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Exhibit B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (this "Agreement"), dated as of November 30, 1999,
between MEDCO RESEARCH, INC., a Delaware corporation (the "Company"), and KING
PHARMACEUTICALS, INC., a Tennessee corporation ("Grantee").
WHEREAS, the Company, Grantee and Merlin Acquisition I Corp., a Delaware
corporation and a newly-formed, wholly-owned, direct subsidiary of Grantee
("Merger Sub"), have contemporaneously with the execution of this Agreement
entered into an Agreement and Plan of Merger dated as of the date hereof (the
"Merger Agreement") which provides, among other things, that Merger Sub shall be
merged with and into the Company pursuant to the terms and conditions thereof;
and
WHEREAS, as an essential condition and inducement to Grantee's entering
into the Merger Agreement and in consideration therefor, the Company has agreed
to grant Grantee the Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein and in the Merger Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereby agree
as follows:
1. Grant of Option.
The Company hereby grants to Grantee an irrevocable option (the "Option")
to purchase up to Two Million Three Hundred Thirty-nine Thousand Six Hundred
Ninety-two (2,339,692) validly issued, fully paid and non-assessable shares of
Company Common Stock (such shares, as adjusted pursuant to Section 7 of this
Agreement, the "Option Shares"), together with the associated rights (the
"Rights") under the Rights Agreement, dated as of April 14, 1998, between the
Company and American Stock Transfer & Trust Company, as Rights Agent (references
to the Option Shares shall be deemed to include the associated Rights), at a
purchase price of Thirty Dollars ($30.00) per share (such price, as adjusted
pursuant to Section 7 of this Agreement, the "Option Price"); provided, however,
that in no event shall the number of Option Shares for which this Option is
exercisable exceed nineteen and nine-tenths percent (19.9%) of the number of
shares of Company Common Stock issued and outstanding (before giving effect to
the exercise of the Option) at the time this Option is exercised.
2. Certain Terms of the Option.
(a) Exercise of Option. Grantee may exercise the Option, in whole or part,
and from time to time, if, but only if, a Triggering Event (as hereinafter
defined) shall have occurred prior to the occurrence of an Option Termination
Event (as hereinafter defined); provided that Grantee shall have sent the
written notice of such exercise (as provided in Section 2(e) hereof) on or prior
to the last date of the eighteen (18) month period following such Triggering
Event (the "Option Expiration Date"). The right to exercise the Option shall
terminate upon the first to occur of the Option Expiration Date or an Option
Termination Event.
(b) Triggering Events. The term "Triggering Event" shall mean the
occurrence of the date, upon or after termination of the Merger Agreement, on
which Grantee's right,
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pursuant to Section 9.5(b), Section 9.5(d) or Section 9.5(e) of the Merger
Agreement, to receive the Termination Fee first arises.
(c) Option Termination Events. The term "Option Termination Event" shall
mean the earlier to occur of (i) the Effective Time; (ii) the termination of the
Merger Agreement pursuant to Section 9.1(l) of the Merger Agreement; or (iii)
the termination of the Merger Agreement other than under circumstances which
constitute (or may constitute in the event of a termination of the Merger
Agreement pursuant to Section 9.1(e) or Section 9.1(f) of the Merger Agreement)
a Triggering Event under this Agreement.
(d) Notice of Triggering Event. The Company shall notify Grantee in
writing as promptly as practicable following the Company becoming aware of the
occurrence of any Triggering Event, it being understood that the giving of such
notice by the Company shall not be a condition to the right of Grantee to
exercise the Option or for a Triggering Event to have occurred.
(e) Notice of Exercise; Closing. In the event that Grantee is entitled to
and desires to exercise the Option (in whole or in part), Grantee shall send to
the Company a written notice (such notice being herein referred to as an
"Exercise Notice" and the date of issuance of an Exercise Notice being herein
referred to as the "Notice Date") specifying (i) the total number of shares (or
other Option Securities (as hereinafter defined)) Grantee will purchase pursuant
to such exercise and (ii) a place and date not earlier than three (3) Business
Days nor later than sixty (60) Business Days after the Notice Date for the
closing of such purchase (the "Option Closing Date"); provided, that if the
closing of the purchase and sale pursuant to the Option (the "Option Closing")
cannot be consummated by reason of any applicable Order, the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which such restriction on consummation has expired or been terminated; provided,
further, without limiting the foregoing, that if, in the reasonable opinion of
Grantee, prior notification to or approval of any Governmental Entity is
required in connection with such purchase, the Company or Grantee, as the case
may be, shall promptly file the required notice or application for approval and
shall expeditiously process the same and the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which any
required notification periods have expired or been terminated or such approvals
have been obtained and any requisite waiting period or periods shall have
passed.
(f) Payment of Purchase Price. Subject to Section 2(k), at any Option
Closing, Grantee shall pay to the Company the aggregate Option Price for the
number of Option Shares and Option Securities to be issued at such Option
Closing, in immediately available funds by wire transfer to a bank account
designated by the Company; provided that failure or refusal of the Company to
designate such a bank account shall not preclude Grantee from exercising the
Option.
(g) Issuance of Company Common Stock. Subject to Section 2(k), at any
Option Closing, simultaneously with the delivery of immediately available funds
as provided in Section 2(f) hereof, the Company shall deliver to Grantee a
certificate or certificates representing the number of shares of Company Common
Stock (or other Option Securities) purchased by Grantee at such Option Closing
and, if the Option should be exercised in part only, a new Option evidencing the
rights of Grantee thereof to purchase the balance of the Option Shares (or other
Option Securities) purchasable hereunder. If at the time of issuance of any
Option Shares pursuant to an exercise of all or part of the
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Option hereunder, the Company shall have issued any rights or other securities
which are attached to or otherwise associated with Company Common Stock, then
each Option Share issued pursuant to such exercise shall also represent such
rights or other securities with terms substantially the same as and at least as
favorable to Grantee as are provided under any shareholder rights agreement or
similar agreement of the Company then in effect.
(h) Legend. Certificates for Company Common Stock (or other Option
Securities) delivered at an Option Closing hereunder may be endorsed with a
restrictive legend that shall read substantially as follows:
"THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESALE RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED."
It is understood and agreed that the reference to the resale restrictions of the
Securities Act in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if Grantee shall have delivered to the
Company a copy of a letter from the staff of the SEC, or an opinion of counsel
reasonably satisfactory to the Company, to the effect that such legend is not
required for purposes of the Securities Act.
(i) Record Grantee; Expenses. Upon the delivery by Grantee to the Company
of the Exercise Notice and the tender of the applicable Option Price in
immediately available funds, Grantee shall be deemed to be the holder of record
of the shares of Company Common Stock (or other Option Securities) issuable upon
such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such shares of Company
Common Stock (or other Option Securities) shall not then be actually delivered
to Grantee or that the Company shall have failed or refused to designate the
bank account described in Section 2(f). The Company shall pay all expenses that
may be payable in connection with the preparation, issuance and delivery of
stock certificates under this Section 2 in the name of Grantee. Grantee shall
pay all expenses that may be payable in connection with the issuance and
delivery of stock certificates or a substitute option agreement in the name of
any assignee, transferee or designee of Grantee.
(j) Consents. The obligation of the Company to issue Option Shares (or
other Option Securities) to Grantee hereunder is subject to the conditions that
(i) any waiting period under the HSR Act applicable to the issuance of the
Option Shares (or other Option Securities) hereunder shall have expired or been
terminated; (ii) all material consents, approvals, orders or authorizations of,
or registrations, declarations or filings with, any Governmental Entity, if any,
required in connection with the issuance of the Option Shares (or other Option
Securities) hereunder shall have been obtained or made, as the case may be; and
(iii) no preliminary or permanent injunction or other Order prohibiting or
otherwise restraining such issuance shall be in effect. It is understood and
agreed that at any time during which the Option is exercisable, the parties will
use their respective best efforts to satisfy all such conditions to closing, so
that an Option Closing may take place as promptly as practicable.
(k) Cancellation Amount. If at any time while this Option is exercisable
under Section 2(a), any Person or group (other than Grantee or its Affiliates)
(i) shall have made a bona fide proposal with respect to (A) a tender offer or
exchange offer for fifty percent (50%) or more of the then outstanding shares of
Company Common Stock (a
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"Share Proposal"), (B) a merger, consolidation or other business combination
with the Company (a "Merger Proposal") or (C) any acquisition of a material
portion of the assets of the Company (an "Asset Proposal"), or (ii) shall have
acquired fifty percent (50%) or more of the then outstanding shares of Company
Common Stock (a "Share Acquisition"), then Grantee, in lieu of exercising the
Option, shall have the right at any time thereafter (for so long as the Option
is exercisable under Section 2(a)) to request in writing (a "Cancellation
Notice") that the Company pay, and promptly (but in any event not more than five
(5) Business Days) after the giving by Grantee of such Cancellation Notice, the
Company shall pay to Grantee, in cancellation of the Option, an amount in cash
equal to the Cancellation Amount (as defined below). Notwithstanding anything to
the contrary in this Agreement, in the event of any closing involving the
payment of a Cancellation Amount, Grantee shall deliver to the Company for
cancellation the Option, and the Company shall make payment to Grantee of the
Cancellation Amount by wire transfer of immediately available funds pursuant to
Grantee's instructions.
As used herein, the "Cancellation Amount" shall mean an amount equal to:
(i) the excess over the Option Price of the greater of (A) the last
sale price of a share of Company Common Stock as reported on the New York
Stock Exchange on the last trading day prior to the date of the
Cancellation Notice, or (B)(x) the highest price per share of Company
Common Stock offered or proposed to be paid or paid by any such Person or
group pursuant to or in connection with a Share Proposal, a Share
Acquisition or a Merger Proposal or (y) the aggregate consideration offered
to be paid or paid in any transaction or proposed transaction in connection
with an Asset Proposal, divided by the number of shares of Company Common
Stock then outstanding, multiplied by (ii) the number of Option Shares then
covered by the Option. If all or a portion of the price per share of
Company Common Stock offered, paid or payable or the aggregate
consideration offered, paid or payable for the assets of the Company, each
as contemplated by this Section 2(k), consists of non-cash consideration,
such price or aggregate consideration shall be the cash consideration, if
any, plus the fair market value of the non-cash consideration as determined
by the mutual agreement of the investment bankers of the Company and the
investment bankers of Grantee (or, if such investment bankers cannot agree
within ten (10) Business Days of such question being submitted for such
determination, then promptly by an independent investment banker chosen by
Grantee's investment bankers and reasonably acceptable to the Company's
investment bankers).
3. Evaluation of Investments. Grantee, by reason of its knowledge and
experience in financial and business matters, believes itself capable of
evaluating the merits and risks of an investment in the Option and the
securities to be purchased/sold pursuant to this Agreement (collectively, the
"Option Securities").
4. Investment Intent. Grantee represents and warrants that Grantee is
entering into this Agreement and is acquiring and/or will acquire the Option
Securities for Grantee's own account and not with a view to resale or
distribution of all or any part of the Option Securities in violation of
applicable law.
5. Reservation of Shares. The Company agrees (a) that the Company shall at
all times maintain, free from preemptive rights, sufficient authorized but
unissued shares of Company Common Stock (and other Option Securities) issuable
pursuant to this Agreement so that the Option may be exercised without
additional authorization of Company Common Stock (or such other Option
Securities) after giving effect to all other
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options, warrants, convertible securities and other rights to purchase Company
Common Stock (or such other Option Securities); (b) that the Company shall not,
by charter amendment or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants to be observed or
performed hereunder by the Company; and (c) promptly to take all action as may
from time to time be required in order to permit Grantee to exercise the Option
and the Company to duly and effectively issue shares of Company Common Stock (or
other Option Securities) pursuant hereto.
6. Division of Option; Lost Options. This Agreement (and the Option
granted hereby) are exchangeable, without expense, at the option of Grantee,
upon presentation and surrender of this Agreement at the principal office of the
Company, for other agreements providing for Options of different denominations
entitling the holder(s) thereof to purchase, on the same terms and subject to
the same conditions as are set forth herein, in the aggregate the same number of
shares of Company Common Stock purchasable hereunder. Upon receipt by the
Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, the Company will execute and
deliver a new Agreement of like tenor and date.
7. Adjustment Upon Changes in Capitalization. The number of shares of
Company Common Stock purchasable upon the exercise of the Option shall be
subject to adjustment from time to time as provided in this Section 7.
(a) Transaction Adjustment. In the event of any change in Company Common
Stock by reason of stock dividends, splits, mergers, recapitalizations,
combinations, subdivisions, conversions, exchanges of shares or other similar
transactions, then the Option Shares that are then purchasable upon exercise of
the Option shall be appropriately adjusted so that Grantee shall receive upon
exercise of the Option and payment of the aggregate Option Price hereunder the
number and class of shares or other securities or property (including cash) that
Grantee would have owned or been entitled to receive after the happening of any
of the events described in this Section 7(a) if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable.
(b) Option Price Adjustment. Whenever the number of shares of Company
Common Stock subject to this Option are adjusted pursuant to Section 7(a), the
Option Price shall be appropriately adjusted, if applicable, by multiplying the
Option Price by a fraction, the numerator of which shall be equal to the
aggregate number of shares of Company Common Stock purchasable under the Option
prior to the adjustment and the denominator of which shall be equal to the
aggregate number of shares of Company Common Stock purchasable under the Option
immediately after the adjustment.
8. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement, in no event
shall the Total Profit (as hereinafter defined) exceed in the aggregate
Seventeen Million Dollars ($17,000,000) (such amount, the "Maximum Profit") and,
if Grantee's Total Profit shall exceed such Maximum Profit, Grantee, at its sole
discretion, shall either (i) reduce the number of shares of Company Common Stock
subject to this Option, (ii) deliver to the Company for cancellation Option
Shares (or other securities into which such Option Shares are converted or
exchanged) previously purchased by Grantee, (iii) pay cash to the
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Company or (iv) any combination thereof, so that Grantee's actually realized
Total Profit shall not exceed the Maximum Profit after taking into account the
foregoing actions.
(b) As used herein, the term "Total Profit" shall mean: (i) the aggregate
amount of (A) any excess of (x) the net cash proceeds actually received by
Grantee from the sale of Option Shares (or securities into which such shares are
converted or exchanged) to any unaffiliated third party, over (y) the aggregate
Option Price for such Option Shares (or other securities), plus (B) the amount
of the Cancellation Amount actually received by Grantee pursuant to Section
2(k)hereof, plus (C) any Termination Fee actually received by Grantee pursuant
to the terms of the Merger Agreement, minus (ii) the sum of amounts of any cash
previously paid to the Company pursuant to this Section 8 plus the value of the
Option Shares (or other securities) previously delivered to the Company for
cancellation pursuant to this Section 8.
(c) Notwithstanding any other provision of this Agreement, nothing in this
Agreement shall affect the ability of Grantee to receive, nor relieve the
Company's obligation to pay, any Termination Fee provided for in Sections
9.5(b), 9.5(d) or 9.5(e) of the Merger Agreement; provided that if and to the
extent that the Total Profit received by Grantee would exceed the Maximum Profit
following receipt of such payment, Grantee shall be obligated to promptly comply
with the terms of Section 8(a).
9. Registration Rights.
(a) The Company shall, if requested by Grantee at any time and from time to
time within two (2) years after a Triggering Event, as promptly as possible (but
in no event later than thirty (30) days after receipt of such request) prepare
and file up to three (3) registration statements under the Securities Act to the
extent necessary in order to permit the sale or other disposition of any or all
shares of securities that have been acquired by or are issuable to Grantee upon
exercise of the Option in accordance with the intended method of sale or other
disposition stated by Grantee, including a "shelf" registration statement under
Rule 415 under the Securities Act or any successor provision, and the Company
will use its best efforts to qualify such shares or other securities under any
applicable state securities laws. The Company shall use best efforts to cause
each such registration statement to become effective, to obtain all consents or
waivers of other parties which are required therefor, and to keep such
registration statement effective for a period of at least one hundred eighty
(180) calendar days after the date such registration statement first becomes
effective (or such shorter period as may be necessary to effect such sale or
other disposition).
(b) The obligations of the Company hereunder to file a registration
statement and to maintain its effectiveness may be suspended for one or more
periods of time not exceeding sixty (60) calendar days in the aggregate if the
Board of Directors of the Company shall have determined in good faith after
having consulted with outside counsel that the filing of such registration or
the maintenance of its effectiveness would require premature disclosure of
material nonpublic information that would materially and adversely affect the
Company or the Company is required under the Securities Act to include audited
financial statements for any period in such registration statement and such
financial statements are not yet available for inclusion in such registration
statement.
(c) In addition to such demand registrations, if the Company proposes to
effect a registration of Company Common Stock (other than a registration
statement on Form S-4 or S-8 or any successor thereto) for the Company's own
account or for the account of any
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other stockholder of the Company, the Company shall give prompt written notice
to all holders of Options or Option Shares of the Company's intention to do so
and shall use best efforts to include therein all Option Shares requested by
Grantee to be so included. No registration effected under this Section 9(c)
shall relieve the Company of its obligations to effect demand registrations
under Section 9(a) hereof.
(d) Registrations effected under this Section 9 shall be effected at the
Company's expense, including the fees and expenses of counsel to the holder of
Options or Option Shares, but excluding underwriting discounts and commissions
to brokers or dealers. In connection with each registration under this Section
9, the Company shall indemnify and hold each holder of Options or Option Shares
participating in such offering (a "Holder"), its underwriters and each of their
respective affiliates harmless against any and all losses, claims, damages,
liabilities and expenses (including, without limitation, investigation expenses
and fees and disbursements of counsel and accountants), joint or several, to
which such Holder, its underwriters and each of their respective Affiliates may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) arise
out of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any registration statement (including any prospectus
therein), or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
other than such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) which arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in written information
furnished by a Holder to the Company expressly for use in such registration
statement.
(e) In connection with any registration statement pursuant to this Section
9, each Holder agrees to furnish the Company with such information concerning
itself and the proposed sale or distribution as shall reasonably be required in
order to ensure compliance with the requirements of the Securities Act. In
addition, each Holder shall indemnify and hold the Company, its underwriters and
each of their respective Affiliates harmless against any and all losses, claims,
damages, liabilities and expenses (including without limitation investigation
expenses and fees and disbursements of counsel and accountants), joint or
several, to which the Company, its underwriters and each of their respective
Affiliates may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in written information furnished by such
Holder to the Company expressly for use in such registration statement. In no
event shall the liability of any Holder or any Affiliate thereof under this
Section 9 be greater in amount than the dollar amount of the proceeds (net of
payment of all expenses) received by such Holder upon the sale of the Option
Shares giving rise to such indemnification obligation.
(f) Upon the issuance of Option Shares hereunder, the Company shall
promptly list such Option Shares with the New York Stock Exchange or on such
national or other exchange on which the shares of Company Common Stock are at
the time principally listed.
10. Extension of Time for Regulatory Approvals. The periods related to
exercise of the Option and the other rights of Grantee hereunder shall be
extended (a) to the extent necessary to obtain all regulatory approvals for the
exercise of such rights, and for the
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expiration of all statutory waiting periods and (b) to the extent necessary to
avoid liability under Section 10(b) of the Exchange Act by reason of such
exercise.
11. Representations and Warranties of the Company. The Company hereby
represents and warrants to Grantee as follows:
(a) Authority. The Company has the necessary corporate power and authority
to enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Grantee, constitutes a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws of general applicability relating to or affecting creditors' rights
generally and by the application of general principles of equity.
(b) Corporate Action. The Company has taken all necessary corporate action
to authorize and reserve and to permit the Company to issue, and at all times
from the date hereof through the termination of this Agreement in accordance
with its terms will have reserved for issuance upon the exercise of the Option,
that number of shares of Company Common Stock equal to the maximum number of
shares of Company Common Stock at any time and from time to time issuable
hereunder, and all such shares of Company Common Stock, upon issuance pursuant
hereto, will be duly authorized, validly issued, fully paid, non-assessable, and
will be delivered free and clear of all Encumbrances and not subject to any
preemptive rights.
(c) No Conflict. The execution and delivery of this Agreement by the
Company do not, and the performance by the Company of its obligations under this
Agreement will not (i) conflict with or violate the certificate or articles of
incorporation, bylaws or partnership agreement of the Company or any Company
Subsidiary, (ii) conflict with or violate any law, statute, ordinance, rule,
regulation, order, judgment or decree applicable to the Company or any Company
Subsidiary or by which any of their respective properties is bound or affected,
or (iii) result in any breach of or constitute a default (or an event which with
or without notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of an Encumbrance on any of the
properties or assets of the Company or any Company Subsidiary pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any Company
Subsidiary is a party or by which the Company, any Company Subsidiary or any of
their respective properties or assets is bound or affected, except, in the case
of clauses (ii) and (iii) above, for any such conflicts, violations, breaches,
defaults or other alterations or occurrences that would not have a Material
Adverse Effect on the Company.
(d) Anti-Takeover Statutes. The provisions of Section 203 of the General
Corporation Law of the State of Delaware will not, prior to the termination of
this Agreement, apply to this Agreement or the transactions contemplated hereby
and thereby. The Company has taken, and will in the future take, all steps
necessary to irrevocably exempt
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the transactions contemplated by this Agreement from any other applicable state
takeover law and from any applicable charter provision containing change of
control or anti-takeover provisions.
(e) Additional Representations and Warranties. The representations and
warranties contained in Section 3.1 of the Merger Agreement and, to the extent
they relate to this Agreement, the representations and warranties in Section
3.3, Section 3.20, and Section 3.26 of the Merger Agreement, are incorporated by
reference herein.
12. Assignment. The Company may not assign any of the Company's rights or
obligations under this Agreement or the Option created hereunder to any other
Person, without the express written consent of Grantee.
13. Application for Regulatory Approval. Each of Grantee and the Company
will use its reasonable efforts to make all filings with, and to obtain consents
of, all third parties and Governmental Entities necessary to the consummation of
the transactions contemplated by this Agreement, including without limitation
making application to list the shares of Company Common Stock issuable hereunder
on the New York Stock Exchange upon official notice of issuance.
14. Specific Performance. The Company acknowledges and agrees that damages
would be an inadequate remedy for a breach of this Agreement by the Company and
that the obligations of the Company shall be enforceable by Grantee through
injunctive or other equitable relief.
15. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect 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 determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto 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 to the end
that transactions contemplated hereby are fulfilled to the extent possible.
16. Notices. All notices, claims, demands and other communications
hereunder shall be deemed to have been duly given or made when delivered in
person, by registered or certified mail (postage prepaid, return receipt
requested), by overnight courier or by facsimile at the respective addresses of
the parties set forth in the Merger Agreement.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
18. Counterparts. This Agreement may be executed and delivered in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
19. Definitions. Capitalized terms used and not defined herein shall have
the meanings set forth in the Merger Agreement.
20. Expenses. Except as otherwise expressly provided herein or in the
Merger Agreement, each of the parties hereto shall bear and pay all costs and
expenses incurred
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by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
21. Entire Agreement. This Agreement, the Merger Agreement, the
Confidentiality Agreement and any documents and instruments referred to herein
and therein constitute the entire agreement of the parties with respect to the
transactions contemplated hereunder and supersede all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties hereto, and their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein. Any provision of this Agreement
may be waived only in writing at any time by the party that is entitled to the
benefits of such provision. This Agreement may not be modified, amended, altered
or supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
22. Further Assurances. In the event of any exercise of the Option by
Grantee, the Company and Grantee shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary to
the fullest extent permitted by law in order to consummate the transactions
provided for by such exercise. Nothing contained in this Agreement shall be
deemed to authorize the Company or Grantee to breach any provision of the Merger
Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Stock Option
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
MEDCO RESEARCH, INC.
By: /s/ XXXXXXX X. XXXXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman
KING PHARMACEUTICALS, INC.
By: /s/ XXXX X. XXXXXXX
---------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
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