Washington, D.C. 20549
You are cordially invited to attend
a special meeting of shareholders of Akorn, Inc., a Louisiana corporation the “Company”), on July 19 , 2017 at
10:00 a.m. , local time, at 1925 West Field Court, Suite 300, Lake Forest, Illinois 60045 .
On April 24, 2017, the Company entered into
an Agreement and Plan of Merger (the “merger agreement”) with Fresenius Kabi AG, a German stock corporation (“Fresenius
Kabi”), Quercus Acquisition, Inc., a Louisiana corporation and a wholly owned subsidiary of Fresenius Kabi (“Merger
Sub”), and, solely for the purposes of Article VIII of the merger agreement, Fresenius SE & Co. KGaA, a German partnership
limited by shares, providing for, subject to the satisfaction or waiver (if permissible under applicable law) of specified conditions,
the acquisition of the Company by Fresenius Kabi at a price of $34.00 per common share in cash. Subject to the terms and conditions
of the merger agreement, Merger Sub will be merged with and into the Company (the “merger”), with the Company surviving
the merger as a subsidiary of Fresenius Kabi. At the special meeting, the holders of common shares of the Company will vote on
the approval of the merger agreement.
If the merger is completed, you will be
entitled to receive $34.00 in cash, without interest and less any applicable withholding taxes, for each share of common stock,
no par value, of the Company (“Company common shares”) you own at the effective time of the merger.
The proxy statement accompanying this letter
provides you with more specific information concerning the special meeting, the merger agreement, the merger and the other transactions
contemplated by the merger agreement. We encourage you to carefully read the accompanying proxy statement and the copy of the merger
agreement attached as Annex A thereto.
The board of directors of the Company (the
“Board”) carefully reviewed and considered the terms and conditions of the merger agreement, the merger and the other
transactions contemplated by the merger agreement. The Board adopted the merger agreement, directed that the approval of the merger
agreement be submitted to holders of Company common shares and recommended that the holders of Company common shares vote their
shares to approve the merger agreement at a special meeting of the holders of Company common shares.
Accordingly, the Board
recommends a vote “FOR” the proposal to approve the merger agreement, the nonbinding compensation proposal and the
adjournment proposal.
Whether or not you plan to attend the special
meeting and regardless of the number of shares you own, your careful consideration of, and vote on, the merger agreement is important
and we encourage you to vote promptly. The merger cannot be completed unless the merger agreement is approved by shareholders holding
at least a majority of the outstanding Company common shares entitled to vote thereon at the special meeting.
The failure to
vote will have the same effect as a vote against the proposal to approve the merger agreement.
After reading the accompanying proxy statement,
please make sure to vote your Company common shares by promptly voting electronically or telephonically as described in the accompanying
proxy statement, or, if you received a paper copy of the proxy card, by completing, dating, signing and returning your proxy card,
or attending our special shareholders’ meeting in person. Instructions regarding all three methods of voting are provided
on the proxy card. If you hold shares through an account with a brokerage firm, bank or other nominee, please follow the instructions
you receive from them to vote your Company common shares. If you have any questions or need assistance voting your shares, please
contact our proxy solicitor, Innisfree M&A Incorporated, toll-free at (888) 750-5834.
The merger has not been approved or disapproved
by the Securities and Exchange Commission or any state securities commission. Neither the Securities and Exchange Commission nor
any state securities commission has passed upon the merits or fairness of the merger or upon the adequacy or accuracy of the information
contained in this document or the accompanying proxy statement. Any representation to the contrary is a criminal offense.
The accompanying proxy statement is dated
June 15, 2017 and is first being mailed to holders of Company common shares on or about June 19, 2017.
In accordance with Section 14A of the Exchange
Act, the Company is providing holders of Company common shares with the opportunity to cast a nonbinding advisory vote on the compensation
that may be payable to the Company’s named executive officers in connection with the merger. As required by those rules,
the Company is asking holders of Company common shares to vote on the approval of the following resolution:
“RESOLVED, that the compensation that
may be paid or become payable to the Company’s named executive officers in connection with the merger, as disclosed in the
table entitled “
Potential Payments to Named Executive Officers
”, including the associated narrative discussion,
and the agreements or understandings pursuant to which such compensation may be paid or become payable, are hereby APPROVED.”
The vote on executive compensation payable
in connection with the merger is a vote separate and apart from the vote to approve the merger agreement. Accordingly, you may
vote to approve the merger agreement and vote not to approve the executive compensation or vice versa. Because the vote is advisory
in nature only, it will not be binding on the Company or the Board. Accordingly, because the Company is contractually obligated
to pay the compensation, such compensation will be paid or become payable, subject only to the conditions applicable thereto, if
the merger is consummated and regardless of the outcome of the advisory vote.
The approval of the nonbinding compensation
proposal by the holders of Company common shares requires the approval by a majority of the votes cast affirmatively or negatively
on that proposal at the special meeting. Assuming a quorum is present at the special meeting, abstentions, failures to vote and
“broker non-votes” will have no effect on the outcome of the nonbinding compensation proposal.
The Board recommends a vote “FOR”
the approval of the nonbinding compensation proposal.
Other Information
Historical Trading Range for the Company
.
For reference purposes only and not as a component of its fairness analysis, J.P. Morgan reviewed the historical trading prices
of the Company common shares during the 52-week period prior to April 6, 2017 (the last day before media reports of a possible
transaction involving Akorn and Fresenius Kabi had been first published in the press), noting that the low and high closing prices
during such period ranged from $18.23 per share to $34.23 per share, as compared to the value of the merger consideration of $34.00
per share.
Analyst Price Targets for the Company
.
For reference purposes only and not as a component of its fairness analysis, J.P. Morgan reviewed certain publicly available equity
research analyst share price targets for the shares obtained from FactSet Research Systems as of April 6, 2017 (the last day before
media reports of a possible transaction involving Akorn and Fresenius Kabi had been first published in the press), noting that
the low and high share price targets ranged from $21.00 per share to $40.00 per share, as compared to the value of the merger consideration
of $34.00 per Share.
Miscellaneous
. The foregoing summary
of certain material financial analyses does not purport to be a complete description of the analyses or data presented by J.P.
Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary
description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting
portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete
view of the processes underlying the analyses and its opinion. As a result, the ranges of valuations resulting from any particular
analysis or combination of analyses described above were merely utilized to create points of reference for analytical purposes
and should not be taken to be the view of J.P. Morgan with respect to the actual value of the Company. The order of analyses described
does not represent the relative importance or
weight given to those analyses by J.P. Morgan.
In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and
did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported
or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining
its opinion.
Analyses based upon forecasts of future results
are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors.
Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which
may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and
do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be acquired or sold. None
of the selected companies reviewed as described in the above summary is identical to the Company, and none of the selected transactions
reviewed was identical to the merger. However, the companies selected were chosen because they are publicly traded companies with
operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of the Company.
The transactions selected were similarly chosen because their size, the parties involved and other factors, for purposes of J.P.
Morgan’s analysis, may be considered similar to the merger. The analyses necessarily involve complex considerations and judgments
concerning differences in financial and operational characteristics of the companies involved and other factors that could affect
the companies compared to the Company and the transactions compared to the merger.
As a part of its investment banking business,
J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers
and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for corporate and other purposes. J.P. Morgan was selected to advise the
Company with respect to the merger on the basis of, among other things, such experience and its qualifications and reputation in
connection with such matters and its familiarity with the Company and the industries in which it operates.
J.P. Morgan received a fee from the Company
of $3 million, paid upon the public announcement of the merger, which will be credited against any Services Fee (as defined below).
For services rendered in connection with the merger, the Company has agreed to pay J.P. Morgan an additional fee equal to 1.0%
of the total amount of cash paid to the Company’s common stockholders plus the principal amount of all indebtedness of the
Company outstanding immediately prior to consummation of the merger minus the amount of all cash and cash equivalents of the Company
immediately prior to the consummation of the merger (the “Services Fee”), contingent and payable upon the closing
of the merger, which in this case amounts to approximately $47 million. In addition, the Company has agreed to reimburse J.P.
Morgan for its reasonable costs and expenses incurred in connection with its services, including the fees and disbursements of
counsel, and will indemnify J.P. Morgan against certain liabilities arising out of J.P. Morgan’s engagement. During the
two years preceding the date of J.P. Morgan’s opinion, J.P. Morgan and its affiliates have had commercial or investment
banking relationships with the Company, Fresenius Kabi and Fresenius Parent for which J.P. Morgan and such affiliates have received
customary compensation. Such services during such period have included acting as joint lead arranger and bookrunner on Fresenius
Parent’s €3.7 billion bridge loan closed in January 2017 and joint lead bookrunner on Fresenius Parent’s €2.6
billion debt securities offering closed in January 2017. In addition, our commercial banking affiliate is an agent bank and a
lender under outstanding credit facilities of the Company, for which it receives customary compensation or other financial benefits.
J.P. Morgan and its affiliates hold, on a proprietary basis, less than 1% of the outstanding common stock of each of the Company
and Fresenius Parent. During the two years preceding the date of J.P. Morgan’s opinion, the aggregate fees received by J.P.
Morgan from the Company were less than $2 million and the aggregate fees received by J.P. Morgan from Fresenius Parent were less
than $10 million. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and
equity securities or financial instruments (including derivatives, bank loans or other obligations) of the Company or the Fresenius
Parent for their own accounts or for the accounts of customers and, accordingly, they may at any time hold long or short positions
in such securities or other financial instruments.
Financial Forecasts
Other than annual guidance, including the
guidance included in the Company’s earnings release dated March 1, 2017 and the reaffirmation of such guidance in the Company’s
press release dated April 24, 2017 (the “2017 earnings guidance”), with respect to consolidated revenues, select other
GAAP line items and certain other performance measures, which guidance the Company presents as a range, the Company does not, as
a matter of course, publicly disclose forecasts as to future performance, earnings or other results due to the unpredictability
of the underlying assumptions and estimates. However, the Company has included below certain financial forecasts of the Company
that, to the extent described below, were furnished to the Board, the Company’s financial advisor and Fresenius Kabi, in
connection with the discussions concerning the proposed merger.
These Financial Forecasts (as defined below)
were not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American
Institute of Certified Public Accountants for preparation and presentation of prospective financial data, published guidelines
of the SEC regarding forward-looking statements or generally accepted accounting principles in the United States (“GAAP”).
A summary of this information is presented below.
While the Financial Forecasts were prepared
in good faith, no assurance can be made regarding future events. The estimates and assumptions underlying these financial forecasts
involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions
and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive
and regulatory uncertainties and contingencies, including, among other things, the inherent uncertainty of the business and economic
conditions affecting the industries in which the Company operates, and the risk and uncertainties described under “
Cautionary
Statement Regarding Forward-Looking Statements
”, all of which are difficult to predict and many of which are outside
the control of the Company and, upon consummation of the merger, will be beyond the control of Fresenius Kabi and the surviving
corporation. The Company’s shareholders are urged to review the Company’s SEC filings for a description of risk factors
with respect to the Company’s business. There can be no assurance that the underlying assumptions will prove to be accurate
or that the projected results will be realized and actual results likely will differ, and may differ materially, from those reflected
in the Financial Forecasts, whether or not the merger is completed. The inclusion in this proxy statement of the Financial Forecasts
below should not be regarded as an indication that the Company, Fresenius Kabi, their respective boards of directors or their respective
financial advisors considered, or now considers, these forecasts to be a reliable predictor of future results. The Financial Forecasts
are not fact and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement
are cautioned not to place undue, if any, reliance on this information. The Financial Forecasts assume that the Company would continue
to operate as a standalone company and do not reflect any impact of the merger.
The Financial Forecasts include certain
non-GAAP financial measures, including EBITDA, EBIT, net operating profits after taxes or NOPAT and unlevered free cash
flow (in each case, as defined below). The Company’s management included forecasts of EBITDA, EBIT and NOPAT in the
Financial Forecasts because the Company’s management believes EBITDA, EBIT and NOPAT provide useful information because
they are commonly used by investors to assess financial performance and operating results of ongoing business operations,
and because the Company’s management also believes that EBITDA, EBIT and NOPAT could be useful in evaluating the
business, potential operating performance and cash flow of the Company. The Company’s management included forecasts of unlevered
free cash flow in the Financial Forecasts because the Company’s management believes that unlevered free cash flow could
be useful in evaluating the future cash flows generated by the Company without including in such calculation any debt servicing
costs.
Investors should also note that these non-GAAP
financial measures presented in this proxy statement are not prepared under any comprehensive set of accounting rules or principles
and do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with
GAAP. Investors should also note that these non-GAAP financial measures presented in this proxy statement have no standardized
meaning prescribed by GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions,
the non-GAAP financial measures as used by Akorn in this proxy statement and the accompanying footnotes may be calculated differently
from, and therefore may not be directly comparable to, similarly titled measures used by the Company’s competitors and other
companies, or any similarly titled measures used by Fresenius Parent, which prepares and publishes its financial statements in
accordance with International Financial Reporting Standards pursuant to Section 315a of the German Commercial Code.
Due to the inherent limitations of non-GAAP
financial measures, investors should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior
measure to, measures of financial performance prepared in accordance with GAAP. The footnotes to the tables below provide certain
supplemental information with respect to the calculation of these non-GAAP financial measures. All of the financial forecasts summarized
in this section were prepared by the Company’s management. Neither BDO USA, LLP (the Company’s independent registered
public accounting firm) nor any other independent registered public accounting firm has examined, compiled or otherwise performed
any procedures with respect to the prospective financial information contained in these financial forecasts and, accordingly, neither
BDO USA, LLP nor any other independent registered public accounting firm has expressed any opinion or given any other form of assurance
with respect thereto and no independent registered public accounting firm assumes any responsibility for the prospective financial
information. The BDO USA, LLP reports incorporated by reference in this proxy statement relate to the historical financial information
of the Company. Those reports do not extend to the financial forecasts and should not be read to do so.
By including in this proxy statement the
Financial Forecasts below, neither the Company nor Fresenius Kabi nor any of their respective representatives has made or makes
any representation to any person regarding the ultimate performance of the
Company compared to the information contained
in the Financial Forecasts. Accordingly, the Financial Forecasts should not be construed as financial guidance, nor relied upon
as such, and the Financial Forecasts may differ in important respects from the 2017 earnings guidance, which are presented as a
range and which the Company’s management prepared based on a more conservative set of assumptions, including with respect
to expected results from new product launches. Further, the inclusion of the Financial Forecasts in this proxy statement does not
constitute an admission or representation by the Company that this information is material. The Financial Forecasts summarized
in this section reflected the estimates and judgments available to the Company’s management at the time they were prepared
and have not been updated to reflect any changes since such financial forecasts were prepared. Neither the Company, Fresenius Kabi
nor, after completion of the merger, the surviving corporation undertakes any obligation, except as required by law, to update
or otherwise revise the Financial Forecasts to reflect circumstances existing since their preparation or to reflect the occurrence
of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error, or to reflect
changes in general economic or industry conditions.
The summary of the Financial Forecasts is
not included in this proxy statement to induce any shareholder to vote in favor of the approval of the merger agreement or any
other proposals to be voted on at the special meeting, but because the Financial Forecasts were made available to the Board, the
Company’s financial advisor and certain parties potentially interested in a transaction with the Company, including Fresenius
Kabi.
In the second half of 2016, the Company’s
management prepared certain unaudited prospective financial information for the fiscal years 2017 through 2026 as part of the development
of management’s strategic plan and in connection with the Company’s review of strategic alternatives (the “November
2016 Management Case”). The projections contained in the November 2016 Management Case for the fiscal years 2017 through
2020 were prepared by the Company’s management based on management’s reasonable best estimates and assumptions with
respect to the Company’s future financial performance. The projections contained in the November 2016 Management Case for
fiscal years 2021 through 2026 were prepared by the Company’s management by applying a growth rate determined based on a
number of factors to the projected fiscal year 2020 revenue, which growth rate was then decreased year-over-year following fiscal
year 2021, and by applying adjustments to EBITDA margin from the projected fiscal year 2020 based on the reasonable judgment of
management (collectively, the “November 2016 Management Case Extrapolations”).
The November 2016 Management Case was presented
to the Board at its meeting held on December 2, 2016. The November 2016 Management Case, excluding the November 2016 Management
Case Extrapolations, was made available to Fresenius Kabi in connection with their review of a possible transaction with the Company.
The following table sets forth a summary
of the November 2016 Management Case:
|
|
Fiscal Year ending December 31,
|
|
|
|
|
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
2022E
|
|
|
2023E
|
|
|
2024E
|
|
|
2025E
|
|
|
2026E
|
|
|
|
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,170
|
|
|
$
|
1,278
|
|
|
$
|
1,357
|
|
|
$
|
1,503
|
|
|
$
|
1,568
|
|
|
$
|
1,630
|
|
|
$
|
1,689
|
|
|
$
|
1,746
|
|
|
$
|
1,788
|
|
|
$
|
1,821
|
|
EBITDA
(1)
|
|
|
532
|
|
|
|
587
|
|
|
|
632
|
|
|
|
665
|
|
|
|
680
|
|
|
|
695
|
|
|
|
706
|
|
|
|
715
|
|
|
|
715
|
|
|
|
707
|
|
EBIT
(1)
|
|
|
440
|
|
|
|
489
|
|
|
|
529
|
|
|
|
558
|
|
|
|
580
|
|
|
|
593
|
|
|
|
603
|
|
|
|
611
|
|
|
|
609
|
|
|
|
600
|
|
Stock-based compensation expense
|
|
|
(16
|
)
|
|
|
(17
|
)
|
|
|
(17
|
)
|
|
|
(18
|
)
|
|
|
(19
|
)
|
|
|
(20
|
)
|
|
|
(21
|
)
|
|
|
(21
|
)
|
|
|
(22
|
)
|
|
|
(22
|
)
|
Taxes
|
|
|
(157
|
)
|
|
|
(175
|
)
|
|
|
(189
|
)
|
|
|
(189
|
)
|
|
|
(196
|
)
|
|
|
(201
|
)
|
|
|
(204
|
)
|
|
|
(206
|
)
|
|
|
(206
|
)
|
|
|
(202
|
)
|
NOPAT
(2)
|
|
|
267
|
|
|
|
298
|
|
|
|
322
|
|
|
|
351
|
|
|
|
364
|
|
|
|
373
|
|
|
|
379
|
|
|
|
383
|
|
|
|
382
|
|
|
|
376
|
|
Depreciation
|
|
|
25
|
|
|
|
32
|
|
|
|
37
|
|
|
|
41
|
|
|
|
35
|
|
|
|
36
|
|
|
|
37
|
|
|
|
39
|
|
|
|
40
|
|
|
|
41
|
|
Amortization
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
Capital expenditures
|
|
|
(75
|
)
|
|
|
(55
|
)
|
|
|
(45
|
)
|
|
|
(45
|
)
|
|
|
(35
|
)
|
|
|
(35
|
)
|
|
|
(35
|
)
|
|
|
(35
|
)
|
|
|
(35
|
)
|
|
|
(35
|
)
|
Changes in net working capital
|
|
|
11
|
|
|
|
(25
|
)
|
|
|
(22
|
)
|
|
|
(61
|
)
|
|
|
(27
|
)
|
|
|
(26
|
)
|
|
|
(25
|
)
|
|
|
(24
|
)
|
|
|
(18
|
)
|
|
|
(14
|
)
|
Unlevered free cash flow
(3)
|
|
|
$294
|
|
|
|
$315
|
|
|
|
$358
|
|
|
|
$351
|
|
|
|
$403
|
|
|
|
$414
|
|
|
|
$422
|
|
|
|
$429
|
|
|
|
$435
|
|
|
|
$434
|
|
|
(1)
|
The Company’s EBITDA represents net income before deducting
for net interest expense, income tax expense, depreciation, amortization
and stock-based compensation expense. The Company’s EBIT represents
net income before deducting for net interest expense, income tax expense
and stock-based compensation expense. EBITDA and EBIT are non-GAAP financial
measures and should not be considered as an alternative to net income
or operating income as a measure of operating performance or cash flows
or as a measure of liquidity.
|
|
(2)
|
The Company’s net operating profits after taxes, or NOPAT,
is defined as EBIT, less stock-based compensation expense, less projected
taxes. NOPAT is a non-GAAP financial measure and should not be considered
as an alternative to net income or operating income as a measure of
operating performance or cash flows or as a measure of liquidity.
|
|
(3)
|
The Company’s unlevered free cash flows are defined as
NOPAT, plus depreciation, plus amortization, less capital expenditures,
less (plus) increase (decrease) in net working capital. Unlevered free
cash flows is a non-GAAP financial measure and should not be considered
as an alternative to net income or operating income as a measure of
operating performance or cash flows or as a measure of liquidity.
|
Following the December 2, 2016 meeting
of the Board and receipt of Fresenius Kabi’s non-binding indication of interest on February 3, 2017, in March 2017, the Company’s
management updated the November 2016 Management Case to reflect recent developments with respect to certain of the Company’s
products and developments in the markets in which the Company operates, including new market entrants, improvements in base business
products and other opportunities, as well as to further refine certain of the assumptions and estimates related to near-term pipeline
products (the “March 2017 Management Case”). The projections contained in the March 2017 Management Case for the remainder
of fiscal year 2017 and fiscal years 2018
through 2020 were prepared by the Company’s management based on the projections
contained in the November 2016 Management Case for the corresponding periods and the updated information, assumptions and estimates
described in the preceding sentence. The projections contained in the March 2017 Management Case for fiscal years 2021 through
2026 were prepared by the Company’s management by applying a growth rate determined based on a number of factors to the projected
fiscal year 2020 revenue, which growth rate was then decreased year-over-year following fiscal year 2021, and by applying adjustments
to EBITDA margin from the projected fiscal year 2020 based on the reasonable judgment of management (collectively, the “March
2017 Management Case Extrapolations”). The November 2016 Management Case and the March 2017 Management Case are collectively
referred to as the “Financial Forecasts”. The March 2017 Management Case was prepared by the Company’s management
in good faith based on the Company’s management’s reasonable best estimates and assumptions with respect to the Company’s
future financial performance at the time such forecasts was prepared and speaks only as of that time.
The March 2017 Management Case was prepared
by the Company’s management and was first presented to the Board at its meeting held on March 25, 2017. The March 2017 Management
Case was not made available to Fresenius Kabi. However, the Company’s management provided information to Fresenius Kabi as
to how certain assumptions and estimates underlying the November 2016 Management Case would change to reflect the information about
recent developments that was used to prepare the March 2017 Management Case.
The November 2016 Management Case made available
to the Board was not relied upon by the Board in reaching its determination on April 24, 2017 to adopt the merger agreement and
the transactions contemplated thereby and to recommend that the Company’s shareholders vote to approve the merger agreement,
and the March 2017 Management Cast was the only forecast approved by the Company for use by J.P. Morgan in connection with rendering
its oral opinion delivered to the Board, which was subsequently confirmed by delivery of a written opinion dated as of April 24,
2017, and performing its financial analysis in connection therewith.
The following table sets forth a summary of
the March 2017 Management Case:
|
|
Fiscal Year ending December 31,
|
|
|
|
|
|
|
|
2017E
(1)
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
2022E
|
|
|
2023E
|
|
|
2024E
|
|
|
2025E
|
|
|
2026E
|
|
|
|
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$834
|
|
|
$
|
1,157
|
|
|
$
|
1,258
|
|
|
$
|
1,399
|
|
|
$
|
1,459
|
|
|
$
|
1,517
|
|
|
$
|
1,572
|
|
|
$
|
1,625
|
|
|
$
|
1,664
|
|
|
$
|
1,680
|
|
EBITDA
(2)
|
|
|
336
|
|
|
|
492
|
|
|
|
555
|
|
|
|
589
|
|
|
|
615
|
|
|
|
639
|
|
|
|
657
|
|
|
|
665
|
|
|
|
665
|
|
|
|
652
|
|
EBIT
(2)
|
|
|
268
|
|
|
|
394
|
|
|
|
453
|
|
|
|
482
|
|
|
|
514
|
|
|
|
537
|
|
|
|
554
|
|
|
|
561
|
|
|
|
560
|
|
|
|
545
|
|
Stock-based compensation expense
|
|
|
(12
|
)
|
|
|
(17
|
)
|
|
|
(17
|
)
|
|
|
(18
|
)
|
|
|
(19
|
)
|
|
|
(20
|
)
|
|
|
(21
|
)
|
|
|
(21
|
)
|
|
|
(22
|
)
|
|
|
(22
|
)
|
Taxes
|
|
|
(95
|
)
|
|
|
(140
|
)
|
|
|
(161
|
)
|
|
|
(162
|
)
|
|
|
(173
|
)
|
|
|
(181
|
)
|
|
|
(187
|
)
|
|
|
(189
|
)
|
|
|
(188
|
)
|
|
|
(183
|
)
|
NOPAT
(3)
|
|
|
161
|
|
|
|
238
|
|
|
|
274
|
|
|
|
302
|
|
|
|
322
|
|
|
|
336
|
|
|
|
347
|
|
|
|
351
|
|
|
|
350
|
|
|
|
340
|
|
Depreciation
|
|
|
19
|
|
|
|
32
|
|
|
|
37
|
|
|
|
41
|
|
|
|
35
|
|
|
|
36
|
|
|
|
37
|
|
|
|
39
|
|
|
|
40
|
|
|
|
41
|
|
Amortization
|
|
|
49
|
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
|
|
66
|
|
Capital expenditures
|
|
|
(56
|
)
|
|
|
(55
|
)
|
|
|
(45
|
)
|
|
|
(45
|
)
|
|
|
(35
|
)
|
|
|
(35
|
)
|
|
|
(35
|
)
|
|
|
(35
|
)
|
|
|
(35
|
)
|
|
|
(35
|
)
|
Changes in net working capital
|
|
|
1
|
|
|
|
(5
|
)
|
|
|
(28
|
)
|
|
|
(59
|
)
|
|
|
(25
|
)
|
|
|
(24
|
)
|
|
|
(23
|
)
|
|
|
(22
|
)
|
|
|
(16
|
)
|
|
|
(7
|
)
|
Unlevered free cash flow
(4)
|
|
|
$174
|
|
|
|
$275
|
|
|
|
$304
|
|
|
|
$305
|
|
|
|
$362
|
|
|
|
$379
|
|
|
|
$392
|
|
|
|
$398
|
|
|
|
$404
|
|
|
|
$405
|
|
|
(1)
|
Reflects revenue projections from April 1, 2017 to December 31,
2017 as of the time the March 2017 Management Case was prepared.
|
|
(2)
|
The Company’s EBITDA represents net income before deducting
for net interest expense, income tax expense, depreciation, amortization
and stock-based compensation expense. The Company’s EBIT represents
net income before deducting for net interest expense, income tax expense
and stock-based compensation expense. EBITDA and EBIT are non-GAAP financial
measures and should not be considered as an alternative to net income
or operating income as a measure of operating performance or cash flows
or as a measure of liquidity.
|
|
(3)
|
The Company’s net operating profits after taxes, or NOPAT,
is defined as EBIT, less stock-based compensation expense, less projected
taxes. NOPAT is a non-GAAP financial measure and should not be considered
as an alternative to net income or operating income as a measure of
operating performance or cash flows or as a measure of liquidity.
|
|
(4)
|
The Company’s unlevered free cash flows are defined as
NOPAT, plus depreciation, plus amortization, less capital expenditures,
less (plus) increase (decrease) in net working capital. Unlevered free
cash flows is a non-GAAP financial measure and should not be considered
as an alternative to net income or operating income as a measure of
operating performance or cash flows or as a measure of liquidity.
|
The non-GAAP financial measures included
in the November 2016 Management Case and the March 2017 Management Case constitute forward-looking information, and the
Company believes that a quantitative reconciliation of such forward-looking information to the most comparable financial
measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts. A
reconciliation of these non-GAAP financial measures would require the Company to quantify merger-related costs, purchase
price accounting effects, amortization expense of acquisition-related intangibles, asset impairment charges, amounts related
to securities litigation and governmental investigations, restructuring charges and gains or losses relating to sales of
assets. These items cannot be reliably quantified due to the combination of variability and volatility of such components and
may, depending on the size of the components, have a significant impact on the reconciliation. If these items could be
quantified, they may be significant for the following reasons:
|
•
|
The Company may make one or more acquisition during the periods covered by the November 2016 Management Case and the
March 2017 Management Case, any of which would likely have a significant impact on the Company’s merger-related costs
and purchase price accounting. Recent acquisitions by the Company have ranged from $28.5 million to
approximately $650 million. The Company does not have a reasonable basis to predict the timing, value or nature of any
future potential acquisitions which could have a probable
material impact on these reconciling items;
|
|
•
|
Certain of the Company’s assets may be significantly impaired over the periods covered by the November 2016
Management Case and the March 2017 Management Case. The Company does not have a reasonable basis to predict the timing,
amount and nature of any future potential impairment charges which could have a probable material impact on this reconciling
item;
|
|
•
|
Amounts related to securities litigation and governmental investigations are contingent on the initiation of such litigation
or investigations by shareholders or the applicable governmental entities, both of which are outside the Company’s control.
As a result, the Company does not have a reasonable basis to predict the timing, amount or nature of any potential charges that
could impact this reconciling item;
|
|
•
|
As a result of restructuring activities that may be undertaken by the Company during the periods covered by the November
2016 Management Case and the March 2017 Management Case, the Company would likely incur significant charges. The Company may
in the future determine to exit certain facilities and/or restructure its operations, each of those decisions being
independent from one another. The amount and timing of the restructuring charges (and any reversals of charges recorded in
prior periods) associated with these activities are wholly dependent upon the nature and timing of those restructuring
activities. Restructuring charges could include, among other things, headcount reductions and associated severance and
benefits costs, exit costs associated with closing office space or other locations and other contract cancellation charges,
all of which are highly dependent upon the details of the particular restructuring activity. Estimating future restructuring
charges (and reversals of charges) would require the Company to speculate about the occurrence and timing of
future restructuring activities, which are both inherently uncertain; and
|
|
•
|
The Company may sell assets over the periods covered by the November 2016 Management Case and the March 2017 Management
Case and the gain or loss on such sales may be significant. Gains or losses on such sales have been inconsistent in amount
and frequency, and future gains or losses will be significantly impacted by the timing and nature of the Company’s
decisions to conduct sales of its assets. Estimating future gains and losses would therefore require the Company to speculate
about the timing of these future asset sales and the assets involved in any such sales, both of which are inherently
uncertain. It would be impracticable to quantify with any reasonable reliability the book value of the relevant assets and
the value to be received for such assets in order to determine the associated amount of the gain or loss on such sale.
|
Certain Effects of the Merger
If the proposal to approve the merger agreement
receives the affirmative vote of shareholders holding at least a majority of the issued and outstanding Company common shares and
the other conditions to the closing of the merger are either satisfied or (if permissible under applicable law) waived, Merger
Sub will be merged with and into the Company upon the terms set forth in the merger agreement. As the surviving corporation in
the merger, the Company will continue to exist following the merger as a subsidiary of Fresenius Kabi.
Following the merger, all of the Company common
shares will be beneficially owned by Fresenius Kabi, and none of the current holders of Company common shares will, by virtue of
the merger, have any ownership interest in, or be a shareholder of, the Company, the surviving corporation or Fresenius Kabi or
Fresenius Parent after the consummation of the merger. As a result, the current holders of Company common shares will no longer
benefit from any increase in the value, nor will they bear the risk of any decrease in the value, of Company common shares. Following
the merger, Fresenius Kabi will benefit from any increase in the Company’s value and also will bear the risk of any decrease
in the Company’s value.
Upon the consummation of the merger, each Company
common share issued and outstanding immediately prior to the effective time of the merger (other than Company common shares owned
by the Company as treasury shares or owned by Fresenius Kabi or Merger Sub and other than Company common shares owned by wholly
owned subsidiaries of the Company or Fresenius Kabi (other than Merger Sub) that Fresenius Kabi has elected to be canceled) will
be canceled and converted into the right to receive $34.00 in cash, without interest and less any applicable withholding taxes.
Please see the sections of this proxy statement
entitled “
The Merger Agreement—Consideration to be Received in the Merger
” and “
The Merger Agreement—Cancellation
of Shares
” beginning on page 61.
For information regarding the effects of the
merger on the Company’s outstanding equity awards, please see the section below entitled “
—Interests of the
Company’s Directors and Executive Officers in the Merger
” beginning on page 51 and the section of this proxy
statement entitled “
The Merger Agreement—Treatment of Equity and Equity-Based Awards
” beginning on page
61.
The Company common shares are currently registered
under the Exchange Act and trades on the NASDAQ under the symbol “AKRX”. Following the consummation of the merger,
Company common shares will no longer be traded on the NASDAQ or any other public market. In addition, the registration of Company
common shares under the Exchange Act will be terminated and the Company will no longer be required to file periodic and other reports
with the SEC with respect to the Company common shares. Termination of registration of the Company common shares under the Exchange
Act will reduce the information required to be furnished by the Company to the Company’s shareholders and the SEC.
Effects on the Company if the Merger Is Not
Completed
In the event that the proposal to approve the
merger agreement does not receive the required approval from the holders of Company common shares, or if the merger is not completed
for any other reason, the holders of Company common shares will not receive any payment for their Company common shares in connection
with the merger. Instead, the Company will remain an independent public company, the Company common shares will continue to be
listed and traded on the NASDAQ, the Company common shares will continue to be registered under the Exchange Act and the Company’s
shareholders will continue to own their Company common shares and will continue to be subject to the same general risks and opportunities
as they currently are with respect to ownership of Company common shares.
If the merger is not completed, there is no
assurance as to the effect of these risks and opportunities on the future value of your Company common shares, including the risk
that the market price of Company common shares may decline to the extent that the current market price of the Company common shares
reflect a market assumption that the merger will be completed. If the merger is not completed, there is no assurance that any other
transaction acceptable to the Company will be offered or that the business, operations, financial condition, earnings or prospects
of the Company will not be adversely impacted. Pursuant to the merger agreement, under certain circumstances the Company is permitted
to terminate the merger agreement in order to enter into an alternative transaction. Please see the section of this proxy statement
entitled “
The Merger Agreement—Termination
” beginning on page 73.
Under certain circumstances, if the merger
is not completed, the Company may be obligated to pay to Fresenius Kabi a termination fee. Please see the section of this proxy
statement entitled “
The Merger Agreement—Termination Fee
” beginning on page 74.
Financing of the Merger
The merger agreement does not contain any financing-related
closing condition and Fresenius Kabi has represented that it will have sufficient funds at closing to fund the payment of the merger
consideration and any other payments required in connection with the consummation of the merger. Fresenius Kabi has informed the
Company that it expects that funds needed by Fresenius Kabi and Merger Sub in connection with the merger will be derived from a
broad mix of Euro and U.S. dollar denominated debt instruments.
No Appraisal Rights
Appraisal rights are statutory rights that,
if applicable under law, enable a shareholder of a Louisiana corporation to avoid the effects of a proposed corporate action, such
as the merger, by selling the shareholder’s shares to the corporation at their fair value, paid in cash. Under the LBCA,
however, a shareholder of a Louisiana corporation does not have appraisal rights in connection with a merger or other extraordinary
transaction if the corporation’s outstanding shares are a “covered security” under Section 18(b)(1)(A) or (B)
of the Securities Act of 1933, as amended. A “covered security” includes, among other things, a security listed on
the NASDAQ. Company common shares are currently listed on the NASDAQ. Accordingly, shareholders of the Company are not entitled
to appraisal rights in connection with the merger.
Litigation Related to the Merger
On May 2, 2017, a purported shareholder of the Company filed
a complaint in a putative class and derivative action in the Circuit Court of Cook County, Illinois, County Department, Chancery
Division, captioned
Robert J. Shannon, Jr. v. Fresenius Kabi AG, et al.
, Case No. 2017-CH-06322. On May 16, 2017, a purported
shareholder of the Company filed a complaint in a putative class and derivative action in the Circuit Court of Cook County, Illinois,
County Department, Chancery Division, captioned
Daniel Ochoa v. John N. Kapoor, et al.
, Case No. 2017-CH-06928. The Shannon
Action and the Ochoa Action allege, among other things, that in pursuing the merger, the directors of the Company breached their
fiduciary duties to the Company and its shareholders by, among other things, agreeing to enter into the merger agreement for an
allegedly unfair price and as the result of an allegedly deficient process. The Shannon Action and the Ochoa Action also allege
that Fresenius Kabi, Fresenius Parent and Merger Sub aided and abetted the other defendants’ alleged breaches of their fiduciary
duties. The Shannon Action and the Ochoa Action seek, among other things, to enjoin the transactions contemplated by the merger
agreement or, in the alternative, to recover monetary damages.
On June 2, 2017, a purported shareholder of the Company filed
a complaint in a putative class action in the United States District Court for the Middle District of Louisiana, captioned
Robert
Berg v. Akorn, Inc., et al.
, Case No. 3:17-cv-00350. On June 7, 2017, a purported shareholder of the Company filed a complaint
in a putative class action in the United States District Court for the Middle District of Louisiana, captioned
Jorge Alcarez
v. Akorn, Inc., et al.
, Case No. 3:17-cv-00359. The Berg Action and the Alcarez Action allege that the Company’s preliminary
proxy statement, filed with the SEC on May 22, 2017, omits material information with respect to the merger, rendering it false
and misleading and thus that the Company, the directors of the Company and the CEO of the Company violated Section 14(a) of the Exchange
Act as well as SEC Rule 14a-9. The Berg Action further alleges that Fresenius Kabi, the directors of the Company and the CEO of
the Company violated Section 20(a) of the Exchange Act. Similarly, the Alcarez Action also alleges that the directors of the Company
and the CEO of the Company violated Section 20(a) of the Exchange Act. The Berg Action and Alcarez Action seek, among other things,
an order requiring the dissemination of a proxy statement that does not contain allegedly untrue statements of material fact and
that states all material facts allegedly required or necessary to make the proxy statement not misleading; an order enjoining the
transactions contemplated by the merger agreement; an award of rescissory damages should the merger be consummated; and an award
of attorneys’ fees and expenses.
On June 12, 2017, a purported shareholder
of the Company filed a complaint in a putative class action in the United States District Court for the Middle District of Louisiana,
captioned
Shaun A. House v. Akorn, Inc., et al.
, Case No. 3:17-cv-00367. On June 13, 2017, a purported shareholder of the
Company filed a complaint in a putative class action in the United States District Court for the Northern District of Illinois,
captioned
Robert Carlyle v. Akorn, Inc., et al.
, Case No. 1:17-cv-04455. On June 14, 2017, a purported shareholder of
the Company filed a complaint in a putative class action in the United States District Court for the Middle District of Louisiana,
captioned
Sean Harris v. Akorn, Inc. et at.,
Case No. 3:17-cv-00373. The House Action, the Carlyle Action and the Harris Action allege that the Company’s preliminary
proxy statement, filed with the SEC on May 22, 2017, omits material information with respect to the merger, rendering it false
and misleading and thus that the Company and the directors of the Company violated Section 14(a) of the Exchange Act as well as SEC
Rule 14a-9. The House Action, the Carlyle Action and the Harris Action further allege that the directors of the Company violated Section 20(a) of
the Exchange Act. The House Action and the Harris Action seek, among other things, to enjoin the transactions contemplated by the merger agreement
unless the Company discloses the allegedly material information that was allegedly omitted from the proxy statement, an award
of damages and an award of attorneys’ fees and expenses. The Carlyle Action seeks, among other things, to enjoin the transactions
contemplated by the merger agreement unless the Company adopts and implements a procedure or process to obtain certain unspecified
terms for shareholders and discloses the allegedly material information that was allegedly omitted from the proxy statement, rescission,
to the extent already implemented, of the transactions contemplated by the merger agreement or of the terms thereof, an award
of damages and an award of attorneys’ fees and expenses.
The Company believes that the Shannon Action, the Ochoa Action,
the Berg Action, the Alcarez Action, the House Action, the Carlyle Action and the Harris Action are without merit and intends to vigorously defend them.
Interests of the Company’s Directors
and Executive Officers in the Merger
The Company’s directors and executive
officers have financial interests in the merger that may be different from, or in addition to, the interests of the Company’s
shareholders generally. The members of the Board were aware of and considered these interests in reaching the determination to
adopt the merger agreement and recommend that the holders of Company common shares vote their Company common shares to approve
the merger agreement.
Treatment of Equity and Equity-Based Awards
As described further in the section entitled
“
The Merger Agreement—Treatment of Equity and Equity-Based Awards
” beginning on page 61, each outstanding
Company stock option and each Company RSU granted prior to the date of the merger agreement will be cashed out upon the effective
time of the merger, and each outstanding Company RSU granted following the date of the merger agreement will be converted at the
effective time of the merger into an unvested award representing the opportunity to receive a fixed cash amount, payable in installments
in accordance with the Company RSU’s original vesting schedule.
Any such converted awards held by the Company’s
executive officers will vest and be paid on an accelerated basis in the event the executive officer’s employment is terminated
by the Company without cause or by the executive officer with “good reason” within the ninety-day period prior to,
or the twelve-month period following, the completion of the merger. For these purposes, “good reason” generally means
(a) a material and adverse change in the executive officer’s status or responsibilities, the assignment to the executive
officer of any duties or responsibilities which are materially inconsistent with the executive officer’s status or responsibilities,
or any action by the Company that results in a material diminution in the executive officer’s position, authority, duties
or responsibilities (in each case without sole regard to any change in title or the Company’s status as a public or private
entity); (b) a reduction in the executive officer’s base salary (except to the extent such reduction is not due to a change
in control and is part of a comprehensive reduction in salary applicable to employees of the Company generally and is comparable
to the reduction applied to employees of the Company at the same career level as the executive officer); (c) the Company requiring
the executive officer to be based at any place outside a 50-mile radius from the executive officer’s job location or residence
without the executive officer’s written consent, except for travel that is reasonably necessary in connection with the Company’s
business; (d) the insolvency or the filing of a petition for bankruptcy of the Company that is not dismissed within 60 days; and
(e) the failure of the Company to obtain an agreement, satisfactory to the executive officer, from any successor entities to assume
the award agreement.
The following table sets forth the number
of Company stock options and Company RSUs held by each of the Company’s directors and executive officers as of June 9 ,
2017, the latest practicable date to determine such amounts before the filing of this proxy statement, and the cash amounts payable
(on a pre-tax basis) in respect thereof. The amounts reflected in the table below exclude any grants that may be made following
June 9 , 2017 and any Company stock options and Company RSUs that are vested or are expected to vest in accordance with
their terms prior to December 31, 2017 (the assumed date of the completion of the merger solely for purposes of this transaction-related
compensation disclosure). In addition, depending on when the merger occurs, certain equity awards that are included in the table
below may be forfeited pursuant to their terms, without regard to the merger. Company stock options are valued based on the difference
between the per share exercise price of such Company stock option and the merger consideration of $34.00 per share. As a result,
any Company stock option included in the table below that has an exercise price that is greater than or equal to the merger consideration
does not have any value for purposes of the table below. Company RSUs are valued based on the merger consideration of $34.00 per
share. Payments in respect of the Company RSUs granted following the date of the merger agreement are “double-trigger”
in that they will be paid only if the holder experiences a qualifying termination of employment prior to or following the effective
time of the merger, or if the awards otherwise vest in accordance with their terms.
Name
|
|
Unvested Company
Stock Options
|
|
|
Company RSUs
Granted Prior to
Date of Merger
Agreement
|
|
|
Company RSUs
Granted Following
Date of Merger
Agreement
|
|
|
Total
|
|
|
|
(#) (1)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John N. Kapoor, Ph.D.
|
|
|
5,800
|
|
|
|
$26,100
|
|
|
|
2,330
|
|
|
|
$79,220
|
|
|
|
8,088
|
|
|
|
$274,992
|
|
|
|
$380,312
|
|
Kenneth S. Abramowitz
|
|
|
5,800
|
|
|
|
$26,100
|
|
|
|
2,330
|
|
|
|
$79,220
|
|
|
|
8,088
|
|
|
|
$274,992
|
|
|
|
$380,312
|
|
Adrienne L. Graves, Ph.D.
|
|
|
5,800
|
|
|
|
$26,100
|
|
|
|
2,330
|
|
|
|
$79,220
|
|
|
|
8,088
|
|
|
|
$274,992
|
|
|
|
$380,312
|
|
Ronald M. Johnson
|
|
|
5,800
|
|
|
|
$26,100
|
|
|
|
2,330
|
|
|
|
$79,220
|
|
|
|
8,088
|
|
|
|
$274,992
|
|
|
|
$380,312
|
|
Steven J. Meyer
|
|
|
5,800
|
|
|
|
$26,100
|
|
|
|
2,330
|
|
|
|
$79,220
|
|
|
|
8,088
|
|
|
|
$274,992
|
|
|
|
$380,312
|
|
Terry Allison Rappuhn
|
|
|
5,800
|
|
|
|
$26,100
|
|
|
|
2,330
|
|
|
|
$79,220
|
|
|
|
8,088
|
|
|
|
$274,992
|
|
|
|
$380,312
|
|
Brian Tambi
|
|
|
5,800
|
|
|
|
$26,100
|
|
|
|
4,338
|
|
|
|
$147,492
|
|
|
|
8,088
|
|
|
|
$274,992
|
|
|
|
$448,584
|
|
Alan Weinstein
|
|
|
5,800
|
|
|
|
$26,100
|
|
|
|
2,330
|
|
|
|
$79,220
|
|
|
|
8,088
|
|
|
|
$274,992
|
|
|
|
$380,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raj Rai
|
|
|
340,334
|
|
|
|
$2,679,101
|
|
|
|
51,554
|
|
|
|
$1,752,836
|
|
|
|
100,824
|
|
|
|
$3,428,016
|
|
|
|
$7,859,953
|
|
Duane A. Portwood
|
|
|
206,250
|
|
|
|
$1,263,938
|
|
|
|
–
|
|
|
|
$–
|
|
|
|
34,412
|
|
|
|
$1,170,008
|
|
|
|
$2,433,946
|
|
Joseph Bonaccorsi
|
|
|
107,440
|
|
|
|
$840,166
|
|
|
|
32,856
|
|
|
|
$1,117,104
|
|
|
|
33,529
|
|
|
|
$1,139,986
|
|
|
|
$3,097,256
|
|
Bruce Kutinsky. Pharm. D.
|
|
|
97,928
|
|
|
|
$633,986
|
|
|
|
10,821
|
|
|
|
$367,914
|
|
|
|
44,382
|
|
|
|
$1,508,988
|
|
|
|
$2,510,888
|
|
Steven Lichter
|
|
|
176,488
|
|
|
|
$630,846
|
|
|
|
1,906
|
|
|
|
$64,804
|
|
|
|
9,853
|
|
|
|
$335,002
|
|
|
|
$1,030,652
|
|
Jonathan Kafer
|
|
|
108,538
|
|
|
|
$355,274
|
|
|
|
1,906
|
|
|
|
$64,804
|
|
|
|
9,853
|
|
|
|
$335,002
|
|
|
|
$755,080
|
|
Randall E. Pollard
|
|
|
78,546
|
|
|
|
$391,257
|
|
|
|
2,622
|
|
|
|
$89,148
|
|
|
|
8,500
|
|
|
|
$289,000
|
|
|
|
$769,405
|
|
Treatment of Purchase Rights under the Company ESPP
The merger agreement provides that prior to
the effective time of the merger, no new offering periods under the ESPP will commence, no person will be permitted to increase
his or her payroll elections through the ESPP and no new individuals will be permitted to commence participation in the ESPP. If
the closing date of the merger is scheduled to occur before the scheduled purchase date for the then-current purchase period under
the ESPP, then the final purchase date will be set before the effective time of the merger. On the final purchase date, each participant’s
accumulated payroll deductions under the ESPP will be used to purchase Company common shares, and all such Company common shares
will be treated, upon the effective time of the merger, in the same manner as Company common shares held by all other shareholders
of the Company. The ESPP will be terminated prior to the effective time of the merger, immediately after the final purchase date.
The estimated aggregate value of the amounts
the Company’s executive officers would receive (on a pre-tax basis) in respect of their purchase rights under the ESPP, less
their accumulated payroll deductions, is $98,146, assuming each executive officer’s anticipated accumulated payroll deductions
through December 31, 2017 (the assumed date of the completion of the merger solely for purposes of this transaction-related compensation
disclosure) are used to purchase Company common shares immediately prior to the termination of the ESPP and such Company common
shares are exchanged for merger consideration as described above.
Severance Entitlements
Each of Messrs Rai, Portwood, Bonaccorsi and
Kutinsky is party to an individual employment agreement and each of Messrs. Lichter, Pollard and Kafer participate in the Company’s
Key Executive and Management Change-in-Control Severance Program, which we refer to as the “CIC Severance Program”.
The employment agreements and the CIC Severance Program provide for severance payments and other benefits in the event of a “qualifying
termination”, which constitutes a termination of employment by the Company without cause or by the executive officer for
“good reason” (as described below) within the period of ninety-days prior to the Company entering into a definitive
agreement that results in a change in control of the Company and the twelve-month period following a change in control of the Company,
in the case of the employment agreements with Messrs. Rai, Portwood and Kutinsky, or within the ninety-day period prior to or the
twelve-month period
following a change in control of the Company,
in the case of the employment agreement with Mr. Bonaccorsi and the CIC Severance Program. The merger will constitute a change
of control of the Company for purposes of the executive officers’ employment agreements and the CIC Severance Program. For
purposes of the employment agreements and the CIC Severance Program, “Good Reason” has the meaning as described above
in the section entitled “
Interests of the Company’s Directors and Executive Officers in the Merger – Treatment
of Equity and Equity-Based Awards
”.
In the event of a qualifying termination,
Messrs Rai, Portwood, Bonaccorsi and Kutinsky would be entitled to receive: (a) a lump-sum payment equal to the product of three
times (in the case of Mr. Rai) or two times (in the case of Messrs. Portwood, Bonaccorsi and Kutinsky) the sum of the executive’s
base salary and total eligible bonus amount; and (b) continued health and welfare benefits for three years (in the case of Mr.
Rai) or two years (in the case of Messrs. Portwood, Bonaccorsi and Kutinsky). In the event of a qualifying termination, Messrs.
Lichter, Pollard and Kafer would be entitled to receive a lump-sum payment equal to one times the executive’s base salary
and continued health and welfare benefits for one year. Receipt of the above-described payments and benefits is conditioned upon
the applicable executive officer executing a release of claims in favor of the Company. The estimated aggregate value of the severance
payments and benefits the Company’s executive officers would receive in the event of a qualifying termination prior to or
following the completion of the merger is $12,539,798. The foregoing estimate is based on compensation and benefit levels in effect
as of June 9 , 2017. The employment agreements with Messrs. Rai, Portwood, Bonaccorsi and Kutinsky also provide for payment
of a pro-rata portion of the executive officer’s total eligible bonus amount for the year in which such termination occurs.
The CIC Severance Program will be amended prior to the completion of the merger to provide for a similar pro-rata bonus payment.
The executive officer’s outstanding unvested equity awards would be treated as described above in the section entitled “
Interests
of the Company’s Directors and Executive Officers in the Merger – Treatment of Equity and Equity-Based Awards
”.
The employment agreements provide that in the
event that any payment or benefit payable to each of Messrs Rai, Portwood, Bonaccorsi and Kutinsky in connection with his separation
with the Company would constitute a parachute payment within the meaning of Section 280G of the Internal Revenue Code of 1986,
as amended, which we refer to as the “Code”, then the payments will be reduced to the largest amount which would result
in no portion of the payments being subject to the excise tax. Neither the employment agreements nor the CIC Severance Program
provide for a gross-up in the event the executive officer is subject to the “golden parachute” excise tax under Section
4999 of the Code.
New Management Arrangements
As of the date of this proxy statement, there
are no employment, equity contribution or other agreements, arrangements or understandings between any of the Company’s directors
or executive officers, on the one hand, and Fresenius Kabi, on the other hand, and the merger is not conditioned upon any of the
Company’s directors or executive officers entering into any such agreement, arrangement or understanding.
Fresenius Kabi and the Company have agreed
that the Company may grant cash retention bonuses, not to exceed $8.0 million in the aggregate, to the Company’s employees,
including the Company’s executive officers. As of the date of this proxy statement, Messrs. Kafer, Lichter and Pollard
have received retention awards providing for aggregate payments of $500,000, $335,000 and $250,000, respectively, in each case
payable in two equal installments as soon as practicable following the closing of the merger and the ninety-day anniversary thereof,
subject to the executive officer’s continued employment. The retention awards would vest and become payable on an accelerated
basis in the event of a termination without cause. In addition, the retention awards would vest (but would continue to be paid
according to their normal payment schedule) in the event of a resignation for “Good Reason” (as described above in
the section entitled “
Interests of the Company’s Directors and Executive Officers in the Merger—Treatment of
Equity and Equity-Based Awards
”) more than forty-five days following the closing of the merger. No determinations
have been made as to whether any other executive officer will receive an award, the payment and other terms of any such
potential awards or the amounts of any such potential awards to any particular individual.
Continuing Employee Benefits
The merger agreement provides that for a period
of not less than one year following the effective time, Fresenius Kabi will, and will cause the surviving corporation to, provide
each individual who was an employee of the Company or any of its subsidiaries immediately prior to the effective time of the merger,
which we refer to as a “continuing employee”, with (a) a base salary that is no less favorable than such continuing
employee’s base salary as in effect immediately prior to the effective time of the merger, (b) severance benefits that are
no less favorable than those that would have been provided to such continuing employee under the Company’s severance benefit
plans, programs, policies, agreements and arrangements and (c) employee benefit plans and arrangements (other than base salary,
bonus, commissions, annual incentives and severance benefits) that are substantially comparable in the aggregate to those provided
to such continuing employee immediately prior to the effective time of the merger.
In addition, on or as soon as practicable after
the effective time, the surviving corporation will, or will cause its subsidiaries to, pay each continuing employee an amount in
respect of such continuing employee’s annual bonus, commission or incentive plan award for the plan year in which the closing
occurs, prorated to reflect the number of days elapsed from the
commencement of the applicable performance period
through the effective time of the merger, based upon performance achieved through the effective time, as determined by the Company
prior to the closing date.
Following the closing date of the merger, each
continuing employee who participates in an annual bonus, commission or incentive plan of the Company immediately prior to the effective
time of the merger will be entitled to participate in an annual bonus, commission or incentive plan of Fresenius Kabi or one of
its subsidiaries on a basis substantially comparable to similarly situated employees of Fresenius Kabi and its subsidiaries and
will be eligible to receive a pro-rata annual bonus, commission or incentive plan award for the portion of plan year that elapses
following the effective time of the merger. In addition, each such continuing employee will be eligible to receive one or more
additional payments, which we refer to as the “bonus true-up payments”, in an aggregate amount equal to the shortfall,
if any, between (a) the aggregate amount of the annual bonus, commission or incentive plan award or awards he or she actually receives
or is owed under the annual bonus, commission or incentive plans of Fresenius Kabi or its subsidiaries with respect to the period
from the effective time of the merger through December 31, 2018 (including the period from the effective time through December
31, 2017, if the effective time occurs during 2017) and (b) the annual bonus, commission or incentive plan award or awards he or
she would have received for such period or periods based on his or her target annual bonus, commission or incentive plan opportunity
and base salary as in effect as of immediately prior to the effective time of the merger. The bonus true-up payments will be paid
in installments as soon as practicable following December 31, 2017 and December 31, 2018, in each case subject to the continuing
employee’s continued employment through the payment date.
Director and Officer Indemnification
Pursuant to the terms of the merger agreement,
members of the Board and executive officers of the Company will be entitled to certain ongoing indemnification and coverage under
directors’ and officers’ liability insurance policies following the merger. For a more detailed description of the
provisions of the merger agreement relating to director and officer indemnification, please see the section of this proxy statement
entitled “
The Merger Agreement—Indemnification
” beginning on page 71.
Quantification of Payments and Benefits
In accordance with Item 402(t) of Regulation
S-K, the table below sets forth for each of the Company’s named executive officers estimates of the amounts of compensation
that are based on or otherwise relate to the merger and that will or may become payable to the named executive officer either immediately
at the effective time (
i.e.
, on a “single-trigger” basis) or in the event of a qualifying termination of employment
prior to or following the merger (
i.e.
, on a “double-trigger” basis). The holders of Company common shares are
being asked to approve, on a non-binding, advisory basis, such compensation for these named executive officers. Because the vote
to approve such compensation is advisory only, it will not be binding on either the Company, the Board or Fresenius Kabi. Accordingly,
if the proposal to approve the merger agreement is approved by the holders of Company common shares and the merger is completed,
the compensation will be payable regardless of the outcome of the vote to approve such compensation, subject only to the conditions
applicable thereto, which are described in the footnotes to the tables below and above under “—
Interests of the
Company’s Directors and Executive Officers in the Merger
”.
The potential payments in the tables below
are quantified in accordance with Item 402(t) of Regulation S-K. The estimated values are based on (a) an assumption that the
merger is completed on December 31, 2017, (b) per share merger consideration of $34.00, (c) the named executive officers’
salary and total eligible bonus levels as in effect as of the date of this proxy statement, (d) the number of unvested Company
stock options and Company RSUs held by the named executive officers as of June 9 , 2017, the latest practicable date to
determine such amounts before the filing of this proxy statement, and excluding any additional grants that may occur following
such date and any Company stock options and Company RSUs that are vested or are expected to vest in accordance with their terms
prior to December 31, 2017, and (e) an assumption that each named executive officer’s employment is terminated by the Company
without “cause” or by the named executive officer for “good reason” immediately following the completion
of the merger. Depending on when the merger occurs, certain equity awards that are included in the tables below may be forfeited
pursuant to their terms, without regard to the merger. In addition, the amounts indicated below are estimates based on multiple
assumptions that may or may not actually occur, including assumptions described in this proxy statement, and do not reflect certain
compensation actions that may occur before completion of the merger. As a result, the actual amounts, if any, to be received by
a named executive officer may materially differ from the amounts set forth below.
The amounts shown below do not attempt to
quantify any reduction that may be required as a result of a Section 280G cutback; therefore, actual payments to the named executive
officers may be less than the amounts indicated below. The amounts shown below do not attempt to quantify any cash retention bonuses
the named executive officers other than Messrs. Kafer and Lichter may receive, as described in the section entitled “
Interests
of the Company’s Directors and Executive Officers in the Merger - New Management Arrangements”
beginning on page
53, or any bonus true-up payments the named executive may receive, as described in the section entitled “
Interests of
the Company’s Directors and Executive Officers in the Merger - Continuing Employee Benefits”
beginning on page
53.
Potential Payments to Named Executive Officers
Name
|
|
Cash ($)
(1)
|
|
|
Equity ($)
(2)
|
|
|
Perquisites /
Benefits ($)
(3)
|
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raj Rai
|
|
|
$6,427,500
|
|
|
|
$7,859,953
|
|
|
|
$39,699
|
|
|
|
$14,327,152
|
|
Duane A. Portwood
|
|
|
$1,638,000
|
|
|
|
$2,433,946
|
|
|
|
$26,466
|
|
|
|
$4,098,412
|
|
Joseph Bonaccorsi
|
|
|
$1,596,000
|
|
|
|
$3,097,256
|
|
|
|
$26,466
|
|
|
|
$4,719,722
|
|
Bruce Kutinsky, Pharm. D.
|
|
|
$1,760,500
|
|
|
|
$2,510,888
|
|
|
|
$26,466
|
|
|
|
$4,297,854
|
|
Jonathan Kafer
|
|
|
$835,000
|
|
|
|
$755,080
|
|
|
|
$13,233
|
|
|
|
$1,603,313
|
|
Steven Lichter
|
|
|
$670,000
|
|
|
|
$1,030,652
|
|
|
|
$13,233
|
|
|
|
$1,713,885
|
|
|
(1)
|
The estimated amounts shown in this column for Messrs. Rai, Portwood,
Bonaccorsi and Kutinsky represent a lump-sum payment equal to the
product of three times (in the case of Mr. Rai) or two times (in the
case of Messrs. Portwood, Bonaccorsi and Kutinsky) the sum of the
named executive officer’s base salary and total eligible bonus
amount. The estimated amount shown in this column for Messrs. Kafer
and Lichter represents a lump-sum payment equal to one times the named
executive officer’s base salary. These payments are “double-trigger”,
as they will only be payable in the event of a “qualifying termination”
prior to or following the effective time of the merger. Because participants
in the Company’s annual bonus plan will be paid pro-rata bonuses
based on performance through the closing date of the merger, if Messrs.
Rai, Portwood, Bonaccorsi or Kutinsky were to experience a qualifying
termination of employment immediately following the closing of the
merger, they would be eligible to receive an amount equal to the shortfall,
if any, between the amount of such pro-rata bonus payment and a pro-rata
bonus payment based on their total eligible bonus amount. This amount
has not been included in the cash severance total. The estimated
amounts shown in this column also include the retention awards Messrs.
Kafer and Lichter have received as of the date of this proxy statement.
These awards are “single-trigger” benefits in that they will be payable
in installments shortly following the closing of the merger and the
ninety-day anniversary thereof and payment is not conditioned upon a termination or resignation of the named executive
officer.
|
|
(2)
|
The estimated amounts shown in this column represent the aggregate value of the named executive officers’ unvested Company
stock options and Company RSUs. The estimated payments in respect of the named executive officers’ unvested Company Stock
Options and the named executive officer’s Company RSUs granted prior to the date of the merger agreement as shown in the
following table are “single-trigger” benefits in that they will be payable shortly following the effective time of
the merger, whether or not the named executive officer’s employment is later terminated.
|
Name
|
|
Unvested Stock Options
|
|
|
Company RSUs Granted
Prior to the Date of the
Merger Agreement
|
|
|
Total
|
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raj Rai
|
|
|
340,334
|
|
|
|
$2,679,101
|
|
|
|
51,554
|
|
|
|
$1,752,836
|
|
|
|
$4,431,937
|
|
Duane A. Portwood
|
|
|
206,250
|
|
|
|
$1,263,938
|
|
|
|
–
|
|
|
|
$–
|
|
|
|
$1,263,938
|
|
Joseph Bonaccorsi
|
|
|
107,440
|
|
|
|
$840,166
|
|
|
|
32,856
|
|
|
|
$1,117,104
|
|
|
|
$1,957,270
|
|
Bruce Kutinsky, Pharm. D.
|
|
|
97,928
|
|
|
|
$633,986
|
|
|
|
10,821
|
|
|
|
$367,914
|
|
|
|
$1,001,900
|
|
Jonathan Kafer
|
|
|
108,538
|
|
|
|
$355,274
|
|
|
|
1,906
|
|
|
|
$64,804
|
|
|
|
$420,078
|
|
Steven Lichter
|
|
|
176,488
|
|
|
|
$630,846
|
|
|
|
1,906
|
|
|
|
$64,804
|
|
|
|
$695,650
|
|
The estimated payments in respect of the named executive
officers’ Company RSUs granted following the date of the merger agreement as shown in the following table are “double-trigger”
benefits in that they will be paid to the named executive officer only if the named executive officer experiences a qualifying
termination of employment prior to or following the effective time of the merger, or if the awards otherwise vest in accordance
with their terms.
Name
|
|
Company RSUs Granted Following
the Date of the Merger Agreement
|
|
|
|
(#)
|
|
|
($)
|
|
|
|
|
|
|
|
|
Raj Rai
|
|
|
100,824
|
|
|
|
$3,428,016
|
|
Duane A. Portwood
|
|
|
34,412
|
|
|
|
$1,170,008
|
|
Joseph Bonaccorsi
|
|
|
33,529
|
|
|
|
$1,139,986
|
|
Bruce Kutinsky, Pharm. D.
|
|
|
44,382
|
|
|
|
$1,508,988
|
|
Jonathan Kafer
|
|
|
9,853
|
|
|
|
$335,002
|
|
Steven Lichter
|
|
|
9,853
|
|
|
|
$335,002
|
|
|
(3)
|
The estimated amounts shown in this column represent continued health and welfare benefits for three years, in the case of
Mr. Rai, two years, in the case of Messrs. Portwood, Bonaccorsi and Kutinsky and one year, in the case of Messrs. Kafer and Lichter.
These are “double-trigger” benefits in that they will be paid to the named executive officer only if the named executive
officer experiences a qualifying termination of employment prior to or following the effective time of the merger.
|
Material U.S. Federal Income Tax Consequences
of the Merger
The following discussion summarizes the material
U.S. federal income tax consequences to holders with respect to the disposition of the Company common shares pursuant to the merger.
This discussion is based upon the provisions of the Code, the U.S. Treasury Regulations promulgated thereunder and judicial and
administrative rulings, all as in effect as of the date of this proxy statement and all of which are subject to change or varying
interpretation, possibly with retroactive effect. Any such changes could affect the accuracy of the statements and conclusions
set forth herein.
This discussion assumes that holders of Company
common shares hold their shares as capital assets within the meaning of Section 1221 of the Code (generally, property held for
investment). This discussion does not address all aspects of U.S. federal income taxation that may be relevant to a holder of Company
common shares in light of such holder’s particular circumstances, nor does it discuss the special considerations applicable
to holders of Company common shares subject to special treatment under the U.S. federal income tax laws, such as, for example,
financial institutions or broker-dealers, mutual funds, partnerships or other pass-through entities and their partners or members,
tax-exempt organizations, retirement or other tax-deferred accounts, insurance companies, dealers in securities or non-U.S. currencies,
traders in securities who elect mark-to-market method of accounting, controlled foreign corporations, passive foreign investment
companies, U.S. expatriates, holders who acquired their Company common shares through the exercise of Company stock options or
otherwise as compensation, holders subject to the alternative minimum tax, holders who hold their Company common shares as part
of a hedge, straddle, constructive sale or conversion transaction, U.S. holders (as defined below) whose functional currency is
not the U.S. dollar, and holders who own or have owned (directly, indirectly or constructively) 5% or more of the Company’s
shares (by vote or value). In addition, this discussion does not address any tax consequences arising under the laws of any state,
local or non-U.S. jurisdiction or U.S. federal non-income tax consequences (
e.g.
, the federal estate or gift tax or the
application of the Medicare tax on net investment income under Section 1411 of the Code).
If an entity or arrangement treated as a partnership
for U.S. federal income tax purposes holds Company common shares, the tax treatment of a partner in such partnership generally
will depend on the status of the partner and activities of the partnership. If you are a partner of a partnership holding Company
common shares, you should consult your own tax advisor.
We intend this discussion to provide only a
general summary of the material U.S. federal income tax consequences of the merger to holders of Company common shares. We do not
intend it to be a complete analysis or description of all potential U.S. federal income tax consequences of the merger. The U.S.
federal income tax laws are complex and subject to varying interpretation. Accordingly, the Internal Revenue Service may not agree
with the tax consequences described in this proxy statement.
All holders should consult their own tax
advisor to determine the particular tax consequences to them (including the application and effect of any state, local or non-U.S.
income and other tax laws) of the receipt of cash in exchange for Company common shares pursuant to the merger.
For purposes of this discussion, the term “U.S.
holder” means a beneficial owner of Company common shares, that is, for U.S. federal income tax purposes:
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an individual citizen or resident of the United States;
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a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized in
or under the laws of the United States, any state thereof or the District of Columbia;
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a trust if (1) its administration is subject to the primary supervision of a court within the United States and one or more
U.S. persons, within the meaning of Section 7701(a)(30) of the Code, have the authority to control all substantial decisions of
the trust or (2) it has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person for
U.S. federal income tax purposes; or
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an estate the income of which is subject to U.S. federal income tax regardless of its source.
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A “non-U.S. holder” is a beneficial
owner (other than a partnership or an entity classified as a partnership for U.S. federal income tax purposes) of Company common
shares that is not a U.S. holder.
U.S. Holders
The receipt of cash pursuant to the merger
will be a taxable transaction for U.S. federal income tax purposes. A U.S. holder generally will recognize gain or loss for U.S.
federal income tax purposes equal to the difference, if any, between the amount of cash received pursuant to the merger and such
U.S. holder’s adjusted tax basis in the shares converted into cash pursuant to the merger. Such gain or loss generally will
be capital gain or loss, and will be long-term capital gain or loss if the holder’s holding period for such shares exceeds
one year as of the date of the merger. Long-term capital gains for certain non-corporate U.S. holders, including individuals, are
generally eligible for a reduced rate of U.S. federal income taxation. The deductibility of capital losses is subject to limitations.
If a U.S. holder acquired different blocks of Company common shares at different times or at different prices, such U.S. holder
must determine its tax basis, holding period, and gain or loss separately with respect to each block of Company common shares.
A U.S. holder may, under certain circumstances,
be subject to information reporting and backup withholding (at a rate of 28%) with respect to the cash received pursuant to the
merger, unless such holder properly establishes an exemption or provides its correct tax identification number and otherwise complies
with the applicable requirements of the backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld
under the backup withholding rules can be refunded or credited against a U.S. holder’s U.S. federal income tax liability,
if any;
provided
that such U.S. holder furnishes the required information to the Internal Revenue Service in a timely manner.
Non-U.S. Holders
Any gain recognized on the receipt of cash
pursuant to the merger by a non-U.S. holder generally will not be subject to U.S. federal income tax unless:
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the gain is effectively connected with a U.S. trade or business of such non-U.S. holder (and, if required by an applicable
income tax treaty, is also attributable to a permanent establishment or, in the case of an individual, a fixed base in the United
States maintained by such non-U.S. holder), in which case the non-U.S. holder generally will be subject to tax on such gain in
the same manner as a U.S. holder and, if the non-U.S. holder is a non-U.S. corporation, such corporation may be subject to branch
profits tax at the rate of 30% (or such lower rate as may be specified by an applicable income tax treaty);
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the non-U.S. holder is a nonresident alien individual who is present in the United States for 183 days or more in the taxable
year of the merger and certain other conditions are met, in which case the non-U.S. holder generally will be subject to tax at
a 30% rate (or a lower applicable income tax treaty rate) on any U.S. source gain derived from the disposition of the Company common
shares pursuant to the merger (other than gain effectively connected with a U.S. trade or business), which may be offset by U.S.
source capital losses; or
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the Company is or has been a “United States real property holding corporation” for U.S. federal income tax purposes
at any time during the shorter of (i) the five-year period ending on the date of the merger and (ii) the non-U.S. holder’s
holding period in the Company common shares, and, if the Company common shares are “regularly traded on an established securities
market,” the non-U.S. holder held (directly, indirectly or constructively), at any time during such period, more than 5%
of the outstanding Company common shares, in which case the non-U.S. holder generally will be subject to tax on such gain in the
same manner as described in the first bullet point above, except that the branch profits tax will not apply. Although there can
be no assurances in this regard, the Company does not believe that it is or was a “United States real property holding corporation”
for U.S. federal income tax purposes during the applicable five-year period.
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A non-U.S. holder will be subject to information
reporting and, in certain circumstances, backup withholding will apply with respect to the cash received by such holder pursuant
to the merger, unless such non-U.S. holder certifies under penalties of perjury that it is a non-U.S. holder (and the payor does
not have actual knowledge or reason to know that the holder is a United States person as defined under the Code) or such holder
otherwise establishes an exemption from backup withholding. Backup withholding is not an additional tax and any amounts withheld
under the backup withholding rules may be refunded or credited against a non-U.S. holder’s U.S. federal income tax liability,
if any;
provided
that such non-U.S. holder furnishes the required information to the Internal Revenue Service in a timely
manner.
Dividends
The Company has not declared or paid any cash
dividends on Company common shares since 1991. Under the terms of the merger agreement, the Company is prohibited from declaring,
setting a record date for, setting aside for payment or paying any dividends on, or making any other distributions in respect of,
its capital stock, other than intercompany dividends and distributions.
Regulatory Approvals Required for the Merger
Under the HSR Act, and the related rules and
regulations issued by the Federal Trade Commission (the “FTC”), certain transactions, including the merger, may not
be consummated until notification and report forms have been filed by each of the Company and Fresenius Kabi with the FTC and
the Antitrust Division of the Department of Justice (the “DOJ”) and the applicable waiting periods have expired or
terminated. The Company and Fresenius Kabi filed their respective notification and report forms under the HSR Act with the DOJ
and the FTC on May 8, 2017. Fresenius Kabi and the Company received a request for additional information (a “second request”)
under the HSR Act from the FTC relating to the merger on June 7, 2017, extending the HSR Act waiting period until the parties
have substantially complied with the second request, unless the period is extended voluntarily by the parties or terminated sooner
by the FTC.
At any time before or after the effective time
of the merger, the DOJ, the FTC, the U.S. state attorneys general or certain foreign governmental authorities could take action
under applicable antitrust laws, including seeking to enjoin the consummation of the merger, conditionally approving the merger
upon the divestiture of assets of the Company or Fresenius Kabi, subjecting the consummation of the merger to regulatory conditions
or seeking other remedies. Private parties may also seek to take legal action under the antitrust laws under certain circumstances.
Under the merger agreement, the respective
obligations of the Company, Fresenius Kabi and Merger Sub to effect the merger are subject to, among other things, the expiration
or early termination of the waiting period (and any extension thereof) applicable to the merger under the HSR Act. For a description
of Fresenius Kabi’s and the Company’s respective obligations under the merger agreement with respect to regulatory
approvals, please see the section of this proxy statement entitled “
The Merger Agreement—Reasonable Best Efforts
and Certain Pre-Closing Obligations
” beginning on page 69.
We currently expect to obtain HSR Act clearance
by early 2018; however, we cannot guarantee when HSR Act clearance will be obtained or that it will be obtained at all.
Delisting and Deregistration of the Company
Common Shares
If the merger is completed, the Company common
shares will be delisted from the NASDAQ and deregistered under the Exchange Act, and Company common shares will no longer be publicly
traded.
THE MERGER AGREEMENT
The following is a summary of the material
provisions of the merger agreement, a copy of which is attached as Annex A to this proxy statement and is incorporated into this
proxy statement by reference. We urge you to carefully read this entire proxy statement, including the annexes and the other documents
to which we have referred you. You should also review the section entitled “
Where You Can Find Additional Information
”
beginning on page 82.
The merger agreement has been included for
your convenience to provide you with information regarding its terms, and we recommend that you read it in its entirety. The merger
agreement is a contractual document that establishes and governs the legal relations between the Company, Fresenius Kabi and Fresenius
Parent, and allocates risks between the parties, with respect to the merger.
The representations and warranties of the Company
contained in the merger agreement have been made solely for the benefit of Fresenius Kabi and Merger Sub, and the representations
and warranties of Fresenius Kabi and Merger Sub have been made solely for the benefit of the Company. In addition, such representations
and warranties (a) have been made only for purposes of the merger agreement, (b) have been qualified by certain documents filed
with, or furnished to, the SEC by the Company prior to the date of the merger agreement, (c) have been qualified by confidential
disclosures made to Fresenius Kabi and Merger Sub in connection with the merger agreement, (d) are subject to materiality qualifications
contained in the merger agreement which may differ from what may be viewed as material by investors, (e) were made only as of the
date of the merger agreement or such other date as is specified in the merger agreement and (f) have been included in the merger
agreement for the purpose of allocating risk between the Company, on the one hand, and Fresenius Kabi and Merger Sub, on the other
hand, rather than establishing matters as facts. Accordingly, the merger agreement is included with this proxy statement only to
provide investors with information regarding the terms of the merger agreement and not to provide investors with any other factual
information regarding the Company or Fresenius Kabi or their respective subsidiaries or businesses. Investors should not rely on
the representations and warranties or any descriptions thereof as characterization of the actual state of facts or condition of
the Company or Fresenius Kabi or their respective subsidiaries or businesses. Moreover, information concerning the subject matter
of the representations and warranties may change after the date of the merger agreement, which subsequent information may or may
not be fully reflected in the Company’s public disclosures.
The Company will provide additional disclosure
in its public reports of any material information necessary to provide the holders of Company common shares with a materially complete
understanding of the disclosures relating to the merger agreement. The representations and warranties in the merger agreement and
the description of them in this proxy statement should not be read alone but instead should be read in conjunction with the other
information contained in the reports, statements and filings the Company publicly files with the SEC. Such information can be found
elsewhere in this proxy statement and in the public filings the Company makes with the SEC, as described in the section entitled
“
Where You Can Find Additional Information
” beginning on page 82.
The Merger
Subject to the terms and conditions of the
merger agreement and in accordance with the LBCA, at the effective time of the merger, Merger Sub, a wholly owned subsidiary of
Fresenius Kabi, will be merged with and into the Company. The separate corporate existence of Merger Sub will cease and the Company
will continue as the surviving corporation. As a result, the Company will become a subsidiary of Fresenius Kabi. Merger Sub was
created solely for purposes of the merger and has no material assets or operations of its own.
Closing and Effective Time of the Merger
The closing of the merger will take place at
10:00 a.m. (New York City time) on the second business day following the satisfaction or waiver (to the extent such waiver is permitted
by applicable law) of all of the conditions described in the section below entitled “
—Conditions of the Merger
”
beginning on page 72 (other than any condition that by its nature cannot be satisfied until the closing of the merger, but
subject to satisfaction of any such condition), unless the Company and Fresenius Kabi agree to another date or time in writing.
The merger will become effective at the time
the articles of merger are filed with the Secretary of State of the State of Louisiana, or such later time as is specified in the
articles of merger and as is agreed to by the Company, Fresenius Kabi and Merger Sub, which is referred to as the “effective
time” of the merger.
At the effective time of the merger, the articles
of incorporation and bylaws of Akorn in effect immediately prior to the effective time of the merger will be amended and restated
to be in the form of Exhibit A to the merger agreement and the bylaws of Merger Sub (except with respect to the name of Akorn),
respectively, and so amended and restated will be the articles of incorporation and bylaws of the surviving corporation until thereafter
amended in accordance with their terms or by applicable law.
Consideration to be Received in the Merger
The merger agreement provides that, at the
effective time of the merger, each Company common share issued and outstanding immediately prior to the effective time of the merger
(other than Company common shares owned by the Company as treasury shares or owned by Fresenius Kabi or Merger Sub and other than
Company common shares owned by wholly owned subsidiaries of the Company or Fresenius Kabi (other than Merger Sub) that Fresenius
Kabi has elected to be canceled) will be canceled and converted into the right to receive $34.00 in cash, without interest and
less any applicable withholding tax. Following the effective time of the merger, each holder of Company common shares will cease
to have any rights with respect to such Company common shares, except for the right to receive the merger consideration therefor,
without interest.
Cancellation of Shares
Any Company common shares owned by the Company
as treasury shares or owned by Fresenius Kabi or Merger Sub or owned by wholly owned subsidiaries of the Company or Fresenius Kabi
(other than Merger Sub) that Fresenius Kabi has elected to be canceled, will be automatically canceled and extinguished and will
not be entitled to any merger consideration.
Treatment of Equity and Equity-Based Awards
At the effective time of the merger, subject
to all required withholding taxes:
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each outstanding Company stock option, other than rights under the ESPP, whether vested or unvested, will be canceled and converted
into the right to receive an amount in cash equal to the product of (x) the number of Company common shares underlying such Company
stock option and (y) the excess (if any) of the merger consideration over the exercise price per share of such Company stock option,
except that each such Company stock option that has an exercise price that is greater than or equal to the merger consideration
will be canceled for no consideration;
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each outstanding Company RSU granted prior to the date of the merger agreement, whether vested or unvested, will be canceled
and converted into the right to receive an amount in cash equal to the product of (x) the number of Company common shares underlying
such Company RSU and (y) the merger consideration.
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each outstanding Company RSU granted following the date of the merger agreement will be converted into an unvested award representing
the opportunity to receive cash payments in an aggregate amount equal to the product of (x) the number of Company common shares
underlying such Company RSU and (y) the merger consideration, with such aggregate amount being payable on the vesting dates applicable
to such Company RSU based proportionately on the number of Company common shares that would have vested on such vesting date, and
which award will continue to vest and will otherwise be subject to the same terms and conditions as were applicable to such Company
RSU as of immediately prior to the effective time of the merger (including any terms and conditions related to accelerated vesting
upon a termination of the holder’s employment prior to or following the effective time of the merger).
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In addition, the merger agreement provides
that prior to the effective time of the merger, no new offering periods under the ESPP will commence, no person will be permitted
to increase his or her payroll elections through the ESPP and no new individuals will be permitted to commence participation in
the ESPP. If the closing date of the merger is scheduled to occur before the scheduled purchase date during the then current purchase
period under the ESPP, then the final purchase date will be set before the effective time of the merger. On the final purchase
date, each participant’s accumulated payroll deductions under the ESPP will be used to purchase Company common shares, and
all such Company common shares will be treated, upon the effective time of the merger, in the same manner as Company common shares
held by all other holders of the Company common shares. The ESPP will be terminated prior to the effective time of the merger,
immediately after the final purchase date.
Payment for Shares
Prior to the closing of the merger, Fresenius
Kabi will designate a bank or trust company reasonably acceptable to the Company to act as paying agent for the payment of the
merger consideration. At or prior to the effective time of the merger, Fresenius Kabi will deposit, or will cause to be deposited,
with the paying agent funds sufficient to pay the aggregate merger consideration (the “exchange fund”).
Promptly after the effective time of the merger
(but no later than three business days after the effective time of the merger), Fresenius Kabi and the surviving corporation will
cause the paying agent to mail to all record holders of certificates or book-entry shares representing Company common shares whose
shares were converted into the right to receive the merger consideration, a letter of transmittal and instructions on how to surrender
certificates or book-entry shares representing such Company common shares in exchange for the merger consideration. Upon delivery
of a properly completed letter of transmittal, duly executed and completed in accordance with the instructions thereto, and the
surrender of certificates or book-entry shares representing Company common shares, Fresenius Kabi and the surviving corporation
will cause the paying agent to pay the holder of such certificates or book-entry shares, in exchange therefor, cash in an amount
equal to the merger consideration multiplied by the number of Company common shares represented by such certificate or book-entry
share. At any time following the first anniversary of the closing, the surviving corporation will be entitled to require the paying
agent to deliver to it any portion of the exchange fund (including any interest received) which has not been disbursed to holders
of certificates or book entry shares, and thereafter such holders will be entitled to look only to Fresenius Kabi and the surviving
corporation for claims with respect to such merger consideration, pursuant to the terms of the merger agreement.
Each certificate
or book-entry share representing a Company common share that is surrendered will be canceled. You should not send in your Company
common share certificates until you receive a letter of transmittal with instructions from the paying agent. Do not send Company
common share certificates with your proxy card.
The merger consideration paid upon the surrender
of certificates representing Company common shares in accordance with the merger agreement will be deemed to have been paid in
full satisfaction of all rights pertaining to the Company common shares previously represented by such certificates. At the effective
time of the merger, the share transfer books of the Company will be closed, and there will not be any further registration of transfers
of any Company common shares thereafter on the records of the Company.
If, during the period between the date of the
merger agreement and the effective time of the merger, any change in the Company common shares shall occur, by reason of any share
split, reverse share split, share dividend (including any dividend or other distribution of securities convertible into Company
common shares), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change, the merger
consideration and any other amounts payable pursuant to the merger agreement, shall be appropriately adjusted so that the aggregate
amount payable with respect to all Company common shares shall not be changed.
If your Company common share certificate has
been lost, stolen or destroyed, you will be entitled to obtain payment of the merger consideration by making an affidavit to that
effect and, if required by the surviving corporation, posting a bond, in such reasonable amount as Fresenius Kabi may direct, as
indemnity against any claim that may be made against the surviving corporation with respect to your lost, stolen or destroyed Company
common share certificate.
Pursuant to the merger agreement, Fresenius
Kabi, the surviving corporation and the paying agent may deduct and withhold from the merger consideration and any other amounts
payable under the merger agreement in connection with the Company share options and Company RSUs any amounts required to be withheld
or deducted under applicable federal, state, local or non-U.S. tax laws with respect to the making of such payments.
Representations and Warranties
The merger agreement contains a number of representations
and warranties made by the Company with respect to the Company and its subsidiaries, including representations and warranties relating
to:
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corporate organization, good standing and similar matters;
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capital structure and equity securities;
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corporate power and authority to execute and deliver the merger agreement and to consummate the transactions contemplated by
the merger agreement;
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authorization of the merger agreement, the merger and the other transactions contemplated by the merger agreement and enforceability
of the merger agreement;
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required governmental filings and consents and absence of violation of applicable laws in connection with the execution, delivery
and performance of the merger agreement and the consummation of the merger and the other transactions contemplated by the merger
agreement;
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absence of conflicts with, violation or breach of or defaults under the charter documents and certain contracts in connection
with the execution, delivery and performance of the merger agreement and the consummation of the merger and the other transactions
contemplated by the merger agreement;
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accuracy and sufficiency of reports and financial statements filed with the SEC;
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absence of undisclosed liabilities;
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internal controls over financial reporting;
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accuracy of the information in this proxy statement;
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absence of certain changes or events and the conduct of business in the ordinary course of business since December 31, 2016;
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compliance with applicable laws (including anti-corruption laws), court orders and certain regulatory matters;
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employee compensation and benefits matters and matters relating to the Employee Retirement Income Securities Act of 1974, as
amended;
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environmental matters and compliance with environmental laws;
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the inapplicability of state takeover statutes, the absence of shareholder rights agreements and the absence of appraisal rights
for shareholders;
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healthcare regulatory matters;
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receipt of opinion from the Company’s financial advisor; and
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brokers’, finder’s and similar fees payable in connection with the merger and the other transactions contemplated
by the merger agreement.
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The merger agreement also contains a number
of representations and warranties made by Fresenius Kabi with respect to Fresenius Kabi and Merger Sub, including representations
and warranties relating to:
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corporate organization, good standing and similar matters;
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corporate power and authority to execute and deliver the merger agreement and to consummate the transactions contemplated by
the merger agreement;
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authorization of the merger agreement, the merger and the other transactions contemplated by the merger agreement, and enforceability
of the merger agreement;
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absence of conflicts with, violation or breach of, defaults under, the charter documents and certain contracts in connection
with the execution, delivery and performance of the merger agreement and the consummation of the merger and the other transactions
contemplated by the merger agreement;
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required governmental filings and consents and absence of violation of applicable laws in connection with the execution, delivery
and performance of the merger agreement and the consummation of the merger and the other transactions contemplated by the merger
agreement;
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ownership and operations of Merger Sub since its formation;
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sufficiency of funds to pay the merger consideration;
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brokers’, finder’s and similar fees payable in connection with the merger and the other transactions contemplated
by the merger agreement;
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non-reliance on Company estimates, projections, forecasts, forward-looking statements and business plans;
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accuracy of information supplied to the Company for inclusion or incorporation by reference in this proxy statement;
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ownership of Company common shares.
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Significant portions of the representations
and warranties of the Company are qualified as to “materiality” or “material adverse effect” and significant
portions of the representations and warranties of Fresenius Kabi and Merger Sub are qualified as to “materiality” or
a “material adverse effect on the ability of Fresenius Kabi and Merger Sub to perform their obligations under the merger
agreement or consummate the transactions contemplated by the merger agreement”. Under the merger agreement, a “material
adverse effect” with respect to the Company and its subsidiaries means any effect, change, event or occurrence that, individually
or in the aggregate (1) would prevent or materially delay, interfere with, impair or hinder the consummation of the transactions
contemplated by the merger agreement or the compliance by the Company with its obligations under the merger agreement or (2) has
a material adverse effect on the business, results of operations or financial condition of the Company and its subsidiaries, taken
as a whole, except that none of the following, and no effect, change, event or occurrence arising out of, or resulting from, the
following, constitutes or is taken into account in determining whether a “material adverse effect” has occurred, is
continuing or would reasonably be expected to occur:
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any effect, change, event or occurrence generally affecting (i) the industry in which the Company and its subsidiaries operate,
or (ii) the economy, credit or financial or capital markets, in the United States or elsewhere in the world, including changes
in interest or exchange rates, monetary policy or inflation;* or
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any effect, change, event or occurrence to the extent arising out of, resulting from or attributable to:
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changes or prospective changes in law or in GAAP or in accounting standards, or any changes or prospective changes in the interpretation
or enforcement of any of the foregoing, or any changes or prospective changes in general legal, regulatory, political or social
conditions;
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the negotiation, execution, announcement or performance of the merger agreement or the consummation of the merger, including
the impact thereof on relationships, contractual or otherwise, with customers, suppliers, distributors, partners, employees or
regulators, or any litigation arising from allegations of breach of fiduciary duty or violation of law relating to the merger agreement
or the transactions contemplated thereby;
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acts of war (whether or not declared), military activity, sabotage, civil disobedience or terrorism, or any escalation or worsening
of any such acts of war (whether or not declared), military activity, sabotage, civil disobedience or terrorism;*
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pandemics, earthquakes, floods, hurricanes, tornados or other natural disasters, weather-related events, force majeure events
or other comparable events;*
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any action taken by the Company or its subsidiaries that is required by the merger agreement or at Fresenius Kabi’s request;
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any change or prospective change in the Company’s credit ratings (but not the underlying causes of such decline or change);
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any decline in the market price or change in trading volume, of the shares of the Company (but not the underlying causes of
such decline or change); or
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any failure to meet any internal or public projections, forecast, guidance, estimates, milestones, budgets or internal or published
financial or operating predictions of revenue, earnings, cash flow or cash position (but not the underlying causes of such failure);
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except, in the case of the three bullets marked with an asterisk
above, to the extent such effect, change, event or occurrence has a disproportionate adverse affect on the Company and its subsidiaries,
taken as a whole, as compared to other participants in the industry in which the Company and its subsidiaries operate, in which
case the incremental disproportionate impact or impacts may be taken into account in determining whether there has been, or would
reasonably be expected to be, a material adverse effect.
The representations and warranties of the Company,
Fresenius Kabi and Merger Sub will expire upon the effective time of the merger.
Covenants Regarding Conduct of Business by
Akorn Pending the Effective Time
Unless Fresenius Kabi otherwise consents in
writing (which consent may not be unreasonably withheld, conditioned or delayed), the Company has agreed that during the period
from the date of the merger agreement until the effective time of the merger, the Company and its subsidiaries will use their commercially
reasonable efforts to:
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carry on their business in all material respects in the ordinary course of business;
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preserve their business organizations (including the services of key employees) substantially intact substantially consistent
with past practice; and
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preserve existing relations with key customers, suppliers and other persons with whom the Company or its subsidiaries have
significant business relationships substantially intact substantially consistent with past practice.
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In addition, the merger agreement places specific
restrictions on the ability of the Company and its subsidiaries to, unless Fresenius Kabi otherwise consents in writing (which
consent may not be unreasonably withheld, conditioned or delayed), or otherwise required by applicable law or as expressly contemplated,
required or permitted by the merger agreement, among other things:
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issue, sell, encumber or grant any Company common shares or other equity or voting interests, or any securities or rights convertible
into, exchangeable or exercisable for, or evidencing the right to subscribe for any shares of its capital stock or other equity
or voting interests, or any rights, warrants or options to purchase any shares of its capital
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stock or other equity or voting interests,
except pursuant to outstanding equity awards or new awards granted in the ordinary course of business consistent with past practice
under the Company’s benefit plans;
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redeem, purchase or otherwise acquire any of the Company’s or its subsidiaries’ capital stock or other equity or
voting interests or any rights, warrants or options to purchase any shares of its capital stock or other equity or voting interests,
except for transactions pursuant to outstanding options or Company RSUs and intercompany transactions;
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declare or pay any dividend or other distribution, except for intercompany dividends and distributions;
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split, combine, subdivide or reclassify any shares of its capital stock or other equity or voting interests;
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incur, assume or otherwise become liable for any indebtedness for borrowed money, issue or sell any debt securities or warrants
or other rights to acquire any debt securities of the Company or its subsidiaries or guarantee any such indebtedness or similar
obligation of another person, except for intercompany indebtedness, letters of credit or similar credit support instruments in
the ordinary course of business, existing indebtedness incurred under the Company’s credit agreement or other existing arrangements
in an amount not to exceed $50 million outstanding at any time, or indebtedness incurred in connection with refinancing existing
indebtedness, subject to certain limitations;
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enter into any swap or hedging transaction or other derivative agreements, except in the ordinary course of business;
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make any loans, capital contributions or advances to, or investments in, any person other than by the Company to any wholly
owned subsidiary of the Company or in the ordinary course of business;
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sell or lease any of its properties or assets for consideration, individually or in the aggregate, in excess of $10 million,
except ordinary course dispositions of inventory, dispositions of obsolete, surplus or worn out assets or assets that are no longer
useful in the Company’s or any of its subsidiaries’ businesses, intercompany transfers, leases and subleases of real
property and voluntary terminations or surrenders of such leases or subleases, in each case, following prior good faith consultation
with Fresenius Kabi or other sales and leases in the ordinary course of business;
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make capital expenditures, except for those capital expenditures that are materially consistent with the Company’s plan
that was previously made available to Fresenius Kabi, in connection with repairs or replacements to facilities, properties or assets
destroyed or damaged due to casualty or accident, or otherwise in an aggregate amount not to exceed $10 million;
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make any acquisition of, or investment in, properties, assets, securities or businesses for consideration, except in the ordinary
course of business, subject to certain limitations;
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make any material changes in financial accounting methods, principles or practices, except as required by GAAP, applicable
law or any governmental authority;
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amend the Company’s organizational documents or amend in any material respect the organizational documents of any subsidiary
of the Company;
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grant any lien (other than certain permitted liens) on any of its material assets other than intercompany liens and liens to
secure indebtedness and other obligations in existence as of April 24, 2017 or permitted under the merger agreement;
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settle any pending or threatened action outside of the ordinary course of business (Hatch-Waxman related litigation is not
considered ordinary course for purposes of this provision) for amounts in excess of (1) with respect to actions reflected or reserved
against in the Company’s balance sheet, an amount not materially in excess of the amount so reflected or reserved or (2)
otherwise, $5 million individually or $25 million in the aggregate (in each case, net of insurance proceeds); provided that no
settlement may involve any material injunctive or equitable relief, any admission of wrongdoing by the Company or its subsidiaries,
the grant of any license or similar arrangement with
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respect to material intellectual property
or impose any restraints on the use by the Company or its subsidiaries of any material intellectual property;
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encumber, abandon, fail to diligently prosecute or maintain, transfer, license or otherwise dispose of any registered intellectual
property or other material intellectual, except in the ordinary course of business;
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disclose any material confidential intellectual property, except in the ordinary course of business;
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make any material change in any method of tax accounting, any annual tax accounting period or any material tax election, except
in the ordinary course of business;
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enter into, terminate or amend any material contract or permit or enter into any contract that would be breached by, or require
the consent of any third party in order to continue in full force following, consummation of the transactions contemplated by the
merger agreement, except in the ordinary course of business;
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adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization, merger, consolidation or other
reorganization;
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license on-market or in-development products from third parties except in the ordinary course of business, subject to certain
limitations; or
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except in the ordinary course of business consistent with past practice or to the extent required under a benefit plan as in
effect as of the date of the merger agreement (a) grant to any employee of the Company any material increase in compensation (including
bonus or long-term incentive opportunities), (b) grant to any current or former employee of the Company any material increase in
severance, retention or termination pay, (c) grant or amend any equity or other incentive awards, (d) hire, appoint or promote
any employee whose base salary and target bonus opportunity exceeds $250,000 per annum, hire or appoint any employee to a position
at or above the vice president level or promote any employee to a position at or above the director level, (e) establish, adopt,
enter into, amend or terminate in any material respect any labor agreement or benefit plan or (f) take any action to accelerate
any rights or benefits under any benefit plan.
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No Solicitation; Board Recommendation
In the merger agreement, the Company agreed
to, and to cause its subsidiaries and each of its and their officers and directors to, and to instruct and use its reasonable
best efforts to cause its investment bankers, financial advisors, attorneys, accountants or other representatives to, immediately
cease any discussions or negotiations with any parties that may have been ongoing with respect to a takeover proposal and to seek
to have destroyed or returned to the Company any information with respect to a takeover proposal that has been provided in any
such discussions or negotiations. We have also agreed that we will not (and will cause our officers and directors not to), and
will instruct and use our reasonable best efforts to cause our investment bankers, financial advisors, attorneys, accountants or
other representatives not to, directly or indirectly:
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initiate, solicit or knowingly encourage (including by way of furnishing non-public information) the submission of any inquiries
regarding, or the making of, any proposal which constitutes, or would reasonably be expected to lead to, a takeover proposal;
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engage in, continue or otherwise participate in any discussions or negotiations regarding (except to notify any person of the
provisions regarding non-solicitation in the merger agreement), or furnish to any other person any non-public information in connection
with, or for the purpose of, encouraging a takeover proposal; or
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enter into any letter of intent, memorandum of understanding, agreement in principle, merger agreement, acquisition agreement
or other similar agreement providing for a takeover proposal.
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The merger agreement provides that, notwithstanding
the restrictions described above, if, at any time prior to the approval of the merger agreement by the holders of Company common
shares, the Company receives an unsolicited oral or written takeover proposal in circumstances not otherwise involving a breach
of the non-solicitation provisions of the merger agreement, the Company and its representatives may contact and engage in discussions
with the person making such takeover
proposal to clarify the terms and conditions thereof
or to request that any takeover proposal made orally be made in writing or to notify the person of the provisions regarding non-solicitation
in the merger agreement. If the Board determines in good faith, after consultation with its financial advisors and outside legal
counsel, that any such written takeover proposal constitutes or could reasonably be expected to result in a superior proposal and
the failure to do so would be reasonably likely to be inconsistent with the Board’s fiduciary duties under applicable law,
the Company may:
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furnish information, including non-public information, with respect to the Company and its subsidiaries to the party making
the takeover proposal after entering into a customary confidentiality agreement (provided that such confidentiality agreement contains
confidentiality provisions that are not less favorable in the aggregate to the Company than those contained in the confidentiality
agreement between the Company and Fresenius Kabi (except that such confidentiality agreement need not contain a counterpart of
the standstill provisions set forth in that confidentiality agreement or any implicit standstill provisions or otherwise restrict
the making of or an amendment or modification to a takeover proposal), and the Company delivers to Fresenius Kabi all such nonpublic
information within 24 hours of its delivery to the requesting party); and
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engage in or otherwise participate in discussions or negotiations with such party regarding such takeover proposal.
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If, prior to the approval of the merger agreement
by the holders of Company common shares, the Board determines in good faith, after consultation with its financial advisors and
outside legal counsel, that the failure to do so is reasonably likely to be inconsistent with the Board’s fiduciary duties
under applicable law and, if the Company has received a takeover proposal, such takeover proposal constitutes a superior proposal,
the Board or any committee thereof may (1) publicly propose to withhold (in the case of the Board) or withdraw (or modify in a
manner adverse to Fresenius Kabi) its recommendation that the holders of Company common shares approve the merger agreement; (2)
in the case of the Board, if any takeover proposal structured as a tender or exchange offer is commenced, fail to recommend against
acceptance of such tender or exchange offer by the Company’s shareholders within ten business days of commencement thereof
pursuant to Rule 14d-2; (3) recommend the approval or adoption of, or approve or adopt, or publicly propose to recommend, approve
or adopt, any takeover proposal (any action referred to in clauses (1) or (2) or this clause (3) is referred to as an “adverse
recommendation change”); or (4) terminate the merger agreement to enter into a definitive agreement providing for such superior
proposal, subject to the concurrent or prior payment by the Company of the termination fee (as described below under “
The
Merger Agreement—Termination Fee
”).
Such actions may only be taken if (i) the Company
has given Fresenius Kabi five business days’ prior written notice advising Fresenius Kabi that the Board intends to take
such action; (ii) the Company has negotiated, and caused its representatives to negotiate, in good faith with Fresenius Kabi during
such notice period, to the extent Fresenius Kabi wishes to negotiate, to enable Fresenius Kabi to propose revisions to the terms
of the merger agreement; (iii) following the end of such notice period, the Board shall have considered in good faith any written
revisions to the terms of the merger agreement proposed by Fresenius Kabi, and shall have determined in good faith that the superior
proposal would nevertheless continue to constitute a superior proposal (or, if the action does not relate to a takeover proposal,
that the failure to make an adverse recommendation change would continue to be reasonably likely to be inconsistent with the Board’s
fiduciary duties under applicable law) if the revisions proposed by Fresenius Kabi were to be given effect; and (iv) in the event
of any change to any of the financial terms or any other material terms of such superior proposal (or, if such action does not
relate to a takeover proposal, any material change to the underlying relevant facts and circumstances), the Company has given Fresenius
Kabi an additional opportunity to negotiate changes to the terms of the merger agreement (except that the notice period need only
be two business days).
The Company has also agreed to promptly (and
in any event within 24 hours after knowledge of receipt by an officer or director of the Company) notify Fresenius Kabi of any
takeover proposal, the material terms and conditions of such takeover proposal and the identity of the person making such takeover
proposal, and to provide Fresenius Kabi copies of any documents evidencing or delivered in connection with such takeover proposal.
Further, the Company will keep Fresenius Kabi reasonably informed promptly (and in any event within 24 hours after knowledge of
the applicable developments by an officer or director of the Company) of any material developments with respect to any such takeover
proposal.
A “takeover proposal” as used herein
means any inquiry, proposal or offer from any person or group of persons (other than Fresenius Kabi and its subsidiaries) relating
to, in a single transaction or a series of related transactions, any direct or indirect (i) acquisition of 15% or more of the consolidated
assets of the Company and its subsidiaries, taken as a whole, including through the acquisition of equity interests in subsidiaries,
(ii) acquisition of 15% or more of the outstanding Company common shares or voting power of the Company (or issuance of securities
representing more than 15% of the outstanding
shares of any class of voting securities of the
Company), (iii) tender offer or exchange offer that if consummated would result in any person or group of persons beneficially
owning 15% or more of the outstanding Company common shares or (iv) merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the Company pursuant to which such person or group
of persons (or the shareholders of any person) would acquire, directly or indirectly, 15% or more of the consolidated assets of
the Company and its subsidiaries or 15% or more of the aggregate voting power of the Company or of the surviving entity in a merger,
consolidation, share exchange or other business combination involving the Company or the resulting direct or indirect parent of
the Company or such surviving entity, in each case, other than the transactions contemplated by the merger agreement.
A “superior proposal” as used herein
means a bona fide written takeover proposal (with all references to “15%” in the definition of takeover proposal being
deemed to be references to “50%”) which the Board determines in its good faith judgment (after consultation with its
financial advisors and outside legal counsel), (i) to be more favorable from a financial point of view to the Company’s shareholders
than the transactions contemplated by the merger agreement and (ii) is reasonably capable of being completed on the terms proposed,
taking into account all legal, regulatory, financial, timing, financing and other aspects of such proposal and of the merger agreement.
Nothing described above limits the Company’s
ability to take and disclose to the Company’s shareholders a position contemplated by Rule 14e-2(a), Rule 14d-9 or Item 1012(a)
of Regulation M-A promulgated under the Exchange Act in the event that a takeover proposal that is structured as a tender offer
or exchange offer is commenced or to make any other disclosure to the Company’s shareholders that is required by applicable
law or if, in the Board’s determination in good faith after consultation with outside legal counsel, failure to make such
disclosure is reasonably likely to be inconsistent with the Board’s exercise of their duties to the Company’s shareholders
under applicable law (
provided
that any such disclosure or statement that constitutes or contains an adverse recommendation
change shall be subject to the terms of the merger agreement).
Reasonable Best Efforts and Certain Pre-Closing
Obligations
The Company and Fresenius Kabi have agreed
to use reasonable best efforts to promptly:
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take, or cause to be taken, all actions, and do, or cause to be done, all things necessary, proper or advisable to cause the
conditions to closing the merger to be satisfied as promptly as reasonably practicable and to consummate and make effective, in
the most expeditious manner reasonably practicable, the transactions contemplated by the merger agreement, including preparing
and promptly filing all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions
of information, applications and other documents;
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obtain all approvals, consents, registrations, waivers, permits, authorizations, orders and other confirmations from any governmental
authority or third party necessary, proper or advisable to consummate the transactions contemplated by the merger agreement;
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execute and deliver any additional instruments necessary to consummate the transactions contemplated by the merger agreement;
and
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defend or contest in good faith any action brought by a third party that could otherwise prevent or impede, interfere with,
hinder or delay in any material respect the consummation of the transactions contemplated by the merger agreement;
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in each case, other than with respect to antitrust
laws, which are discussed below.
In addition, the Company and Fresenius Kabi
have each agreed to:
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make an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated
by the merger agreement within 10 days after April 24, 2017;
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supply as promptly as reasonably practicable any additional information and documentary material that may be requested pursuant
to the HSR Act; and
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promptly take any and all steps necessary to avoid or eliminate each and every impediment and obtain all consents under any
antitrust laws that may be required by any foreign or U.S. federal, state or local governmental authority, so as to enable the
parties hereto to consummate the transactions contemplated by the merger agreement.
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Fresenius Kabi has agreed to promptly take
all actions necessary to secure the expiration or termination of any applicable waiting period under the HSR Act or other antitrust
laws and resolve any objections asserted with respect to the transactions contemplated by the merger agreement under the FTC or
any other applicable law raised by any governmental authority, in order to prevent the entry of, or to have vacated, lifted, reversed
or overturned, any restraint that would prevent, prohibit, restrict or delay the consummation of the transactions contemplated
by the merger agreement, including (i) executing settlements, undertakings, consent decrees, stipulations or other agreements with
any governmental authority or with any other person, (ii) selling, divesting, or otherwise conveying or holding separate particular
assets or categories of assets or businesses of Fresenius Kabi and its subsidiaries, (iii) agreeing to sell, divest or otherwise
convey or hold separate any particular assets or categories of assets or businesses of the Company and its subsidiaries contemporaneously
with or subsequent to the effective time of the merger, (iv) permitting the Company to sell, divest or otherwise convey or hold
separate any of the particular assets or categories of assets or businesses of the Company or any of its subsidiaries prior to
the effective time of the merger, (v) terminating existing relationships, contractual rights or obligations of the Company or Fresenius
Kabi or their respective subsidiaries, (vi) terminating any joint venture or other arrangement (vii) creating any relationship,
contractual right or obligation of the Company or Fresenius Kabi or their respective subsidiaries, (viii) effecting any other change
or restructuring of the Company or Fresenius Kabi or their respective subsidiaries (and, in each case, entering into agreements
or stipulating to the entry of any judgment by, or filing appropriate applications with, the FTC, the DOJ or any other governmental
authority in connection with any of the foregoing and, in the case of actions by or with respect to the Company, by consenting
to such action by the Company; provided that any such action may, at the discretion of the Company, be conditioned upon the closing
of the merger), and (ix) defending through litigation any claim asserted in court or administrative or other tribunal by any person
(including any governmental authority) in order to avoid entry of, or to have vacated or terminated, any restraint that would prevent
the closing of the merger prior to the outside date. The parties agreed that all such efforts are unconditional and not qualified
in any manner and are not to be considered for purposes of determining whether a material adverse effect has occurred or would
reasonably be expected to occur. Fresenius Kabi also agreed not to withdraw and refile its initial filing under the HSR Act or
any other antitrust law unless the Company has consented in advance to such withdrawal and refiling, such consent not to be unreasonably
withheld.
Fresenius Kabi will (i) control the strategy
for obtaining any approvals, consents, registrations, waivers, permits, authorizations, orders and other confirmations from any
governmental authority in connection with the transactions contemplated by the merger agreement and (ii) control the overall development
of the positions to be taken and the regulatory actions to be requested in any filing or submission with a governmental authority
in connection with the transactions contemplated by the merger agreement and in connection with any investigation or other inquiry
or litigation by or before, or any negotiations with, a governmental authority relating to the transactions and of all other regulatory
matters incidental thereto. The Company and Fresenius Kabi also agreed not to commit to or agree with any governmental authority
to stay, toll or extend any applicable waiting period under the HSR Act or any other antitrust laws or enter into a timing agreement
with any governmental authority, without the prior written consent of the other party, such consent not to be unreasonably withheld.
Fresenius Kabi will, however, consult and cooperate with the Company with respect to such strategy, positions and requested regulatory
action and consider the Company’s views in good faith.
Access to Information; Confidentiality
Subject to the confidentiality agreement between
Fresenius Kabi and the Company and applicable law relating to the sharing of information and any applicable judgment or order of
a governmental authority, we have agreed to provide Fresenius Kabi and its representatives, from time to time prior to the earlier
of the effective time of the merger or the termination of the merger agreement, with reasonable access during normal business hours
to (i) our officers, employees, agents, properties, books, contracts and records and (ii) such other information as Fresenius Kabi
shall reasonably request regarding the Company and its business, personnel, assets, liabilities and properties.
Meeting of Our Shareholders
We have agreed to take all necessary action
in accordance with applicable law, the Company’s organizational documents and the rules of the NASDAQ to duly call, give
notice of, convene and hold a meeting of holders of Company common shares for the purpose of considering and taking action upon
the approval of the merger agreement, which meeting is the subject of this
proxy statement, as soon as reasonably practicable
after the SEC confirms that it has no further comments on this proxy statement.
Indemnification
Under the merger agreement, from and after
the effective time of the merger, each of Fresenius Kabi and the surviving corporation will, and Fresenius Kabi will cause the
surviving corporation to, (i) jointly and severally indemnify and hold harmless directors, officers, employees or agents of the
Company and its subsidiaries (“indemnified parties”), against any and all claims, liabilities, losses, damages, judgments,
fines, costs (including amounts paid in settlement or compromise) and expenses (including reasonable fees and expenses of legal
counsel) in connection with any claim, action, suit, proceeding, hearing, enforcement, audit or investigation (whether civil, criminal,
administrative or investigative) based in whole or in part on or arising in whole or in part out of (A) the fact that such person
is or was a director, officer, employee or agent of the Company or any of its subsidiaries or (B) acts or omissions by such person
in his or her capacity as a director, officer, employee or agent of the Company or such subsidiary or taken at the request of the
Company or such subsidiary at or prior to the effective time and (ii) assume (in the case of the surviving corporation, in the
merger without any further action) all obligations of the Company and such subsidiaries to such indemnified parties in respect
of indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the
effective time of the merger as provided in the Company’s organizational documents or the organizational documents of such
subsidiaries as in effect on the date of the merger agreement or in any other agreement in existence as of the date of the merger
agreement providing for indemnification between the Company or any of its subsidiaries and any such person.
Fresenius Kabi agreed to, from and after the
effective time of the merger, cause, unless otherwise required by law, the articles of incorporation and bylaws of the surviving
corporation to contain provisions no less favorable to the indemnified parties with respect to limitation of liabilities of directors
and officers and indemnification than are set forth as of the date of the merger agreement in the Company’s organizational
documents, which provisions shall not be amended, repealed or otherwise modified in a manner that would adversely affect the rights
thereunder of the indemnified parties in any material respect. In addition, from the effective time of the merger, Fresenius Kabi
will, and Fresenius Kabi agreed to cause the surviving corporation to, without requiring a preliminary determination of entitlement
to indemnification, advance any expenses (including reasonable fees and expenses of legal counsel) of any such indemnitee (including
in connection with enforcing the indemnity and other obligations referred to in the merger agreement) as incurred to the fullest
extent permitted under applicable law;
provided
that the individual to whom expenses are advanced provides an undertaking
to repay such advances if it shall be determined that such person is not entitled to be indemnified pursuant to the merger agreement
or applicable law. Fresenius Kabi’s and the surviving corporation’s indemnification obligations described in the merger
agreement will continue for a period of six years from the effective time of the merger.
The parties agreed that, for the six-year period
commencing immediately after the effective time of the merger, the surviving corporation will maintain in effect the Company’s
current directors’ and officers’ liability insurance covering acts or omissions occurring at or prior to the effective
time of the merger with respect to those indemnified parties who are, as of the effective time, covered by the Company’s
directors’ and officers’ liability insurance policies on terms and scope with respect to such coverage, and in amount,
no less favorable in the aggregate to such individuals than those of such policy in effect on the date of the merger agreement
(or Fresenius Kabi may substitute therefor policies, issued by reputable insurers, of at least the same aggregate coverage with
respect to matters existing or occurring prior to the effective time of the merger, including a “tail” policy);
provided
that if the aggregate annual premium for such insurance exceeds 300% of the annual premium for such insurance as of the date of
the merger agreement (which we refer to as the “premium cap”), then the surviving corporation or Fresenius Kabi shall
cause to be provided a policy covering such individuals with the best coverage as is then available at a cost up to but not exceeding
such premium cap. Prior to the effective time of the merger, the Company may (or, if requested by Fresenius Kabi, the Company will),
in consultation with Fresenius Kabi, purchase a six-year prepaid “tail policy” on terms and conditions providing at
least substantially equivalent benefits in the aggregate as the policies of directors’ and officers’ liability insurance
maintained by the Company and its subsidiaries as of the date of the merger agreement, at an aggregate cost up to but not exceeding
the aggregate maximum amount payable by the surviving corporation or Fresenius Kabi as described above for such six-year period.
Employee Benefits Matters
The merger agreement provides that for a period
of not less than one year following the effective time, Fresenius Kabi will, and will cause the surviving corporation to, provide
each individual who was an employee of the Company or any of its
subsidiaries immediately prior to the effective
time of the merger, which we refer to as a “continuing employee”, with (a) a base salary that is no less favorable
than such continuing employee’s base salary as in effect immediately prior to the effective time of the merger, (b) severance
benefits that are no less favorable than those that would have been provided to such continuing employee under the Company’s
severance benefit plans, programs, policies, agreements and arrangements and (c) employee benefit plans and arrangements (other
than base salary, bonus, commissions, annual incentives and severance benefits) that are substantially comparable in the aggregate
to those provided to such continuing employee immediately prior to the effective time of the merger.
In addition, on or as soon as practicable after
the effective time, the surviving corporation will, or will cause its subsidiaries to, pay each continuing employee an amount in
respect of such continuing employee’s annual bonus, commission or incentive plan award for the plan year in which the closing
occurs, prorated to reflect the number of days elapsed from the commencement of the applicable performance period through the effective
time of the merger, based upon performance achieved through the effective time of the merger, as determined by the Company prior
to the closing date.
Following the closing date of the merger, each
continuing employee who participates in an annual bonus, commission or incentive plan of the Company immediately prior to the effective
time of the merger will be entitled to participate in an annual bonus, commission or incentive plan of Fresenius Kabi or one of
its subsidiaries on a basis substantially comparable to similarly situated employees of Fresenius Kabi and its subsidiaries and
will be eligible to receive a pro-rata annual bonus, commission or incentive plan award for the portion of plan year that elapses
following the effective time of the merger. In addition, each such continuing employee will be eligible to receive one or more
additional bonus true-up payments in an aggregate amount equal to the shortfall, if any, between (a) the aggregate amount of the
annual bonus, commission or incentive plan award or awards he or she actually receives or is owed under the annual bonus, commission
or incentive plans of Fresenius Kabi or its subsidiaries with respect to the period from the effective time of the merger through
December 31, 2018 (including the period from the effective time through December 31, 2017, if the effective time occurs during
2017) and (b) the annual bonus, commission or incentive plan award or awards he or she would have received for such period or periods
based on his or her target annual bonus, commission or incentive plan opportunity and base salary as in effect as of immediately
prior to the effective time of the merger. The bonus true-up payments will be paid installments as soon as practicable following
December 31, 2017 and December 31, 2018, in each case subject to the continuing employee’s continued employment through the
payment date.
In addition, with respect to all employee benefit
plans of Fresenius Kabi and its subsidiaries, each continuing employee’s service with the Company or its subsidiaries will
be treated as service with the surviving corporation or any of its subsidiaries; provided, however, that such service need not
be recognized (i) to the extent that recognition would result in duplication of benefits for the same period of service, (ii) for
any purpose under any defined benefit retirement plan, retiree welfare plan, equity-based incentive plan or long-term incentive
plan or (iii) for purposes of any plan, program or arrangement (x) under which similarly situated employees of Fresenius Kabi and
its subsidiaries do not receive credit for prior service or (y) that is grandfathered or frozen, either with respect to level of
benefits or participation.
Additional Agreements
The merger agreement contains additional agreements
between us and Fresenius Kabi relating to, among other things:
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consultations regarding public announcements;
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shareholder litigation; and
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notification of certain matters.
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Conditions of the Merger
The obligation of each party to the merger
agreement to effect the merger is subject to the satisfaction or (if permissible under applicable law) waiver on or before the
closing date of the merger of the following conditions:
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no restraints in the U.S. shall be in effect enjoining or otherwise prohibiting the consummation of the merger;
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the waiting period (including any extension thereof) applicable to the consummation of the merger under the HSR Act shall have
expired or early termination thereof shall have been granted; and
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the approval of the merger agreement by the holders of a majority of the outstanding Company common shares.
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The obligation of Fresenius Kabi and Merger
Sub to effect the merger is subject to the satisfaction, or waiver by Fresenius Kabi and Merger Sub, on or prior to the closing
date of the merger, of the following conditions:
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accuracy as of the date of the merger agreement (or as otherwise specified) and as of the closing of the merger of the representations
and warranties made by us to the extent specified in the merger agreement;
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performance in all material respects of, or compliance in all material respects with, obligations contained in the merger agreement
to be performed or complied with by us prior to or on the effective time of the merger;
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delivery to Fresenius Kabi of a certificate signed by an executive officer of the Company certifying to the satisfaction of
the two conditions above-mentioned; and
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since the date of the merger agreement, there not having occurred and be continuing any effect, change, event or occurrence
that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect.
|
The obligation of the Company to effect the
merger is subject to the satisfaction, or waiver by the Company, on or prior to the closing date of the merger, of the following
conditions:
|
•
|
accuracy as of the date of the merger agreement (or as otherwise specified) and as of the closing of the merger of the representations
and warranties made by Fresenius Kabi and Merger Sub to the extent specified in the merger agreement;
|
|
•
|
performance in all material respects of, or compliance in all material respects with, obligations of each of Fresenius Kabi
and Merger Sub contained in the merger agreement to be performed or complied with by Fresenius Kabi or Merger Sub prior to or on
the effective time of the merger; and
|
|
•
|
delivery to us of a certificate signed by an executive officer of Fresenius Kabi and Merger Sub certifying to the satisfaction
of the two conditions above-mentioned.
|
The Company and Fresenius Kabi can provide
no assurance that all of the conditions precedent to the merger will be satisfied or waived by the party permitted to do so.
Termination
The Company and Fresenius Kabi may mutually
agree in writing, at any time prior to the effective time of the merger, to terminate the merger agreement and abandon the merger.
Also, either Fresenius Kabi or the Company may terminate the merger agreement and abandon the merger without the consent of the
other, at any time prior to the effective time of the merger if:
|
•
|
the merger is not consummated by the outside date, which date will be automatically extended to July 24, 2018, if, on the outside
date, all conditions to the closing of the merger either have been satisfied or waived or are then capable of being satisfied,
except the HSR approval condition or the no restraints condition (as set forth above); provided if the outside date has been extended
to July 24, 2018, and on July 24, 2018, all conditions to the closing of the merger either have been satisfied or waived or are
then capable of being satisfied, except the HSR approval condition, and Fresenius Kabi is then actively engaged in actions required
to satisfy such condition, then Fresenius Kabi will have the right to extend the outside date to October 24, 2018; provided further
that a party whose breach or failure to perform of any provision of the merger agreement has been a principal cause of or resulted
in a failure of the merger to be consummated by the outside date will not be able to terminate under this provision;
|
|
•
|
a restraint in the U.S. that enjoins or otherwise prohibits consummation of the merger is in effect and has become final and
nonappealable; provided that the party seeking to so terminate the merger agreement has used the required efforts to prevent the
entry of and to remove such restraint in accordance with its obligations under the merger agreement; or
|
|
•
|
the holders of Company common shares fail to approve the merger agreement at the special meeting (including any adjournments
and postponements thereof).
|
Fresenius Kabi can terminate the merger agreement
before the effective time of the merger if:
|
•
|
our Board or any committee thereof makes an adverse recommendation change; or
|
|
•
|
the Company breaches any of its representations or warranties or fails to perform any of its covenants or agreements contained
in the merger agreement, which breach or failure to perform or comply would give rise to the failure to satisfy certain conditions
to completion of the merger, and such breach or failure cannot be cured by the outside date or, if capable of being cured by the
outside date, the Company (x) shall not have commenced good faith efforts to cure the breach or failure to perform within 30 calendar
days following receipt by the Company of written notice of such breach or failure to perform from Fresenius Kabi or (y) is not
thereafter continuing to take good faith efforts to cure such breach or failure to perform (provided that Fresenius Kabi or Merger
Sub is not then in material breach of any representation, warranty, agreement or covenant contained in the merger agreement).
|
The Company can terminate the merger agreement:
|
•
|
prior to the approval of the merger agreement by holders of Company common shares at the special meeting, in order to concurrently
enter into a definitive agreement with respect to a superior proposal, subject to payment of the related termination fee (as set
forth below); or
|
|
•
|
if either Fresenius Kabi or Merger Sub breaches any of its representations or warranties or fails to perform any of its covenants
or agreements contained in the merger agreement, which breach or failure to perform or comply would give rise to the failure to
satisfy certain conditions to completion of the merger, and such breach or failure cannot be cured by the outside date or, if capable
of being cured by the outside date, Fresenius Kabi or Merger Sub (x) shall not have commenced good faith efforts to cure the breach
or failure to perform within 30 calendar days following receipt by Fresenius Kabi or Merger Sub of written notice of such breach
or failure to perform from the Company or (y) are not thereafter continuing to take good faith efforts to cure such breach or failure
to perform (provided that we are not then in material breach of any representation, warranty, agreement or covenant contained in
the merger agreement).
|
Termination Fee
Pursuant to the merger agreement, the Company
will be required to pay Fresenius Kabi a termination fee equal to $129 million if the merger agreement is terminated:
|
•
|
by either Fresenius Kabi or the Company because (i) the holders of Company common shares fail to approve the merger agreement
at the special meeting or (ii) the outside date has arrived and, in each such case (A) a takeover proposal shall have been publicly
made, proposed or communicated by a third party after the date of the merger agreement and not withdrawn prior to (x) in the case
of a termination because of a failure to obtain such shareholder approval, the earlier of the completion of the special meeting
(including any adjournment or postponement thereof) and the time of termination or (y) in the case of a termination because the
outside date arrived, the time of termination, and (B) at any time on or prior to the 12 month anniversary of such termination,
the Company enters into a definitive agreement with respect to a takeover proposal(whether or not such takeover proposal was the
same takeover proposal referred to in clause (A) and provided that the term “takeover proposal” shall have the meaning
as set forth above under “—
No Solicitation; Board Recommendation
” except that all references to 15% shall
be deemed to be references to 50%) and such takeover proposal is subsequently consummated, even if after such 12-month anniversary;
|
|
•
|
by us prior to the approval of the merger agreement by our holders of Company common shares in order to accept a superior proposal
and enter into a definitive agreement in connection with that superior proposal; or
|
|
•
|
by Fresenius Kabi because the Board or a committee thereof makes an adverse recommendation change.
|
The parties have agreed that in no event shall
the Company be required to pay the termination fee on more than one occasion. The termination fee, if paid, shall be the sole and
exclusive monetary damages remedy of Fresenius Kabi, Merger Sub and their respective subsidiaries and any of their respective former,
current or future officers, directors, partners, shareholders, managers, members or affiliates against the Company and its subsidiaries
and any of their respective former, current or future officers, directors, partners, shareholders, managers, members or affiliates
for any loss suffered as a result of the failure of the transactions contemplated by the merger agreement to be consummated or
for a breach or failure to perform under the merger agreement or otherwise (so long as, in the event the agreement was terminated
by the Company, such termination was in accordance with the applicable provisions of the merger agreement).
Effect of Termination
If the merger agreement is terminated by us
or Fresenius Kabi in accordance with its terms, the merger agreement will become void and of no effect, with no liability on the
part of any party (or any director, officer, or affiliate of such party) to the other party to the merger agreement;
provided
,
that no such termination shall relieve any party from liability for damages to another party resulting from a knowing and intentional
breach of the merger agreement or from fraud. In the event the merger agreement is terminated, certain provisions of the merger
agreement, including but not limited to those related to confidentiality, governing law and the termination fee, will survive the
termination.
Amendment
Subject to the requirements of applicable law,
the merger agreement may be amended by the written agreement of the parties thereto at any time prior to the effective time of
the merger, whether before or after approval of the merger agreement by the holders of Company common shares;
provided
that
following the approval of the merger agreement by the holders of Company common shares, the merger agreement may not be amended
in any manner which by law would require further approval by the holders of Company common shares without approval by such holders
of Company common shares.
Extension; Waiver
At any time prior to the effective time of
the merger, subject to the requirements of applicable law, any party to the merger agreement may (i) extend the time for the performance
of any of the obligations or other acts of the other parties to the merger agreement, (ii) waive any inaccuracies in the representations
and warranties by the other party contained in the merger agreement or in any document delivered pursuant thereto and (iii) waive
compliance by the other party with any of the agreements or conditions contained in the merger agreement. Any such extension or
waiver will be valid only if set forth in an instrument in writing signed by the party or parties to be bound thereby. The failure
of any party to the merger agreement to assert any of its rights under the merger agreement or otherwise will not constitute a
waiver of such rights. Notwithstanding the foregoing, following the approval of the merger agreement by the holders of Company
common shares, there may be no waiver or extension under the merger agreement that decreases the merger consideration, modifies
the articles of incorporation of the surviving corporation except as permitted by applicable law or adversely affects the rights
of the holders of Company common shares without approval by such shareholders.
Governing Law
The merger agreement is governed by and will
be construed in accordance with the laws of the State of Delaware (except that the procedures of the merger and matters relating
to the fiduciary duties of the Board will be subject to the internal laws of the State of Louisiana).
Fresenius Parent Undertaking
Fresenius Parent has agreed to cause Fresenius
Kabi to comply with its obligations under the merger agreement.
VOTING AGREEMENTS
As a condition to Fresenius Kabi and Merger
Sub entering into the merger agreement, Dr. Kapoor, Mr. Rai, Mr. Bonaccorsi, Dr. Kutinsky and their shareholder affiliates executed
and delivered to Fresenius Kabi the voting agreements, each dated April 24, 2017. At the close of business on the record date,
Dr. Kapoor, Mr. Rai, Mr. Bonaccorsi, Dr. Kutinsky and their shareholder affiliates collectively beneficially owned and held voting
power over 31,063,189 Company common shares (the “subject shares”), which represents approximately 24.9% of the voting power
of the Company common shares. In connection with the execution and delivery of the voting agreements, Fresenius Kabi did not pay
any of Dr. Kapoor, Mr. Rai, Mr. Bonaccorsi, Dr. Kutinsky and their shareholder affiliates any consideration in addition to the
consideration they may receive pursuant to the merger agreement in respect of their Company common shares or, as applicable, any
equity-based awards. The voting agreements are attached hereto as Annexes B, C, D and E.
Under the voting agreements, Dr. Kapoor, Mr.
Rai, Mr. Bonaccorsi, Dr. Kutinsky and their shareholder affiliates agreed, among other things, to:
|
•
|
appear, or otherwise cause any subject shares to be counted as present, at any special meeting called to vote upon the merger
and the merger agreement, provided that the merger agreement shall not have been amended or modified in a manner without any such
shareholder’s consent to (x) decrease the merger consideration or (y) change the form of merger consideration;
|
|
•
|
vote or cause to be voted all subject shares (A) in favor of, and shall consent to (or cause to be consented to), the approval
of the merger agreement and the transactions contemplated by the merger agreement and any related proposal in furtherance of the
foregoing and (B) against any takeover proposal; provided that the merger agreement shall not have been amended or modified in
a manner without any such shareholder’s consent to (x) decrease the merger consideration or (y) change the form of merger
consideration; and
|
|
•
|
not (i) sell, transfer, pledge, exchange, assign, tender, encumber, hypothecate or otherwise dispose of, or enter into a contract,
option, call or other arrangement with respect to the sale, transfer, pledge, exchange, assignment, tender, encumbrance, hypothecation
or other disposition of, any subject shares or any rights to acquire securities of the Company, other than pursuant to the applicable
voting agreement or the merger agreement, unless such sale, transfer, pledge, exchange, assignment, tender, encumbrance, hypothecation
or other disposition is to an affiliate who, prior to any such action, is a party to the applicable voting agreement, enters into
a voting agreement in form and substance reasonably acceptable to Fresenius Kabi or agrees to enter into the applicable voting
agreement pursuant to a customary joinder agreement.
|
Under the voting agreements, Dr. Kapoor, Mr.
Rai, Mr. Bonaccorsi, Dr. Kutinsky and their shareholder affiliates irrevocably granted and appointed Fresenius Kabi, and any individuals
designated in writing by Fresenius Kabi, as their proxy and attorney-in-fact to vote (A) in favor of the merger agreement and the
transactions contemplated by the merger agreement and any related proposal in furtherance of the foregoing and (B) against any
takeover proposal.
The voting agreements will terminate upon the
earlier of:
|
•
|
the effective time of the merger; and
|
|
•
|
the termination of the merger agreement in accordance with its terms.
|
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of June 9 , 2017, the following persons
were directors, nominees, Named Executive Officers or others with beneficial ownership of 5% or more of our common shares. The
information set forth below has been determined in accordance with Rule 13d-3 under the Exchange Act based upon information furnished
to us or to the SEC by the persons listed. Unless otherwise noted, the address of each of the following persons is 1925 West Field
Court, Suite 300, Lake Forest, Illinois 60045.
Beneficial Ownership
of Holders of 5% or More of Company Common Shares, Directors and Named Executive Officers:
Beneficial Owner
|
|
Shares Beneficially Owned
(1)
|
|
Percent
of Class
|
Holders of 5% or more of our common shares (excluding Directors and Named Executive Officers):
|
|
|
|
|
|
|
|
|
BlackRock, Inc.
|
|
|
8,880,815
|
(2)
|
|
|
7.1
|
%
|
Paulson & Co. Inc.
|
|
|
8,686,500
|
(3)
|
|
|
7.0
|
%
|
The Vanguard Group
|
|
|
6,678,166
|
(4)
|
|
|
5.4
|
%
|
Directors:
|
|
|
|
|
|
|
|
|
John N. Kapoor, Ph.D.
|
|
|
28,465,612
|
(5)
|
|
|
22.8
|
%
|
Kenneth S. Abramowitz
|
|
|
46,570
|
(6)
|
|
|
*
|
|
Adrienne L. Graves, Ph.D.
|
|
|
38,886
|
(7)
|
|
|
*
|
|
Ronald M. Johnson
|
|
|
148,151
|
(8)
|
|
|
*
|
|
Steven J. Meyer
|
|
|
117,442
|
(9)
|
|
|
*
|
|
Terry Allison Rappuhn
|
|
|
28,633
|
(10)
|
|
|
*
|
|
Brian Tambi
|
|
|
73,461
|
(11)
|
|
|
*
|
|
Alan Weinstein
|
|
|
97,943
|
(12)
|
|
|
*
|
|
Executive Officers:
|
|
|
|
|
|
|
|
|
Raj Rai
|
|
|
2,403,395
|
(13)
|
|
|
1.9
|
%
|
Duane A. Portwood
|
|
|
75,000
|
(14)
|
|
|
*
|
|
Joseph Bonaccorsi
|
|
|
456,609
|
(15)
|
|
|
*
|
|
Bruce Kutinsky, Pharm. D.
|
|
|
357,046
|
(16)
|
|
|
*
|
|
Steven Lichter
|
|
|
126,132
|
(17)
|
|
|
*
|
|
Randy Pollard
|
|
|
44,556
|
(18)
|
|
|
|
|
Jonathan Kafer
|
|
|
78,482
|
(19)
|
|
|
*
|
|
Directors and Executive Officers as a group (15 persons)
|
|
|
32,557,918
|
|
|
|
25.9
|
%
|
|
(*)
|
Indicates beneficial ownership of less than 1%.
|
|
(1)
|
Includes all Company common shares beneficially owned, whether directly and indirectly, individually or together with associates,
jointly or as community property with a spouse, as well as any shares as to which beneficial ownership may be acquired within 60
days of June 9, 2017 by the vesting of RSUs or the exercise of options, warrants or other convertible securities. Unless otherwise
specified in the footnotes that follow, the indicated person or entity has sole voting power and sole investment power with respect
to the shares.
|
|
(2)
|
The Company common shares ownership of BlackRock, Inc. is as of December 31, 2016 as reflected in the Schedule 13G/A filed
with the SEC on January 19, 2017. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.
|
|
(3)
|
The Company common shares ownership of Paulson & Co. Inc. is as of December 31, 2016 as reflected in the Schedule 13G/A
filed with the SEC on February 14, 2017. The address of Paulson & Co. Inc. is 1251 Avenue of the Americas, New York, New York
10020.
|
|
(4)
|
The Company common shares ownership of The Vanguard Group is as of December 31, 2016 as reflected in the Schedule 13G filed
with the SEC on February 8, 2017. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.
|
|
(5)
|
Includes (i) 1,907,445 Company common shares owned by the Kapoor Trust, of which Dr. Kapoor is the sole trustee and beneficiary,
(ii) 501,896 Company common shares owned directly by Dr. Kapoor, (iii) 1,165 Company common shares to be issued upon vesting of
RSUs, and (iv) 16,555 Company common shares issuable upon exercise of options. The total also includes (iv) 15,050,000 Company
common shares owned by Akorn Holdings, L.P., a Delaware limited partnership, of which Dr. Kapoor is the indirect managing general
partner, (v) 2,970,644 Company common shares owned by EJ Financial / Akorn Management L.P., of which Dr. Kapoor is the indirect
managing general partner, (vi) 3,590,445 Company common shares owned by EJ Funds LP., of which Dr. Kapoor is the indirect managing
general partner, and (vii)
|
4,427,462 Company common shares held
through several trusts, the trustee of which is employed by a company controlled by Dr. Kapoor and the beneficiaries of which include
Dr. Kapoor’s children and various other family members, all of which shares in (iv) – (vii) Dr. Kapoor disclaims beneficial
ownership of to the extent of his actual pecuniary interest therein. Dr. Kapoor’s ownership excludes 10,418 unvested RSUs
and 5,800 shares subject to unvested stock options.
|
(6)
|
Beneficial ownership for Mr. Abramowitz includes 16,555 Company common shares issuable upon exercise of options and 1,165 Company
common shares to be issued upon vesting of RSUs, and excludes: (i) 10,418 unvested RSUs, and (ii) 5,800 shares subject to unvested
stock options.
|
|
(7)
|
Beneficial ownership for Dr. Graves includes 16,555 Company common shares issuable upon exercise of options and 1,165 Company
common shares to be issued upon vesting of RSUs, and excludes: (i) 10,418 unvested RSUs, and (ii) 5,800 shares subject to unvested
stock options.
|
|
(8)
|
Beneficial ownership for Mr. Johnson includes 16,555 Company common shares issuable upon exercise of options and 1,165 Company
common shares to be issued upon vesting of RSUs, and excludes: (i) 10,418 unvested RSUs, and (ii) 5,800 shares subject to unvested
stock options.
|
|
(9)
|
Beneficial ownership for Mr. Meyer includes 16,555 Company common shares issuable upon exercise of options and 1,165 Company
common shares to be issued upon vesting of RSUs, and excludes: (i) 10,418 unvested RSUs, and (ii) 5,800 shares subject to unvested
stock options.
|
|
(10)
|
Beneficial ownership for Ms. Rappuhn includes 25,802 Company common shares issuable upon exercise of options and 1,165 Company
common shares to be issued upon vesting of RSUs, and excludes: (i) 10,418 unvested RSUs, and (ii) 5,800 shares subject to unvested
stock options.
|
|
(11)
|
Beneficial ownership for Mr. Tambi includes 16,555 Company common shares issuable upon exercise of options and 1,165 Company
common shares to be issued upon vesting of RSUs, and excludes: (i) 14,434 unvested RSUs, and (ii) 5,800 shares subject to unvested
stock options.
|
|
(12)
|
Beneficial ownership for Mr. Weinstein includes 16,555 Company common shares issuable upon exercise of options and 1,165 Company
common shares to be issued upon vesting of RSUs, and excludes: (i) 10,418 unvested RSUs, and (ii) 5,800 shares subject to unvested
stock options.
|
|
(13)
|
Beneficial ownership for Mr. Rai includes 2,000,000 shares owned by the Rajat Rai 2016 GRAT. The total also includes 319,773
Company common shares issuable upon the exercise of options and 6,780 Company common shares to be issued upon vesting of RSUs and
excludes: (i) 177,026 unvested RSUs, and (ii) 340,334 shares subject to unvested stock options.
|
|
(14)
|
Beneficial ownership for Mr. Portwood includes 75,000 Company common shares issuable upon exercise of options and excludes:
(i) 34,412 unvested RSUs, and (ii) 300,000 shares subject to unvested stock options.
|
|
(15)
|
Beneficial ownership for Mr. Bonaccorsi includes 76,136 Company common shares issuable upon the exercise of options and 2,251
Company common shares to be issued upon vesting of RSUs and excludes: (i) 91,175 unvested RSUs, and (ii) 107,440 shares subject
to unvested stock options.
|
|
(16)
|
Beneficial ownership for Dr. Kutinsky includes 193,825 Company common shares issuable upon the exercise of stock options and
2,988 Company common shares to be issued upon vesting of RSUs and excludes: (i) 55,202 unvested RSUs, and (ii) 97,928 shares subject
to unvested stock options.
|
|
(17)
|
Beneficial ownership for Mr. Lichter includes 125,496 Company common shares issuable upon the exercise of stock options and
636 Company common shares to be issued upon vesting of RSUs, and excludes: (i) 11,759 unvested RSUs, and (ii) 176,488 shares subject
to unvested stock options.
|
|
(18)
|
Beneficial ownership for Mr. Pollard includes 43,682 Company common shares issuable upon the exercise of stock options and
874 Company common shares to be issued upon vesting of RSUs, and excludes: (i) 11,122 unvested RSUs, and (ii) 81,046 shares subject
to unvested stock options.
|
|
(19)
|
Beneficial ownership for Mr. Kafer includes 77,846 Company common shares issuable upon the exercise of stock options and 636
Company common shares to be issued upon vesting of RSUs and excludes: (i) 11,759 unvested RSUs, and (ii) 108,538 shares subject
to unvested stock options.
|
MARKET PRICE AND DIVIDEND
INFORMATION
The Company common shares trade on the NASDAQ
under the symbol “AKRX”. The table below provides the high and low trading prices of the Company common shares for
the periods indicated, as reported by the NASDAQ.
|
|
High
|
|
Low
|
2017
|
|
|
|
|
|
|
First quarter
|
|
$
|
25.13
|
|
|
$
|
17.74
|
|
2016
|
|
|
|
|
|
|
|
|
Fourth quarter
|
|
$
|
28.42
|
|
|
$
|
17.61
|
|
Third quarter
|
|
$
|
35.40
|
|
|
$
|
26.07
|
|
Second quarter
|
|
$
|
31.92
|
|
|
$
|
19.18
|
|
First quarter
|
|
$
|
39.46
|
|
|
$
|
17.57
|
|
2015
|
|
|
|
|
|
|
|
|
Fourth quarter
|
|
$
|
37.86
|
|
|
$
|
19.08
|
|
Third quarter
|
|
$
|
47.35
|
|
|
$
|
26.30
|
|
Second quarter
|
|
$
|
57.10
|
|
|
$
|
38.63
|
|
First quarter
|
|
$
|
55.86
|
|
|
$
|
35.45
|
|
|
|
|
|
|
|
|
|
|
The Company has not declared or paid any cash
dividends on Company common shares since 1991. The Company does not anticipate paying cash dividends on Company common shares in
the foreseeable future. Under the terms of the merger agreement, the Company is prohibited from declaring, setting a record date
for, setting aside for payment or paying any dividends on, or making any other distributions in respect of, its capital stock,
other than intercompany dividends and distributions.
On April 6, 2017, the last day before
media reports of a possible transaction involving the Company and Fresenius Kabi had been first published in the press, the
reported closing price for the Company common shares was $25.22 per share. On April 24, 2017, the last trading day prior to
the Board’s adoption of the merger agreement, the reported closing price for the Company common shares was $32.72 per
share. The $34.00 per share to be paid for each Company common share in the merger represents a premium of approximately
34.8% over the closing price on April 6, 2017 and 3.9% over the closing price on April 21, 2017. On June 14, 2017 , the latest
practicable trading date before the filing of this proxy statement, the reported closing price for the Company common shares
was $33.44 . You are encouraged to obtain current market quotations for Company common shares in connection with voting
your Company common shares.
As of the close of business on the record date,
there were 124,763,997 Company common shares outstanding and entitled to vote, held by 282 shareholders of record. The number of holders
is based upon the actual number of holders registered in our records at such date and excludes holders of shares in “street
name” or persons, partnerships, associations, corporations or other entities identified in security positions listings maintained
by depository trust companies.
HOUSEHOLDING
The SEC has adopted rules that permit companies
and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to
two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This
process, which is commonly referred to as “householding,” potentially means extra convenience for shareholders and
cost savings for companies.
Brokers with account holders who are Akorn
shareholders may be “householding” our proxy materials. A single proxy statement will be delivered to multiple shareholders
sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice
from your broker that they will be “householding” communications 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 and annual report, please notify your broker and direct your written request
to Akorn, Inc., Attention: Investor Relations, 1925 West Field Court, Suite 300, Lake Forest, Illinois 60045, or call (847) 582-6923.
Shareholders who currently receive multiple copies of the proxy statement at their address and would like to request “householding”
of their communications should contact their broker.
SHAREHOLDER PROPOSALS
If the merger is completed on the expected
timeline, the Company does not expect to hold an annual meeting of shareholders in 2018. If the merger is not completed, or the
outside date is extended as described under “
Merger Agreement—Termination
”, you will continue to be entitled
to attend and participate in the Company’s annual meetings of shareholders, and we may hold a 2018 annual meeting of shareholders,
in which case we will provide notice of or otherwise publicly disclose the date on which the 2018 annual meeting will be held.
If the 2018 annual meeting of shareholders is held, shareholder proposals will be eligible for consideration for inclusion in the
proxy statement and form of proxy for the Company’s 2018 annual meeting of shareholders in accordance with Rule 14a-8 under
the Exchange Act and the Company’s By-laws, as described below.
If the 2018 annual meeting of shareholders
is held, any proposal that a shareholder of Company common shares wishes to submit for inclusion in the Akorn Proxy Statement for
the 2018 annual meeting (“2018 Proxy Statement”) pursuant to Rule 14a-8 must be received by Akorn’s Corporate
Secretary at 1925 West Field Court, Suite 300, Lake Forest, Illinois 60045 not later than November 24, 2017, or if such year’s
annual meeting does not take place within 30 days from April 27, 2018, then the deadline is a reasonable time before Akorn begins
to print and send its proxy materials. Such proposals must comply with SEC regulations under Rule 14a-8 regarding the inclusion
of shareholder proposals in company-sponsored proxy materials. In addition, notice of any proposal that a holder of Company common
shares wishes to propose for consideration at the 2018 annual meeting, but does not seek to include in the 2018 Proxy Statement
pursuant to Rule 14a-8, must be delivered to the Company no later than November 24, 2017 if the proposing shareholder of Company
common shares wishes for Akorn to describe the nature of the proposal in its 2018 Proxy Statement. Any shareholder proposals or
notices submitted to Akorn in connection with our 2018 annual meeting should be addressed to: Akorn’s Corporate Secretary
at 1925 West Field Court, Suite 300, Lake Forest, Illinois 60045. Any notice of a shareholder proposal submitted after November
24, 2017, or if such year’s annual meeting does not take place within 30 days from April 27, 2018, a reasonable time before
Akorn begins to print and send its proxy materials, will be considered untimely.
WHERE YOU CAN FIND ADDITIONAL
INFORMATION
The Company is subject to the informational
requirements of the Exchange Act. We file reports, proxy statements and other information with the SEC. You may read and copy any
materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet
site that contains our reports, proxy and information statements and other information at
www.sec.gov
.
The Company will make available a copy of the
documents we file with the SEC on the “Investor Relations” section of our website at
www.akorn.com
as soon as
reasonably practicable after filing these materials with the SEC. The information provided on our website is not part of this proxy
statement, and therefore is not incorporated by reference. Copies of any of these documents may be obtained free of charge either
on our website, by contacting Akorn, Inc., Investor Relations, 1925 West Field Court, Suite 300, Lake Forest, Illinois 60045, or
by calling (847) 582-6923.
Statements contained in this proxy statement,
or in any document incorporated in this proxy statement by reference, regarding the contents of any contract or other document,
are not necessarily complete and each such statement is qualified in its entirety by reference to that contract or other document
filed as an exhibit with the SEC. The SEC allows us to “incorporate by reference” information into this proxy statement.
This means that we can disclose important information by referring to another document filed separately with the SEC. The information
incorporated by reference is considered to be part of this proxy statement. This proxy statement and the information that we later
file with the SEC may update and supersede the information incorporated by reference. Similarly, the information that we later
file with the SEC may update and supersede the information in this proxy statement. We also incorporate by reference into this
proxy statement the following documents filed by us with the SEC under the Exchange Act and any documents filed by us pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this proxy statement and before the date of the special
meeting (
provided
that we are not incorporating by reference any information furnished to, but not filed with, the SEC):
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our Annual Report on Form 10-K for the fiscal year ended December 31, 2016;
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our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017;
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the portions of our Definitive Proxy Statement on Schedule 14A filed with the SEC on March 20, 2017, that are incorporated
by reference in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016; and
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our Current Reports on Form 8-K filed on April 7, 2017, April 24, 2017 and April 27, 2017.
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Information furnished under Item 2.02 or Item
7.01 of any Current Report on Form 8-K, including related exhibits, is not and will not be incorporated by reference into this
proxy statement.
The information contained in this proxy statement
speaks only as of the date indicated on the cover of this proxy statement unless the information specifically indicates that another
date applies.
We have not authorized anyone to give you
any information or to make any representation about the proposed merger or the Company that is different from or adds to the information
contained in this proxy statement or in the documents we have publicly filed with the SEC. Therefore, if anyone does give you any
different or additional information, you should not rely on it.
Annex A
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
By and Among
FRESENIUS KABI AG,
QUERCUS ACQUISITION, INC.,
AKORN, INC.
and
FRESENIUS SE & CO. KGAA
(solely for purposes of Article VIII)
Dated as of April 24, 2017
TABLE OF CONTENTS
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Page
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ARTICLE I
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The Merger
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SECTION 1.01.
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The Merger
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2
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SECTION 1.02.
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Closing
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2
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SECTION 1.03.
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Effective Time
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2
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SECTION 1.04.
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Effects of the Merger
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2
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SECTION 1.05.
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Articles of Incorporation and Bylaws of the Surviving Corporation
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2
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SECTION 1.06.
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Directors and Officers of the Surviving Corporation
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3
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ARTICLE II
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Effect of the Merger on Capital Stock; Exchange of Certificates; Equity-Based Awards
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SECTION 2.01.
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Effect on Capital Stock
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3
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SECTION 2.02.
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Exchange of Certificates and Book Entry Shares
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4
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SECTION 2.03.
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Equity-Based Awards
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6
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SECTION 2.04.
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Payments with Respect to Equity-Based Awards
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7
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SECTION 2.05.
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Adjustments
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7
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ARTICLE III
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Representations and Warranties of the Company
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SECTION 3.01.
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Organization; Standing
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8
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SECTION 3.02.
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Capitalization
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8
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SECTION 3.03.
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Authority; Noncontravention
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9
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SECTION 3.04.
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Governmental Approvals
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11
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SECTION 3.05.
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Company SEC Documents; Undisclosed Liabilities
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11
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SECTION 3.06.
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Absence of Certain Changes
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12
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SECTION 3.07.
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Legal Proceedings
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13
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SECTION 3.08.
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Compliance with Laws; Permits
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13
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SECTION 3.09.
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Tax Matters
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13
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SECTION 3.10.
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Employee Benefits
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15
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SECTION 3.11.
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Labor Matters
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16
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SECTION 3.12.
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Environmental Matters
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SECTION 3.13.
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Intellectual Property
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17
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SECTION 3.14.
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No Rights Agreement; Anti-Takeover Provisions; No Appraisal Rights
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18
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SECTION 3.15.
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Property
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18
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SECTION 3.16.
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Contracts
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18
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SECTION 3.17.
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Insurance
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20
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TABLE OF CONTENTS
(continued)
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Page
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SECTION 3.18.
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Regulatory Compliance
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SECTION 3.19.
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Opinion of Financial Advisor
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23
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SECTION 3.20.
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Brokers and Other Advisors
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SECTION 3.21.
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No Other Representations or Warranties
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23
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ARTICLE IV
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Representations and Warranties of Parent and Merger Sub
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SECTION 4.01.
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Organization; Standing
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24
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SECTION 4.02.
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Authority; Noncontravention
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24
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SECTION 4.03.
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Governmental Approvals
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SECTION 4.04.
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Ownership and Operations of Merger Sub
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SECTION 4.05.
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Sufficiency of Funds
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SECTION 4.06.
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Brokers and Other Advisors
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SECTION 4.07.
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No Other Company Representations or Warranties
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SECTION 4.08.
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Non-Reliance on Company Estimates, Projections, Forecasts, Forward-Looking Statements and Business Plans
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SECTION 4.09.
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Information Supplied
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27
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SECTION 4.10.
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Legal Proceedings
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27
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SECTION 4.11.
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Ownership of Company Common Shares
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27
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ARTICLE V
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Additional Covenants and Agreements
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SECTION 5.01.
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Conduct of Business
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SECTION 5.02.
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Solicitation; Change in Recommendation
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32
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SECTION 5.03.
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Efforts
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36
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SECTION 5.04.
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Public Announcements
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38
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SECTION 5.05.
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Access to Information; Confidentiality
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39
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SECTION 5.06.
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Indemnification and Insurance
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39
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SECTION 5.07.
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Rule 16b-3
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42
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SECTION 5.08.
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Employee Matters
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42
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SECTION 5.09.
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Company ESPP
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44
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SECTION 5.10.
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Notification of Certain Matters; Shareholder Litigation
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SECTION 5.11.
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Parent Vote
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45
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SECTION 5.12.
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Stock Exchange De-listing
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45
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SECTION 5.13.
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Preparation of the Proxy Statement; Shareholders’ Meeting
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SECTION 5.14.
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Voting Agreements
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46
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TABLE OF CONTENTS
(continued)
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Page
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ARTICLE VI
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Conditions to the Merger
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SECTION 6.01.
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Conditions to Each Party’s Obligation To Effect the Merger
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46
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SECTION 6.02.
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Conditions to the Obligations of Parent and Merger Sub
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SECTION 6.03.
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Conditions to the Obligations of the Company
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47
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ARTICLE VII
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Termination
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SECTION 7.01.
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Termination
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48
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SECTION 7.02.
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Effect of Termination
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50
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SECTION 7.03.
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Termination Fee
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50
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ARTICLE VIII
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Miscellaneous
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SECTION 8.01.
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No Survival of Representations and Warranties
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51
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SECTION 8.02.
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Amendment or Supplement
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51
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SECTION 8.03.
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Extension of Time, Waiver, Etc
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51
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SECTION 8.04.
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Assignment
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52
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SECTION 8.05.
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Counterparts
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52
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SECTION 8.06.
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Entire Agreement; No Third Party Beneficiaries
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52
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SECTION 8.07.
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Governing Law; Jurisdiction
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52
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SECTION 8.08.
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Specific Enforcement
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53
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SECTION 8.09.
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WAIVER OF JURY TRIAL
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53
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SECTION 8.10.
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Notices
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54
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SECTION 8.11.
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Severability
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55
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SECTION 8.12.
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Definitions
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55
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SECTION 8.13.
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Fees and Expenses
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62
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SECTION 8.14.
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Performance Guaranty
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62
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SECTION 8.15.
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Interpretation
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62
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SECTION 8.16.
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FK Parent Undertaking
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63
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Exhibit A
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--
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Amended and Restated Articles of Incorporation
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Exhibit B
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--
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Wiring Instructions
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This AGREEMENT AND PLAN OF MERGER,
dated as of April 24, 2017 (this “
Agreement
”), is by and among Fresenius Kabi AG, a German stock corporation
(“
Parent
”), Quercus Acquisition, Inc., a Louisiana corporation and a wholly owned Subsidiary of Parent (“
Merger
Sub
”), Akorn, Inc., a Louisiana corporation (the “
Company
”) and, solely for purposes of Article VIII,
Fresenius SE & Co. KGaA, a German partnership limited by shares (“
FK Parent
”). Certain capitalized terms
used in this Agreement are defined in Section 8.12.
WHEREAS, the parties intend that, upon the
terms and subject to the conditions set forth in this Agreement and in accordance with the Louisiana Business Corporation Act (the
“
LBCA
”), Merger Sub will be merged with and into the Company, with the Company surviving the Merger as a wholly
owned subsidiary of Parent (the “
Merger
”);
WHEREAS, simultaneously with the execution
and delivery of this Agreement and as a condition and inducement to the willingness of Parent and Merger Sub to enter into this
Agreement, Parent and certain shareholders of the Company are entering into voting agreements (collectively, the “
Voting
Agreements
”), pursuant to which, among other things, such shareholders have agreed to vote to approve this Agreement
and to take certain other actions in furtherance of the Merger, in each case upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Board of Directors of the Company
has (i) duly authorized and approved the execution, delivery and performance by the Company of this Agreement and the consummation
by the Company of the Transactions, (ii) adopted this Agreement and (iii) recommended that the Company’s shareholders approve
this Agreement;
WHEREAS, the Board of Directors of each of
Parent and Merger Sub has duly authorized and approved the execution, delivery and performance by each of Parent and Merger Sub
of this Agreement and the consummation by Parent and Merger Sub of the Transactions;
WHEREAS, the Board of Directors of Merger
Sub has (i) adopted this Agreement and (ii) recommended that Parent, in its capacity as sole shareholder of Merger Sub, approve
this Agreement;
WHEREAS, Parent, in its capacity as sole
shareholder of Merger Sub, will approve this Agreement by written consent immediately following its execution; and
WHEREAS, the Company, Parent and Merger Sub
desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.
A-1
NOW, THEREFORE, in consideration of the foregoing
and the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE
I
The Merger
SECTION 1.01.
The Merger.
Upon
the terms and subject to the conditions set forth in this Agreement, and in accordance with the provisions of the LBCA, at
the Effective Time, Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger Sub
shall thereupon cease, and the Company shall be the surviving corporation in the Merger.
The
Company, as the surviving corporation after the Merger, is hereinafter referred to as the “
Surviving
Corporation
”.
SECTION 1.02.
Closing.
The
closing of the Merger (the “
Closing
”) shall take place at 10:00 a.m. (New York City time) on the second
business day (the “
Closing Date
”) following the satisfaction or waiver (to the extent such waiver is
permitted by applicable Law) of the conditions set forth in Article VI (other than those conditions that by their nature are
to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time), at the offices
of Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, New York 10019, unless another date, time or place is agreed
to in writing by Parent and the Company.
SECTION 1.03.
Effective Time.
Subject to the provisions of this Agreement, as soon as practicable on the Closing Date, the parties hereto shall cause the
Merger to be consummated by filing articles of merger executed in accordance with, and in such form as is required by, the
relevant provisions of the LBCA (the “
Articles of Merger
”), and shall make all other filings, recordings
or publications required under the LBCA in connection with the Merger. The Merger shall become effective at the time that the
Articles of Merger are filed with the Secretary of State of the State of Louisiana (the “
Secretary of
State
”) or, to the extent permitted by applicable Law, at such later time as is agreed to by the parties hereto
prior to the filing of such Articles of Merger and specified in the Articles of Merger (the time at which the Merger becomes
effective is herein referred to as the “
Effective Time
”).
SECTION 1.04.
Effects of the
Merger.
The Merger shall have the effects provided in this Agreement and as set forth in the applicable provisions,
including Section 1-1107, of the LBCA.
SECTION 1.05.
Articles of
Incorporation and Bylaws of the Surviving Corporation.
At the Effective Time, the articles of incorporation and bylaws of
the Company, as in effect immediately prior to the Effective Time, shall be amended and restated as of the Effective Time to
be in the form of Exhibit A and the bylaws of Merger Sub (except with respect to the name of the Company), respectively, and
as so amended and restated shall be the articles of incorporation and bylaws of the Surviving Corporation until thereafter
amended as provided therein or by applicable Law (and subject to Section 5.06 hereof).
A-2
SECTION 1.06.
Directors and Officers
of the Surviving Corporation.
(a) The directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation immediately following the Effective Time, until their respective successors are duly
elected or appointed and qualified or their earlier death, resignation or removal in accordance with the articles of
incorporation and bylaws of the Surviving Corporation.
(b) The officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving Corporation until their respective successors are duly appointed
and qualified or their earlier death, resignation or removal in accordance with the articles of incorporation and bylaws of the
Surviving Corporation.
ARTICLE
II
Effect of the Merger on Capital Stock; Exchange of Certificates; Equity-Based Awards
SECTION 2.01.
Effect on Capital
Stock.
At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Parent, Merger
Sub or the holder of any of the outstanding shares of the common stock, no par value per share, of the Company
(“
Company Common Shares
”) or any shares of Merger Sub:
(a)
Capital Shares of Merger
Sub.
Each issued and outstanding share of Merger Sub shall be converted into and become one validly issued, fully paid
and nonassessable share of common stock, no par value per share, of the Surviving Corporation.
(b)
Cancelation of Certain
Shares.
All Company Common Shares that are owned by the Company as treasury shares immediately prior to the Effective
Time shall be canceled and shall cease to exist and no consideration shall be delivered in exchange therefor. All Company
Common Shares then held by Parent or Merger Sub shall be canceled and shall cease to exist and no consideration shall be
delivered in exchange therefor. Each Company Common Share that is owned by any direct or indirect wholly owned subsidiary of
the Company or of Parent (other than Merger Sub) shall not represent the right to receive the Merger Consideration and shall
be, at the election of Parent, either (i) converted into shares of common stock of the Surviving Corporation or (ii)
canceled.
(c)
Conversion of Company Common
Shares.
Each issued and outstanding Company Common Share (other than Company Common Shares to be canceled in accordance
with Section 2.01(b)) shall be converted automatically into and shall thereafter represent only the right to receive an
amount in cash equal to $34.00 per share, without interest (the “
Merger Consideration
”). As of the
Effective Time, all such Company Common Shares shall no longer be outstanding and shall automatically be canceled and shall
cease to exist, and each holder of a certificate which immediately prior to the Effective Time represented any such Company
Common Share (each, a “
Certificate
”) or non-certificated Company Common Share held in book entry form
(each, a “
Book Entry Share
”) shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration to be paid in consideration therefor upon surrender of such Certificate or Book Entry Share
in accordance with Section 2.02(b).
A-3
SECTION 2.02.
Exchange of
Certificates and Book Entry Shares.
(a)
Paying Agent.
Prior to the Closing Date, Parent shall designate a bank or
trust company reasonably acceptable to the Company to act as agent (the “
Paying Agent
”) for the payment of
the Merger Consideration in accordance with this Article II and, in connection therewith, prior to the Closing Date shall
enter into an agreement with the Paying Agent in a form reasonably acceptable to the Company. At or prior to the Effective
Time, Parent shall deposit or cause to be deposited with the Paying Agent an amount in cash sufficient to pay the aggregate
Merger Consideration (such cash being hereinafter referred to as the “
Exchange Fund
”). Pending its
disbursement in accordance with this Section 2.02, the Exchange Fund shall be invested by the Paying Agent as directed by
Parent in (i) short-term direct obligations of the United States of America, (ii) short-term obligations for which the full
faith and credit of the United States of America is pledged to provide for the payment of principal and interest, (iii)
short-term commercial paper rated the highest quality by either Moody’s Investors Service, Inc. or Standard and
Poor’s Ratings Services or (iv) certificates of deposit, bank repurchase agreements or banker’s acceptances of
commercial banks with capital exceeding $1 billion. Parent shall or shall cause the Surviving Corporation to promptly replace
or restore the cash in the Exchange Fund so as to ensure that the Exchange Fund is at all times maintained at a level
sufficient for the Paying Agent to make all payments of Merger Consideration in accordance herewith. No investment losses
resulting from investment of the funds deposited with the Paying Agent shall diminish the rights of any holder of Company
Common Shares to receive the Merger Consideration as provided herein.
(b)
Payment Procedures.
Promptly
after the Effective Time (but in no event more than three business days thereafter), Parent and the Surviving Corporation
shall cause the Paying Agent to mail to each Person who was, at the Effective Time, a holder of record of Company Common
Shares (other than the Company Common Shares to be canceled or converted in accordance with Section 2.01(b)) (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates or Book
Entry Shares, as applicable, shall pass, only upon delivery of the Certificates to the Paying Agent, and which shall be in
such form and shall have such other customary provisions (including customary provisions regarding delivery of an
“agent’s message” with respect to Book Entry Shares) as Parent and the Company may reasonably agree prior
to the Closing Date) and (ii) instructions for use in effecting the surrender of the Certificates or Book Entry Shares in
exchange for payment of the Merger Consideration as provided in Section 2.01(c). Upon surrender of a Certificate or a Book
Entry Share for cancelation to the Paying Agent, together with such letter of transmittal, duly completed and validly
executed in accordance with such letter’s instructions (and such other customary documents as may reasonably be
required by the Paying Agent), the holder of such Certificate or Book Entry Share shall be entitled to receive in exchange
therefor the Merger Consideration for each Company Common Share formerly represented by such Certificate or Book Entry Share,
and the Certificate or Book Entry Share so surrendered shall forthwith be canceled. If payment of the Merger Consideration is
to be made to a Person other than the Person in whose name the surrendered Certificate or Book Entry Share is registered,
it shall be a condition of payment that (x) the Certificate or Book Entry Share so surrendered shall be properly endorsed or
shall otherwise be in proper form for transfer and (y) the Person requesting such payment shall have paid any transfer and
other Taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of
such Certificate or Book Entry Share surrendered and shall have established to the reasonable satisfaction of the Surviving
Corporation that such Tax either has been paid or is not applicable. Until surrendered as
A-4
contemplated by this Section 2.02, each Certificate
and Book Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration
as contemplated by this Article II.
(c)
Transfer Books; No Further
Ownership Rights in Company Shares.
The Merger Consideration paid in respect of Company Common Shares upon the surrender
for exchange of Certificates or Book Entry Shares in accordance with the terms of this Article II shall be deemed to have
been paid in full satisfaction of all rights pertaining to the Company Common Shares previously represented by such
Certificates or Book Entry Shares, and at the Effective Time, the transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers on the transfer books of the Surviving Corporation of the
Company Common Shares that were outstanding immediately prior to the Effective Time. From and after the Effective Time, the
holders of Certificates that represented ownership of Company Common Shares and Book Entry Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such shares, except as otherwise provided for
herein or by applicable Law. Subject to the last sentence of Section 2.02(e), if, at any time after the Effective Time,
Certificates and Book Entry Shares are presented to the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Article II.
(d)
Lost, Stolen or Destroyed
Certificates.
If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact
by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the
posting by such Person of a bond, in such reasonable amount as Parent may direct, as indemnity against any claim that may be
made against it with respect to such Certificate, the Paying Agent will pay, in exchange for such lost, stolen or destroyed
Certificate, the applicable Merger Consideration to be paid in respect of Company Common Shares formerly represented by such
Certificate as contemplated by this Article II.
(e)
Termination of Exchange
Fund.
At any time following the first anniversary of the Closing Date, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any portion of the Exchange Fund (including any interest received with respect
thereto) which has not been disbursed to holders of Certificates or Book Entry Shares, and thereafter such holders shall be
entitled to look only to Parent and the Surviving Corporation for, and Parent and the Surviving Corporation shall remain
liable for, payment of their claims for the Merger Consideration pursuant to the provisions of this Article II. Any amounts
remaining unclaimed by such holders at such time at which such amounts would otherwise escheat to or become property of any
Governmental Authority shall become, to the extent permitted by applicable Law, the property of Parent or its designee, free
and clear of all claims or interest of any Person previously entitled thereto.
(f)
No Liability.
Notwithstanding any provision of this Agreement to the contrary, none of the parties hereto, the Surviving Corporation or the
Paying Agent shall be liable to any Person for Merger Consideration delivered to a public official pursuant to any applicable
state, federal or other abandoned property, escheat or similar Law.
(g)
Withholding.
Parent, the
Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from the Merger Consideration and any
other amounts
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payable pursuant to this Article II such amounts
as are required to be deducted and withheld with respect to the making of such payment under the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder (the “
Code
”), or under any provision of state,
local or non-U.S. Tax Law. To the extent amounts are so withheld and paid over to the appropriate Governmental Authority, the withheld
amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction
and withholding was made.
(h)
FIRPTA Certificate.
Prior to
the Closing Date, the Company will deliver to Parent a certificate described in U.S. Treasury Regulation sections
1.1445-2(c)(3) and 1.897-2(h), certifying that the Company Common Shares do not constitute “United States real property
interests” within the meaning of section 897(c)(1) of the Code and the U.S. Treasury Regulations promulgated
thereunder;
provided
that in no event will any failure to deliver such certificate be deemed a failure of a condition
to Closing.
SECTION 2.03.
Equity-Based
Awards.
Prior to the Effective Time, the Board of Directors of the Company (or, if appropriate, any committee thereof
administering the Company Stock Option Plans) shall adopt such resolutions and take such other actions as may be required to
provide that:
(a) each option to purchase Company Common
Shares other than rights under the Company ESPP (each, a “
Company Stock Option
”) outstanding immediately prior
to the Effective Time, whether vested or unvested, shall, as of the Effective Time, be canceled and the holder thereof shall then
become entitled to receive solely, in full satisfaction of the rights of such holder with respect thereto, a lump-sum cash payment,
without interest, equal to the product of (i) the number of Company Common Shares for which such Company Stock Option has not then
been exercised and (ii) the excess, if any, of the Merger Consideration over the exercise price per share of such Company Stock
Option;
provided
, that any such Company Stock Option with an exercise price per Company Common Share that is equal to or
greater than the Merger Consideration shall be canceled for no consideration;
(b) each restricted stock unit (each, a “
Company
RSU
”) granted prior to the date hereof that is outstanding immediately prior to the Effective Time, whether vested or
unvested, shall, as of the Effective Time, be canceled and the holder thereof shall then become entitled to receive solely, in
full satisfaction of the rights of such holder with respect thereto, a lump-sum cash payment, without interest, equal to the product
of (i) the number of Company Common Shares subject to such Company RSU as of immediately prior to the Effective Time and (ii) the
Merger Consideration; and
(c) each Company RSU granted following the
date hereof that is outstanding immediately prior to the Effective Time shall, as of the Effective Time, be converted into an unvested
award representing the opportunity to receive cash payments, without interest, in an aggregate amount equal to the product of (i)
the number of Company Common Shares subject to such Company RSU as of immediately prior to the Effective Time and (ii) the Merger
Consideration, with such aggregate amount being payable on the vesting dates applicable to such Company RSU as of immediately prior
to the Effective Time based proportionately on the number of Company Common Shares that would have vested on each such vesting
date, and
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which award shall continue to vest and shall
otherwise be subject to the same terms and conditions as were applicable to such Company RSU as of immediately prior to the Effective
Time (including any terms and conditions related to accelerated vesting upon a termination of the holder’s employment in
connection with or following the Effective Time, but excluding any terms and conditions related to accelerated vesting solely as
a result of a change in control).
SECTION 2.04.
Payments with Respect
to Equity-Based Awards.
The Surviving Corporation shall pay through its payroll systems (a) the amounts due pursuant to
Sections 2.03(a) and 2.03(b) promptly after the Effective Time (but in any event, no later than the second payroll date that
occurs after the Effective Time) and (b) the amounts due pursuant to Section 2.03(c) at the times required under the terms of
the applicable agreement, plan or arrangement relating to the corresponding Company RSU, as described in Section 2.03(c), in
accordance with the terms and conditions thereof (including any terms and conditions relating to accelerated vesting upon a
termination of the holder’s employment in connection with or following the Effective Time, but excluding any terms and
conditions related to accelerated vesting solely as a result of a change in control);
provided
,
however
, that
in the case of any such amounts that constitute non-qualified deferred compensation under Section 409A of the Code, the
Surviving Corporation shall pay such amounts at the earliest time permitted under the terms of the applicable agreement, plan
or arrangement that will not trigger a tax or penalty under Section 409A of the Code.
SECTION 2.05.
Adjustments.
If
between the date hereof and the Effective Time the outstanding Company Common Shares shall have been changed into a different
number of shares or a different class by reason of the occurrence or record date of any share split, reverse share split,
share dividend (including any dividend or other distribution of securities convertible into Company Common Shares),
reorganization, recapitalization, reclassification, combination, exchange of shares or other like change, the Merger
Consideration and any other amounts payable pursuant to this Article II shall be appropriately adjusted to reflect such share
split, reverse share split, share dividend (including any dividend or other distribution of securities convertible into
Company Common Shares), reorganization, recapitalization, reclassification, combination, exchange of shares or other like
change.
ARTICLE
III
Representations and Warranties of the Company
The Company represents and warrants to Parent
and Merger Sub that, except as (A) set forth in the confidential disclosure letter delivered by the Company to Parent and Merger
Sub prior to the execution of this Agreement (the “
Company Disclosure Letter
”) (it being understood that any
information, item or matter set forth on one section or subsection of the Company Disclosure Letter shall be deemed disclosure
with respect to, and shall be deemed to apply to and qualify, the section or subsection of this Agreement to which it corresponds
in number and each other section or subsection of this Agreement to the extent that it is reasonably apparent on its face without
review or other examination of the underlying documents listed therein that such information, item or matter is relevant to such
other section or subsection) or (B) disclosed in any report, schedule, form, statement or other document (including exhibits) filed
with, or furnished to, the SEC by the Company after January 1, 2015 and publicly available
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prior to the execution of this Agreement (the
“
Filed SEC Documents
”), other than any risk factor disclosure in any such Filed SEC Document contained in the
“Risk Factors” section thereof or other similarly cautionary, forward-looking or predictive statements in such Filed
SEC Documents:
SECTION 3.01.
Organization;
Standing.
(a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the
State of Louisiana and has all requisite corporate power and corporate authority necessary to carry on its business as it is
now being conducted, except (other than with respect to the Company’s due incorporation and valid existence) as would
not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company is duly licensed
or qualified to do business and is in good standing (where such concept is recognized under applicable Law) in each
jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets
owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
True and complete copies of the Company Charter Documents are included in the Filed SEC Documents, and the Company is not in
violation of any of the provisions thereof, except as would not reasonably be expected to be material to the Company and its
Subsidiaries, taken as a whole.
(b) Each of the Company’s Subsidiaries
is duly organized, validly existing and in good standing (where such concept is recognized under applicable Law) under the Laws
of the jurisdiction of its organization, has all requisite corporate power and authority necessary to carry on its business as
it is now being conducted, and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so organized, existing, qualified, licensed, and in good standing would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.02.
Capitalization.
(a) The authorized shares of the Company consist of 150,000,000 Company Common Shares and 5,000,000 preferred shares, par
value $1.00 per share (“
Company Preferred Shares
”). At the close of business on April 21, 2017 (the
“
Capitalization Date
”), (i) 124,533,605 Company Common Shares were issued and outstanding, (ii) 2,725,931
Company Common Shares were reserved and available for issuance pursuant to the Company Stock Option Plans, (iii) 4,615,905
Company Common Shares were subject to Company Stock Options, (iv) Company RSUs were outstanding pursuant to which a maximum
of 407,334 Company Common Shares could be issued, (v) 2,000,000 Company Common Shares were reserved and available for
purchase under the Company’s 2016 Employee Stock Purchase Plan (the “
Company ESPP
”) and (vi) no
Company Preferred Shares were issued or outstanding. Since the Capitalization Date through the date hereof, neither the
Company nor any of its Subsidiaries has (1) issued any Company Securities or incurred any obligation to make any payments
based on the price or value of any Company Securities or (2) established a record date for, declared, set aside for payment
or paid any dividend on, or made any other distribution in respect of, any shares of the Company, other than, in each case,
pursuant to the vesting of Company RSUs, the exercise of Company Stock Options or the forfeiture or withholding of taxes with
respect to Company Stock Options or Company RSUs.
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(b) Except as described in this Section 3.02,
as of the Capitalization Date, there were (i) no outstanding shares of capital stock of, or other equity or voting interests in,
the Company, (ii) no outstanding securities of the Company convertible into or exchangeable for shares of capital stock of, or
other equity or voting interests in, the Company, (iii) no outstanding options, warrants, rights or other commitments or agreements
to acquire from the Company, or that obligate the Company to issue, any capital stock of, or other equity or voting interests in,
or any securities convertible into or exchangeable for shares of capital stock of, or other equity or voting interests in, the
Company, (iv) no obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable
security or other similar agreement or commitment relating to any capital stock of, or other equity or voting interests in, the
Company (the items in clauses (i), (ii), (iii) and (iv) being referred to collectively as “
Company Securities
”)
and (v) no other obligations by the Company or any of its Subsidiaries to make any payments based on the price or value of any
Company Securities. There are no outstanding agreements of any kind which obligate the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Company Securities (other than pursuant to the cashless exercise of Company Stock Options or the
forfeiture or withholding of taxes with respect to Company Stock Options or Company RSUs), or obligate the Company to grant, extend
or enter into any such agreements relating to any Company Securities, including any agreements granting any preemptive rights,
subscription rights, anti-dilutive rights, rights of first refusal or similar rights with respect to any Company Securities. No
direct or indirect Subsidiary of the Company owns any Company Common Shares. None of the Company or any Subsidiary of the Company
is a party to any shareholders’ agreement, voting trust agreement, registration rights agreement or other similar agreement
or understanding relating to any Company Securities or any other agreement relating to the disposition, voting or dividends with
respect to any Company Securities. All outstanding Company Common Shares have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights.
(c) All of the outstanding shares of capital
stock of, or other equity or voting interests in, each Significant Subsidiary of the Company (except for directors’ qualifying
shares or the like) are owned directly or indirectly, beneficially and of record, by the Company free and clear of all Liens and
transfer restrictions, except for Permitted Liens and such Liens and transfer restrictions of general applicability as may be provided
under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (collectively, the “
Securities
Act
”) or other applicable securities Laws (including any restriction on the right to vote, sell or otherwise dispose
of such shares of capital stock or other equity or voting interests). Each outstanding share of capital stock of each Significant
Subsidiary of the Company which is held, directly or indirectly, by the Company, is duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights, and there are no subscriptions, options, warrants, rights, calls, contracts or other
commitments, understandings, restrictions or arrangements relating to the issuance, acquisition, redemption, repurchase or sale
of any shares of capital stock or other equity or voting interests of any Significant Subsidiary of the Company, including any
right of conversion or exchange under any outstanding security, instrument or agreement, any agreements granting any preemptive
rights, subscription rights, anti-dilutive rights, rights of first refusal or similar rights with respect to any securities of
any Significant Subsidiary.
SECTION 3.03.
Authority;
Noncontravention.
(a) The Company has all necessary corporate power and corporate authority to execute and deliver this
Agreement and to
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perform its obligations hereunder and, subject
to the receipt of the Company Shareholder Approval, to consummate the Transactions. The execution, delivery and performance by
the Company of this Agreement, and the consummation by it of the Transactions, have been duly authorized by its Board of Directors
and, except for obtaining the Company Shareholder Approval and filing the Articles of Merger with the Secretary of State pursuant
to the LBCA, no other corporate action on the part of the Company is necessary to authorize the execution, delivery and performance
by the Company of this Agreement and the consummation by it of the Transactions. This Agreement has been duly executed and delivered
by the Company and, assuming due authorization, execution and delivery hereof by the other parties hereto, constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability
(i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws of general
application affecting or relating to the enforcement of creditors’ rights generally and (ii) is subject to general principles
of equity, whether considered in a proceeding at law or in equity (the “
Bankruptcy and Equity Exception
”).
(b) The Board of Directors of the Company,
at a meeting duly called and held, adopted resolutions (i) authorizing and approving the execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the Transactions, (ii) adopting this Agreement, (iii) directing
that the Company submit the approval of this Agreement to a vote at a meeting of the holders of Company Common Shares in accordance
with the terms of this Agreement and (iv) recommending that the holders of the Company Common Shares approve this Agreement (such
recommendation, the “
Company Board Recommendation
”), which resolutions have not, except after the date hereof
as permitted by Section 5.02, been subsequently rescinded, modified or withdrawn.
(c) The affirmative vote (in person or by
proxy) of the holders of a majority of the outstanding Company Common Shares entitled to vote thereon, voting together as a single
class (the “
Company Shareholder Approval
”), at the Company Shareholders’ Meeting or any adjournment or
postponement thereof, is the only vote of the holders of any class or series of shares of the Company necessary to approve this
Agreement and for the consummation by the Company of the Transactions.
(d) Neither the execution and delivery of
this Agreement by the Company, nor the consummation by the Company of the Transactions, nor performance or compliance by the Company
with any of the terms or provisions hereof, will (i) subject to the receipt of the Company Shareholder Approval, conflict with
or violate any provision (A) of the Company Charter Documents or (B) of the similar organizational documents of any of the Company’s
Subsidiaries or (ii) assuming that the authorizations, consents and approvals referred to in Section 3.04 and the Company Shareholder
Approval are obtained prior to the Effective Time and the filings referred to in Section 3.04 are made and any waiting periods
thereunder have terminated or expired prior to the Effective Time, (x) violate any Law or Judgment applicable to the Company or
any of its Subsidiaries, (y) violate or constitute a breach of or default (with or without notice or lapse of time, or both) under
or give rise to a right of termination, modification, or cancelation of any obligation or to the loss of any benefit, any of the
terms or provisions of any loan or credit agreement, indenture, debenture, note, bond, mortgage, deed of trust, lease, sublease,
license, contract or other agreement (each, a “
Contract
”) to which the Company or any
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of its Subsidiaries is a party or accelerate
the Company’s or, if applicable, any of its Subsidiaries’ obligations under any such Contract or (z) result in the
creation of any Lien (other than Permitted Lien) on any properties or assets of the Company or any of its Subsidiaries, except,
in the case of clause (i)(B) and clause (ii), as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
SECTION 3.04.
Governmental
Approvals.
Except for (a) compliance with the applicable requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder (the “
Exchange Act
”), including the filing with the
Securities and Exchange Commission (the “
SEC
”) of a proxy statement relating to the Company
Shareholders’ Meeting (as amended or supplemented from time to time, the “
Proxy Statement
”), (b)
compliance with the rules and regulations of the NASDAQ Stock Market LLC (“
NASDAQ
”), (c) the filing of the
Articles of Merger with the Secretary of State pursuant to the LBCA and of appropriate documents with the relevant
authorities of other jurisdictions in which the Company or any of its Subsidiaries are qualified to do business, (d) filings
required under, and compliance with other applicable requirements of the HSR Act and (e) compliance with any applicable state
securities or blue sky laws, no consent or approval of, or filing, license, permit or authorization, declaration or
registration with, any Governmental Authority is necessary for the execution and delivery of this Agreement by the Company,
the performance by the Company of its obligations hereunder and the consummation by the Company of the Transactions, other
than such other consents, approvals, filings, licenses, permits or authorizations, declarations or registrations that, if not
obtained, made or given, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
SECTION 3.05.
Company SEC Documents;
Undisclosed Liabilities.
(a) The Company has filed with the SEC all material reports, schedules, forms, statements and
other documents required to be filed by the Company with the SEC pursuant to the Securities Act or the Exchange Act since
January 1, 2015 (collectively, the “
Company SEC Documents
”). As of their respective effective dates (in
the case of Company SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act)
and as of their respective SEC filing dates or, if amended prior to the date hereof, the date of the filing of such
amendment, with respect to the portions that are amended (in the case of all other Company SEC Documents), the Company SEC
Documents complied as to form in all material respects with the requirements of the Securities Act or the Exchange Act, as
the case may be, applicable to such Company SEC Documents, and none of the Company SEC Documents as of such respective dates
(or, if amended prior to the date hereof, the date of the filing of such amendment, with respect to the disclosures that are
amended) contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements
of the Company (including all related notes or schedules) included or incorporated by reference in the Company SEC Documents, as
of their respective dates of filing with the SEC (or, if such Company SEC Documents were amended prior to the date hereof, the
date of the filing of such amendment, with respect to the consolidated financial statements that are amended or restated therein),
complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, have been
prepared in all material respects in accordance with GAAP (except, in the case of unaudited
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quarterly statements, as permitted by Form
10-Q of the SEC or other rules and regulations of the SEC) applied on a consistent basis during the periods involved (except (i)
as may be indicated in the notes thereto or (ii) as permitted by Regulation S-X) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods shown (subject, in the case of unaudited quarterly financial statements, to
normal year-end adjustments).
(c) Neither the Company nor any of its Subsidiaries
has any liabilities of any nature (whether accrued, absolute, contingent or otherwise), except liabilities (i) reflected or reserved
against in the consolidated balance sheet (or the notes thereto) of the Company as of December 31, 2016 (the “
Balance
Sheet Date
”), included in the Filed SEC Documents, (ii) incurred after the Balance Sheet Date in the ordinary course
of business consistent with past practice, (iii) as contemplated by this Agreement or otherwise incurred in accordance with this
Agreement in connection with the Transactions or (iv) as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(d) The Company has established and maintains
disclosure controls and procedures and a system of internal controls over financial reporting (as such terms are defined in paragraphs
(e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. As of the
date hereof, neither the Company nor, to the Company’s Knowledge, the Company’s independent registered public accounting
firm, has identified or been made aware of “significant deficiencies” or “material weaknesses” (as defined
by the Public Company Accounting Oversight Board) in the design or operation of the Company’s internal controls over financial
reporting which would reasonably be expected to adversely affect in any material respect the Company’s ability to record,
process, summarize and report financial data, in each case which has not been subsequently remediated.
(e) The Proxy Statement (including any amendment
or supplement thereto), at the time first sent or given to the shareholders of the Company and at the time of the Company Shareholders’
Meeting, will comply as to form in all material respects with the requirements of the Exchange Act and will not contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to statements made or incorporated by reference therein based on information
supplied by or on behalf of Parent or Merger Sub or any Affiliates thereof for inclusion or incorporation by reference in the Proxy
Statement.
SECTION 3.06.
Absence of Certain
Changes.
Since the Balance Sheet Date through the date of this Agreement (a) except for the execution of this Agreement
and consummation of the Transactions, and the discussions and negotiations related thereto and to any transaction of the type
contemplated by this Agreement, the business of the Company and its Subsidiaries has been carried on and conducted in all
material respects in the ordinary course of business and (b) there has not been any Material Adverse Effect or any effect,
change, event or occurrence that would, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
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SECTION 3.07.
Legal Proceedings.
Section 3.07 of the Company Disclosure Letter sets forth, to the Knowledge of the Company, as of the date hereof, each legal
or administrative proceeding, suit, hearing, enforcement, audit, claim, investigation, arbitration or action (an
“
Action
”) pending against the Company or any of its Subsidiaries by or before any Governmental Authority
that seeks or reasonably could be expected to result in fines or damages of more than $1 million or relates to a criminal
matter. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect,
there is no (a) pending or, to the Knowledge of the Company, threatened Action against the Company or any of its
Subsidiaries, or (b) outstanding order, judgment, injunction, ruling, writ or decree of any Governmental Authority (a
“
Judgment
”) imposed upon the Company or any of its Subsidiaries, in each case, by or before any
Governmental Authority.
SECTION 3.08.
Compliance with Laws;
Permits.
The Company and each of its Subsidiaries are, and have been since July 1, 2013, in compliance in all material
respects with all state or federal laws, statutes, ordinances, codes, rules or regulations (“
Laws
”) or
Judgments, applicable to the Company or any of its Subsidiaries. The Company and each of its Subsidiaries hold all licenses,
franchises, permits, certificates, approvals and authorizations from Governmental Authorities (collectively,
“
Permits
”) necessary for the lawful conduct of their respective businesses, except where the failure to
hold the same would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The
Company, each of its Subsidiaries and each of its and their directors, officers and employees acting in such capacity and, to
the Knowledge of the Company, each of its and their other agents acting on its or their behalf, is, and has been since July
1, 2013, in compliance in all material respects with the Foreign Corrupt Practices Act of 1977 and any rules and regulations
promulgated thereunder. This Section 3.08 does not relate to and shall not be deemed to apply to the matters addressed in
Section 3.18.
SECTION 3.09.
Tax Matters.
(a) The Company and each of its Subsidiaries
has prepared (or caused to be prepared) and timely filed (taking into account valid extensions of time within which to file) all
material Tax Returns required to be filed by any of them, and all such filed Tax Returns (taking into account all amendments thereto)
are true, complete and accurate in all material respects.
(b) All material Taxes owed by the Company
and each of its Subsidiaries that are due (whether or not shown on any Tax Return) have been timely paid or have been adequately
reserved against in accordance with GAAP.
(c) No claim has ever been made by an authority
in a jurisdiction where the Company or any of its Subsidiaries does not file Tax Returns that the Company or any of its Subsidiaries
is or may be subject to taxation by that jurisdiction.
(d) As of the date of this Agreement, the
Company has not received written notice of any pending audits, examinations, investigations, proposed adjustments, claims or other
proceedings in respect of any material Taxes of the Company or any of its Subsidiaries.
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(e) There are no Liens for Taxes on any of
the assets of the Company or any of its Subsidiaries other than Permitted Liens.
(f) Neither the Company nor any of its Subsidiaries
has been a “controlled corporation” or a “distributing corporation” in any distribution that was purported
or intended to be governed by Section 355 of the Code (or any similar provision of state, local or non-U.S. Law).
(g) Neither the Company nor any of its Subsidiaries
has been a member of an affiliated group of corporations filing a consolidated federal income Tax return (other than a group the
common parent of which is the Company) or has any liability for the Taxes of any Person (other than the Company or any of its Subsidiaries)
under U.S. Treasury Regulations Section 1.1502-6 (or any similar provision of any state, local or non-U.S. law), as a transferee
or successor.
(h) Neither the Company nor any of its Subsidiaries
is a party to, or bound by, or has any obligation under, any Tax sharing Contract other than (i) Contracts solely among the Company
and its Subsidiaries and (ii) customary Tax indemnification provisions in Contracts the primary purpose of which does not relate
to Taxes.
(i) Neither the Company nor any of its Subsidiaries
has waived any statute of limitations in respect of material Taxes or agreed to any extension of time with respect to an assessment
or deficiency for material Taxes (other than pursuant to extensions of time to file Tax Returns obtained in the ordinary course).
(j) Neither the Company nor any of its Subsidiaries
has participated in any “reportable transaction” within the meaning of U.S. Treasury Regulation Section 1.6011-4(b).
(k) Neither the Company nor any of its Subsidiaries
is or has been a “United States real property holding corporation” within the meaning of Section 897(c) of the Code
at any time during the applicable period specified in Code Section 897(c)(1)(A)(ii).
(l) 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) ending after the Closing Date as a result of any:
(i) change in method of accounting
for a taxable period ending on or prior to the Closing Date;
(ii) “closing agreement”
as described in section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law);
(iii) intercompany transaction or
excess loss account described in U.S. Treasury Regulations under section 1502 of the Code (or any corresponding or similar provision
of state, local or non-U.S. income Tax Law);
(iv) installment sale or open transaction
disposition made on or prior to the Closing Date;
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(v) prepaid amount received on or
prior to the Closing Date; or
(vi) election under Code Section
108(i).
(m) Neither the Company nor any of its Subsidiaries
has received any letter ruling from the U.S. Internal Revenue Service (or any comparable ruling from any other taxing authority).
(n) For purposes of this Agreement: (x) ”
Tax
”
shall mean any and all federal, state, local or non-U.S. taxes, fees, levies, duties, tariffs, imposts, and other similar charges
in the nature of a tax (together with any and all interest, penalties and additions to tax) imposed by any Governmental Authority,
including taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property,
sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation, or net
worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; license,
registration and documentation fees; and customs duties, tariffs, and similar charges, together with any interest or penalty, addition
to tax or additional amount imposed by any Governmental Authority, and (y) ”
Tax Returns
” shall mean returns,
reports, claims for refund, declarations of estimated Taxes and information statements, including any schedule or attachment thereto
or any amendment thereof, with respect to Taxes filed or required to be filed with any Governmental Authority, including consolidated,
combined and unitary tax returns.
SECTION 3.10.
Employee Benefits.
(a) Section 3.10(a) of the Company Disclosure Letter contains a true and complete list, as of the date of this Agreement, of
each material Company Plan. With respect to each material Company Plan, the Company has made available to Parent true and
complete copies (to the extent applicable) of (i) the plan document or a written description thereof (or, if appropriate, a
form thereof), including any amendments thereto, other than any document that the Company or any of its Subsidiaries are
prohibited from making available to Parent as the result of applicable Law relating to the safeguarding of data privacy, (ii)
the most recent annual report on Form 5500 filed with the IRS or similar report required to be filed with any Governmental
Authority and the most recent actuarial valuation or similar report, (iii) the most recent IRS determination or opinion
letter received by the Company, (iv) the most recent summary plan description and (v) each insurance or group annuity
contract or other funding vehicle.
(b) Each Company Plan has been administered
in material compliance with its terms and applicable Laws, including ERISA and the Code, as applicable. Each Company Plan intended
to be “qualified” within the meaning of Section 401(a) of the Code has received a favorable determination letter from
the IRS or is entitled to rely upon a favorable opinion issued by the IRS. To the Knowledge of the Company, there are no existing
circumstances or any events that have occurred that could reasonably be expected to cause the loss of any such qualification status
of any such Company Plan. There are no pending, or to the Knowledge of the Company, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any Company Plan or any trust related thereto which could reasonably be
expected to result in any material liability to the Company or any of its Subsidiaries and no
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material audit or other proceeding by a Governmental
Authority is pending, or to the Knowledge of the Company, threatened or anticipated with respect to such plan.
(c) Neither
the
Company nor any Commonly Controlled Entity has maintained, established, sponsored, participated in, or contributed to, any (i)
pension plan that is subject to Title IV of ERISA or Section 412 of the Code or (ii) “multiemployer plan” (as defined
in Sections 3(37) or 4001(a)(3) of ERISA), in each case, at any time within the last six (6) years.
(d) No Company Plan provides benefits or
coverage in the nature of health, life or disability insurance following retirement or other termination of employment, other than
coverage or benefits (i) required to be provided under Part 6 of Title I of ERISA or Section 4980(B)(f) of the Code, or any other
applicable Law or (ii) the full cost of which is borne by the employee or former employee (or any of their beneficiaries).
(e) The consummation of the Transactions
will not, either alone or in combination with another event, (i) accelerate the time of payment or vesting, or increase the amount
of compensation due to any director, officer, employee or other service provider of the Company or any of its Subsidiaries under
any Company Plan, (ii) cause the Company to transfer or set aside any assets to fund any benefits under any Company Plan, (iii)
result in any “disqualified individual” receiving any “excess parachute payment” (each such term as defined
in Section 280G of the Code) or (iv) limit or restrict the right to amend, terminate or transfer the assets of any Company Plan
on or following the Effective Time.
SECTION 3.11.
Labor Matters.
Section 3.11 of the Company Disclosure Letter sets forth a complete and accurate list of all material collective bargaining
agreements or other Contracts applicable to any employees of the Company or any of its Subsidiaries (“
Labor
Agreements
”). Except as would not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, (i) no demand for recognition as the exclusive bargaining representative of any employees has been made by or
on behalf of any labor or similar organization and (ii) there is no pending or, to the Knowledge of the Company, threatened,
strike, lockout, slowdown, or work stoppage by or with respect to the employees of the Company or any of its Subsidiaries.
Each of the Company and its Subsidiaries is in material compliance with all Labor Agreements and all applicable Laws
respecting employment and employment practices, including Laws concerning terms and conditions of employment, wages and
hours, classification and occupational safety and health.
SECTION 3.12.
Environmental
Matters.
Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect,
(a) the Company and each of its Subsidiaries is, and have been since January 1, 2015, in compliance with all applicable
Environmental
Laws
, and neither the Company nor any of its Subsidiaries have received any written notice since January 1, 2015 alleging
that the Company is in violation of or liable under, or other request for information or related to, any Environmental Law,
(b) the Company and its Subsidiaries possess and are in compliance with all Permits required under Environmental Laws for the
operation of their respective businesses (“
Environmental Permits
”), (c) there is no Action under or
pursuant to any Environmental Law or Environmental Permit that is pending or, to the Knowledge of the Company, threatened the
Company or any of its Subsidiaries, (d) neither the Company nor any of its Subsidiaries have become subject to any
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Judgment imposed by any Governmental Authority
under which there are uncompleted, outstanding or unresolved obligations on the part of the Company or its Subsidiaries arising
under Environmental Laws, (e) there are no Hazardous Substances at the Owned Real Property or real property leased by the Company
or any of its Subsidiaries, or to the Knowledge of the Company, at properties formerly owned, leased or operated by the Company
or its Subsidiaries, in each case that are reasonably likely to result in any obligation to conduct remedial activities for, or
Action against, the Company or any of its Subsidiaries under Environmental Laws, and (f) to the Knowledge of the Company, there
are no environmental conditions that would reasonably be expected to give rise to or result in any obligation to conduct remedial
activities for, or Action against, the Company or any of its Subsidiaries under Environmental Law.
SECTION 3.13.
Intellectual
Property.
(a) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect, the Company and its Subsidiaries own all of the rights, title and interest in and to the Registered Company
Intellectual Property, free and clear of all Liens (other than Permitted Liens). Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, all of the Registered Company Intellectual Property is
subsisting, valid and enforceable.
(b) Except as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) the Company and its Subsidiaries own or have legally
enforceable and sufficient rights to use all Intellectual Property necessary to the conduct of the business of the Company and
its Subsidiaries as currently conducted free and clear of all Liens (other than Permitted Liens) and (ii) the Company and its Subsidiaries
have taken commercially reasonable steps in accordance with industry practice to maintain the confidentiality of non-public Intellectual
Property;
provided
that nothing in this Section 3.13(b) shall be interpreted or construed as a representation or warranty
with respect to whether there is any infringement of any Intellectual Property, which is the subject of Section 3.13(d).
(c) Except as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect, no Actions are pending or threatened in writing, and
since January 1, 2015, neither the Company nor any of its Subsidiaries has received any written notice or claim, (i) challenging
the ownership, validity, enforceability or use by the Company or any of its Subsidiaries of any Intellectual Property owned by
or exclusively licensed to the Company or any of its Subsidiaries or (ii) alleging that the Company or any of its Subsidiaries
are infringing, misappropriating or otherwise violating the Intellectual Property of any Person.
(d) Except as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) no Person has infringed, misappropriated or otherwise
violated the rights of the Company or any of its Subsidiaries with respect to any Intellectual Property owned by or exclusively
licensed to the Company or a Subsidiary of the Company and (ii) the operation of the business of the Company and its Subsidiaries
has not violated, misappropriated or infringed the Intellectual Property of any other Person.
(e) The consummation of the Transactions
will not (i) materially impair the rights of the Company or any of its Subsidiaries in or to any material Intellectual Property,
or (ii) result in the grant of any right or license to any material Intellectual Property that is owned or exclusively licensed
by the Company or any of its Subsidiaries to any third party.
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(f) Except as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) the Company and its Subsidiaries’ collection,
processing, transfer, destruction and other use of Personal Information does not violate any Contract to which any of them is a
party, any binding privacy policies, or any Information Privacy and Security Laws, (ii) no Actions are pending, and since January
1, 2015, neither the Company nor any of its Subsidiaries has received any written notice or claim, alleging any violation of the
foregoing from any Governmental Authority or any other Person, (iii) the Company and its Subsidiaries take reasonable measures
to protect Personal Information and (iv) to the Knowledge of the Company, there have been no material unauthorized intrusions or
breaches of any information technology systems of the Company or any of its Subsidiaries.
SECTION 3.14.
No Rights Agreement;
Anti-Takeover Provisions; No Appraisal Rights.
(a) The Company is not party to a shareholder rights agreement,
“poison pill” or similar anti-takeover agreement or plan.
(b) No “business combination,”
“control share acquisition,” “fair price,” “moratorium” or other anti-takeover Laws (each,
a “
Takeover Law
”) apply or will apply to the Company, this Agreement, the Voting Agreements or the Transactions.
(c) In accordance with the LBCA, no appraisal
rights shall be available to any holder of Company Common Shares in connection with the Transactions.
SECTION 3.15.
Property.
Except
as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (a) the Company or
one of its Subsidiaries has good and valid title to the real estate owned by the Company or any of its Subsidiaries (the
“
Owned Real Property
”) free and clear of all Liens (other than Permitted Encumbrances) and (b) the Company
or one of its Subsidiaries has a good and valid leasehold interest in each Company Lease, free and clear of all Liens (other
than Permitted Encumbrances).
SECTION 3.16.
Contracts.
(a)
Section 3.16(a) of the Company Disclosure Letter sets forth a list of all Material Contracts as of the date of this
Agreement. For purposes of this Agreement, “
Material Contract
” means any Contract to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their respective properties
or assets is bound that:
(i) is or would be required to be
filed as an exhibit to the Company’s Annual Report on Form 10-K pursuant to Item 601(b)(10) of Regulation S-K under the Securities
Act;
(ii) relates to the formation, creation,
governance, economics or control of any joint venture, partnership or other similar arrangement, other than (x) with respect to
any partnership that is wholly owned by the Company or any of its wholly owned Subsidiaries and (y) for the avoidance of doubt,
marketing, licensing, manufacturing and distribution Contracts entered into in the ordinary course of business;
(iii) provides for indebtedness
for borrowed money of the Company or any of its Subsidiaries having an outstanding or committed amount in excess of $10 million,
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other than (A) indebtedness
solely between or among any of the Company and any of its wholly owned Subsidiaries or (B) letters of credit;
(iv) relates to the acquisition
or disposition of any business, assets or properties (whether by merger, sale of stock, sale of assets or otherwise) for aggregate
consideration under such Contract in excess of $10 million (A) that was entered into after January 1, 2015 or (B) pursuant to which
any earn-out, indemnification or deferred or contingent payment obligations remain outstanding that would reasonably be expected
to involve payments by or to the Company or any of its Subsidiaries of more than $5 million after the date hereof (in each case,
excluding for the avoidance of doubt, acquisitions or dispositions of supplies, inventory, merchandise or products in the ordinary
course of business or of supplies, inventory, merchandise, products, properties or other assets that are obsolete, worn out, surplus
or no longer used or useful in the conduct of business of the Company or its Subsidiaries);
(v) is a Contract (other than purchase
orders under a master agreement) for the purchase of materials, supplies, goods, services, equipment or other assets pursuant to
which the Company or any of its Subsidiaries would reasonably be expected to make payments of more than $10 million during any
fiscal year;
(vi) is a Contract (other than purchase
orders under a master agreement) with a customer of the Company or any of its Subsidiaries pursuant to which the Company or any
of its Subsidiaries received aggregate net payments of more than $10 million during the fiscal year ended December 31, 2016;
(vii) contains any provision (A)
limiting, in any material respect, the right of the Company or any of its Subsidiaries to engage in any business, make use of any
material Intellectual Property, compete with any Person, or operate anywhere in the world, or (B) granting any exclusivity right
to any third party, or containing a “most favored nation” provision in favor of any third party, in each case, other
than (x) a Contract that can be terminated on less than 90 days’ notice without resulting in a breach or violation of, or
any acceleration of any rights or obligations or the payment of any penalty under, such Contract, (y) distribution or customer
Contracts entered into in the ordinary course of business granting exclusive rights to sell or distribute certain of the Company’s
and its Subsidiaries’ products or containing “most favored nation” provisions with respect to certain of the
Company’s and its Subsidiaries’ products or (z) any provision in any license agreements for Intellectual Property limiting
the Company’s and its Subsidiaries’ use of such Intellectual Property to specified fields of use or specified territories;
or
(viii) is a (A) license or similar
Contract with respect to (x) any Hatch-Waxman Act related litigation or (y) any products covered by an NDA and entered into since
January 1, 2011, or (B) settlement, coexistence agreement, covenant not to sue or similar Contract with respect to any material
Intellectual Property, in each case, to which the Company or any of its Subsidiaries is a party,
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beneficiary or otherwise bound (other
than generally commercially available, “off the shelf” software programs or non-exclusive licenses granted by or to
the Company or any of its Subsidiaries in the ordinary course of business which do not contain any material restriction or condition
on the use or exploitation of any material Intellectual Property by the Company or any of its Subsidiaries).
(b) Except with respect to any Contract that
has previously expired in accordance with its terms, been terminated, restated or replaced, (a) each Material Contract is valid
and binding on the Company and/or any of its Subsidiaries to the extent such Person is a party thereto, as applicable, and to the
Knowledge of the Company, each other party thereto, and is in full force and effect, except where the failure to be valid, binding
or in full force and effect would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect,
(b)
the Company and each of its Subsidiaries, and, to the Knowledge of the Company, any other party
thereto, have performed all obligations required to be performed by it under each Material Contract, except where such nonperformance
would not
, individually or in the aggregate,
reasonably be expected to have a Material Adverse
Effect, (c)
neither the Company nor any of its Subsidiaries have received written notice of the existence of any breach
or default on the part of the Company or any of its Subsidiaries under any Material Contract, except where such default would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (d) there are no events or conditions
which constitute, or, after notice or lapse of time or both, will constitute a default on the part of the Company or any of its
Subsidiaries, or to the Knowledge of the Company, any counterparty under such Material Contract and (e) to the Knowledge of the
Company, the Company has not received any notice from any Person that such Person intends to terminate, or not renew, any Material
Contract, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.17.
Insurance.
Except
as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (a) the Company and
its Subsidiaries own or hold policies of insurance, or are self-insured, in amounts providing reasonably adequate coverage
against all risks customarily insured against by companies in similar lines of business as the Company and its Subsidiaries
and (b) all such insurance policies are in full force and effect except for any expiration thereof in accordance with the
terms thereof, no written notice of cancelation or modification has been received other than in connection with ordinary
renewals, and there is no existing default or event which, with the giving of notice or lapse of time or both, would
constitute a default, by any insured thereunder.
SECTION 3.18.
Regulatory
Compliance.
(a) The Company and its Subsidiaries are and, to the Knowledge of the Company, since July 1, 2013, (1) have
been in compliance with (A) all applicable Laws (including all rules, regulations, guidance and policies) relating to or
promulgated by the U.S. Food and Drug Administration (the “
FDA
”), DEA, EMEA and other Healthcare
Regulatory Authorities and (B) all Healthcare Regulatory Authorizations, including all requirements of the FDA, DEA, the EMEA
and all other Healthcare Regulatory Authorities, in each case that are applicable to the Company and its Subsidiaries, or by
which any property, product, filing, submission, registration, declaration, approval, practice (including without limitation,
manufacturing) or other asset of the Company and its Subsidiaries is bound, governed or affected and (2) have held all
Healthcare Regulatory Authorizations required for the conduct
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of their respective businesses, except, in
each case, where such noncompliance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect. As of the date of this Agreement, since July 1, 2013, neither the Company nor its Subsidiaries has received any written
notification of any pending or, to the Knowledge of the Company, threatened Action from any Healthcare Regulatory Authority, except
where such occurrence would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) All material reports, documents, claims
and notices required or requested to be filed, maintained, or furnished to any Healthcare Regulatory Authority by the Company and
its Subsidiaries since July 1, 2013, have been so filed, maintained or furnished and, to the Knowledge of the Company, were complete
and correct in all material respects on the date filed (or were corrected in or supplemented by a subsequent filing), except where
the failure to do so (or the failure to be complete and correct) would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. The Company and its Subsidiaries are and have been, since July 1, 2013, in compliance with current
good manufacturing practices and have maintained appropriate mechanisms, policies, procedures and practices to ensure the prompt
collection and reporting of adverse event or any other safety or efficacy data, notifications, corrections, recalls and other actions
required by Law related to their products, except where the failure to do so would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(c) Except as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect, since July 1, 2013 (i) all preclinical and clinical
studies or tests sponsored by the Company and its Subsidiaries have been conducted in compliance with standard medical and scientific
research procedures and applicable Law (including Good Clinical Practices requirements and Laws restricting the use and disclosure
of individually identifiable health information) and (ii) the Company and its Subsidiaries have not received written notice from
(A) the FDA or any other Governmental Authority performing functions similar to those performed by the FDA with respect to any
ongoing clinical or pre-clinical studies or tests requiring the termination, suspension or material modification of such studies
or tests or (B) any Person regarding any breach or alleged breach with respect to individually identifiable health information.
(d) Since July 1, 2013, neither the Company
nor any of its Subsidiaries (i) have made an untrue statement of a material fact or fraudulent statement to the FDA or any other
Governmental Authority, (ii) have failed to disclose a material fact required to be disclosed to the FDA or other Governmental
Authority, (iii) have committed any other act, made any statement or failed to make any statement, that (in any such case) establishes
a reasonable basis for the FDA to invoke its Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities Final
Policy or (iv) have been the subject of any investigation by the FDA pursuant to its Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities Final Policy, except, in each case, as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. None of the Company, any of its Subsidiaries or, to the Knowledge of the Company,
any officer, employee, agent or clinical investigator of the Company or any of its Subsidiaries has been suspended or debarred
or convicted of any crime or engaged in any
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conduct that would reasonably be expected
to result in (a) debarment under 21 U.S.C. Section 335a or any similar Law or (b) exclusion under 42 U.S.C. Section 1320a-7 or
any similar Law.
(e) Except as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect, since July 1, 2013, the Company and each of its Subsidiaries
have been in compliance with all healthcare Laws applicable to the operation of their respective businesses as then conducted,
including (i) any and all federal, state and local fraud and abuse Laws, including the federal Anti-Kickback Statute (42 U.S.C.
§ 1320a-7(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.) and the regulations promulgated thereunder, (ii)
the Federal Food, Drug and Cosmetics Act, as amended (the “
FDCA
”), (iii) the Health Insurance Portability and
Accountability Act of 1996, as amended by the Health Information and Technology for Economic and Clinical Health Act, and the regulations
promulgated thereunder, (iv) Laws which are cause for exclusion from any federal health care program and (v) Laws relating to the
billing or submission of claims, collection of accounts receivable, underwriting the cost of, or provision of management or administrative
services in connection with, any and all of the foregoing, by the Company and its Subsidiaries. None of the Company, any of its
Subsidiaries or, to the Knowledge of the Company, any officer, employee, representative or agent of the Company or any of its Subsidiaries
(in each case, acting in the capacity of an employee or representative of the Company or such Subsidiary), is subject to any enforcement,
regulatory or administrative proceedings against or affecting the Company or any of its Subsidiaries relating to or arising under
the FDCA, the Anti-Kickback Statute or similar Laws, except as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(f) Except as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect, since July 1, 2013, the Company and each of its Subsidiaries
(i) have been in compliance with all applicable statutes, rules, and regulatory guidance relating to the Medicaid Drug Rebate Program,
the 340B Drug Pricing Program, the Medicare Part B Program, the Veterans Health Care Act Drug Pricing Program, and applicable state
price reporting laws, and (ii) have calculated and reported the applicable pricing metrics under the foregoing programs (including
Average Manufacturer Price, Best Price, 340B Ceiling Price, Average Sales Price, and Non-Federal Average Manufacturer Price) consistent
with the applicable statutes, rules, and regulatory guidance associated with the foregoing programs.
(g) Except as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect: (i) no new drug applications (“
NDAs
”)
or ANDAs submitted by the Company or any of its Subsidiaries to any Health Regulatory Authority for approval contain any untrue
statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, (ii) all NDAs and ANDAs submitted by the Company or any
of its Subsidiaries are true, complete and correct and none is deficient by virtue of any failure to submit a modification, amendment
or supplement thereto or for failure to pay any requisite fee, penalty or other charge or expense, and (iii) neither the Company
nor any of its Subsidiaries has used or engaged the services of any debarred individual in connection with the preparation or submission
of any marketing applications for its products.
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SECTION 3.19.
Opinion of Financial
Advisor.
The Board of Directors of the Company has received the opinion of J.P. Morgan Securities LLC, to the effect
that, as of the date of such opinion and subject to the limitations, qualifications and assumptions set forth therein, the
Merger Consideration to be paid to the holders (other than Parent and its Affiliates) of Company Common Shares is fair from a
financial point of view to such holders. It is agreed and understood that such opinion is for the benefit of the Board of
Directors of the Company and may not be relied on by Parent or Merger Sub.
SECTION 3.20.
Brokers and Other
Advisors.
Except for J.P. Morgan Securities LLC, the fees and expenses of which will be paid by the Company, no broker,
investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial
advisor’s or other similar fee or commission, or the reimbursement of expenses in connection therewith, in connection
with the Transactions based upon arrangements made by or on behalf of the Company or any of its Subsidiaries.
SECTION 3.21.
No Other
Representations or Warranties.
Except for the representations and warranties made by the Company in this Article III,
neither the Company nor any other Person makes any other express or implied representation or warranty with respect to the
Company or any of its Subsidiaries or their respective businesses, operations, properties, assets, liabilities, condition
(financial or otherwise) or prospects, or any estimates, projections, forecasts and other forward-looking information or
business and strategic plan information regarding the Company and its Subsidiaries, notwithstanding the delivery or
disclosure to Parent, Merger Sub or any of their respective Representatives of any documentation, forecasts or other
information (in any form or through any medium) with respect to any one or more of the foregoing, and each of Parent and
Merger Sub acknowledge the foregoing. In particular, and without limiting the generality of the foregoing, neither the
Company nor any other Person makes or has made any express or implied representation or warranty to Parent, Merger Sub or any
of their respective Representatives with respect to (a) any financial projection, forecast, estimate, budget or prospect
information relating to the Company, any of its Subsidiaries or their respective businesses or (b) except for the
representations and warranties made by the Company in this Article III, any oral, written, video, electronic or other
information presented to Parent, Merger Sub or any of their respective Representatives in the course of their due diligence
investigation of the Company, the negotiation of this Agreement or the course of the Transactions.
ARTICLE
IV
Representations and Warranties of Parent and Merger Sub
Except as set forth in the confidential disclosure
letter delivered by FK Parent, Parent and Merger Sub to the Company prior to the execution of this Agreement (the “
FK
Disclosure Letter
”) (it being understood that any information, item or matter set forth on one section or subsection
of the FK Disclosure Letter shall be deemed disclosure with respect to, and shall be deemed to apply to and qualify, the section
or subsection of this Agreement to which it corresponds in number and each other section or subsection of this Agreement to the
extent that it is reasonably apparent on its face without review or other examination of the underlying
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documents listed therein that such information,
item or matter is relevant to such other section or subsection), Parent and Merger Sub jointly and severally represent and warrant
to the Company:
SECTION 4.01.
Organization;
Standing.
Parent is a German stock corporation duly organized, validly existing and in good standing under the laws of
Germany and Merger Sub is a corporation duly incorporated, validly existing under the laws of the State of Louisiana and is
in good standing with the Secretary of State. Each of Parent and Merger Sub has all requisite corporate power and authority
necessary to carry on its business as it is now being conducted and is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be
so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of Parent and Merger Sub to perform their obligations under this Agreement or to
consummate the Transactions. Parent has made available to the Company complete and correct copies of an excerpt from the
commercial register and articles of association with respect to Parent, and Merger Sub’s certificate of incorporation
and bylaws, or comparable governing documents, each effective as of the date of this Agreement (or in the case of a
commercial register excerpt, as of a date not earlier than five business days prior to the date of this Agreement).
SECTION 4.02.
Authority;
Noncontravention.
(a) Each of Parent and Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The Management Board of
Parent has adopted resolutions approving the execution, delivery and performance by Parent of this Agreement and the
consummation of the Transactions, which resolutions have not been subsequently rescinded, modified or withdrawn. The Board of
Directors of Merger Sub has adopted resolutions (i) authorizing and approving the execution, delivery and performance by
Merger Sub of this Agreement and the consummation by Merger Sub of the Transactions, (ii) adopting this Agreement, (iii)
directing that this Agreement be submitted for consideration at a meeting or by unanimous written consent of Merger
Sub’s shareholder, which resolutions have not been subsequently rescinded, modified or withdrawn. No vote of holders of
capital stock of Parent is necessary to approve this Agreement or the consummation by Parent and Merger Sub of the Merger and
the other Transactions. Parent, as the sole shareholder of Merger Sub, will approve this Agreement and the Transactions
immediately following the execution and delivery of this Agreement. Except as expressly set forth in this Section 4.02(a), no
other corporate action (including any shareholder vote or other action) on the part of Parent or Merger Sub is necessary to
authorize the execution, delivery and performance by Parent and Merger Sub of this Agreement and the consummation by Parent
and Merger Sub of the Transactions. This Agreement has been duly executed and delivered by Parent and Merger Sub
and, assuming due authorization, execution and delivery hereof by the Company, constitutes a legal, valid and binding
obligation of each of Parent and Merger Sub, enforceable against each of them in accordance with its terms, subject to the
Bankruptcy and Equity Exception.
(b) Neither the execution and delivery of
this Agreement by Parent and Merger Sub, nor the consummation by Parent or Merger Sub of the Transactions, nor performance or compliance
by Parent or Merger Sub with any of the terms or provisions hereof, will (i) conflict with or violate any provision of the certificate
of incorporation, bylaws or other comparable
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charter or organizational documents of Parent
or Merger Sub or (ii) assuming that the authorizations, consents and approvals referred to in Section 4.03 are obtained prior to
the Effective Time and the filings referred to in Section 4.03 are made and any waiting periods with respect to such filings have
terminated or expired prior to the Effective Time, (x) violate any Law or Judgment applicable to Parent, Merger Sub or any of their
respective Subsidiaries or (y) violate or constitute a default under any of the terms, conditions or provisions of any Contract
to which Parent, Merger Sub or any of their respective Subsidiaries are a party or accelerate Parent’s, Merger Sub’s
or any of their respective Subsidiaries’, if applicable, obligations under any such Contract, except, in the case of clause
(ii), as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of
Parent and Merger Sub to perform their obligations under this Agreement or to consummate the Transactions.
SECTION 4.03.
Governmental
Approvals.
Except for (a) compliance with the applicable requirements of the Exchange Act, including the filing with the
SEC of the Proxy Statement, (b) the filing of the Articles of Merger with the Secretary of State pursuant to the LBCA and the
filing of appropriate documents with the relevant authorities of other jurisdictions in which the Company or any of its
Subsidiaries are qualified to do business, (c) filings required under, and compliance with other applicable requirements of,
the HSR Act and (d) approval of the India Foreign Investment Promotion Board, no consent or approval of, or filing, license,
permit or authorization, declaration or registration with, any Governmental Authority is necessary for the execution and
delivery of this Agreement by Parent and Merger Sub, the performance by Parent and Merger Sub of their obligations hereunder
and the consummation by Parent and Merger Sub of the Transactions, other than such other consents, approvals, filings,
licenses, permits or authorizations, declarations or registrations that, if not obtained, made or given, would not,
individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Parent and
Merger Sub to perform their obligations under this Agreement or to consummate the Transactions.
SECTION 4.04.
Ownership and
Operations of Merger Sub.
Parent owns beneficially, and its wholly owned subsidiary, Fresenius Kabi USA, LLC, owns of
record, all of the outstanding shares of Merger Sub, free and clear of all Liens. Merger Sub was formed solely for the
purpose of engaging in the Transactions, has no liabilities or obligations of any nature other than those incident to its
formation and pursuant to the Transactions, and prior to the Effective Time, will not have engaged in any other business
activities other than those relating to the Transactions.
SECTION 4.05.
Sufficiency of
Funds.
(a) FK Parent has sufficient access to financial resources, and at the Closing will have sufficient cash to enable
Merger Sub and the Surviving Corporation to pay the aggregate Merger Consideration and any other amounts required to be paid
in connection with the consummation of the Transactions (including all amounts payable in respect of Company Stock Options
and Company RSUs under this Agreement) and to pay all related fees and expenses, and there is no restriction on the use of
such cash for such purposes. Parent has, through FK Parent, the financial resources and capabilities to fully perform all of
its obligations under this Agreement.
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(b) In no event shall the receipt or availability
of any funds or financing by or to FK Parent or any of its Affiliates or any other financing transaction be a condition to any
of the obligations of Parent or Merger Sub hereunder.
SECTION 4.06.
Brokers and Other
Advisors.
No broker, investment banker, financial advisor or other Person is entitled to any broker’s,
finder’s, financial advisor’s or other similar fee or commission, or the reimbursement of expenses in connection
therewith, in connection with the Transactions based upon arrangements made by or on behalf of Parent, Merger Sub or any of
their respective Subsidiaries, except for Persons, if any, whose fees and expenses will be paid by Parent.
SECTION 4.07.
No Other Company
Representations or Warranties.
Parent and Merger Sub each acknowledges that it and its Representatives have received
access to such books and records, facilities, equipment, Contracts and other assets of the Company which it and its
Representatives have desired or requested to review, and that it and its Representatives have had full opportunity to meet
with the management of the Company and to discuss the business and assets of the Company. Except for the representations and
warranties expressly set forth in Article III, Parent and Merger Sub hereby acknowledge that neither the Company nor any of
its Subsidiaries, nor any other Person, (a) have made or is making any other express or implied representation or warranty
with respect to the Company or any of its Subsidiaries or their respective business or operations, including with respect to
any oral, written, video, electronic or other information provided or made available to Parent, Merger Sub or any of their
respective Representatives or any oral, written, video, electronic or other information developed by Parent, Merger Sub or
any of their respective Representatives or (b) will have or be subject to any liability or indemnification obligation to
Parent or Merger Sub resulting from the delivery, dissemination or any other distribution to Parent, Merger Sub or any of
their respective Representatives (in any form whatsoever and through any medium whatsoever), or the use by Parent, Merger Sub
or any of their respective Representatives, of any information, documents, estimates, projections, forecasts or other
forward-looking information, business plans or other material developed by or provided or made available to Parent,
Merger Sub or any of their respective Representatives, including in due diligence materials, “data rooms” or
management presentations (formal or informal, in person, by phone, through video or in any other format), in anticipation or
contemplation of any of the Transactions. Parent, on behalf of itself and on behalf of its Affiliates, expressly waives any
such claim relating to the foregoing matters. Parent and Merger Sub hereby acknowledge (each for itself and on behalf of its
Affiliates and Representatives) that it has conducted, to its satisfaction, its own independent investigation of the
business, operations, assets and financial condition of the Company and its Subsidiaries and, in making its determination to
proceed with the Transactions, each of Parent, Merger Sub and their respective Affiliates and Representatives have relied on
the results of their own independent investigation.
SECTION 4.08.
Non-Reliance on
Company Estimates, Projections, Forecasts, Forward-Looking Statements and Business Plans.
In connection with the due
diligence investigation of the Company by Parent and Merger Sub, Parent and Merger Sub have received and may continue to
receive from the Company certain estimates, projections, forecasts and other forward-looking information, as well as certain
and business and strategic plan information, regarding the Company and its Subsidiaries and their respective businesses
and
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operations. Parent and Merger Sub hereby acknowledge
that there are uncertainties inherent in attempting to make such estimates, projections, forecasts and other forward-looking statements,
as well as in such business and strategic plans, with which Parent and Merger Sub are familiar, that Parent and Merger Sub are
taking full responsibility for making their own evaluation of the adequacy and accuracy of all estimates, projections, forecasts
and other forward-looking information, as well as such business plans, so furnished to them (including the reasonableness of the
assumptions underlying such estimates, projections, forecasts, forward-looking information or business plans), and that Parent
and Merger Sub have not relied on such information and will have no claim against the Company or any of its Subsidiaries, or any
of their respective Representatives, with respect thereto or any rights hereunder with respect thereto, except pursuant to the
express terms of this Agreement, including on account of a breach of any of the representations, warranties, covenants or agreements
set forth herein.
SECTION 4.09.
Information
Supplied.
None of the information supplied or to be supplied by or on behalf of Parent or Merger Sub for inclusion or
incorporation by reference in the Proxy Statement (including any amendments or supplements thereto) will, at the time the
Proxy Statement (or any amendment or supplement thereto) is first sent or given to the shareholders of the Company or at the
time of the Company Shareholders’ Meeting, 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, in light of the circumstances under
which they are made, not misleading. Notwithstanding the foregoing, Parent and Merger Sub make no representation or warranty
with respect to statements made or incorporated by reference therein based on information supplied by or on behalf of the
Company or any Affiliates thereof for inclusion or incorporation by reference in the Proxy Statement.
SECTION 4.10.
Legal Proceedings.
Except as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the
ability of Parent and Merger Sub to perform their obligations under this Agreement or to consummate the Transactions, to the
Knowledge of Parent and Merger Sub, as of the date of this Agreement, there is no (a) pending or threatened Action against
Parent or Merger Sub or any of their respective Affiliates or (b) Judgment imposed upon or affecting Parent or Merger Sub or
any of their respective Affiliates, in each case, by or before any Governmental Authority.
SECTION 4.11.
Ownership of Company Common
Shares.
Neither Parent nor Merger Sub nor any of their Affiliates own any Company Common Shares.
ARTICLE
V
Additional Covenants and Agreements
SECTION 5.01.
Conduct of
Business.
(a) Except as required by applicable Law, Judgment or a Governmental Authority, as expressly contemplated,
required or permitted by this Agreement or as set forth in Section 5.01 of the Company Disclosure Letter, during the period
from the date of this Agreement until the Effective Time (or such earlier date on which this Agreement is terminated pursuant
to Section 7.01), unless Parent otherwise consents in writing (such consent not to be unreasonably withheld, delayed or
conditioned), (i) the Company shall, and shall cause each of its Subsidiaries to, use its and their commercially reasonable
efforts to
A-27
carry on its business in all material respects
in the ordinary course of business, and (ii) to the extent consistent with the foregoing, the Company shall, and shall cause its
Subsidiaries to, use its and their commercially reasonable efforts to preserve its and each of its Subsidiaries’ business
organizations (including the services of key employees) substantially intact and preserve existing relations with key customers,
suppliers and other Persons with whom the Company or its Subsidiaries have significant business relationships substantially intact,
in each case, substantially consistent with past practice;
provided
that no action by the Company or any of its Subsidiaries
with respect to matters specifically addressed by Section 5.01(b) shall be deemed to be a breach of this Section 5.01(a) unless
such action would constitute a breach of Section 5.01(b).
(b) Except as required by applicable Law,
Judgment or a Governmental Authority, as expressly contemplated, required or permitted by this Agreement or as set forth in Section
5.01 of the Company Disclosure Letter, during the period from the date of this Agreement until the Effective Time (or such earlier
date on which this Agreement is terminated pursuant to Section 7.01), unless Parent otherwise consents in writing (such consent
not to be unreasonably withheld, delayed or conditioned), the Company shall not, and shall not permit any of its Subsidiaries to:
(i) (A) other than transactions
among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, issue, sell, encumber
or grant any shares of its capital stock or other equity or voting interests, or any securities or rights convertible into, exchangeable
or exercisable for, or evidencing the right to subscribe for any shares of its capital stock or other equity or voting interests,
or any rights, warrants or options to purchase any shares of its capital stock or other equity or voting interests;
provided
that the Company may issue or grant Company Common Shares or other securities in the ordinary course of business consistent with
past practice under Company Plans in effect on the date of this Agreement or adopted, established, entered into or amended after
the date of this Agreement not in violation of this Agreement or as required pursuant to equity awards or obligations under the
Company Plans outstanding on the date of this Agreement in accordance with the terms of the applicable Company Plan in effect on
the date of this Agreement or granted after the date of this Agreement not in violation of this Agreement, (B) other than transactions
among the Company and its wholly owned Subsidiaries or among the Company’s wholly owned Subsidiaries, redeem, purchase or
otherwise acquire any of its outstanding shares of capital stock or other equity or voting interests, or any rights, warrants or
options to acquire any shares of its capital stock or other equity or voting interests (other than pursuant to the cashless exercise
of Company Stock Options or the forfeiture or withholding of taxes with respect to Company Stock Options or Company RSUs), (C)
establish a record date for, declare, set aside for payment or pay any dividend on, or make any other distribution in respect of,
any shares of its capital stock or other equity or voting interests, other than dividends and distributions by a wholly owned Subsidiary
of the Company to its direct or indirect parent, or (D) split, combine, subdivide or reclassify any shares of its capital stock
or other equity or voting interests;
(ii) (A) incur, assume or otherwise
become liable for any indebtedness for borrowed money, issue or sell any debt securities or warrants or other rights to acquire
A-28
any debt securities of the Company
or any of its Subsidiaries, guarantee any such indebtedness or any debt securities of another Person or enter into any “keep
well” or other agreement to maintain any financial statement condition of another Person (collectively, “
Indebtedness
”),
except (1) for intercompany Indebtedness among the Company and its wholly owned Subsidiaries, (2) for letters of credit, bank guarantees,
security or performance bonds or similar credit support instruments, overdraft facilities or cash management programs, in each
case issued, made or entered into in the ordinary course of business, (3) for Indebtedness incurred under the Credit Agreement
or other existing arrangements (including in respect of letters of credit) in an amount not to exceed $50 million outstanding at
any time and (4) indebtedness incurred in connection with the refinancing of any Indebtedness existing on the date of this Agreement
or permitted to be incurred, assumed or otherwise entered into hereunder;
provided
that no such refinancing indebtedness
shall have a principal amount greater than the principal amount of the indebtedness being refinanced (plus any applicable premiums,
defeasance costs, accrued interest, fees and expenses) and shall not include any greater prepayment premiums or restrictions on
prepayment than the indebtedness being refinanced, (B) enter into any swap or hedging transaction or other derivative agreements
other than in the ordinary course of business or (C) make any loans, capital contributions or advances to, or investments in, any
Person other than (x) to the Company or any wholly owned Subsidiary of the Company, (y) as permitted pursuant to Section 5.01(b)(v)
or (z) in the ordinary course of business;
(iii) sell or lease to any Person,
in a single transaction or series of related transactions, any of its properties or assets for consideration, individually or in
the aggregate, in excess of $10 million, except (A) ordinary course dispositions of inventory and dispositions of obsolete, surplus
or worn out assets or assets that are no longer used or useful in the conduct of the business of the Company or any of its Subsidiaries,
(B) transfers among the Company and its wholly owned Subsidiaries, (C) leases and subleases of real property owned by the Company
or its Subsidiaries and leases or subleases of real property under which the Company or any of its Subsidiaries is a tenant or
a subtenant and voluntary terminations or surrenders of such leases or subleases, in each case following prior good faith consultation
with Parent, (D) sales of real property owned by the Company or its Subsidiaries in the ordinary course of business or (E) other
sales and leases in the ordinary course of business;
(iv) make or authorize capital expenditures,
including for property, plant and equipment, except for those (A) that are materially consistent with the Company’s plan
that was previously made available to Parent, (B) in connection with the repair or replacement of facilities, properties or assets
destroyed or damaged due to casualty or accident (whether or not covered by insurance) or (C) otherwise in an aggregate amount
for all such capital expenditures made pursuant to this clause (C) not to exceed $10 million in the aggregate;
(v) except as permitted under Section
5.01(b)(iv) and except for acquisitions made with Parent’s prior written consent, make any acquisition of, or investment
in, any properties, assets, securities or business (including by merger), except in the ordinary course of business (which for
the avoidance of doubt and without limitation of the
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foregoing shall be deemed to include
any acquisition of inventory in the ordinary course of business and which shall be deemed to exclude any acquisition of capital
stock or of a material portion of the assets of any other Person);
provided
that the aggregate amount of consideration paid
or transferred by the Company and its Subsidiaries in connection with all such transactions shall not exceed the applicable amount
specified in Section 5.01(b)(v) of the Company Disclosure Letter, it being understood that this Section 5.01(b)(v) shall not permit
any acquisition or investment that would reasonably be expected to prevent or materially delay, interfere with, impair or hinder
the consummation of the Transactions;
(vi) except (A) in the ordinary
course of business consistent with past practice or (B) as required pursuant to the terms of any Company Plans, in each case, in
effect on the date of this Agreement or adopted, established, entered into or amended after the date of this Agreement not in violation
of this Agreement, (1) grant to any employee any material increase in compensation (including bonus or long-term incentive opportunities),
(2) grant to any current or former employee any material increase in severance, retention or termination pay, (3) grant or amend
any equity or other incentive awards, (4) hire, appoint or promote any employee whose base salary and target bonus opportunity
exceeds $250,000 per annum, hire or appoint any employee to a position at or above the vice president level or promote any employee
to a position at or above the director level, (5) establish, adopt, enter into, amend or terminate in any material respect any
Labor Agreement or Company Plan or (6) take any action to accelerate any rights or benefits under any Company Plan;
provided
,
however
, that the foregoing shall not restrict the Company or any of its Subsidiaries from entering into or making available
to newly hired employees or to employees in the context of promotions based on job performance or workplace requirements, in each
case, in the ordinary course of business consistent with past practice, plans, agreements, benefits and compensation arrangements
(including incentive grants) that have a value that is consistent with the past practice of making compensation and benefits available
to newly hired or promoted employees in similar positions;
(vii) make any material changes
in financial accounting methods, principles or practices materially affecting the consolidated assets, liabilities or results of
operations of the Company and its Subsidiaries, except insofar as may be required (A) by GAAP (or any interpretation thereof),
(B) by any applicable Law, including Regulation S-X under the Securities Act, or (C) by any Governmental Authority or quasi-governmental
authority (including the Financial Accounting Standards Board or any similar organization);
(viii) amend the Company Charter
Documents or amend in any material respect the comparable organizational documents of any Subsidiary of the Company;
(ix) grant any Lien (other than
Permitted Liens) on any of its material assets other than (A) to secure Indebtedness and other obligations in existence at the
date of this Agreement (and required to be so secured by their terms) or permitted under Section 5.01(b)(ii) or (B) to the Company
or to a wholly owned Subsidiary of the Company;
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(x) settle any pending or threatened
Action against the Company or any of its Subsidiaries, other than settlements of any pending or threatened Action (A) in which
the Company or any of its Subsidiaries is named as a nominal defendant, (B) in the ordinary course of business (excluding Hatch-Waxman
Act related litigation), (C) with respect to which there is a specific reserve in the balance sheet (or the notes thereto) of the
Company as of the Balance Sheet Date included in the Filed SEC Documents for an amount not materially in excess of the amount so
reflected or reserved (excluding any amount that would be expected to be paid or reimbursed under insurance policies or for which
the Company or any of its Subsidiaries is entitled to indemnification or contribution) or (D) if the amount to be paid by the Company
or any of its Subsidiaries in any such settlements does not exceed the applicable amounts specified in Section 5.01(b)(x)(D) of
the Company Disclosure Letter (in each case, excluding any amount that would be expected to be paid or reimbursed under insurance
policies or for which the Company or any of its Subsidiaries is entitled to indemnification or contribution);
provided
that
no settlement of any pending or threatened Action may: (1) involve any material injunctive or equitable relief, or impose material
restrictions, on the business activities of the Company or its Subsidiaries, (2) involve any admission of wrongdoing by the Company
or its Subsidiaries, (3) involve the grant of any license, cross-license or similar arrangement by the Company or any of its Subsidiaries
with respect to any material Intellectual Property owned by or licensed to the Company or any of its Subsidiaries or (4) impose
any restrictions on the use by the Company or any of its Subsidiaries of any material Intellectual Property owned by or licensed
to the Company or any of its Subsidiaries;
(xi) except in the ordinary course
of business (A) encumber, abandon, fail to diligently prosecute or maintain, transfer, license or otherwise dispose of any right,
title or interest in any Registered Company Intellectual Property or other material Intellectual Property, or (B) disclose any
material confidential Intellectual Property, in each case, that is owned by or exclusively licensed to the Company or any of its
Subsidiaries;
(xii) except in the ordinary course
of business, make any material change (or file a request to make any such change) in any method of Tax accounting, any annual Tax
accounting period or any material Tax election;
(xiii) except in the ordinary course
of business, (A) enter into, terminate or amend any Material Contract or any Permit or (B) enter into any Contract that would be
breached by, or require the consent of any third party in order to continue in full force following, consummation of the Transactions;
(xiv) adopt a plan or agreement
of complete or partial liquidation, dissolution, restructuring, recapitalization, merger, consolidation or other reorganization;
(xv) license on-market or in-development
products from third parties except in the ordinary course of business;
provided
that the amount of consideration paid or
transferred by the Company and its Subsidiaries (excluding, for the avoidance of doubt, any profit sharing payments, cost sharing
payments or royalties) in connection with any such individual license and for all such licenses shall not exceed the applicable
amounts
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specified in Section 5.01(b)(xv)
of the Company Disclosure Letter, it being understood that this Section 5.01(b)(xv) shall not permit any license that would reasonably
be expected to prevent or materially delay, interfere with, impair or hinder the consummation of the Transactions; or
(xvi) authorize any of, or commit
or agree, in writing or otherwise, to take any of, the foregoing actions.
(c) Nothing contained in this Agreement is
intended to give Parent, directly or indirectly, the right to control or direct the Company’s or its Subsidiaries’
operations prior to the Effective Time, and nothing contained in this Agreement is intended to give the Company, directly or indirectly,
the right to control or direct Parent’s or its Subsidiaries’ operations. Prior to the Effective Time, each of Parent
and the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over
its and its Subsidiaries’ respective operations.
SECTION 5.02.
Solicitation; Change in
Recommendation.
(a) Except as permitted by this Section 5.02,
the Company shall and shall cause each of its Subsidiaries and its and their officers and directors to, and shall instruct and
use its reasonable best efforts to cause its other Representatives to, (i) immediately cease any solicitation, discussions or negotiations
with any Persons with respect to a Takeover Proposal that existed on or prior to the date hereof and (ii) from the date hereof
until the Effective Time or, if earlier, the termination of this Agreement in accordance with Article VII, not, directly or indirectly,
(A) initiate, solicit, or knowingly encourage (including by way of furnishing non-public information) the submission of any inquiries
regarding, or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, a Takeover Proposal,
(B) engage in, continue or otherwise participate in any discussions or negotiations regarding (except to notify any Person of the
provisions of this Section 5.02), or furnish to any other Person any non-public information in connection with, or for the purpose
of, encouraging a Takeover Proposal or (C) enter into any letter of intent, memorandum of understanding, agreement in principle,
merger agreement, acquisition agreement or other similar agreement providing for a Takeover Proposal. The Company shall promptly
request the return or destruction of all information furnished by or on its behalf to any Person and its Representatives with respect
to a Takeover Proposal on or prior to the date hereof.
(b) Notwithstanding anything contained in
Section 5.02(a) or any other provision of this Agreement to the contrary, if at any time on or after the date hereof and prior
to obtaining the Company Shareholder Approval, the Company or any of its Representatives receives an oral or written Takeover Proposal,
which Takeover Proposal
did not result from any breach of this Section 5.02, (i)
the Company
and its Representatives may contact and engage in discussions with such Person or group of Persons making the Takeover Proposal
or its or their Representatives and financing sources to clarify the terms and conditions thereof or to request that any Takeover
Proposal made orally be made in writing or to notify such Person or group of Persons or its or their Representatives and financing
sources of the provisions of this Section 5.02
and (ii) if the Board of Directors of the Company or
any committee thereof determines in good faith, after consultation with its financial advisors and outside legal counsel, that
any such
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written Takeover
Proposal constitutes or could reasonably be expected to result in a Superior Proposal and the failure to take the following actions
is reasonably likely to be inconsistent with the Board of Directors’ fiduciary duties under applicable Law, then the Company
and any of its Representatives may (x) enter into
an Acceptable Confidentiality Agreement with the Person or group of Persons
making the Takeover Proposal and furnish pursuant to an Acceptable Confidentiality Agreement information (including non-public
information) with respect to the Company and its Subsidiaries to the Person or group of Persons who has made such Takeover Proposal
and its or their respective Representatives and financing sources;
provided
that the Company shall promptly (and in any
event within 24 hours) provide to Parent any non-public information concerning the Company or any of its Subsidiaries that is provided
to any Person given such access which was not previously provided to Parent or its Representatives and (y) engage in or otherwise
participate in discussions or negotiations with the Person or group of Persons making such Takeover Proposal and its or their Representatives
and financing sources.
(c) The Company shall promptly (and in any
event within 24 hours after knowledge of receipt by an officer or director of the Company) notify Parent in the event that the
Company or any of its Subsidiaries or any of its or their Representatives receives a Takeover Proposal and shall disclose to Parent
the material terms and conditions of any such Takeover Proposal and the identity of the Person or group of Persons making such
Takeover Proposal and shall provide Parent with copies of any documents evidencing or delivered in connection with such Takeover
Proposal, and the Company shall keep Parent reasonably informed promptly (and in any event within 24 hours after knowledge of the
applicable developments by an officer or director of the Company) of any material developments with respect to any such Takeover
Proposal (including any material changes thereto and including by providing copies of any revised or new documents evidencing or
delivered in connection with such Takeover Proposal). For the avoidance of doubt, all information provided to Parent pursuant to
this Section 5.02(c) will be subject to the terms of the Confidentiality Agreement.
(d) Neither the Board of Directors of the
Company nor any committee thereof shall (i) (A) withhold (in the case of the Board of Directors of the Company) or withdraw (or
modify in a manner adverse to Parent), or publicly propose to withhold (in the case of the Board of Directors of the Company) or
to withdraw (or modify in a manner adverse to Parent), the Company Board Recommendation, (B) in the case of the Board of Directors
of the Company, if any Takeover Proposal structured as a tender or exchange offer is commenced, fail to recommend against acceptance
of such tender or exchange offer by the Company’s stockholders within ten business days of commencement thereof pursuant
to Rule 14d-2 of the Exchange Act or (C) recommend the approval or adoption of, or approve or adopt, or publicly propose to recommend,
approve or adopt, any Takeover Proposal (it being understood that the Board of Directors of the Company or any committee thereof
may, and may cause the Company to, (x) if any Takeover Proposal structured as a tender or exchange offer is commenced, make a customary
“stop, look and listen” communication, or elect to take no position with respect to a Takeover Proposal until such
time as a position statement is required pursuant to Rule 14e-2 under the Exchange Act without such communication or election in
and of itself being considered an Adverse Recommendation Change or (y) disclose, to the extent that any of the following actions
would be otherwise permitted in accordance with the terms of this Agreement, that the Board of Directors of the Company or any
committee thereof has determined that a Takeover Proposal constitutes a Superior Proposal, that the Board of Directors of the Company
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or any committee thereof intends to make an
Adverse Recommendation Change or that the Company intends to terminate this Agreement to enter into a Company Acquisition Agreement
and in each case any material facts and circumstances relating thereto) (any action described in this clause (i), other than the
actions in the foregoing clause (x), being referred to as an “
Adverse Recommendation Change
”), or (ii) authorize,
execute or enter into (or cause or permit the Company or any of its Subsidiaries to execute or enter into) any letter of intent,
memorandum of understanding, agreement in principle, merger agreement, acquisition agreement or other similar agreement relating
to a Takeover Proposal, other than any Acceptable Confidentiality Agreement (each, a “
Company Acquisition Agreement
”).
Notwithstanding the foregoing or any other provision of this Agreement to the contrary, prior to obtaining the Company Shareholder
Approval, but not after, the Board of Directors of the Company or any committee thereof may (I) make an Adverse Recommendation
Change or (II) cause the Company to enter into a Company Acquisition Agreement with respect to a Takeover Proposal not solicited
in violation of this Section 5.02 and terminate this Agreement pursuant to Section 7.01(d)(ii), in either case if the Board of
Directors of the Company or any committee thereof has determined in good faith, after consultation with its financial advisors
and outside legal counsel, that (x) in the case of clause (I), failure to take such action is reasonably likely to be inconsistent
with the Board of Directors’ fiduciary duties under applicable Law and (y) in the case of clause (II), such Takeover Proposal
constitutes a Superior Proposal and the failure to take such action is reasonably likely to be inconsistent with the Board of Directors’
fiduciary duties under applicable Law;
provided
,
however
, that the Board of Directors of the Company or any committee
thereof shall not, and shall cause the Company not to, take any action set forth in clause (I) or clause (II), unless (1) the Company
has given Parent at least five business days’ prior written notice of its intention to take such action (which notice shall
specify the reasons therefor and, if relating to a Takeover Proposal, include an unredacted copy of any such Superior Proposal
and an unredacted copy of any relevant proposed transaction agreements, the identity of the party making such Superior Proposal
and the material terms thereof), (2) the Company has negotiated, and has caused its Representatives to negotiate, in good faith
with Parent during such notice period, to the extent Parent wishes to negotiate, to enable Parent to propose in writing a binding
offer to effect revisions to the terms of this Agreement such that it would cause such Superior Proposal to no longer constitute
a Superior Proposal (or, if the action set forth in clause (I) does not relate to a Takeover Proposal, such that the failure to
effect an Adverse Recommendation Change would not be reasonably likely to be inconsistent with the Board of Directors’ fiduciary
duties under applicable Law), (3) following the end of such notice period, the Board of Directors of the Company or any committee
thereof shall have considered in good faith such binding offer, and shall have determined that the Superior Proposal would continue
to constitute a Superior Proposal (or, if the action set forth in clause (I) does not relate to a Takeover Proposal, that the failure
to effect an Adverse Recommendation Change would continue to be reasonably likely to be inconsistent with the Board of Directors’
fiduciary duties under applicable Law) if the revisions proposed in such binding offer were to be given effect (it being understood
that in the event of any change to the financial terms or any other material terms of any such Superior Proposal (or, if the action
set forth in clause (I) does not relate to a Takeover Proposal, any material change to the underlying relevant facts and circumstances),
this proviso shall again apply (but the five business day period shall instead be two business days); and
provided further
that any purported termination of this Agreement pursuant to this sentence shall be void and of no force and effect unless the
termination is in accordance with Section 7.01 and the Company
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pays or causes to be paid to Parent the applicable
Company Termination Fee in accordance with Section 7.03 prior to or concurrently with such termination. The wire instructions for
payment of the Termination Fee are attached hereto as Exhibit B.
(e) Nothing in this Section 5.02 or elsewhere
in this Agreement shall prohibit the Company or the Board of Directors of the Company or any committee thereof from (i) if any
Takeover Proposal structured as a tender or exchange offer is commenced, taking and disclosing to the shareholders 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 Exchange Act or (ii)
making any disclosure to the shareholders of the Company that is required by applicable Law or if the Board of Directors of the
Company determines in good faith, after consultation with the Company’s outside legal counsel, that the failure of the Board
of Directors of the Company to make such disclosure is reasonably likely to be inconsistent with the Board of Directors’
exercise of their duties to the Company’s shareholders under applicable Law; provided, however, that any such disclosure
or statement that constitutes or contains an Adverse Recommendation Change shall be subject to the provisions of
Section 5.02(d)
.
(f) As used in this Agreement, “
Acceptable
Confidentiality Agreement
” means any confidentiality agreement entered into by the Company from and after the date of
this Agreement that (i) contains confidentiality provisions that are not less favorable in the aggregate to the Company than those
contained in the Confidentiality Agreement (except that such confidentiality agreement need not contain a counterpart of the provisions
set forth in paragraph 8 of the Confidentiality Agreement or any implicit standstill provisions or otherwise restrict the making
of or an amendment or modification to a Takeover Proposal (paragraph 8, together with any such provisions, the “
Restrictive
Provisions
”), or it may contain less restrictive provisions, in either of which events, the applicable Restrictive Provisions
of the Confidentiality Agreement shall be deemed to have been deleted or amended to incorporate the less restrictive provisions,
as applicable, and except for such changes necessary in order for the Company to be able to comply with its obligations under this
Agreement) and (ii) does not restrict the Company from providing the access, information or data required to be provided to Parent
pursuant to this
Section 5.02
.
(g) As used in this Agreement, “
Takeover
Proposal
” shall mean any inquiry, proposal or offer from any Person or group (other than Parent and its Subsidiaries)
relating to, in a single transaction or series of related transactions, any direct or indirect (i) acquisition of 15% or more of
the consolidated assets of the Company and its Subsidiaries (based on the fair market value thereof, as determined in good faith
by the Board of Directors of the Company or any committee thereof), including through the acquisition of one or more Subsidiaries
of the Company owning such assets, (ii) acquisition of 15% or more of the outstanding Company Common Shares (or issuance of securities
representing more than 15% of the outstanding shares of any class of voting securities of the Company), (iii) tender offer or exchange
offer that if consummated would result in any Person or group beneficially owning 15% or more of the outstanding Company Common
Shares or (iv) merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company pursuant to which such Person or group (or the shareholders of any Person) would acquire, directly
or indirectly, 15% or more of the consolidated assets of the Company and its Subsidiaries (based on the fair market value thereof,
as determined in good faith by the Board of Directors of the Company or any committee thereof) or 15% or more of the aggregate
voting
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power of the Company or of the surviving entity
in a merger, consolidation, share exchange or other business combination involving the Company or the resulting direct or indirect
parent of the Company or such surviving entity, in each case, other than the Transactions;
provided
,
however
, that
this Agreement and the Transactions shall not be deemed a Takeover Proposal.
(h) As used in this Agreement, “
Superior
Proposal
” shall mean any bona fide written Takeover Proposal that the Board of Directors of the Company or any committee
thereof has determined in its good faith judgment after consultation with its financial advisors and outside legal counsel, (i)
to be more favorable from a financial point of view to the Company’s shareholders than the Transactions and (ii) is reasonably
capable of being completed on the terms proposed, taking into account all legal, regulatory, financial, timing, financing and other
aspects of such proposal and of this Agreement;
provided
that for purposes of the definition of “Superior Proposal”,
the references to “15%” in the definition of Takeover Proposal shall be deemed to be references to “50%”.
SECTION 5.03.
Efforts.
(a)
Subject to the terms and conditions of this Agreement, each of the parties hereto shall cooperate with the other parties and
use (and shall cause their respective Subsidiaries to use) their respective reasonable best efforts (unless, with respect to
any action, another standard of performance is expressly provided for herein) to promptly (i) take, or cause to be taken, all
actions, and do, or cause to be done, and assist and cooperate with the other parties hereto in doing, all things necessary,
proper or advisable to cause the conditions to Closing to be satisfied as promptly as reasonably practicable and to
consummate and make effective, in the most expeditious manner reasonably practicable, the Transactions, including preparing
and filing promptly and fully all documentation to effect all necessary filings, notices, petitions, statements,
registrations, submissions of information, applications and other documents, (ii) obtain all approvals, consents,
registrations, waivers, permits, authorizations, orders and other confirmations from any Governmental Authority or third
party necessary, proper or advisable to consummate the Transactions, (iii) execute and deliver any additional instruments
necessary to consummate the Transactions and (iv) defend or contest in good faith any Action brought by a third party that
could otherwise prevent or impede, interfere with, hinder or delay in any material respect the consummation of the
Transactions, in the case of each of clauses (i) through (iv), other than with respect to filings, notices, petitions,
statements, registrations, submissions of information, applications and other documents, approvals, consents, registrations,
permits, authorizations and other confirmations relating to Antitrust Laws, which are dealt with in Sections 5.03(c) and (d)
below. For purposes hereof, “
Antitrust Laws
” means the Sherman Act, the Clayton Act, the HSR Act, the
Federal Trade Commission Act, all applicable foreign antitrust Laws and all other applicable Laws issued by a Governmental
Authority that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade or lessening of competition through merger or acquisition.
(b) In furtherance and not in limitation
of the foregoing, the Company and Parent shall each use its reasonable best efforts to (i) take all action necessary to ensure
that no Takeover Law is or becomes applicable to any of the Transactions and refrain from taking any actions that would cause the
applicability of such Laws and (ii) if the restrictions of any Takeover Law become applicable to any of the Transactions, take
all action necessary to ensure that the Transactions may be consummated as promptly as practicable on the terms contemplated
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by this Agreement and otherwise lawfully minimize
the effect of such Takeover Law on the Transactions.
(c) Each of the parties hereto agrees to
make an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the Transactions as promptly
as reasonably practicable following the date of this Agreement, and in any event within 10 days following the date hereof, and
to supply as promptly as reasonably practicable any additional information and documentary material that may be requested pursuant
to the HSR Act and to promptly take any and all steps necessary to avoid or eliminate each and every impediment and obtain all
consents under any Antitrust Laws that may be required by any foreign or U.S. federal, state or local Governmental Authority, in
each case with competent jurisdiction, so as to enable the parties hereto to consummate the Transactions. Without limiting the
foregoing, Parent shall promptly take all actions necessary to secure the expiration or termination of any applicable waiting period
under the HSR Act or any other Antitrust Law and resolve any objections asserted with respect to the Transactions under the Federal
Trade Commission Act or any other applicable Law raised by any Governmental Authority, in order to prevent the entry of, or to
have vacated, lifted, reversed or overturned, any Restraint that would prevent, prohibit, restrict or delay the consummation of
the Transactions, including (i) (A) executing settlements, undertakings, consent decrees, stipulations or other agreements with
any Governmental Authority or with any other Person, (B) selling, divesting or otherwise conveying or holding separate particular
assets or categories of assets or businesses of Parent and its Subsidiaries, (C) agreeing to sell, divest or otherwise convey or
hold separate any particular assets or categories of assets or businesses of the Company and its Subsidiaries contemporaneously
with or subsequent to the Effective Time, (D) permitting the Company to sell, divest or otherwise convey or hold separate any of
the particular assets or categories of assets or businesses of the Company or any of its Subsidiaries prior to the Effective Time,
(E) terminating existing relationships, contractual rights or obligations of the Company or Parent or their respective Subsidiaries,
(F) terminating any joint venture or other arrangement, (G) creating any relationship, contractual right or obligation of the Company
or Parent or their respective Subsidiaries or (H) effectuating any other change or restructuring of the Company or Parent or their
respective Subsidiaries (and, in each case, entering into agreements or stipulating to the entry of any Judgment by, or filing
appropriate applications with, the Federal Trade Commission (the “
FTC
”), the Antitrust Division of the Department
of Justice (the “
DOJ
”) or any other Governmental Authority in connection with any of the foregoing and, in the
case of actions by or with respect to the Company, by consenting to such action by the Company (including any consents required
under this Agreement with respect to such action);
provided
that any such action may, at the discretion of the Company,
be conditioned upon the Closing) and (ii) defending through litigation any claim asserted in court or administrative or other tribunal
by any Person (including any Governmental Authority) in order to avoid entry of, or to have vacated or terminated, any Restraint
that would prevent the Closing prior to the Outside Date. All such efforts shall be unconditional and shall not be qualified in
any manner and no actions taken pursuant to this Section 5.03 shall be considered for purposes of determining whether a Material
Adverse Effect has occurred or would reasonably be expected to occur. Parent will not withdraw its initial filing pursuant to the
HSR Act or any other Antitrust Law, as the case may be, and refile any of them, unless the Company has consented in advance to
such withdrawal and refiling, such consent not to be unreasonably withheld. Parent shall respond to and seek to resolve as promptly
as reasonably practicable any objections asserted by any Governmental
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Authority with respect to the Transactions.
The Company, Parent and Merger Sub and any of their respective Affiliates shall not take any action with the intention to, or that
could reasonably be expected to, hinder or delay the expiration or termination of any waiting period under the HSR Act or the obtaining
of approval of the DOJ or FTC as necessary (including, in the case of Parent and Merger Sub, acquiring or merging with any business,
Person or division thereof, or entering into a definitive agreement with respect thereto, if doing so could reasonably be expected
to have such effect). Nothing in this Agreement shall require any party to take or agree to take any action with respect to its
business or operations unless the effectiveness of such agreement or action is conditioned upon the Closing. Parent shall (x) control
the strategy for obtaining any approvals, consents, registrations, waivers, permits, authorizations, orders and other confirmations
from any Governmental Authority in connection with the Transactions and (y) control the overall development of the positions to
be taken and the regulatory actions to be requested in any filing or submission with a Governmental Authority in connection with
the Transactions and in connection with any investigation or other inquiry or litigation by or before, or any negotiations with,
a Governmental Authority relating to the Transactions and of all other regulatory matters incidental thereto;
provided
that
Parent shall consult and cooperate with the Company with respect to such strategy, positions and requested regulatory action and
consider the Company’s views in good faith. Neither Parent nor the Company shall commit to or agree with any Governmental
Authority to stay, toll or extend any applicable waiting period under the HSR Act or any other Antitrust Laws or enter into a timing
agreement with any Governmental Authority, without the prior written consent of the other party, such consent not to be unreasonably
withheld.
(d) Each of the parties hereto shall use
its reasonable best efforts to (i) cooperate in all respects with each other in connection with any filing, submission or written
communication with a Governmental Authority in connection with the Transactions and in connection with any investigation or other
inquiry by or before a Governmental Authority relating to the Transactions, including any proceeding initiated by a private person,
and allow the other party to review in advance and consider in good faith the views of the other party with respect to such filing,
submission, or written communication, (ii) keep the other parties hereto informed in all material respects and on a reasonably
timely basis of any material communication received by such party from the FTC, the DOJ or any other Governmental Authority and
of any material communication received or given in connection with any proceeding by a private Person, in each case regarding any
of the Transactions, (iii) subject to applicable Laws relating to the exchange of information, and to the extent reasonably practicable,
consult with the other parties hereto with respect to
information relating to the other parties hereto
and their respective Subsidiaries, as the case may be, that appears in any filing made with, or written materials submitted to,
any third Person or any Governmental Authority in connection with the Transactions, other than “4(c) documents” as
that term is used in the rules and regulations under the HSR Act,
and (iv) to the extent permitted by the FTC, the DOJ or
such other applicable Governmental Authority or other Person, give the other parties hereto the opportunity to attend and participate
in such meetings and conferences.
SECTION 5.04.
Public
Announcements.
Parent and the Company shall consult with each other before issuing, and give each other the opportunity
to review and comment upon, any press release or other public statements with respect to the Transactions, and shall not
issue any such press release or make any such public statement prior to such consultation, except as
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may be required by applicable Law, Judgment,
court process or the rules and regulations of any national securities exchange or national securities quotation system and except
for any matters referred to in, and made in compliance with, Section 5.02. The parties hereto agree that the initial press release
to be issued with respect to the Transactions following execution of this Agreement shall be in the form heretofore agreed to by
the parties hereto (the “
Announcement
”). Notwithstanding the forgoing, this Section 5.04 shall not apply to
any press release or other public statement made by the Company or Parent (a) that is consistent with the Announcement and the
terms of this Agreement and does not contain any information relating to the Company or the Transactions that has not been previously
announced or made public in accordance with the terms of this Agreement or (b) is made in the ordinary course of business consistent
with past practice and does not relate primarily to this Agreement or the Transactions.
SECTION 5.05.
Access to Information;
Confidentiality.
Subject to applicable Law and any applicable Judgment, between the date of this Agreement and the
earlier of the Effective Time and the termination of this Agreement pursuant to Section 7.01, upon reasonable notice, the
Company shall afford to Parent and Parent’s Representatives reasonable access during normal business hours to the
Company’s officers, employees, agents, properties, books, Contracts and records (other than any of the foregoing that
relate to the negotiation and execution of this Agreement, or, except as expressly provided in Section 5.02, to any Takeover
Proposal or any other transactions potentially competing with or alternative to the Transactions or proposals from other
parties relating to any competing or alternative transactions that occurred prior to the date hereof or were made in
accordance with the terms of this Agreement) and the Company shall furnish promptly to Parent and Parent’s
Representatives such information concerning its business, personnel, assets, liabilities and properties as Parent may
reasonably request;
provided
that Parent and its Representatives shall conduct any such activities in such a manner as
not to interfere unreasonably with the business or operations of the Company;
provided further
,
however
, that
the Company shall not be obligated to provide such access or information if the Company determines, in its reasonable
judgment, that doing so is reasonably likely to (i) violate applicable Law or an applicable Judgment, (ii) jeopardize the
protection of an attorney-client privilege, attorney work product protection or other legal privilege or (iii) expose the
Company to risk of liability for disclosure of sensitive or personal information. In any such event, the Company shall use
its reasonable best efforts to communicate, to the extent feasible, the applicable information in a way that would not
violate applicable Law, Judgment or obligation or risk waiver of such privilege or protection or risk such liability,
including entering into a joint defense agreement, common interest agreement or other similar arrangement. All requests for
information made pursuant to this Section 5.05 shall be directed to the executive officer or other Person designated by the
Company. Until the Effective Time, all information provided will be subject to the terms of the letter agreement dated as of
November 8, 2016, by and among the Company and Fresenius Kabi USA, LLC (the
“
Confidentiality Agreement
”).
SECTION 5.06.
Indemnification and
Insurance.
(a) From and after the Effective Time, each of Parent and the Surviving Corporation shall, and Parent shall
cause the Surviving Corporation to, in each case to the fullest extent permissible by applicable Law, (i) jointly and
severally indemnify and hold harmless each individual who at the Effective Time is, or at any time prior to the Effective
Time was, a director, officer, employee or agent of the Company or of a Subsidiary of the Company (each, an
“
Indemnitee
” and, collectively, the “
Indemnitees
”) with respect to all claims,
liabilities, losses, damages, judgments, fines, penalties, costs (including
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amounts paid in settlement or compromise)
and expenses (including reasonable fees and expenses of legal counsel) in connection with any Action (whether civil, criminal,
administrative or investigative), whenever asserted, based on or arising out of, in whole or in part, (A) the fact that an Indemnitee
is or was a director, officer, employee or agent of the Company or such Subsidiary or (B) acts or omissions by an Indemnitee in
the Indemnitee’s capacity as a director, officer, employee or agent of the Company or such Subsidiary or taken at the request
of the Company or such Subsidiary (including in connection with serving at the request of the Company or such Subsidiary as a representative
of another Person (including any employee benefit plan)), in each case under clause (A) or (B), at, or at any time prior to, the
Effective Time (including any Action relating in whole or in part to the Transactions or relating to the enforcement of this provision
or any other indemnification or advancement right of any Indemnitee) and (ii) assume (in the case of the Surviving Corporation,
in the Merger without any further action) all obligations of the Company and such Subsidiaries to the Indemnitees in respect of
indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the Effective
Time as provided in the Company Charter Documents and the organizational documents of such Subsidiaries as in effect on the date
of this Agreement or in any agreement in existence as of the date of this Agreement providing for indemnification between the Company
or any of its Subsidiaries and any Indemnitee. Without limiting the foregoing, Parent, from and after the Effective Time, shall
cause, unless otherwise required by Law, the articles of incorporation and bylaws of the Surviving Corporation to contain provisions
no less favorable to the Indemnitees with respect to limitation of liabilities of directors and officers and indemnification than
are set forth as of the date of this Agreement in the Company Charter Documents, which provisions shall not be amended, repealed
or otherwise modified in a manner that would adversely affect the rights thereunder of the Indemnitees in any material respect.
In addition, from the Effective Time, Parent shall, and shall cause the Surviving Corporation to, without requiring a preliminary
determination of entitlement to indemnification, advance any expenses (including reasonable fees and expenses of legal counsel)
of any Indemnitee under this Section 5.06 (including in connection with enforcing the indemnity and other obligations referred
to in this Section 5.06) as incurred to the fullest extent permitted under applicable Law; provided that the individual to whom
expenses are advanced provides an undertaking to repay such advances if it shall be determined that such Person is not entitled
to be indemnified pursuant to this Section 5.06(a) or applicable Law.
(b) None of Parent or the Surviving Corporation
shall settle, compromise or consent to the entry of any judgment in any threatened or actual
litigation,
claim or proceeding relating to any acts or omissions covered under this Section 5.06 (each, a “
C
laim
”)
for which indemnification has been sought by an Indemnitee hereunder, unless such settlement, compromise or consent includes an
unconditional release of such Indemnitee from all liability arising out of such Claim or such Indemnitee otherwise consents in
writing to such settlement, compromise or consent. Each of Parent, the Surviving Corporation and the Indemnitees shall cooperate
in the defense of any Claim and shall provide access to properties and individuals as reasonably requested and furnish or cause
to be furnished records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals,
as may be reasonably requested in connection therewith.
(c) For the six-year period commencing immediately
after the Effective Time, the Surviving Corporation shall maintain in effect the Company’s current directors’ and officers’
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liability insurance covering acts or omissions
occurring at or prior to the Effective Time with respect to those Indemnitees who are currently (and any additional Indemnitees
who prior to the Effective Time become) covered by the Company’s directors’ and officers’ liability insurance
policies on terms and scope with respect to such coverage, and in amount, no less favorable in the aggregate to such individuals
than those of such policy in effect on the date of this Agreement (or Parent may substitute therefor policies, issued by reputable
insurers, of at least the same aggregate coverage with respect to matters existing or occurring prior to the Effective Time, including
a “tail” policy; provided, that if the aggregate annual premium for such insurance exceeds 300% of the annual premium
for such insurance as of the date hereof (the “
Premium Cap
”), then the Surviving Corporation or Parent shall
cause to be provided a policy covering such individuals with the best coverage as is then available at a cost up to but not exceeding
such Premium Cap. The Company may (or if requested by Parent, the Company shall), in consultation with Parent, purchase, prior
to the Effective Time, a six-year prepaid “tail policy” on terms and conditions providing at least substantially equivalent
benefits in the aggregate as the current policies of directors’ and officers’ liability insurance maintained by the
Company and its Subsidiaries with respect to matters existing or occurring prior to the Effective Time, covering without limitation
the Transactions, at an aggregate cost up to but not exceeding the aggregate maximum amount payable pursuant to the proviso above
for such six year period. If such prepaid “tail policy” has been obtained by the Company, it shall be deemed to satisfy
all obligations to obtain insurance pursuant to this Section 5.06(c) and the Surviving Corporation shall use its reasonable best
efforts to cause such policy to be maintained in full force and effect, for its full term, and to honor all of its obligations
thereunder.
(d) The provisions of this Section 5.06 are
(i) intended to be for the benefit of, and shall be enforceable by, each Indemnitee, his or her heirs and his or her representatives
and (ii) in addition to, and not in substitution for, any other rights to indemnification or contribution that any such individual
may have under the Company Charter Documents, by contract or otherwise. The obligations of Parent and the Surviving Corporation
under this Section 5.06 shall not be terminated or modified in such a manner as to adversely affect the rights of any Indemnitee
to whom this Section 5.06 applies unless (x) such termination or modification is required by applicable Law or (y) the affected
Indemnitee shall have consented in writing to such termination or modification (it being expressly agreed that the Indemnitees
to whom this Section 5.06 applies shall be third party beneficiaries of this Section 5.06).
(e) In the event that (i) Parent, the Surviving
Corporation or any of their respective successors or assigns (A) consolidates with or merges into any other Person and is not the
continuing or surviving corporation or entity of such consolidation or merger or (B) transfers or conveys all or substantially
all of its properties and assets to any Person, or (ii) Parent or any of its successors or assigns dissolves the Surviving Corporation,
then, and in each such case, proper provision shall be made so that the successors and assigns of Parent or the Surviving Corporation
shall assume all of the obligations thereof set forth in this Section 5.06.
(f) Nothing in this Agreement is intended
to, shall be construed to or shall release, waive or impair any rights to directors’ and officers’ insurance claims
under any policy that is or has been in existence with respect to the Company or any of its Subsidiaries for any of their respective
directors, officers or other employees, it being understood and agreed that the
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indemnification provided for in this Section
5.06 is not prior to or in substitution for any such claims under such policies.
(g) Parent’s and the Surviving Corporation’s
obligations under this Section 5.06 shall continue in full force and effect for a period of six years from the Effective Time;
provided
,
however
, that if any Claim (whether arising before, at or after the Effective Time) is brought against
an Indemnitee on or prior to the sixth anniversary of the Effective Time, the provisions of this Section 5.06 shall continue in
effect until the full and final resolution of such Claim.
SECTION 5.07.
Rule 16b-3.
Prior
to the Effective Time, the Company shall take such steps as may be reasonably necessary or advisable to cause dispositions of
Company equity securities (including derivative securities) pursuant to the Transactions by each individual who is a director
or officer of the Company subject to Section 16 of the Exchange Act to be exempt under Rule 16b-3 promulgated under the
Exchange Act.
SECTION 5.08.
Employee Matters.
(a) Subject to any applicable Labor Agreements and except as otherwise set forth in this Section 5.08(a), for a period of not
less than one year following the Effective Time, Parent shall, and shall cause the Surviving Corporation to, provide each
individual who was an employee of the Company or any of its Subsidiaries immediately prior to the Effective Time (each, a
“
Continuing Employee
”) with (i) a base salary that is no less favorable than such Continuing
Employee’s base salary as in effect immediately prior to the Effective Time, (ii) severance benefits that are no less
favorable than those that would have been provided to such Continuing Employee under the applicable severance benefit plans,
programs, policies, agreements and arrangements listed in Section 5.08(a) of the Company Disclosure Letter and (iii) employee
benefit plans and arrangements (other than base salary, bonus, commissions, annual incentives and severance benefits) that
are substantially comparable in the aggregate to those provided to such Continuing Employee immediately prior to the
Effective Time. Notwithstanding the foregoing, on or as soon as practicable after the Effective Time, the Surviving
Corporation shall or shall cause any of its Subsidiaries to pay each Continuing Employee an amount in respect of such
Continuing Employee’s annual bonus, commission or incentive plan award for the plan year in which the Closing occurs;
provided
that the amount of such payment shall be based upon performance achieved from the commencement of the applicable performance
period through the Effective Time, as determined by the Company in its sole discretion prior to the Closing Date, and shall
be prorated to reflect the number of days elapsed from the commencement of the applicable performance period through the
Closing Date. Following the Effective Time, each Continuing Employee who participates in an annual bonus, commission or
incentive plan of the Company immediately prior to the Effective Time shall be entitled to participate in an annual bonus,
commission or incentive plan of Parent and/or its relevant Subsidiary(ies) on a basis substantially comparable to similarly
situated employees of Parent and/or its relevant Subsidiary(ies) and shall be eligible to receive an annual bonus, commission
or incentive plan award for the plan year in which the Closing occurs, in each case in an amount to be determined by Parent
or its applicable Subsidiary in accordance with the terms of such plan;
provided
that the amount of such payment shall
be prorated to reflect the number of days elapsed following the Closing Date through the conclusion of the applicable
performance period. In addition, each Continuing Employee described in the immediately preceding sentence shall be eligible
to receive one or more additional payments in an aggregate amount equal to the shortfall, if any, between (1) the aggregate
amount of the annual bonus,
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commission or incentive plan award or awards
such Continuing Employee actually received or is owed under the annual bonus, commission or incentive plan of Parent or a Subsidiary
of Parent with respect to the period from the Effective Time through December 31, 2018 (including, for the avoidance of doubt,
the period from the Effective Time through December 31, 2017 if the Effective Time occurs during 2017) and (2) the annual bonus,
commission or incentive plan award or awards such Continuing Employee would have received for such period or periods based on such
Continuing Employee’s target annual bonus, commission or incentive plan opportunity and base salary as in effect immediately
prior to the Effective Time (such shortfall, the applicable Continuing Employee’s “Aggregate True-Up Amount”);
provided
that (A) the portion of each Continuing Employee’s Aggregate True-Up Amount that relates to the 2017 performance
period (if any) shall be paid as soon as practicable following December 31, 2017, so long as such Continuing Employee remains employed
by Parent or a Subsidiary of Parent through such payment date, and (B) the portion of each Continuing Employee’s Aggregate
True-Up Amount that relates to the 2018 performance period shall be paid as soon as practicable following December 31, 2018, so
long as such Continuing Employee remains employed by Parent or a Subsidiary of Parent through such payment date.
(b) Parent hereby acknowledges that the consummation
of the Transactions constitutes a “change in control” or “change of control” (or a term of similar import)
for purposes of the Company Plans listed in Section 5.08(b) of the Company Disclosure Letter.
(c) With respect to all employee benefit
plans of Parent, the Surviving Corporation or any of their Subsidiaries, including any “employee benefit plan” (as
defined in Section 3(3) of ERISA) (including any vacation, paid time-off and severance plans), for all purposes (except as set
forth below), including determining eligibility to participate, level of benefits, vesting, benefit accruals and early retirement
subsidies, each Continuing Employee’s service with the Company or any of its Subsidiaries (as well as service with any predecessor
employer of the Company or any such Subsidiary, to the extent service with the predecessor employer was recognized by the Company
or such Subsidiary) shall be treated as service with the Surviving Corporation or any of its Subsidiaries (or in the case of a
transfer of all or substantially all the assets and business of the Surviving Corporation, its successors and assigns);
provided
,
however
, that such service need not be recognized (i) to the extent that such recognition would result in any duplication
of benefits for the same period of service, (ii) for any purpose under any defined benefit retirement plan, retiree welfare plan,
equity-based incentive plan or long-term incentive plan or (iii) for purposes of any plan, program or arrangement (other than as
necessary to comply with Section 5.08(a)(ii) of this Agreement) (x) under which similarly situated employees of Parent and its
Subsidiaries do not receive credit for prior service or (y) that is grandfathered or frozen, either with respect to level of benefits
or participation.
(d) Without limiting the generality of Section
5.08(a), Parent shall, or shall cause the Surviving Corporation to, use commercially reasonable efforts to waive, or cause to be
waived, any pre-existing condition limitations, exclusions, actively-at-work requirements and waiting periods under any welfare
benefit plan maintained by the Surviving Corporation or any of its Subsidiaries in which Continuing Employees (and their eligible
dependents) will be eligible to participate from and after the Effective Time, except to the extent that such pre-existing condition
limitations, exclusions, actively-at-work requirements and waiting periods would not have been satisfied or waived under the comparable
Company Plan immediately prior
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to the Effective Time. Parent shall, or shall
cause the Surviving Corporation to, use commercially reasonable efforts to recognize the dollar amount of all co-payments, deductibles
and similar expenses incurred by each Continuing Employee (and his or her eligible dependents) during the calendar year in which
the Effective Time occurs for purposes of satisfying such year’s deductible and co-payment limitations under the relevant
welfare benefit plans in which they will be eligible to participate from and after the Effective Time.
(e) Nothing in this Agreement shall be construed
as requiring the Parent or any of its Subsidiaries (including the Surviving Corporation) to retain the employment of any particular
employee of the Company or any of its Subsidiaries following the Effective Time. The provisions of this Section 5.08 are solely
for the benefit of the parties to this Agreement, and no provision of this Section 5.08 is intended to, or shall, constitute the
establishment or adoption of or an amendment to any employee benefit plan for purposes of ERISA or otherwise and, except as otherwise
explicitly provided for in this Agreement, no current or former director, employee, consultant or any other individual associated
therewith shall be regarded for any purpose as a third party beneficiary of this Agreement or have the right to enforce the provisions
hereof.
SECTION 5.09.
Company ESPP.
The
Company shall take all action necessary to ensure that (a) no new offering periods under the Company ESPP commence during the
period from the date of this Agreement through the Effective Time, (b) the amount of payroll deductions permitted to be made
by the participants under the Company ESPP during the current offering period or periods in effect as of the date of this
Agreement is not increased beyond the deductions that are scheduled to be made in accordance with payroll deduction elections
in effect as of the date of this Agreement, and (c) no individuals shall commence participation in the Company ESPP during
the period from the date of this Agreement through the Effective Time. No later than 15 days prior to the Effective Time, the
Board of Directors of the Company (or, if appropriate, any committee thereof administering the Company ESPP) shall terminate
the Company ESPP (with prior notice to participating employees) in accordance with its terms. In connection with such
termination, in the case of any outstanding purchase rights under the Company ESPP, the then-current offering period under
the Company ESPP shall end and each participant’s accumulated payroll deductions shall be used to purchase Company
Common Shares in accordance with the terms of the Company ESPP, and such Company Common Shares shall be treated the same as
all other Company Common Shares in accordance with Section 2.01(c).
SECTION 5.10.
Notification of
Certain Matters; Shareholder Litigation.
Prior to the Effective Time, Parent shall give prompt notice to the Company, and
the Company shall give prompt notice to Parent, of (i) any notice or other communication received by such party from any
Governmental Authority in connection with this Agreement or the Transactions or from any Person alleging that the consent of
such Person is or may be required in connection with the Transactions, if the subject matter of such communication or the
failure of such party to obtain such consent could be material to the Company, the Surviving Corporation or Parent, (ii) any
Actions commenced or, to such party’s Knowledge, threatened against such party which relates to this Agreement or the
Transactions, (iii) any Material Adverse Effect or any effect, change, event or occurrence that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect and (iv) any effect, change, event or occurrence that is
reasonably likely to result in the failure of any of the conditions set forth in Article VI to be satisfied. The
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Company shall give Parent the opportunity
to participate in the defense and settlement of any shareholder litigation against the Company or its directors relating to this
Agreement or the Transactions, and no such settlement shall be agreed without Parent’s prior written consent (such consent
not to be unreasonably withheld, delayed or conditioned).
SECTION 5.11.
Parent Vote.
(a)
Parent shall vote or cause to be voted any Company Common Shares beneficially owned by it or any of its Subsidiaries or with
respect to which it or any of its Subsidiaries has the power (by agreement, proxy or otherwise) to cause to be voted, in
favor of the approval of this Agreement at any meeting of shareholders of the Company at which this Agreement shall be
submitted for approval and at all adjournments or postponements thereof.
(b) Immediately following the execution and
delivery of this Agreement, Parent, in its capacity as the sole shareholder of Merger Sub, will execute and deliver to Merger Sub
and the Company a written consent adopting this Agreement in accordance with the LBCA.
SECTION 5.12.
Stock Exchange
De-listing.
Parent shall use its reasonable best efforts to cause the Company Common Shares to be de-listed from NASDAQ
and de-registered under the Exchange Act as soon as reasonably practicable following the Effective Time.
SECTION 5.13.
Preparation of the
Proxy Statement; Shareholders’ Meeting.
(a) As promptly as reasonably practicable after the execution of this
Agreement and subject to applicable Law, the Company shall prepare the Proxy Statement in preliminary form and file it with
the SEC. Subject to Section 5.02, the Board of Directors of the Company shall make the Company Board Recommendation to the
Company’s shareholders and shall include such recommendation in the Proxy Statement. Parent shall provide to the
Company all information concerning Parent and Merger Sub and their respective Affiliates as may be reasonably requested by
the Company in connection with the Proxy Statement and shall otherwise assist and cooperate with the Company in the
preparation of the Proxy Statement and the resolution of any comments thereto received from the SEC. Each of the Company,
Parent and Merger Sub shall correct any information provided by it for use in the Proxy Statement as promptly as reasonably
practicable if and to the extent such information shall have become false or misleading in any material respect. The Company
shall notify Parent promptly upon the receipt of any comments from the SEC and of any request by the SEC for amendments or
supplements to the Proxy Statement and shall supply Parent with copies of all written correspondence between the Company or
any of its Representatives, on the one hand, and the SEC, on the other hand, with respect to the Proxy Statement. The Company
shall use its reasonable best efforts to respond as promptly as reasonably practicable to any comments received from the SEC
concerning the Proxy Statement and to resolve such comments with the SEC, and shall use its reasonable best efforts to cause
the Proxy Statement to be disseminated to its shareholders as promptly as reasonably practicable after the resolution of any
such comments. Prior to the filing of the Proxy Statement (or any amendment or supplement thereto) or any dissemination
thereof to the shareholders of the Company, or responding to any comments from the SEC with respect thereto, the Company
shall provide Parent with a reasonable opportunity to review and to propose comments on such document or response, which the
Company shall consider in good faith.
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(b) Notwithstanding any Adverse Recommendation
Change but subject to Section 5.13(a) and applicable Law and to the extent not prohibited by any Judgment, the Company shall take
all necessary actions in accordance with applicable Law, the Company Charter Documents and the rules of NASDAQ to duly call, give
notice of, convene and hold a meeting of its shareholders (including any adjournment, recess or postponement thereof, the “
Company
Shareholders’ Meeting
”) for the purpose of obtaining the Company Shareholder Approval, as soon as reasonably practicable
after the SEC confirms that it has no further comments on the Proxy Statement and, prior to the termination of this Agreement in
accordance with its terms, shall not submit any Takeover Proposal for approval by the shareholders of the Company. Subject to Section
5.02, the Company shall use its reasonable best efforts to obtain the Company Shareholder Approval. Notwithstanding anything to
the contrary contained in this Agreement, the Company may, in its sole discretion, adjourn, recess, or postpone the Company Shareholders’
Meeting (i) after consultation with Parent, to allow reasonable additional time for the filing or mailing of any supplement or
amendment to the Proxy Statement that the Company has determined is reasonably likely to be required under applicable Law other
than as a result of an action by the Company that is not otherwise permitted by the terms of ths Agreement and for such supplement
or amendment to be disseminated and reviewed by the shareholders of the Company in advance of the Company Shareholders’ Meeting,
(ii) to the extent required by a court of competent jurisdiction in connection with any proceedings in connection with this Agreement
or the Transactions, (iii) if as of the time for which the Company Shareholders’ Meeting is originally scheduled (as set
forth in the Proxy Statement) there are insufficient Company Common Shares represented (either in person or by proxy) to constitute
a quorum necessary to conduct the business of the Company Shareholders’ Meeting or (iv) to solicit additional proxies if
necessary for the purpose of obtaining the Company Shareholder Approval.
SECTION 5.14.
Voting Agreements.
The Company shall instruct its transfer agent not to register the transfer of any Subject Shares (as defined in each of the
Voting Agreements) made or attempted to be made in violation of any of the Voting Agreements.
ARTICLE
VI
Conditions to the Merger
SECTION 6.01.
Conditions to Each
Party’s Obligation To Effect the Merger.
The respective obligations of each party hereto to effect the Merger shall
be subject to the satisfaction (or written waiver by Parent and the Company, if permissible under applicable Law) on or prior
to the Closing Date of the following conditions:
(a)
No Restraints.
No Judgment
enacted, promulgated, issued, entered, amended or enforced by any Governmental Authority or any applicable Law (collectively,
“
Restraints
”) in the United States shall be in effect enjoining or otherwise prohibiting consummation of
the Merger;
(b)
Governmental Consents.
The
waiting period (and any extension thereof) applicable to the consummation of the Merger under the HSR Act shall have expired
or early termination thereof shall have been granted; and
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(c)
Company Shareholder
Approval.
The Company Shareholder Approval shall have been obtained.
SECTION 6.02.
Conditions to the
Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger shall be subject to
the satisfaction (or written waiver by Parent, if permissible under applicable Law) on or prior to the Closing Date of the
following conditions:
(a)
Representations and
Warranties.
The representations and warranties of the Company (i) set forth in Section 3.01(a), Section 3.02(a), Section
3.02(b), Section 3.03(a)-(c), Section 3.14 and Section 3.20 shall be true and correct in all material respects as of the date
hereof and as of the Closing Date, with the same effect as though made as of such date (except to the extent expressly made
as of an earlier date, in which case as of such earlier date) and (ii) set forth in this Agreement, other than in those
Sections specifically identified in clause (i) of this paragraph, shall be true and correct (disregarding all qualifications
or limitations as to “materiality”, “Material Adverse Effect” and words of similar import set forth
therein) as of the date hereof and as of the Closing Date with the same effect as though made as of such date (except to the
extent expressly made as of an earlier date, in which case as of such earlier date), except, in the case of this clause (ii),
where the failure to be true and correct would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Parent shall have received a certificate signed on behalf of the Company by an executive officer of
the Company to such effect.
(b)
Compliance with Covenants.
The Company shall have complied with or performed in all material respects its obligations required to be complied with or
performed by it at or prior to the Effective Time under this Agreement and Parent shall have received a certificate signed on
behalf of the Company by an executive officer of the Company to such effect; and
(c)
No Material Adverse Effect.
Since the date of this Agreement there shall not have occurred and be continuing any effect, change, event or occurrence
that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect.
SECTION 6.03.
Conditions to the
Obligations of the Company.
The obligations of the Company to effect the Merger shall be subject to the satisfaction (or
written waiver by the Company, if permissible under applicable Law) on or prior to the Closing Date of the following
conditions:
(a)
Representations and
Warranties.
The representations and warranties of Parent and Merger Sub set forth in this Agreement shall be true and
correct (disregarding all qualifications or limitations as to “materiality” and words of similar import set forth
therein) as of the date hereof and as of the Closing Date with the same effect as though made as of such date (except to the
extent expressly made as of an earlier date, in which case as of such earlier date), except where the failure to be true and
correct would not, individually or in the aggregate, reasonably be expected to prevent or materially delay or materially
impair the ability of Parent or Merger Sub to consummate the Transactions. The Company shall have received a certificate
signed on behalf of Parent and Merger Sub by an executive officer of Parent to such effect; and
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(b)
Compliance with Covenants.
Parent and Merger Sub shall have complied with or performed in all material respects their obligations required to be
complied with or performed by them at or prior to the Effective Time under this Agreement and the Company shall have received
a certificate signed on behalf of Parent and Merger Sub by an executive officer of Parent to such effect.
ARTICLE
VII
Termination
SECTION 7.01.
Termination.
This
Agreement may be terminated and the Transactions abandoned at any time prior to the Effective Time (except as otherwise
expressly noted), whether before or after receipt of the Company Shareholder Approval:
(a) by the mutual written consent of the
Company and Parent;
(b) by either of the Company or Parent:
(i) if the Effective Time shall
not have occurred on or prior to April 24, 2018 (as such date may be extended pursuant to the immediately succeeding proviso, the
“
Outside Date
”);
provided
that if on the Outside Date any of the conditions set forth in Section 6.01(b)
or Section 6.01(a) (to the extent relating to the matters set forth in Section 6.01(b)) shall not have been satisfied but all other
conditions set forth in Article VI shall have been satisfied or waived (other than those conditions that by their nature are to
be satisfied at the Closing, but provided that such conditions shall then be capable of being satisfied if the Closing were to
take place on such date), then the Outside Date shall be automatically extended to July 24, 2018, and such date shall become the
Outside Date for purposes of this Agreement;
provided,
further
, that if the Outside Date shall have been extended
pursuant to the preceding proviso and on the extended Outside Date any of the conditions set forth in Section 6.01(b) or Section
6.01(a) (to the extent relating to the matters set forth in Section 6.01(b)) shall not have been satisfied but all other conditions
set forth in Article VI shall have been satisfied or waived (other than those conditions that by their nature are to be satisfied
at the Closing, but provided that such conditions shall then be capable of being satisfied if the Closing were to take place on
such date), and Parent is then actively engaged in actions required to discharge its obligations under the second sentence of Section
5.03(c), then Parent shall have the right to extend the Outside Date to October 24, 2018, and, if so extended, such date shall
become the Outside Date for purposes of this Agreement;
provided,
further,
that the right to terminate this Agreement
under this Section 7.01(b)(i) shall not be available to any party if the breach by such party of its representations and warranties
set forth in this Agreement or the failure of such party to perform any of its obligations under this Agreement has been a principal
cause of or resulted in the events specified in this Section 7.01(b)(i) (it being understood that Parent and Merger Sub shall be
deemed a single party for purposes of the foregoing proviso);
(ii) if any Restraint in the United
States having the effect set forth in Section 6.01(a) shall be in effect and shall have become final and nonappealable;
provided
that
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the party seeking to terminate this
Agreement pursuant to this Section 7.01(b)(ii) shall have used the required efforts to prevent the entry of and to remove such
Restraint in accordance with its obligations under this Agreement; or
(iii) if the Company Shareholders’
Meeting (including any adjournments or postponements thereof) shall have concluded and the Company Shareholder Approval shall not
have been obtained;
(c) by Parent:
(i) if the Company shall have breached
any of its representations or warranties or failed to perform any of its covenants or agreements set forth in this Agreement, which
breach or failure to perform (A) would give rise to the failure of a condition set forth in Section 6.02(a) or Section 6.02(b)
and (B) is incapable of being cured or, if capable of being cured by the Outside Date, the Company (x) shall not have commenced
good faith efforts to cure such breach or failure to perform within 30 calendar days following receipt by the Company of written
notice of such breach or failure to perform from Parent stating Parent’s intention to terminate this Agreement pursuant to
this Section 7.01(c)(i) and the basis for such termination or (y) is not thereafter continuing to take good faith efforts to cure
such breach or failure to perform;
provided
that Parent shall not have the right to terminate this Agreement pursuant to
this Section 7.01(c)(i) if Parent or Merger Sub is then in material breach of any of its representations, warranties, covenants
or agreements hereunder; or
(ii) if the Board of Directors of
the Company or a committee thereof shall have made an Adverse Recommendation Change; or
(d) by the Company:
(i) if either Parent or Merger Sub
shall have breached any of its representations or warranties or failed to perform any of its covenants or agreements set forth
in this Agreement, which breach or failure to perform (A) would give rise to the failure of a condition set forth in Section 6.03(a)
or Section 6.03(b) and (B) is incapable of being cured or, if capable of being cured by the Outside Date, Parent and Merger Sub
(x) shall not have commenced good faith efforts to cure such breach or failure to perform within 30 calendar days following receipt
by Parent or Merger Sub of written notice of such breach or failure to perform from the Company stating the Company’s intention
to terminate this Agreement pursuant to this Section 7.01(d)(i) and the basis for such termination or (y) are not thereafter continuing
to take good faith efforts to cure such breach or failure to perform;
provided
that the Company shall not have the right
to terminate this Agreement pursuant to this Section 7.01(d)(i) if the Company is then in material breach of any of its representations,
warranties, covenants or agreements hereunder; or
(ii) prior to receipt of the Company
Shareholder Approval, in connection with entering into a Company Acquisition Agreement in accordance with Section 5.02(d)(II);
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provided
that prior to or
concurrently with such termination the Company pays or causes to be paid the Company Termination Fee due under Section 7.03(a).
SECTION 7.02.
Effect of
Termination.
In the event of the termination of this Agreement as provided in Section 7.01, written notice thereof shall
be given to the other party or parties hereto, specifying the provision hereof pursuant to which such termination is made,
and this Agreement shall forthwith become null and void (other than Sections 7.02 and 7.03, Article VIII and the
Confidentiality Agreement, all of which shall survive termination of this Agreement), and there shall be no liability on the
part of Parent, Merger Sub or the Company or their respective directors, officers and Affiliates, except subject to Section
7.03(b) no such termination shall relieve any party from liability for damages to another party resulting from a knowing and
intentional breach of this Agreement or from fraud.
SECTION 7.03.
Termination Fee.
(a) In the event that:
(i) this Agreement is terminated
by the Company or Parent pursuant to Section 7.01(b)(i) or Section 7.01(b)(iii);
provided
that (A) a Takeover Proposal shall
have been publicly made, proposed or communicated by a third party after the date of this Agreement and not withdrawn prior to,
in the case of a termination pursuant to Section 7.01(b)(iii), the earlier of the completion of the Company Shareholders’
Meeting (including any adjournment or postponement thereof) and the
time this Agreement is terminated
or in the case of a termination under Section 7.01(b)(i), the time this Agreement is terminated
and (B) within 12 months
of the date this Agreement is terminated, the Company enters into a definitive agreement with respect to a Takeover Proposal (whether
or not such Takeover Proposal was the same Takeover Proposal referred to in clause (A) and such Takeover Proposal is subsequently
consummated (even if after the 12 month period));
provided
that, for purposes of clauses (B) and (C) of this Section 7.03(a)(i),
the references to “15%” in the definition of Takeover Proposal shall be deemed to be references to “50%”;
or
(ii) this Agreement is terminated
(A) by Parent pursuant to Section 7.01(c)(ii) or (B) by the Company pursuant to Section 7.01(d)(ii);
then, in any such event under clause (i) or (ii) of
this Section 7.03(a), the Company shall pay, or cause to be paid, the Company Termination Fee to Parent or its designee by wire
transfer of same-day funds (x) in the case of Section 7.03(a)(ii)(A), within two business days after such termination, (y) in the
case of Section 7.03(a)(ii)(B), prior to or concurrently with such termination or (z) in the case of Section 7.03(a)(i), within
two business days after the consummation of the Takeover Proposal referred to therein; it being understood that in no event shall
the Company be required to pay or cause to be paid the Company Termination Fee on more than one occasion.
As used herein, “
Company Termination Fee
”
shall mean a cash amount equal to $129,000,000.
(b) In the event that this Agreement is terminated
and the Company Termination Fee is paid to Parent in circumstances for which such fee is payable pursuant to Section 7.03(a), payment
of the Company Termination Fee shall be the sole and exclusive monetary damages
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remedy of Parent, Merger Sub and their respective
Subsidiaries and any of their respective former, current or future officers, directors, partners, shareholders, managers, members
or Affiliates against the Company and its Subsidiaries and any of their respective former, current or future officers, directors,
partners, shareholders, managers, members or Affiliates (collectively, “
Company Related Parties
”) for any loss
suffered as a result of the failure of the Transactions to be consummated or for a breach or failure to perform hereunder or otherwise
(so long as, in the event that this Agreement was terminated by the Company, such termination was in accordance with the applicable
provisions of this Agreement), and, subject as aforesaid, upon payment of such amount none of the Company Related Parties shall
have any further liability or obligation relating to or arising out of this Agreement or the Transactions.
ARTICLE
VIII
Miscellaneous
SECTION 8.01.
No Survival of
Representations and Warranties.
None of the representations or warranties in this Agreement or in any document or
instrument delivered pursuant to or in connection with this Agreement shall survive the Effective Time. This Section 8.01
shall not limit any covenant or agreement contained in this Agreement or in any document or instrument delivered pursuant to
or in connection with this Agreement that by its terms applies in whole or in part after the Effective Time.
SECTION 8.02.
Amendment or
Supplement.
Subject to compliance with applicable Law, at any time prior to the Effective Time, this Agreement may be
amended or supplemented in any and all respects by written agreement of the parties hereto;
provided, however
, that
following receipt of the Company Shareholder Approval, there shall be no amendment or change to the provisions hereof which
by Law would require further approval by the shareholders of the Company without such approval.
SECTION 8.03.
Extension of Time,
Waiver, Etc.
At any time prior to the Effective Time, Parent and the Company may, subject to applicable Law, (a) waive
any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered
pursuant hereto, (b) extend the time for the performance of any of the obligations or acts of the other party or (c) waive
compliance by the other party with any of the agreements contained herein applicable to such party or, except as otherwise
provided herein, waive any of such party’s conditions (it being understood that Parent and Merger Sub shall be deemed a
single party for purposes of the foregoing);
provided
,
however
, that following receipt of the Company
Shareholder Approval and prior to the Effective Time, there shall be no waiver or extension of this Agreement that (x)
decreases the Merger Consideration, (y) modifies the articles of incorporation of the Surviving Corporation except as
permitted by applicable Law or (z) that adversely affects the rights of the shareholders of the Company, in each case of
clauses (x), (y) and (z) without such approval. Notwithstanding the foregoing, no failure or delay by the Company, Parent or
Merger Sub in exercising any right 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 hereunder. Any agreement
on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
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SECTION 8.04.
Assignment.
Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by
operation of Law or otherwise, by any of the parties hereto without the prior written consent of the other parties hereto,
except that Parent may assign, in its sole discretion, all of the rights, interests and obligations of Parent under this
Agreement to any wholly owned Subsidiary of Parent, but no such assignment shall relieve Parent of its obligations under this
Agreement. No assignment by any party shall relieve such party of any of its obligations hereunder. Subject to the
immediately preceding two sentences, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective successors and permitted assigns. Any purported assignment not permitted under this
Section 8.04 shall be null and void.
SECTION 8.05.
Counterparts.
This
Agreement may be executed in one or more counterparts (including by facsimile or electronic mail), each of which shall be
deemed to be an original but all of which taken together shall constitute one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties
hereto.
SECTION 8.06.
Entire Agreement; No
Third Party Beneficiaries.
This Agreement, including the Company Disclosure Letter, together with the Confidentiality
Agreement, constitutes the entire agreement, and supersedes all other prior agreements and understandings, both written and
oral, among the parties and their Affiliates, or any of them, with respect to the subject matter hereof and thereof. This
Agreement is not intended to and does not confer upon any Person other than the parties hereto any rights or remedies
hereunder, except for: (i) if the Effective Time occurs, the right of the Company’s shareholders to receive the Merger
Consideration in accordance with Article II; (ii) if the Effective Time occurs, the right of the holders of Company Stock
Options and Company RSUs to receive such amounts as provided for in Section 2.03; (iii) if the Effective Time occurs, the
rights of the Indemnitees set forth in Section 5.06 of this Agreement; and (iv) the rights of the Company Related Parties set
forth in Section 7.03(b), which are intended for the benefit of the Persons and shall be enforceable by the Persons referred
to respectively in clauses (i) through (iv) above.
SECTION 8.07.
Governing Law;
Jurisdiction.
(a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of
Delaware applicable to contracts executed in and to be performed entirely within that State, regardless of the laws that
might otherwise govern under any applicable conflict of Laws principles (except that the procedures of the Merger and matters
relating to the fiduciary duties of the Board of Directors of the Company shall be subject to the internal laws of the State
of Louisiana).
(b) All Actions arising out of or relating
to this Agreement or the Transactions shall be heard and determined in the Court of Chancery of the State of Delaware (or, if the
Court of Chancery of the State of Delaware declines to accept jurisdiction over any Action, any state or federal court within the
State of Delaware) (such courts, the “
Delaware Courts
”). The parties hereto hereby irrevocably (i) submit to
the exclusive jurisdiction and venue of the Delaware Courts in any such Action, (ii) waive the defense of an inconvenient forum
or lack of jurisdiction to the maintenance of any such Action brought in the Delaware Courts, (iii) agree to not contest the jurisdiction
of the Delaware Courts in any such Action, by motion or otherwise and (iv) agree to not bring any Action arising out of or relating
to this Agreement or the Transactions in any
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court other than the Delaware Courts, except
for Actions brought to enforce the judgment of any such court. The consents to jurisdiction and venue set forth in this Section
8.07(b) shall not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose
except as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto. Each
party hereto agrees that service of process upon such party in any Action arising out of or relating to this Agreement shall be
effective if notice is given by Federal Express, UPS, DHL or similar courier service to the address set forth in Section 8.10 of
this Agreement. The parties hereto agree that a final judgment in any such Action shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by applicable Law;
provided
,
however
, that
nothing in the foregoing shall restrict any party’s rights to seek any post-judgment relief regarding, or any appeal from,
a final trial court judgment.
SECTION 8.08.
Specific
Enforcement.
The parties hereto agree that irreparable damage for which monetary relief, even if available, would not be
an adequate remedy, would occur in the event that any provision of this Agreement is not performed in accordance with its
specific terms or is otherwise breached, including if the parties hereto fail to take any action required of them hereunder
to consummate this Agreement and the Transactions. Subject to the following sentence, the parties acknowledge and agree that
(a) the parties shall be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent
breaches of this Agreement and to enforce specifically the terms and provisions hereof in the courts described in Section
8.07(b) without proof of damages or otherwise, this being in addition to any other remedy to which they are entitled under
this Agreement and (b) the right of specific enforcement is an integral part of the Transactions and without that right
neither the Company nor Parent would have entered into this Agreement. The parties hereto agree not to assert that a remedy
of specific enforcement is unenforceable, invalid, contrary to Law or inequitable for any reason, and not to assert that a
remedy of monetary damages would provide an adequate remedy or that the parties otherwise have an adequate remedy at law. The
parties hereto acknowledge and agree that any party seeking an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 8.08 shall
not be required to provide any bond or other security in connection with any such order or injunction.
SECTION 8.09.
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 IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. 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) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER
VOLUNTARILY
A-53
AND (D) IT HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 8.09.
SECTION 8.10.
Notices.
All
notices, requests and other communications to any party hereunder shall be in writing and shall be deemed given if delivered
personally, by facsimile (which is confirmed), emailed (which is confirmed) or sent by Federal Express, UPS, DHL or similar
courier service (providing proof of delivery) to the parties at the following addresses:
If to Parent, Merger Sub or FK Parent, to
it at:
Fresenius Kabi USA, LLC
Three Corporate Drive
Lake Zurich, Illinois 60047
Attention: Jack C. Silhavy
Facsimile: +1 847 550 2920
Email:
Jack.Silhavy@fresenius-kabi.com
with a copy (which shall not constitute notice)
to:
Allen & Overy LLP
1221 Avenue of the Americas
New York, NY 10020
Attention: Eric S. Shube, Esq.
Facsimile: 212-610-6399
Email: eric.shube@allenovery.com
If to the Company, to it at:
Akorn, Inc.
1925 West Field Court
Suite #300
Lake Forest, Illinois 60045
Attention: General Counsel
Facsimile: (866) 468-0750
Email:
joe.bonaccorsi@akorn.com
A-54
with copies (which shall not constitute notice)
to:
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
|
Attention:
|
Robert I. Townsend
III, Esq.
|
|
|
O. Keith Hallam,
III, Esq.
|
|
Facsimile:
|
212-474-3700
|
|
Email:
|
rtownsend@cravath.com
|
|
|
khallam@cravath.com
|
or such other address, email address or facsimile number as
such party may hereafter specify by like notice to the other parties hereto. All such notices, requests and other communications
shall be deemed received on the date of actual receipt by the recipient thereof if received prior to 5:00 p.m. local time in the
place of receipt and such day is a business day in the place of receipt. Otherwise, any such notice, request or communication shall
be deemed not to have been received until the next succeeding business day in the place of receipt.
SECTION 8.11.
Severability.
If
any term, condition or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid,
illegal or incapable of being enforced by any rule of Law or public policy, all other terms, provisions and conditions of
this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term, condition 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 to the fullest extent permitted by
applicable Law.
SECTION 8.12.
Definitions.
(a)
As used in this Agreement, the following terms have the meanings ascribed thereto below:
“
Affiliate
” means, as
to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such
Person. For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under
common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of
management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by
contract or otherwise.
“
business day
” means a
day except a Saturday, a Sunday or other day on which the SEC, banks in the City of New York or the Secretary of State are authorized
or required by Law to be closed.
“
Commonly Controlled Entity
”
means any person or entity that, together with the Company or any of its Subsidiaries, is treated as a single employer under Section
414(b), (c), (m) or (o) of the Code.
“
Company Charter Documents
”
means the Company’s articles of incorporation and bylaws, each as amended to the date of this Agreement.
A-55
“
Company Lease
” means
any lease, sublease, sub-sublease, license and other agreement under which the Company or any of its Subsidiaries leases, subleases,
licenses, uses or occupies (in each case whether as landlord, tenant, sublandlord, subtenant or by other occupancy arrangement),
or has the right to use or occupy, now or in the future, any real property.
“
Company Plan
” means each
plan, program, policy, agreement or other arrangement covering current or former employees, directors or consultants, that is (i)
an employee welfare plan within the meaning of Section 3(1) of ERISA (whether or not subject to ERISA), (ii) an employee pension
benefit plan within the meaning of Section 3(2) of ERISA (whether or not subject to ERISA), other than any plan which is a “multiemployer
plan” (as defined in Section 4001(a)(3) of ERISA), (iii) a stock option, stock purchase, stock appreciation right or other
stock-based agreement, program or plan, (iv) an individual employment, consulting, severance, retention or other similar agreement
or (v) a bonus, incentive, deferred compensation, profit-sharing, retirement, post-retirement, vacation, severance or termination
pay, benefit or fringe benefit plan, program, policy, agreement or other arrangement, in each case that is sponsored, maintained
or contributed to by the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries contributes or is
obligated to contribute to or has or may have any liability, other than any plan, program, policy, agreement or arrangement mandated
by applicable Law.
“
Company Stock Option Plans
”
means the Amended and Restated Company 2014 Stock Option Plan and Amended and Restated Company 2003 Stock Option Plan.
“
Credit Agreement
” means
the Credit Agreement dated as of April 17, 2014, as amended, supplemented or otherwise modified from time to time prior to the
date hereof, among the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, as administrative agent.
“
Encumbrance
” means any
mortgage, deed of trust, lease, license, condition, covenant, restriction, hypothecation, option to purchase or lease or otherwise
acquire any interest, right of first refusal or offer, conditional sale or other title retention agreement, adverse claim of ownership
or use, easement, encroachment, right-of-way or other title defect, third-party right or encumbrance of any kind or nature.
“
Environmental Laws
” means
Laws relating to pollution or the protection of the environment or natural resources or human exposure to hazardous or toxic substances
in the environment.
“
ERISA
” means the Employee
Retirement Income Security Act of 1974, as amended.
“
GAAP
” means generally
accepted accounting principles in the United States, consistently applied.
“
Governmental Authority
”
means any government, court, regulatory or administrative agency, commission or authority or other legislative, executive or judicial
A-56
governmental entity (in each case including
any self-regulatory organization), whether federal, state or local, domestic, foreign or multinational.
“
Hazardous Substances
”
means any substance, material or other matter (i) for which liability is imposed causing harm to human health or the environment,
or (ii) which is otherwise regulated in any way, or for which standards of conduct are imposed, by any Governmental Authority,
in each of cases (i) and (ii) under any Environmental Law.
“
Healthcare Regulatory Authority
”
means the FDA, the DEA or any other federal, state, local or foreign Governmental Authority (such as EMEA and Health Canada) that
is concerned with or regulates the marketing, sale, use, handling and control, safety, efficacy, reliability or manufacturing of
drug or biological products or medical devices or is concerned with or regulates public health care programs.
“
Healthcare Regulatory Authorizations
”
means all approvals, clearances, authorizations, registrations, certifications, licenses and permits granted by any Healthcare
Regulatory Authority, including all investigational new drug applications and new drug applications.
“
HSR Act
” means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and the rules and regulations promulgated thereunder.
“
Information Privacy and Security
Laws
” means all Laws and self-regulatory guidelines that apply to the Company or any of its Subsidiaries concerning the
privacy, protection or security of Personal Information, including, where applicable, the Health Insurance Portability and Accountability
Act of 1996 (as amended by the Health Information Technology for Economic and Clinical Health Act), state data breach notification
Laws and any European Union member state Laws implementing the European Union Directive 95/46/EC or, after May 24, 2018, the European
Union General Data Protection Regulation 2016/679.
“
Intellectual Property
”
means all intellectual property and other similar proprietary rights, title and interests in any jurisdiction, whether registered
or unregistered, including such rights, title and interests in and to: any patent (including all reissues, divisions, continuations,
continuations-in-part and extensions thereof), patent application and invention; any trademark (including any service mark), trademark
registration, trademark application, logo, trade dress, trade name, business name and brand name, and all goodwill associated with
any of the foregoing; any copyright, copyright registration, design, design registration, database rights, work of authorship,
and computer program or other code and related documentation ; any internet domain name;
and any trade
secret, confidential know-how, discoveries, formulas, methods, processes, technical data, research and development information,
or other confidential and proprietary information.
“
IRS
” means the Internal
Revenue Service.
“
Knowledge
” means (i)
with respect to the Company, the actual knowledge of the individuals listed on Section 8.12 of the Company Disclosure Letter after
having made reasonable inquiry of those employees of the Company and its Subsidiaries primarily responsible for, or who would otherwise
be expected to know about, such matters and (ii) with respect to
A-57
Parent or Merger Sub, the actual knowledge
of any of the officers or directors of Parent or Merger Sub after having made reasonable inquiry of those employees of Parent and
its Subsidiaries primarily responsible for, or who would otherwise be expected to know about, such matters.
“
Lien
” means any pledge,
lien, charge, Encumbrance or security interest of any kind or nature.
“
Material Adverse Effect
”
means any effect, change, event or occurrence that, individually or in the aggregate (i) would prevent or materially delay, interfere
with, impair or hinder the consummation of the Transactions or the compliance by the Company with its obligations under this Agreement
or (ii) has a material adverse effect on the business, results of operations or financial condition of the Company and its Subsidiaries,
taken as a whole;
provided
,
however
, that none of the following, and no effect, change, event or occurrence arising
out of, or resulting from, the following, shall constitute or be taken into account in determining whether a Material Adverse Effect
has occurred, is continuing or would reasonably be expected to occur: any effect, change, event or occurrence (A) generally affecting
(1) the industry in which the Company and its Subsidiaries operate or (2) the economy, credit or financial or capital markets,
in the United States or elsewhere in the world, including changes in interest or exchange rates, monetary policy or inflation,
or (B) to the extent arising out of, resulting from or attributable to (1) changes or prospective changes in Law or in GAAP or
in accounting standards, or any changes or prospective changes in the interpretation or enforcement of any of the foregoing, or
any changes or prospective changes in general legal, regulatory, political or social conditions, (2) the negotiation, execution,
announcement or performance of this Agreement or the consummation of the Transactions (other than for purposes of any representation
or warranty contained in Sections 3.03(c) and 3.04), including the impact thereof on relationships, contractual or otherwise, with
customers, suppliers, distributors, partners, employees or regulators, or any litigation arising from allegations of breach of
fiduciary duty or violation of Law relating to this Agreement or the Transactions, (3) acts of war (whether or not declared), military
activity, sabotage, civil disobedience or terrorism, or any escalation or worsening of any such acts of war (whether or not declared),
military activity, sabotage, civil disobedience or terrorism, (4) pandemics, earthquakes, floods, hurricanes, tornados or other
natural disasters, weather-related events, force majeure events or other comparable events, (5) any action taken by the Company
or its Subsidiaries that is required by this Agreement or at Parent’s written request, (6) any change or prospective change
in the Company’s credit ratings, (7) any decline in the market price, or change in trading volume, of the shares of the Company
or (8) any failure to meet any internal or public projections, forecasts, guidance, estimates, milestones, budgets or internal
or published financial or operating predictions of revenue, earnings, cash flow or cash position (it being understood that the
exceptions in clauses (6), (7) and (8) shall not prevent or otherwise affect a determination that the underlying cause of any such
change, decline or failure referred to therein (if not otherwise falling within any of the exceptions provided by clause (A) and
clauses (B)(1) through (8) hereof) is a Material Adverse Effect);
provided further
,
however
, that any effect, change,
event or occurrence referred to in clause (A) or clauses (B)(3) or (4) may be taken into account in determining whether there has
been, or would reasonably be expected to be, a Material Adverse Effect to the extent such effect, change, event or occurrence has
a disproportionate adverse affect on the Company and its Subsidiaries, taken as a whole, as compared to other participants in the
industry in which the
A-58
Company and its Subsidiaries operate (in which
case the incremental disproportionate impact or impacts may be taken into account in determining whether there has been, or would
reasonably be expected to be, a Material Adverse Effect).
“
Permitted Encumbrances
”
means (i) easements, rights-of-way, encroachments, restrictions, conditions and other similar Encumbrances incurred or suffered
in the ordinary course of business and which, individually or in the aggregate, do not and would not reasonably be expected to
materially impair the use (or contemplated use), utility or value of the applicable real property or otherwise materially impair
the present or contemplated business operations at such location, (ii) zoning, entitlement, building and other land use regulations
imposed by Governmental Authorities having jurisdiction over such real property and (iii) Permitted Liens.
“
Permitted Liens
” means
(i) statutory Liens for Taxes, assessments or other charges by Governmental Authorities not yet due and payable or the amount or
validity of which is being contested in good faith and by appropriate proceedings, (ii) mechanics’, materialmen’s,
carriers’, workmen’s, warehouseman’s, repairmen’s, landlords’ and similar Liens granted or which
arise in the ordinary course of business, (iii) Liens securing payment, or any obligation, with respect to outstanding Indebtedness
so long as there is no event of default under such Indebtedness, (iv) pledges or deposits under workmen’s compensation Laws,
unemployment insurance Laws or similar legislation, or good faith deposits in connection with bids, tenders, Contracts (other than
for the payment of Indebtedness) or leases to which such entity is a party, or deposits to secure public or statutory obligations
of such entity or to secure surety or appeal bonds to which such entity is a party, or deposits as security for contested Taxes,
in each case incurred or made in the ordinary course of business, (v) Liens discharged at or prior to the Effective Time and (vi)
such other Liens, Encumbrances or imperfections that do not materially detract from the value of or materially impair the existing
use of the asset or property affected by such Lien, Encumbrance or imperfection.
“
Person
” means an individual,
corporation, limited liability company, partnership, joint venture, association, trust, unincorporated organization or any other
entity, including a Governmental Authority.
“
Personal Information
”
means (i) any information or data that is governed, regulated or protected by one or more applicable Information Privacy and Security
Law, and (ii) any confidential information or data that the Company or any of its Subsidiaries receives, creates, transmits or
maintains in any form.
“
Registered Company Intellectual
Property
” means all patents, patent applications, registered copyrights, applications to register copyrights, registered
marks (including trademarks, service marks, and trade dress, to the extent registered), applications to register marks and registered
domain names that are owned by the Company or any of its Subsidiaries.
“
Representatives
” means,
with respect to any Person, its officers, directors, employees, consultants, agents, financial advisors, investment bankers, attorneys,
accountants, other advisors, Affiliates and other representatives.
A-59
“
Significant Subsidiary
”
means each of the Company’s “significant subsidiaries” (as such term is defined in Section 1-02 of Regulation
S-X under the Exchange Act).
“
Subsidiary
”, when used
with respect to any Person, means any corporation, limited liability company, partnership, association, trust or other entity of
which securities or other ownership interests representing more than 50% of the ordinary voting power (or, in the case of a partnership,
more than 50% of the general partnership interests) are, as of such date, owned by such Person or one or more Subsidiaries of such
Person or by such Person and one or more Subsidiaries of such Person.
“
Transactions
” means,
collectively, the transactions contemplated by this Agreement, including the Merger, and the Voting Agreements.
The following terms are defined on the page
of this Agreement set forth after such term below:
Terms Not Defined in this Section 8.12
|
Section
|
|
|
Acceptable Confidentiality Agreement
|
5.02(f)
|
Action
|
3.07
|
Adverse Recommendation Change
|
5.02(d)
|
Aggregate True-Up Amount
|
5.08(a)
|
Agreement
|
Preamble
|
Announcement
|
5.04
|
Antitrust Laws
|
5.03(a)
|
Articles of Merger
|
1.03
|
Balance Sheet Date
|
3.05(c)
|
Bankruptcy and Equity Exception
|
3.03(a)
|
Book Entry Share
|
2.01(c)
|
Capitalization Date
|
3.02(a)
|
Certificate
|
2.01(c)
|
Claim
|
5.06(b)
|
Closing
|
1.02
|
Closing Date
|
1.02
|
Code
|
2.02(g)
|
Company
|
Preamble
|
Company Acquisition Agreement
|
5.02(d)
|
Company Board Recommendation
|
3.03(b)
|
Company Common Shares
|
2.01
|
Company Disclosure Letter
|
Article III
|
Company ESPP
|
3.02(a)
|
Company Preferred Shares
|
3.02(a)
|
Company Related Parties
|
7.03(b)
|
Company RSU
|
2.03(b)
|
Company SEC Documents
|
3.05(a)
|
Company Securities
|
3.02(b)
|
Company Shareholder Approval
|
3.03(c)
|
A-60
Terms Not Defined in this Section 8.12
|
Section
|
|
|
Company Shareholders’ Meeting
|
5.13(b)
|
Company Stock Option
|
2.03(a)
|
Company Termination Fee
|
7.03(a)(ii)
|
Confidentiality Agreement
|
5.05
|
Continuing Employee
|
5.08(a)
|
Contract
|
3.03(d)
|
DOJ
|
5.03(c)
|
Effective Time
|
1.03
|
Exchange Act
|
3.04
|
Exchange Fund
|
2.02(a)
|
FDA
|
3.18(a)
|
FDCA
|
3.18(e)
|
Filed SEC Documents
|
Article III
|
FK Disclosure Letter
|
Article IV
|
FTC
|
5.03(c)
|
Delaware Courts
|
8.07(b)
|
Indebtedness
|
5.01(b)(ii)
|
Indemnitee
|
5.06(a)
|
Indemnitees
|
5.06(a)
|
Judgment
|
3.07
|
Laws
|
3.08
|
LBCA
|
Recitals
|
Material Contract
|
3.16(a)
|
Merger
|
Recitals
|
Merger Consideration
|
2.01(c)
|
Merger Sub
|
Preamble
|
NASDAQ
|
3.04
|
Outside Date
|
7.01(b)(i)
|
Owned Real Property
|
3.15
|
Parent
|
Preamble
|
Paying Agent
|
2.02(a)
|
Permits
|
3.08
|
Premium Cap
|
5.06(c)
|
Proxy Statement
|
3.04
|
Restraints
|
6.01(a)
|
SEC
|
3.04
|
Secretary of State
|
1.03
|
Securities Act
|
3.02(c)
|
Voting Agreements
|
Preamble
|
Superior Proposal
|
5.02(h)
|
Surviving Corporation
|
1.01
|
Takeover Law
|
3.14(b)
|
Takeover Proposal
|
5.02(g)
|
Tax
|
3.09(n)
|
A-61
Terms Not Defined in this Section 8.12
|
Section
|
|
|
Tax Returns
|
3.09(n)
|
SECTION 8.13.
Fees and Expenses.
Whether or not the Transactions are consummated, all fees and expenses incurred in connection with this Agreement, the Voting
Agreements and the Transactions shall be paid by the party incurring or required to incur such fees or expenses, except as
otherwise expressly set forth in this Agreement.
SECTION 8.14.
Performance
Guaranty.
Parent hereby guarantees the due, prompt and faithful performance and discharge by, and compliance with, all of
the obligations, covenants, terms, conditions and undertakings of Merger Sub under this Agreement in accordance with the
terms hereof, including any such obligations, covenants, terms, conditions and undertakings that are required to be
performed, discharged or complied with following the Effective Time by the Surviving Corporation.
SECTION 8.15.
Interpretation.
(a) When a reference is made in this Agreement to an Article, a Section, Exhibit or Schedule, such reference shall be to an
Article of, a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words “
include
”, “
includes
” or
“
including
” are used in this Agreement, they shall be deemed to be followed by the words “
without
limitation
”. The words “
hereof
”, “
herein
” and “
hereunder
”
and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The words “
date hereof
” when used in this Agreement shall refer to the date
of this Agreement. The terms “
or
”, “
any
” and “
either
” are not
exclusive. The word “
extent
” in the phrase “
to the extent
” shall mean the degree to
which a subject or other thing extends, and such phrase shall not mean simply “
if
”. The word
“
will
” shall be construed to have the same meaning and effect as the word “
shall
”. The
words “
made available to Parent
” and words of similar import refer to documents (A) posted to the
Merrill Datasite by or on behalf of the Company by 10:00 a.m. (New York City time) on April 23, 2017 or (B) delivered in
person or electronically to Parent, Merger Sub or their respective Representatives by 10:00 a.m. (New York City time) on
April 23, 2017. All accounting terms used and not defined herein shall have the respective meanings given to them under GAAP.
All terms defined in this Agreement shall have the defined meanings when used in any document made or delivered pursuant
hereto unless otherwise defined therein. The occurrence of any effect, change, event or occurrence set forth in clause (B)(2)
of the definition of Material Adverse Effect shall not be deemed to constitute the operation of the business of the Company
and its Subsidiaries outside the ordinary course. The definitions contained in this Agreement are applicable to the singular
as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.
Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to
herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the
case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated therein. Unless otherwise specifically
indicated, all references to
A-62
“
dollars
” or “
$
”
shall refer to the lawful money of the United States. References to a Person are also to its permitted assigns and successors.
(b) The parties hereto have participated
jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall
arise favoring or disfavoring any party hereto by virtue of the authorship of any provision of this Agreement.
SECTION 8.16.
FK Parent Undertaking
.
FK Parent will cause Parent to comply with its obligations under this Agreement. FK Parent hereby makes the representations and
warranties in Article IV of this Agreement,
mutatis mutandis
, with respect to its obligations under this Section 8.16.
[
signature page follows
]
A-63
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and delivered as of the date first above written.
|
FRESENIUS KABI AG,
|
|
|
|
by
|
|
|
|
/s/ Philipp Schulte-Noelle
|
|
|
Name: Philipp Schulte-Noelle
|
|
|
Title: Chief Financial Officer & Chief Compliance Officer
|
|
|
|
by
|
|
|
|
/s/ John R. Ducker
|
|
|
Name: John R. Ducker
|
|
|
Title: President, Region North America
|
|
|
|
|
QUERCUS ACQUISITION, INC.,
|
|
|
|
by
|
|
|
|
/s/ Steven J. Adams
|
|
|
Name: Steven J. Adams
|
|
|
Title: Chief Financial Officer & Treasurer
|
|
|
|
by
|
|
|
|
/s/ Jack C. Silhavy
|
|
|
Name: Jack C. Silhavy
|
|
|
Title: Secretary
|
|
|
|
|
SOLELY FOR PURPOSES OF ARTICLE VIII:
FRESENIUS SE & cO. KGAA,
R
epresented
by
Fresenius
Management SE, as General Partner,
|
|
by
|
|
|
|
/s/ Stephan Sturm
|
|
|
Name: Stephan Sturm
|
|
|
Title: Chief Executive Officer
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by
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/s/ Mats Henriksson
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Name: Mats Henriksson
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Title: Chief Executive Officer, Fresenius Kabi AG
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[Signature Page to the Agreement and Plan
of Merger]
A-64
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akorn, inc.
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by
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/s/ Rajat Rai
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Name: Rajat Rai
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Title: Chief Executive Officer
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[Signature Page to the Agreement and Plan
of Merger]
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RESTATED ARTICLES OF INCORPORATION
OF
AKORN, INC.
AKORN, INC., a Louisiana
corporation (the “
Corporation
”), through its undersigned President and Chief Executive Officer, and by authority
of its Board of Directors, does hereby certify the following:
FIRST: Each amendment to
the Articles of Incorporation of the Corporation has been effected in conformity with law.
SECOND: The date of incorporation
of the Corporation was January 20, 1971, and the date of these Restated Articles of Incorporation is [•].
THIRD: Pursuant to Section
1.05 of the Agreement and Plan of Merger by and among Fresenius Kabi AG, Quercus Acquisition, Inc., the Corporation and Fresenius
SE & Co. KGaA (solely for purposes of Article VIII thereof) dated as of April 24, 2017 (the “
Merger Agreement
”),
at the Effective Time (as defined in the Merger Agreement) the Restated Articles of Incorporation of the Corporation shall be amended
as follows:
ARTICLE I
NAME
The name of the Corporation is Akorn, Inc.
ARTICLE II
OBJECTS AND PURPOSES
The purpose of the corporation is to engage
in any lawful activity permitted under the Louisiana Business Corporation Act.
ARTICLE III
DURATION
The duration of the Corporation shall be
perpetual.
ARTICLE IV
REGISTERED OFFICE AND REGISTERED AGENTS
The registered office of the Corporation is
located at One Lakeway Center, Suite 1470, 3900 North Causeway Boulevard, Metairie, Louisiana 70002, which shall continue as the
registered office of the Corporation until changed by the Board of Directors in the manner required by law.
The name and address of the registered agent
for the service of process of the Corporation is P. Keith Daigle, One Lakeway Center, Suite 1470, 3900 North Causeway Boulevard,
Metairie, Louisiana 70002.
ARTICLE V
AUTHORIZED CAPITAL
The Corporation shall have
the authority to issue an aggregate of 100 common shares, no par value per share.
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ARTICLE VI
DIRECTORS
Unless and until otherwise
provided in the by-laws, all of the corporate powers of the Corporation shall be vested in and all the business and affairs of
the Corporation shall be managed by a Board of Directors, which shall consist of one or more members, the number thereof to be
determined from time to time by resolution of the Board of Directors.
The Board of Directors shall
have authority to make and alter the by-laws, fix their own qualifications, classification, or terms of office and fix or increase
their compensation, subject to the power of the shareholders to change or repeal the by-laws so made.
Unless or until otherwise
provided in the by-laws, the Directors shall hold office until their successors have been duly elected and qualified, and the number,
qualification, classification, terms of office, manner of election, time and places of meetings and powers and duties of the Directors
shall be as from time to time fixed by the by-laws.
Any vacancy occurring on
the Board of Directors shall be filled for the unexpired term by the remaining members of the said Board though less than a quorum.
Each Director shall hold
office until a successor is elected at the Annual Shareholders’ Meeting.
ARTICLE VII
OFFICERS
The Officers of the Corporation shall include
a President, one or more Vice Presidents, a Secretary, a Treasurer and such other Officers as the Board may appoint from time to
time. Any two Offices may be held by one person.
The failure to hold the annual meeting of
the shareholders or the failure to elect Directors or the failure of the Directors to elect Officers, shall not dissolve the Corporation,
but the Directors and Officers then in office shall remain in office until their successors have been duly elected and installed.
ARTICLE VIII
SHAREHOLDERS’ MEETINGS
All shareholders’ meetings, annual or
special, shall be held in accordance with the laws of the State of Louisiana unless changed by the by-laws of the Corporation,
and at all shareholders’ meetings a majority of the votes entitled to be cast shall constitute a quorum. Shareholders may
vote at shareholders’ meetings either in person or by proxy. However, whenever the vote of shareholders is necessary to authorize
or constitute corporate action, it may be so authorized and evidenced without the necessity of a meeting by the written consent
of the holders of outstanding shares having not less than the minimum number of votes that would be required to authorize or take
the action at a meeting at which all shares entitled to vote on the action were present and voted.
ARTICLE IX
These articles of incorporation may be amended
and the capital of the Corporation may be increased or decreased, or the Corporation may be dissolved, in the method and manner
provided by law.
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ARTICLE X
No shareholder of the Corporation shall ever
be held liable or responsible for the contracts or faults of the Corporation in any further sum than the unpaid balance of the
shares for which he has subscribed, nor shall any mere informality in organization have the effect of rendering these articles
of incorporation null or of exposing shareholders to any liability other than as above provided.
ARTICLE XI
LIMITATION OF LIABILITY OF DIRECTORS
AND OFFICERS
The Directors and Officers of the Corporation,
all former directors and officers of the Corporation and all of their respective heirs, executors, administrators, and assigns,
shall be entitled to the benefit of Section 832(D) of the Louisiana Business Corporation Act. To the fullest extent that Section
832 of the Louisiana Business Corporation Act or any other law of the State of Louisiana, or the provisions of the articles of
incorporation or any applicable law, in each case as in effect immediately prior to the effective date of this Article XI, permits
the limitation or elimination of the liability of Directors or Officers, none of the Directors or Officers of the Corporation,
the former directors and officers of the Corporation or any of their respective heirs, executors, administrators, and assigns shall
be liable to the Corporation or its shareholders for money damages for any action taken, or any failure to take action, whether
such action or failure to take action occurred before or after the effective date of this Article XI.
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Annex B
VOTING AGREEMENT dated as of April
24, 2017 (this “
Agreement
”), among FRESENIUS KABI AG, a German stock corporation (“
Parent
”),
and each of
the individuals AND OTHER PARTIES listed on Schedule A attached hereto
(each, a “
Shareholder
” and, collectively, the “
Shareholders
”).
WHEREAS Parent, Quercus Acquisition, Inc.,
a Louisiana corporation and a wholly owned subsidiary of Parent (“
Merger Sub
”), and Akorn, Inc., a Louisiana
corporation (the “
Company
”), and, solely for purposes of Article VIII thereof, Fresenius SE & Co. KGaA,
a German partnership limited by shares, have contemporaneously with the execution of this Agreement entered into an Agreement and
Plan of Merger dated as of the date hereof (as the same may be amended or supplemented, the “
Merger Agreement
”;
capitalized terms used but not defined herein shall have the meanings set forth in the Merger Agreement);
WHEREAS each Shareholder is the record or
beneficial owner of the number of shares of Company Common Shares set forth opposite such Shareholder’s name on Schedule A
(such shares of the Company, the “
Original Shares
”, and together with any New Shares (as defined below) but
excluding the Excluded Shares (as defined on Schedule A), the “
Subject Shares
”); and
WHEREAS as a condition to their willingness
to enter into the Merger Agreement, Parent and Merger Sub have requested that the Shareholders enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing
and the representations, warranties, covenants and agreements set forth herein and in the Merger Agreement, each party hereto agrees
as follows:
SECTION 1.
Representations and Warranties
of Each Shareholder.
Each Shareholder jointly and severally hereby represents and warrants to Parent as follows:
(a)
Organization; Authority;
Execution and Delivery; Enforceability.
If such Shareholder is not a natural person, such Shareholder is duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization. Such Shareholder has the legal capacity and all
necessary corporate, company, partnership or other power and authority to execute and deliver this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated by this Agreement. The execution, delivery and performance
by such Shareholder of this Agreement, and the consummation by it of the transactions contemplated by this Agreement, have been
duly authorized by its governing body, members, stockholders or trustees, as applicable, and no other corporate, company, partnership
or other action on the part of such Shareholder or any manager or partner thereof is necessary to authorize the execution, delivery
and performance by such Shareholder of this Agreement and the consummation by it of the transactions contemplated by this Agreement.
This Agreement has been duly executed and delivered by such Shareholder and, assuming due authorization, execution and delivery
hereof by Parent, constitutes a legal, valid and
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binding obligation of such Shareholder,
enforceable against such Shareholder in accordance with its terms, subject to the Bankruptcy and Equity Exception.
(b)
No Conflicts; Consents.
Neither the execution and delivery of this Agreement by such Shareholder, nor the consummation by such Shareholder of the transactions
contemplated by this Agreement, nor performance or compliance by such Shareholder with any of the terms or provisions hereof, will
(i) if such Shareholder is not a natural person, conflict with or violate any provision of any certificate of incorporation,
bylaws or trust (or similar organizational documents) of such Shareholder, (ii) (x) violate any Law or Judgment applicable
to such Shareholder or to such Shareholder’s properties or assets (including such Shareholder’s Subject Shares), (y) violate
or constitute a breach of or default (with or without notice of lapse of time, or both) under or give rise to a right of termination,
modification, or cancelation of any obligation or to the loss of any benefit under, any Contract to which such Shareholder is a
party or by which any of the properties or assets of such Shareholder (including such Shareholder’s Subject Shares) is bound
or subject or (z) result in the creation of any Lien (other than Permitted Lien) on any properties or assets of such Shareholder,
except, in the case of clause (ii), as would not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Shareholder to perform its obligations under this Agreement or to consummate the transactions
contemplated by this Agreement. No consent or approval of, or filing, license, permit or authorization, declaration or registration
with, any Governmental Authority (“
Consent
”) is necessary for the execution and delivery of this Agreement by
such Shareholder, the performance by such Shareholder of its obligations hereunder and the consummation by such Shareholder of
the transactions contemplated by this Agreement, other than such Consents that, if not obtained, made or given, would not, individually
or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Shareholder to perform its
obligations under this Agreement or to consummate the transactions contemplated by this Agreement.
(c)
Ownership.
Such Shareholder
is the beneficial owner of the number of Original Shares set forth opposite such Shareholder’s name on Schedule A and the
Excluded Shares, and such Shareholder’s Original Shares and the Excluded Shares constitute all of the shares of Company Common
Shares held of record, beneficially owned or for which voting power or disposition power is held by such Shareholder as of the
date hereof (excluding, for the avoidance of doubt, any shares held by the John and Editha Kapoor Charitable Foundation as of the
date of this Agreement). Such Shareholder has good and marketable title, free and clear of any Liens, to those Original Shares
of which such Shareholder is the record owner. Such Shareholder has the right to vote those Original Shares of which such Shareholder
is the beneficial owner but not the owner of record. Such Shareholder does not own, of record or beneficially, (i) any shares of
capital stock of the Company other than the Original Shares or (ii) any option, warrant, call or other right to acquire or receive
capital stock or other equity or voting interests in the Company, other than those set forth opposite such Shareholder’s
name on Schedule B. Such Shareholder has the sole right to vote and Transfer such Shareholder’s Original Shares, and none
of such Shareholder’s Original Shares are subject to any voting trust or other agreement, arrangement or restriction with
respect to the voting or the Transfer of such Shareholder’s Original Shares that would in any way limit the ability of such
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Shareholder to perform its obligations
hereunder, except as set forth in Section 3 of this Agreement.
(d)
Absence of Litigation
.
As of the date hereof, there is no action, claim, suit, proceeding or investigation before or by any Governmental Authority or
arbitrator or any judgment, order, legal requirement or injunction pending or, to the knowledge of such Shareholder, threatened
against or affecting such Shareholder that would reasonably be expected to have a material adverse effect on the ability of such
Shareholder to perform such Shareholder’s obligations hereunder or to consummate the transactions contemplated hereby on
a timely basis.
(e)
Reliance by Parent and Merger
Sub
. Such Shareholder understands and acknowledges that Parent and Merger Sub’s willingness to enter into the Merger
Agreement is subject to such Shareholder’s execution and delivery of this Agreement.
SECTION 2.
Representations and Warranties
of Parent.
Parent hereby represents and warrants to each Shareholder as follows: Parent has all necessary corporate or other
applicable power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement. The Management Board of Parent has adopted resolutions approving the execution, delivery
and performance by Parent of this Agreement and the consummation of the transactions contemplated by this Agreement, which resolutions
have not been subsequently rescinded, modified or withdrawn. No other corporate action (including any shareholder vote or other
action) on the part of Parent is necessary to authorize the execution, delivery and performance by Parent of this Agreement and
the consummation by Parent of the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered
by Parent and, assuming due authorization (in the case of each Shareholder that is not a natural person), execution and delivery
hereof by each Shareholder, constitutes a legal, valid and binding obligation of Parent, enforceable against Parent in accordance
with its terms, subject to the Bankruptcy and Equity Exception. Neither the execution and delivery of this Agreement by Parent,
nor the consummation by Parent of the transactions contemplated by this Agreement, nor performance or compliance by Parent with
any of the terms or provisions hereof, will (i) conflict with or violate any provision of the certificate of incorporation, bylaws
or other comparable charter or organizational documents of Parent or (ii) (x) violate any Law or Judgment applicable to Parent
or any of its Subsidiaries or (y) violate or constitute a default under any of the terms, conditions or provisions of any
Contract to which Parent or any of its Subsidiaries are a party or accelerate Parent’s or any of its Subsidiaries’,
if applicable, obligations under any such Contract, except, in the case of clause (ii), as would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of Parent to perform its obligations under this Agreement
or to consummate the transactions contemplated by this Agreement. No Consent is necessary for the execution and delivery of this
Agreement by Parent, the performance by Parent of its obligations hereunder and the consummation by Parent of the transactions
contemplated by this Agreement, other than such Consents that, if not obtained, made or given, would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the ability of Parent to perform its obligations under this
Agreement or to consummate the transactions contemplated by this Agreement.
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SECTION 3.
Covenants of Each Shareholder.
During the term of this Agreement, each Shareholder severally and not jointly covenants and agrees as to itself as follows:
(a) At any meeting of the shareholders
of the Company called to vote upon the Merger Agreement, the Merger or any of the other transactions contemplated by the Merger
Agreement, or at any postponement or adjournment thereof, and in any other circumstances upon which a vote, consent, adoption or
other approval with respect to the Merger Agreement, the Merger or any of the other transactions contemplated by the Merger Agreement,
or any Takeover Proposal, is sought, such Shareholder shall (i) appear at such meeting or otherwise cause its Subject Shares
to be counted as present thereat for purposes of calculating a quorum and (ii) vote (or cause to be voted) all of such Shareholder’s
Subject Shares (A) in favor of, and shall consent to (or cause to be consented to), the approval of the Merger Agreement and of
the Merger and each of the other transactions contemplated by the Merger Agreement and any related proposal in furtherance of the
foregoing, including in favor of any proposal to adjourn or postpone to a later date any meeting of the shareholders of the Company
at which any of the foregoing matters are submitted for consideration and vote of the shareholders of the Company if there are
not sufficient votes for approval of such matters on the date on which the meeting is held; and (B) against any Takeover Proposal;
provided
that, in each case, the Merger Agreement shall not have been amended or modified without such Shareholder’s
consent to (1) decrease the Merger Consideration or (2) change the form of Merger Consideration. Any vote required to be cast or
consent required to be executed pursuant to this Section 3(a) shall be cast or given by such Shareholder in accordance with such
procedures relating thereto so as to reasonably expect that it is duly counted, including for purposes of determining whether a
quorum is present. The obligations of this Section 3(a) shall apply whether or not the Merger or any action described above is
recommended by the Board of Directors of the Company (or any committee thereof).
(b) Such Shareholder shall not,
and shall not commit or agree to, directly or indirectly, sell, transfer, pledge, exchange, assign, tender, encumber, hypothecate
or otherwise dispose of (including by gift, merger (including by conversion into securities or other consideration) or tendering
into a tender or exchange offer), by operation of law or otherwise), either voluntarily or involuntarily (collectively, “
Transfer
”),
any Subject Shares (or beneficial ownership thereof or any other interest therein) or any rights to acquire any securities or equity
interests of the Company, or enter into any Contract, option, call or other arrangement with respect to the Transfer (including
any profit-sharing or other derivative arrangement) of any Subject Shares (or beneficial ownership thereof or any other interest
therein) or any rights to acquire any securities or equity interests of the Company, to any person other than pursuant to this
Agreement or the Merger Agreement, unless such Transfer is to an Affiliate who, prior to any such Transfer, is a party to this
Agreement, enters into a voting agreement in form and substance reasonably acceptable to Parent or agrees to become a party to
this Agreement pursuant to a customary joinder agreement;
provided
that nothing contained herein shall restrict the ability
of such Shareholder to exercise any Company Stock Options for Company Common Shares. For the avoidance of doubt, this Agreement
shall not apply
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to the Excluded Shares or any shares
held by the John and Editha Kapoor Charitable Foundation as of the date of this Agreement.
(c) (i) Such Shareholder shall not
commit or agree to take any action inconsistent with the transactions contemplated by, or the terms of, this Agreement or the Merger
Agreement. Such Shareholder hereby consents to and approves the actions taken by the Board of Directors of the Company in adopting
the Merger Agreement and recommending the Merger. Such Shareholder hereby (A) waives any rights of appraisal, or rights to dissent
from the Merger, that such Shareholder may have and (B) agrees not to commence or join in, and agrees to take all actions necessary
to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against Parent, Merger Sub, the
Company or any of their respective successors (1) challenging the validity of, or seeking to enjoin the operation of, any provision
of this Agreement or (2) alleging a breach of any fiduciary duty of any Person in connection with the negotiation and entry into
the Merger Agreement.
(ii) Such Shareholder shall not,
and such Shareholder shall not permit any of its Subsidiaries to, or authorize or permit any affiliate (other than the Company
or any of its Subsidiaries in accordance with the terms of the Merger Agreement), director, officer, trustee, spouse, employee
or partner of such Shareholder or any of its Subsidiaries or any investment banker, attorney, accountant or other advisor or representative
of such Shareholder or any of its Subsidiaries to, directly or indirectly, issue any press release or make any other public
statement with respect to the Merger Agreement, this Agreement, the Merger or any of the other transactions contemplated by the
Merger Agreement or by this Agreement without the prior written consent of Parent, except as may be required by applicable Law
or court process;
provided
that the foregoing shall not apply to the Excluded Shares or any disclosure required to be made
by such Shareholder to the SEC or other Governmental Authority, including any amendment of any statement on Schedule 13D, so long
as such disclosure is consistent with the terms of this Agreement and the Merger Agreement and the public statements made by the
Company and Parent pursuant to the Merger Agreement.
(d) Such Shareholder hereby agrees
that, in the event (i) of any share or extraordinary dividend or other distribution, share split, reverse share split, recapitalization,
reclassification, reorganization, combination or other like change, of or affecting the Subject Shares or (ii) that such Shareholder
purchases or otherwise acquires beneficial ownership of or an interest in, or acquires the right to vote or share in the voting
of, any shares of capital stock of the Company, in each case after the execution of this Agreement (including by conversion, exercise,
operation of law or otherwise) (collectively, the “
New Shares
”), such Shareholder shall deliver promptly (and
in any event within 48 hours of such acquisition by such Shareholder) to Parent written notice of its acquisition or receipt of
New Shares, which notice shall state the number of New Shares so acquired or received. Such Shareholder agrees that any New Shares
acquired or received by such Shareholder pursuant to clause (i) or (ii) of this paragraph shall be subject to the terms of this
Agreement and shall be deemed to be Subject Shares, including for purposes of all covenants, agreements, obligations, representations
and
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warranties set forth herein, and
shall constitute Subject Shares to the same extent as if those New Shares were owned by such Shareholder on the date of this Agreement.
(e)
Spousal Consent
. If such
Shareholder is a natural person who is married and resides in a community property state, such Shareholder shall cause such Shareholder’s
spouse to execute and deliver to Parent the spousal consent set forth in
Schedule C
.
(f)
Disclosure
. Such Shareholder
hereby authorizes the Company and Parent to publish and disclose in any press release or public announcement or in any disclosure
required by the SEC and in the Proxy Statement such Shareholder’s identity and ownership of such Shareholder’s Subject
Shares and the nature of such Shareholder’s obligations under this Agreement.
SECTION 4.
Grant of Irrevocable Proxy;
Appointment of Proxy.
(a) Each Shareholder hereby irrevocably grants to, and appoints, Parent and any individual designated
in writing by Parent, and each of them individually, such Shareholder’s proxy and attorney-in-fact (with full power of substitution
and re-substitution), for and in the name, place and stead of such Shareholder, to attend any meeting of the shareholders of the
Company on behalf of the Shareholder with respect to the matters set forth in Section 3(a), to include such Shareholder’s
Subject Shares in any computation for purposes of establishing a quorum at any such meeting of the shareholders of the Company,
and to vote all of such Shareholder’s Subject Shares at any meeting of shareholders of the Company or any adjournment or
postponement thereof, or grant a consent or approval in respect of such Shareholder’s Subject Shares, in a manner consistent
with the provisions of Section 3(a). The proxy granted in this Section 4 shall expire upon the termination of this Agreement.
(b) Each Shareholder hereby represents
that any proxies heretofor given in respect of such Shareholder’s Subject Shares are not irrevocable, and that all such proxies
are hereby revoked.
(c) Each Shareholder hereby affirms
that the irrevocable proxy set forth in this Section 4 is given in connection with the execution of the Merger Agreement,
and that such irrevocable proxy is given to secure the performance of the duties of such Shareholder under this Agreement. Each
Shareholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked.
Each Shareholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof.
Each such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 1-722.D
of the LBCA.
SECTION 5.
Further Assurances.
Each
Shareholder shall, from time to time, execute and deliver, or cause to be executed and delivered, such additional or further consents,
documents and other instruments as Parent may reasonably request for the purpose of effectuating the matters covered by this Agreement,
including the grant of proxies set forth in Section 4 of this Agreement.
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SECTION 6.
Assignment.
Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of Law
or otherwise, by any of the parties hereto without the prior written consent of the other parties hereto, except that Parent may
assign, in its sole discretion, all of the rights, interests and obligations of Parent under this Agreement to any wholly owned
Subsidiary of Parent, but no such assignment shall relieve Parent of its obligations under this Agreement. No assignment by any
party shall relieve such party of any of its obligations hereunder. Subject to the immediately preceding two sentences, this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and permitted
assigns. Any purported assignment not permitted under this Section 6 shall be null and void.
SECTION 7.
Termination.
This Agreement
shall terminate upon the earlier of (i) the Effective Time and (ii) the termination of the Merger Agreement in accordance
with its terms, in each case other than Section 8, which shall survive and instead shall expire upon the expiration of all rights
of Parent and Merger Sub thereunder.
SECTION 8.
General Provisions.
(a)
Amendments.
This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.
(b)
No Ownership Interest
.
Nothing contained in this Agreement shall be deemed to vest in Parent any direct or indirect ownership or incidence of ownership
(whether beneficial ownership or otherwise) of or with respect to any Subject Shares. All rights, ownership and economic benefits
of and relating to the Subject Shares shall remain vested in and belong to the applicable Shareholder, and Parent shall have no
authority to direct any Shareholder in the voting or disposition of any of the Subject Shares, except as otherwise provided herein.
(c)
Capacity as Shareholder.
Each Shareholder signs this Agreement solely in such Shareholder’s capacity as a shareholder of the Company, and not in such
Shareholder’s capacity as a director, officer or employee of the Company, if applicable.
(d)
Notices.
All notices,
requests and other communications to any party hereunder shall be in writing and shall be deemed given if delivered personally,
by facsimile (which is confirmed), emailed (which is confirmed) or sent by Federal Express, UPS, DHL or similar courier service
(providing proof of delivery) to Parent in accordance with Section 8.10 of the Merger Agreement and to the Shareholders at their
respective addresses set forth on Schedule A (or at such other address for a party as shall be specified by notice given in
accordance with this Section 8(d)). All such notices, requests and other communications shall be deemed received on the date
of actual receipt by the recipient thereof if received prior to 5:00 p.m. local time in the place of receipt and such day
is a business day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been
received until the next succeeding business day in the place of receipt.
(e)
Interpretation.
When
a reference is made in this Agreement to a Section or a Schedule, such reference shall be to a Section of, or a Schedule to, this
Agreement unless otherwise indicated. The headings contained in this Agreement are for
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reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes”
or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.
The words “hereof”, “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The words “date
hereof” shall refer to the date of this Agreement. The terms “or”, “any” and “either”
are not exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject
or other thing extends, and such phrase shall not mean simply “if”. The word “
will
” shall be construed
to have the same meaning and effect as the word “
shall
”. The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms. Any agreement, instrument or statute defined or referred to herein or
in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes)
by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.
(f)
Counterparts.
This Agreement
may be executed in one or more counterparts (including by facsimile, electronic mail or .pdf), each of which shall be deemed to
be an original but all of which taken together shall constitute one and the same agreement, and shall become effective when one
or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto.
(g)
Entire Agreement; No Third-Party
Beneficiaries.
This Agreement and the Merger Agreement constitute the entire agreement, and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement. This Agreement
is not intended to and does not confer upon any Person other than the parties hereto any rights or remedies hereunder (except the
rights conferred upon those persons specified as proxies in Section 4).
(h)
Governing Law.
This Agreement
shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and
to be performed entirely within that State, regardless of the laws that might otherwise govern under any applicable conflict of
Laws principles.
(i)
Severability.
If any
term, condition or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal
or incapable of being enforced by any rule of Law or public policy, all other terms, provisions and conditions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination that any term, condition 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 to the fullest extent permitted by applicable Law.
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(j)
Consent to Jurisdiction;
Service of Process; Venue.
All Actions arising out of or relating to this Agreement or the transactions contemplated by this
Agreement shall be heard and determined in the Delaware Courts. The parties hereto hereby irrevocably (i) submit to the exclusive
jurisdiction and venue of the Delaware Courts in any such Action, (ii) waive the defense of an inconvenient forum or lack of jurisdiction
to the maintenance of any such Action brought in the Delaware Courts, (iii) agree to not contest the jurisdiction of the Delaware
Courts in any such Action, by motion or otherwise and (iv) agree to not bring any Action arising out of or relating to this Agreement
or the transactions contemplated by this Agreement in any court other than the Delaware Courts, except for Actions brought to enforce
the judgment of any such court. The consents to jurisdiction and venue set forth in this Section 8(j) shall not constitute
general consents to service of process in the State of Delaware and shall have no effect for any purpose except as provided in
this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto. Each party hereto agrees that
service of process upon such party in any Action arising out of or relating to this Agreement shall be effective if notice is given
by Federal Express, UPS, DHL or similar courier service to the address provided for in Section 8(d) of this Agreement. The
parties hereto agree that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by applicable Law;
provided
,
however
, that nothing in the foregoing
shall restrict any party’s rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment.
(k)
Enforcement.
The parties
hereto agree that irreparable damage for which monetary relief, even if available, would not be an adequate remedy, would occur
in the event that any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached,
including if the parties hereto fail to take any action required of them hereunder to consummate this Agreement and the transactions
contemplated by this Agreement. Subject to the following sentence, the parties acknowledge and agree that (a) the parties
shall be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in the courts described in Section 8(j) without proof of damages
or otherwise, this being in addition to any other remedy to which they are entitled under this Agreement and (b) the right
of specific enforcement is an integral part of the transactions contemplated by this Agreement and without that right neither the
Company nor Parent would have entered into this Agreement. The parties hereto agree not to assert that a remedy of specific enforcement
is unenforceable, invalid, contrary to Law or inequitable for any reason, and not to assert that a remedy of monetary damages would
provide an adequate remedy or that the parties otherwise have an adequate remedy at law. The parties hereto acknowledge and agree
that any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms
and provisions of this Agreement in accordance with this Section 8(k) shall not be required to provide any bond or other security
in connection with any such order or injunction.
(l)
Waiver of Jury Trial.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
B-9
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 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) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT
MAKES SUCH WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVER AND CERTIFICATIONS IN THIS SECTION 8(L).
(m)
Expenses
. All fees and
expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party
incurring or required to incur such fees or expenses.
[
Signature page follows
]
B-10
IN WITNESS WHEREOF, Parent has caused this
Agreement to be signed by its officer thereunto duly authorized and each Shareholder has signed this Agreement, all as of the date
first written above.
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FRESENIUS KABI AG,
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by
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/s/ Philipp Schulte-Noelle
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Name: Philipp Schulte-Noelle
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Title: Chief Financial Officer & Chief Compliance Officer
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by
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/s/ John R. Ducker
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Name: John R. Ducker
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Title: President, Region North America
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B-11
Shareholders:
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John N. Kapoor Trust Dated September 20, 1989
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By
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/s/Dr. John N. Kapoor
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Name: Dr. John N. Kapoor
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Title: Trustee
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Dr. John N. Kapoor
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By
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/s/Dr. John N. Kapoor
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Akorn Holdings, L.P.
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By: EJ Financial Enterprises, Inc., General partner
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By
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/s/Dr. John N. Kapoor
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Name: Dr. John N. Kapoor
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Title: President
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EJ Financial / Akorn Management L.P.
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By: Pharma Nevada, Inc., General partner
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By
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/s/Dr. John N. Kapoor
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Name: Dr. John N. Kapoor
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Title: President
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EJ Funds LP
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By: EJ Financial Enterprises, Inc., General partner
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By
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/s/Dr. John N. Kapoor
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Name: Dr. John N. Kapoor
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Title: President
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B-12
John E. Hillock Trust U/A Kapoor 2010 GRAT-H
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Lawrence Hillock Trust U/A Kapoor 2010 GRAT-H
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Randon Hillock Trust U/A Kapoor 2010 GRAT-H
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Robert Hillock Trust U/A Kapoor 2010 GRAT-H
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Hilary Balderas Trust U/A Kapoor 2010 GRAT-H
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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B-13
Lucille Floss Trust U/A Kapoor 2010 GRAT-H
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Linda B. Clark Trust U/A Kapoor 2010 GRAT-H
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Christina G. Kapoor General Trust U/A Kapoor Children’s 1992 Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Jonathan N. Kapoor General Trust U/A Kapoor Children’s 1992 Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Olivia J. Kapoor General Trust U/A Kapoor Children’s 1992 Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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B-14
Jules A. Kapoor General Trust U/A Kapoor Children’s 1992 Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Kamal Kapoor Trust U/A Kapoor 2010 GRAT-K
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Gopal Mehra Trust U/A Kapoor 2010 GRAT-K
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Ashok B. Mehra Trust U/A Kapoor 2010 GRAT-K
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Neena K. Arora Trust U/A Kapoor 2010 GRAT-K
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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B-15
Kamala Vati Mehra U/A Kapoor 2010 GRAT-K
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Rani Aneja Trust U/A Kapoor 2010 GRAT-K
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Shashi Mehra Trust U/A Kapoor 2010 GRAT-K
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Sanjiv Mehra Trust U/A Kapoor 2010 GRAT-K
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Beena Bhatia Trust U/A Kapoor 2010 GRAT-K
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Kapoor Family 1996 R Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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B-16
Ashok B. Mehra General Trust U/A Kapoor Family 1996 NR Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Neena K. Arora Trust U/A Kapoor Family 1996 NR Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Kamala Vati Mehra U/A Kapoor Family 1996 NR Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Rani Aneja Trust U/A Kapoor Family 1996 NR Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Shashi Mehra Trust U/A Kapoor Family 1996 NR Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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B-17
Sanjiv Mehra Trust U/A Kapoor Family 1996 NR Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Beena Bhatia Trust U/A Kapoor Family 1996 NR Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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John E. Hillock Trust U/A Hillock Family 2015 Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Lawrence Hillock Trust U/A Hillock Family 2015 Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Randon Hillock Trust U/A Hillock Family 2015 Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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B-18
Robert Hillock Trust U/A Hillock Family 2015 Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Hilary Balderas Trust U/A Hillock Family 2015 Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Lucille Floss Trust U/A Hillock Family 2015 Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Linda B. Clark Trust U/A Hillock Family 2015 Trust
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Christina Grace Kapoor Trust U/A Trust Agreement f/b/o children, DATED DECEMBER 20, 1990
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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B-19
Jonathan Nath Kapoor Trust U/A Trust Agreement f/b/o children, DATED DECEMBER 20, 1990
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Jules Alexander Kapoor Trust U/A Trust Agreement f/b/o children, DATED DECEMBER 20, 1990
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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Olivia Jane Kapoor Trust U/A Trust Agreement f/b/o children, DATED DECEMBER 20, 1990
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By
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/s/Rao Akella
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Name: Rao Akella
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Title: Trustee
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B-20
Schedule A
Company Common Shares
Name and Address of
Shareholder
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Number of Subject Shares
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John N. Kapoor Trust Dated September 20, 1989
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1,907,445
(1)
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Dr. John N. Kapoor
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501,896
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Akorn Holdings, L.P.
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15,050,000
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EJ Financial / Akorn Management L.P.
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2,970,644
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EJ Funds LP
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3,590,445
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Certain trusts for the benefit of Dr. Kapoor’s children and other family members, the trustee of which is Rao Akella
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4,427,462
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(1)
Excludes 3,000,079 shares currently owned by
the John N. Kapoor Trust Dated September 20, 1989 as of the date of this Agreement (such shares being defined under this Agreement
as the “
Excluded Shares
”).
B-21
Schedule B
Name of
Shareholder
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Number of
Unexercised Options
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Number of
RSUs
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Dr. John N. Kapoor
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13,654 common shares issuable upon exercise of options
8,701 common shares subject to unvested options
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3,495 unvested RSUs
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B-22
Schedule C
Form of Spousal Consent
The undersigned represents
that he or she is the spouse of Shareholder and that the undersigned is familiar with the terms of the Voting Agreement (the “
Agreement
”)
entered into as of [●], 2017, among Fresenius Kabi AG, a German stock corporation (“
Parent
”)
and the undersigned’s spouse (the “
Shareholder
”). All capitalized terms used but not defined herein shall
have the respective meanings ascribed to such terms in the Agreement. The undersigned hereby agrees that the interest of the Shareholder
in all property that is the subject of such Agreement shall be irrevocably bound by the terms of such Agreement and by any amendment,
modification, waiver or termination signed by the Shareholder. The undersigned further agrees that the undersigned’s community
property interest in all property that is the subject of such Agreement shall be irrevocably bound by the terms of such Agreement,
and that such Agreement shall be binding on the executors, administrators, heirs and assigns of the undersigned. The undersigned
further authorizes the Shareholder to amend, modify or terminate such Agreement, or waive any rights thereunder, and that each
such amendment, modification, waiver or termination signed by the Shareholder shall be binding on the community property interest
of undersigned in all property that is the subject of such Agreement and on the executors, administrators, heirs and assigns of
the undersigned, each as fully as if the undersigned had signed such amendment, modification, waiver or termination.
Dated: [●],
2017
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SPOUSE:
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[●]
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Signature:
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Print
name:
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B-23
Annex C
VOTING AGREEMENT dated as of April
24, 2017 (this “
Agreement
”), among FRESENIUS KABI AG, a German stock corporation (“
Parent
”),
and each of
the individuals AND OTHER PARTIES listed on Schedule A attached hereto
(each, a “
Shareholder
” and, collectively, the “
Shareholders
”).
WHEREAS Parent, Quercus Acquisition, Inc.,
a Louisiana corporation and a wholly owned subsidiary of Parent (“
Merger Sub
”), and Akorn, Inc., a Louisiana
corporation (the “
Company
”), and, solely for purposes of Article VIII thereof, Fresenius SE & Co. KGaA,
a German partnership limited by shares, have contemporaneously with the execution of this Agreement entered into an Agreement and
Plan of Merger dated as of the date hereof (as the same may be amended or supplemented, the “
Merger Agreement
”;
capitalized terms used but not defined herein shall have the meanings set forth in the Merger Agreement);
WHEREAS each Shareholder is the record or
beneficial owner of the number of shares of Company Common Shares set forth opposite such Shareholder’s name on Schedule A
(such shares of the Company, the “
Original Shares
”, and together with any New Shares (as defined below), the
“
Subject Shares
”); and
WHEREAS as a condition to their willingness
to enter into the Merger Agreement, Parent and Merger Sub have requested that the Shareholders enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing
and the representations, warranties, covenants and agreements set forth herein and in the Merger Agreement, each party hereto agrees
as follows:
SECTION 1.
Representations
and Warranties of Each Shareholder.
Each Shareholder jointly and severally hereby represents and warrants to Parent as follows:
(a)
Organization;
Authority; Execution and Delivery; Enforceability.
If such Shareholder is not a natural person, such Shareholder is duly organized,
validly existing and in good standing under the laws of its jurisdiction of organization. Such Shareholder has the legal capacity
and all necessary corporate, company, partnership or other power and authority to execute and deliver this Agreement and to perform
its obligations hereunder and to consummate the transactions contemplated by this Agreement. The execution, delivery and performance
by such Shareholder of this Agreement, and the consummation by it of the transactions contemplated by this Agreement, have been
duly authorized by its governing body, members, stockholders or trustees, as applicable, and no other corporate, company, partnership
or other action on the part of such Shareholder or any manager or partner thereof is necessary to authorize the execution, delivery
and performance by such Shareholder of this Agreement and the consummation by it of the transactions contemplated by this Agreement.
This Agreement has been duly executed and delivered by such Shareholder and, assuming due authorization, execution and delivery
hereof by Parent, constitutes a legal, valid and binding obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms, subject to the Bankruptcy and Equity Exception.
C-1
(b)
No
Conflicts; Consents.
Neither the execution and delivery of this Agreement by such Shareholder, nor the consummation by such
Shareholder of the transactions contemplated by this Agreement, nor performance or compliance by such Shareholder with any of the
terms or provisions hereof, will (i) if such Shareholder is not a natural person, conflict with or violate any provision of
any certificate of incorporation, bylaws or trust (or similar organizational documents) of such Shareholder, (ii) (x) violate
any Law or Judgment applicable to such Shareholder or to such Shareholder’s properties or assets (including such Shareholder’s
Subject Shares), (y) violate or constitute a breach of or default (with or without notice of lapse of time, or both) under
or give rise to a right of termination, modification, or cancelation of any obligation or to the loss of any benefit under, any
Contract to which such Shareholder is a party or by which any of the properties or assets of such Shareholder (including such Shareholder’s
Subject Shares) is bound or subject or (z) result in the creation of any Lien (other than Permitted Lien) on any properties
or assets of such Shareholder, except, in the case of clause (ii), as would not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the ability of such Shareholder to perform its obligations under this Agreement
or to consummate the transactions contemplated by this Agreement. No consent or approval of, or filing, license, permit or authorization,
declaration or registration with, any Governmental Authority (“
Consent
”) is necessary for the execution and
delivery of this Agreement by such Shareholder, the performance by such Shareholder of its obligations hereunder and the consummation
by such Shareholder of the transactions contemplated by this Agreement, other than such Consents that, if not obtained, made or
given, would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of
such Shareholder to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement.
(c)
Ownership.
Such Shareholder is the beneficial owner of the number of Original Shares set forth opposite such Shareholder’s name on Schedule
A, and such Shareholder’s Original Shares constitute all of the shares of Company Common Shares held of record, beneficially
owned or for which voting power or disposition power is held by such Shareholder as of the date hereof. Such Shareholder has good
and marketable title, free and clear of any Liens, to those Original Shares of which such Shareholder is the record owner. Such
Shareholder has the right to vote those Original Shares of which such Shareholder is the beneficial owner but not the owner of
record. Such Shareholder does not own, of record or beneficially, (i) any shares of capital stock of the Company other than the
Original Shares or (ii) any option, warrant, call or other right to acquire or receive capital stock or other equity or voting
interests in the Company, other than those set forth opposite such Shareholder’s name on Schedule B. Such Shareholder has
the sole right to vote and Transfer such Shareholder’s Original Shares, and none of such Shareholder’s Original Shares
are subject to any voting trust or other agreement, arrangement or restriction with respect to the voting or the Transfer of such
Shareholder’s Original Shares that would in any way limit the ability of such Shareholder to perform its obligations hereunder,
except as set forth in Section 3 of this Agreement.
(d)
Absence
of Litigation
. As of the date hereof, there is no action, claim, suit, proceeding or investigation before or by any Governmental
Authority or arbitrator or any judgment, order, legal requirement or injunction pending or, to the knowledge of
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such Shareholder,
threatened against or affecting such Shareholder that would reasonably be expected to have a material adverse effect on the ability
of such Shareholder to perform such Shareholder’s obligations hereunder or to consummate the transactions contemplated hereby
on a timely basis.
(e)
Reliance
by Parent and Merger Sub
. Such Shareholder understands and acknowledges that Parent and Merger Sub’s willingness to enter
into the Merger Agreement is subject to such Shareholder’s execution and delivery of this Agreement.
SECTION 2.
Representations
and Warranties of Parent.
Parent hereby represents and warrants to each Shareholder as follows: Parent has all necessary corporate
or other applicable power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated by this Agreement. The Management Board of Parent has adopted resolutions approving the execution,
delivery and performance by Parent of this Agreement and the consummation of the transactions contemplated by this Agreement, which
resolutions have not been subsequently rescinded, modified or withdrawn. No other corporate action (including any shareholder vote
or other action) on the part of Parent is necessary to authorize the execution, delivery and performance by Parent of this Agreement
and the consummation by Parent of the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered
by Parent and, assuming due authorization (in the case of each Shareholder that is not a natural person), execution and delivery
hereof by each Shareholder, constitutes a legal, valid and binding obligation of Parent, enforceable against Parent in accordance
with its terms, subject to the Bankruptcy and Equity Exception. Neither the execution and delivery of this Agreement by Parent,
nor the consummation by Parent of the transactions contemplated by this Agreement, nor performance or compliance by Parent with
any of the terms or provisions hereof, will (i) conflict with or violate any provision of the certificate of incorporation, bylaws
or other comparable charter or organizational documents of Parent or (ii) (x) violate any Law or Judgment applicable to Parent
or any of its Subsidiaries or (y) violate or constitute a default under any of the terms, conditions or provisions of any
Contract to which Parent or any of its Subsidiaries are a party or accelerate Parent’s or any of its Subsidiaries’,
if applicable, obligations under any such Contract, except, in the case of clause (ii), as would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of Parent to perform its obligations under this Agreement
or to consummate the transactions contemplated by this Agreement. No Consent is necessary for the execution and delivery of this
Agreement by Parent, the performance by Parent of its obligations hereunder and the consummation by Parent of the transactions
contemplated by this Agreement, other than such Consents that, if not obtained, made or given, would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the ability of Parent to perform its obligations under this
Agreement or to consummate the transactions contemplated by this Agreement.
SECTION 3.
Covenants
of Each Shareholder.
During the term of this Agreement, each Shareholder severally and not jointly covenants and agrees as
to itself as follows:
(a)
At
any meeting of the shareholders of the Company called to vote upon the Merger Agreement, the Merger or any of the other transactions
contemplated by
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the Merger Agreement, or at any postponement or adjournment thereof, and in any other circumstances upon which
a vote, consent, adoption or other approval with respect to the Merger Agreement, the Merger or any of the other transactions contemplated
by the Merger Agreement, or any Takeover Proposal, is sought, such Shareholder shall (i) appear at such meeting or otherwise
cause its Subject Shares to be counted as present thereat for purposes of calculating a quorum and (ii) vote (or cause to
be voted) all of such Shareholder’s Subject Shares (A) in favor of, and shall consent to (or cause to be consented to), the
approval of the Merger Agreement and of the Merger and each of the other transactions contemplated by the Merger Agreement and
any related proposal in furtherance of the foregoing, including in favor of any proposal to adjourn or postpone to a later date
any meeting of the shareholders of the Company at which any of the foregoing matters are submitted for consideration and vote of
the shareholders of the Company if there are not sufficient votes for approval of such matters on the date on which the meeting
is held; and (B) against any Takeover Proposal;
provided
that, in each case, the Merger Agreement shall not have been amended
or modified without such Shareholder’s consent to (1) decrease the Merger Consideration or (2) change the form of Merger
Consideration. Any vote required to be cast or consent required to be executed pursuant to this Section 3(a) shall be cast or given
by such Shareholder in accordance with such procedures relating thereto so as to reasonably expect that it is duly counted, including
for purposes of determining whether a quorum is present. The obligations of this Section 3(a) shall apply whether or not the Merger
or any action described above is recommended by the Board of Directors of the Company (or any committee thereof).
(b)
Such
Shareholder shall not, and shall not commit or agree to, directly or indirectly, sell, transfer, pledge, exchange, assign, tender,
encumber, hypothecate or otherwise dispose of (including by gift, merger (including by conversion into securities or other consideration)
or tendering into a tender or exchange offer), by operation of law or otherwise), either voluntarily or involuntarily (collectively,
“
Transfer
”), any Subject Shares (or beneficial ownership thereof or any other interest therein) or any rights
to acquire any securities or equity interests of the Company, or enter into any Contract, option, call or other arrangement with
respect to the Transfer (including any profit-sharing or other derivative arrangement) of any Subject Shares (or beneficial ownership
thereof or any other interest therein) or any rights to acquire any securities or equity interests of the Company, to any person
other than pursuant to this Agreement or the Merger Agreement, unless such Transfer is to an Affiliate who, prior to any such Transfer,
is a party to this Agreement, enters into a voting agreement in form and substance reasonably acceptable to Parent or agrees to
become a party to this Agreement pursuant to a customary joinder agreement;
provided
that nothing contained herein shall
restrict the ability of such Shareholder to exercise any Company Stock Options for Company Common Shares or elect and engage in
a “net settlement” with respect to the exercise or vesting of any Company Stock Options or Company RSUs.
(c)
(i)
Such Shareholder shall not commit or agree to take any action inconsistent with the transactions contemplated by, or the terms
of, this Agreement or the Merger Agreement. Such Shareholder hereby consents to and approves the actions taken by the Board of
Directors of the Company in adopting the Merger Agreement and recommending the Merger. Such Shareholder hereby (A) waives any rights
of appraisal,
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or rights to dissent from the Merger, that such Shareholder may have and (B) agrees not to commence or join in, and
agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise,
against Parent, Merger Sub, the Company or any of their respective successors (1) challenging the validity of, or seeking to enjoin
the operation of, any provision of this Agreement or (2) alleging a breach of any fiduciary duty of any Person in connection with
the negotiation and entry into the Merger Agreement.
(ii)
Such Shareholder shall not, and such Shareholder shall not permit any of its Subsidiaries to, or authorize or permit any
affiliate (other than the Company or any of its Subsidiaries in accordance with the terms of the Merger Agreement), director, officer,
trustee, spouse, employee or partner of such Shareholder or any of its Subsidiaries or any investment banker, attorney, accountant
or other advisor or representative of such Shareholder or any of its Subsidiaries to, directly or indirectly, issue any press
release or make any other public statement with respect to the Merger Agreement, this Agreement, the Merger or any of the other
transactions contemplated by the Merger Agreement or by this Agreement without the prior written consent of Parent, except as may
be required by applicable Law or court process;
provided
that the foregoing shall not apply to any disclosure required to
be made by such Shareholder to the SEC or other Governmental Authority, including any amendment of any statement on Schedule 13D,
so long as such disclosure is consistent with the terms of this Agreement and the Merger Agreement and the public statements made
by the Company and Parent pursuant to the Merger Agreement.
(d)
Such
Shareholder hereby agrees that, in the event (i) of any share or extraordinary dividend or other distribution, share split, reverse
share split, recapitalization, reclassification, reorganization, combination or other like change, of or affecting the Subject
Shares or (ii) that such Shareholder purchases or otherwise acquires beneficial ownership of or an interest in, or acquires the
right to vote or share in the voting of, any shares of capital stock of the Company, in each case after the execution of this Agreement
(including by conversion, exercise, operation of law or otherwise) (collectively, the “
New Shares
”), such Shareholder
shall deliver promptly (and in any event within 48 hours of such acquisition by such Shareholder) to Parent written notice of its
acquisition or receipt of New Shares, which notice shall state the number of New Shares so acquired or received. Such Shareholder
agrees that any New Shares acquired or received by such Shareholder pursuant to clause (i) or (ii) of this paragraph shall be subject
to the terms of this Agreement and shall be deemed to be Subject Shares, including for purposes of all covenants, agreements, obligations,
representations and warranties set forth herein, and shall constitute Subject Shares to the same extent as if those New Shares
were owned by such Shareholder on the date of this Agreement.
(e)
Spousal
Consent
. If such Shareholder is a natural person who is married and resides in a community property state, such Shareholder
shall cause such Shareholder’s spouse to execute and deliver to Parent the spousal consent set forth in
Schedule C
.
C-5
(f)
Disclosure
.
Such Shareholder hereby authorizes the Company and Parent to publish and disclose in any press release or public announcement or
in any disclosure required by the SEC and in the Proxy Statement such Shareholder’s identity and ownership of such Shareholder’s
Subject Shares and the nature of such Shareholder’s obligations under this Agreement.
SECTION 4.
Grant
of Irrevocable Proxy; Appointment of Proxy.
(a) Each Shareholder hereby irrevocably grants to, and appoints, Parent and any
individual designated in writing by Parent, and each of them individually, such Shareholder’s proxy and attorney-in-fact
(with full power of substitution and re-substitution), for and in the name, place and stead of such Shareholder, to attend any
meeting of the shareholders of the Company on behalf of the Shareholder with respect to the matters set forth in Section 3(a),
to include such Shareholder’s Subject Shares in any computation for purposes of establishing a quorum at any such meeting
of the shareholders of the Company, and to vote all of such Shareholder’s Subject Shares at any meeting of shareholders of
the Company or any adjournment or postponement thereof, or grant a consent or approval in respect of such Shareholder’s Subject
Shares, in a manner consistent with the provisions of Section 3(a). The proxy granted in this Section 4 shall expire upon
the termination of this Agreement.
(b)
Each
Shareholder hereby represents that any proxies heretofor given in respect of such Shareholder’s Subject Shares are not irrevocable,
and that all such proxies are hereby revoked.
(c)
Each
Shareholder hereby affirms that the irrevocable proxy set forth in this Section 4 is given in connection with the execution
of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of such Shareholder under
this Agreement. Each Shareholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no
circumstances be revoked. Each Shareholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause
to be done by virtue hereof. Each such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions
of Section 1-722.D of the LBCA.
SECTION 5.
Further
Assurances.
Each Shareholder shall, from time to time, execute and deliver, or cause to be executed and delivered, such additional
or further consents, documents and other instruments as Parent may reasonably request for the purpose of effectuating the matters
covered by this Agreement, including the grant of proxies set forth in Section 4 of this Agreement.
SECTION 6.
Assignment.
Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation
of Law or otherwise, by any of the parties hereto without the prior written consent of the other parties hereto, except that Parent
may assign, in its sole discretion, all of the rights, interests and obligations of Parent under this Agreement to any wholly owned
Subsidiary of Parent, but no such assignment shall relieve Parent of its obligations under this Agreement. No assignment by any
party shall relieve such party of any of its obligations hereunder. Subject to the immediately preceding two sentences, this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by,
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the parties hereto and their respective successors and permitted
assigns. Any purported assignment not permitted under this Section 6 shall be null and void.
SECTION 7.
Termination.
This Agreement shall terminate upon the earlier of (i) the Effective Time and (ii) the termination of the Merger Agreement
in accordance with its terms, in each case other than Section 8, which shall survive and instead shall expire upon the expiration
of all rights of Parent and Merger Sub thereunder.
SECTION 8.
General
Provisions.
(a)
Amendments.
This Agreement may not be amended except by an instrument in writing signed by each of the
parties hereto.
(b)
No
Ownership Interest
. Nothing contained in this Agreement shall be deemed to vest in Parent any direct or indirect ownership
or incidence of ownership (whether beneficial ownership or otherwise) of or with respect to any Subject Shares. All rights, ownership
and economic benefits of and relating to the Subject Shares shall remain vested in and belong to the applicable Shareholder, and
Parent shall have no authority to direct any Shareholder in the voting or disposition of any of the Subject Shares, except as otherwise
provided herein.
(c)
Capacity
as Shareholder.
Each Shareholder signs this Agreement solely in such Shareholder’s capacity as a shareholder of the Company,
and not in such Shareholder’s capacity as a director, officer or employee of the Company, if applicable.
(d)
Notices.
All notices, requests and other communications to any party hereunder shall be in writing and shall be deemed given if delivered
personally, by facsimile (which is confirmed), emailed (which is confirmed) or sent by Federal Express, UPS, DHL or similar courier
service (providing proof of delivery) to Parent in accordance with Section 8.10 of the Merger Agreement and to the Shareholders
at their respective addresses set forth on Schedule A (or at such other address for a party as shall be specified by notice
given in accordance with this Section 8(d)). All such notices, requests and other communications shall be deemed received
on the date of actual receipt by the recipient thereof if received prior to 5:00 p.m. local time in the place of receipt and
such day is a business day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to
have been received until the next succeeding business day in the place of receipt.
(e)
Interpretation.
When a reference is made in this Agreement to a Section or a Schedule, such reference shall be to a Section of, or a Schedule to,
this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes”
or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.
The words “hereof”, “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The words “date
hereof” shall refer to the date of this Agreement. The terms “or”, “any” and “either”
are not exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject
or other thing extends,
C-7
and such phrase shall not mean simply “if”. The word “
will
” shall be construed
to have the same meaning and effect as the word “
shall
”. The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms. Any agreement, instrument or statute defined or referred to herein or
in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes)
by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.
(f)
Counterparts.
This Agreement may be executed in one or more counterparts (including by facsimile, electronic mail or .pdf), each of which shall
be deemed to be an original but all of which taken together shall constitute one and the same agreement, and shall become effective
when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto.
(g)
Entire
Agreement; No Third-Party Beneficiaries.
This Agreement and the Merger Agreement constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement.
This Agreement is not intended to and does not confer upon any Person other than the parties hereto any rights or remedies hereunder
(except the rights conferred upon those persons specified as proxies in Section 4).
(h)
Governing
Law.
This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed entirely within that State, regardless of the laws that might otherwise govern under
any applicable conflict of Laws principles.
(i)
Severability.
If any term, condition or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal
or incapable of being enforced by any rule of Law or public policy, all other terms, provisions and conditions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination that any term, condition 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 to the fullest extent permitted by applicable Law.
(j)
Consent
to Jurisdiction; Service of Process; Venue.
All Actions arising out of or relating to this Agreement or the transactions contemplated
by this Agreement shall be heard and determined in the Delaware Courts. The parties hereto hereby irrevocably (i) submit to
the exclusive jurisdiction and venue of the Delaware Courts in any such Action, (ii) waive the defense of an inconvenient forum
or lack of jurisdiction to the maintenance of any such Action brought in the Delaware Courts, (iii) agree to not contest the
jurisdiction of the Delaware Courts in any such Action, by motion or otherwise and (iv) agree to not bring any Action arising out
of or relating to this Agreement or the transactions contemplated by this Agreement in any court other
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than the Delaware Courts,
except for Actions brought to enforce the judgment of any such court. The consents to jurisdiction and venue set forth in this
Section 8(j) shall not constitute general consents to service of process in the State of Delaware and shall have no effect
for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties
hereto. Each party hereto agrees that service of process upon such party in any Action arising out of or relating to this Agreement
shall be effective if notice is given by Federal Express, UPS, DHL or similar courier service to the address provided for in Section 8(d)
of this Agreement. The parties hereto agree that a final judgment in any such Action shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by applicable Law;
provided
,
however
,
that nothing in the foregoing shall restrict any party’s rights to seek any post-judgment relief regarding, or any appeal
from, a final trial court judgment.
(k)
Enforcement.
The parties hereto agree that irreparable damage for which monetary relief, even if available, would not be an adequate remedy,
would occur in the event that any provision of this Agreement is not performed in accordance with its specific terms or is otherwise
breached, including if the parties hereto fail to take any action required of them hereunder to consummate this Agreement and the
transactions contemplated by this Agreement. Subject to the following sentence, the parties acknowledge and agree that (a) the
parties shall be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in the courts described in Section 8(j) without
proof of damages or otherwise, this being in addition to any other remedy to which they are entitled under this Agreement and (b) the
right of specific enforcement is an integral part of the transactions contemplated by this Agreement and without that right neither
the Company nor Parent would have entered into this Agreement. The parties hereto agree not to assert that a remedy of specific
enforcement is unenforceable, invalid, contrary to Law or inequitable for any reason, and not to assert that a remedy of monetary
damages would provide an adequate remedy or that the parties otherwise have an adequate remedy at law. The parties hereto acknowledge
and agree that any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in accordance with this Section 8(k) shall not be required to provide any bond
or other security in connection with any such order or injunction.
(l)
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 IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
C-9
OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT
MAKES SUCH WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVER AND CERTIFICATIONS IN THIS SECTION 8(L).
(m)
Expenses
.
All fees and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid
by the party incurring or required to incur such fees or expenses.
[
Signature page follows
]
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IN WITNESS WHEREOF, Parent has caused this
Agreement to be signed by its officer thereunto duly authorized and each Shareholder has signed this Agreement, all as of the date
first written above.
|
FRESENIUS KABI AG,
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by
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/s/ Philipp Schulte-Noelle
|
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Name: Philipp Schulte-Noelle
|
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Title: Chief Financial Officer & Chief Compliance Officer
|
|
|
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by
|
|
|
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/s/ John R. Ducker
|
|
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Name: John R. Ducker
|
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Title: President, Region North America
|
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SHAREHOLDERS:
|
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RAJAT RAI 2016 GRAT,
|
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By
|
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/s/ Rajat Rai
|
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Rajat Rai, Trustee
|
C-12
Schedule A
Company Common Shares
Name and Address of
Shareholder
|
Number of Subject Shares
|
|
|
Rajat Rai 2016 GRAT
1925 West Field Court, Suite 300
Lake Forest, Illinois 60045
|
2,000,000
|
|
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Rajat Rai
1925 West Field Court, Suite 300
Lake Forest, Illinois 60045
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73,275
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C-13
Schedule B
Name of
Shareholder
|
Number of
Unexercised Options
|
Number of
RSUs
|
|
|
|
Rajat Rai
|
202,593 common shares issuable upon exercise
of options
457,514 common shares subject to unvested
options
|
89,550 unvested RSUs
|
C-14
Schedule C
Form of Spousal Consent
The undersigned represents
that he or she is the spouse of Shareholder and that the undersigned is familiar with the terms of the Voting Agreement (the “
Agreement
”)
entered into as of [●], 2017, among Fresenius Kabi AG, a German stock corporation (“
Parent
”)
and the undersigned’s spouse (the “
Shareholder
”). All capitalized terms used but not defined herein shall
have the respective meanings ascribed to such terms in the Agreement. The undersigned hereby agrees that the interest of the Shareholder
in all property that is the subject of such Agreement shall be irrevocably bound by the terms of such Agreement and by any amendment,
modification, waiver or termination signed by the Shareholder. The undersigned further agrees that the undersigned’s community
property interest in all property that is the subject of such Agreement shall be irrevocably bound by the terms of such Agreement,
and that such Agreement shall be binding on the executors, administrators, heirs and assigns of the undersigned. The undersigned
further authorizes the Shareholder to amend, modify or terminate such Agreement, or waive any rights thereunder, and that each
such amendment, modification, waiver or termination signed by the Shareholder shall be binding on the community property interest
of undersigned in all property that is the subject of such Agreement and on the executors, administrators, heirs and assigns of
the undersigned, each as fully as if the undersigned had signed such amendment, modification, waiver or termination.
Dated: [●],
2017
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SPOUSE:
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[●]
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Signature:
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Print name:
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C-15
Annex D
VOTING AGREEMENT dated as of April
24, 2017 (this “
Agreement
”), among FRESENIUS KABI AG, a German stock corporation (“
Parent
”),
and each of
the individuals AND OTHER PARTIES listed on Schedule A attached hereto
(each, a “
Shareholder
” and, collectively, the “
Shareholders
”).
WHEREAS Parent, Quercus Acquisition, Inc.,
a Louisiana corporation and a wholly owned subsidiary of Parent (“
Merger Sub
”), and Akorn, Inc., a Louisiana
corporation (the “
Company
”), and, solely for purposes of Article VIII thereof, Fresenius SE & Co. KGaA,
a German partnership limited by shares, have contemporaneously with the execution of this Agreement entered into an Agreement and
Plan of Merger dated as of the date hereof (as the same may be amended or supplemented, the “
Merger Agreement
”;
capitalized terms used but not defined herein shall have the meanings set forth in the Merger Agreement);
WHEREAS each Shareholder is the record or
beneficial owner of the number of shares of Company Common Shares set forth opposite such Shareholder’s name on Schedule
A (such shares of the Company, the “
Original Shares
”, and together with any New Shares (as defined below), the
“
Subject Shares
”); and
WHEREAS as a condition to their willingness
to enter into the Merger Agreement, Parent and Merger Sub have requested that the Shareholders enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing
and the representations, warranties, covenants and agreements set forth herein and in the Merger Agreement, each party hereto agrees
as follows:
SECTION 1.
Representations and Warranties
of Each Shareholder.
Each Shareholder jointly and severally hereby represents and warrants to Parent as follows:
(a)
Organization;
Authority; Execution and Delivery; Enforceability.
If such Shareholder is not a natural person, such Shareholder is duly
organized, validly existing and in good standing under the laws of its jurisdiction of organization. Such Shareholder has the
legal capacity and all necessary corporate, company, partnership or other power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the transactions contemplated by this Agreement. The
execution, delivery and performance by such Shareholder of this Agreement, and the consummation by it of the transactions
contemplated by this Agreement, have been duly authorized by its governing body, members, stockholders or trustees, as
applicable, and no other corporate, company, partnership or other action on the part of such Shareholder or any manager or
partner thereof is necessary to authorize the execution, delivery and performance by such Shareholder of this Agreement and
the consummation by it of the transactions contemplated by this Agreement. This Agreement has been duly executed and
delivered by such Shareholder and, assuming due authorization, execution and delivery hereof by Parent, constitutes a legal,
valid and binding obligation of such Shareholder, enforceable against such Shareholder in accordance with its terms, subject
to the Bankruptcy and Equity Exception.
D-1
(b)
No Conflicts;
Consents.
Neither the execution and delivery of this Agreement by such Shareholder, nor the consummation by such
Shareholder of the transactions contemplated by this Agreement, nor performance or compliance by such Shareholder with any of
the terms or provisions hereof, will (i) if such Shareholder is not a natural person, conflict with or violate any provision
of any certificate of incorporation, bylaws or trust (or similar organizational documents) of such Shareholder, (ii) (x)
violate any Law or Judgment applicable to such Shareholder or to such Shareholder’s properties or assets (including
such Shareholder’s Subject Shares), (y) violate or constitute a breach of or default (with or without notice of lapse
of time, or both) under or give rise to a right of termination, modification, or cancelation of any obligation or to the loss
of any benefit under, any Contract to which such Shareholder is a party or by which any of the properties or assets of such
Shareholder (including such Shareholder’s Subject Shares) is bound or subject or (z) result in the creation of any Lien
(other than Permitted Lien) on any properties or assets of such Shareholder, except, in the case of clause (ii), as would
not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such
Shareholder to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement.
No consent or approval of, or filing, license, permit or authorization, declaration or registration with, any Governmental
Authority (“
Consent
”) is necessary for the execution and delivery of this Agreement by such
Shareholder, the performance by such Shareholder of its obligations hereunder and the consummation by such Shareholder of the
transactions contemplated by this Agreement, other than such Consents that, if not obtained, made or given, would not,
individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Shareholder
to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement.
(c)
Ownership.
Such
Shareholder is the beneficial owner of the number of Original Shares set forth opposite such Shareholder’s name on
Schedule A, and such Shareholder’s Original Shares constitute all of the shares of Company Common Shares held of
record, beneficially owned or for which voting power or disposition power is held by such Shareholder as of the date hereof.
Such Shareholder has good and marketable title, free and clear of any Liens, to those Original Shares of which such
Shareholder is the record owner. Such Shareholder has the right to vote those Original Shares of which such Shareholder is
the beneficial owner but not the owner of record. Such Shareholder does not own, of record or beneficially, (i) any shares of
capital stock of the Company other than the Original Shares or (ii) any option, warrant, call or other right to acquire or
receive capital stock or other equity or voting interests in the Company, other than those set forth opposite such
Shareholder’s name on Schedule B. Such Shareholder has the sole right to vote and Transfer such Shareholder’s
Original Shares, and none of such Shareholder’s Original Shares are subject to any voting trust or other agreement,
arrangement or restriction with respect to the voting or the Transfer of such Shareholder’s Original Shares that would
in any way limit the ability of such Shareholder to perform its obligations hereunder, except as set forth in Section 3 of
this Agreement.
(d)
Absence of Litigation
.
As of the date hereof, there is no action, claim, suit, proceeding or investigation before or by any Governmental Authority or
arbitrator or any judgment, order, legal requirement or injunction pending or, to the knowledge of
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such Shareholder, threatened against or affecting
such Shareholder that would reasonably be expected to have a material adverse effect on the ability of such Shareholder to perform
such Shareholder’s obligations hereunder or to consummate the transactions contemplated hereby on a timely basis.
(e)
Reliance by Parent and Merger
Sub
. Such Shareholder understands and acknowledges that Parent and Merger Sub’s willingness to enter into the Merger
Agreement is subject to such Shareholder’s execution and delivery of this Agreement.
SECTION 2.
Representations and
Warranties of Parent.
Parent hereby represents and warrants to each Shareholder as follows: Parent has all necessary
corporate or other applicable power and authority to execute and deliver this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated by this Agreement. The Management Board of Parent has adopted resolutions
approving the execution, delivery and performance by Parent of this Agreement and the consummation of the transactions
contemplated by this Agreement, which resolutions have not been subsequently rescinded, modified or withdrawn. No other
corporate action (including any shareholder vote or other action) on the part of Parent is necessary to authorize the
execution, delivery and performance by Parent of this Agreement and the consummation by Parent of the transactions
contemplated by this Agreement. This Agreement has been duly executed and delivered by Parent and, assuming due authorization
(in the case of each Shareholder that is not a natural person), execution and delivery hereof by each Shareholder,
constitutes a legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, subject
to the Bankruptcy and Equity Exception. Neither the execution and delivery of this Agreement by Parent, nor the consummation
by Parent of the transactions contemplated by this Agreement, nor performance or compliance by Parent with any of the terms
or provisions hereof, will (i) conflict with or violate any provision of the certificate of incorporation, bylaws or other
comparable charter or organizational documents of Parent or (ii) (x) violate any Law or Judgment applicable to Parent or any
of its Subsidiaries or (y) violate or constitute a default under any of the terms, conditions or provisions of any
Contract to which Parent or any of its Subsidiaries are a party or accelerate Parent’s or any of its
Subsidiaries’, if applicable, obligations under any such Contract, except, in the case of clause (ii), as would not,
individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Parent to
perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement. No Consent is
necessary for the execution and delivery of this Agreement by Parent, the performance by Parent of its obligations hereunder
and the consummation by Parent of the transactions contemplated by this Agreement, other than such Consents that, if not
obtained, made or given, would not, individually or in the aggregate, reasonably be expected to have a material adverse
effect on the ability of Parent to perform its obligations under this Agreement or to consummate the transactions
contemplated by this Agreement.
SECTION 3.
Covenants of Each
Shareholder.
During the term of this Agreement, each Shareholder severally and not jointly covenants and agrees as to
itself as follows:
(a) At any meeting of the shareholders
of the Company called to vote upon the Merger Agreement, the Merger or any of the other transactions contemplated by
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the Merger Agreement, or at any postponement
or adjournment thereof, and in any other circumstances upon which a vote, consent, adoption or other approval with respect to the
Merger Agreement, the Merger or any of the other transactions contemplated by the Merger Agreement, or any Takeover Proposal, is
sought, such Shareholder shall (i) appear at such meeting or otherwise cause its Subject Shares to be counted as present thereat
for purposes of calculating a quorum and (ii) vote (or cause to be voted) all of such Shareholder’s Subject Shares (A) in
favor of, and shall consent to (or cause to be consented to), the approval of the Merger Agreement and of the Merger and each of
the other transactions contemplated by the Merger Agreement and any related proposal in furtherance of the foregoing, including
in favor of any proposal to adjourn or postpone to a later date any meeting of the shareholders of the Company at which any of
the foregoing matters are submitted for consideration and vote of the shareholders of the Company if there are not sufficient votes
for approval of such matters on the date on which the meeting is held; and (B) against any Takeover Proposal;
provided
that,
in each case, the Merger Agreement shall not have been amended or modified without such Shareholder’s consent to (1) decrease
the Merger Consideration or (2) change the form of Merger Consideration. Any vote required to be cast or consent required to be
executed pursuant to this Section 3(a) shall be cast or given by such Shareholder in accordance with such procedures relating thereto
so as to reasonably expect that it is duly counted, including for purposes of determining whether a quorum is present. The obligations
of this Section 3(a) shall apply whether or not the Merger or any action described above is recommended by the Board of Directors
of the Company (or any committee thereof).
(b) Such Shareholder shall not,
and shall not commit or agree to, directly or indirectly, sell, transfer, pledge, exchange, assign, tender, encumber, hypothecate
or otherwise dispose of (including by gift, merger (including by conversion into securities or other consideration) or tendering
into a tender or exchange offer), by operation of law or otherwise), either voluntarily or involuntarily (collectively, “
Transfer
”),
any Subject Shares (or beneficial ownership thereof or any other interest therein) or any rights to acquire any securities or equity
interests of the Company, or enter into any Contract, option, call or other arrangement with respect to the Transfer (including
any profit-sharing or other derivative arrangement) of any Subject Shares (or beneficial ownership thereof or any other interest
therein) or any rights to acquire any securities or equity interests of the Company, to any person other than pursuant to this
Agreement or the Merger Agreement, unless such Transfer is to an Affiliate who, prior to any such Transfer, is a party to this
Agreement, enters into a voting agreement in form and substance reasonably acceptable to Parent or agrees to become a party to
this Agreement pursuant to a customary joinder agreement;
provided
that nothing contained herein shall restrict the ability
of such Shareholder to exercise any Company Stock Options for Company Common Shares or elect and engage in a “net settlement”
with respect to the exercise or vesting of any Company Stock Options or Company RSUs.
(c) (i) Such Shareholder shall not
commit or agree to take any action inconsistent with the transactions contemplated by, or the terms of, this Agreement or the Merger
Agreement. Such Shareholder hereby consents to and approves the actions taken by the Board of Directors of the Company in adopting
the Merger Agreement and recommending the Merger. Such Shareholder hereby (A) waives any rights of appraisal,
D-4
or rights to dissent from the Merger, that
such Shareholder may have and (B) agrees not to commence or join in, and agrees to take all actions necessary to opt out of any
class in any class action with respect to, any claim, derivative or otherwise, against Parent, Merger Sub, the Company or any of
their respective successors (1) challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement
or (2) alleging a breach of any fiduciary duty of any Person in connection with the negotiation and entry into the Merger Agreement.
(ii) Such Shareholder shall not,
and such Shareholder shall not permit any of its Subsidiaries to, or authorize or permit any affiliate (other than the Company
or any of its Subsidiaries in accordance with the terms of the Merger Agreement), director, officer, trustee, spouse, employee
or partner of such Shareholder or any of its Subsidiaries or any investment banker, attorney, accountant or other advisor or representative
of such Shareholder or any of its Subsidiaries to, directly or indirectly, issue any press release or make any other public statement
with respect to the Merger Agreement, this Agreement, the Merger or any of the other transactions contemplated by the Merger Agreement
or by this Agreement without the prior written consent of Parent, except as may be required by applicable Law or court process;
provided
that the foregoing shall not apply to any disclosure required to be made by such Shareholder to the SEC or other
Governmental Authority, including any amendment of any statement on Schedule 13D, so long as such disclosure is consistent with
the terms of this Agreement and the Merger Agreement and the public statements made by the Company and Parent pursuant to the Merger
Agreement.
(d) Such Shareholder hereby agrees
that, in the event (i) of any share or extraordinary dividend or other distribution, share split, reverse share split, recapitalization,
reclassification, reorganization, combination or other like change, of or affecting the Subject Shares or (ii) that such Shareholder
purchases or otherwise acquires beneficial ownership of or an interest in, or acquires the right to vote or share in the voting
of, any shares of capital stock of the Company, in each case after the execution of this Agreement (including by conversion, exercise,
operation of law or otherwise) (collectively, the “
New Shares
”), such Shareholder shall deliver promptly (and
in any event within 48 hours of such acquisition by such Shareholder) to Parent written notice of its acquisition or receipt of
New Shares, which notice shall state the number of New Shares so acquired or received. Such Shareholder agrees that any New Shares
acquired or received by such Shareholder pursuant to clause (i) or (ii) of this paragraph shall be subject to the terms of this
Agreement and shall be deemed to be Subject Shares, including for purposes of all covenants, agreements, obligations, representations
and warranties set forth herein, and shall constitute Subject Shares to the same extent as if those New Shares were owned by such
Shareholder on the date of this Agreement.
(e)
Spousal Consent
. If such
Shareholder is a natural person who is married and resides in a community property state, such Shareholder shall cause such Shareholder’s
spouse to execute and deliver to Parent the spousal consent set forth in
Schedule C
.
D-5
(f)
Disclosure
. Such Shareholder
hereby authorizes the Company and Parent to publish and disclose in any press release or public announcement or in any disclosure
required by the SEC and in the Proxy Statement such Shareholder’s identity and ownership of such Shareholder’s Subject
Shares and the nature of such Shareholder’s obligations under this Agreement.
SECTION 4.
Grant of Irrevocable
Proxy; Appointment of Proxy.
(a) Each Shareholder hereby irrevocably grants to, and appoints, Parent and any individual
designated in writing by Parent, and each of them individually, such Shareholder’s proxy and attorney-in-fact (with
full power of substitution and re-substitution), for and in the name, place and stead of such Shareholder, to attend any
meeting of the shareholders of the Company on behalf of the Shareholder with respect to the matters set forth in Section
3(a), to include such Shareholder’s Subject Shares in any computation for purposes of establishing a quorum at any such
meeting of the shareholders of the Company, and to vote all of such Shareholder’s Subject Shares at any meeting of
shareholders of the Company or any adjournment or postponement thereof, or grant a consent or approval in respect of such
Shareholder’s Subject Shares, in a manner consistent with the provisions of Section 3(a). The proxy granted in this
Section 4 shall expire upon the termination of this Agreement.
(b) Each Shareholder hereby represents
that any proxies heretofor given in respect of such Shareholder’s Subject Shares are not irrevocable, and that all such proxies
are hereby revoked.
(c) Each Shareholder hereby affirms
that the irrevocable proxy set forth in this Section 4 is given in connection with the execution of the Merger Agreement, and that
such irrevocable proxy is given to secure the performance of the duties of such Shareholder under this Agreement. Each Shareholder
hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked. Each Shareholder
hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Each such irrevocable
proxy is executed and intended to be irrevocable in accordance with the provisions of Section 1-722.D of the LBCA.
SECTION 5.
Further Assurances.
Each Shareholder shall, from time to time, execute and deliver, or cause to be executed and delivered, such additional or
further consents, documents and other instruments as Parent may reasonably request for the purpose of effectuating the
matters covered by this Agreement, including the grant of proxies set forth in Section 4 of this Agreement.
SECTION 6.
Assignment.
Neither
this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation
of Law or otherwise, by any of the parties hereto without the prior written consent of the other parties hereto, except that
Parent may assign, in its sole discretion, all of the rights, interests and obligations of Parent under this Agreement to any
wholly owned Subsidiary of Parent, but no such assignment shall relieve Parent of its obligations under this Agreement. No
assignment by any party shall relieve such party of any of its obligations hereunder. Subject to the immediately preceding
two sentences, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
D-6
the parties hereto and their respective successors
and permitted assigns. Any purported assignment not permitted under this Section 6 shall be null and void.
SECTION 7.
Termination.
This
Agreement shall terminate upon the earlier of (i) the Effective Time and (ii) the termination of the Merger Agreement in
accordance with its terms, in each case other than Section 8, which shall survive and instead shall expire upon the
expiration of all rights of Parent and Merger Sub thereunder.
SECTION 8.
General Provisions.
(a)
Amendments.
This Agreement may not be amended except by an instrument in writing signed by each of the parties
hereto.
(b)
No Ownership Interest
.
Nothing contained in this Agreement shall be deemed to vest in Parent any direct or indirect ownership or incidence of ownership
(whether beneficial ownership or otherwise) of or with respect to any Subject Shares. All rights, ownership and economic benefits
of and relating to the Subject Shares shall remain vested in and belong to the applicable Shareholder, and Parent shall have no
authority to direct any Shareholder in the voting or disposition of any of the Subject Shares, except as otherwise provided herein.
(c)
Capacity as Shareholder.
Each Shareholder signs this Agreement solely in such Shareholder’s capacity as a shareholder of the Company, and not in such
Shareholder’s capacity as a director, officer or employee of the Company, if applicable.
(d)
Notices.
All
notices, requests and other communications to any party hereunder shall be in writing and shall be deemed given if delivered
personally, by facsimile (which is confirmed), emailed (which is confirmed) or sent by Federal Express, UPS, DHL or similar
courier service (providing proof of delivery) to Parent in accordance with Section 8.10 of the Merger Agreement and to the
Shareholders at their respective addresses set forth on Schedule A (or at such other address for a party as shall be
specified by notice given in accordance with this Section 8(d)). All such notices, requests and other communications shall be
deemed received on the date of actual receipt by the recipient thereof if received prior to 5:00 p.m. local time in the place
of receipt and such day is a business day in the place of receipt. Otherwise, any such notice, request or communication shall
be deemed not to have been received until the next succeeding business day in the place of receipt.
(e)
Interpretation.
When a reference is made in this Agreement to a Section or a Schedule, such reference shall be to a Section of, or a Schedule
to, this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”,
“includes” or “including” are used in this Agreement, they shall be deemed to be followed by the
words “without limitation”. The words “hereof”, “herein” and “hereunder” and
words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The words “date hereof” shall refer to the date of this Agreement. The terms
“or”, “any” and “either” are not exclusive. The word “extent” in the phrase
“to the extent” shall mean the degree to which a subject or other thing extends,
D-7
and such phrase shall not mean simply “if”.
The word “
will
” shall be construed to have the same meaning and effect as the word “
shall
”.
The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms. Any agreement,
instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments
thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns.
(f)
Counterparts.
This
Agreement may be executed in one or more counterparts (including by facsimile, electronic mail or .pdf), each of which shall
be deemed to be an original but all of which taken together shall constitute one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties
hereto.
(g)
Entire Agreement; No
Third-Party Beneficiaries.
This Agreement and the Merger Agreement constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this
Agreement. This Agreement is not intended to and does not confer upon any Person other than the parties hereto any rights or
remedies hereunder (except the rights conferred upon those persons specified as proxies in Section 4).
(h)
Governing Law.
This
Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts
executed in and to be performed entirely within that State, regardless of the laws that might otherwise govern under any
applicable conflict of Laws principles.
(i)
Severability.
If
any term, condition or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid,
illegal or incapable of being enforced by any rule of Law or public policy, all other terms, provisions and conditions of
this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term, condition 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 to the fullest extent permitted by
applicable Law.
(j)
Consent to
Jurisdiction; Service of Process; Venue.
All Actions arising out of or relating to this Agreement or the transactions
contemplated by this Agreement shall be heard and determined in the Delaware Courts. The parties hereto hereby irrevocably
(i) submit to the exclusive jurisdiction and venue of the Delaware Courts in any such Action, (ii) waive the defense of an
inconvenient forum or lack of jurisdiction to the maintenance of any such Action brought in the Delaware Courts, (iii) agree
to not contest the jurisdiction of the Delaware Courts in any such Action, by motion or otherwise and (iv) agree to not bring
any Action arising out of or relating to this Agreement or the transactions contemplated by this Agreement in any court
other
D-8
than the Delaware Courts, except for Actions
brought to enforce the judgment of any such court. The consents to jurisdiction and venue set forth in this Section 8(j) shall
not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose except
as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto. Each party
hereto agrees that service of process upon such party in any Action arising out of or relating to this Agreement shall be effective
if notice is given by Federal Express, UPS, DHL or similar courier service to the address provided for in Section 8(d) of this
Agreement. The parties hereto agree that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by applicable Law;
provided
,
however
, that nothing in the
foregoing shall restrict any party’s rights to seek any post-judgment relief regarding, or any appeal from, a final trial
court judgment.
(k)
Enforcement.
The
parties hereto agree that irreparable damage for which monetary relief, even if available, would not be an adequate remedy,
would occur in the event that any provision of this Agreement is not performed in accordance with its specific terms or is
otherwise breached, including if the parties hereto fail to take any action required of them hereunder to consummate this
Agreement and the transactions contemplated by this Agreement. Subject to the following sentence, the parties acknowledge and
agree that (a) the parties shall be entitled to an injunction or injunctions, specific performance or other equitable relief
to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in the courts described in
Section 8(j) without proof of damages or otherwise, this being in addition to any other remedy to which they are entitled
under this Agreement and (b) the right of specific enforcement is an integral part of the transactions contemplated by this
Agreement and without that right neither the Company nor Parent would have entered into this Agreement. The parties hereto
agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to Law or inequitable for any
reason, and not to assert that a remedy of monetary damages would provide an adequate remedy or that the parties otherwise
have an adequate remedy at law. The parties hereto acknowledge and agree that any party seeking an injunction or injunctions
to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance
with this Section 8(k) shall not be required to provide any bond or other security in connection with any such order or
injunction.
(l)
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 IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES
THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
D-9
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH
WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS
IN THIS SECTION 8(L).
(m)
Expenses
. All fees and
expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party
incurring or required to incur such fees or expenses.
[
Signature page follows
]
D-10
IN WITNESS WHEREOF, Parent has caused this
Agreement to be signed by its officer thereunto duly authorized and each Shareholder has signed this Agreement, all as of the date
first written above.
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FRESENIUS KABI AG,
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by
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/s/ Philipp Schulte-Noelle
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Name: Philipp Schulte-Noelle
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Title: Chief Financial Officer & Chief Compliance Officer
|
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by
|
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/s/ John R. Ducker
|
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Name: John R. Ducker
|
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Title: President, Region North America
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D-11
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SHAREHOLDER:
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/s/ Joseph Bonaccorsi
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Joseph Bonaccorsi
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D-12
Schedule A
Company Common Shares
Name and Address of
Shareholder
|
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Number of Subject Shares
|
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Joseph Bonaccorsi
1925 West Field Court, Suite 300
Lake Forest, Illinois 60045
|
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376,909
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D-13
Schedule B
Name of
Shareholder
|
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Number of
Unexercised Options
|
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Number of
RSUs
|
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Joseph Bonaccorsi
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46,605 common shares issuable upon exercise of options
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61,210 unvested RSUs
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136,971 common shares subject to unvested options
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D-14
Schedule C
Form of Spousal Consent
The undersigned represents
that he or she is the spouse of Shareholder and that the undersigned is familiar with the terms of the Voting Agreement (the “
Agreement
”)
entered into as of [●], 2017, among Fresenius Kabi AG, a German stock corporation (“
Parent
”)
and the undersigned’s spouse (the “
Shareholder
”). All capitalized terms used but not defined herein shall
have the respective meanings ascribed to such terms in the Agreement. The undersigned hereby agrees that the interest of the Shareholder
in all property that is the subject of such Agreement shall be irrevocably bound by the terms of such Agreement and by any amendment,
modification, waiver or termination signed by the Shareholder. The undersigned further agrees that the undersigned’s community
property interest in all property that is the subject of such Agreement shall be irrevocably bound by the terms of such Agreement,
and that such Agreement shall be binding on the executors, administrators, heirs and assigns of the undersigned. The undersigned
further authorizes the Shareholder to amend, modify or terminate such Agreement, or waive any rights thereunder, and that each
such amendment, modification, waiver or termination signed by the Shareholder shall be binding on the community property interest
of undersigned in all property that is the subject of such Agreement and on the executors, administrators, heirs and assigns of
the undersigned, each as fully as if the undersigned had signed such amendment, modification, waiver or termination.
Dated: [●],
2017
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SPOUSE:
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[●]
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Signature:
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Print name:
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D-15
Annex E
VOTING AGREEMENT dated as of April
24, 2017 (this “
Agreement
”), among FRESENIUS KABI AG, a German stock corporation (“
Parent
”),
and each of
the individuals AND OTHER PARTIES listed on Schedule A attached hereto
(each, a “
Shareholder
” and, collectively, the “
Shareholders
”).
WHEREAS Parent, Quercus Acquisition, Inc.,
a Louisiana corporation and a wholly owned subsidiary of Parent (“
Merger Sub
”), and Akorn, Inc., a Louisiana
corporation (the “
Company
”), and, solely for purposes of Article VIII thereof, Fresenius SE & Co. KGaA,
a German partnership limited by shares, have contemporaneously with the execution of this Agreement entered into an Agreement and
Plan of Merger dated as of the date hereof (as the same may be amended or supplemented, the “
Merger Agreement
”;
capitalized terms used but not defined herein shall have the meanings set forth in the Merger Agreement);
WHEREAS each Shareholder is the record or
beneficial owner of the number of shares of Company Common Shares set forth opposite such Shareholder’s name on Schedule
A (such shares of the Company, the “
Original Shares
”, and together with any New Shares (as defined below), the
“
Subject Shares
”); and
WHEREAS as a condition to their willingness
to enter into the Merger Agreement, Parent and Merger Sub have requested that the Shareholders enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing
and the representations, warranties, covenants and agreements set forth herein and in the Merger Agreement, each party hereto agrees
as follows:
SECTION 1.
Representations and Warranties
of Each Shareholder.
Each Shareholder jointly and severally hereby represents and warrants to Parent as follows:
(a)
Organization; Authority;
Execution and Delivery; Enforceability.
If such Shareholder is not a natural person, such Shareholder is duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization. Such Shareholder has the legal capacity and all
necessary corporate, company, partnership or other power and authority to execute and deliver this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated by this Agreement. The execution, delivery and performance
by such Shareholder of this Agreement, and the consummation by it of the transactions contemplated by this Agreement, have been
duly authorized by its governing body, members, stockholders or trustees, as applicable, and no other corporate, company, partnership
or other action on the part of such Shareholder or any manager or partner thereof is necessary to authorize the execution, delivery
and performance by such Shareholder of this Agreement and the consummation by it of the transactions contemplated by this Agreement.
This Agreement has been duly executed and delivered by such Shareholder and, assuming due authorization, execution and delivery
hereof by Parent, constitutes a legal, valid and binding obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms, subject to the Bankruptcy and Equity Exception.
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(b)
No Conflicts; Consents.
Neither
the execution and delivery of this Agreement by such Shareholder, nor the consummation by such Shareholder of the transactions
contemplated by this Agreement, nor performance or compliance by such Shareholder with any of the terms or provisions hereof, will
(i) if such Shareholder is not a natural person, conflict with or violate any provision of any certificate of incorporation, bylaws
or trust (or similar organizational documents) of such Shareholder, (ii) (x) violate any Law or Judgment applicable to such Shareholder
or to such Shareholder’s properties or assets (including such Shareholder’s Subject Shares), (y) violate or constitute
a breach of or default (with or without notice of lapse of time, or both) under or give rise to a right of termination, modification,
or cancelation of any obligation or to the loss of any benefit under, any Contract to which such Shareholder is a party or by which
any of the properties or assets of such Shareholder (including such Shareholder’s Subject Shares) is bound or subject or
(z) result in the creation of any Lien (other than Permitted Lien) on any properties or assets of such Shareholder, except, in
the case of clause (ii), as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect
on the ability of such Shareholder to perform its obligations under this Agreement or to consummate the transactions contemplated
by this Agreement. No consent or approval of, or filing, license, permit or authorization, declaration or registration with, any
Governmental Authority (“
Consent
”) is necessary for the execution and delivery of this Agreement by such Shareholder,
the performance by such Shareholder of its obligations hereunder and the consummation by such Shareholder of the transactions contemplated
by this Agreement, other than such Consents that, if not obtained, made or given, would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of such Shareholder to perform its obligations under this
Agreement or to consummate the transactions contemplated by this Agreement.
(c)
Ownership.
Such Shareholder
is the beneficial owner of the number of Original Shares set forth opposite such Shareholder’s name on Schedule A, and such
Shareholder’s Original Shares constitute all of the shares of Company Common Shares held of record, beneficially owned or
for which voting power or disposition power is held by such Shareholder as of the date hereof. Such Shareholder has good and marketable
title, free and clear of any Liens, to those Original Shares of which such Shareholder is the record owner. Such Shareholder has
the right to vote those Original Shares of which such Shareholder is the beneficial owner but not the owner of record. Such Shareholder
does not own, of record or beneficially, (i) any shares of capital stock of the Company other than the Original Shares or (ii)
any option, warrant, call or other right to acquire or receive capital stock or other equity or voting interests in the Company,
other than those set forth opposite such Shareholder’s name on Schedule B. Such Shareholder has the sole right to vote and
Transfer such Shareholder’s Original Shares, and none of such Shareholder’s Original Shares are subject to any voting
trust or other agreement, arrangement or restriction with respect to the voting or the Transfer of such Shareholder’s Original
Shares that would in any way limit the ability of such Shareholder to perform its obligations hereunder, except as set forth in
Section 3 of this Agreement.
(d)
Absence of Litigation
.
As of the date hereof, there is no action, claim, suit, proceeding or investigation before or by any Governmental Authority or
arbitrator or any judgment, order, legal requirement or injunction pending or, to the knowledge of
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such Shareholder, threatened against or affecting
such Shareholder that would reasonably be expected to have a material adverse effect on the ability of such Shareholder to perform
such Shareholder’s obligations hereunder or to consummate the transactions contemplated hereby on a timely basis.
(e)
Reliance by Parent and Merger
Sub
. Such Shareholder understands and acknowledges that Parent and Merger Sub’s willingness to enter into the Merger
Agreement is subject to such Shareholder’s execution and delivery of this Agreement.
SECTION 2.
Representations and
Warranties of Parent.
Parent hereby represents and warrants to each Shareholder as follows: Parent has all necessary
corporate or other applicable power and authority to execute and deliver this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated by this Agreement. The Management Board of Parent has adopted resolutions
approving the execution, delivery and performance by Parent of this Agreement and the consummation of the transactions
contemplated by this Agreement, which resolutions have not been subsequently rescinded, modified or withdrawn. No other
corporate action (including any shareholder vote or other action) on the part of Parent is necessary to authorize the
execution, delivery and performance by Parent of this Agreement and the consummation by Parent of the transactions
contemplated by this Agreement. This Agreement has been duly executed and delivered by Parent and, assuming due authorization
(in the case of each Shareholder that is not a natural person), execution and delivery hereof by each Shareholder,
constitutes a legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, subject
to the Bankruptcy and Equity Exception. Neither the execution and delivery of this Agreement by Parent, nor the consummation
by Parent of the transactions contemplated by this Agreement, nor performance or compliance by Parent with any of the terms
or provisions hereof, will (i) conflict with or violate any provision of the certificate of incorporation, bylaws or other
comparable charter or organizational documents of Parent or (ii) (x) violate any Law or Judgment applicable to Parent or any
of its Subsidiaries or (y) violate or constitute a default under any of the terms, conditions or provisions of any
Contract to which Parent or any of its Subsidiaries are a party or accelerate Parent’s or any of its
Subsidiaries’, if applicable, obligations under any such Contract, except, in the case of clause (ii), as would not,
individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Parent to
perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement. No Consent is
necessary for the execution and delivery of this Agreement by Parent, the performance by Parent of its obligations hereunder
and the consummation by Parent of the transactions contemplated by this Agreement, other than such Consents that, if not
obtained, made or given, would not, individually or in the aggregate, reasonably be expected to have a material adverse
effect on the ability of Parent to perform its obligations under this Agreement or to consummate the transactions
contemplated by this Agreement.
SECTION 3.
Covenants of Each Shareholder.
During the term of this Agreement, each Shareholder severally and not jointly covenants and agrees as to itself as follows:
(a) At any meeting of the shareholders
of the Company called to vote upon the Merger Agreement, the Merger or any of the other transactions contemplated by
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the Merger Agreement, or at any postponement
or adjournment thereof, and in any other circumstances upon which a vote, consent, adoption or other approval with respect to the
Merger Agreement, the Merger or any of the other transactions contemplated by the Merger Agreement, or any Takeover Proposal, is
sought, such Shareholder shall (i) appear at such meeting or otherwise cause its Subject Shares to be counted as present thereat
for purposes of calculating a quorum and (ii) vote (or cause to be voted) all of such Shareholder’s Subject Shares (A) in
favor of, and shall consent to (or cause to be consented to), the approval of the Merger Agreement and of the Merger and each of
the other transactions contemplated by the Merger Agreement and any related proposal in furtherance of the foregoing, including
in favor of any proposal to adjourn or postpone to a later date any meeting of the shareholders of the Company at which any of
the foregoing matters are submitted for consideration and vote of the shareholders of the Company if there are not sufficient votes
for approval of such matters on the date on which the meeting is held; and (B) against any Takeover Proposal;
provided
that,
in each case, the Merger Agreement shall not have been amended or modified without such Shareholder’s consent to (1) decrease
the Merger Consideration or (2) change the form of Merger Consideration. Any vote required to be cast or consent required to be
executed pursuant to this Section 3(a) shall be cast or given by such Shareholder in accordance with such procedures relating thereto
so as to reasonably expect that it is duly counted, including for purposes of determining whether a quorum is present. The obligations
of this Section 3(a) shall apply whether or not the Merger or any action described above is recommended by the Board of Directors
of the Company (or any committee thereof).
(b) Such Shareholder shall not,
and shall not commit or agree to, directly or indirectly, sell, transfer, pledge, exchange, assign, tender, encumber, hypothecate
or otherwise dispose of (including by gift, merger (including by conversion into securities or other consideration) or tendering
into a tender or exchange offer), by operation of law or otherwise), either voluntarily or involuntarily (collectively, “
Transfer
”),
any Subject Shares (or beneficial ownership thereof or any other interest therein) or any rights to acquire any securities or equity
interests of the Company, or enter into any Contract, option, call or other arrangement with respect to the Transfer (including
any profit-sharing or other derivative arrangement) of any Subject Shares (or beneficial ownership thereof or any other interest
therein) or any rights to acquire any securities or equity interests of the Company, to any person other than pursuant to this
Agreement or the Merger Agreement, unless such Transfer is to an Affiliate who, prior to any such Transfer, is a party to this
Agreement, enters into a voting agreement in form and substance reasonably acceptable to Parent or agrees to become a party to
this Agreement pursuant to a customary joinder agreement;
provided
that nothing contained herein shall restrict the ability
of such Shareholder to exercise any Company Stock Options for Company Common Shares or elect and engage in a “net settlement”
with respect to the exercise or vesting of any Company Stock Options or Company RSUs.
(c) (i) Such Shareholder shall not
commit or agree to take any action inconsistent with the transactions contemplated by, or the terms of, this Agreement or the Merger
Agreement. Such Shareholder hereby consents to and approves the actions taken by the Board of Directors of the Company in adopting
the Merger Agreement and recommending the Merger. Such Shareholder hereby (A) waives any rights of appraisal,
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or rights to dissent from the Merger, that
such Shareholder may have and (B) agrees not to commence or join in, and agrees to take all actions necessary to opt out of any
class in any class action with respect to, any claim, derivative or otherwise, against Parent, Merger Sub, the Company or any of
their respective successors (1) challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement
or (2) alleging a breach of any fiduciary duty of any Person in connection with the negotiation and entry into the Merger Agreement.
(ii) Such Shareholder shall not,
and such Shareholder shall not permit any of its Subsidiaries to, or authorize or permit any affiliate (other than the Company
or any of its Subsidiaries in accordance with the terms of the Merger Agreement), director, officer, trustee, spouse, employee
or partner of such Shareholder or any of its Subsidiaries or any investment banker, attorney, accountant or other advisor or representative
of such Shareholder or any of its Subsidiaries to, directly or indirectly, issue any press release or make any other public statement
with respect to the Merger Agreement, this Agreement, the Merger or any of the other transactions contemplated by the Merger Agreement
or by this Agreement without the prior written consent of Parent, except as may be required by applicable Law or court process;
provided
that the foregoing shall not apply to any disclosure required to be made by such Shareholder to the SEC or other
Governmental Authority, including any amendment of any statement on Schedule 13D, so long as such disclosure is consistent with
the terms of this Agreement and the Merger Agreement and the public statements made by the Company and Parent pursuant to the Merger
Agreement.
(d) Such Shareholder hereby agrees
that, in the event (i) of any share or extraordinary dividend or other distribution, share split, reverse share split, recapitalization,
reclassification, reorganization, combination or other like change, of or affecting the Subject Shares or (ii) that such Shareholder
purchases or otherwise acquires beneficial ownership of or an interest in, or acquires the right to vote or share in the voting
of, any shares of capital stock of the Company, in each case after the execution of this Agreement (including by conversion, exercise,
operation of law or otherwise) (collectively, the “
New Shares
”), such Shareholder shall deliver promptly (and
in any event within 48 hours of such acquisition by such Shareholder) to Parent written notice of its acquisition or receipt of
New Shares, which notice shall state the number of New Shares so acquired or received. Such Shareholder agrees that any New Shares
acquired or received by such Shareholder pursuant to clause (i) or (ii) of this paragraph shall be subject to the terms of this
Agreement and shall be deemed to be Subject Shares, including for purposes of all covenants, agreements, obligations, representations
and warranties set forth herein, and shall constitute Subject Shares to the same extent as if those New Shares were owned by such
Shareholder on the date of this Agreement.
(e)
Spousal Consent
. If such
Shareholder is a natural person who is married and resides in a community property state, such Shareholder shall cause such Shareholder’s
spouse to execute and deliver to Parent the spousal consent set forth in
Schedule C
.
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(f)
Disclosure
. Such Shareholder
hereby authorizes the Company and Parent to publish and disclose in any press release or public announcement or in any disclosure
required by the SEC and in the Proxy Statement such Shareholder’s identity and ownership of such Shareholder’s Subject
Shares and the nature of such Shareholder’s obligations under this Agreement.
SECTION 4.
Grant of Irrevocable Proxy;
Appointment of Proxy.
(a) Each Shareholder hereby irrevocably grants to, and appoints, Parent and any individual designated
in writing by Parent, and each of them individually, such Shareholder’s proxy and attorney-in-fact (with full power of substitution
and re-substitution), for and in the name, place and stead of such Shareholder, to attend any meeting of the shareholders of the
Company on behalf of the Shareholder with respect to the matters set forth in Section 3(a), to include such Shareholder’s
Subject Shares in any computation for purposes of establishing a quorum at any such meeting of the shareholders of the Company,
and to vote all of such Shareholder’s Subject Shares at any meeting of shareholders of the Company or any adjournment or
postponement thereof, or grant a consent or approval in respect of such Shareholder’s Subject Shares, in a manner consistent
with the provisions of Section 3(a). The proxy granted in this Section 4 shall expire upon the termination of this Agreement.
(b) Each Shareholder hereby represents
that any proxies heretofor given in respect of such Shareholder’s Subject Shares are not irrevocable, and that all such proxies
are hereby revoked.
(c) Each Shareholder hereby affirms
that the irrevocable proxy set forth in this Section 4 is given in connection with the execution of the Merger Agreement, and that
such irrevocable proxy is given to secure the performance of the duties of such Shareholder under this Agreement. Each Shareholder
hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked. Each Shareholder
hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Each such irrevocable
proxy is executed and intended to be irrevocable in accordance with the provisions of Section 1-722.D of the LBCA.
SECTION 5.
Further Assurances.
Each
Shareholder shall, from time to time, execute and deliver, or cause to be executed and delivered, such additional or further consents,
documents and other instruments as Parent may reasonably request for the purpose of effectuating the matters covered by this Agreement,
including the grant of proxies set forth in Section 4 of this Agreement.
SECTION 6.
Assignment.
Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of Law
or otherwise, by any of the parties hereto without the prior written consent of the other parties hereto, except that Parent may
assign, in its sole discretion, all of the rights, interests and obligations of Parent under this Agreement to any wholly owned
Subsidiary of Parent, but no such assignment shall relieve Parent of its obligations under this Agreement. No assignment by any
party shall relieve such party of any of its obligations hereunder. Subject to the immediately preceding two sentences, this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by,
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the parties hereto and their respective successors
and permitted assigns. Any purported assignment not permitted under this Section 6 shall be null and void.
SECTION 7.
Termination.
This Agreement
shall terminate upon the earlier of (i) the Effective Time and (ii) the termination of the Merger Agreement in accordance with
its terms, in each case other than Section 8, which shall survive and instead shall expire upon the expiration of all rights of
Parent and Merger Sub thereunder.
SECTION 8.
General Provisions.
(a)
Amendments.
This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.
(b)
No Ownership Interest
.
Nothing contained in this Agreement shall be deemed to vest in Parent any direct or indirect ownership or incidence of ownership
(whether beneficial ownership or otherwise) of or with respect to any Subject Shares. All rights, ownership and economic benefits
of and relating to the Subject Shares shall remain vested in and belong to the applicable Shareholder, and Parent shall have no
authority to direct any Shareholder in the voting or disposition of any of the Subject Shares, except as otherwise provided herein.
(c)
Capacity as Shareholder.
Each Shareholder signs this Agreement solely in such Shareholder’s capacity as a shareholder of the Company, and not in such
Shareholder’s capacity as a director, officer or employee of the Company, if applicable.
(d)
Notices.
All notices,
requests and other communications to any party hereunder shall be in writing and shall be deemed given if delivered personally,
by facsimile (which is confirmed), emailed (which is confirmed) or sent by Federal Express, UPS, DHL or similar courier service
(providing proof of delivery) to Parent in accordance with Section 8.10 of the Merger Agreement and to the Shareholders at their
respective addresses set forth on Schedule A (or at such other address for a party as shall be specified by notice given in accordance
with this Section 8(d)). All such notices, requests and other communications shall be deemed received on the date of actual receipt
by the recipient thereof if received prior to 5:00 p.m. local time in the place of receipt and such day is a business day in the
place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next
succeeding business day in the place of receipt.
(e)
Interpretation.
When
a reference is made in this Agreement to a Section or a Schedule, such reference shall be to a Section of, or a Schedule to, this
Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.
The words “hereof”, “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The words “date
hereof” shall refer to the date of this Agreement. The terms “or”, “any” and “either”
are not exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject
or other thing extends,
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and such phrase shall not mean simply “if”.
The word “
will
” shall be construed to have the same meaning and effect as the word “
shall
”.
The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms. Any agreement,
instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments
thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns.
(f)
Counterparts.
This Agreement
may be executed in one or more counterparts (including by facsimile, electronic mail or .pdf), each of which shall be deemed to
be an original but all of which taken together shall constitute one and the same agreement, and shall become effective when one
or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto.
(g)
Entire Agreement; No Third-Party
Beneficiaries.
This Agreement and the Merger Agreement constitute the entire agreement, and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement. This Agreement
is not intended to and does not confer upon any Person other than the parties hereto any rights or remedies hereunder (except the
rights conferred upon those persons specified as proxies in Section 4).
(h)
Governing Law.
This Agreement
shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and
to be performed entirely within that State, regardless of the laws that might otherwise govern under any applicable conflict of
Laws principles.
(i)
Severability.
If any
term, condition or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal
or incapable of being enforced by any rule of Law or public policy, all other terms, provisions and conditions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination that any term, condition 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 to the fullest extent permitted by applicable Law.
(j)
Consent to Jurisdiction;
Service of Process; Venue.
All Actions arising out of or relating to this Agreement or the transactions contemplated by this
Agreement shall be heard and determined in the Delaware Courts. The parties hereto hereby irrevocably (i) submit to the exclusive
jurisdiction and venue of the Delaware Courts in any such Action, (ii) waive the defense of an inconvenient forum or lack of jurisdiction
to the maintenance of any such Action brought in the Delaware Courts, (iii) agree to not contest the jurisdiction of the Delaware
Courts in any such Action, by motion or otherwise and (iv) agree to not bring any Action arising out of or relating to this Agreement
or the transactions contemplated by this Agreement in any court other
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than the Delaware Courts, except for Actions
brought to enforce the judgment of any such court. The consents to jurisdiction and venue set forth in this Section 8(j) shall
not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose except
as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto. Each party
hereto agrees that service of process upon such party in any Action arising out of or relating to this Agreement shall be effective
if notice is given by Federal Express, UPS, DHL or similar courier service to the address provided for in Section 8(d) of this
Agreement. The parties hereto agree that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by applicable Law;
provided
,
however
, that nothing in the
foregoing shall restrict any party’s rights to seek any post-judgment relief regarding, or any appeal from, a final trial
court judgment.
(k)
Enforcement.
The parties
hereto agree that irreparable damage for which monetary relief, even if available, would not be an adequate remedy, would occur
in the event that any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached,
including if the parties hereto fail to take any action required of them hereunder to consummate this Agreement and the transactions
contemplated by this Agreement. Subject to the following sentence, the parties acknowledge and agree that (a) the parties shall
be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in the courts described in Section 8(j) without proof of damages or
otherwise, this being in addition to any other remedy to which they are entitled under this Agreement and (b) the right of specific
enforcement is an integral part of the transactions contemplated by this Agreement and without that right neither the Company nor
Parent would have entered into this Agreement. The parties hereto agree not to assert that a remedy of specific enforcement is
unenforceable, invalid, contrary to Law or inequitable for any reason, and not to assert that a remedy of monetary damages would
provide an adequate remedy or that the parties otherwise have an adequate remedy at law. The parties hereto acknowledge and agree
that any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms
and provisions of this Agreement in accordance with this Section 8(k) shall not be required to provide any bond or other security
in connection with any such order or injunction.
(l)
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 IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
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OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH
WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS
IN THIS SECTION 8(L).
(m)
Expenses
. All fees and
expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party
incurring or required to incur such fees or expenses.
[
Signature page follows
]
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IN WITNESS WHEREOF, Parent has caused this
Agreement to be signed by its officer thereunto duly authorized and each Shareholder has signed this Agreement, all as of the date
first written above.
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FRESENIUS KABI AG,
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by
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/s/ Philipp Schulte-Noelle
|
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Name: Philipp Schulte-Noelle
|
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Title: Chief Financial Officer & Chief Compliance Officer
|
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by
|
|
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|
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/s/ John R. Ducker
|
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Name: John R. Ducker
|
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Title: President, Region North America
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SHAREHOLDER:
|
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/s/ Bruce Kutinsky
|
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Bruce Kutinsky
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Schedule A
Company Common Shares
Name and Address of
Shareholder
|
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Number of Subject Shares
|
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|
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Bruce Kutinsky
1925 West Field Court, Suite 300
Lake Forest, Illinois 60045
|
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158,960
|
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Schedule B
Name of
Shareholder
|
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Number of
Unexercised Options
|
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Number of
RSUs
|
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Bruce Kutinsky
|
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152,401 common shares issuable upon exercise of options
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15,670 unvested RSUs
|
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139,352 common shares subject to unvested options
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Schedule C
Form of Spousal Consent
The undersigned represents
that he or she is the spouse of Shareholder and that the undersigned is familiar with the terms of the Voting Agreement (the “
Agreement
”)
entered into as of [●], 2017, among Fresenius Kabi AG, a German stock corporation (“
Parent
”)
and the undersigned’s spouse (the “
Shareholder
”). All capitalized terms used but not defined herein shall
have the respective meanings ascribed to such terms in the Agreement. The undersigned hereby agrees that the interest of the Shareholder
in all property that is the subject of such Agreement shall be irrevocably bound by the terms of such Agreement and by any amendment,
modification, waiver or termination signed by the Shareholder. The undersigned further agrees that the undersigned’s community
property interest in all property that is the subject of such Agreement shall be irrevocably bound by the terms of such Agreement,
and that such Agreement shall be binding on the executors, administrators, heirs and assigns of the undersigned. The undersigned
further authorizes the Shareholder to amend, modify or terminate such Agreement, or waive any rights thereunder, and that each
such amendment, modification, waiver or termination signed by the Shareholder shall be binding on the community property interest
of undersigned in all property that is the subject of such Agreement and on the executors, administrators, heirs and assigns of
the undersigned, each as fully as if the undersigned had signed such amendment, modification, waiver or termination.
Dated: [●],
2017
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SPOUSE:
|
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[●]
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Signature:
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Print name:
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Annex F
April 24, 2017
The Board of Directors
Akorn, Inc.
1925 W. Field Court, Suite 300
Lake Forest, Illinois 60045
Members of the Board of Directors:
You have requested our opinion as to the
fairness, from a financial point of view, to the holders of common stock, no par value (the “Company Common Stock”),
of Akorn, Inc., a Louisiana corporation (the “Company”), of the consideration to be paid to such holders in the proposed
merger (the “Transaction”) of the Company with a wholly-owned subsidiary of Fresenius Kabi AG, a German stock corporation
(the “Acquiror”). Pursuant to the Agreement and Plan of Merger, dated as of April 24, 2017 (the “Agreement”),
among the Company, the Acquiror, the Acquiror’s wholly-owned subsidiary, Quercus Acquisition, Inc., a Louisiana corporation
(“Merger Sub”), and solely for purposes of Article VIII of the Agreement, Fresenius SE & Co. KGaA, a German partnership
limited by shares (“FK Parent”), the Company will become a wholly-owned subsidiary of the Acquiror, and each outstanding
share of Company Common Stock, other than shares of Company Common Stock held in treasury or owned by the Acquiror and its affiliates,
will be converted into the right to receive $34.00 per share in cash (the “Consideration”).
In connection with preparing our opinion,
we have (i) reviewed the Agreement; (ii) reviewed certain publicly available business and financial information concerning the
Company and the industries in which it operates; (iii) compared the proposed financial terms of the Transaction with the publicly
available financial terms of certain transactions involving companies we deemed relevant and the consideration paid for such companies;
(iv) compared the financial and operating performance of the Company with publicly available information concerning certain other
companies we deemed relevant and reviewed the current and historical market prices of the Company Common Stock and certain publicly
traded securities of such other companies; (v) reviewed certain internal financial analyses and forecasts prepared by the management
of the Company relating to its business; and (vi) performed such other financial studies and analyses and considered such other
information as we deemed appropriate for the purposes of this opinion.
In addition, we have held discussions with
certain members of the management of the Company with respect to certain aspects of the Transaction, and the past and current
business operations of the Company, the financial condition and future
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prospects and operations of the Company, and certain other
matters we believed necessary or appropriate to our inquiry.
In giving our opinion, we have relied upon
and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with
us by the Company or otherwise reviewed by or for us. We have not independently verified any such information or its accuracy
or completeness and, pursuant to our engagement letter with the Company, we did not assume any obligation to undertake any such
independent verification. We have not conducted or been provided with any valuation or appraisal of any assets or liabilities,
nor have we evaluated the solvency of the Company or the Acquiror under any state or federal laws relating to bankruptcy, insolvency
or similar matters. In relying on financial analyses and forecasts provided to us or derived therefrom, we have assumed that they
have been reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management
as to the expected future results of operations and financial condition of the Company to which such analyses or forecasts relate.
We express no view as to such analyses or forecasts or the assumptions on which they were based. We have also assumed that the
Transaction and the other transactions contemplated by the Agreement will be consummated as described in the Agreement. We have
also assumed that the representations and warranties made by the Company, the Acquiror and Merger Sub in the Agreement and the
related agreements are and will be true and correct in all respects material to our analysis. We are not legal, regulatory or
tax experts and have relied on the assessments made by advisors to the Company with respect to such issues. We have further assumed
that all material governmental, regulatory or other consents and approvals necessary for the consummation of the Transaction will
be obtained without any adverse effect on the Company or on the contemplated benefits of the Transaction.
Our opinion is necessarily based on economic,
market and other conditions as in effect on, and the information made available to us as of, the date hereof. It should be understood
that subsequent developments may affect this opinion and that we do not have any obligation to update, revise, or reaffirm this
opinion. Our opinion is limited to the fairness, from a financial point of view, of the Consideration to be paid to the holders
of the Company Common Stock in the proposed Transaction and we express no opinion as to the fairness of any consideration paid
in connection with the Transaction to the holders of any other class of securities, creditors or other constituencies of the Company
or as to the underlying decision by the Company to
engage in the Transaction. Furthermore, we express no opinion with respect to the amount or nature of any compensation to any
officers, directors, or employees of any party to the Transaction, or any class of such persons relative to the Consideration
to be paid to the holders of the Company Common Stock in the Transaction or with respect to the fairness of any such compensation
.
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We have acted as financial advisor to the
Company with respect to the proposed Transaction and will receive a fee from the Company for our services, a substantial portion
of which will become payable only if the proposed Transaction is consummated. In addition, the Company has agreed to indemnify
us for certain liabilities arising out of our engagement. During the two years preceding the date of this letter, we and our affiliates
have had commercial or investment banking relationships with FK Parent, for which we and such affiliates have received customary
compensation. Such services during such period have included acting as joint lead arranger and bookrunner on FK Parent’s
€3.7 billion bridge loan closed in January 2017 and joint lead bookrunner on FK Parent’s €2.6 billion debt securities
offering closed in January 2017. In addition, our commercial banking affiliate is an agent bank and a lender under outstanding
credit facilities of the Company, for which it receives customary compensation or other financial benefits. In addition, we and
our affiliates hold, on a proprietary basis, less than 1% of the outstanding common stock of each of the Company and FK Parent.
In the ordinary course of our businesses, we and our affiliates may actively trade the debt and equity securities or financial
instruments (including derivatives, bank loans or other obligations) of the Company or FK Parent for our own account or for the
accounts of customers and, accordingly, we may at any time hold long or short positions in such securities or other financial
instruments.
On the basis of and subject to the foregoing,
it is our opinion as of the date hereof that the Consideration to be paid to the holders of the Company Common Stock in the proposed
Transaction is fair, from a financial point of view, to such holders.
The issuance of this opinion has been approved
by a fairness opinion committee of J.P. Morgan Securities LLC. This letter is provided to the Board of Directors of the Company
(in its capacity as such) in connection with and for the purposes of its evaluation of the Transaction. This opinion does not
constitute a recommendation to any shareholder of the Company as to how such shareholder should vote with respect to the Transaction
or any other matter. This opinion may not be disclosed, referred to, or communicated (in whole or in part) to any third party
for any purpose whatsoever except with our prior written approval. This opinion may be reproduced in full in any proxy or information
statement mailed to shareholders of the Company but may not otherwise be disclosed publicly in any manner without our prior written
approval.
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Very truly yours,
/s/ J.P. MORGAN SECURITIES LLC
J.P. MORGAN SECURITIES LLC
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