receiving advice from
Warner's independent financial adviser that the proposal for a
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Competing Transaction is more favorable to the Warner Shareholders, from a
financial point of view, than the Scheme and the Transactions), to be more
favorable to Warner Shareholders than the Scheme and the Transactions (a
"Superior Proposal"), the Warner Board may terminate this Agreement pursuant to
Section 8.01(e)hereof and may take any of the actions described in sub-section
(A) and (B) in Section 6.10(b) above in relation to the Superior Proposal and
enter into a letter of intent, agreement-in-principle, acquisition agreement or
other similar agreement, but in any case only after complying with the
provisions of sub-section (d) below.
(d) At such time as Warner intends to take any action as set
forth in Section 6.10(b) (A) or (B) in relation to a Superior Proposal, Warner
shall provide to Galen written notice advising Galen that the Warner Board is
prepared to accept a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal and confirming that such proposal is capable of creating a
legally binding agreement upon Termination of this Agreement. Until the expiry
of a period of five Business Days following receipt of such written notice (the
"Period of First Refusal") or, if earlier, until receipt of a Refusal Notice,
Warner hereby undertakes not to proceed in any way with the Superior Proposal,
including taking any action as set out in clause 6.10(b)(A) or (B) above. During
this period, Galen shall be able to (A) present in writing to Warner a revised
proposal (capable of creating a legally binding amendment to this Agreement upon
acceptance by Warner within the Period of First Refusal) to continue with the
Acquisition (the "Revised Proposal") or (B) present in writing to Warner notice
that Galen does not intend to revise the current proposals as set out in this
Agreement in response to notice of such Superior Proposal (the "Refusal
Notice"). On receipt of the Revised Proposal Warner shall procure that a meeting
of the Warner Board shall consider the terms thereof. In the event that the
Revised Proposal is determined by a majority of the members of the Warner Board
(being, where relevant, a majority of such members who shall be disinterested in
the Superior Proposal) in good faith (after receiving advice from Warner's
independent financial adviser that the Revised Proposal is more favorable to
Warner Shareholders, from a financial point of view, than the Superior Proposal)
to be more favorable to Warner's shareholders than the Superior Proposal, taking
into account all legal, financial, regulatory and other aspects of the proposal,
Warner undertakes to and to procure that its subsidiaries, directors, officers,
employees, agents and representatives shall cease all existing activities,
discussions and negotiations with any party with respect to the Superior
Proposal ) save that the provisions of this Section 6.10 shall apply ab initio
in relation to any proposed amendment to such Superior Proposal). Otherwise, (x)
in the event that the Revised Proposal is determined (on the same bases as
stated in the previous sentence) by the Warner Board to be less favorable than
the Superior Proposal, or (y) in the event that a Refusal Notice is served on
Warner, or (z) on the expiry of the Period of First Refusal without service of a
Revised Proposal or a Refusal Notice, Warner shall be entitled to terminate this
agreement as provided by Section 6.10(c) above and to proceed with any such
actions as set forth in clause 6.10(b)(A) and (B) above.
SECTION 6.11 Termination of Scheme. Galen hereby covenants and
agrees that in the event that this Agreement is terminated, Galen will provide
all such reasonable cooperation to Warner in relation to any steps reasonably
necessary to or appropriate in
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connection with the abandonment of the Scheme.
SECTION 6.12 Additional Action.
(a) If the Irish Takeover Panel Act, 1997 (Takeover) Rules,
1997 or any other takeover statute ("Takeover Statute") shall become applicable
to the transactions contemplated hereby, Warner and Galen and the members of
their respective Boards of Directors of Warner, subject to their respective
fiduciary duties, shall grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby (which shall include
the provision by Warner and its directors and officers of all suitable
assistance and information which may be necessary to or reasonably requested by
Galen in connection with the preparation of any offer document required to be
published by the Irish Takeover Panel, which shall be given in a prompt fashion)
and otherwise act to eliminate or minimize the effects of such Takeover Statute
on the transactions contemplated hereby.
(b) Galen shall ensure that Warner shall have access to
sufficient funds which may be required pursuant to any rights of the holders of
Warner's outstanding 12 5/8% Senior Notes due 2008 (the "Notes") triggered by
the entering into by Warner of the Transactions and, to the extent required by
the terms of the Notes, will, with effect from the Effective Time, comply, or
cause Warner to comply, in all respects with Warner's obligations under the
indenture governing the Notes.
(c) Galen shall use its reasonable best efforts to cause the
Galen ADSs to be listed for trading on Nasdaq at the Effective Time.
(d) Prior to the Effective Time Galen shall procure the
adoption of a new share option scheme for the benefit of US employees on terms
mutually acceptable to it and Warner (in each case acting reasonably) which
scheme shall have due regard to the requirements of both US and UK law,
regulation, custom and practice.
ARTICLE VII - CONDITIONS
SECTION 7.01 Conditions. The obligations of the parties to effect
the Scheme are subject to the satisfaction (or, to the extent permitted by
Section 7.02 or 7.03, waiver) of each of the conditions set out in this Section
7.01 and in Sections 7.02 and 7.03 on or before the earlier of the Effective
Time or 5 p.m. on December 29, 2000 (the "Outside Date").
(a) No Injunctions or Restraints. No judgment, order, decree,
statute, law, ordinance, rule or regulation entered, enacted, promulgated,
enforced or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect or pending (i) imposing or seeking to impose
material limitations on the ability of Galen to acquire or hold or to exercise
full rights of ownership of any Warner Shares; (ii) imposing or seeking to
impose material limitations on the
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ability of Galen and its Affiliates to combine, operate or control the business
and assets of Warner; (iii) imposing or seeking to impose other material
sanctions, damages, or liabilities directly arising out of the Transactions on
Galen or Warner; (iv) requiring or seeking to require divestiture by Galen of
all or any material portion of the business, assets or property of Warner; or
(v) preventing the consummation of the Transactions.
(b) Governmental Action. No action or proceeding shall be
instituted, proposed or threatened by any Governmental Entity seeking to prevent
consummation of the Acquisition, asserting the illegality of the Acquisition or
this Agreement or seeking material damages directly arising out of the
transactions contemplated hereby which continues to be outstanding.
(c) Galen Shareholder Approval. The Galen Shareholder Approval
shall have been obtained.
(d) Antitrust Laws.
(i) The waiting period applicable to the consummation of
the Transactions under the HSR Act and any applicable foreign
or supranational Antitrust Laws shall have expired or been
terminated; and
(ii) no action by the Department of Justice or Federal
Trade Commission or any foreign or supranational agency or
entity charged with enforcement of Antitrust Laws that are
applicable to the transactions contemplated hereby challenging
or seeking to enjoin the consummation of the Transactions
shall have been instituted and be pending; and
(iii) to the extent that the Irish Mergers, Takeovers
and Monopolies (Control) Act, 1978 as amended (the "Mergers
Act") is applicable, the Minister for Enterprise, Trade and
Employment of Ireland shall have stated in writing, pursuant
to Section 7(a) of the Mergers Act, that he/she does not
intend to make an order under Section 9 of the Act in relation
to the Acquisition or, in the event of the said Minister
making an order under Section 9 prohibiting the implementation
of the Scheme except on conditions specified in the said
order, Galen in its absolute discretion having decided to
accept such conditions or, in the event of no order under that
section being made and the said Minster not stating in writing
that he/she does not intend to make such an order, the
relevant period within the meaning of Section 6 of that Act
having elapsed.
(e) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing or prohibiting the consummation of the Transactions or
materially limiting or restricting Galen's conduct or
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operation of the business of Warner after the relevant Closing shall have been
issued and be in effect, nor shall any proceeding brought by a domestic
administrative agency or commission or other domestic Governmental Entity,
seeking any of the foregoing be pending; nor shall any action have been taken or
any statute, rule, regulation or order have been enacted, entered or enforced or
be deemed applicable to the Transactions which makes the consummation of the
Transactions illegal or prevents or prohibits the Transactions.
(f) Warner Shareholder and Court Approvals.
(i) Approval of the Scheme in substantially the form
attached as Annex A by a majority in number representing
three-fourths in value of the holders of Scheme Shares present
and voting, either in person or by proxy, at the Court
Meeting;
(ii) the Warner EGM Resolution (as described in Section
1.01(b)) being duly passed as a special resolution at the
Warner EGM;
(iii) the Scheme in substantially the form attached as
Annex A being sanctioned by the Court (without modification
save as agreed by Warner and Galen) and the Capital Reduction
being confirmed by the Court; and
(iv) an official copy of the Final Court Order and the
minute of the Capital Reduction of capital being duly
delivered to the Registrar of Companies in Ireland for
registration and such Registrar issuing a certificate of
registration in relation to the Capital Reduction.
(g) Effective Registration Statement. The Registration
Statement shall and if filed, the Registration Statement on Form F-4, have been
declared effective by the SEC and no stop order suspending its effectiveness
shall have been issued by the SEC and no proceedings for that purpose shall have
been initiated or, to the Knowledge of Galen or Warner, threatened by the SEC,
and all necessary approvals under blue sky laws relating to the issuance or
trading of the Galen Shares and the Galen ADSs to be issued to the Warner
Shareholders in connection with the Transactions shall have been received.
(h) Nasdaq Listing. The Galen ADSs shall be listed for
trading on Nasdaq;
(i) UK Admission. The UKLA shall have agreed to admit the new
Galen Shares to be issued pursuant to the Scheme to the Official List of the
UKLA and the LSE shall have agreed to admit such shares to trading as referred
to in section 1.02(c)(v), such agreements shall not have been revoked or
withdrawn and, no event shall have occurred which will or may reasonably be
expected to result in such agreements being revoked or withdrawn.
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SECTION 7.02 Conditions to the Obligations of Warner. The
obligations of Warner to implement the Scheme are subject to the satisfaction or
waiver by Warner of the following further conditions:
(a) each of the representations and warranties of Galen
contained in this Agreement shall be true, complete and correct in all material
respects both when made and on and as of the Effective Time as if made at and as
of the Effective Time (other than representations and warranties which address
matters only as of a certain date which shall be true, complete and correct as
of such certain date) and Warner shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of Galen to such effect;
(b) Galen shall have performed or complied in all material
respects with all covenants required by this Agreement to be performed or
complied with by it on or prior to the Effective Time and Warner shall have
received a certificate of an officer of Galen to that effect;
(c) there shall not have occurred any change, condition, event
or development that would result in a Material Adverse Effect on Galen;
(d) Warner shall be reasonably satisfied that the Transactions
will constitute a reorganization within the meaning of Section 368(a)(1)(B) of
the Code and that no gain or loss will be recognized by Warner Shareholders for
U.S. federal income tax purposes upon exchange of their Warner Shares as set
forth herein; and
(e) Galen, unless prevented by laws or regulations in any
relevant jurisdiction, LSE, UKLA or SEC, shall have taken, all appropriate
actions within their remit to appoint to the Galen Board Messrs. Boissoneault
and Herendeen with effect from the Effective Time, provided that neither of
these individuals nor Warner shall have taken any action or omitted to fulfill
any obligation which would result in the termination of his Employment Agreement
or affect the ability of his Employment Agreement to become unconditional.
SECTION 7.03 Conditions to the Obligations of Galen. The obligations
of Galen to effect the Acquisition are subject to the satisfaction or waiver by
Galen of the following further conditions:
(a) each of the representations and warranties of Warner
contained in this Agreement shall be true, complete and correct in all material
respects both when made and on and as of the Closing as if made at and as of the
Closing (other than representations and warranties which address matters only as
of a certain date which shall be true, complete and correct as of such certain
date) and Galen shall have received a certificate of the Chief Executive Officer
and Chief Financial Officer of Warner to such effect;
(b) Warner shall have performed or complied in all material
respects with all covenants required by this Agreement to be performed or
complied with by it on or prior
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to the Effective Time and Galen shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of Warner to that effect;
(c) there shall not have occurred any change, condition, event
or development that would result in a Material Adverse Effect on Warner;
ARTICLE VIII - TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Scheme and the Transactions may be abandoned at any time prior to the making of
the Final Court Order:
(a) by the mutual written consent of Galen and Warner;
(b) by Warner or Galen pursuant to the relevant provisions of
this Section 8.01, provided, however, that neither Warner or Galen may terminate
this Agreement pursuant to this Section 8.01 if such party shall have materially
breached this Agreement.
(c) by Galen or Warner if any court or other Governmental
Entity shall have issued, enacted, entered, promulgated or enforced any order,
judgment, decree, injunction, or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Transactions and such order, judgment,
decree, injunction, ruling or other action shall have become final and
nonappealable; provided, that the party seeking to terminate the Agreement shall
have used its reasonable best efforts to remove or lift such order, decree or
ruling;
(d) by Galen if the Warner Board shall have withdrawn or
modified in a manner adverse to Galen, or refrained from making the Warner Board
Recommendation, or shall have publicly disclosed its intention to change such
recommendation, unless Warner is at such time entitled to terminate this
Agreement pursuant to any of sub-sections (e),(f), or (k) of this Section 8.01;
(e) by Warner, pursuant to and in accordance with Section
6.10(c) and (d);
(f) by Warner in the event of any breach of the covenants
and/or representations and warranties of Galen contained in this Agreement which
has a Material Adverse Effect on Galen (and for this purpose a breach of
representation/warranty shall be regarded as having a Material Adverse Effect on
Galen if the actual state of affairs, when compared to the position as
represented/warranted, amounts to a change having such a Material Adverse
Effect) ;
(g) by Warner if the Galen Shareholder Approval has not been
obtained on or prior to October 31, 2000;
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(h) by Warner if the Galen Board shall have withdrawn or
modified in a manner adverse to Warner, or refrained from making the Galen Board
Recommendation, or shall have publicly disclosed its intention to change such
recommendation, unless Galen is at such time entitled to terminate this
Agreement pursuant to any of sub-sections (i), (j)or (l) of this Section 8.01;
(i) by Galen in the event of any breach of the covenants
and/or representations and warranties of Warner contained in this Agreement
which has a material adverse effect on Warner (and for this purpose a breach of
representation/warranty shall be regarded as having a Material Adverse Effect on
Warner if the actual state of affairs, when compared to the position as
represented/warranted, amounts to a change having such a Material Adverse
Effect);
(j) by Galen if the Warner Shareholder approval as referred to
in Section 7.01 (f) (i) and (ii) has not occurred on or prior to October 31,
2000;
(k) by Warner if (otherwise than as referred to in sub-section
(f) of this Section 8.01), there shall have occurred a change, condition, event
or development that would constitute a Material Adverse Effect on Galen;
(l) by Galen if (otherwise than as referred to in sub-section
(i) of this Section 8.01), there shall have occurred a change, condition, event
or development that would constitute a Material Adverse Effect on Warner; and
(m) by Warner if CSFB shall have withdrawn its written
fairness opinion referred to in Section 1.01(d) hereof.
In the event that the Scheme does not become effective as a result of a failure
of any of the conditions set forth in Article VII hereof to be satisfied or
(where applicable) waived, within the time provided by Article VII, this
Agreement shall terminate automatically. For the avoidance of doubt, if this
Agreement terminates pursuant to this provision due to non-satisfaction or
(where applicable) waiver of the Galen Shareholder approval condition set forth
in Section 7.01(c) (unless Galen is at the time entitled to terminate this
Agreement pursuant to any of sub-sections 8.01(i) or (l)), or the Warner
Shareholder approval conditions set forth in Section 7.01(f)(i) and (ii) (unless
Warner is at the time entitled to terminate this Agreement pursuant to
sub-section 8.01(f) or (k)), such termination shall be treated in the same
manner as if notice of termination had been given pursuant to Section 8.01(g) or
(j), as the case may be and the corresponding provisions of Section 8.02(c) or,
as the case may be, (e) shall apply accordingly.
SECTION 8.02 Effect of Termination; Fees and Expenses.
(a) In the event of the termination of this Agreement pursuant
to
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Section 8.01, this Agreement shall forthwith become void and have no effect
without any liability on the part of any party or its directors, officers or
shareholders, other than as provided by this Section 8.02 and Sections 6.06,
8.03 and 8.04 and Articles IX and X, which shall survive any such termination.
In the event of such termination, the provisions of this Section 8.02 shall
constitute the sole and exclusive remedies of the parties, provided always that
nothing contained in this Section 8.02 shall relieve any party from liability
for any breach of this Agreement or the Confidentiality Agreement. Following
such termination the sole remedy for breach of this Agreement (other than
Section 6.06) shall lie in damages, provided that if it shall be judicially
determined that termination of this Agreement was caused by an intentional
breach of this Agreement, then in addition to damages for such breach, the party
so found to have intentionally breached this Agreement shall indemnify and hold
harmless the other party for its respective costs, fees and expenses of its
counsel, accountants, financial advisers and other experts and advisers incident
to negotiation and preparation of this Agreement.
(b) The prevailing party in any legal action undertaken to
enforce this Agreement or any provision hereof shall be entitled to recover from
the other party the costs and expenses (including attorneys' and expert witness
fees) incurred in connection with such action.
(c) Notwithstanding any provision in this Agreement to the
contrary, if this Agreement terminates pursuant to Section 8.01(d), (e), or
(unless Warner is at the time entitled to terminate this Agreement pursuant to
sub-section (f) or (k) of Section 8.01) (m), Warner shall pay to Galen on demand
a sum equivalent to the reasonable and documented costs and expenses incurred by
Galen in connection with this Agreement and all matters provided for or referred
to herein, including but not limited to the fees and expenses of its lawyers and
merchant banking advisors and any value added tax or similar tax on any such
costs and expenses (which shall include any fees payable in respect of the
facility arrangement put in place by Galen prior to the date of this Agreement
pursuant to its obligations under section 6.13(c) of this Agreement), provided
that the aggregate amount payable pursuant to this Section 8.02(c) shall not
exceed US$4.25 million. The provisions of this sub-section (c) shall also apply
if this Agreement terminates pursuant to Section 8.01(j) (unless, the average of
the closing middle market prices for one Galen Share as reflected by the London
Stock Exchange Daily Official List for the three Business Days prior to the date
of the Court Meeting and the Warner EGM (or the later of the two if different)
is less than or equal to 75% of the average of such closing middle market prices
for the 3 Business Days ended May 3, 2000).
(d) Notwithstanding any other provision in this Agreement to
the contrary, if this Agreement is terminated by Warner or Galen (as the case
may be) pursuant to Section 8.01(d), (e) or (unless Warner is at the time
entitled to terminate this Agreement pursuant to sub-section (f) or (k) of
Section 8.01) (m), Warner shall pay to Galen the sum of US$4.25 million (the
"Termination Fee") in cash, such payment to be made promptly, but in no event
later than the fifth Business Day following any such termination; provided,
however, that any amount payable under this Section 8.02(d) shall be reduced by
the aggregate amount required to be paid by Warner pursuant to Section 8.02(c)
above.
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<PAGE> 53
(e) (i) Notwithstanding any provision in this Agreement to the
contrary, if this Agreement terminates pursuant to Section 8.01(g) or (h)
(unless Galen is at the time entitled to terminate this Agreement pursuant to
sub-section (i) or (l) of Section 8.01), Galen shall pay to Warner on demand a
sum equivalent to the reasonable and documented costs and expenses incurred by
Warner in connection with this Agreement and all matters provided for or
referred to herein, including but not limited to the fees and expenses of its
lawyers and merchant banking advisors and any value added tax or similar tax on
any such costs and expenses, provided that the aggregate amount payable pursuant
to this Section 8.02(e) shall not exceed US$4.25 million.
(ii) In addition, if this Agreement terminates pursuant to
Section 8.01(h) (except as referred to in Section 8.02 (e)(i)) then Galen shall
pay to Warner such additional amount if any as, when added to the sum referred
to in Section 8.02(e)(i) shall be equal to the Termination Fee.
(f) If both parties are entitled to terminate this Agreement
in accordance with Section 8.01(g) or (j) (as applicable) then, notwithstanding
any provision of this Section 8.02, neither party will be obligated to pay any
of the expenses of the other party or the Termination Fee.
(g) The parties acknowledge that the agreements contained in
Sections 8.02(c), (d) and (e) hereof are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Galen, on
the one hand, and Warner, on the other, would not enter into this Agreement.
Accordingly, if a party fails promptly to pay the amounts due pursuant to this
Section 8.02, (i) the party failing so to pay shall pay interest on such amounts
at the prime rate announced by the Chase Manhattan Bank, in effect on the date
the Termination Fee (or fees and expenses) were due to be paid in accordance
with this Agreement, and (ii) if in order to obtain such payment a party
commences a suit or takes other action which results in a judgment or other
binding determination against such party for the fees and expenses in Sections
8.02(c) or 8.02(e) hereof or the Termination Fee, the non-paying party shall
also pay to the party entitled to receive payment thereunder (as the case may
be) its costs and expenses (including reasonable attorneys' fees) in connection
with such suit, together with interest payable under the preceding clause (i).
SECTION 8.03 Amendment. This Agreement may not be amended except by
an instrument in writing signed on behalf of all the parties.
SECTION 8.04 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto may (i) extend the time for the performance of any of
the obligations or other acts of any other party hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein by any other
party or in any document, certificate or writing delivered pursuant hereto by
any other party or (iii) waive compliance with any of the agreements of any
other party or with any conditions to its own obligations. Any agreement on the
part of any party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on
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<PAGE> 54
behalf of such party.
ARTICLE IX -- MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement, or past breaches thereof,
shall not survive beyond the Effective Time. Notwithstanding the foregoing, the
covenants set forth herein shall survive the Effective Time indefinitely (except
to the extent a shorter period of time is explicitly specified therein).
SECTION 9.02 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the
instruments referred to herein) and the confidentiality agreements entered into
by the parties prior to the date of this Agreement, constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof and
thereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
SECTION 9.03 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
SECTION 9.04 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, by overnight courier or facsimile to
the respective parties as follows:
If to Galen: Galen Holdings Plc
Seagoe Industrial Estate
Craigavon
Northern Ireland
BT63 5UA
Attention: Company Secretary
Fax: 00 44 1762-331-500
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<PAGE> 55
with copies to: Ashurst Morris Crisp
Broadwalk House
5 Appold Street
London EC2A 2HA
Attention: Steven Fox
Fax: 00 44-207-972-7990
and: Latham & Watkins
99 Bishopsgate
London EC2M 3XF
Attention: Mark Stegemoeller
Fax: 00 44-207-374-4460
If to Warner: Warner Chilcott, PLC
Rockaway
NJ 07868
USA
Attention: General Counsel
Fax: 001-973-442-3316
with a copy to: Kirkland & Ellis
153 East 53rd Street
New York
NY 10022-4675
Attention: Frederick Tanne
Fax: 001-212-446-4900
and Macfarlanes
10 Norwich Street
London EC4A 1BD
Attention: Mary Leth
Fax: 00 44-207-831-9607
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, regardless of
the laws that
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<PAGE> 56
might otherwise govern under applicable principles of conflicts of laws thereof
or otherwise.
SECTION 9.06 Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 9.07 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 9.08 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and, except with
respect to Sections 6.06 and 6.07 nothing in this Agreement, express or implied,
is intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
SECTION 9.09 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
ARTICLE X -- DEFINITIONS
SECTION 10.01 Certain Definitions. As used in this Agreement unless
the context requires otherwise:
"ADRs" shall mean American Depositary Receipts.
"Affiliate", as applied to any person, shall mean any other person
directly or indirectly controlling, controlled by, or under common control with,
that person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that person, whether through the ownership of voting securities, by
contract or otherwise.
"Acquisition" has the meaning given thereto in the preamble hereof.
"Agreement" has the meaning given thereto in the preamble hereof.
"Amendments" has the meaning given thereto in the preamble hereof.
"Antitrust Laws" has the meaning given thereto in Section 6.05(b)
hereof.
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<PAGE> 57
"Business Day" means any day other than a Saturday, Sunday or public
holiday in New York or the United Kingdom.
"Capital Reduction" has the meaning given thereto in Section
1.01(b).
"Code" has the meaning given thereto in the preamble hereof.
"Competing Transaction" has the meaning given thereto in Section
6.10(a) hereof.
"Confidentiality Agreement" has the meaning given thereto in Section
9.02(a) hereof.
"Court" has the meaning given thereto in the preamble hereof.
"Court Meeting" has the meaning given thereto in Section 1.01(b)
hereof.
"CSFB" has the meaning given thereto in Section 1.01(d) hereof.
"Depositary" has the meaning given thereto in the preamble hereof.
"Effective Date" has the meaning given thereto in the Scheme.
"Effective Time" has the meaning given thereto in the Scheme.
"Employee Arrangements" has the meaning given thereto in Section
6.07 hereof.
"Employment Agreements" means employment agreements and option
rollover agreements between Galen or one of its Subsidiaries and each of (i)
Roger M. Boissonneault and (ii) Paul Herendeen, together with a severance
agreement between Mr Andress and Warner or one of its subsidiaries in respect of
Mr Andress's current employment contract with Warner;
"Environmental Laws" has the meaning given thereto in Section 4.15
hereof.
"ERISA" has the meaning given thereto in Section 4.12(a) hereof.
"ERISA Affiliate" has the meaning given thereto in Section 4.12(d)
hereof.
"Exchange Act" has the meaning given thereto in Section 1.02(b)
hereof.
"FDA" has the meaning given thereto in Section 4.21 hereof.
"Final Court Order" has the meaning given thereto in Section 1.01(e)
hereof.
"Galen" has the meaning given thereto in the preamble hereof.
"Galen ADSs" has the meaning given thereto in the preamble hereof.
"Galen Board" has the meaning given thereto in Section 1.02(e)
hereof.
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<PAGE> 58
"Galen Board Recommendation" has the meaning given thereto in
Section 1.02(d) hereof.
"Galen Disclosure Letter" has the meaning given thereto in Article V
hereof.
"Galen Leases" has the meaning given thereto in Section 5.18(b)
hereof.
"Galen Material Contracts" has the meaning given thereto in Section
5.19 hereof.
"Galen Meeting" has the meaning given thereto in Section 1.02(c)
hereof.
"Galen Memorandum and Articles" has the meaning given thereto in
Section 5.01(a) hereof.
"Galen Owned Property" has the meaning given thereto in Section
5.18(a) hereof.
"Galen Permits" has the meaning given thereto in Section 5.08
hereof.
"Galen Public Documents" has the meaning given thereto in Section
5.05 hereof.
"Galen Representatives" has the meaning given thereto in Section
6.03 hereof.
"Galen Shareholders" has the meaning given thereto in Section
1.02(c) hereof.
"Galen Shares" has the meaning given thereto in the preamble hereof.
"Galen Shareholder Agreement" has the meaning given thereto in the
preamble hereof.
"Galen Shareholder Approval" has the meaning given thereto in
Section 1.02(c) hereof.
"Galen Stock Plans" has the meaning given thereto in Section 5.02(a)
hereof.
"Governmental Entity" has the meaning given thereto in Section 4.04
hereof.
"HSR Act" has the meaning given thereto in Section 4.04 hereof.
"Indemnified Parties" has the meaning given thereto in Section
6.08(a) hereof.
"Intellectual Property Rights" has the meaning given thereto in
Section 4.14 hereof.
"Ireland" unless preceded by the word "Northern" means the Republic
of Ireland and "Irish" shall be construed accordingly.
"Irish Companies Act" has the meaning given thereto in the preamble
hereof.
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<PAGE> 59
"Irish Law" has the meaning given thereto in the preamble hereof.
"IRS" means the US Internal Revenue Service.
"ISE" means the Irish Stock Exchange.
"Knowledge of Galen" has the meaning given thereto in Section 5.08
hereof.
"Knowledge of Warner" has the meaning given thereto in Section 4.08
hereof.
"Laws" has the meaning given thereto in Section 4.21 hereof.
"Liens" means liens, security interests, options, rights of first
refusal, easements, mortgages, charges, pledges, deeds of trust, rights-of-way,
restrictions, encroachments, licenses, leases, permits, security agreements, or
any other encumbrances, restrictions or limitations on the use of real or
personal property, whether or not they constitute specific or floating charges.
"Listing Particulars" has the meaning given thereto in Section
1.02(c) hereof.
"Listing Rules" has the meaning given thereto in Section 1.02(c)
hereof.
"LSE" has the meaning given thereto in Section 1.01(a) hereof.
"Material Adverse Effect" has the meaning given thereto in Section
4.01(a) hereof.
"Material Agreement" has the meaning given thereto in Section
4.03(b) hereof.
"Mergers Act" has the meaning given thereto in Section 7.01(d)
hereof.
"Nasdaq" has the meaning given thereto in Section 1.01(a) hereof.
"Notes" has the meaning given thereto in Section 6.12(c).
"Option" has the meaning given thereto in Section 3.01 hereof.
"Outside Date" has the meaning given thereto in Section 7.01.
"Pension Plan" has the meaning given thereto in Section 4.12(d)
hereof.
"Period of First Refusal" has the meaning given thereto in Section
6.10(d).
"Permits" has the meaning given thereto in Section 4.08 hereof.
"Permitted Liens" has the meaning given thereto in Section 4.19(a)
hereof.
"Per Share Consideration" has the meaning given thereto in the
preamble hereof.
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"Person" or "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act ).
"Petition" has the meaning given thereto in Section 1.01(e) hereof.
"Proxy Statement" has the meaning given thereto in Section 1.01 (b)
hereof.
"PS/P" has the meaning given thereto in Section 1.01(g) hereof.
"Refusal Notice" has the meaning given thereto in Section 6.10(d).
"Registration Statement" has the meaning given thereto in Section
1.02(b) hereof.
"Restraints" has the meaning given thereto in Section 7.01(a)
hereof.
"Scheme" has the meaning given thereto in the preamble hereof.
"Scheme Shareholders" shall mean the registered holders of the
Scheme Shares as at the Scheme Record Time (and in relation to any time after
the Effective Time, the persons who were the registered holders of the Scheme
Shares as at such time, notwithstanding the cancellation of the Scheme Shares).
"Scheme Shares" has the meaning given thereto in the Scheme.
"SEC" has the meaning given thereto in Section 1.01(a) hereof.
"Section 201" has the meaning given thereto in Section 1.01(e)
hereof.
"Securities Act" shall mean the U.S. Securities Act of 1933.
"State and Foreign Approvals" has the meaning given thereto in
Section 4.04 hereof.
"Subsidiary" or "Subsidiaries" has the meaning given thereto in
Section 4.01 hereof.
"Substitute Option" has the meaning given thereto in Section 3.01
hereof.
"Superior Proposal" has the meaning given thereto in Section
6.10(c).
"Takeover Statute" has the meaning given thereto in Section 6.12(a).
"Taxes" mean any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property,
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<PAGE> 61
personal property, sales, use, transfer, registration, value added, alternative
or add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest penalty, or addition thereto, whether disputed or not.
"Tax Return" has the meaning given thereto in Section 4.09 hereof.
"Termination Fee" has the meaning given thereto in Section 8.02(d)
hereof.
"Transactions" has the meaning given thereto in the preamble hereof.
"U.K. GAAP" has the meaning given thereto in Section 5.05 hereof.
"U.K. Listing Authority" or "UKLA" has the meaning given thereto in
Section 1.02(c) hereof.
"U.S. GAAP" has the meaning given thereto in Section 4.05 hereof.
"Warrants" means the warrants to buy Warner Shares listed in Section
4.02(a) of the Warner Disclosure Letter.
"Warner" has the meaning given thereto in the preamble hereof.
"Warner ADSs" has the meaning given thereto in the preamble hereof.
"Warner Board" has the meaning given thereto in Section 1.01(d)
hereof.
"Warner Board Recommendation" has the meaning given thereto in
Section 1.01(d) hereof.
"Warner Deferred Shares" has the meaning given thereto in Section
4.02(a) hereof.
"Warner Disclosure Letter" has the meaning given thereto in Article
IV hereof.
"Warner EGM" has the meaning given thereto in Section 1.01(b)
hereof.
"Warner EGM Resolution" has the meaning given thereto in Section
1.01(b) hereof.
"Warner Ex-U.S. Pension Plan" has the meaning given thereto in
Section 4.12(e) hereof.
"Warner Leased Property" has the meaning given thereto in Section
4.19(b) hereof.
"Warner Leases" has the meaning given thereto in Section 4.19(b)
hereof.
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"Warner Material Contracts" has the meaning given thereto in Section
4.20 hereof.
"Warner Memorandum and Articles" has the meaning given thereto in
Section 4.01(a) hereof.
"Warner Multiemployer Plan" has the meaning given thereto in Section
4.12(d) hereof.
"Warner Option Plan" has the meaning given thereto in Section
4.02(a) hereof.
"Warner Owned Property" has the meaning given thereto in Section
4.19(a) hereof.
"Warner Permits" has the meaning given thereto in Section 4.08
hereof.
"Warner Plan" has the meaning given thereto in Section 4.12(d)
hereof.
"Warner Real Property" has the meaning given thereto in Section
4.19(b) hereof.
"Warner Representatives" has the meaning given thereto in Section
6.03(a) hereof.
"Warner SEC Documents" has the meaning given thereto in Section 4.05
hereof.
"Warner Shareholders" means holders of Warner Shares.
"Warner Shares" has the meaning given thereto in the preamble
hereof.
"Warner Stock Options" has the meaning given thereto in Section 4.02
hereof.
"Welfare Plans" has the meaning given thereto in Section 4.12(d)
hereof.
"Wholly-owned Subsidiary" has the meaning given thereto in Section
4.01(a) hereof.
"Worker Safety Laws" has the meaning given thereto in Section 4.15
hereof.
* * * * *
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its respective officer thereunto duly authorized,
all as of the day and year first above written.
GALEN HOLDINGS, PLC
By: /s/ John King
---------------------------------------
Name: Dr. John King
Title: CEO
WARNER PUBLIC LIMITED COMPANY
By: /s/ Roger M. Boissonneault
---------------------------------------
Name: Roger M. Boissonneault
Title: COO
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DRAFT: 4 MAY 2000 EXHIBIT 2.2
THE HIGH COURT
2000 NO. COS
IN THE MATTER OF WARNER CHILCOTT PUBLIC LIMITED COMPANY
AND
IN THE MATTER OF THE COMPANIES ACT, 1963
--------------------
SCHEME OF ARRANGEMENT
(UNDER SECTION 201 OF THE COMPANIES ACT, 1963)
BETWEEN
WARNER CHILCOTT PUBLIC LIMITED COMPANY
AND
THE HOLDERS OF WARNER ORDINARY SHARES
(OTHER THAN GALEN-HELD WARNER ORDINARY SHARES) AND WARNER DEFERRED SHARES
(EACH AS HEREINAFTER DEFINED)
Preliminary
(A) In this Scheme, unless inconsistent with the subject or context, the
following expressions bear the following meanings:
"BUSINESS DAY" a day (other than a Saturday or Sunday) on which
banks are open for business in Dublin, London and
New York;
"COURT" the High Court of Ireland;
"COURT MEETING" the meeting of holders of Warner Ordinary Shares
(other than holders of Galen-held Warner Ordinary
Shares) convened by
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direction of the Court pursuant to section 201
of the Companies Act, 1963, including any
adjournment thereof;
"EFFECTIVE DATE" the date on which the Scheme becomes effective in
accordance with its terms;
"EFFECTIVE TIME" the time on the Effective Date at which the Scheme
becomes effective in accordance with its terms;
"GALEN" Galen Holdings Public Limited Company, a public
limited company incorporated in Northern Ireland on
23 August 1991 under the Companies (Northern
Ireland) Order 1986 (as amended), with
registered number 25836 ;
"GALEN SHARES" ordinary shares of 10p each in the capital of
Galen;
"GALEN-HELD Warner Ordinary Shares held by or on behalf
WARNER SHARES" of Galen or any subsidiary undertaking of Galen;
"HEARING DATE" the date on which the Order is made;
"HOLDER" a registered holder and includes any person(s)
entitled by transmission;
"IRELAND" the Republic of Ireland;
"NEW GALEN the meaning given to that expression in
SHARES" Clause 2(A);
"NEW WARNER the meaning given to that expression in
SHARES" Clause 1(B)(i);
"ORDER" the order of the Court sanctioning the Scheme under
section 201 of the Companies Act, 1963;
"PER SHARE the meaning given to that expression in
CONSIDERATION" Clause 2(A);
"RELEVANT HOLDERS" holders of Scheme Shares whose names appear in the
register of members of Warner at the Scheme Record
Time;
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<PAGE> 66
"SCHEME" this scheme in its present form or with or subject
to any modification, addition or condition approved
or imposed by the Court;
"SCHEME DEFERRED Warner Deferred Shares which constitute
SHARE" Scheme Shares;
"SCHEME ORDINARY Warner Ordinary Shares which constitute
SHARES" Scheme Shares;
"SCHEME RECORD 5.00 p.m. on the business day immediately
TIME" preceding the Effective Date;
"SCHEME SHARES" (i) the Warner Ordinary Shares (excluding any
Galen-held Warner Ordinary Shares) and the
Warner Deferred Shares in issue at the date
of this document; and
(ii) any Warner Ordinary Shares (excluding any
Galen-held Warner Ordinary Shares) issued
after the date of this document and prior to
the commencement of the Court Meeting or
issued after the commencement of the Court
Meeting and prior to 5.00 p.m. on the day
before the Hearing Date on terms that the
original or any subsequent holder thereof
shall be bound by the Scheme;
"SUBSIDIARY a subsidiary undertaking as that term is
UNDERTAKING" defined in Regulation 4 of the European Communities
(Companies: Group Accounts) Regulations, 1992;
"UNITED KINGDOM" the United Kingdom of Great Britain and Northern
Ireland;
"UNITED STATES" the United States of America;
"WARNER" Warner Chilcott Public Limited Company, a public
limited company incorporated in the Republic of
Ireland on 7 July 1992 under the Companies Acts,
1963 to 1990, with registered number 191050;
"WARNER DEFERRED deferred shares of IRPound Sterling1 each in
SHARES" the capital of Warner;
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"WARNER ORDINARY ordinary shares of $0.05 each in the capital
SHARES" of Warner;
"$" United States dollars;
"POUND STERLING"
AND "P" pounds and pence sterling;
"IR POUND STERLING"
AND "IR" Irish pounds and pence.
(B) The authorised share capital of Warner is US$2,500,000 and IRPound
Sterling30,000 divided into 50,000,000 Warner Ordinary Shares and
30,000 Warner Deferred Shares of which as at close of business on
2000 (the last practicable date before publication of this
document) Warner Ordinary Shares and 30,000 Warner Deferred
Shares were in issue and were fully paid or credited as fully paid
and the remainder of the Warner Ordinary Shares were unissued.
(C) The authorised share capital of Galen is Pound Sterling 17,000,000
divided into 170,000,000 Galen Shares of which as at close of
business on 2000 (the last practicable date before publication
of this document) Galen Shares were in issue and were fully paid
or credited as fully paid and the remainder of the Galen Shares were
unissued.
(D) Galen holds one Warner Ordinary Share and no Warner Deferred Shares.
(E) The holders of the 30,000 issued Warner Deferred Shares have agreed to
be bound by the Scheme.
(F) James Andress, Roger M. Boissonneault and Paul Herendeen (the
"Excluded Officers"), being officers of Warner, have beneficial
interests in , and Warner Ordinary Shares respectively;
and each of the Excluded Officers has agreed to procure that the
voting rights attaching to the Warner Ordinary Shares in which he or
she has an interest will not be exercised at the Court Meeting and
that such shares shall not be represented at that meeting and has
further agreed in respect of those shares that, subject to the
Scheme becoming effective as described in Clause 5(A), he or she
will be bound by the Scheme and he or she will execute and do or
procure to be executed and done all such documents, acts and things
as may be necessary to be executed or done by him or her for the
purpose of giving effect to the Scheme.
(G) Galen has agreed to appear by Counsel on the hearing of the petition
to sanction the Scheme and to undertake to the Court that, subject
to the Scheme having become effective, it will be bound thereby and
will execute and do or procure to be executed and done all such
documents, acts and things as may be necessary or desirable to be
executed or done by it for the purpose of giving effect to the
Scheme.
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THE SCHEME
1. CANCELLATION OF SCHEME SHARES
(A) At the Effective Time, the share capital of Warner shall be reduced b
the cancellation and extinguishment of the Scheme Shares.
(B) Forthwith and contingently upon the reduction of capital referred to
in Clause 1(A) taking effect:
(i) the share capital of Warner shall be increased to its former
amount by the creation of such number of new Warner
Ordinary Shares and new Warner Deferred Shares (collectively
"New Warner Shares") as shall be requisite so to do, such
New Warner Shares to confer the same respective rights
and be subject to the same respective restrictions as the
Scheme Shares of the same class; and
(ii) Warner shall apply the reserve arising as a result of such
reduction of capital in paying up in full the New Warner
Shares which shall be allotted and issued credited as fully
paid to Galen and/or its nominee(s).
2. CONSIDERATION FOR THE CANCELLATION OF SCHEME SHARES
(A) In consideration for the cancellation of the Scheme Shares, Galen
shall allot and issue new Galen Shares credited as fully paid ("New
Galen Shares") to and amongst the Relevant Holders of Scheme Shares on
the following basis:
(i) for each Scheme 2.5 New Galen Shares
Ordinary Share (the" PER SHARE CONSIDERATION");
provided that no fractional New Galen Shares shall be issued to any
such Relevant Holder of Scheme Ordinary Shares and if but for this
provision any such Relevant Holder would be entitled to a fractional
New Galen Share such fractional entitlement shall be rounded down to a
whole share which shall be allotted and issued to such Relevant
Holder; and
(ii) for all the Scheme one New Galen Share
Deferred Shares which shall be allotted and issued
to the holders of the Scheme
Deferred Shares
jointly;
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(B) If, between 4 May 2000 and the Effective Time, Galen Shares
shall be changed into a different number of hares or a different
class of shares by reason of any reclassification, consolidation,
subdivision or cancellation or if a capitalization issue of shares
to the holders of Galen Shares shall be declared with a record date
within such period (in any such case a "Galen Share Adjustment"),
then the Per Share Consideration shall be adjusted appropriately so
as to maintain the respective proportional interests of holders of
Scheme Ordinary Shares in the outstanding Galen Shares in effect
immediately prior to the Galen Share Adjustment.
(C) If, between 4 May 2000 and the Effective Time, the Warner
Ordinary Shares shall be changed into a different number of shares
or a different class of shares by reason of any reclassification,
consolidation, subdivision or cancellation (other than the
cancellation contemplated by Clause 1) or if a capitalization issue
of shares to the holders of Warner Ordinary Shares (other than the
issue of New Warner contemplated by Clause 1 (B)(ii)) shall be
declared with a record date within such period (in any such case a
"Warner Share Adjustment"), then the Per Share Consideration shall
be adjusted appropriately so as to maintain the proportional
interests of holders of Scheme Ordinary Shares in the outstanding
Galen Shares in effect immediately prior to the Warner Share
Adjustment.
3. ALLOTMENT AND ISSUE OF NEW GALEN SHARES
(A) The New Galen Shares shall rank pari passu with all ther Galen
Shares in issue on the Effective Date and shall rank for all
dividends or distributions made, paid or declared thereon by
reference to a record date following the Effective Date.
(B) Immediately after the Scheme becomes effective, Galen shall make
all such allotments of and shall issue such New Galen Shares as
are required to be issued by it to give effect to the Scheme to
the persons respectively entitled thereto. The New Galen Shares to
which the Relevant Holders are entitled shall be issued in
certificated form and, provided that such shares are still held in
certificated form immediately prior to the dispatch of such
certificates, share certificates for those shares shall be
dispatched, shall be within 14 days of the Effective Date.
(C) All deliveries of notices and documents of title required to be
made by the Scheme shall be effected by posting the same in
pre-paid envelopes addressed to the persons respectively entitled
thereto at their respective addresses as appearing in the relevant
register of members (or, in the case of joint holders, to the
ddress of that one of the joint holders whose name stands first in
the said register of members in respect of the joint
6
<PAGE> 70
holding) immediately prior to the date of their dispatch or to
such other addresses (if any) as such persons may respectively
direct in writing.
(D) Neither Warner nor Galen shall be responsible for any loss or
delay in the transmission of the documents of title posted in
accordance with Clause 3(C) which shall be posted at the risk of
the addressee.
(E) Prior to the issue of share certificates representing New Galen
Shares to Relevant Holders pursuant to Clause 3(B), such Relevant
Holders wishing to register fers of the New Galen Shares issued
to them pursuant to the Scheme will be required to produce their
existing certificates representing Scheme Shares to Galen's
registrar. After the issue of such certificates senting New Galen
Shares, every Relevant Holder who t already produced his or her
existing certificates to Galen's registrar shall be bound on the
request of Warner to deliver up to Warner, or to any .person
appointed by Warner to receive the same, the xisting certificate
(s) for his or ] her Scheme Shares, which will have ceased to be
of value, for cancellation.
(F) All New Galen Shares issued upon cancellation of the
Scheme Shares in accordance with Clause 2 shall be deemed to have
been issued in full satisfaction of all rights pertaining to such
Scheme Shares.
(G) Neither Galen nor Warner shall be liable to any Relevant
Holder for any New Galen Shares or cash delivered to a public
official in compliance with any law permitting attachment of money
or property or similar law.
4. PAYMENT MANDATES
Each mandate in force at the Effective Time relating to the payment of
dividends on any Scheme Shares and other instructions given to Warner by
holders of Warner Ordinary Shares shall, unless and until revoked, be
deemed as from the Effective Time to be an effective mandate or
instruction to Galen in relation to the corresponding of New Galen Shares
to be allotted and issued pursuant to the Scheme.
5. OPERATION OF THE SCHEME
(A) The Scheme shall become effective as soon as an office
copy of the Order shall have been duly delivered by Warner to the
Registrar of Companies in Ireland for registration and an office
copy of the order of the Court under section 74 of the Companies
Act, 1963 confirming the reduction of capital provided for by the
Scheme and a copy of the minute required
7
<PAGE> 71
by section 75 of that Act shall have been duly delivered by Warner
to the Registrar of Companies for registration and registered by
him.
(B) Unless the Scheme shall become effective on or before 29
December 2000 or such later date, if any, as Warner and Galen may
agree and Court may allow, the Scheme shall never become
effective.
(C) Warner and Galen may but neither shall be required to
consent jointly on behalf of all persons concerned to any
modification of or addition to the Scheme or to any condition
which the Court may approve or impose.
6. COSTS
Warner is authorised and permitted to pay all of its costs and expenses
relating to the negotiation, preparation and implementation of the
Scheme.
2000
8
<PAGE> 1
[WARNER CHILCOTT LETTERHEAD]
NEWS RELEASE
Dublin, Ireland May 4, 2000
Rockaway, NJ
GALEN HOLDINGS PLC TO ACQUIRE WARNER CHILCOTT PLC
NASDAQ LISTING OF GALEN
BUILDING AN INTERNATIONAL SPECIALTY PHARMACEUTICAL PRODUCTS AND SERVICES
BUSINESS
May 4, 2000...The Boards of Warner Chilcott (Nasdaq:WCRX) and Galen (LSE:GAL)
announce today that they have entered into an agreement (the "Transaction
Agreement") under which Warner Chilcott will become a wholly owned subsidiary of
Galen. The acquisition is to be effected by way of a scheme of arrangement to be
proposed to Warner Chilcott shareholders (the "Scheme"). The Scheme is subject
to sanction by the High Court of Ireland.
Under the Transaction Agreement, Galen proposes to issue 2.5 new Galen shares
for each Warner Chilcott share (equivalent to 2.5 Galen shares for each Warner
Chilcott ADS) pursuant to the terms of the Scheme. The proposed acquisition of
Warner Chilcott in consideration for new Galen shares (the "Transaction") is
expected to be tax free to Warner Chilcott's US, UK and Republic of Ireland
shareholders and ADS holders.
Galen will seek the listing of the new Galen shares on Nasdaq in American
Depositary Share ("ADS") form.
Based on the closing mid-market price per Galen share of 612.5p ($9.58) on May
3, 2000, the terms of the Transaction value each Warner Chilcott share at $23.94
(1,531.3p) and the total current issued share capital of Warner Chilcott at
approximately $296.5 million ((pound sterling) 189.6 million) (or $406.3 million
((pound sterling) 259.9 million) on a fully diluted basis). The terms of the
Transaction represent a premium of 33.0 % over the closing price of $18.00 per
Warner Chilcott ADS on Nasdaq on May 3, 2000 and a premium of 57.0 % over the
average closing price of a Warner Chilcott ADS for the last 30 business days
ended 3rd May, 2000.
The scheme will require the approval of Warner Chilcott shareholders. Due to the
size of the Transaction, Galen will seek the approval of its shareholders at an
EGM. Subject to appropriate regulatory clearances in the US, Republic of Ireland
and UK, it is currently the intention of Warner Chilcott and Galen to send the
relevant documentation to their respective shareholders in July 2000. The Scheme
is currently expected to become effective and the Transaction to complete by the
end of August 2000.
Credit Suisse First Boston served as financial adviser to Warner Chilcott in
this transaction and Merrill Lynch served as financial adviser to Galen. Hoare
Govett Limited are sole UK and European broker to Galen, Goodbody Stockbrokers
are broker to Galen in Ireland and Merrill Lynch are broker to Galen in the US.
<PAGE> 2
Merger Will Create a Fully Integrated, International Pharmaceutical Company
The Transaction will create a significant international specialty pharmaceutical
products and services group with combined pro forma revenues of $233.2 million
((pound sterling) 143.1 million), with a sales force of approximately 260
servicing the US and approximately 65 servicing the UK and Ireland. Based on the
closing mid-market price per Galen share of (pound sterling) 612.5p ($9.58) on
May 3, 2000, the pro forma combined market capitalization of the combined group
would be approximately $1.5 billion ((pound sterling) 969.1 million).
Major benefits of the combination include:
- Strengthened women's healthcare portfolio. The combined entity will
benefit from the combination of Galen's pipeline of proprietary
women's healthcare products and Warner Chilcott's women's healthcare
focused sales and marketing organization in the US. In particular, the
transaction will enable Galen both to commercialize its intravaginal
ring drug delivery system ("IVR"), and, by retaining the distribution
margin, to achieve a greater economic stake in any future success of
products using the IVR platform technology. The strength of Warner
Chilcott's US sales and marketing organization will be improved by
Galen's pipeline of proprietary products, enhanced product development
capability and current GMP (good manufacturing practice) manufacturing
capacity.
- Greater opportunities for growth and acquisitions. With its greater
scale and profitability, the combined entity expects to pursue
acquisitions both in the UK and the US as well as to seek selective
in-licensing opportunities from the pharmaceutical industry.
- An international management team with extensive pharmaceutical
expertise. The executive management of the combined entity, which will
be continue to be called Galen Holdings PLC, will consist of two
members each from Galen and Warner Chilcott. Dr. John King will be
Chairman of the Board, Roger Boissonneault will be Chief Executive
Officer, Geoffrey Elliott will be Chief Financial Officer and Paul
Herendeen will be Executive Vice President and Director of Business
Development. All four executives will serve on the Board of Directors.
- Increased investor profile and enhanced liquidity. The combined entity
will have listings in London, Dublin and Nasdaq and will offer
investors an opportunity to invest in a larger company with a growing
international presence and geographical reach.
Commenting, Roger Boissonneault, President and Chief Operating Officer of Warner
Chilcott, said:
"The most exciting element of this transaction is the opportunity to combine the
complementary strengths of our management teams. With the scale to be
competitive in segments of both the UK and the US markets we will have access to
a broad range of initiatives and the strength to capitalize on those we choose
to pursue. Warner Chilcott's Board of Directors is unanimous in its support for
the Offer and believes that it is in the best interests of Warner Chilcott
shareholders, customers and employees. Our entire senior management team is
looking forward to developing the business as a combined entity."
Commenting on the Offer, Dr. John King, Chief Executive Officer of Galen, said:
"This transaction is a major step in internationalizing the Galen business and
provides Galen with immediate product marketing and distribution strength in the
US, the world's largest pharmaceutical market. The combination will allow us to
geographically expand the distribution of our women's healthcare portfolio,
including our IVR product, within Galen without having to give away value from
out-licensing deals. The enlarged group will have a larger therapeutic and
geographic base with significant combined sales forces in the US, UK and Ireland
providing a strong platform to take the enlarged business forward."
<PAGE> 3
Galen Holdings, PLC
Galen is an integrated pharmaceutical company, based in Northern Ireland. The
company was founded in 1968 and was listed on the London Stock Exchange in 1997.
Galen develops and manufactures branded prescription pharmaceutical products,
which are promoted by its 65 person sales and marketing organisation in the
United Kingdom and Ireland. Galen's Ethical Pharmaceutical Services division
supplies and distributes clinical trial materials internationally, operates a
drug reconciliation business and uses computer-based interactive voice response
systems to permit the more efficient management of the clinical trial process.
The Services division also provides a 'bench-to-pilot-scale' specialist chemical
synthesis service for the research-based pharmaceutical industry through its
SynGal and QuChem units. In 1997, Galen opened its first pharmaceutical services
facility in the United States to meet the needs of a global marketplace.
Galen's research and development activity focuses on the development of
proprietary drug delivery applications and technologies. Galen has a solid
pipeline of proprietary products in development for the women's healthcare
market including an intravaginal ring drug delivery system (IVR) that is
designed to deliver a consistent dose of a wide range of medicines over extended
periods of time.
The company has lodged its first marketing authorization application in the UK,
for the estradiol-based IVR for hormone replacement therapy (HRT), and
anticipates the UK launch of the product during the second half of 2000, with
the European launch expected to follow in late 2001. Galen is also targeting a
US NDA application for late 2000. A phase III trial for the estradiol/progestin
IVR for continuous combined HRT is planned for the current financial year, with
anticipated marketing authorization applications in the US and UK during 2002,
with Europe one year later. Galen has also developed proprietary topical drug
delivery technology based on the improved skin penetrating properties of
eutectic mixtures of pharmacologically active agents.
Galen has an impressive track record of profitable growth generated both
organically and through acquisition. Since 1995 revenues have nearly tripled
from (pound sterling) 23.3 million to (pound sterling) 67.0 million ($36.9
million to $109.2 million) while profit before taxation and exceptional items
increased five-fold from (pound sterling) 3.6 million to (pound sterling) 18.4
million ($5.7 million to $30.0 million).
Warner Chilcott, PLC
Warner Chilcott develops and markets branded prescription pharmaceutical
products in the United States, primarily focused on the women's health
therapeutic category. The company was formed in 1992 and its shares became
publicly traded in ADS form on Nasdaq in 1997. Through its national US sales
force of approximately 260 representatives, Warner Chilcott markets branded
pharmaceutical products directly to physician specialists across the US,
particularly obstetrician/gynecologists and urologists. The Company's principal
offices are in Dublin, Ireland and Rockaway, New Jersey. On February 15, 2000,
Warner Chilcott acquired three women's healthcare products from Bristol-Myers
Squibb for a total consideration of $175.1 million. The acquired brands, which
generated nearly $50 million in revenues during 1999, are Estrace(R) vaginal
cream, an estrogen replacement therapy product, and two oral contraceptives,
Ovcon(R) 35 and Ovcon(R) 50.
On a pro forma basis after giving effect to the recent acquisition of the three
branded pharmaceutical products from Bristol-Myers Squibb and the financing
thereof, Warner Chilcott would have had, on a US GAAP basis, total revenues and
income before taxes for the twelve months ended December 31, 1999 of $124.0
million ((pound sterling) 76.1 million) and $4.8 million ((pound sterling) 3.0
million), respectively and would have had net assets as at December 31, 1999 of
$98.3 million ((pound sterling) 60.3 million).
<PAGE> 4
Recommendations
The Directors of Warner Chilcott, who have been so advised by CSFB, consider the
Transaction to be fair to Warner Chilcott shareholders from a financial point of
view. In providing advice to the Directors, CSFB has taken into account the
commercial assessments of the Directors. The Directors of Warner Chilcott intend
unanimously to recommend Warner Chilcott shareholders to vote in favor of the
resolutions necessary to implement the Scheme and related transactions.
The Directors of Galen, who have been advised by Merrill Lynch, Galen's
financial adviser, consider the terms of the Transaction to be fair and
reasonable. In providing its advice, Merrill Lynch has relied on the Directors'
commercial assessments. Additionally, the Directors believe the transaction to
be in the best interests of the Shareholders as a whole and, accordingly,
unanimously recommend Shareholders to vote in favour of the resolution(s) to be
proposed at the extraordinary general meeting of Galen, as they intend to do in
respect of their own beneficial holdings of, in aggregate, 68.0 million Galen
Shares, representing approximately 53.4 per cent of Galen's existing issued
share capital. Dr. Allen McClay, Dr. John King and Geoffrey Elliott, whose
aggregate interests represent 53.1 per cent of the Galen shares in issue, have
given indicative undertakings to Warner Chilcott that they will vote in favour
of the resolution to be proposed to approve the Transaction.
Investors and security holders are advised to read the proxy statement and such
other documents that may be distributed by Galen and Warner Chilcott
("Shareholder Documentation") regarding the business combination transaction
referenced in the foregoing information, when it becomes available, because it
will contain important information. The Shareholder Documentation will be filed
with the Securities and Exchange Commission by Galen and Warner Chilcott.
Investors and security holders may obtain free copies of the Shareholder
Documentation (when available) and other documents filed by Galen and Warner
Chilcott with the Commission at the Commission's web site at www.sec.gov. The
Shareholder Documentation and such other documents may also be obtained for free
from Warner Chilcott by directing such requests to: Warner Chilcott PLC, 100
Enterprise Drive, Suite 280, Rockaway, New Jersey 07866, USA, Attention:
Investor Relations, telephone: +1 973 442 3200, e-mail: [email protected] or from
Galen by directing such requests to: Galen Holdings PLC, Seagoe Industrial
Estate, Craigavon, Northern Ireland, BT63 5UA, Attention: Investor Relations,
telephone: +44 28 3833 4974, e-mail: [email protected].
Warner Chilcott and its officers and directors may be deemed to be participants
in the solicitation of proxies from shareholders of Warner Chilcott with respect
to the transactions contemplated by the Transaction Agreement. Information
regarding such officers and directors is included in Warner Chilcott's proxy
Statement for its 2000 Annual Meeting of Shareholders filed with the Commission
on April 13, 2000 and its Annual Report on Form 10-K for the year ended December
31, 1999 filed with the commission on March 16, 2000. These documents are
available free of charge at the Commission's web site at http://www.sec.gov and
from Warner Chilcott at the address set forth above.
The securities offered will not be or have not been registered under the US
Securities Act of 1933 and may not be offered or sold in the United States
absent registration or an applicable exception from registration requirements.
This press release contains forward-looking statements which are based on
assumptions and external factors, including assumptions relating to, but not
limited to, the compatibility of the combined businesses, regulatory action,
product pricing, competitive market conditions, unaudited financial data, new
product development and other risks or uncertainties detailed from time to time
in filings with the Securities and Exchange Commission. These forward-looking
statements represent the companies' judgment as of the date of this release and
any changes in the assumptions or external factors could produce significantly
different results.
<PAGE> 5
Contacts:
WARNER CHILCOTT GALEN
Diane M. Cady John King
Sr. Vice President, Investor Relations Geoffrey Elliott
Telephone: (973) 442-3327 or (800) 521-8813 Telephone: +44 207 628 1000 (today
only)
Telephone: +44 28 33 4974
(thereafter)
CSFB MERRILL LYNCH
Financial adviser Financial adviser and sponsor
Stephanie Leouzon/Magnus Scaddan Mark Preston/Michael Frost/Martin
Telephone: +44 207 888 8888 Brass
Telephone: +44 207 628 1000
MERRILL LYNCH
Sole US Broker
Peter Moorhouse/Wayland Austin
Telephone: +44 207 772-1000
HOARE GOVETT LIMITED
Sole UK and European broker
Andrew Chapman/Jim Wight
Telephone: +44 207 678 8000
GALEN FINANCIAL DYNAMICS
Andrew Dowler/Sophie Pender-Cudlip
Telephone: +44 207 831 3113
