70,000,000 Shares
IMMUNEX CORPORATION
Common Stock
(par value $0.01 per share)
UNDERWRITING AGREEMENT
November 9, 2000
November 9, 2000
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Credit Suisse First Boston Corporation
Xxxxxx Brothers Inc.
Banc of America Securities LLC
Bear, Xxxxxxx & Co. Inc.
Xxxxxxxxx Xxxxxxxx, Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
Immunex Corporation, a Washington corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "Underwriters"), and certain shareholders of the Company (the
"Selling Shareholders") named in Schedule II hereto severally propose to sell to
the several Underwriters, an aggregate of 70,000,000 shares of the Common Stock,
par value $0.01 per share, of the Company (the "Firm Shares"), of which
20,000,000 shares are to be issued and sold by the Company and 50,000,000 shares
are to be sold by the Selling Shareholders, each Selling Shareholder selling the
amount set forth opposite such Selling Shareholder's name in Schedule II hereto.
MDP Holdings, Inc., a Delaware corporation and one of the Selling
Shareholders named in Schedule II hereto ("MDP"), also proposes to sell to the
several Underwriters not more than an additional 10,500,000 shares of the Common
Stock, par value $0.01 per share, of the Company (the "Additional Shares"), if
and to the extent that you, as Managers of the offering, shall have determined
to exercise, on behalf of the Underwriters, the right to purchase such shares of
common stock granted to the Underwriters in Section 3 hereof. The Firm Shares
and the Additional Shares are hereinafter collectively referred to as the
"Shares". The shares of Common Stock, par value $0.01 per share of the Company
to be outstanding after giving effect to the sales contemplated hereby are
hereinafter referred to as the "Common Stock". The Company and the Selling
Shareholders are hereinafter sometimes collectively referred to as the
"Sellers".
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333-43354),
including a prospectus, relating to 70,000,000 of the Shares. The Company has
filed or will file with the Commission, prior to the time the Prospectus
Supplement (as hereinafter defined) was or will be printed and distributed to
the Underwriters, a registration statement satisfying the requirements
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of Rule 462(b) under the Securities Act of 1933, as amended (the "Securities
Act") covering 10,500,000 additional Shares, and, assuming no confirmations were
sent or given prior to such filing, such registration statement has or will
become effective upon its filing on or prior to 10:00 p.m., Eastern time, on the
date of this Agreement. The term "Registration Statement" means such
registration statement No. 333-43354, as amended to the date of this Agreement,
and such registration statement filed pursuant to Rule 462(b), including in each
case the exhibits thereto. The Company shall promptly after the filing of such
registration statement pursuant to Rule 462(b) file with or transmit for filing
to, the Commission a prospectus supplement (the "Prospectus Supplement")
specifically relating to the Shares pursuant to Rule 424 under the Securities
Act. The term "Basic Prospectus" means the prospectus included or incorporated
in the Registration Statement. The term "Prospectus" means the Basic Prospectus
together with the Prospectus Supplement. The term "preliminary prospectus" means
a preliminary prospectus supplement specifically relating to some or all of the
Shares, together with the Basic Prospectus. As used herein, the terms "Basic
Prospectus", "Prospectus" and "preliminary prospectus" shall include in each
case the documents, if any, incorporated by reference therein. The terms
"supplement", "amendment" and "amend" as used herein shall include all documents
deemed to be incorporated by reference in the Prospectus that are filed
subsequent to the date of the Basic Prospectus by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters and the
Selling Shareholders that:
(a) The Registration Statement has become effective under the
Securities Act; no stop order suspending the effectiveness of the
Registration Statement is in effect, and, to the knowledge of the Company,
no proceedings for such purpose are pending before or threatened by the
Commission.
(b) (i) Each document filed or to be filed pursuant to the Exchange
Act and incorporated by reference in the preliminary prospectus or the
Prospectus complied, or will comply when so filed, in all material respects
with the Exchange Act and the applicable rules and regulations of the
Commission thereunder, (ii) each part of the Registration Statement, when
such part became effective, did not contain, and each such part, as amended
or supplemented, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, (iii) the Registration
Statement, the preliminary prospectus and the Prospectus comply and, as
amended or supplemented, if applicable, will comply in all material
respects with the Securities Act and the applicable rules and regulations
of the Commission thereunder and (iv) the preliminary prospectus and the
Prospectus do not contain and, as amended or supplemented, if applicable,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
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statements or omissions in the Registration Statement, the preliminary
prospectus or the Prospectus based upon information relating to any
Underwriter or the Selling Shareholders furnished to the Company in writing
by such Underwriter through you or the Selling Shareholders, respectively,
expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company
and its subsidiary, taken as a whole.
(d) The subsidiary of the Company has been duly incorporated, is
validly existing as a corporation under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiary, taken as a whole. All of the
issued shares of capital stock of the Company's subsidiary have been duly
and validly authorized and issued, are fully paid and non-assessable and
are owned directly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and delivered
by the Company.
(f) The authorized capital stock of the Company conforms to the
description thereof contained in the Prospectus under the caption
"Description of Capital Stock".
(g) The issuance of the shares of Common Stock (including the Shares
to be sold by the Selling Shareholders) outstanding prior to the issuance
of the Shares to be sold by the Company has been duly authorized and such
shares of Common Stock are validly issued, fully paid and non-assessable.
(h) The issuance of the Shares to be sold by the Company has been
duly authorized and, when issued and delivered in accordance with the terms
of this Agreement, the Shares to be sold by the Company will be validly
issued, fully paid and non-assessable, and the issuance of such Shares will
not be subject to any preemptive or similar rights.
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(i) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene
any provision of applicable law or the articles of incorporation or bylaws
of the Company or any agreement or other instrument binding upon the
Company or its subsidiary that is material to the Company and its
subsidiary, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except
such as have been obtained or made under the Securities Act and such as may
be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiary, taken as a whole, from that
set forth in the Prospectus (exclusive of any further amendments or
supplements thereto subsequent to the date of this Agreement).
(k) There are no legal or governmental proceedings that are required
to be described in the Registration Statement, the preliminary prospectus
or the Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement, the preliminary prospectus or the Prospectus or to
be filed or incorporated by reference as exhibits to the Registration
Statement that are not described, filed or incorporated as required.
(l) The preliminary Basic Prospectus filed on August 9, 2000 as part
of the Registration Statement complied when so filed in all material
respects with the Securities Act and the applicable rules and regulations
of the Commission thereunder.
(m) The Company is not, and after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described
in the Prospectus will not be, required to register as an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
(n) The Company and its subsidiary (i) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals
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would not, singly or in the aggregate, have a material adverse effect on
the Company and its subsidiary, taken as a whole.
(o) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiary, taken as a whole.
(p) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) the Company and
its subsidiary have not incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in the
ordinary course of business; (ii) the Company has not purchased any of its
outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock other than
ordinary and customary dividends; and (iii) there has not been any material
change in the capital stock, short-term debt or long-term debt of the
Company and its subsidiary, except in each case as described in the
Prospectus.
(q) The Company and its subsidiary have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the
Company and its subsidiary, 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 such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its subsidiary; and any real or personal property and buildings
held under lease by the Company and its subsidiary 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, in each case except as
described in the Prospectus.
(r) Each of the Company and its subsidiary owns, is licensed to use,
or otherwise possesses adequate rights to use (i) the patents described in
the Prospectus as being owned by or licensed to the Company or its
subsidiary or as necessary to conduct the business of the Company and its
subsidiary in the manner presently conducted and as proposed to be
conducted as described in the Prospectus (the "Company Patents"), (ii) the
Company Patent Applications (as defined below) and (iii) the licenses,
copyrights, trademarks, service marks, trade names, technology and know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary rights) necessary to conduct the business of the Company and
its subsidiary in the manner presently conducted and as proposed to be
conducted as described in the Prospectus (together with the Company Patents
and Company Patent Applications, the "Company Intellectual Property");
there
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is no Company Intellectual Property required to be described in the
Prospectus that is not so described; the Company and its subsidiary are not
obligated to pay any royalty, grant any license, or provide any other
consideration to any third party in connection with the Company
Intellectual Property other than royalties, licenses and other
consideration that are not, singly or in the aggregate, material to the
business or operations of the Company and its subsidiary, taken as a whole,
or as disclosed in the Prospectus, and, except as disclosed in the
Prospectus, neither the Company nor its subsidiary has received any notice
of infringement or conflict with (and the Company does not know of any
infringement or conflict with) asserted rights of others with respect to
the Company Intellectual Property, in each case which would reasonably be
expected to result in any material adverse effect on the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiary, taken as a whole; and, except as disclosed in
the Prospectus, the discoveries, inventions, products or processes of the
Company and its subsidiary referred to in the Prospectus do not, to the
knowledge of the Company, infringe or conflict with any right or patent of
any third party, or any discovery, invention, product or process which is
the subject of a patent application filed by any third party, known to the
Company, which could reasonably be expected to have a material adverse
effect on the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiary, taken as a whole.
Except as described in the Prospectus, no third party, including any
academic or governmental organization, possesses rights to the Company
Intellectual Property which, if exercised, could enable such party to
develop products competitive to those of the Company and its subsidiary or
could reasonably be expected to have a material adverse effect on the
ability of the Company and its subsidiary to conduct their business in the
manner described in the Prospectus.
(s) The Company and its subsidiary have duly and properly filed or
caused to be filed with the United States Patent and Trademark Office (the
"USPTO") and applicable foreign and international patent authorities all
patent applications of the Company and its subsidiary described in the
Prospectus or necessary to conduct the business of the Company and its
subsidiary in the manner presently conducted or as proposed to be conducted
as described in the Prospectus (the "Company Patent Applications"); in
connection with the filing of the Company Patent Applications, the Company
and its subsidiary have complied with the USPTO's duty of candor and
disclosure for the Company Patent Applications and has made no
misrepresentation in the Company Patent Applications; the Company is
unaware of any facts material to a determination of patentability regarding
the Company Patent Applications not called to the attention of the USPTO;
the Company is unaware of any facts not called to the attention of the
USPTO which would preclude the grant of a patent for the Company Patent
Applications; and the Company has no knowledge of any facts which would
preclude it from having clear title to the Company Patent Applications.
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(t) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, the studies, tests and
preclinical and clinical trials conducted by or on behalf of the Company
and its subsidiary that are described in the Registration Statement and the
Prospectus were and, if still pending, are being conducted in accordance
with experimental protocols, procedures and controls pursuant to, where
applicable, generally accepted professional scientific standards, except
where the failure could not reasonably be expected to result in a material
adverse effect on the Company and its subsidiary, taken as a whole; the
descriptions of the results of such studies, tests and trials contained in
the Registration Statement and the Prospectus do not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances in which they
were made, not misleading; and the Company has not received any notices or
correspondence from the United States Food and Drug Administration ("FDA")
or any foreign, state or local governmental body exercising comparable
authority requiring the termination, suspension or material modification of
any studies, tests or preclinical or clinical trials conducted by or on
behalf of the Company which termination, suspension or material
modification could reasonably be expected to have a material adverse effect
on the Company and its subsidiary, taken as a whole;
(u) No material labor dispute with the employees of the Company and
its subsidiary exists, except as described in the Prospectus, or, to the
knowledge of the Company, is imminent; and, except as described in the
Prospectus, the Company is not aware of any existing, threatened or
imminent labor disturbance by the employees of any of its principal
suppliers, manufacturers or contractors that could result in any material
adverse effect on the Company and its subsidiary, taken as a whole.
(v) The Company and its subsidiary are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the business in which the
Company and its subsidiary are engaged; the Company and its subsidiary have
not been refused any insurance coverage sought or applied for; and the
Company and its subsidiary have no reason to believe that they will not be
able to renew their existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue their business at a cost that could not have a
material adverse effect on the Company and its subsidiary, taken as a
whole.
(w) The Company and its subsidiary possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct their business as
presently conducted, including without limitation, all such certificates,
authorizations and permits required by the FDA, the Nuclear Regulatory
Commission (the "NRC") or any other federal, state or foreign agencies or
bodies engaged in the regulation of pharmaceuticals, biohazardous
substances or radioactive materials, except for such certificates,
authorizations and permits the failure of which to
8
obtain would not, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiary, taken as a whole; and neither the
Company nor its subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could result in a material adverse effect on
the Company and its subsidiary, taken as a whole. The Company and its
subsidiary are in compliance with all applicable federal, state, local and
foreign laws, regulations, orders and decrees governing their business as
currently conducted, including without limitation, all regulations
prescribed by the FDA, the NRC or any other federal, state or foreign
agencies or bodies engaged in the regulation of pharmaceuticals,
biohazardous substances or radioactive materials, except where
noncompliance would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiary, taken as a whole.
(x) The Company and its subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(y) To the knowledge of the Company, Ernst & Young LLP are, and
during the periods covering their report included or incorporated by
reference in the Registration Statement and the Prospectus were,
independent accountants with respect to the Company and its subsidiary as
required by the Securities Act. The consolidated financial statements of
the Company (together with the related notes thereto) included or
incorporated by reference in the Registration Statement and the Prospectus
present fairly the financial position and results of operations of the
Company and its subsidiary at the respective dates and for the respective
periods to which they apply, subject to normal year-end adjustments. Such
financial statements (together with the related notes thereto) have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved except as otherwise
stated therein.
(z) Except as described in the Prospectus, 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 to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement.
(aa) Each of the (i) ENBREL Supply Agreement among the Company,
American Home Products Corporation, a Delaware corporation ("AHP"), and
Boehringer
9
Ingelheim Pharma KG, dated as of November 5, 1998, as amended by Amendment
No.1 to the Enbrel Supply Agreement among the Company, AHP and Boehringer
Ingelheim Pharma KG, dated June 27, 2000, (ii) ENBREL Promotion Agreement
between the Company and AHP, dated as of September 25, 1997, (iii) TNFR
License and Development Agreement between the Company and the Wyeth-Ayerst
Laboratories division of AHP, dated as of July 1, 1996, (iv) Product Rights
Agreement among the Company, AHP and American Cyanamid Company, dated as of
July 1, 1998, as amended by Amendment No. 1 to the Product Rights Agreement
among the Company, AHP and American Cynamid Company, dated May 20, 1999,
(v) Amended and Restated Governance Agreement, dated as of December 15,
1992, among the Company, American Cyanamid Company and Lederle Oncology
Corporation, as amended by Amendment No. 1 to the Amended and Restated
Governance Agreement among the Company, AHP and American Cyanamid Company,
dated May 20, 1999, and further amended by Amendment No. 2 to the Amended
and Restated Governance Agreement among the Company, AHP and American
Cyanamid Company, dated August 9, 2000 (as amended, the "Governance
Agreement"), (vi) Memorandum of Understanding for Helix Project Financing
Guaranty between the Company and AHP, dated August 9, 2000, (vii) Short-
term Allocation Agreement of ENBREL Supplies between AHP and the Company,
dated August 9, 2000, and (viii) Memorandum of Understanding Regarding
Long-Term Allocation of ENBREL Supplies between AHP and the Company dated
August 9, 2000 (together, the "Related Party Contracts") is the legal,
valid, binding and enforceable agreement of the Company, and is in full
force and effect. Neither the Company nor, to the Company's knowledge, any
other party is in breach or default with respect to any Related Party
Contract, and, to the Company's knowledge, no event has occurred which with
notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under any Related Party
Contract. No party has repudiated any provision of any Related Party
Contract.
(bb) The subsidiary of the Company is not currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such subsidiary's capital stock or from
repaying to the Company any loans or advances to such subsidiary from the
Company, except as described in the Prospectus.
(cc) Each of the Company and its subsidiary has filed all material
foreign, federal, state and local tax returns that are required to be filed
or has requested extensions thereof and has paid all taxes required to be
paid by it and any other assessment, fine or penalty levied against it, to
the extent that any of the foregoing is due and payable, except for such
tax, assessment, fine or penalty that is currently being contested in good
faith or as described in the Prospectus.
2. Representations and Warranties of the Selling Shareholders.
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(a) The Selling Shareholders, jointly and severally, represent and warrant
to and agree with each of the Underwriters that:
(i) This Agreement has been duly authorized, executed and delivered
by or on behalf of the Selling Shareholders.
(ii) The execution and delivery by the Selling Shareholders of, and
the performance by the Selling Shareholders of their obligations under,
this Agreement will not contravene any provision of applicable law, or the
certificate of incorporation or by-laws of either Selling Shareholder, or
any agreement or other instrument binding upon either Selling Shareholder
or any judgment, order or decree of any governmental body, agency or court
having jurisdiction over either Selling Shareholder, other than any such
contravention as would not have a material adverse effect on the ability of
the Selling Shareholders to consummate the transactions contemplated
herein, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Selling Shareholders of their obligations under this
Agreement, except such consents, approvals, authorizations, orders,
registrations or qualifications as have been obtained or made under the
Securities Act and as may be required by the securities or Blue Sky laws of
the various states in connection with the offer and sale of the Shares.
(iii) Each of the Selling Shareholders has full corporate power,
right and authority to sell the Shares to be sold by such Selling
Shareholder hereunder. Immediately prior to the Closing Date, the Selling
Shareholders will have good and valid title to the Shares to be sold by the
Selling Shareholders hereunder, free and clear of all liens, encumbrances,
equities or claims; and upon payment for and delivery of the Shares in
accordance with this Agreement, the Underwriters will acquire all of the
rights of the Selling Shareholders in the Shares to be sold by the Selling
Shareholders hereunder and will acquire their interest in such Shares free
of any "adverse claim" (as defined in Section 8-102 of the Uniform
Commercial Code as adopted in the State of New York).
(iv) Delivery of the Shares to be sold by the Selling Shareholders
pursuant to this Agreement will pass title to such Shares free and clear of
any security interests, claims, liens, equities and other encumbrances.
(b) The Selling Shareholders, jointly and severally, represent, warrant to
and agree with each of the Underwriters and the Company that:
(i) Each of the Related Party Contracts is the legal, valid, binding
and enforceable agreement of AHP, and is in full force and effect. Neither
AHP nor, to AHP's knowledge, any other party is in breach or default with
respect to any
11
Related Party Contract, and, to AHP's knowledge, no event has occurred
which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under
any Related Party Contract. No party has repudiated any provision of
any Related Party Contract.
(ii) (A) Each part of the Registration Statement, when such part
became effective, did not contain, and each such part, as amended or
supplemented, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (B) the
preliminary prospectus and the Prospectus do not contain and, as
amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in the
case of clauses (A) and (B) only with reference to information
relating to either of the Selling Shareholders furnished to the
Company in writing by either of the Selling Shareholders expressly for
use therein.
3. Agreements to Sell and Purchase. Each Seller, severally and not
jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees,
severally and not jointly, to purchase from such Seller at $38.68 a share
(the "Purchase Price") the number of Firm Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears
the same proportion to the number of Firm Shares to be sold by such Seller
as the number of Firm Shares set forth in Schedule I hereto opposite the
name of such Underwriter bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, MDP agrees to sell to the
Underwriters the Additional Shares, and the Underwriters shall have a one-time
right to purchase, severally and not jointly, up to 10,500,000 Additional Shares
at the Purchase Price. If you, on behalf of the Underwriters, elect to exercise
such option, you shall so notify MDP and the Company in writing not later than
30 days after the date of this Agreement, which notice shall specify the number
of Additional Shares to be purchased by the Underwriters and the date on which
such shares are to be purchased. Such date may be the same as the Closing Date
(as defined below) but not earlier than the Closing Date nor later than five
business days after the date of such notice. Additional Shares may be purchased
as provided in Section 5 hereof solely for the purpose of covering over-
allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each Underwriter agrees, severally and
not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Shares to be purchased as the
number of Firm Shares set forth in Schedule I hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
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The Company hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 90 days after the date of this Agreement, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The Selling Shareholders hereby agree
that, without the prior written consent of Xxxxxx Xxxxxxx & Co. Incorporated on
behalf of the Underwriters, they and their respective subsidiaries (other than
the Company) will not, during the period ending 90 days after the date of this
Agreement, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or (ii) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The two
foregoing sentences shall not apply to (A) the Shares to be sold hereunder, (B)
the issuance by the Company of shares of Common Stock upon the exercise of an
option or warrant or any convertible security outstanding on the date hereof of
which the Underwriters have been advised in writing, (C) transactions by any
person other than the Company relating to shares of Common Stock or other
securities acquired in open market transactions after the completion of the
offering of the Shares, (D) the issuance by the Company of up to 8,100,000
shares of Common Stock in connection with acquisitions or other strategic
transactions, provided these shares of Common Stock are subject to the lock-up
restrictions described in this paragraph, (E) the issuance by the Company of
shares of Common Stock or options to purchase Common Stock to the Company's
employees pursuant to the Company's stock option plan and employee stock
purchase plan described in the Prospectus, or (F) the issuance by the Company to
AHP of shares of Common Stock on a quarterly basis pursuant to the provisions of
the Governance Agreement. In addition, the Selling Shareholders, agree that,
without the prior written consent of Xxxxxx Xxxxxxx & Co. Incorporated on behalf
of the Underwriters, they will not, during the period ending 90 days after the
date of this Agreement, make any demand for, or exercise any right with respect
to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock.
4. Terms of Public Offering. The Sellers are advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after this Agreement has become effective as in your
judgment is advisable. The Sellers are further advised by you that the Shares
are to be offered to the public initially at $ 39.75 a share (the
13
"Public Offering Price") and to certain dealers selected by you at a price that
represents a concession not in excess of $0.70 a share under the Public
Offering Price.
5. Payment and Delivery. Payment for the Firm Shares to be sold by
each Seller shall be made to such Seller in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on November 15, 2000, or at such other time on the same or such other
date, not later than November 16, 2000, as shall be designated in writing by
you. The time and date of such payment are hereinafter referred to as the
"Closing Date".
Payment for any Additional Shares shall be made to MDP in Federal or
other funds immediately available in New York City against delivery of such
Additional Shares for the respective accounts of the several Underwriters at
10:00 a.m., New York City time, on the date specified in the notice described in
Section 3 or at such other time on the same or on such other date, in any event
not later than December 15, 2000, as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the "Option Closing
Date".
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of
the Sellers to sell the Shares to the Underwriters and the several obligations
of the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the accuracy of the representations and warranties of the Sellers in
this Agreement as of the Closing Date with the same force and effect as if made
on such date.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and
its subsidiary, taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement) that, in your reasonable judgment, is material and
adverse and that makes it, in your reasonable judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the
Prospectus.
14
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by the chief executive
officer, chief operating officer or chief financial officer of the Company,
to the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date and
that the Company has complied with all of the agreements and satisfied all
of the conditions on its part to be performed or satisfied hereunder on or
before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, outside counsel for the
Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly existing
as a corporation under the laws of the State of Washington, has paid
all excise taxes required by the Washington Department of Revenue, has
the corporate power and authority to own its property and to conduct
its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except where the failure to be
so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiary, taken as a whole;
(ii) the subsidiary of the Company has been duly incorporated,
is validly existing as a corporation under the laws of the State of
Washington, has paid all excise taxes required by the Washington
Department of Revenue, has the corporate power and authority to own
its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification,
except where the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its
subsidiary, taken as a whole. All of the issued shares of capital
stock of the subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly by the Company, free and clear of all liens, encumbrances,
equities or claims;
(iii) this Agreement has been duly authorized, executed and
delivered by the Company;
15
(iv) the authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof set
forth under the caption "Description of Capital Stock" in the
Prospectus;
(v) the shares of Common Stock (including the Shares to be sold
by the Selling Shareholders) outstanding prior to the issuance of the
Shares to be sold by the Company have been duly authorized and are
validly issued, fully paid and non-assessable;
(vi) the issuance of the Shares to be sold by the Company has
been duly authorized and, when issued and delivered in accordance with
the terms of this Agreement, such Shares will be validly issued, fully
paid and non-assessable, and the issuance of such Shares will not be
subject to any statutory or, to such counsel's knowledge, contractual,
preemptive or similar rights;
(vii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of federal or Washington statute or
any rule or regulation issued pursuant to any federal or Washington
statute, the articles of incorporation or bylaws of the Company or any
Related Party Contract or any other agreement or other instrument
filed as an exhibit to the Company's Annual Report on Form 10K for the
year ended December 31, 1999, Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2000, June 30, 2000 and September 30, 2000,
and any Current Report on Form 8-K filed since December 31, 1999, or,
to such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the
Company or its subsidiary, and no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is
required for the performance by the Company of its obligations under
this Agreement, except such as have been obtained or made under the
Securities Act and as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of
the Shares;
(viii) the statements (A) in the Prospectus under the captions
"Business -Legal Proceedings", "Relationship with AHP", "Important
United States Tax Consequences to Non-U.S. Holders of Common Stock"
and "Underwriters", (B) in the Registration Statement in Items 14 and
15, (C) in "Item 3 - Legal Proceedings" of the Company's most recent
Annual Report on Form 10-K incorporated by reference in the Prospectus
and (D) in "Item 1 - Legal Proceedings" of Part II of each of the
Company's quarterly reports on Form 10-Q filed since such annual
report, in each case insofar as such statements constitute summaries
of the legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such legal
matters, documents and proceedings and fairly summarize the matters
referred to therein;
16
(ix) such counsel does not know of any legal or governmental
proceedings that are required to be described in the Registration
Statement or the Prospectus and are not so described or of any
statutes, regulations, contracts or other documents that are required
to be described in the Registration Statement or the Prospectus or to
be filed or incorporated by reference as exhibits to the Registration
Statement that are not described, filed or incorporated as required;
(x) the Company is not, and after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus will not be required to register as an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended; and
(xi) such counsel (A) is of the opinion that each document filed
pursuant to the Exchange Act and incorporated by reference in the
Prospectus (except for financial statements and schedules and other
financial data included therein as to which such counsel need not
express any opinion) complied when so filed as to form in all material
respects with the Exchange Act and the applicable rules and
regulations of the Commission thereunder, (B) is of the opinion that
the Registration Statement and Prospectus (except for financial
statements and schedules and other financial data included therein as
to which such counsel need not express any opinion) comply as to form
in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder, (C) has no reason
to believe that (except for financial statements and schedules and
other financial data as to which such counsel need not express any
belief) each part of the Registration Statement, when such part became
effective, contained and, as of the date such opinion is delivered,
contains any 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 (D) has no reason to believe
that (except for financial statements and schedules and other
financial data as to which such counsel need not express any belief)
the Prospectus as of the date of the Prospectus Supplement and as of
the date such opinion is delivered contains any untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(d) The Underwriters shall have received on the Closing Date an opinion
from Xxxxxxx Xxxxxxxxx, Esq., Vice President, Intellectual Property, of the
Company in his capacity as an officer and senior internal counsel for
intellectual property matters at the Company and not in his individual capacity,
dated the Closing Date, to the effect that:
(i) Except as described in the Prospectus and except to the
extent the Company Patents and the Company Patent Applications are co-
owned by the Company and other parties (provided such parties' co-
ownership is not material to
17
the Company and its subsidiary, taken as a whole), such counsel is
unaware of any facts which would preclude the Company and its
subsidiary from having clear title to any of the Company Patents and
the Company Patent Applications;
(ii) To such counsel's knowledge, neither the Company nor its
subsidiary is infringing or otherwise violating any valid and
enforceable patents of others material to the Company and its
subsidiary, taken as a whole;
(iii) To such counsel's knowledge, other than as set forth in
the Prospectus, no third party, including any academic or governmental
organization, possesses rights to the Company Patents, Company Patent
Applications or the Company's patent rights which, if exercised, would
have a material adverse effect on the Company and its subsidiary,
taken as a whole;
(iv) To such counsel's knowledge, except as described in the
Prospectus, there are no legal or governmental proceedings pending or
threatened against the Company or its subsidiary relating to the
Company Patents which would have a material adverse effect on the
Company and its subsidiary, taken as a whole;
(v) To such counsel's knowledge, there are no patents or
patent applications of the Company or its subsidiary or others that
are material to the Company and its subsidiary, taken as a whole, that
are not described in the Prospectus; and
(vi) The statements in the Prospectus under the caption
"Business-Patents, Licenses and Trademarks" insofar as such statements
constitute summaries of the legal matters, documents or proceedings
referred to therein, fairly present the information called for with
respect to such legal matters, documents and proceedings and fairly
summarize the matters referred to therein.
With respect to Section 6(d) above, such counsel may state in his
opinion that, whenever a statement in such opinion is qualified by the
phrase "to such counsel's knowledge", it means that, during the course
of performing such counsel's duties as Vice President, Intellectual
Property for the Company, no information has come to the attention of
such counsel that has given such counsel actual knowledge of the
inaccuracy of such statement and that such counsel has not performed
an independent check or verification of such statement.
(e) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the Selling Shareholders,
dated the Closing Date, to the effect that:
18
(i) the Shares to be sold by the Selling Shareholders have
been duly authorized by the Company and are validly issued, fully paid
and nonassessable;
(ii) the Selling Shareholders have full corporate power, right
and authority to sell such Shares and the Underwriters will acquire
all of the rights of the Selling Shareholders in the Shares to be sold
by the Selling Shareholders hereunder and will also acquire their
interest in such Shares free of any adverse claim;
(iii) this Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Shareholders;
(iv) the sale of the Shares by the Selling Shareholders and the
compliance by the Selling Shareholders with all of the provisions of
this Agreement will not breach or result in a default under any
indenture, mortgage, deed of trust, loan agreement, or other agreement
or instrument identified on the annexed scheduled furnished to such
counsel by the Selling Shareholders and which the Selling Shareholders
have represented lists all material instruments to which either the
Selling Shareholders is a party or by which either of the Selling
Shareholders is bound or to which any of the property or assets of
either of the Selling Shareholders is subject, nor will such action
violate the Certificate of Incorporation or Bylaws of either Selling
Shareholder or any federal or New York statute or the Delaware General
Corporation Law (the "DGCL") or any rule or regulation issued pursuant
to any federal or New York statute or the DGCL or any order known to
such counsel issued pursuant to any federal or New York statute or the
DGCL by any court or governmental agency or court having jurisdiction
over either of the Selling Shareholders or any of their properties;
and
(v) no consent, approval, authorization, order, registration
or qualification of or with any federal or New York governmental
agency or body or any Delaware governmental agency or body acting
pursuant to the DGCL or, to such counsel's knowledge, any federal or
New York court or any Delaware court acting pursuant to the DGCL is
required for the issue and sale of the Shares by the Selling
Shareholders and the compliance by the Selling Shareholders with all
of the provisions of this Agreement, except for the registration under
the Securities Act of the Shares, and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters.
Xxxxxxx Xxxxxxx & Xxxxxxxx may rely as to matters of Washington law
upon the opinion of Xxxxxx Xxxxxxxxxx & Sutcliffe LLP referred to in
Section 6(c) above.
19
(f) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxxx & Xxxxxxxx, counsel for the Underwriters, dated the
Closing Date, with respect to the incorporation of the Company, the
validity of the Shares, the Registration Statement, the Prospectus and such
other related matters as you may reasonably request, and such counsel shall
have received such papers and information as they may reasonably request to
enable them to pass on such matters. Xxxxxxxx & Xxxxxxxx may rely as to
matters of Washington law upon the opinion of Xxxxxx Xxxxxxxxxx & Sutcliffe
LLP referred to in Section 6(c) above.
With respect to Section 6(c)(xi) above, Xxxxxx Xxxxxxxxxx & Xxxxxxxxx
LLP may state that its opinion and belief are based upon their
participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification, except as specified.
The opinions of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, Xxxxxxx Xxxxxxxxx,
Esq., and Xxxxxxx Xxxxxxx & Xxxxxxxx described in Sections 6(c), 6(d) and
6(e) above shall be rendered to the Underwriters at the request of the
Company or either Selling Shareholder, as the case may be, and shall so
state therein.
(g) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from Ernst & Young LLP, independent auditors, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained or incorporated by reference in the
Registration Statement and the Prospectus; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than
three business days prior to the date hereof.
(h) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain officers and directors of the
Company relating to sales and certain other dispositions of shares of
Common Stock or certain other securities, delivered to you on or before the
date hereof, shall be in full force and effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the Option Closing Date
of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares and other matters related to the issuance of the Additional Shares.
7. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
20
(a) To furnish to you, without charge, 7 signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 7(c) below, as many copies of the Prospectus, any documents
incorporated by reference therein and any supplements and amendments
thereto or to the Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions in the United States as
you shall reasonably request, provided that the Company shall not be
required to qualify as a foreign corporation, to file a consent to service
of process or to subject itself to taxation in respect of doing business in
any jurisdiction where it is not now qualified, required to file a consent
or so subject.
(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the 12-month
period ending September 30, 2001 that satisfies the provisions of Section
11(a) of the Securities Act and the rules and regulations of the Commission
thereunder.
21
8. Expenses. The expense allocation provisions of this Agreement
shall not supersede or otherwise affect the provisions of the Governance
Agreement or any other agreement that the Sellers may otherwise have for the
allocation of such expenses among themselves.
Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, (a) the Company agrees to pay or
cause to be paid all expenses incident to the performance of its own obligations
under this Agreement, and, except as provided in Section 8(b) and Section 9
entitled "Indemnification and Contribution," the Company agrees to pay or cause
to be paid all expenses incident to the performance of the Selling Shareholders'
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel and the Company's accountants in connection
with the registration and delivery of the Shares under the Securities Act and
all other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to the
Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any Blue Sky or Legal Investment memorandum in
connection with the offer and sale of the Shares under state securities laws and
all expenses in connection with the qualification of the Shares for offer and
sale under state securities laws as provided in Section 7(d) hereof, including
filing fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky or Legal Investment memorandum, provided, however, that the fees and
disbursements of counsel for the Underwriters incurred in connection with the
qualification of the Shares under state securities or Blue Sky laws shall not
exceed $10,000, (v) the cost of printing certificates representing the Shares,
(vi) the costs and charges of any transfer agent, registrar or depositary, (vii)
the costs and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the offering of the
Shares, including, without limitation, expenses associated with the production
of road show slides and graphics, fees and expenses of any consultants engaged
in connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and 16.7% of the cost of any aircraft
chartered in connection with the road show. and (viii) all other costs and
expenses incident to the performance of the obligations of the Company hereunder
for which provision is not otherwise made in this Section and (b) the Selling
Shareholders agree to pay or cause to be paid all other expenses incident to the
performance of its obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Selling Shareholders' counsel, (ii) 33.3% of
the cost of any aircraft chartered in connection with the road show and (iii)
all other costs and expenses incident to the performance of the obligations of
the Selling Shareholders hereunder for which provision is not otherwise made in
this Section. It is understood, however, that except as provided in this
Section, Section 9 entitled "Indemnity and Contribution," and the last two
paragraphs of Section 11 below, the Underwriters will pay all of their costs and
expenses,
22
including fees and disbursements of their counsel, stock transfer taxes payable
on resale of any of the Shares by them, and any advertising expenses connected
with any offers they may make and 50% of the cost of any aircraft chartered in
connection with the road show.
9. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein; provided, however, that
the foregoing indemnity, with respect to any preliminary prospectus, shall
not inure to the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages or liabilities purchased Shares, or any
person controlling such Underwriter, if a copy of the Prospectus was not
sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the
Prospectus would have cured the defect giving rise to such losses, claims,
damages or liabilities, unless such failure is the result of noncompliance
by the Company with Section 7(a) hereof.
(b) The Selling Shareholders, jointly and severally, agree to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and
all losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, but
only with reference to information relating to either of the Selling
Shareholders furnished to the Underwriters in writing by either of the
Selling Shareholders expressly
23
for use therein; provided, however, that the foregoing indemnity, with
respect to any preliminary prospectus, shall not inure to the benefit of
any Underwriter from whom the person asserting any such losses, claims,
damages or liabilities purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus was not sent or given by or on
behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such
failure is the result of noncompliance by the Company with Section 7(a)
hereof.
(c) If (i) a judgment, decision or order for the payment of money
shall be rendered by a court of law, arbitral authority or regulatory
agency against the Company in respect of the indemnification provided for
in Section 9(a) and such judgment, decision or order is not subject to
further appeal and has not been paid in full in accordance with the terms
of such judgement, decision or order, (ii) the Company is obligated under
the terms of any settlement of a pending or threatened proceeding to make a
payment in respect of the indemnification provided for in Section 9(a) and
such payment is not paid in full in accordance with the terms of such
settlement, (iii) the Company is not able to pay its debts as they become
due (unless such debts are the subject of a bona fide dispute) or would be
rendered unable to pay its debts as they become due by reason of the
satisfaction of any of its obligations under Section 9(a) or (iv)
proceedings have been instituted by or against the Company under any
bankruptcy, reorganization, suspension of payments or insolvency law or
other law for the relief of debtors, then the Selling Shareholders, jointly
and severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action or
claim) caused by any untrue statement or alleged untrue statement of a
material fact relating to the Subject Matter (as hereinafter defined)
contained in the Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
relating to the Subject Matter required to be stated therein or necessary
to make the statements therein not misleading; provided, however, that the
liability of the Selling Shareholders pursuant to this Section 9(c) shall
not exceed the net proceeds from the sale of the Shares (before deducting
expenses) received by the Selling Shareholders; provided, further, that the
foregoing indemnity, with respect to any preliminary prospectus, shall not
inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus was not sent or
given by or on behalf of such Underwriter to such person, if required by
law so to have been delivered, at or prior to the written confirmation of
the
24
sale of the Shares to such person, and if the Prospectus would have
cured the defect giving rise to such losses, claims, damages or
liabilities, unless such failure is the result of noncompliance by the
Company with Section 7(a) hereof. "Subject Matter" means all matters
relating to Enbrel(R) (entanercept), including, without limitation, raw
materials, manufacturing and manufacturing facilities, quality assurance,
vialing, labeling, shipping and other production, capacity and supply
matters, government regulation and approvals, intellectual property,
marketing, competition, revenues and expenses, research, preclinical and
clinical results and safety and efficacy.
(d) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Selling Shareholders, the
directors of the Company, the officers of the Company who sign the
Registration Statement and each person, if any, who controls the Company or
either of the Selling Shareholders within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act from and against
any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection
with defending or investigating any such action or claim) caused by any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto), or caused by
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through
you expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
(e) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 9(a), 9(b), 9(c) or 9(d), such
person (the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in writing and
the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in
such proceeding and shall pay the reasonable fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties
to any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings
in the same
25
jurisdiction, be liable for (i) the reasonable fees and expenses of more
than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, (ii) the reasonable fees and expenses of more than one
separate firm (in addition to any local counsel) for the Company, its
directors, its officers who sign the Registration Statement and each
person, if any, who controls the Company within the meaning of either such
Section and (iii) the reasonable fees and expenses of more than one
separate firm (in addition to any local counsel) for the Selling
Shareholders and all persons, if any, who control either Selling
Shareholder within the meaning of either such Section, and that all such
fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Underwriters and such control persons of any
Underwriters, such firm shall be designated in writing by Xxxxxx Xxxxxxx &
Co. Incorporated. In the case of any such separate firm for the Company,
and such directors, officers and control persons of the Company, such firm
shall be designated in writing by the Company. In the case of any such
separate firm for the Selling Shareholders and such control persons of the
Selling Shareholders, such firm shall be designated in writing by AHP. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or
if there be a final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel as contemplated by the second and third sentences
of this paragraph, the indemnifying party agrees that it shall be liable
for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by
such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with
such request prior to the date of such settlement. Notwithstanding the
immediately preceding sentence, if at any time an indemnified party shall
have requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel, an indemnifying party shall not be liable for
any settlement effected without its consent if such indemnifying party (i)
reimburses such indemnified party in accordance with such request to the
extent it considers such request to be reasonable and (ii) provides written
notice to the indemnified party substantiating the unpaid balance as
unreasonable, in each case prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been
a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter
of such proceeding.
26
(f) To the extent the indemnification provided for in Section 9(a),
9(b), 9(c) or 9(d) is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities referred to
therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party or parties on
the other hand from the offering of the Shares or (ii) if the allocation
provided by clause 9(f)(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 9(f)(i) above but also the relative fault of the
indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The relative benefits received
by the Sellers on the one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the
Shares (before deducting expenses) received by each Seller and the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover of the Prospectus, bear to
the aggregate Public Offering Price of the Shares. The relative fault of
the Sellers on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, 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
Sellers or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 9 are several in proportion to the respective
number of Shares they have purchased hereunder, and not joint.
(g) The Sellers and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 9(f). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, 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 9, 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
that such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within
27
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 remedies provided for in this Section 9 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(h) The indemnity and contribution provisions contained in this
Section 9 and the representations, warranties and other statements of the
Company and the Selling Shareholders contained in this Agreement shall
remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter, either
Selling Shareholder or any person controlling either Selling Shareholder,
or the Company, its officers or directors or any person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
10. Termination. This Agreement shall be subject to termination by
notice given by you to the Company and the Selling Shareholders, if (a) after
the execution and delivery of this Agreement and prior to the Closing Date (or,
in the case of the Additional Shares, prior to the Option Closing Date) (i)
trading generally shall have been suspended or materially limited on or by, as
the case may be, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the Chicago
Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board
of Trade, (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall have been declared
by either Federal or New York State authorities or (iv) there shall have
occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in your reasonable judgment, is material
and adverse and (b) in the case of any of the events specified in clauses
10(a)(i) through 10(a)(iv), such event, singly or together with any other such
event, makes it, in your reasonable judgment, impracticable to market the Shares
on the terms and in the manner contemplated in the Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I bears to the
aggregate number of Firm Shares set forth opposite the names of all such non-
defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided that in no event shall the
number of Shares
28
that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you, the Company and
the Selling Shareholders for the purchase of such Firm Shares are not made
within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter, the Company or the
Selling Shareholders. In any such case either you or the relevant Sellers shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. If, on the Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than one-
tenth of the aggregate number of Additional Shares to be purchased, the non-
defaulting Underwriters shall have the option to (i) terminate their obligation
hereunder to purchase Additional Shares or (ii) purchase not less than the
number of Additional Shares that such non-defaulting Underwriters would have
been obligated to purchase in the absence of such default. Any action taken
under this paragraph shall not relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Selling Shareholders
to comply with the terms or to fulfill any of the conditions of this Agreement,
or if for any reason the Selling Shareholders shall be unable to perform their
obligations under this Agreement, the Selling Shareholders will reimburse the
Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and disbursements of their counsel) reasonably incurred by such
Underwriters in connection with this Agreement or the offering contemplated
hereunder.
12. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
29
13. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
14. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
Very truly yours,
IMMUNEX CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
AMERICAN HOME PRODUCTS CORPORATION
By: /s/ Xxxxxxx Xxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxx
Title: Senior Vice President, Chief Financial
Officer
MDP HOLDINGS, INC.
By: /s/ Xxxxxxx Xxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxx
Title:
30
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Credit Suisse First Boston Corporation
Xxxxxx Brothers Inc.
Banc of America Securities LLC
Bear, Xxxxxxx & Co. Inc.
Xxxxxxxxx Xxxxxxxx, Inc.
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule I hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: Principal
31
SCHEDULE I
Underwriter Number of Firm Shares
To Be Purchased
Xxxxxx Xxxxxxx & Co. Incorporated................................ 17,010,250
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx 17,010,250
Incorporated...................................................
Credit Suisse First Boston Corporation........................... 7,483,000
Xxxxxx Brothers Inc.............................................. 7,483,000
Banc of America Securities LLC................................... 4,088,000
Bear, Xxxxxxx & Co. Inc. ........................................ 4,088,000
Xxxxxxxxx Xxxxxxxx, Inc. ........................................ 4,088,000
Xxxxx, Xxxxxxxx & Xxxx, Inc. .................................... 583,300
Xxxxxxx X. Xxxxxxxxx & Co., Inc. ................................ 583,300
Chase Securities Inc. ........................................... 583,300
Commerzbank Capital Markets Corporation.......................... 583,300
Xxxx Xxxxxxxx Xxxxxxx............................................ 583,300
A Division of Xxxx Xxxxxxxx
X.X. Xxxxxxxx & Co. Incorporated................................. 583,300
First Union Securities, Inc. .................................... 583,300
Fortis Bank...................................................... 583,300
Xxxxxx Xxxxxxxxxx Xxxxx Inc. .................................... 583,300
Xxxxxx X. Xxxxx & Co., L.P. ..................................... 583,300
Leerink Xxxxx & Company.......................................... 583,300
Xxxxxxxxx Xxxxxx, LLC............................................ 583,300
Prudential Securities Incorporated............................... 583,300
Xxxxx XxxXxxxxx, A Division of Xxxxx Fargo Investments LLC....... 583,300
U.S. Bancorp Xxxxx Xxxxxxx Capital Markets....................... 583,300
----------
Total................................ 70,000,000
==========
SCHEDULE II
Selling Shareholder Number of
Firm Shares
To Be Sold
American Home Products Corporation.......... 15,544,041
MDP Holdings, Inc. ......................... 34,455,959
----------
Total....................... 50,000,000
==========
