1
EXHIBIT 10.5
DISTRIBUTION AGREEMENT
This Distribution Agreement (the "Agreement") is made as of the __
day of _______, 1998 between Allergan, Inc., a Delaware corporation
("Allergan"), and Allergan Specialty Therapeutics, Inc., a Delaware corporation
("ASTI").
BACKGROUND
A. Allergan is the holder of all of the issued and outstanding
shares of capital stock of ASTI. Allergan intends to make a $200 million capital
contribution to ASTI, to license certain technology to ASTI, and to make other
arrangements in order to establish ASTI as a separate enterprise for the purpose
of researching and developing human pharmaceutical products and commercializing
such products, most likely through licensing to Allergan.
B. Allergan intends to distribute all of the ASTI Shares (as defined
below) to the holders of Allergan Common Stock.
Now, therefore, the parties agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
1.1 "Action" shall mean any action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative agency or commission or any arbitration tribunal.
1.2 "Agent" shall mean First Chicago Trust Company of New York, as
distribution agent, appointed by Allergan to set up book entry accounts under
the Direct Registration System representing the ASTI Shares pursuant to the
Distribution.
1.3 "Allergan/ASTI Agreements" shall mean this Agreement, the
Research and Development Agreement, the Technology License Agreement, the
License Option Agreement, the Services Agreement and the Purchase Option.
1.4 "Allergan Common Stock" shall mean the Common Stock, par value
$0.01 per share, of Allergan.
1.5 "Commission" shall mean the Securities and Exchange Commission.
1.6 "ASTI Shares" shall mean the Class A Common Stock, par value
$0.01 per share, of ASTI.
1.
2
1.7 "Distribution" shall mean the distribution of ASTI Shares to
holders of record on ______, 1998 of Allergan Common Stock immediately following
completion of the transactions contemplated in Sections 2 and 3 hereof.
1.8 "Distribution Date" shall mean the proposed date of effecting
the Distribution, which is anticipated to occur on or about _______, 1998.
1.9 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
1.10 "Form 8-A" shall mean the registration statement on Form 8-A to
be filed by ASTI with the Commission to effect the registration of the ASTI
Shares pursuant to the Exchange Act.
1.11 "License Option Agreement" shall mean the License Option
Agreement dated as of the date hereof between Allergan and ASTI.
1.12 "Prospectus" shall mean the prospectus to be distributed to the
holders of Allergan Common Stock in connection with the Distribution.
1.13 "Purchase Option" shall mean that certain option contained in
ASTI's Restated Certificate of Incorporation pursuant to which Allergan has the
right to purchase all, but not less than all, of the outstanding ASTI Shares.
1.14 "Record Date" shall mean the close of business on _______, 1998
or such other date as is determined by the Allergan Board of Directors or any
committee thereof.
1.15 "Registration Statement" shall mean the registration statement
on Form S-1 registering the issuance of ASTI Shares pursuant to the
Distribution.
1.16 "Research and Development Agreement" shall mean the Research
and Development Agreement dated as of the date hereof between Allergan and ASTI.
1.17 "Services Agreement" shall mean the Services Agreement dated as
of the date hereof between Allergan and ASTI.
1.18 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.19 "Technology License Agreement" shall mean the Technology
License Agreement dated as of the date hereof between Allergan and ASTI.
2.
3
2. PRELIMINARY ACTION.
2.1 REGISTRATION STATEMENT AND PROSPECTUS. ASTI has prepared and
filed the Registration Statement with the Commission. Subject to the conditions
set forth herein, Allergan and ASTI shall use reasonable efforts to cause the
Registration Statement to become effective under the Securities Act. ASTI has
prepared, and Allergan shall cause to be mailed, the Prospectus to the record
holders on the Record Date of Allergan Common Stock.
2.2 FORM 8-A. ASTI has prepared and filed with the Commission a Form
8-A which includes or incorporates by reference relevant portions of the
Registration Statement. Subject to the conditions set forth herein, ASTI shall
use reasonable efforts to cause the Form 8-A to become effective under the
Exchange Act.
2.3 BLUE SKY. ASTI shall take all such action as may be necessary or
appropriate under the securities or blue sky laws of states or other political
subdivisions of the United States in connection with the Distribution to permit
the ASTI Shares to be distributed as described in the Prospectus.
2.4 LISTING. ASTI has prepared and filed an application to effect
the listing of the ASTI Shares on the Nasdaq National Market. ASTI shall use
reasonable efforts to cause the ASTI Shares to be so listed.
2.5 NO REPRESENTATIONS OR WARRANTIES; CONSENTS. Each party hereto
understands and agrees that no party hereto is, in this Agreement or in any
other agreement or document contemplated by this Agreement or otherwise,
representing or warranting in any way that the obtaining of any consents or
approvals, the execution and delivery of any agreements or the making of any
filings or applications contemplated by this Agreement will satisfy the
provisions of any or all applicable laws. Notwithstanding the foregoing, the
parties shall use reasonable efforts to obtain all consents and approvals, to
enter into all agreements and to make all filings and applications which may be
required for the consummation of the transactions contemplated by this
Agreement, including, without limitation, all applicable regulatory filings or
consents under federal or state laws and all necessary consents, approvals,
agreements, filings and applications.
3. ISSUE AND SALE OF ASTI SHARES.
3.1 PURCHASE OF ASTI CLASS A COMMON STOCK. Prior to the Distribution
Date, ASTI will issue to Allergan that number of ASTI Shares such that Allergan
may distribute to holders of Allergan Common Stock one ASTI Share for every 20
shares of Allergan Common Stock held on the Record Date. Allergan and ASTI
acknowledge that all of the ASTI Shares held by Allergan will be distributed by
Allergan to the holders of outstanding shares of Allergan Common Stock.
3.
4
4. THE DISTRIBUTION.
4.1 THE DISTRIBUTION. ASTI shall take all steps required by Allergan
or the Agent to effect the Distribution. Prior to the Distribution, and upon
receipt of the capital contribution described in Section 3 hereof, ASTI shall
cause to be issued to Allergan a certificate or certificates representing a
sufficient number of ASTI Shares so that Allergan may distribute one ASTI Share
for every 20 shares of Allergan Common Stock held on the Record Date.
4.2 EXPENSES OF DISTRIBUTION. All expenses related in any way to the
Distribution, including without limitation all legal, financial advisory and
accounting fees of Allergan and ASTI, shall be borne by ASTI.
5. ADDITIONAL ASSURANCES; INDEMNIFICATION.
5.1 MUTUAL ASSURANCES. Allergan and ASTI agree to cooperate with
respect to the implementation of the Allergan/ASTI Agreements and to execute
such further documents and instruments as may be necessary to confirm the
transactions contemplated thereby.
5.2 INDEMNIFICATION. If Allergan exercises the Purchase Option, from
and after such exercise, Allergan shall indemnify, defend and hold harmless
ASTI's officers and directors to the same extent as provided in ASTI's Restated
Certificate of Incorporation.
5.3 NOTICE. Any person entitled to indemnification pursuant to
Section 5.2 shall give Allergan prompt notice in writing, in the manner set
forth in Section 7.7 below, of any claim or demand made against such person for
which such person may be entitled to indemnification under Section 5.2.
6. CONDITIONS TO EFFECTIVENESS OF DISTRIBUTION.
The Distribution shall be subject to the satisfaction or waiver by
Allergan of the following conditions and the satisfaction or waiver by ASTI of
the conditions in Sections 6.8 and 6.9:
6.1 BOARD APPROVAL. The Allergan/ASTI Agreements (including exhibits
and schedules) shall have been approved by the Board of Directors of Allergan
and ASTI and shall have been executed and delivered by appropriate officers of
Allergan and ASTI, and the Allergan Board of Directors (or a committee thereof)
shall have declared a dividend of the ASTI Shares as of the Record Date to the
holders of record of the Allergan Common Stock.
4.
5
6.2 SECURITIES LAW COMPLIANCE. The transactions contemplated hereby
shall be in compliance with applicable federal and state securities laws, and
the Registration Statement shall have been declared effective and no stop orders
shall have been instituted with respect thereto under the Securities Act.
6.3 RESTATED CERTIFICATE OF INCORPORATION. The Restated Certificate
of Incorporation of ASTI shall have been adopted by the Board of Directors,
approved by Allergan as sole stockholder of ASTI, and filed with the Delaware
Secretary of State.
6.4 FORM 8-A EFFECTIVE. The Form 8-A shall have become effective
under the Exchange Act.
6.5 LISTING APPLICATION APPROVED. The ASTI Shares shall be approved
for quotation on the Nasdaq National Market.
6.6 FAIRNESS OPINION. Allergan shall have received an opinion of
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, investment advisor to
Allergan, in form and substance satisfactory to Allergan, to the effect that (i)
from a financial point of view, the Distribution provides a reasonable structure
to pursue the financial objectives described in the Prospectus of Allergan and
(ii) from a financial point of view, the Distribution is fair to the
stockholders of Allergan.
6.7 PERMITS AND LICENSES. ASTI shall have received such permits and
licenses as may be necessary for the purpose of commencing operations
contemplated by the Allergan/ASTI Agreements.
6.8 CONSENTS. Each of Allergan and ASTI shall have received such
consents, and shall have received executed copies of such agreements or
amendments of agreements, as it shall deem necessary in connection with the
completion of the transaction contemplated by this Agreement.
6.9 OTHER INSTRUMENTS. All actions and other documents and
instruments deemed necessary or advisable in connection with the transactions
contemplated hereby shall have been taken or executed, as the case may be, in
form and substance satisfactory to Allergan and ASTI.
6.10 LEGAL PROCEEDINGS. No legal proceedings affecting or arising
out of the transactions contemplated hereby or which could otherwise affect
Allergan or ASTI in a materially adverse manner shall have been commenced or
threatened against Allergan, ASTI or the directors or officers of either
Allergan or ASTI.
6.11 MATERIAL CHANGES. No material adverse change shall have
occurred with respect to Allergan or ASTI, the securities markets (either
generally or with respect to
5.
6
Allergan or ASTI) or general economic or financial conditions which shall, in
the reasonable judgment of Allergan, make the transactions contemplated by this
Agreement inadvisable.
6.12 OTHER CONDITIONS. Such other conditions as may be set by the
Allergan Board of Directors or any committee thereof in the resolutions
authorizing the Distribution shall have been satisfied.
7. MISCELLANEOUS.
7.1 WAIVER, REMEDIES AND AMENDMENT. Any waiver by either party
hereto of a breach of any provisions of this Agreement shall not be implied and
shall not be valid unless such waiver is recited in writing and signed by such
party. Failure of any party to require, in one or more instances, performance by
the other party in strict accordance with the terms and conditions of this
Agreement shall not be deemed a waiver or relinquishment of the future
performance of any such terms or conditions or of any other terms and conditions
of this Agreement. A waiver by either party of any term or condition of this
Agreement shall not be deemed or construed to be a waiver of such term or
condition for any other term. All rights, remedies, undertakings, obligations
and agreements contained in this Agreement shall be cumulative and none of them
shall be a limitation of any other remedy, right, undertaking, obligation or
agreement of either party. This Agreement may not be amended except in a writing
signed by both parties.
7.2 ASSIGNMENT. Neither party may assign its rights and obligations
hereunder without the prior written consent of the other party, which consent
may not be unreasonably withheld; provided, however, that Allergan may assign
such rights and obligations hereunder to an Affiliate of Allergan or to any
person or entity with which Allergan is merged or consolidated or which acquires
all or substantially all of the assets of Allergan.
7.3 DISPUTE RESOLUTION. In the event of any dispute, the parties
shall refer such dispute to the Chief Executive Officer ("CEO") of ASTI and the
CEO of Allergan for attempted resolution by good faith negotiations within sixty
(60) days after such referral is made. During such period of good faith
negotiations, any applicable time periods under this Agreement shall be tolled.
In the event such executives are unable to resolve such dispute within such
sixty (60) day period, the parties shall submit their dispute to binding
arbitration before a retired California Superior Court Judge at
J.A.M.S./Endispute located in Orange, California, such arbitration to be
conducted pursuant to the J.A.M.S./Endispute procedure rules for commercial
disputes then in effect. The award of the arbitrator shall include an award of
reasonable attorneys' fees and costs to the prevailing party.
6.
7
7.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute this Agreement.
7.5 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the state of California as applied to residents
of that state entering into contracts to be performed in that state.
7.6 HEADINGS. The headings set forth at the beginning of the various
sections of this Agreement are for convenience and form no part of the Agreement
between the parties.
7.7 NOTICES. Notices required under this Agreement shall be in
writing and sent by registered or certified mail, postage prepaid, or by
facsimile and confirmed by registered or certified mail, postage prepaid, and
addressed as follows:
If to Allergan: Allergan, Inc.
0000 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Corporate Vice President,
General Counsel
If to ASTI: Allergan Specialty Therapeutics, Inc.
0000 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: President and Chief
Executive Officer
All notices shall be deemed to be effective five days after the date
of mailing or upon receipt if sent by facsimile (but only if followed by
certified or registered confirmation). Either party may change the address at
which notice is to be received by written notice pursuant to this Section 7.7.
7.8 SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid or unenforceable, it shall be
modified, if possible, to the minimum extent necessary to make it valid and
enforceable or, if such modification is not possible, it shall be stricken and
the remaining provisions shall remain in full force and effect.
7.9 RELATIONSHIP OF THE PARTIES. For all purposes of this Agreement,
ASTI and Allergan shall be deemed to be independent contractors and anything in
this Agreement to the contrary notwithstanding, nothing herein shall be deemed
to constitute ASTI and Allergan as partners, joint venturers, coowners, an
association or any entity separate and
7.
8
apart from each party itself, nor shall this Agreement constitute any party
hereto an employee or agent, legal or otherwise, of the other party for any
purposes whatsoever. Neither party hereto is authorized to make any statements
or representations on behalf of the other party or in any way to obligate the
other party, except as expressly authorized in writing by the other party.
Anything in this Agreement to the contrary notwithstanding, no party hereto
shall assume nor shall be liable for any liabilities or obligations of the other
party, whether past, present or future.
7.10 SURVIVAL. The provisions of Sections 1, 5, 7.1, 7.3, 7.5, 7.6,
7.7, 7.8 and this Section 7.10 shall survive the termination for any reason of
this Agreement. Any payments due under this Agreement with respect to any period
prior to its termination shall be made notwithstanding the termination of this
Agreement. Neither party shall be liable to the other due to the termination of
this Agreement as provided herein, whether in loss of good will, anticipated
profits or otherwise.
8.
9
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
ALLERGAN, INC.
By:_____________________________________
Title:__________________________________
ALLERGAN SPECIALTY THERAPEUTICS, INC.
By:_____________________________________
Title:__________________________________
9.
