Agreement and Plan of Merger (2015)Full Document 

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EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

among:

AUSPEX PHARMACEUTICALS, INC.

a Delaware corporation;

TEVA PHARMACEUTICAL INDUSTRIES LTD.,

an Israeli corporation; and

AURUM MERGER SUB, INC.,

a Delaware corporation

Dated as of March 29, 2015


TABLE OF CONTENTS

Page

SECTION 1. THE OFFER

2

1.1

The Offer 2

1.2

Company Actions 4

SECTION 2. MERGER TRANSACTION

5

2.1

Merger of Purchaser into the Company 5

2.2

Effect of the Merger 5

2.3

Closing; Effective Time 6

2.4

Certificate of Incorporation and Bylaws; Directors and Officers 6

2.5

Conversion of Shares 6

2.6

Surrender of Certificates; Stock Transfer Books 7

2.7

Dissenters’ Rights 9

2.8

Treatment of Company Options, Company RSUs; Restricted Stock and Warrants 10

2.9

Loan Payoff 11

2.10

Further Action 11

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

11

3.1

Due Organization; Subsidiaries, Etc 12

3.2

Certificate of Incorporation and Bylaws 12

3.3

Capitalization, Etc 12

3.4

SEC Filings; Financial Statements 14

3.5

Absence of Changes 16

3.6

Title to Assets 16

3.7

Real Property 16

3.8

Intellectual Property 17

3.9

Contracts 19

3.10

Liabilities 22

3.11

Compliance with Legal Requirements 22

3.12

Regulatory Matters 22

i.


TABLE OF CONTENTS

(continued)

Page

3.13

Certain Business Practices 24

3.14

Governmental Authorizations 24

3.15

Tax Matters 25

3.16

Employee Matters; Benefit Plans 27

3.17

Environmental Matters 30

3.18

Insurance 31

3.19

Legal Proceedings; Orders 31

3.20

Authority; Binding Nature of Agreement 31

3.21

Section 203 of the DGCL Not Applicable 32

3.22

Merger Approval 32

3.23

Non-Contravention; Consents 32

3.24

Fairness Opinion 33

3.25

Financial Advisor 33

SECTION 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER

33

4.1

Due Organization 33

4.2

Purchaser 33

4.3

Authority; Binding Nature of Agreement 33

4.4

Non-Contravention; Consents 34

4.5

Disclosure 34

4.6

Absence of Litigation 34

4.7

Funds 35

4.8

Ownership of Company Common Stock 35

4.9

Acknowledgement by Parent and Purchaser 35

4.10

Brokers and Other Advisors 36

SECTION 5. CERTAIN COVENANTS OF THE COMPANY

36

5.1

Access and Investigation 36

ii.


TABLE OF CONTENTS

(continued)

Page

5.2

Operation of the Acquired Corporations’ Business 37

5.3

No Solicitation 41

SECTION 6. ADDITIONAL COVENANTS OF THE PARTIES

43

6.1

Company Board Recommendation 43

6.2

Filings, Consents and Approvals 44

6.3

Company Stock Awards; ESPP 46

6.4

Employee Benefits 47

6.5

Indemnification of Officers and Directors 48

6.6

Securityholder Litigation 50

6.7

Additional Agreements 50

6.8

Disclosure 50

6.9

Takeover Laws; Advice of Changes 51

6.10

Section 16 Matters 51

6.11

Rule 14d-10 Matters 51

6.12

Purchaser Stockholder Consent 52

6.13

Assumption of Certain Obligations 52

SECTION 7. CONDITIONS PRECEDENT TO THE MERGER

52

7.1

No Restraints 52

7.2

Consummation of Offer 52

SECTION 8. TERMINATION

52

8.1

Termination 52

8.2

Effect of Termination 54

8.3

Expenses; Termination Fee 54

SECTION 9. MISCELLANEOUS PROVISIONS

56

9.1

Amendment 56

9.2

Waiver 56

9.3

No Survival of Representations and Warranties 56

iii.


TABLE OF CONTENTS

(continued)

Page

9.4

Entire Agreement; Counterparts 56

9.5

Applicable Legal Requirements; Jurisdiction; Specific Performance; Remedies 56

9.6

Assignability 57

9.7

No Third Party Beneficiaries 58

9.8

Notices 58

9.9

Severability 59

9.10

Obligation of Parent 60

9.11

Construction 60

iv.


AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered into as of March 29, 2015, by and among: Teva Pharmaceuticals Industries Ltd., an Israeli corporation ("Parent"); Aurum Merger Sub, Inc. a Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"); and Auspex Pharmaceuticals, Inc. a Delaware corporation (the "Company"). Certain capitalized terms used in this Agreement are defined in Exhibit A.

RECITALS

A. Parent has agreed to cause Purchaser to commence a cash tender offer (as it may be amended from time to time as permitted under this Agreement, the "Offer") to acquire all of the outstanding shares of Company Common Stock (the "Shares") for $101.00 per share (such amount, or any higher amount per share paid pursuant to the Offer, being the "Offer Price"), net to the seller in cash, without interest, upon the terms and subject to the conditions of this Agreement.

B. Following the consummation of the Offer, Purchaser will be merged with and into the Company (the "Merger"), with the Company continuing as the surviving corporation in the merger (the "Surviving Corporation"), on the terms and subject to the conditions set forth in this Agreement, whereby, except as expressly provided in Section 2.5, (i) each issued and outstanding Share not owned by Parent, Purchaser or the Company as of the Effective Time shall be converted into the right to receive the Offer Price, in cash, without interest and (ii) the Company shall become a wholly owned Subsidiary of Parent as a result of the Merger.

C. The Board of Directors of the Company has (i) determined that this Agreement and the Transactions, including the Offer and the Merger, are advisable to, and in the best interest of, the Company and its stockholders, (ii) agreed that the Merger Agreement shall be subject to Section 251(h) of the DGCL, (iii) approved the execution, delivery and performance by the Company of this Agreement and the consummation of the Transactions, including the Offer and the Merger, (iv) resolved to recommend that the stockholders of the Company tender their shares to Purchaser pursuant to the Offer (the "Company Board Recommendation") and (v) approved the Support Agreements for purposes of and in accordance with Section 203 of the DGCL.

D. Concurrently with the execution and delivery of this Agreement, and as a condition and inducement to Parent’s and Purchaser’s willingness to enter into this Agreement, Parent and Purchaser have entered into agreements with certain stockholders of the Company, pursuant to which, among other things, such stockholders have irrevocably agreed to tender the Shares beneficially owned by such Persons in the Offer (each, a "Support Agreement" and, collectively, the "Support Agreements").

E. The Board of Directors of each of Parent and Purchaser have approved this Agreement and declared it advisable for Parent and Purchaser, respectively, to enter into this Agreement.

1.


F. Parent, Purchaser and the Company acknowledge and agree that the Merger shall be governed by, and effected pursuant to, Section 251(h) of the DGCL and shall, subject to satisfaction of the conditions set forth in this Agreement, be consummated immediately following the Offer Acceptance Time.

AGREEMENT

The Parties to this Agreement, intending to be legally bound, agree as follows:

SECTION 1. THE OFFER

1.1 The Offer.

(a) Commencement of the Offer. Provided that this Agreement shall not have been terminated in accordance with Section 8, as promptly as practicable after the date of this Agreement but in no event more than seven (7) business days after the date of this Agreement, Purchaser shall (and Parent shall cause Purchaser to) commence (within the meaning

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