ARTICLE I. DEFINITIONS			1
	1.1	Defined Terms	1
	1.2	Other Defined Terms	5
	1.3	Construction	6
ARTICLE II. PURCHASE AND SALE OF THE SHARES			6
	2.1	Purchase and Sale of the Shares	6
	2.2	Closing	7
	2.3	Deliveries at Closing	7
	2.4	Other Closing Matters	7
ARTICLE III. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY			8
	3.1	Organization and Qualification	8
	3.2	Capitalization	8
	3.3	Authority for this Agreement; Valid Issuance of Shares	9
	3.4	Consents and Approvals; No Violation	10
	3.5	Reports; Financial Statements	11
	3.6	Litigation	11
	3.7	Compliance with Law; No Default	12
	3.8	Absence of Certain Changes	12
	3.9	Exemption from Registration	12
	3.10	No Brokers	12
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER			13
	4.1	Organization	13
	4.2	Authorization	13
	4.3	Consents and Approvals; No Violation	13
	4.4	No Brokers	14
	4.5	Investment Purpose	14
	4.6	Sophistication and Financial Condition of the Purchaser	14
	4.7	Financing	14
	4.8	Ownership	14
ARTICLE V. ADDITIONAL AGREEMENTS OF THE PURCHASER AND THE COMPANY			15
	5.1	Reasonable Best Efforts; Consents and Governmental Approvals	15
	5.2	Conduct of Business of the Company	16
	5.3	Market Listing	16
	5.4	Notification of Certain Matters	16
	5.5	Press Releases	16
	5.6	Legends	17

 

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ARTICLE VI. CONDITIONS TO THE CONSUMMATION OF THE TRANSACTIONS			17
	6.1	Conditions to Each Party’s Obligations	17
	6.2	Conditions to Obligations of the Purchaser	18
	6.3	Conditions to Obligations of the Company	19
ARTICLE VII. TERMINATION			19
	7.1	Termination	19
	7.2	Notice of Termination	20
	7.3	Effect of Termination	20
ARTICLE VIII. MISCELLANEOUS			20
	8.1	Assignment	20
	8.2	Notices	21
	8.3	Governing Law	22
	8.4	Effectiveness: Entire Agreement; Amendments and Waivers	22
	8.5	Multiple Counterparts	23
	8.6	Severability	23
	8.7	Titles; Currency; Schedules	23
	8.8	Fees and Expenses	23
	8.9	Representation of Counsel; Mutual Negotiation	23
	8.10	No Third Party Beneficiaries	24
	8.11	Non-Survival of Representations and Warranties	24
	8.12	Time of Essence	24

 

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this “ Agreement ”), dated as of November 14, 2008, is made by and between Eli Lilly and Company, an Indiana corporation (the “ Purchaser ”), and United Therapeutics Corporation, a Delaware corporation (the “ Company ”).

 

RECITALS

 

WHEREAS, the Purchaser desires to purchase from the Company, and the Company desires to sell to the Purchaser, a number of shares of the Company’s common stock, par value $.01 per share (the “ Common Stock ”) (rounded to the nearest whole number) equal to One Hundred and Fifty Million Dollars ($150,000,000) divided by the Per Share Price.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants and premises contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1                                  Defined Terms .  As used herein, the terms below shall have the following meanings:

 

“ Action ” shall mean any action, order, writ, injunction, judgment or decree or any claim, suit, litigation, proceeding, dispute, arbitration, mediation, inquiry, audit, assessment or investigation, or any similar event, occurrence or proceeding.

 

“ Action of Divestiture or Limitation ” shall mean (i) executing or carrying out agreements or submitting to the requirements of any Governmental Entity providing for a license, sale or other disposition of any assets or businesses or categories of assets or businesses of the Purchaser, the Company or their respective Affiliates, or the holding separate of any of their respective assets or businesses or imposing or seeking to impose any limitation on the ability of the Purchaser, the Company or their respective Affiliates to own such assets or to acquire, hold or exercise full rights of ownership with respect to such assets or on their respective abilities to conduct their respective businesses, (ii) modification of a Permit with respect to the Company or any of its Affiliates or the terms of any contract or agreement material to the Company or any of its Affiliates in a manner that would adversely affect the business of the Company or any of its Affiliates or the Purchaser or (iii) the imposition of any condition or limitation that would adversely affect the business of the Company, the Purchaser or their respective Affiliates in connection with any approval required in connection with the transactions contemplated hereby or that restricts the businesses of the Purchaser, the Company or any of their respective Affiliates,

 

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or that would adversely affect the anticipated benefits to the Purchaser or the Company of the transactions contemplated by this Agreement or the License Agreement.

 

“ Affiliate ” shall mean, with respect to any Person, any Person that, directly or indirectly, controls such Person, any Person that such Person controls, or any Person that is under common control with such Person.  For purposes of the preceding sentence, the term “control” shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of a Person through voting securities, by contract or otherwise.

 

“ Beneficial Owner ” or “ Beneficial Ownership ” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act.

 

“ Business Day ” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in New York City are authorized by Law or executive order to remain closed.

 

“ Bylaws ” shall mean the Bylaws of the Company, as amended through the date of this Agreement.

 

“ Certificate of Incorporation ” shall mean the Company’s Certificate of Incorporation as in effect as of the date of this Agreement, including any amendments thereto.

 

“ Closing Date ” shall mean the date of the Closing, which shall be the third Business Day following satisfaction or waiver 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 fulfillment or waiver of those conditions or, if the parties hereto shall mutually agree upon a different date, the date upon which they shall have mutually agreed.

 

“ Confidentiality Agreement ” shall mean the Confidentiality Agreement, dated February 25, 2008 between the Company and the Purchaser.

 

“ Convertible Notes ” shall mean the Company’s 0.50% Convertible Senior Notes due 2011.

 

“ GAAP ” shall mean accounting principles generally accepted in the United States of America, including generally accepted accounting principles as interpreted by the SEC as reflected in Regulation S-X promulgated under the Exchange Act as in effect from time to time or otherwise.

 

“ Governmental Entity ” shall mean any federal, state, county, municipal, local or foreign government, any legislature, agency, authority, bureau, branch, department, division, commission, court, regulator, tribunal, magistrate, justice, multi-national organization, quasi-governmental body, or other similar recognized organization, body or instrumentality of any federal, state, county, municipal, local, or foreign

 

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government or any other similar recognized organization, body or instrumentality exercising similar powers or authority.

 

“ HSR Act ” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

 

“ Law ” shall mean any law (statutory, common, or otherwise), constitution, treaty, convention, statute, ordinance, code, regulation, rule or other similar authority enacted, adopted, promulgated, or applied by any Governmental Entity and any judgment, decision, decree or order of any Governmental Entity.

 

“ License Agreement ” shall mean the License Agreement, dated the date hereof, by and between the Purchaser and the Company.

 

“ Lien ” shall mean any mortgages, deeds of trust, liens (statutory or other) pledges, security interests, claims, covenants, conditions, restrictions, options, rights of first offer or refusal, charges, easements, rights-of-way, encroachments, Third Party rights, building or use restrictions or other encumbrances or title defects of any kind or nature, including any agreements to give any of the foregoing in the future.

 

“ Manufacturing and Supply Agreement ” shall mean the Manufacturing and Supply Agreement, dated the date hereof, by and between the Purchaser, Lilly del Caribe, Inc., a Cayman Island corporation, and the Company.

 

“ Material Adverse Effect ” shall mean a material adverse event, change, effect, condition or occurrence on or with respect to (i) the business, assets, liabilities, results of operations or financial condition of the Company and its Subsidiaries taken as a whole, or (ii) the ability of the Company to timely perform its obligations under and consummate the transactions contemplated by this Agreement; provided , however , that, Material Adverse Effect shall not be deemed to include any event, change, effect, condition or occurrence to the extent resulting from, or attributable to, (A) changes in the economy or financial markets, including, without limitation, prevailing interest rates and market conditions, generally in the United States or globally or that are the result of acts of war or terrorism, except to the extent any of the same disproportionately affects the Company and its Subsidiaries, taken as a whole, as compared to other companies in the industry in which the Company and its Subsidiaries operate, (B) changes that are proximately caused by factors generally affecting the industry in which the Company and its Subsidiaries operate, except to the extent any of the same disproportionately affects the Company and its Subsidiaries taken as a whole, (C) changes or proposed changes, in each case after the date hereof, in Law or GAAP, except to the extent any of the same disproportionately affects the Company and its Subsidiaries, taken as a whole, as compared to other companies in the industry in which the Company and its Subsidiaries operate, (D) this Agreement, the License Agreement or the Manufacturing and Supply Agreement, (E) expenses (including legal fees, costs and expenses relating to any litigation) and costs arising as a result of the transactions contemplated by this Agreement, the License Agreement or the Manufacturing and Supply Agreement, (F) public disclosure

 

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of the transactions contemplated by this Agreement, the License Agreement or the Manufacturing Agreement, (E) actions or omissions of the Company or any of its Subsidiaries with the prior written consent of the Purchaser in furtherance of the transactions contemplated by this Agreement, the License Agreement or the Manufacturing and Supply Agreement or otherwise required to be taken by the Company or any of its Subsidiaries under any such agreement, (F) changes in the market price or trading volume of the Common Stock, (G) the failure of the Company to meet any internal or public projections, forecasts or estimates of revenues or earnings (but not the underlying cause of such failure), (H) any change or announcement of a potential change in the rating of the Company by a credit rating agency or any equity analyst (but not the underlying cause of such change or potential change) or (I) actions taken by the Purchaser or its Affiliates in breach of the Purchaser’s obligations hereunder.

 

“ Material Subsidiaries ” shall mean the following Subsidiaries of the Company: Lung Rx, Inc., a Delaware corporation; and United Therapeutics Europe, Ltd., a United Kingdom company.

 

“ Options ” shall mean options to purchase capital stock of the Company issued by the Company pursuant to the United Therapeutics Corporation Amended and Restated Equity Incentive Plan.

 

“ Permits ” shall mean, with respect to the Company or any of its Subsidiaries, all licenses, permits, franchises, approvals, authorizations, consents or orders of, or filings with, or notifications to, any Governmental Entity, or any other Person, necessary or desirable for the past, present or anticipated conduct of, or relating to the operation of the businesses of or the ownership of the assets of, the Company and/or any of its Subsidiaries.

 

“ Per Share Price ” shall mean a price per share equal to 0.90 multiplied by the lesser of (x) the average closing price for the Common Stock quoted on the NASDAQ Global Select Market during the five (5) trading day period ending on (and including) November 14, 2008 and (y) the average closing price for the Common Stock quoted on the NASDAQ Global Select Market during the five (5) trading day period commencing on (and including) November 17, 2008.

 

 “ Person ” shall mean any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, limited liability company or Governmental Entity or other entity.

 

“ Purchased Call Option ” shall mean the privately-negotiated convertible note hedge transaction with respect to Common Stock entered into on October 24, 2006 between the Company and Deutsche Bank AG London, which covers, subject to customary anti-dilution adjustments, approximately 3,323,332 shares of Common Stock at a strike price of approximately $75.2257 per share.

 

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“ Purchaser Material Adverse Effect ” shall mean a material adverse event, change, effect, condition or occurrence on or with respect to the ability of the Purchaser to timely perform its obligations under and consummate the transactions contemplated by this Agreement.

 

“ Rights ” shall mean rights granted under the First Amended and Restated Rights Agreement between the Company and the Bank of New York, dated as of June 30, 2008.

 

“ Share Tracking Awards ” shall mean cash-settled awards issued by the Company under the United Therapeutics Corporation Share Tracking Awards Plan.

 

“ Subsidiary ” shall mean, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by any such Person, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any such Person.

 

“ Third Party ” means any Person who is not an Affiliate of the Company nor the Purchaser.

 

“ Warrants ” means the warrants issued by the Company on October 24, 2006 to Deutsche Bank AG London to acquire, subject to customary anti-dilution adjustments, approximately 3,323,332 shares of Common Stock at a strike price of $105.6890 per share.

 

 “ Voting Securities ” shall mean at any time shares of any class of capital stock of the Company which are then entitled to vote generally in the election of directors.

 

1.2                                  Other Defined Terms .  In addition to the terms defined in the Introduction and Recitals to this Agreement or in Section 1.1 , the following terms shall have the meanings defined for such terms in the Sections set forth below:

 

Term		Section
“Aggregate Purchase Price”		2.1
“Breaching Party”		7.3
“Closing”		2.2
“Company SEC Reports”		3.5(a)
“Company Securities”		3.2
“Common Stock”		Recitals
“Exchange Act”		3.4(b)
“Other Antitrust Law”		3.4(b)
“Preferred Stock”		3.2

 

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Term		Section
“SEC”		3.5(a)
“Securities Act”		3.5(a)
“Shares”		2.1

 

1.3                                  Construction .

 

(a)                                   Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement; (iv) the terms “Article” or “Section” refer to the specified Article or Section of this Agreement; (v) the word “including” shall mean “including, without limitation;” (vi) the word “or” shall be disjunctive but not exclusive and (vii) the words “made available” shall mean that the information referred to has been made available if requested by the party to whom such information is to be made available.

 

(b)                                  References to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto.

 

(c)                                   References to statutes shall include all regulations promulgated thereunder and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation.

 

(d)                                  “knowledge” of the Company means actual knowledge of the following senior executive officers of the Company: Martine A. Rothblatt, Ph.D, Roger Jeffs, Ph.D, Paul A. Mahon and John Ferrari.

 

(e)                                   The annexes, schedules and exhibits to this Agreement are a material part hereof and shall be treated as if fully incorporated into the body of the Agreement.

 

(f)                                     Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified and shall be counted from the day immediately following the date from which such number of days are to be counted.

 

(g)                                  All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.

 

ARTICLE II.

PURCHASE AND SALE OF THE SHARES

 

2.1                                  Purchase and Sale of the Shares .   Upon the terms and subject to the conditions contained herein, on the Closing Date, the Company shall sell, convey, transfer, assign and deliver to the Purchaser, and the Purchaser shall purchase and accept from the

 

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Company, free and clear of any and all Liens, at a price per share equal to the Per Share Price, a number of shares of Common Stock (rounded up to the nearest whole number) (the “ Shares ”) determined by dividing (i) One Hundred and Fifty Million Dollars ($150,000,000) (the “ Aggregate Purchase Price ”) by (ii) the Per Share Price.

 

2.2                                  Closing .  Upon the terms and conditions set forth herein, the closing (the “ Closing ”) of the transactions contemplated herein shall occur at 10:00 a.m. local time on the Closing Date at the offices of Latham & Watkins LLP, 885 Third Avenue, New York, New York 10022 (or by the exchange of documents and instruments by mail, courier, facsimile or email to the extent mutually acceptable to the parties hereto) or such other place or time agreed to by the Company and the Purchaser.

 

2.3                                  Deliveries at Closing .  To effect the sale and purchase of the Shares and the delivery of the Aggregate Purchase Price referred to in Section 2.1 , the Company and the Purchaser shall deliver the following:

 

(a)                                   Wire Instructions .  No later than three (3) Business Days prior to the Closing Date, the Company shall provide to the Purchaser wire transfer instructions for the receipt of the Aggregate Purchase Price.

 

(b)                                  Closing Certificate .  At the Closing, the Company shall deliver to the Purchaser a certificate setting forth the number of Shares and the Aggregate Purchase Price, each calculated in accordance with this Agreement, which certificate shall conclusively evidence the Aggregate Purchase Price and number of Shares for purposes of this Agreement, absent manifest error.

 

(c)                                   Instruments of Possession .  At the Closing, the Company shall deliver to the Purchaser a certificate representing the Shares (which may bear the legends provided for in Section 5.6 ) free and clear of all Liens.

 

(d)                                  Payment of Transfer Taxes .  At the Closing, the Company shall deliver such evidence as may be reasonably requested by the Purchaser of full payment of any and all amounts that will become due and payable upon Closing in connection with obtaining consents, waivers, agreements and permits required for, and stock transfer taxes and any sales, use or other taxes imposed by reason of, the transfer of the Shares to the Purchaser and any deficiency, interest or penalty, as applicable, asserted with respect thereto.

 

(e)                                   Purchase Price .  Upon the terms and subject to the conditions contained herein, at the Closing, the Purchaser shall pay the Aggregate Purchase Price to the Company by wire transfer of immediately available funds.

 

2.4                                  Other Closing Matters .  Each of the parties shall take such other actions required hereby to be performed by it prior to or on the Closing Date, including, without limitation, satisfying the conditions set forth in Article VI .  The Company and the Purchaser shall take all additional reasonable steps as may be necessary or desirable,

 

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including the execution and delivery of additional documents, to consummate the transactions contemplated hereby, including, but not limited to, to ensure that the Purchaser is given possession of and good and marketable title to the Shares, free and clear of all Liens as of the Closing Date.

 

ARTICLE III.
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY

 

As an inducement to the Purchaser to enter into this Agreement, the Company hereby makes as of the date hereof and as of the Closing Date, the following representations and warranties to the Purchaser.

 

3.1          Organization and Qualification .   The Company and each of its Subsidiaries is a duly organized and validly existing entity in good standing (to the extent such concepts are recognized in the applicable jurisdiction) under the Laws of its jurisdiction of incorporation, with all corporate power and authority to own its properties and conduct its business as currently conducted.  The Company and each of its Subsidiaries is duly qualified and in good standing as a foreign corporation authorized to do business in each of the jurisdictions in which the character of the properties owned or held under lease by it or the nature of the business transacted by it makes such qualification necessary and where the failure to be so qualified and in good standing as a foreign corporation authorized to do business would reasonably be expected to have a Material Adverse Effect.  The Company has heretofore made available to the Purchaser true, correct and complete copies of the Certificate of Incorporation and Bylaws (or similar governing documents) as currently in effect for the Company and each of its Material Subsidiaries.  Neither the Company nor any of its Subsidiaries, directly or indirectly, owns any interest in any Person other than the Company’s Subsidiaries, other than investments by the Company in U.S. treasury notes, certificates of deposit, commercial paper and other similar securities in the ordinary course of the Company’s business.

 

3.2          Capitalization .  The authorized capital stock of the Company consists of (i) 100,000,000 shares of Common Stock and (ii) 10,000,000 shares of preferred stock, par value $0.01 per share (the “ Preferred Stock ”).  As of the date hereof, 23,255,723 shares of Common Stock and no Preferred Stock were issued and outstanding, and 4,381,632 shares of Common Stock and no Preferred Stock were held in the Company’s treasury.  In addition, as of such date, there were outstanding Options to purchase an aggregate of 4,797,774 shares of Common Stock and no Preferred Stock. Since such date, the Company has not issued any shares of Common Stock or Preferred Stock other than the issuance of Common Stock upon the exercise of Options outstanding on such date, has not granted any options, restricted stock, warrants or rights or entered into any other agreements or commitments to issue any shares of Common Stock or Preferred Stock, and has not split, combined or reclassified any of its shares of capital stock.  All of the outstanding shares of the Company’s capital stock have been duly authorized and validly issued and are fully paid and nonassessable and are free of preemptive rights.  Except for the Options, the

 

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Convertible Notes, the Purchased Call Option, the Warrants, the Rights and the Share Tracking Awards, there are no outstanding (i) securities of the Company or any of its Material Subsidiaries convertible into or exchangeable for shares of capital stock or Voting Securities or ownership interests in the Company or any of its Material Subsidiaries, (ii) options, warrants, rights or other agreements or commitments to acquire from the Company or any of its Material Subsidiaries, or obligations of the Company or any of its Material Subsidiaries to issue, any capital stock, Voting Securities or other ownership interests in (or securities convertible into or exchangeable for capital stock or Voting Securities or other ownership interests in) the Company or any of its Material Subsidiaries, (iii) obligations of the Company or any of its Material Subsidiaries 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, Voting Securities or other ownership interests in the Company or any of its Material Subsidiaries (the items in clauses (i), (ii) and (iii), together with the capital stock, Voting Securities and other ownership interests of the Company or each of its Material Subsidiaries, being referred to collectively as “ Company Securities ”) or (iv) obligations of the Company or any of its Subsidiaries to make any payments directly or indirectly based (in whole or in part) on the price or value of the shares of Common Stock or Preferred Stock. Neither the Company nor any of its Subsidiaries has any outstanding stock appreciation rights, phantom stock, performance-based rights or similar rights or obligations, except for the Share Tracking Awards.  Except for the Company’s obligation to repurchase shares of Common Stock from Toray Industries, Inc. (as disclosed in the Company SEC Reports), there are no outstanding obligations, commitments or arrangements, contingent or otherwise, of the Company or any of its Subsidiaries to purchase, redeem or otherwise acquire any Company Securities.  There are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries or, to the knowledge of the Company, any other Person is a party with respect to the voting of capital stock of the Company. The Company or one or more of its Subsidiaries is the holder of record and the Beneficial Owner of all the equity interests of each of the Material Subsidiaries, free and clear of any Lien, including any limitation or restriction on the right to vote, pledge or sell or otherwise dispose of such equity interests.

 

3.3          Authority for this Agreement; Valid Issuance of Shares .

 

(a)           The Company has all necessary corporate power and authority to enter into this Agreement and to perform its obligations hereunder.  The execution, delivery and performance by the Company of this Agreement have been duly and validly authorized by all necessary corporate action.  This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by the Purchaser, constitutes a valid and binding agreement of the Company and is enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar Laws affecting creditors’ rights generally and, subject to general principles of equity, including good faith and fair dealing, regardless of whether in a proceeding at equity or at law).

 

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(b)           The issuance of the Shares has been duly authorized by all requisite co