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EXHIBIT 1.1
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IDEC PHARMACEUTICALS CORPORATION
(a Delaware corporation)
ISSUER
$300,000,000
Liquid Yield Option Notes(TM) due 2019
(Zero Coupon -- Subordinated)
PURCHASE AGREEMENT
Dated: February 9, 1999
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(TM)Trademark of Merrill Lynch & Co., Inc.
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TABLE OF CONTENTS
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PURCHASE AGREEMENT...........................................................................1
SECTION 1. Representations and Warranties by the Company........................3
(a) Representations and Warranties.......................................3
(i) Similar Offerings...........................................3
(ii) Offering Memorandum.........................................3
(iii) Incorporated Documents......................................4
(iv) Independent Accountants.....................................4
(v) Financial Statements........................................4
(vi) No Material Adverse Change in Business......................4
(vii) Good Standing of the Company................................5
(viii) Good Standing of the Subsidiary.............................5
(ix) Capitalization..............................................5
(x) Authorization of Agreement..................................6
(xi) Authorization of the Indenture..............................6
(xii) Authorization of the Registration Rights Agreement..........6
(xiii) Authorization of the Securities.............................6
(xiv) Description of the Securities, the Indenture and the
Registration Rights Agreement...............................7
(xv) Absence of Defaults and Conflicts...........................7
(xvi) Absence of Labor Dispute....................................8
(xvii) Absence of Proceedings......................................8
(xviii) Possession of Intellectual Property.........................8
(xix) Absence of Further Requirements.............................9
(xx) Possession of Licenses and Permits..........................9
(xxi) Title to Property...........................................9
(xxii) Environmental Laws.........................................10
(xxiii) Rule 144A Eligibility......................................10
(xxiv) No General Solicitation....................................10
(xxv) No Registration Required...................................10
(xxvi) Investment Company Act.....................................11
(xxvii) Filing of Tax Returns......................................11
(xxviii) Insurance..................................................11
(xxix) Interests in Corporation, Partnership or Joint Ventures....11
(xxx) System of Internal Accounting Controls.....................11
(xxxi) Solvency...................................................12
(xxxii) Default Under Senior Indebtedness..........................12
(b) Officer's Certificates..............................................12
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SECTION 2. Sale and Delivery to Initial Purchaser; Closing.....................12
(a) Initial Securities..................................................12
(b) Option Securities...................................................12
(c) Payment.............................................................13
(d) Qualified Institutional Buyer.......................................13
(e) Denominations; Registration.........................................13
SECTION 3. Covenants of the Company............................................13
(a) Offering Memorandum.................................................13
(b) Notice and Effect of Material Events................................13
(c) Amendment to Offering Memorandum and Supplements....................14
(d) Qualification of Securities for Offer and Sale......................14
(e) DTC.................................................................14
(f) Use of Proceeds.....................................................14
(g) Restriction on Sale of Securities...................................15
(h) PORTAL Designation..................................................15
(i) Reservation of Common Stock.........................................15
(j) Listing of Common Stock.............................................15
SECTION 4. Payment of Expenses.................................................15
(a) Expenses............................................................15
(b) Termination of Agreement............................................16
SECTION 5. Conditions of Initial Purchaser's Obligations.......................16
(a) Opinion of Counsel for the Company..................................16
(b) Opinion of Regulatory Affairs Counsel for the Company...............16
(c) Opinion of Intellectual Property Counsel for the Company............16
(d) Opinion of Counsel for Initial Purchaser............................16
(e) Officers' Certificates..............................................17
(f) Accountants' Comfort Letters........................................17
(g) Bring-down Comfort Letter...........................................17
(h) Rating..............................................................17
(i) Registration Rights Agreement.......................................17
(j) PORTAL..............................................................18
(k) Lock-up Agreements..................................................18
(l) Consents............................................................18
(m) Conditions to Purchase of Option Securities.........................18
(i) Officers' Certificates.....................................18
(ii) Opinions of Counsel........................................18
(iii) Opinion of Counsel for the Initial Purchaser...............18
(iv) Bring-down Comfort Letters.................................19
(n) Additional Documents................................................19
(o) Termination of Agreement............................................19
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SECTION 6. Subsequent Offers and Resales of the Securities.....................19
(a) Offer and Sale Procedures...........................................19
(i) Offers and Sales Only to Institutional Accredited Investors
or Qualified Institutional Buyers..........................19
(ii) No General Solicitation....................................19
(iii) Purchases by Non-Bank Fiduciaries..........................20
(iv) Subsequent Purchaser Notification..........................20
(v) Minimum Principal Amount...................................20
(vi) Restrictions on Transfer...................................20
(b) Covenants of the Company............................................20
(i) Integration................................................20
(ii) Rule 144A Information......................................21
(iii) Restriction on Repurchases.................................21
SECTION 7. Indemnification.....................................................21
(a) Indemnification of Initial Purchaser................................21
(b) Indemnification of Company, Directors and Officers..................22
(c) Actions Against Parties; Notification...............................22
(d) Settlement Without Consent if Failure to Reimburse..................23
SECTION 8. Contribution........................................................23
SECTION 9. Representations, Warranties and Agreements to Survive Delivery......24
SECTION 10. Termination of Agreement............................................24
(a) Termination; General................................................24
(b) Liabilities.........................................................25
SECTION 11. Notices.............................................................25
SECTION 12. Parties.............................................................25
SECTION 13. GOVERNING LAW.......................................................25
SECTION 14. Effect of Headings..................................................25
SCHEDULES
Schedule A - Pricing Information......................................Sch A-1
Schedule B - List of Persons Subject to Lock-up Agreements............Sch B-1
EXHIBITS
Exhibit A - Form of Registration Rights Agreement...........................A-1
Exhibit B - Form of Opinion of Counsel to the Company.......................B-1
Exhibit C - Form of Opinion of Regulatory Affairs Counsel to the Company....C-1
Exhibit D - Form of Opinion of Intellectual Property
Counsel to the Company.........................................D-1
Exhibit E - Form of Lock-Up Letter Agreement................................E-1
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IDEC PHARMACEUTICALS CORPORATION
(a Delaware corporation)
ISSUER
$300,000,000
Liquid Yield Option Notes(TM) due 2019
(Zero Coupon -- Subordinated)
PURCHASE AGREEMENT
February 9, 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
IDEC Pharmaceuticals Corporation, a Delaware corporation (the
"Company"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated (the "Initial Purchaser"), with respect to
the issue and sale by the Company and the purchase by the Initial Purchaser of
$300,000,000 aggregate principal amount at maturity of the Company's Liquid
Yield Option Notes(TM) due 2019 (the "Initial Securities") and the grant by the
Company to the Initial Purchaser of the option described in Section 2(b) to
purchase all or any part of an additional $45,000,000 aggregate principal amount
at maturity of the Company's Liquid Yield Option Notes(TM) due 2019 to cover
over-allotments, if any (the "Option Securities"). The Initial Securities,
together with the Option Securities, are collectively referred to herein as the
"Securities". The Securities are to be issued pursuant to an indenture dated as
of February 16, 1999 (the "Indenture") between the Company and Chase Manhattan
Bank and Trust Company, N.A., as trustee (the "Trustee"). Securities issued in
book-entry form will be issued to Cede & Co. as nominee of The Depository Trust
Company ("DTC") pursuant to a letter agreement, to be dated as of the Closing
Time (as defined in Section 2(b)) (the "DTC Agreement"), among the Company, the
Trustee and DTC.
The Securities will be convertible into shares of common stock, par
value $0.001 per share, of the Company (the "Common Stock") in accordance with
the terms of the Securities and the Indenture, at the initial conversion rate
specified in Schedule A hereto. Upon the fifth, tenth and
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fifteenth anniversaries of the initial issuance date of the Securities, each
holder of Securities may require the Company to purchase such Securities for a
price to be paid, at the Company's option, in cash or (subject to certain
limitations) shares of Common Stock, or any combination thereof, at a purchase
price equal to the issue price of the Securities plus the accrued original issue
discount thereon to the date of such purchase. If prior to such date of purchase
the Securities have been converted to semiannual coupon notes following the
occurrence of a Tax Event (as defined in the Indenture), such purchase price
will be equal to the Restated Principal Amount (as defined in the Indenture)
plus accrued and unpaid interest (in lieu of any original issue discount) from
the date of such conversion through such date of purchase. Upon each Change in
Control (as defined in the Indenture) occurring prior to the fifth anniversary
of the initial issuance date of the Securities, each holder of Securities may
require the Company to purchase for cash such holder's Securities (subject to
certain restrictions described below) at a purchase price equal to the issue
price of the Securities plus the accrued original issue discount thereon to the
date of such purchase. If prior to such date of purchase the Securities have
been converted to semiannual coupon notes following the occurrence of a Tax
Event, the Company will be required to purchase such Securities at a cash price
equal to the Restated Principal Amount plus accrued and unpaid interest (in lieu
of any original issue discount) from the date of such conversion through such
date of purchase.
The holders of Securities will be entitled to the benefits of a
Registration Rights Agreement, substantially in the form attached hereto as
Exhibit A with such changes as shall be agreed to by the parties hereto (the
"Registration Rights Agreement"), pursuant to which the Company will file a
registration statement with the Securities and Exchange Commission (the
"Commission") registering resales of the Securities and the shares of Common
Stock issuable upon conversion thereof, as referred to in the Registration
Rights Agreement under the Securities Act of 1933, as amended (the "1933 Act").
The Company understands that the Initial Purchaser proposes to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchaser may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers ("Subsequent
Purchasers") at any time after the date of this Agreement. The Securities are to
be offered and sold through the Initial Purchaser without being registered under
the 1933 Act, in reliance upon exemptions therefrom. Pursuant to the terms of
the Securities and the Indenture, investors that acquire Securities may only
resell or otherwise transfer such Securities if such Securities are hereafter
registered under the 1933 Act or if an exemption from the registration
requirements of the 1933 Act is available (including the exemption afforded by
Rule 144A ("Rule 144A") or Regulation S ("Regulation S") of the rules and
regulations promulgated under the 1933 Act (the "1933 Act Regulations") by the
Commission).
The Company has prepared and delivered to the Initial Purchaser copies
of a preliminary offering memorandum dated February 1, 1999 (the "Preliminary
Offering Memorandum") and has prepared and will deliver to the Initial Purchaser
on the date hereof or the next succeeding day, copies of a final offering
memorandum dated February 9, 1999 (the "Final Offering
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Memorandum") for use by the Initial Purchaser in connection with its
solicitation of, purchases of, or offering of, the Securities. "Offering
Memorandum" means, with respect to any date or time referred to in this
Agreement, the most recent offering memorandum (whether the Preliminary Offering
Memorandum or the Final Offering Memorandum, or any amendment or supplement to
either such document), including exhibits and appendices thereto and any
documents incorporated therein by reference, which has been prepared and
delivered by the Company to the Initial Purchaser in connection with its
solicitation of purchases of, or offering of, the Securities.
All references in this Agreement to financial statements and schedules
and other information which is "contained", "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information
which are incorporated by reference in the Offering Memorandum; and all
references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 (the "1934 Act") which is incorporated by
reference in the Offering Memorandum.
SECTION 1. Representations and Warranties by the Company.
(a) Representations and Warranties. The Company represents and warrants
to the Initial Purchaser as of the date hereof and as of the Closing Time
referred to in Section 2(c) hereof, and as of the Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with the Initial Purchaser, as
follows:
(i) Similar Offerings. Neither the Company nor any of its
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
(each, an "Affiliate"), has, directly or indirectly, solicited any offer
to buy, sold or offered to sell or otherwise negotiated in respect of,
or will solicit any offer to buy or offer to sell or otherwise negotiate
in respect of, in the United States or to any United States citizen or
resident, any security which is or would be integrated with the sale of
the Securities in a manner that would require the Securities to be
registered under the 1933 Act.
(ii) Offering Memorandum. The Offering Memorandum does not, and
at the Closing Time (as defined herein) (and, if any Option Securities
are purchased, at the Date of Delivery (as defined herein)) will not,
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided that this representation, warranty and agreement shall not
apply to statements in or omissions from the Offering Memorandum made in
reliance upon and in conformity with information furnished to the
Company in writing by the Initial Purchaser expressly for use in the
Offering Memorandum.
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(iii) Incorporated Documents. The Offering Memorandum as
delivered from time to time shall incorporate by reference the most
recent Annual Report of the Company on Form 10-K, each Quarterly Report
of the Company on Form 10-Q and each Current Report of the Company on
Form 8-K filed with the Commission since the filing of such Annual
Report. The documents incorporated or deemed to be incorporated by
reference in the Offering Memorandum at the time they were or hereafter
are filed with the Commission complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the Commission thereunder (the "1934 Act Regulations"),
and, when read together with the other information in the Offering
Memorandum, at the date of the Offering Memorandum and at the Closing
Time (and, if any Option Securities are purchased, at the Date of
Delivery), do not and will not include 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 were made, not misleading.
(iv) Independent Accountants. KPMG LLP ("KPMG"), the accountants
who certified the financial statements and supporting schedules with
respect to the Company included in the Offering Memorandum are
independent public accountants with respect to the Company and its
subsidiaries within the meaning of Regulation S-X under the 1933 Act.
(v) Financial Statements. The financial statements, together
with the related schedules and notes, included in the Offering
Memorandum present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved. The supporting schedules, if any, included in the
Offering Memorandum present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data
included in the Offering Memorandum present fairly the information shown
therein and have been compiled on a basis consistent with that of the
audited financial statements included in the Offering Memorandum.
(vi) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business (a "Material Adverse Effect"), (B) there
have been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered
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as one enterprise, and (C) there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its
capital stock.
(vii) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
corporate authority to own, lease and operate its properties and to
conduct its business as described in the Offering Memorandum and to
enter into and perform its obligations under this Agreement, the
Indenture and the Registration Rights Agreement; and the Company is duly
qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to be
in good standing would not result in a Material Adverse Effect.
(viii) Good Standing of the Subsidiary. IDEC Seigaku (the
"Subsidiary") has been duly organized, is validly existing and is in
good standing under the laws of the jurisdiction of its incorporation
with corporate power and corporate authority to own, lease and operate
its properties and to conduct its business as described in the Offering
Memorandum and is duly qualified to transact business as a foreign
corporation and is in good standing in each other jurisdiction in which
it owns or leases property of a nature or transacts business of a type,
that would make such qualification necessary, except to the extent that
the failure to so qualify or be in good standing would not have a
Material Adverse Effect; all of the issued and outstanding capital stock
of the Subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and is wholly owned by the Company, directly
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity; none of the outstanding shares of capital
stock of the Subsidiary was issued in violation of any preemptive or
similar rights of any securityholder of the Subsidiary. The Subsidiary
is the only subsidiary of the Company as of the date hereof.
(ix) Capitalization. The authorized, issued and outstanding
capital stock and the debt of the Company is as set forth in the
Offering Memorandum in the column entitled "Actual" under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to
this Agreement, pursuant to reservations, agreements, employee benefit
plans referred to in the Offering Memorandum or pursuant to the exercise
of convertible securities or options referred to in the Offering
Memorandum). The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid
and non-assessable; none of the outstanding shares of capital stock of
the Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company. The authorized capital
stock of the Company conforms in all material respects as to legal
matters to the description thereof contained in the Offering Memorandum.
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Upon issuance and delivery of the Securities in accordance with
this Agreement and the Indenture, the Securities will be convertible at
the option of the holder thereof into shares of Common Stock, subject to
the Company's right to elect instead to pay such holder in cash the
market value of such shares of Common Stock, in accordance with the
terms of the Securities and the Indenture; the shares of Common Stock
issuable upon such conversion of the Securities have been duly
authorized and reserved for issuance upon such conversion by all
necessary corporate action and such shares, when issued upon such
conversion, will be validly issued and will be fully paid and
non-assessable; the shares of Common Stock issuable at the Company's
option upon purchase of the Securities at the option of the holder
thereof will have been, prior to the issuance thereof, duly authorized
by all necessary corporate action, and such shares if and when issued,
in accordance with the terms of the Securities and the Indenture, will
be validly issued, fully paid and non-assessable; and the issuance of
such shares upon such conversion or purchases will not be subject to the
preemptive or other similar rights of any securityholder of the Company.
(x) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(xi) Authorization of the Indenture. The Indenture has been duly
authorized by the Company and, when executed and delivered by the
Company and the Trustee, will constitute a valid and binding agreement
of the Company, enforceable against the Company in accordance with its
terms, except as enforceability thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
relating to or affecting the enforcement of creditors' rights generally
and by equitable principles of general applicability, regardless of
whether such enforceability is considered in a proceeding at equity or
at law.
(xii) Authorization of the Registration Rights Agreement. The
Registration Rights Agreement has been duly authorized by the Company
and, when executed and delivered by the Company and the Initial
Purchaser, will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as
enforceability thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws relating to or
affecting the enforcement of creditors' rights generally and by
equitable principles of general applicability, regardless of whether
such enforceability is considered in a proceeding at equity or at law.
(xiii) Authorization of the Securities. The Securities have been
duly authorized by the Company and, at the Closing Time, will have been
duly executed by the Company and, when authenticated, issued and
delivered in the manner provided for in the Indenture and delivered
against payment of the purchase price therefor as provided in this
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Agreement, will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except
as enforceability thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws relating to or
affecting the enforcement of creditors' rights generally and by
equitable principles of general applicability, regardless of whether
such enforceability is considered in a proceeding at equity or at law,
and will be in the form contemplated by, and entitled to the benefits
of, the Indenture and the Registration Rights Agreement.
(xiv) Description of the Securities, the Indenture and the
Registration Rights Agreement. The Securities, the Indenture and the
Registration Rights Agreement will conform in all material respects to
the respective statements relating thereto contained in the Offering
Memorandum and will be in substantially the respective forms last
delivered to the Initial Purchaser prior to the date of this Agreement.
(xv) Absence of Defaults and Conflicts. Except as disclosed in
the Offering Memorandum, neither the Company nor any of its subsidiaries
is in violation of its charter, by-laws or other organizational
documents or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which it may be bound or to which any
of the property or assets of the Company or any of its subsidiaries may
be subject (collectively, "Agreements and Instruments"), except for such
violations or defaults that would not result in a Material Adverse
Effect; and the execution, delivery and performance of this Agreement,
the Indenture, the Registration Rights Agreement and the Securities and
any other agreement or instrument entered into or issued or to be
entered into or issued by the Company in connection with the
transactions contemplated hereby or thereby or in the Offering
Memorandum and the consummation of the transactions contemplated herein
and in the Offering Memorandum (including, without limitation, the
issuance and sale of the Securities and the use of the proceeds from the
sale of the Securities as described in the Offering Memorandum under the
caption "Use of Proceeds") and compliance by the Company with its
obligations hereunder have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or constitute
a breach of, or default or a Repayment Event (as defined below) under,
or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, the Agreements and Instruments except for such
conflicts, breaches or defaults or liens, charges or encumbrances that,
singularly or in the aggregate, would not result in a Material Adverse
Effect, nor will such action result in any violation of the provisions
of the charter or by-laws of the Company or any of its subsidiaries or
any applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or
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any of its subsidiaries or any of their assets or properties. As used
herein, a "Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its subsidiaries.
(xvi) Absence of Labor Dispute. No labor dispute exists with the
employees of the Company or with employees of any of its subsidiaries
nor, to the knowledge of the Company, is any such labor dispute
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or any of its subsidiaries'
principal suppliers, manufacturers, customers, contractors, or
collaborative business partners, including Genentech, Inc. and F.
Hoffman-LaRoche, Inc., which, in either case, may reasonably be expected
to result in a Material Adverse Effect.
(xvii) Absence of Proceedings. Except as disclosed in the
Offering Memorandum, there is no action, suit, proceeding (except
applications for regulatory approval from the Food and Drug
Administration and foreign drug agencies), inquiry or investigation
before or by any government, governmental instrumentality or court,
domestic or foreign, now pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries,
as the case may be, that could reasonably be expected to have a Material
Adverse Effect, or that could reasonably be expected individually or in
the aggregate to materially and adversely affect the properties or
assets of the Company or any of its subsidiaries, considered as one
enterprise, or that could reasonably be expected to adversely affect the
consummation of the transactions contemplated in this Agreement or the
performance by the Company of its obligations hereunder. The aggregate
of all pending legal or governmental proceedings to which the Company or
any of its subsidiaries is a party or which affect any of its properties
that are not described in the Offering Memorandum, including ordinary
routine litigation incidental to the business, could not reasonably be
expected to have a Material Adverse Effect.
(xviii) Possession of Intellectual Property. Except as disclosed
in the Offering Memorandum, the Company and its subsidiaries own or
possess, or can acquire on reasonable terms, adequate patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) trademarks, service
marks, trade names or other intellectual property (collectively,
"Intellectual Property") necessary to carry on the business now operated
by them, and neither the Company nor any of its subsidiaries has
received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of
the Company or any of its subsidiaries therein, and which infringement
or conflict (if the subject of any unfavorable decision, ruling or
finding) or
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invalidity or inadequacy, singularly or in the aggregate, would result
in a Material Adverse Effect.
(xix) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance or
sale of the Securities hereunder or the consummation of the transactions
contemplated by this Agreement or for the due execution, delivery or
performance of the Indenture by the Company, except such as have been
already obtained.
(xx) Possession of Licenses and Permits. Except as disclosed in
the Offering Memorandum, the Company and its subsidiaries possess such
licenses, approvals, consents and other authorizations (collectively,
the "Governmental Licenses") issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them; the Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in
the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except when the
invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
(xxi) Title to Property. The Company and its subsidiaries have
good and marketable title to all properties and assets owned by each of
them, free and clear of all mortgages, pledges, liens, charges, security
interests, claims, encumbrances or restrictions of any kind, except such
as (A) are disclosed in the Offering Memorandum or (B) are neither
material in amount nor materially significant in relation to the
business of the Company and its subsidiaries, considered as one
enterprise; all of the leases and subleases material to the business of
the Company and its subsidiaries, considered as one enterprise, and
under which the Company or any of its subsidiaries holds properties
described in the Offering Memorandum, are in full force and effect, and
neither the Company nor any of its subsidiaries has any notice of any
material claim of any sort that has been asserted by anyone adverse to
the rights of the Company or any of its subsidiaries under any of the
leases or subleases mentioned above, or affecting or questioning the
rights of the Company or any subsidiary thereof to the continued
possession of the leased or subleased premises under any such lease or
sublease.
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(xxii) Environmental Laws. Except as disclosed in the Offering
Memorandum and except as such matters would not, singularly or in the
aggregate, have a Material Adverse Effect, (A) neither the Company nor
any of its subsidiaries is in violation of any federal, state, local or
foreign statute, law, rule, regulation, ordinance, code, policy or rule
of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials (collectively, "Environmental Laws"), (B) the
Company and its subsidiaries have all permits, authorizations and
approvals required under any applicable Environmental Laws and are each
in compliance with their requirements, except where the failure so to be
in compliance would not result in a Material Adverse Effect, (C) there
are no pending or, to the best knowledge of the Company, threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against
the Company or any of its subsidiaries and (D), to the best knowledge of
the Company, there are no events or circumstances that might reasonably
be expected to form the basis of an order for clean-up or remediation,
or an action, suit or proceeding by any private party or governmental
body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or any Environmental Laws.
(xxiii) Rule 144A Eligibility. The Securities are eligible for
resale pursuant to Rule 144A and will not be, at the Closing Time, of
the same class as securities listed on a national securities exchange
registered under Section 6 of the 1934 Act, or quoted in a U.S.
automated interdealer quotation system.
(xxiv) No General Solicitation. None of the Company, its
Affiliates or any person acting on its or any of their behalf (other
than the Initial Purchaser and its Affiliates, as to whom the Company
makes no representation) has engaged or will engage, in connection with
the offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the 1933
Act.
(xxv) No Registration Required. Subject to compliance by the
Initial Purchaser with the representations and warranties set forth in
Section 2 and the procedures set forth in Section 6 hereof, it is not
necessary in connection with the offer, sale and delivery of the
Securities to the Initial Purchaser and to each Subsequent Purchaser in
the manner contemplated by this Agreement and the Offering Memorandum
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to register the Securities under the 1933 Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended (the "1939
Act").
(xxvi) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Offering
Memorandum will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
(xxvii) Filing of Tax Returns. The Company and each of its
subsidiaries have filed all tax returns which are required to have been
filed by them pursuant to domestic or foreign laws and have paid all
taxes due pursuant to such returns or pursuant to any assessment
received by them (except where the requirement for payment of such taxes
is being contested in good faith in appropriate proceedings), except
where the failure so to file or pay would not result in a Material
Adverse Effect. The charges, accruals and reserves on the books of the
Company and its subsidiaries in respect of taxes or other governmental
charges are, to the best knowledge of the Company after reasonable
investigation, adequate.
(xxviii) Insurance. The Company and the Subsidiary are insured
by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; neither the Company nor the
Subsidiary has been refused any material insurance coverage sought or
applied for that has not subsequently been approved by an insurance
company with sound financial resources; and neither the Company nor the
Subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely
affect the condition, financial or otherwise, or the earnings, business
or operations of the Company and the Subsidiary, taken as a whole.
(xxix) Interests in Corporation, Partnership or Joint Ventures.
The Company does not own any equity or capital interests in any
corporation, partnership, joint venture, association or other entity,
other than the Subsidiary.
(xxx) System of Internal Accounting Controls. The Company and
its subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific
authorization, (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to
maintain accountability for assets, (C) access to assets is permitted
only in accordance with management's general or specific authorization
and (D) the recorded accountability
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for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(xxxi) Solvency. The Company is, and immediately after the
Closing Time or the Date of Delivery, as the case may be, will be,
Solvent. As used herein, the term "Solvent" means, with respect to the
Company on a particular date, that on such date (A) the fair market
value of the assets of the Company is greater than the total amount of
liabilities (including contingent liabilities) of the Company, (B) the
present fair salable value of the assets of the Company is greater than
the amount that will be required to pay the probable liabilities of the
Company on its debts as they become absolute and matured, (C) the
company is able to realize upon its assets and pay its debts and other
liabilities, including contingent obligations, as they mature, and (D)
the Company does not have unreasonably small capital in relation to its
business and operations.
(xxxii) Default Under Senior Indebtedness. No event of default
exists under any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument constituting Senior Indebtedness
(as defined in the Indenture).
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Initial Purchaser or to
counsel for the Initial Purchaser shall be deemed a representation and warranty
by the Company to the Initial Purchaser as to the matters covered thereby.
SECTION 2. Sale and Delivery to Initial Purchaser; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to the Initial Purchaser, and the Initial
Purchaser agrees to purchase from the Company, at the price set forth in
Schedule A hereto, the Initial Securities.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Initial Purchaser to
purchase any or all of the Option Securities (in multiples of $1,000 principal
amount at maturity) at the price set forth in Schedule A hereto plus accrued
Original Issue Discount, if any, from the Closing Time to the Date of Delivery.
The option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments that may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Initial Purchaser to
the Company setting forth the number of Option Securities as to which the
Initial Purchaser is then exercising the option and the time and date of payment
and delivery for such Option Securities. Any such time and date of delivery (a
"Date of Delivery") shall be determined by the Initial Purchaser, but shall not
be later than seven full business days after the exercise of said option, nor in
any event prior to the Closing Time, as hereinafter defined.
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(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the office of Brobeck,
Phleger & Harrison, LLP, Two Embarcadero Place, 2200 Geng Road, Palo Alto, CA,
or at such other place as shall be agreed upon by the Initial Purchaser and the
Company, at 9:00 A.M. (eastern time) on February 16, 1999, or such other time
not later than ten business days after such date as shall be agreed upon by the
Initial Purchaser and the Company (such time and date of payment and delivery
being herein called the "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Initial Purchaser, payment of the purchase price for, and
delivery of certificates for, such Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Initial Purchaser and the Company, on each Date of Delivery as specified in the
notice from the Initial Purchaser to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company in writing, against
delivery to the Initial Purchaser for its account of certificates for the
Securities to be purchased by it.
(d) Qualified Institutional Buyer. The Initial Purchaser represents and
warrants to, and agrees with, the Company that it is a "qualified institutional
buyer" within the meaning of Rule 144A under the 1933 Act (a "Qualified
Institutional Buyer") and an "accredited investor" within the meaning of Rule
501(a) under the 1933 Act (an "Accredited Investor").
(e) Denominations; Registration. Certificates for the Securities shall
be in such denominations ($1,000 or integral multiples thereof) and registered
in such names as the Initial Purchaser may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates representing the Securities shall be registered in
the name of Cede & Co. pursuant to the DTC Agreement and shall be made available
for examination and packaging by the Initial Purchaser in The City of New York
not later than 10:00 A.M. on the last business day prior to the Closing Time or
the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with the
Initial Purchaser as follows:
(a) Offering Memorandum. The Company, as promptly as possible, will
furnish to the Initial Purchaser, without charge, such number of copies of the
Preliminary Offering Memorandum, Final Offering Memorandum and any amendments
and supplements thereto and documents incorporated by reference therein as the
Initial Purchaser may reasonably request.
(b) Notice and Effect of Material Events. The Company will immediately
notify the Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities with any securities exchange or any other
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regulatory body in the United States or any other jurisdiction, and (y) prior to
the completion of the placement of the Securities by the Initial Purchaser as
evidenced by a notice in writing from the Initial Purchaser to the Company, any
material changes in or affecting the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries, considered as one enterprise, of which the Company becomes aware
of after reasonable investigation, which (i) make any statement in the Offering
Memorandum false or misleading or (ii) are not disclosed in the Offering
Memorandum. In such event or if during such time any event shall occur as a
result of which it is necessary, in the reasonable opinion of any of the
Company, its counsel, the Initial Purchaser or counsel for the Initial
Purchaser, to amend or supplement the Final Offering Memorandum in order that
the Final Offering Memorandum not include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances then existing, the
Company will forthwith amend or supplement the Final Offering Memorandum by
preparing and furnishing to the Initial Purchaser an amendment or amendments of,
or a supplement or supplements to, the Final Offering Memorandum (in form and
substance satisfactory in the reasonable opinion of counsel for the Initial
Purchaser) so that, as so amended or supplemented, the Final Offering Memorandum
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances existing at the time it is delivered to a Subsequent
Purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company will
advise the Initial Purchaser promptly of any proposal to amend or supplement the
Offering Memorandum and will not effect such amendment or supplement without the
consent of the Initial Purchaser. Neither the consent of the Initial Purchaser,
nor the Initial Purchaser's delivery of any such amendment or supplement, shall
constitute a waiver of any of the conditions set forth in Section 5 hereof.
(d) Qualification of Securities for Offer and Sale. The Company will use
its reasonable best efforts, in cooperation with the Initial Purchaser, to
qualify the Securities for offering and sale under the applicable securities
laws of such states and other jurisdictions as the Initial Purchaser may
designate and will maintain such qualifications in effect as long as required
for the sale of the Securities; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
(e) DTC. The Company will cooperate with the Initial Purchaser and use
its reasonable best efforts to permit the Securities to be eligible for
clearance and settlement through the facilities of DTC.
(f) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Offering
Memorandum under "Use of Proceeds".
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(g) Restriction on Sale of Securities. During a period of 90 days from
the date of the Offering Memorandum, the Company will not, without the prior
written consent of Merrill Lynch, directly or indirectly, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale of,
or otherwise dispose of or transfer any shares of the Company's Common Stock or
any securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the Company or with respect to which
the Company has or hereafter acquires the power of disposition, or file any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of Common Stock or any securities convertible into or exchangeable
for Common Stock, whether any such swap or transaction is to be settled by
delivery of Common Stock or other securities, in cash or otherwise. The
foregoing sentence shall not apply to (A) the Securities to be sold hereunder,
(B) any shares of Common Stock issued by the Company upon the exercise of an
option or warrant or upon the conversion of a security outstanding on the date
hereof and referred to in the Offering Memorandum or the conversion of the
Securities or (C) any shares of Common Stock issued or options to purchase
Common Stock granted pursuant to existing employee benefit plans of the Company.
(h) PORTAL Designation. The Company will use its best efforts to permit
the Securities to be designated PORTAL securities in accordance with the rules
and regulations adopted by the National Association of Securities Dealers, Inc.
("NASD") relating to trading in the PORTAL Market.
(i) Reservation of Common Stock. The Company will reserve and keep
available at all times, free of preemptive rights, Common Stock for the purpose
of enabling the Company to satisfy any obligations to issue Common Stock upon
conversion of the Securities.
(j) Listing of Common Stock. The Company will use its best efforts to
cause all shares of Common Stock issuable upon conversion of the Securities to
be listed on the Nasdaq National Market.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company agrees to bear all expenses incident to the
performance of its obligations under this Agreement, the Securities, the
Indenture and the Registration Rights Agreement, including, but not limited to,
(i) the preparation and printing of the Offering Memorandum (including financial
statements and any schedules or exhibits and any document incorporated therein
by reference) and of each amendment or supplement thereto, (ii) the preparation,
printing and delivery to the Initial Purchaser of this Agreement, the Indenture,
the Registration Rights Agreement and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Initial Purchaser, including any charges of
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DTC in connection therewith, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(d) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Initial Purchaser in connection therewith and in connection with the
preparation of the Blue Sky Survey, any supplement thereto and any Legal
Investment Survey, (vi) the fees and expenses of the Trustee, including the
reasonable fees and disbursements of counsel for the Trustee in connection with
the Indenture and the Securities, (vii) any fees payable in connection with the
rating of the Securities and (viii) any fees and expenses payable in connection
with the initial and continued designation of the Securities as PORTAL
securities under the PORTAL Market Rules pursuant to NASD Rule 5322.
(b) Termination of Agreement. If this Agreement is terminated by the
Initial Purchaser in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchaser for all of
its out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Initial Purchaser.
SECTION 5. Conditions of Initial Purchaser's Obligations. The
obligations of the Initial Purchaser hereunder are subject to the accuracy of
the representations and warranties of the Company contained in Section 1 hereof
or in certificates of any officer of the Company or any of its subsidiaries
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Opinion of Counsel for the Company. At the Closing Time, the Initial
Purchaser shall have received the opinion, dated as of the Closing Time, of
Brobeck, Phleger & Harrison, LLP, counsel for the Company, in form and substance
reasonably satisfactory to counsel for the Initial Purchaser, to the effect set
forth in Exhibit B hereto.
(b) Opinion of Regulatory Affairs Counsel for the Company. At the
Closing Time, the Initial Purchaser shall have received the opinion, dated as of
the Closing Time, of Buc & Beardsley, special regulatory affairs counsel for the
Company, in form and substance reasonably satisfactory to counsel for the
Initial Purchaser, to the effect set forth in Exhibit C hereto and to such
further effect as counsel to the Initial Purchaser may reasonably request.
(c) Opinion of Intellectual Property Counsel for the Company. At the
Closing Time, the Initial Purchaser shall have received the opinion, dated as of
the Closing Time, of Burns, Doane, Sweeker & Mathis, L.L.P., intellectual
property counsel for the Company, in form and substance reasonably satisfactory
to counsel for the Initial Purchaser, to the effect set forth in Exhibit D
hereto and to such further effect as counsel to the Initial Purchaser may
reasonably request.
(d) Opinion of Counsel for Initial Purchaser. At the Closing Time, the
Initial Purchaser shall have received the opinion, dated as of the Closing Time,
of Shearman & Sterling,
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counsel for the Initial Purchaser, in form and substance reasonably satisfactory
to the Initial Purchaser. In giving such opinion such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the law of the
State of New York, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Initial Purchaser. Such counsel may also state that, insofar
as such opinion involves factual matters, they have relied, to the extent they
deem proper, upon certificates of officers of the Company and its subsidiaries
and certificates of public officials.
(e) Officers' Certificates. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Initial Purchaser shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of the Closing Time, to the effect that (i) there has
been no such material adverse change, (ii) the representations and warranties in
Section 1 hereof are true and correct with the same force and effect as though
expressly made at and as of the Closing Time, and (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time.
(f) Accountants' Comfort Letters. At the time of the execution of this
Agreement, the Initial Purchaser shall have received from KPMG, a letter dated
such date, in form and substance reasonably satisfactory to the Initial
Purchaser, containing statements and information of the type ordinarily included
in accountants' "comfort letters" to Initial Purchaser with respect to the
financial statements and certain financial information contained in the Offering
Memorandum.
(g) Bring-down Comfort Letter. At the Closing Time, the Initial
Purchaser shall have received from KPMG a letter, dated as of the Closing Time,
to the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (f) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to the
Closing Time.
(h) Rating. Since the date of this Agreement, there shall not have
occurred a downgrading in the rating, if any, assigned to the Securities or any
of the Company's other debt securities by any "nationally recognized statistical
rating agency", as that term is defined by the Commission for purposes of Rule
436(g)(2) under the 1933 Act, and no such securities rating agency shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Securities or any of the Company's
other debt securities.
(i) Registration Rights Agreement. At the Closing Time, the Registration
Rights Agreement, in form and substance reasonably satisfactory to the Initial
Purchaser, shall have
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been duly executed and delivered by the Company and (assuming due execution,
delivery and performance by the Initial Purchaser) be in full force and effect.
(j) PORTAL. At the Closing Time, the Securities shall have been
designated for trading on PORTAL.
(k) Lock-up Agreements. At the date of this Agreement, the Initial
Purchaser shall have received an agreement substantially in the form of Exhibit
E hereto signed by the persons listed on Schedule B hereto.
(l) Consents. The Initial Purchaser shall have received (A) a consent of
all of the Lenders under the Loan Agreement dated as of December 28, 1994 among
the Company, Silicon Valley Bank, as collateral agent, and the Lenders signatory
thereto consenting to the Company's issuance of the Securities and (B) a consent
of Genentech, Inc. waiving any rights it has to register with the Commission
pursuant to the Registration Rights Agreement any securities of the Company it
owns.
(m) Conditions to Purchase of Option Securities. In the event that the
Initial Purchaser exercises its option provided in Section 2(b) to purchase all
or any portion of the Option Securities, the representations and warranties of
the Company contained herein and the statements in any certificates furnished by
the Company and any subsidiary of the Company hereunder shall be true and
correct as of the Date of Delivery and, at the Date of Delivery, the Initial
Purchaser shall have received:
(i) Officers' Certificates. Certificates, dated the Date of
Delivery, of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company confirming
that the certificate delivered at the Closing Time pursuant to Section
5(e) remains true and correct as of the Date of Delivery.
(ii) Opinions of Counsel. The opinions of Brobeck, Phleger &
Harrison, LLP, counsel for the Company, Buc & Beardsley, special
regulatory affairs counsel for the Company, and Burns, Doane, Sweeker &
Mathis, L.L.P., intellectual property counsel for the Company, each in
form and substance reasonably satisfactory to counsel for the Initial
Purchaser, dated the Date of Delivery, relating to the Option Securities
to be purchased on the Date of Delivery and otherwise to substantially
the same effect as the opinions provided in Sections 5(a), 5(b) and
5(c).
(iii) Opinion of Counsel for the Initial Purchaser. The opinion
of Shearman & Sterling, counsel for the Initial Purchaser, dated the
Date of Delivery, relating to the Option Securities to be purchased on
the Date of Delivery and otherwise to the same effect as the opinion
provided in Section 5(d).
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(iv) Bring-down Comfort Letters. Letter from KPMG in form and
substance reasonably satisfactory to the Initial Purchaser and dated the
Date of Delivery, substantially in the same form and substance as the
letters furnished to the Initial Purchaser pursuant to Section 5(f),
except that the "specified date" in the letters furnished pursuant to
this paragraph shall be a date not more than three business days prior
to the Date of Delivery.
(n) Additional Documents. At the Closing Time and at each Date of
Delivery, counsel for the Initial Purchaser shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance and
sale of the Securities as herein contemplated shall be reasonably satisfactory
in form and substance to the Initial Purchaser and counsel for the Initial
Purchaser.
(o) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option Securities
on a Date of Delivery which is after the Closing Time, the obligations of the
Initial Purchaser to purchase the Option Securities, may be terminated by the
Initial Purchaser by notice to the Company at any time at or prior to the
Closing Time or such Date of Delivery, as the case may be, and such termination
shall be without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 7, 8 and 9 shall survive any such
termination and remain in full force and effect.
SECTION 6. Subsequent Offers and Resales of the Securities.
(a) Offer and Sale Procedures. The Initial Purchaser and the Company
hereby establish and agree to observe the following procedures in connection
with the offer and sale of the Securities:
(i) Offers and Sales Only to Institutional Accredited Investors
or Qualified Institutional Buyers. Offers and sales of the Securities
shall only be made (A) to persons whom the offeror or seller reasonably
believes to be qualified institutional buyers (as defined in Rule 144A
under the Securities Act), or (B) to a limited number of other
institutional accredited investors (as such term is defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D) that the offeror or seller
reasonably believes to be and, with respect to sales and deliveries,
that are Accredited Investors ("Institutional Accredited Investors").
(ii) No General Solicitation. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the 1933 Act) will
be used in the United States in connection with the offering or sale of
the Securities.
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(iii) Purchases by Non-Bank Fiduciaries. In the case of a
non-bank Subsequent Purchaser of a Security acting as a fiduciary for
one or more third parties, each third party shall, in the judgment of
the applicable Initial Purchaser, be an Institutional Accredited
Investor or a Qualified Institutional Buyer.
(iv) Subsequent Purchaser Notification. The Initial Purchaser
will take reasonable steps to inform, and cause each of its U.S.
Affiliates to take reasonable steps to inform, persons acquiring
Securities from the Initial Purchaser or affiliate, as the case may be,
in the United States that the Securities (A) have not been and will not
be registered under the 1933 Act, (B) are being sold to them without
registration under the 1933 Act in reliance on Rule 144A or in
accordance with another exemption from registration under the 1933 Act,
as the case may be, and (C) may not be offered, sold or otherwise
transferred except (1) to the Company, (2) inside the United States in
accordance with (x) Rule 144A to a person whom the seller reasonably
believes is a Qualified Institutional Buyer that is purchasing such
Securities for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the offer, sale or
transfer is being made in reliance on Rule 144A, or (3) outside the
United States in accordance with Regulation S or (y) pursuant to another
available exemption from registration under the 1933 Act.
(v) Minimum Principal Amount. No sale of the Securities to any
one Subsequent Purchaser will be for less than $250,000 principal amount
at maturity and no Security will be issued in a smaller principal
amount. If the Subsequent Purchaser is a non-bank fiduciary acting on
behalf of others, each person for whom it is acting must purchase at
least $250,000 principal amount at maturity of the Securities.
(vi) Restrictions on Transfer. The transfer restrictions and the
other provisions set forth in the Offering Memorandum under the heading
"Transfer Restrictions", including the legend required thereby, shall
apply to the Securities except as otherwise agreed by the Company and
the Initial Purchaser.
(b) Covenants of the Company. The Company covenants with the Initial
Purchaser as follows:
(i) Integration. The Company agrees that it will not and will
cause its Affiliates not to solicit any offer to buy or make any offer
or sale of, or otherwise negotiate in respect of, securities of the
Company of any class if, as a result of the doctrine of "integration"
referred to in Rule 502 under the 1933 Act, such offer or sale would
render invalid (for the purpose of (i) the sale of the Securities by the
Company to the Initial Purchaser, (ii) the resale of the Securities by
the Initial Purchaser to Subsequent Purchasers or (iii) the resale of
the Securities by such Subsequent Purchasers to others) the exemption
from the registration requirements of the 1933 Act provided by Section
4(2) thereof or by Rule 144A thereunder or otherwise.
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(ii) Rule 144A Information. The Company agrees that, in order to
render the Securities eligible for resale pursuant to Rule 144A under
the 1933 Act, while any of the Securities remain outstanding, it will
make available, upon request, to any holder of Securities or prospective
purchasers of Securities the information specified in Rule 144A(d)(4),
unless the Company furnishes information to the Commission pursuant to
Section 13 or 15(d) of the 1934 Act (such information, whether made
available to holders or prospective purchasers or furnished to the
Commission, is herein referred to as "Additional Information").
(iii) Restriction on Repurchases. Until the expiration of two
years after the original issuance of the Securities, the Company will
not, and will cause its Affiliates not to, purchase or agree to purchase
or otherwise acquire any Securities which are "restricted securities"
(as such term is defined under Rule 144(a)(3) under the 1933 Act),
whether as beneficial owner or otherwise (except as agent acting as a
securities broker on behalf of and for the account of customers in the
ordinary course of business in unsolicited broker's transactions).
SECTION 7. Indemnification.
(a) Indemnification of Initial Purchaser. The Company agrees to
indemnify and hold harmless the Initial Purchaser and each person, if any, who
controls the Initial Purchaser within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Offering Memorandum or the Final Offering Memorandum (or any amendment
or supplement thereto), or the omission or alleged omission therefrom of
a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission; provided that (subject to
Section 7(d) below) any such settlement is effected with the written
consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the Initial
Purchaser), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue
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statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Initial Purchaser expressly for use in the Offering Memorandum (or any amendment
thereto).
(b) Indemnification of Company, Directors and Officers. The Initial
Purchaser agrees to indemnify and hold harmless the Company and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Offering Memorandum in
reliance upon and in conformity with written information furnished to the
Company by the Initial Purchaser expressly for use in the Offering Memorandum.
(c) Actions Against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by the Initial Purchaser,
and, in the case of parties indemnified pursuant to Section 7(b) above, counsel
to the indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section or Section 8
hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
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(d) Settlement Without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 7(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 20 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 8. Contribution. If the indemnification provided for in Section
7 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Initial Purchaser on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) 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 on the one hand and of the
Initial Purchaser on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchaser on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchaser, bear to the aggregate initial offering price of the Securities.
The relative fault of the Company on the one hand and the Initial
Purchaser on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchaser and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating,
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preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission.
Notwithstanding the provisions of this Section, the Initial Purchaser
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
the Initial Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls the
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as the Initial
Purchaser, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the Initial
Purchaser or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Initial Purchaser.
SECTION 10. Termination of Agreement.
(a) Termination; General. The Initial Purchaser may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the Offering
Memorandum, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Initial Purchaser, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission, or if trading generally on the American Stock Exchange or the New
York Stock Exchange or in the Nasdaq
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National Market has been suspended or materially limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority or (iv) if a banking moratorium has been declared by
either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 7, 8 and 9 shall survive such termination and remain in full force and
effect.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchaser shall be directed to it at 3300 Hillview Avenue, Suite 150, Palo Alto,
California 94304, attention of D. Casey Safreno; notices to the Company shall be
directed to it at 11011 Torreyana Road, San Diego, California 92121, attention
of Ken Woolcott.
SECTION 12. Parties. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchaser and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchaser and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchaser and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
the Initial Purchaser shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES
OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Initial Purchaser and the Company in accordance with its terms.
Very truly yours,
IDEC PHARMACEUTICALS CORPORATION
By /s/ Phillip M. Schneider
--------------------------------------
Title: Vice President and Chief
Financial Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/Mark J. Robinson
---------------------------------
Authorized Signatory
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SCHEDULE A
IDEC PHARMACEUTICALS CORPORATION
$300,000,000 Liquid Yield Option Notes(TM) due 2019
1. The initial public offering price per $1,000 principal amount at
maturity of the Securities shall be $337.85, which represents a yield to
maturity of 5.5% per annum (computed on a semiannual bond equivalent basis).
2. The Securities shall be convertible into shares of common stock, par
value $0.001 per share, of the Company (the "Common Stock") at an initial rate
of 6.734 shares of Common Stock per $1,000 principal amount at maturity of
Securities.
3. The purchase price to be paid by the Initial Purchaser for the
Securities shall be $327.71, being an amount equal to the initial public
offering price per $1,000 principal amount at maturity of Securities set forth
above, less $10.14 per $1,000 principal amount at maturity of Securities.
4. Prior to February 16, 2004, the Securities will not be redeemable.
5. The redemption prices to be supplied on page 58 of the Offering
Memorandum (and correspondingly in the Indenture) shall be:
Accrued Original
Issue Discount Redemption Price
Redemption Date LYON Issue Price at 5.5%
- --------------- ---------------- ----------------- ----------------
February 16, 2004 ............ $337.85 $105.29 $ 443.14
February 16, 2005 ............ $337.85 $130.00 $ 467.85
February 16, 2006 ............ $337.85 $156.09 $ 493.94
February 16, 2007 ............ $337.85 $183.63 $ 521.48
February 16, 2008 ............ $337.85 $212.70 $ 550.55
February 16, 2009 ............ $337.85 $243.40 $ 581.25
February 16, 2010 ............ $337.85 $275.81 $ 613.66
February 16, 2011 ............ $337.85 $310.02 $ 647.87
February 16, 2012 ............ $337.85 $346.15 $ 684.00
February 16, 2013 ............ $337.85 $384.28 $ 722.13
February 16, 2014 ............ $337.85 $424.55 $ 762.40
Sch A - 1
32
Accrued Original
Issue Discount Redemption Price
Redemption Date LYON Issue Price at 5.5%
- --------------- ---------------- ----------------- ----------------
February 16, 2015 ............ $337.85 $467.06 $ 804.91
February 16, 2016 ............ $337.85 $511.93 $ 849.78
February 16, 2017 ............ $337.85 $559.32 $ 897.17
February 16, 2018 ............ $337.85 $609.34 $ 947.19
At Maturity .................. $337.85 $662.15 $1,000.00
6. The Purchase Dates and Purchase Prices to be supplied on page 59 of
the Offering Memorandum and correspondingly in the Indenture shall be:
Purchase Date Purchase Price
- ---------------------------- --------------
February 16, 2004 $443.14
February 16, 2009 $581.25
February 16, 2014 $762.40
7. The prices referred to in paragraphs 5 and 6 above are subject to
adjustment upon the occurrence of a Tax Event, and the subsequent conversion of
the Securities to semiannual coupon notes in the manner specified in the
Offering Memorandum.
Sch A - 2
33
SCHEDULE B
List of Persons Subject to Lock-up Agreements
Number of shares of Common
Persons Stock that is exempt
- ------- --------------------------
William H. Rastetter, Ph.D............................... 40,000
Christopher J. Burman.................................... 20,000
Antonio J. Grillo-Lopez, M.D............................. 30,000
Nabil Hanna, Ph.D........................................ 30,000
William R. Rohn.......................................... 20,000
John Geigert, Ph.D....................................... 0
Connie L. Matsui......................................... 20,000
Phillip M. Schneider..................................... 20,000
Kenneth J. Woolcott...................................... 20,000
Charles C. Edwards, M.D.................................. 100
Alan Burnett Glassberg................................... 0
John Groom............................................... 0
Kuzuhiro Hashimoto....................................... 0
Franklin P. Johnson, Jr.................................. 5,674
Robert W. Pangia......................................... 0
Bruce R. Ross............................................ 0
William D. Young......................................... 0
Genentech, Inc........................................... 0
Sch B - 1
34
Exhibit A
FORM OF REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of February 16, 1999 between IDEC PHARMACEUTICALS CORPORATION, a
Delaware corporation (the "Company"), and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, a Delaware corporation (the "Purchaser").
This Agreement is made pursuant to the Purchase Agreement, dated as of
February 9, 1999 (the "Purchase Agreement"), between the Company and the
Purchaser, which provides for the sale by the Company to the Purchaser of
$300,000,000 aggregate principal amount at maturity of the Company's Liquid
Yield Option(TM) Notes due 2019 (Zero Coupon-Subordinated) (the "LYONs") and the
grant by the Company to the Purchaser of the option to purchase all or any part
of an additional $45,000,000 aggregate principal amount at maturity of its
LYONs. In order to induce Purchaser to enter into the Purchase Agreement, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution of this Agreement is a condition to the closing under
the Purchase Agreement.
The parties hereby agree as follows:
Section 1. Definitions. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase Agreement or
Indenture. As used in this Agreement, the following terms shall have the
following meanings:
Closing Date: February 16, 1999, or such other date as may be agreed
upon for the sale and purchase of the LYONs pursuant to the Purchase Agreement.
Common Stock: Common stock, par value $0.001 per share, of the Company.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Indenture: The Indenture, dated as of February 16, 1999, between the
Company and Chase Manhattan Bank and Trust Company, as Trustee, pursuant to
which the LYONs are being issued, as amended or supplemented from time to time
in accordance with the terms thereof.
Person: An individual, partnership, limited liability company,
corporation, association, trust, joint venture or any other unincorporated
organization or entity.
A-1
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Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by such Registration Statement, and all
other amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
Registrable Securities: All LYONs and shares of Common Stock issuable
upon conversion of LYONs that are Restricted Securities.
Registration Expenses: See Section 5 hereof.
Registration Statement: Any registration statement of the Company that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Restricted Securities: Any and all LYONs upon original issuance thereof
(and any shares of Common Stock issuable upon conversion thereof other than
pursuant to an effective registration statement under the Securities Act) and at
all times subsequent thereto until, as to any restricted security, (i) the sale
of such restricted security has been effectively registered under the Securities
Act and such restricted security has been disposed of in accordance with the
method of distribution set forth in the Registration Statement relating thereto,
or (ii) it is distributed to the public, or is otherwise able to be sold,
pursuant to Rule 144(k) (or any similar provision then in force, but not Rule
144A) under the Securities Act.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
Shelf Registration: See Section 3 hereof.
Special Counsel: Shearman & Sterling, special counsel to the Purchaser,
or such other special counsel as may be designated in writing to the Company by
the holders of a majority in aggregate principal amount at maturity of
Registrable Securities outstanding.
TIA: The Trust Indenture Act of 1939, as amended.
Section 2. Securities Subject to this Agreement.
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(a) Securities. The securities entitled to the benefits of this
Agreement are the Registrable Securities.
(b) Holders of Registrable Securities. A Person is deemed to be a holder
of Registrable Securities whenever such Person beneficially owns Registrable
Securities; provided that only Registrable Securities of holders who are
registered holders of Registrable Securities shall be counted for purposes of
calculating any proportion of holders of Registrable Securities entitled to take
action or give notice pursuant to this Agreement.
Section 3. Shelf Registrations.
(a) Shelf Registrations. Within 180 days after the date hereof, the
Company shall prepare and file with the SEC a Registration Statement (which may
include any previously filed Registration Statement meeting the requirements set
forth herein) under the Securities Act for an offering to be made on a
continuous basis pursuant to Rule 415 (or any similar rule that may be adopted
by the SEC) under the Securities Act covering all of the Registrable Securities
(the "Shelf Registration").
(b) The Shelf Registration shall be on Form S-3 or another appropriate
form permitting registration of such Registrable Securities for resale by such
holders in the manner or manners designated by them.
(c) The Company shall use all reasonable efforts to cause the Shelf
Registration to become effective under the Securities Act in accordance with
Section 3(a) hereof and shall keep the Shelf Registration continuously effective
until the earlier of (i) the sale pursuant to the Shelf Registration of all the
Registrable Securities and (ii) the expiration of the holding period applicable
to such Registrable Securities held by Persons that are not affiliates of the
Company under Rule 144(k) under the Securities Act or any successor provision.
The Company shall also supplement or make amendments to any Shelf Registration
if required by the rules, regulations or instructions applicable to the
registration form used by the Company or if required by the Securities Act.
(d) No holder of Registrable Securities may include any of its
Registrable Securities in any prospectus pursuant to this Agreement unless and
until such holder furnishes to the Company in writing, at least three business
days prior to the effective date of the Registration Statement pursuant to the
Shelf Registration, such information regarding such holder and the proposed
distribution by such holder of such Registrable Securities as the Company may
reasonably request in writing; provided that such holder shall have received
such request at least 10 business days prior to the effective date of the
Registration Statement pursuant to the Shelf Registration; provided further that
if such information is furnished to the Company after such three business days
prior to the effective date of the Registration Statement pursuant to the Shelf
Registration, the Company will, within five business days of receipt of such
information, file
A-3
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with the SEC such amendments to the Registration Statement pursuant to the Shelf
Registration as are necessary to permit such holder to deliver such prospectus
to purchasers of Registrable Securities.
Section 4. Registration Procedures. (A) In connection with the
registration obligations pursuant to Section 3 hereof, the Company shall use all
reasonable efforts to effect such registration to permit the sale of such
Registrable Securities in accordance with the then intended method or methods of
disposition thereof, and pursuant thereto the Company shall as expeditiously as
possible:
(a) prepare and file with the SEC, within the time period specified in
Section 3, a Registration Statement or Registration Statements on any
appropriate form under the Securities Act, which form shall be available for the
sale of the Registrable Securities by the holders thereof in accordance with the
intended method or methods of distribution thereof, and use all reasonable
efforts to cause each such Registration Statement to become effective and remain
effective as provided herein; provided, however, that before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
the Company shall furnish to the Special Counsel copies of the Registration
Statement or Prospectus and all such documents in the form proposed to be filed
(but excluding any exhibits thereto, including those incorporated by reference
thereto, unless specifically requested by the Special Counsel) at least three
business days prior thereto, which documents will be subject to the review of
the Special Counsel, and the Company shall not file any such Registration
Statement or amendment thereto or any Prospectus or any supplement thereto to
which the Special Counsel shall reasonably object on a timely basis, unless the
Company is advised by its counsel that such Registration Statement or amendment
thereto or any Prospectus or supplement thereto is required to be filed by
applicable law;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable period; cause
the related Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Securities Act;
(c) promptly notify the Special Counsel and, with respect to any event
contemplated by clauses (i)(B), (iv), (v), (vi) or (vii) hereof, notify such
registered holders of Registrable Securities promptly (and in each case, if
requested, confirm any such oral or telephonic notice in writing), (i) when a
Prospectus or any Prospectus supplement or post-effective amendment related to
such Registrable Securities (A) has been filed and (B) with respect to a
Registration Statement or any post-effective amendment related to such
Registrable Securities, when the same has been filed and has become effective,
(ii) of the receipt of any comments from the SEC relating to a Registration
Statement, (iii) of any request by the SEC for amendments or supplements to a
Registration Statement or related Prospectus or for additional information, (iv)
of the issuance by the SEC of any stop order suspending the effectiveness of a
A-4
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Registration Statement or the initiation of any proceedings for that purpose,
(v) if at any time the representations and warranties of the Company contained
in any agreement entered into pursuant to paragraph (1) below in connection with
the sale of Restricted Securities by selling holders thereof cease to be true
and correct in all material respects, (vi) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale or exchange in
any jurisdiction of the United States of America or the initiation of any
proceeding for such purpose, (vii) of the happening of any event that makes any
statement of a material fact made in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue or that requires the making of any changes in a Registration
Statement or related Prospectus so that such documents will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading (provided that the
timely filing of a report under the Exchange Act which is incorporated by
reference in the Registration Statement and related Prospectus shall constitute
effective notice under this subsection (vii)), and (viii) of the determination
of the Company that a post-effective amendment to a Registration Statement would
be appropriate;
(d) use every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale or exchange in any jurisdiction of the United
States of America, as promptly as practicable;
(e) if reasonably requested by any holder of Registrable Securities
covered by a Registration Statement, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment such information as such holder
reasonably requests to be included therein as is required by applicable law or
as necessary so that the Registration Statement does not include an untrue
statement of a material fact or omit to state a material fact with respect to
such holder or such holder's planned method of distribution, (ii) make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as the Company has received notification of the matters to be
incorporated in such Prospectus supplement or such post-effective amendment, and
(iii) supplement or make amendments to any Registration Statement as is required
by applicable law;
(f) furnish to each selling holder of Registrable Securities upon
request, and the Special Counsel, without charge, at least one conformed copy of
the Registration Statement or Statements and any post-effective amendment
thereto, including financial statements and schedules, without charge, as well
as all documents incorporated therein by reference or deemed incorporated
therein by reference and all exhibits (including those previously furnished or
incorporated by reference), at the earliest practicable time under the
circumstances after the filing of such documents with the SEC;
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(g) deliver to each holder of Registrable Securities and the Special
Counsel, without charge, copies of the Prospectus or Prospectuses (including
each preliminary prospectus) and any amendment or supplement thereto; the
Company consents to the use of such Prospectus or any amendment or supplement
thereto in accordance with applicable law by each of the selling holders of
Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by such Prospectus or any amendment or supplement
thereto in accordance with applicable law;
(h) prior to any public offering of Registrable Securities, use all
reasonable efforts to register or qualify or cooperate with the selling holders
of Registrable Securities and the Special Counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale, as the case
may be, under the securities or Blue Sky laws of such state or local
jurisdictions in the United States as any seller reasonably requests in writing;
keep each such registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept effective
and do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
applicable Registration Statement; provided, however, that the Company will not
be required to (i) qualify generally to do business in any jurisdiction where it
is not then so qualified, (ii) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject,
(iii) take any action that would subject it to taxation in any jurisdiction
where it is not then subject or (iv) register or qualify securities prior to the
effective date of any Registration Statement under Section 3 hereof;
(i) cooperate with the selling holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities, which certificates shall not bear any restrictive
legends; and enable such Registrable Securities to be in such denominations and
registered in such names, in all cases consistent with the requirements set
forth in the Indenture, as the holders may request;
(j) subject to the exceptions contained in (i), (ii), (iii) and (iv) of
subsection (h) hereof, use all reasonable efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other Federal, state and local governmental regulatory
agencies or authorities in the United States as may be necessary, by virtue of
the business and operations of the Company, to enable the seller or sellers
thereof to consummate the disposition of such Registrable Securities and
cooperate with each seller of such Registrable Securities in connection with any
filings required to be made with the National Association of Securities Dealers,
Inc.;
(k) upon the occurrence of any event contemplated by paragraph
4(A)(c)(vii) or 4(A)(c)(viii) above, as promptly as practicable thereafter,
prepare and file with the SEC a supplement or post-effective amendment to the
applicable Registration Statement or a
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supplement to the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities being sold thereunder, such
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;
(1) enter into such customary agreements and take all such other
reasonable or necessary actions in connection therewith (including those
reasonably requested by the holders of a majority of the Registrable Securities
being sold) in order to expedite or facilitate the disposition of such
Registrable Securities;
(m) cause the Indenture to be qualified under the TIA not later than the
effective date of any Registration Statement; and in connection therewith,
cooperate with the Trustee to effect such changes to the Indenture as may be
required for the Indenture to be so qualified in accordance with the terms of
the TIA and execute, and use all reasonable efforts to cause the Trustee to
execute, all documents as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC to enable the Indenture to
be so qualified in a timely manner; and
(n) to comply with all applicable rules and regulations of the SEC and
make generally available to the Company's securityholders an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder no later than the date required for the filing of the applicable
forms referred to in Rule 158 under the Exchange Act, commencing on the first
day of the first fiscal quarter of the Company commencing after the effective
date of a Registration Statement, which statement shall cover said 12-month
period.
(B) (a) Purchaser shall, as a condition to the sale of any Registrable
Security, require the holder to whom such Registrable Security is sold to agree
to be bound by this Agreement with respect to the obligations of holders of
Registrable Securities set forth herein. The Company may require each selling
holder of Registrable Securities under a Shelf Registration to furnish to the
Company such information regarding such selling holder and the distribution of
such Registrable Securities, including the information specified in Item 507 of
Regulation S-K under the Securities Act, as the Company may from time to time
reasonably request in writing, and each holder in acquiring such Registrable
Securities agrees to supply such information to the Company promptly upon such
request. In addition, each such holder shall furnish to the Company all material
information necessary to make any information previously furnished by such
holder to the Company not misleading.
(b) Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that (i) such holder will promptly (and in any case
within two business days after completion of such sale or distribution) notify
the Company following any sale of Registrable Securities under a Shelf
Registration or distribution to the public pursuant to Rule
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144(k) (or any similar provision then in force, but not Rule 144A under the
Securities Act) and (ii) upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(A)(c)(iii),
4(A)(c)(iv), 4(A)(c)(vi), or 4(A)(c)(vii) hereof, such holder will forthwith
discontinue disposition of such Registrable Securities covered by such
Registration Statement or Prospectus and will not resume disposition of such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 4(A)(k) hereof, or
until it is advised in writing by the Company that the use of the applicable
Prospectus may be resumed and has received copies of the Registration Statement
and Prospectus and any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such Prospectus. If so directed by
the Company, such holder will deliver to the Company (at the Company's expense)
all copies in its possession, other than permanent file copies then in such
holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice.
(c) If the Company determines (at any time in its sole discretion), to
suspend use of the Shelf Registration due to pending material corporate
developments or similar material events that have not yet been publicly
disclosed, the Company shall deliver a certificate in writing, signed by an
authorized officer to the registered holders of Registrable Securities and the
Special Counsel to the effect of the foregoing and upon receipt of such
certificate such holders will forthwith discontinue disposition of such
Registrable Securities covered by such Registration Statement or Prospectus and
will not resume disposition of such Registrable Securities until such holders'
receipt of copies of a supplemental or amended Prospectus, or until they are
advised in writing by the Company that such Prospectus may be used and have
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus. The Company will use
reasonable efforts to ensure that use of the Shelf Registration statement may be
resumed as promptly as is practicable. The period of time that the Shelf
Registration statement is not available for sales as a result of events under
this Section 4(B)(c) shall not exceed in the aggregate (A) 45 days in any 3
month period and (B) 90 days in any 12 month period. Each day that the Shelf
Registration statement is not available for sales of Registrable Securities
shall extend by such day the period of time that the Shelf Registration
statement would have to remain effective under Section 3(c).
Section 5. Registration Expenses. The Company shall pay all fees and
expenses incurred by it or Purchaser incident to the performance of or
compliance with this Agreement by the Company including, without limitation, (i)
all SEC, stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all fees and expenses incurred in connection
with compliance with state securities or Blue Sky laws (including reasonable
fees and disbursements of counsel for any underwriters or holders in connection
with Blue Sky qualification of any of the Registrable Securities), (iii) all
expenses in preparing or assisting in preparing, printing and distributing any
Registration Statement, any Prospectus, any amendments or supplements thereto,
other documents relating to the Company's performance of and compliance with
this Agreement, and (iv) all rating agency fees but excluding fees of any
special
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accountants retained by the selling holders and transfer taxes, if any, relating
to the sale or disposition of Registrable Securities by a holder of Registrable
Securities.
Section 6. Indemnification; Contribution. (a) The Company agrees to
indemnify and hold harmless the Purchaser and each holder of Registrable
Securities and each person, if any, who controls the Purchaser or any holder of
Registrable Securities within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact included in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto),
or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, provided that (subject to
Section 6(d) below) any such settlement is effected with the prior
written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel), reasonably incurred
in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply (x) to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by the Purchaser or such holder of Registrable Securities (which also
acknowledges the indemnity provisions herein) and each person, if any, who
controls the Purchaser or any such holder of Registrable Securities expressly
for use in the Registration Statement (or any amendment thereto), or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) or (y) with respect to any preliminary prospectus to the extent
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that any such loss, liability, claim, damage or expense, results from the fact
the Purchaser or a holder of Registrable Securities sold securities to a person
to whom there was not sent or given at or prior to the written confirmation of
such sale, a final Prospectus (if the Company had previously furnished copies
thereof and such final Prospectus is required by law to be delivered to such
person), if the loss, liability, claim or expense of the Purchaser or such
holder results from an untrue statement or alleged untrue statement or an
omission or alleged omission contained in the preliminary prospectus that was
corrected in the final Prospectus.
(b) In connection with any Shelf Registration in which a holder,
including, without limitation, the Purchaser, of Registrable Securities is
participating, in furnishing information relating to such holder of Registrable
Securities to the Company in writing expressly for use in such Registration
Statement, any preliminary prospectus, the Prospectus or any amendments or
supplements thereto, the holders of such Registrable Securities agree, severally
and not jointly, to indemnify and hold harmless the Purchaser and each person,
if any, who controls the Purchaser within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act and the Company, and each
person, if any, who controls the Company within the meaning of either such
Section, against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such holder of Registrable Securities
(which also acknowledges the indemnity provisions herein) and each person, if
any, who controls any such holder of Registrable Securities expressly for use in
the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
The Purchaser agrees to indemnify and hold harmless the Company, the
holders of Registrable Securities, and each person, if any, who controls the
Company or any holder of Registrable Securities within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
and all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendment thereto), or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by the Purchaser expressly for use in the Registration Statement
(or any amendment thereto) or such preliminary prospectus or the Prospectus (or
any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not
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relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense in
the defense of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified party)
also be counsel to the indemnified party. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in addition to
any local counsel) separate from their own counsel for all indemnified parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(e) If the indemnification provided for in this Section 6 is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, in such proportion as is appropriate to reflect
the relative fault of the indemnifying party or parties on the one hand and of
the indemnified party on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and the holders of the
Registrable Securities or the Purchaser on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or by the holder of the
Registrable Securities or the Purchaser and the parties' relative
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intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(e) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 6(e). The
aggregate amount of losses, liabilities, claims, damages, and expenses incurred
by an indemnified party and referred to above in this Section 6(e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 6, neither the holder of
any Registrable Securities nor the Purchaser, shall be required to indemnify or
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities sold by such holder of Registrable Securities or
unwritten by the Purchaser, as the case may be, and distributed to the public
were offered to the public exceeds the amount of any damages that such holder of
Registrable Securities or the Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 6(e), each person, if any, who controls the
Purchaser or any holder of Registrable Securities within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Purchaser or such holder, and each person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act shall have the same rights to contribution as
the Company.
Section 7. Miscellaneous. (a) Remedies. In the event of a breach by any
party to this Agreement of any of its obligations under this Agreement, the
other party (or, in the event of a breach by the Company, each holder of
Registrable Securities), in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. Each party agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect of
such breach, it shall waive the defense that a remedy at law would be adequate.
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(b) No Inconsistent Agreements. The Company shall not, during the term
of this Agreement, enter into any agreement that is inconsistent with the rights
granted to the holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof.
(c) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented
(other than to cure any ambiguity or correct or supplement any provision
herein), and waivers or consents to departures from the provisions hereof may
not be given, unless the Company has obtained the written consent of holders of
a majority of the then outstanding aggregate principal amount at maturity of
Registrable Securities, except in the case of the Purchaser prior to
distribution of the LYONs to the holders, then the consent of the Purchaser.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
holders of Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other holders of Registrable Securities may be given by holders of at
least a majority in aggregate principal amount at maturity of the Registrable
Securities being sold by such holders.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first
class mail, or telecopier:
(i) if to a holder of Registrable Securities, at the most
current address set forth on the records of the registrar under the
Indenture or given by such holder to the Company in accordance with the
provisions of this Section 7(d), except with respect to the Purchaser
prior to distribution of the LYONS, then to the Purchaser at the address
set forth on the first page of the Purchase Agreement, attention of D.
Casey Safreno (fax: (650) 849-2101) with a copy to William Hinman, Esq.,
Shearman & Sterling, 555 California Street, San Francisco, CA 94104
(fax: (415) 616-1199); and
(ii) if to the Company, to the attention of Phillip Schneider at
IDEC Pharmaceuticals Corporation, 11011 Torreyana Road, San Diego, CA
92121 (fax: (619) 458-8887), with copies to Brobeck, Phleger & Harrison
LLP, Two Embarcadero Place, 2200 Geng Road, Palo Alto, CA 94303,
attention J. Stephan Dolezalek, Esq. (fax: (650) 496-2736), and
thereafter by such other address, notice of which is given in accordance
with the provision of this Section 7(d).
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being sent by next-day delivery by a solvent air courier; and when receipt
acknowledged, if telecopied.
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Copies of all such notices, demands or other communications shall be
concurrently delivered by the person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
holders of Registrable Securities; provided that nothing herein shall be deemed
to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement. If any
transferee of any holder shall acquire Registrable Securities in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
subject to all of the terms of this Agreement and by taking and holding such
Registrable Securities, such person shall be conclusively deemed to have agreed
to be bound by and to perform all of the terms and provisions of this Agreement
and such person shall be entitled to receive the benefits hereof. The Initial
Purchaser (in its capacity as Initial Purchaser) shall have no liability or
obligation to the Company with respect to any failure by a holder of Registrable
Securities to comply with, or any breach by such holder of, any obligations of
such holder under this Agreement.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(i) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
(j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement, and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained
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herein. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein, with respect to the registration
rights granted by the Company with respect to the securities sold pursuant to
the Purchase Agreement. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(k) Securities Held by the Company or its Affiliates; Calculation of
Percentage of Registrable Securities. Whenever the consent or approval of
holders of a specified percentage of Registrable Securities is required
hereunder, (i) Registrable Securities held by the Company or any of its
affiliates shall not be counted in determining whether such consent or approval
was given by the holders of such required percentage or amount and (ii) any
shares of Common Stock that are included among the outstanding Registrable
Securities, or the applicable portions thereof, shall be deemed, subject to the
terms of clause (i) above, to represent the principal amount at maturity of
LYONs from which such shares were converted at the time of such conversion.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
IDEC PHARMACEUTICALS CORPORATION
By /s/ Phillip M. Schneider
---------------------------------------
Name: Phillip M. Schneider
Title: Vice President and Chief
Financial Officer
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ Mark J. Robinson
---------------------------------------
Name: Mark J. Robinson
Title: Vice President
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Exhibit B
FORM OF OPINION OF COUNSEL TO THE COMPANY
TO BE DELIVERED PURSUANT TO
SECTION 5(a)
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) The Company has full corporate power and corporate authority to
own, lease and operate its properties and to conduct its business as described
in the Offering Memorandum and to enter into and perform its obligations under
the Purchase Agreement.
(iii) The Company is duly qualified as a foreign corporation in the
United States to transact business and is in good standing in each jurisdiction
in the United States in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business, except where
the failure so to qualify or to be in good standing would not result in a
Material Adverse Effect.
(iv) To our knowledge, the authorized, issued and outstanding capital
stock of the Company is as set forth in the Offering Memorandum in the column
entitled "Actual" under the caption "Capitalization" except for subsequent
issuances, if any, pursuant to the Purchase Agreement or pursuant to
reservations, agreements, employee benefit plans or the exercise of convertible
securities or options referred to in the Offering Memorandum; the shares of
issued and outstanding capital stock of the Company have been duly authorized
and the shares of Common Stock issuable upon conversion of the Securities have
been duly authorized and, when issued in accordance with the terms of the
Indenture and the Securities, will be validly issued, fully paid and
non-assessable.
(v) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(vi) The Indenture has been duly authorized, executed and delivered by
the Company and (assuming the due authorization, execution and delivery thereof
by the Trustee), constitutes a valid and binding agreement to the Company
enforceable against the Company in accordance with its terms, except to the
extent that enforceability may be limited by (A) bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, arrangement, moratorium, fraudulent transfer and other similar
laws relating to or affecting rights of creditors generally and (B) general
equitable principles whether considered in a proceeding at law or in equity,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing, and the discretion of any court of competent
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jurisdiction in awarding specific performance or injunctive relief and other
equitable remedies.
(vii) The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except to the extent that enforceability may be limited by (A)
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, arrangement, moratorium, fraudulent
transfer and other similar laws relating to or affecting rights of creditors'
generally and (B) general equitable principles whether considered in a
proceeding at law or in equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, and the discretion of
any court of competent jurisdiction in awarding specific performance or
injunctive relief and other equitable remedies.
(viii) The documents incorporated by reference in the Offering
Memorandum (except for the financial statements and other financial data
included therein or omitted therefrom, as to which we need express no opinion),
as of the date they were filed with the Commission, appear on their face to have
been appropriately responsive in all material respects to the requirements of
the 1934 Act and the 1934 Act Regulations.
(ix) The Securities, the Indenture and the registration Rights Agreement
conform in all material respect to the description thereof contained in the
Offering Memorandum.
(x) The Securities in the form contemplated by the Indenture have been
duly authorized by the Company and, when executed by the Company and
authenticated by the Trustee in the manner provided in the Indenture (assuming
the due authorization, execution and delivery of the Indenture by the Trustee)
and issued and delivered against payment of the purchase price therefor will
constitute valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except to the extent that enforceability
may be limited by (A) bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, arrangement, moratorium,
fraudulent transfer and other similar laws relating to or affecting rights of
creditors' generally and (B) general equitable principles whether considered in
a proceeding at law or in equity; the holders of the Securities are entitled to
the benefits of the Indenture; and such Securities are convertible to shares of
Common Stock in accordance with the terms of the Indenture, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, and the discretion of any court of competent jurisdiction in awarding
specific performance or injunctive relief and other equitable remedies.
(xi) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any United States federal or
California state court, governmental authority or agency other than such as may
be required under the 1933 Act and applicable securities laws of California is
required in connection with the due authorization, execution and delivery of the
Purchase Agreement or the execution, delivery or performance of the Indenture
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and the Registration Rights Agreement by the Company or for the valid
authorization, issuance, sale and delivery of the Securities to the Initial
Purchaser in accordance with the terms of the Purchase Agreement and of the
Common Stock issuable upon conversion of the Securities.
(xii) It is not necessary in connection with the offer, sale and
delivery of the Securities to the Initial Purchaser and to each Subsequent
Purchaser in the manner contemplated by the Purchase Agreement and the Offering
Memorandum to register the Securities under the 1933 Act or to qualify the
Indenture under the Trust indenture Act.
(xiii) The execution, delivery and performance of the Purchase
Agreement, the DTC Agreement, the Indenture, the Registration Rights Agreement
and the Securities and the consummation of the transactions contemplated in the
Purchase Agreement and in the Offering Memorandum and compliance by the Company
with its obligations under the Purchase Agreement, the Indenture and the
Securities do not and will not, whether with or without the giving of notice or
lapse of time or both, conflict with or constitute a breach of, or default or
Repayment Event (as defined in Section 1(a)(xv) of the Purchase Agreement) under
or result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any subsidiary thereof pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note ,
lease or any other agreement or instrument, filed as an exhibit to any 1934 Act
filing or incorporated by reference in the Offering Memorandum, to which the
Company or any of its subsidiaries is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or any
subsidiary thereof is subject (except for such conflicts, breaches or defaults
or liens, charges, or encumbrances that would not have a Material Adverse
Effect), nor will such action result in any violation of the provisions of the
charter or by-laws of the Company or any of its subsidiaries, or any applicable
United States federal or California state law, statute, rule, regulation,
judgment, order, writ or decree, known to us, of any United States federal or
California state government instrumentality or court having jurisdiction over
the Company or any of its subsidiaries or any of their respective properties,
assets or operations.
(xiv) The information in the Offering Memorandum under the headings
"Business-Litigation," "Description of Capital Stock", "Description of the
LYONs," and "Certain Federal Income Tax Considerations" has been reviewed by us
and is correct in all material respects.
(xv) There is not pending or, to the best of our knowledge, threatened
any action, suit, proceeding, inquiry or investigation, to which the Company or
any subsidiary is a party, or to which the property of the Company or any
subsidiary thereof is subject, before or brought by any United Stated federal or
California state court or governmental agency or body, which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably be
expected to materially and adversely affect the properties or assets thereof or
the consummation of the transactions contemplated in the Purchase Agreement or
the performance by the Company of its obligations thereunder or the transactions
contemplated by the Offering Memorandum.
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(xvi) All descriptions in the Offering Memorandum of contracts and other
documents to which the Company or any of its subsidiaries are a party are
accurate in all material respects; to our knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments that would be required to be described in the Offering Memorandum
that are not described or referred to in the Offering Memorandum other than
those described or referred to therein or in the Offering Memorandum other than
those described or referred to therein or incorporated by reference thereto, and
the description thereof or references thereto are correct in all material
respects.
(xvii) To our knowledge, the Company is not in violation of its charter
or by-laws.
In addition, we participated in conferences with certain officers and
representatives of the Company, its independent public accountants, the Initial
Purchaser and the Initial Purchaser's counsel at which the contents of the
Offering Memorandum and related matters were discussed. We are not, however,
passing upon, and do not assume any responsibility for, and we have not
independently checked or verified, the accuracy, completeness or fairness of the
information contained in the Offering Memorandum. In addition, we are not
experts on patent, FDA or regulatory issues and we are not passing upon, and do
not assume any responsibility for, and we have not independently checked or
verified, the accuracy, completeness or fairness of the information contained in
the Offering Memorandum with respect to such issues.
We may state, however, that based upon our participation as described in
the preceding paragraph, (i) we confirm that we have no reason to believe that
(other than the financial statements, including the notes and schedules thereto,
and the other financial data included therein, as to which we express no
belief), at the time the Offering Memorandum was issued, the Offering Memorandum
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and (ii) we confirm that we have no reason to believe that
(other than the financial statements, including the notes and schedules thereto,
and the other financial data included therein, as to which we express no belief)
the Offering Memorandum, on the date hereof, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
Nothing has come to our attention that would lead us to believe that the
Offering Memorandum or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included or incorporated by
reference therein or omitted therefrom, as to which we need make no statement),
at the time the Offering Memorandum was issued at the time any such amended or
supplemented Offering Memorandum was issued or at the Closing Time, included or
includes an untrue statement of a material fact or omitted or omits
circumstances under which they were made, not misleading.
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Exhibit C
FORM OF OPINION OF REGULATORY
AFFAIRS COUNSEL TO THE COMPANY
DRAFT
February 9, 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
North Tower
World Financial Center
New York, N.Y. 10281-1209
Ladies & Gentlemen:
We have acted as special regulatory counsel to IDEC Pharmaceuticals
Corporation (the "Company") with respect to U.S. Food and Drug Administration
("FDA") regulatory matters in connection with the Purchase Agreement, dated
February 9, 1999, between the Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("the Purchase Agreement"). This opinion is furnished to you at the
request of the Company pursuant to Section 5(b) of the Purchase Agreement. Each
capitalized term used but not defined herein shall have the meaning ascribed
thereto in the Purchase Agreement.
We have read the statements in the final Offering Memorandum dated
February 9, 1999 under the captions "Risk Factors - Failure to Obtain Product
Approvals or Comply with Government Regulations Could Adversely Affect our
Business" and "Business - Regulation of Products by the FDA." We are of the
opinion that the statements included under such captions that summarize
provisions of the Federal Food, Drug and Cosmetic Act and the Public Health
Service Act and implementing regulations are correct in all material respects.
In addition, although we have made no independent inquiry, nothing has
come to our attention that leads us to believe that the statements in the final
Offering Memorandum under the captions "Risk Factors - Failure to Obtain Product
Approvals or Comply with Government Regulations Could Adversely Affect our
Business" and "Business - Regulation of Products by
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the FDA," as of the date of the Offering Memorandum or at the Closing Time,
contained or contain any untrue statement of a material fact relating to the
Company or FDA matters or omitted or omit to state any material fact relating to
the Company or FDA matters which is necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
As to the factual matters addressed herein, we have relied without
independent investigation upon the attached certificate of the Company.
This opinion is rendered solely for your benefit in connection with the
transaction described above. This opinion may not be used or relied upon by any
other person or entity and may not be disclosed, quoted, filed with a
governmental agency, or otherwise referred to without our express prior written
consent. This opinion is limited to the matters stated herein, and no opinion or
belief is implied or may be inferred beyond the matters expressly stated herein.
Sincerely,
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Exhibit D
FORM OF OPINION OF INTELLECTUAL PROPERTY COUNSEL
TO THE COMPANY
DRAFT
February , 1999
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
North Tower
World Financial Center
New York, N.Y. 10281-1209
Ladies and Gentlemen:
As counsel for IDEC Pharmaceuticals Corporation (IDEC), a California
corporation, for its patent matters, we have been asked to provide you with an
opinion letter concerning the patent activities and matters we have handled for
the Company. We are familiar with the efforts of the Company to obtain patent
rights in the United States and abroad. We have read the portions of the
Offering Memorandum entitled "Risk Factors - We May Be Unable to Adequately
Protect or Enforce Our Intellectual Property Rights or Secure Rights to Third
Party Patents", and "Business - Patents and Proprietary Technology"
(collectively, "the Intellectual Property Portion"). The opinions given below
are based on our files maintained in the course of representing the Company, and
an inquiry of attorneys within Burns, Doane, Swecker & Mathis who perform legal
services of the Company.
Subject to the qualifications herein stated, we are of the opinion that:
(1) To the best of our knowledge, we are not aware of any legal actions,
claims or proceedings pending or threatened against the Company alleging that
the Company is infringing or otherwise violating any patents or trade secrets
owned by others and to the best of our knowledge, the Company has not received
any communication in which it is alleged that the Company is infringing or
violating the patent rights of third parties.
(2) The Intellectual Property Portion of the Offering Memorandum
contains accurate and complete descriptions of the Company's patent
applications, issued and allowed patents, and
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patents licensed to the Company and fairly summarize the legal matters,
documents and proceedings relating thereto.
(3) To the best of our knowledge, at least 20 United States patents have
issued to the Company, and the Company is the Assignee of record, and the
patents are being maintained by the Company.
(4) To the best of our knowledge, at least 15 additional U.S. patent
applications have been filed by the Company in the U.S. Patent and Trademark
Office; those pending patent applications have been properly prepared as to form
and have been assigned to the Company, which assignments are either recorded in
the U.S. Patent and Trademark Office or have been submitted for recording in the
U.S. Patent and Trademark Office; and each of these patent applications is being
pursued by the Company.
(5) To the best of our knowledge, with respect to patent applications
that have been assigned to the Company, we have no reason to believe that such
assignments are invalid.
(6) To the best of our knowledge, at least 200 foreign counterpart
patent applications have been filed on behalf of the Company.
(7) To the extent that the Intellectual Property Portion contains
descriptions which constitute matters of law or legal conclusions, these
descriptions are correct in all material respects and fairly present the patent
situation of the Company.
(8) To the best of our knowledge, there are no legal or government
proceedings other than patent applications pending, relating to patent rights of
the Company to which the Company is a party and, to our knowledge, no such
proceedings are threatened or contemplated by government authorities or others.
(9) Although we have not conducted comprehensive product clearance
investigations, to the best of our knowledge, all subject matter areas, of which
we are aware, in which the Company could be prevented by third-party-held
patents from manufacturing and selling, in the United States and abroad, the
compositions and methods claimed in the patent applications described in the
Appendix to this opinion, have been disclosed in the Offering Memorandum.
(10) In addition, although we have not independently verified the
accuracy, completeness or fairness of the statements contained in the Offering
Memorandum (except that we have independently verified the accuracy of the
matters contained in (3), (4) and (6) hereof), nothing has come to our attention
that would cause us to believe that the statements in the Intellectual Property
Portion in the Offering Memorandum, as of the date of the Offering Memorandum or
as of the date hereof, included or includes an untrue statement of a material
fact or omit or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading as to patent matters (it being
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57
understood that we have not participated in the negotiation of or reviewed the
Company's license agreements and we have not undertaken any independent
investigation as to whether the Company is infringing any patents or other
rights of others or whether the Company owns or possesses sufficient licenses or
other rights to use all patents or other rights necessary for the conduct of the
Company's business).
This opinion letter is furnished to you as the underwriter and solely
for your benefit and may not be make available to or relied upon by any other
person, firm, or entity without our prior written consent. The foregoing
information is being furnished as of the date of this letter, and we do not
undertake an advisory obligation after this date if knowledge hereafter would
result in a change herein.
Very truly yours,
BURNS, DOANE, SWECKER & MATHIS, L.L.P.
By
-----------------------------------
E. Joseph Gess
By
-----------------------------------
Robin L. Teskin
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Exhibit E
FORM OF LOCK-UP LETTER AGREEMENT
February *, 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
North Tower
World Financial Center
New York, New York 10281-1209
Re: Proposed Offering by IDEC Pharmaceuticals Corporation of Liquid
Yield Option Notes(TM) due 2019
Dear Sirs:
The undersigned, a stockholder [and an officer and/or director] of IDEC
Pharmaceuticals Corporation, a Delaware corporation (the "Company"), understands
that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") proposes to enter into a Purchase Agreement (the "Purchase
Agreement") with the Company providing for the offering of the Company's Liquid
Yield Option Notes(TM) due 2019 (the "Initial Securities") and the grant by the
Company to Merrill Lynch of the option to purchase additional Securities to
cover over-allotments, if any (the "Option Securities"). The Initial Securities,
together with the Option Securities, are collectively the "Securities." In
recognition of the benefit that such an offering will confer upon the
undersigned as a stockholder [and an officer and/or director] of the Company,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned agrees with Merrill Lynch that,
during a period of 90 days from the date of the Purchase Agreement, the
undersigned will not, without the prior written consent of Merrill Lynch,
directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant for the sale of, or otherwise dispose of or
transfer any shares of the Company's common stock, par value $0.001 per share
(the "Common Stock"), or any securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or hereafter acquired by the
undersigned or with respect to which the undersigned has or hereafter acquires
the power of disposition, or file any registration statement under the
Securities Act of 1933, as amended, with respect to any of the foregoing or (ii)
enter into any swap or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of
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59
ownership of Common Stock or any securities convertible into or exchangeable for
Common Stock, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise. The foregoing
sentence shall not apply to such number of shares of Common Stock, whether now
owned or hereafter acquired by the undersigned, as specified in Schedule B to
the Purchase Agreement.
Very truly yours,
Signature:
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Print Name:
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E-2