RISK FACTORS
You should consider carefully the following risk factors, as well as the other information set forth in and incorporated
by reference into this proxy statement/prospectus, before making a decision on the transaction proposal, the compensation proposal or the adjournment proposal. As a holder of AstraZeneca ADSs or
ordinary shares following completion of the transaction, you will be subject to all risks inherent in the business of AstraZeneca in addition to the risks relating to Alexion. The market value of your
AstraZeneca ADSs or ordinary shares will reflect the performance of the business relative to, among other things, that of the competitors of AstraZeneca and Alexion and general economic, market and
industry conditions. The value of your investment may increase or may decline and could result in a loss. You should carefully consider the following factors as well as the other information contained
in and incorporated by reference into this proxy statement/prospectus. For information about the filings incorporated by reference in this proxy statement/prospectus, see the section entitled "Where
You Can Find Additional Information."
Risks Relating to the Transaction
Because the market value of AstraZeneca ADSs that Alexion stockholders will receive in the transaction may
fluctuate, Alexion stockholders cannot be sure of the market value of the merger consideration that they will receive in the transaction.
As merger consideration, Alexion stockholders will receive (1) $60.00 in cash, without interest and (2) a fixed number of
AstraZeneca ADSs, not a number of shares that will be determined based on a fixed market value. The market value of AstraZeneca ADSs (and the AstraZeneca ordinary shares represented thereby) and the
market value of Alexion common stock at the first effective time may vary significantly from their respective values on the date that the merger agreement was executed or at other dates, such as the
date of this proxy statement/prospectus, the date of the Alexion special meeting or the date of completion of the transaction. Stock price changes may result from a variety of factors, including
changes in AstraZeneca's or Alexion's respective businesses, operations or prospects, regulatory considerations and general business, market, industry or economic conditions. The exchange ratio will
not be adjusted to reflect any changes in the market value of AstraZeneca ADSs (and the AstraZeneca ordinary shares represented thereby), the comparative value of pounds sterling and the U.S. dollar
or market value of the Alexion common stock. Therefore, the aggregate market value of the AstraZeneca ADSs that an Alexion stockholder is entitled to receive at the time that the transaction is
completed could vary significantly from the value of such shares on the date of this proxy statement/prospectus, the date of the Alexion special meeting or the date on which an Alexion stockholder
actually receives its AstraZeneca ADSs.
Upon completion of the transaction, Alexion stockholders will become AstraZeneca ADS holders, and the market
price for AstraZeneca ADSs may be affected by factors different from those that historically have affected Alexion.
Upon completion of the transaction, Alexion stockholders will become AstraZeneca ADS holders or AstraZeneca shareholders. AstraZeneca's
businesses differ from those of Alexion, and accordingly, the results of operations of AstraZeneca will be affected by some factors that are different from those currently affecting the results of
operations of Alexion. For a discussion of the businesses of Alexion and AstraZeneca and of some important factors to consider in connection with those businesses, see the documents incorporated by
reference in this proxy statement/prospectus and referred to in the section entitled "Where You Can Find Additional Information."
Certain rights of Alexion stockholders will change as a result of the transaction.
Upon completion of the transaction, Alexion stockholders will no longer be stockholders of Alexion, a Delaware corporation, but will be
AstraZeneca ADS holders or AstraZeneca shareholders.
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AstraZeneca
is a public limited company incorporated under the laws of England and Wales. There will be certain differences between your current rights as an Alexion stockholder, on the one hand, and
the rights to which you will be entitled as an AstraZeneca ADS holder or AstraZeneca shareholder, on the other hand. For a more detailed discussion of the differences in the rights of Alexion
stockholders and AstraZeneca shareholders, see the section entitled "Comparison of Rights of AstraZeneca Shareholders and Alexion Stockholders."
There is no assurance when or if the transaction will be completed.
The completion of the transaction is subject to the satisfaction or waiver of a number of conditions as set forth in the merger agreement,
including, among others, (i) the adoption of the merger agreement by an affirmative vote of the holders of a majority of all of the outstanding shares of Alexion common stock entitled to vote
at the Alexion special meeting, (ii) affirmative vote of at least a majority of the votes cast by holders of outstanding ordinary shares of AstraZeneca at a duly convened and held meeting of
AstraZeneca's shareholders at which a quorum is present approving the transactions contemplated by the merger agreement, (iii) approval for listing on Nasdaq of the AstraZeneca ADSs (and the
AstraZeneca ordinary shares represented thereby) to be issued in connection with the transaction, subject to official notice of issuance, (iv) acknowledgement by the FCA of the approval of the
application for the admission of AstraZeneca ordinary shares represented by the AstraZeneca ADSs to the premium segment of the official list, (v) acknowledgement by the FCA and the LSE of the
admission of the AstraZeneca ordinary shares represented by the AstraZeneca ADSs to the premium segment of the FCA's official list and to trading on the LSE's main market for listed securities,,
(vi) the expiration or early termination of the applicable waiting period under the HSR Act and the receipt of required approvals or expiration of waiting periods under the antitrust and
foreign investment laws of other certain specified jurisdictions, (vii) the approval by the FCA of the shareholder circular and the distribution thereof to AstraZeneca shareholders in
accordance with the FCA's listing rules and the memorandum and articles of association of AstraZeneca, (viii) the absence of any law, injunction or other order that prohibits or makes illegal
the completion of the transaction, (ix) effectiveness of the registration statement for the AstraZeneca ordinary shares to be issued in the
transaction (of which this proxy statement/prospectus forms a part) and of the registration statement on Form F-6 relating to the AstraZeneca ADSs and the absence of any stop order
suspending that effectiveness or any proceedings for that purpose pending before the SEC and (x) other customary closing conditions, including the accuracy of each party's representations and
warranties (subject to specified materiality qualifiers), and each party's material compliance with its covenants and agreements contained in the merger agreement. There can be no assurance as to when
these conditions will be satisfied or waived, if at all, or that other events will not intervene to delay or result in the failure to complete the transaction.
In order to complete the transaction, AstraZeneca and Alexion must obtain certain governmental approvals, and
if such approvals are not granted or are granted with conditions that become applicable to the parties, completion of the transaction may be delayed, jeopardized or prevented and the anticipated
benefits of the merger could be reduced.
No assurance can be given that the required consents, orders and approvals will be obtained or that the required conditions to the completion of
the transaction will be satisfied. Even if all such consents, orders and approvals are obtained and such conditions are satisfied, no assurance can be given as to the terms, conditions and timing of
such consents, orders and approvals. For example, these consents, orders and approvals may impose conditions on or require divestitures relating to the divisions, operations or assets of Alexion and
AstraZeneca or may impose requirements, limitations or costs or place restrictions on the conduct of Alexion's or AstraZeneca's business, and if such consents, orders and approvals require an extended
period of time to be obtained, such extended period of time could increase the chance that an adverse event occurs with respect to Alexion or AstraZeneca. Such
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extended
period of time also may increase the chance that other adverse effects with respect to Alexion or AstraZeneca could occur, such as the loss of key personnel. Even if all necessary approvals
are obtained, no assurance can be given as to the terms, conditions and timing of such approvals. For more information, see the sections entitled "The Merger
ProposalRegulatory Approvals Required for the Transaction" and "The Merger AgreementConditions to Completion of the
Transaction."
The
Alexion special meeting may take place before all of the required regulatory approvals have been obtained and before all conditions to such approvals, if any, are known.
Notwithstanding the foregoing, if the merger proposal is approved by Alexion stockholders, Alexion may not be required to seek further approval of Alexion stockholders.
The combined company may not realize all of the anticipated benefits of the transaction.
AstraZeneca and Alexion believe that the transaction will provide benefits to the combined company as described elsewhere in this proxy
statement/prospectus. However, there is a risk that some or all of the expected benefits of the transaction may fail to materialize, or may not occur within the time periods anticipated by AstraZeneca
and Alexion. The realization of such benefits may be affected by a number of factors, including regulatory considerations and decisions, many of which are beyond the control of AstraZeneca and
Alexion. The challenge of coordinating previously independent businesses makes evaluating the business and future financial prospects of the combined company following the transaction difficult.
Alexion and AstraZeneca have operated and, until completion of the transaction, will continue to operate, independently. The success of the transaction, including anticipated benefits and cost
savings, will depend, in part, on the ability to successfully integrate the operations of both companies in a manner that results in various benefits, including, among other things, an expanded market
reach and operating efficiencies that do not materially disrupt existing customer relationships nor result in decreased revenues or dividends due to the full or partial loss of customers. The past
financial performance of each of Alexion and AstraZeneca may not be indicative of their future financial performance. The combined company will be required to devote significant management attention
and resources to integrating its business practices and support functions. The diversion of management's attention and any delays or difficulties encountered in connection with the transaction and the
coordination of the two companies' operations could have an adverse effect on the business, financial results, financial condition or the share price of the combined company following the transaction.
The coordination process may also result in additional and unforeseen expenses.
Failure
to realize all of the anticipated benefits of the transaction may impact the financial performance of the combined company, the price of the combined company's ADSs (and the
AstraZeneca ordinary shares represented thereby) and the ability of the combined company to continue paying dividends on its ordinary shares at levels per share consistent with the current dividend or
at all. The declaration of dividends by the combined company will be at the discretion of its board of directors, which may determine at any time to cease paying dividends, lower the dividend level
per share or not increase the dividend level per share.
The announcement and pendency of the transaction could adversely affect each of Alexion's and AstraZeneca's
business, results of operations and financial condition.
The announcement and pendency of the transaction could cause disruptions in and create uncertainty surrounding Alexion's and AstraZeneca's
business, including affecting Alexion's and AstraZeneca's relationships with its existing and future customers, suppliers and employees, which could have an adverse effect on Alexion's or
AstraZeneca's business, results of operations and financial condition, regardless of whether the transaction is completed. In particular, Alexion and AstraZeneca could potentially lose important
personnel as a result of the departure of employees who decide to
pursue other opportunities in light of the transaction. Alexion and AstraZeneca could also potentially lose customers or suppliers, and new customer or supplier contracts could be delayed or
decreased. In
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addition,
each of Alexion and AstraZeneca has expended, and continues to expend, significant management resources in an effort to complete the transaction, which are being diverted from Alexion's and
AstraZeneca's day-to-day operations.
If
the transaction is not completed, Alexion's and AstraZeneca's stock prices may fall to the extent that the current prices of Alexion common stock and AstraZeneca ADS (and the
AstraZeneca ordinary shares represented thereby) reflect a market assumption that the transaction will be completed. In addition, the failure to complete the transaction may result in negative
publicity or a negative impression of Alexion in the investment community and may affect Alexion's and AstraZeneca's relationship with employees, customers, suppliers and other partners in the
business community.
Alexion and AstraZeneca will incur substantial transaction fees and costs in connection with the transaction.
Alexion and AstraZeneca have incurred and expect to incur additional material non-recurring expenses in connection with the transaction and
completion of the transactions contemplated by the merger agreement, including costs relating to obtaining required approvals and compensation change in control payments. Alexion and AstraZeneca have
incurred significant financial services, accounting, tax and legal fees in connection with the process of negotiating and evaluating the terms of the transaction. Additional significant unanticipated
costs may be incurred in the course of coordinating the businesses of Alexion and AstraZeneca after completion of the transaction. Even if the transaction is not completed, Alexion and AstraZeneca
will need to pay certain costs relating to the transaction incurred prior to the date the transaction was abandoned, such as financial advisory, accounting, tax, legal, filing and printing fees. Such
costs may be significant and could have an adverse effect on the parties' future results of operations, cash flows and financial condition. In addition to its own fees and expenses, in the event the
Alexion stockholders do not approve the matters required to be voted upon, and the merger agreement is terminated, Alexion may be required to pay an amount equal to $270 million to AstraZeneca.
In addition to its own fees and expenses, in the event the AstraZeneca shareholders do not approve the matters required to be voted upon, and the merger agreement is terminated, AstraZeneca may be
required to pay an amount equal to $1.415 billion to Alexion. For more information, see the section entitled "The Merger AgreementTermination Payments and
Expenses."
The unaudited pro forma condensed combined financial information of Alexion and AstraZeneca is presented for
illustrative purposes only and may not be indicative of the results of operations or financial condition of the combined company following the transaction.
The unaudited pro forma condensed combined financial information included in this proxy
statement/prospectus has been prepared using the consolidated historical financial statements of AstraZeneca and Alexion, is presented for illustrative purposes only and should not be considered to be
an indication of the results of operations or financial condition of the combined company following the transaction. In addition, the pro forma combined
financial information included in this proxy statement/prospectus is based in part on certain assumptions regarding the transaction. These assumptions may not prove to be accurate, and other factors
may affect the combined company's results of operations or financial condition following the transaction. Accordingly, the historical and pro forma
financial information included in this proxy statement/prospectus does not necessarily represent the combined company's results of operations and financial condition had Alexion and AstraZeneca
operated as a combined entity during the periods presented, or of the combined company's results of operations and financial condition following completion of the transaction. The combined company's
potential for future business success and operating profitability must be considered in light of the risks, uncertainties, expenses and difficulties typically encountered by recently combined
companies.
In
preparing the pro forma financial information contained in this proxy statement/prospectus, AstraZeneca has given effect to, among
other items, the completion of the transaction, the payment of the merger consideration and the indebtedness of AstraZeneca on a consolidated basis after giving
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effect
to the transaction, including the indebtedness of Alexion. The unaudited pro forma financial information does not reflect all of the costs that
are expected to be incurred by Alexion and AstraZeneca in connection with the transaction. For more information, see the section entitled "Unaudited Pro forma condensed
combined Financial Information," including the notes thereto.
The substantial additional indebtedness that AstraZeneca will incur in connection with the transaction could
adversely affect AstraZeneca's, and following consummation of the transaction, the combined company's, financial position, including by decreasing AstraZeneca's, and following consummation of the
transaction, the combined company's, business flexibility and resulting in a reduction of AstraZeneca's, and following consummation of the transaction, the combined company's credit rating.
Following consummation of the transaction, the combined company will have substantially increased borrowings compared to AstraZeneca's
historical level of borrowings. AstraZeneca's consolidated borrowings were US$[ · ]
as at [ · ], 2021. The combined company's pro forma borrowings as at
[ · ], 2021, if the transaction had been completed on
[ · ], 2021, would have been approximately
US$[ · ], of which
[ · ] would have been at variable rates of interest as at
[ · ], 2021.
AstraZeneca
expects to incur up to US$17.5 billion of additional debt in connection with the transaction, as a result of financing to complete the transaction and to refinance debt
assumed in the transaction. This increased level of borrowings could have the effect, among other things, of reducing the combined company's flexibility to respond to changing business and economic
conditions and will have the effect of increasing the combined company's interest expense. In addition, the amount of cash required to service the combined company's increased borrowing levels and
increased aggregate dividends following consummation of the transaction and thus the demands on the combined company's cash resources will be greater than the amount of cash flows required to service
AstraZeneca's borrowings and pay dividends prior to the transaction. The increased levels of borrowings and dividends following consummation of the transaction could also reduce funds available for
the combined company's investments in research and development and capital expenditures and other activities and may create competitive disadvantages for the combined company relative to other
companies with lower debt levels.
AstraZeneca's
credit rating impacts the cost and availability of future borrowings and, accordingly, AstraZeneca's cost of capital. AstraZeneca's credit rating reflects each credit
rating organization's opinion of AstraZeneca's financial and business strength, operating performance and ability to meet AstraZeneca's debt obligations. If AstraZeneca's credit rating is reduced,
AstraZeneca may not be able to sell additional debt securities, borrow money, refinance the transaction facilities if drawn or establish alternatives to the transaction facilities in the amounts, at
the times or interest rates or upon the more favourable terms and conditions that might be available if AstraZeneca's current credit rating is maintained.
In
addition, future borrowings under circumstances in which the combined company's debt is rated below investment grade may contain further restrictions that impose significant
restrictions on the way the combined company operates following the transaction.
AstraZeneca or Alexion may waive one or more of the closing conditions without re-soliciting shareholder
approval or stockholder approval, respectively.
Certain conditions to AstraZeneca and Alexion's obligations, respectively, to complete the transaction may be waived, in whole or in part, to
the extent legally permissible, either unilaterally or by agreement of AstraZeneca and Alexion. In the event that any such waiver does not require resolicitation of AstraZeneca's shareholders or an
amendment of this proxy statement/prospectus or any re-solicitation of proxies or voting cards, as applicable, the parties will have the discretion to
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complete
the transaction without seeking further approval of AstraZeneca shareholders or Alexion stockholders, as applicable.
The opinion of Alexion's financial advisor rendered to Alexion's Board of Directors does not reflect changes
in circumstances between the signing of the merger agreement and the completion of the transaction.
Alexion's board of directors has received an opinion from BofA Securities, Inc. dated December 11, 2020, to the effect that, as of
the date of the opinion and based on and subject to various assumptions and limitations described in BofA Securities' written opinion, the merger consideration to be received in the transaction by
holders of Alexion common stock was fair, from a financial point of view, to such holders, but has not obtained an updated opinion as of the date of this proxy statement/prospectus. Changes in the
operations and prospects of AstraZeneca or Alexion, general market and economic conditions and other factors that may be beyond the control of AstraZeneca or Alexion, and on which the forecasts and
assumptions used by Alexion's financial advisors in connection with rendering its opinion may have been based, may significantly alter the value of AstraZeneca or Alexion or the prices of the
AstraZeneca ADSs (and the AstraZeneca ordinary shares represented thereby) or of the shares of Alexion common stock by the time the transaction is completed. The opinion did not speak as of the time
the transaction will be completed or as of any
date other than the date of such opinion and Alexion's board of directors does not anticipate asking its financial advisor to update its opinion. The Alexion Board's recommendation that Alexion
stockholders vote "FOR" approval of the merger proposal, "FOR" the non-binding compensation advisory
proposal and "FOR" the adjournment proposal, however, is made as of the date of this proxy statement/prospectus.
For
a description of the opinion that Alexion's board of directors received from its financial advisor, see the section entitled "The Merger
ProposalOpinion of Alexion's Financial Advisor." A copy of the opinion of BofA Securities, Inc., Alexion's financial advisor, is attached as Annex B
to this proxy statement/prospectus and is incorporated by reference herein in its entirety.
While the merger agreement is in effect, Alexion, AstraZeneca and their respective subsidiaries' businesses
are subject to restrictions on their business activities.
Under the merger agreement, Alexion, AstraZeneca and their respective subsidiaries have agreed to certain restrictions on the conduct of their
respective businesses and generally must operate their respective businesses in the ordinary course prior to completing the transaction (unless Alexion or AstraZeneca obtains the other's consent, as
applicable, which is not to be unreasonably withheld, conditioned or delayed), which may restrict Alexion's and AstraZeneca's ability to exercise certain of their respective business strategies. These
restrictions may prevent Alexion and AstraZeneca from pursuing otherwise attractive business opportunities, making certain investments or acquisitions, selling assets, engaging in capital expenditures
in excess of certain agreed limits, continuing share repurchase programs, incurring indebtedness or making changes to Alexion's and AstraZeneca's respective businesses prior to the completion of the
transaction or termination of the merger agreement, as applicable. These restrictions could have an adverse effect on Alexion's and AstraZeneca's respective businesses, financial results, financial
condition or stock price.
In
addition, the merger agreement prohibits Alexion and AstraZeneca from (i) soliciting, initiating, knowingly facilitating or knowingly encouraging, subject to certain exceptions
set forth in the merger agreement, any inquiry or the making or submission of any proposal or offer that constitutes an acquisition proposal (as defined for each party in the merger agreement),
(ii) (A) entering into or participating in any discussions or negotiations regarding, (B) furnishing to any third party any information, or (C) otherwise assisting,
participating in, knowingly facilitating or knowingly encouraging any third party, in each case, in connection with or for the purpose of knowingly encouraging or facilitating, an acquisition
proposal, or (iii) approving, recommending or entering into (or publicly or
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formally
proposing to approve, recommend or enter into), any letter of intent or similar document, agreement, commitment or agreement in principle with respect to an acquisition proposal. Alexion may
be required to pay AstraZeneca a termination payment of $1.180 billion if the merger agreement is terminated under the circumstances specified in the merger agreement, and AstraZeneca may be
required to pay Alexion a termination payment of $1.415 billion if the merger agreement is terminated under the circumstances specified in the merger agreement.
These
provisions may limit Alexion's ability to pursue offers from third parties that could result in greater value to Alexion stockholders than the merger consideration. The termination
payment may also discourage third parties from pursuing an alternative acquisition proposal with respect to Alexion.
AstraZeneca expects to refinance its credit facilities entered into for the purpose of the transaction but
cannot guarantee that it will be able to obtain new financing on terms acceptable to it or at all.
AstraZeneca anticipates that the funds needed to complete the transaction will be derived from a combination of some or all
of: (i) cash on hand; (ii) borrowings under the credit facilities which have been entered into for the purpose of the transaction, its existing credit facilities and/or new credit
facilities; and (iii) the proceeds from the sale of new debt securities and the issuance of any commercial paper. While AstraZeneca intends to refinance the credit facilities it has entered
into for the purpose of the transaction, AstraZeneca's ability to obtain any new debt financing will depend on, among other factors, prevailing market conditions and other factors beyond AstraZeneca's
control. AstraZeneca cannot assure you that it will be able to obtain new debt financing on terms acceptable to it or at all on or before the maturity date of its existing credit facilities, and
therefore any such failure to refinance could materially adversely affect its operations and financial condition. AstraZeneca's obligation to complete the transaction is not conditioned upon the
receipt of any financing.
The termination of the merger agreement could negatively impact Alexion.
If the transaction is not completed for any reason, including as a result of Alexion stockholders failing to approve the transaction proposal,
the ongoing businesses of Alexion may be adversely affected and, without realizing any of the anticipated benefits of having completed the transaction, Alexion would be subject to a number of risks,
including the following:
-
-
Alexion may experience negative reactions from the financial markets, including a decline of its stock price (which may reflect a market
assumption that the transaction will be completed);
-
-
Alexion may experience negative reactions from the investment community, its customers, suppliers, distributors, regulators and employees and
other partners in the business community;
-
-
Alexion may be required to pay certain costs relating to the transaction, whether or not the transaction is completed; and
-
-
matters relating to the transaction will have required substantial commitments of time and resources by Alexion management, which would
otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to Alexion had the transaction not been contemplated.
If
the merger agreement is terminated and the Alexion board of directors seeks another merger, business combination or other transaction, Alexion stockholders cannot be certain that
Alexion will find a party willing to offer equivalent or more attractive consideration than the merger consideration Alexion stockholders would receive from AstraZeneca in the transaction. If the
merger agreement is terminated under the circumstances specified in the merger agreement, Alexion may be required to pay AstraZeneca a termination payment of $1.180 billion or a payment of
$270 million or reimburse AstraZeneca for its expenses incurred in connection with the merger agreement, depending on the circumstances surrounding the termination. If the merger agreement is
terminated under the
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circumstances
specified in the merger agreement, AstraZeneca may also be required to pay Alexion a termination payment of $1.415 billion. If an expense reimbursement is paid by Alexion or
AstraZeneca and the Alexion termination payment or AstraZeneca termination payment subsequently becomes due,
then the amount of the Alexion or AstraZeneca termination payment, as applicable, will be reduced by the amount of reimbursement expenses previously paid.
See
the section entitled "The Merger AgreementTermination of the Merger Agreement" for a more complete discussion of the
circumstances under which the merger agreement could be terminated and when the termination payment and, with respect to Alexion, the no vote payment, may be payable by Alexion or AstraZeneca, as
applicable.
Directors and executive officers of Alexion have interests in the transaction that may differ from the
interests of Alexion stockholders generally, including, if the transaction is completed, the receipt of financial and other benefits.
In considering the recommendation of the Alexion board of directors, you should be aware that Alexion's directors and executive officers have
interests in the transaction that are different from, or in addition to, those of Alexion stockholders generally. These interests may include, among others, the treatment of outstanding Alexion equity
awards pursuant to the merger agreement, the payment of severance benefits and acceleration of outstanding Alexion equity awards upon certain terminations of employment, and the combined company's
agreement to indemnify Alexion directors and executive officers against certain claims and liabilities. These interests are described in more detail in the section entitled
"The Merger ProposalInterests of Alexion's Directors and Executive Officers in the Transaction."
Except in specified circumstances, if the transaction is not completed by December 12, 2021, subject
to extension in specified circumstances by either Alexion or AstraZeneca to March 12, 2022, either Alexion or AstraZeneca may choose not to proceed with the transaction.
Either Alexion or AstraZeneca may terminate the merger agreement if the transaction has not been completed by December 12, 2021. However,
this right to terminate the merger agreement will not be available to Alexion or AstraZeneca if the failure of such party to perform any of its obligations under the merger agreement has been the
proximate cause of or resulted in the failure of the transaction to be completed on or before such time. The December 12, 2021 deadline is subject to an extension for an additional
90 day period by Alexion or AstraZeneca to March 12, 2022, if at the time of any such extension all closing conditions (other than the closing conditions with respect to receipt of HSR
Act clearance and approvals under the antitrust and foreign investment laws of certain specified jurisdictions or there being no injunction or order enjoining, preventing or prohibiting the
consummation of the transaction, if such injunction or order relates to antitrust laws) have been satisfied or waived. For more information, see the section entitled "The
Merger AgreementTermination of the Merger Agreement."
There may be less publicly available information concerning AstraZeneca than there is for issuers that are
not foreign private issuers because, as a foreign private issuer, AstraZeneca is exempt from a number of rules under the Exchange Act and is permitted to file less information with the SEC than
issuers that are not foreign private issuers and AstraZeneca, as a foreign private issuer, is permitted to follow home country practice in lieu of the listing requirements of Nasdaq, subject to
certain exceptions.
As a foreign private issuer under the Exchange Act, AstraZeneca is exempt from certain rules under the Exchange Act, and is not required to file
periodic reports and financial statements with the SEC as frequently or as promptly as companies whose securities are registered under the Exchange Act but are not foreign private issuers, or to
comply with Regulation FD, which restricts the selective disclosure of material non-public information. In addition, AstraZeneca is exempt from certain disclosure and procedural requirements
applicable to proxy solicitations under Section 14 of the
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Exchange
Act. The members of the AstraZeneca management board, officers and principal shareholders are exempt from the reporting and "short-swing" profit recovery provisions of Section 16 of
the Exchange Act. Accordingly, there may be less publicly available information concerning AstraZeneca than there is for companies whose securities are registered under the Exchange Act but are not
foreign private issuers, and such information may not be provided as promptly as it is provided by such companies. In addition, certain information may be provided by AstraZeneca in accordance with
English law, which may differ in substance or timing from such disclosure requirements under the Exchange Act. Further, as a foreign private issuer, under Nasdaq rules AstraZeneca is subject to less
stringent corporate governance requirements. Subject to certain exceptions, the rules of Nasdaq permit a foreign private issuer to follow its home country practice in lieu of the listing requirements
of Nasdaq, including, for example, certain internal controls as well as board, committee and director independence requirements. AstraZeneca is required to disclose any significant ways in which its
corporate governance practices differ from those followed by U.S. domestic companies under Nasdaq listing standards in its annual report on Form 20-F filed with the SEC or on its website.
Accordingly, you may not have the same protections afforded to shareholders of companies that are required to comply with all of the Nasdaq corporate governance requirements.
AstraZeneca is organized under the laws of England and Wales and a substantial portion of its assets are, and
many of its directors and officers reside, outside of the United States. As a result, it may not be possible for shareholders to enforce civil liability provisions of the securities laws of the United
States against AstraZeneca or AstraZeneca's directors and members of the AstraZeneca board.
AstraZeneca is organized under the laws of England and Wales. A substantial portion of AstraZeneca's assets are located outside the United
States, and many of AstraZeneca's directors and officers and some of the experts named in this proxy statement/prospectus are residents of jurisdictions outside of the United States and the assets of
such persons may be located outside of the United States. As a result, it may be difficult for investors to effect service within the United States upon AstraZeneca and those directors, officers and
experts, or to enforce judgments obtained in U.S. courts against AstraZeneca or such persons either inside or outside of the United States, or to enforce in U.S. courts judgments obtained against
AstraZeneca or such persons in courts in jurisdictions outside the United States, in any action predicated upon the civil liability provisions of the federal securities laws of the United States.
There
is no certainty that civil liabilities predicated solely upon the federal securities laws of the United States can be enforced in England, whether by original action or by seeking
to enforce a judgment of U.S. courts. In addition, punitive damages awards in actions brought in the United States or elsewhere may be unenforceable in England.
Resales of AstraZeneca ADSs following the transaction may cause the market value of AstraZeneca ADSs to
decline.
AstraZeneca expects that it will issue up to approximately
[ · ] AstraZeneca ordinary shares at the first effective time in connection with the
transaction. The issuance of these new AstraZeneca ordinary shares and the new AstraZeneca ADSs by which those AstraZeneca ordinary shares are represented, and the sale of additional AstraZeneca ADSs
that may become eligible for sale in the public market from time to time (and the AstraZeneca ordinary shares represented thereby) could have the effect of depressing the market value for AstraZeneca
ADSs (and the AstraZeneca ordinary shares represented thereby). The increase in the number of AstraZeneca ADSs may lead to sales of such AstraZeneca ADSs or the perception that such sales may occur,
either of which may adversely affect the market for, and the market value of, AstraZeneca ADSs.
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The market value of AstraZeneca ADSs may decline as a result of the transaction.
The market value of AstraZeneca ADSs may decline as a result of the transaction if, among other things, the combined company is unable to
achieve the expected growth in revenues and earnings, or if the operational cost savings estimates in connection with the integration of Alexion's and AstraZeneca's businesses are not realized or if
the transaction costs related to the transaction are greater than expected. The market value also may decline if the combined company does not achieve the perceived benefits of the transaction as
rapidly or to the extent anticipated by the market or if the effect of the transaction on the combined company's financial position, results of operations or cash flows is not consistent with the
expectations of financial or industry analysts.
The AstraZeneca ADSs and AstraZeneca ordinary shares have different rights from the shares of Alexion common
stock.
Certain of the rights associated with Alexion common stock are different from the rights associated with AstraZeneca ordinary shares. See the
section of this proxy statement/prospectus entitled "Comparison of Rights of AstraZeneca Shareholders and Alexion Stockholders" for a discussion of the
different rights associated with AstraZeneca ordinary shares and Alexion common stock. In addition, holders of AstraZeneca ADSs will be able to exercise the shareholder rights for the AstraZeneca
ordinary shares represented by such AstraZeneca ADSs through the depositary bank, only to the extent contemplated by the deposit agreement. For more information, see the description of AstraZeneca
ADSs contained in its annual report on Form 20-F, filed February 16, 2021, and which is incorporated into this document by reference, for a discussion of the terms of the AstraZeneca
ADSs and the material rights of owners of AstraZeneca ADSs.
In
particular, the laws of England and Wales, the jurisdiction in which AstraZeneca is incorporated, limit the circumstances under which shareholders of a company may bring derivative
actions on behalf of that company. In most cases, only the corporation may be the claimant or plaintiff for the purposes of maintaining proceedings in respect of any wrongful act committed against it
and the permission of the court is required to maintain any derivative action, which is able to be brought by shareholders. In addition, the laws of England and Wales do not afford appraisal rights to
dissenting shareholders in the form typically available to shareholders of a U.S. corporation. English law also requires that shareholders approve certain capital structure decisions (including the
allotment and issuance of shares, the exclusion of preemptive rights and share repurchases), which may limit AstraZeneca's flexibility to manage its capital structure.
In
addition, only registered holders of AstraZeneca ordinary shares are afforded the rights of shareholders under English law and the AstraZeneca articles of association. Because the
depositary bank holds the AstraZeneca ordinary shares represented by AstraZeneca ADSs through a custodian
which is a participant in the CREST securities settlement system, and CREST or its nominee is the registered holder of the AstraZeneca ordinary shares represented by AstraZeneca ADSs, the holders of
AstraZeneca ADSs must rely on the depositary bank to exercise the rights of a shareholder via its custodian and CREST.
Holders
of AstraZeneca ADSs are entitled to present AstraZeneca ADSs to the depositary bank for cancellation and withdraw the corresponding number of underlying AstraZeneca ordinary
shares, but would be responsible for fees relating to such exchange. Fees and charges are also payable by AstraZeneca ADS holders in relation of certain other depositary services.
Current AstraZeneca shareholders and Alexion stockholders will have a reduced ownership and voting interest
after the transaction and will exercise less influence over the management of the combined company.
Upon completion of the transaction, AstraZeneca expects to issue approximately
[ · ] AstraZeneca ADSs to Alexion stockholders pursuant to the merger agreement. As
a result, it is
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expected
that, immediately after completion of the transaction, former Alexion stockholders will own approximately
[ · ]% of the outstanding AstraZeneca ordinary shares. In addition, AstraZeneca
ordinary shares may be issued from time to time following the first effective time to holders of Alexion equity awards on the terms set forth in the merger agreement. See the section of this proxy
statement/prospectus entitled "The Merger AgreementTreatment of Alexion Equity Awards" for a more detailed explanation. Consequently,
current AstraZeneca shareholders in the aggregate will have less influence over the management and policies of AstraZeneca than they currently have over the management and policies of AstraZeneca, and
Alexion stockholders in the aggregate will have significantly less influence over the management and policies of AstraZeneca than they currently have over the management and policies of Alexion.
Alexion and AstraZeneca may be targets of securities class action and derivative lawsuits which could result
in substantial costs and may delay or prevent the transaction from being completed.
Securities class action lawsuits and derivative lawsuits are often brought against companies that have entered into merger agreements. Even if
the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. Additionally, if a plaintiff is successful in obtaining an
injunction prohibiting consummation of the transaction, then that injunction may delay or prevent the transaction from being completed. For information regarding these class actions, see the section
of this proxy statement/prospectus entitled "The Merger ProposalLitigation Relating to the Transaction."
The combined company may be exposed to increased litigation, which could have an adverse effect on the
combined company's business and operations.
The combined company may be exposed to increased litigation from stockholders, customers, suppliers, consumers and other third parties due to
the combination of AstraZeneca's business and Alexion's business following the transaction. Such litigation may have an adverse impact on the combined company's business and results of operations or
may cause disruptions to the combined company's operations.
If the transaction is not treated as a "reorganization" for U.S. federal income tax purposes, or if the
requirements of Section 367(a) of the Code are not met, Alexion stockholders may be required to recognize a greater amount of gain for U.S. federal income tax purposes at the time they exchange
shares of Alexion common stock for the merger consideration.
Although Alexion expects to receive a tax opinion from Wachtell, Lipton, Rosen & Katz, special counsel to Alexion, or Freshfields
Bruckhaus Deringer US LLP, counsel to AstraZeneca, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the transaction will
qualify as a "reorganization" within the meaning of Section 368(a) of the Code and that Section 367(a)(1) of the Code will not generally apply to cause the transaction to result in gain
recognition to Alexion stockholders, neither AstraZeneca nor Alexion has applied for, or expects to obtain, a ruling from the IRS with respect to the U.S. federal income tax consequences of the
transaction. No assurance can be given that the IRS will agree with the conclusions reached in such opinion or that it will not challenge the U.S. federal income tax consequences of the transaction.
If the transaction does not qualify as a reorganization for U.S. federal income tax purposes, it will generally be treated as a fully taxable transaction for such purposes and U.S. Holders will
recognize gain or loss on their exchange of their shares of Alexion common stock for merger consideration. If the transaction does qualify as a reorganization but does not satisfy the requirements of
Section 367(a)(1) of the Code,
U.S. Holders will be required to recognize the full amount of any gain, but not loss, on their exchange of their shares of Alexion common stock for merger consideration. Non-U.S. Holders also may, in
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certain
circumstances, be subject to U.S. federal income and/or withholding tax if the transaction does not qualify as a reorganization.
For
a more detailed discussion of the material U.S. federal income tax consequences of the transaction to U.S. Holders and Non-U.S. Holders, see the section entitled
"Material U.S. Federal Income Tax Consequences."
The transaction may affect the application of new or existing tax rules to AstraZeneca and its subsidiaries
(which will include Alexion and which we refer to as the "AstraZeneca group") which could result in a material impact on the AstraZeneca group's cash tax liabilities and tax charge.
Changes in tax regimes, such as those proposed by the new administration in the United States that include raising the corporate tax rate and
raising the tax rate on global intangible low-taxed income, could result in a material impact on the cash tax liabilities and tax charge of the AstraZeneca group (which will include Alexion) . The
AstraZeneca group will have a greater presence in the United States following the acquisition of Alexion than the existing AstraZeneca group which means that these changes could have a more
significant impact. Such an impact could also arise from changes in the application of existing tax rules, such as the UK's controlled foreign company regime, to the AstraZeneca group as a result of
the transaction. In either case, this could result in either an increase or a reduction in financial results depending upon the nature of the change.
AstraZeneca and Alexion may have difficulty attracting, motivating and retaining executives and other key
employees in light of the transaction.
AstraZeneca's success after the transaction will depend in part on the ability of AstraZeneca to retain key executives and other employees of
Alexion. Uncertainty about the effect of the transaction on AstraZeneca and Alexion employees may have an adverse effect on each of AstraZeneca and Alexion separately and consequently the combined
company. This uncertainty may impair AstraZeneca's and/or Alexion's ability to attract, retain and motivate key personnel. Employee
retention may be particularly challenging during the pendency of the transaction, as employees of AstraZeneca and Alexion may experience uncertainty about their future roles in the combined company.
Additionally,
Alexion's officers and employees may hold shares of Alexion common stock, and, if the transaction is completed, these officers and employees may be entitled to the merger
consideration in respect of such shares of Alexion common stock. Under agreements between Alexion and certain of its key employees, such employees could potentially resign from employment on or after
the first effective time following specified circumstances constituting good reason or constructive termination (as set forth in the applicable agreement) that could result in severance payments to
such employees and accelerated vesting of their equity awards. These payments and accelerated vesting benefits, individually or in the aggregate, could make retention of Alexion key employees more
difficult.
Furthermore,
if key employees of AstraZeneca or Alexion depart or are at risk of departing, including because of issues relating to the uncertainty and difficulty of integration,
financial security or a desire not to become employees of the combined company, AstraZeneca may have to incur significant costs in retaining such individuals or in identifying, hiring and retaining
replacements for departing employees and may lose significant expertise and talent, and the combined company's ability to realize the anticipated benefits of the transaction may be materially and
adversely affected. No assurance can be given that the combined company will be able to attract or retain key employees to the same extent that Alexion has been able to attract or retain employees in
the past.
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The merger agreement contains provisions that make it more difficult for AstraZeneca and Alexion to pursue
alternatives to the transaction and may discourage other companies from trying to acquire Alexion for greater consideration than what AstraZeneca has agreed to pay.
The merger agreement contains provisions that make it more difficult for Alexion to sell its business to a party other than AstraZeneca, or for
AstraZeneca to sell its business. These provisions include a general prohibition on each party soliciting any acquisition proposal. Further, there are only limited exceptions to each party's agreement
that its board of directors will not withdraw or modify in a manner adverse to the other party the recommendation of its board of directors in favor of the adoption of the merger agreement. In the
event that either the Alexion Board or the AstraZeneca Board make an adverse recommendation change, then Alexion and AstraZeneca may be required to pay to the other party a termination payment of
$1.180 billion and $1.415 billion, respectively. See "The Merger AgreementNo Solicitation" and "The
Merger AgreementTermination Payments and Expenses" beginning on pages 121 and 132, respectively, of this proxy statement/prospectus.
The
parties believe these provisions are reasonable and not preclusive of other offers, but these restrictions might discourage a third party that has an interest in acquiring all or a
significant part of either Alexion or AstraZeneca from considering or proposing an acquisition proposal, even if that party were prepared to pay consideration with a higher per-share value than the
currently proposed merger consideration, in the case of Alexion, or that party were prepared to enter into an agreement that may be favorable to AstraZeneca or its shareholders, in the case of
AstraZeneca. Furthermore, the termination payments described above may result in a potential competing acquirer proposing to pay a lower per-share price to acquire the applicable party than it might
otherwise have proposed to pay because of the added expense of the termination payment that may become payable by such party in certain circumstances.
The financial forecasts are based on various assumptions that may not be realized.
The financial estimates set forth in the forecasts included under the section "The Merger ProposalAlexion
Unaudited Prospective Financial Information" were based on assumptions of, and information available to, Alexion's management when prepared and these estimates and assumptions
are subject to uncertainties, many of which are beyond Alexion's control and may not be realized. Many factors mentioned in this proxy statement/prospectus, including the risks outlined in this "Risk
Factors" section and the events or circumstances described under "Cautionary Statement Regarding Forward-Looking Statements," will be important in
determining the combined company's future results. As a result of these contingencies, actual future results may vary materially from the estimates. In view of these uncertainties, the inclusion of
financial estimates in this proxy statement is not and should not be viewed as a representation that the forecasted results will necessarily reflect actual future results.
Alexion's
financial estimates set forth in the forecasts included under the sections "The Merger ProposalAlexion Unaudited Prospective Financial
Information" were not prepared with a view toward public disclosure, and such financial estimates were not prepared with a view toward compliance with published guidelines of
any regulatory or professional body. Further, any forward-looking statement speaks only as of the date on which it is made, and Alexion does not undertake any obligation, other than as required by
applicable law, to update the financial estimates herein to reflect events or circumstances after the date those financial estimates were prepared or to reflect the occurrence of anticipated or
unanticipated events or circumstances. The prospective financial information included in this document has been prepared by, and is the responsibility of, Alexion management. PricewaterhouseCoopers
LLP, US and PricewaterhouseCoopers LLP, UK have not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying prospective financial information included
under the section "The Merger Proposal Alexion Unaudited Prospective Financial Information" and, accordingly, PricewaterhouseCoopers LLP, US and
PricewaterhouseCoopers LLP, UK do not express an opinion or any other form of assurance with respect thereto.
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PricewaterhouseCoopers
LLP, US and PricewaterhouseCoopers LLP, UK reports incorporated by reference in this document relates to the previously issued financial statements. It does not extend to the
prospective financial information and should not be read to do so. See "The Merger ProposalAlexion Unaudited Prospective Financial
Information" beginning on page 74 for more information.
Exchange rate fluctuations may adversely affect the foreign currency value of AstraZeneca ADSs and any
dividends.
AstraZeneca ordinary shares are quoted in pounds sterling on the LSE and AstraZeneca ADS are quoted in U.S. dollars on the Nasdaq. Dividends in
respect of AstraZeneca ordinary shares, if any, will be declared in U.S. dollars. AstraZeneca's financial statements are prepared in U.S. dollars. Fluctuations in the exchange rate between the U.S.
dollar and pounds sterling will affect, among other matters, the pounds sterling value of AstraZeneca ordinary shares and of any dividends in respect of such shares.
Risks Related to Alexion's Business
You should read and consider the risk factors specific to Alexion's business that will also affect the combined company after completion of the
transaction. These risks are described in Alexion's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which is incorporated by reference into this proxy
statement/prospectus, and in other documents that are incorporated by reference into this proxy statement/prospectus. See the section entitled "Where You Can Find Additional
Information" for the location of information incorporated by reference into this proxy statement/prospectus.
Risks Related to AstraZeneca's Business
You should read and consider the risk factors specific to AstraZeneca's business that will also affect the combined company after completion of
the merger. These risks are described in AstraZeneca's Annual Report on Form 20-F for the fiscal year ended December 31, 2020, which is incorporated by reference into this proxy
statement/prospectus, and in other documents that are incorporated by reference into this proxy statement/prospectus. See the section entitled "Where You Can Find Additional
Information" for the location of information incorporated by reference into this proxy statement/prospectus.
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THE ALEXION SPECIAL MEETING
This proxy statement/prospectus is being provided to Alexion stockholders in connection with the solicitation of proxies by the Alexion board of
directors for use at the Alexion special meeting and at any adjournments or postponements of the Alexion special meeting. Alexion stockholders are encouraged to read the entire document carefully,
including the annexes to and documents incorporated by reference into this document, for more detailed information regarding the merger agreement and the transactions contemplated by the merger
agreement.
Date, Time and Place of the Alexion Special Meeting
The Alexion special meeting is scheduled to be held virtually via the Internet on
[ · ], 2021, beginning at
[ · ], Eastern Time, unless postponed to a later date.
In
light of ongoing developments with respect to the COVID-19 (coronavirus) pandemic, Alexion has elected to hold the Alexion special meeting solely by means of remote communication (via
the Internet). The Alexion special meeting will be held solely via live webcast and there will not be a physical meeting location. Alexion stockholders will be able to attend the Alexion special
meeting online and vote their shares electronically by visiting
www.virtualshareholdermeeting.com/[ · ] (which we refer to as the "special meeting
website"). Alexion stockholders will need the 16-digit control number found on their proxy card in order to access the special meeting website.
Alexion
will entertain questions at the Alexion special meeting in accordance with the rules of conduct for the meeting to the extent that the question posed by a stockholder are
relevant to the Alexion special meeting and the proposals presented. Any questions or comments that are unrelated to the business of the Alexion special meeting will not be addressed at the meeting.
Matters to Be Considered at the Alexion Special Meeting
The purpose of the Alexion special meeting is to consider and vote on each of the following proposals, each of which is further described in
this proxy statement/prospectus:
-
-
Proposal
1: Adoption of the Merger Agreement. To consider and vote on the merger proposal;
-
-
Proposal
2: Approval, on an Advisory (Non-Binding) Basis, of Certain Merger-Related Compensatory Arrangements with Alexion's Named
Executive Officers. To consider and vote on the compensation proposal; and
-
-
Proposal 3:
Adjournment of the Alexion Special Meeting. To consider and vote on the adjournment proposal.
Recommendation of the Alexion Board of Directors
The Alexion board of directors unanimously recommends that Alexion stockholders vote:
-
-
Proposal
1: "FOR" the merger proposal;
-
-
Proposal
2: "FOR" the compensation proposal; and
-
-
Proposal
3: "FOR" the adjournment proposal.
After
careful consideration, the Alexion board of directors unanimously (1) determined that the merger agreement and the transactions contemplated by the merger agreement,
including the transaction, are fair to, and in the best interests of, Alexion and its stockholders; (2) approved and declared advisable the merger agreement and the transactions contemplated by
the merger agreement, including the transaction; (3) directed that the adoption of the merger agreement be submitted to a
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vote
at a meeting of the Alexion stockholders; and (4) resolved to recommend adoption of the merger agreement by the Alexion stockholders.
See
also the section entitled "The Merger ProposalRecommendation of the Alexion Board of Directors; Alexion's Reasons for the
Transaction" beginning on page 58.
Record Date for the Alexion Special Meeting and Voting Rights
The record date to determine stockholders who are entitled to receive notice of and to vote at the Alexion special meeting or any adjournments
or postponements thereof is [ · ], 2021. As of the close of business on the record
date, there were [ · ] shares of Alexion common stock issued and outstanding and
entitled to vote at the Alexion special meeting.
Each
Alexion stockholder is entitled to one vote for each share of Alexion common stock such holder owned of record at the close of business on the record date with respect to each
matter properly brought before the Alexion special meeting. Only Alexion stockholders of record at the close of business on the record date are entitled to receive notice of and to vote at the Alexion
special meeting and any and all adjournments or postponements thereof.
Quorum; Abstentions and Broker Non-Votes
A quorum of Alexion stockholders is necessary to conduct the Alexion special meeting. The presence, via the special meeting website or by proxy,
of the holders of a majority of the shares of Alexion common stock entitled to vote at the Alexion special meeting will constitute a
quorum. Shares of Alexion common stock represented at the Alexion special meeting by attendance via the special meeting website or by proxy and entitled to vote, but not voted, including shares for
which a stockholder directs an "abstention" from voting, will be counted for purposes of determining a quorum. However, because all of the proposals for consideration at the Alexion special meeting
are considered "non-routine" matters under NYSE and Nasdaq rules (as described below), shares held in "street name" will not be counted as present for the purpose of determining the existence of a
quorum unless the stockholder provides their bank, broker or other nominee with voting instructions for at least one of the proposals before the Alexion special meeting. If a quorum is not present,
the Alexion special meeting will be adjourned or postponed until the holders of the number of shares of Alexion common stock required to constitute a quorum attend.
Under
the NYSE and Nasdaq rules, banks, brokers or other nominees who hold shares in "street name" on behalf of the beneficial owner of such shares have the authority to vote such shares
in their discretion on certain "routine" proposals when they have not received voting instructions from the beneficial owners. However, banks, brokers or other nominees are not allowed to exercise
their voting discretion with respect to matters that under the NYSE or Nasdaq rules, as applicable, are "non-routine." This can result in a "broker non-vote," which occurs on an item when (1) a
bank, broker or other nominee has discretionary authority to vote on one or more "routine" proposals to be voted on at a meeting of stockholders, but is not permitted to vote on other "non-routine"
proposals without instructions from the beneficial owner of the shares and (2) the beneficial owner fails to provide the bank, broker or other nominee with voting instructions on a
"non-routine" matter. All of the proposals before the Alexion special meeting are considered "non-routine" matters under the NYSE and Nasdaq rules, and banks, brokers or other nominees will not have
discretionary authority to vote on any matter before the meeting. As a result, Alexion does not expect any broker non-votes at the Alexion special meeting and if you hold your shares of Alexion common
stock in "street name," your shares will not be represented and will not be voted on any matter unless you affirmatively instruct your bank, broker or other nominee how to vote your shares in
accordance with the voting instructions provided by your bank, broker or other nominee. It is therefore critical that you cast your vote by instructing your bank, broker or other nominee on how to
vote. Brokers will not be able to
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vote
on any of the proposals before the Alexion special meeting unless they have received voting instructions from the beneficial owners.
Required Votes
Except for the adjournment proposal, the vote required to approve each of the proposals listed below assumes the presence of a quorum at the
Alexion special meeting. As described above, Alexion does not expect there to be any broker non-votes at the Alexion special meeting.
|
|
|
|
|
Proposal
|
|
Required Vote
|
|
Effect of Certain Actions
|
Proposal 1:
Merger Proposal
|
|
Approval requires the affirmative vote of at least a majority of the outstanding shares of Alexion common stock entitled to vote on the merger proposal.
|
|
Shares of Alexion common stock not present at the Alexion special meeting, shares that are present and not voted on the merger proposal, including due to the failure of any Alexion stockholder who holds their shares in
"street name" through a bank, broker or other nominee to give voting instructions to such bank, broker or other nominee with respect to the merger proposal, and abstentions will have the same effect as a vote "AGAINST" the merger proposal
|
Proposal 2:
Compensation Proposal
|
|
Approval requires the affirmative vote of at least a majority of votes cast on the compensation proposal (meaning the number of votes cast "FOR" this proposal must exceed
the votes cast "AGAINST").
|
|
A failure to vote, a broker non-vote or an abstention will have no effect on the outcome of the compensation proposal, assuming a quorum is present.
|
Proposal 3:
Adjournment Proposal
|
|
Approval requires the affirmative vote of at least a majority of votes cast on the adjournment proposal (meaning the number of votes cast "FOR" this proposal must exceed
the votes cast "AGAINST").
|
|
A failure to vote, a broker non-vote or an abstention will have no effect on the outcome of the adjournment proposal.
|
Vote of Alexion's Directors and Executive Officers
As of [ · ], 2021, the
latest practicable date prior to the date of this proxy statement/prospectus, Alexion directors and executive officers, and their affiliates, as a group, owned and were entitled to vote approximately
[ · ]% of the total outstanding shares of Alexion common stock. Although no Alexion
director or executive officer has entered into any agreement obligating them to do so, Alexion currently expects that all of its directors and executive officers will vote their shares
"FOR" the merger proposal, "FOR" the compensation proposal and
"FOR" the adjournment proposal. See the section entitled "Interests of Alexion's Directors and Executive Officers In The
Transaction" beginning on page 78 and the arrangements described in Part III of Alexion's Annual Report on Form 10-K for the fiscal year ended
December 31, 2020 and Alexion's Definitive Proxy Statement on Schedule 14A for
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Alexion's
2020 annual meeting of stockholders filed with the SEC on March 26, 2020, both of which are incorporated into this proxy statement/prospectus by reference.
Methods of Voting
Registered Stockholders
If you are a stockholder of record, you may vote at the Alexion special meeting by proxy through the Internet, by telephone or by mail, or by
attending the Alexion special meeting and voting via the special meeting website, as described below.
-
-
By Internet: By visiting the
Internet address provided on the proxy card and following the instructions provided on your proxy card.
-
-
By Telephone: By calling the
number located on the proxy card and following the recorded instructions.
-
-
By Mail: If you have received a
paper copy of the proxy materials by mail, you may complete, sign, date and return by mail the enclosed proxy card in the envelope provided to you with your proxy materials.
-
-
Via the Special Meeting
Website: All stockholders of record may vote at the Alexion special meeting by attending the meeting via the special meeting website.
Stockholders who plan to attend the Alexion special meeting will need the 16-digit control number included on their proxy card in order to access the special meeting website and to attend and vote
thereat.
Unless
revoked, all duly executed proxies representing shares of Alexion common stock entitled to vote will be voted at the Alexion special meeting and, where a choice has been specified
on the proxy card, will be voted in accordance with such specification. If you submit an executed proxy without providing instructions with respect to any proposal, then the Alexion officers
identified on the proxy will vote your shares consistent with the recommendation of the Alexion board of directors on such proposal. If you are a stockholder of record, proxies submitted over the
Internet or by telephone as described above must be received by 11:59 p.m., Eastern Time, on
[ · ], 2021. To reduce administrative costs and help the environment by conserving
natural resources, Alexion asks that you vote through the Internet or by telephone.
By
executing and delivering a proxy in connection with the Alexion special meeting, you designate certain Alexion officers identified therein as your proxies at the Alexion special
meeting. If you deliver an executed proxy, but do not specify a choice with respect to any proposal properly brought before the Alexion special meeting, such proxies will vote your underlying shares
of Alexion common stock on such uninstructed proposal in accordance with the recommendation of the Alexion board of directors. Alexion does not expect that any matter other than the proposals listed
above will be brought before the Alexion special meeting and the Alexion bylaws provide that the only business that may be conducted at the Alexion special meeting are those proposals brought before
the meeting by or at the direction of the Alexion board of directors.
Beneficial (Street Name) Stockholders
If you hold your shares through a bank, broker or other nominee in "street name" instead of as a registered holder, you must follow the voting
instructions provided by your bank, broker or other nominee in order to vote your shares. Your voting instructions must be received by your bank, broker or other nominee prior to the deadline set
forth in the information from your bank, broker or other nominee on how to submit voting instructions. If you do not provide voting instructions to your bank, broker or other nominee with respect to a
proposal, your shares of Alexion common stock will not be voted on that proposal as your bank, broker or other nominee does not have discretionary authority to
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vote
on any of the proposals to be voted on at the Alexion special meeting; see the section entitled "The Alexion Special MeetingQuorum; Abstentions and Broker
Non-Votes" beginning on page 43.
If
you hold your shares through a bank, broker or other nominee in "street name" (instead of as a registered holder), you must obtain a specific control number from your bank, broker or
other nominee in order to attend and vote at the Alexion special meeting via the special meeting website. For more information on how to attend the Alexion special meeting, see the section entitled
"The Alexion Special MeetingAttending the Alexion Special Meeting" beginning on page 47.
Revocability of Proxies
Any stockholder giving a proxy has the right to revoke it at any time before the proxy is voted at the Alexion special meeting. If you are an
Alexion stockholder of record, you may revoke your proxy by any of the following actions:
-
-
by voting again by Internet or telephone as instructed on your proxy card before the closing of the voting facilities at 11:59 p.m.,
Eastern Time, on [ · ], 2021;
-
-
by sending a signed written notice of revocation to Alexion's Corporate Secretary, provided such statement is received no later than
[ · ], 2021;
-
-
by submitting a properly signed and dated proxy card with a later date that is received by Alexion no later than the close of business on
[ · ], 2021; or
-
-
by attending the Alexion special meeting via the special meeting website and requesting that your proxy be revoked or voting via the website as
described above.
Only
your last submitted proxy card will be considered.
Execution
or revocation of a proxy will not in any way affect a stockholder's right to attend the Alexion special meeting and vote thereat.
Written
notices of revocation and other communications with respect to the revocation of proxies should be addressed to:
Alexion Pharmaceuticals, Inc.
121 Seaport Boulevard
Boston, Massachusetts 02210
(475) 230-2596
Attn: Corporate Secretary
If your shares are held in "street name" and you previously provided voting instructions to your broker, bank or other nominee, you should
follow the instructions provided by your broker, bank or other nominee to revoke or change your voting instructions. You may also change your vote by obtaining your specific control number and
instructions from your bank, broker or other nominee and voting your shares at the Alexion special meeting via the special meeting website.
Proxy Solicitation Costs
Alexion is soliciting proxies to provide an opportunity to all Alexion stockholders to vote on agenda items at the Alexion special meeting,
whether or not the stockholders are able to attend the Alexion special meeting or any adjournment or postponement thereof. Alexion will bear the entire cost of soliciting proxies from its
stockholders. In addition to the solicitation of proxies by mail, Alexion will request that banks, brokers and other nominee record holders send proxies and proxy material to the beneficial owners of
Alexion common stock and secure their voting instructions, if necessary. Alexion
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may
be required to reimburse those banks, brokers and other nominees on request for their reasonable expenses in taking those actions.
Alexion
has also retained Innisfree M&A Incorporated to assist in soliciting proxies and in communicating with Alexion stockholders and estimates that it will pay them a fee of
approximately $40,000 plus reimbursement for certain out-of-pocket fees and expenses. Alexion also has agreed to indemnify Innisfree M&A Incorporated against various liabilities and expenses that
relate to or arise out of its solicitation of proxies (subject to certain exceptions). Proxies may be solicited on behalf of Alexion or by Alexion directors, officers and other employees in person, by
mail, by telephone, by facsimile, by messenger, via the Internet or by other means of communication, including electronic communication. Directors, officers and employees of Alexion will not be paid
any additional amounts for their services or solicitation in this regard.
Attending the Alexion Special Meeting
If you wish to attend the Alexion special meeting via the special meeting website, you must (1) be a stockholder of record of Alexion at
the close of business on [ · ], 2021 (the record date for the Alexion special
meeting), (2) hold your shares of Alexion beneficially in
the name of a broker, bank or other nominee as of the Alexion record date or (3) hold a valid proxy for the Alexion special meeting.
To
enter the special meeting website and attend the Alexion special meeting, you will need the 16-digit control number located on your proxy card. If you hold your Alexion shares in
street name beneficially through a broker, bank or other nominee and you wish to attend the Alexion special meeting via the special meeting website, you will need to obtain your specific control
number and further instructions from your bank, broker or other nominee.
If
you plan to attend the Alexion special meeting and vote via the special meeting website, Alexion still encourages you to vote in advance by the Internet, telephone or (if you received
a paper copy of the proxy materials) by mail so that your vote will be counted in the event you later decide not to attend the Alexion special meeting via the special meeting website. Voting your
proxy by the Internet, telephone or mail will not limit your right to vote at the Alexion special meeting via the special meeting website if you later decide to attend the Alexion special meeting.
Householding
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with
respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as "householding,"
potentially provides extra convenience for stockholders and cost savings for companies. Alexion and some brokers "household" proxy materials, delivering a single proxy statement to multiple
stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker or Alexion that they or Alexion will be
householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding
and would prefer to receive a separate proxy statement, or if you are receiving multiple copies of the proxy statement and wish to receive only one, please notify your broker if your shares are held
in a brokerage account, or Alexion if you hold shares directly in your name. You can notify Alexion by sending a written request to Corporate Secretary, Alexion Pharmaceuticals, Inc., 121
Seaport Boulevard, Boston, Massachusetts 02210 or by calling (475) 230-2596.
Tabulation of Votes
The Alexion board of directors will appoint an independent inspector of election for the Alexion special meeting. The inspector of election
will, among other matters, determine the number of shares
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of
Alexion common stock represented at the Alexion special meeting to confirm the existence of a quorum, determine the validity of all proxies and ballots and certify the results of voting on all
proposals submitted to Alexion stockholders at the Alexion special meeting.
Adjournments
If a quorum is present at the Alexion special meeting but there are not sufficient votes at the time of the Alexion special meeting to approve
the merger proposal, then Alexion stockholders may be asked to vote on the adjournment proposal.
At
any subsequent reconvening of the Alexion special meeting at which a quorum is present, any business may be transacted that might have been transacted at the original meeting and all
proxies will be voted in the same manner as they would have been voted at the original convening of the Alexion special meeting, except for any proxies that have been effectively revoked or withdrawn
prior to the time the proxy is voted at the reconvened meeting.
Assistance
If you need assistance voting or in completing your proxy card or have questions regarding the Alexion special meeting, please contact Innisfree
M&A Incorporated, Alexion's proxy solicitor for the Alexion special meeting:
INNISFREE
M&A INCORPORATED
Shareholders call toll-free from the U.S. and Canada at (877) 717-3904
or direct at +1 (412) 232-3651 from other locations
Banks and brokers may call collect at (212) 750-5833.
ALEXION STOCKHOLDERS SHOULD CAREFULLY READ THIS PROXY STATEMENT/PROSPECTUS IN ITS ENTIRETY FOR MORE DETAILED INFORMATION CONCERNING THE MERGER AGREEMENT AND THE TRANSACTION. IN
PARTICULAR, ALEXION STOCKHOLDERS ARE DIRECTED TO THE MERGER AGREEMENT, WHICH IS ATTACHED AS ANNEX A HERETO.
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Transaction Structure
The merger agreement provides that, subject to the terms and conditions of the merger agreement, at the first effective time, (1) Merger
Sub I, a direct wholly owned subsidiary of Bidco, will merge with and into Alexion with Alexion surviving as a wholly owned subsidiary of Bidco, and (2) immediately thereafter Alexion will
merge with and into Merger Sub II, with Merger Sub II continuing as the surviving company in the merger as a direct wholly owned subsidiary of Bidco and therefore an indirect wholly owned subsidiary
of AstraZeneca. The terms and conditions of the transaction are contained in the merger agreement, which is described in this proxy statement/prospectus and attached to this proxy statement/prospectus
as Annex A. You are encouraged to read the merger agreement carefully, as it is the legal document that governs the transaction. All descriptions in this summary and elsewhere in this proxy
statement/prospectus of the terms and conditions of the transaction are qualified by reference to the merger agreement.
Merger Consideration
At the first effective time, by virtue of the first merger and without any action on the part of the parties to the merger agreement or any
Alexion stockholder, each eligible share of Alexion common stock will be automatically converted into the right to receive (1) 2.1243 AstraZeneca ADSs (or, at the election of the holder
thereof, a number of ordinary shares of AstraZeneca equal to the number of underlying ordinary shares represented by such AstraZeneca ADSs) (the "share consideration") and (2) $60.00 in cash,
without interest (the "cash consideration" and, collectively with the share consideration, the "merger consideration").
Based
on the number of shares of Alexion common stock outstanding as of
[ · ], 2021, AstraZeneca expects to issue approximately
[ · ] AstraZeneca ADSs to Alexion stockholders pursuant to the merger agreement. The
actual number of AstraZeneca ADSs to be issued pursuant to the merger agreement will be determined upon the completion of the transaction based on the exchange ratio, the number of shares of Alexion
common stock outstanding at such time and the number of Alexion Stock Options, Alexion RSU Awards and Alexion PSU Awards. Based on the number of shares of Alexion common stock outstanding as of
[ · ], 2021, and the number of AstraZeneca ordinary shares outstanding as of
[ · ], 2021, immediately after completion of the transaction, former Alexion
stockholders would own approximately [ · ]% of the combined company.
Based
on the closing price of AstraZeneca ADSs on Nasdaq on December 11, 2020, the last full trading day before the announcement of the merger agreement, the per share value of
Alexion common stock implied by the merger consideration was $175.29. Based on the closing price of AstraZeneca ADSs on Nasdaq on
[ · ], 2021, the most recent practicable date prior to the date of this proxy
statement/prospectus, the per share value of Alexion common stock implied by the merger consideration was
$[ · ]. The implied value of the merger consideration will fluctuate, however, as
the market price of AstraZeneca ADSs fluctuates, because the share consideration portion of the merger consideration that is payable per share of Alexion common stock is a fixed number of AstraZeneca
ADSs. As a result, the value of the merger consideration that Alexion stockholders will receive upon the completion of the transaction could be greater than, less than or the same as the value of the
merger consideration on the date of this proxy statement/prospectus or at the time of the Alexion special meeting. Accordingly, you are encouraged to obtain current stock price quotations for Alexion
common stock and AstraZeneca ADSs before deciding how to vote with respect to the
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approval
of the merger agreement. Alexion common stock trades on Nasdaq under the ticker symbol "ALXN" and AstraZeneca ADSs trade on Nasdaq under the ticker symbol "AZN." The price of AstraZeneca ADSs
on Nasdaq is reported in U.S. dollars, while the price of the AstraZeneca ordinary shares represented thereby on the LSE is reported in pounds sterling.
Ordinary Share Election of Share Consideration
Each Alexion stockholder of record will be mailed an election form that will allow such Alexion stockholder to make an ordinary share election
and receive AstraZeneca ordinary shares instead of AstraZeneca ADSs for all (but not less than all) of their shares of Alexion common stock, which shares will serve as the share consideration. Any
Alexion stockholder who votes against the merger proposal is still entitled to make an ordinary share election with respect to such stockholder's shares of Alexion common stock.
In
order to elect to receive AstraZeneca ordinary shares, an Alexion stockholder must return a properly completed and signed election form to the exchange agent prior to the election
deadline, which will be [ · ] p.m., Eastern time, on
[ · ], 2021. If the election deadline is delayed, AstraZeneca and Alexion will
promptly announce any such delay and, when determined, the rescheduled election deadline.
Impact of Selling Alexion Common Stock as to which an Ordinary Share Election has Already Been Made
Alexion stockholders who have made an ordinary share election will be unable to sell or otherwise transfer their shares after making an ordinary
share election, unless such ordinary share election is properly revoked before such election deadline or unless the merger agreement is terminated.
Ordinary Share Election Revocation
Any record holder of Alexion common stock who has delivered a duly completed election form to the exchange agent may, at any time prior to the
election deadline, revoke such stockholder's ordinary share election only by written notice received by the exchange agent prior to the election deadline. Alexion stockholders will not be entitled to
revoke their ordinary share elections following the election deadline, unless the merger agreement is thereafter terminated. As a result, Alexion stockholders who have made an ordinary share election
will be unable to revoke their election
or sell their shares of Alexion common stock during the period between the election deadline and the date of completion of the transaction or termination of the merger agreement.
Alexion
stockholders not making a valid ordinary share election in respect of their shares prior to the election deadline, including as a result of revocation, will be deemed
non-electing holders. If it is determined that any purported ordinary share election was not properly made, the purported ordinary share election will be deemed to be of no force or effect and the
Alexion stockholder making the purported ordinary share election will be deemed not to have made an ordinary share election for these purposes, unless a proper ordinary share election is subsequently
made on a timely basis.
Non-Electing Holders
Alexion stockholders who do not make an ordinary share election, whose election forms are not received by the exchange agent by the election
deadline, or whose election forms are improperly completed or not signed will be deemed not to have made an ordinary share election. Alexion stockholders who do not make an election will receive
AstraZeneca ADSs for shares of Alexion common stock they own immediately prior to the transaction.
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Neither AstraZeneca nor Alexion is making any recommendation as to whether Alexion stockholders should make an ordinary share election. You must make your own
decision with respect to such ordinary share election.
Background of the Transaction
The Alexion board of directors and senior management team, on an ongoing basis, regularly review and evaluate Alexion's long-term strategy and
the range of strategic opportunities that might be available to it to strengthen Alexion's business and to enhance stockholder value. As part of this ongoing evaluation, Alexion has considered, from
time to time, various potential
strategic transactions, including large and small acquisitions, potential licensing, partnering, research and development or collaboration transactions with third parties, initiation of a regular
dividend, expanded stock repurchases, and other potential strategic alternatives.
Alexion's
management and board of directors also engage in active dialogue with its stockholders, including to understand investor queries regarding valuation, performance and business
risks to Alexion, as well as to obtain investor feedback on Alexion's business operations, financial performance, capital allocation decisions, corporate governance, social responsibility,
sustainability and ESG-related priorities, and potential strategic transactions.
In
September 2019 and continuing into the fourth quarter of 2019, one of Alexion's investors in particular, Elliott Advisors (UK) Limited ("Elliott"), began recommending that the Alexion
board of directors immediately launch a proactive process to explore a sale of the company. Following these interactions, on December 6, 2019, Alexion issued a public statement disclosing that
the Alexion board of directors had considered Elliott's recommendation but had determined that conducting a proactive sale process would not be in the best interest of stockholders at that time. On
December 9, 2019, Elliott issued its own public statement setting forth its view, previously privately communicated to Alexion, that Alexion would be a highly valuable strategic asset for a
number of larger pharmaceutical companies and reiterating Elliott's belief that Alexion should launch a proactive sale process. In May 2020, Elliott publicly reiterated these views in an open letter
to the Alexion board of directors.
Beginning
in the first quarter of 2020 and during the spring and summer of 2020, Alexion developed an update to its long-range business and financial plan, which it does on an annual
basis. The Alexion board of directors meets regularly to, among other things, review the development of Alexion's long-range plan, and to review and, as appropriate, update Alexion's capital
allocation strategy. During the summer of 2020, the Alexion board of directors determined to conduct, at its board meetings scheduled for August and September 2020, a comprehensive and in-depth review
of Alexion's long-range plan and valuation ranges derivable from that plan, positioning with investors, various business scenarios and potential strategic alternatives, including the potential merits
of exploring a business combination of Alexion with a third party versus remaining an independent company. During the summer and fall of 2020, Alexion also continued to engage with its stockholders,
and in these interactions, several stockholders encouraged the company to explore strategic alternatives.
On
July 30, 2020, Alexion reported its financial results for the second quarter of 2020, announced certain forward-looking financial information and presented an updated
multi-year capital allocation strategy featuring new targets for minimum levels of stock repurchase and return of capital to stockholders based on Alexion having entered a new phase of company growth
and diversification.
On
August 10, 2020, Pascal Soriot, AstraZeneca's Chief Executive Officer, contacted David Brennan, the Chairman of the Alexion board of directors. Mr. Brennan previously
had served as a director and Chief Executive Officer of AstraZeneca, retiring from those positions with AstraZeneca in June of 2012. Mr. Soriot indicated that AstraZeneca would like to discuss
with Mr. Brennan and with Alexion's Chief Executive Officer, Dr. Ludwig Hantson, possible interest in a potential business combination. Mr. Brennan indicated to Mr. Soriot
that should AstraZeneca wish to make a proposal
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for
a business combination, it should do so in writing so that the Alexion board of directors could consider it.
On
August 19, 2020, the Alexion board of directors met, together with members of senior management and representatives of BofA Securities, Inc. ("BofA Securities"),
Alexion's external financial advisor, and Wachtell, Lipton, Rosen & Katz ("Wachtell Lipton"), its external legal advisor, to review and discuss, among other things, Alexion's positioning with
investors and potential strategic alternatives, including the possibility of conducting outreach to third parties to determine their potential interest in a business combination transaction with
Alexion, including an acquisition of Alexion. On August 31, 2020, the Alexion board of directors convened a previously-scheduled meeting, together with members of Alexion senior management and
representatives of BofA Securities and Wachtell Lipton, to review, discuss and approve the company's long-range plan, and to review and discuss preliminary financial analyses and potential strategic
alternatives, including possible outreach to potential counterparties to ascertain whether there would be third-party interest in pursuing a business combination with Alexion. On the same day,
Mr. Brennan received a message from Leif Johansson, the Chairman of the AstraZeneca board of directors, who was seeking to speak to Mr. Brennan concerning AstraZeneca's interest in a
business combination transaction with Alexion. Mr. Brennan reported this contact to the Alexion board, and the Alexion board authorized Mr. Brennan and Dr. Hantson to meet with
AstraZeneca's representatives to understand what, if anything, AstraZeneca wished to convey.
On
September 2, 2020, Mr. Johansson and Mr. Soriot met via videoconference with Mr. Brennan and Dr. Hantson. The AstraZeneca representatives verbally
outlined a potential merger in which AstraZeneca would acquire Alexion for total consideration of $148 per share, with $38 per share to be paid in cash and $110 per share to be paid in AstraZeneca
ADSs (with a fixed exchange ratio to be determined at a mutually agreed time prior to announcement), and presented the strategic and financial merits of such a proposal. On September 3, 2020,
AstraZeneca sent Alexion a letter setting forth AstraZeneca's proposal in writing. The proposal also requested exclusivity and emphasized the importance of confidentiality, indicating that a leak
could result in AstraZeneca withdrawing its proposal and jeopardize the transaction.
On
September 6, 2020, the Alexion board of directors met, together with members of Alexion senior management and representatives of BofA Securities and Wachtell Lipton, to review
and consider AstraZeneca's proposal and Alexion's strategic alternatives. Following review and deliberation, the Alexion board of directors determined to reject the proposal from AstraZeneca on the
grounds that it undervalued Alexion. On September 6, 2020, Mr. Brennan and Dr. Hantson conveyed this determination in a letter to Mr. Soriot.
On
September 8, 2020, AstraZeneca submitted an updated written proposal to acquire Alexion in which it increased its proposed offer price to $155 per share in the aggregate,
consisting of $45 per share in cash and $110 per share in AstraZeneca ADSs (with a fixed exchange ratio to be determined at a mutually agreed time prior to announcement). Later that day, the Alexion
board of directors met, together with members of Alexion senior management and representatives of BofA Securities and Wachtell Lipton, to consider AstraZeneca's revised proposal. Following review and
deliberation, based upon, among other things, the Alexion board's belief that the updated proposal undervalued Alexion, the Alexion board of directors determined to reject the updated proposal.
Following the meeting, Mr. Brennan and Dr. Hantson conveyed this determination in a letter to Mr. Soriot.
On
September 16, 2020, a member of the Alexion board of directors was contacted by a representative of AstraZeneca's financial advisor seeking to continue the discussions between
the parties and requesting additional information on AstraZeneca's behalf. On September 16-17, 2020, the Alexion board of directors met, together with members of Alexion senior management and
representatives of BofA Securities and Wachtell Lipton, to continue its review and consideration of Alexion's strategic alternatives. The Alexion board of directors continued its discussion from its
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August 31
meeting concerning the desirability of authorizing BofA Securities to conduct outreach to certain large pharmaceutical companies that might have the interest and capability and
strategic fit to put forward a proposal to merge with or acquire Alexion on terms that would be more favorable to Alexion and its stockholders than the proposals advanced by AstraZeneca, which
proposals the Alexion board of directors believed undervalued Alexion. The Alexion board of directors determined that any such outreach, if authorized, should occur on a private and strictly
confidential basis to minimize the risk of disruptive leaks. Alexion had been planning a virtual investor day to be held on October 6, 2020, at which Alexion would share certain long-term
financial and business plans, as well as details on Alexion's research and development pipeline. The Alexion board of directors authorized management to provide to AstraZeneca certain limited due
diligence information, consisting solely of financial, business and pipeline-related information that Alexion planned to disclose at its upcoming virtual investor day, accompanied by a clear message
that a substantial improvement in value would be necessary in order for discussions between the parties to proceed beyond this limited due diligence information.
Following
the Board meeting, on September 18, 2020, Mr. Brennan and Dr. Hantson met with Mr. Johansson and Mr. Soriot. Mr. Soriot reiterated
AstraZeneca's commitment to a value-creating transaction with Alexion and said that AstraZeneca would be willing to consider offering additional value above $155 per Alexion share if AstraZeneca were
to be provided with certain diligence information and an opportunity to engage in further discussions regarding a potential business combination.
Following
further discussion among Alexion's and AstraZeneca's respective financial and legal advisors, on September 23, 2020, Alexion and AstraZeneca executed a limited-duration
form of confidentiality agreement to enable AstraZeneca to receive an advance preview of the new financial, business and pipeline-related disclosures that Alexion planned to make at Alexion's Investor
Day and to share Alexion's views on the company's prospects and capabilities. Alexion provided such information to AstraZeneca pursuant to the confidentiality agreement, and the members of the
respective senior management teams of Alexion and AstraZeneca met on September 24, 2020.
On
September 26, 2020, Mr. Soriot delivered to Mr. Brennan and Dr. Hantson a letter containing a revised proposal to acquire Alexion for total consideration
of $170 per share, with $60 per share to be paid in cash and $110 per share to be paid in AstraZeneca ADSs (with a fixed exchange ratio to be determined closer to the time of announcement), reflecting
a consideration mix of 35% cash and 65% in AstraZeneca ADSs. The proposal indicated that it was subject to, among other things, satisfactory completion of confirmatory due diligence.
On
September 27, 2020, the Alexion board of directors met, together with members of Alexion senior management and representatives of BofA Securities and Wachtell Lipton, to
consider the updated proposal from AstraZeneca and to discuss the previously-considered outreach to other potential strategic counterparties. Following review and deliberation, the board determined to
authorize management to permit AstraZeneca to continue its due diligence but to advise AstraZeneca that it would need to provide further improvement in value after completion of due diligence in order
to induce Alexion to agree to a transaction. On September 29, 2020, representatives of Alexion communicated this message from the Alexion board to representatives of AstraZeneca.
At
the September 27 board meeting, the Alexion board of directors also authorized BofA Securities to move forward with the contemplated private outreach to other strategic parties
which had been discussed at the September 16-17 board meeting and prior board meetings. BofA Securities then proceeded to contact seven other industry participants to determine their potential
respective interest in possibly engaging in an acquisition of, or other business combination transaction with, Alexion.
On
October 4, 2020, Alexion and AstraZeneca entered into a mutual confidentiality agreement, which contained customary standstill restrictions on AstraZeneca (which restrictions
would terminate in
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the
event Alexion were to, among other specified circumstances, enter into a change of control transaction with another party), allowing for continued confidential discussions and the exchange of
confidential information in connection with the parties' respective due diligence investigations, in which the parties engaged over the following weeks.
On
October 6, 2020, Alexion held its public Virtual Investor Day to provide the investment community with previously-non-public additional insight into the company's pipeline,
future growth potential and continued progress against its business plan.
By
the end of October, all but one of the seven other industry participants contacted by BofA Securities at the direction of the Alexion board of directors expressly declined to pursue
the opportunity to explore a transaction with Alexion. One participant ("Participant 2") indicated potential interest and a willingness to engage in further discussions and due diligence. On
October 8, 2020, Participant 2 and Alexion entered into a confidentiality and standstill agreement (which standstill would terminate in the event Alexion were to enter into a change of control
transaction with another party), and thereafter diligence-related information was exchanged with Participant 2. During the month of October 2020, Mr. Brennan had conversations with a senior
representative of Participant 2, and representatives of BofA Securities also had several discussions with Participant 2's financial advisors, to determine whether or not Participant 2 would submit an
indication of interest and to encourage Participant 2 to do so.
In
the third quarter of 2020, Alexion received a letter from the Dutch Tax Authorities ("DTA") regarding certain tax-related matters (the "DTA tax-related matters"), as publicly
disclosed by Alexion in its publicly filed Quarterly Report on Form 10-Q, issued on October 29, 2020 for the quarterly period ended September 30, 2020. In the course of due
diligence between Alexion and AstraZeneca, among other diligence, the parties discussed the DTA tax-related matters, which by October were the subject of on-going settlement discussions between
Alexion and the DTA. On October 24, 2020, Marc Dunoyer, the Chief Financial Officer of AstraZeneca, advised Dr. Aradhana Sarin, the Chief Financial Officer of Alexion, that AstraZeneca
intended to terminate due diligence and transaction negotiations. In this conversation, Mr. Dunoyer advised Dr. Sarin that although AstraZeneca remained strategically interested in a
potential combination with Alexion, and that due diligence had enabled AstraZeneca to identify potential sources of additional value, AstraZeneca could not proceed further unless and until Alexion
were to settle the DTA tax-related matter with the DTA, or, in the absence of a settlement, obtain greater clarity as to Alexion's potential obligations to the DTA, if any. On October 30, 2020,
a representative of Participant 2's financial advisor contacted a representative of Alexion's financial advisor to convey that while Participant 2 had not yet determined whether to submit a written
transaction proposal to Alexion, Participant 2 was considering a valuation range between $154 to $160 per share in cash and required access to additional sensitive due diligence information to
evaluate the potential transaction and possible upside.
On
November 3, 2020, the Alexion board of directors met, together with members of Alexion senior management and representatives of BofA Securities and Wachtell Lipton. At that
meeting the board received an update regarding the DTA matters, the status of discussions with AstraZeneca and the communication from Participant 2's financial advisor. The Alexion board of
directors directed BofA Securities to advise Participant 2's financial advisor that Alexion would be willing to provide Participant 2 with access to additional confidential due diligence
if Participant 2 were to submit a written indication of interest at a valuation of at least $160 per share with a view towards further increase, and to advise Participant 2 that the Alexion
board of directors would expect a valuation above $160 per share in an agreed transaction. The directors also instructed Alexion management and advisors to inform Participant 2 that if Alexion were to
enter into a transaction, Alexion would require a high degree of certainty of closing in any transaction, including that Participant 2 would need to take responsibility for
accepting and minimizing or eliminating regulatory risk. At the meeting, the Alexion board of directors also reviewed other strategic alternatives, including a larger, and potentially
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leveraged,
significant share buyback and a proposal received from Elliott to acquire a royalty interest in Alexion's global revenues from its ULTOMIRIS product for $4.7 billion. The Alexion
board of directors concluded that these alternatives did not compare favorably to the alternative of a business combination at an attractive valuation.
On
November 7, 2020, Participant 2 submitted to the Alexion board of directors a written preliminary, non-binding indication of interest outlining a potential transaction in which
Alexion stockholders would receive $160 per share in cash, subject to due diligence and other conditions. The indication of interest also indicated that this valuation relied on internal evaluation
performed by Participant 2 and that to the extent additional diligence highlighted additional value, Participant 2 would be open to discussing an appropriate increase in the offer price. Following
receipt of the letter, representatives of Alexion provided requested information to Participant 2 and participated in management-level meetings requested by Participant 2. During these discussions,
representatives of Participant 2 advised that they would not be willing to provide the degree of assurance regarding regulatory matters which the Alexion board of directors had specifically requested.
During the week of November 23, 2020, representatives of Participant 2 conveyed to Alexion's financial advisor and to Mr. Brennan that Participant 2 had completed its core due diligence
with respect to Alexion but had not identified additional value. Participant 2 did not re-affirm its prior proposal nor submit a further indication of interest thereafter.
During
November 2020, Alexion's tax advisors continued to discuss with the DTA a potential resolution of the DTA tax-related matters, and by mid-November reached a verbal agreement in
principle with the DTA on acceptable settlement terms. On November 19, Dr. Sarin updated Mr. Dunoyer as to this anticipated resolution, and, on November 23, 2020,
AstraZeneca indicated that, on the basis of this development, AstraZeneca would consider re-engaging concerning a potential transaction.
On
November 24, 2020, Mr. Dunoyer contacted Dr. Sarin to convey a revised transaction proposal for AstraZeneca to acquire Alexion for total consideration of $175 per
share, with $60 per share to be paid in cash and $115 per share to be paid in AstraZeneca ADSs (with a fixed exchange ratio to be determined closer to the time of announcement), indicating that this
proposal represented the maximum consideration authorized by the AstraZeneca board of directors, and was subject to confirmatory diligence. AstraZeneca's representatives also stated to Alexion's
representatives that AstraZeneca would conduct its remaining diligence in parallel with the negotiation of definitive agreements within the following weeks and work towards announcing an agreed
transaction as promptly as possible.
On
November 25, 2020, the Alexion board of directors met, together with members of Alexion senior management and representatives of BofA Securities and Wachtell Lipton, to review
the revised proposal from AstraZeneca and to receive updated financial analyses from BofA Securities. Mr. Brennan also updated the Alexion board of directors on his conversation with the Chief
Executive Officer of Participant 2 during the week of November 23, 2020, in which Participant 2 indicated, among other things, that it had not identified additional value nor re-affirmed its
prior proposal. Following review and deliberation, the Alexion board of directors determined the proposed economic terms to be attractive and acceptable, and instructed senior management and Alexion's
financial and legal advisors to engage with AstraZeneca to complete negotiations of the non-price transaction terms so that the Alexion board of directors could consider the full proposed terms for
potential approval.
On
November 28, 2020, Wachtell Lipton provided an initial draft transaction agreement to Freshfields, AstraZeneca's legal advisor. Thereafter, through December 12, the
parties negotiated the transaction agreement and related documentation.
On
December 2-3, 2020, Alexion held a regularly scheduled two-day board meeting and subsequently held special board meetings on December 7, 9 and 10. At these meetings,
Alexion senior
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management
and representatives of BofA Securities and Wachtell Lipton provided the Alexion board of directors with updates on the transaction-related negotiations (including as to regulatory matters,
the allocation of business risks that could arise following a transaction announcement, provisions relating to certainty of closing, and the manner in which the exchange ratio for the portion of the
transaction consideration to be paid in the form of AstraZeneca ADSs would be calculated). During these meetings, members of Alexion senior management and representatives of BofA Securities and
Wachtell Lipton reported on the results of Alexion's reverse due diligence review of AstraZeneca, representatives of BofA Securities reviewed with the Alexion board of directors their preliminary
financial analysis of the transaction consideration to be received by Alexion stockholders and representatives of BofA Securities reviewed with members of the Alexion board of directors and the
Alexion senior management certain publicly available financial forecasts for AstraZeneca and the Alexion board of directors and the Alexion senior management discussed and considered AstraZeneca's
future prospects, business-related risks and opportunities for AstraZeneca, the potential benefits to the combined company and potential valuation upside for AstraZeneca stock arising from the
combination. During these meetings, members of senior management also made financial presentations concerning Alexion, AstraZeneca and the pro forma combined company, and discussed the potential
synergies potentially arising from the proposed transaction. At the meeting of the Alexion board of directors on December 10, 2020, among other matters, representatives of BofA Securities
presented BofA Securities' financial analysis of the proposed transaction and the transaction consideration to be received by Alexion stockholders.
On
December 8, 2020, Alexion and the DTA entered into a settlement agreement resolving the outstanding DTA tax-related matters, and AstraZeneca was apprised of such resolution.
By
the morning of December 11, 2020, the parties had completed negotiations of all of the material terms of the transaction, other than the final calculation of the exchange ratio
for the portion of the transaction consideration to be paid in the form of AstraZeneca ADSs. Later that day Mr. Dunoyer and Dr. Sarin reached agreement to fix the exchange ratio at
2.1243 AstraZeneca ADSs per share of Alexion common stock, which, together with the cash portion of the transaction consideration, represented an implied per share price of approximately $175.00 per
share of Alexion common stock based on the agreed reference price of an AstraZeneca ADS of $54.14. On the evening of December 11, 2020, the Alexion board of directors met, together with members
of Alexion senior management and representatives of BofA Securities and Wachtell Lipton, to discuss and deliberate on the proposed transaction with AstraZeneca. Representatives of Wachtell Lipton
presented a detailed summary of the terms of the draft merger agreement and summarized the resolution of open issues that had been unresolved at the time of the Alexion board of directors' previous
meeting, including issues relating to certainty of closing. BofA Securities reviewed with the Alexion board of directors its financial analysis of the merger consideration, and, at the request of the
Alexion board of directors, BofA Securities rendered its oral opinion, which was subsequently confirmed by delivery of a written opinion dated December 11, 2020, to the effect that, as of the
date of the opinion and based on and subject to various assumptions and limitations described in BofA Securities' written opinion, the merger consideration to be received in the transaction by holders
of Alexion common stock was fair, from a financial point of view, to such holders, as more fully described below under the section entitled "The TransactionOpinion of Alexion's Financial
Advisor". After carefully considering the proposed terms of the transaction, and taking into consideration the matters discussed during that meeting and prior meetings of the Alexion board of
directors, including those outlined under the sections entitled "Recommendation of the Alexion Board of Directors; Alexion's Reasons for the Transaction," the Alexion board of directors
unanimously: (1) determined that the merger agreement and the transactions contemplated by the merger agreement (including the transaction) were fair to and in the best interests of Alexion and
its stockholders; (2) approved, adopted and declared advisable the merger agreement and the transactions contemplated by the merger agreement (including the transaction); (3) recommended
the adoption by Alexion's stockholders of the merger agreement and the transactions
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contemplated
by the merger agreement (including the transaction); and (4) directed that the adoption of the merger agreement and the transactions contemplated by the merger agreement (including
the transaction) be submitted to a vote at a meeting of Alexion's stockholders.
Following
the approval of the merger agreement and the transaction by each of the Alexion board of directors and the AstraZeneca board of directors, Alexion and AstraZeneca executed the
merger agreement early during the morning of December 12, 2020. Later that morning, the parties issued a joint press release announcing their entry into a definitive merger agreement for
AstraZeneca to acquire Alexion.
Recommendation of the Alexion Board of Directors; Alexion's Reasons for the Transaction
At a special meeting held on December 11, 2020, the Alexion board of directors unanimously: (1) determined that the merger
agreement and the transactions contemplated by the merger agreement (including the transaction) were fair to and in the best interests of Alexion and its stockholders; (2) approved, adopted and
declared advisable the merger agreement and the transactions contemplated by the merger agreement (including the transaction); (3) recommended the adoption by Alexion's stockholders of the
merger agreement and the transactions contemplated by the merger agreement; and (4) directed that the merger agreement and the transactions contemplated by the merger agreement to submitted to
a vote at a meeting of Alexion's stockholders. Accordingly, the Alexion board of directors unanimously recommends that Alexion stockholders vote "FOR" the merger
proposal.
In
evaluating the transaction and in reaching its determinations and making its recommendations, the Alexion board of directors consulted with Alexion senior management and its outside
legal and financial advisors, and considered a number of factors, including the following factors that weighed in favor of the transaction.
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than
AstraZeneca provided a specific indication of interest, with the AstraZeneca proposal being the most attractive and, by December 2020, the only proposal believed to be available;
-
-
its belief, based on AstraZeneca's statements made and positions taken during negotiations, as well as the increases in merger consideration
during negotiations, and the significant premium relative to the stand-alone price of Alexion's common stock, that the merger consideration was the maximum consideration that AstraZeneca would be
willing to offer;
-
-
its belief that entering into the merger agreement with AstraZeneca provided the best alternative for maximizing stockholder value reasonably
available to Alexion and its stockholders, including when compared to continuing to operate on a stand-alone basis and taking into account certain risks associated with continuing to operate as a
stand-alone company, including those set forth in the "Risk Factors";
-
-
that Alexion stockholders would have the opportunity to participate in the long-term potential of AstraZeneca after giving effect to the
transaction;
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Governance Matters
-
-
the fact that, at the effective time of the first merger, two Alexion directors will be appointed to the AstraZeneca board of directors, which
will allow for oversight of and input into the strategy of the combined company;
The
Alexion board of directors weighed these advantages and opportunities against a number of potentially negative factors in its deliberations concerning the merger agreement and the
transaction, including:
-
-
that the fixed exchange ratio would not adjust downwards to compensate for changes in the price of AstraZeneca ADSs or ordinary shares prior to
the consummation of the transaction. The Alexion board of directors determined that the exchange ratio was appropriate and that the risks were acceptable in view of the relative historical trading
values and financial performance of Alexion and AstraZeneca;
-
-
the terms of the merger agreement that restrict Alexion's ability to solicit alternative acquisition proposals and to provide information to,
or engage in discussions with, a third party interested in pursuing an alternative acquisition proposal, as further discussed in the section entitled "The Merger
AgreementNo Solicitation";
-
-
the potential for diversion of management attention and employee attrition due to the possible effects of the announcement and pendency of the
transaction and the potential effects on customers and business relationships as a result of the transaction;
-
-
the amount of time it could take to complete the transaction, including the fact that completion of the transaction depends on factors outside
of Alexion's control, and that there can be no assurance that the conditions to the transaction will be satisfied even if the merger proposal is approved by Alexion stockholders;
-
-
the possibility of non-consummation of the transaction and the potential consequences of non-consummation, including the potential negative
impacts on Alexion, its business and the trading price of its shares of common stock;
-
-
the difficulty and costs inherent in integrating large and diverse businesses and the risk that the potential synergies, dividend growth and
other benefits expected to be obtained as a result of the transaction might not be fully or timely realized;
-
-
the obligation of Alexion to pay AstraZeneca a termination payment of $1.18 billion upon termination of the merger agreement under
specified circumstances;
-
-
the obligation of Alexion to pay AstraZeneca a termination payment of $270 million upon the termination of the merger agreement as a
result of Alexion's failure to obtain the requisite Alexion stockholder approval for the merger proposal; and
-
-
the risks and other considerations of the type and nature described under the sections entitled "Risk
Factors" and "Cautionary Statement Regarding Forward-Looking Statements."
The
Alexion board of directors considered the factors described above as a whole, including through engaging in discussions with Alexion senior management and Alexion's outside legal and
financial advisors. Based on this review and consideration, the Alexion board of directors unanimously concluded that these factors, on balance, supported a determination that the merger agreement and
the transactions contemplated by the merger agreement, including the transaction, were advisable and in the best interests of Alexion stockholders, and to make its recommendation to Alexion
stockholders that they vote to adopt the merger agreement.
In
addition, the Alexion board of directors was aware of and considered the fact that Alexion's directors and executive officers may have certain interests in the transaction that are
different from, or in addition to, the interests of Alexion stockholders generally, including the treatment of equity awards held by such directors and executive officers in the transaction, as
described in the section entitled "Interests of Alexion's Directors and Executive Officers in the Transaction".
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The foregoing discussion of the information and factors that the Alexion board of directors considered is not, and is not intended to be, exhaustive. The Alexion
board of directors collectively reached the conclusion to approve the merger agreement and the consummation of the transactions contemplated by the merger agreement, including the transaction, in
light of the various factors described above and other factors that the members of the Alexion board of directors believed appropriate. In view of the complexity and wide variety of factors, both
positive and negative, that the Alexion board of directors considered in connection with its evaluation of the transaction, the Alexion board of directors did not find it useful to, and did not
attempt, to quantify, rank or otherwise assign relative or specific weights or values to any of the factors it considered in reaching its decision and did not undertake to make any specific
determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to the ultimate determination of the Alexion board of directors. In considering
the factors discussed above, individual directors may have given different weights to different factors.
The
foregoing discussion of the information and factors considered by the Alexion board of directors in approving the merger agreement is forward-looking in nature. This information
should be read in light
of the factors discussed in the section entitled "Cautionary Statement Regarding Forward-Looking Statements".
Opinion of Alexion's Financial Advisor
Alexion retained BofA Securities to act as its financial advisor in connection with the proposed transaction. BofA Securities is an
internationally recognized investment banking firm which is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings,
secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. Alexion selected BofA Securities to act as Alexion's financial advisor in
connection with the proposed transaction on the basis of BofA Securities' experience in transactions similar to the proposed transaction, its reputation in the investment community and its familiarity
with Alexion and its business.
On
December 11, 2020, at a meeting of the Alexion board of directors held to evaluate the proposed transaction, BofA Securities delivered to the Alexion board of directors an oral
opinion, which was confirmed by delivery of a written opinion dated December 11, 2020, to the effect that, as of the date of the opinion and based on and subject to various assumptions and
limitations described in BofA Securities' written opinion, the merger consideration to be received in the transaction by holders of Alexion common stock was fair, from a financial point of view, to
such holders.
The full text of BofA Securities' written opinion to the Alexion board of directors, which describes, among other things, the assumptions made, procedures
followed, factors considered and limitations on the review undertaken, is attached as Annex B to this proxy statement/prospectus and is incorporated by reference herein in its entirety. The
following summary of BofA Securities' opinion is qualified in its entirety by reference to the full text of BofA Securities' written opinion. BofA Securities delivered its opinion to the Alexion board
of directors for the benefit and use of the Alexion board of directors (in its capacity as such) in connection with and for purposes of its evaluation of the transaction. BofA Securities' opinion does
not address any other terms or other aspects or implications of the proposed transaction and no opinion or view was expressed as to the relative merits of the proposed transaction in comparison to
other strategies or transactions that might be available to Alexion or in which Alexion might engage or as to the underlying business decision of Alexion to proceed with or effect the proposed
transaction. BofA Securities' opinion does not address any other aspect of the transaction and does not express any opinion or recommendation as to how any stockholder should vote or act in connection
with the proposed transaction or any related matter.
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In
connection with rendering its opinion, BofA Securities, among other things:
-
(1)
-
reviewed
certain publicly available business and financial information relating to Alexion and AstraZeneca;
-
(2)
-
reviewed
certain internal financial and operating information with respect to the business, operations and prospects of Alexion furnished to or discussed with BofA
Securities by the management of Alexion, including the certain financial forecasts relating to Alexion prepared by the management of Alexion reflecting its long-range plan for Alexion (referred to as
the "Alexion management unaudited PTRS Alexion projections," as defined and summarized in the section titled "Alexion Unaudited Prospective Financial
Information" beginning on page 74);
-
(3)
-
reviewed
certain financial forecasts relating to AstraZeneca prepared by the management of Alexion based on certain publicly available financial forecasts for
AstraZeneca (referred to as the "Alexion management unaudited AstraZeneca projections, as defined and summarized in the section titled "Alexion Unaudited
Prospective Financial Information" beginning on page 74), and discussed with the management of Alexion its assessments as to the likelihood of AstraZeneca achieving the
future financial results reflected in the Alexion management unaudited AstraZeneca projections;
-
(4)
-
reviewed
certain estimates as to the amount and timing of cost savings (referred to as the "cost-synergies," as defined and summarized in the section titled
"Alexion Unaudited Prospective Financial Information" beginning on page 74), anticipated by the management of Alexion to result from
the proposed transaction;
-
(5)
-
discussed
the past and current business, operations, financial condition and prospects of Alexion and AstraZeneca with members of senior management of Alexion;
-
(6)
-
discussed
with the management of Alexion its assessments as to the products and product candidates of Alexion, including the likelihood of technical, clinical and
regulatory success of such products and product candidates;
-
(7)
-
reviewed
the potential pro forma financial impact of the proposed transaction on the future financial performance of AstraZeneca, including the potential effect on
AstraZeneca's estimated earnings per share;
-
(8)
-
reviewed
the trading histories for Alexion common stock, AstraZeneca ADSs, and AstraZeneca ordinary shares and a comparison of such trading histories with each other
and with the trading histories of other companies BofA Securities deemed relevant;
-
(9)
-
compared
certain financial and stock market information of Alexion and AstraZeneca with similar information of other companies BofA Securities deemed relevant;
-
(10)
-
compared
certain financial terms of the proposed transaction to financial terms, to the extent publicly available, of other transactions we deemed relevant;
-
(11)
-
considered
the results of the efforts taken by BofA Securities on behalf of Alexion to solicit, at the direction of Alexion, indications of interest from third
parties with respect to a possible acquisition of Alexion;
-
(12)
-
reviewed
a draft, dated December 11, 2020, of the merger agreement; and
-
(13)
-
performed
such other analyses and studies and considered such other information and factors as BofA Securities deemed appropriate.
In
arriving at its opinion, BofA Securities assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information and data
publicly available or provided to or otherwise reviewed by or discussed with BofA Securities and has relied
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upon
the assurances of the management of Alexion that it was not aware of any facts or circumstances that would make such information or data inaccurate or misleading in any material respect. With
respect to the Alexion management unaudited PTRS Alexion projections, BofA Securities was advised by Alexion, and assumed, that they were reasonably prepared on bases reflecting the best currently
available estimates and good faith judgments of the management of Alexion as to the future financial performance of Alexion. With respect to the cost-synergies, BofA Securities was advised by Alexion,
and has assumed, that they were also reasonably prepared on bases reflecting the best currently available estimates and good faith judgment of the management of Alexion as to the matters covered
thereby. As the Alexion board of directors was aware, BofA Securities did not discuss the past and current business, operations, financial condition and prospects of AstraZeneca with the management of
AstraZeneca, and was not provided with, and did not have access to, stand-alone financial forecasts relating to AstraZeneca prepared by the management of AstraZeneca. Accordingly, Alexion advised BofA
Securities, and BofA Securities assumed with the consent of Alexion, that the Alexion management unaudited AstraZeneca projections were a reasonable basis upon which to evaluate the future financial
performance of AstraZeneca and, at the direction of Alexion, BofA Securities relied on the Alexion management unaudited AstraZeneca projections for purposes of its opinion. BofA Securities also
relied, at the direction of Alexion, on the assessments of the management of Alexion as to AstraZeneca's ability to achieve the cost-synergies and was advised by Alexion, and assumed, with the consent
of Alexion, that the cost-synergies would be realized in the amounts and at the times projected. BofA Securities also relied, at the direction of Alexion, on the assessments of the management of
Alexion as to the products and product candidates of Alexion, including the likelihood of technical, clinical and regulatory success of such products and product candidates. BofA Securities did not
make and was not provided with any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Alexion, AstraZeneca or any other entity, nor did BofA Securities make
any physical inspection of the properties or assets of Alexion, AstraZeneca or any other entity. BofA Securities did not evaluate the solvency or fair value of Alexion or AstraZeneca under any state,
federal or other laws relating to bankruptcy, insolvency or similar matters. BofA Securities assumed, at the direction of Alexion, that the transaction would be consummated in accordance with its
terms and in compliance with all applicable laws, relevant documents and other requirements, without waiver, modification or amendment of any material term, condition or agreement and that, in the
course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the transaction, no delay, limitation, restriction or condition, including any
divestiture requirements or amendments or modifications, would be imposed that would have an adverse effect on Alexion, AstraZeneca or the contemplated benefits of the transaction. BofA Securities
also assumed, at the direction of Alexion, that the transaction would qualify for federal income tax purposes as a reorganization under the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended. BofA Securities also assumed, at the direction of Alexion, that the final executed merger agreement would not differ in any material respect from the draft agreement reviewed
by BofA Securities.
BofA
Securities expressed no view or opinion as to any terms or other aspects or implications of the proposed transaction (other than the merger consideration to the extent expressly
specified in its opinion), including, without limitation, the form or structure of the proposed transaction or any terms, aspects or implications of any other agreement, arrangement or understanding
entered into in connection with or related to the proposed transaction or otherwise. BofA Securities' opinion was limited to the fairness, from a financial point of view, of the merger consideration
to be received by the holders of Alexion common stock and no opinion or view was expressed with respect to any consideration received in connection with the transaction by the holders of any other
class of securities, creditors or other constituencies of any party. In addition, no opinion or view was expressed with respect to the fairness (financial or otherwise) of the amount, nature or any
other aspect of any compensation or other consideration to any of the officers, directors or employees of any party to the transaction or any related entity, or class of such persons, relative to the
merger consideration or
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otherwise.
Furthermore, no opinion or view was expressed as to the relative merits of the proposed transaction in comparison to other strategies or transactions that might be available to Alexion or
in which Alexion might engage or as to the underlying business decision of Alexion to proceed with or effect the proposed transaction. In addition, BofA Securities did not express any view or opinion
with respect to, and BofA Securities relied, with the consent of Alexion, upon the assessments of Alexion and its representatives regarding, legal, regulatory, accounting, tax and similar matters
relating to Alexion, AstraZeneca or any other entity and the proposed transaction (including the contemplated benefits thereof) as to which BofA Securities noted that Alexion obtained such advice as
it deemed necessary from qualified professionals. BofA Securities further expressed no opinion as to what the value of AstraZeneca ADSs (or the underlying AstraZeneca ordinary shares) actually would
be when issued or the prices at which Alexion common stock, AstraZeneca ADSs or AstraZeneca ordinary shares would trade at any time, including following announcement or consummation of the proposed
transaction. In addition, BofA Securities expressed no opinion or recommendation as to how any stockholder should vote or act in connection with the transaction or any related matter.
BofA
Securities' opinion was necessarily based on financial, economic, monetary, market, tax and other conditions and circumstances as in effect on, and the information made available to
BofA Securities as of, the date of its opinion. While the credit, financial and stock markets have been experiencing unusual volatility, BofA Securities expressed no opinion or view as to any
potential effects of such volatility on Alexion, AstraZeneca or the proposed transaction. It should be understood that subsequent developments may affect BofA Securities' opinion, and BofA Securities
does not have any obligation to update, revise, or reaffirm its opinion. The issuance of BofA Securities' opinion was approved by a fairness opinion review committee of BofA Securities. Except as
described in this summary, Alexion imposed no other limitations on the investigations made or procedures followed by BofA Securities in rendering its opinion.
The
discussion set forth below in "Summary of Material Financial Analyses of Alexion,"
"Summary of Material Financial Analyses of AstraZeneca" and "Summary
of Material Pro Forma Financial Analyses," beginning on page 65 represents a brief summary of the material financial analyses presented by BofA Securities to the Alexion
board of directors in connection with its opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand the
financial analyses performed by BofA Securities, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses
performed by BofA Securities. Considering the data set forth in the tables below without considering the full narrative description of the financial analyses, including the methodologies and
assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses performed by BofA Securities.
Summary of Material Financial Analyses of Alexion
Selected Publicly Traded Companies Analysis.
BofA Securities reviewed publicly available financial and stock market information of the following seven selected publicly traded companies in
the biopharmaceutical industry:
-
-
AbbVie Inc.
-
-
Bristol-Myers Squibb Company
-
-
Amgen, Inc.
-
-
Gilead Sciences, Inc.
-
-
Regeneron Pharmaceuticals Inc.
-
-
Biogen Inc.
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BofA
Securities reviewed, among other things, the closing price per share for each selected company as of December 11, 2020, as a multiple of Wall Street analyst consensus
estimates of calendar year 2021 and 2022 earnings per share ("EPS") for the applicable company unburdened by stock based compensation and amortization of purchased intangibles (such EPS, unburdened by
stock based compensation and amortization of purchased intangibles, is referred to in this section as "Non-GAAP EPS," and such multiples are referred to in this section as "2021E Price/ Non-GAAP EPS"
and "2022E Price/ Non-GAAP EPS"). Financial data of the selected companies were derived from their public filings and publicly available Wall Street research analysts' estimates published by FactSet
as of December 11, 2020. The overall low to high 2021E Price/ Non-GAAP EPS multiples observed for the selected companies were 8.1x to 16.4x (with a mean of 11.1x and median of 9.6x). The
overall low to high 2022E Price/ Non-GAAP EPS multiples observed for the selected companies were 7.4x to 14.3x (with a mean of 10.4x and median of 9.8x).
Based
on BofA Securities' review of the Price/ Non-GAAP EPS multiples for the selected companies and on its professional judgment and experience, BofA Securities applied a 2021E Price/
Non-GAAP EPS multiple reference range of 9.25x to 14.0x to Alexion management's estimates of calendar year 2021 Non-GAAP EPS as reflected in the Alexion management unaudited PTRS Alexion projections,
and a 2022E Price/ Non-GAAP EPS multiple reference range of 9.0x to 13.0x to Alexion management's estimates of calendar year 2022 Non-GAAP EPS as reflected in the Alexion management unaudited PTRS
Alexion projections to calculate implied equity value reference ranges per share of Alexion common stock (rounded to the nearest $1.00) for Alexion. This analysis indicated the following
approximate implied equity value reference ranges per share of Alexion common stock, as compared to the implied value of the merger consideration, calculated by adding the $60.00 in cash merger
consideration to $115.29, the implied value of the 2.1243 of AstraZeneca ADSs included in the merger consideration based on the $54.27 closing price of the AstraZeneca ADSs on December 11, 2020
("implied merger consideration value"):
|
|
|
|
|
|
|
Implied Equity Value
Reference Range Per Share
of Alexion Common Stock
|
|
|
|
2021E Non-GAAP EPS
|
|
2022E Non-GAAP EPS
|
|
Implied Merger Consideration Value
|
|
$114 - $173
|
|
$141 - $204
|
|
$
|
175.29
|
|
No
selected publicly traded company used in this analysis is identical or directly comparable to Alexion. Accordingly, an evaluation of the results of this analysis is not entirely
mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics (reflected, among other things, in differences in
historical trading levels of these companies) and other factors that could affect the public trading or other values of the companies to which Alexion was compared.
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Selected Precedent Transactions Analysis.
BofA Securities reviewed, to the extent publicly available, financial information relating to the following ten selected transactions involving
acquisitions of publicly traded biopharmaceutical and large cap pharmaceutical companies since 2009.
|
|
|
|
|
|
Date
Announced
|
|
Target
|
|
Acquiror
|
|
06/25/19
|
|
Allergan plc
|
|
AbbVie Inc.
|
|
01/03/19
|
|
Celgene Corporation
|
|
Bristol-Myers Squibb Company
|
|
05/08/18
|
|
Shire plc
|
|
Takeda Pharmaceutical Company Limited
|
|
01/26/17
|
|
Actelion Ltd
|
|
Johnson & Johnson
|
|
01/11/16
|
|
Baxalta Incorporated
|
|
Shire plc
|
|
11/17/14
|
|
Allergan plc
|
|
Actavis plc
|
|
02/16/11
|
|
Genzyme Corporation
|
|
Sanofi-aventis
|
|
03/12/09
|
|
Genentech, Inc.
|
|
Roche Holdings, Inc.
|
|
03/09/09
|
|
Schering-Plough Corporation
|
|
Merck & Co., Inc.
|
|
01/25/09
|
|
Wyeth
|
|
Pfizer Inc.
|
For
each of these transactions, BofA Securities reviewed the enterprise values implied for each target company based on the consideration paid in the selected transaction, as multiples
of estimates of the target company's earnings before interest, taxes, depreciation and amortization ("EBITDA") (unburdened by stock-based compensation), for the calendar year in which the applicable
transaction was announced if the transaction was announced prior to June 30, and the calendar year following the calendar year in which the applicable transaction was announced if the
transaction was announced after June 30, or "CY EBITDA," and based on publicly available information at that time. The overall low to high enterprise value to EBITDA multiples of the target
companies in the selected transactions were 8.0x to 28.2x (with a top quartile of 14.5x, a median of 11.3x and bottom quartile of 9.8x).
Based
on BofA Securities' review of the enterprise values to EBITDA multiples for the selected transactions and on its professional judgment and experience, BofA Securities applied an
enterprise value to EBITDA multiple reference range of 9.5x to 14.5x to Alexion management's estimate of Alexion's calendar year 2021 EBITDA (unburdened by stock-based compensation), as reflected in
the Alexion management unaudited PTRS Alexion projections, to calculate a range of implied enterprise values for Alexion. BofA Securities then calculated an implied equity value reference range per
share of Alexion common stock (rounded to the nearest $1.00) for Alexion by subtracting from this range of implied enterprise values the net debt of Alexion as of September 30, 2020, as
reflected in Alexion public filings, and dividing the result by a number of fully-diluted shares of Alexion common stock outstanding as of December 9, 2020 (calculated on a treasury stock
method basis, based on information provided by the management of Alexion). This analysis indicated the following approximate implied equity value reference ranges per share of Alexion common stock
(rounded to the nearest $1.00), as compared to the implied merger consideration value:
|
|
|
Implied Equity Value Reference
Range Per Share of Alexion
Common Stock
|
|
Implied Merger
Consideration Value
|
$144 - $221
|
|
$175.29
|
No
selected precedent transaction used in this analysis or the applicable business or target company is identical or directly comparable to Alexion or the transaction. Accordingly, an
evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating
characteristics, market conditions and other factors that could affect the acquisition or other values of the companies or transactions to which Alexion and the transaction were compared.
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Discounted Cash Flow Analysis
BofA Securities performed a discounted cash flow analysis of Alexion to calculate a range of implied present values per share of Alexion common
stock utilizing estimates of the standalone, unlevered, after-tax free cash flows Alexion was expected to generate over the period from September 30, 2020 through December 31, 2040 based
on the Alexion management unaudited PTRS Alexion projections. Per Alexion management guidance, the analysis assumed no cash flows and terminal value for Alexion beyond 2040. The cash flows were
discounted to present value as of September 30, 2020, utilizing mid-year discounting convention, and using a discount rate range of 7.0% to 9.5%, which was based on an estimate of Alexion's
weighted average cost of capital, derived using the capital asset pricing model. BofA Securities then calculated implied equity value reference ranges per share of Alexion common stock (rounded to the
nearest $1.00) for Alexion by deducting from this range of present values, Alexion's net debt as of September 30, 2020, as reflected in Alexion public filings and dividing the result by a
number of fully-diluted shares of Alexion common stock outstanding (calculated on a treasury stock method basis, based on information provided by the management of Alexion). This analysis indicated
the following approximate implied equity value reference range per share of Alexion common stock (rounded to the nearest $1.00) for Alexion, as compared to the implied merger consideration value:
|
|
|
|
|
Implied Equity Value Reference
Range Per share of Alexion
common stock
|
|
Implied Merger
Consideration Value
|
|
$164 - $199
|
|
$
|
175.29
|
|
Other Factors
BofA Securities also noted certain additional factors that were not considered part of BofA Securities' financial analyses with respect to its
opinion but were referenced for informational purposes, including, among other things the following:
-
-
Discounted Cash Flow Analysis Sensitivity Analysis. At the direction of and
based on sensitivity inputs provided by Alexion management, BofA Securities also performed a sensitivity analysis to analyze the implied impact on the approximate implied equity value reference range
per share of Alexion common stock for Alexion derived from the Discounted Cash Flow analysis described above under the heading "Summary of Material Financial Analyses of
AlexionDiscounted Cash Flow Analysis," by varying certain of Alexion management's assumptions with respect to
ANDEXXA pricing, ULTOMIRIS pricing and tax rates reflected in the Alexion management unaudited Alexion projections, as well as the illustrative discount rate used by BofA Securities, as described
below. The following table presents the results of this analysis:
|
|
|
|
|
|
|
Sensitivity Analysis
|
|
|
|
Implied Equity
Value Reference
Range Per share
of Alexion
common stock
|
|
ANDEXXA Pricing
|
|
~40% EU price decrease for ANDEXXA as compared to Alexion management unaudited Alexion projections
|
|
$
|
162 - $197
|
|
ULTOMIRIS Pricing
|
|
~5% ULTOMIRIS price decrease in 2023 and subsequently every 4 years thereafter
|
|
$
|
154 - $186
|
|
ANDEXXA & ULTOMIRIS Pricing
|
|
~40% EU price decrease for ANDEXXA as compared to Alexion management unaudited Alexion projections
|
|
$
|
152 - $183
|
|
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|
|
|
|
|
|
|
Sensitivity Analysis
|
|
|
|
Implied Equity
Value Reference
Range Per share
of Alexion
common stock
|
|
|
|
~5% ULTOMIRIS price decrease in 2023 and subsequently every 4 years thereafter
|
|
|
|
|
Tax Rate
|
|
Tax rate increase to 28% by 2026, 33% by 2030, and 40% by 2032
|
|
$
|
145 - $174
|
|
Combined Sensitivities
|
|
~40% EU price decrease for ANDEXXA as compared to Alexion management unaudited Alexion projections
|
|
$
|
134 - $160
|
|
|
|
~5% ULTOMIRIS price decrease in 2023 and subsequently every 4 years thereafter
|
|
|
|
|
|
|
Tax rate increase to 28% by 2026, 33% by 2030, and 40% by 2032
|
|
|
|
|
Discount Rate
|
|
Illustrative discount rate range of 8.0% to 10.5%
|
|
$
|
153 - $184
|
|
-
-
52-Week Trading Range. BofA Securities reviewed the trading range of the
shares of Alexion common stock for the 52-week period ended December 11, 2020, which was $76 to $128.
-
-
Wall Street Analysts Price Targets. BofA Securities reviewed certain
publicly available equity research analyst price targets for the shares of Alexion common stock available as of December 11, 2020, and noted that the range of such price targets (discounted by
one year at Alexion's estimated mid-point cost of equity of 8.25% and rounded to the nearest $1.00) was $110 to $165.
-
-
Premia Paid Analysis. BofA Securities reviewed, among other things, the
premia paid in selected public company pharmaceutical and biopharmaceutical acquisitions in relation to each target company's (i) closing share price on the day prior to announcement of the
applicable transaction, and (ii) highest closing share price during the 52-week period prior to announcement of the applicable transaction (referred to in this section as the "52-Week High").
The 25th percentile, median and 75th percentile premia to the closing price on the day prior to announcement of the selected transactions were observed to be 38%, 47% and 65%,
respectively. The 25th percentile, median and 75th percentile premia to the 52-Week High closing share price of the selected transactions were observed to be 10%, 32% and 57%,
respectively. The 25th percentile, median and 75th percentile premia to the closing price on the day prior to announcement of the selected mixed consideration transactions were observed
to be 34%, 39% and 54%, respectively. The 25th percentile, median and 75th percentile premia to the 52-Week High closing share price of the selected mixed consideration transactions were
observed to be 1%, 6% and 36%, respectively. Based on this review, BofA Securities applied (i) an illustrative premia reference range of 30% to 55% to the closing price per share of Alexion
common stock on December 11, 2020, and (ii) an
illustrative premia reference range of 5% to 35% to the 52-Week High of the shares of Alexion common stock as of December 11, 2020, to derive approximate implied equity value reference ranges
per share of Alexion common stock (rounded to the nearest $1.00) for Alexion, of $157 to $188 and $134 to $173, respectively.
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Summary of Material Financial Analyses of AstraZeneca
Selected Publicly Traded Companies Analysis.
BofA Securities reviewed publicly available financial and stock market information of the following ten selected publicly traded companies in
the pharmaceutical and biopharmaceutical industry:
-
-
Johnson & Johnson
-
-
Roche Holding AG
-
-
Pfizer Inc.
-
-
Merck & Co., Inc.
-
-
Novartis AG
-
-
Novo Nordisk A/S
-
-
Eli Lilly And Company
-
-
Sanofi-aventis
-
-
GlaxoSmithKline plc
-
-
Vertex, Inc.
BofA
Securities reviewed, among other things, the closing price per share for each selected company as of December 11, 2020, as a multiple of Wall Street analyst consensus
estimates of calendar year 2021 and 2022 EPS for the applicable company (burdened by stock-based compensation and unburdened by amortization of purchased intangibles). Financial data of the selected
companies were derived from their public filings and publicly available Wall Street research analysts' estimates published by FactSet as of December 11, 2020. The overall low to high 2021E
Price/EPS multiples observed for the selected companies were 12.8x to 23.5x (with a mean of 16.8x and median of 15.0x). The overall low to high 2022E Price/EPS multiples observed for the selected
companies were 11.4x to 20.8x (with a mean of 15.5x and median of 14.1x).
Based
on BofA Securities' review of the Price/EPS multiples for the selected companies and on its professional judgment and experience, BofA Securities applied a 2021E Price/EPS multiple
reference range of 17.0x to 23.0x to estimates of calendar year 2021 core earnings per ordinary share of AstraZeneca (burdened by stock-based compensation and unburdened by amortization of intangibles
and one-time charges), as reflected in the Alexion management unaudited AstraZeneca projections, and a 2022E Price/EPS multiple reference range of 15.5x to 20.0x to estimates of calendar year 2022
core earnings per ordinary share for AstraZeneca (burdened by stock-based compensation and unburdened by amortization of intangibles and one-time charges) as reflected in the Alexion management
unaudited AstraZeneca projections, to calculate implied equity value reference ranges per AstraZeneca ordinary share. BofA Securities divided the implied equity value reference range per AstraZeneca
ordinary share by the number of AstraZeneca ADSs underlying each ordinary share (2) to calculate the implied equity value reference range per AstraZeneca ADS (rounded to the nearest $1.00) for
AstraZeneca. This analysis indicated the following approximate implied equity value reference ranges per AstraZeneca ADS, as compared to the closing price of the AstraZeneca ADSs on
December 11, 2020 of $54.27:
|
|
|
Implied Equity Value
Reference Range Per AstraZeneca ADS
|
2021E Core Earnings
|
|
2022E Core Earnings
|
$42 - $56
|
|
$48 - $62
|
No
selected publicly traded company used in this analysis is identical or directly comparable to AstraZeneca. Accordingly, an evaluation of the results of this analysis is not entirely
mathematical.
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Table of Contents
Rather,
this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics (reflected, among other things, in differences in historical
trading levels of these companies) and other factors that could affect the public trading or other values of the companies to which AstraZeneca was compared.
Discounted Cash Flow Analysis
BofA Securities performed a discounted cash flow analysis of AstraZeneca to calculate a range of implied present values per AstraZeneca ADS
utilizing estimates of the standalone, unlevered, after-tax free cash flows AstraZeneca was expected to generate over the period from September 30, 2020 through December 31, 2030 based
on the Alexion management unaudited AstraZeneca projections. BofA Securities calculated terminal values for AstraZeneca by applying a range of perpetuity growth rates of negative 3.0% to positive 1.0%
based on Alexion management guidance, to the terminal year cash flows. The cash flows and the terminal year values were discounted to present value as of September 30, 2020, utilizing mid-year
discounting convention, and using discount rates ranging from 6.0% to 7.5%, which were based on an estimate of AstraZeneca's weighted average cost of capital, derived using the capital asset pricing
model. BofA Securities then calculated implied equity value reference ranges per AstraZeneca ADS (rounded to the nearest $1.00) for AstraZeneca by deducting from this range of present values
AstraZeneca's net debt as of September 30, 2020, as reflected in AstraZeneca public filings and dividing the result by a number of fully-diluted AstraZeneca ordinary shares outstanding
(calculated on a treasury stock method basis, based on information provided by the management of AstraZeneca and Alexion). This analysis indicated the following approximate implied equity value
reference range per AstraZeneca ADS (based on there being 0.5 of an AstraZeneca ordinary share underlying each AstraZeneca ADS and rounded to the nearest $1.00) for AstraZeneca, as compared to the
closing price of the AstraZeneca ADSs on December 11, 2020 of $54.27:
|
Implied Equity Value Reference
Range Per AstraZeneca ADS
|
$46 - $86
|
Other Factors
BofA Securities also noted certain additional factors that were not considered part of BofA Securities' financial analyses with respect to its
opinion but were referenced for informational purposes, including, among other things the following:
-
-
52-Week Trading Range. BofA Securities reviewed the trading range of the
AstraZeneca ADSs for the 52-week period ended December 11, 2020, which was $38 to $61.
-
-
Wall Street Analysts Price Targets. BofA Securities reviewed certain
publicly available equity research analyst price targets for the AstraZeneca ordinary shares available as of December 11, 2020, and noted that the range of such price targets (discounted by one
year at AstraZeneca's estimated mid-point cost of equity of 6.75% and assuming 0.757 GBP / USD exchange rate and rounded to the nearest $1.0) was $45 to $74.
Has/Gets Analysis
BofA securities performed a Has/Gets Analysis to calculate the theoretical change in value for holders of Alexion common stock resulting from
the transaction based on a comparison of (i) the pro forma ownership by holders of Alexion common stock of AstraZeneca giving effect to the transaction, and (ii) the 100% ownership by
holders of Alexion common stock of the Alexion common stock on a stand-alone basis. For Alexion on a stand-alone basis, BofA Securities used the reference range obtained in its discounted cash flow
analysis described above under "Summary of Material Financial Analyses of AlexionDiscounted Cash Flow Analysis." BofA Securities then
performed the same analysis
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Table of Contents
by
calculating the range of implied per share equity values allocable to holders of Alexion common stock on a pro forma basis, giving effect to the transaction, by assuming approximately 15% pro forma
ownership, based on the number of AstraZeneca ADSs estimated to be issued to holders of Alexion common stock in the transaction, utilizing the results of the standalone discounted cash flow analyses
for Alexion and AstraZeneca described above under "Summary of Material Financial Analyses of AlexionDiscounted Cash Flow Analysis" and
under "Summary of Material Financial Analyses of AstraZenecaDiscounted Cash Flow Analysis," and taking into account the cost-synergies.
BofA Securities calculated the present value of the cost-synergies (including after-tax costs to achieve such cost-synergies) as of September 30, 2020 by using a discount rate range of 7.0% to
9.5%. Per Alexion management guidance, the analysis assumed no terminal value for the cost-synergies beyond 2040. BofA Securities then compared these implied per share equity value reference ranges to
the implied per share equity value reference ranges derived for Alexion on a standalone basis utilizing the results of the standalone discounted cash flow analysis for Alexion described above.
This
analysis yielded the following implied per share equity value reference ranges for Alexion common stock on a stand-alone basis and on a pro forma basis (rounded to the nearest
$1.00):
|
|
|
Per Share Equity Value
Reference Ranges for
Holders of Alexion Common Stock
|
Stand-Alone
|
|
Pro-Forma
|
$164 - $199
|
|
$159 - $236
|
Miscellaneous
As noted above, the discussion set forth above in "Summary of Material Financial Analyses of
Alexion," "Summary of Material Financial Analyses of AstraZeneca" and "Summary of Material Pro Forma Financial
Analyses" represents a brief summary of the material financial analyses presented by BofA Securities to the Alexion board of directors in connection with its opinion, and is
not a comprehensive description of all analyses undertaken or factors considered by BofA Securities in connection with its opinion. The preparation of a financial opinion is a complex analytical
process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a
financial opinion is not readily susceptible to partial analysis or summary description. BofA Securities believes that its analyses summarized above must be considered as a whole. BofA Securities
further believes that selecting portions of its analyses and the factors considered or focusing on information presented in tabular format, without considering all analyses and factors or the
narrative description of the analyses, could create a misleading or incomplete view of the processes underlying BofA Securities' analyses and opinion. The fact that any specific analysis has been
referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analysis referred to in the summary.
In
performing its analyses, BofA Securities considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of Alexion
and AstraZeneca. The estimates of the future performance of Alexion and AstraZeneca in or underlying BofA Securities' analyses are not necessarily indicative of actual values or actual future results,
which may be significantly more or less favorable than those estimates or those suggested by BofA Securities' analyses. These analyses were prepared solely as part of BofA Securities' analysis of the
fairness, from a financial point of view, to the holders of Alexion common stock of the merger consideration, to be received by such holders in the transaction and were provided to the Alexion board
of directors in connection with the delivery of BofA Securities' opinion. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or acquired or
the prices at which any securities have traded or may trade at any time in the future. Accordingly, the estimates used in, and the ranges of valuations resulting from, any particular analysis
described above are inherently subject to substantial uncertainty and should not be taken to be BofA Securities' view of the actual values of Alexion or AstraZeneca.
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Table of Contents
The type and amount of consideration payable in the transaction was determined through negotiations between Alexion and AstraZeneca, rather than by any financial
advisor, and was approved by the Alexion board of directors. The decision to enter into the merger agreement was solely that of the Alexion board of directors. As described above, BofA Securities'
opinion and analyses were only one of many factors considered by the Alexion board of directors in its evaluation of the proposed transaction and should not be viewed as determinative of the views of
the Alexion board of directors or management or any other party with respect to the transaction or the merger consideration.
Alexion
has agreed to pay BofA Securities for its services in connection with the transaction an aggregate fee, which is estimated, based on the information available as of the date of
announcement, to be of approximately $75 million, $2 million of which was payable upon delivery of its opinion and the remainder of which is payable upon the closing of the transaction.
Alexion also has agreed to reimburse BofA Securities for its expenses incurred in connection with BofA Securities' engagement and to indemnify BofA Securities any of its affiliates, its and their
respective directors, officers, employees and agents and each other person controlling BofA Securities or any of its affiliates, against certain liabilities, including liabilities under the federal
securities laws, arising out of BofA Securities' engagement.
BofA
Securities and its affiliates comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other
brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and financial advisory services and other
commercial services and products to a wide range of companies, governments and individuals. In the ordinary course of their businesses, BofA Securities and its affiliates may invest on a principal
basis or on behalf of customers or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions in equity, debt or other securities or
financial instruments (including derivatives, bank loans or other obligations) of Alexion, AstraZeneca and certain of their respective affiliates.
BofA
Securities and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services
to Alexion and have received or in the future may receive compensation for the rendering of these services, including (i) having acted as financial advisor to Alexion and certain of its
affiliates in connection with certain transactions, (ii) having acted or acting as a co-lead arranger and as a joint-bookrunner for, and as a lender under, Alexion's revolving credit facility
and term loan facility due 2023 and under certain term loans, letters of credit and credit, leasing and/or conduit facilities for Alexion or certain of its affiliates, (iii) having provided or
providing certain treasury services and products to Alexion or certain of its affiliates, and (iv) having provided or providing certain fixed income, derivatives and foreign exchange trading
services to Alexion or certain of its affiliates. From November 30, 2018, through November 30, 2020, BofA Securities and its affiliates derived aggregate revenues from Alexion and
certain of its affiliates of approximately $18.5 million for corporate and/or investment banking services.
In
addition, BofA Securities and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other
financial services to AstraZeneca and have received or in the future may receive compensation for the rendering of these services, including (i) having acted or acting as lender under certain
term loans, letters of credit and credit, leasing and conduit facilities for AstraZeneca or certain of its affiliates, (ii) having acted as bookrunner on various equity and debt offerings
undertaken by AstraZeneca or certain of its affiliates, (ii) having provided or providing certain treasury services and products to AstraZeneca or certain of its affiliates, and
(iii) having provided or providing certain foreign exchange trading services to AstraZeneca or certain of its affiliates. From November 30, 2018, through November 30, 2020, BofA
Securities and its affiliates derived aggregate revenues from AstraZeneca of approximately $17.5 million for corporate and/or investment banking services.
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Table of Contents
Alexion Unaudited Prospective Financial Information
On an annual basis, Alexion prepares for the use of the Alexion board of directors a long-range business and financial plan. In 2020,
preparation of the long-range plan commenced in the first quarter and continued in the spring and summer. This long-range plan was reviewed by the Alexion board of directors in connection with its
long-range and strategic planning (including at its meeting on August 31, 2020).
The
long-range plan included certain unaudited prospective financial information concerning Alexion on a standalone basis for the fiscal quarter ending December 31, 2020 and for
the fiscal years ending December 31, 2021 through December 31, 2040, adjusted to reflect Alexion management's estimate of the probability of technical and regulatory success (which we
refer to as "PTRS") for the company's pipeline products. We refer to these unaudited projections as the "Alexion management unaudited PTRS Alexion projections." The Alexion management unaudited PTRS
Alexion projections were reviewed again by the Alexion board of directors in connection with their consideration of the proposed transaction, and also provided to BofA Securities, which was directed
by Alexion management to use and rely upon the Alexion management unaudited PTRS Alexion projections for purposes of its financial analysis and fairness opinion.
In
addition, certain unaudited prospective financial information concerning Alexion on a standalone basis for the fiscal years ending December 31, 2021 through December 31,
2031 prepared without consideration of probability of technical and regulatory success for the company's pipeline products (i.e., assuming one hundred
percent probability of technical and regulatory success), was provided to AstraZeneca, Evercore Partners International LLP ("Evercore") and Centerview Partners UKL LLP ("Centerview
Partners") in connection with the proposed transaction. We refer to these projections as the "unaudited non-PTRS Alexion projections" and, together with the Alexion management unaudited PTRS Alexion
projections, as the "Alexion management unaudited Alexion projections".
In
connection with the transaction, Alexion management also prepared certain unaudited prospective financial information concerning AstraZeneca on a standalone basis using publicly
available Wall Street research analyst financial forecasts and consensus estimates for the fiscal years ending December 31, 2020 through December 31 2030. We refer to these unaudited
projections as the "Alexion management unaudited AstraZeneca projections," and to the Alexion management unaudited Alexion projections and the Alexion management unaudited AstraZeneca projections,
collectively, as the Alexion management unaudited projections. The Alexion management unaudited AstraZeneca projections were provided to the Alexion board of directors in connection with its
consideration of the proposed transaction as well as to BofA Securities, which was directed by Alexion management to use and rely upon the Alexion management unaudited AstraZeneca projections for
purposes of its financial analysis and fairness opinion.
The
Alexion management unaudited projections were prepared treating Alexion and AstraZeneca, respectively, on a standalone basis, without giving effect to the proposed transaction,
including any impact of the negotiation or execution of the proposed transaction, the expenses that may be incurred in connection with the proposed transaction or the consummation thereof, the
potential synergies that may be achieved by the combined company as a result of the proposed transaction, the effect of any business or strategic decision or action that has been or will be taken as a
result of the merger agreement having been executed or in anticipation of the proposed transaction, or the effect of any business or strategic decisions or actions which would likely have been taken
if the merger agreement had not been executed but which were instead altered, accelerated, postponed or not taken in anticipation of the transaction. In connection with the proposed transaction,
Alexion management prepared pro-forma analyses which were presented to the Alexion board of directors and assumed $300 million of annual pre-tax cost synergies, with half of that amount to be
achieved during 2022 and
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Table of Contents
the
full amount to be achieved during 2023 and subsequent years. Alexion management assumed that the aggregate cost of achieving the projected cost synergies would be $300 million, with all of
such cost to be incurred in 2022. These assumed cost synergies including cost to achieve such cost synergies, which we refer to collectively as the "Alexion management assumed cost synergies," are not
reflected in the Alexion management unaudited projections. The Alexion management assumed cost synergies were provided to BofA Securities, which was directed by Alexion management to use and rely upon
the Alexion management assumed cost synergies for purposes of its financial analysis and fairness opinion.
Other
than annual financial guidance provided to investors, which is generally updated each quarter, Alexion does not as a matter of course make public long-term forecasts or projections
as to future performance, revenues, earnings or other results, due to, among other reasons, the inherent difficulty of accurately predicting financial performance for future periods and the
uncertainty of the underlying assumptions and estimates. However, the financial projections by Alexion management are being included in this proxy statement/prospectus to give shareholders access to
certain non-public information provided to the Alexion board of directors and Alexion's financial advisor and to AstraZeneca and its financial advisors. The inclusion of the financial projections by
Alexion should not be regarded as an indication that the Alexion board of directors, Alexon, the AstraZeneca board of directors, AstraZeneca, BofA Securities, Centerview Partners or Evercore or any
other recipient of this information considered, or now considers, it to be an assurance of the achievement of future results or an accurate prediction of future results, and they should not be relied
on as such.
In
addition, the Alexion management unaudited projections and the Alexion management assumed cost synergies were not prepared with a view toward public disclosure or with a view toward
compliance with the published guidelines established by the SEC or the American Institute of Certified Public Accountants for preparation or presentation of prospective financial information, or GAAP,
but, in the view of Alexion's management were prepared on a reasonable basis, reflected the best available estimates and judgments at the time of preparation, and presented as of the time of
preparation, to the best of management's knowledge and belief, the expected course of action and the expected future
financial performance of Alexion or AstraZeneca, as applicable. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of
this proxy statement/prospectus are cautioned not to place undue reliance on the Alexion management unaudited projections or the Alexion management assumed cost synergies. Although Alexion's
management believes there is a reasonable basis for the Alexion management unaudited projections and the Alexion management assumed cost synergies, Alexion cautions stockholders that future results
could be materially different from the Alexion management unaudited projections and the Alexion management assumed cost synergies. This summary of the Alexion management unaudited projections and the
Alexion management assumed cost synergies is included in this proxy statement/prospectus because the Alexion management unaudited projections and the Alexion management assumed cost synergies were
provided to Alexion's financial advisor and to the Alexion board of directors for purposes of considering and evaluating the transaction and the merger agreement.
The
Alexion management unaudited projections and the Alexion management assumed cost synergies are subject to estimates and assumptions in many respects and, as a result, subject to
interpretation. While presented with numerical specificity, the Alexion management unaudited projections and the Alexion management assumed cost synergies are based upon a variety of estimates and
assumptions that are inherently uncertain, though considered reasonable by Alexion's management as of the date of their preparation. These estimates and assumptions may prove to be inaccurate for any
number of reasons, including general economic conditions, trends in the biopharmaceutical industry, the regulatory environment, competition, and the risks discussed in this proxy statement/prospectus
under the sections entitled "Cautionary Statement Regarding Forward-Looking Statements" and "Risk
Factors" beginning on pages 15 and 28, respectively. See also "Where You Can Find Additional Information" beginning on page 183
of this proxy statement/prospectus. The Alexion
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management
unaudited projections and the Alexion management assumed cost synergies also reflect assumptions as to certain business decisions that are subject to change. Because the Alexion management
unaudited projections were developed for Alexion on a standalone basis without giving effect to the transaction, they do not reflect any divestitures or other restrictions that may be imposed in
connection with the receipt of any necessary governmental or regulatory approvals, any synergies that may be realized as a result of the transaction or any changes to Alexion's or AstraZeneca's
operations or strategy that may be implemented after completion of the transaction. There can be no assurance that the Alexion management unaudited projections or the Alexion management assumed cost
synergies will be realized, and actual results may differ materially from those shown. Generally, the further out the period to which the Alexion management unaudited projections and the Alexion
management assumed cost synergies relate, the less predictable and more unreliable the information becomes.
The
Alexion management unaudited projections contain certain non-GAAP financial measures that Alexion believes are helpful in understanding its past financial performance and future
results. Alexion management regularly uses a variety of financial measures that are not in accordance with GAAP for forecasting, budgeting and measuring financial performance. The non-GAAP financial
measures are not
meant to be considered in isolation or as a substitute for comparable GAAP measures. While Alexion believes that these non-GAAP financial measures provide meaningful information to help investors
understand the operating results and to analyze Alexion's financial and business trends on a period-to-period basis, there are limitations associated with the use of these non-GAAP financial measures.
These non-GAAP financial measures are not prepared in accordance with GAAP, are not reported by all of Alexion's competitors and may not be directly comparable to similarly titled measures of
Alexion's competitors due to potential differences in the exact method of calculation.
None
of Alexion, AstraZeneca, the combined company or their respective affiliates, advisors, officers, directors or other representatives can provide any assurance that actual results
will not differ from the Alexion management unaudited projections or the Alexion management assumed cost synergies, and none of them undertakes any obligation to update, or otherwise revise or
reconcile, the Alexion management unaudited projections or the Alexion management assumed cost synergies to reflect circumstances existing after the date the Alexion management unaudited projections
or the Alexion management assumed cost synergies were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Alexion management
unaudited projections or the Alexion management assumed cost synergies, as applicable, are shown to be in error. Except as required by applicable securities laws, Alexion does not intend to make
publicly available any update or other revision to the Alexion management unaudited projections or the Alexion management assumed cost synergies, even in the event that any or all assumptions are
shown to be in error. None of Alexion or its affiliates, advisors, officers, directors or other representatives has made or makes any representation to any Alexion stockholder or other person
regarding Alexion's ultimate performance compared to the information contained in the Alexion management unaudited projections or the Alexion management assumed cost synergies or that forecasted
results will be achieved. Alexion has made no representation to AstraZeneca, in the merger agreement or otherwise, concerning the Alexion management unaudited projections or the Alexion management
assumed cost synergies.
The
prospective financial information included in this document has been prepared by, and is the responsibility of, Alexion management. Neither PricewaterhouseCoopers LLP, US nor
PricewaterhouseCoopers LLP, UK has audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying prospective financial information and, accordingly,
neither PricewaterhouseCoopers LLP, US nor PricewaterhouseCoopers LLP, UK expresses an opinion or any other form of assurance with respect thereto. PricewaterhouseCoopers LLP, US's and
PricewaterhouseCoopers LLP, UK's reports incorporated by reference in this document relate to
76
Table of Contents
previously
issued financial statements. They do not extend to the prospective financial information and should not be read to do so.
The
following tables present a summary of the Alexion management unaudited PTRS Alexion projections that were reviewed by the Alexion board of directors in connection with its
consideration of
the proposed transaction and provided to BofA Securities for purposes of its financial analysis and fairness opinion.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions except EPS)
|
|
Q4 '20E
|
|
2021E
|
|
2022E
|
|
2023E
|
|
2024E
|
|
2025E
|
|
2026E
|
|
2027E
|
|
2028E
|
|
2029E
|
|
2030E
|
|
Total Revenue
|
|
$
|
1,472
|
|
$
|
6,250
|
|
$
|
7,187
|
|
$
|
7,868
|
|
$
|
8,836
|
|
$
|
9,807
|
|
$
|
10,253
|
|
$
|
10,604
|
|
$
|
10,926
|
|
$
|
11,452
|
|
$
|
11,561
|
|
Non-GAAP Operating Income (Post-SBC)(1)
|
|
|
612
|
|
|
3,058
|
|
|
3,828
|
|
|
4,276
|
|
|
4,955
|
|
|
5,688
|
|
|
6,031
|
|
|
6,297
|
|
|
6,578
|
|
|
6,987
|
|
|
7,109
|
|
Tax-Effected EBIT(2)
|
|
|
515
|
|
|
2,538
|
|
|
3,177
|
|
|
3,549
|
|
|
4,112
|
|
|
4,721
|
|
|
4,945
|
|
|
5,163
|
|
|
5,394
|
|
|
5,729
|
|
|
5,829
|
|
Unlevered Free Cash Flow(3)
|
|
|
588
|
|
|
2,002
|
|
|
2,538
|
|
|
2,734
|
|
|
3,482
|
|
|
4,298
|
|
|
4,730
|
|
|
5,006
|
|
|
5,333
|
|
|
5,617
|
|
|
5,905
|
|
Non-GAAP EPS (Pre-SBC)(4)
|
|
|
|
|
$
|
12.33
|
|
$
|
15.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions)
|
|
2031E
|
|
2032E
|
|
2033E
|
|
2034E
|
|
2035E
|
|
2036E
|
|
2037E
|
|
2038E
|
|
2039E
|
|
2040E
|
|
Total Revenue
|
|
$
|
11,201
|
|
$
|
10,956
|
|
$
|
10,642
|
|
$
|
10,494
|
|
$
|
10,051
|
|
$
|
7,956
|
|
$
|
6,199
|
|
$
|
5,191
|
|
$
|
4,293
|
|
$
|
3,852
|
|
Non-GAAP Operating Income (Post-SBC)(1)
|
|
|
6,943
|
|
|
6,821
|
|
|
6,628
|
|
|
6,554
|
|
|
6,289
|
|
|
4,961
|
|
|
3,876
|
|
|
3,206
|
|
|
2,593
|
|
|
2,300
|
|
Tax-Effected EBIT(2)
|
|
|
5,693
|
|
|
5,593
|
|
|
5,435
|
|
|
5,374
|
|
|
5,157
|
|
|
4,068
|
|
|
3,178
|
|
|
2,629
|
|
|
2,126
|
|
|
1,886
|
|
Unlevered Free Cash Flow(3)
|
|
|
5,942
|
|
|
5,773
|
|
|
5,603
|
|
|
5,518
|
|
|
5,361
|
|
|
4,563
|
|
|
3,538
|
|
|
2,779
|
|
|
2,230
|
|
|
1,937
|
|
-
(1)
-
Non-GAAP
Operating Income (Post-SBC), a non-GAAP term, refers to Total Revenue less cost of goods sold, less research and development expense, less selling, general
and administrative expense, less stock-based compensation expense, and excluding one-time items, milestone payments and amortization of purchased intangibles.
-
(2)
-
Tax-Effected
EBIT, a non-GAAP term, refers to Non-GAAP Operating Income (Post-SBC) less estimated tax expense.
-
(3)
-
Unlevered
Free Cash Flows, a non-GAAP term, refers to Tax-Effected EBIT plus depreciation, less changes in net working capital, less milestone payments, less capital
expenditures.
-
(4)
-
Non-GAAP
EPS (Pre-SBC), a non-GAAP term, refers to Non-GAAP Net Income (Pre-SBC) divided by estimated fully diluted shares outstanding. Non-GAAP Net Income
(Pre-SBC), a non-GAAP term, refers to Non-GAAP Operating Income (Post-SBC) plus stock-based compensation expense, less interest expense, less other income / expense, less estimated tax expense.
The
following tables present a summary of the unaudited non-PTRS Alexion projections that were provided to AstraZeneca, Evercore and Centerview Partners in connection with the proposed
transaction:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions)
|
|
2021E
|
|
2022E
|
|
2023E
|
|
2024E
|
|
2025E
|
|
2026E
|
|
2027E
|
|
2028E
|
|
2029E
|
|
2030E
|
|
2031E
|
|
Total Revenue
|
|
$
|
6,466
|
|
$
|
7,537
|
|
$
|
8,501
|
|
$
|
10,268
|
|
$
|
12,303
|
|
$
|
14,148
|
|
$
|
16,140
|
|
$
|
18,266
|
|
$
|
20,604
|
|
$
|
22,283
|
|
$
|
23,083
|
|
Gross Profit
|
|
|
5,821
|
|
|
6,765
|
|
|
7,540
|
|
|
9,014
|
|
|
10,894
|
|
|
12,571
|
|
|
14,392
|
|
|
16,335
|
|
|
18,483
|
|
|
20,057
|
|
|
20,877
|
|
Operating Profit(1)
|
|
|
3,517
|
|
|
4,280
|
|
|
4,822
|
|
|
6,039
|
|
|
7,645
|
|
|
9,005
|
|
|
10,463
|
|
|
12,080
|
|
|
13,920
|
|
|
15,233
|
|
|
15,951
|
|
Non-GAAP Net Income(2)
|
|
|
2,844
|
|
|
3,481
|
|
|
3,977
|
|
|
5,009
|
|
|
6,343
|
|
|
7,382
|
|
|
8,578
|
|
|
9,905
|
|
|
11,414
|
|
|
12,491
|
|
|
13,081
|
|
-
(1)
-
Operating
Profit refers to Total Revenue less cost of goods sold, less research and development expense, less selling, general and administrative expense, and
excluding one-time items, milestone payments and amortization of purchased intangibles. Note this figure is before accounting for stock-based compensation expense.
-
(2)
-
Non-GAAP
Net Income, a non-GAAP term, refers to operating income less interest expense, less other income / expense, less estimated tax expense.
The
following table presents a summary of the Alexion management unaudited AstraZeneca projections that were provided to the Alexion board of directors in connection with its
consideration of
77
Table of Contents
the
proposed transaction as well as to BofA Securities for purposes of its financial analysis and fairness opinion:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions except EPS)
|
|
2020E
|
|
2021E
|
|
2022E
|
|
2023E
|
|
2024E
|
|
2025E
|
|
2026E
|
|
2027E
|
|
2028E
|
|
2029E
|
|
2030E
|
|
Total Revenue
|
|
$
|
26,501
|
|
$
|
29,840
|
|
$
|
33,820
|
|
$
|
37,293
|
|
$
|
41,065
|
|
$
|
44,268
|
|
$
|
46,412
|
|
$
|
47,773
|
|
$
|
48,435
|
|
$
|
48,065
|
|
$
|
46,723
|
|
Core EBIT(1)
|
|
|
7,509
|
|
|
8,817
|
|
|
10,998
|
|
|
13,096
|
|
|
15,427
|
|
|
17,145
|
|
|
17,953
|
|
|
18,467
|
|
|
18,716
|
|
|
18,576
|
|
|
18,071
|
|
Unlevered Free Cash Flow(2)
|
|
|
|
|
|
4,487
|
|
|
4,784
|
|
|
7,138
|
|
|
8,787
|
|
|
11,954
|
|
|
13,293
|
|
|
13,852
|
|
|
14,245
|
|
|
14,860
|
|
|
14,703
|
|
Core EPS(3)
|
|
|
|
|
$
|
4.89
|
|
$
|
6.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Core
EBIT, a non-GAAP term, refers to Total Revenue less cost of goods sold, less research and development expense, less selling, general and administrative expense,
plus other operating income.
-
(2)
-
Unlevered
Free Cash Flow, a non-GAAP term, refers to Core EBIT less estimated tax expense, plus depreciation, less restructuring payments, less purchase of
intangible assets, less changes in net working capital, less capital expenditures.
-
(3)
-
Core
EPS, a non-GAAP term, refers to Core Net Income (post-SBC) divided by estimated fully diluted shares outstanding. Core Net Income, a non-GAAP term, refers to
Core EBIT, less net interest and associates, less estimated taxes, less minority interest expense.
Listing of AstraZeneca ADSs
It is a condition to the completion of the transaction that the AstraZeneca ADSs to be issued in connection with the transaction are approved
for listing on Nasdaq, subject to official notice of issuance. In addition, it is a requirement that AstraZeneca receive acknowledgement by the FCA and the LSE that the ordinary shares represented by
the AstraZeneca ADSs to be issued in connection with the transaction shall be admitted to the premium segment of the FCA's official list and to trading on the LSE's main market for listed securities.
AstraZeneca must use its best efforts to cause the AstraZeneca ADSs to be issued in the transaction as part of the merger consideration to be listed on Nasdaq prior to the first effective time. For
more information see the sections of this proxy statement/prospectus entitled "The Merger AgreementListing of AstraZeneca ADSs" and
"The Merger AgreementConditions to Completion of the Transaction," respectively.
Delisting and Deregistration of Alexion Common Stock
If the transaction is completed, Alexion common stock will be delisted from the Nasdaq and deregistered under the Exchange Act, and Alexion will
no longer be required to file periodic reports with the SEC with respect to Alexion common stock.
Alexion
and AstraZeneca have agreed to cooperate with each other in taking, or causing to be taken, all actions necessary to delist the Alexion common stock from the Nasdaq and to
terminate its registration under the Exchange Act, provided that such delisting and deregistration will not be effective until the first effective time.
Interests of Alexion's Directors and Executive Officers in the Transaction
In considering the recommendation of the Alexion board of directors to adopt the merger agreement, Alexion stockholders should be aware that
Alexion's directors and executive officers have interests in the transaction that may be different from, or in addition to, the interests of Alexion stockholders generally. Alexion's board of
directors was aware of these interests and considered them, among other matters, in evaluating and negotiating the merger agreement, in reaching its decision to approve the merger agreement and the
transactions contemplated by the merger agreement (including the transaction), and in recommending to Alexion stockholders that the merger agreement be
78
Table of Contents
approved.
Such interests are described below. The transaction will be a "change in control" for purposes of the Alexion executive compensation and benefit plans and agreements described below.
Except as otherwise specifically noted, for purposes of quantifying the potential payments and benefits described in this section, the following
assumptions were used:
-
-
The relevant price per share of Alexion common stock is $157.39, which is the average closing price per share of Alexion common stock as
reported on Nasdaq over the first five business days following the first public announcement of the transaction on December 12, 2020;
-
-
The first effective time as referenced in this section occurs on February 12, 2021, which is the assumed date of the first effective
time solely for purposes of the disclosure in this section; and
-
-
The employment of each executive officer of Alexion was terminated by Alexion without "cause" or due to the officer's resignation for "good
reason" (as such terms are defined in the relevant plans and agreements), in either case immediately following the first merger and on the assumed date of the first effective time of
February 12, 2021.
The
amounts indicated below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including the assumptions described above,
and do not reflect certain compensation actions that may occur before completion of the transaction.
The merger agreement provides that, at the first effective time, each compensatory option to purchase shares of Alexion common stock under any
Alexion stock plan that is outstanding and unexercised immediately prior to the first effective time, which is referred to in this proxy statement/prospectus as an Alexion Stock Option, whether or not
vested, will be cancelled in consideration for the right to receive, within five business days following the first effective time, the merger consideration, without interest and less applicable
withholding taxes, in respect of each net option share subject to such Alexion Stock Option immediately prior to the first effective time. For purposes of this proxy statement/prospectus, net option
share means, with respect to an Alexion Stock Option, the quotient obtained by dividing (i) the product obtained by multiplying (A) the excess, if any, of the value of the merger
consideration over the exercise price per share of Alexion common stock subject to such Alexion Stock Option immediately prior to the first effective time by (B) the number of shares of Alexion
common stock subject to such Alexion Stock Option immediately prior to the first effective time by (ii) the value of the merger consideration. For purposes of the preceding sentence, the value
of the merger consideration that consists of AstraZeneca ADSs shall equal the product of (x) the exchange ratio and (y) the average of the volume weighted averages of the trading prices
of
AstraZeneca ADSs on the Nasdaq on each of the five consecutive trading days ending on (and including) the trading day that is two trading days prior to the closing date (which average price we refer
to as the "AstraZeneca ADS Price").
The merger agreement provides that, at the first effective time, each restricted stock unit award with respect to shares of Alexion common stock
outstanding under any Alexion stock plan that vests solely based on the passage of time, which is referred to in this proxy statement/prospectus as an Alexion RSU Award, will be treated as described
below.
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Table of Contents
If
such Alexion RSU Award is held by a non-employee director of Alexion, it will automatically become fully vested and cancelled and converted into the right to receive, within five
business days following the first effective time, the merger consideration, without interest and less applicable withholding taxes, with respect to each share of Alexion common stock subject to such
Alexion RSU Award immediately prior to the first effective time. Based on the assumptions described above under "Certain Assumptions", the estimated aggregate amount that would become
payable to Alexion's nine non-employee directors in respect of their unvested Alexion RSU Awards is $5,493,068.
Each
other Alexion RSU Award will be assumed by AstraZeneca and will be converted into an equivalent AstraZeneca restricted stock unit award, with the number of AstraZeneca ADSs
underlying each converted award equal to (i) the number of shares of Alexion common stock underlying such Alexion RSU Award multiplied by (ii) the equity award exchange ratio, rounded up
to the nearest whole number of shares. For purposes of this proxy statement/prospectus, "equity award exchange ratio" means the sum, rounded to four decimal places, equal to (A) the exchange
ratio, plus (B) the quotient obtained by dividing (1) the cash consideration by (2) the AstraZeneca ADS Price.
Each
such assumed AstraZeneca restricted stock unit award will continue to have, and shall be subject to, the same terms and conditions as applied to the corresponding Alexion RSU Award
immediately prior to the first effective time (including any terms and conditions relating to vesting (except as otherwise noted below) and accelerated vesting on a termination of the holder's
employment in connection with or following the merger).
The merger agreement provides that, at the first effective time, each restricted stock unit award with respect to shares of Alexion common stock
outstanding under any Alexion stock plan that vests based on the achievement of performance goals, which is referred to in this proxy statement/prospectus as an Alexion PSU Award, will be assumed by
AstraZeneca and will be converted into an AstraZeneca restricted stock unit award that settles in a number of AstraZeneca ADSs equal to the product of (i) the number of shares of Alexion common
stock underlying the Alexion PSU Award immediately prior to the first effective time (determined by deeming the applicable performance goals to be achieved at the greater of the target level and the
actual level of achievement through the latest practicable date prior to the first effective time), subject to a limit of 175% of target for Alexion PSU Awards granted in 2019 and 150% of target for
Alexion PSU Awards granted in 2020, multiplied by (ii) the equity award exchange ratio, rounded up to the nearest whole number of shares.
Each
such assumed AstraZeneca restricted stock unit award will continue to have, and will be subject to, the same terms and conditions as applied to the corresponding Alexion PSU Award
immediately prior to the first effective time (including any terms and conditions related to time-vesting (except as otherwise noted below) and accelerated vesting on a termination of the holder's
employment in connection with or following the merger but excluding performance-based vesting conditions).
Pursuant to the terms of the employment agreements described below and the award agreements for the Alexion Stock Options, Alexion RSU Awards
and Alexion PSU Awards held by Alexion's executive officers, if an executive officer's employment is terminated by Alexion without "cause" or due to the executive officer's resignation for "good
reason", in each case, on or within 24 months (in the case of awards granted prior to 2020) or 18 months (in the case of award granted in 2020 or later) following a change in control of
Alexion, all such equity awards then held by such executive officer would fully vest upon such termination of employment.
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Table of Contents
These
"double trigger" vesting provisions applicable to Alexion equity awards held by executive officers will continue to apply to such awards after such awards are assumed by
AstraZeneca at the effective time of the first merger.
See
the section entitled "Quantification of Potential Payments and Benefits to Alexion's Named Executive Officers in Connection with the Transaction" beginning on page 83 of this proxy
statement/prospectus for an estimate of the value of each of Alexion's named executive officer's unvested Alexion equity awards. Based on the assumptions described above under "Certain
Assumptions" and including 2021 annual equity awards that have been approved by the leadership and compensation committee of the Alexion board of directors and will be granted on February 28,
2021 in accordance with Alexion's equity grant policy, the estimated aggregate value of the unvested equity awards held by Alexion's two executive officers who are not named executive officers is:
unvested Alexion Stock Options$180,087; unvested Alexion RSU Awards$10,807,224; and unvested Alexion PSU Awards (assuming achievement of the applicable performance goals at
the target level)$7,976,683.
Alexion and AstraZeneca have agreed that each Alexion employee, including each executive officer, who remains employed by Alexion and its
affiliates (including, after the first effective time, AstraZeneca and its subsidiaries) through the first anniversary of the first effective time will receive accelerated vesting, effective as of the
first anniversary of the first effective time, of the portion of each then-outstanding AstraZeneca restricted stock unit award received by such employee in the transaction in respect of an Alexion RSU
Award or Alexion PSU Award that is scheduled to vest on or before the second anniversary of the first effective time.
Based
on the assumptions described above under "Certain Assumptions" and including 2021 annual equity awards that have been approved by the leadership and compensation
committee of the Alexion board of directors and will be granted on February 28, 2021 in accordance with Alexion's equity grant policy, the estimated value of the converted Alexion RSU Awards
and converted Alexion PSU Awards (assuming achievement of the applicable performance goals at the target level) that would become vested pursuant to this acceleration provision for each named
executive officer is included in the table below and the estimated aggregate value for Alexion's two executive officers who are not named executive officers is $5,577,862.
|
|
|
|
|
Named Executive Officer
|
|
Accelerated
Converted
RSU Awards ($)
|
|
Ludwig Hantson
|
|
|
18,777,060
|
|
Aradhana Sarin
|
|
|
4,259,918
|
|
Brian Goff
|
|
|
4,869,647
|
|
John Orloff
|
|
|
4,869,647
|
|
Ellen Chiniara
|
|
|
4,225,843
|
|
Each Alexion executive officer has entered into an employment agreement with Alexion that provides that, in the event that the officer's
employment with Alexion is terminated within 18 months following a change in control of Alexion (1) by Alexion without cause, (2) by the officer for good reason or following a
constructive termination, or (3) upon non-renewal of the officer's employment agreement by Alexion, then Alexion will be obligated to pay the officer (a) a cash lump sum payment equal to
(i) 2.0 (or 3.0, in the case of the Chief Executive Officer) multiplied by (ii) the sum of the officer's then-current base salary and an amount equal to the officer's target annual cash
incentive award for the year in which the termination of employment occurs (or, in the case of the Chief
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Executive
Officer, the greater of such target amount and his average annual cash incentive award for the two years preceding the year in which is termination of employment occurs), (b) a pro
rata amount of the officer's target annual cash incentive award for the year in which the termination occurs, and (c) a lump sum cash amount that, after applicable taxes and withholdings are
deduced, is equal to the value of the premiums that otherwise would have been paid by Alexion for the officer's and the officer's eligible dependents' participation in Alexion's health and welfare
plans for an 18-month period.
The
executive officer employment agreements provide that, if the compensation and benefits payable to the officer would be subject to an excise tax under Section 4999 of the Code,
such amounts shall either be paid in full or reduced to the level that would avoid application of the excise tax, whichever would place the executive officer in a better after-tax position.
Pursuant
to the terms of each executive officer employment agreement, each executive officer is subject to noncompetition and nonsolicitation covenants (except that the General Counsel
is not subject to a noncompetition covenant) that apply during employment and for a period of 18 months following termination of employment for any reason (or 24 months, in the case of
the Chief Executive Officer, and 12 months following termination other than a termination without cause, in the case of the Chief Financial Officer).
See
the section entitled "Quantification of Potential Payments and Benefits to Alexion's Named Executive Officers in Connection with the
Transaction" beginning on page 83 of this proxy statement/prospectus for the estimated amounts that each of Alexion's named executive officers would receive under their
employment agreements upon a qualifying termination of employment following a change in control of Alexion. Based on the assumptions described above under "Certain
Assumptions," the estimated aggregate amount of the cash severance payments (including a prorated target annual cash incentive award) that Alexion's two executive officers who
are not named executive officers would receive under their employment agreements upon a qualifying termination of employment following a change in control of Alexion is $4,159,989.
Under the terms of the merger agreement, Alexion may provide to each Alexion employee who is eligible to participate in an Alexion annual bonus
program, including each executive officer, a prorated portion of the annual bonus with respect to the portion of the year of the closing that occurs prior to the closing, which bonus will be
determined based on actual performance through
the latest practicable date prior to the closing date, as determined by Alexion prior to the first effective time.
See
the section entitled "Quantification of Potential Payments and Benefits to Alexion's Named Executive Officers in Connection with the
Transaction" beginning on page 83 of this proxy statement/prospectus for the estimated amount of the prorated bonus payment that each of Alexion's named executive officers
would receive under the terms of the merger agreement. Based on the assumptions described above under "Certain Assumptions," and assuming
that the applicable performance goals are achieved at the target level, the estimated aggregate amount of the prorated bonus payments that Alexion's two executive officers who are not named executive
officers would receive under the terms of the merger agreement is $98,510.
Alexion and AstraZeneca have agreed that, prior to the first effective time, Alexion may grant cash transaction bonus awards to Alexion
employees in an aggregate amount of up to $40 million. Each transaction bonus award would vest and become payable during the six-month period commencing on the first effective time, subject to
the recipient's continued employment with Alexion and its affiliates through the applicable vesting date, or upon an earlier termination of employment by Alexion without
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cause,
by the recipient for good reason, or due to the recipient's death or permanent disability (or earlier if agreed by the parties). Although each of Alexion's executive officers is eligible to
receive a transaction bonus award, as of the date of this proxy statement/prospectus, no executive officer of Alexion has been granted a transaction bonus award in connection with the transaction.
Pursuant to the terms of the merger agreement, Alexion non-employee directors and executive officers will be entitled to certain ongoing
indemnification and coverage under directors'
and officers' liability insurance policies following the transaction. Such indemnification and insurance coverage is further described in the section entitled "The Merger
AgreementIndemnification and Insurance" beginning on page 128 of this proxy statement/prospectus.
David R. Brennan, Chairman of the Board of Directors of Alexion, holds 81,000 AstraZeneca ordinary shares acquired in connection with his
previous employment with AstraZeneca, which ended in 2012.
Any Alexion executive officers who become officers or employees or who otherwise are retained to provide services to AstraZeneca or the
surviving corporation may, prior to, on, or following the closing of the transaction, enter into new individualized compensation arrangements with AstraZeneca or the surviving corporation and may
participate in cash or equity incentive or other benefit plans maintained by AstraZeneca or the surviving corporation. As of the date of this proxy statement/prospectus, no new individualized
compensation arrangements between Alexion's executive officers and AstraZeneca or the surviving corporation have been established.
Quantification of Potential Payments and Benefits to Alexion's Named Executive Officers in Connection
with the Transaction
The information set forth in the table below is intended to comply with Item 402(t) of the SEC's Regulation S-K, which requires
disclosure of information about certain compensation for each named executive officer of Alexion that is based on, or otherwise relates to, the transaction. For additional details regarding the terms
of the payments and benefits described below, see the discussion under the caption "Interests of Alexion's Directors and Executive Officers in the
Transaction" above.
The
amounts shown in the table below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including the assumptions
described below and in the footnotes to the table, and do not reflect certain compensation actions that may occur before completion of the transaction. For purposes of calculating such amounts, the
following assumptions were used:
-
-
The relevant price per share of Alexion common stock is $157.39, which is the average closing price per share of Alexion common stock as
reported on Nasdaq over the first five business days following the first public announcement of the transaction on December 12, 2020;
-
-
The first effective time as referenced in this section occurs on February 12, 2021, which is the assumed date of the first effective
time solely for purposes of the disclosure in this section; and
-
-
The employment of each named executive officer of Alexion was terminated by Alexion without "cause" or due to the officer's resignation for
"good reason" (as such terms are defined in the
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer(1)
|
|
Cash ($)(2)
|
|
Equity($)(3)
|
|
Perquisites /
Benefits($)(4)
|
|
Total ($)(5)
|
|
Ludwig Hantson
|
|
|
12,457,862
|
|
|
47,788,980
|
|
|
61,587
|
|
|
60,308,429
|
|
Aradhana Sarin
|
|
|
2,937,504
|
|
|
12,792,502
|
|
|
60,017
|
|
|
15,790,023
|
|
Brian Goff
|
|
|
2,934,566
|
|
|
12,900,737
|
|
|
78,730
|
|
|
15,914,033
|
|
John Orloff
|
|
|
3,053,535
|
|
|
13,148,243
|
|
|
61,587
|
|
|
16,263,365
|
|
Ellen Chiniara
|
|
|
2,609,605
|
|
|
10,615,326
|
|
|
61,587
|
|
|
13,286,518
|
|
-
(1)
-
Anne-Marie
Law, former Chief Human Experience Officer of Alexion, terminated employment with Alexion on August 21, 2020. In connection with her separation, a
prorated number of Ms. Law's outstanding Alexion PSU Awards remained outstanding and eligible to vest in accordance with their terms. As of February 12, 2021, Ms. Law holds
Alexion PSU Awards granted in 2019, relating to 9,120 shares of Alexion common stock, and 2020, relating to 4,210 shares of Alexion common stock, in each case, assuming that the applicable performance
goals are achieved at the target level. Ms. Law's Alexion PSU Awards are subject to the terms of the merger agreement, including the determination of the applicable performance goals at the
first effective time (see "Interests of Alexion's Directors and Executive Officers in the TransactionAlexion Performance Stock Unit Awards").
-
(2)
-
Cash. Consists of (a) a cash severance payment equal to (i) 2.0 (or 3.0, in the case of the Chief
Executive Officer) multiplied by the sum of the named executive officer's then-current base salary and an amount equal to the named executive officer's annual target cash incentive award for the year
in which the termination of employment occurs (or, in the case of the Chief Executive Officer, the greater of such target amount and his average annual cash incentive award for the two years preceding
the year in which is termination of employment occurs), plus (ii) a pro rata amount of the named executive officer's target annual cash incentive award for the year in which the termination
occurs, and (b) a prorated portion of the annual bonus with respect to the portion of the year of the closing that occurs prior to the closing, which bonus will be determined based on actual
performance through the latest practicable date prior to the closing date (which actual performance is assumed to equal target performance for purposes of this quantification). The cash severance
payment is "double trigger" and becomes payable only upon a qualifying termination of employment following a change in control of Alexion under the terms of the applicable employment agreement (see
"Interests of Alexion's Directors and Executive Officers in the TransactionOfficer Employment Agreements"). The prorated bonus payment based on actual performance is "single trigger" and
becomes payable upon the closing (see "Interests of Alexion's Directors and Executive Officers in the TransactionTreatment of Annual Bonus"). The estimated amount of each such payment is
shown in the following table:
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Severance ($)
|
|
Prorated
Bonus ($)
|
|
Total ($)
|
|
Ludwig Hantson
|
|
|
12,244,906
|
|
|
212,956
|
|
|
12,457,862
|
|
Aradhana Sarin
|
|
|
2,869,552
|
|
|
67,952
|
|
|
2,937,504
|
|
Brian Goff
|
|
|
2,866,682
|
|
|
67,884
|
|
|
2,934,566
|
|
John Orloff
|
|
|
2,982,899
|
|
|
70,636
|
|
|
3,053,535
|
|
Ellen Chiniara
|
|
|
2,549,238
|
|
|
60,367
|
|
|
2,609,605
|
|
-
(3)
-
Equity. Includes accelerated vesting of Alexion RSU Awards and Alexion PSU Awards upon a qualifying termination of
employment following a change in control of Alexion; this accelerated vesting is a "double trigger" benefit and is triggered only upon a qualifying termination of
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employment
following a change in control of Alexion. Also includes accelerated vesting of unvested Alexion Stock Options upon the first effective time; this accelerated vesting is a "single trigger"
benefit. Amounts are inclusive of 2021 annual equity awards that have been approved by the leadership and compensation committee of the Alexion board of directors and will be granted on
February 28, 2021 in accordance with Alexion's equity grant policy. For further details regarding the treatment of Alexion equity awards in connection with the transaction, see "Interests of
Alexion's Directors and Executive Officers in the TransactionTreatment of Outstanding Equity Awards". The estimated value of such awards are shown in the following table (in the case of
Alexion PSU Awards, this estimated value assumes that the applicable performance goals are achieved at the target level):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Alexion Stock
Options ($)
|
|
Alexion RSU
Awards ($)
|
|
Alexion PSU
Awards ($)
|
|
Total ($)
|
|
Ludwig Hantson
|
|
|
136,796
|
|
|
23,859,694
|
|
|
23,792,489
|
|
|
47,788,980
|
|
Aradhana Sarin
|
|
|
|
|
|
7,200,907
|
|
|
5,591,595
|
|
|
12,792,502
|
|
Brian Goff
|
|
|
155,648
|
|
|
6,808,967
|
|
|
5,936,121
|
|
|
12,900,737
|
|
John Orloff
|
|
|
|
|
|
7,212,121
|
|
|
5,936,121
|
|
|
13,148,243
|
|
Ellen Chiniara
|
|
|
|
|
|
5,222,515
|
|
|
5,392,811
|
|
|
10,615,326
|
|
-
(4)
-
Perquisites/Benefits. Consists of estimated amount of the lump sum cash amount that, after applicable taxes and
withholdings are deduced, is equal to the value of the premiums that otherwise would have been paid by Alexion for the named executive officer's and the named executive officer's eligible dependents'
participation in Alexion's health and welfare plans for an 18-month period. Such payment is "double trigger" and is provided only upon a qualifying termination of employment following a change in
control of Alexion (see "Interests of Alexion's Directors and Executive Officers in the TransactionOfficer Employment Agreements"). The estimated value of each such payment is shown in
the following table:
|
|
|
|
|
Named Executive Officer
|
|
Welfare
Benefits ($)
|
|
Ludwig Hantson
|
|
|
61,587
|
|
Aradhana Sarin
|
|
|
60,017
|
|
Brian Goff
|
|
|
78,730
|
|
John Orloff
|
|
|
61,587
|
|
Ellen Chiniara
|
|
|
61,587
|
|
-
(5)
-
Cutback. Amounts reported in this table do not reflect the impact of the better net after-tax cutback that may apply
to the payments and benefits of the named executive officers in the event that the excise tax applicable under Section 4999 of the Code would otherwise apply. See
"Interests of Alexion's Directors and Executive Officers in the TransactionOfficer Employment Agreements."
Accounting Treatment of the Transaction
The transaction will be accounted for as a business combination using the acquisition method of accounting in accordance with IFRS under
IFRS 3, Business Combinations, referred to as IFRS 3. IFRS requires that one of the two companies in a transaction be designated as the acquirer for accounting purposes based on the
evidence available. AstraZeneca will be treated as the acquiring entity for accounting purposes. In identifying AstraZeneca as the acquiring entity for accounting purposes, AstraZeneca and Alexion
took into account the relative voting rights of all equity instruments, the intended composition of the governing body and senior management of the combined company and the size of each of the
companies. In assessing the size of each of the companies, AstraZeneca and Alexion management evaluated various metrics, including, but not limited to, revenue, profit before taxation, total assets
and market capitalization. No single factor was the sole determinant
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in
the overall conclusion that AstraZeneca is the acquirer for accounting purposes; rather, all factors were considered in arriving at such conclusion. Accordingly, AstraZeneca will record assets
acquired, including identifiable intangible assets, and liabilities assumed from Alexion at their respective fair values at the date of completion of the transaction. Any excess of the purchase price
over the net fair value of such assets and liabilities will be recorded as goodwill.
The
financial condition and results of operations of AstraZeneca after completion of the transaction will reflect Alexion after completion of the transaction, but will not be restated
retroactively to reflect the historical financial condition or results of operations of Alexion. The earnings of AstraZeneca following the completion of the transaction will reflect acquisition
accounting adjustments, including the effect of changes in the carrying value for assets and liabilities on depreciation expense, amortization expense and interest expense. Indefinite-lived intangible
assets, including certain trademarks, and goodwill will not be amortized but will be tested for impairment at least annually, and all tangible and intangible assets including goodwill will be tested
for impairment when certain indicators are present. If, in the future, AstraZeneca determines that tangible or intangible assets (including goodwill) are impaired, AstraZeneca would record an
impairment charge at that time.
Regulatory Approvals Required for the Transaction
As more fully described in this proxy statement/prospectus and in the merger agreement, and subject to the terms and conditions of the merger
agreement, AstraZeneca and Alexion have each agreed to use their respective reasonable best efforts to obtain all regulatory approvals required to complete the transaction. This includes
(i) preparing and filing as promptly as practicable with any governmental authority or other third party all documentation to effect all filings necessary to complete the transaction,
(ii) using reasonable best efforts to obtain, as promptly as practicable, and thereafter maintain, all consents from any governmental authority or other third party that are necessary, proper
or advisable to consummate the transaction, and complying with the terms and conditions of each consent, (iii) cooperating with the other parties to the merger agreement in their efforts to
comply with their obligations under the merger agreement, including in seeking to obtain as promptly as practicable any consents necessary, proper or advisable to complete the transaction and
(iv) using reasonable best efforts to contest certain actions, suits, investigations or proceedings brought by, or orders that have been entered by, a court or governmental authority of
competent jurisdiction relating to the merger agreement or the consummation of the transactions contemplated by the merger agreement.
Without
limiting the generality of the undertakings set forth above, AstraZeneca and its affiliates are required to take, or cause to be taken, all actions, and do or cause to be done,
all things necessary, proper or advisable to eliminate each and every impediment under any antitrust or foreign investment law that is asserted by any governmental authority, obtain the consent or
cooperation of any other person and permit and cause the satisfaction of the conditions to closing regarding the receipt of required regulatory approvals, in each of the foregoing cases, to permit the
closing to occur as promptly as reasonably practicable and in any event prior to the end date. See the section of this proxy statement/prospectus entitled "The Merger
AgreementEfforts to Consummate the Transaction".
The
obligation of AstraZeneca and Alexion to effect the transaction is conditioned upon, among other things, the expiration or early termination of the applicable waiting period under
the HSR Act and the receipt of approvals under the antitrust and foreign investment laws of certain specified foreign jurisdictions. For more information see the section of this proxy
statement/prospectus entitled "The Merger AgreementConditions to Completion of the Transaction."
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Department of Justice, Federal Trade Commission and Other U.S. Antitrust Authorities
Under the HSR Act, certain transactions, including the transaction, may not be completed unless certain waiting period requirements have expired
or been terminated. The HSR Act provides that each party must file a pre-merger notification with the FTC and the DOJ. A transaction notifiable under the HSR Act may not be completed until the
expiration of a 30-calendar-day waiting period following the parties' filings of their respective HSR Act notification forms or the early termination of that waiting period. At any time before the
expiration of the initial waiting period, the DOJ or the FTC may issue a Second Request. If a Second Request is issued, the parties may not complete the transaction until they substantially comply
with the Second Request and observe a second 30-calendar-day waiting period, unless the waiting period is terminated earlier.
Each
of AstraZeneca and Alexion filed its respective HSR Act notification and report with respect to the transaction on February 10, 2021.
At
any time before or after the transaction is completed, the FTC or DOJ could take action under U.S. antitrust laws in opposition to the transaction, including seeking to enjoin
completion of the transaction, condition approval of the transaction upon the divestiture of assets of AstraZeneca, Alexion or their respective affiliates or impose restrictions on AstraZeneca's
post-transaction operations. In addition, U.S. state attorneys general could take such action under the antitrust laws as they deem necessary or desirable in the public interest, including, without
limitation, seeking to enjoin completion of the transaction or permitting completion subject to regulatory concessions or conditions. Private parties also may seek to take legal action under the
antitrust laws under some circumstances.
Other Governmental Approvals
Completion of the transaction is further subject to the receipt of clearances and/or approval under the antitrust and foreign investment laws of
certain specified foreign jurisdictions.
Timing; Challenges by Governmental and Other Entities
There can be no assurance that any of the regulatory approvals described above will be obtained and, if obtained, there can be no assurance as
to the timing of any approvals, the ability to obtain the approvals on satisfactory terms or the absence of any action challenging such approvals. In addition, there can be no assurance that any of
the governmental or other entities described above, including the DOJ, FTC, U.S. state attorneys general, state insurance regulators, foreign regulators and private parties, will not challenge the
transaction on antitrust, competition, or foreign investment grounds and, if such a challenge is made, there can be no assurance as to its result.
Subject
to certain conditions, if the transaction is not completed on or before the end date (as may be extended in accordance with the merger agreement), either AstraZeneca or Alexion
may terminate the merger agreement. For more information, see the section of this proxy statement/prospectus entitled "The Merger AgreementTermination of the
Merger Agreement".
Appraisal or Dissenters' Rights
If you hold one or more shares of Alexion common stock, you may be entitled to appraisal rights under Delaware law and have the right to dissent
from the transaction, have your shares appraised by the Delaware Court of Chancery and receive the "fair value" of such shares (exclusive of any element of value arising from the accomplishment or
expectation of the transaction) as of the completion of the transaction in place of the merger consideration, as determined by such court, if you strictly comply with the procedures specified in
Section 262 of the DGCL, subject to certain limitations under the DGCL. Any such Alexion stockholder awarded "fair value" for their shares by the court would receive
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payment
of that fair value in cash, together with interest, if any, in lieu of the right to receive the merger consideration. The following discussion is not a full summary of the law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262 of the DGCL, the full text of which is attached as Annex C to this proxy
statement/prospectus. All references in Section 262 of the DGCL and in this summary to a "stockholder" are to the holder of record of shares of Alexion common stock. The following discussion
does not constitute any legal or other advice, nor does it constitute a recommendation that you exercise your rights to seek appraisal under Section 262 of the DGCL.
Under
Section 262 of the DGCL, Alexion, not less than 20 days prior to the Alexion special meeting, must notify each stockholder who was an Alexion stockholder on the
record date for notice of the Alexion special meeting and who is entitled to exercise appraisal rights, that appraisal rights are available and include in the notice a copy of Section 262 of
the DGCL. This proxy statement/prospectus constitutes the required notice to Alexion stockholders that appraisal rights are available in connection with the transaction. A holder of Alexion common
stock who wishes to exercise appraisal rights or who wishes to preserve the right to do so should review the following discussion carefully. Failure to comply timely and properly with the requirements
of Section 262 of the DGCL may result in the loss of
appraisal rights. A stockholder who loses his, her or its appraisal rights will be entitled to receive the merger consideration.
How to Exercise and Perfect Your Appraisal Rights. If you are an Alexion stockholder wishing to exercise the rights to seek an
appraisal of your
shares, you must do ALL of the following:
-
-
you must not vote in favor of the adoption of the merger agreement. Because a proxy that is signed and submitted but does not otherwise contain
voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement; if you vote by proxy and wish to exercise your appraisal rights, you must vote against the adoption
of the merger agreement or abstain from voting your shares;
-
-
you must deliver to Alexion a written demand for appraisal of your shares before the vote on the adoption of the merger agreement at the
Alexion special meeting and such demand must reasonably inform Alexion of your identity and your intention to demand appraisal of your shares of Alexion common stock;
-
-
you must continuously hold the shares from the date of making the demand through the completion of the transaction. You will lose your
appraisal rights if you transfer such shares before the completion of the transaction; and
-
-
you or the surviving company must file a petition in the Delaware Court of Chancery requesting a determination of the fair value of such
shares within 120 days after the completion of the transaction. The surviving company is under no obligation to file any such petition in the Delaware Court of Chancery and has no intention of
doing so. Accordingly, it is the obligation of the Alexion stockholders to initiate all necessary action to perfect their appraisal rights in respect of shares of Alexion common stock within the time
prescribed in Section 262 of the DGCL.
Voting,
electronically at the Alexion special meeting or by proxy, against, abstaining from voting on or failing to vote on the adoption of the merger agreement will not constitute a
written demand for
appraisal as required by Section 262 of the DGCL. The written demand for appraisal must be in addition to and separate from any proxy or vote.
Who May Exercise Appraisal Rights. Only a holder of record of shares of Alexion common stock issued and outstanding at the time a
demand for
appraisal is made and that continue to be issued and outstanding and held of record by such holder immediately prior to the completion of the transaction may assert appraisal rights for the shares of
Alexion common stock registered in that holder's name. A
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demand
for appraisal must be executed by or on behalf of the stockholder of record, fully and correctly, as the stockholder's name appears on the stock certificates (or in the stock ledger). The
demand for appraisal must reasonably inform Alexion of the identity of the stockholder and that the stockholder intends to demand appraisal of his, her or its common stock. Beneficial owners who do not also hold their shares
of common stock of record may not directly make appraisal demands to Alexion. The beneficial holder must, in such cases,
have the owner of record, such as a bank, brokerage firm or other nominee, submit the required demand in respect of those shares of common stock of record. A record owner, such
as a bank, brokerage firm or other nominee, who holds shares of Alexion common stock as a nominee for others, may exercise his, her or its right of appraisal with respect to the shares of Alexion
common stock held for one or more beneficial owners, while not exercising this right for other beneficial owners. In that case, the written demand should state the number of shares of Alexion common
stock as to which appraisal is sought. Where no number of shares of Alexion common stock is expressly mentioned, the demand will be presumed to cover all shares of Alexion common stock held in the
name of the record owner.
IF YOU HOLD YOUR SHARES IN BANK OR BROKERAGE ACCOUNTS OR OTHER NOMINEE FORMS, AND YOU WISH TO EXERCISE APPRAISAL RIGHTS, YOU SHOULD CONSULT WITH YOUR BANK, BROKERAGE FIRM OR
OTHER NOMINEE, AS APPLICABLE, TO DETERMINE THE APPROPRIATE PROCEDURES FOR THE BANK, BROKERAGE FIRM OR OTHER NOMINEE TO MAKE A DEMAND FOR APPRAISAL OF THOSE SHARES. IF YOU HAVE A BENEFICIAL INTEREST IN
SHARES HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BANK, BROKERAGE FIRM OR OTHER NOMINEE, YOU MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW PROPERLY AND IN A TIMELY MANNER THE
STEPS NECESSARY TO PERFECT YOUR APPRAISAL RIGHTS.
If
you own shares of Alexion common stock jointly with one or more other persons, as in a joint tenancy or tenancy in common, demand for appraisal must be executed by or for you and all
other joint owners. An authorized agent, including an agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must identify the record
owner and expressly disclose the fact that, in exercising the demand, such person is acting as agent for the
record owner. If you hold shares of Alexion common stock through a broker who in turn holds the shares through a central securities depository nominee such as Cede & Co., a demand for
appraisal of such shares must be made by or on behalf of the depository nominee and must identify the depository nominee as record holder.
If
you elect to exercise appraisal rights under Section 262 of the DGCL, you should mail or deliver a written demand to:
Alexion
Corporation
121 Seaport Boulevard
Boston, Massachusetts 02210
Attention: Corporate Secretary
AstraZeneca's Actions After the Completion of the Transaction. If the transaction is completed, the surviving company will give written
notice of the
completion of the transaction within 10 days after the completion of the transaction to you if you did not vote in favor of adoption of the merger agreement and you made a written demand for
appraisal in accordance with Section 262 of the DGCL. At any time within 60 days after the completion of the transaction, if you have not commenced an appraisal proceeding or joined such
a proceeding as a named party, you have the right to withdraw the demand and to accept the merger consideration in accordance with the merger agreement for your shares of Alexion common stock. Within
120 days after the completion of the transaction, but not later, either you, provided you have complied with the requirements of Section 262 of the DGCL, or the surviving company may
commence an appraisal proceeding by filing a petition in the Delaware Court of
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Chancery,
with a copy served on the surviving company in the case of a petition filed by you, demanding a determination of the fair value of the shares of Alexion common stock held by all dissenting
stockholders who are entitled to appraisal rights. The surviving company is under no obligation to file an appraisal petition and has no intention of doing so. If you desire to have your shares
appraised, you should initiate any petitions necessary for the perfection of your appraisal rights within the time periods and in the manner prescribed in Section 262 of the DGCL.
Within
120 days after the completion of the transaction, provided you have complied with the provisions of Section 262 of the DGCL, you will be entitled to receive from the
surviving company, upon your written request, a statement setting forth the aggregate number of shares not voted in favor of the
adoption of the merger agreement and with respect to which Alexion has received demands for appraisal, and the aggregate number of holders of those shares. The surviving company must mail this
statement to you within the later of 10 days of receipt of the request or 10 days after expiration of the period for delivery of demands for appraisal. If you are the beneficial owner of
shares of Alexion common stock held in a voting trust or by a nominee on your behalf you may, in your own name, file an appraisal petition or request from the surviving company the statement described
in this paragraph. As noted above, however, a demand for appraisal may only be made by or on behalf of a holder of record of shares of Alexion common stock. If a petition for appraisal is duly filed
by you or another record holder of Alexion common stock who has properly exercised his or her appraisal rights in accordance with the provisions of Section 262 of the DGCL, the surviving
company will then be obligated, within 20 days after receiving service of a copy of the petition, to provide the office of the Register in Chancery in which the petition was filed with a duly
verified list containing the names and addresses of all stockholders who have demanded an appraisal of their shares and with whom agreements as to the value of their shares have not been reached. Upon
the filing of any such petition, the Delaware Court of Chancery may order the Register in Chancery to give notice of the time and place fixed for the hearing on the petition by registered or certified
mail to the surviving company and to the stockholders shown on such duly verified list at the addresses therein stated. Such notice will also be published at least one week before the day of the
hearing in at least one newspaper of general circulation published in the City of Wilmington, Delaware, or in another publication deemed advisable by the Delaware Court of Chancery. The costs of these
notices are borne by the surviving company. The Delaware Court of Chancery will then determine which stockholders are entitled to appraisal rights and may require the stockholders demanding appraisal
who hold certificated shares to submit their stock certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings and the Delaware Court of Chancery may
dismiss from the proceedings any stockholder who fails to comply with this direction. If immediately before a merger the shares of the class or series of stock of the constituent corporation as to
which appraisal rights are available were listed on a national securities exchange, the Delaware Court of Chancery shall dismiss the proceedings as to all holders of such shares who are otherwise
entitled to appraisal rights unless (1) the total number of shares entitled to appraisal exceeds 1% of the outstanding shares of the class or series eligible for appraisal, (2) the value
of the consideration provided in the transaction for such total number of shares exceeds $1 million or (3) the merger was approved pursuant to Section 253 or 267 of the DGCL. The
Alexion common stock is listed on Nasdaq and therefore this provision may be applicable in respect thereof, to the extent that Alexion common stock continues to be listed on Nasdaq until immediately
before the transaction.
After
determination of the stockholders entitled to appraisal of their shares of Alexion common stock, the appraisal proceeding will be conducted as to the shares of Alexion common stock
owned by such stockholders, in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing appraisal proceedings. The Delaware Court of Chancery will
thereafter determine the fair value of the shares of Alexion common stock at the completion of the transaction held by dissenting stockholders who have properly exercised his, her or its appraisal
rights, exclusive of any element of value arising from the accomplishment or expectation of the transaction, together with
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interest,
if any, to be paid. Unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown, and except as otherwise provided in Section 262 of the DGCL,
interest from the completion of the transaction through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any
surcharge) as established from time to time during the period between the completion of the transaction and the date of payment of the judgment. At any time before the entry of judgment in the
proceedings, the surviving company may pay to each Alexion stockholder entitled to appraisal an amount in cash (which will be treated as an advance against the payment due to such Alexion
stockholder), in which case interest shall accrue after such payment only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined
by the Delaware Court of Chancery and (2) interest theretofore accrued, unless paid at that time. When the fair value is determined, the Delaware Court of Chancery will direct the payment of
the fair value of the shares, together with interest, if any, by the surviving company to the Alexion stockholders entitled thereto. Payment will be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and in the case of holders of shares of Alexion common stock represented by certificates upon the surrender to the surviving company of such stockholder's
certificates.
In
determining the fair value, the Delaware Court of Chancery is required to take into account all relevant factors. In Weinberger v.
UOP, Inc., the Delaware Supreme Court discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that "proof of value
by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court" should be considered and that "[f]air price
obviously requires consideration of all relevant factors involving the value of a company." The Delaware Supreme Court has stated that, in making this determination of fair value, the court must
consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other factors which could be ascertained as of the date of the transaction which throw any light
on future prospects of the combined company. Section 262 of the DGCL provides that fair value is to be "exclusive of any element of value arising from the accomplishment or expectation of the
transaction." In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a "narrow exclusion
[that] does not encompass known elements of value," but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Delaware
Supreme Court construed Section 262 of the DGCL to mean that "elements of future value, including the nature of the
enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.
An
opinion of an investment banking firm as to the fairness from a financial point of view of the consideration payable in a merger is not an opinion as to, and does not in any manner
address, fair value under Section 262 of the DGCL. The fair value of shares of Alexion common stock as determined under Section 262 of the DGCL could be greater than, the same as, or
less than the value of the merger consideration.
AstraZeneca
does not anticipate offering more than the per share merger consideration to any Alexion stockholder exercising appraisal rights and reserves the rights to make a voluntary
cash payment
pursuant to subsection (h) of Section 262 of the DGCL and to assert, in any appraisal proceeding, that, for purposes of Section 262 of the DGCL, the "fair value" of a share of
Alexion common stock is less than the per share merger consideration. No representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery.
If
no party files a petition for appraisal within 120 days after the effective date of the transaction or, assuming the shares of Alexion common stock remain listed on a
national securities exchange immediately before the transaction, if neither of the ownership thresholds above has been satisfied, then all Alexion stockholders will lose the right to an appraisal, and
will instead receive the per share
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consideration described in the merger agreement, without interest thereon, less any withholding taxes.
The
Delaware Court of Chancery may determine the costs of the appraisal proceeding and may allocate those costs to the parties as the Delaware Court of Chancery determines to be
equitable under the circumstances. Each Alexion stockholder party to the appraisal proceeding is responsible for its own attorneys' fees and expert witnesses' fees and expenses, although, upon
application of a stockholder, the Delaware Court of Chancery may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without
limitation, reasonable attorneys' fees and the fees and expenses of experts, to be charged pro rata against the value of all shares of Alexion common stock entitled to appraisal.
If
you have duly demanded an appraisal in compliance with Section 262 of the DGCL you may not, on or after the effective date of the transaction, vote the shares of Alexion common
stock subject to the demand for any purpose or receive any dividends or other distributions on those shares, except dividends or other distributions payable to holders of record of Alexion common
stock as of a record date prior to the effective date of the transaction.
If
you have not commenced an appraisal proceeding or joined such a proceeding as a named party you may withdraw a demand for appraisal and accept the merger consideration by delivering a
written withdrawal of the demand for appraisal and an acceptance of the merger to the surviving corporation, except that any attempt to withdraw made more than 60 days after the effective date
of the merger will require written approval of the surviving corporation, and no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of
the Delaware Court of Chancery. Such approval may be conditioned on the terms the Delaware Court of Chancery deems just; provided, however, that this provision will not affect the right of any Alexion
stockholder that has made an appraisal demand but who has not commenced an appraisal proceeding or joined such proceeding as a named party to withdraw such stockholder's demand for appraisal and to
accept the
terms offered in the transaction within 60 days after the effective date of the transaction. If you fail to perfect, successfully withdraw your demand for appraisal, or otherwise lose your
appraisal rights, your shares of Alexion common stock will be converted into the right to receive the per share merger consideration, without interest thereon, less any withholding taxes.
Failure
to follow the steps required by Section 262 of the DGCL for perfecting appraisal rights may result in the loss of your appraisal rights. In that event, you will be
entitled to receive the per share merger consideration for your shares of Alexion common stock in accordance with the merger agreement. In view of the complexity of the provisions of
Section 262 of the DGCL, if you are an Alexion stockholder and are considering exercising your appraisal rights under the DGCL, you are urged to consult your own legal and financial advisor.
THE PROCESS OF DEMANDING AND EXERCISING APPRAISAL RIGHTS REQUIRES COMPLIANCE WITH THE PREREQUISITES OF SECTION 262 OF THE DGCL. IF YOU WISH TO EXERCISE YOUR APPRAISAL
RIGHTS, YOU ARE URGED TO CONSULT WITH YOUR OWN LEGAL AND FINANCIAL ADVISORS IN CONNECTION WITH COMPLIANCE UNDER SECTION 262 OF THE DGCL. TO THE EXTENT THERE ARE ANY INCONSISTENCIES BETWEEN THE
FOREGOING SUMMARY AND SECTION 262 OF THE DGCL, THE DGCL WILL GOVERN.
Restrictions on Resales of AstraZeneca ADSs Received in the Transaction
The AstraZeneca ADSs to be issued in connection with the transaction will be registered under the U.S. Securities Act and will be freely
transferable under the U.S. Securities Act and the U.S. Exchange Act, except for shares issued to any shareholder who may be deemed to be an "affiliate" of AstraZeneca for purposes of Rule 144
under the U.S. Securities Act. Persons who may be deemed to
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be
affiliates include individuals or entities that control, are controlled by, or are under the common control with AstraZeneca and may include the executive officers, directors and significant
shareholders of AstraZeneca. This proxy statement/prospectus does not cover resale of AstraZeneca ADSs received by any person upon completion of the transaction, and no person is authorized to make
use of this proxy statement/prospectus in connection with any such resale.
The AstraZeneca Debt Financing
AstraZeneca's obligation to complete the transaction is not contingent on the receipt by AstraZeneca of any financing. AstraZeneca estimates
that it will need approximately $17.5 billion in order to pay Alexion stockholders the cash amounts due to them as merger consideration under the merger agreement and related fees and
transaction costs in connection with the transaction and fund the repayment of certain existing indebtedness of Alexion.
AstraZeneca
anticipates that the funds needed to pay the foregoing amount will be derived from a combination of some or all of (i) cash on hand, (ii) borrowings under its
existing and new credit facilities described below and (iii) the proceeds from the sale of debt securities.
In
connection with entry into the merger agreement, on December 12, 2020, AstraZeneca and certain of its subsidiaries entered into a bridge facility agreement, the credit facility
established in accordance with the terms thereof is referred to in this proxy statement/prospectus as the bridge facility, with Morgan Stanley Bank International Limited, J.P. Morgan
Securities plc and Goldman Sachs Bank USA, respectively, to finance up to $17.5 billion of the (i) cash consideration in connection with the transaction, (ii) repayment of
certain existing indebtedness of Alexion or its subsidiaries and (iii) fees and expenses in connection with the foregoing transaction. Morgan Stanley Senior Funding, Inc., Morgan Stanley
Bank NA, JPMorgan Chase Bank, N.A., London Branch and Goldman Sachs Bank USA each provided a commitment to fund loans under the bridge facility and are collectively referred to in this proxy
statement/prospectus as the initial bridge commitment parties.
On
December 24, 2020, the bridge facility was successfully syndicated to a number of large, well regarded international banks, and are collectively referred to, together with the
initial bridge commitment parties, the bridge commitment parties, and $5 billion of the bridge facility was cancelled and refinanced with new long term credit facilities made available by the
bridge commitment parties, which facilities are referred to in this proxy statement/prospectus as the take-out facilities, and the commitment parties in relation to the take-out facilities, the
take-out commitment parties.
The
bridge commitment parties' obligation to fund the bridge facility and the take-out commitment parties' obligation to fund the take-out facilities are subject to certain limited
conditions as set forth in the bridge facility agreement and the take-out facilities agreement, respectively, including, among others, all relevant consents to the transaction having been received,
all conditions to closing under the merger agreement have been satisfied and that the transaction will be consummated substantially simultaneously with the first utilization of the relevant facility,
and other customary conditions to completion. The commitments to provide the financing under the bridge facility are available for an initial term of 12 months from the earlier of
(i) the date of completion of the acquisition and (ii) December 12, 2021 with up to two six-month extensions available at the discretion of AstraZeneca.
The commitments to provide the term loan financing under the take-out facilities are available for a period which corresponds with the period in which closing can occur under the merger agreement.
AstraZeneca
intends to refinance the remainder of the outstanding bridge facility through a combination of debt-capital market issuances and business cash flows.
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Section 4.05 Capitalization.
(a) The
authorized capital stock of the Company consists of (i) 290,000,000 shares of Company Common Stock and (ii) 5,000,000 shares of preferred stock, par
value $0.0001 per share ("Company Preferred Stock"). As of the close of business on December 9, 2020, there were issued (A) 240,085,996
shares of Company Common Stock (of which 21,365,429 shares were held in treasury), (B) no shares of Company Preferred Stock, (C) Company Stock Options to purchase an aggregate of
2,372,634 shares of Company Common Stock, (D) 4,568,750 shares of Company Common Stock were subject to outstanding Company RSU Awards, (E) 1,056,176 shares of Company Common Stock were
subject to outstanding Company PSU Awards, determined assuming target performance levels were achieved and 2,703,746 shares of Company Common Stock were subject to outstanding Company PSU Awards,
determined assuming maximum performance levels were achieved, (F) (1) 9,502,104 additional shares of Company Common Stock were reserved for issuance pursuant to the Company Stock Plans and
(2) 423,409 additional shares of Company Common Stock were reserved for issuance under the Company ESPP, (G) 152,681,745 CVRs subject to, and having the terms set forth in, the CVR
Agreement. Except as set forth in this Section 4.05(a), as of the close of business on December 9, 2020, there are no issued, reserved for
issuance or outstanding Equity Securities of the Company.
(b) All
outstanding shares of capital stock of the Company have been, and all shares that may be issued pursuant to any Company Stock Plan will be, when issued in accordance
with the respective terms thereof, duly authorized and validly issued, fully paid and nonassessable and free of preemptive rights. No Subsidiary of the Company owns any shares of capital stock of the
Company (other than any such shares owned by Subsidiaries of the Company in a fiduciary, representative or other capacity on behalf of other Persons, whether or not held in a separate account). There
are no outstanding bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters
on which stockholders of the Company have the right to vote. There are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Equity
Securities of the Company. Neither the Company nor any of its Subsidiaries is a party to any agreement with respect to the voting of any Equity Securities of the Company.
Section 4.06 Subsidiaries.
(a) Each
Subsidiary of the Company is a corporation or other entity duly incorporated or organized, validly existing and in good standing (except to the extent such concept
is not applicable under Applicable Law of such Subsidiary's jurisdiction of incorporation, formation or organization, as applicable) under the laws of its jurisdiction of incorporation, formation or
organization and has all corporate or other organizational powers and authority, as applicable, required to own, lease and operate its properties and assets and to carry on its business as now
conducted, except for those
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jurisdictions
where failure to be so duly incorporated or organized, validly existing and in good standing or to have such power or authority has not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Each such Subsidiary is duly qualified to do business and is in good standing in each jurisdiction where such qualification is
necessary, except for those jurisdictions where failure to be so qualified or in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(b) All
of the issued and outstanding capital stock or other Equity Securities of each Subsidiary of the Company have been validly issued and are fully paid and
nonassessable (except to the extent such concepts are not applicable under Applicable Law of such Subsidiary's jurisdiction of incorporation, formation or organization, as applicable) and are owned by
the Company, directly or indirectly, free and clear of any Lien (other than any restrictions imposed by Applicable Law) and free of preemptive rights, rights of first refusal, subscription rights or
similar rights of any Person and transfer restrictions (other than transfer restrictions under Applicable Law or under the organizational documents of such Subsidiary). There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Equity Securities of any Subsidiary of the Company. Except for the capital stock or other Equity
Securities of its Subsidiaries and publicly traded securities held for investment that do not exceed five percent of the outstanding securities of any entity, the Company does not own, directly or
indirectly, any capital stock or other Equity Securities of any Person.
Section 4.07 SEC Filings and the Sarbanes-Oxley Act.
(a) The
Company has timely filed with or furnished to the SEC all reports, schedules, forms, statements, prospectuses, registration statements and other documents required
to be filed with or furnished to the SEC by the Company since January 1, 2018 (collectively, together with any exhibits and schedules thereto and other information incorporated therein, the
"Company SEC Documents"). No Subsidiary of the Company is required to file or furnish any report, schedule, form, statement, prospectus, registration
statement or other document with the SEC.
(b) As
of its filing date (or, if amended or superseded by a filing prior to the date of this Agreement, on the date of such amended or superseding filing), the Company SEC
Documents filed or furnished prior to the date of this Agreement complied, and each Company SEC Document filed or furnished subsequent to the date of this Agreement (assuming, in the case of the Proxy
Statement/Prospectus, that the representations and warranties set forth in Section 5.09 are true and correct) will comply, in all material
respects with the applicable requirements of Nasdaq, the 1933 Act, the 1934 Act and the Sarbanes-Oxley Act, as the case may be.
(c) As
of its filing date (or, if amended or superseded by a filing prior to the date of this Agreement, on the date of such amended or superseding filing), each Company SEC
Document filed or furnished prior to the date of this Agreement did not, and each Company SEC Document filed or furnished subsequent to the date of this Agreement (assuming, in the case of the Proxy
Statement/Prospectus, that the representations and warranties set forth in Section 5.09 are true and correct) will not, contain any untrue
statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
(d) Each
Company SEC Document that is a registration statement, as amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of the date such registration
statement or amendment became effective, and as of the date of such amendment or supplement, did not contain 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 therein not misleading in any material respect.
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(e) As
of the date of this Agreement, there are no outstanding or unresolved comments received from the SEC staff with respect to any of the Company SEC Documents, and, to
the knowledge of the Company, none of the Company SEC Documents are subject to ongoing SEC review.
(f) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company is, and since
January 1, 2019 has been, in compliance with (i) the applicable provisions of the Sarbanes-Oxley Act and (ii) the applicable listing and corporate governance rules and regulations
of Nasdaq.
(g) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company currently maintains
disclosure controls and procedures (as defined in Rule 13a-15 under the 1934 Act) that are designed to provide reasonable assurance that all information required to be disclosed in the
Company's reports filed under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that all such information is
accumulated and communicated to the Company's management as appropriate to allow timely decisions regarding required disclosure and to enable each of the principal executive officer of the Company and
the principal financial officer of the Company to make the certifications required under the 1934 Act with respect to such reports. For purposes of this Agreement, "principal
executive officer"and "principal financial officer"shall have the meanings given to such terms in the Sarbanes-Oxley Act.
(h) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company currently maintains
a system of internal controls over financial reporting (as defined in Rule 13a-15 under the 1934 Act) ("internal controls") designed to provide
reasonable assurance regarding the reliability of the Company's financial reporting and the preparation of the Company's financial statements for external purposes in accordance with GAAP, and the
Company's principal executive officer and principal financial officer have disclosed, based on their most recent evaluation of such internal controls prior to the date of this Agreement, to the
Company's auditors and the audit committee of the Board of Directors of the Company (i) all significant deficiencies and material weaknesses in the design or operation of internal controls
which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in internal controls.
(i) Since
January 1, 2018, each of the principal executive officer and principal financial officer of the Company (or each former principal executive officer and
principal financial officer of the Company, as applicable) has made all certifications required by Rules 13a-14 and 15d-14 under the 1934 Act and Sections 302 and 906 of the
Sarbanes-Oxley Act and any related rules and regulations promulgated by the SEC and Nasdaq.
Section 4.08 Financial Statements and Financial Matters.
(a) The
audited consolidated financial statements and unaudited consolidated interim financial statements of the Company included or incorporated by reference in the Company
SEC Documents (or, if any such Company SEC Document is amended or superseded by a filing prior to the date of this Agreement, such amended or superseding Company SEC Document) present fairly in all
material respects, in conformity with GAAP applied on a consistent basis during the periods presented (except as may be indicated in the notes thereto), the consolidated financial position of the
Company and its Subsidiaries as of the dates thereof and their consolidated results of operations and cash flows for the periods then ended (subject, in each case, to normal and recurring year-end
audit adjustments in the case of any unaudited interim financial statements).
(b) From
January 1, 2018 to the date of this Agreement, the Company has not received written notice from the SEC or any other Governmental Authority indicating that
any of its accounting policies
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or
practices are or may be the subject of any review, inquiry, investigation or challenge by the SEC or any other Governmental Authority.
Section 4.09 Disclosure Documents.
(a) The
information relating to the Company and its Subsidiaries that is provided in writing by the Company, any of its Subsidiaries or any of their respective
Representatives for inclusion or incorporation by reference in the Form F-4 or the Proxy Statement/Prospectus will not (i) in the case of the Form F-4, at the time the
Form F-4 or any amendment or supplement thereto becomes effective and at the time of the Company Stockholder Meeting or (ii) in the case of the Proxy Statement/Prospectus, at the time
the Proxy Statement/Prospectus or any amendment or supplement thereto is first mailed to the stockholders of the Company and at the time of the Company Stockholder Meeting, contain any untrue
statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
(b) The
information relating to the Company and its Subsidiaries that is provided in writing by the Company, any of its Subsidiaries or any of their respective
Representatives for inclusion or incorporation by reference in the Parent Circular will not, at the time the Parent Circular or any amendment or supplement thereto is submitted to the FCA, at the time
the Parent Circular or any amendment or supplement thereto is first mailed to the shareholders of Parent and at the time of the Parent Shareholder Meeting, contain any information or any expression of
opinion, belief, expectation or intention which is untrue or inaccurate or omit a fact, the omission of which renders any information or expression in the Parent Circular inaccurate or misleading.
(c) The
information relating to the Company and its Subsidiaries that is provided in writing by the Company, any of its Subsidiaries or any of their respective
Representatives for inclusion or incorporation by reference in a Parent Prospectus will not, at the time a Parent Prospectus or any amendment or supplement thereto is submitted to the FCA, at the time
a Parent Prospectus or any amendment or supplement thereto is made available to the public in accordance with the Prospectus Regulation Rules and at the time the Parent Shares Admission becomes
effective, contain any information or any expression of opinion, belief, expectation or intention which is untrue or inaccurate or omit a fact, the omission of which renders any information or
expression in a Parent Prospectus inaccurate or misleading.
(d) Notwithstanding
the foregoing provisions of this Section 4.09, no representation or warranty is made by the
Company with respect to information or statements made or incorporated by reference in the Form F-4, the Proxy Statement/Prospectus, a Parent Prospectus (if so required) or the Parent Circular
that were not supplied by or on behalf of the Company.
Section 4.10 Absence of Certain Changes.
(a) (i)
Since the Company Balance Sheet Date through the date of this Agreement, except in connection with or related to the process in connection with which the Company and
its Representatives discussed and negotiated this Agreement and the transactions contemplated hereby, the business of the Company and its Subsidiaries has been conducted in all material respects in
the ordinary course of business and (ii) since the Company Balance Sheet Date, there has not been any event, change, effect, development or occurrence that has had or would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(b) Since
the Company Balance Sheet Date through the date of this Agreement, there has not been any action taken by the Company or any of its Subsidiaries that, if taken
during the period from the date of this Agreement through the First Effective Time without Parent's consent, would constitute a breach of clause (ii), (iii)(C), (v), (vi), (vii) or
(xi) of Section 6.01(b) (or solely with respect to the foregoing clauses, clause (xvi) of Section 6.01(b)).
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Section 4.11 No Undisclosed Material Liabilities. There are no liabilities or obligations of the
Company or any of its Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, that would be required by GAAP to be reflected on the consolidated balance sheet of the Company and its Subsidiaries, other than (a) liabilities or obligations
disclosed or provided for in the Company Balance Sheet or in the notes thereto, (b) liabilities or obligations incurred in the ordinary course of business since the Company Balance Sheet Date,
(c) liabilities arising in connection with the transactions contemplated hereby or in connection with obligations under Contracts binding on the Company or any of its Subsidiaries (except to
the extent such liabilities arose or resulted from a breach or a default of such Contract) or (d) other liabilities or obligations that have not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect. As of the date of this Agreement, there are no off-balance sheet arrangements of any type pursuant to any off-balance sheet
arrangement required to be disclosed pursuant to Item 303(a)(4) of Regulation S-K promulgated under the 1933 Act ("Regulation S-K")
that have not been so described in the Company SEC Documents.
Section 4.12 Litigation. There is no claim, action, proceeding or suit or, to the knowledge of
the Company, investigation pending or, to the knowledge of the Company, threatened against
the Company, any of its Subsidiaries, any present or, to the knowledge of the Company, former officers, directors or employees of the Company or any of its Subsidiaries in their respective capacities
as such, or any of the respective properties or assets of the Company or any of its Subsidiaries, before (or, in the case of threatened claims, actions, suits, investigations or proceedings, that
would be before) any Governmental Authority, (a) that has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or (b) that
would reasonably be expected to prevent, materially delay or materially impair the ability of the Company to perform its obligations under this Agreement or to consummate the Mergers; provided, that to
the extent any such representations or warranties in the foregoing clauses (a) and (b) pertain to claims, actions,
proceedings, suits or investigations that relate to the execution, delivery, performance or consummation of this Agreement or any of the transactions contemplated by this Agreement, such
representations and warranties are made only as of the date hereof. There is (in the case of clause (ii), as of the date of this Agreement) no Order outstanding against the Company, any of its
Subsidiaries, any present or, to the knowledge of the Company, former officers, directors or employees of the Company or any of its Subsidiaries in their respective capacities as such, or any of the
respective properties or assets of any of the Company or any of its Subsidiaries or, to the knowledge of the Company, threatened against or affecting the Company, any of its Subsidiaries, any present
or, to the knowledge of the Company, former officers, directors or employees of the Company in their respective capacities as such, or any of the respective properties or assets of any of the Company
or any of its Subsidiaries, that (i) has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or (ii) would reasonably be
expected to prevent, materially delay or materially impair the ability of the Company to perform its obligations under this Agreement or to consummate the Mergers.
Section 4.13 Permits. Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, the Company and each of
its Subsidiaries hold all governmental licenses and Consents necessary for the operation of its respective businesses (the "Company Permits"). The
Company and each of its Subsidiaries are, and since January 1, 2019 have been, in compliance with the terms of the Company Permits, except for failures to comply that have not had and would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. There is no claim, action, proceeding or suit or, to the knowledge of the Company, investigation
pending, or, to the knowledge of the Company, threatened that seeks the revocation, cancellation, termination, non-renewal or adverse modification of any Company Permit, except where such revocation,
cancellation, termination, non-renewal or adverse modification (i) has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect
or (ii) individually or in the aggregate, would not
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reasonably
be expected to prevent, materially delay or materially impair the ability of the Company to perform its obligations under this Agreement or to consummate the Mergers.
Section 4.14 Compliance with Laws. The Company and each of its Subsidiaries are, and since
January 1, 2018 have been, in compliance with all Applicable Laws, except for failures to comply
that (i) have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or (ii) individually or in the aggregate, would
not reasonably be expected to prevent, materially delay or materially impair the ability of the Company to perform its obligations under this Agreement or to consummate the Mergers. Nothing in this Section 4.14 is intended to or shall be treated as a representation or warranty given by the Company with respect to Privacy Legal Requirements.
Section 4.15 Regulatory Matters.
(a) Except
(x) as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or (y) that,
individually or in the aggregate, as of the date of this Agreement, would not reasonably be expected to prevent, materially delay or materially impair the ability of the Company to perform its
obligations under this Agreement or to consummate the Mergers, (i) each of the Company and its Subsidiaries holds (A) all authorizations under the U.S. Food, Drug, and Cosmetic Act of
1938 (the "FDCA"), the U.S. Public Health Service Act (the "PHSA"), and the regulations of the U.S. Food
and Drug Administration (the "FDA") promulgated thereunder, and (B) authorizations of any applicable Governmental Authority that are concerned
with the quality, identity, strength, purity, safety, efficacy, manufacturing, marketing, distribution, sale, pricing, import or export of any of the Company Products (any such Governmental Authority,
a "Company Regulatory Agency") necessary for the lawful operation of the businesses of the Company or any of its Subsidiaries as currently conducted
(the "Company Regulatory Permits"); (ii) all such Company Regulatory Permits are valid and in full force and effect; and (iii) the Company
and its Subsidiaries are in compliance with the terms of all Company Regulatory Permits. All Company Regulatory Permits are in full force and effect, except where the failure to be in full force and
effect (A) has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or (B) as of the date of this Agreement,
individually or in the aggregate, would not reasonably be expected to prevent, materially delay or materially impair the ability of the Company to perform its obligations under this Agreement or to
consummate the Mergers.
(b) Neither
the Company nor any of its Subsidiaries are party to any material corporate integrity agreements, monitoring agreements, consent decrees, settlement orders, or
similar agreements with or imposed by any Company Regulatory Agency.
(c) All
pre-clinical and clinical investigations in respect of a Company Product conducted or sponsored by the Company or any of its Subsidiaries are being, and since
January 1, 2019 have been, conducted in compliance with all Applicable Laws administered or issued by the applicable Company Regulatory Agencies, including (i) FDA standards for the
design, conduct, performance, monitoring, auditing, recording, analysis and reporting of clinical trials contained in Title 21 parts 50, 54, 56, 312, 314 and 320 of the Code of Federal
Regulations and (ii) any Applicable Laws restricting the collection, use and disclosure of individually identifiable health information and personal information, except, in each case, for such
noncompliance that has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(d) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, during the period beginning on
January 1, 2019 and ending on the date of this Agreement, neither the Company nor any of its Subsidiaries has received any written notice from the FDA or the European Medicines Agency (the
"EMA") or any foreign agency with jurisdiction over the development, marketing, labeling, sale, use handling and control, safety, efficacy, reliability,
or manufacturing of the Company Products that would reasonably be
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expected
to lead to the denial, limitation, revocation, or rescission of any of the Company Regulatory Permits or of any application for marketing approval currently pending before the FDA or such
other Company Regulatory Agency.
(e) Since
January 1, 2019, all reports, documents, claims, permits and notices required to be filed, maintained or furnished to the FDA or any other Company
Regulatory Agency by the Company and its Subsidiaries have been so filed, maintained or furnished, except where failure to file, maintain or furnish such reports, documents, claims, permits or notices
have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. All such reports, documents, claims, permits and notices were true and
complete in all material respects on the date filed (or were corrected in or supplemented by a subsequent filing). Since January 1, 2019, neither the Company nor any of its Subsidiaries, nor,
to the knowledge of the Company, any officer, employee, agent or distributor of the Company or any of its Subsidiaries, has made an untrue statement of a material fact or a fraudulent statement to the
FDA or any other Company Regulatory Agency, failed to disclose a material fact required to be disclosed to the FDA or any other Company Regulatory Agency, or committed an act, made a statement, or
failed to make a statement, in each such case, related to the business of the Company or any of its Subsidiaries, that, at the time such disclosure was made, would reasonably be expected to provide a
basis for the FDA to invoke its policy respecting "Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities", set forth in 56 Fed. Reg. 46191 (September 10, 1991) or for the
FDA or any other Company Regulatory Agency to invoke any similar policy, except for any act or statement or failure to make a statement that has not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect, since January 1, 2019, (i) neither the Company nor any of its Subsidiaries, nor, to the knowledge of the Company, any officer, employee, agent or distributor of the Company or
any of its Subsidiaries, has been debarred or convicted of any crime or engaged in any conduct for which debarment is mandated by 21 U.S.C. § 335a(a) or any similar Applicable Law
or authorized by 21 U.S.C. § 335a(b) or any similar Applicable Law applicable in other jurisdictions in which material quantities of any of the Company Products are sold or intended
by the Company to be sold; and (ii) neither the Company nor any of its Subsidiaries, nor, to the knowledge of the Company, any officer, employee, agent or distributor of the Company or any of
its Subsidiaries, has been excluded from participation in any federal health care program or convicted of any crime or engaged in any conduct for which such Person could reasonably be expected to be
excluded from participating in any federal health care program under Section 1128 of the Social Security Act of 1935 or any similar Applicable Law or program.
(f) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, as to each Company Product
subject to the FDCA and the regulations of the FDA promulgated thereunder or any similar Applicable Law in any foreign jurisdiction in which material quantities of any of the Company Products are sold
or intended by the Company or any of its Subsidiaries to be sold that is or has been developed, manufactured, tested, distributed or marketed by or on behalf of the Company or any of its Subsidiaries,
each such Company Product is being or has been developed, manufactured, stored, distributed and marketed in compliance with all Applicable Laws, including those relating to investigational use,
marketing approval, current good manufacturing practices, packaging, labeling, advertising, record keeping, reporting, and security. There is no action or proceeding pending or, to the knowledge of
the Company, threatened, including any prosecution, injunction, seizure, civil fine, debarment, suspension or recall, in each case alleging any violation applicable to any Company Product by the
Company or any of its Subsidiaries of any Applicable Law, except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
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(g) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) during the period
beginning on January 1, 2019 and ending on the date of this Agreement, neither the Company nor any of its Subsidiaries have voluntarily or involuntarily initiated, conducted or issued, or
caused to be initiated, conducted or issued, any material recall, field corrections, market withdrawal or replacement, safety alert, warning, "dear doctor" letter, investigator notice, or other notice
or action to wholesalers, distributors, retailers, healthcare professionals or patients relating to an alleged lack of safety, efficacy or regulatory compliance of any Company Product and
(ii) to the knowledge of the Company, neither the Company nor any of its Subsidiaries has received, any written notice from the FDA or any other Company Regulatory Agency during the period
beginning on January 1, 2019 and ending on the date of this Agreement regarding (A) the recall, market withdrawal or replacement of any Company Product sold or intended to be sold by the
Company or its Subsidiaries (other than recalls, withdrawals or replacements that are not material to the Company and its Subsidiaries, taken as a whole), (B) a material change in the marketing
classification or a material change in the labeling of any such Company Products, (C) a termination or suspension of the manufacturing, marketing, or distribution of such Company Products, or
(D) a material negative change in reimbursement status of a Company Product.
Section 4.16 Material Contracts.
(a) Section 4.16(a)
of the Company Disclosure Schedule sets forth a list as of the date of this Agreement of each of the following Contracts to which the Company or
any of its Subsidiaries is a party or by which it is bound (each such Contract listed or required to be so listed, and each of the following Contracts to which the Company or any of its Subsidiaries
becomes a party or by which it becomes bound after the date of this Agreement, a "Company Material Contract"):
(i) any
Contract, including any manufacturing, supply or distribution agreement, that requires by its terms or is reasonably likely to require the payment or delivery of
cash or other consideration by or to the Company or any of its Subsidiaries in an amount having an expected value in excess of $50,000,000 in the fiscal year ending December 31, 2020 or any
fiscal year thereafter, which cannot be terminated by the Company or such Subsidiary on 60 days' notice or less without material payment or penalty;
(ii) each
Contract providing for or (in the case of subclause (B)) related to the acquisition or disposition of assets or securities by or from any Person or any
business (or any contract providing for an option, right of first refusal or offer or similar rights with respect to any of the foregoing) (A) entered into since December 31, 2018 that
involved or would reasonably be expected to involve the payment of consideration in excess of $50,000,000 in the aggregate with respect to such Contract or series of related Contracts, or
(B) that contains (or would contain, in the case of an option, right of first refusal
or offer or similar rights) ongoing representations, warranties, covenants, indemnities or other obligations (including "earn-out", contingent value rights or other contingent payment or value
obligations) that would involve or may reasonably be expected to require the receipt or making of payments or the issuance of any Equity Securities of the Company or any of its Subsidiaries, in each
case having an expected value in excess of $50,000,000 in the fiscal year ending December 31, 2020;
(iii) any
Contract between any Governmental Authority, on the one hand, and the Company or any of its Subsidiaries, on the other hand, involving or that would reasonably be
expected to involve payments to or from such Governmental Authority in an amount having an expected value in excess of $50,000,000 in the fiscal year ending December 31, 2020 or any fiscal year
thereafter;
(iv) any
Contract that (A) limits or purports to limit, in any material respect, the freedom of the Company or any of its Subsidiaries to engage or compete in any
line of business or with any Person or in any area or that would so limit or purport to limit, in any material respect, the freedom of Parent or any of its Affiliates after the First Effective Time,
(B) contains material
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exclusivity
or "most favored nation" obligations or restrictions or (C) contains any other provisions that restrict the ability of the Company or any of its Subsidiaries to sell, market,
distribute, promote, manufacture, develop, commercialize, or test or research any Company Product, directly or indirectly through third parties, in any material respect, or that would so limit or
purport to limit the ability of Parent or any of its Affiliates to sell, market, distribute, promote, manufacture, develop, commercialize, or test or research any Parent Product after the First
Effective Time, directly or indirectly through third parties, in any material respect;
(v) any
Contract relating to third-party indebtedness for borrowed money (including under any short-term financing facility) in excess of $20,000,000 (whether incurred,
assumed, guaranteed or secured by any asset of the Company or any of its Subsidiaries) other than any Contract exclusively between or among the Company and any of its wholly owned Subsidiaries;
(vi) any
Contract restricting the payment of dividends or the making of distributions in respect of any Equity Securities of the Company or any of its Subsidiaries or the
repurchase or redemption of, any Equity Securities of the Company or any of its Subsidiaries;
(vii) any
material joint venture, profit-sharing, partnership, collaboration, co-promotion, commercialization, research, development, license or other similar agreement;
(viii) any
Contract with any Person (A) pursuant to which the Company or its Subsidiaries may be required to pay milestones, royalties or other contingent payments
based on any research, testing, development, regulatory filings or approval, sale, distribution, commercial manufacture or other similar occurrences, developments, activities or events, or
(B) under which the Company or its Subsidiaries grants to any Person any right of first refusal, right of first negotiation, option to purchase, option to license, or any other similar rights
with respect to any Company Product or any material Intellectual Property Rights, in each case, which payments are in an amount having an expected value in excess of $50,000,000 in the fiscal year
ending December 31, 2020;
(ix) any
lease or sublease for real or personal property for which annual rental payments made by the Company or any of its Subsidiaries are expected to be in excess of
$50,000,000 in the fiscal year ending December 31, 2020 or any fiscal year thereafter;
(x) all
material Contracts pursuant to which the Company or any of its Subsidiaries (A) receives or is granted any license (including any sublicense) to, or covenant
not to be sued under, any Intellectual Property Rights (other than licenses to commercially available software, including off-the-shelf software, or other technology) or (B) grants any license
(including any sublicense) to, or covenant not to be sued under, any Company Intellectual Property (other than non-exclusive licenses granted in the ordinary course of business consistent with past
practice), in the case of each of clauses (A) and (B), that (1) will involve aggregate payments by or to the Company or any of its Subsidiaries in excess of $10,000,000 in the fiscal
year ending December 31, 2020 or (2) are material to the development, manufacture or sale of a Company Product;
(xi) any
Contracts or other transactions with any record or, to the knowledge of the Company, beneficial owner of five percent or more of the voting securities of the
Company, or (B) affiliate (as such term is defined in Rule 12b-2 promulgated under the 1934 Act) or "associates" (or members of any of their "immediate family") (as such terms are
respectively defined in Rule 12b-2 and Rule 16a-1 of the 1934 Act) of any such director or beneficial owner;
(xii) any
Contract involving the settlement of any claim, action or proceeding or threatened claim, action or proceeding (or series of related, claims actions or
proceedings) which (A) will involve payments after the date of this Agreement in excess of $5,000,0000 or (B) will impose materially burdensome monitoring or reporting obligations to any
other Person outside the ordinary course of business or material restrictions on the Company or any Subsidiary of the Company (or, following the Closing, on Parent or any Subsidiary of Parent);
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(xiii) any
settlement agreements by the Company or any of its Subsidiaries with Taxing Authorities entered into since January 1, 2020 and providing for payments in
excess of $50,000,000; and
(xiv) any
other Contract required to be filed by the Company pursuant to Item 601(b)(10) of Regulation S-K.
(b) All
of the Company Material Contracts are, subject to the Bankruptcy and Equity Exceptions, (i) valid and binding obligations of the Company or a Subsidiary of
the Company (as the case may be) and, to the knowledge of the Company, each of the other parties thereto, and (ii) in full force and effect and enforceable in accordance with their respective
terms against the Company or its Subsidiaries (as the case may be) and, to the knowledge of the Company, each of the other parties thereto (in each case except for such Company Material Contracts that
are terminated after the date of this Agreement in accordance with their respective terms, other than as a result of a default or breach by the Company or any of its Subsidiaries of any of the
provisions thereof), except where the failure to be valid and binding obligations and in full force and effect and enforceable has not had and would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect. To the knowledge of the Company, as of the date of this Agreement, no Person is seeking to terminate or challenging the validity or enforceability
of any Company Material Contract, except such terminations or challenges which have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect. Neither the Company nor any of its Subsidiaries, nor, to the knowledge of the Company, any of the other parties thereto, has violated any provision of, or committed or failed to perform any
act that (with or without notice, lapse of time or both) would constitute a default under any provision of, and neither the Company nor any of its Subsidiaries has received written notice that it has
violated or defaulted under, any Company Material Contract, except for those violations and defaults (or potential defaults) that would not have had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. The Company has made available to Parent true and complete copies of each of Company Material Contract as in effect as of the date
hereof.
Section 4.17 Taxes. Except as has not had and would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect:
(a) All
Tax Returns required by Applicable Law to be filed with any Taxing Authority by the Company or any of its Subsidiaries have been filed when due (giving effect to all
extensions) in accordance with all Applicable Law, and all such Tax Returns are true, correct and complete in all respects.
(b) Each
of the Company and its Subsidiaries has paid (or has had paid on its behalf) all Taxes due and owing (whether or not shown on any Tax Return), except for Taxes
being contested in good faith pursuant to appropriate procedures for which an adequate reserve has been established on the books and records of the Company or its applicable Subsidiary.
(c) Each
of the Company and its Subsidiaries has duly and timely withheld all Taxes required to be withheld, and such withheld Taxes have been either duly and timely paid to
the proper Taxing Authority or properly set aside in accounts for such purpose.
(d) There
is no audit, claim, action, suit, proceeding or other investigation pending or, to the Company's knowledge, threatened in writing against or with respect to the
Company or its Subsidiaries in respect of Taxes.
(e) Except
in the ordinary course of business, neither the Company nor any of its Subsidiaries has waived any statute of limitations with respect to Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency, which waiver is still in effect.
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(f) During
the two year period ending on the date of this Agreement, the Company was not a "distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a transaction intended to qualify for tax-free treatment under Section 355 of the Code.
(g) There
are no Liens for Taxes (other than Permitted Liens) on any of the assets of the Company or any of its Subsidiaries.
(h) Neither
the Company nor any of its Subsidiaries (i) has been a member of an affiliated, consolidated, combined or unitary group other than one of which the
Company or any of its Subsidiaries was the common parent, (ii) is party to any agreement relating to the apportionment, sharing, assignment or allocation of Taxes (other than (x) an
agreement solely between or among the Company and/or one or more of its Subsidiaries or (y) customary Tax indemnification provisions in ordinary course commercial agreements that are not
primarily related to Taxes), (iii) has entered into a closing agreement pursuant to Section 7121 of the Code, or any similar provision of state, local or non-U.S. law or (iv) has
any liability for the Taxes of any Person (other than the Company or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or non-U.S.
law) or as a transferee or successor.
(i) Neither
the Company nor any of its Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable
income for any taxable period (or portion thereof) beginning after the Closing Date as a result of (i) any change in method of accounting occurring prior to the Closing pursuant to
Section 481(a) of the Code (or any similar provision of state, local, or foreign Applicable Law), (ii) any installment sale or open transaction made prior to Closing, (iii) any
intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any similar provision of state, provincial, local or foreign Applicable Law)
entered into prior to or existing as of immediately prior to the Closing, (iv) any closing agreement pursuant to Section 7121 of the Code (or any similar provision of state, local or
non-U.S. Law) entered into prior to the Closing, (v) any prepaid amount received or paid prior to the Closing, or (vi) any election pursuant to Section 108(i) of the Code.
(j) Neither
the Company nor any of its Subsidiaries has engaged in any "listed transaction" within the meaning of Treasury Regulation Section 1.6011-4(b)(2).
(k) As
of December 31, 2019, the Company and its Subsidiaries have not formed a compartmentalisation reserve for Dutch Tax purposes, and to the best of their
knowledge they have not formed any such reserve between December 31, 2019 and the date of this Agreement.
(l) Within
the past six years, no jurisdiction in which the Company or any of its Subsidiaries does not file a Tax Return has asserted in writing a claim that has not
been resolved to the effect that the Company or such Subsidiary is subject to Taxes or required to file Tax Returns in such jurisdiction.
(m) Neither
the Company nor any of its Subsidiaries has taken or agreed to take any action or knows of any fact, agreement, plan or other circumstance that is reasonably
likely (i) to prevent the Mergers, taken together, from qualifying as a "reorganization" within the meaning of Section 368(a) of the Code or (ii) to cause the stockholders of the
Company (other than any Excepted Stockholder) to recognize gain pursuant to Section 367(a)(1) of the Code.
Section 4.18 Employees and Employee Benefit Plans.
(a) Section 4.18(a) of the Company Disclosure Schedule sets forth a true and complete list as of the date of this
Agreement of each material Company Employee Plan and each Company Employee Plan that is subject to ERISA. For each material Company Employee Plan and each Company Employee Plan that is subject to
ERISA, the Company has made available to Parent a copy of such plan (or a description, if such plan is not written) and all amendments thereto and material written interpretations thereof, together
with a copy of (if applicable) (i) each trust, insurance or other funding
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arrangement,
(ii) each summary plan description and summary of material modifications, (iii) the most recently filed Internal Revenue Service Forms 5500, (iv) the most
recent favorable determination or opinion letter from the Internal Revenue Service, (v) the most recently prepared actuarial reports and financial statements in connection with each such
Company Employee Plan, and (vi) all documents and correspondence relating thereto received from or provided to the Department of Labor, the PBGC, the Internal Revenue Service or any other
Governmental Authority during the past year.
(b) Neither
the Company nor any of its ERISA Affiliates (nor any predecessor of any such entity) sponsors, maintains, administers or contributes to (or has any obligation to
contribute to), or has, during the last six years, sponsored, maintained, administered or contributed to (or had any obligation to contribute to), any plan subject to Title IV of ERISA, including any
multiemployer plan, as defined in Section 3(37) of ERISA.
(c) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, each Company Employee Plan that
is intended to be qualified under Section 401(a) of the Code has received a favorable determination or opinion letter from the Internal Revenue Service or has applied to the Internal Revenue
Service for such a letter within the applicable remedial amendment period or such period has not expired and, to the knowledge of the Company, no circumstances exist that would reasonably be expected
to result in any such letter being revoked or not being reissued or a penalty under the Internal Revenue Service Closing Agreement Program if discovered during an Internal Revenue Service audit or
investigation. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, each trust created under any such Company
Employee Plan is exempt from tax under Section 501(a) of the Code and has been so exempt since its creation.
(d) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, each Company Employee Plan has
been maintained in compliance with its terms and all Applicable Law, including ERISA and the Code. Except as has not had and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect, no claim (other than routine claims for benefits), action, suit, investigation or proceeding (including an audit) is pending against or involves or, to the Company's
knowledge, is threatened against or reasonably expected to involve, any Company Employee Plan before any Governmental Authority, including the Internal Revenue Service, the Department of Labor or the
PBGC.
(e) Except
as provided under this Agreement or pursuant to Applicable Law, with respect to each director, officer, or employee (including each former director, officer, or
employee) of the Company or any of its Subsidiaries, the consummation of the transactions contemplated by this Agreement will not, either alone or together with any other event: (i) entitle any
such individual to any payment or benefit, including any bonus, retention, severance, retirement or job security payment or benefit, (ii) accelerate the time of payment or vesting or trigger
any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, or increase the amount payable or trigger any other obligation under, any Company Employee Plan,
(iii) contractually limit or restrict the right of the Company or any of its Subsidiaries or, after the Closing, Parent to merge, amend or terminate any Company Employee Plan or
(iv) result in the payment of any "excess parachute payment" (as defined in Section 280G(b)(1) of the Code).
(f) Neither
the Company nor any of its Subsidiaries has any current or projected liability for, and no Company Employee Plan provides or promises, any post-employment or
post-retirement medical, dental, disability, hospitalization, life or similar benefits (whether insured or self-insured) to any director, officer, or employee (including any former director, officer,
or employee) of the Company or any of its Subsidiaries (other than coverage mandated by Applicable Law).
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(g) Neither
the Company nor any of its Subsidiaries has any obligation to gross-up, indemnify or otherwise reimburse any Person for any Tax incurred by such Person under
Section 409A or 4999 of the Code.
(h) With
respect to any Company Employee Plan for the benefit of Company employees or dependents thereof who perform services or who are employed outside of the United
States (a "Non-U.S. Plan"), except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material
Adverse Effect: (i) if required to have been approved by any non-U.S. Governmental Authority (or permitted to have been approved to obtain any beneficial Tax or other status), such Non-U.S.
Plan has been so approved or timely submitted for approval; no such approval has been revoked (nor, to the knowledge of the Company, has revocation been threatened) and no event has occurred since the
date of the most recent approval or application therefor that is reasonably likely to affect any such approval or increase the costs relating thereto; (ii) if intended to be funded and/or book
reserved, such Non-U.S. Plan is fully funded and/or book reserved, as appropriate, based upon reasonable actuarial assumptions; (iii) no material liability exists or reasonably could be imposed
upon the assets of the Company or any of its Subsidiaries by reason of such Non-U.S. Plan; and (iv) the financial statements of such Non-U.S. Plan (if any) accurately reflect such Non-U.S.
Plan's liabilities.
(i) On
or prior to the date hereof, the Company has made available to Parent a list of each Company Equity Award outstanding as of December 9, 2020 that includes
(A) the number of shares of Company Common Stock underlying such Company Equity Award (assuming achievement of the applicable performance goals at the target level in the case of any such
Company Equity Award that is a Company PSU Award), (B) the exercise price of each such Company Equity Award that is a Company Stock Option, and (C) the vesting schedule of each such
Company Equity Award that is unvested as of December 9, 2020.
Section 4.19 Labor Matters.
(a) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries
are, and since January 1, 2018 have been, in compliance with all Applicable Laws relating to labor and employment, including those relating to labor management relations, wages, hours,
overtime, employee classification, discrimination, sexual harassment, civil rights, affirmative action, work authorization, immigration, safety and health, information privacy and security, workers
compensation, continuation coverage under group health plans, wage payment and the payment and withholding of Taxes.
(b) Neither
the Company nor any of its Subsidiaries is, or from January 1, 2018 to the date of this Agreement has been, a party to or subject to, or is currently
negotiating in connection with entering into, any collective bargaining agreement or any other similar agreement with any labor organization, labor union or other employee representative, and, to the
Company's knowledge, from January 1, 2018 through the date of this Agreement, there has not been any organizational campaign, card solicitation, petition or other unionization or similar
activity seeking recognition of a collective bargaining or similar unit relating to any director, officer, or employee of the Company or any of its Subsidiaries. Except as has not had and would not
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, as of the date of this Agreement, (i) there are no unfair labor practice complaints pending
or, to the Company's knowledge, threatened against the Company or any of its Subsidiaries before the National Labor Relations Board or any other Governmental Authority or any current union
representation questions involving any director, officer, or employee (including any former director, officer, or employee) of the Company or any of its Subsidiaries with respect to the Company or its
Subsidiaries, and (ii) since January 1, 2018 there has not been, and there is, no labor strike, slowdown, stoppage, picketing, interruption of work or lockout pending or, to the
Company's knowledge, threatened against or affecting the Company or any of its Subsidiaries.
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(c) The
Company and its Subsidiaries have not entered into any agreement with any works council, labor union, or similar labor organization that would require the Company to
obtain the consent of, or provide advance notice, to such works council, labor union or similar labor organization of the transactions contemplated by this Agreement.
Section 4.20 Intellectual Property.
(a) The
Company has made available to Parent a true and complete list, as of the date of this Agreement, of all Registered Intellectual Property that is Company Intellectual
Property (the "Company Registered IP"). Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, (i) each item of Company Registered IP is legally, beneficially and solely owned by the Company or one of its Subsidiaries, free and clear of all Liens (other than
Permitted Liens), (ii) since January 1, 2020, none of the Company Registered IP has lapsed, expired, or been abandoned (including as a result of failure to pay the necessary renewal or
maintenance fees) prior to the end of the applicable term of such Company Registered IP, except where the Company has made a reasonable business decision to not maintain such Company Registered IP,
(iii) none of the Company Registered IP that has issued has, since January 1, 2020, subsequently been adjudged invalid or unenforceable, (iv) to the knowledge of the Company, all
Company Registered IP is subsisting, and if registered, not invalid or unenforceable and (v) there is no opposition or cancellation proceeding pending or, to the knowledge of the Company,
threatened against the Company or its Subsidiaries challenging or contesting the ownership, validity, scope or enforceability of any Company Registered IP (other than ordinary course proceedings
related to the application for, or renewal of, any item of Company Registered IP).
(b) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company Intellectual
Property and the Licensed Intellectual Property constitutes all of the material Intellectual Property Rights necessary to develop, manufacture or sell each material Company Product as currently
developed, manufactured or sold by the Company and its Subsidiaries as of the date of this Agreement.
(c) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) none of the Company
Intellectual Property is subject to any Order, claim, action, proceeding, suit or, to the knowledge of the Company, investigation pending or, to the knowledge of the Company, threatened, naming the
Company or any of its Subsidiaries adversely affecting the use thereof or rights thereto by or of the Company or any of its Subsidiaries, (ii) to the knowledge of the Company, the operation of
the business of the Company or any of its Subsidiaries does not infringe, misappropriate or otherwise violate and, since January 1, 2020, has not infringed, misappropriated or otherwise
violated, any Intellectual Property Rights of any Third Party (other than with respect to Intellectual Property Rights owned, controlled or licensed to Third Parties by non-practicing entities or
patent assertion entities), and (iii) to the knowledge of the Company, as of the date of this Agreement no Third Party has infringed, misappropriated or otherwise violated any material Company
Intellectual Property or any Intellectual Property Rights exclusively licensed to the Company or any of its Subsidiaries and material to the development, manufacture or sale of a Company Product, in
each case, except as has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
(d) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its Subsidiaries
have taken commercially reasonable steps to protect and maintain any material Trade Secrets included in the Company Intellectual Property (except for any Company Intellectual Property whose value
would not reasonably be expected to be impaired in a material respect by disclosure), and to the knowledge of the Company, since January 1, 2020, there have been no material unauthorized uses
or disclosures of any such Trade Secrets.
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(e) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, to the knowledge of the Company
(A) the Company and its Subsidiaries have complied with any and all obligations to the extent applicable pursuant to the Bayh-Dole Act, 35 U.S.C. §200-212, with respect to any
Patents that are part of the Company Registered IP and are practiced by a Company Product, and (B) no funding, facilities or personnel of any Governmental Authority or any university, college,
research institute or other educational institution has been used to create or develop any Patents that are part of the Company Registered IP and are practiced by a Company Product, except for any
such funding or use of facilities or personnel that has not resulted in such Governmental Authority or institution any ownership interest in such Patents that are part of the Company Registered IP and
are practiced by a Company Product.
(f) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect (as defined below in this Section 4.20(f)), neither the Company nor
any of its Subsidiaries is party to any Contracts which, solely as a result of the consummation of the
transactions contemplated by this Agreement, would grant to any Third Party any right to any material Intellectual Property Rights (other than Company Intellectual Property) owned by, or licensed to,
Parent or any of its Affiliates. Solely for purposes of determining satisfaction of the conditions set forth in Section 9.02(b)(iv) with respect
to this Section 4.20(f), "Company Material Adverse Effect" shall take into account any consequences to Parent or any of its Affiliates.
(g) Except
as has not had, and would not reasonably be expected to have, a Company Material Adverse Effect, the Company and its Subsidiaries have obtained from all current
or former employees, officers, consultants and contractors who have created or developed material Intellectual Property Rights for or on behalf of the Company or any of its Subsidiaries, valid
assignments (or, in the case of consultants and contractors, assignment or license) of such parties' rights in such Intellectual Property Rights to the Company or one of its Subsidiaries, to the
extent permitted by applicable Law, or the Company and its Subsidiaries otherwise own such Intellectual Property Rights by operation of law.
(h) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, since January 1, 2019
through the date of this Agreement, (i) all collection, acquisition, use, storage, transfer (including any cross-border transfers), distribution, dissemination or other processing by or on
behalf of the Company and any of its Subsidiaries of Personal Data are and have been in material compliance with all applicable Privacy Legal Requirements and Privacy Commitments, (ii) neither
the Company nor any of its Subsidiaries has received any written notice alleging any material violation by the Company or any of its Subsidiaries of any Privacy Legal Requirement or Privacy
Commitments, nor, to the knowledge of the Company, has the Company or any of its Subsidiaries been threatened in writing to be charged with any such violation by any Governmental Authority,
(iii) neither the Company nor any of its Subsidiaries has received any material written complaint by any Person with respect to the collection, acquisition, use, storage, transfer (including
any cross-border transfers), distribution, dissemination or other processing of Personal Data by the Company or any of its Subsidiaries, (iv) the Company and its Subsidiaries implements and
maintains commercially reasonable written policies and procedures with respect to technical, organizational, administrative, and physical safeguards adequate to protect Personal Data against any
unauthorized use, access or disclosure, and (v) to the knowledge of the Company, there has been no unauthorized use, access or disclosure of Personal Data.
(i) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, since January 1, 2020, to
the knowledge of the Company, (i) the Company and its Subsidiaries implement and maintain commercially reasonable written policies and procedures with respect to technical, organizational,
administrative, and physical safeguards adequate to protect the security, confidentiality, integrity and availability of Trade Secrets, Personal Data and information technology systems of the Company
and its Subsidiaries, (ii) there have been no security breaches in the information technology systems of the Company nor any of its
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Subsidiaries,
and (iii) there have been no material disruptions in any such information technology systems, that adversely affected the operations of the business of the Company or any of its
Subsidiaries.
(j) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, any transfer of Personal Data in
connection with the transactions contemplated by this Agreement (including the Mergers) will not violate in any material respect any applicable Privacy Legal Requirement or Privacy Commitment.
Section 4.21 Properties. Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, (a) the Company
and each of its Subsidiaries has good, valid and marketable fee simple title to, or valid leasehold interests in, as the case may be, each parcel of real property of the Company or any of its
Subsidiaries, free and clear of all Liens, except for Permitted Liens, (b) each lease, sublease or license (each, a "Lease") under which the
Company or any of its Subsidiaries leases, subleases or licenses any real property is, subject to the Bankruptcy and Equity Exceptions, a valid and binding obligation of the Company or a Subsidiary of
the Company (as the case may be) and, to the knowledge of the Company, each of the other parties thereto, and in full force and effect and enforceable in accordance with its terms against the Company
or its Subsidiaries (as the case may be) and, to the knowledge of the Company, each of the other parties thereto (except for such Leases that are terminated after the date of this Agreement in
accordance with their respective terms, other than as a result of a default or breach by the Company or any of its Subsidiaries of any of the provisions thereof), (c) neither the Company nor
any of its Subsidiaries, nor, to the knowledge of the Company, any of the other parties thereto has violated or committed or failed to perform any act which (with or without notice, lapse of time or
both) would constitute a default under any provision of any Lease, and (d) neither the Company nor any of its Subsidiaries has received written notice that it has violated or defaulted under
any Lease.
Section 4.22 Environmental Matters. Except as has not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect:
(a) Since
January 1, 2018, no notice, notification, demand, request for information, citation, summons or order has been received, no complaint has been filed, no
penalty has been assessed, and no claim, action or suit or, to the knowledge of the Company, proceeding or investigation (including a review) is pending or, to the knowledge of the Company, threatened
by any Governmental Authority or other Person relating to the Company or any of its Subsidiaries that relates to, or arises under, any Environmental Law, Environmental Permit or Hazardous Substance;
and
(b) the
Company and its Subsidiaries are, and since January 1, 2019 have been, in compliance with all Environmental Laws and all Environmental Permits and hold all
applicable Environmental Permits.
Section 4.23 FCPA; Anti-Corruption; Sanctions.
(a) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, neither the Company nor any of
its Subsidiaries, nor, to the knowledge of the Company, any director, manager, employee, agent or representative of the Company or any of its Subsidiaries, in each case acting on behalf of the Company
or any of its Subsidiaries, has, in the last five years, in connection with the business of the Company or any of its Subsidiaries, taken any action in violation of the FCPA or other applicable
Bribery Legislation (in each case to the extent applicable).
(b) Neither
the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any director, manager or employee of the Company or any of its Subsidiaries, is, or
in the last five years has been, subject to any actual or pending or, to the knowledge of the Company, threatened civil, criminal, or administrative actions, suits, demands, claims, hearings, notices
of violation, investigations, proceedings, demand letters, settlements, or enforcement actions, or made any voluntary disclosures to any Governmental Authority, involving the Company or any of its
Subsidiaries relating to applicable Bribery Legislation, including the FCPA.
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(c) The
Company and each of its Subsidiaries has made and kept books and records, accounts and other records, which, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company and each of its Subsidiaries as required by the FCPA.
(d) The
Company and each of its Subsidiaries has instituted policies and procedures reasonably designed to ensure compliance with the FCPA and other applicable Bribery
Legislation and maintain such policies and procedures in force.
(e) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, none of the Company or any of
its Subsidiaries, nor, to the knowledge of the Company, any of their respective directors, managers or employees (i) is a Sanctioned Person, (ii) has, in the last five years, engaged in,
has any plan or commitment to engage in, direct or indirect dealings with any Sanctioned Person or in any Sanctioned Country on behalf of the Company or any of its Subsidiaries in violation of
applicable Sanctions Law or (iii) has, in the last five years, violated, or engaged in any conduct sanctionable under, any Sanctions Law, nor to the knowledge of the Company, been the subject
of an investigation or allegation of such a violation or sanctionable conduct.
Section 4.24 Insurance. Except as has not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect, the Company and its
Subsidiaries maintain insurance coverage with reputable insurers in such amounts and covering such risks as the Company reasonably believes, based on past experience, is adequate for the businesses
and operations of the Company and its Subsidiaries (taking into account the cost and availability of such insurance).
Section 4.25 Transactions with Affiliates To the knowledge of the Company, since January 1,
2018 through the date of this Agreement, there have been no transactions, or series of related
transactions, agreements, arrangements or understandings in effect, nor are there any currently proposed transactions, or series of related transactions, agreements, arrangements or understandings,
that would be required to be disclosed under Item 404(a) of Regulation S-K that have not been otherwise disclosed in the Company SEC Documents filed prior to the date hereof.
Section 4.26 Antitakeover Statutes. Assuming the representations and warranties set forth in
Section 5.19 are true and correct, neither the
restrictions set forth in Section 203 of the DGCL nor any other "control share acquisition," "fair price," "moratorium" or other antitakeover laws enacted under Applicable Law apply to this
Agreement or any of the transactions contemplated hereby.
Section 4.27 Opinions of Financial Advisors. BofA Securities, Inc., financial advisor to
the Company, has delivered to the Board of Directors of the Company its oral opinion, to be confirmed by
delivery of a written opinion, to the effect that, as of the date of such opinion and based on and subject to the various assumptions, limitations, qualifications and other matters set forth therein,
the Merger Consideration to be received in the First Merger by the holders of Company Common Stock pursuant to this Agreement is fair, from a financial point of view, to such holders. A written copy
of such opinion shall be delivered promptly to Parent after the date of this Agreement for informational purposes only.
Section 4.28 Finders' Fees. Except for BofA Securities, Inc., there is no investment banker,
broker, finder or other intermediary that has been retained by or is authorized to act on
behalf of the Company or any of its Subsidiaries who might be entitled to any finders or similar fee or commission from the Company or any of its Affiliates in connection with the transactions
contemplated by this Agreement.
Section 4.29 No Ownership of Parent Ordinary Shares. Neither the Company nor any of its
Subsidiaries beneficially owns, directly or indirectly, any Parent Ordinary Shares or other securities convertible into,
exchangeable for or exercisable for Parent Ordinary Shares, and neither the Company nor any of its Subsidiaries has any rights to acquire any Parent Ordinary Shares (other than any such
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securities
owned by the Company or any of its Subsidiaries in a fiduciary, representative or other capacity on behalf of other Persons, whether or not held in a separate account). There are no voting
trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting of the capital stock or other Equity Securities of Parent or any of
its Subsidiaries.
Section 4.30 No Other Representations and Warranties. Except for the representations and
warranties made by the Company in this Article IV (as qualified by the
applicable items disclosed in the Company Disclosure Schedule in accordance with Section 11.05 and the introduction to this Article IV) and in
the certificate to be delivered by the Company pursuant to Section 9.02(c), neither the Company nor any other Person makes or has made any representation or warranty, expressed or implied, at law
or in
equity, with respect to or on behalf of the Company or its Subsidiaries, their businesses, operations, assets, liabilities, financial condition, results of operations, future operating or financial
results, estimates, projections, forecasts, plans or prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or the accuracy
or completeness of any information regarding the Company or its Subsidiaries or any other matter furnished or provided to Parent or made available to Parent in any "data rooms," "virtual data rooms,"
management presentations or in any other form in expectation of, or in connection with, this Agreement or the transactions contemplated hereby. The Company and its Subsidiaries disclaim any other
representations or warranties, whether made by the Company or any of its Subsidiaries or any of their respective Affiliates or Representatives. The Company acknowledges and agrees that, except for the
representations and warranties made by Parent in Article V (as qualified by the applicable items disclosed in the Parent Disclosure Schedule in
accordance with Section 11.05 and the introduction to Article V) and the certificate
delivered by Parent pursuant to Section 9.03(c), neither Parent nor any other Person is making or has made any representations or warranty,
expressed or implied, at law or in equity, with respect to or on behalf of Parent or its Subsidiaries, their businesses, operations, assets, liabilities, financial condition, results of operations,
future operating or financial results, estimates, projections, forecasts, plans or prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans
or prospects) or the accuracy or completeness of any information regarding Parent or its Subsidiaries or any other matter furnished or provided to Parent or made available to the Company in any "data
rooms," "virtual data rooms," management presentations or in any other form in expectation of, or in connection with, this Agreement, or the transactions contemplated hereby or thereby. The Company
specifically disclaims that it is relying on or has relied on any such other representations or warranties that may have been made by any Person, and acknowledges and agrees that Parent and its
Affiliates have specifically disclaimed and do hereby specifically disclaim any such other representations and warranties.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT, BIDCO AND MERGER SUBS
Subject to Section 11.05, except (a) as disclosed in any Parent Public Document
filed or furnished and publicly available since January 1, 2019 and prior to the date that was three business days prior to the date of this Agreement or (b) as set forth in the Parent's
Disclosure Schedule, Parent, Bidco, Merger Sub I and Merger Sub II jointly and severally represent and warrant to the Company that:
Section 5.01 Corporate Existence and Power. Parent is a public limited company duly incorporated
and validly existing under the laws of England and Wales, and each of Bidco and Merger Sub I is a corporation
duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and Merger Sub II is a limited liability company duly formed, validly existing and in good standing
under the laws of the State of Delaware. Each of Parent, Bidco and each Merger Sub has all requisite corporate power and authority required to own or lease all of its properties or assets and to carry
on its business as now conducted, except where the failure to have such power or authority
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would
not reasonably be expected to, individually or in the aggregate, (a) have a Parent Material Adverse Effect or (b) prevent, materially delay or materially impair the ability of
Parent, Bidco or either Merger Sub to perform its obligations under this Agreement or to consummate the Mergers. Each of Parent, Bidco and each Merger Sub is duly qualified to do business and is in
good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified or in good standing has not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse Effect. Parent directly or indirectly owns all of the outstanding shares of capital stock of Bidco and Bidco directly
owns all of the outstanding shares of capital stock of Merger Sub I and all of the outstanding membership interests of Merger Sub II. Neither Bidco nor either Merger Sub has, since the date of
its incorporation (or, with respect to Merger Sub II, its formation) engaged in any activities other than (i) in connection with the preparation, negotiation and execution of this Agreement or
the consummation of the transactions contemplated hereby or as expressly contemplated by this Agreement or (ii) those incident or related to its incorporation (or, with respect to Merger Sub
II, its formation). Prior to the date of this Agreement, Parent has made available to the Company true and complete copies of the memorandum and articles of association of Parent (the
"Parent Organizational Documents").
Section 5.02 Corporate Authorization.
(a) The
execution, delivery and performance by Parent, Bidco and each Merger Sub of this Agreement and the consummation by Parent, Bidco and each Merger Sub of the
transactions contemplated by this Agreement are within the corporate powers and authority of Parent, Bidco and each Merger Sub and, except for the Parent Shareholder Approval and the adoption of this
Agreement by the sole stockholders of Bidco and Merger Sub I and the approval of this Agreement by the sole member of Merger Sub II, have been duly authorized by all necessary corporate action on the
part of Parent, Bidco and each Merger Sub. The affirmative vote of at least a majority of the votes cast by the holders of outstanding Parent Ordinary Shares at a duly convened and held meeting of
Parent's shareholders at which a quorum is present approving the transactions contemplated by this Agreement (including, if required with respect to the issuance of Parent ADSs in connection with the
First Merger (the "Parent ADS Issuance")) is the only vote of the holders of any of Parent's capital stock necessary in connection with the consummation
of the Mergers (the "Parent Shareholder Approval"). This Agreement has been duly executed and delivered by each of Parent, Bidco and each Merger Sub and
(assuming due authorization, execution and delivery by the Company) constitutes a valid, legal and binding agreement of each of Parent, Bidco and each Merger Sub enforceable against Parent, Bidco and
each Merger Sub in accordance with its terms (subject to the Bankruptcy and Equity Exceptions).
(b) At
a meeting duly convened and held, the Board of Directors (or a duly authorized committee of the Board of Directors) of Parent unanimously adopted resolutions that
(i) this Agreement and the transactions contemplated hereby will most likely promote the success of Parent for the benefit of its shareholders as a whole, (ii) approved this Agreement
and the transactions contemplated hereby, (iii) resolved that the approval of this Agreement and the transactions contemplated hereby be submitted to a vote at a meeting of Parent's
shareholders and (iv) resolved to recommend the approval of the transactions contemplated by this Agreement by Parent's shareholders (such recommendation, the "Parent
Board Recommendation").
(c) The
Boards of Directors of Bidco and Merger Sub I have unanimously adopted resolutions (i) determining that this Agreement and the transactions contemplated
hereby (including the Mergers) are fair to and in the best interests of such companies and their respective stockholders, (ii) approving, adopting and declaring advisable this Agreement and the
transactions contemplated hereby (including the Mergers), (iii) directing that the approval and adoption of this Agreement be submitted to a vote of their respective stockholders or member, as
applicable, and (iv) recommending approval and adoption of this Agreement by their respective stockholders or member, as applicable.
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(d) The
Board of Directors of Merger Sub II has unanimously adopted resolutions (i) determining that this Agreement and the transactions contemplated hereby
(including the Mergers) are fair to and in the best interests of such Merger Sub and its sole member, (ii) approving, adopting and declaring advisable this Agreement and the transactions
contemplated hereby (including the Mergers), (iii) directing that the approval and adoption of this Agreement be submitted to a vote of such Merger Sub II's sole member, and
(iv) recommending approval and adoption of this Agreement by Merger Sub II's sole member.
Section 5.03 Governmental Authorization. The execution, delivery and performance by each of
Parent, Bidco and each Merger Sub of this Agreement and the consummation by each of Parent, Bidco and each
Merger Sub of the transactions contemplated hereby require no action by or in respect of, Consents of, or Filings with, any Governmental Authority other than (a) the filing of the First
Certificate of Merger and the Second Certificate of Merger with the Delaware Secretary of State and appropriate documents with the relevant authorities of other states in which Parent or such Merger
Sub is qualified to do business, (b) compliance with any applicable requirements of the HSR Act, (c) compliance with and Filings under any applicable Foreign Antitrust Laws,
(d) compliance with any applicable requirements of the 1933 Act, the 1934 Act and any other applicable U.S. state or federal securities laws or pursuant to the Listing Rules, the CA 2006, the
DTRs, the MAR, the FSMA or the rules of Nasdaq, the LSE or Nasdaq Stockholm and (e) any other actions, Consents or Filings the absence of which (i) has not had and would not reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse Effect or (ii) individually or in the aggregate, would not reasonably be expected to prevent, materially delay
or materially impair the ability of Parent, Bidco or either Merger Sub to perform its obligations under this Agreement or to consummate the Mergers.
Section 5.04 Non-contravention. Assuming compliance with the matters referred to in Section 5.03 and receipt of the Parent Shareholder
Approval, the execution, delivery and performance by each of Parent, Bidco and each Merger Sub of this Agreement and the consummation of the transactions contemplated hereby do not and will not
(a) contravene, conflict with, or result in any violation or breach of any provision of the Parent Organizational Documents, the certificate of incorporation or bylaws of either Bidco or Merger
Sub I or the certificate of formation or limited liability company agreement of Merger Sub II, (b) contravene, conflict with or result in any violation or breach of any provision of any
Applicable Law, (c) require any Consent or other action by any Person under, constitute a default, or an event that, with or without notice or lapse of time or both, would constitute a default
under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which Parent or any of its Subsidiaries is entitled
under, any provision of any Contract binding on Parent or any of its Subsidiaries, or (d) result in the creation or imposition of any Lien on any asset of Parent or any of its Subsidiaries,
except, in the case of each of clauses (b) through (d), as (i) has not had and would not reasonably be expected to, individually or in the aggregate, have a Parent Material Adverse
Effect or (ii) individually or in the aggregate, would not reasonably be expected to prevent, materially delay or materially impair the ability of Parent, Bidco or either Merger Sub to perform
its obligations under this Agreement or to consummate the Mergers.
Section 5.05 Capitalization.
(a) As
of the close of business on December 9, 2020, there were issued (A) 1,312,660,216 Parent Ordinary Shares (of which 0 shares were held in treasury),
(B) 478,282,076 Parent ADSs (which Parent ADSs each represent 0.50 Parent Ordinary Shares), (C) 50,000 redeemable preference shares, par value £1.00 per share, of Parent,
(D) options to purchase Parent Ordinary Shares ("Parent Stock Options") with respect to an aggregate of 1,269,871 Parent Ordinary Shares,
(E) options to purchase Parent ADSs ("Parent ADS Options") with respect to an aggregate of 0 Parent ADSs, (F) 2,422,100 Parent Ordinary
Shares and 9,868,320.66 Parent ADSs were subject to restricted stock unit awards under the Parent Stock Plans ("Parent RSU Awards") and
(G) 3,046,948.10 Parent Ordinary Shares and 4,873,891.85
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Parent
ADSs were subject to performance share units under the Parent Stock Plans ("Parent PSU Awards"), determined assuming target performance levels
were achieved. When issued and delivered in accordance with the terms of this Agreement, the Parent ADSs issued as part of the Merger Consideration will have been validly issued in accordance with the
terms of, and will entitle the holders thereof to the rights specified in, the Deposit Agreement and will be fully paid and nonassessable and the issuance thereof will be free of preemptive rights.
Parent has authority to issue the Parent Ordinary Shares represented by such Parent ADSs and, when issued and delivered in accordance with the terms of this Agreement, such Parent Ordinary Shares will
have been validly issued and will be fully paid and the issuance thereof will be free of preemptive rights. Except as set forth in this Section 5.05(a), as of the close of business on
December 9, 2020, there are no issued, reserved for issuance or outstanding Equity
Securities of Parent.
(b) All
of the issued share capital of Parent has been, and of the share capital of Parent that may be issued pursuant to any employee stock option or other compensation
plan or arrangement will be, when issued in accordance with the respective terms thereof, duly authorized and validly issued, fully paid and nonassessable (where such concept is applicable under
Applicable Law) and free of preemptive rights. No Subsidiary of Parent owns any share capital of Parent (other than any such shares owned by Subsidiaries of Parent in a fiduciary, representative or
other capacity on behalf of other Persons, whether or not held in a separate account). There are no outstanding bonds, debentures, notes or other indebtedness of Parent having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on any matters on which shareholders of Parent have the right to vote. There are no outstanding obligations of Parent or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any Equity Securities of Parent. Neither Parent nor any of its Subsidiaries is a party to any agreement with respect to the voting of any
Equity Securities of Parent.
Section 5.06 Subsidiaries.
(a) Each
Subsidiary of Parent is a corporation or other entity duly incorporated or organized, validly existing and in good standing (except to the extent such concept is
not applicable under Applicable Law of such Subsidiary's jurisdiction of incorporation, formation or organization, as applicable) under the laws of its jurisdiction of incorporation, formation or
organization and has all corporate or other organizational powers and authority, as applicable, required to own, lease and operate its properties and assets and to carry on its business as now
conducted, except for those jurisdictions where failure to be so duly incorporated or organized, validly existing and in good standing or to have such power or authority has not had and would not
reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Each such Subsidiary is duly qualified to do business and is in good standing in each jurisdiction
where such qualification is necessary, except for those jurisdictions where failure to be so qualified or in good standing has not had and would not reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect.
(b) All
of the issued and outstanding capital stock or other Equity Securities of each Subsidiary of Parent have been validly issued and are fully paid and nonassessable
(except to the extent such concepts are not applicable under Applicable Law of such Subsidiary's jurisdiction of incorporation, formation or organization, as applicable) and are owned by Parent,
directly or indirectly, free and clear of any Lien (other than any restrictions imposed by Applicable Law) and free of preemptive rights, rights of first refusal, subscription rights or similar rights
of any Person and transfer restrictions (other than transfer restrictions under Applicable Law or under the organizational documents of such Subsidiary). There are no outstanding obligations of Parent
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Equity Securities of any Subsidiary of Parent. Except for the capital stock or other Equity Securities of its Subsidiaries and
publicly traded securities held for investment that do not exceed five percent of the outstanding securities of any entity, Parent does not own, directly or indirectly, any capital stock or other
Equity Securities of any Person.
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Section 5.07 SEC Filings and the Sarbanes-Oxley Act.
(a) Since
January 1, 2018, Parent has (i) timely filed with or furnished to the SEC all reports, schedules, forms, statements, prospectuses, registration
statements and other documents required to be filed with or furnished to the SEC (collectively, together with any exhibits and schedules thereto and other information incorporated therein, the
"Parent SEC Documents") and (ii) timely filed with or furnished or submitted to the FCA (and the National Storage Mechanism maintained by the
FCA) all reports (including annual financial reports, half yearly financial reports and interim management statements), notices, resolutions, prospectuses, circulars and other documents required to be
filed with, furnished or submitted to the FCA (collectively, together with any other information incorporated therein, the "Parent Non-SEC Documents"
and the Parent Non-SEC Documents together with the Parent SEC Documents, the "Parent Public Documents"). No Subsidiary of Parent is required to file,
furnish or submit any report, schedule, form, statement, prospectus, registration statement or other document with the SEC or the FCA. Since January 1, 2019, Parent has complied in all material
respects with its disclosure obligations under Article 17 of the MAR.
(b) As
of its filing or publication date (or, if amended or superseded by a filing or publication prior to the date of this Agreement, on the date of such amended or
superseding filing or publication), the Parent Public Documents filed, published or furnished prior to the date of this Agreement complied, and each Parent Public Document filed, published or
furnished subsequent to the date of this Agreement (assuming, in the case of each of the Form F-4, a Parent Prospectus and the Parent Circular, that the representations and warranties set forth
in Section 4.09 are true and correct) will comply, in all material respects with the applicable requirements of Nasdaq, the LSE, the FCA, the
1933 Act, the 1934 Act, the Sarbanes-Oxley Act, the CA 2006 and the Listing Rules, as the case may be.
(c) As
of its filing date (or, if amended or superseded by a filing prior to the date of this Agreement, on the date of such amended or superseding filing), each Parent SEC
Document filed or furnished prior to the date of this Agreement did not, and each Parent SEC Document filed or furnished subsequent to the date of this Agreement (assuming, in the case of the
Form F-4, that the representations and warranties set forth in Section 4.09 are true and correct) will not, contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
(d) As
of its filing or publication date (or, if amended or superseded by a filing or publication prior to the date of this Agreement, on the date of such amended or
superseding filing or publication), each Parent Non-SEC Document filed or furnished prior to the date of this Agreement did not, and each Parent Non-SEC Document filed, published or furnished
subsequent to the date of this Agreement (assuming, in the case of each of any Parent Prospectus and the Parent Circular, that the representations and warranties set forth in Section 4.09 are true
and correct) will not, contain any untrue statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
(e) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, Parent (i) is, and since
January 1, 2019 has been, in compliance with (A) the applicable provisions of the Sarbanes-Oxley Act and the CA 2006, (B) the applicable listing and corporate governance rules and
regulations of the LSE and the FCA and (C) the Listing Rules, (ii) is, and since January 1, 2019 until November 24, 2020 has been, in compliance with the applicable listing
and corporate governance rules and regulations of the New York Stock Exchange and (iii) is, and since November 25, 2020 has been, in compliance with the applicable listing and corporate
governance rules and regulations of Nasdaq.
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(f) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, Parent currently maintains
disclosure controls and procedures (as defined in Rule 13a-15 under the 1934 Act) that are designed to provide reasonable assurance that all information required to be disclosed in Parent's
reports filed under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, the CA 2006, the MAR and the Listing Rules and
that all such information is accumulated and communicated to Parent's management as appropriate to allow timely decisions regarding required disclosure and to enable each of the principal executive
officer of Parent and the principal financial officer of Parent to make the certifications required under the 1934 Act, the MAR and the Listing Rules with respect to such reports.
(g) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, Parent currently maintains a
system of internal controls designed to provide reasonable assurance regarding the reliability of Parent's financial reporting and the preparation of Parent's financial statements for external
purposes in accordance with IFRS, and Parent's principal executive officer and principal financial officer have disclosed, based on their most recent evaluation of such internal controls prior to the
date of this Agreement, to Parent's auditors and the audit committee of the Board of Directors of Parent (i) all significant deficiencies and material weaknesses in the design or operation of
internal controls which are reasonably likely to adversely affect Parent's ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material,
that involves management or other employees who have a significant role in internal controls.
(h) Since
January 1, 2018, each of the principal executive officer and principal financial officer of Parent (or each former principal executive officer and principal
financial officer of Parent, as applicable) has made all certifications required by Rules 13a-14 and 15d-14 under the 1934 Act and Sections 302 and 906 of the Sarbanes-Oxley Act, the CA
2006 and any related rules and regulations promulgated by the SEC, the FCA, Nasdaq and the LSE.
Section 5.08 Financial Statements and Financial Matters.
(a) The
audited consolidated financial statements and unaudited consolidated interim financial statements of Parent included or incorporated by reference in the Parent
Public Documents (or, if any such Parent Public Document is amended or superseded by a filing prior to the date of this Agreement, such amended or superseding Parent Public Document) present fairly in
all material respects, in conformity with IFRS applied on a consistent basis during the periods presented (except as may be indicated in the notes thereto), the consolidated financial position of
Parent and its Subsidiaries as of the dates thereof and their consolidated results of operations and cash flows for the periods then ended (subject, in each case, to normal and recurring year-end
audit adjustments in the case of any unaudited interim financial statements).
(b) From
January 1, 2018 to the date of this Agreement, Parent has not received written notice from the SEC, the FCA, the FRC, Companies House or any other
Governmental Authority indicating that any of its accounting policies or practices are or may be the subject of any review, inquiry, investigation or challenge by the SEC, the FCA, the FRC, Companies
House or any other Governmental Authority.
Section 5.09 Disclosure Documents.
(a) The
information relating to Parent and its Subsidiaries that is provided in writing by Parent, any of its Subsidiaries or any of their respective Representatives for
inclusion or incorporation by reference in the Form F-4 or the Proxy Statement/Prospectus will not (i) in the case of the Form F-4, at the time the Form F-4 or any
amendment or supplement thereto becomes effective and at the time of the Company Stockholder Meeting or (ii) in the case of the Proxy Statement/Prospectus, at the time the Proxy
Statement/Prospectus or any amendment or supplement thereto is first mailed to the
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stockholders
of the Company and at the time of the Company Stockholder Meeting, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were made, not misleading.
(b) The
information relating to Parent and its Subsidiaries that is provided in writing by Parent, any of its Subsidiaries or any of their respective Representatives for
inclusion or incorporation by reference in the Parent Circular will not, at the time the Parent Circular or any amendment or supplement thereto is submitted to the FCA, at the time the Parent Circular
or any amendment or supplement thereto is first mailed to the shareholders of Parent and at the time of the Parent Shareholder Meeting, contain any information or any expression of opinion, belief,
expectation or intention which is untrue or inaccurate or omit a fact, the omission of which renders any information or expression in the Parent Circular inaccurate or misleading.
(c) The
information relating to Parent and its Subsidiaries that is provided in writing by Parent, any of its Subsidiaries or any of their respective Representatives for
inclusion or incorporation by reference in a Parent Prospectus will not, at the time a Parent Prospectus or any amendment or supplement thereto is submitted to the FCA, at the time a Parent Prospectus
or any amendment or supplement thereto is made available to the public in accordance with the Prospectus Regulation Rules, and at the time the Parent Shares Admission becomes effective, contain any
information or any expression of opinion, belief, expectation or intention which is untrue or inaccurate or omit a fact, the omission of which renders any information or expression in a Parent
Prospectus inaccurate or misleading.
(d) Notwithstanding
the foregoing provisions of this Section 5.09, no representation or warranty is made by Parent
with respect to information or statements made or incorporated by reference in the Form F-4, the Proxy Statement/Prospectus, a Parent Prospectus (if so required) or the Parent Circular that
were not supplied by or on behalf of the Parent, Bidco or either Merger Sub.
Section 5.10 Absence of Certain Changes. (a) Since the Parent Balance Sheet Date through the
date of this Agreement, except in connection with or related to the process in connection with which Parent
and its Representatives discussed and negotiated this Agreement and the transactions contemplated hereby, the business of Parent and its Subsidiaries has been conducted in all material respects in the
ordinary course of business and (b) since the Parent Balance Sheet Date, there has not been any event, change, effect, development or occurrence that has had or would reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 5.11 No Undisclosed Material Liabilities. There are no liabilities or obligations of
Parent or any of its Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, that would be required by IFRS to be reflected on the consolidated balance sheet of Parent and its Subsidiaries, other than (a) liabilities or obligations disclosed
or provided for in the Parent Balance Sheet or in the notes thereto, (b) liabilities or obligations incurred in the ordinary course of business since the Parent Balance Sheet Date,
(c) liabilities arising in connection with the transactions contemplated hereby or in connection with obligations under Contracts binding on Parent or any of its Subsidiaries (except to the
extent such liabilities arose or resulted from a breach or a default of such Contract) or (d) other liabilities or obligations that have not had and would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. As of the date of this Agreement, there are no off-balance sheet arrangements of any type pursuant to any off-balance sheet
arrangement required to be disclosed pursuant to Item 303(a)(4) of Regulation S-K that have not been so described in the Parent SEC Documents.
Section 5.12 Litigation. There is no claim, action, proceeding or suit or, to the knowledge of
Parent, investigation pending or, to the knowledge of Parent, threatened against Parent or
any of its Subsidiaries or any of the respective properties or assets of Parent or any of its Subsidiaries, any present or, to the knowledge of the Parent, former officers, directors or employees of
Parent or any of
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its
Subsidiaries in their respective capacities as such, or any of the respective properties or assets of the Company or any of its Subsidiaries, before (or, in the case of threatened claims, actions,
suits, investigations or proceedings, that would be before) any Governmental Authority, (a) that has had or would reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect or (b) that would reasonably be expected to prevent, materially delay or materially impair the ability of Parent, Bidco or either Merger Sub to perform its obligations
under this Agreement or to consummate the Mergers; provided, that to the extent any such representations or warranties in the foregoing
clauses (a) and (b) pertain to claims, actions, proceedings, suits or investigations that relate to
the execution, delivery, performance or consummation of this Agreement or any of the transactions contemplated by this Agreement, such representations and warranties are made only as of the date
hereof. There is (in the case of clause (ii), as of the date of this Agreement) no Order outstanding against Parent, any of its Subsidiaries, any present or, to the knowledge of the Parent,
former officers, directors or employees of Parent or any of its Subsidiaries in their respective capacities as such, or any of the respective properties or assets of any of Parent or any of its
Subsidiaries or, to the knowledge of Parent, threatened against or affecting Parent or any of its Subsidiaries, any present or, to the knowledge of the Parent, former officers, directors or employees
of Parent in their respective capacities as such, or any of the respective properties or assets of any of Parent or any of its Subsidiaries, that (i) has had or would reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect or (ii) individually or in the aggregate, would reasonably be expected to prevent, materially delay or materially impair
the ability of Parent, Bidco or either Merger Sub to perform its obligations under this Agreement or to consummate the Mergers.
Section 5.13 Permits. Except as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect, Parent and each of its
Subsidiaries hold all governmental licenses and Consents necessary for the operation of its respective businesses (the "Parent Permits"). Parent and
each of its Subsidiaries are, and since January 1, 2019 have been, in compliance with the terms of the Parent Permits, except for failures to comply that have not had and would not reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. There is no claim, action, proceeding or suit or, to the knowledge of Parent, investigation pending, or, to the
knowledge of Parent, threatened that seeks the revocation, cancellation, termination, non-renewal or adverse modification of any Parent Permit, except where such revocation, cancellation, termination,
non-renewal or adverse modification (i) has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect or (ii) individually
or in the aggregate, would not reasonably be expected to prevent, materially delay or materially impair the ability of the Company to perform its obligations under this Agreement or to consummate the
Mergers.
Section 5.14 Compliance with Laws. Parent and each of its Subsidiaries are, and since
January 1, 2018 have been, in compliance with all Applicable Laws, except for failures to comply that
(i) have not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect or (ii) individually or in the aggregate, would not
reasonably be expected to prevent, materially delay or materially impair the ability of the Company to perform its obligations under this Agreement or to consummate the Mergers.
Section 5.15 Regulatory Matters.
(a) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect or that, individually or in the
aggregate, would not reasonably be expected to prevent, materially delay or materially impair the ability of the Company to perform its obligations under this Agreement or to consummate the Mergers,
(i) each of Parent and its Subsidiaries holds (A) all authorizations under the FDCA, the PHSA, and the regulations of the FDA promulgated thereunder, and (B) authorizations of any
applicable Governmental Authority that are concerned with the quality, identity, strength, purity, safety, efficacy, manufacturing, marketing, distribution, sale, pricing, import or export of any of
the Parent Products (any such Governmental
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Authority,
a "Parent Regulatory Agency") necessary for the lawful operation of the businesses of Parent or any of its Subsidiaries as currently
conducted (the "Parent Regulatory Permits"); (ii) all such Parent Regulatory Permits are valid and in full force and effect; and
(iii) Parent and its Subsidiaries are in compliance with the terms of all Parent Regulatory Permits. All Parent Regulatory Permits are in full force and effect, except where the failure to be
in full force and effect (A) has not had, and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect or (B) individually or in the
aggregate, would not reasonably be expected to prevent, materially delay or materially impair the ability of Parent to perform its obligations under this Agreement or to consummate the Mergers (in the
case of this clause (B), as of the date of this Agreement).
(b) Neither
Parent nor any of its Subsidiaries are party to any material corporate integrity agreements, monitoring agreements, consent decrees, settlement orders or similar
agreements with or imposed by any Parent Regulatory Agency that have had or would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
(c) All
pre-clinical and clinical investigations in respect of a Parent Product conducted or sponsored by Parent or any of its Subsidiaries are being, and since
January 1, 2019 have been, conducted in compliance with all Applicable Laws administered or issued by the applicable Parent Regulatory Agencies, including (i) FDA standards for the
design, conduct, performance, monitoring, auditing, recording, analysis and reporting of clinical trials contained in Title 21 parts 50, 54, 56, 312, 314 and 320 of the Code of Federal
Regulations and (ii) any Applicable Laws restricting the collection, use and disclosure of individually identifiable health information and personal information, except, in each case, for such
noncompliance that has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect.
(d) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, during the period beginning on
January 1, 2019 and ending on the date of this Agreement, neither Parent nor any of its Subsidiaries has received any written notice from the FDA or the EMA or any foreign agency with
jurisdiction over the development, marketing, labeling, sale, use handling and control, safety, efficacy, reliability, or manufacturing of the Parent Products that would reasonably be expected to lead
to the denial, limitation, revocation, or rescission of any of the Parent Regulatory Permits or of any application for marketing approval currently pending before the FDA or such other Parent
Regulatory Agency.
(e) Since
January 1, 2019, all reports, documents, claims, permits and notices required to be filed, maintained or furnished to the FDA or any other Parent Regulatory
Agency by Parent and its Subsidiaries have been so filed, maintained or furnished, except where failure to file, maintain or furnish such reports, documents, claims, permits or notices have not had
and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. Except as has not had and would not reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect, since January 1, 2019, (i) neither Parent nor any of its Subsidiaries has been debarred or convicted of any crime or engaged in any
conduct for which debarment is mandated by 21 U.S.C. § 335a(a) any similar Applicable Law or authorized by 21 U.S.C. § 335a(b) or any similar Applicable Law
applicable in other jurisdictions in which material quantities of any of the Parent Products are sold or intended by Parent to be sold; and (ii) neither Parent nor any of its Subsidiaries has
been excluded from participation in any federal health care program or convicted of any crime or engaged in any conduct for which such Person could reasonably be expected to be excluded from
participating in any federal health care program under Section 1128 of the Social Security Act of 1935 or any similar Applicable Law or program.
(f) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, as to each Parent Product subject
to the FDCA and the regulations of the FDA promulgated thereunder or any similar Applicable Law in any foreign jurisdiction in which material quantities of any of the Parent Products are sold that is
or has been
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developed,
manufactured, tested, distributed or marketed by or on behalf of Parent or any of its Subsidiaries, each such Parent Product is being or has been developed, manufactured, stored,
distributed and marketed in compliance with Applicable Law.
Section 5.16 Specified Contracts. Section 5.16 of the Parent Disclosure Schedule sets forth a list as of the date of this Agreement of each
Parent Specified Contract. "Parent Specified Contracts"has the meaning set forth on
Section 5.16(a) of the Parent Disclosure Schedule. Parent has made available to the Company a true and complete copy of each Parent
Specified Contract.
Section 5.17 Intellectual Property.
(a) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, as of the date of this Agreement
(i) to the knowledge of Parent, the material Parent Products currently marketed and sold by Parent do not infringe, misappropriate or otherwise violate and, since January 1, 2020, have
not infringed, misappropriated or otherwise violated, any Intellectual Property Rights of any Third Party (other than with respect to Intellectual Property Rights owned, controlled or licensed to
Third Parties by non-practicing entities or patent assertion entities), and (ii) to the knowledge of Parent, since January 1, 2020, no Third Party has infringed, misappropriated or
otherwise violated any material Parent Intellectual Property covering any material Parent Product marketed and sold by Parent.
(b) Except
as has not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, since January 1, 2020, to
the knowledge of Parent, as of the date of this Agreement (i) there have been no security breaches in the information technology systems of Parent nor any of its Subsidiaries, and
(ii) there have been no material disruptions in any such information technology systems, that adversely affected the operations of the business of Parent or any of its Subsidiaries.
Section 5.18 Finders' Fees. Except as set forth in Section 5.18 of the Parent Disclosure
Schedule, there is no investment banker, broker, finder or other intermediary that has been
retained by or is authorized to act on behalf of Parent or any of its Subsidiaries who might be entitled to any finders or similar fee or commission from Parent or any of its Affiliates in connection
with the transactions contemplated by this Agreement.
Section 5.19 No Ownership of Company Common Stock. Neither Parent nor any of its Subsidiaries
beneficially owns, directly or indirectly, any shares of Company Common Stock or other securities convertible into,
exchangeable for or exercisable for shares of Company Common Stock, and neither Parent nor any of its Subsidiaries has any rights to acquire any shares of Company Common Stock (other than any such
securities owned by Parent or any of its Subsidiaries in a fiduciary, representative or other capacity on behalf of other Persons, whether or not held in a separate account). There are no voting
trusts or other agreements or understandings to which Parent or any of its Subsidiaries is a party with respect to the voting of the capital stock or other Equity Securities of the Company or any of
its Subsidiaries.
Section 5.20 Reorganization. Neither Parent nor any of its Subsidiaries has taken or agreed to
take any action or knows of any fact, agreement, plan or other circumstance that is reasonably
likely (i) to prevent the Mergers, taken together, from qualifying as a "reorganization" within the meaning of Section 368(a) of the Code or (ii) to cause the stockholders of the
Company (other than any Excepted Stockholder) to recognize gain pursuant to Section 367(a)(1) of the Code.
Section 5.21 Financing.
(a) Parent
has delivered to the Company a true and complete copy of the fully executed bridge facility agreement, dated on or before the date of this Agreement, among Parent
and certain of its Subsidiaries and the Financing Sources party thereto (including all exhibits, schedules, and annexes to such agreement in effect as of the date of this Agreement), pursuant to which
such Financing Sources
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have
committed, on the terms and subject to the conditions set forth therein, to provide the debt financing described therein in connection with the transactions contemplated hereby (the
"Bridge Facility Agreement").
(b) Parent
and its Subsidiaries have available to them upon funding of the Bridge Facility Agreement, and at the Closing will have available to them the funds necessary to
consummate the transactions contemplated by this Agreement and to make all payments required to be made in connection therewith in an amount sufficient to enable Parent, Bidco and Merger Subs to pay
in cash all amounts required to be paid by Parent, Bidco and Merger Subs in cash on the Closing Date including the payment of (i) the aggregate Cash Consideration in full in accordance with the
terms of this Agreement (ii) the aggregate amount of obligations outstanding under the Credit Agreement at Closing to effect the payoff and termination of the Credit Agreement and
(iii) any other amounts (including all payments, fees and expenses) required to be paid in connection with, related to or arising out of the consummation of the Mergers (collectively, the
"Required Financing Amount").
(c) Notwithstanding
anything in this Agreement to the contrary, Parent, Bidco, and each Merger Sub acknowledge and agree that the receipt and availability of any funds or
financing is not a condition to Closing under this Agreement nor is it a condition to Closing under this Agreement for Parent to obtain all or any portion of the Debt Financing or any other financing.
Section 5.22 No Other Representations and Warranties. Except for the representations and
warranties made by Parent in this Article V (as qualified by the
applicable items disclosed in the Parent Disclosure Schedule in accordance with Section 11.05 and the introduction to this Article V) and in the
certificate to be delivered by Parent pursuant to Section 9.03(c),
neither Parent nor any other Person (including either Merger Sub) makes or has made any representation or warranty, expressed or implied, at law or in equity, with respect to or on behalf of Parent or
its Subsidiaries, their businesses, operations, assets, liabilities, financial condition, results of operations, future operating or financial results, estimates, projections, forecasts, plans or
prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or the accuracy or completeness of any information regarding Parent or
its Subsidiaries or any other matter furnished or provided to the Company or made available to the Company in any "data rooms," "virtual data rooms," management presentations or in any other form in
expectation of, or in connection with, this Agreement or the transactions contemplated hereby. Parent and its Subsidiaries disclaim any other representations or warranties, whether made by Parent or
any of its Subsidiaries or any of their respective Affiliates or Representatives. Each of Parent, Bidco and each Merger Sub acknowledges and agrees that, except for the representations and warranties
made by the Company in Article IV (as qualified by the applicable items disclosed in the Company Disclosure Schedule in accordance with Section 11.05 and the introduction to Article IV) and in the certificate to be delivered
by the Company pursuant to Section 9.02(c), neither the Company nor any other Person is making or has made any representations or warranty,
expressed or implied, at law or in equity, with respect to or on behalf of the Company or its Subsidiaries, their businesses, operations, assets, liabilities, financial condition, results of
operations, future operating or financial results, estimates, projections, forecasts, plans or prospects (including the reasonableness of the assumptions underlying such estimates, projections,
forecasts, plans or prospects) or the accuracy or completeness of any information regarding the Company or its Subsidiaries or any other matter furnished or provided to Parent or made available to
Parent in any "data rooms," "virtual data rooms," management presentations or in any other form in expectation of, or in connection with, this Agreement, or the transactions contemplated hereby or
thereby. Each of Parent, Bidco and each Merger Sub specifically disclaims that it is relying on or has relied on any such other representations or warranties that may have been made by any Person, and
acknowledges and agrees that the Company and its Affiliates have specifically disclaimed and do hereby specifically disclaim any such other representations and warranties.
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ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.01 Conduct of the Company.
(a) From
the date of this Agreement until the earlier of the First Effective Time and the termination of this Agreement, except (x) as prohibited or required by
Applicable Law, (y) as set forth in Section 6.01 of the Company Disclosure Schedule, or (z) as otherwise required or expressly
contemplated by this Agreement, unless Parent shall have given its prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall, and shall cause
each of its Subsidiaries to, use commercially reasonable efforts to conduct its business in all material respects in the ordinary course of business and to preserve intact its business organization,
keep available the services of its present key employees and maintain its existing relations and goodwill with material customers, members, suppliers, licensors, licensees and other Third Parties with
whom it has material business relations; provided, that (i) no action by the Company or any of its Subsidiaries to the extent expressly permitted
by an exception to any of Section 6.01(b)(i) through Section 6.01(b)(xvi) shall be a
breach of this sentence and (ii) the Company's or any of its Subsidiaries' failure to take any action prohibited by any of Section 6.01(b)(i) through Section 6.01(b)
(xvi) shall not be deemed to be a breach of this Section 6.01(a).
(b) From
the date of this Agreement until the earlier of the First Effective Time and the termination of this Agreement, except (x) as prohibited or required by
Applicable Law, (y) as set forth in Section 6.01 of the Company Disclosure Schedule, or (z) as otherwise required or expressly
contemplated by this Agreement, without Parent's prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall not, and shall cause each of its
Subsidiaries not to:
(i) adopt
any change to its certificate of incorporation, bylaws or other organizational documents (whether by merger, consolidation or otherwise) (including the Company
Organizational Documents);
(ii) (A)
merge or consolidate with any other Person, other than any merger or consolidation between any Subsidiary of the Company and any other Person that does not involve
the acquisition of assets, securities or property for consideration in an amount exceeding $100 million in the aggregate (including the value of any contingent payments potentially payable); provided, that, neither the Company nor any
of its Subsidiaries shall engage in any merger or consolidation that is reasonably likely to result in the acquisition or disposition of, or any restriction or obligation related to, any product,
service, activity or business in the field of oncology; (B) acquire (including by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other
business organization or any division thereof or any assets, securities or property, other than (1) acquisitions of assets, securities or property for consideration in an amount not to exceed
$100 million in the aggregate (including the value of any contingent payments potentially payable) for all such acquisitions, (2) acquisitions of securities consistent with the Company's
investment policy in effect as of the date of this Agreement, (3) transactions (I) solely among the Company and one or more of its wholly owned Subsidiaries or (II) solely among
the Company's wholly owned Subsidiaries and (4) acquisitions of inventory or equipment in the ordinary course of business consistent with past practice (provided that any of the acquisitions or
transactions described in clauses (1) through (4) shall require the prior written consent of Parent if such acquisition or transaction would, individually or in the aggregate, reasonably
be expected to prevent or materially delay the consummation of the transactions contemplated by this agreement) or (C) adopt a plan of complete or partial liquidation, dissolution,
recapitalization or restructuring;
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(iii) (A)
split, combine or reclassify any shares of its capital stock (other than transactions (1) solely among the Company and one or more of its wholly owned
Subsidiaries or (2) solely among the Company's wholly owned Subsidiaries), (B) amend any term or alter any rights of any of the outstanding Equity Securities of the Company,
(C) declare, set aside or pay any dividend or make any other distribution (whether in cash, stock, property or any combination thereof) in respect of any shares of its capital stock or other
Equity Securities, other than dividends or distributions by a Subsidiary of the Company to the Company or a wholly owned Subsidiary of the Company, or (D) redeem, repurchase, cancel or
otherwise acquire or offer to redeem, repurchase, or otherwise acquire any of its Equity Securities or any Equity Securities of any Subsidiary of the Company, other than repurchases of shares of
Company Common Stock in connection with the exercise of Company Stock Options or the vesting or settlement of Company RSU Awards or Company PSU Awards (including in satisfaction of any amounts
required to be deducted or withheld under Applicable Law), in each case outstanding as of the date of this Agreement in accordance with the present terms of such Company Equity Awards or granted after
the date of this Agreement to the extent permitted by this Agreement;
(iv) issue,
deliver or sell, or authorize the issuance, delivery or sale of, any shares of its capital stock or any other Equity Securities, other than (A) the
issuance of any shares of Company Common Stock upon the exercise of Company Stock Options or the vesting or settlement of shares of Company RSU Awards or Company PSU Awards that are, in each case
outstanding as of the date of this Agreement in
accordance with the present terms of such Company Equity Awards or granted after the date of this Agreement to the extent permitted by this Agreement, (B) the issuance of shares of Company
Common Stock on the exercise of purchase rights under the Company ESPP in accordance with Section 2.07(f) or (C) with respect to Equity
Securities of any Subsidiary of the Company, in connection with transactions (1) solely among the Company and one or more of its wholly owned Subsidiaries or (2) solely among the
Company's wholly owned Subsidiaries;
(v) authorize,
make or incur any capital expenditures or obligations or liabilities in connection therewith, other than (A) from the date of this Agreement through
December 2, 2021, (1) any capital expenditures contemplated by the capital expenditure budget of the Company and its Subsidiaries made available to Parent prior to the date of this
Agreement and (2) capital expenditures (I) for an expenditure for which there is an individual line item, not in excess of 20% above the annual amount contemplated by such line item in
such capital expenditure budget and (II) in any event, not in excess in the aggregate of 20% above the aggregate annual amount contemplated by such capital expenditure budget and (B) for
2022, capital expenditures not exceeding 20% above the aggregate quarterly amount set forth in such capital expenditure budget for the fourth quarter of 2021;
(vi) sell,
lease, license, transfer or otherwise dispose of any Subsidiary or any division thereof or of the Company or any assets, securities or property (in each case,
other than Intellectual Property Rights, which are addressed in Section 6.01(b)(xv)), other than (A) dispositions of securities under the
Company's investment portfolio consistent with the Company's investment policy in effect as of the date of this Agreement, (B) sales or dispositions of inventory or tangible personal property
(including equipment), in each case in the ordinary course of business, (C) dispositions of assets, securities or property in an amount not to exceed $100 million in the aggregate for
all such dispositions; provided, that any such disposition of assets, securities or property of the Company or its Subsidiaries shall not relate to any
business, product, activity or service in the fields of (1) oncology, (2) cardiovascular, renal and metabolism and (3) respiratory and immunology, or (D) transactions
(1) solely among the Company and one or more of its wholly owned Subsidiaries or (2) solely among the Company's wholly owned Subsidiaries;
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(vii) (A)
make any material loans, advances or capital contributions to, or investments in, any other Person, other than (1) loans, advances, capital contributions or
investments (I) by the Company to or in, as applicable, one or more of its wholly owned Subsidiaries or (II) by any Subsidiary of the Company to or in, as applicable, the Company or any
wholly owned Subsidiary of the Company, or (2) capital contributions required under the terms of Contracts in effect as of the date of this Agreement, or (B) incur, assume, guarantee or
repurchase or otherwise become liable for any indebtedness for borrowed money or issue or sell any debt securities or any options, warrants or other rights to acquire debt securities (in each case,
whether, directly or indirectly, on a contingent basis or otherwise), other than (1) additional borrowings under the Credit Agreement (as in effect as of the date of this Agreement) in
accordance with the terms thereof, (2) intercompany indebtedness among the Company and its wholly owned Subsidiaries or among the Company's wholly owned Subsidiaries, (3) indebtedness
not to exceed $100 million in aggregate principal amount incurred to replace, renew, extend, refinance or
refund any existing indebtedness of the Company or any of its Subsidiaries, which indebtedness is (I) prepayable without premium or penalty (other than customary LIBOR breakage amounts),
(II) on terms that are substantially consistent with or not more restrictive than those contained in the indebtedness being replaced, renewed, extended, refinanced or refunded and
(III) not in a principal amount greater than such indebtedness being replaced, renewed, extended, refinanced or refunded, or, in the case of any "revolving" credit facility, the aggregate
amount that may be incurred under the credit agreement governing such indebtedness being replaced, renewed, extended, refinanced or refunded (as in effect as of the date hereof) and
(4) guarantees of indebtedness of the Company or its wholly owned Subsidiaries outstanding on the date of this Agreement or otherwise incurred in compliance with this Section 6.01(b)(vii)(B);
(viii) (A)
subject to clause (B) below, other than in the ordinary course of business, enter into, terminate (other than the expiration of any Company Material
Contract in accordance with its terms), renew, extend or in any material respect modify or amend any Company Material Contract (including by amendment of any Contract that is not a Company Material
Contract such that such Contract becomes a Company Material Contract) or waive, release or assign any material right or claim thereunder or (B) enter into, terminate (other than the expiration
of any Company Material Contract in accordance with its terms), renew, extend or in any material respect modify or amend any Company Material Contract (including the entering into or amendment of any
Contract that is not a Company Material Contract such that such Contract becomes a Company Material Contract) of the type described in clause (i), (iv), (vii), (viii), (x) or
(xi) of Section 4.16(a) or set forth on Section 6.01(b)(viii) of the Company Disclosure Schedule (with respect to
clauses (vii), (viii) and (x) of Section 4.16(a), solely if such Company Material Contract (1) involves payments
(including any potential or contingent payments) to or from the Company or any of its Subsidiaries in an amount not exceeding $100,000,000 individually or $200,000,000 in the aggregate or
(2) relates to any business, product, activity or service in the fields of oncology or waive, release or assign any material right or claim thereunder;
(ix) voluntarily
(A) terminate, (B) suspend, (C) abrogate, (D) amend, (E) let lapse or (F) modify any material Company Permit in a
manner materially adverse to the Company and its Subsidiaries, taken as a whole;
(x) except
as required by Company Employee Plans as in effect as of the date of this Agreement, (A) grant any change in control, severance, retention or termination
pay to (or amend any existing change in control, severance, retention or termination pay arrangement with) any of their respective directors, officers, employees, or individual consultants (including
former directors, officers, employees, or individual consultants), (B) take any action to accelerate the vesting of, or payment of, any compensation or benefit under any Company Employee Plan,
(C) establish, adopt or amend any Company Employee Plan or labor agreement, other than amendments of health or
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welfare
benefit plans in the ordinary course of business consistent with past practice that would not increase the aggregate cost to the Company or any of its Subsidiaries of maintaining all Company
Employee Plans that are health or welfare benefit plans by more than 5% in the aggregate for all such amendments, (D) increase the compensation, bonus opportunity or other benefits payable to
any of their respective directors, officers, or employees (including former directors, officers, or employees), other than any annual merit and market-based increases or increases in connection with
promotions, in each case, in the ordinary course of business and that would not increase the cost to the Company or any of its Subsidiaries of such compensation, bonus opportunities or other benefits
by more than 5% in the aggregate on an annualized basis, (E) hire or terminate without cause any director, officer or employee holding a title above Vice President, or (F) in any
calendar year, (1) increase the total number of employees of the Company and its Subsidiaries by more than 10% on a net basis, taking into account all employees hired during such calendar year
and all employees who separate from employment for any reason during such calendar year, or (2) terminate (other than for cause) the employment of a number of employees of the Company and its
Subsidiaries that exceeds 10% of the total number of employees of the Company and its Subsidiaries as of the first day of such calendar year;
(xi) make
any material change in any method of financial accounting or financial accounting principles or practices, except for any such change required by reason of (or, in
the reasonable good-faith judgment of the Company, advisable under) a change in GAAP or Regulation S-X under the 1934 Act
("Regulation S-X"), as approved by its independent public accountants;
(xii) (A)
make, change or revoke any material Tax election; (B) change any annual Tax accounting period; (C) adopt or change any material method of Tax
accounting; (D) enter into any material closing agreement with respect to Taxes; or (E) settle or surrender or otherwise concede, terminate or resolve any material Tax claim, audit,
investigation or assessment for an amount in excess of $3 million individually or $10 million in the aggregate; (F) amend any material Tax Returns; or (G) apply for a
ruling from any Taxing Authority.
(xiii) settle
or compromise any claim, action, suit, investigation or proceeding involving or against the Company or any of its Subsidiaries that is would reasonably be
expected to have a material effect on the business of the Company or the combined business of the Company and Parent after the Closing Date (including any action, suit, investigation, or proceeding
involving or against any employee, officer or director of the Company or any of its Subsidiaries in their capacities as such), other than any settlement or compromise that (A) does not involve
payments (contingent or otherwise) by the Company or any of its Subsidiaries in excess of $5 million individually or $20 million in the aggregate and (B) does not involve any
material non-monetary relief or obligations; provided, that this clause (xiii) shall not apply with respect to any claim, action, suit,
investigation or proceeding (A) in respect of Taxes (which shall be governed exclusively by clause (xii)) or (B) brought by the stockholders of the Company against the
Company and/or its directors relating to this Agreement and the transactions contemplated hereby, including the Mergers (which shall be governed exclusively by Section 8.07);
(xiv) take
any action or knowingly fail to take any action where such action or failure to act could reasonably be expected to (A) prevent or impede the Mergers,
taken together, from qualifying as a "reorganization" within the meaning of Section 368(a) of the Code or (B) cause the stockholders of the Company (other than any Excepted Stockholder)
to recognize gain pursuant to Section 367(a)(1) of the Code;
(xv) (A)
license or grant any rights under, sell, transfer or otherwise dispose of any material Company Intellectual Property other than nonexclusive licenses granted in the
ordinary course of business, or (B) permit any material Company Registered IP to lapse, expire or become abandoned prior to the end of the applicable term of such Company Registered IP, except
where
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Company has made a reasonable business decision to not maintain such item of Company Registered IP, in each case, consistent with past practice; or
(xvi) agree,
resolve, commit or propose to do any of the foregoing.
(c) Anything
to the contrary set forth in this Agreement notwithstanding, the Company shall not, and shall cause its Affiliates not to, directly or indirectly (whether by
merger, consolidation or otherwise), acquire, purchase, lease or license or otherwise enter into a transaction with (or agree to acquire, purchase, lease or license or otherwise enter into a
transaction with) any business, corporation, partnership, association or other business organization or division or part thereof that has one or more products, whether marketed or in development, that
compete, or if commercialized would compete, with one or more Parent Products, if doing so would reasonably be expected to (i) impose any material delay in the satisfaction of, or increase
materially the risk of not satisfying the conditions set forth in Section 9.01(c) (to the extent related to any Antitrust Law) or the conditions
set forth in Section 9.01(h); (ii) materially increase the risk of any Governmental Authority entering an Order prohibiting or enjoining
the consummation of the Mergers; or (iii) otherwise prevent or materially delay the consummation of the Mergers (including the Debt Financing). The fact that a merger, acquisition or similar
transaction requires approval under the Antitrust Laws shall not in and of itself restrict such transaction under this Section 6.01(c).
(d) Nothing
contained in this Agreement shall give Parent, directly or indirectly, the right to control or direct the Company's or any of its Subsidiaries' businesses or
operations, other than after Closing.
Section 6.02 No Solicitation by the Company.
(a) From
the date of this Agreement until the earlier of the First Effective Time and the termination of this Agreement, except as otherwise set forth in this Section 6.02, the Company shall not, and shall
cause its Subsidiaries and its and its Subsidiaries' respective directors and officers to not, and
shall use its reasonable best efforts to cause its and its Subsidiaries' other respective Representatives to not, directly or indirectly, (i) solicit, initiate, knowingly facilitate or
knowingly encourage (including by way of furnishing information) any inquiries regarding, or the making or submission of any Company Acquisition Proposal, (ii) (A) enter into or
participate in any discussions or negotiations regarding, (B) furnish to any Third Party any information, or (C) otherwise assist, participate in, knowingly facilitate or knowingly
encourage any Third Party, in each case, in connection with or for the purpose of knowingly encouraging or facilitating, a Company Acquisition Proposal, (iii) approve, recommend or enter into,
or publicly or formally propose to approve, recommend or enter into, any letter of intent or similar document, agreement, commitment, or agreement in principle (whether written or oral, binding or
nonbinding) with respect to a Company Acquisition Proposal, (iv) (A) withdraw or qualify, amend or modify in any manner adverse to Parent the Company Board Recommendation,
(B) fail to include the Company Board Recommendation in the Proxy Statement/Prospectus or (C) recommend, adopt or approve or publicly propose to recommend, adopt or approve any Company
Acquisition Proposal (any of the foregoing in this clause (iv), a "Company Adverse Recommendation Change") or (v) take any action to make
any "moratorium", "control share acquisition", "fair price", "supermajority", "affiliate transactions" or "business combination statute or regulation" or other similar anti-takeover laws and
regulations of the State of Delaware, including Section 203 of the DGCL, inapplicable to any Third Party or any Company Acquisition Proposal.
(b) The
foregoing notwithstanding, if at any time prior to the receipt of the Company Stockholder Approval (the "Company Approval
Time"), the Board of Directors of the Company receives a bona fide written Company Acquisition Proposal made after the date of
this Agreement that has not resulted from a violation of this Section 6.02, the Board of Directors of the Company, directly or indirectly through
its Representatives, may (i) contact the Third Party that has made such Company Acquisition Proposal in order to ascertain facts or clarify terms for the sole purpose of the Board of Directors
of
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Company informing itself about such Company Acquisition Proposal and such Third Party and (ii) if the Board of Directors of the Company determines in good faith, after consultation with its
financial advisor and outside legal counsel, that such Company Acquisition Proposal is or could reasonably be expected to lead to a Company Superior Proposal, (A) subject to compliance with
this Section 6.02,
engage in negotiations or discussions with such Third Party and (B) furnish to such Third Party and its Representatives and financing sources non-public information relating to the Company or
any of its Subsidiaries pursuant to a confidentiality agreement that (1) does not contain any provision that would prevent the Company from complying with its obligation to provide disclosure
to Parent pursuant to this Section 6.02 and (2) contains confidentiality and use provisions that, in each case, are no less favorable in
the aggregate to the Company than those contained in the Confidentiality Agreement; provided, that all such non-public information (to the extent that
such information has not been previously provided or made available to Parent) is provided or made available to Parent, as the case may be, substantially concurrently with the time it is provided or
made available to such Third Party. Nothing contained herein shall prevent the Board of Directors of the Company from (x) taking and disclosing to the stockholders of the Company a position
contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the 1934 Act, or (y) making any required disclosure to the stockholders
of the Company if the Board of Directors of the Company determines in good faith, after consultation with its outside legal counsel, that the failure to take such action would be reasonably likely to
be inconsistent with Applicable Law; provided, that any such action or disclosure that constitutes a Company Adverse Recommendation Change shall be made
in compliance with the applicable provisions of this Section 6.02. A "stop, look and listen" disclosure pursuant to Rule 14d-9(f) under
the 1934 Act in connection with a tender or exchange offer shall not constitute a Company Adverse Recommendation Change.
(c) The
Company shall notify Parent as promptly as practicable (but in no event later than 24 hours) after receipt by the Company (or any of its Representatives) of
any Company Acquisition Proposal or any request for information relating to the Company or any of its Subsidiaries that, to the knowledge of the Company, has been or is reasonably likely to have been
made in connection with any Company Acquisition Proposal, which notice shall be provided in writing and shall identify the Third Party making, and the material terms and conditions of, any such
Company Acquisition Proposal or request. The Company shall thereafter (i) keep Parent reasonably informed, on a reasonably current basis, of any material changes in the status and details (or
any changes to the type and amount of consideration) of any such Company Acquisition Proposal or request and (ii) as promptly as practicable (but in no event later than 24 hours after
receipt) provide to Parent copies of any material written correspondence, proposals or indications of interest relating to the terms and conditions of such Company Acquisition Proposal or request
provided to the Company or any of its Subsidiaries (as well as written summaries of any material oral communications relating to the terms and conditions of any Company Acquisition Proposal).
(d) Anything
in this Agreement to the contrary notwithstanding, prior to the Company Approval Time, in response to a Company Acquisition Proposal that the Board of Directors
of the Company determines in good faith constitutes a Company Superior Proposal, the Board of Directors of the Company may, subject to compliance with this Section 6.02(d), (i) make a Company
Adverse Recommendation Change and/or (ii) terminate this Agreement in accordance with
Section 10.01(d)(iii); provided, that (A) the Company shall first notify Parent in writing
at least four Business Days before taking such action that the Company intends to take such action, which notice shall include an unredacted copy of such proposal and a copy of any financing
commitments (in the form provided to the Company) relating thereto (and, to the extent not in writing, the material terms and conditions thereof and the identity of the person making any such
proposal), (B) the Company shall make its Representatives reasonably available to negotiate with Parent and its Representatives during such four Business Day notice period, to the extent Parent
wishes to negotiate, to enable Parent to propose revisions to the terms of this Agreement such that it would cause such Company Superior Proposal to
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no
longer constitute a Company Superior Proposal, (C) upon the end of such notice period, the Board of Directors of the Company shall have considered in good faith any revisions to the terms of
this Agreement committed to in writing by Parent, and shall have determined that the Company Superior Proposal would nevertheless continue to constitute a Company Superior Proposal if the revisions
committed to in writing by Parent were to be given effect and (D) in the event of any change, from time to time, to any of the financial terms or any other material terms of such Company
Superior Proposal, the Company shall, in each case, have delivered to Parent an additional notice consistent with that described in clause (A) of this proviso and a new notice period under
clause (A) of this proviso shall commence each time, except each such notice period shall be three Business Days (instead of four Business Days), during which time the Company shall be required
to comply with the requirements of this Section 6.02(d) anew with respect to each such additional notice, including clauses (A) through
(D) above of this proviso.
(e) Anything
in this Agreement to the contrary notwithstanding, at any time prior to the Company Approval Time, the Board of Directors of the Company may effect a Company
Adverse Recommendation Change in response or relating to a Company Intervening Event if the Board of Directors of the Company determines in good faith, after consultation with its outside legal
counsel, that the failure to take such action would be reasonably likely to be inconsistent with its fiduciary duties under Applicable Law; provided,
that (i) the Company shall first notify Parent in writing at least four Business Days before taking such action of its intention to take such action, which notice shall include a reasonably
detailed description of such Company Intervening Event, (ii) if requested by Parent, the Company shall make its Representatives reasonably available to negotiate with Parent and its
Representatives during such four Business Day period following such notice regarding any proposal by Parent to amend the terms of this Agreement in response to such Company Intervening Event, and
(iii) the Board of Directors of the Company shall not effect any Company Adverse Recommendation Change involving or relating to a Company Intervening Event unless, after the four Business Day
period described in the foregoing clause (ii), the Board of Directors of the Company determines in good faith, after consultation with its outside legal counsel and taking into account any
written commitment by Parent to amend the terms of this Agreement during such four Business Day period, that the failure to take such action would continue to be reasonably likely to be inconsistent
with its fiduciary duties under Applicable Law.
(f) The
Company shall, and shall cause its Subsidiaries to, and shall use its reasonable best efforts to cause its and its Subsidiaries' Representatives to, cease
immediately and cause to be terminated any and all existing discussions or negotiations, if any, with any Third Party conducted prior to or ongoing as of the date of this Agreement with respect to any
actual or potential (including if such discussions or negotiations were for the purpose of soliciting any) Company Acquisition Proposal or with respect to any indication, proposal or inquiry that
could reasonably be expected to lead to a Company Acquisition Proposal and shall use its reasonable best efforts to cause any such Third Party (and any of its Representatives) in possession of
confidential information about the Company or any of its Subsidiaries that was furnished by or on behalf of the Company in connection with such discussions or negotiations to return or destroy all
such information.
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Section 6.03 Financing Assistance.
(a) Prior
to the Closing, the Company shall, and shall cause its Subsidiaries to, use its and their commercially reasonable efforts to provide such cooperation that is
customary as may be reasonably requested by Parent to assist Parent in arranging, obtaining or syndicating the debt financing provided by the Bridge Facility Agreement (or any financing intended to
replace or refinance the debt financing provided by the Bridge Facility Agreement) or any other third party debt financing necessary or incurred by Parent, any wholly owned Subsidiary of Parent or any
Merger Sub to consummate the transactions contemplated hereby (the "Debt Financing") (provided, that
such requested cooperation does not unreasonably interfere with the ongoing business or operations of the Company and its Subsidiaries or require the Company or any of its Subsidiaries to waive or
amend any terms of this Agreement), including using commercially reasonable efforts to:
(i) reasonably
cooperate with the customary marketing efforts or due diligence efforts of Parent in connection with all or any portion of the Debt Financing, including
making available members of the management team with appropriate seniority and expertise to assist in preparation for and to
participate in a mutually agreed number (on reasonable notice) of meetings, presentations, road shows, due diligence sessions, drafting sessions and sessions with proposed lenders, underwriters,
initial purchasers, placement agents, investors and rating agencies,
(ii) on
reasonable notice comment on customary offering memoranda, rating agency presentations, bank information memoranda, lender and investor presentations, road show
materials, confidential information memoranda, registration statements, prospectuses, prospectus supplements, private placement memoranda, and similar documents customarily required in connection with
the Debt Financing, including the marketing and syndication thereof,
(iii) cause
the Company's independent accountants and/or auditors to provide customary cooperation with the Debt Financing,
(iv) (I)
to the extent customary for Parent to prepare marketing materials for any Debt Financing of the applicable type, furnish Parent and the applicable Financing Sources
with (A) audited consolidated balance sheets and related audited statements of operations, comprehensive income, stockholders' equity and cash flows of the Company for each of the three fiscal
years most recently ended more than sixty (60) days prior to the Closing Date, (B) unaudited consolidated balance sheets and related unaudited consolidated statements of operations,
comprehensive income, stockholders' equity and cash flows of the Company for each subsequent interim quarterly period ended more than 40 days prior to the Closing Date, in the case of each of
clauses (I)(A) and (I)(B), prepared in accordance with GAAP, and (C) if the Parent is pursuing a registered public offering of debt securities and has notified the Company of such
election, such other historical financial and other information of the type required by Regulation S-X and Regulation S-K under the 1933 Act in each case that is customary for such
offering or as otherwise necessary to permit the Company's independent accountants and/or auditors to issue customary "comfort letters" to Parent's Financing Sources in connection with such offering,
including as to customary negative assurances required to consummate such offering (it being understood that the Company need only to provide information to assist the Parent in the preparation of pro
forma financial information, and shall not in any event be required to provide pro forma financial statements, projections or pro forma adjustments), and (II) furnish Parent and its Financing
Sources with such other customary information relating to the Company and its Subsidiaries that is reasonably requested by Parent and is customarily required in marketing materials for Debt Financings
of the applicable type.
(v) provide
to Parent and the Financing Sources promptly all documentation and other information about the Company and its Subsidiaries required by the Financing Sources or
regulatory authorities with respect to the Debt Financing under applicable "know your customer"
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and
anti-money laundering rules and regulations, including the PATRIOT Act, that is required under any Debt Financing to the extent such documentation and other information is requested in writing to
the Company at least ten Business Days prior to the Closing Date,
(vi) subject
to customary confidentiality provisions and disclaimers, provide customary authorization letters to the Financing Sources authorizing the distribution of
information to prospective lenders or investors,
(vii) facilitate
the payoff, discharge and termination in full substantially concurrently with Closing of obligations outstanding under the Credit Agreement (including,
without limitation, using commercially reasonable efforts to facilitate the calculation of the amounts required to effect the payoff and termination of the Credit Agreement in full at Closing no less
than three Business Days prior thereto); provided that (A) neither the Company nor any of its Subsidiaries shall have any obligation to make any payment in respect of the foregoing unless and
until the Closing occurs and it being understood that at the Closing, Parent and its Subsidiaries shall provide the Company and its Subsidiaries with the funds necessary for the Company to actually
effect such payoff and termination and (B) no such action shall be required unless it can be and is conditioned on the occurrence of the Closing, and
(viii) consent
to the reasonable use of trademarks and logos of the Company or any of its Subsidiaries in connection with the Debt Financing; provided, that such trademarks and logos are used solely in a manner that
is not intended to or is reasonably likely to harm or disparage the Company or
its Subsidiaries or the reputation or goodwill of the Company or any of its Subsidiaries.
(b) The
foregoing notwithstanding, neither the Company nor any of its Subsidiaries shall be required to (i) take or permit the taking of any action pursuant to Section 6.03(a) that (A) would
require the Company, its Subsidiaries or any Persons who are directors or officers of the Company or its
Subsidiaries to enter into or approve any definitive financing or purchase agreement for the Debt Financing effective prior to the Closing, pass resolutions or consents to approve or authorize the
execution of the Debt Financing, execute or deliver any certificate, document, instrument or agreement or agree to any change or modification of any existing certificate, document, instrument or
agreement, in each case, that is effective prior to the Closing, or that would be effective if the Closing does not occur (other than customary authorization letters to the Financing Sources
authorizing the distribution of information to prospective lenders or investors); (B) would cause any representation or warranty in this Agreement to be breached by the Company or any of its
Subsidiaries (unless waived by Parent); (C) would require the Company or any of its Subsidiaries to pay any commitment or other similar fee prior to the Closing or incur any other expense,
liability or obligation in connection with the Debt Financing prior to the Closing; (D) could reasonably be expected to cause any director, officer or employee or stockholder of the Company or
any of its Subsidiaries to incur any personal liability in their capacity as such; (E) conflict with the organizational documents of the Company or its Subsidiaries or any Applicable Law; or
(F) could reasonably be expected to result in a material violation or breach of, or a default (with or without notice, lapse of time, or both) under, any Contract to which the Company or any of
its Subsidiaries is a party; (ii) provide access to or disclose information that the Company or any of its Subsidiaries reasonably determines would jeopardize any attorney-client privilege of
the Company or any of its Subsidiaries; (iii) prepare (A) any IFRS financial statements or reconciliations or otherwise provide financial information in a format other than in accordance
with GAAP or (B) any other financial statements or information that are not reasonably available to it or that are not capable of being prepared by it without undue burden or otherwise with the
use of commercially reasonable efforts; (iv) enter into any instrument or agreement with respect to the Debt Financing that is effective prior to the occurrence of the Closing or that would be
effective if the Closing does not occur; or (v) prepare any projections or pro forma financial statements; or (vi) deliver or cause to be delivered any opinion of counsel in connection
with the Debt Financing. Nothing
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contained
in this Section 6.03 or otherwise shall require the Company or any of its Subsidiaries, prior to the Closing, to be an issuer or other
obligor with respect to the Debt Financing.
(c) Parent
and Merger Subs shall, on a joint and several basis, promptly on written request by the Company, reimburse the Company for all reasonable and documented
out-of-pocket costs and expenses (including reasonable attorneys' fees) incurred by the Company or any of its Subsidiaries in connection with the Debt Financing or satisfying its obligations under
this Section 6.03, whether or not the Mergers are consummated or this Agreement is terminated (excluding, for the avoidance of doubt, the costs
of the preparation of any annual or quarterly financial statements of the Company to the extent prepared in the ordinary course of its financial reporting practice). Parent and Merger Subs shall, on a
joint and several basis, indemnify and hold harmless the Company and its Subsidiaries and their respective Representatives from and against any and all losses, claims, damages, liabilities, reasonable
out-of-pocket costs, reasonable out-of-pocket attorneys' fees, judgments, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in
connection with or in respect of any thereof) suffered or incurred in connection with the Debt Financing or otherwise in connection with any action taken by the Company, any of its Subsidiaries or any
of their respective Representatives pursuant to this Section 6.03 (other than the use of any information provided by the Company, any of its
Subsidiaries or any of their respective Representatives in writing for use in connection with the Debt Financing) whether or not the Mergers are consummated or this Agreement is terminated, except in
the event such losses, claims, damages, liabilities, reasonable out-of-pocket costs reasonable out-of-pocket attorneys' fees, judgments, fines, penalties and amounts paid in settlement (including all
interest, assessments and other charges paid or payable in connection with or in respect of any thereof) arise out of or result from the gross negligence or willful misconduct of the Company or its
Subsidiaries in fulfilling their obligations pursuant to this Section 6.03.
(d) Anything
to the contrary in this Agreement notwithstanding,(i) the parties hereto acknowledge and agree that the provisions contained in this Section 6.03 represent the sole obligation of the Company, its
Subsidiaries and their respective Representatives with respect to cooperation in
connection with the arrangement of any financing (including the Debt Financing) to be obtained by Parent, Bidco or either Merger Sub with respect to the transactions contemplated by this Agreement and
no other provision of this Agreement (including the Exhibits and Schedules hereto) shall be deemed to expand or modify such obligations; (ii) the Company's breach of any of the covenants
required to be performed by it under this Section 6.03 shall not be considered in determining the satisfaction of the condition set forth in Section 9.02(a)
unless such breach is the primary cause of, or primarily resulted in, Parent being unable to consummate the Mergers; and
(iii) the receipt and availability of any funds or financing is not a condition to Closing under this Agreement nor is it a condition to Closing under this Agreement for Parent to obtain all or
any portion of the Debt Financing or any other financing.
(e) All
confidential information provided by Company, its Subsidiaries and their respective Representatives shall be kept confidential in accordance with the Confidentiality
Agreement, except that Parent shall be permitted to disclose such information as applicable to any number of Financing Sources as would be reasonable and customary in connection with any financing; provided, that all confidential information shared with Financing Sources shall be kept confidential and otherwise treated in accordance with the
Confidentiality Agreement or other confidentiality obligations that are substantially similar to those contained in the Confidentiality Agreement (which, with respect to the Financing Sources, may be
satisfied by the confidentiality provisions applicable thereto under the Bridge Facility Agreement or other customary confidentiality undertakings in the context of customary syndication practices
from Financing Sources not party to the Bridge Facility Agreement).
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ARTICLE VII
COVENANTS OF PARENT, BIDCO AND MERGER SUBS
Section 7.01 Conduct of Parent.
(a) From
the date of this Agreement until the earlier of the First Effective Time and the termination of this Agreement, except (x) as prohibited or required by
Applicable Law, (y) as set forth in Section 7.01 of the Parent Disclosure Schedule, or (z) as otherwise required or expressly
contemplated by this Agreement, unless the Company shall have given its prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), Parent shall, and shall cause
each of its Subsidiaries to, use commercially reasonable efforts to conduct its business in all material respects in the ordinary course of business; provided, that (i) no action by Parent or any
of its Subsidiaries to the extent expressly permitted by an exception to any of Section 7.01(b)(i) through Section 7.01(b)(vi) shall be a breach
of this sentence and
(ii) Parent's or any of its Subsidiaries' failure to take any action prohibited by any of Section 7.01(b)(i) through Section 7.01(b)(vi)
shall not be deemed to be a breach of this Section 7.01(a).
(b) From
the date of this Agreement until the earlier of the First Effective Time and the termination of this Agreement, except (x) as prohibited or required by
Applicable Law, (y) as set forth in Section 7.01 of the Parent Disclosure Schedule, or (z) as otherwise required or expressly
contemplated by this Agreement, without the Company's prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), Parent shall not, and shall cause each of its
Subsidiaries not to:
(i) adopt
or propose any change (A) to the Parent Organizational Documents that would adversely impact the rights of the holders of the Parent Ordinary Shares or the
holders of the Parent ADSs, or (B) the organizational documents of Bidco or either Merger Sub;
(ii) (A)
split, combine or reclassify any shares of Parent, (B) declare, set aside or pay any dividend or make any other distribution (whether in cash, stock,
property or any combination thereof) in respect of any shares of Parent, other than regular cash dividends in the ordinary course of business consistent
with past practice (including with respect to the timing of declaration, and the record and payment dates) in an amount not to exceed $1.60 per Parent ADS in any 12-month period (appropriately
adjusted to reflect any stock dividends, subdivisions, splits, combinations or other similar events relating to the Parent ADSs), or (C) redeem, repurchase, cancel or otherwise acquire or offer
to redeem, repurchase, or otherwise acquire any of the Equity Securities of Parent, other than repurchases of Parent Ordinary Shares or Parent ADSs (whether directly by Parent or by a third party
employee benefit trust funded by Parent) in connection with the exercise, vesting or settlement of Parent Equity Awards (including in satisfaction of any amounts required to be deducted or withheld
under Applicable Law), in each case outstanding as of the date of this Agreement in accordance with the present terms of such Parent Equity Awards or granted after the date of this Agreement to the
extent permitted by this Agreement;
(iii) issue,
deliver or sell, or authorize the issuance, delivery or sale of any shares of Parent, other than (A) the issuance of any shares of Parent Ordinary Shares
or Parent ADSs on the exercise, vesting or settlement of Parent Equity Awards, (B) the grant of Parent Equity Awards to employees, directors or individual independent contractors of Parent or
any of its Subsidiaries pursuant to Parent's equity compensation plans or (C) in connection with the Parent ADS Issuance;
(iv) (A)
sell substantially all of the consolidated assets of Parent, (B) adopt a plan of complete or partial liquidation or dissolution or (C) enter into a
business combination transaction that provides for the pre-transaction Parent Ordinary Shares as of the closing such transaction, to no longer represent at least a majority of the outstanding voting
power of Parent or its successor
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or,
if there is a publicly traded parent company directly or indirectly holding Parent or its successor as a result of the transaction, of the publicly traded company;
(v) take
any action or knowingly fail to take any action where such action or failure to act could reasonably be expected to (A) prevent or impede the Mergers, taken
together, from qualifying as a "reorganization" within the meaning of Section 368(a) of the Code or (B) cause the stockholders of the Company (other than any Excepted Stockholder) to
recognize gain pursuant to Section 367(a)(1) of the Code; or
(vi) agree,
resolve, commit or propose to do any of the foregoing.
(c) Anything
to the contrary set forth in this Agreement notwithstanding, Parent shall not, and shall cause its Affiliates not to, directly or indirectly (whether by merger,
consolidation or otherwise), acquire, purchase, lease or license or otherwise enter into a transaction with (or agree to acquire, purchase, lease or license or otherwise enter into a transaction with)
any business, corporation, partnership, association or other business organization or division or part thereof that has one or more products, whether marketed or in development, that compete, or if
commercialized would compete, with one or more Company Products, if doing so would reasonably be expected to (i) impose any material delay in the satisfaction of, or increase materially the
risk of not satisfying the conditions set forth in Section 9.01(c) (to the extent related to any Antitrust Law) or the conditions set forth in Section 9.01(h)
; (ii) materially increase the risk of any Governmental Authority entering an Order prohibiting or enjoining the
consummation of the Mergers; or (iii) otherwise prevent or materially delay the consummation of the Mergers (including the Debt Financing). The fact that a merger, acquisition or similar
transaction requires approval under the Antitrust Laws shall not in and of itself restrict such transaction under this Section 7.01(c).
Section 7.02 No Solicitation by Parent.
(a) From
the date of this Agreement until the earlier of the First Effective Time and the termination of this Agreement, except as otherwise set forth in this Section 7.02, Parent shall not, and shall cause
its Subsidiaries and its and its Subsidiaries' respective directors and officers to not, and
shall use its reasonable best efforts to cause its and its Subsidiaries' other respective Representatives to not, directly or indirectly, (i) solicit, initiate, knowingly facilitate or
knowingly encourage (including by way of furnishing information) any inquiries regarding, or the making or submission of any Parent Acquisition Proposal, (ii) (A) enter into or
participate in any discussions or negotiations regarding, (B) furnish to any Third Party any information, or (C) otherwise assist, participate in, knowingly facilitate or knowingly
encourage any Third Party, in each case, in connection with or for the purpose of knowingly encouraging or facilitating, a Parent Acquisition Proposal, (iii) approve, recommend or enter into,
or publicly or formally propose to approve, recommend or enter into, any letter of intent or similar document, agreement, commitment, or agreement in principle (whether written or oral, binding or
nonbinding) with respect to a Parent Acquisition Proposal, (iv) (A) withdraw or qualify, amend or modify in any manner adverse to the Company the Parent Board Recommendation,
(B) fail to include the Parent Board Recommendation in the Parent Circular or (C) recommend, adopt or approve or publicly propose to recommend, adopt or approve any Parent Acquisition
Proposal (any of the foregoing in this clause (iv), a "Parent Adverse Recommendation Change") or (v) take any action to make any
"moratorium", "control share acquisition", "fair price", "supermajority", "affiliate transactions" or "business combination statute or regulation" or other similar anti-takeover laws and regulations
of the State of Delaware, including Section 203 of the DGCL, inapplicable to any Third Party or any Parent Acquisition Proposal.
(b) The
foregoing notwithstanding, if at any time prior to the receipt of the Parent Shareholder Approval (the "Parent Approval
Time"), the Board of Directors of Parent receives a bona fide written Parent Acquisition Proposal made after the date of this
Agreement that has not resulted from a violation of this Section 7.02, the Board of Directors of Parent, directly or indirectly through its
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Representatives,
may (i) contact the Third Party that has made such Parent Acquisition Proposal in order to ascertain facts or clarify terms for the sole purpose of the Board of Directors of
Parent informing itself about such Parent Acquisition Proposal and such Third Party and (ii) if the Board of Directors of Parent determines in good faith, after consultation with its financial
advisor and outside legal counsel, that such Parent Acquisition Proposal is or could reasonably be expected to lead to a Parent Superior Proposal, (A) subject to compliance with this Section 7.02, engage in negotiations or discussions with such Third Party and (B) furnish to such Third Party and its Representatives and
financing sources non-public information relating to Parent or any of its Subsidiaries pursuant to a confidentiality agreement that (1) does not contain any provision that would prevent Parent
from complying with its obligation to provide disclosure to the Company pursuant to this Section 7.02 and (2) contains confidentiality and
use provisions that, in each case, are no less favorable in the aggregate to Parent than those contained in the Confidentiality Agreement; provided,
that all such non-public information (to the extent that such information has not been previously provided or made available to the Company) is provided or made available to the Company, as the case
may be, substantially concurrently with the time it is provided or made available to such Third Party. Nothing contained herein shall prevent the Board of Directors of Parent from (x) complying
with either Rule 14e-2(a) under the 1934 Act or the U.K. Code, in each case, with regard to a Parent Acquisition Proposal, or (y) making any required disclosure to the shareholders of
Parent, either if required by the UK Panel on Takeovers and Mergers, or otherwise if the Board of Directors of Parent determines in good faith, after consultation with its outside legal counsel, that
the failure to take such action would be reasonably likely to be inconsistent with Applicable Law; provided, that any such action or disclosure that
constitutes a Parent Adverse Recommendation Change shall be made in compliance with the applicable provisions of this Section 7.02. A "stop, look
and listen" disclosure pursuant to Rule 14d-9(f) under the 1934 Act in connection with a tender or exchange offer shall not constitute a Parent Adverse Recommendation Change.
(c) Parent
shall notify the Company as promptly as practicable (but in no event later than 24 hours) after receipt by Parent (or any of its Representatives) of any
Parent Acquisition Proposal or any request for information relating to Parent or any of its Subsidiaries that, to the knowledge of Parent, has been or is reasonably likely to have been made in
connection with any Parent Acquisition Proposal, which notice shall be provided in writing and shall identify the Third Party making, and the material terms and conditions of, any such Parent
Acquisition Proposal or request. Parent shall thereafter (i) keep the Company reasonably informed, on a reasonably current basis, of any material changes in the status and details (or any
changes to the type and amount of consideration) of any such Parent Acquisition Proposal or request and (ii) as promptly as practicable (but in no event later than 24 hours after
receipt) provide to the Company copies of any material written correspondence, proposals or indications of interest relating to the terms and conditions of such Parent Acquisition Proposal or request
provided to Parent or any of its Subsidiaries (as well as written summaries of any material oral communications relating to the terms and conditions of any Parent Acquisition Proposal).
(d) Anything
in this Agreement to the contrary notwithstanding, prior to the Parent Approval Time, in response to a Parent Acquisition Proposal that the Board of Directors
of Parent determines in good faith constitutes a Parent Superior Proposal, the Board of Directors of Parent may, subject to compliance with this Section 7.02, make a Parent Adverse Recommendation
Change; provided, that (A) Parent shall
first notify the Company in writing at least four Business Days before taking such action that Parent intends to take such action, which notice shall include an unredacted copy of such proposal and a
copy of any financing commitments (in the form provided to Parent) relating thereto (and, to the extent not in writing, the material terms and conditions thereof and the identity of the person making
any such proposal), (B) Parent shall make its Representatives reasonably available to negotiate with the Company and its Representatives during such four Business Day notice period, to the
extent the Company wishes to negotiate, to enable the Company to propose revisions to the terms of this Agreement such that it would cause such Parent Superior Proposal to no longer constitute a
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Parent
Superior Proposal, (C) upon the end of such notice period, the Board of Directors of Parent shall have considered in good faith any revisions to the terms of this Agreement committed to
in writing by the Company, and shall have determined that the Parent Superior Proposal would nevertheless continue to constitute a Parent Superior Proposal if the revisions committed to in writing by
the Company were to be given effect and (D) in the event of any change, from time to time, to any of the financial terms or any other material terms of such Parent Superior Proposal, Parent
shall, in each case, have delivered to the Company an additional notice consistent with that described in clause (A) of this proviso and a new notice period under clause (A) of this
proviso shall commence each time, except each such notice period shall be three Business Days (instead of four Business Days), during which time Parent shall be required to comply with the
requirements of this Section 7.02(d) anew with respect to each such additional notice, including clauses (A) through (D) above of
this proviso.
(e) Anything
in this Agreement to the contrary notwithstanding, at any time prior to the Parent Approval Time, the Board of Directors of Parent may effect a Parent Adverse
Recommendation Change in response or relating to a Parent Intervening Event if the Board of Directors of Parent determines in good faith, after consultation with its outside legal counsel, that the
failure to take such action would be reasonably likely to be inconsistent with its fiduciary duties under Applicable Law; provided, that
(i) Parent shall first notify the Company in writing at least four Business Days before taking such action of its intention to take such action, which notice shall include a reasonably detailed
description of such Parent Intervening Event, (ii) if requested by the Company, Parent shall make its Representatives reasonably available to negotiate with the Company and its Representatives
during such four Business Day period following such notice regarding any proposal by the Company to amend the terms of this Agreement in response to such Parent Intervening Event, and (iii) the
Board of Directors of Parent shall not effect any Parent Adverse Recommendation Change involving or relating to a Parent Intervening Event unless, after the four Business Day period described in the
foregoing clause (ii), the Board of Directors of Parent determines in good faith, after consultation with its outside legal counsel and taking into account any written commitment by the Company
to amend the terms of this Agreement during such four Business Day period, that the failure to take such action would continue to be reasonably likely to be inconsistent with its fiduciary duties
under Applicable Law.
(f) Parent
shall, and shall cause its Subsidiaries to, and shall use its reasonable best efforts to cause its and its Subsidiaries' Representatives to, cease immediately and
cause to be terminated any and all existing discussions or negotiations, if any, with any Third Party conducted prior to or ongoing as of the date of this Agreement with respect to any actual or
potential (including if such discussions or negotiations were for the purpose of soliciting any) Parent Acquisition Proposal or with respect to any indication, proposal or inquiry that could
reasonably be expected to lead to a Parent Acquisition Proposal and shall use its reasonable best efforts to cause any such Third Party (and any of its Representatives) in possession of confidential
information about Parent or any of its Subsidiaries that was furnished by or on behalf of Parent in connection with such discussions or negotiations to return or destroy all such information.
Section 7.03 Obligations of Merger Subs. (a) Until the First Effective Time, Bidco shall at all
times be the direct owner of all of the outstanding shares of capital stock of Merger Sub I and Merger Sub
II. Parent shall take all action necessary to cause Bidco and each Merger Sub to perform its obligations under this Agreement and to consummate the Mergers on the terms and subject to the conditions
set forth in this Agreement. Promptly following the execution of this Agreement, Parent, in its capacity as the sole or majority stockholder of Bidco, and Bidco, in its capacity as the sole
stockholder of Merger Sub I and sole member of Merger Sub II, shall each execute and deliver a written consent approving and adopting this Agreement in accordance with the DGCL and DLLCA, as
applicable.
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Section 7.04 Director and Officer Liability.
(a) For
a period of not less than six years from the First Effective Time, Parent shall cause the First Surviving Corporation and the Surviving Company or any applicable
Subsidiary thereof (collectively, the "D&O Indemnifying Parties"), to the fullest extent each such D&O Indemnifying Party is authorized or permitted by
Applicable Law, to: (i) indemnify and hold harmless each person who is at the date of this Agreement, was previously, or during the period from the date of this Agreement through the date of
the First Effective Time will be, serving as a director or officer of the Company (in the case of indemnification by the First Surviving Corporation and the Surviving Company) or any of its
Subsidiaries (in the case of indemnification by such applicable Subsidiary) or, at the request or for the benefit of the Company or any of its Subsidiaries, as the case may be, as a director, trustee
or officer of any other entity or any benefit plan maintained by the Company or any of its Subsidiaries, as the case may be (collectively, the "D&O Indemnified
Parties"), as now or hereafter in effect, in connection with any D&O Claim and any losses, claims, damages, liabilities, Claim Expenses, judgments, fines, penalties and amounts
paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of any thereof) relating to or resulting from such D&O Claim; and
(ii) promptly advance to such D&O Indemnified Party any Claim Expenses incurred in defending, serving as a witness with respect to or otherwise participating with respect to any D&O Claim in
advance of the final disposition of such D&O Claim, including payment on behalf of or advancement to the D&O Indemnified Party of any Claim Expenses incurred by such D&O Indemnified Party in
connection with enforcing any rights with respect to such indemnification and/or advancement, in each case without the requirement of any bond or other security, but subject to the D&O Indemnifying
Party's receipt of a written undertaking by or on behalf of such D&O Indemnified Party to repay such Claim Expenses if it is ultimately determined under Applicable Law that such D&O Indemnified Party
is not entitled to be indemnified. All rights to indemnification and advancement conferred hereunder shall continue as to a Person who has ceased to be a director or officer of the Company or any of
its Subsidiaries after the date of this Agreement and shall inure to the benefit of such Person's heirs, successors, executors and personal and legal representatives. As used in this Section 7.04:
(x) the term "D&O Claim" means any threatened, asserted, pending or
completed claim, action, suit, proceeding, inquiry or investigation, whether instituted by any party hereto, any Governmental Authority or any other Person, whether civil, criminal, administrative,
investigative or other, including any arbitration or other alternative dispute resolution mechanism, arising out of or pertaining to matters that relate to such D&O Indemnified Party's duties or
service (A) as a director, officer or employee of the Company or the applicable Subsidiary thereof at or prior to the First Effective Time (including with respect to any acts, facts, events or
omissions occurring in connection with the approval of this Agreement, the Mergers or the consummation of the other transactions contemplated by this Agreement, including the consideration and
approval thereof and the process undertaken in connection therewith and any D&O Claim relating thereto) or (B) as a director, trustee, officer or employee of any other entity or any benefit
plan maintained by the Company or any of its Subsidiaries (for which such D&O Indemnified Party is or was serving at the request or for the benefit of the Company or any of its Subsidiaries) at or
prior to the First Effective Time; and (y) the term "Claim Expenses" means reasonable out-of-pocket attorneys' fees and all other reasonable
out-of-pocket costs, expenses and obligations (including experts' fees, travel expenses, court costs, retainers, transcript fees, legal research, duplicating, printing and binding costs, as well as
telecommunications, postage and courier charges) paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to
investigate, defend, be a witness in or participate in (including on appeal) any D&O Claim for which indemnification is authorized pursuant to this Section 7.04(a), including any action
relating to a claim for indemnification or advancement brought by a D&O Indemnified Party. No D&O
Indemnifying Party shall settle, compromise or consent to the entry of any judgment in any actual or threatened D&O Claim in respect of which indemnification has been sought by such D&O Indemnified
Party
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hereunder
unless such settlement, compromise or judgment includes an unconditional release of such D&O Indemnified Party from all liability arising out of such D&O Claim, or such D&O Indemnified Party
consents thereto. Parent shall guarantee the foregoing obligations of the D&O Indemnifying Parties.
(b) Without
limiting the foregoing, Parent agrees that all rights to indemnification, advancement of expenses and exculpation from liabilities for acts or omissions
occurring at or prior to the First Effective Time now existing in favor of the current or former directors, officers or employees of the Company or any of its Subsidiaries as provided in the Company
Organizational Documents, similar organizational documents of the Company's Subsidiaries and indemnification agreements of the Company and its Subsidiaries shall survive the Mergers and shall continue
in full force and effect in accordance with their terms. For a period of not less than six years from the First Effective Time, Parent shall cause the organizational documents of the Surviving Company
and its Subsidiaries to contain provisions no less favorable with respect to indemnification, advancement of expenses and limitations on liability of directors and officers than are set forth in the
Company Organizational Documents, which provisions shall not be amended, repealed or otherwise modified for a period of at least six years from the First Effective Time in any manner that would affect
adversely the rights thereunder of any individuals who, at or prior to the First Effective Time, were directors, officers or employees of the Company or any of its Subsidiaries. The Company may
purchase (and pay in full the aggregate premium for) a six-year prepaid "tail" insurance policy (which policy by its express terms shall survive the Mergers) of at least the same coverage and amounts
and containing terms and conditions that are no less favorable to the covered individuals as the Company's and its Subsidiaries' existing directors' and officers' insurance policy or policies with a
claims period of six years from the First Effective Time for D&O Claims arising from facts, acts, events or omissions that occurred on or prior to the First Effective Time; provided, that the
premium for such tail policy shall not exceed three hundred percent of the aggregate annual amounts currently paid by the Company and
its Subsidiaries for such insurance (such amount being the "Maximum Premium"). If the Company fails to obtain such tail policy prior to the First
Effective Time, Parent or the Surviving Company shall obtain such a tail policy; provided, that the premium for such tail policy shall not exceed the
Maximum Premium; provided, further, that if such tail policy cannot be obtained or can be obtained only
by paying aggregate annual premiums in excess of the Maximum Premium, Parent, the Company or the Surviving Company shall only be required to obtain as much coverage as can be obtained by paying an
annual premium equal to the Maximum Premium. Parent and the Surviving Company shall cause any such policy (whether obtained by Parent, the Company or the Surviving Company) to be maintained in full
force and effect, for its full term, and Parent shall cause the Surviving Company to honor all its obligations thereunder.
(c) If
any of Parent or the Surviving Company or any of their respective successors or assigns (i) consolidates with or merges with or into any other Person and shall
not be the continuing or surviving company, partnership or other Person of such consolidation or merger or (ii) liquidates, dissolves or winds-up, or transfers or conveys all or substantially
all of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that the successors and assigns of Parent or the Surviving Company, as applicable, assume
the obligations set forth in this Section 7.04.
Section 7.05 Employee Matters.
(a) From
the Closing Date through the date that is 12 months following the Closing Date (the "Benefits Continuation
Period"), the Surviving Company shall provide, and Parent shall cause the Surviving Company to provide, to each individual who is employed by the Company and its Subsidiaries
immediately prior to the First Effective Time, while such individual continues to be employed by the Surviving Company, Parent or any of Parent's Subsidiaries (including Subsidiaries of the Surviving
Company) during the Benefits Continuation Period (collectively, the "Affected Employees") (i) a base salary or wage rate that is not less than
the base salary or wage rate provided to such Affected
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Employee
immediately prior to the First Effective Time, (ii) cash and equity incentive compensation opportunities that are in the aggregate no less favorable than the aggregate cash and equity
incentive compensation opportunities provided to such Affected Employee immediately prior to the First Effective Time, and (iii) employee benefits that are substantially comparable in the
aggregate to the employee benefits provided to such Affected Employee under the Company Employee Plans immediately prior to the First Effective Time; provided, however, that no retention, change-in
control or other special or non-recurring compensation or benefits provided prior to the First Effective
Time shall be taken into account for purposes of this covenant.
(b) With
respect to any employee benefit plan in which any Affected Employee first becomes eligible to participate on or after the First Effective Time (the
"New Company Plans"), Parent shall: (i) use commercially reasonable efforts to waive all pre-existing conditions, exclusions and waiting periods
with respect to participation and coverage requirements applicable to such Affected Employee under any New Company Plan that is a health or welfare plan in which such Affected Employee may be eligible
to participate after the First Effective Time to the extent satisfied or waived under a comparable Company Employee Plan, (ii) recognize service of Affected Employees (to the extent credited by
the Company or its Subsidiaries in any comparable Company Employee Plan) accrued prior to the First Effective Time for all purposes under (but not for the purposes of benefit accrual under any defined
benefit pension plan) any New Company Plan in which such Affected Employees may be eligible to participate after the First Effective Time, provided,
however, that in no event shall any credit be given to the extent it would result in the duplication of benefits for the same period of service, and (iii) if applicable,
use commercially reasonable efforts to cause to be credited, in any New Company Plan that is a health plan in which Affected Employees participate, any deductibles or out-of-pocket expenses incurred
by such Affected Employee and such Affected Employee's beneficiaries and dependents during the portion of the calendar year in which such Affected Employee first becomes eligible for the New Company
Plan that occurs prior to such Affected Employee's commencement of participation in such New Company Plan with the objective that there be no double counting during the first year of eligibility of
such deductibles or out-of-pocket expenses.
(c) The
Company may provide to each employee who, immediately prior to the First Effective Time, is employed by the Company or a Subsidiary thereof and is eligible to
participate in an annual bonus program of the Company or any of its Subsidiaries a pro-rated portion of the annual bonus with respect to the portion of the year of the Closing that occurs prior to the
Closing, which bonus shall be determined based on actual performance through the latest practicable date prior to the Closing Date, as determined by the Company prior to the First Effective Time.
(d) Nothing
contained in this Section 7.05 or elsewhere in this Agreement, express or implied (i) shall cause
either Parent or any of its Affiliates to be obligated to continue to employ any Person, including any Affected Employees, for any period of time following the First Effective Time, (ii) shall
prevent Parent or its Affiliates from revising, amending or terminating any Company Employee Plan, Parent Employee Plan or any other employee benefit plan, program or policy in effect from time to
time, (iii) shall be construed as an amendment of any Company Employee Plan, Parent Employee Plan or any other employee benefit plan, program or policy in effect from time to time, or
(iv) shall create any third-party beneficiary rights in any director, officer, employee or individual Person, including any present or former employee, officer, director or individual
independent contractor of the Company or any of its Subsidiaries (including any beneficiary or dependent of such individual).
Section 7.06 Financing.
(a) Each
of Parent, Bidco and each Merger Sub shall use reasonable best efforts, and shall cause their respective Subsidiaries to use reasonable best efforts, to take or
shall cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to maintain the commitments under and to consummate the Debt Financing and obtain the
proceeds thereof (including
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for
the avoidance of doubt, the Bridge Facility Agreement or any replacement financing (provided, that (i) the conditions to the availability of
any such replacement financing shall not be materially less favorable to Parent than those of the Bridge Facility Agreement and (ii) the other terms of such replacement financing shall not be
materially less favorable to Parent than those of the Bridge Facility Agreement in any manner that materially adversely affects the ability or likelihood of Parent, Bidco or either Merger Sub from
timely consummating the transactions contemplated by this Agreement)) in an amount sufficient, together with other funds available to the Parent and its Subsidiaries, to enable Parent or Bidco to pay
in cash the Required Financing Amount at the Closing.
(b) (i)
From time to time, upon the written request of the Company, Parent shall inform the Company in reasonable detail on the status of its efforts to arrange the Debt
Financing and (ii) Parent shall give the Company prompt written notice of (A) any termination of the Bridge Facility Agreement (other than any termination in connection with a
replacement financing thereof), (B) the receipt of any notice or other communication from any Financing Source with respect to such Financing Source's failure or anticipated failure to fund its
commitments under any definitive agreements relating to the Debt Financing (other than in connection with a replacement lender assuming the commitments of a defaulting lender pursuant to the
documentation related to the applicable Debt Financing), (C) any material default or material breach by any party to the Debt Financing of which Parent, Bidco or either Merger Sub has become
aware (other than in connection with a replacement lender assuming the commitments of a defaulting lender pursuant to the documentation related to the applicable Debt Financing) and (D) any
condition precedent of the Debt Financing as to which Parent, Bidco or either Merger Sub believes will not be satisfied at Closing.
(c) Notwithstanding
anything in this Agreement to the contrary, Parent, Bidco, and each Merger Sub acknowledge and agree that the receipt and availability of any funds or
financing is not a condition to Closing under this Agreement nor is it a condition to Closing under this Agreement for Parent to obtain all or any portion of the Debt Financing or any other financing.
Section 7.07 CVR Agreement. From and after the First Effective Time, Parent shall expressly
assume in writing all of the First Surviving Corporation's obligations, duties and covenants under
the CVR Agreement.
ARTICLE VIII
COVENANTS OF PARENT, MERGER SUBS AND THE COMPANY
Section 8.01 Access to Information; Confidentiality.
(a) All
information furnished pursuant to this Agreement shall be subject to the Amended and Restated Confidentiality Agreement, dated as of October 4, 2020 (as
amended, supplemented or otherwise modified from time to time in accordance with its terms, the "Confidentiality Agreement"), between Parent and the
Company. On reasonable notice, during normal business hours during the period from the date of this Agreement to the earlier of the First Effective Time or the termination of this Agreement, solely in
connection with the Mergers and the other transactions contemplated hereby or integration planning relating thereto, (i) the Company shall, and shall cause its Subsidiaries to, afford to Parent
and its Representatives reasonable access to its properties, books, contracts and records and (ii) the Company shall, and shall cause its respective Subsidiaries to, make available to Parent
all other information not made available pursuant to clause (i) of this Section 8.01(a) concerning its businesses, properties and
personnel, in the case of each of clause (i) and (ii), as the other party reasonably requests and in a manner so as to not unreasonably interfere with the normal business operations of the
Company or any of its Subsidiaries. During such period described in the immediately preceding sentence, on reasonable notice and subject to Applicable Law and during normal business hours, the Company
shall instruct its pertinent Representatives to reasonably cooperate with Parent in its review of any such information provided or made available pursuant to the immediately preceding
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sentence.
No information or knowledge obtained in any review or investigation pursuant to this Section 8.01 shall affect or be deemed to modify
any representation or warranty made by the Company or Parent pursuant to this Agreement.
(b) To
the extent reasonably necessary for the Company to confirm the accuracy of the representations of Parent, Bidco and each Merger Sub set forth in Article V and the satisfaction of the conditions
precedent set forth in Section 9.03(a)
and Section 9.03(b), Parent shall, and shall cause its Subsidiaries to, afford to the Company and its Representatives reasonable access to its
books, contracts and records and such other information as the Company may reasonably request, during normal business hours during the period from the date of this Agreement to the earlier of the
First Effective Time or the termination of this Agreement, in a manner so as to not unreasonably interfere with the normal business operations of Parent or any of its Subsidiaries.
(c) Anything
to the contrary in this Section 8.01, Section 8.02
or Section 8.03 notwithstanding, none of the Company, Parent, nor any of their respective Subsidiaries shall be required to provide access to,
disclose information to or assist or cooperate with the other party, in each case if such access, disclosure, assistance or cooperation (i) would, as reasonably determined based on the advice
of outside counsel, jeopardize any attorney-client, attorney-work product or other similar privilege with respect to such information, (ii) would contravene any Applicable Law or Contract to
which the applicable party is a subject or bound, (iii) would result in the disclosure of any valuations of the Company or Parent in connection with the transactions contemplated by this
Agreement or any other sale process, (iv) would result in the disclosure of any information in connection with any litigation or similar dispute between the parties hereto or (v) would
result in the disclosure of any trade secrets; provided, that the Company and Parent shall, and each shall cause its Subsidiaries to, use reasonable
best efforts to make appropriate substitute disclosure arrangements under circumstances in which such restrictions apply (including redacting such information (A) to remove references
concerning valuation, (B) as necessary to comply with any Contract in effect on the date of this Agreement or after the date of this Agreement and (C) as necessary to address reasonable
attorney-client, work-product or other privilege or confidentiality concerns) and to provide such information as to the applicable matter as can be conveyed. Each of the Company and Parent may, as
each reasonably deems advisable and necessary, designate any competitively sensitive material provided to the other under this Section 8.01 or Section 8.02 as "Outside Counsel Only Material". Such materials and the information contained therein shall be given only to the outside counsel
of the recipient and, subject to any additional confidentiality or joint defense agreement the parties may mutually propose and enter into, shall not be disclosed by such outside counsel to employees,
officers or directors of the recipient unless express permission is obtained in advance from the source of the materials (the Company or Parent, as the case may be) or its legal counsel.
Section 8.02 Filings, Consents and Approvals.
(a) Subject
to the terms and conditions of this Agreement, each of the Company and Parent shall, and each shall cause its Subsidiaries to, use their respective reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under Applicable Law to consummate the Mergers and other transactions
contemplated hereby as promptly as reasonably practicable, including (i) (A) preparing and filing as promptly as practicable with any Governmental Authority or other Third Party all
documentation to effect all Filings as are necessary, proper or advisable to consummate the Mergers and the other transactions contemplated hereby, (B) using reasonable best efforts to obtain,
as promptly as practicable, and thereafter maintain, all Consents from any Governmental Authority or other Third Party that are necessary, proper or advisable to consummate the Mergers or other
transactions contemplated hereby, and complying with the terms and conditions of each Consent (including by supplying as promptly as reasonably practicable any additional information or documentary
material that may be requested pursuant to the HSR Act or other applicable Antitrust Laws), and (C) cooperating with the other parties hereto in their efforts to
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comply
with their obligations under this Agreement, including in seeking to obtain as promptly as practicable any Consents necessary, proper or advisable to consummate the Mergers or the other
transactions contemplated hereby and (ii) (A) defending any lawsuit or other legal proceeding, whether judicial or administrative, brought by any Governmental Authority or Third Party
challenging this Agreement or seeking to enjoin, restrain, prevent, prohibit or make illegal consummation of the Mergers or any of the other transactions contemplated hereby and (B) contesting
any Order that enjoins, restrains, prevents, prohibits or makes illegal consummation of the Mergers or any of the other transactions contemplated hereby.
(b) Parent
shall have the right to (i) direct, devise and implement the strategy for obtaining any necessary Consent of, for responding to any request from, inquiry
or investigation by (including directing the timing, nature and substance of all such responses), and lead all meetings and communications (including any negotiations) with, any Governmental Authority
that has authority to enforce any Antitrust Law and (ii) control the defense and settlement of any litigation, action, suit, investigation or proceeding brought by or before any Governmental
Authority that has authority to enforce any Antitrust Law, Parent shall consult with the Company in a reasonable manner and consider in good faith the views and comments of the Company in connection
with the foregoing.
(c) In
furtherance and not in limitation of the foregoing, each of the Company and Parent shall, and each shall cause its Subsidiaries to, as promptly as practicable
following the date of this Agreement, make all Filings with all Governmental Authorities that are necessary, proper or advisable under this Agreement or Applicable Law to consummate and make effective
the Mergers and the other transactions contemplated hereby, provided that the parties shall not have an obligation to file a notification and report form pursuant to the HSR Act with respect to
the Mergers and the other transactions contemplated hereby until the 60th calendar day after the date hereof. In the event that the Company or Parent receives a request for information or
documentary material pursuant to the HSR Act or any other Antitrust Law (a "Second Request"), each shall, and shall cause its respective Subsidiaries
and Affiliates to, use reasonable best efforts (and shall cooperate with each other) to submit an appropriate response to such Second Request as promptly as reasonably practicable, and to make
available their respective Representatives to, on reasonable request, any Governmental Authority in connection with (i) the preparation of any Filing made by or on their behalf to any
Governmental Authority in connection with the Mergers or any of the other transactions contemplated hereby or (ii) any Governmental Authority investigation, review or approval process.
(d) Subject
to Applicable Laws relating to the sharing of information and the terms and conditions of the Confidentiality Agreement, each of the Company and Parent shall,
and each shall cause its Subsidiaries to, cooperate and consult with each other in connection with the making of all Filings pursuant to this Section 8.02, and shall keep each other apprised on a
current basis of the status of matters relating to the completion of the Mergers and the
other transactions contemplated hereby, including: (i) (A) as far in advance as practicable, notifying the other party of, and providing the other party with an opportunity to consult with
respect to, any Filing or communication or inquiry it or any of its Affiliates intends to make with any Governmental Authority other than a Taxing Authority (or any communication or inquiry it or any
of its Affiliates intends to make with any Third Party in connection therewith) relating to the matters that are the subject of this Agreement, (B) providing the other party and its counsel,
prior to submitting any such Filing or making any such communication or inquiry, a reasonable opportunity to review, and considering in good faith the comments of the other party and such other
party's Representatives in connection with any such Filing, communication or inquiry, and (C) promptly following the submission of such Filing or making of such communication or inquiry,
providing the other party with a copy of any such Filing, communication or inquiry, if in written form, or, if in oral form, a summary of such communication or inquiry; provided, that this Section 8.02(d) shall not apply to any initial filings made pursuant to the
HSR Act; (ii) as promptly as practicable following receipt, furnishing the other party with a copy of any Filing or written
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communication
or inquiry, or, if in oral form, a summary of any such communication or inquiry, it or any of its Affiliates receives from any Governmental Authority other than a Taxing Authority (or
any communication or inquiry it receives from any Third Party in connection therewith) relating to matters that are the subject of this Agreement; and (iii) coordinating and reasonably
cooperating with the other party in exchanging such information and providing such other assistance as the other party may reasonably request in connection with this Section 8.02. The Company,
Parent or their respective Representatives shall notify and consult with the other party in advance of any meeting or
conference (including by telephone or videoconference) with any Governmental Authority other than a Taxing Authority, or any member of the staff of any such Governmental Authority, in respect of any
Filing, proceeding, investigation (including the settlement of any investigation), litigation or other inquiry regarding the Mergers or any of the other transactions contemplated hereby and, to the
extent permitted by such Governmental Authority, enable the other party to participate. Materials provided to the other party pursuant to this Section 8.02 may be redacted to remove references
concerning the valuation of Parent, the Company or any of their Subsidiaries.
(e) Anything
in this Agreement to the contrary notwithstanding, Parent and its Affiliates shall take, or cause to be taken, all actions and shall do, or cause to be done,
all things necessary, proper or advisable to eliminate each and every impediment under any Antitrust Law that is asserted by any Governmental Authority, obtain the consent or cooperation of any other
Person and permit and cause the satisfaction of the conditions set forth in Section 9.01(c) (to the extent related to any Antitrust Law) or Section 9.01(h)
, in each of the foregoing cases, to permit the Closing to occur as promptly as reasonably practicable and in any event prior to
the End Date, including: (i) proposing, negotiating, committing to, effecting and agreeing to, by consent decree, hold separate order, or otherwise, the sale, divestiture, license, holding
separate, and other disposition of or restrictions on the businesses, assets, properties, product lines, and equity or other business interests of, or changes to the conduct of business of, the
Company, Parent, and their respective Affiliates, and take all actions necessary or appropriate in furtherance of the foregoing, (ii) creating, terminating, unwinding, divesting or assigning,
subcontracting or otherwise securing substitute parties for relationships, ventures, and contractual or commercial rights or obligations of the Company, Parent, and their respective Affiliates and
(iii) otherwise taking or committing to take any action that would limit Parent's freedom of action with respect to, or its ability to retain, hold or continue, directly or indirectly, any
businesses, assets, properties, product lines, and equity or other business interests, relationships, ventures or contractual rights and obligations of the Company, Parent, and their respective
Affiliates. In addition to and without limiting the foregoing, Parent shall take all steps relating to the matter referenced in Section 8.02(e) of the Parent Disclosure Schedule as promptly as
reasonably practicable to the extent necessary or advisable to satisfy the condition set forth in Section 9.01(c) (to the extent related to any
Antitrust Law) and Section 9.01(h) as promptly as reasonably practicable. Parent, the Company and their Affiliates shall not be required to agree
to take or enter into any such action described in clauses (i) through (iii) that is not conditioned upon, or that becomes effective prior to, the Closing.
(f) Anything
to the contrary notwithstanding, Parent's obligations to take or cause to take any actions described in the first sentence of Section 8.02(e) shall be subject to the right of Parent, in Parent's
good faith reasonable discretion, to take reasonable periods of time in
order to advocate and negotiate with Governmental Authorities with respect to such actions.
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Section 8.03 Certain Filings; SEC Matters.
(a) As
promptly as practicable following the date of this Agreement, (i) the Company shall prepare (with Parent's reasonable cooperation) and file with the SEC a
proxy statement relating to the Company Stockholder Meeting (together with all amendments and supplements thereto, the "Proxy Statement/Prospectus") in
preliminary form, (ii) Parent shall prepare (with the Company's reasonable cooperation) and file with the SEC a Registration Statement on Form F-4 which shall include the Proxy
Statement/Prospectus (together with all amendments and supplements thereto, the "Form F-4") relating to the registration of the Parent ADSs and
the Parent Ordinary Shares represented thereby to be issued to the stockholders of the Company pursuant to the Parent ADS Issuance, (iii) Parent shall prepare and shall cause the ADS Depository
to file with the SEC a Registration Statement on Form F-6 (together with all amendments and supplements thereto, the "Form F-6") relating
to the registration of the Parent ADSs to be issued to the stockholders of the Company pursuant to the Parent ADS Issuance, (iv) Parent shall, if required by the FCA in order to carry out the
transactions contemplated by this Agreement, prepare (with the Company's reasonable cooperation) and submit to the FCA a Parent Prospectus and (v) Parent shall prepare (with the Company's
reasonable cooperation) and submit to the FCA a shareholder circular prepared under the Listing Rules relating to the Parent Shareholder Meeting (together with all amendments and supplements thereto,
the "Parent Circular") in draft form. The Proxy Statement/Prospectus, the Form F-4 and the Form F-6 shall comply as to form in all
material respects with the applicable provisions of the 1933 Act, the 1934 Act and other Applicable Law, and any Parent Prospectus and the Parent Circular shall comply as to form in all material
respects with the requirements of the Listing Rules and other Applicable Law.
(b) The
Company and Parent shall cooperate with each other and use their respective reasonable best efforts (i) to have the Proxy Statement/Prospectus cleared by the
SEC as promptly as practicable after its filing, (ii) to have the Form F-4 and the Form F-6 declared effective under the 1933 Act as promptly as practicable after its filing and
keep the Form F-4 and Form F-6 effective for so long as necessary to consummate the Mergers, (iii) to have a Parent Prospectus (if required) formally approved by the FCA as
promptly as practicable after its submission and (iv) to have the Parent Circular formally approved by the FCA as promptly as practicable after its submission. Each of the Company and Parent
shall, as promptly as practicable after the receipt thereof, provide the other party with copies of any written comments and advise the other party of any oral comments with respect to the Proxy
Statement/Prospectus, the Form F-4, the Form F-6, a Parent Prospectus and the Parent Circular received by such party from the SEC, the FCA or any other Governmental Authority, including
any request from the SEC for amendments or supplements to the Proxy Statement/Prospectus, the Form F-4 or the Form F-6 or any request from the FCA for amendments or supplements to a
Parent Prospectus or the Parent Circular, and shall provide the other with copies of all material or substantive correspondence between it and its Representatives, on the one hand, and the SEC, the
FCA or any other Governmental Authority, on the other hand, related to the foregoing. The foregoing notwithstanding, prior to filing the Form F-4 or the Form F-6 or mailing the Proxy
Statement/Prospectus or Parent Circular, or making a Parent Prospectus available to the public or responding to any comments of the SEC or the FCA with respect thereto, each of the Company and Parent
shall reasonably cooperate and provide the other party and its counsel a reasonable opportunity to review such document or response (including the proposed final version of such document or response)
and consider in a commercially reasonable manner the comments of the other party or such other party's Representatives in connection with any such document or response. None of the Company, Parent or
any of their respective Representatives shall agree to participate in any material or substantive meeting or conference (including by telephone) with the SEC or the FCA, or any member of the staff
thereof, in respect of the Proxy Statement/Prospectus, the Form F-4, the Form F-6 or the Parent Circular or (if applicable) the Parent Prospectus unless it consults with the other party
in advance and, to the extent permitted by the SEC or the FCA, as applicable, allows the other party to participate. Parent shall advise the Company, promptly after receipt of notice thereof, of the
time of effectiveness of the
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Form F-4
and the Form F-6, and the issuance of any stop order relating thereto or the suspension of the qualification of Parent ADSs or the Parent Ordinary Shares represented thereby for
offering or sale in any jurisdiction, and each of the Company and Parent shall use its reasonable best efforts to have any such stop order or suspension lifted, reversed or otherwise terminated.
(c) Each
of the Company and Parent shall use its reasonable best efforts to take any other action required to be taken by it under the 1933 Act, the 1934 Act, the Listing
Rules, the DGCL, the CA 2006 and the rules of Nasdaq in connection with the filing and distribution of the Proxy Statement/Prospectus, the Form F-4, the Form F-6, a Parent Prospectus (if
required) and the Parent Circular, and the solicitation of proxies from the stockholders of the Company and the shareholders of Parent. Subject to Section 6.02, the Proxy Statement/Prospectus shall
include the Company Board Recommendation, and, subject to Section 7.02, the Parent Circular shall include the Parent Board Recommendation.
(d) Parent
shall use its reasonable best efforts to take, or cause to be taken, all actions, and to do or cause to be done all things, necessary, proper or advisable under
Applicable Law and the rules and policies of Nasdaq and the SEC to enable the listing of the Parent ADSs being registered pursuant to the Form F-4 on Nasdaq no later than the First Effective
Time, subject to official notice of issuance. Parent shall also use its reasonable best efforts to obtain all necessary state securities law or "blue sky" permits and approvals required to carry out
the transactions contemplated by this Agreement.
(e) Each
of the Company and Parent shall, on request, furnish to the other all information, documents, submissions or comfort concerning itself, its Subsidiaries, directors,
officers and (to the extent reasonably available to the applicable party) stockholders or shareholders (including the Required Information) and such other matters as may be reasonably necessary or
advisable in connection with any statement, Filing, notice or application made by or on behalf of the Company, Parent or any of their respective Subsidiaries, to the SEC, the FCA or Nasdaq in
connection with the Mergers and the other transactions contemplated by this Agreement, including the Proxy Statement/Prospectus, the Form F-4, the Form F-6, any Parent Prospectus (if
required) and the Parent Circular, in each case having due regard to the planned timing of publication of such document, the requirements of the CA 2006, the FSMA, the Listing Rules, the Prospectus
Regulation Rules, the FCA, the Admission and Disclosure Standards of the LSE and any other Applicable Law, and reasonable and customary requirements of the Parent's sponsor; provided, that neither party
shall use any such information for any purposes other than those contemplated by this Agreement unless such party obtains
the prior written consent of the other. In addition, each of the Company and Parent shall (i) use its reasonable best efforts to promptly provide information concerning it necessary to enable
the Company and Parent to prepare required pro forma financial statements, working capital reports and related footnotes in connection with the preparation of the Proxy Statement/Prospectus, and
Form F-4, the Parent Circular and (if required) a Parent Prospectus, (ii) assist with due diligence and, in the case of the Company, provide such information as Parent may reasonably
request to enable Parent to prepare verification materials in relation to the preparation of the Parent Circular and (if required) a Parent Prospectus and (iii) enter into any agreement or
execute any letter (including representation letters and letters of comfort) or other document which is customary and/or necessary in connection with the preparation of the Proxy Statement/Prospectus,
Form F-4, a Parent Prospectus (if required) and the Parent Circular and, in each case, any amendment or supplement thereto or where such documents, information, and/or submissions are ancillary
to the preparation of the Proxy Statement/Prospectus, the Form F-4, the Parent Circular or (if required) a Parent Prospectus. In addition, in relation to any Parent Prospectus, the Company
shall use its reasonable best efforts to cause each of the Designated Directors to provide responsibility letters and duly completed director and officer questionnaires in a reasonable and customary
form provided by the Parent's sponsor.
(f) If
at any time prior to the latter of the Company Approval Time and the Parent Approval Time, any information relating to the Company or Parent, or any of their
respective Affiliates, officers
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or
directors, should be discovered by the Company or Parent that (i) should be set forth in an amendment or supplement to the Proxy Statement/Prospectus, or the Form F-4 or the
Form F-6 so that such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, (ii) constitutes a material change or material new matter that would require a supplement to the Parent Circular under Applicable Law or the Listing
Rules, the party that discovers such information shall promptly notify the other party hereto, and each party shall use reasonable best efforts to, and reasonably cooperate with the other to, promptly
prepare and file with the SEC or submit to the FCA, as applicable, an appropriate amendment or supplement describing such information and, to the extent required under Applicable Law, disseminate such
amendment or supplement to the stockholders of the Company and/or the shareholders of Parent, or (iii) constitutes a
material change or material new matter that would require a supplement to any Parent Prospectus under Applicable Law or the Prospectus Regulation Rules, the party that discovers such information shall
promptly notify the other party hereto, and each party shall use reasonable best efforts to, and reasonably cooperate with the other to, promptly prepare and file with the SEC or submit to the FCA, as
applicable, an appropriate amendment or supplement describing such information and, to the extent required under Applicable Law, disseminate such amendment or supplement to the stockholders of the
Company or the shareholders of Parent, as the case may be, or make available such amendment or supplement in accordance with the Prospectus Regulation Rules.
Section 8.04 Company Stockholder Meeting; Parent Shareholder Meeting.
(a) As
promptly as practicable following the effectiveness of the Form F-4 (but subject to Section 8.04(c)),
the Company shall, in consultation with Parent, in accordance with Applicable Law and the Company Organizational Documents, (i) establish a record date for, duly call and give notice of a
meeting of the stockholders of the Company entitled to vote on the adoption of this Agreement (the "Company Stockholder Meeting") at which meeting the
Company shall seek the Company Stockholder Approval (and will use reasonable best efforts to conduct "broker searches" in a manner to enable such record date to be held promptly following the
effectiveness of the Form F-4), (ii) cause the Proxy Statement/Prospectus (and all other proxy materials for the Company Stockholder Meeting) to be mailed to its stockholders and
(iii) duly convene and hold the Company Stockholder Meeting. Subject to Section 6.02, the Company shall use its reasonable best efforts to
take, or cause to be taken, all actions, and do or cause to be done all things, necessary, proper or advisable on its part to cause the Company Stockholder Approval to be received at the Company
Stockholder Meeting or any adjournment or postponement thereof, and shall comply with all legal requirements applicable to the Company Stockholder Meeting. The Company shall not, without the prior
written consent of Parent, adjourn, postpone or otherwise delay the Company Stockholder Meeting; provided, that the Company may, without the prior
written consent of Parent, adjourn or postpone the Company Stockholder Meeting (A) if the Company believes in good faith that such adjournment or postponement is reasonably necessary to allow
reasonable additional time to (1) solicit additional proxies necessary to obtain the Company Stockholder Approval, or (2) distribute any supplement or amendment to the Proxy
Statement/Prospectus that the Board of Directors of the Company has determined (which determination and subsequent distribution shall be made as promptly as practicable) in good faith after
consultation with outside legal counsel is necessary under Applicable Law and for such supplement or amendment to be reviewed by the Company's stockholders prior to the Company Stockholder Meeting,
(provided, that no such postponement or adjournment under this clause (2) may be to a date that is after the earlier of (I) the 10th Business Day before the End Date
and (II) the 10th Business Day after the date of such distribution), (B) due to the absence of a quorum, (C) if and to the extent such postponement or
adjournment of the Company Stockholder Meeting is required by an Order issued by any court or other Governmental Authority of competent jurisdiction in connection with this Agreement or (D) if
the Parent Shareholder Meeting has been adjourned or postponed by Parent in accordance with Section 8.04(b), to the extent necessary to enable
the Company Stockholder Meeting
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and
the Parent Shareholder Meeting to be held within a single period of twenty-four consecutive hours as contemplated by Section 8.04(c). The
foregoing notwithstanding, the Company may not, without the prior written consent of Parent, postpone or adjourn the Company Stockholder Meeting pursuant to clause (A)(1) or (B) of the
immediately preceding sentence for a period of more than 10 Business Days on any single occasion or, on any occasion, to a date after the earlier of (x) 40 Business Days after the date on which
the Company Stockholder Meeting was originally scheduled and (y) 10 Business Days before the End Date. Without the prior written consent of Parent, the matters contemplated by the Company
Stockholder Approval shall be the only matters (other than matters of procedure and matters required by or advisable under Applicable Law to be voted on by the Company's stockholders in connection
therewith) that the Company shall propose to be voted on by the stockholders of the Company at the Company Stockholder Meeting.
(b) As
promptly as practicable following the date on which the Parent Circular is formally approved by the FCA (but subject to Section 8.04(c)), Parent shall, in consultation with the Company, in
accordance with Applicable Law and the Parent Organizational Documents,
(i) establish a record date for, duly convene and give notice of a meeting of the shareholders of Parent entitled to vote on the approval of this Agreement and the transactions contemplated
hereby (the "Parent Shareholder Meeting") at which meeting Parent shall seek the Parent Shareholder Approval, (ii) cause the Parent Circular (and
all other proxy materials for the Parent Shareholder Meeting) to be mailed to its shareholders and (iii) duly hold the Parent Shareholder Meeting. Subject to Section 7.02, Parent shall use its
reasonable best efforts to take, or cause to be taken, all actions, and do or cause to be done all things,
necessary, proper or advisable on its part to cause the Parent Shareholder Approval to be obtained at the Parent Shareholder Meeting or any adjournment or postponement thereof, and shall comply with
all legal requirements applicable to the Parent Shareholder Meeting. Parent shall not, without the prior written consent of the Company, adjourn, postpone or otherwise delay the Parent Shareholder
Meeting; provided, that Parent may, without the prior written consent of the Company, adjourn or postpone the Parent Shareholder Meeting (A) if
Parent believes in good faith that such adjournment or postponement is reasonably necessary to allow reasonable additional time to (1) solicit additional proxies necessary to obtain the Parent
Shareholder Approval, or (2) distribute any supplement to the Parent Circular that the Board of Directors of Parent has determined (which determination and subsequent distribution shall be made
as promptly as practicable) in good faith after consultation with outside legal counsel is necessary under Applicable Law (including Rule 10.5.4 of the Listing Rules) and for such supplement to
be reviewed by Parent's shareholders prior to the Parent Shareholder Meeting (provided, that no such postponement or adjournment under this clause (2) may be to a date that is after the earlier
of (I) the 10th Business Day before the End Date and (II) the 10th Business Day after the date of such distribution), (B) due to the
absence of a quorum, (C) if and to the extent such postponement or adjournment of the Company Stockholder Meeting is required by an Order issued by any court or other Governmental Authority of
competent jurisdiction in connection with this Agreement or (D) if the Company Stockholder Meeting has been adjourned or postponed by the Company in accordance with Section 8.04(a), to the
extent necessary to enable the Company Stockholder Meeting and the Parent Shareholder Meeting to be held within a single
period of twenty-four consecutive hours as contemplated by Section 8.04(c). The foregoing notwithstanding, Parent may not, without the prior
written consent of the Company, postpone or adjourn the Parent Shareholder Meeting pursuant to clause (A)(1) or (B) of the immediately preceding sentence for a period of more than 10
Business Days on any single occasion or, on any occasion, to a date after the earlier of (x) 40 Business Days after the date on which the Parent Shareholder Meeting was originally scheduled and
(y) 10 Business Days before the End Date. Without the prior written consent of the Company, the matters contemplated by the Parent Shareholder Approval shall be the only matters (other than
matters of procedure and matters required by or advisable under Applicable Law to be voted on by Parent's shareholders in connection therewith) that Parent shall propose to be voted on by the
shareholders of Parent at the Parent Shareholder Meeting.
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(c) It
is the intention of the parties that, and each of the parties shall reasonably cooperate and use their commercially reasonable efforts to cause, the date and time of
the Company Stockholder Meeting and the Parent Shareholder Meeting be coordinated such that they occur on the same calendar day (and in any event as close in time as possible).
(d) Any
Company Adverse Recommendation Change or Parent Adverse Recommendation Change notwithstanding, the obligations of the Company and Parent under Section 8.03 and this Section 8.04 shall continue in full force and effect unless this
Agreement is validly terminated in accordance with Article X.
Section 8.05 Public Announcements.
The initial press release concerning this Agreement and the transactions contemplated hereby shall be a joint press release to be in the form agreed on by the Company and Parent prior to
the execution of this Agreement. Following such initial press release, Parent and the Company shall consult with each other before issuing any additional press release, making any other public
statement or scheduling any press conference, conference call or meeting with investors or analysts with respect to this Agreement or the transactions contemplated hereby and, except as may be
required by Applicable Law or any listing agreement with or rule of any national securities exchange or association, shall not issue any such press release, make any such other public statement or
schedule any such press conference, conference call or meeting before such consultation (and, to the extent applicable, shall provide copies of any such press release, statement or agreement (or any
scripts for any conference calls) to the other party and shall consider in good faith the comments of the other party); provided, that the restrictions
set forth in this Section 8.05 shall not apply to any release or public statement (a) made or proposed to be made by the Company in
compliance with Section 6.02 with respect to the matters contemplated by Section 6.02, or
made or proposed to be made by Parent in response or related to any such release or public statement that is not in violation of Section 7.02,
(b) made or proposed to be made by Parent in compliance with Section 7.02 with respect to the matters contemplated
by Section 7.02, or made or proposed to be made by the Company in response or related to any such release or public statement that is not in
violation of Section 6.02, (c) in connection with any dispute between the parties regarding this Agreement, the Mergers or the other
transactions contemplated hereby or (d) if the information contained therein substantially reiterates (or is consistent with) previous releases, public disclosures or public statements made by
the Company and/or Parent in compliance with this Section 8.05.
Section 8.06 Section 16 Matters. Prior to the First Effective Time, the Company shall take
all such steps as may be required (to the extent permitted under Applicable Law) to cause any
dispositions of Company Common Stock (including derivative securities with respect to Company Common Stock) resulting from the transactions contemplated by this Agreement by each individual who is
subject to the reporting requirements of Section 16(a) of the 1934 Act to be exempt under Rule 16b-3 promulgated under the 1934 Act.
Section 8.07 Transaction Litigation.
Subject to the last sentence of this Section 8.07, each of the Company and Parent shall promptly notify the other of any
stockholder or shareholder demands, litigations, arbitrations or other similar claims, actions, suits or proceedings (including derivative claims) commenced against it, its Subsidiaries and/or its or
its Subsidiaries' respective directors or officers relating to this Agreement or any of the transactions contemplated hereby or any matters relating thereto (collectively, "Transaction Litigation")
and shall keep the other party informed regarding any Transaction Litigation (including by promptly furnishing to the other party and such other party's Representatives such information relating to
such Transaction Litigation as may reasonably be requested). Each of the Company and Parent shall reasonably cooperate with the other in the defense or settlement of any Transaction Litigation, and
shall give the other party the opportunity to consult with it regarding the defense and settlement of such Transaction Litigation, shall consider in good faith the other party's advice with respect to
such Transaction Litigation and shall give the other party the opportunity to participate (at the other party's expense) in (but not control) the defense and settlement
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of
such Transaction Litigation. Prior to the First Effective Time, other than with respect to any Transaction Litigation where the parties are adverse to each other or in the context of any
Transaction Litigation related to or arising out of a Company Acquisition Proposal or a Parent Acquisition Proposal, neither the Company nor any of its Subsidiaries shall settle or offer to settle any
Transaction Litigation without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed). Notwithstanding anything to the contrary in
this Section 8.07, (a) in the event of any conflict with any other covenant or agreement contained in Section 8.02 that expressly addresses
the subject matter of this Section 8.07, Section 8.02 shall govern
and control, and (b) Section 8.07 shall be in addition to and not limit or otherwise modify the parties' respective obligations
under Section 6.02 or Section 7.02.
Section 8.08 Stock Exchange Delisting. Each of the Company and Parent agrees to cooperate with
the other party in taking, or causing to be taken, all actions necessary to delist the Company Common
Stock from the Nasdaq and terminate its registration under the 1934 Act; provided, that such delisting and termination shall not be effective until the
First Effective Time.
Section 8.09 Governance; Rare Diseases Business.
(a) Parent
shall take all necessary corporate action to cause, effective at the First Effective Time, two individuals who currently serve on the board of directors of the
Company, as mutually agreed by the Company and Parent prior to the Closing, to have joined the board of directors of Parent, subject to such individuals' having accepted offers from Parent to serve on
the board of directors of Parent (such individuals, the "Designated Directors").
(b) Parent
intends to establish, as promptly as reasonably practicable after the Closing, a global rare diseases business unit initially comprising the "rare disease"
activities of Parent, the Surviving Company and their respective Subsidiaries and for such unit to be initially headquartered in Boston, MA and led initially by members of the current senior
management of the Company.
Section 8.10 State Takeover Statutes. Each of Parent, Bidco, each Merger Sub and the Company
shall (a) take all action necessary so that no "moratorium," "control share acquisition," "fair
price," "supermajority," "affiliate transactions" or "business combination statute or regulation" or other similar state anti-takeover laws or regulations, or any similar provision of the Company
Organizational Documents or the Parent Organizational Documents, as applicable, is or becomes applicable to the Mergers or any of the other transactions contemplated hereby, and (b) if any such
anti-takeover law, regulation or provision is or becomes applicable to the Mergers or any other transactions contemplated hereby, cooperate and grant such approvals and take such actions as are
reasonably necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects
of such statute or regulation on the transactions contemplated hereby.
Section 8.11 Certain Tax Matters.
(a) Each
of Parent and the Company shall use its reasonable best efforts to cause the Mergers, taken together, to qualify, and shall not take or knowingly fail to take (and
shall cause its Affiliates not to take or knowingly fail to take) any action that could reasonably be expected to (i) prevent or impede the Mergers, taken together, from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code or (ii) cause the stockholders of the Company (other than any Excepted Stockholder) to recognize gain pursuant to
Section 367(a)(1) of the Code.
(b) Each
of Parent and the Company shall use its reasonable best efforts and shall cooperate with one another to obtain the opinion referred to in Section 9.03(d) and any similar opinions required to be
delivered in connection with the effectiveness of the Form F-4. In connection with
the foregoing, (i) Parent shall (and shall cause Bidco and each Merger Sub to) deliver to Company Tax Counsel a duly executed letter of representation substantially in the form of the letter of
representation included
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in
Exhibit A, with such changes as may reasonably be agreed by Parent, the Company and Company Tax Counsel (the "Parent
Tax Certificate"), and (ii) the Company shall deliver to Company Tax Counsel a duly executed letter of representation substantially in the form of the letter of
representation included in Exhibit B, with such changes as may reasonably be agreed by Parent, the Company and Company Tax Counsel (the
"Company Tax Certificate"), in the case of each of clause (i) and (ii), at such times as such counsel shall reasonably request (including on the
effective date of the Form F-4 and at the Closing). Parent and the Company shall also provide such other information as reasonably requested by Company Tax Counsel for purposes of rendering any
opinion described in this Section 8.11.
(c) Parent
shall, and shall cause Bidco and the Surviving Company to, comply with the reporting requirements of Treasury Regulations Section 1.367(a)-3(c)(6) and
shall make arrangements with each "five-percent transferee shareholder" of Parent within the meaning of Treasury Regulations Section 1.367(a)-3(c)(5)(ii), if any, to ensure that such
shareholder will be informed of any disposition of any property that would require the recognition of gain under such person's gain recognition agreement entered into under Treasury Regulations
Section 1.367(a)-8.
ARTICLE IX
CONDITIONS TO THE MERGERS
Section 9.01 Conditions to the Obligations of Each Party. The obligations of the Company, Parent, Bidco
and each Merger Sub to consummate the Mergers are subject to the satisfaction (or, to the extent permitted by
Applicable Law, waiver) of the following conditions:
(a) the
Company Stockholder Approval shall have been obtained;
(b) the
Parent Shareholder Approval shall have been obtained;
(c) no
injunction or other Order shall have been issued by any court or other Governmental Authority of competent jurisdiction that remains in effect and enjoins, prevents
or prohibits the consummation of the Mergers, and no Applicable Law shall have been enacted, entered or promulgated by any Governmental Authority that remains in effect and prohibits or makes illegal
consummation of the Mergers;
(d) the
Form F-4 and the Form F-6 shall have been declared effective, no stop order suspending the effectiveness of the Form F-4 or the Form F-6
shall be in effect and no proceedings for such purpose shall be pending before the SEC;
(e) if
confirmed by the FCA that a Parent Prospectus is required to be published in connection with the transactions contemplated hereby, including any supplement or
amendment thereto, such Parent Prospectus shall have been approved by the FCA and made available to the public in accordance with the Prospectus Regulation Rules;
(f) the
Parent Circular, including any supplement or amendment thereto, shall have been approved by the FCA and made available to the shareholders of Parent in accordance
with the Listing Rules and the Parent Organizational Documents;
(g) (i)
the Parent ADSs (and the Parent Ordinary Shares represented thereby) to be issued in the Parent ADS Issuance shall have been approved for listing on Nasdaq, subject
to official notice of issuance, (ii) the FCA shall have acknowledged to the Parent or its agent (and such acknowledgement shall not have been withdrawn) that the application for the admission
of the Parent Ordinary Shares represented by the Parent ADSs and, if required by the FCA, the application for the readmission of the Parent Ordinary Shares outstanding immediately prior to the First
Effective Time to the premium segment of the Official List shall have been approved and (after satisfaction of any conditions to which such approval is expressed to be subject) shall become effective
as soon as a dealing notice has been issued by the FCA and any such conditions upon which such approval is expressed to be subject having
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been
satisfied, and (iii) the LSE shall have acknowledged to the Parent or its agent (and such acknowledgement not having been withdrawn) that such Parent Ordinary Shares referred to in
clause (ii) shall be admitted to trading on the LSE's main market for listed securities; and
(h) any
applicable waiting period under the HSR Act shall have expired or been terminated and any applicable waiting period or other Consent under the Foreign Antitrust Laws
of the jurisdictions set forth on Section 9.01(h)(i) of the Company Disclosure Schedule relating to the transactions contemplated by this
Agreement shall have expired, been terminated or been obtained, as applicable; provided, that Section 9.01(h)(i) of the Company Disclosure
Schedule shall be deemed updated to include such additional jurisdictions from the list set forth on Section 9.01(h)(ii) of the Company Disclosure Schedule as mutually agreed in good faith by
Parent and the Company within 15 days following the date of this Agreement.
Section 9.02 Conditions to the Obligations of Parent, Bidco and each Merger Sub. The obligations
of Parent, Bidco and each Merger Sub to consummate the Mergers are subject to the satisfaction (or, to the extent permitted by Applicable Law,
waiver by Parent) of the following further conditions:
(a) the
Company shall have performed, in all material respects, all of its obligations hereunder required to be performed by it at or prior to the First Effective Time;
(b) (i)
the representations and warranties of the Company contained in the first and last sentences of Section 4.01, Section 4.02, Section 4.04(a), Section 4.26, Section 4.27 and Section 4.28 shall be true and correct in all material respects at and as of the date of this Agreement and at and as of the Closing as if made
at and as of the Closing (or, if such representations and warranties are given as of another specific date, at and as of such date); (ii) the representations and warranties of the Company
contained in Section 4.05(a) shall be true and correct at and as of the date of this Agreement and at and as of the Closing as if made at and as
of the Closing (or, if such representations and warranties are given as of another specific date, at and as of such date), except for any de minimis
inaccuracies, (iii) the representations and warranties of the Company contained in Section 4.10(a)(ii) shall be true and correct in all
respects at and as of the date of this Agreement and at and as of the Closing as if made at and as of the Closing; and (iv) the other representations and warranties of the Company contained in Article IV (disregarding all qualifications and exceptions contained therein relating to materiality or Company Material Adverse Effect) shall be
true and correct at and as of the date of this Agreement and at and as of the Closing as if made at and as of the Closing (or, if such representations and warranties are given as of another specific
date, at and as of such date), except, in the case of this clause (iv) only, where the failure of such representations and warranties to be true and correct has not had and would not reasonably
be expected to have, individually or in the aggregate, a Company Material Adverse Effect; and
(c) Parent
shall have received a certificate from an executive officer of the Company confirming the satisfaction of the conditions set forth in Section 9.02(a) and Section 9.02(b)
.
Section 9.03 Conditions to the Obligations of the Company. The obligations of the Company to
consummate the Mergers are subject to the satisfaction (or, to the extent permitted by Applicable Law, waiver by the Company) of
the following further conditions:
(a) each
of Parent, Bidco and each Merger Sub shall have performed, in all material respects, all of its obligations hereunder required to be performed by it at or prior to
the First Effective Time;
(b) (i)
the representations and warranties of Parent contained in the first and last sentences of Section 5.01, Section 5.02, Section 5.04(a) and Section 5.18 shall be true and correct in all material respects at and as of the date of this Agreement and at and as of the Closing as if
made
at and as of the Closing (or, if such representations and warranties are given as of another specific date, at and as of such date); (ii) the representations and warranties of Parent contained
in Section 5.05(a) shall be true and correct at and as of the date of this Agreement and at and as of the Closing as if made at and
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as
of the Closing (or, if such representations and warranties are given as of another specific date, at and as of such date), except for any de minimis
inaccuracies; (iii) the representations and warranties of Parent contained in Section 5.10(b) shall be true and correct in all respects at
and as of the date of this Agreement and at and as of the Closing as if made at and as of the Closing; and (iv) the other representations and warranties of Parent contained in Article V
(disregarding all qualifications and exceptions contained therein relating to materiality or Parent Material Adverse Effect) shall be
true and correct at and as of the date of this Agreement and at and as of the Closing as if made at and as of the Closing (or, if such representations and warranties are given as of another specific
date, at and as of such date), except, in the case of this clause (iv) only, where the failure of such representations and warranties to be true and correct has not had and would not reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse Effect;
(c) the
Company shall have received a certificate from an executive officer of Parent confirming the satisfaction of the conditions set forth in Section 9.03(a) and Section 9.03
(b); and
(d) the
Company shall have received the opinion of Wachtell, Lipton, Rosen & Katz, or, if Wachtell, Lipton, Rosen & Katz is unable or unwilling to provide such
opinion, Freshfields Bruckhaus Deringer US LLP ("Company Tax Counsel"), dated as of the Closing Date, in form and substance reasonably
satisfactory to the Company, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, (i) the Mergers, taken together, will qualify
as a "reorganization" within the meaning of Section 368(a) of the Code and (ii) the Mergers will not result in gain recognition to the stockholders of the Company pursuant to
Section 367(a)(1) of the Code (assuming that in the case of any such stockholder who would be treated as a "five-percent transferee shareholder" of Parent within the meaning of Treasury
Regulations Section 1.367(a)-3(c)(5)(ii), such stockholder enters into a five-year gain recognition agreement in the form provided in Treasury Regulations Section 1.367(a)-8(c) and
complies with the requirements of that agreement and Treasury Regulations Section 1.367(a)-8 for avoiding the recognition of gain). In rendering such opinion, Company Tax Counsel may rely on
the Parent Tax Certificate, the Company Tax Certificate and such other information provided to it by Parent and/or the Company for purposes of rendering such opinion.
ARTICLE X
TERMINATION
Section 10.01 Termination. This Agreement may be terminated and the Mergers and the other transactions
contemplated hereby may be abandoned at any time prior to the First Effective Time
(notwithstanding receipt of the Company Stockholder Approval or the Parent Shareholder Approval):
(a) by
mutual written agreement of the Company and Parent;
(b) by
either the Company or Parent, if:
(i) the
Mergers have not been consummated on or before December 12, 2021 (as such date may be extended pursuant to the following proviso, the
"End Date"); provided, that (A) if on such date, the conditions to the Closing set forth in Section 9.01(h)
or Section 9.01(c) (if the injunction, other Order or Applicable Law
relates to Antitrust Laws) shall not have been satisfied, but all other conditions to the Closing shall have been satisfied (or in the case of conditions that by their terms are to be satisfied at the
Closing, shall be capable of being satisfied on such date) or waived, then the End Date may be extended by either Parent or the Company for a period of 90 days by written notice to the other
party; provided, further, that the right to terminate this Agreement or to extend the End Date, as
applicable,
pursuant to this Section 10.01(b)(i) shall not be available to any party whose breach of any provision of this Agreement has been the proximate
cause of the failure of the Mergers to be consummated by such time;
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(ii) a
court or other Governmental Authority of competent jurisdiction shall have issued an injunction or other Order that permanently enjoins, prevents or prohibits the
consummation of the Mergers and such injunction or other Order shall have become final and non-appealable; provided, that the right to terminate this
Agreement pursuant to this Section 10.01(b)(ii) shall not be available to any party whose breach of any provision of this Agreement has been the
proximate cause of such injunction or other Order;
(iii) the
Company Stockholder Meeting (as it may be adjourned or postponed) at which a vote on the Company Stockholder Approval was taken shall have concluded and the
Company Stockholder Approval shall not have been obtained; provided, that, unless the Parent Shareholder Approval shall have previously been obtained,
the right to terminate this Agreement pursuant to this Section 10.01(b)(iii) shall not be available until 24 hours after the conclusion of
such meeting.
(iv) the
Parent Shareholder Meeting (as it may be adjourned or postponed) at which a vote on the Parent Shareholder Approval was taken shall have concluded and the Parent
Shareholder Approval shall not have been obtained; provided, that, unless the Company Stockholder Approval shall have previously
been obtained, the right to terminate this Agreement pursuant to this Section 10.01(b)(iv) shall not be available until 24 hours after the
conclusion of such meeting; or
(c) by
Parent:
(i) prior
to the receipt of the Company Stockholder Approval, if (A) a Company Adverse Recommendation Change shall have occurred, (B) a tender or exchange
offer subject to Regulation 14D under the 1934 Act that constitutes a Company Acquisition Proposal shall have been commenced (within the meaning of Rule 14d-2 under the Exchange Act) and
the Company shall not have communicated to its stockholders, within ten Business Days after such commencement, a statement disclosing that the Company recommends rejection of such tender or exchange
offer (or shall have withdrawn any such rejection thereafter) or (C) the Company has committed a Willful Breach of Section 6.02 or Section 8.04(a), provided, that this Agreement may not be terminated pursuant to this
clause (C) if Parent, Bidco or either Merger Sub is then in breach of any of its representations, warranties, covenants or agreements set forth in this Agreement, which breach by Parent, Bidco
or either Merger Sub would cause any condition set forth in Section 9.03(a) or Section 9.03(b) not to be satisfied;
(ii) if
a breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Company set forth in this Agreement shall have occurred
that would cause any condition set forth in Section 9.02(a) or Section 9.02(b) not to be
satisfied, and such breach or failure to perform (A) is incapable of being cured by the End Date or (B) has not been cured by the Company within the earlier of (x) 45 days
following written notice to the Company from Parent of such breach or failure to perform and (y) the End Date; provided, that this Agreement may
not be terminated pursuant to this Section 10.01(c)(ii) if Parent, Bidco or either Merger Sub is then in breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement, which breach by Parent, Bidco or either Merger Sub would cause any condition set forth in Section 9.03(a) or Section 9.03(b) not to be satisfied;
(d) by
the Company:
(i) prior
to the receipt of the Parent Shareholder Approval, if (A) a Parent Adverse Recommendation Change shall have occurred, (B) an offer (as defined in
the U.K. Code) or tender or exchange offer subject to Regulation 14D under the 1934 Act that constitutes a Parent Acquisition Proposal shall have been commenced and Parent shall not have
communicated to its shareholders, within ten Business Days after such commencement, a statement disclosing that Parent recommends rejection of such offer or tender or exchange offer (or shall have
withdrawn any such rejection thereafter); or (C) Parent, Bidco or either Merger Sub has committed a Willful
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Breach
of Section 7.02 or Section 8.04(b), provided, that this Agreement may not be terminated pursuant
to this clause (C) if the Company is then in breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement, which breach by the Company would cause any condition set forth in Section 9.02(a) or Section 9.02(b)
not to be satisfied;
(ii) if
a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Parent, Bidco or either Merger Sub set forth in this
Agreement shall have occurred that would cause any condition set forth in Section 9.03(a) or Section 9.03(b) not to be satisfied, and such breach
or failure to perform (A) is incapable of being cured by the End Date or
(B) has not been cured by Parent, Bidco or either Merger Sub, as applicable, within the earlier of (x) 45 days following written notice to Parent from the Company of such breach
or failure to perform and (y) the End Date; provided, that this Agreement may not be terminated pursuant to this Section 10.01(d)(ii) if the
Company is then in breach of any of its representations, warranties, covenants or agreements set forth in this
Agreement, which breach by the Company would cause any condition set forth in Section 9.02(a) or Section 9.02(b) not to be satisfied; or
(iii) prior
to obtaining the Company Stockholder Approval, in order to enter into a definitive agreement providing for a Company Superior Proposal promptly following such
termination in accordance with, and subject to the terms and conditions of, Section 6.02.
The party desiring to terminate this Agreement pursuant to this Section 10.01 (other than pursuant to Section 10.01(a)) shall
give written notice of such termination to the other party.
Section 10.02 Effect of Termination. If this Agreement is terminated pursuant to Section 10.01, this Agreement shall become void and of no
effect without liability of any party (or any of its Affiliates or its or their respective stockholders or shareholders, as applicable, or Representatives) to the other party hereto, except as
provided in Section 10.03; provided, that, subject to Section 10.03(g), neither Parent nor the
Company shall be released from any liabilities or damages arising out of any (i) fraud by any
party or (ii) the Willful Breach of any covenant or agreement set forth in this Agreement. The provisions of Section 6.03(c), the first
sentence of Section 8.01(a), this Section 10.02, Section 10.03, Article XI (other than Section 11.13, except to the extent that Section 11.13 relates to the specific
performance
of the provisions of this Agreement that survive termination) and Section 1.01 (to the extent related to the foregoing) shall survive any
termination of this Agreement pursuant to Section 10.01. In addition, the termination of this Agreement shall not affect the parties' respective
obligations under the Confidentiality Agreement.
Section 10.03 Termination Payment.
(a) If
this Agreement is terminated: (i) by Parent pursuant to Section 10.01(c)(i) or (ii) by the
Company pursuant to Section 10.01(d)(iii), then the Company shall pay to Parent (or its designee), in cash and by way of compensation, a payment
in an amount equal to $1,180,000,000 (the "Company Termination Payment") at or prior to, and as a condition to the effectiveness of, the termination of
this Agreement in the case of a termination pursuant to Section 10.01(d)(iii) or as promptly as practicable (and, in any event, within two
Business Days following such termination) in the case of a termination pursuant to Section 10.01(c)(i).
(b) If
(i) this Agreement is terminated by Parent or Company pursuant to Section 10.01(b)(iii),
(ii) prior to such termination and after the date of this Agreement, a Company Acquisition Proposal shall have been publicly announced or publicly made known and shall not have been publicly
withdrawn at least four Business Days prior to the Company Stockholder Meeting and (iii) on or prior to the twelve-month anniversary of such termination of this Agreement: (A) a
transaction constituting a Company Acquisition Proposal is consummated; or (B) a definitive agreement relating to a Company Acquisition Proposal is entered into by the Company or any of its
Affiliates (in each case, whether or not such Company Acquisition Proposal is the same as the original Company Acquisition Proposal
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publicly
made known or publicly announced), then, the Company shall pay to Parent (or its designee) by way of compensation the Company Termination Payment no later than the consummation of such
Company Acquisition Proposal; provided, that if the Company shall have actually paid the Company No Vote Payment pursuant to Section 10.03(e), then
only the incremental amount between the Company No Vote Payment and the Company Termination Payment shall be payable.
"Company Acquisition Proposal" for purposes of this Section 10.03(b) shall have the meaning assigned thereto in the definition thereof set forth
in Section 1.01, except that references in the definition to "20%" shall be replaced by "50%".
(c) If
this Agreement is terminated by the Company pursuant to Section 10.01(d)(i), Parent shall pay to the Company
(or its designee), in cash and by way of compensation within three Business Days after the date of termination of this Agreement (or such other later date as the Company has notified in writing to
Parent on the date of termination), a payment in an amount equal to $1,415,000,000 (the "Parent Termination Payment"), subject to any adjustment in
accordance with Section 10.03(i).
(d) If
this Agreement is terminated by the Company or Parent pursuant to Section 10.01(b)(iv), Parent shall pay to the
Company (or its designee), in cash and by way of compensation within three Business Days after the date of termination of this Agreement (or such other later date as the Company has notified in
writing to Parent on the date of termination), a payment in an amount equal to the Parent Termination Payment; provided, that such amount shall be
payable only if either (i) the Company Stockholder Approval shall have previously been obtained or (ii) (A) the condition to termination under Section 10.01(b)(iii) has not been
satisfied at the time of such termination, (B) the Company has complied with Section 8.04(c) and (C) more than 24 hours has passed since the satisfaction of the condition to
termination under Section 10.01(b)(iv).
(e) If
this Agreement is terminated by the Company or Parent pursuant to Section 10.01(b)(iii), the Company shall pay
to Parent (or its designee), in cash and by way of compensation within three Business Days after the date of termination of this Agreement, a payment in an amount equal to $270,000,000 (the
"Company No Vote Payment"); provided, that such amount shall be payable only if either (i) the
Parent Shareholder Approval shall have previously been obtained or (ii) (A) the condition to termination under Section 10.01(b)(iv)
has not been satisfied at the time of such termination, (B) Parent has complied with Section 8.04(c) and (C) more than
24 hours has passed since the satisfaction of the condition to termination under Section 10.01(b)(iii).
(f) Any
payment of the Company Termination Payment or the Company No Vote Payment (each, a "Company Payment") or the Parent
Termination Payment shall be made by wire transfer of immediately available funds to an account designated in writing by Parent or the Company, as applicable. Any Company Payment or Parent Termination
Payment shall be made free and clear of and without deduction or withholding of any Taxes; provided:
(i) in
the case of the Company Payment, Parent has supplied the Company with a properly completed IRS Form W-8BEN-E, on which the Company is entitled to rely,
claiming the benefits of, and establishing an exemption to withholding under, the income tax treaty between the United States and the United Kingdom prior to the payment of the Company Payment;
(ii) in
the case of the Company Payment, in the event that deductions or withholdings on account of U.S. federal income Taxes should have been made under applicable law,
then Parent shall bear the cost of such Taxes;
(iii) in
the case of the Parent Termination Payment, in the event that deductions or withholdings on account of UK income Tax should have been made under applicable law,
then the Company shall bear the cost of such Taxes; and
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(iv) in
the case of the Parent Termination Payment, Parent may deduct or withhold any amounts in respect of VAT required or permitted to be withheld in accordance with the
following provisions of this Section 10.03.
(g) The
parties agree and understand that (x) in no event shall the Company be required to pay the Company Termination Payment on more than one occasion or the
Company No Vote Payment on more than one occasion, in each case under any circumstances, and the Company No Vote Payment shall be credited toward any subsequent payment of the Company Termination
Payment, and in no event shall Parent be required to pay the Parent Termination Payment on more than one occasion under any circumstances, and (y) except in the case of fraud or Willful Breach
by the other party of any covenant or agreement set forth in this Agreement, in no event shall Parent be entitled, pursuant to this Section 10.03, to receive an amount greater than the Company
Termination Payment and Company No Vote Payment, as applicable (subject to the
understanding that the Company No Vote Payment is set off against the Company Termination Payment when the payment of the Company Termination Payment follows the payment of the Company No Vote Payment
under Section 10.03(e)), and any applicable additional amounts pursuant to the last two sentences of this Section 10.03(g) (such additional
amounts, collectively, the "Parent Additional Amounts"), and in
no event shall the Company be entitled, pursuant to this Section 10.03, to receive an amount greater than the Parent Termination Payment and any
applicable additional amounts pursuant to Section 6.03(c) and/or the last two sentences of this Section 10.3(g) (such additional amounts,
collectively, the "Company Additional Amounts").
Notwithstanding anything to the contrary in this Agreement, except in the case of fraud or Willful Breach by the other party of any covenant or agreement set forth in this Agreement, (i) if
Parent receives a Company Payment and any applicable Parent Additional Amounts from the Company pursuant to this Section 10.03, or if the Company
receives the Parent Termination Payment and any applicable Company Additional Amounts from Parent pursuant to this Section 10.03, such payment
shall be the sole and exclusive remedy of the receiving party against the paying party and its Subsidiaries and their respective former, current or future partners, equityholders, managers, members,
Affiliates and Representatives, and none of the paying party, any of its Subsidiaries or any of their respective former, current or future partners, equityholders, managers, members, Affiliates or
Representatives shall have any further liability or obligation, in each case relating to or arising out of this Agreement or the transactions contemplated hereby and (ii) if (A) Parent,
Bidco or either Merger Sub receives any payments from the Company in respect of any breach of this Agreement and thereafter Parent receives a Company Payment pursuant to this Section 10.03 or
(B) the Company receives any payments from Parent, Bidco or either Merger Sub in respect of any breach of this Agreement
and thereafter the Company receives the Parent Termination Payment, the amount of such Company Termination Payment or such Parent Termination Payment, as applicable, shall be reduced by the aggregate
amount of such payments made by the party paying the Company Payment or the Parent Termination Payment, as applicable, in respect of any such breaches (in each case, after taking into account any
Parent Additional Amounts or Company Additional Amounts, as applicable). The parties acknowledge that the agreements contained in this Section 10.03 are an integral part of the transactions
contemplated hereby, that, without these agreements, the parties would not enter into this
Agreement and that any amounts payable pursuant to this Section 10.03 do not constitute a penalty. Accordingly, if any party fails to promptly
pay any Company Payment or the Parent Termination Payment due pursuant to this Section 10.03, such party shall also pay any out-of-pocket costs
and expenses (together with any irrecoverable VAT incurred thereon, and including reasonable legal fees and expenses) incurred by the party entitled to such payment in connection with a legal action
to enforce this Agreement that results in a judgment for such amount against the party failing to promptly pay such amount. Any Company Payment or Parent Termination Payment not paid when due pursuant
to this Section 10.03 shall bear interest from the date such amount is due until the date paid at a rate equal to the prime rate as published in The Wall Street Journal,
Eastern Edition in effect on the date of such payment.
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(h) The
Parent Termination Payment and the Company Termination Payment (in each case if any) shall be VAT inclusive.
(i) The
parties hereto intend that any payment of a Parent Termination Payment, being compensatory in nature, shall not be treated (in whole or in part) as consideration for
a supply for the purposes of VAT and, accordingly, Parent shall:
(i) file
its relevant VAT return on the basis that the payment of any such Parent Termination Payment falls outside the scope of VAT; and
(ii) pay
the full amount of any such Parent Termination Payment free and clear of any deduction or adjustment on account of VAT,
it
being understood and agreed that if it is finally determined that the Parent Termination Payment is (in whole or in part) consideration for a supply for the purposes of VAT then:
(A) Parent
shall (1) subject to having received the relevant amount from the Company as provided in sub-clause (C) below, promptly account for and pay to HMRC
such VAT together with any associated interest and penalties; and (2) use its reasonable best efforts to recover (by refund, credit or otherwise) any such VAT at the residual recovery rate
generally applied by Parent in respect of input VAT incurred on its overheads from time to time;
(B) the
amount of the Parent Termination Payment payable by Parent shall be reduced so that the sum of (1) the Parent Termination Payment (as so reduced) and
(2) any VAT reverse charge thereon that Parent certifies acting in good faith that it is not entitled to recover (by way of credit or repayment) as input tax (together with any related interest
or penalties in respect of such VAT reverse charge but excluding any interest or penalties arising as a result of the unreasonable delay or default of Parent), is equal to the amount of the Parent
Termination Payment that would be payable but for this subclause (B) (the amount of such reduction being the "Adjustment Amount"); and
(C) the
Company covenants to pay to Parent on written demand and on an after-Tax basis an amount equal to the Adjustment Amount save to the extent that such Adjustment
Amount has previously been adjusted by way of refund of such part of the Parent Termination Payment, the due date for payment of which shall be five Business Days after the date such written demand is
received by the Company.
This
section 10.03(i) is subject to the provisions of Section 10.03(i) of the Company Disclosure Schedule.
(j) Any
reference in Section 10.03(i) or Section 10.03(i) of
the Company Disclosure Schedule to Parent shall where applicable be regarded as referring to the representative member of any VAT group of which Parent is a member, and
"finally determined" shall mean determined by HMRC or, if such determination is appealed, a court or tribunal in a decision or judgment in respect of
which no right of appeal exists (or in relation to which any periods for appeal have expired) or, whether or not such determination is appealed, as provided in a binding agreement made with HMRC.
(k) The
parties anticipate that any Company Payment shall be outside the scope of UK VAT and not otherwise subject to VAT.
(l) For
the purposes of Section 10.03(i)(ii)(C), and Section 10.03(i) of the Company Disclosure Schedule, a
covenant or indemnity being given on an "after-Tax basis" means that the amount payable (the "Payment") pursuant to such covenant or indemnity (as
applicable) shall be calculated in such a manner as will ensure that, after taking into account: (A) any Tax required to be deducted or withheld from the Payment (save to the extent that Parent
has not provided a W-8BEN-E when it was entitled to do so, and provision of a W-8BEN-E would have prevented such deduction or withholding being
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required)
and any additional amounts required to be paid by the payer of the Payment in consequence of such withholding; (B) the amount and timing of any additional Tax which becomes (or would
become, but for the use of any credit or other relief which would otherwise have been available to reduce the Tax liabilities of any member of the recipient's Group) payable by the recipient of the
Payment as a result of the Payment's being chargeable to Tax in the hands of that person; and (C) the amount and timing of any Tax benefit which is obtained by the recipient of the Payment (or
any member of the recipient's Group) to the extent that such Tax benefit is attributable to the matter giving rise to the obligation to make the Payment or the receipt of the Payment, the recipient of
the Payment is in the same position as that in which it would have been if the matter giving rise to the obligation to make a Payment under this Section 10.03(l) had not occurred, provided that if
any party to this Agreement shall have assigned or novated the benefit of this Agreement in
whole or in part or shall, after the date of this Agreement, have changed its Tax residence or the permanent establishment to which the rights under this Agreement are allocated then no Payment to
that party shall be increased by reason of the operation of clauses (A) through (C) (inclusive) to any greater extent than would have been the case had no such assignment, novation or
change taken place. In this Section 10.03(l), references to "Tax" shall exclude "VAT" and references to a "W-8BEN-E" shall mean a properly
completed IRS Form W-8BEN-E, on which the Company is entitled to rely, claiming the benefits of, and establishing an exemption to withholding under, the income tax treaty between the United
States and the United Kingdom prior to such Payment.
(m) None
of the Financing Sources shall have any liability to the Company, any of its Subsidiaries or any Person that is an Affiliate of the Company prior to giving effect
to the Mergers relating to or arising out of this Agreement or the Debt Financing, whether at law, or equity, in contract, in tort or otherwise, and neither the Company nor any Person that is an
Affiliate of the Company prior to giving effect to the Mergers shall have any rights or claims directly against any of the Financing Sources hereunder or thereunder. The foregoing shall not impair,
supplement, or otherwise modify any of the commitments and other obligations that the Financing Sources have under any definitive agreement related to the Debt Financing to Parent, Bidco or either
Merger Sub or any of the rights of Parent, Bidco or either Merger Sub against any of the Financing Sources under any definitive agreement related to the Debt Financing.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Notices. All notices, requests and other communications to any party hereunder shall be
in writing (including facsimile or email transmission, the receipt of which is
confirmed in writing) and shall be given,
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If to the Company, to:
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Alexion Pharmaceuticals, Inc.
121 Seaport Boulevard
Boston, Massachusetts 02210
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Attention:
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General Counsel
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Email:
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ellen.chiniara@alexion.com
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with a copy to (which shall not constitute notice):
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Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
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Attention:
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Daniel A. Neff
Mark Gordon
Sabastian V. Niles
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Facsimile:
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(212) 403 2000
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Email:
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DANeff@wlrk.com
MGordon@wlrk.com
SVNiles@wlrk.com
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If to Parent, Bidco or either Merger Sub or, following the Closing, the Surviving Company, to:
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AstraZeneca PLC
1 Francis Crick Avenue
Cambridge Biomedical Campus
Cambridge
CB2 0AA
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Attention:
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Deputy General Counsel, Corporate
with a copy to Company Secretary
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Email:
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legalnotices@astrazeneca.com
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with a copy to (which shall not constitute notice):
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Freshfields Bruckhaus Deringer US LLP
601 Lexington Avenue, 31st Floor
New York, NY 10022
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Attention:
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Ethan A. Klingsberg
Sebastian L. Fain
John A. Fisher
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Facsimile:
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(212) 277-4001
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Email:
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ethan.klingsberg@freshfields.com
sebastian.fain@freshfields.com
john.fisher@freshfields.com
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and:
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Freshfields Bruckhaus Deringer LLP
100 Bishopsgate
London EC2P 2S
United Kingdom
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Attention:
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Julian G. Long
Kate Cooper
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Facsimile:
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+44 20 7832 7001
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Email:
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julian.long@freshfields.com
kate.cooper@freshfields.com
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or
to such other address, facsimile number or email address as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices, requests and other
communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a Business Day. Otherwise, any such notice, request or communication
shall be deemed to have been received on the next succeeding Business Day.
Section 11.02 Survival. The representations, warranties, covenants and agreements contained in
this Agreement and in any certificate or other writing delivered pursuant hereto shall not
survive the First Effective Time, except for the covenants and agreements set forth in Article II, Section 6.03(c), Section 7.04, Section 7.05 and Section 7.07 and any other covenant or agreement that by its terms is to
be performed in whole or in part after the First Effective Time.
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Section 11.03 Amendments and Waivers.
(a) Any
provision of this Agreement may be amended or waived prior to the First Effective Time if, but only if, such amendment or waiver is in writing and is signed, in the
case of an amendment, by each party to this Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective; provided,
that after the Company Stockholder Approval or the Parent Shareholder Approval has been obtained, there shall be no amendment or waiver that would require the further approval of the stockholders of
the Company or the shareholders of Parent under Applicable Law without such approval having first been obtained.
(b) No
failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided in this Agreement shall be cumulative and not exclusive
of any rights or remedies provided by Applicable Law.
Section 11.04 Expenses. Except as otherwise provided in this Agreement, all costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring such cost
or expense.
Section 11.05 Disclosure Schedule References and SEC Document References.
(a) The
parties hereto agree that each section or subsection of the Company Disclosure Schedule or the Parent Disclosure Schedule, as applicable, shall be deemed to qualify
the corresponding section or subsection of this Agreement, irrespective of whether or not any particular section or subsection of this Agreement specifically refers to the Company Disclosure Schedule
or the Parent Disclosure Schedule, as applicable. The parties hereto further agree that disclosure of any item, matter or event in any particular section or subsection of either the Company Disclosure
Schedule or the Parent Disclosure Schedule shall be deemed disclosure with respect to any other section or subsection of the Company Disclosure Schedule or the Parent Disclosure Schedule, as
applicable, to which the relevance of such disclosure would be reasonably apparent, notwithstanding the omission of a cross-reference to such other section or subsections.
(b) The
parties hereto agree that in no event shall any disclosure contained in any part of any Company SEC Document or Parent SEC Document entitled "Risk Factors",
"Forward-Looking Statements", "Cautionary Statement Regarding Forward-Looking Statements", "Special Note Regarding Forward Looking Statements" or "Note Regarding Forward Looking Statements" or any
other disclosures in any Company SEC Document or Parent SEC Document that are cautionary, predictive or forward-looking in nature be deemed to be an exception to (or a disclosure for purposes of or
otherwise qualify) any representations and warranties of any party contained in this Agreement.
Section 11.06 Binding Effect; Benefit; Assignment.
(a) The
provisions of this Agreement shall be binding upon and shall inure solely to the benefit of the parties hereto; other than: (i) only following the First
Effective Time, each holder of shares of Company Common Stock or Company Equity Awards shall have the right, which shall be enforceable by each such holder, to receive, as applicable, (w) the
Merger Consideration in respect of shares of Company Common Stock pursuant to Article II, (x) the Merger Consideration in respect of
Company Stock Options pursuant to Section 2.07(a), (y) the Merger Consideration or Assumed RSU Awards, as applicable, in respect of the
Company RSU Awards pursuant to Section 2.07(b), and/or (z) the Assumed PSU Awards in respect of the Company PSU Awards pursuant to Section 2.07(b), (ii) only following the First Effective Time, each D&O Indemnified Party shall have the right to enforce the provisions
of Section 7.04, and (iii) each of the Financing Sources shall have the right to enforce the provisions of Section 10.03(i), Section 11.03(b), this Section 11.06(a), Section 11.07, Section 11.08(b)
and Section 11.09.
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(b) No
party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of each other party hereto,
except that Parent may transfer or assign its rights and obligations under this Agreement, in whole or from time to time in part, to one or more of its wholly owned Subsidiaries at any time or any
other Person after the Closing; provided, that such transfer or assignment by Parent shall not relieve Parent of its obligations hereunder or otherwise
alter or change any obligation of any other party hereto or delay the consummation of the Mergers or any of the other transactions contemplated hereby.
Section 11.07 Governing Law. This Agreement, and all disputes, claims, actions, suits or
proceedings based upon, arising out of or related to this Agreement or the transactions contemplated
hereby, shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law rules or principles that would result in the application of the
law of any other state.
Section 11.08 Jurisdiction/Venue. Each of the parties hereto irrevocably and unconditionally
agrees that any legal action or proceeding with respect to this Agreement and the rights and
obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other party hereto or its
successors or assigns, shall be brought and determined exclusively in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, solely if the Delaware
Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware). Each of the parties hereto hereby irrevocably and unconditionally
submits with regard to any such action or proceeding for itself and in respect of its property to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and agrees not
to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, (a) any claim that it is not personally subject to the
jurisdiction of the above named courts, (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by Applicable
Law, any claim that (i) the suit, action or proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or
(iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. To the fullest extent permitted by Applicable Law, each of the parties hereto hereby consents to
the service of process in accordance with Section 11.01; provided, that nothing herein shall
affect the right of any party to serve legal process in any other manner permitted by Applicable Law.
Section 11.09 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE MERGERS OR THE OTHER TRANSACTIONS CONTEMPLATED HEREBY (INCLUDING WITH RESPECT TO THE FINANCING SOURCES). EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH PARTY
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HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.09.
Section 11.10 Counterparts; Effectiveness. This Agreement may be signed in any number of
counterparts, including by facsimile, by email with .pdf attachments, or by other electronic signatures (including,
DocuSign and AdobeSign), each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each
party hereto shall have received a counterpart hereof signed and delivered (by electronic communication, facsimile or otherwise) by all of the other parties hereto. Until and unless each party has
received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect, and no party shall have any right or obligation hereunder (whether by virtue of any other oral or
written agreement or other communication).
Section 11.11 Entire Agreement. This Agreement and the Confidentiality Agreement constitute the
entire agreement between the parties with respect to the subject matter thereof and supersede all
prior agreements and understandings, both oral and written, between the parties with respect to the subject matter thereof.
Section 11.12 Severability. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other Governmental Authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated
as originally contemplated to the fullest extent possible.
Section 11.13 Specific Performance. The parties' rights in this Section 11.13 are an integral part of the transactions contemplated by this
Agreement. The parties acknowledge and agree that irreparable harm would occur and that the parties would not have any adequate remedy at law (a) for any breach of any of the provisions of this
Agreement or (b) in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is accordingly agreed that (except where this Agreement
is validly terminated in accordance with Section 10.01) the parties shall be entitled to an injunction or injunctions to prevent breaches or
threatened breaches of this Agreement and to specifically enforce the terms and provisions of this Agreement, without proof of actual damages, and each party further agrees to waive any requirement
for the securing or posting of any bond in connection with such remedy. The parties further agree that (x) by seeking the remedies provided for in this Section 11.13, a party shall not in any
respect waive its right to any other form of relief that may be available to a party under this
Agreement, including, subject to Section 10.03(g), monetary damages in the event that the remedies provided for in this Section 11.13 are not
available or otherwise are not granted, and (y) nothing contained in this Section 11.13 shall require any party to institute any proceeding for (or limit any party's right to institute any
proceeding for) specific
performance under this Section 11.13 before exercising any termination right under Section 10.01 (and/or pursuing damages), nor shall the
commencement of any action pursuant to this Section 11.13 or anything contained in this Section 11.13 restrict or limit any party's
right to terminate this Agreement in accordance with the terms of Section 10.01 or pursue any other remedies under this Agreement that may be
available then or thereafter. In no event shall the Company or Parent be entitled to both (i) specific performance to cause the other party to consummate the Closing and (ii) the payment
of the Parent Termination Payment or the Company Termination Payment, as applicable.
Section 11.14 Financing Provisions. Notwithstanding anything in this Agreement to the contrary,
the Company on behalf of itself, its Subsidiaries and each of its controlled Affiliates hereby:
(a) agrees
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that,
except as specifically set forth in the documents relating to the Debt Financing, any proceeding, whether in law or in equity, whether in contract or in tort or otherwise, involving the
Financing Sources, arising out of or relating to, this Agreement, the Debt Financing or any of the agreements entered into in connection with the Debt Financing or any of the transactions contemplated
hereby or thereby or the performance of any services thereunder shall be subject to the exclusive jurisdiction of any federal or state court in the Borough of Manhattan, New York, New York, so long as
such forum is and remains available, and any appellate court thereof and each party hereto irrevocably submits itself and its property with respect to any such proceeding to the exclusive jurisdiction
of such court, (b) agrees that, except as specifically set forth in the documents relating to the Debt Financing, any such proceeding shall be governed by the laws of the State of New York
(without giving effect to any conflicts of law principles that would result in the application of the laws of another state), except as otherwise provided in the documents relating to the Debt
Financing, (c) agrees not to bring or support or permit any of its controlled Affiliates to bring or support any proceeding of any kind or description,
whether in law or in equity, whether in contract or in tort or otherwise, against any Financing Source in any way arising out of or relating to, this Agreement, the Debt Financing and the documents
relating thereto or any of the transactions contemplated hereby or thereby or the performance of any services thereunder in any forum other than any federal or state court in the Borough of Manhattan,
New York, New York, (d) agrees that service of process on the Company or its Subsidiaries in any such proceeding shall be effective if notice is given in accordance with Section 11.01,
(e) irrevocably waives, to the fullest extent that it may effectively do so, the defense of an inconvenient forum to the
maintenance of such proceeding in any such court, (f) knowingly, intentionally and voluntarily waives to the fullest extent permitted by applicable law trial by jury in any proceeding brought
against the Financing Sources in any way arising out of or relating to, this Agreement, the Debt Financing and the documents relating thereto, or any of the transactions contemplated hereby or thereby
or the performance of any services thereunder, (g) agrees that none of the Financing Sources shall have any liability to the Company, any of its Subsidiaries or any of its controlled Affiliates
(in each case, other than Parent and its Affiliates) relating to or arising out of this Agreement, the Debt Financing and the documents relating thereto, or any of the transactions contemplated hereby
or thereby or the performance of any services thereunder, whether in law or in equity, whether in contract or in tort or otherwise and (h) agrees that the Financing Sources are express Third
Party beneficiaries of, and may enforce, any of the provisions of Section 10.3(k) and this Section 11.14, and that such provisions shall not be
amended, supplemented, waived or otherwise modified in any way adverse to the Financing
Sources without the prior written consent of the Financing Sources.
[Remainder of page intentionally left blank; signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above
written.
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ASTRAZENECA PLC
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By:
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/s/ ADRIAN KEMP
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Name:
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Adrian Kemp
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Title:
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Authorized Signatory
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DELTA OMEGA SUB HOLDINGS INC.
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By:
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/s/ JEFFREY POTT
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Name:
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Jeffrey Pott
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Title:
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Secretary and Treasurer
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DELTA OMEGA SUB HOLDINGS INC. 1
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By:
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/s/ JEFFREY POTT
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Name:
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Jeffrey Pott
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Title:
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Secretary and Treasurer
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DELTA OMEGA SUB HOLDINGS LLC 2
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By:
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/s/ JEFFREY POTT
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Name:
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Jeffrey Pott
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Title:
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Secretary and Treasurer
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ALEXION PHARMACEUTICALS, INC.
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By:
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/s/ LUDWIG HANTSON
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Name:
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Ludwig Hantson
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Title:
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Chief Executive Officer
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[Signature Page to Merger Agreement]
Table of Contents
Annex BOpinion of Alexion Financial Advisor
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BofA Securities, Inc.
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GLOBAL CORPORATE &
INVESTMENT BANKING
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December 11,
2020
The
Board of Directors
Alexion Pharmaceuticals, Inc.
121 Seaport Boulevard,
Boston Massachusetts 02210
Members
of the Board of Directors:
We
understand that Alexion Pharmaceuticals, Inc. ("Alexion") proposes to enter into an Agreement and Plan of Merger (the "Agreement"), among Alexion, AstraZeneca PLC
("AstraZeneca"), Delta Omega Sub Holdings Inc., a wholly owned subsidiary of AstraZeneca ("Bidco"), Delta Omega Sub Holdings Inc. 1, a wholly owned subsidiary of Bidco ("Merger Sub I")
and Delta Omega Sub Holdings LLC 2, a wholly owned subsidiary of Bidco, pursuant to which, among other things, Merger Sub I will merge with and into Alexion (the "Merger"), and each outstanding
share of the common stock, par value $0.0001 per share, of Alexion ("Alexion Common Stock") other than Excluded Shares (as defined in the Agreement) will be converted into the right to receive
(i) $60.00 in cash (the "Cash Consideration") and (ii) 2.1243 American depositary shares ("AstraZeneca ADS") each representing a beneficial interest in 0.5 of an ordinary share, par
value £0.25 per share, of AstraZeneca ("AstraZeneca Shares") (such number of AstraZeneca ADS, the "Share Consideration" and, together with the Cash Consideration, the "Consideration"). The
terms and conditions of the Merger are more fully set forth in the Agreement.
You
have requested our opinion as to the fairness, from a financial point of view, to the holders of Alexion Common Stock of the Consideration to be received by such holders in the
Merger.
In
connection with this opinion, we have, among other things:
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(1)
-
reviewed
certain publicly available business and financial information relating to Alexion and AstraZeneca;
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(2)
-
reviewed
certain internal financial and operating information with respect to the business, operations and prospects of Alexion furnished to or discussed with us by
the management of Alexion, including certain financial forecasts relating to Alexion prepared by the management of Alexion reflecting its long-range plan for Alexion (such forecasts, "Alexion
Forecasts");
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(3)
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reviewed
certain financial forecasts relating to AstraZeneca (the "AstraZeneca Public Forecasts") prepared by the management of Alexion based on certain publicly
available financial forecasts for Astra Zeneca and discussed with the management of Alexion its assessments as to the likelihood of AstraZeneca achieving the future financial results reflected in the
AstraZeneca Public Forecasts;
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(4)
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reviewed
certain estimates as to the amount and timing of cost savings (collectively, the "Cost Savings") anticipated by the management of Alexion to result from the
Merger;
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(5)
-
discussed
the past and current business, operations, financial condition and prospects of Alexion and AstraZeneca with members of senior management of Alexion;
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-
(6)
-
discussed
with the management of Alexion its assessments as to the products and product candidates of Alexion, including the likelihood of technical, clinical and
regulatory success of such products and product candidates;
-
(7)
-
reviewed
the potential pro forma financial impact of the Merger on the future financial performance of AstraZeneca, including the potential effect on AstraZeneca's
estimated earnings per share;
-
(8)
-
reviewed
the trading histories for Alexion Common Stock, AstraZeneca ADS and AstraZeneca Shares and a comparison of such trading histories with each other and with
the trading histories of other companies we deemed relevant;
-
(9)
-
compared
certain financial and stock market information of Alexion and AstraZeneca with similar information of other companies we deemed relevant;
-
(10)
-
compared
certain financial terms of the Merger to financial terms, to the extent publicly available, of other transactions we deemed relevant;
-
(11)
-
considered
the results of our efforts on behalf of Alexion to solicit, at the direction of Alexion, indications of interest from third parties with respect to a
possible acquisition of Alexion;
-
(12)
-
reviewed
a draft, dated December 11, 2020, of the Agreement (the "Draft Agreement"); and
-
(13)
-
performed
such other analyses and studies and considered such other information and factors as we deemed appropriate.
In
arriving at our opinion, we have assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information and data publicly
available or provided to or otherwise reviewed by or discussed with us and have relied upon the assurances of the management of Alexion that it is not aware of any facts or circumstances that would
make such information or data inaccurate or misleading in any material respect. With respect to the Alexion Forecasts, we have been advised by Alexion, and have assumed, that they have been reasonably
prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Alexion as to the future financial performance of Alexion. With respect to the Cost
Savings, we have been advised by Alexion, and have assumed, that they have also been reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the
management of Alexion as to the matters covered thereby. As you are aware, we did not discuss the past and current business, operations, financial condition and prospects of AstraZeneca with the
management of AstraZeneca, and we have not been provided with, and we did not have access to, stand-alone financial forecasts relating to AstraZeneca prepared by the management of AstraZeneca.
Accordingly, we have been advised by Alexion and have assumed, with the consent of Alexion, that the AstraZeneca Public Forecasts are a reasonable basis upon which to evaluate the future financial
performance of AstraZeneca and, at the direction of Alexion, we have relied on the AstraZeneca Public Forecasts for purposes of our opinion. We have also relied, at the direction of Alexion, on the
assessments of the management of Alexion as to AstraZeneca's ability to achieve the Cost Savings and have been advised by Alexion, and have assumed, with the consent of Alexion, that the Cost Savings
will be realized in the amounts and at the times projected. We have also relied, at the direction of Alexion, on the assessments of the management of Alexion as to the products and product candidates
of Alexion, including the likelihood of technical, clinical and regulatory success of such products and product candidates. We have not made or been provided with any independent evaluation or
appraisal of the assets or liabilities (contingent or otherwise) of Alexion, AstraZeneca or any other entity, nor have we made any physical inspection of the properties or assets of Alexion,
AstraZeneca or any other entity. We have not evaluated the solvency or fair value of Alexion or AstraZeneca under any state, federal or other laws relating to bankruptcy, insolvency or similar
matters. We have assumed, at the
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direction
of Alexion, that the Merger will be consummated in accordance with its terms and in compliance with all applicable laws, relevant documents and other requirements, without waiver,
modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers
for the Merger, no delay, limitation, restriction or condition, including any divestiture requirements or amendments or modifications, will be imposed that would have an adverse effect on Alexion,
AstraZeneca or the contemplated benefits of the Merger. We also have assumed, at the direction of Alexion, that the Merger, taken together with a subsequent merger contemplated by the Agreement, will
qualify for federal income tax purposes as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended. We also have assumed, at the direction of
Alexion, that the final executed Agreement will not differ in any material respect from the Draft Agreement reviewed by us.
We
express no view or opinion as to any terms or other aspects or implications of the Merger (other than the Consideration to the extent expressly specified herein), including, without
limitation, the form or structure of the Merger or any terms, aspects or implications of any other agreement, arrangement or understanding entered into in connection with or related to the Merger or
otherwise. Our opinion is limited to the fairness, from a financial point of view, of the Consideration to be received by holders of Alexion Common Stock and no opinion or view is expressed with
respect to any consideration received in connection with the Merger by the holders of any other class of securities, creditors or other constituencies of any party. In addition, no opinion or view is
expressed with respect to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation or other consideration to any of the officers, directors or employees of
any party to the Merger or any related entities, or class of such persons, relative to the Consideration or otherwise. Furthermore, no opinion or view is expressed as to the relative merits of the
Merger in comparison to other strategies or transactions that might be available to Alexion or in which Alexion might engage or as to the underlying business decision of Alexion to proceed with or
effect the Merger. In addition, we are not expressing any view or opinion with respect to, and we have relied, with the consent of Alexion, upon the assessments of Alexion and its representatives
regarding, legal, regulatory, accounting, tax and similar matters relating to Alexion, AstraZeneca or any other entity and the Merger (including the contemplated benefits thereof) as to which we
understand that Alexion obtained such advice as it deemed necessary from qualified professionals. We further express no opinion as to what the value of the AstraZeneca ADS (or the underlying
AstraZenaca Shares) actually will be when issued or the prices at which Alexion Common Stock, AstraZeneca ADS or AstraZeneca Shares will trade at any time, including following announcement or
consummation of the Merger. In addition, we express no opinion or recommendation as to how any stockholder should vote or act in connection with the Merger or any related matter.
We
have acted as financial advisor to Alexion in connection with the Merger and will receive a fee for our services, a portion of which is payable upon delivery of this opinion and a
significant portion of which is contingent upon consummation of the Merger. In addition, Alexion has agreed to reimburse our expenses and indemnify us against certain liabilities arising out of our
engagement.
We
and our affiliates comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage
activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and financial advisory services and other commercial
services and products to a wide range of companies, governments and individuals. In the ordinary course of our businesses, we and our affiliates may invest on a principal basis or on behalf of
customers or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions in equity, debt or other securities or financial instruments
(including derivatives, bank loans or other obligations) of Alexion, AstraZeneca and certain of their respective affiliates.
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We
and our affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to Alexion
and have received or in the future may receive compensation for the rendering of these services, including (i) having acted as financial advisor to Alexion and certain of its affiliates in
connection with certain transactions, (ii) having acted or acting as a co-lead arranger and as a joint-bookrunner for, and as a lender under, Alexion's revolving credit facility and term loan
facility due 2023 and under certain term loans, letters of credit and credit, leasing and/or conduit facilities for Alexion or certain of its affiliates, (iii) having provided or providing
certain treasury services and products to Alexion or certain of its affiliates, and (iv) having provided or providing certain fixed income, derivatives and foreign exchange trading services to
Alexion or certain of its affiliates.
In
addition, we and our affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services
to AstraZeneca and have received or in the future may receive compensation for the rendering of these services, including (i) having acted or acting as lender under certain term loans, letters
of credit and credit, leasing and conduit facilities for AstraZeneca or certain of its affiliates, (ii) having acted as bookrunner on various equity and debt offerings undertaken by AstraZeneca
or certain of its affiliates, (ii) having provided or providing certain treasury services and products to AstraZeneca or certain of its affiliates, and (iii) having provided or providing
certain foreign exchange trading services to AstraZeneca or certain of its affiliates.
It
is understood that this letter is for the benefit and use of the Board of Directors of Alexion (in its capacity as such) in connection with and for purposes of its evaluation of the
Merger.
Our
opinion is necessarily based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to us as of, the date
hereof. As you are aware, the credit, financial and stock markets have been experiencing unusual volatility and we express no opinion or view as to any potential effects of such volatility on Alexion,
AstraZeneca or the Merger. It should be understood that subsequent developments may affect this opinion, and we do not have any obligation to update, revise, or reaffirm this opinion. The issuance of
this opinion was approved by a fairness opinion review committee of BofA Securities, Inc.
Based
upon and subject to the foregoing, including the various assumptions and limitations set forth herein, we are of the opinion on the date hereof that the Consideration to be
received in the Merger by holders of Alexion Common Stock is fair, from a financial point of view, to such holders.
Very
truly yours,
/s/
BofA Securities, Inc.
BOFA
SECURITIES, INC.
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Annex CSection 262 of the Delaware General Corporation Law
Section 262 of the General Corporation Law of the State of Delaware
SECTION 262 APPRAISAL RIGHTS.
(a) Any
stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with
respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of
the fair value of the stockholder's shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word "stockholder" means a
holder of record of stock in a corporation; the words "stock" and "share" mean and include what is ordinarily meant by those words; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal
rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to
§ 251 (other than a merger effected pursuant to § 251(g) of this title), § 252, § 254, § 255,
§ 256, § 257, § 258, § 263 or § 264 of this title:
(1) Provided,
however, that, no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in
respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation (or, in the case
of a merger pursuant to § 251(h), as of immediately prior to the execution of the agreement of merger), were either: (i) listed on a national securities exchange or
(ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the
merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this title.
(2) Notwithstanding
paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of stock of a
constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263
and 264 of this title to accept for such stock anything except:
a. Shares
of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
b. Shares
of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository
receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;
c. Cash
in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or
d. Any
combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing
paragraphs (b)(2)a., b. and c. of this section.
(3) In
the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 or § 267 of this title is
not owned by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
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(c) Any
corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its
stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the
assets of the corporation. If the certificate of incorporation contains such a provision, the provisions of this section, including those set forth in subsections (d), (e), and (g) of
this section, shall apply as nearly as is practicable.
(d) Appraisal
rights shall be perfected as follows:
(1) If
a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in
accordance with § 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that
appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a
nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such stockholder's shares shall deliver to the corporation, before the
taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder's shares; provided that a demand may be delivered to the corporation by electronic transmission if
directed to an information processing system (if any) expressly designated for that purpose in such notice. Such demand will be sufficient if it reasonably informs the corporation of the identity of
the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder's shares. A proxy or
vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within
10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
(2) If
the merger or consolidation was approved pursuant to § 228, § 251(h), § 253, or § 267 of
this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each
of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are
available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a
nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of giving such notice or, in the case of a
merger approved pursuant to § 251(h) of this title, within the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days
after the date of giving such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder's shares; provided that a demand may be delivered to the corporation by
electronic transmission if directed to an information processing system (if any) expressly designated for that purpose in such notice. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder's shares. If such notice did not notify stockholders of the effective
date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation
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notifying
each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or
(ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second
notice is sent more than 20 days following the sending of the first notice or, in the case of a merger approved pursuant to § 251(h) of this title, later than the later of
the consummation of the offer contemplated by § 251(h) of this title and 20 days following the sending of the first notice, such second notice need only be sent to each
stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder's shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in
advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day
next preceding the day on which the notice is given.
(e) Within
120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery
demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation,
any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder's demand for appraisal and to accept the
terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) of this section hereof, upon request given in writing (or by electronic transmission directed to an information processing system (if any) expressly designated
for that purpose in the notice of appraisal), shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number
of shares not voted in favor of the merger or consolidation (or, in the case of a merger approved pursuant to § 251(h) of this title, the aggregate number of shares (other than any
excluded stock (as defined in § 251 (h)(6)d. of this title)) that were the subject of, and were not tendered into, and accepted for purchase or exchange in, the offer referred to in
§ 251 (h)(2)), and, in either case, with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such statement shall be given
to the stockholder within 10 days after such stockholder's request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later. Notwithstanding subsection (a) of this section, a person who is the
beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such person's own name, file a petition or request from the corporation
the statement described in this subsection.
(f) Upon
the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within
20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have
demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed
for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein
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stated.
Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington,
Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or
resulting corporation.
(g) At
the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The
Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder. If immediately
before the merger or consolidation the shares of the class or series of stock of the constituent corporation as to which appraisal rights are available were listed on a national securities exchange,
the Court shall dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless (1) the total number of shares entitled to appraisal exceeds 1% of
the outstanding shares of the class or series eligible for appraisal, (2) the value of the consideration provided in the merger or consolidation for such total number of shares exceeds
$1 million, or (3) the merger was approved pursuant to § 253 or § 267 of this title.
(h) After
the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery,
including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court
shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, and except as provided in this subsection, interest from the effective date
of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time
to time during the period between the effective date of the merger and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the surviving corporation may
pay to each stockholder entitled to appraisal an amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the difference, if any, between the
amount so paid and the fair value of the shares as determined by the Court, and (2) interest theretofore accrued, unless paid at that time. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the
stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has
submitted such stockholder's certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is
not entitled to appraisal rights under this section.
(i) The
Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders
entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the
surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or
resulting corporation be a corporation of this State or of any state.
(j) The
costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a
stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal
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proceeding,
including, without limitation, reasonable attorney's fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
(k) From
and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section
shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record
at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e)
of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder's demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder
without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however that this provision shall not affect the right of any stockholder who
has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder's demand for appraisal and to accept the terms offered upon the merger or
consolidation within 60 days after the effective date of the merger or consolidation, as set forth in subsection (e) of this section. (l) The shares of the surviving or resulting
corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the
surviving or resulting corporation.
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