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EXHIBIT 1.1
8,919,000 Shares
KING PHARMACEUTICALS, INC.
Common Stock
FORM OF UNDERWRITING AGREEMENT
December __, 1997
XXXXXX BROTHERS INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXXXXXXX & XXXXX LLC
As Representatives of the several
Underwriters named in Schedule I,
c/x Xxxxxx Brothers Inc.
Three World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
King Pharmaceuticals, Inc., a Tennessee corporation (the "Company"),
proposes to issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") 6,000,000 shares of the Company's common stock, no par value
per share (the "Common Stock"), and the shareholders named in Schedule II and
Schedule III hereto (the "Selling Shareholders") propose to sell severally to
the Underwriters an aggregate of 2,919,000 shares of Common Stock (together
with the 6,000,000 shares of Common Stock to be issued and sold by the Company,
the "Firm Shares"). In addition, for the sole purpose of covering
over-allotments in connection with the sale of the Firm Shares, the Company
proposes to grant to the Underwriters an option to purchase up to 1,000,000
additional shares of Common Stock on the terms and for the purposes set forth
in Section 3 herein. The shares of Common Stock for which the Company has
granted the Underwriters an option to purchase are referred to herein as the
"Option Shares." The Firm Shares and any Option Shares purchased pursuant to
this Underwriting Agreement are hereinafter collectively called
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the "Shares." This is to confirm the agreement concerning the purchase of the
Shares from the Company and the Selling Shareholders by the Underwriters.
1. Representations, Warranties and Agreements of the Company. The Company
represents and warrants to, and agrees that:
(a) A registration statement on Form S-1 (File No. 333-38753) and
amendments thereto with respect to the Shares (i) have been prepared by
the Company in conformity with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") thereunder, (ii) have been filed with the Commission
under the Securities Act and (iii) become effective under the Securities
Act. Copies of such registration statement and any amendments thereto
have been delivered by the Company to you as the representatives (the
"Representatives") of the Underwriters. As used in this Agreement,
"Effective Time" means the date and the time as of which such
registration statement, or the most recent post-effective amendment
thereto, if any, was declared effective by the Commission; "Effective
Date" means the date of the Effective Time; "Preliminary Prospectus"
means each prospectus included in such registration statement, or
amendments thereof, before it became effective under the Securities Act
and any prospectus filed with the Commission by the Company with the
consent of the Representatives pursuant to Rule 424(a) of the Rules and
Regulations; "Registration Statement" means such registration statement
as amended at the Effective Time, including all information contained in
the final prospectus filed with the Commission pursuant to Rule 424(b) of
the Rules and Regulations in accordance with Section 6(a) hereof and
deemed to be a part of the registration statement as of the Effective
Time pursuant to paragraph (b) of Rule 430A of the Rules and Regulations;
and "Prospectus" means such final prospectus as first filed with the
Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules
and Regulations. The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. "Rule 462(b)
Registration Statement" means a registration statement filed pursuant to
Rule 462(b) of the Rules and Regulations related to the offering covered
by the Registration Statement.
(b) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all material respects to the
requirements of the Securities Act and the Rules and Regulations and do
not and will not, as of the applicable effective date (as to the
Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) contain an untrue statement of a material fact or
omit to state a material fact required to be stated
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therein or necessary to make the statements therein not misleading;
provided that no representation or warranty is made as to information
contained in or omitted from the Registration Statement or the Prospectus
in reliance upon and in conformity with written information furnished to
the Company through the Representatives by or on behalf of any
Underwriter specifically for inclusion therein, which information is
comprised solely of the information set forth in Section 10(f) hereof.
(c) The Company and each of its subsidiaries (defined in Section 17)
have been duly incorporated and are validly existing as corporations in
good standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good standing
as foreign corporations, in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective
businesses requires such qualification, and in which the failure to so
qualify would, in the aggregate, result in a material adverse effect on
the stockholders' equity, assets, liabilities, business, results of
operations, condition (financial or otherwise), cash flows, affairs or
prospects of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect"), and have all power and authority necessary
(corporate and other) to own or hold their respective properties and to
conduct the businesses in which they are engaged. The Company has no
subsidiaries other than as identified on Annex A hereto.
(d) The Company has an authorized capitalization as set forth in the
Prospectus and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof contained in the
Prospectus; and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued and are fully paid, non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims.
(e) The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued, fully paid and non-assessable and conform to the
description thereof contained in the Prospectus in the section entitled
"Description of Capital Stock."
(f) This Agreement has been duly authorized, executed and delivered
by the Company.
(g) The execution, delivery and performance of this Agreement by the
Company, the issuance and sale of the Shares (the "Offering") and the
other transactions contemplated hereby will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, any
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indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound or
to which any of the property or assets of the Company or any of its
subsidiaries is subject, which conflicts, breaches, violations or
defaults would have, individually or in the aggregate, a Material Adverse
Effect, nor will such actions result in any violation of the provisions
of the articles of incorporation or by-laws or other organizational
documents of the Company or any of its subsidiaries or any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of
their respective properties or assets; and except for the registration of
the Shares under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
the Securities Exchange Act of 1934 (the "Exchange Act") and applicable
state securities laws in connection with the purchase and distribution of
the Shares by the Underwriters, no consent, approval, authorization or
order of, or filing or registration with, any such court or governmental
agency or body is required for the execution, delivery and performance of
this Agreement by the Company and the consummation of the Offering and
the other transactions contemplated hereby.
(h) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company or any of its subsidiaries owned
or to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Securities Act.
(i) Except as described in the Registration Statement or Prospectus,
the Company has not sold or issued any shares of Common Stock during the
six month period preceding the date of the Prospectus, including any
sales pursuant to Rule 144A under, or Regulations D or S of, the
Securities Act, other than shares issued under employee benefit plans,
qualified stock options plans or other employee compensation plans or
pursuant to outstanding options, rights or warrants. There is no
commitment, plan or arrangement to issue, and no outstanding option,
warrant or other right calling for the issuance of, any share of capital
stock of the Company or of any subsidiary or any security or other
instrument that by its terms is convertible into, exercisable for, or
exchangeable for capital stock of the Company.
(j) Neither the Company nor any of its subsidiaries has sustained,
since the date of the latest audited financial statements included in the
Prospectus, any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or
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governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus nor has the Company incurred or undertaken
any liability or obligation, direct or contingent, that is material to
the Company except for liabilities or obligations (i) incurred or
undertaken in the ordinary course of business or (ii) described in the
Registration Statement; and, since such date, there has not been any
change in the capital stock or long-term debt of the Company or any of
its subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, consolidated financial condition,
shareholders' equity, results of operations or prospects of the Company
and its subsidiaries, otherwise than as set forth or contemplated in the
Prospectus.
(k) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or
included in the Prospectus present fairly the financial condition and
results of operations of the entities purported to be shown thereby, at
the dates and for the periods indicated, and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved. The pro forma
financial statements and other pro forma financial information filed as
part of the Registration Statement or included in the Prospectus present
fairly the information shown therein, have been prepared in accordance
with the Commissions rules and guidelines with respect to pro forma
financial statements, have been properly compiled on the pro forma bases
described therein and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions or circumstances referred to therein.
(l) Coopers & Xxxxxxx L.L.P., who have certified certain financial
statements of the Company, certain financial information for the product
line Cortisporin, including related products, and certain financial
information for the additional branded product lines acquired from Glaxo
Wellcome, Inc. (the "Glaxo Lines") on November 14, 1997, whose reports
appear in the Registration Statement and the Prospectus and who have
delivered the initial letters referred to in Section 9(i)(A) hereof, are
independent certified public accountants as required by the Securities
Act and the Rules and Regulations; and Price Waterhouse, who have
certified certain financial information for the additional branded
product lines, manufacturing facility and contracts for manufacturing
products for third parties to be acquired from Xxxxxx-Xxxxxxx Company
pursuant to a Letter of Intent entered into on October 31, 1997 (the
"Warner Lines"), and who have delivered the initial letters referred to
in Section 9(i)(B) hereof, are independent certified public accountants
as required by the Securities Act and the Rules and Regulations.
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(m) The Company and each of its subsidiaries has good and marketable
title in fee simple to all real property and good and marketable title to
all personal property owned by them, in each case free and clear of all
liens, encumbrances, security interests, claims and defects, except such
as are described in the Prospectus or such as do not materially and
adversely affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by
the Company and each of its subsidiaries; and all real property and
buildings held under lease by the Company and each of its subsidiaries is
held by them under valid, subsisting and enforceable leases, with such
exceptions as would not have a Material Adverse Effect and do not
materially interfere with the use made and proposed to be made of such
property and buildings by the Company and each of its subsidiaries.
(n) The Company and each of its subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as is adequate for
the conduct of their respective businesses and as is customary for
companies engaged in similar businesses in similar industries.
(o) The Company and each of its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service xxxx
registrations, copyrights and licenses and other intangible properties
and assets which are both material and necessary for the conduct of their
businesses and have no reason to believe that the conduct of their
businesses will conflict with, and have not received any notice of any
claim of conflict with, any such rights of others, nor, to the best of
the Company's knowledge, is there an infringement by others of such
rights of the Company which could reasonably be expected to have a
Material Adverse Effect.
(p) Except as described in the Registration Statement and the
Prospectus, there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any
property or assets of the Company or any of its subsidiaries is subject
which, if determined adversely to the Company or any of its subsidiaries,
might have a Material Adverse Effect; and to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(q) The Company is in compliance in all material respects with all
applicable rules and regulations of the Food and Drug Administration (the
"FDA"), the Federal Trade Commission (the "FTC"), the Consumer Product
Safety Commission, the United States Department of Agriculture, the Drug
Enforcement Agency (the "DEA"), the United States Environmental
Protection Agency ("EPA") and the Occupational Safety and Health
Administration ("OSHA") and all applicable
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laws, statutes, ordinances, rules or regulations, the enforcement of
which, individually or in the aggregate, would be reasonably expected to
have a Material Adverse Effect.
(r) There are no contracts or other documents which are required to
be described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations which
have not been described in the Prospectus or filed as exhibits to the
Registration Statement.
(s) No relationship, direct or indirect, exists between or among the
Company, on the one hand, and the directors, officers, shareholders,
customers or suppliers of the Company on the other hand, which is
required to be described in the Prospectus which is not so described.
(t) No labor disturbance by the employees of the Company or any of
its subsidiaries exists or, to the knowledge of the Company, is imminent
which might be expected to have a Material Adverse Effect.
(u) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined
in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability; the Company has
not incurred and does not expect to incur liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Section 412 or 4971 of the Internal Revenue Code of 1986,
as amended, including the regulations and published interpretations
thereunder (the "Code"); and each "pension plan" for which the Company
would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing
has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(v) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and
has paid all taxes due thereon, and no tax deficiency has been determined
adversely to the Company or any of its subsidiaries which has had (nor
does the Company have any knowledge of any tax deficiency which, if
determined adversely to the Company or any of its subsidiaries, might
have) a Material Adverse Effect.
(w) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, the Company has not (i) issued securities or
granted options on any securities, (ii) incurred any liabilities or
obligations, direct or contingent, other than liabilities
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and obligations which were incurred in the ordinary course of
business, (iii) entered into any transaction not in the ordinary course
of business or (iv) declared or paid any dividend on its capital stock.
(x) The Company (i) makes and keeps accurate books and records and
(ii) maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with
management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain
accountability for its assets, (C) access to its assets is permitted only
in accordance with management's authorization and (D) the reported
accountability for its assets is compared with existing assets at
reasonable intervals.
(y) Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or by-laws, (ii) except for any defaults or
events that, individually or in the aggregate, would not have a Material
Adverse Effect, in default in any material respect, and no event has
occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or observance of any term,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which it is a
party or by which it is bound or to which any of its properties or assets
is subject, or (iii) except for any violations or failures to obtain
that, individually or in the aggregate, would not have a Material Adverse
Effect, in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property
or assets may be subject or has failed to obtain any material license,
permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or to the conduct of
its business.
(z) Neither the Company nor any of its subsidiaries nor any
director, officer, agent, employee or other person associated with or
acting on behalf of the Company has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(aa) Neither the Company nor any of its subsidiaries is an
"investment company" within the meaning of such term under the Investment
Company Act of 1940 and the rules and regulations of the Commission
thereunder.
(ab) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of medical wastes,
toxic wastes,
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hazardous wastes or hazardous substances by the Company or any of
its subsidiaries (or, to the knowledge of the Company, any of their
predecessors in interest) at, upon or from any of the property now or
previously owned or leased by the Company or any of its subsidiaries in
violation of any applicable law, ordinance, rule, regulation, order,
judgment, decree or permit or which would require remedial action under
any applicable law, ordinance, rule, regulation, order, judgment, decree
or permit, except for any violation or remedial action which would not
have, or could not be reasonably likely to have, singularly or in the
aggregate with all such violations and remedial actions a Material
Adverse Effect; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such
property or of any medical wastes, toxic wastes, hazardous wastes or
hazardous substances due to or caused by the Company or any of its
subsidiaries or with respect to which the Company or any of its
subsidiaries had knowledge, except for any such spill, discharge, leak,
emission, injection, escapes, dumpings and releases which would not have
or would not be reasonably likely to have, singularly or in the aggregate
with all such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, a Material Adverse Effect; and the terms
"hazardous substances," "toxic wastes," "hazardous wastes" and "medical
wastes" shall have the meanings specified in any applicable local, state,
federal and foreign laws or regulations with respect to environmental
protection.
(ac) Except as described in the Registration Statement and the
Prospectus, (i) there are no outstanding warrants or options issued by
the Company to purchase any shares of the capital stock of the Company,
(ii) there are no statutory, contractual, preemptive or other rights to
subscribe for or to purchase any Common Stock that do not by their terms
terminate upon the First Delivery Date (as defined below), and (iii)
there are no restrictions upon transfer of the Common Stock pursuant to
the Company's articles of incorporation or by-laws.
(ad) The Company has not taken, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation
of the price of the shares of Common Stock to facilitate the sale or
resale of the Shares.
(ae) The Shares are authorized for quotation on the Nasdaq National
Market and the Common Stock has been approved for listing, subject only
to official notice of issuance and evidence of satisfactory distribution.
(af) The Company and its subsidiaries possess adequate licenses,
franchises, authorizations or permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as currently conducted, and neither the Company nor
any such subsidiary has received any notice
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of proceedings relating to the revocation or modification of any
such license, franchise, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect, except as described in or
contemplated by the Prospectus.
(ag) The Company has complied and will comply with all of the
provisions of Florida H.B. 1771, codified as Section 517.075 of the
Florida Statutes, and all regulations promulgated thereunder relating to
issuers doing business in Cuba.
2. Representations, Warranties and Agreements of the Selling Shareholders.
Each Selling Shareholder severally and not jointly represents, warrants and
agrees with, each Underwriter:
(a) Each such Selling Shareholder that is an executive officer or
director of the Company as set forth in the Registration Statement has no
reason to believe that the representations and warranties of the Company
contained in Section 1 hereof are not materially true and correct, is
familiar with the Registration Statement and the Prospectus as amended or
supplemented and has no knowledge of any material fact, condition or
information not disclosed in the Registration Statement or the Prospectus
or any amendment or supplement thereto, as of the applicable filing date,
which has adversely affected or may adversely affect the business of the
Company and is not prompted to sell shares of Common Stock by any
information concerning the Company which is not set forth in the
Registration Statement and the Prospectus.
(b) Such Selling Shareholder has full right, power and authority to
execute and deliver this Agreement, the Custody Agreement and the Power
of Attorney referred to below and to perform such Selling Shareholder's
obligations under such agreements; the execution, delivery and
performance of this Agreement, the Custody Agreement and the Power of
Attorney by such Selling Shareholder and the consummation by such Selling
Shareholder of the transactions contemplated hereby and thereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, note agreement or other agreement or instrument to which
such Selling Shareholder is a party or by which such Selling Shareholder
is bound or to which any of the property or assets of the Selling
Shareholder is subject, nor will such actions result in any violation of
the provisions of the charter or by-laws of any Selling Shareholder or
any statute, law, rule, regulation, ordinance, judgment, order or decree
of any government, governmental instrumentality or court having
jurisdiction over such Selling Shareholder or the property or assets of
such Selling Shareholder; and no consent, approval, authorization or
order of or declaration or filing with any government, governmental
instrumentality or court is required for the execution, delivery and
performance of this Agreement, the Custody Agreement and the Power
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of Attorney by such Selling Shareholder and the consummation by such
Selling Shareholder of the transactions contemplated hereby and thereby.
(c) Such Selling Shareholder has, and immediately prior to a
Delivery Date (as defined in Section 5 hereof) such Selling Shareholder
will have, good and valid title to the Shares to be sold by such Selling
Shareholder hereunder on such date, free and clear of all claims, liens,
encumbrances, equities, or security interests, and, upon delivery of such
Shares and payment therefore pursuant hereto, good and valid title to
such Shares free and clear of all claims, liens, encumbrances, equities,
security interests or restrictions on transfer will pass to the
Underwriters.
(d) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to or which has constituted
or which might reasonably be expected to cause or result, under the
Exchange Act or otherwise, in the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the Shares.
(e) Such Selling Shareholder has placed in custody under a custody
agreement (the "Custody Agreement" and together with all other similar
agreements executed by the other Selling Shareholders, the "Custody
Agreements") with Union Planters National Bank, Memphis, Tennessee as
custodian (the "Custodian") for delivery under this Agreement,
certificates in negotiable form (with signature guaranteed by a
commercial bank or trust company having an office or correspondent in the
United States or a member firm of the New York or American Stock
Exchanges) representing the Shares to be sold by such Selling Shareholder
hereunder.
(f) Such Selling Shareholder has duly and irrevocably executed and
delivered a power of attorney (the "Power of Attorney" and together with
all other similar agreements executed by the other Selling Shareholders,
the "Powers of Attorney"), appointing one or more persons, as
attorneys-in-fact with full power of substitution, and with full
authority (exercisable by any one or more of them) to execute and deliver
this Agreement and to take such action as may be necessary or desirable
to carry out the provisions hereof on behalf of such Selling Shareholder.
(g) Each such Selling Shareholder that is an executive officer or
director of the Company as set forth in the Registration Statement
severally represents, warrants and agrees that the Registration Statement
and the Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus, when they become effective or
are filed with the Commission, as the case may be, do not and will not,
as of the applicable effective date (as to the Registration Statement and
any amendment thereto) and as of the applicable filing date (as to the
Prospectus and any amendment or supplement thereto) contain any untrue
statement of a material fact
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or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided that no
representation or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance
upon and in conformity with written information furnished to the Company
through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein; and further, each Selling Shareholder
severally represents, warrants and agrees that the Registration Statement
and the Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus, when they become effective or
are filed with the Commission, as the case may be, do not and will not,
as of the applicable effective date (as to the Registration Statement and
any amendment thereto) and as of the applicable filing date (as to the
Prospectus and any amendment or supplement thereto), with respect to any
information about the Selling Shareholder, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Registration Statement or
the Prospectus in reliance upon and in conformity with written
information furnished to the Company through the Representatives by or on
behalf of any Underwriter specifically for inclusion therein.
3. Purchase of the Shares by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to issue and sell 6,000,000
Firm Shares and each Selling Shareholder hereby agrees to sell the number of
Firm Shares set opposite its/his/her name in Schedule 2 hereto, severally and
not jointly, to the several Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase the number of Firm Shares set
opposite that Underwriter's name in Schedule 1 hereto. Each Underwriter shall
be obligated to purchase from the Company, and from each Selling Shareholder,
that number of Firm Shares which represent the same proportion of the number of
Firm Shares to be sold by the Company, and by each Selling Shareholder, as the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule 1 represents of the total number of Firm Shares to be purchased by all
of the Underwriters pursuant to this Agreement. The respective purchase
obligations of the Underwriters with respect to the Firm Shares shall be
rounded among the Underwriters to avoid fractional shares, as the
Representatives may determine.
In addition, the Company grants to the Underwriters an option to purchase
up to 1,000,000 Option Shares. Such option is granted for the purpose of
covering over-allotments in the sale of Firm Shares and is exercisable as
provided in Section 5 hereof. Option Shares shall be purchased severally for
the account of the Underwriters in proportion to the number of Firm Shares set
opposite the name of such Underwriters in Schedule 1 hereto. The respective
purchase obligations of each Underwriter with respect to the Option Shares
shall be adjusted by the Representatives so that no Underwriter shall be
obligated to
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purchase Option Shares other than in 100 share amounts. The price of both the
Firm Shares and any Option Shares shall be $_____ per share.
The Company and the Selling Shareholders shall not be obligated to deliver
any of the Shares to be delivered on any Delivery Date (as hereinafter
defined), as the case may be, except upon payment for all the Shares to be
purchased on such Delivery Date as provided herein.
4. Offering of Shares by the Underwriters. Upon authorization by the
Representatives of the release of the Firm Shares, the several Underwriters
propose to offer the Firm Shares for sale upon the terms and conditions set
forth in the Prospectus.
5. Delivery of and Payment for the Shares. Delivery of and payment for
the Firm Shares shall be made at the offices of Shearman & Sterling, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 A.M. New York City time, on
the third full business day following the date of this Agreement (or if pricing
of the Firm Shares occurs after 4:30 P.M. New York City time, on the fourth
full business day thereafter) or at such other date or place as shall be
determined by agreement between the Representatives and the Company. This date
and time are sometimes referred to as the "First Delivery Date." On the First
Delivery Date, the Company and the Selling Shareholders shall deliver or cause
to be delivered certificates representing the Firm Shares to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company and the Selling Shareholders of the purchase price by
wire transfer in immediately available funds. Time shall be of the essence,
and delivery at the time and place specified pursuant to this Agreement is a
further condition of the obligation of each Underwriter hereunder. Upon
delivery, the Firm Shares shall be registered in such names and in such
denominations as the Representatives shall request in writing not less than two
full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm Shares,
the Company and the Selling Shareholders shall make the certificates
representing the Firm Shares available for inspection by the Representatives in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the First Delivery Date.
The option granted in Section 3 will expire 30 days after the date of this
Agreement and may be exercised in whole or in part from time to time by written
notice being given to the Company by the Representatives. Such notice shall
set forth the aggregate number of Option Shares as to which the option is being
exercised, the names in which the Option Shares are to be registered, the
denominations in which the Option Shares are to be issued and the date and
time, as determined by the Representatives, when the Option Shares are to be
delivered; provided, however, that this date and time shall not be earlier than
the First Delivery Date, nor earlier than the second business day after the
date on which the
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option shall have been exercised nor later than the fifth business day after
the date on which the option shall have been exercised. The date and time
the Option Shares are delivered are sometimes referred to as a "Second Delivery
Date" and the First Delivery Date and any Second Delivery Date are sometimes
referred to as a "Delivery Date."
Delivery of and payment for the Option Shares shall be made at the
place specified in the first sentence of the first paragraph of this Section 5
(or at such other place as shall be determined by agreement between the
Representatives and the Company) at 10:00 A.M., New York City time, on such
Second Delivery Date. On such Second Delivery Date, the Company shall deliver
or cause to be delivered the certificates representing the Option Shares to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. Upon delivery, the Option Shares
shall be registered in such names and in such denominations as the
Representatives shall request in the aforesaid written notice. For the purpose
of expediting the checking and packaging of the certificates for the Option
Shares, the Company shall make the certificates representing the Option Shares
available for inspection by the Representatives in New York, New York, not later
than 2:00 P.M., New York City Time, on the business day prior to such Second
Delivery Date.
6. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Securities Act not later than the Commission's close of business on
the second business day following the execution and delivery of this
Agreement or, if applicable, such earlier time as may be required by Rule
430A(a)(3) under the Securities Act; to make no further amendments or any
supplement to the Registration Statement or to the Prospectus except as
permitted herein; to advise the Representatives, promptly after it
receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and
to furnish the Representatives with copies thereof; to advise the
Representatives, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or the Prospectus, of
the suspension of the qualification of the Shares for offering or sale in
any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus
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or the Prospectus or suspending any such qualification, to use
promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to
counsel for the Underwriters a signed copy of the Registration Statement
as originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed therewith;
(c) To deliver promptly to each of the Representatives such number
of the following documents as the Representatives shall reasonably
request: (i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto (in each
case excluding exhibits other than this Agreement and the computation of
per share earnings); (ii) each Preliminary Prospectus, the Prospectus and
any amended or supplemented Prospectus; and, if the delivery of a
prospectus is required at any time after the Effective Time in connection
with the offering or sale of the Shares and if at such time any events
shall have occurred as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
when such Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary to amend or supplement the Prospectus in
order to comply with the Securities Act, to notify the Representatives
and, upon their request, to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended or
supplemented Prospectus which will correct such statement or omission or
effect such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy
thereof to the Representatives and counsel for the Underwriters and
obtain the consent of the Representatives to the filing;
(f) As soon as practicable after the Effective Date, to deliver to
the Representatives and to make generally available to the Company's
security holders an earnings statement of the Company and its
subsidiaries (which need not be audited)
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complying with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Company, Rule 158);
(g) For a period of five years following the Effective Date, to
furnish to the Representatives copies of all materials furnished by the
Company to its shareholders and all public reports and all reports and
financial statements furnished by the Company to the principal national
securities exchange upon which the Shares may be listed pursuant to
requirements of or agreements with such exchange or to the Commission
pursuant to the Exchange Act or any rule or regulation of the Commission
thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Shares for offering
and sale under the securities laws of such jurisdictions as the
Representatives may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the distributions of the Shares;
except that in no event shall the Company be obligated in connection
therewith to qualify as a foreign corporation or execute a general
consent for service of process in any jurisdiction;
(i) For a period of 180 days from the date of the Prospectus, not
to, directly or indirectly, (1) offer for sale, sell, pledge or otherwise
dispose of (or, during such period, enter into any transaction or device
which is designed to, or could be expected to, result in the disposition
by any person at any time in the future of) any shares of Common Stock or
securities convertible into or exchangeable for Common Stock (other than
the Shares and shares issued pursuant to employee benefit plans,
qualified stock option plans or other employee compensation plans
existing on the date hereof or pursuant to currently outstanding options,
warrants or rights), or sell or grant options, rights or warrants with
respect to any shares of Common Stock or securities convertible into or
exchangeable for Common Stock (other than the grant of options pursuant
to option plans existing on the date hereof), or (2) enter into any swap
or other derivatives transaction that transfers to another, in whole or
in part, any of the economic benefits or risks of ownership of such
shares of Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, in each case without the prior written
consent of Xxxxxx Brothers Inc., and to cause each officer and director
of the Company, and each other holder of shares constituting (or shares
convertible into, or options exercisable for) at least three percent
(3.0%) of the outstanding common stock of the Company prior to
consummation of the Offering, to furnish to the Representatives, prior to
the First Delivery Date, a letter or letters, in form and substance
satisfactory to counsel for the Underwriters, pursuant to which each such
person shall agree not to, directly or indirectly, (1) offer for sale,
sell,
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pledge or otherwise dispose of (or enter into any transaction or
device which is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any shares of
Common Stock or securities convertible into or exchangeable for Common
Stock or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits
or risks of ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or other securities, in cash or otherwise, in
each case for a period of 180 days from the date of the Prospectus,
without the prior written consent of Xxxxxx Brothers Inc;
(j) To apply the net proceeds from the sale of the Shares being sold
by the Company as set forth in the Prospectus;
(k) To take such steps as shall be necessary to ensure that neither
the Company nor any of its subsidiaries shall become an "investment
company" within the meaning of such term under the Investment Company Act
of 1940 and the rules and regulations of the Commission thereunder;
(l) Prior to the Effective Date, to apply for the inclusion of the
Shares on the Nasdaq National Market and use its best efforts to complete
that listing, subject only to official notice of issuance, prior to the
First Delivery Date; and
(m) To comply with all registration, filings and reporting
requirements of the Exchange Act, which may from time to time be
applicable to the Company and to comply with all provisions of all
undertakings contained in the Registration Statement.
7. Further Agreements of the Selling Shareholders. Each Selling
Shareholder agrees:
(a) For a period of 180 days from the date of the Prospectus, not
to, directly or indirectly, (1) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device which is designed to,
or could be expected to, result in the disposition by any person at any
time in the future of) any shares of Common Stock or securities
convertible into or exchangeable for Common Stock (other than the Stock)
or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits
or risks of ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or other securities, in cash or otherwise, in
each case without the prior written consent of Xxxxxx Brothers Inc.
(b) That the Shares to be sold by the Selling Shareholder hereunder
which are represented by the certificates held in custody for the Selling
Shareholder, are
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subject to the interest of the Underwriters hereunder, that the
arrangements made by the Selling Shareholder for such custody are to that
extent irrevocable, and that the obligations of the Selling Shareholder
hereunder shall not be terminated by any act of the Selling Shareholder,
by operation of law, by the death or incapacity of any individual Selling
Shareholder or the occurrence of any other event; and
(c) To deliver to the Representatives prior to the First Delivery
Date a properly completed and executed United States Treasury Department
Form W-8 (if the Selling Shareholder is a non-United States person) or
Form W-9 (if the Selling Shareholder is a United States person).
8. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Shares and any taxes payable
in that connection; (b) the costs incident to the preparation, printing and
filing under the Securities Act of the Registration Statement and any
amendments and exhibits thereto; (c) the costs of distributing the Registration
Statement as originally filed and each amendment thereto and any post-effective
amendments thereof (including, in each case, exhibits), any Preliminary
Prospectus, the Prospectus and any amendment or supplement to the Prospectus,
all as provided in this Agreement; (d) the costs of producing and distributing
this Agreement and the Agreement Among Underwriters and any other related
documents in connection with the offering, purchase, sale and delivery of the
Shares; (e) the costs of delivering and distributing the Custody Agreements and
the Powers of Attorney; (f) the filing fees incident to securing any required
review by the National Association of Securities Dealers, Inc. of the terms of
sale of the Shares; (g) any applicable listing or other fees; (h) the fees and
expenses of qualifying the Shares under the securities laws of the several
jurisdictions as provided in Section 6(h) and of preparing, printing and
distributing a Blue Sky Memorandum (including related expenses and reasonable
fees of counsel to the Underwriters); and (i) all other costs and expenses
incident to the performance of the obligations of the Company and the Selling
Shareholders under this Agreement; provided that, except as provided in this
Section 8 and in Section 13, the Underwriters shall pay their own costs and
expenses, including the costs and expenses of their counsel, any transfer taxes
on the Common Stock which they may sell and the expenses of advertising any
offering of the Shares made by the Underwriters, and the Selling Shareholders
shall pay the fees and expenses of their respective counsel, the Custodian and
any attorney-in-fact, and any transfer taxes payable in connection with its
sale of Shares to the Underwriters.
9. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
and the Selling Shareholders contained herein, to the performance by the Company
and the Selling Shareholders of their respective obligations hereunder, and to
the following additional terms and conditions:
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(a) The Prospectus shall have been timely filed with the Commission
in accordance with Section 6(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall
have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to such Delivery Date that the Registration Statement
or the Prospectus or any amendment or supplement thereto contains an
untrue statement of fact which, in the opinion of Shearman & Sterling,
counsel for the Underwriters, is material, or omits to state a fact
which, in the opinion of the Representatives, or in the opinion of
counsel to the Underwriters, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Custody
Agreements, the Powers of Attorney, the Shares, the Registration
Statement and the Prospectus, and all other legal matters relating to
this Agreement and the transactions contemplated hereby shall be
satisfactory in all respects to counsel for the Underwriters, and the
Company and the Selling Shareholders shall have furnished to such counsel
all documents and information that they may reasonably request to enable
them to pass upon such matters.
(d) Baker, Donelson, Bearman & Xxxxxxxx shall have furnished to the
Representatives its written opinion, as counsel to the Company, addressed
to the Underwriters and dated such Delivery Date, in form and substance
satisfactory to the Representatives, to the effect that:
(i) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good
standing as foreign corporations in each jurisdiction in which
their respective ownership or lease of property or the conduct of
their respective businesses requires such qualification, except to
the extent the failure to so qualify or be in good standing would
not have a Material Adverse Effect, and have all power and
authority necessary (corporate or other) to own or hold their
respective properties and to conduct the businesses in which they
are engaged;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus and all of the issued shares of capital stock of
the Company
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20
(including the shares of capital stock being offered on such
Delivery Date in connection with the Offering) have been duly and
validly authorized and issued, are fully paid and non-assessable
and conform to the description thereof contained in the Prospectus;
all of the issued shares of capital stock of its subsidiaries have
been duly and validly authorized and issued and are fully paid,
non-assessable and are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims;
(iii) There are no preemptive or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of,
any Shares pursuant to the Company's articles of incorporation or
by-laws or any agreement or other instrument known to such counsel;
(iv) To the best knowledge of such counsel, there are no legal
or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property or assets of
the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries,
could reasonably be expected to have a Material Adverse Effect;
and, to the best knowledge of such counsel, no such proceedings are
threatened or contemplated by governmental authorities or
threatened by others;
(v) The Registration Statement was declared effective under
the Securities Act as of the date and time specified in such
opinion, the Prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) of the Rules and Regulations
specified in such opinion on the date specified therein and, to the
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose is pending or threatened by the
Commission;
(vi) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company prior
to such Delivery Date (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Rules and Regulations;
(vii) To the best knowledge of such counsel, there are no
contracts or other documents to which the Company or any of its
subsidiaries is a party which are required to be described in the
Prospectus or filed as exhibits to the Registration Statement by
the Securities Act or by the Rules and Regulations which have not
been described or filed as exhibits to the Registration
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Statement as required by the Rules and Regulations; and all
descriptions in the Prospectus of contracts and other documents are
accurate in all material respects and fairly present the
information purported to be shown;
(viii) This Agreement has been duly authorized, executed and
delivered by the Company;
(ix) The execution, delivery and performance of this Agreement
by the Company, the issuance and sale of the Shares being delivered
on such Delivery Date by the Company and the other transactions
contemplated hereby do not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to
which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is
subject, nor will such actions result in any violation of the
provisions of the articles of incorporation or by-laws or other
organizational documents of the Company or any of its subsidiaries
or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their respective properties or
assets; and, except for the registration of the Shares under the
Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the
Exchange Act and applicable state or foreign securities laws in
connection with the purchase and distribution of the Shares by the
Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency
or body is required for the execution, delivery and performance of
this Agreement and the consummation of the other transactions
contemplated hereby;
(x) To the best knowledge of such counsel, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to
include any securities of the Company or any of its subsidiaries
owned or to be owned by such person in the securities registered
pursuant to the Registration Statement or granting such person the
right to file a registration statement under the Securities Act
with respect to such securities;
(xi) The Company and each of its subsidiaries have good and
marketable title in fee simple to all real property owned by them,
in each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not
materially affect the value of
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such property and not materially interfere with the use made
and proposed to be made of such property by the Company and its
subsidiaries; and all real property and buildings held under lease
by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases, with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
subsidiaries;
(xii) Neither the Company nor any of its subsidiaries is an
"investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder;
(xiii) The statements in the Registration Statement and the
Prospectus under the captions "Risk Factors--Certain Charter,
By-Laws and Statutory Provisions; Rights Agreement," "Management,"
"Certain Transactions," "Description of Capital Stock" "Shares
Eligible for Future Sale," and "Certain United States Federal Tax
considerations for Non-U.S. Holders of Common Stock" insofar as such
statements describe statutes, regulations, legal or governmental
proceedings, contracts or other documents referred to therein are
accurate and fairly summarize the information called for with
respect to such documents and matters and, insofar as such
statements constitute matters of law or legal conclusions, have been
reviewed by such counsel and fairly present the information
disclosed therein in all material respects;
(xiv) The Common Stock is duly authorized for listing on the
Nasdaq National Market, subject only to official notice of
issuance;
(xv) No consent or waiver of any party to any contract,
agreement, instrument, lease or license to which the Company is a
party, or to which any of its properties or assets are subject, is
required for the execution, delivery, or performance of this
Agreement, or the sale or delivery of the Stock;
(xvi) To the best knowledge of such counsel, there are no
statutes or regulations that are required to be described in the
Prospectus that are not described as required; and
(xvii) The form of certificate used to evidence the Common
Stock complies in all material respects with all applicable
statutory requirements, with any applicable requirements of the
charter and bylaws of the Company and the requirements of the
Nasdaq National Market.
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In rendering such opinion, such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the federal law of the
United States of America, the laws of the State of New York and the
General Corporation Law of the State of Tennessee, upon opinions of other
counsel, who shall be counsel satisfactory to counsel for the
Underwriters, in which case the opinion shall state that they believe you
and they are entitled to so rely. Such counsel may also state that it is
relying, in respect of matters of fact, upon certificates of officers of
the Company and its subsidiaries, provided that such counsel shall state
that it believes that both the Underwriters and it are justified in
relying upon such certificates. Such counsel shall also have furnished
to the Representatives a written statement, addressed to the Underwriters
and dated such Delivery Date, in form and substance satisfactory to the
Representatives, to the effect that (x) such counsel has acted as counsel
to the Company in connection with the preparation of the Registration
Statement, and is familiar with the documents incorporated by reference
in the Prospectus as of the Delivery Date, and (y) based on the
foregoing, no facts have come to the attention of such counsel which lead
it to believe that the Registration Statement, as of the Effective Date,
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 not misleading, that the Prospectus contains any
untrue statement of a material fact or omits 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 or that the documents incorporated by reference in
the Prospectus (except for the financial statements, as to which such
counsel needs express no opinion), as of the dates they were filed with
the Commission, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(e) Baker, Donelson, Bearman & Xxxxxxxx shall have furnished to the
Representatives its written opinion, as counsel to the Selling
Shareholders named in Schedule II hereto, for whom it is acting as
counsel, addressed to the Underwriters and dated the First Delivery Date,
in form and substance satisfactory to the Representatives, to the effect
that:
(i) This Agreement and the Custody Agreement have been duly
authorized, executed and delivered by or on behalf of each such
Selling Shareholder and each of such Selling Shareholders has duly
authorized, executed and delivered such Selling Shareholder's
respective power of attorney;
(ii) Each Attorney-in-Fact has been duly authorized by each
such Selling Shareholder to deliver the Shares to be sold by such
Selling
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Shareholder on behalf of such Selling Shareholder in
accordance with the terms of this Agreement;
(iii) Immediately prior to the Delivery Date, to the knowledge
of such counsel after due inquiry of corporate or partnership books
and records, review of certificates representing the Shares to be
sold by such Selling Shareholder and all prior ownership interests
and review of all representations, warranties by and certificates
from such Selling Shareholders, each Selling Shareholder had good
and valid title to the Shares to be sold by such Selling
Shareholder hereunder on such date, free and clear of all claims,
liens, encumbrances, equities, or security interests and had full
right, power and authority to sell, transfer and deliver such
Shares pursuant to this Agreement;
(iv) Good and valid title to the Shares to be sold by each
Selling Shareholder under this Agreement, free and clear of all
claims, liens, encumbrances, equities or claims, has been
transferred to each of the several Underwriters, assuming that such
Underwriters have purchased such shares in good faith and without
notice of any such claim, lien, encumbrance, equities security
interests or restrictions on transfer or any other adverse claim
within the meaning of the Uniform Commercial Code; and
(v) Each Selling Shareholder has all necessary power and
authority to execute and deliver this Agreement, the Power of
Attorney and the Custody Agreement and to perform its obligations
under such agreements; all corporate action required to be taken by
such Selling Shareholder for the due and proper sale and delivery
of the Shares to be sold by the Selling Shareholder has been duly
and validly taken; the execution, delivery and performance of this
Agreement, the Power of Attorney and the Custody Agreement by the
Selling Shareholder and the consummation by the Selling Shareholder
of the transactions contemplated hereby and thereby will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any statute,
any material indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument known to such counsel to
which the Selling Shareholder is a party or by which the Selling
Shareholder is bound or to which any of the property or assets of
the Selling Shareholder is subject, nor will such actions result in
any violation of the charter or by-laws of the Selling Shareholder
or any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body having
jurisdiction over the Selling Shareholder or the property or assets
of the Selling Shareholder; and, except for the registration of the
Shares under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state
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or foreign securities laws in connection with the purchase and
distribution of the Shares by the Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement, the
Power of Attorney or the Custody Agreement by the Selling
Shareholder and the consummation by the Selling Shareholder of the
transactions contemplated hereby and thereby.
In rendering such opinion, such counsel (i) may rely, as to all
matters governed by the laws of jurisdictions other than the federal law
of the United States of America, the laws of the State of New York and
the General Corporation Law of the State of Tennessee, upon opinions of
other counsel, who shall be counsel satisfactory to counsel for the
Underwriters, in which case the opinion shall state that they believe you
and they are entitled to so rely, and (ii) in rendering the opinion in
Section 9(e) above, rely upon a certificate of each Selling Shareholder
in respect of matters of fact as to ownership of and liens, encumbrances,
equities or claims on the shares of Common Stock sold by such Selling
Shareholder, provided that such counsel shall furnish copies thereof to
the Representatives and state that it believes that both the Underwriters
and it are justified in relying upon such certificate. On each Delivery
Date, such counsel shall also have furnished to the Representatives a
written statement, addressed to the Underwriters and dated such Delivery
Date, in form and substance satisfactory to the Representatives, to the
effect that (x) such counsel has acted as counsel to each Selling
Shareholder in connection with the preparation of the Registration
Statement, and (y) based on the foregoing, no facts have come to the
attention of such counsel which lead it to believe that the Registration
Statement, as of the Effective Date, contained any untrue statement of a
material fact relating to any Selling Shareholder or omitted to state
such a material fact required to be stated therein or necessary in order
to make the statements therein not misleading, or that the Prospectus
contains any untrue statement of a material fact relating to any Selling
Shareholder or omits to state such 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.
(f) Boult, Cummings, Xxxxxxx & Xxxxx, PLC shall have furnished to
the Representatives its written opinion, as counsel to the Selling
Shareholders named in Schedule III hereto for whom it is acting as
counsel, addressed to the Underwriters and dated the First Delivery Date,
in form and substance satisfactory to the Representatives, to the effect
that:
(i) This Agreement and the Custody Agreement have been duly
authorized, executed and delivered by or on behalf of each such
Selling Shareholder and each of such Selling Shareholders has duly
authorized,
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executed and delivered such Selling Shareholder's respective
power of attorney;
(ii) Each Attorney-in-Fact has been duly authorized by each
such Selling Shareholder to deliver the Shares to be sold by such
Selling Shareholder on behalf of such Selling Shareholder in
accordance with the terms of this Agreement;
(iii) Immediately prior to the Delivery Date, to the knowledge
of such counsel after due inquiry of corporate or partnership books
and records, review of certificates representing the Shares to be
sold by such Selling Shareholder and all prior ownership interests
and review of all representations, warranties by and certificates
from such Selling Shareholders, each Selling Shareholder had good
and valid title to the Shares to be sold by such Selling
Shareholder hereunder on such date, free and clear of all claims,
liens, encumbrances, equities, or security interests and had full
right, power and authority to sell, transfer and deliver such
Shares pursuant to this Agreement;
(iv) To the best knowledge of such counsel, good and valid
title to the Shares to be sold by each Selling Shareholder under
this Agreement, free and clear of all claims, liens, encumbrances,
equities or claims, has been transferred to each of the several
Underwriters, assuming that such Underwriters have purchased such
shares in good faith and without notice of any such claim, lien,
encumbrance, equities security interests or restrictions on
transfer or any other adverse claim within the meaning of the
Uniform Commercial Code; and
(v) To the best knowledge of such counsel, each Selling
Shareholder has all necessary power and authority to execute and
deliver this Agreement, the Power of Attorney and the Custody
Agreement and to perform its obligations under such agreements; all
corporate action required to be taken by such Selling Shareholder
for the due and proper sale and delivery of the Shares to be sold
by the Selling Shareholder has been duly and validly taken; the
execution, delivery and performance of this Agreement, the Power of
Attorney and the Custody Agreement by the Selling Shareholder and
the consummation by the Selling Shareholder of the transactions
contemplated hereby and thereby will not conflict with or result in
a breach or violation of any of the terms or provisions of, or
constitute a default under, any statute, any material indenture,
mortgage, deed of trust, loan agreement or other material agreement
or instrument known to such counsel to which the Selling
Shareholder is a party or by which the Selling Shareholder is bound
or to which any of the property or assets of the Selling
Shareholder is subject, nor will such actions
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result in any violation of the charter or by-laws of the
Selling Shareholder or any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or body
having jurisdiction over the Selling Shareholder or the property or
assets of the Selling Shareholder; and, except for the registration
of the Shares under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may
be required under the Exchange Act and applicable state or foreign
securities laws in connection with the purchase and distribution of
the Shares by the Underwriters, no consent, approval, authorization
or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery
and performance of this Agreement, the Power of Attorney or the
Custody Agreement by the Selling Shareholder and the consummation
by the Selling Shareholder of the transactions contemplated hereby
and thereby.
In rendering such opinion, such counsel (i) may rely, as to all
matters governed by the laws of jurisdictions other than the federal law
of the United States of America, the laws of the State of New York (the
laws of which such counsel is allowed to assume, for purposes of such
opinion, are identical to the laws of the State of Tennessee) and the
General Corporation Law of the State of Tennessee, upon opinions of other
counsel, who shall be counsel satisfactory to counsel for the
Underwriters, in which case the opinion shall state that they believe you
and they are entitled to so rely, and (ii) in rendering the opinion in
Section 9(e) above, rely upon a certificate of each Selling Shareholder
in respect of matters of fact as to ownership of and liens, encumbrances,
equities or claims on the shares of Common Stock sold by such Selling
Shareholder, provided that such counsel shall furnish copies thereof to
the Representatives and state that it believes that both the Underwriters
and it are justified in relying upon such certificate. On each Delivery
Date, such counsel shall also have furnished to the Representatives a
written statement, addressed to the Underwriters and dated such Delivery
Date, in form and substance satisfactory to the Representatives, to the
effect that (x) such counsel has acted as counsel to each Selling
Shareholder in connection with the preparation of the Registration
Statement, and (y) based on the foregoing, no facts have come to the
attention of such counsel which lead it to believe that the Registration
Statement, as of the Effective Date, contained any untrue statement of a
material fact relating to any Selling Shareholder or omitted to state
such a material fact required to be stated therein or necessary in order
to make the statements therein not misleading, or that the Prospectus
contains any untrue statement of a material fact relating to any Selling
Shareholder or omits to state such 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.
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(g) XxXxxxx & Xxxxx, L.L.P. shall have furnished to the
Representatives its written opinion, as special regulatory counsel to the
Company, addressed to the Underwriters and dated such Delivery Date, in
form and substance satisfactory to the Representatives to the effect
that:
(i) The statements and descriptions made in the Prospectus
under the captions "Risk Factors--Government Regulation" and
"Business--Government Regulation" to the extent that they
constitute matters of law or legal conclusions, have been reviewed
by us and fairly present the information required to be disclosed
therein in all material respects and nothing has come to our
attention which leads us to believe that (A) the information set
forth in the Registration Statement, or any amendment thereto,
under the captions referred to above as of the time the Registration
Statement became effective under the Securities Act, and as of the
Delivery Date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (B) the
information set forth in the Prospectus, or in any supplement
thereto, under the captions referred to above as of its issue date
and as of such Delivery Date, contained an untrue statement of a
material fact or omitted to state a material fact, necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(ii) The execution and delivery of the Underwriting Agreement
and the consummation of the transactions contemplated in the
Underwriting Agreement do not and will not conflict with, or result
in a breach of any of the terms or provisions of, or constitute
default under, or result in the creation of a lien, charge or
encumbrance upon any property or assets of the Company or any of
its subsidiaries under any existing applicable federal or state
law, rule or regulation governing the sale or distribution of
pharmaceutical products of the pharmaceutical industry generally or
the relationship between pharmacists and customers.
(iii) Such counsel does not know of any federal or state law,
rules or regulations governing the sale or distribution of
pharmaceutical products or the pharmaceutical industry generally or
the relationship between pharmacists and customers, or any pending
or threatened legal or governmental proceedings in respect of such
statutes, rules or regulations, required to be described in the
Prospectus that are not described as required.
(iv) The descriptions in the Prospectus of the federal and
state laws, rules or regulations governing the sale or distribution
of pharmaceutical products or the pharmaceutical industry
generally, and the legal or
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governmental proceedings in respect of such laws, rules or
regulations, fairly summarize the information required to be shown.
(v) Such counsel has no reason to believe that the Company's
current business is not being conducted in material compliance with
currently applicable requirements under the Federal Food, Drug and
Cosmetic Act or that the U.S. Food and Drug Administration is
currently considering taking action that would result in withdrawal
from marketing of any of the Company's currently marketed products.
In giving its opinion, such counsel may state that (1) such
counsel's opinion is limited to matters governed by the applicable
regulations described above, and (2) such counsel has not conducted an
audit of the Company. The foregoing opinion may be qualified by
statements to the effect that (1) while such counsel has had
conversations with the Company's employees and the Company's regulatory
advisors and reviewed certain relevant documents as such counsel deems
necessary and appropriate, such counsel has not verified the accuracy or
validity of the facts set forth in the Prospectus, and (2) in such
counsel's examinations, such counsel has assumed the genuineness of all
signatures, the authenticity of all documents submitted to such counsel
as originals and the conformity with the originals of all documents
submitted to such counsel as copies.
(h) Xxxxxxx & Xxxxxxxx, LLC shall have furnished to the
Representatives its written opinion, as special patent counsel for the
Company, addressed to the Underwriters (and stating that it may be relied
upon by counsel to the Underwriters) and dated such Delivery Date to the
effect that:
(i) The statements and descriptions made in the Prospectus
under the caption "Business--Patents, Trademarks and Proprietary
Property" to the extent that they constitute matters of law or
legal conclusions, have been reviewed by us and fairly present the
information required to be disclosed therein in all material
respects and nothing has come to our attention which leads us to
believe that (A) the information set forth in the Registration
Statement, or any amendment thereto, under the caption referred to
above as of the time the Registration Statement became effective
under the Securities Act, and as of the Delivery Date, contained an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading and (B) the information set forth
in the Prospectus, or in any supplement thereto, under the caption
referred to above as of its issue date and as of such Delivery
Date, contained an untrue statement of a material fact or omitted
to state a material
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fact, necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(ii) Such counsel has no knowledge of any pending or
threatened legal or governmental proceeding relating to patents or
proprietary know-how owned or used by the Company or any of its
subsidiaries, to which the Company or any of its subsidiaries is a
party or to which any of the properties of the Company or any of
its subsidiaries is subject, except as disclosed in the
Registration Statement, which, if adversely decided, would have a
material adverse effect on the business, financial condition or
results of operations of the Company or any of its subsidiaries,
taken as a whole.
(iii) Such counsel has no knowledge of any infringement or
alleged infringement by the Company or any of its subsidiaries of
issued patent rights of others, except as disclosed in the
Registration Statement, which would have a material adverse effect
on the business, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole.
(i) You shall have received from Shearman & Sterling, counsel for
the Underwriters, such opinions dated such Delivery Date, with respect to
the Registration Statement, the Prospectus and other related matters as
you reasonably may request, and such counsel shall have received such
papers and information as they reasonably request to enable them to pass
upon such matters. In giving such opinions, Shearman & Sterling is
entitled to rely on the opinion of Baker, Donelson, Bearman & Xxxxxxxx,
counsel to the Company.
(j) (A) With respect to the letters of Coopers & Xxxxxxx L.L.P.
delivered to the Representatives concurrently with the execution of this
Agreement (the "initial letters"), the Company shall have furnished to
the Representatives letters (the "bring-down letters") of such
accountants, addressed to the Underwriters and dated such Delivery Date
(i) confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01
of Regulation S-X of the Commission, (ii) stating, as of the date of the
bring-down letters (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five
days prior to the date of the bring-down letters), the conclusions and
findings of such firms with respect to the financial information and
other matters covered by the initial letters and (iii) confirming in all
material respects the conclusions and findings set forth in the initial
letters; (B) with respect to the letters of Price Waterhouse delivered to
the Representatives concurrently with the execution of this Agreement
(the "initial letters"), the Company shall have furnished
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31
to the Representatives letters (the "bring-down letters") of such
accountants, addressed to the Underwriters and dated such Delivery Date
(i) confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01
of Regulation S-X of the Commission, (ii) stating, as of the date of the
bring-down letters (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five
days prior to the date of the bring-down letters), the conclusions and
findings of such firms with respect to the financial information and
other matters covered by the initial letters and (iii) confirming in all
material respects the conclusions and findings set forth in the initial
letters.
(k) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of the Company signed by its
President and Chief Executive Officer or a Vice President and its Chief
Financial Officer stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of such Delivery Date;
the Company has complied with all its agreements contained herein;
and the conditions set forth in Sections 9(a), 9(n), 9(o) and 9(p)
have been fulfilled;
(ii) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial
statements included in the Prospectus, any change in the capital
stock or long-term debt of the Company or any of its subsidiaries
or any change, in or affecting the general affairs, management,
business, financial condition, shareholders' equity or results of
operations of the Company and its subsidiaries taken as a whole,
except as set forth or contemplated in the Prospectus; and
(iii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion (A) as of the Effective
Date, the Registration Statement and Prospectus did not include any
untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and (B) since the Effective
Date no event has occurred which should have been set forth in a
supplement or amendment to the Registration Statement or the
Prospectus.
(l) Each Selling Shareholder (or one or more attorneys-in-fact on
behalf of the Selling Shareholders) shall have furnished to the
Representatives a certificate, dated the Delivery Date, signed by, or on
behalf of, the Selling Shareholder (or one or more attorneys-in-fact)
stating that the representations, warranties and agreements
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of the Selling Shareholder contained herein are timely and correct
as of the Delivery Date and that the Selling Shareholder has complied
with all agreements contained herein to be performed by the Selling
Shareholder at or prior to the Delivery Date.
(m) Neither the Company nor any of its subsidiaries shall have
sustained, since the date of the latest audited financial statements
included in the Prospectus, any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus; and since such date, there shall not have been any change in
the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, management, business,
financial condition, shareholders' equity, results of operations or
prospects of the Company and its subsidiaries taken as a whole, except as
set forth or contemplated in the Prospectus, the effect of which, in the
reasonable judgment of the Representatives, is so material and adverse as
to make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered on such Delivery
Date on the terms and in the manner contemplated in the Prospectus.
(n) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or minimum prices
shall have been established on either of such exchanges or such market by
the Commission by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium
shall have been declared by Federal or state authorities, (iii) the
United States shall have become engaged in hostilities, there shall have
been an escalation in hostilities involving the United States or there
shall have been a declaration of a national emergency or war by the
United States or (iv) there shall have occurred such a material adverse
change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the United
States shall be such) as to make it, in the judgment of a majority in
interest of the several Underwriters, impracticable or inadvisable to
proceed with the public offering or delivery of the Shares being
delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus.
(o) The Nasdaq National Market shall have approved the Shares for
listing, subject only to official notice of issuance and evidence of
satisfactory distribution.
(p) The Representatives shall have received Lock-up Letters from each
holder of shares constituting (or shares convertible into, or options
exercisable for) at
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least 3.0 percent of the Common Stock of the Company and each
officer and director of the Company.
(q) The National Association of Securities Dealers, Inc., upon
review of the terms of the underwriting arrangements for the public
offering of the Common Stock, shall have raised no objection thereto.
(r) Prior to any Delivery Date, the Company shall have furnished to
the Representatives such other information, certificates and documents as
they may reasonable request.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance satisfactory to
counsel for the Underwriters.
10. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter, its
officers and employees and each person, if any, who controls any Underwriter
within the meaning of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Shares), to which that Underwriter, officer,
employee or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or supplement
thereto any material fact required to be stated therein or necessary to make
the statements therein not misleading, or (iii) any act or failure to act or
any alleged act or failure to act by any Underwriter in connection with, or
relating in any manner to, the Common Stock or the offering contemplated
hereby, and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon matters covered by
clause (i) or (ii) above (provided that the Company shall not be liable under
this clause (iii) to the extent that it is determined in a final judgment by a
court of competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such Underwriter through its gross negligence or willful
misconduct) and shall reimburse each Underwriter and each such officer,
employee or controlling person promptly upon demand for any legal or other
expenses reasonably incurred by that Underwriter, officer, employee or
controlling person in connection with investigating or defending or preparing
to defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however,
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that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any such amendment or supplement in reliance upon and in
conformity with written information concerning such Underwriter furnished to
the Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, which information is comprised solely of
the information set forth in Section 10(e) hereof. The foregoing indemnity
agreement is in addition to any liability which the Company may otherwise have
to any Underwriter or to any officer, employee or controlling person of that
Underwriter.
(b) The Selling Shareholders, severally in proportion to the number of
Shares to be sold by each of them hereunder, shall indemnify and hold harmless
each Underwriter, its officers and employees and each person, if any, who
controls any Underwriter within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action
in respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Shares), to which that
Underwriter, officer, employee or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus,
the Registration Statement or the Prospectus or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, Registration Statement or the Prospectus or in any amendment or
supplement thereto any material fact required to be stated therein or necessary
to make the statements therein not misleading, but in each case for each
Selling Shareholder that is not an executive officer or director of the Company
as set forth in the Registration Statement, only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information concerning such
Selling Shareholder furnished to the Company specifically for inclusion
therein, and shall reimburse each Underwriter, its officers and employees and
each such controlling person for any legal or other expenses reasonably
incurred by that Underwriter, its officers and employees or controlling person
in connection with investigating or defending or preparing to defend against
any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Selling Shareholders shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement or the Prospectus or in any such amendment or
supplement in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for inclusion
therein, which information is comprised solely of the information set forth in
Section 10(e) hereof; and provided further, that the aggregate liability shall
be limited to the
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gross proceeds received by such Selling Shareholder. The foregoing indemnity
agreement is in addition to any liability which the Selling Shareholders may
otherwise have to any Underwriter or any officer, employee or controlling
person of that Underwriter.
(c) Each Underwriter, severally and not jointly, shall indemnify and hold
harmless the Company, its officers and employees, each of its directors and
each person, if any, who controls the Company within the meaning of the
Securities Act and the Selling Shareholders, from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof, to
which the Company, any such director, officer or controlling person or any
Selling Shareholder may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto any
material fact required to be stated therein or necessary to make the statements
therein not misleading but in each case only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information concerning such
Underwriter furnished to the Company through the Representatives by or on
behalf of that Underwriter specifically for inclusion therein, and shall
reimburse the Company, any such director, officer or controlling person and
any Selling Shareholder for any legal or other expenses reasonably incurred by
the Company, any such director, officer or controlling person or any Selling
Shareholder in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which any Underwriter may otherwise have to the Company or any such
director, officer, employee or controlling person.
(d) Promptly after receipt by an indemnified party under this Section 10
of notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 10, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure
to notify the indemnifying party shall not relieve it from any liability which
it may have under this Section 10 except to the extent it has been materially
prejudiced by such failure, and provided, further, that the failure to notify
the indemnifying party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under this Section 10. If any such
claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any
other similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such
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claim or action, the indemnifying party shall not be liable to the indemnified
party under this Section 10 for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof other
than any reasonable costs of investigation; provided, however, that the
Representatives shall have the right to employ counsel to represent jointly the
Representatives and those other Underwriters and their respective officers,
employees and controlling persons who may be subject to liability arising out
of any claim in respect of which indemnity may be sought by the Underwriters
against the Company or any Selling Shareholder under this Section 10, if in the
reasonable judgment of the Representatives, it is advisable for the
Representatives and those Underwriters, officers, employees and controlling
persons to be jointly represented by separate counsel, and in that event the
fees and expenses of such separate counsel shall be paid by the Company and the
Selling Shareholders. No indemnifying party shall (i) without the prior
written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(e) If the indemnification provided for in this Section 10 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 10(a), 10(b) or 10(c) in respect of any loss, claim, damage or
liability or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and each of the Selling Shareholders on the one hand
and the Underwriters on the other from the offering of the Shares or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
each of the Selling Shareholders on the one hand and the Underwriters on the
other with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relative equitable considerations. The relative benefits received by the
Company and each of the Selling Shareholders on the one hand and the
Underwriters on the other with respect to such offering shall be deemed to be
in the same proportion as the total net proceeds from the offering of
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the Shares purchased under this Agreement (before deducting expenses) received
by the Company and each of the Selling Shareholders, on the one hand, and the
total underwriting discounts and commissions received by the Underwriters with
respect to the Shares purchased under this Agreement, on the other, bear to the
total gross proceeds from the offering of the Shares under this Agreement, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company, each
of the Selling Shareholders or the Underwriters, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company, each of the Selling
Shareholders and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 10(e) were to be determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability or
action in respect thereof, referred to above in this Section 10(e) shall be
deemed to include, for purposes of this Section 10(e), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 10(e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 10(e) are several in proportion to their respective
underwriting obligations and not joint.
(f) The Underwriters severally confirm and the Company acknowledges that
the statements with respect to the public offering of Common Stock by the
Underwriters set forth on the cover page of, the legend concerning
over-allotments on the inside front cover page of, and the concession and
reallowance figures appearing under the caption "Underwriting" in, the
Prospectus are correct and constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
11. Defaulting Underwriters. If, on either Delivery Date, any Underwriter
defaults in the performance of its obligations under this Agreement, the
remaining non-defaulting Underwriters shall be obligated to purchase the Shares
which the defaulting Underwriter agreed but failed to purchase on such Delivery
Date in the respective proportions which the number of shares of the Firm
Shares set opposite the name of the
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remaining non-defaulting Underwriters in Schedule I hereto bears to the total
number of the Firm Shares set opposite the names of all remaining
non-defaulting Underwriters in Schedule I hereto; provided, however, that the
remaining non-defaulting Underwriters shall not be obligated to purchase any of
the Shares on such Delivery Date if the total number of Shares which the
defaulting Underwriter agreed but failed to purchase on such date exceeds 9.09%
of the total number of Shares to be purchased on such Delivery Date, and any
remaining non-defaulting Underwriters shall not be obligated, to purchase more
than 110% of the number of Shares which it agreed to purchase on such Delivery
Date pursuant to the terms of Section 3. If the foregoing maximums are
exceeded, the remaining non-defaulting Underwriters, or those other
underwriters satisfactory to the Representatives who so agree, shall have the
right, but shall not be obligated, to purchase, in such proportion as may be
agreed upon among them, all Shares to be purchased on such Delivery Date. If
the remaining Underwriters, or other underwriters satisfactory to the
Representatives, do not elect to purchase the shares which the defaulting
Underwriter agreed but failed to purchase on such Delivery Date, this Agreement
(or, with respect to any Second Delivery Date, the obligation of the
Underwriters to purchase, and of the Company to sell, the Option Shares) shall
terminate without liability on the part of any non-defaulting Underwriters or
the Company or the Selling Shareholders, except that the Company will continue
to be liable for the payment of expenses to the extent set forth in Sections 8
and 13. As used in this Agreement, the term "Underwriter" includes, for all
purposes of this Agreement unless the context requires otherwise, any party not
listed in Schedule I hereto who, pursuant to this Section 10, purchases Firm
Shares which a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company and the Selling Shareholders, for damages
caused by its default. If other underwriters are obligated to agree to
purchase the Shares of a defaulting or withdrawing Underwriter, either the
Representatives or the Company may postpone the First Delivery Date for up to
seven full business days in order to effect any changes that in the opinion of
counsel for the Company or counsel for the Underwriters may be necessary in the
Registration Statement, the Prospectus or in any other document or arrangement.
12. Termination. The obligations of the Underwriters hereunder may be
terminated by the Representatives by notice given to and received by the
Company and the Selling Shareholders prior to delivery of and payment for the
Firm Shares if, prior to that time, any of the events described in Sections
9(l) or 9(m) shall have occurred or if the Underwriters shall decline to
purchase the Shares for any reason permitted under this Agreement.
13. Reimbursement of Underwriters' Expenses. If the Company or any
Selling Shareholder shall fail to tender the Shares for delivery to the
Underwriters by reason of any failure, refusal or inability on the part of the
Company or any Selling Shareholder to
39
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perform any agreement on its part to be performed or because any other
condition of the Underwriters' obligations hereunder required to be fulfilled
by the Company or the Selling Shareholder is not fulfilled, the Company and the
Selling Shareholders will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
incurred by the Underwriters in connection with this Agreement and the proposed
purchase of the Shares, and upon demand the Company and the Selling
Shareholders shall pay the full amount thereof to the Representatives. If this
Agreement is terminated pursuant to Section 11 by reason of the default of one
or more Underwriters, neither the Company nor any Selling Shareholder shall be
obligated to reimburse any defaulting Underwriter on account of those expenses.
14. Notices, Etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Xxxxxx Brothers Inc., Three World
Financial Center, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Syndicate Department (Fax: (000) 000-0000), with a copy, in the case of
any notice pursuant to Section 10(d) to the Director of Litigation,
Office of the General Counsel, Xxxxxx Brothers Inc., 0 Xxxxx Xxxxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000;
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Xxxx Xxxxxxx, Chairman (Fax: (423)
000-0000), with a copy to Xxxxx X. Xxxxxx, Baker, Donelson, Bearman &
Xxxxxxxx, 165 Madison Avenue, 0xx Xxxxxxxxx Xxxxxxxx, 00xx Xxxxx,
Xxxxxxx, Xxxxxxxxx 00000 (Fax: (000) 000-0000);
(c) if to any Selling Shareholder, shall be delivered or sent by
mail, telex or facsimile transmission to such Selling Shareholder at the
address set forth on Schedule II or Schedule III hereto and in the case
of any Selling Shareholder listed on Schedule III hereto, with a copy to
Xxxxxx X. Xxxxxxx, Boult, Cummings, Xxxxxxx & Xxxxx, PLC, 000 Xxxxx
Xxxxxx, Xxxxx 0000, P.O. Box 198062, Xxxxxxxxx, Xxxxxxxxx 00000 (Fax:
(000) 000-0000);
provided, however, that any notice to an Underwriter pursuant to Section 10(d)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by
the Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and
the Selling Shareholders shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Underwriters by
Xxxxxx Brothers Inc. and the
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Company and the Underwriters shall be entitled to act and rely upon any
request, consent, notice or agreement given or made on behalf of the Selling
Shareholders by the Custodian.
15. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the Underwriters, the Company and the
Selling Shareholders and their respective personal representatives and
successors. This Agreement and the terms and provisions hereof are for the
sole benefit of only those persons, except that (A) the representations,
warranties, indemnities and agreements of the Company contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any Underwriter within the meaning of Section 15 of the
Securities Act and (B) the indemnity agreement of the Underwriters contained in
Section 10(c) of this Agreement shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement any person controlling the Company within the meaning of
Section 15 of the Securities Act and the Selling Shareholders. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 15, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
16. Survival. The respective indemnities, representations, warranties and
agreements of the Company, the Selling Shareholders and the Underwriters
contained in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Shares and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them.
17. Definition of the Terms "Business Day" and "Subsidiary." For purposes
of this Agreement (a) "business day" means any day on which the New York Stock
Exchange, Inc. is open for trading, (b) "subsidiary" has the meaning set forth
in Rule 405 of the Rules and Regulations.
18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF NEW YORK.
19. Consent to Jurisdiction. Each of the parties hereto consents to the
jurisdiction of and venue in federal and state courts located in the Borough of
Manhattan, City and State of New York, over any suit, action or proceeding with
respect to this Agreement.
20. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
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41
21. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
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42
If the foregoing correctly sets forth the agreement between the Company
and the Underwriters, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
KING PHARMACEUTICALS, INC.
By
-------------------------------
SELLING SHAREHOLDERS
By
-------------------------------
As Attorney-in-Fact for the
Shareholders named in
Schedule II hereto
SELLING SHAREHOLDERS
By
-------------------------------
As Attorney-in-Fact for the
Shareholders named in
Schedule III hereto
Accepted:
XXXXXX BROTHERS INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXXXXXXX & XXXXX LLC
as Representatives of the several
Underwriters named in Schedule I hereto
By XXXXXX BROTHERS INC.
By
-----------------------------
Authorized Representative
43
SCHEDULE I
Number of
Underwriters Firm Shares
------------ -----------
Xxxxxx Brothers Inc...............................
Credit Suisse First Boston Corporation............
Xxxxxxxxx & Xxxxx LLC.............................
----------
Total 8,919,000
==========
44
SCHEDULE II
Names and Addresses Number of Number of
of Selling Shareholders Firm Shares Option Shares
------------------------------------ ----------- -------------
Xxxx X. and Xxxx X Xxxxxxx 220,137 0
c/o King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
The Lazarus Foundation, Inc. 75,000(1) 0
c/o King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Xxxxxx X. Xxxxxxx 60,000 0
c/o King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Xxxxxxxxx X. Xxxxxxx 50,000 0
and Xxxxx X. Xxxxx-Xxxxxxx
c/o King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Xxxxx X. and April X. Xxxxxxx 42,000 0
c/o King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
R. Xxxxx Xxxxxxxx, M.D. 35,000 0
and Xxxx X. Xxxxxxxx
c/o King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Xxxxx X. Xxxxxxx 65,000 0
c/o King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
King Pharmaceuticals Benevolent Fund, Inc. 175,000 0
c/o King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
45
Names and Addresses Number of Number of
of Selling Shareholders Firm Shares Option Shares
------------------------------------ ----------- -------------
Xxxx Xxx and Xxxxxxxx X. Xxxxxxxx 90,000 0
c/o King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Xxxx and Xxxx Xxxxxx 29,000 0
c/o King Pharmaceuticals, Inc.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
A. Xxxxxxx Xxxxxx 362,000 0
c/o General Injectables & Vaccines, Inc.
Xxxxx 00 xxx X.X. Xxx 00 Xxxxx
Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Xxxxx X. Xxxxxxx 357,000 0
c/o General Injectables & Vaccines, Inc.
Xxxxx 00 xxx X.X. Xxx 00 Xxxxx
Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
--------- ------
TOTAL 1,560,137 0
========= ======
----------------
(1) The Lazarus Foundation, Inc. is a private foundation controlled by
Xx Xxxx Xxxxxxx.
46
SCHEDULE III
Names and Addresses Number of Number of
of Selling Shareholders Firm Shares Option Shares
------------------------------------ ------------ ------------
Xxxxxx X. Xxxx
0000 Xxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000 824,270 0
Xxxxx Xxxx
0000 Xxxxxxx Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000 748(1) 0
Xxxxxx X. Xxxx
0000 Xxxxxxx Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000 3,220(1) 0
Xxxxxx Xxxx
0000 Xxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000 5,474(1) 0
Kirkfield, L.L.C.
0000 Xxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000 161,000(1) 0
Xxxx Labs
0000 Xxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000 42,151(1) 0
RJK, L.L.C
0000 Xxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000 322,000(1) 0
---------- ------
TOTAL 1,358,863 0
========== ======
----------------------------
(1) These shares are held by affiliates of Xx. Xxxx (together with Xx. Xxxx,
"Xxxxxx X. Xxxx and affiliates").
47
ANNEX A
Subsidiaries of the Company
Monarch Pharmaceuticals, Inc., a Tennessee corporation
King Pharmaceuticals of Nevada, Inc., a Nevada corporation
