EXHIBIT 1.1
RIBAPHARM INC.
26,000,000 Shares
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
__________, 2002
UNDERWRITING AGREEMENT
___________, 2002
UBS Warburg LLC
CIBC World Markets Corp.
XX Xxxxx Securities Corporation
As Representatives of the several Underwriters
named in Schedule A hereto
c/o UBS Warburg LLC
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
ICN Pharmaceuticals, Inc., a Delaware corporation (the "Selling
Stockholder") and the corporate parent of Ribapharm Inc., a Delaware corporation
(the "Company"), proposes to sell to the underwriters named in Schedule A
annexed hereto (the "Underwriters") an aggregate of 26,000,000 shares (the "Firm
Shares") of Common Stock, $.01 par value per share (the "Common Stock"), of the
Company. In addition, solely for the purpose of covering over-allotments, the
Selling Stockholder proposes to grant to the Underwriters the option to purchase
from the Selling Stockholder up to an additional 3,900,000 shares of Common
Stock (the "Additional Shares" and, collectively with the Firm Shares, the
"Shares"). The Shares are described in the Prospectus (as defined below).
The Selling Stockholder and the Company hereby acknowledge that in
connection with the proposed offering of the Shares, they have requested UBS
Warburg LLC ("UBS Warburg") to administer a directed share program (the
"Directed Share Program") under which up to 1,300,000 shares of the Firm Shares
to be purchased by the Underwriters (the "Reserved Shares") shall be reserved
for sale by the Underwriters at the initial public offering price to the
Company's and the Selling Stockholder's officers, directors, employees, and
consultants and others having a business relationship with the Company (the
"Directed Share Participants") as part of the distribution of the Shares by the
Underwriters, subject to the terms of this Agreement, the applicable rules,
regulations and interpretations of the National Association of Securities
Dealers, Inc. and all other applicable laws, rules and regulations. The number
of Shares available for sale to the general public will be reduced to the extent
that Directed Share Participants purchase Reserved Shares. The Underwriters may
offer any Reserved Shares not purchased by Directed Share Participants to the
general public on the same basis as the other Shares being sold hereunder. The
Selling Stockholder and the Company have supplied UBS Warburg with the names,
addresses and telephone numbers of the individuals or other entities which the
Selling Stockholder and the Company have designated to be
participants in the Directed Share Program. It is understood that any number of
those designated to participate in the Directed Share Program may decline to do
so.
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively called the "Act"), with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1 (File No. 333-39350)
including a prospectus, relating to the Shares. The Company has furnished to
you, for use by the Underwriters and by dealers, copies of one or more
preliminary prospectuses (each thereof being herein called a "Preliminary
Prospectus") relating to the Shares. Except where the context otherwise
requires, the registration statement, as amended when it becomes effective,
including all documents filed as a part thereof, and including any information
contained in a prospectus subsequently filed with the Commission pursuant to
Rule 424(b) under the Act and deemed to be part of the registration statement at
the time of effectiveness pursuant to Rule 430(A) under the Act and also
including any registration statement filed pursuant to Rule 462(b) under the
Act, is herein called the "Registration Statement," and the prospectus, in the
form filed by the Company with the Commission pursuant to Rule 424(b) under the
Act on or before the second business day after the date hereof (or such earlier
time as may be required under the Act) or, if no such filing is required, the
form of final prospectus included in the Registration Statement at the time it
became effective, is herein called the "Prospectus." At or prior to completion
of the offering of the Shares, the Selling Stockholder shall have contributed to
the Company, and the Company shall have received from the Selling Stockholder,
all the assets necessary for the conduct of the business of the Company as
described in the Registration Statement and the Prospectus, and the Selling
Stockholder, the Company and, in certain cases, certain other subsidiaries of
the Selling Stockholder shall enter into an affiliation and distribution
agreement, a management services agreement, a confidentiality agreement, a
registration rights agreement, a tax sharing agreement and a lease agreement
(all as described in the Registration Statement and the Prospectus under the
caption "Relationship with ICN") (such agreements, collectively, the
"Intercompany Agreements," and all of such transactions, including the
contribution of assets to the Company, the "Formation Transactions"). All
historical references in this Agreement to the Company include its prior
operation as a division of the Selling Stockholder.
The Company, the Selling Stockholder and the Underwriters agree as
follows:
1. Sale and Purchase. Upon the basis of the representations,
warranties and covenants and subject to the terms and conditions herein set
forth, the Selling Stockholder agrees to sell to the respective Underwriters and
each of the Underwriters, severally and not jointly, agrees to purchase from the
Selling Stockholder that number of Firm Shares set forth opposite the name of
such Underwriter in Schedule A annexed hereto. The purchase price in respect of
the Shares purchased by the Underwriters from the Selling Stockholder is $ per
Share. The Selling Stockholder and the Company are advised by you that the
Underwriters intend (i) to make a public offering of their respective portions
of the Firm Shares as soon after the effective date of the Registration
Statement as in your judgment is advisable and (ii) initially to offer the Firm
Shares upon
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the terms set forth in the Prospectus. You may from time to time increase or
decrease the public offering price after the initial public offering to such
extent as you may determine.
Upon the basis of the representations, warranties and covenants and
subject to the terms and conditions herein set forth, the Selling Stockholder
also hereby grants to the several Underwriters the option to purchase, and the
Underwriters shall have the right to purchase, severally and not jointly, from
the Selling Stockholder ratably in accordance with the number of Firm Shares to
be purchased by each of them, all or a portion of the Additional Shares as may
be necessary to cover over-allotments made in connection with the offering of
the Firm Shares, at the same purchase price per share to be paid by the
Underwriters to the Selling Stockholder for the Firm Shares. This option may be
exercised by you on behalf of the several Underwriters at any time on or before
the thirtieth day following the date hereof, by written notice to the Selling
Stockholder and the Company. Such notice shall set forth the aggregate number of
Additional Shares as to which the option is being exercised, and the date and
time when the Additional Shares are to be delivered (such date and time being
herein referred to as the additional time of purchase); provided, however, that
the additional time of purchase shall not be earlier than the time of purchase
(as defined below) nor earlier than the second business day(1) after the date on
which the option shall have been exercised nor later than the tenth business day
after the date on which the option shall have been exercised. The number of
Additional Shares to be sold to each Underwriter shall be the number which bears
the same proportion to the aggregate number of Additional Shares being purchased
as the number of Firm Shares set forth opposite the name of such Underwriter on
Schedule A hereto bears to the total number of Firm Shares (subject, in each
case, to such adjustment as you may determine to eliminate fractional shares).
2. Payment and Delivery. Payment of the purchase price for the Firm
Shares shall be made to the Selling Stockholder by Federal Funds immediately
available wire transfer, against delivery of the certificates for the Firm
Shares to you through the facilities of the Depository Trust Company for the
respective accounts of the Underwriters. Such payment and delivery shall be made
at 10:00 A.M., New York City time, on _________, 2002 (unless another time shall
be agreed to by you and the Selling Stockholder and the Company or unless
postponed in accordance with the provisions of Section 8 hereof). The time at
which such payment and delivery are actually made is hereinafter sometimes
called the "time of purchase." Electronic transfer of the Firm Shares shall be
made to you at the time of purchase in such names and in such denominations as
you shall specify.
Payment of the purchase price for the Additional Shares shall be
made at the additional time of purchase in the same manner and at the same
office as the payment for the Firm Shares. Electronic transfer of the Additional
Shares shall be made to you at
------------------------------------
(1) As used herein "business day" shall mean a day on which the New York Stock
Exchange is open for trading.
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the additional time of purchase in such names and in such denominations as you
shall specify.
Deliveries of the documents described in Section 6 below with
respect to the purchase of the Shares shall be made at the offices of Xxxxx
Xxxxxxxxxx LLP, 1301 Avenue of the Americas, New York, New York at 9:00 A.M.,
New York City time, on the date of the closing of the purchase of the Firm
Shares or the Additional Shares, as the case may be.
3. Representations and Warranties of the Company and the Selling
Stockholder.
(i) The Company represents and warrants to each of the
Underwriters that:
(a) the Company has not received, and has no notice of, any order
of the Commission preventing or suspending the use of any Preliminary
Prospectus, or instituting proceedings for that purpose, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act; and when the
Registration Statement becomes effective, the Registration Statement and
the Prospectus will conform in all material respects with the provisions
of the Act, and the Registration Statement will not contain an 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 the Prospectus will not contain an 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, in light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representation or warranty with respect
to any statement contained in the Registration Statement or the Prospectus
in reliance upon and in conformity with information concerning the
Underwriters and furnished in writing by or on behalf of any Underwriter
through you to the Company expressly for use in the Registration Statement
or the Prospectus; and neither the Company nor any of its affiliates has
distributed any offering material in connection with the offering or sale
of the Shares other than the Registration Statement, the Preliminary
Prospectus, the Prospectus or any other materials, if any, permitted by
the Act;
(b) as of the date of this Agreement and as of the time of
purchase, the Company has and will have an authorized and outstanding
capitalization as set forth in the section of the Registration Statement
and the Prospectus entitled "Capitalization";
(c) all of the issued and outstanding shares of capital stock of
the Company, including the Shares, have been duly and validly authorized
and issued and are fully paid and non-assessable, have been issued in
compliance with all federal and state securities laws and were not issued
in violation of any preemptive right, resale right, right of first refusal
or similar right;
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(d) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with all requisite corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the
Registration Statement and the Prospectus, to execute and deliver and
perform its obligations under this Agreement, to enter into the
Intercompany Agreements and to receive the assets to be contributed to it
in the Formation Transactions;
(e) the Company is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not
individually or in the aggregate have a material adverse effect on the
business, operations, prospects, properties, condition (financial or
otherwise) or results of operations of the Company or on the ability of
the Company and the Selling Stockholder to consummate the transactions
contemplated hereby or to receive the assets to be contributed to it in
the Formation Transactions (a "Material Adverse Effect"); the Company has
no subsidiaries (as defined in the Act); the Company does not own,
directly or indirectly, any shares of stock or any other equity or
long-term debt of any corporation or have any direct or indirect equity
interest or ownership of long-term debt in any firm, partnership, limited
liability company, joint venture, association or other entity; complete
and correct copies of the certificate of incorporation and of the bylaws
of the Company and all amendments thereto have been delivered to you and,
except as set forth in the exhibits to the Registration Statement, no
changes therein will be made subsequent to the date hereof and prior to
the time of purchase or, if later, the additional time of purchase;
(f) the Company is not in breach of, or in default under (nor has
any event occurred which with notice, lapse of time, or both would result
in any breach of, or constitute a default under), (i) its charter or
bylaws or (ii) except as would not individually or in the aggregate have a
Material Adverse Effect, any indenture, mortgage, deed of trust, bank loan
or credit agreement or other evidence of indebtedness, or any lease,
contract or other agreement or instrument to which the Company is a party
or by which it or any of its properties is bound; and the execution,
delivery and performance of this Agreement and the Intercompany
Agreements, the sale of the Shares by the Selling Stockholder, the
consummation of the transactions contemplated hereby and by the
Intercompany Agreements and the receipt by the Company of the assets to be
contributed to it in the Formation Transactions do not and will not
conflict with, or result in any breach of or constitute a default under
(nor constitute any event which with notice, lapse of time, or both, would
result in any conflict with, breach of or default under) (x) any
provisions of the charter or bylaws of the Company or (y) except as would
not individually or in the aggregate have a Material Adverse Effect, under
any provision of any license, indenture, mortgage, deed of trust, bank
loan or credit agreement or other evidence of indebtedness, or any lease,
contract or other agreement or instrument to which the Company is a party
or by which it or its properties may be bound or affected, or under any
federal, state,
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local or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company or any of its properties;
(g) the execution, delivery and performance of this Agreement and
the Intercompany Agreements, the consummation of the transactions
contemplated hereby and by the Intercompany Agreements and the receipt by
the Company of the assets to be contributed to it in the Formation
Transactions, whether considered independently or as one or more of a
series of transactions, do not require (i) the consent or approval of the
holders of any class or series of the outstanding capital stock or debt
securities of the Company (under law, pursuant to contract or otherwise),
(ii) the consent or approval of any lender pursuant to the terms of any
credit facility or similar financing agreement of the Company or (iii) the
consent or approval of any party to any other agreement to which the
Company is a party, except, in the case of each of the foregoing clauses
(i), (ii) and (iii), for any such consents or approvals as have been
obtained prior to the date hereof (copies of which have been previously
furnished to you);
(h) the execution, delivery and performance of this Agreement and
the Intercompany Agreements, the consummation of the transactions
contemplated hereby and by the Intercompany Agreements and the receipt by
the Company of the assets to be contributed to it in the Formation
Transactions, whether considered independently or as one or more of a
series of transactions, will not (i) result in the acceleration of any
indebtedness or similar obligations of the Company, (ii) except as
described in the Registration Statement and the Prospectus, require the
Company to assume or otherwise become an obligor with respect to any
indebtedness or similar obligations of the Selling Stockholder or any of
the Other Selling Stockholder Subsidiaries or (iii) require the making of
an offer by the Company to repurchase or repay any indebtedness or similar
obligations pursuant to the terms thereof, in the case of each of the
foregoing clauses (i), (ii) and (iii), whether as a result of a change of
control, the disposition of assets or otherwise;
(i) this Agreement has been duly authorized, executed and
delivered by, and is a legal, valid and binding agreement of, the Company,
enforceable against the Company in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and general principles of equity;
(j) the capital stock of the Company, including the Shares,
conforms in all material respects to the description thereof contained in
the Registration Statement and Prospectus; and the certificates for the
Shares comply with the requirements of the Delaware General Corporation
Law (the "DGCL");
(k) no approval, authorization, consent or order of or filing with
any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency is required to be obtained or
made by the Company in connection with the sale of the Shares by the
Selling Stockholder, the
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consummation of the transactions contemplated hereby, the receipt by the
Company of the assets to be contributed to it in the Formation
Transactions and the entering into, and consummation of the transactions
contemplated by, the Intercompany Agreements, other than registration of
the Shares under the Act and under the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (collectively called the
"Exchange Act"), any necessary qualification under the securities or blue
sky laws of the various jurisdictions in which the Shares are being
offered by the Underwriters, approval by the Corporate Financing
Department of NASD Regulation, Inc. ("NASDR") pursuant to the Corporate
Financing Rule thereof, and approval by the New York Stock Exchange, Inc.
("NYSE") of the Company's application to have the Shares listed on the
NYSE;
(l) except as described in the Registration Statement and
Prospectus, no person has (i) the right, contractual or otherwise, to
cause the Company to issue to it, or register pursuant to the Act, any
shares of capital stock or other equity interests of the Company or (ii)
preemptive rights, co-sale rights, rights of first refusal or other rights
to purchase any shares of capital stock or other equity interests of the
Company or rights to underwrite the offer and sale of the Shares;
(m) PricewaterhouseCoopers LLP, whose report on the financial
statements of the Company is filed with the Commission as part of the
Registration Statement and Prospectus, are independent public accountants
as required by the Act;
(n) the Company has all necessary licenses, permits, franchises,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state, local or foreign law, regulation or
rule, and has obtained all necessary authorizations, consents and
approvals from other persons, in order to conduct its business as
described in the Registration Statement and the Prospectus, except in each
case where the failure to possess or have made or obtained the same would
not individually or in the aggregate have a Material Adverse Effect; and
the Company is not in violation of, or in default under, any license,
permit, franchise, authorization, consent or approval or any federal,
state, local or foreign law, regulation or rule or any decree, order,
directive or judgment applicable to the Company, the effect of which
individually or in the aggregate would have a Material Adverse Effect;
(o) all legal and governmental proceedings, all statutes and
regulations and all contracts, leases or documents of a character required
to be described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement have been so described
or filed as required;
(p) except as described in the Registration Statement and the
Prospectus, there are no private or governmental actions, suits,
investigations or proceedings pending or known by the Company to be
threatened or contemplated to which the Company or any of its officers or
directors or any of its properties is
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subject, whether at law, in equity or before or by any federal, state,
local or foreign governmental or regulatory commission, board, body,
authority or agency which would result in a judgment, decree or order that
individually or in the aggregate would reasonably be likely to have a
Material Adverse Effect;
(q) the financial statements and related notes thereto included in
the Registration Statement and the Prospectus present fairly in all
material respects the financial position of the Company as of the dates
indicated and the results of operations and cash flows of the Company for
the periods specified; such financial statements have been prepared in
conformity with the requirements of Regulation S-X under the Act and,
except as set forth in the notes to the financial statements, in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved; all pro forma or similar
adjustments to historical financial information set forth in the
Registration Statement and the Prospectus have been properly applied to
the applicable historical amounts; all other financial data set forth in
the Registration Statement and the Prospectus are accurately presented and
prepared on a basis consistent with the financial statements contained in
the Registration Statement and the Prospectus and the books and records of
the Company; and there are no financial statements (historical or pro
forma) that are required to be included in the Registration Statement and
the Prospectus that are not included as required;
(r) except as described in the Registration Statement and the
Prospectus, subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been
(i) any material adverse change, or any development involving a
prospective material adverse change, in the business, properties,
condition (financial or otherwise) or results of operations of the
Company, (ii) any transaction which is material to the Company, (iii) the
incurrence by the Company of any obligation, direct or contingent, and
whether or not in the ordinary course of business, which is material to
the Company, (iv) any change in the capital stock or any other equity
interest or outstanding indebtedness of the Company or (v) any dividend or
distribution of any kind declared, paid or made on the capital stock or
any other equity interest of the Company; and the Company does not have
any material contingent obligation which is not disclosed in the
Registration Statement and the Prospectus;
(s) the Company has obtained the agreement (in the form set forth
in Exhibit I to this Agreement) of each of the executive officers and
directors of the Company and the Selling Stockholder not to sell, offer to
sell, contract to sell, hypothecate, pledge, grant any option to sell or
otherwise dispose of, directly or indirectly, any Common Stock or
securities convertible into or exercisable or exchangeable for Common
Stock or warrants or other rights to purchase Common Stock for a period of
180 days after the date of the Prospectus without the prior written
consent of UBS Warburg (except under the limited circumstances set forth
in Exhibit I to this Agreement); other than as described in the
Registration Statement and the Prospectus, at the time of purchase there
will be no outstanding shares of Common Stock or securities that are
convertible into or exercisable or
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exchangeable for (or other rights to acquire) Common Stock during the
180-day period after the date of the Prospectus;
(t) all statistical and market-related data included in the
Registration Statement and the Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate, and the
Company has obtained the written consent to the use of such data from such
sources to the extent required;
(u) each of (i) the description of the Company's library of
nucleoside analog and other compounds, (ii) the descriptions of ribavirin,
the combination therapies of which ribavarin forms a part and each of the
Company's products under development, (iii) the description of the license
agreement with Schering-Plough Ltd. ("Schering-Plough") with respect to
ribavirin (as amended, the "Schering-Plough License Agreement"), (iv) the
description of the November 2000 agreement with Schering-Plough relating
to options and rights of first/last refusal with respect to Company
compounds (as amended, the "November 2000 Schering-Plough Agreement"), (v)
the description of the June 2001 license agreement with X. Xxxxxxx-Xx
Xxxxx relating to Levovirin and IL-12 (as amended, the "Roche License
Agreement"), (vi) the description of the October 2001 agreement with
Metabasis Therapeutics, Inc. relating to Hepavir B (as amended, the
"Metabasis Agreement") and (vii) the summaries of clinical trial results
and other clinical data with respect to ribavirin, the combination
therapies of which ribavarin forms a part, the Company's products under
development and, to the knowledge of the Company after due inquiry,
pegylated interferon (both as a monotherapy and in combination with
ribavirin) in each case included in the Registration Statement and the
Prospectus is accurate in all material respects and does not omit any
material information necessary to make such description or summary, in
light of the circumstances under which it was made, not misleading and
fairly presents the information purported to be shown;
(v) neither the Company nor any of its affiliates has taken,
directly or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result, under the Exchange
Act or otherwise, in stabilization or manipulation of the price of any
security to facilitate the sale or resale of the Shares, except as
permitted by this Agreement;
(w) except as described in the Registration Statement and the
Prospectus, the Company maintains insurance (including self insurance as
disclosed in the Registration Statement and the Prospectus) against such
losses and risks and in such amount as are customary in the business in
which it is engaged; all policies of insurance insuring the Company or any
of its businesses, assets, employees, officers and directors are in full
force and effect, and the Company and all other insureds under such
policies are in compliance with the terms of such policies in all material
respects; and there are no claims by or relating to the Company under any
such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause;
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(x) since the date of the latest audited financial statements
included in the Registration Statement and the Prospectus, there has not
been any loss or interference sustained with respect to the business of or
to be conducted by the Company from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as
described in the Registration Statement and the Prospectus or other than
any loss or interference which would not individually or in the aggregate
have a Material Adverse Effect;
(y) upon completion of the Formation Transactions, the Company
will have good title to all property owned by it as described in the
Registration Statement and the Prospectus, free and clear of any liens,
encumbrances, claims or defects except such as are described in the
Registration Statement and the Prospectus or such as would not
individually or in the aggregate have a Material Adverse Effect; except as
described in the Registration Statement and the Prospectus, any real
property and buildings held under lease by the Company are held by it
under valid, subsisting and enforceable leases with such exceptions as do
not materially interfere with the use made and proposed to be made of such
property and buildings by the Company;
(z) (i) except as described in the Registration Statement and the
Prospectus or as would not, individually or in the aggregate, have a
Material Adverse Effect, upon completion of the Formation Transactions,
the Company will own, possess, license or have other rights to use all
patents, patent applications, inventions, technology, trademarks,
trademark applications, service marks, service xxxx applications, trade
names, copyrights, manufacturing processes, formulae, trade secrets,
know-how, franchises, information, proprietary rights and processes and
other material intangible property and assets described in the
Registration Statement and the Prospectus as being owned or used by or
licensed to the Company or necessary for the conduct of its business as
currently conducted or future business as described in the Registration
Statement and the Prospectus (collectively, the "Intellectual Property")
without any conflict with or infringement of the interests of others and
all such Intellectual Property is valid and enforceable, and the Company
has taken all reasonable steps necessary to secure interests in such
Intellectual Property; (ii) except as described in the Registration
Statement and Prospectus, the Company is not aware of outstanding options,
licenses or agreements of any kind relating to the Intellectual Property
to be held by the Company upon completion of the Formation Transactions
which are required to be described in the Registration Statement and the
Prospectus, and, except as described in the Registration Statement and
Prospectus, upon completion of the Formation Transactions, the Company
will not be a party to or bound by any options, licenses or agreements
with respect to the Intellectual Property of any other person or entity
which are required to be described in the Registration Statement and the
Prospectus; (iii) except as described in the Registration Statement and
the Prospectus, none of the technology to be employed by the Company upon
completion of the Formation Transactions has been or will be obtained or
has been or is being used in violation of any contractual obligation
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binding, or to be binding upon completion of the Formation Transactions,
on the Company or any of its directors or executive officers or other
employees of the Company or otherwise in violation of the rights of any
persons; (iv) except as described in the Registration Statement and the
Prospectus or as would not individually or in the aggregate have a
Material Adverse Effect, the Company has not received any communications
alleging that the Company has violated, infringed or conflicted with, or
upon completion of the Formation Transactions will be in violation or
infringement of or in conflict with, or, that the current or proposed
conduct by the Company of its business as described in the Registration
Statement and Prospectus, would violate, infringe or conflict with, any of
the Intellectual Property of any other person or entity; (v) except as
described in the Registration Statement and the Prospectus, the Company
has neither violated, infringed or conflicted with, nor, by conducting its
business as described in the Registration Statement and the Prospectus and
commercializing the products under development described therein, would
violate, infringe or conflict with, any of the Intellectual Property of
any other person or entity other than any such violation, infringement or
conflict which would not individually or in the aggregate have a Material
Adverse Effect; and (vi) the products and product candidates of the
Company described in the Registration Statement and the Prospectus read on
the claims contained in the patents and patent applications described in
the Registration Statement and the Prospectus;
(aa) except as described in the Registration Statement and the
Prospectus, the Company does not have any information to the effect that
Schering-Plough and its affiliates do not own, possess, license or have
other rights to use all Intellectual Property necessary for the commercial
sale of interferon alpha-2B or pegylated interferon in combination with
ribavirin, without any conflict with or infringement of the interests of
others;
(bb) the Company has not violated any federal, state, local or
foreign law or regulation relating to discrimination in the hiring,
promotion or pay of employees or any applicable wages and hours laws, nor
any provisions of the Employee Retirement Income Security Act or 1976, as
amended, or the rules and regulations promulgated thereunder or any
similar act or law, which individually or in the aggregate would result in
a Material Adverse Effect; and the Company is not involved in any labor
dispute or disturbance nor, to the knowledge of the Company after due
inquiry, is any such dispute or disturbance threatened except, in each
case, for disputes or disturbances which would not, individually or in the
aggregate, have a Material Adverse Effect;
(cc) the Company has not violated any federal, state, local or
foreign law or regulation relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants, which individually or in the aggregate would
result in a Material Adverse Effect;
11
(dd) the Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorization; (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;
(ee) the descriptions of the transactions and agreements described
in the Prospectus under the caption "Relationship with ICN" are accurate
and complete in all material respects; and there are no material
agreements or understandings between or among the Company, the Selling
Stockholder and/or any Other Selling Stockholder Subsidiary (as defined
below) relating to or affecting the Company or its business other than as
described in the Registration Statement and the Prospectus;
(ff) except as described in the Registration Statement and the
Prospectus, the Company has not sent or received any notice of breach or
termination of the Schering-Plough Agreement, the November 2000
Schering-Plough Agreement, the Roche License Agreement, the Metabasis
Agreement, any of the Intercompany Agreements or any other contract or
agreement described in the Registration Statement or the Prospectus or
filed as an exhibit to the Registration Statement and except as described
in the Registration Statement and the Prospectus, and no such breach or
termination has been threatened by the Company or to the knowledge of the
Company, any other party to any such contract or agreement;
(gg) except as would not individually or in the aggregate have a
Material Adverse Effect, the Company has filed on a timely basis all
federal, state, local and foreign income, franchise and other tax forms
required to be filed by them; except as would not individually or in the
aggregate have a Material Adverse Effect, such returns and forms of the
Company are complete and correct in all material respects; except as would
not individually or in the aggregate have a Material Adverse Effect, all
taxes of the Company shown by such returns or otherwise assessed that are
due or payable have been paid other than such taxes as are being contested
in good faith and as to which adequate reserves have been provided; except
as would not individually or in the aggregate have a Material Adverse
Effect, all payroll withholdings required to be made by the Company with
respect to employees have been made; except as would not individually or
in the aggregate have a Material Adverse Effect, the charges, accruals and
reserves on the books of the Company in respect of any tax liability for
any year not finally determined are adequate to meet any assessments or
reassessments for additional taxes; and, except as would not individually
or in the aggregate have a Material Adverse Effect, there have been no tax
deficiencies asserted against the Company and the Company is not aware of
any tax deficiency that might be reasonably
12
asserted or threatened against the Company that would, individually or in
the aggregate, have a Material Adverse Effect;
(hh) the Company is not, and after the offering and sale of the
Shares will not be an "investment company," as such term is defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(ii) the Company has not offered, or caused the Underwriters to
offer, Shares to any person pursuant to the Directed Share Program with
the specific intent to influence unlawfully (i) a customer or supplier of
the Company or the Selling Stockholder or any Other Selling Stockholder
Subsidiary to alter the customer's or supplier's level or type of business
with the Company, the Selling Stockholder or any Other Selling Stockholder
Subsidiary or (ii) a trade journalist or publication to write or publish
favorable information about the Company or the Selling Stockholder or any
Other Selling Stockholder Subsidiary or any of their respective products
or services; and
(jj) to the knowledge of the Company, the representations and
warranties made by the Selling Stockholder in Section 3(ii) hereof, as
they relate to the Company, are true and correct as of the date hereof.
(ii) The Selling Stockholder represents and warrants to each
of the Underwriters that:
(a) the Selling Stockholder has not received, and has no notice
of, any order of the Commission preventing or suspending the use of any
Preliminary Prospectus, or instituting proceedings for that purpose, and
each Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Act; and when the
Registration Statement becomes effective, the Registration Statement and
the Prospectus will conform in all material respects with the provisions
of the Act, and the Registration Statement will not contain an 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 the Prospectus will not contain an 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, in light of the
circumstances under which they were made, not misleading; provided,
however, that the Selling Stockholder makes no representation or warranty
with respect to any statement contained in the Registration Statement or
the Prospectus in reliance upon and in conformity with information
concerning the Underwriters and furnished in writing by or on behalf of
any Underwriter through you to the Company expressly for use in the
Registration Statement or the Prospectus; and none of the Selling
Stockholder or any of its affiliates has distributed any offering material
in connection with the offering or sale of the Shares other than the
Registration Statement, the Preliminary Prospectus, the Prospectus or any
other materials, if any, permitted by the Act;
13
(b) the Selling Stockholder has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
State of Delaware, with all requisite corporate power and authority to
own, lease and operate its properties, to execute and deliver and perform
its obligations under this Agreement, to enter into the Intercompany
Agreements and to contribute the assets to be contributed by it to the
Company in the Formation Transactions;
(c) except as would not individually or in the aggregate have a
Material Adverse Effect, neither the Selling Stockholder nor any of the
Selling Stockholder's subsidiaries other than the Company (the "Other
Selling Stockholder Subsidiaries") is in breach of, or in default under
(nor has any event occurred which with notice, lapse of time, or both,
would result in any breach of, or constitute a default under), (i) its
charter or bylaws or other organizational documents or (ii) any indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence
of indebtedness, or any lease, contract or other agreement or instrument
to which the Selling Stockholder or any of the Other Selling Stockholder
Subsidiaries is a party or by which any of them or any of their respective
properties is bound; and except as would not individually or in the
aggregate have a Material Adverse Effect, the execution, delivery and
performance of this Agreement and the Intercompany Agreements, the sale of
the Shares by the Selling Stockholder, the consummation of the
transactions contemplated hereby and by the Intercompany Agreements and
the contribution of assets by the Selling Stockholder in the Formation
Transactions will not conflict with, or result in any breach of or default
under (nor constitute any event which with notice, lapse of time, or both,
would result in any conflict with, breach of or default under), (x) any
provisions of the charter or bylaws or other organizational documents of
the Selling Stockholder or any of the Other Selling Stockholder
Subsidiaries or (y) under any provision of any license, indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence
of indebtedness, or any lease, contract or other agreement or instrument
to which the Selling Stockholder or any of the Other Selling Stockholder
Subsidiaries is a party or by which any of them or their respective
properties may be bound or affected, or under any federal, state, local or
foreign law, regulation or rule or any decree, judgment or order
applicable to the Selling Stockholder or any of the Other Selling
Stockholder Subsidiaries or any of their respective properties;
(d) the execution, delivery and performance of this Agreement and
the Intercompany Agreements, the consummation of the transactions
contemplated hereby, by the Intercompany Agreements and the contribution
of assets by the Selling Stockholder in the Formation Transactions,
whether considered independently or as one or more of a series of
transactions, do not require (i) the consent or approval of the holders of
any class or series of the outstanding capital stock or debt securities of
the Selling Stockholder or any Other Selling Stockholder Subsidiary (under
law, pursuant to contract or otherwise), (ii) the consent or approval of
any lender pursuant to the terms of any credit facility or similar
financing agreement of the Selling Stockholder or any of the Other Selling
Stockholder Subsidiaries or (iii) the consent or approval of any party to
any other
14
agreement to which the Selling Stockholder or any of the Other Selling
Stockholder Subsidiaries is a party, except, in the case of each of the
foregoing clauses (i), (ii) and (iii), for any such consents or approvals
as have been obtained prior to the date hereof (copies of which have been
previously furnished to you) or that are to be obtained at or prior to the
time of purchase as described in the Registration Statement and the
Prospectus;
(e) the execution, delivery and performance of this Agreement and
the Intercompany Agreements, the consummation of the transactions
contemplated hereby, by the Intercompany Agreements and the contribution
of assets by the Selling Stockholder in the Formation Transactions,
whether considered independently or as one or more of a series of
transactions, will not, after giving effect to the consummation of the
tender offer and consent solicitation with respect to the Selling
Stockholder's 8 3/4% Senior Notes due 2008, which will occur at or prior
to the time of purchase, (i) result in the acceleration of any
indebtedness or similar obligations of the Selling Stockholder or any of
the Other Selling Stockholder Subsidiaries, (ii) except as described in
the Registration Statement and the Prospectus, require the Company to
assume or otherwise become an obligor with respect to any indebtedness or
similar obligations of the Selling Stockholder or any of the Other Selling
Stockholder Subsidiaries or (iii) except as described in the Registration
Statement and the Prospectus, require the making of an offer by the
Selling Stockholder or any of the Other Selling Stockholder Subsidiaries
to repurchase or repay any indebtedness or similar obligations pursuant to
the terms thereof, in the case of each of the foregoing clauses (i), (ii)
and (iii), whether as a result of a change of control, the disposition of
assets or otherwise;
(f) this Agreement has been duly authorized, executed and
delivered by, and is a legal, valid and binding agreement of, the Selling
Stockholder, enforceable against the Selling Stockholder in accordance
with its terms except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and general principles of equity;
(g) the Selling Stockholder is the lawful owner of the Shares to
be sold by it hereunder and upon sale and delivery of, and payment for,
the Shares, as provided herein, the Selling Stockholder will convey to the
Underwriters good and marketable title to the Shares, free and clear of
any liens, encumbrances, claims or defects;
(h) no approval, authorization, consent or order of or filing with
any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency is required to be obtained or
made by the Selling Stockholder or any of the Other Selling Stockholder
Subsidiaries in connection with the sale of the Shares by the Selling
Stockholder, the consummation of the transactions contemplated hereby, the
contribution by the Selling Stockholder of the assets to the Company in
the Formation Transactions and the entering into,
15
and consummation of the transactions contemplated by, the Intercompany
Agreements, other than registration of the Shares under the Act and under
the Exchange Act, any necessary qualification under the securities or blue
sky laws of the various jurisdictions in which the Shares are being
offered by the Underwriters, approval by NASDR pursuant to the Corporate
Financing Rule thereof, and approval by the NYSE of the Company's
application to have the Shares listed on the NYSE;
(i) except as described in the Registration Statement and the
Prospectus, no person has preemptive rights, co-sale rights, rights of
first refusal or other rights to purchase the Shares being sold by the
Selling Stockholder or rights to underwrite the offer and sale of the
Shares;
(j) except as would not individually or in the aggregate have a
Material adverse Effect, the Selling Stockholder and the Other Selling
Stockholder Subsidiaries have all necessary licenses, permits, franchises,
authorizations, consents and approvals, have made all necessary filings
required under any federal, state, local or foreign law, regulation or
rule and have obtained all necessary authorizations, consents and
approvals from other persons in order for the Company to conduct its
business as described in the Registration Statement and the Prospectus;
and except as would not individually or in the aggregate have a Material
adverse Effect, neither the Selling Stockholder nor any of the Other
Selling Stockholder Subsidiaries is in violation of, or in default under,
any license, permit, franchise, authorization, consent or approval or any
federal, state, local or foreign law, regulation or rule or any decree,
order, directive or judgment applicable to the Selling Stockholder or any
of the Other Selling Stockholder Subsidiaries;
(k) except as described in the Registration Statement and the
Prospectus, there are no private or governmental actions, suits,
investigations or proceedings pending or known by the Selling Stockholder
to be threatened or contemplated to which the Selling Stockholder or any
of the Other Selling Stockholder Subsidiaries or any of their respective
officers or directors or any of their respective properties is subject,
whether at law, in equity or before or by any federal, state, local or
foreign governmental or regulatory commission, board, body, authority or
agency which would result in a judgment, decree or order that individually
or in the aggregate would reasonably be likely to have a Material Adverse
Effect;
(l) except as described in the Registration Statement and the
Prospectus, subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been
any change, or any development involving a prospective change, in the
business, properties, condition (financial or otherwise) or results of
operations of the Selling Stockholder or any Other Selling Subsidiary that
would individually or in the aggregate have a Material Adverse Effect;
16
(m) neither the Selling Stockholder nor any of its affiliates has
taken, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result,
under the Exchange Act or otherwise, in stabilization or manipulation of
the price of any security to facilitate the sale or resale of the Shares,
except as permitted by this Agreement;
(n) (i) except as described in the Registration Statement and the
Prospectus, the Selling Stockholder is not aware of outstanding options,
licenses or agreements of any kind relating to the Intellectual Property
to be held by the Company upon completion of the Formation Transactions
which are required to be described in the Registration Statement and the
Prospectus; (ii) except as described in the Registration Statement and the
Prospectus, upon the completion of the Formation Transactions, neither the
Selling Stockholder nor the Other Selling Stockholder Subsidiaries will be
a party to or bound by any options, licenses or agreements with respect to
the Intellectual Property of any other person or entity which are required
to be described in the Registration Statement and the Prospectus; (iii)
except as described in the Registration Statement and the Prospectus, none
of the technology to be employed by the Company upon completion of the
Formation Transactions has been or will be obtained or has been or is
being used in violation of any contractual obligation binding on the
Selling Stockholder or any of the Other Selling Stockholder Subsidiaries
or any of their respective directors, executive officers or other
employees or otherwise in violation of the rights of any persons; (iv)
except as described in the Registration Statement and the Prospectus or as
would not individually or in the aggregate have a Material Adverse Effect,
neither the Selling Stockholder nor any Other Selling Stockholder
Subsidiary has received any communications alleging that the Selling
Stockholder or any Other Selling Stockholder Subsidiary has violated,
infringed or conflicted with, or upon completion of the Formation
Transactions will be in violation or infringement of or in conflict with,
or would violate, infringe or conflict with, any of the Intellectual
Property of any other person or entity; and (v) except as described in the
Registration Statement and the Prospectus, neither the Selling Stockholder
nor any Other Selling Stockholder Subsidiary has violated, infringed or
conflicted with, or, by conducting its respective businesses as described
in the Registration Statement and the Prospectus and commercializing the
products under development described therein, would violate, infringe or
conflict with any of the Intellectual Property of any other person or
entity other than any such violation, infringement or conflict which would
not individually or in the aggregate have a Material Adverse Effect;
(o) except as described in the Registration Statement and the
Prospectus, neither the Selling Stockholder nor any Other Selling
Stockholder Subsidiary has any information to the effect that
Schering-Plough and its affiliates do not own, possess, license or have
other rights to use all Intellectual Property necessary for the commercial
sale of interferon alpha-2B and pegylated interferon in combination with
ribavirin, without any conflict with or infringement of the interests of
others;
17
(p) except for violations which have previously been resolved, by
settlement or otherwise, neither the Selling Stockholder nor any Other
Selling Stockholder Subsidiary has violated any federal, state, local or
foreign law or regulation relating to discrimination in the hiring,
promotion or pay of employees or any applicable wages and hours laws, nor
any provisions of the Employee Retirement Income Security Act or 1976, as
amended, or the rules and regulations promulgated thereunder or any
similar act or law, which individually or in the aggregate would result in
a Material Adverse Effect; and neither the Selling Stockholder nor any
Other Selling Stockholder Subsidiary is involved in any labor dispute or
disturbance nor is any such dispute or disturbance threatened except, in
each case, for disputes or disturbances which would not, individually or
in the aggregate, have a Material Adverse Effect;
(q) neither the Selling Stockholder nor any Other Selling
Stockholder Subsidiary has violated any federal, state, local or foreign
law or regulation relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants, which individually or in the aggregate would result in a
Material Adverse Effect;
(r) the descriptions of the transactions and agreements described
in the Prospectus under the caption "Relationship with ICN" are accurate
and complete in all material respects; and there are no material
agreements or understandings between or among the Company, the Selling
Stockholder and/or any Other Selling Stockholder Subsidiary relating to or
affecting the Company or its business other than as described in the
Registration Statement and the Prospectus;
(s) except as described in the Registration Statement and the
Prospectus, neither the Selling Stockholder nor any Other Selling
Stockholder Subsidiary has sent or received any notice of breach or
termination of the Schering-Plough Agreement, the November 2000
Schering-Plough Agreement, the Roche License Agreement, any of the
Intercompany Agreements or any other contract or agreement described in
the Registration Statement or the Prospectus or filed as an exhibit to the
Registration Statement, and no such breach or termination has been
threatened by the Selling Stockholder or any Other Selling Stockholder
Subsidiary or any other party to any such contract or agreement;
(t) except as would not individually or in the aggregate have a
Material Adverse Effect, the Selling Stockholder and the Other Selling
Stockholder Subsidiaries have filed on a timely basis all federal, state,
local and foreign income, franchise and other tax forms required to be
filed by them; except as would not individually or in the aggregate have a
Material Adverse Effect, such returns and forms of the Selling Stockholder
and the Other Selling Stockholder Subsidiaries are complete and correct in
all material respects; except as would not individually or in the
aggregate have a Material Adverse Effect, all taxes of the Selling
Stockholder and the Other Selling Stockholder Subsidiaries shown by such
returns or otherwise assessed that are due or payable have been paid other
than such taxes as are being contested in good faith and as to which
adequate
18
reserves have been provided; except as would not individually or in the
aggregate have a Material Adverse Effect, all payroll withholdings
required to be made by the Selling Stockholder and the Other Selling
Stockholder Subsidiaries with respect to employees have been made; except
as would not individually or in the aggregate have a Material Adverse
Effect, the charges, accruals and reserves on the books of the Selling
Stockholder and the Other Selling Stockholder Subsidiaries in respect of
any tax liability for any year not finally determined are adequate to meet
any assessments or reassessments for additional taxes; and, except as
would not individually or in the aggregate have a Material Adverse Effect,
there have been no tax deficiencies asserted against the Selling
Stockholder and the Other Selling Stockholder Subsidiaries and the Selling
Stockholder is not aware of any tax deficiency that might be reasonably
asserted or threatened against the Selling Stockholder or the Other
Selling Stockholder Subsidiaries that would, individually or in the
aggregate, have a Material Adverse Effect;
(u) neither the Selling Stockholder or any Other Selling
Stockholder Subsidiary has offered, or caused the Underwriters to offer,
Shares to any person pursuant to the Directed Share Program with the
specific intent to influence unlawfully (i) a customer or supplier of the
Company or the Selling Stockholder or any Other Selling Stockholder
Subsidiary to alter the customer's or supplier's level or type of business
with the Company, the Selling Stockholder or any Other Selling Stockholder
Subsidiary or (ii) a trade journalist or publication to write or publish
favorable information about the Company or the Selling Stockholder or any
Other Selling Stockholder Subsidiary or any of their respective products
or services;
(v) as of each of the date hereof and the date hereof after giving
pro forma effect to the sale of the Shares and the proposed distribution
of the Selling Stockholder's remaining equity interest in the Company to
its stockholders as contemplated by the Registration Statement and the
Prospectus (the "Spin-off"), the Selling Shareholder is solvent. The
Selling Stockholder is not contemplating either the filing of a petition
by it under any bankruptcy or insolvency laws or the liquidating of all or
a substantial portion of its property, and the Selling Stockholder has no
knowledge of any person contemplating the filing of any such petition
against the Selling Stockholder. The Selling Stockholder has sufficient
surplus and net profits out of which the Selling Stockholder may effect
the Spin-off without violating statutory or other legal dividend
requirements. As used herein, "solvent" shall mean that (i) the fair value
of the property of the Selling Stockholder is greater than the total
amount of liabilities, including, without limitation, contingent
liabilities, of the Selling Stockholder, (ii) the present fair salable
value of the assets of the Selling Stockholder is not less than the amount
that will be required to pay the probable liability of the Selling
Stockholder on its debts as they become absolute and matured, (iii) the
Selling Stockholder does not intend to, and does not believe that it will,
incur debts and liabilities beyond the Selling Stockholder's ability to
pay as such debts and liabilities mature, (iv) the Selling Stockholder is
not engaged in a business or a transaction, and is not about
19
to engage in a business or a transaction, for which the Selling
Stockholder's property would constitute an unreasonably small capital and
(v) the Selling Stockholder is able to pay its debts as they become due
and payable; and
(w) the representations and warranties made by the Company in
Section 3(i) are true and correct as of the date hereof.
Any certificate signed by any officer of the Company or the Selling
Stockholder and delivered to the Representatives or counsel for the Underwriters
in connection with the offering of the Shares shall be deemed to be a
representation and warranty by the Company or the Selling Stockholder, as the
case may be, as to matters covered thereby, to each Underwriter.
4. Certain Covenants of the Company and the Selling Stockholder.
(i) The Company hereby agrees:
(a) to furnish such information as may be required and otherwise
to cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states as you may designate and to
maintain such qualifications in effect so long as required for the
distribution of the Shares; provided that the Company shall not be
required to qualify as a foreign corporation or as a dealer in securities,
to subject itself to taxation in respect of doing business in any
jurisdiction or to consent to the service of process under the laws of any
such state (except service of process with respect to the offering and
sale of the Shares); and to promptly advise you of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose;
(b) to make available to the Underwriters in New York City, as
soon as practicable after the Registration Statement becomes effective,
and thereafter from time to time to furnish to the Underwriters, as many
copies of the Prospectus (or of the Prospectus as amended or supplemented
if the Company shall have made any amendments or supplements thereto after
the effective date of the Registration Statement) as the Underwriters may
reasonably request for the purposes contemplated by the Act; in case any
Underwriter is required to deliver a prospectus after the nine-month
period referred to in Section 10(a)(3) of the Act in connection with the
sale of the Shares, the Company will prepare promptly upon request such
amendment or amendments to the Registration Statement and such
prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act;
(c) to advise you promptly and (if requested by you) to confirm
such advice in writing, (i) when the Registration Statement has become
effective and when any post-effective amendment thereto becomes effective
and (ii) if Rule 430A under the Act is used, when the Prospectus is filed
with the Commission
20
pursuant to Rule 424(b) under the Act (which the Company agrees to file in
a timely manner under such Rules);
(d) to advise you promptly, confirming such advice in writing (if
requested by you), of any request by the Commission for amendments or
supplements to the Registration Statement or Prospectus or for additional
information with respect thereto, or of notice of institution of
proceedings for, or the entry of a stop order suspending the effectiveness
of the Registration Statement and, if the Commission should enter a stop
order suspending the effectiveness of the Registration Statement, to make
every reasonable effort to obtain the lifting or removal of such order as
soon as possible; to advise you promptly of any proposal to amend or
supplement the Registration Statement or Prospectus and to file no such
amendment or supplement to which you shall object in writing;
(e) if necessary or appropriate, to file a registration statement
pursuant to Rule 462(b) under the Act;
(f) to furnish to you and, upon request, to each of the other
Underwriters for a period of three years from the date of this Agreement
(i) copies of any reports or other communications which the Company shall
send to its stockholders or shall from time to time publish or publicly
disseminate, (ii) copies of all annual, quarterly and current reports
filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other
similar form as may be designated by the Commission, (iii) copies of
documents or reports filed with any national securities exchange or
automated quotation system on which any class of securities of the Company
is listed, and (iv) such additional information concerning the business
and financial condition of the Company as you may reasonably request, in
each case as soon as reasonably practicable after such reports,
communications, documents or information become available; provided,
however, that in no case shall the Company be required to furnish
materials pursuant to this paragraph which are filed and publicly
accessible via XXXXX;
(g) to advise the Underwriters promptly of the happening of any
event known to the Company within the time during which a Prospectus
relating to the Shares is required to be delivered under the Act which
would require the making of any change in the Prospectus then being used
so that the Prospectus would not include an untrue statement of material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they are made, not
misleading, and, during such time, to prepare and furnish, at the
Company's expense, to the Underwriters promptly such amendments or
supplements to such Prospectus as may be necessary to reflect any such
change and to furnish you a copy of such proposed amendment or supplement
before filing any such amendment or supplement with the Commission;
21
(h) to make generally available to its security holders, and to
deliver to you, as soon as practicable an earnings statement of the
Company (which will satisfy the provisions of Section 11(a) of the Act)
covering a period of twelve months beginning after the effective date of
the Registration Statement (as defined in Rule 158(c) of the Act) and
ending not later than fifteen (15) months thereafter;
(i) to furnish to you three conformed copies of the Registration
Statement, as initially filed with the Commission, and of all amendments
thereto (including all exhibits thereto) and sufficient conformed copies
of the foregoing (other than exhibits) for distribution of a copy to each
of the other Underwriters;
(j) to furnish to you as early as reasonably practicable prior to
the time of purchase and the additional time of purchase, as the case may
be, but not later than two business days prior thereto, a copy of the
latest available unaudited interim financial statements, if any, of the
Company which have been read by the Company's independent certified public
accountants, as stated in their letter to be furnished pursuant to Section
6(j) hereof;
(k) for so long as the Company is engaged in any material respect in
the business described in the Prospectus, to use its reasonable best
efforts to not become an "investment company," as such term is defined in
the Investment Company Act;
(l) to file promptly all reports and any definitive proxy or
information statement required to be filed by the Company with the
Commission in order to comply with the Exchange Act subsequent to the date
of the Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Shares, and to
furnish to you for your review, before filing with the Commission, a copy
of any such documents;
(m) not to sell, offer to sell, contract to sell, hypothecate,
pledge, grant any option to sell or otherwise dispose of, directly or
indirectly, any Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock or warrants or other rights
to purchase Common Stock or any other shares of the Company that are
substantially similar to Common Stock or permit the registration under the
Act of any shares of Common Stock for a period of 180 days after the date
of the Prospectus (the "Lock-up Period"), without the prior written
consent of UBS Warburg, except for (i) the registration of the Shares and
the sales to the Underwriters pursuant to this Agreement, (ii) issuances
of Common Stock upon the exercise of outstanding options or warrants as
disclosed in the Registration Statement and the Prospectus, such issued
Common Stock, in the case of the officers and directors of the Company and
the officers and directors of the Selling Stockholder, not to be disposed
of by the recipients thereof prior to expiration of the Lock-up Period,
(iii) the issuance of employee stock options not exercisable during the
Lock-up Period (or, if so exercisable in the case of the officers and
directors of the Company and the officers and directors of the
22
Selling Stockholder, to persons who have executed and delivered a Lock-Up
Agreement to UBS Warburg) and (iv) the issuance of Common Stock upon
conversion of the Selling Stockholder's outstanding 6 1/2% Convertible
Subordinated Notes due 2008;
(n) to furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and of cash flows of the
Company for such fiscal year), accompanied by a copy of the certificate or
report thereon of nationally recognized independent certified public
accountants; and
(o) to use its reasonable best efforts to cause the Common Stock to
be listed for quotation on the NYSE.
(ii) The Selling Stockholder hereby agrees (and, with respect
to Section 4(ii)(d), the Company jointly and severally agrees with the Selling
Stockholder):
(a) to execute and deliver to the Underwriters a letter in the form
contemplated by Section 6(p);
(b) to advise the Underwriters promptly of the happening of any
event known to the Selling Stockholder within the time during which a
Prospectus relating to the Shares is required to be delivered under the
Act which would require the making of any change in the Prospectus then
being used so that the Prospectus would not include an untrue statement of
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they are
made, not misleading;
(c) for so long as the Company is engaged in any material respect in
the business described in the Prospectus, to use its reasonable best
efforts (to the extent within its control) to cause the Company not to
become an "investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act;
(d) to pay all costs, expenses, fees and taxes in connection with
(i) the preparation and filing of the Registration Statement, each
Preliminary Prospectus, the Prospectus, and any amendments or supplements
thereto, and the printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and shipment),
(ii) the registration, issue, sale and delivery of the Shares, (iii) the
printing of this Agreement, any Agreement Among Underwriters, any dealer
agreements, any Powers of Attorney and any closing documents (including
compilations thereof) and the reproduction and/or printing and furnishing
of copies of each thereof to the Underwriters and (except closing
documents) to dealers (including costs of mailing and shipment), (iv) the
qualification of the Shares for offering and sale under state laws and the
determination of their eligibility for investment under state law as
aforesaid (including the associated filing fees and the legal fees and
disbursements of
23
counsel for the Underwriters) and the printing and furnishing of copies of
any blue sky surveys or legal investment surveys to the Underwriters and
to dealers, (v) any listing of the Shares on the NYSE or any other
securities exchange or qualification of the Shares for quotation on an
automated quotation system and any registration thereof under the Exchange
Act, (vi) any filing for review of the public offering of the Shares by
NASDR (including the associated filing fees and the legal fees and
disbursements of counsel for the Underwriters), (vii) the costs and
expenses of the Company and the Selling Stockholder relating to
presentations or meetings undertaken in connection with the marketing of
the offer and sale of the Shares to prospective investors and the
Representatives' sales forces, 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, travel, lodging and other expenses incurred by the officers
of the Company and the Selling Stockholder and any such consultants, and
the cost of any aircraft chartered in connection with the road show and
(viii) the performance of the other obligations of the Company and the
Selling Stockholder hereunder; and
(e) not to sell, offer to sell, contract to sell, hypothecate,
pledge, grant any option to sell or otherwise dispose of, directly or
indirectly, any Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock or warrants or other rights
to purchase Common Stock or any other shares of the Company that are
substantially similar to Common Stock or permit the registration under the
Act of any shares of Common Stock during the Lock-up Period, without the
prior written consent of UBS Warburg; provided, however, that the Selling
Stockholder may complete the Spin-off in the manner contemplated by the
tax ruling request relating thereto filed with the Internal Revenue
Service and described in the Registration Statement and the Prospectus.
5. Reimbursement of Underwriters' Expenses. If the Shares are not
delivered for any reason other than the termination of this Agreement pursuant
to Section 8 hereof, the Company and the Selling Stockholder, jointly and
severally, agree, in addition to paying the amounts described in Section
4(ii)(d) hereof, to reimburse the Underwriters for all of their reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of their
counsel.
6. Conditions of Underwriters' Obligations. The several obligations
of the Underwriters hereunder are subject to the accuracy of the representations
and warranties on the part of the Company and the Selling Stockholder on the
date hereof and at the time of purchase (and the several obligations of the
Underwriters at the additional time of purchase are subject to the accuracy of
the representations and warranties on the part of the Company and the Selling
Stockholder on the date hereof and at the time of purchase (unless previously
waived) and at the additional time of purchase, as the case may be), the
performance by the Company and the Selling Stockholder of their obligations
hereunder and to the following additional conditions precedent:
24
(a) You shall have received, at the time of purchase and at the
additional time of purchase, as the case may be, an opinion of Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx, special counsel for the Company,
addressed to the Underwriters, and dated the time of purchase or the
additional time of purchase, as the case may be, with reproduced copies
for each of the other Underwriters and in the form set forth in Exhibit
II(a) hereto.
(b) You shall have received, at the time of purchase and at the
additional time of purchase, as the case may be, an opinion of Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx, special counsel for the Selling
Stockholder, addressed to the Underwriters, and dated the time of purchase
or the additional time of purchase, as the case may be, with reproduced
copies for each of the other Underwriters and in the form set forth in
Exhibit II(b) hereto.
(c) You shall have received, at the time of purchase and at the
additional time of purchase, as the case may be, an opinion of Xxxxx X.
Xxxxxx, Xx., General Counsel of the Company, addressed to the
Underwriters, and dated the time of purchase or the additional time of
purchase, as the case may be, with reproduced copies for each of the other
Underwriters and in the form set forth in Exhibit II(c) hereto.
(d) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, an opinion of Xxxxxxx
Xxxxxx, General Counsel of the Selling Stockholder, addressed to the
Underwriters, and dated the time of purchase or the additional time of
purchase, as the case may be, with reproduced copies for each of the other
Underwriters and in the form set forth in Exhibit II(d) hereto.
(e) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the opinion of Xxxxx &
Xxxxxx, LLP, intellectual property counsel to the Company, dated the time
of purchase or the additional time of purchase, as the case may be, with
reproduced copies for each of the other Underwriters and in the form set
forth in Exhibit II(e) hereto.
(f) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the opinion of Xxxxx &
Xxxxxxx L.L.P., regulatory counsel to the Company, dated the time of
purchase or the additional time of purchase, as the case may be, with
reproduced copies for each of the other Underwriters and in the form set
forth in Exhibit II(f) hereto.
(g) You shall have received, at the time of purchase and at the
additional time of purchase, as the case may be, an opinion of Morris,
Nichols, Arsht & Xxxxxxx, special Delaware counsel for the Company and the
Selling Stockholder, addressed to the Underwriters, and dated the time of
purchase or the additional time of purchase, as the case may be, with
reproduced copies for each of the other Underwriters and in the form set
forth in Exhibit II(g) hereto.
25
(h) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the opinion of Proskauer
Rose LLP, special litigation counsel to the Selling Stockholder and the
Company, dated the time of purchase or the additional time of purchase, as
the case may be, with reproduced copies for each of the other Underwriters
and in the form set forth in Exhibit II(h) hereto.
(i) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the opinion of Coudert
Brothers LLP, special litigation counsel to the Selling Stockholder and
the Company, dated the time of purchase or the additional time of
purchase, as the case may be, with reproduced copies for each of the other
Underwriters and in the form set forth in Exhibit II(i) hereto.
(j) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the opinion of Xxxxx
Xxxxxxxxxx LLP, counsel for the Underwriters, dated the time of purchase
or the additional time of purchase, as the case may be, with respect to
the Registration Statement, the Prospectus (together with any supplement
thereto) and other related matters as the Underwriters may require.
(k) You shall have received from PricewaterhouseCoopers LLP comfort
letters dated, respectively, the date of this Agreement and the time of
purchase and additional time of purchase, as the case may be, and
addressed to the Underwriters (with reproduced copies for each of the
Underwriters) in the forms heretofore approved by UBS Warburg.
(l) No amendment or supplement to the Registration Statement or
Prospectus shall at any time have been filed to which you have objected or
shall object in writing (which objection shall have a reasonable basis for
being made).
(m) The Registration Statement shall become effective, or if Rule
430A under the Act is used, the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act, at or before 5:30 P.M.,
New York City time, on the date of this Agreement, unless a later time
(but not later than 5:30 P.M., New York City time, on the second full
business day after the date of this Agreement) shall be agreed to by the
Company and you in writing or by telephone, confirmed in writing;
provided, however, that the Company and you and any group of Underwriters,
including you, who have agreed hereunder to purchase in the aggregate at
least 50% of the Firm Shares may from time to time agree on a later date.
(n) Prior to the time of purchase or the additional time of
purchase, as the case may be, (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued under
the Act or proceedings initiated under Section 8(d) or 8(e) of the Act;
(ii) the Registration Statement and all amendments thereto, or
modifications thereof, if any, shall not contain an
26
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 (iii) the Prospectus and all amendments or supplements
thereto, or modifications thereof, if any, shall not contain an 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, in the
light of the circumstances under which they are made, not misleading.
(o) Between the time of execution of this Agreement and the time of
purchase or the additional time of purchase, as the case may be, (i) no
material and adverse change, financial or otherwise (other than as
referred to in the Registration Statement and Prospectus), in the
operations, business, condition or prospects of the Company or, to the
extent any such change could have a Material Adverse Effect, of the
Selling Stockholder or any Other Selling Stockholder Subsidiary shall have
occurred or become known and (ii) no transaction which is material and
unfavorable to the Company shall have been entered into by the Company,
the Selling Stockholder or any Other Selling Stockholder Subsidiary.
(p) Each of the Company and the Selling Stockholder will, at the
time of purchase or additional time of purchase, as the case may be,
deliver to you a certificate of the Company or the Selling Stockholder, as
the case may be, signed by two of its executive officers to the effect
that the representations and warranties of the Company or the Selling
Stockholder, as the case may be, as set forth in this Agreement are true
and correct as of each such date, that the Company or the Company and the
Selling Stockholder, as the case may be, has performed such of its or
their respective obligations, as the case may be, under this Agreement as
are to be performed at or before the time of purchase and at or before the
additional time of purchase, as the case may be, and that the conditions
set forth in paragraphs (n), (o) and (s) of this Section 6 have been met.
(q) You shall have received signed letters substantially in the form
of Exhibit I to this Agreement and dated the date of this Agreement, from
each director and executive officer of the Company and from the Selling
Stockholder and each director and executive officer of the Selling
Stockholder to the effect that such persons shall not sell, offer or agree
to sell, contract to sell, grant any option to sell or otherwise dispose
of, directly or indirectly, any Common Stock or securities convertible
into or exchangeable or exercisable for Common Stock or warrants or other
rights to purchase Common Stock or any other securities of the Company
that are substantially similar to the Common Stock for a period of 180
days after the date of the Prospectus without UBS Warburg's prior written
consent (except under the limited circumstances set forth in Exhibit I to
this Agreement).
(r) The Shares shall have been approved for listing on the NYSE,
subject only to notice of issuance at or prior to the time of purchase or
the additional time of purchase, as the case may be.
27
(s) The Formation Transactions shall have been completed
substantially in the manner contemplated by the Registration Statement and
the Prospectus, and the Company, the Selling Stockholder and the Other
Selling Stockholder Subsidiaries shall have received all necessary
approvals, authorizations or consents necessary to effectuate the
Formation Transactions prior to completion of such transactions.
(t) The Company and the Selling Stockholder shall have furnished to
you such other documents and certificates as to the accuracy and
completeness of any statement in the Registration Statement and the
Prospectus as of the time of purchase and the additional time of purchase,
as the case may be, as you may reasonably request.
7. Effective Date of Agreement; Termination. This Agreement shall
become effective (i) if Rule 430A under the Act is not used, when you shall have
received notification of the effectiveness of the Registration Statement, or
(ii) if Rule 430A under the Act is used, when the parties hereto have executed
and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be
subject to termination in the absolute discretion of you or any group of
Underwriters (which may include you) which has agreed to purchase in the
aggregate at least 50% of the Firm Shares, (i) if, since the time of execution
of this Agreement or the respective dates as of which information is given in
the Registration Statement and Prospectus, there has been any material adverse
and unfavorable change, financial or otherwise (other than as referred to in the
Registration Statement and Prospectus), in the operations, business, condition
or prospects of the Company, the Selling Stockholder or any Other Selling
Stockholder Subsidiary, which would, in your judgment or in the judgment of such
group of Underwriters, make it impracticable to market the Shares, or (ii) if,
at any time prior to the time of purchase or, with respect to the purchase of
any Additional Shares, the additional time of purchase, as the case may be,
trading in securities on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market shall have been suspended or limitations
or minimum prices shall have been established on the New York Stock Exchange,
the American Stock Exchange or the Nasdaq National Market, or if a banking
moratorium shall have been declared either by the United States or New York
State authorities, or if the United States shall have declared war in accordance
with its constitutional processes or there shall have occurred any material
outbreak or escalation of hostilities or other national or international
calamity or crisis of such magnitude in its effect on the financial markets of
the United States as, in your judgment or in the judgment of such group of
Underwriters, to make it impracticable to market the Shares.
If any Underwriters elect to terminate this Agreement as provided in
this Section 7, the Company, the Selling Stockholder and each other Underwriter
shall be notified promptly by letter or telegram from such terminating
Underwriters.
28
If the sale to the Underwriters of the Shares, as contemplated by
this Agreement, is not carried out by the Underwriters for any reason permitted
under this Agreement or if such sale is not carried out because the Company or
the Selling Stockholder shall be unable to comply with any of the terms of this
Agreement, the Company and the Selling Stockholder shall not be under any
obligation or liability under this Agreement (except to the extent provided in
Sections 4(ii)(d), 5 and 9 hereof), and the Underwriters shall be under no
obligation or liability to the Company or the Selling Stockholder under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
8. Increase in Underwriters' Commitments. Subject to Sections 6 and
7, if any Underwriter shall default in its obligation to purchase and pay for
the Firm Shares to be purchased by it hereunder (otherwise than for a reason
sufficient to justify the termination of this Agreement under the provisions of
Section 7 hereof) and if the number of Firm Shares which all Underwriters so
defaulting shall have agreed but failed to purchase and pay for does not exceed
10% of the total number of Firm Shares, the non-defaulting Underwriters shall
purchase and pay for (in addition to the aggregate number of Firm Shares they
are obligated to purchase pursuant to Section 1 hereof) the number of Firm
Shares agreed to be purchased by all such defaulting Underwriters, as
hereinafter provided. Such Shares shall be purchased and paid for by such
non-defaulting Underwriter or Underwriters in such amount or amounts as you may
designate with the consent of each Underwriter so designated or, in the event no
such designation is made, such Shares shall be purchased and paid for by all
non-defaulting Underwriters pro rata in proportion to the aggregate number of
Firm Shares set opposite the names of such non-defaulting Underwriters in
Schedule A.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company and the Selling Stockholder agree with the non-defaulting
Underwriters that the Selling Stockholder will not sell any Firm Shares
hereunder unless all of the Firm Shares are purchased by the Underwriters (or by
substituted Underwriters selected by you with the approval of the Company and
the Selling Stockholder or selected by the Company and the Selling Stockholder
with your approval).
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company and the Selling Stockholder for a defaulting
Underwriter or Underwriters in accordance with the foregoing provision, the
Company and the Selling Stockholder or you shall have the right to postpone the
time of purchase for a period not exceeding five business days in order that any
necessary changes in the Registration Statement and Prospectus and other
documents may be effected.
The term Underwriter as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with like effect as if
such substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Shares which the defaulting Underwriter
or Underwriters agreed to purchase exceeds 10% of the total number of Shares
which all Underwriters agreed to purchase hereunder, and if neither the
non-defaulting
29
Underwriters nor the Company and the Selling Stockholder shall make arrangements
within the five business day period stated above for the purchase of all the
Shares which the defaulting Underwriter or Underwriters agreed to purchase
hereunder, this Agreement shall be terminated without further act or deed and
without any liability on the part of the Company and the Selling Stockholder to
any non-defaulting Underwriter and without any liability on the part of any
non-defaulting Underwriter to the Company and the Selling Stockholder. Nothing
in this paragraph, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
9. Indemnity and Contribution.
(a) The Company and the Selling Stockholder jointly and severally
agree to indemnify, defend and hold harmless each Underwriter, its
partners, directors and officers, and any person who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, and the successors and assigns of all of the foregoing
persons from and against any loss, damage, expense, liability or claim
(including the reasonable cost of investigation) which, jointly or
severally, any such Underwriter or any such person may incur under the
Act, the Exchange Act, the common law or otherwise, insofar as such loss,
damage, expense, liability or claim arises out of or is based upon (i) any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or in the Registration Statement as amended
by any post-effective amendment thereof by the Company) or in a Prospectus
(the term Prospectus for the purpose of this Section 9 being deemed to
include any Preliminary Prospectus, the Prospectus and the Prospectus as
amended or supplemented by the Company), or arises out of or is based upon
any omission or alleged omission to state a material fact required to be
stated in either such Registration Statement or Prospectus or necessary to
make the statements made therein not misleading, except insofar as any
such loss, damage, expense, liability or claim arises out of or is based
upon any untrue statement or alleged untrue statement of a material fact
contained in and in conformity with information furnished in writing by or
on behalf of any Underwriter through you to the Company expressly for use
with reference to such Underwriter in such Registration Statement or such
Prospectus or arises out of or is based upon any omission or alleged
omission to state a material fact in connection with such information
required to be stated in such Registration Statement or such Prospectus or
necessary to make such information not misleading, or (ii) any untrue
statement or alleged untrue statement made by the Company or the Selling
Stockholder in Section 3 of this Agreement or the failure by the Company
or the Selling Stockholder to perform when and as required any agreement
or covenant contained herein, or (iii) any untrue statement or alleged
untrue statement of any material fact contained in any audio or visual
materials provided by the Company or the Selling Stockholder or based upon
written information furnished by or on behalf of the Company or the
Selling Stockholder including, without limitation, slides, videos, films
or tape recordings, used in connection with the marketing of the Shares or
(iv) the Directed Share Program, provided that, neither the Company
30
nor the Selling Stockholder shall be responsible for any loss, damage,
expense, liability, or claim that is finally judicially determined to have
resulted from the bad faith or gross negligence of the Underwriters in
conducting the Directed Share Program, provided, further, that the
indemnity agreement contained in clause (i) of this subsection (a) with
respect to any Preliminary Prospectus or amended Preliminary Prospectus
shall not inure to the benefit of any Underwriter from whom the person
asserting any such loss, damage, expense, liability or claim purchased the
Shares which is the subject thereof if the Prospectus corrected any such
alleged untrue statement or omission and if such Underwriter failed to
send or give a copy of the Prospectus to such person at or prior to the
written confirmation of the sale of such Shares to such person, unless the
failure is the result of noncompliance by the Company with Section 4(i)(g)
hereof.
If any action, suit or proceeding (together, a "Proceeding") is
brought against an Underwriter or any such person in respect of which
indemnity may be sought against the Company and the Selling Stockholder
pursuant to the foregoing paragraph, such Underwriter or such person shall
promptly notify the Company and the Selling Stockholder in writing of the
institution of such Proceeding and the Company and the Selling Stockholder
shall assume the defense of such Proceeding, including the employment of
counsel reasonably satisfactory to such indemnified party and payment of
all fees and expenses; provided, however, that the omission to so notify
the Company and the Selling Stockholder shall not relieve the Company and
the Selling Stockholder from any liability which the Company and the
Selling Stockholder may have to any Underwriter or any such person or
otherwise except to the extent the Company or the Selling Stockholder is
materially prejudiced thereby. Such Underwriter or such person shall have
the right to employ its or their own counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of such
Underwriter or of such person unless the employment of such counsel shall
have been authorized in writing by the Company and the Selling Stockholder
in connection with the defense of such Proceeding or the Company or the
Selling Stockholder shall not have, within a reasonable period of time in
light of the circumstances, employed counsel to be in charge of the
defense of such Proceeding or such indemnified party or parties shall have
reasonably concluded, upon written advice of counsel, that there may be
defenses available to it or them which are different from, additional to
or in conflict with those available to the Company and the Selling
Stockholder (in which case the Company and the Selling Stockholder shall
not have the right to direct the defense of such Proceeding on behalf of
the indemnified party or parties), in any of which events such fees and
expenses shall be borne by the Company and the Selling Stockholder and
paid as incurred (it being understood, however, that the Company and the
Selling Stockholder shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one Proceeding
or series of related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). The Company and
the Selling Stockholder shall not be liable for any settlement of any
Proceeding effected without the written consent of the Company and the
Selling Stockholder,
31
but if settled with the written consent of the Company and the Selling
Stockholder, the Company and the Selling Stockholder jointly and severally
agree to indemnify and hold harmless any Underwriter and any such person
from and against any loss or liability by reason of such settlement.
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 sentence of this paragraph, then 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 60
business days after receipt by the indemnifying party of the aforesaid
request, (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request for reimbursement of
fees and expenses of counsel prior to the date of such settlement and
(iii) such indemnified party shall have given the indemnifying party at
least 30 days' prior notice of its intention to settle. 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 and does not include an admission of fault, culpability or a
failure to act, by or on behalf of such indemnified party.
(b) In connection with the offer and sale of the Reserved Shares,
the Company agrees to pay UBS Warburg, at its request, the full purchase
price of all Reserved Shares which were subject to a properly confirmed
agreement to purchase and for which any Directed Share Participant failed
to pay therefor and accept delivery thereof.
(c) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company, its directors and officers, any person who controls
the Company within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act and the Selling Stockholder and the successors and
assigns of all of the foregoing persons from and against any loss, damage,
expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, the Company, the Selling
Stockholder or any such person may incur under the Act, the Exchange Act,
the common law or otherwise, insofar as such loss, damage, expense,
liability or claim arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in and in conformity
with information furnished in writing by or on behalf of such Underwriter
through you to the Company expressly for use with reference to such
Underwriter in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof by the
Company) or in a Prospectus, or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with
such information required to be stated in such Registration Statement or
such Prospectus or necessary to make such information not misleading.
32
If any Proceeding is brought against the Company, the Selling
Stockholder or any such person in respect of which indemnity may be sought
against any Underwriter pursuant to the foregoing paragraph, the Company,
the Selling Stockholder or such person shall promptly notify such
Underwriter in writing of the institution of such Proceeding and such
Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party
and payment of all fees and expenses; provided, however, that the omission
to so notify such Underwriter shall not relieve such Underwriter from any
liability which such Underwriter may have to the Company, the Selling
Stockholder or any such person or otherwise except to the extent such
Underwriter is materially prejudiced thereby. The Company, the Selling
Stockholder or such person shall have the right to employ its own counsel
in any such case, but the fees and expenses of such counsel shall be at
the expense of the Company, the Selling Stockholder or such person unless
the employment of such counsel shall have been authorized in writing by
such Underwriter in connection with the defense of such Proceeding or such
Underwriter shall not have, within a reasonable period of time in light of
the circumstances, employed counsel to be in charge of the defense of such
Proceeding or such indemnified party or parties shall have reasonably
concluded, upon written advice of counsel, that there may be defenses
available to it or them which are different from or additional to or in
conflict with those available to such Underwriter (in which case such
Underwriter shall not have the right to direct the defense of such
Proceeding on behalf of the indemnified party or parties, but such
Underwriter may employ counsel and participate in the defense thereof but
the fees and expenses of such counsel shall be at the expense of such
Underwriter), in any of which events such fees and expenses shall be borne
by such Underwriter and paid as incurred (it being understood, however,
that such Underwriter shall not be liable for the expenses of more than
one separate counsel (in addition to any local counsel) in any one
Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding).
No Underwriter shall be liable for any settlement of any such Proceeding
effected without the written consent of such Underwriter but if settled
with the written consent of such Underwriter, such Underwriter agrees to
indemnify and hold harmless the Company, the Selling Stockholder and any
such person from and against any loss or liability by reason of such
settlement. 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 sentence of this paragraph, then 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 60 business days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request for reimbursement of
fees and expenses of counsel prior to the date of such settlement and
(iii) such indemnified party shall have given the indemnifying party at
least 30 days' prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent
33
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.
(d) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsection (a), (b) or (c) of
this Section 9 in respect of any losses, damages, expenses, liabilities or
claims referred to therein, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, damages, expenses, liabilities or claims (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company
and the Selling Stockholder on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
and the Selling Stockholder on the one hand and of the Underwriters on the
other in connection with the statements or omissions which resulted in
such losses, damages, expenses, liabilities or claims, as well as any
other relevant equitable considerations. The relative benefits received by
the Company and the Selling Stockholder on the one hand and the
Underwriters on the other shall be deemed to be in the same respective
proportions as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the
Selling Stockholder and the total underwriting discounts and commissions
received by the Underwriters bear to the aggregate public offering price
of the Shares. The relative fault of the Company and the Selling
Stockholder on the one hand and of the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue
statement or alleged untrue statement of a material fact or omission or
alleged omission relates to information supplied by the Company or by the
Selling Stockholder or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party
as a result of the losses, damages, expenses, liabilities and claims
referred to in this subsection shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in connection
with investigating, preparing to defend or defending any Proceeding.
(e) The Company, the Selling Stockholder and the Underwriters agree
that it would not be just and 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 subsection (d) above. Notwithstanding the provisions of
this Section 9, in no case shall any Underwriter be required to contribute
any amount in excess of the amount by which the total price at which the
Shares underwritten by such Underwriter and distributed to the
34
public were offered to the public exceeds the amount of any damage which
such Underwriter has otherwise been required to pay by reason of such
untrue statement or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters' obligations to contribute pursuant to this Section 9 are
several in proportion to their respective underwriting commitments and not
joint.
(f) The indemnity and contribution agreements contained in this
Section 9 and the covenants, warranties and representations of the Company
and the Selling Stockholder contained in this Agreement shall remain in
full force and effect regardless of any investigation made by or on behalf
of any Underwriter, its partners, directors or officers or any person
(including each partner, officer or director of such person) who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, or by or on behalf of either of the Company or the
Selling Stockholder, their directors or officers or any person who
controls any of the Company or the Selling Stockholder within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, and shall
survive any termination of this Agreement or the issuance and delivery of
the Shares. The Company, the Selling Stockholder and each Underwriter
agree promptly to notify each other of the commencement of any Proceeding
against it and, in the case of the Company or the Selling Stockholder,
against any of the officers or directors of the Company or the Selling
Stockholder, as the case may be, in connection with the issuance and sale
of the Shares, or in connection with the Registration Statement or
Prospectus.
10. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by hand delivery,
first-class mail, facsimile transmission or overnight air courier:
(1) if to the Underwriters:
UBS Warburg LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Syndicate Department
with a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxx
35
(2) if to the Company, at its address as follows:
Ribapharm Inc.
0000 Xxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Xx., General Counsel
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
(3) if to the Selling Stockholder, at its address as
follows:
ICN Pharmaceuticals, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, General Counsel
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; three
business days after being deposited in the mail, postage prepaid, if mailed;
when receipt is acknowledged by recipient's facsimile machine operator, if sent
by facsimile transmission; and on the day delivered, if sent by overnight air
courier.
11. Information Furnished by the Underwriters. The statements set
forth in the last paragraph on the cover page of the Prospectus and the
statements set forth in the fifth, sixth, tenth and eleventh paragraphs under
the caption "Underwriting" in the Prospectus constitute the only information
furnished by or on behalf of the Underwriters as such information is referred to
in Sections 3 and 9 hereof.
12. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and
36
construed in accordance with, the laws of the State of New York. The section
headings in this Agreement have been inserted as a matter of convenience of
reference and are not a part of this Agreement.
13. Submission to Jurisdiction. Except as set forth below, no Claim
may be commenced, prosecuted or continued in any court other than the courts of
the State of New York located in the City and County of New York or in the
United States District Court for the Southern District of New York, which courts
shall have jurisdiction over the adjudication of such matters, and you, the
Company and the Selling Stockholder consent to the jurisdiction of such courts
and personal service with respect thereto. The Company and the Selling
Stockholder hereby consent to personal jurisdiction, service and venue in any
court in which any Claim arising out of or in any way relating to this Agreement
is brought by any third party against an Underwriter or any indemnified party.
Each Underwriter, the Company (on its behalf and, to the extent permitted by
applicable law, on behalf of its stockholders and affiliates) and the Selling
Stockholder (on its behalf and, to the extent permitted by applicable law, on
behalf of its stockholders and affiliates) waives all right to trial by jury in
any action, proceeding or counterclaim (whether based upon contract, tort or
otherwise) in any way arising out of or relating to this Agreement. The Company
and the Selling Stockholder agree that a final judgment in any such action,
proceeding or counterclaim brought in any such court shall be conclusive and
binding upon the Company or the Selling Stockholder, as the case may be, and may
be enforced in any other courts in the jurisdiction of which the Company or the
Selling Stockholder is or may be subject, by suit upon such judgment.
14. Parties at Interest. The Agreement herein set forth has been and
is made solely for the benefit of the Underwriters, the Company and the Selling
Stockholder and, to the extent provided in Section 9 hereof, the controlling
persons, directors and officers referred to in such section, and their
respective successors, assigns, heirs, personal representatives and executors
and administrators. No other person, partnership, association or corporation
(including a purchaser, as such purchaser, from any of the Underwriters) shall
acquire or have any right under or by virtue of this Agreement.
15. Counterparts. This Agreement may be signed by the parties in one
or more counterparts which together shall constitute one and the same agreement
among the parties.
16. Successors and Assigns. This Agreement shall be binding upon the
Underwriters, the Company and the Selling Stockholder and their successors and
assigns and any successor or assign of any substantial portion of the Company's
and the Selling Stockholder's and any of the Underwriters' respective businesses
and/or assets; provided, however, that the Company shall not be deemed a
successor or assign of the Selling Stockholder by reason of the Spin-off.
17. Miscellaneous. UBS Warburg LLC, an indirect, wholly owned
subsidiary of UBS AG, is not a bank and is separate from any affiliated bank,
including any U.S. branch or agency of UBS Warburg LLC. Because UBS Warburg LLC
is a separately incorporated entity, it is solely responsible for its own
contractual obligations
37
and commitments, including obligations with respect to sales and purchases of
securities. Securities sold, offered or recommended by UBS Warburg LLC are not
deposits, are not insured by the Federal Deposit Insurance Corporation, are not
guaranteed by a branch or agency, and are not otherwise an obligation or
responsibility of a branch or agency.
A lending affiliate of UBS Warburg LLC may have lending
relationships with issuers of securities underwritten or privately placed by UBS
Warburg LLC. To the extent required under the securities laws, prospectuses and
other disclosure documents for securities underwritten or privately placed by
UBS Warburg LLC will disclose the existence of any such lending relationships
and whether the proceeds of the issue will be used to repay debts owed to
affiliates of UBS Warburg LLC.
38
If the foregoing correctly sets forth the understanding among the
Company, the Selling Stockholder and the Underwriters, please so indicate in the
space provided below for the purpose, whereupon this letter and your acceptance
shall constitute a binding agreement among the Company, the Selling Stockholder
and the several Underwriters.
Very truly yours,
RIBAPHARM INC.
By: _______________________________
Name:
Title:
ICN PHARMACEUTICALS, INC.
By: _______________________________
Name:
Title:
Accepted and agreed to as of the
date first above written
UBS WARBURG LLC
CIBC WORLD MARKETS CORP.
XX XXXXX SECURITIES CORPORATION
As Representatives of the several Underwriters
By: UBS WARBURG LLC
By: ________________________________
Name:
Title:
By: _________________________________
Name:
Title:
SCHEDULE A
Number of
Underwriter Firm Shares
----------- -----------
UBS WARBURG LLC
CIBC WORLD MARKETS CORP.
XX XXXXX SECURITIES CORPORATION
Total .................... 26,000,000
==========
EXHIBIT I
Ribapharm Inc.
Common Stock
($.01 Par Value)
__________, 2002
UBS Warburg LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
This letter is being delivered to you, as lead underwriter, in connection
with the proposed Underwriting Agreement (the "Underwriting Agreement"),
relating to the public offering of the common stock, $.01 par value per share
(the "Common Stock") of Ribapharm Inc. (the "Company").
In order to induce the representatives of the several underwriters to
enter into the Underwriting Agreement, the undersigned agrees that for a period
of 180 days after the date of the Underwriting Agreement (the "Lock-Up Period")
the undersigned will not, without the prior written consent of UBS Warburg LLC,
(i) sell, offer to sell, contract to sell, hypothecate, pledge, grant any option
to sell or otherwise dispose of, contract to dispose of, or file (or participate
in the filing of) a registration statement with the Securities and Exchange
Commission (the "Commission") in respect of, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent position within
the meaning of Section 16 of the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder with
respect to, any shares of Common Stock, any securities convertible into or
exercisable or exchangeable for such Common Stock or any securities
substantially similar to the Common Stock; (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 Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, whether any such transaction is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise; or (iii) publicly announce an intention to effect any transaction
specified in clause (i) or (ii).
The foregoing notwithstanding, the restrictions described in the paragraph
above shall not apply to (a) bona fide gifts of Common Stock or (b) transfers of
Common Stock by will or intestacy to the undersigned's immediate family or to
any trust for the direct or indirect benefit of the undersigned or any member of
the immediately family of the undersigned, provided that in the case of any
transfer pursuant to clause (a) or (b) the transferee agrees in writing to be
bound by the provisions of this agreement for the remainder of the Lock-Up
Period. For purposes of this agreement, "immediate family" shall mean any
relationship by blood, marriage or adoption, not more remote than that of first
cousin.
* * *
If for any reason the Underwriting Agreement shall be terminated
prior to the time of purchase (as defined in the Underwriting Agreement), the
agreement set forth above shall likewise be terminated.
Yours very truly,
_________________________
Name:
Title:
EXHIBIT II(a)
Legal Opinion of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx,
special counsel to the Company
EXHIBIT II(b)
Legal Opinion of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx,
special counsel to the Selling Stockholder
EXHIBIT II(c)
Legal Opinion of Xxxxx X. Xxxxxx, Xx., General Counsel of the Company
EXHIBIT II(d)
Legal Opinion of Xxxxxxx Xxxxxx, General Counsel of the Selling Stockholder
EXHIBIT II(e)
Legal Opinion of Xxxxx & Xxxxxx, LLP, intellectual property counsel of the
Company
EXHIBIT II(f)
Legal Opinion of Xxxxx & Xxxxxxx L.L.P., regulatory counsel of the Company
EXHIBIT II(g)
Legal Opinion of Morris, Nichols, Arsht & Xxxxxxx,
special Delaware counsel to the Company and the Selling Stockholder
EXHIBIT II(h)
Legal Opinion of Proskauer Rose LLP,
special litigation counsel to the Company and the Selling Stockholder
EXHIBIT II(i)
Legal Opinion of Coudert Brothers LLP,
special litigation counsel to the Company and the Selling Stockholder
