Document:

Exhibit 10.3.1

 

CHANGE IN CONTROL/NONCOMPETITION AGREEMENT

 

This
Change in Control/Noncompetition Agreement (this “Agreement”) entered into on
the 19th day of December, 2008, by and among Enterprise Bancorp, Inc., a
Massachusetts corporation (the “Company”), and its wholly owned subsidiary,
Enterprise Bank and Trust Company, a Massachusetts bank and trust company with
its main office in Lowell, Massachusetts (the “Bank”) (the Bank and the Company
shall be hereinafter collectively referred to as the “Employers”), and Robert
R. Gilman of Lowell, Massachusetts (the “Executive”), amends and restates the
Change In Control/Noncompetition Agreement dated as of August, 2001, as amended
on July 15, 2005 (Amendment 1) and December 13, 2006 (Amendment
2).  The provisions of this Restatement
are effective as of January 1, 2008 (the “Effective Date”).

 

1.                                       Purpose.  To allow the
Executive to consider the prospect of a Change in Control (as defined in Section 2
hereof) in an objective manner and in consideration of the Executive’s
agreement to abide by the confidentiality and noncompetition provisions set
forth in Section 8 hereof and the services to be rendered by the Executive
to the Bank, and in order to protect the ongoing business interests and
competitiveness of the Employers and in consideration of the Employers’
agreement to provide the severance benefits to protect the Executive in the
event of a Change in Control as set forth in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the Executive and the Employers, the parties have entered into
this Agreement and have mutually agreed to be bound by the terms and conditions
hereof.

 

2.                                       Change in Control. 
For purposes of this Agreement, a “Change in Control event” means any
event that may qualify as a “Change in Control” under Company’s 2003 Stock
Incentive Plan, as the same may be amended and continue in effect from time to
time hereafter.

 

3.                                       Terminating Event. 
For purposes of this Agreement, the term “Terminating Event” shall mean
any termination of the employment of the Executive with the Bank for any
reason, whether or not such termination is initiated by the Bank, including
without limitation termination for cause or by reason of the Executive’s death
or disability, or by the Executive, including without limitation resignation by
reason of retirement or for no reason at all.

 

4.                                       Severance
Payments.

 

(a)                                  If a Terminating Event occurs within two (2) years
after the date on which a Change in Control has occurred, then the Executive
shall be entitled to receive the following:

 

(i)                                     an aggregate
amount equal to 1.5 times the Executive’s “Highest Annual Compensation” (as
defined in paragraph (c) of this Section 4) (hereinafter “Lump Sum
Payment”), payable within thirty (30) days of the date on which the Executive’s
employment with the Bank terminates (the “Date of Termination”);

 

(ii)                                  any base salary,
commissions or other compensation accrued or earned, but not yet paid, as of
the Date of Termination and any annual or other bonus actually awarded, but not
yet paid, as of the Date of Termination, such amounts to be paid on the Date of
Termination;

 

 

(iii)                               reimbursement for all
business expenses for which the Executive would ordinarily be reimbursed by the
Employers in the ordinary course of business in accordance with the Employers’
policies, programs, procedures or practices incurred, but not yet paid, as of
the Date of Termination, such amount to be paid on the Date of Termination;

 

(iv)                              payment of the per diem
value of any unused vacation days, whether deemed to be accrued or unaccrued,
that would be available to the Executive through the end of the calendar year
(but not beyond) in which the Date of Termination occurs;

 

(v)                                 continuation of the
Employers’ employee welfare benefit plans, programs and practices in which the
Executive and his spouse and any other eligible dependents participate or are
eligible to participate as of the Date of Termination or, if more favorable to
the Executive, as of the date of a Change in Control, at the levels in effect
on, and at the same out-of-pocket costs to the Executive as of, the Date of
Termination or, if more favorable to the Executive, as of the date of a Change
in Control, for the eighteen-month period commencing on the Date of
Termination; and

 

(vi)                              any other compensation
and benefits as may be provided in accordance with the terms and provisions of
any other agreements between the Executive and either of the Employers and of
any applicable plans, programs, policies, procedures or practices of the
Employers.

 

(b)                                 If a Terminating Event occurs within one (1) year
prior to the date on which a Change in Control occurs, then the Executive shall
be entitled to receive, as provided in this paragraph (b), all of the payments
and benefits that he would have been entitled to receive under paragraph (a) of
this Section 4, unless such Terminating Event occurs as a result of a
termination for Cause (as such term is defined in paragraph (k) of Section 8
below), in which case no increase or adjustments to the amounts paid or
benefits provided to the Executive in connection with such Terminating Event
shall be made under this paragraph (b). 
If required in accordance with the immediately preceding sentence, the
amounts paid and benefits provided to the Executive in connection with a
Terminating Event that occurs within one (1) year prior to the date on
which a Change in Control occurs shall be increased or otherwise adjusted to
ensure that the Executive receives the full payments and benefits contemplated
by paragraph (a) of this Section 4. 
If the payments and/or benefits to be received by the Executive in
connection with a Terminating Event that has occurred within one (1) year
prior to the date on which a Change in Control occurs are required to be
increased or adjusted under this paragraph (b), then the Executive shall be
paid on the first ordinary payroll payment date of the Bank following the
occurrence of such Change in Control the cash amount necessary to ensure that
the Executive shall have received the full amounts of the payments and benefits
that the Executive would have received as of such date under paragraph (a) of
this Section 4.

 

(c)                                  Highest Annual Compensation Defined.  For purposes of this Section 4, the Executive’s
“Highest Annual Compensation” shall mean, as determined as of any Date of
Termination, the sum of (i) the highest per annum rate of base salary paid
by the Employers to the Executive at any time during the three-year period
prior to such Date of Termination, (ii) the highest amount of commission
or other compensation (which is not otherwise included in the base 

 

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salary and bonus amounts referred in clauses (i) and
(iii) of this paragraph (c)) paid by the Employers to the Executive with
respect to any of the three most recently completed fiscal years of the Bank
prior to such Date of Termination, and (iii) the highest annual incentive
compensation or other bonus amount paid by the Employers to the Executive (or
which would have been paid but for an election by the Executive to defer
payment to a later period) with respect to any of the three most recently
completed fiscal years of the Bank prior to such Date of Termination.

 

(d)                                 Payments Pending Resolution of Dispute.  In the event of any dispute concerning payments or
other benefits to be received by the Executive under this Section 4, the
Executive shall be entitled until the resolution of such dispute to be paid in
accordance with the Bank’s ordinary payroll practices his then current base
salary and to continue to receive all other welfare benefits then being
provided to him by the Employers, and there shall be no reduction whatsoever of
any amounts subsequently paid to the Executive upon resolution of such dispute
as a result of, or in respect to, such interim payments or coverage.

 

(e)                                  No Obligation to Mitigate.  In the event that any payments or benefits are to be
received by the Executive under this Section 4, the Executive shall be
under no obligation to seek other employment or to mitigate damages and there
shall be no offset against any amount due the Executive under this Agreement
for any reason, including, without limitation, on account of any remuneration
or benefits attributable to any subsequent employment that the Executive may
obtain.

 

(f)                                    Code Section 280G Reduction. Anything in this Agreement or in any
other agreement, contract, understanding, plan or program entered into or
maintained by the Employers to the contrary notwithstanding, in the event it
shall be determined that any payment or distribution by the Employers to or for
the benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise
(collectively, the “Payments”), would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the “Code”), and/or any
successor provision or section thereto (such excise tax, together with any
interest or penalties incurred by the Executive with respect to such excise
tax, collectively, the “Excise Tax”), and if the Payments less the Excise Tax
would be less than the amount of the Payments that would otherwise be payable
to the Executive without imposition of the Excise Tax, then, to the extent
necessary to eliminate the imposition of the Excise Tax (and taking into
account any reduction in the Payments provided by reason of Section 280G
of the Code in any such other agreement, contract, understanding, plan or
program), the cash and non-cash payments and benefits payable to the Executive
shall be reduced (with the executive being provided with the amount of each
payment and benefit as calculated by the Employers and given ten (10) business
days in which to prioritize the order of reduction of each such payment or
benefit); but only if, by reason of any such reduction, the Payments with any
such reduction shall exceed the Payments less the Excise Tax without any such
reduction.  For purposes of this Section 4(f),
(i) no portion of the Payments, the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to the Date of
Termination, shall be taken into account, (ii) no portion of the Payments
shall be taken into account that, in the opinion of tax counsel selected in
good faith by the Employers, does not constitute a “parachute payment” within
the meaning of Section 280G(b)(2) of the Code, including without
limitation by reason of Section 280G(b)(4)(A) of the Code, (iii) any
payments and/or benefits under this Agreement or otherwise for services to be
rendered on or after the effective date of a Change in Control shall be 

 

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reduced only to the extent necessary so that such
payments and/or benefits in their entirety constitute reasonable compensation
for services actually rendered within the meaning of Section 280G(b)(4)(B) of
the Code or are otherwise not subject to disallowance as deductions, in the
opinion of the tax counsel referred to in the immediately preceding clause (ii) of
this sentence, and (iv) the value of any non-cash payment or benefit or
any deferred payment or benefit included in the Payments shall be determined by
the Employers’ independent auditors in accordance with the principles of
Sections 280G(d)(3) and 280G(d)(4) of the Code and the applicable
regulations or proposed regulations under the Code.  Except as otherwise provided in this Section 4(f),
the foregoing calculations and determinations shall be made in good faith by
the Employers and shall be conclusive and binding upon the parties.  The Employers shall pay all costs and
expenses incurred in connection with any such calculations or determinations.

 

(g)                                 Section 409A.  Payments to which Executive shall be entitled
to under this Section 4 shall be made subject to the following:

 

(i)                                     Payments to
Executive under this Section 4 shall be bifurcated into two portions,
consisting of a portion that does not constitute “nonqualified deferred
compensation” within the meaning of Section 409A of the Code and a portion
that does constitute nonqualified deferred compensation. Payments hereunder
shall first be made from the portion, if any, that does not consist of
nonqualified deferred compensation until it is exhausted and then shall be made
from the portion that does constitute nonqualified deferred compensation.
However, anything in this Agreement to
the contrary notwithstanding, if at the time of Executive’s termination of
employment, Executive is considered a “specified employee” as defined in
Section 409A(a)(2)(B)(i) of the Code, then to the extent required by Section 409A
of the Code, no payments that
constitute nonqualified deferred compensation shall be payable prior to the
date that is the earlier of (i) six months and a day after Executive’s date
of termination, or (ii) Executive’s death (“Earliest Payment Date”).  Any payments that are delayed pursuant
to the preceding sentence shall be paid on the Earliest Payment Date. The
determination of whether, and the extent to which, any of the payments to be
made to Executive hereunder are nonqualified deferred compensation shall be
made after the application of all applicable exclusions under Treas. Reg. §
1.409A-1(b)(9). Any payments that are intended to qualify for the exclusion for
separation pay due to involuntary separation from service set forth in Treas.
Reg. § 1.409A-1(b)(9)(iii) must be paid no later than the last day of the
second taxable year of Executive following the taxable year of Executive in
which the Date of Termination occurs.

 

(ii)                                  The intent of the
parties is that payments and benefits under this Agreement comply with Section 409A
and, accordingly, to the maximum extent permitted, this Agreement shall be
interpreted to be in compliance therewith. The parties acknowledge and agree that
the interpretation of Section 409A of the Code and its application to the
terms of this Agreement is uncertain and may be subject to change as additional
guidance and interpretations become available. Anything to the contrary herein
notwithstanding, all benefits or payments provided by Employer to Executive
that would be deemed to constitute “nonqualified deferred compensation” within
the meaning of Section 409A of the Code are intended to comply with Section 409A
of the Code. If, however, any such benefit or payment is deemed to not comply
with Section 409A of the Code, Employer 

 

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and Executive agree that this
Agreement may be amended (and that any such amendment may be retroactive to the
extent permitted under Section 409A), as reasonably requested by either
party, and as may be necessary to fully comply with Section 409A of the
Code and all related rules and regulations in order to preserve the
payments and benefits provided hereunder without additional cost to either
party.

 

(h)                                 Release.  In
the event of termination of employment for any reason, the payments and other
benefits (if any) required to be provided to Executive pursuant to this Section 4
(including those, if any, required under this Section 4 to be paid
pursuant to other sections of this Agreement) will be in full and complete
satisfaction of any and all obligations owing to Executive pursuant to this
Agreement and, to the fullest extent permitted by law, any other claims
Executive may have in respect of Executive’s employment by Employer. Such
amounts shall constitute liquidated damages with respect to any and all such
rights and claims and, upon Executive’s receipt of such amounts, Employer shall
be released and discharged from any and all liability to Executive in
connection with this Agreement or otherwise in connection with Executive’s
employment by Employer. Notwithstanding the foregoing, Executive shall retain
all rights (i) with respect to matters covered by provisions of this
Agreement that expressly survive the termination of this Agreement,  (ii) rights to which Executive is
entitled by virtue of his participation in the employee benefit plans, policies
and arrangements of Employer, and (iii) as otherwise excluded by
applicable law.

 

5.                                       Employment Status. 
This Agreement is not an agreement for the employment of the Executive
and shall confer no rights on the Executive except as herein expressly
provided.

 

6.                                       Term.  This
Agreement shall take effect on and as of the Effective Date and shall
terminate, subject to the applicability of paragraph (b) of Section 4
above, upon the earlier of (a) termination of the employment of the
Executive for reason of the Executive’s death or permanent disability, in which
case any amounts due to the Executive or the beneficiary named on the
Designation of Beneficiary form completed by Executive or his legal
representative, as the case may be, shall be determined in accordance with Section 4
of this Agreement, if applicable, or otherwise in accordance with the
Employers’ applicable plans, programs, policies, procedures or practices then
in effect, (b) the resignation or termination of the Executive for any
reason prior to a Change in Control, or (c) the second anniversary of the
date on which a Change in Control shall have occurred; provided, however, that
in any event the provisions of Section 8 hereof shall remain in full force
and effect in accordance with their terms.

 

7.                                       Withholding; Reporting.  All payments to
be made to Executive by Employer shall be subject to withholding of such
amounts, if any, relating to tax and other payroll deductions as Employer may
reasonably determine it should withhold pursuant to any applicable law and
regulation. Employer may withhold from any amounts payable under this Agreement
such taxes as shall be required to be withheld pursuant to any applicable law
or regulation. Executive acknowledges that Employer may be required to report
amounts deferred by or for Executive under nonqualified deferred compensation
plans on forms W-2 and agrees that Employer shall comply with all such
requirements and Executive agrees to pay and be solely responsible for all
taxes, interest and penalties.

 

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8.                                       Confidential
Information; Noncompetition.

 

(a)                                  Confidentiality. 
The Executive shall not, during or after the period during which he is
employed by the Bank, make use of or disclose any Confidential Information (as
defined herein) to any natural person or entity, other than the Employers or
any of their affiliates or any of the Employers’ or their affiliates’
employees, consultants, advisors, agents or other representatives who have a
need to know any such information, for any reason or purpose whatsoever.  The term “Confidential Information” shall
mean all confidential information of or relating to the Employers and any of
their affiliates, including without limitation financial information and data,
business plans and information regarding prospects and opportunities (such as,
by way of example only, client and customer lists and acquisition, disposition,
expansion, product development and other strategic plans), but does not include
any information that is or becomes public knowledge by means other than the
Executive’s breach or nonobservance of his obligations described in this
paragraph (a).  Notwithstanding the
foregoing, the Executive may disclose such Confidential Information as he may
be legally required to do so on the advice of counsel in connection with any
legal or regulatory proceeding; provided, however, that the Executive shall
provide the Employers with prior written notice of any such required or
potentially required disclosure and shall cooperate with the Employers and use
his best efforts under such circumstances to obtain appropriate confidential
treatment of any such Confidential Information that may be so required to be
disclosed in connection with any such legal or regulatory proceeding.  The Executive’s obligation to refrain from
disclosing any Confidential Information under this paragraph (a) shall
continue in effect in accordance with its terms following any termination of
this Agreement pursuant to Section 6 above.

 

(b)                                     Noncompetition.  If the Executive’s employment with the Bank
is terminated for any reason prior to a Change in Control (whether or not such
termination is initiated by the Bank or by the Executive), then during the
period of one (1) year following the date of such termination (and
assuming no Change in Control occurs at any time during such one-year period),
the Executive shall not:  (i) directly
or indirectly, whether as owner, partner, shareholder (other than the holder of
1% or less of the common stock of any company the common stock of which is
listed on a national stock exchange or quoted on the Nasdaq Stock Market),
consultant, agent, employee or otherwise, engage in competition with the
Employers or any of their affiliates within a ten (10) mile radius of any
city or town in which the Bank or any affiliate has a branch or other office
(or to such lesser extent and for such lesser period as may be deemed
enforceable, it being the intention of the parties that this Section 8(b) shall
be so enforced); provided, however,  that the restrictive covenant set forth
herein shall automatically terminate or expire upon a Change in Control event
and shall not be of any further force or effect whatsoever following said
Change in Control event.

 

(c)                                  Non-solicitation.  Without
prior written consent of Employers, Executive agrees that he will not, at any
time during the one-year period following the termination of Executive’s
employment for any reason prior to a Change in Control (whether or not such
termination is initiated by the Bank or by the Executive):

 

(i)                                     hire
or attempt to hire, or assist in hiring, any employees of Employer or any of
its affiliates, or solicit, encourage or induce any such employee to terminate
his or her relationship with Employer or any such affiliate; or

 

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(ii)                                  solicit, encourage or induce any customer
or client of Employer or any of its affiliates to terminate his or its
relationship with Employer or any such affiliate or to do business with anyone
other than Employer and its affiliates.

 

(d)                                 Payment
Following Termination by Employer Without Cause.  In consideration of the restrictive covenants
set forth herein, in the event that Employer unilaterally terminates
Executive’s employment for any reason (as distinguished from a termination
initiated by the Executive) other than a termination for Cause (as defined in
paragraph (k) of this Section 8), then the Executive shall receive,
subject to Bank Regulatory Limitations as referenced in Section 18, an
aggregate amount equal to seventy-five percent (75%) of the sum of (i) the
per annum rate of base salary paid by the Employers to the Executive as of the
date on which the Executive’s employment with the Bank is terminated, (ii) the
amount of commission or other compensation (which is not otherwise included in
the base salary and bonus amounts referenced in clauses (i) and (iii) of
this paragraph (c)) paid by the Employers to the Executive with respect to the
most recently completed fiscal year prior to such date on which the Executive’s
employment with the Bank is terminated, and (iii) the annual incentive or
other bonus amount paid by the Employers to the Executive (or which would have
been paid but for an election by the Executive to defer payment to a later
period) with respect to the most recently completed fiscal year prior to such
date on which the Executive’s employment with the Bank is terminated.  Such amount shall be paid no later than two
and one-half (2 1⁄2) months after the close of the taxable year of Executive or
Employers in which Executive’s employment is terminated as provided in this Section 8(d).

 

(e)                                  Claw-back.  To the fullest
extent permitted by law, in the event that Executive breaches any of the
provisions of Sections 8(a), (b) or (c), Employers shall be entitled
to recoup payments made to Executive pursuant to Section 8 (d) hereof,
provided, however, that, in the event of a breach of Section 8(a), such
recoupment shall be limited to the reasonable damages incurred by Employers as
a result of such breach and, in the event of a breach of Section 8(b) or
Section 8(c), such recoupment shall be equal to the total payments made to
Executive pursuant to Section 8(d) multiplied by a fraction, the
numerator of which is the number of months remaining from the date of such
breach to the first anniversary of the date such Executive’s employment was terminated
as set forth in Section 8(d), and the denominator of which is twelve (12)
months

 

(f)                                    Intellectual
Property.  Executive will, during the
period of his employment, disclose to Employers promptly and fully all
Intellectual Property (as defined below) made or conceived by Executive (either
solely or jointly with others) including but not limited to Intellectual
Property which relate to the business of Employers or result from work
performed by him for Employers. All Intellectual Property and all records
related to Intellectual Property, whether or not patentable, shall be and
remain the sole and exclusive property of Employers and Employers shall have
the exclusive worldwide and perpetual right to use, make, and sell products
and/or services derived therefrom. 
Intellectual Property means all copyrights, trademarks, trade names,
trade secrets, proprietary information, inventions, designs, developments, and
ideas, and all know-how related thereto. Executive hereby assigns and agrees to
assign to Employers all his rights to Intellectual Property and any patents,
trademarks, or copyrights which may be issued with respect to Intellectual
Property.  Executive further acknowledges
that all work shall be work made for hire. During and after the Term of Employment,
Executive agrees to assist Employers, without charge to Employer but at its
request and expense, to obtain and retain rights in Intellectual Property, and
will execute all appropriate related documents at the request of 

 

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Employers. Executive and Employers agree that
this Section 8(f)  shall not apply to any Intellectual Property for
which no equipment, supplies, facilities, trade secret, or other confidential
information of Employers was used and which was developed entirely on his own
time, provided that it does not relate to the business of Employers or and does
not result from any work performed by him for Employers.

 

(g)                                 Return of
Materials.  Upon the termination of Executive’s
employment, Executive will return to Employers all property of Employers,
including all materials furnished to Executive during his employment (including
but not limited to keys, computers, automobiles, electronic communication
devices, files, electronic storage devices and identification cards); provided,
however, that Executive may retain copies of materials relating to his
compensation or benefits. In addition, upon termination, Executive will provide
Employers with all passwords and similar information which are reasonably
necessary for Employers to access materials on which Executive worked or to
otherwise continue in its business.

 

(h)                                 Injunctive Relief. 
The Executive acknowledges and agrees that the Employers will have no
adequate remedy at law, and would be irreparably harmed, if the Executive
breaches or threatens to breach any of the provisions of this Section 8.  The Executive agrees that the Employers shall
be entitled to equitable and/or injunctive relief to prevent any breach or
threatened breach of this Section 8, and to specific performance of each
of the terms of this Section 8 in addition to any other legal or equitable
remedies that the Employers may have. 
The Executive further agrees that he shall not, in any equity proceeding
relating to the enforcement of the terms of this Section 8, raise the
defense that the Employers have an adequate remedy at law.

 

(i)                                     Special Severability. 
The terms and provisions of this Section 8 are intended to be
separate and divisible provisions and if, for any reason, any one or more of
them is held to be invalid or unenforceable, neither the validity nor the
enforceability of any other provision of this Agreement shall thereby be
affected.

 

(k)                                  Cause Defined. 
Termination by the Bank of the Executive’s employment for “Cause” shall
mean termination on the basis of (i) the Executive’s willful and continued
failure to substantially perform his employment duties (other than any such
failure resulting from the Executive’s death or incapacity due to physical or
mental illness) after (A) a written demand for substantial performance is
delivered to the Executive by the Bank’s Chief Executive Officer, which demand
specifically identifies the manner in which the Chief Executive Officer
believes that the Executive has not substantially performed his employment
duties, and (B) the Executive has been afforded a reasonable opportunity
to meet with the Chief Executive Officer regarding such assertions of
nonperformance, or (ii) the Executive’s willfully engaging in conduct
(other than conduct related to the operation of an automobile) which is
demonstrably and materially injurious to the Bank, monetarily or
otherwise.  For purposes of this
paragraph (h), no act, or failure to act, on the part of the Executive shall be
deemed “willful” unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that his action or omission was in the
best interests of the Bank.  The
Executive shall be deemed to have been terminated for Cause only at such time
as there shall have been delivered to him a written notice of termination by
the Bank, which specifies in detail the particulars of the Executive’s conduct
that serve as the basis for such termination for Cause.

 

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9.                                       Arbitration Disputes. 
Any controversy or claim arising out of or relating to this Agreement or
the breach hereof, other than an action brought by the Employers for injunctive
or other equitable relief in the enforcement of the Employers’ rights under Section 8
above, in which case such action may be brought in any court of competent
jurisdiction, shall be settled by arbitration in accordance with the laws of
the Commonwealth of Massachusetts by three arbitrators, one of whom shall be
appointed by the Employers, one by the Executive and the third by the first two
arbitrators.  If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association in
the City of Boston, Massachusetts.  Such
arbitration shall be conducted in the City of Boston, Massachusetts in
accordance with the rules of the American Arbitration Association, except
with respect to the selection of arbitrators which shall be as provided in this
Section 9.  Judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.

 

10.                                 Successors.

 

(a)                                  Each of the Company and the Bank will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of its businesses
and/or assets to assume expressly and agree to perform this Agreement in the
same manner and to the same extent as if no such succession had taken
place.  Failure of either the Company or
the Bank to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation in the same amount and on the same terms as he would
be entitled to hereunder if a Terminating Event were to occur within two (2) years
after a Change in Control, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed to be the date of  such
Terminating Event.  As used in this
Agreement, “Company,” “Bank” and “Employers” shall mean the Company, the Bank
and the Employers as hereinbefore defined and any successor to the business
and/or assets of either the Company or the Bank as aforesaid which successor
assumes and agrees to perform this Agreement by operation of law or otherwise.

 

(b)                                 This Agreement shall inure to the benefit
of and be binding upon the Employers and the Executive, their respective
successors, executors, administrators, heirs and permitted assigns.  In the event of the Executive’s death prior
to the payment of any sum due him under this Agreement, the Employers shall
make such payment to the Executive’s beneficiary designated in writing to the
Employers prior to his death (or to his estate, if he fails to make such
designation).

 

11.                                 Enforceability. 
If any portion or provision of this Agreement shall to any extent be
declared illegal or unenforceable by a court of competent jurisdiction, then
the remainder of this Agreement, or the application of such portion or
provision in circumstances other than those as to which it is so declared
illegal or unenforceable, shall not be affected thereby, and each portion and
provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.

 

12.                                 Waiver.  No waiver of
any provision hereof shall be effective unless made in writing and signed by
the waiving party.  The failure of any
party to require the performance of any terms or obligation of this Agreement,
or the waiver by any party of any breach of this 

 

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Agreement, shall not prevent any subsequent
enforcement of such terms or obligation or be deemed a waiver of any subsequent
breach.

 

13.                                 Notices.  Any notices,
requests, demands and other communication provided for by this Agreement shall
be sufficient if in writing and delivered in person or sent by registered or
certified mail, postage prepaid, to the Executive at the last address the
Executive has filed in writing with the Employers or, in the case of the
Employers, at their executive offices, attention of the Chief Executive
Officer.

 

14.                                 Amendment.  This
Agreement may be amended or modified only by a written instrument signed by the
Executive and by duly authorized representatives of each of the Employers
provided, however,
that no amendment that will result in a violation of Section 409A of the
Code, or any other provision of applicable law, may be made to this Agreement
and any such amendment shall be void ab
initio.

 

15.                                 Governing Law. 
This is a Massachusetts contract and shall be construed under and is
governed in all respect by the laws of the Commonwealth of Massachusetts.

 

16.                                 Captions.  The captions
of this Agreement are for convenience of reference only, are not part of the
terms of this Agreement and shall have no force or effect in the application or
interpretation thereof.

 

17.                                 Entire Agreement. 
This Agreement contains the entire agreement between the parties to this
Agreement concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the parties with respect thereto.

 

18.                                 Bank Regulatory Limitations. 
Any payments made to the Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
§ 1828(k) and any applicable regulations promulgated thereunder.  In addition, to the extent required by
applicable law, regulation, regulatory policy or other regulatory requirement,
the aggregate amount and/or value of the compensation paid as a result of any
termination of the Executive’s employment with the Employers, regardless of the
reason for any such termination of employment, shall not exceed the limit
prescribed by such applicable law, regulation, regulatory policy or other
regulatory requirement.

 

[Remainder
of Page Intentionally Blank]

 

10

 

IN WITNESS WHEREOF, this
Agreement has been executed as a sealed instrument on behalf of the Employers
by their duly authorized officers and by the Executive as of the date first
above written.

 

	
  ATTEST:

  	
   

  	
  ENTERPRISE BANCORP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Richard W. Main

  	
   

  	
  By:

  	
  John P. Clancy, Jr.

  
	
   

  	
   

  	
   

  	
  John P. Clancy, Jr.

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  ENTERPRISE BANK AND TRUST COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Richard W. Main

  	
   

  	
  By:

  	
  /s/ John P. Clancy, Jr.

  
	
   

  	
   

  	
  John P. Clancy, Jr.

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Richard W. Main

  	
   

  	
  /s/ Robert R. Gilman

  
	
   

  	
   

  	
  Robert R. Gilman

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  December 19, 2008

  
	
   

  	
   

  	
  Date

  

 

11EXHIBIT 10.1

 

EXECUTION VERSION

 

STOCK PURCHASE AGREEMENT

 

between

 

Eli Lilly and Company

 

(the “Purchaser”)

 

and

 

United Therapeutics Corporation

 

(the “Company”),

 

Dated as of November 14, 2008

 

 

	
  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

  

 

i

 

	
  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, 

 

1

 

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 

 

2

 

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 

 

3

 

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.

 

4

 

“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

  

 

5

 

	
  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 

 

6

 

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,

 

7

 

 

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

 

8

 

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).

 

9

 

(b)           The
issuance of the Shares has been duly authorized by all requisite corporate
action. When the Shares are issued, sold and delivered in accordance with the
terms of this Agreement for the consideration expressed herein, the Shares will
be duly and validly issued and outstanding, fully paid, and nonassessable, and
will be free of restrictions on transfer other than restrictions on transfer
under this Agreement and under applicable state and federal securities laws
and, except as otherwise set forth herein, the Purchaser shall be entitled to
all rights accorded to a holder of shares of Common Stock. The Company has reserved a sufficient
number of shares of Common Stock for issuance to the Purchaser in accordance with the Company’s
obligations under this Agreement.

 

3.4          Consents
and Approvals; No Violation.

 

(a)           Neither the execution and delivery of
this Agreement by the Company nor the consummation of the transactions
contemplated hereby will: (i) violate or conflict with or result in any
breach of any provision of the Certificate of Incorporation or Bylaws or the
respective certificates of incorporation or bylaws or other similar governing
documents of any Subsidiary of the Company; (ii) assuming all consents,
approvals, authorizations and permits contemplated by clauses (i) through (iii) of
subsection (b) below have been obtained, and all filings and notifications
described in such clauses have been made, conflict with or violate any Laws; (iii) violate
or conflict with, or result in a breach of any provision of, or require any
consent, waiver or approval or result in a default or give rise to any right of
termination, cancellation, modification or acceleration (or an event that, with
the giving of notice, the passage of time or otherwise, would constitute a
default or give rise to any such right) under, any of the terms, conditions or
provisions of any note, bond, mortgage, lease, license, agreement, contract,
indenture or other instrument or obligation 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 may be bound; (iv) result
(or, with the giving of notice, the passage of time or otherwise, would result)
in the creation or imposition of any Lien on any asset of the Company or any of
its Subsidiaries; or (v) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any of its
Subsidiaries or by which any of their respective properties or assets are
bound, except, in case of clauses (ii), (iii), (iv) and (v), as have not
had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

(b)           The execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby by the Company do not and will not require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity except (i) the pre-merger notification
requirements under the HSR Act, or applicable state or foreign antitrust or
competition Laws (“Other Antitrust Laws”), (ii) the applicable
requirements of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and the rules and regulations promulgated thereunder and (iii) any
such consent, approval, authorization, permit, filing or notification the
failure of which to make or obtain has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

 

10

 

3.5          Reports;
Financial Statements.

 

(a)           Since December 31, 2005, the
Company has timely filed or furnished all forms, reports, statements,
certifications and other documents (the “Company SEC Reports”) required
to be filed or furnished by it with or to the Securities and Exchange
Commission (the “SEC”), all of which have complied, as to form, as of
their respective filing dates in all material respects with all applicable requirements
of the Securities Act of 1933, as amended (the “Securities Act”), the
Exchange Act and the Sarbanes-Oxley Act of 2002 and, in each case, the rules and
regulations of the SEC promulgated thereunder. 
None of the Company SEC Reports, including any financial statements or
schedules included or incorporated by reference therein, at the time filed or
furnished, and giving effect to any amendments or supplements thereto filed
prior to the date of this Agreement, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.  To the knowledge of the Company, none of the
Company SEC Reports is the subject of ongoing SEC review or outstanding SEC
comment.  None of the Company’s
Subsidiaries is required to file periodic reports with the SEC pursuant to the
Exchange Act.

 

(b)           Except in the case of unaudited
financial statements as permitted by Form 10-Q, the audited and unaudited
consolidated financial statements (including the related notes thereto) of the
Company and its Subsidiaries included (or incorporated by reference) in the
Company SEC Reports, as amended or supplemented prior to the date of this
Agreement, have been prepared in accordance with GAAP applied on a consistent
basis and fairly present, in all material respects, the consolidated financial
position of the Company and its Subsidiaries as of their respective dates, and
the consolidated income, stockholders equity, results of operations and changes
in consolidated financial position or cash flows for the periods presented
therein (subject, in the case of unaudited statements, to normal and recurring
year-end adjustments that are not material in amount or nature).  All of the Company’s Subsidiaries other than
Northern Therapeutics, Inc. are consolidated for accounting purposes.

 

(c)           To the Company’s knowledge, neither
the Company nor any of its Subsidiaries has any liabilities, obligations,
claims or losses (whether liquidated or unliquidated, secured or unsecured,
absolute, accrued, contingent or otherwise) that would be required to be
disclosed on the Company’s most recent consolidated balance sheet filed with
the SEC (including the notes thereto) in conformity with GAAP that are not
disclosed in the Company SEC Reports or reserved on the most recent
consolidated balance sheet of the Company included in the Company SEC Reports,
other than those incurred in the ordinary course of the Company’s or its
Subsidiaries’ respective businesses since December 31, 2007 or which,
individually or in the aggregate, do not or would not reasonably be expected to
have a Material Adverse Effect.

 

3.6          Litigation. 
Except as disclosed in the Company SEC Reports, the Company has not
received notice of any claim, action, suit, proceeding, arbitration, mediation
or

 

11

 

governmental investigation that is
pending or, to the knowledge of the Company, threatened against or relating to
the Company or any of its Material Subsidiaries or any properties or assets of
the Company or any of its Material Subsidiaries, other than any such claim,
action, suit, proceeding, arbitration, mediation or governmental investigation
that (i) does not seek material injunctive relief and (ii) would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

3.7          Compliance
with Law; No Default.  To the
knowledge of the Company, neither the Company nor any of its Material
Subsidiaries is, or has been since December 31, 2005, in conflict with, in
default with respect to or in violation of: (i) any Law applicable to the
Company or any of its Material Subsidiaries or by which any property or asset
of the Company or any of its Material Subsidiaries is bound or affected, or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
Material Subsidiaries is a party or by which the Company or any of its Material
Subsidiaries, or any property or asset of the Company or any of its Material
Subsidiaries, is bound or affected, except in any such case as would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

3.8          Absence
of Certain Changes.  Except as set
forth in the Company SEC Reports filed and publicly available prior to the date
hereof (excluding the disclosures in any “Risk Factors” or “Forward Looking
Statements” sections and any other disclosures included in the Company SEC
Reports which are predictive or forward looking in nature), since December 31, 2007 there has not
been any change, development, event, condition, occurrence or effect that individually
or in the aggregate has had or would reasonably be expected to have a Material
Adverse Effect.

 

3.9          Exemption
from Registration.  Subject to, and
in reliance on, the representations, warranties and covenants made herein by
the Purchaser, the issuance and sale of the Shares in accordance with the terms
and on the bases of the representations and warranties set forth in this
Agreement, may and shall properly occur pursuant to one or more applicable
exemptions from the registration requirements of the Securities Act.

 

3.10        No
Brokers.  None of the Company or any
of its officers, directors, employees, holders of Shares or Affiliates, has
employed or made, or will enter into or make, any agreement, contract,
arrangement or understanding with any broker, finder or similar agent or any
Person that will result in any liability of the Purchaser or any of its
Affiliates, for any finder’s fee, brokerage fee or commission or similar
payment in connection with the transactions contemplated hereby nor is there any
claim by any Person, or to the knowledge of the Company, any basis for a claim
by any Person for any such finder’s fee, brokerage fee or commission or similar
payment.

 

12

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

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

 

4.1          Organization.  The Purchaser is duly organized, validly
existing and in good standing as a corporation under the Laws of the
jurisdiction of its organization with all corporate power and authority to own
its properties and conduct its business as currently conducted.  The Purchaser 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 Purchaser Material Adverse Effect.

 

4.2          Authorization.  The Purchaser has all necessary corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder.  The execution,
delivery and performance of this Agreement by the Purchaser have been duly and
validly authorized by all necessary corporate action.  This Agreement has been duly and validly
executed and delivered by the Purchaser and, assuming due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
agreement of the Purchaser enforceable against the Purchaser in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar Laws of general applicability relating
to or affecting creditors’ rights and to general equity principles.

 

4.3          Consents
and Approvals; No Violation.

 

(a)           Neither the execution and delivery of
this Agreement by the Purchaser nor the consummation of the transactions
contemplated hereby will: (i) violate or conflict with or result in any
breach of any provision of the respective certificates of incorporation or
bylaws or similar governing documents of the Purchaser; (ii) assuming all
consents, approvals, authorizations and permits contemplated by clauses (i) through
(iii) of subsection (b) below have been obtained, and all filings and
notifications described in such clauses have been made, conflict with or
violate any Laws; (iii) violate or conflict with, or result in a breach of
any provision of, or require any consent, waiver or approval or result in a
default or give rise to any right of termination, cancellation, modification or
acceleration (or an event that, with the giving of notice, the passage of time
or otherwise, would constitute a default or give rise to any such right) under,
any of the terms, conditions or provisions of any note, bond, mortgage, lease,
license, agreement, contract, indenture or other instrument or obligation to
which the Purchaser is a party or by which the Purchaser or any of its
properties or assets may be bound; or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the
Purchaser or by which any of its respective properties or assets are bound,
except in the case of clauses (ii) and

 

13

 

(iii), which would not reasonably be expected to have
a Purchaser Material Adverse Effect.

 

(b)           The execution, delivery and
performance of this Agreement by the Purchaser and the consummation of the
transactions contemplated hereby by the Purchaser do not and will not require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity except (i) the pre-merger
notification requirements under the HSR Act and Other Antitrust Laws, (ii) the
applicable requirements of the Exchange Act and the rules and regulations
promulgated thereunder, and (iii) any such consent, approval,
authorization, permit, filing or notification the failure of which to make or
obtain would not reasonably be expected to have a Purchaser Material Adverse
Effect.

 

4.4          No
Brokers.  None of the Purchaser or
any of its officers, directors, employees, holders of Shares or Affiliates, has
employed or made, or will enter into or make, any agreement, contract,
arrangement or understanding with any broker, finder or similar agent or any
Person that will result in any liability of the Company or any of its
Affiliates, for any finder’s fee, brokerage fee or commission or similar
payment in connection with the transactions contemplated hereby nor is there
any claim by any Person, or to the knowledge of the Purchaser, any basis for a
claim by any Person for any such finder’s fee, brokerage fee or commission or
similar payment.

 

4.5          Investment
Purpose.  The Purchaser is acquiring
the Common Stock solely for the purpose of investment and not with a view to,
or for offer or sale in connection with, any distribution thereof.

 

4.6          Sophistication
and Financial Condition of the Purchaser. 
The Purchaser (a) is an “accredited investor” as defined in Rule 501
of Regulation D promulgated under the Securities Act, (b) is a
sophisticated investor and, (c) by virtue of its business or financial
experience, is capable of evaluating the merits and risks of the investment in
the Shares. The Purchaser has been provided an opportunity to ask questions of
and receive answers from representatives of the Company concerning the terms
and conditions of this Agreement and the purchase of the Shares contemplated
hereby. The Purchaser is able to bear the economic risk of holding the Shares
for an indefinite period (including total loss of its investment), and (either
alone or together with its advisors) has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risk of its investment.

 

4.7          Financing.  The Purchaser has, or will have as of the
Closing, sufficient cash, available lines of credit or other sources of
immediately available funds to enable it to make payment of the Aggregate
Purchase Price hereunder.

 

4.8          Ownership.  Neither the Purchaser nor any of its Subsidiaries
has Beneficial Ownership of any shares of Common Stock  except for shares of Common Stock Beneficially Owned by
employee benefit plans of the Purchaser or its Affiliates in the ordinary
course of business.

 

14

 

ARTICLE V.

ADDITIONAL AGREEMENTS OF THE PURCHASER AND THE COMPANY

 

5.1          Reasonable
Best Efforts; Consents and Governmental Approvals.

 

(a)           Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
Laws to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement (including,
without limitation, satisfying the closing conditions in Article VI
hereto).  Without limiting the foregoing,
each of the Company and the Purchaser agrees to use its reasonable best efforts
to: (i) obtain, and cause (with respect to the Company) the Company’s and
(with respect to the Purchaser) the Purchaser’s respective directors, officers,
employees, Affiliates or other related Persons as may be so required to obtain,
all material consents, approvals and authorizations that are required to be
obtained under any Federal, state, local or foreign Law as promptly as
practicable after the date hereof, (ii) prevent the entry, enactment or
promulgation of any threatened or pending injunction or order that could
materially adversely affect the ability of the parties hereto to consummate the
transactions under this Agreement, (iii) lift or rescind any injunction or
order that could materially adversely affect the ability of the parties hereto
to consummate the transactions under this Agreement, (iv) in the event
that any action, suit, proceeding or investigation relating hereto or to the
transactions contemplated hereby is commenced, whether before or after the date
of this Agreement, cooperate to defend vigorously against it and respond
thereto, and (v) effect all necessary registrations and filings and
submissions of information requested by any Governmental Entity.

 

(b)           Each of the Company and the Purchaser
agrees to make any required submissions under the HSR Act and Other Antitrust
Laws which the Company or the Purchaser determines should be made, in each
case, with respect to the transactions contemplated hereby and by the License
Agreement and the Manufacturing and Supply Agreement, as promptly as reasonably
practicable, and in any event within ten (10) calendar days, after the
date of this Agreement and to supply as promptly as reasonably practicable any
additional information and documentary material that may be requested pursuant
to the HSR Act or Other Antitrust Laws and use its reasonable best efforts to
take or cause to be taken all actions necessary, proper or advisable consistent
with this Section 5.1 to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable, and the
Purchaser and the Company shall cooperate with one another (i) in promptly
determining whether any filings are required to be or should be made or
consents, approvals, permits or authorizations are required to be or should be
obtained under any other federal, state or foreign Law or regulation in
connection with the consummation of the transactions contemplated by this
Agreement, the License Agreement and the Manufacturing and Supply Agreement and
(ii) in promptly making any such filings, furnishing information required
in connection therewith and seeking to obtain

 

15

 

as expeditiously as practicable any such consents,
permits, authorizations, approvals or waivers.

 

(c)           Notwithstanding anything in this
Agreement to the contrary, nothing contained in this Agreement shall be deemed
to require the Purchaser, the Company or any of their respective Affiliates to
take or agree to take any Action of Divestiture or Limitation.

 

5.2          Conduct
of Business of the Company.  Except
as expressly required by this Agreement, during the period from the date of
this Agreement to the Closing the Company will not take or omit to be taken any
action, or permit its Subsidiaries to take or to omit to take any action, that
would result in a Material Adverse Effect.

 

5.3          Market
Listing.  The Company shall use its
best efforts to effect the listing of the Shares on the NASDAQ Global Select
Market.

 

5.4          Notification of Certain Matters. 
From the date hereof and until the Closing, the Company shall give
prompt written notice to the Purchaser of: (a) the occurrence, or failure
to occur, of any event, which occurrence or failure would reasonably be
expected to cause any representation or warranty contained in this Agreement or
in any exhibit, schedule, certificate, document or written instrument attached
hereto and made by the Company or its Subsidiaries to be untrue or inaccurate
in any material respect; (b) any default, the written threat or
commencement of any Action, or any development that occurs before the Closing,
of which the Company has knowledge, that would reasonably be expected to result
in a Material Adverse Effect; (c) any failure of the Company, any of its
Subsidiaries or any of their respective Affiliates, holders of Shares or
officers or directors to comply with, perform or satisfy, in any respect, any
covenant, condition or agreement to be complied with, performed by or satisfied
by it under this Agreement or any exhibit, schedule, certificate, document or
written instrument attached hereto; (d) any written notice or other
communication received by the Company from any person alleging that the consent
of such person is or may be required in connection with the execution, delivery
or performance of this Agreement, or the transactions contemplated herein; and (e) any
written notice or other communication received by the Company from any
Governmental Entity in connection with this Agreement or the transactions
contemplated herein; provided that such disclosure shall not be deemed
to cure, or to relieve the Company and its Subsidiaries of any liability or
obligation with respect to, any breach of or failure to satisfy any
representation, warranty, covenant or agreement or to satisfy any condition
hereunder.

 

5.5          Press Releases.  Each of the Company and the Purchaser agrees
that no public release or announcement concerning the transactions contemplated
hereby shall be issued by any party without the prior written consent of the
Company and the Purchaser (which consent shall not be unreasonably withheld,
conditioned or delayed), except as such release or announcement may be required
by Law or the rules or regulations of any applicable United States or
non-U.S. securities exchange or regulatory or governmental body to which the
relevant party is subject or submits, in which case the party required to

 

16

 

make
the release or announcement shall use its reasonable best efforts to allow the
other party reasonable time to comment on such release or announcement in
advance of such issuance, it being understood that the final form and content
of any such release or announcement, to the extent so required, shall be at the
final discretion of the disclosing party.

 

5.6          Legends.

 

(a)           Certificates for the Shares shall
bear a legend in substantially the following form:

 

“THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE OR ANY FOREIGN
REGULATORY REGIMES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE AND FOREIGN SECURITIES LAWS,
AND PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE
SECURITIES (THE “COMPANY”) MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE OR FOREIGN SECURITIES LAWS.

 

(b)           Any holder of Shares may request the
Company to remove any or all of the legends described in this Section 5.6
from the certificates evidencing such Shares by submitting to the Company such
certificates as the Company reasonably requires, together with an opinion of
counsel reasonably satisfactory to the Company to the effect that such legend
or legends are no longer required under the Securities Act or any other
applicable Laws, as the case may be.

 

ARTICLE VI.

CONDITIONS TO THE CONSUMMATION OF THE TRANSACTIONS

 

6.1          Conditions
to Each Party’s Obligations.  The
respective obligations of the parties to effect the transactions contemplated
hereby shall be subject to the satisfaction, on or prior to the Closing Date, of
the following conditions:

 

(a)           No Injunctions or Restraints;
Illegality.  No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition shall be in effect preventing the consummation of the
transactions contemplated by this Agreement. 
No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental Entity

 

17

 

that prohibits or makes illegal consummation of the
purchase or sale of the Shares or any other transaction contemplated
hereby.  No Governmental Entity shall
have filed any claim, action, suit, proceeding, arbitration, mediation or
investigation seeking to enjoin, restrain or otherwise prohibit the
transactions contemplated by this Agreement.

 

(b)                                 HSR
Act.  All filings to be made under
the HSR Act and Other Antitrust Laws with respect to this Agreement and the
transactions contemplated hereby shall have been made and the applicable
waiting period, including all extensions thereof, under the HSR Act and other
Antitrust Laws shall have expired or been terminated.

 

(c)                                  Other
Agreements.  Each of the License
Agreement and the Manufacturing and Supply Agreement shall be in full force and
effect.

 

6.2                                Conditions to Obligations of the Purchaser.  The obligations of
the Purchaser to purchase the Shares and to consummate the transactions
contemplated hereby are subject to the satisfaction, on or prior to the Closing
Date, of each of the following conditions, any of which may be waived by the
Purchaser in accordance with Sections 8.2 and 8.4:

 

(a)                                  Representations
and Warranties.  Each of the
representations and warranties of the Company contained in Article III
shall be true and correct (i) in all respects, if such representations and
warranties are qualified by materiality, Material Adverse Effect or similar
terms and phrases and (ii) in all material respects, if such
representations and warranties are not qualified by materiality, Material
Adverse Effect or similar terms and phrases, in each case at and as of the date
hereof and the Closing Date, as though such representations and warranties were
made on the Closing Date (except for representations and warranties that
expressly speak only as of a specific date or time other than the Closing Date,
which representations and warranties shall continue on the Closing Date to have
been true and correct (in all material respects, if such representations and
warranties are not qualified by materiality, Material Adverse Effect or similar
terms and phrases) as of such specific date or time).

 

(b)                                 Performance
of Obligations of the Company.  The
Company shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Closing Date.

 

(c)                                  Officer’s
Certificate from the Company.  The
Company shall have furnished to the Purchaser, at or prior to the Closing, a
certificate dated the Closing Date signed by the Chief Executive Officer or
Chief Financial Officer of the Company certifying that the conditions set forth
in Sections 6.2(a) and (b) have been satisfied with
respect to the Company.

 

(d)                                 Closing
Certificate.  The Company shall have
delivered a closing certificate in accordance with Section 2.3(b).

 

18

 

(e)                                  Market
Listing. On or prior to the Closing Date, the Shares to be delivered at
Closing shall be listed on the NASDAQ Global Select Market in accordance with Section 5.3.

 

6.3                                Conditions to Obligations of the Company.  The obligations of
the Company to sell the Shares and to consummate the transactions contemplated
hereby are subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, any of which may be waived by the Company in
accordance with Sections 8.2 and 8.4:

 

(a)                                  Representations
and Warranties.  Each of the
representations and warranties of the Purchaser contained in Article IV
shall be true and correct (i) in all respects, if such representations and
warranties are qualified by materiality, Purchaser Material Adverse Effect or
similar terms and phrases and (ii) in all material respects, if such
representations and warranties are not qualified by materiality, Purchaser Material
Adverse Effect or similar terms and phrases, in each case at and as of the date
hereof and the Closing Date, as though such representations and warranties were
made on the Closing Date (except for representations and warranties that
expressly speak only as of a specific date or time other than the Closing Date,
which representations and warranties shall continue on the Closing Date to have
been true and correct as of such specific date or time).

 

(b)                                 Performance
of Obligations of the Purchaser.  The
Purchaser shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date.

 

(c)                                  Officer’s
Certificate from the Purchaser.  The
Purchaser shall have furnished to the Company, at or prior to the Closing, a
certificate dated the Closing Date signed by an authorized officer of the
Purchaser certifying that the conditions set forth in Sections 6.3(a) and
(b) have been satisfied with respect to the Purchaser.

 

ARTICLE VII.

TERMINATION

 

7.1                                Termination.  This Agreement may be terminated, and the
purchase and sale of the Shares abandoned, at any time prior to the Closing:

 

(a)                                  by
mutual written consent of the Purchaser and the Company at any time;

 

(b)                                 by
the Purchaser or the Company if the Closing shall not have occurred on or
before March 4, 2009, except that neither the Purchaser, on the one hand,
nor the Company, on the other hand, may terminate this Agreement if the failure
of the Closing to occur is due to the failure of such party to perform in all
material respects each of its obligations required to be performed at or prior
to the Closing;

 

19

 

(c)                                  by
the Purchaser or the Company, if an event or events shall occur which render
compliance with one or more of the conditions set forth in Section 6.1
impossible except that neither the Purchaser, on the one hand, nor the Company,
on the other hand, may terminate this Agreement if the failure of the Closing
to occur is due to the failure of such party to perform in all material
respects each of its obligations required to be performed at or prior to the
Closing;

 

(d)                                 by
the Purchaser, if an event or events shall occur which render compliance with
one or more of the conditions set forth in Section 6.2 impossible
and such condition (or conditions) is not waived by the Purchaser; provided
that the Purchaser is not in breach in any material respect of its
representations, warranties, covenants or agreements contained in this
Agreement; or

 

(e)                                  by
the Company, if an event or events shall occur which render compliance with one
or more of the conditions set forth in Section 6.3 impossible, and
such condition (or conditions) is not waived by the Company; provided
that the Company is not in breach in any material respect of its or his
representations, warranties, covenants or agreements contained in this
Agreement.

 

7.2                                Notice of Termination.  The party desiring to terminate this
Agreement pursuant to Section 7.1 shall give written notice of such
termination to the other party in accordance with Section 8.2,
specifying the provision hereof pursuant to which such termination is effected.

 

7.3                                Effect of Termination.  Upon the termination of this Agreement
pursuant to Section 7.1, all obligations of the parties hereto
under this Agreement shall terminate, except for the obligations under this Section 7.3
and Article VIII, and there shall be no liability of any party
hereto to any other party and each party hereto shall bear its own fees, costs
and expenses incurred by it or on its behalf in connection with the
negotiation, preparation, execution and performance of this Agreement and no
party shall have any further obligation to any other party; provided, however,
that termination of this Agreement by the Purchaser or the Company pursuant to
clause (c), (d) or (e) of Section 7.1, respectively, by
reason of any breach of this Agreement shall not relieve the defaulting or
breaching party (the “Breaching Party”), whether or not it is the
terminating party, of liability for direct damages actually incurred by the
other party, not including consequential, incidental and/or special damages, as
a result of any breach of this Agreement by the Breaching Party.

 

ARTICLE VIII.

MISCELLANEOUS

 

8.1                                Assignment.  None of this Agreement or any of the
rights or obligations hereunder may be assigned by the Company without the
prior written consent of the Purchaser, or by the Purchaser without the prior
written consent of the Company.  Without
limiting the generality of the foregoing, the Company agrees to the assignment
by the Purchaser of its rights pursuant to this Agreement to any Affiliate or
Subsidiary thereof,

 

20

 

any partnership controlled thereby, any successor in
interest thereto and the Company agrees to execute any and all appropriate
agreements or instruments that the Purchaser may reasonably request in order to
effect or evidence such assignment or consent; provided, however,  that such assignment or consent shall not relieve the
Purchaser of its obligations under this Agreement.  Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, and no other person shall have any right,
benefit or obligation hereunder.

 

8.2                                Notices.  All notices, consents, waivers, requests,
demands and other communications which are required or may be given under this
Agreement shall be in writing and shall be deemed to have been duly given when
received if personally delivered; when transmitted if transmitted by telecopy
upon receipt of telephonic or electronic confirmation, provided that a
copy is mailed by regular mail, return receipt requested; the day after it is
sent, if sent for next day delivery to a domestic address by recognized
overnight delivery service (e.g., Federal
Express); and upon receipt, if sent by certified or registered mail, return
receipt requested.  In each case notice
shall be sent to:

 

if to Purchaser, to:

 

Eli Lilly and Company

Lilly Corporate Center

Indianapolis,
Indiana  46285

Fax:  

Telephone:  

Attention:  General Counsel

 

with a copy to (which shall not constitute notice to Purchaser):

 

Latham &
Watkins LLP

885 Third Avenue

New York, New
York  10022

Fax:  

Telephone:  

Attention:  

 

if to the Company, to:

 

United Therapeutics
Corporation

1110 Spring Street

Silver Spring,
Maryland  20910

Fax:  

Telephone:  

Attention:  Chief Executive Officer

 

21

 

with a copy to:

 

United Therapeutics
Corporation

Office of the General
Counsel

1735 Connecticut
Avenue, N.W.

3rd Floor

Washington, D.C. 20009

Fax:  

Telephone:  

Attention:  General Counsel

 

with a copy to (which shall not constitute notice to the Company):

 

Gibson, Dunn &
Crutcher LLP

1050 Connecticut Ave.,
NW

Washington, D.C. 20036

Fax:  

Telephone:  

Attention:  

 

or to such other place and with such other copies as
either party may designate as to itself by written notice to the others.

 

8.3                                Governing Law.  This Agreement, and any dispute arising out
of, relating to, or in connection with this Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware without giving
effect to any choice or conflict of Law provision or rule (whether of the
State of Delaware of any other jurisdiction) that would cause the application
of the Laws of any jurisdiction other than the State of Delaware.

 

8.4                                Effectiveness: Entire Agreement; Amendments and Waivers.  This Agreement
shall become effective on the parties hereto when all parties hereto have
executed and delivered this Agreement. 
This Agreement, the License Agreement, the Manufacturing and Supply
Agreement and the Confidentiality Agreement, together with all exhibits and
schedules hereto and thereto, constitute the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties.  The parties agree that neither
this Agreement, nor the transactions contemplated hereby, shall violate Section 9
of the Confidentiality Agreement.  In no
event shall this Agreement be deemed to constitute a waiver of, or otherwise
modify, amend or terminate, any rights granted to the Company pursuant to the
Confidentiality Agreement, except as expressly set forth herein.  No amendment, supplement, modification or
waiver of this Agreement shall be binding unless executed in writing by all of
the parties hereto indicating their intention to amend this Agreement.  Neither the failure nor any delay by any
party in exercising any right, power or privilege under this Agreement will
operate as a waiver of any right, power or privilege under this Agreement, and
no waiver of any of the provisions of this 

 

22

 

Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided in such waiver in writing.  In addition, no notice to or demand on one
party will be deemed a waiver of any obligation of such party or of the right
of the party giving such notice or demand to take further action without notice
or demand as provided in this Agreement.

 

8.5                                Multiple Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

8.6                                Severability.  In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument; provided, however, that
in no event shall the Purchaser be required to acquire less than all of the
Shares.

 

8.7                                Titles; Currency; Schedules.  The titles,
captions or headings of the Articles and Sections herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.  Unless otherwise specified, all references
contained in this Agreement to dollars or “$” will mean United States Dollars.

 

8.8                                Fees and Expenses.

 

(a)                                  The
Company.  The Company shall pay all
of the fees, costs and expenses incurred by the Company and its Subsidiaries
incident to or in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, legal,
investment banking and accounting expenses, payments made in connection with
obtaining consents, waivers, agreements and Permits, any stock transfer, real
property transfer, documentary transfer or other similar taxes and sales, use
or other taxes imposed by reason of the sale of the Common Stock and any
deficiency, interest or penalty asserted with respect thereto.  In addition, the Company shall pay one half
of the aggregate HSR Act filing fees paid with respect to the transactions
contemplated hereby.

 

(b)                                 The
Purchaser.  The Purchaser shall pay
all of the fees, costs and expenses incurred by it incident to or in connection
with the negotiation, preparation, execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby.  In addition, the Purchaser shall pay one half
of the aggregate HSR Act filing fees paid with respect to the transactions
contemplated hereby.

 

8.9                                Representation of Counsel; Mutual Negotiation.  Each party has been
represented by counsel of its choice in negotiating this Agreement.  This Agreement shall therefore be deemed to
have been negotiated and prepared at the joint request, direction 

 

23

 

and
construction of the parties, at arm’s length, with the advice and participation
of counsel, and will be interpreted in accordance with its terms without favor
to any party.

 

8.10                          No Third Party Beneficiaries.  This Agreement
shall be binding upon and inure solely to the benefit of each party hereto and
their respective permitted successors and assigns, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any legal or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement, including, without limitation, by way of
subrogation.

 

8.11                          Non-Survival of Representations and
Warranties.  The representations and warranties contained
herein or in any schedule, instrument or other writing delivered pursuant
hereto shall not survive the Closing. 
The covenants and agreements contained herein of the parties hereto
shall survive the Closing without limitation (except for those which by their
terms contemplate a shorter survival time).

 

8.12                          Time of Essence.  With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.

 

[signature pages follow]

 

24

 

IN
WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be duly executed by their respective authorized officers as of the
date first above written.

 

	
   

  	
  ELI LILLY AND COMPANY

  
	
   

  	
   

  
	
   

  
	
   

  	
  By

  	
  /s/ John C.
  Lechleiter

  
	
   

  	
   

  	
  Name: John
  C. Lechleiter

  
	
   

  	
   

  	
  Title:
  President & Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  
	
   

  	
  UNITED THERAPEUTICS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Roger
  A. Jeffs

  
	
   

  	
   

  	
  Name: Roger
  A. Jeffs

  
	
   

  	
   

  	
  Title:
  President & Chief Operating Officer

  

 

 

[Signature Page to Stock Purchase Agreement]

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